The conscience of the King: Kakavas v. Crown Melbourne Ltd.

Author:Robinson, Ludmilla K.
 
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I INTRODUCTION

In the case of Kakavas v Crown Melbourne Ltd [2013] HCA 25 (5 June 2013) ('Kakavas'), the Full Bench of the High Court considered the application of equitable principles relating to unconscionable conduct to the situation of a 'problem' gambler and his dealings with Crown Melbourne Ltd ('Crown'). Although the substantive sections, which address the issue of alleged unconscionable conduct by the respondent, constitute a very small percentage of the judgment, (1) the decision effectively limits the availability of equitable relief in instances of unconscionable behaviour. It is argued below that this is achieved by substantially narrowing the ambit and the definition of 'disability' as enunciated Fullagar J in Blomley v Ryan ('Blomley'), (2) and addressed in Commercial Bank of Australia Ltd v Amadio ('Amadio') (3) by both Deane and Mason JJ.

Indeed, the Kakavas judgment is disturbing on a number of levels. In addition to the circumscription of the equitable principles relating to unconscionable conduct, the High Court, in the joint/collective judgment, demonstrates an unusual degree of what may only be described as subjectivity in its weighing of the evidence presented at first instance. Both the tenor and content of the judgment also suggest that the High Court was in some degree influenced by the potential for a decision in the applicant's favour to 'open the floodgates' to further actions by problem or compulsive gamblers against casinos and other venues at which gambling is encouraged.

II THE FACTS

The facts of the case are fairly complex, being concerned with the numerous dealings between the appellant and the respondent over a number of years, as well as a number of ancillary events and issues. At all three levels of the litigation, (4) the courts were at pains to describe the facts in detail. Indeed, the judgment of the Supreme Court of Victoria Court of Appeal (5) presents a description of all of the transactions between Mr Kakavas and Crown; these being taken from the judgment of the primary judge. (6) The facts summarised below are abstracted from the Supreme Court of Victoria Court of Appeal judgment, upon which the High Court relied for the facts recited in its judgment. (7)

The appellant is what is described in all three decisions as 'a pathological gambler.' (8) In common parlance, he would be described as a 'gambling addict' or 'compulsive gambler.' (9) Interestingly, he is also described in all three decisions as a 'high roller,' i.e. a person who habitually gambles for extremely high stakes. (10) His relationship with the respondent began in 1994, when the Crown first opened its casino in Melbourne. In addition to gambling at Crown, the appellant would also gamble at casinos on the Gold Coast and in Sydney. In 1998, Mr Kakavas was sentenced to two years imprisonment for fraud, 18 months of which was suspended. (11) The appellant alleged that the fraud was committed to help fund his gambling addiction. During the time that he was awaiting trial he underwent therapy for his addiction and self-excluded from Crown. (12) On his release from gaol, the appellant applied to Crown to have the self-exclusion order revoked. This was accomplished in June 1998. However, on revoking the self-exclusion order, the respondent revoked the appellant's licence to remain on the casino's premises. (13) The licence was revoked because the appellant had been charged with an armed robbery offence. The charges were dismissed at the committal hearing.

On dismissal of the criminal charges, from December 1998 until October 2004 the appellant constantly applied and reapplied to Crown for revocation of the Withdrawal of Licence ('WOL'). Throughout these six years, Mr Kakavas established and ran a profitable property development company on the Gold Coast and continued to gamble at other venues in Australia and Las Vegas, in the United States of America. It was not until the management of the respondent discovered that the appellant had been gambling (and losing) $3 and $4 million dollars at the casinos in Las Vegas that it finally considered the revocation of the WOL. (14) In November 2004, the respondent opened negotiations with the appellant for the revocation of the WOL and the terms upon which he would be allowed to gamble in the casino. It is interesting to note that the judge, at first instance was:

... critical of the processes followed by Crown in deciding to restore the appellant's licence to enter Crown Casino. He described them as 'uncoordinated, unstructured and unsatisfactory,' even if the decision to revoke the WOL could, in itself, be justified. (15) It is uncertain from the evidence as to the exact date on which the WOL was revoked. However, towards the end of January 2005, the appellant was the guest of the respondent at the Australian Men's Open Tennis tournament.

The incentives offered by Crown to the appellant included preferential treatment in the casino, an increased stakes limit, the use of a private jet and a cash 'rebate' of 20% on his losses.

The period of gambling which formed the basis of the appellant's claim against Crown commenced in June 2005 and August 2006, during which time he attended the casino on '30 separate occasions, turned over $1,479 billion and in the process lost $20.5 million.' (16)

The facts as presented to the court at first instance also raised the issue of an exclusion order in relation to Star City casino, Sydney, imposed by the New South Wales Commissioner of Police in September 2000 pursuant to s 81 of the Casino Control Act 1992 (NSW). The effect of the order is to make entry into the relevant casino by the excluded person a criminal offence. (17) In 2002 and 2004 amendments to the Victorian Casino Control Act 1991 (Vic) not only extended the effect of an exclusion order from another state ('IEO') to Victoria, and thereby rendered the appellant's entry into a casino in Victoria illegal pursuant to s3, but also required the subject of the order to forfeit any winnings to the State (s 78B(2)). The respondent's knowledge of the IEO and its implications in regard to its conduct toward the appellant was considered at length in the hearings at first instance and in the appeal, but was addressed only briefly by the High Court.

III THE PROCEEDINGS AT FIRST INSTANCE AND ON APPEAL

The appellant commenced proceedings against Crown Melbourne Ltd and two other defendants (they were John Williams, chief operating officer of the casino and Rowen Craigie, a former chief operating officer) initially alleging:

... negligence at common law, unconscionable conduct, misleading or deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth), breach of statutory duties imposed by the Casino Control Act 1991 [(Vic)] and restitution. (18) The claim against Williams and Craigie was based upon the allegation that they had been accessories to the respondent's breach of the Trade Practices Act. In an interlocutory hearing it was held that the claims in negligence, restitution and pursuant to the Trade Practices Act could not be sustained and were struck out. A Second Amended Statement of Claim was filed on 28 August 2008 which relied upon allegations of unconscionable conduct by the respondent.

The basis for the claim for equitable relief in regard to unconscionable conduct was founded in the appellant's gambling addiction, which he alleged was a 'special disability' of which the respondent was aware and of which the respondent took advantage by offering him inducements to gamble at its casino. Further, the appellant alleged that the respondent had taken advantage of his disability for...

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