Kakavas v Crown Melbourne Ltd [2013] HCA 25

October 5, 2021

 

Case Analysis

Name

Course

Date

 

Kakavas v Crown Melbourne Ltd [2013] HCA 25

Name of student

  • Material Facts

The Appellant, Harry Kakavas, according to the High Court of Australia, a “pathological gambler”, who had a serious gambling problem for many years.In the period between June 2005 and August 2006, he spent a total of $20.5 million in playing baccarat at a casino located in Melbourne, which was owned and operated by the Respondent, Crown Melbourne Ltd (hereinafter, “Crown”). Within the same period, the Appellant’s gambling with Crown had generated a turnover of $1.479 billion. At some point, the Appellant was charged and convicted of fraud, which he alleged to have committed so as to fund his gambling behaviors. After serving his sentence, the Appellant negotiated with Crown to readmit him back to the casino, which was allowed and he was allowed to be going to the casino.  

He instituted proceedings against Crown seeking to recover the amount of $20.5 million lost through his gambling at the casino owned by Crown. His main argument was that the Respondent and its employees had acted unconscionably contrary to clear provisions of s 51AA to the Trade Practices Act 1974 (Cth) for having lured him to gamble when they well knew that he had gambling problems. 

  • Procedural History

Before the Court of the First instance, the Appellant’s main claim was that Crown, its then and former Chief Operating Officers had acted negligently at common law, had acted unconscionably and breach their statutory duties under the Victorian Casino Control Act. He asserted that the two Chief Operating Officers of Crown had been accessories to Crown’s breach of the statutory standards enunciated by the Trade Practices Act. This claim was, however, dismissed at the interlocutory stage hearing. The allegations against Crown went to a full hearing before the trial Judge, at which point the Appellant adduced evidence to demonstrate that Crown had been inducing him to gamble at its Casino, despite having full knowledge of the Appellant’s addiction to gambling. He claimed that Crown had taken advantage of his addiction, which he alleged to be a special disability, for its financial gain. The trial Judge dismissed the Appellant’s claim against Crown, reasoning that even though the Appellant was a pathological gambler, he had not demonstrated how his condition hindered him from controlling his urge to gamble, and as such, he voluntarily decided to engage in gambling. 

Aggrieved by the findings of the trial Court, the Appellant filed an appeal to the Victorian Court of Appeal. The Court of Appeal, while affirming the trial Court’s findings, dismissed the Appeal and held that the Appellant was not suffering any special disability as to lead to unconsented advantage by the Respondent. 

Subsequently, the Applicant’s appeal to the Supreme Court of Victoria was dismissed, upon which sought special leave to appeal to the High Court of Australia, which was granted in December 2012.

  • Grounds of Appeal

The Appellant’s Appeal to the Australian High Court was premised on a number of grounds. First, the Appellant argued that although previous Courts acknowledged that he was suffering from a pathological gambling condition, they proceeded to make a finding that he did not have a special disability that would lead to unconscionable conduct on the Respondent’s part. Secondly, the Appellant challenged the finding that both himself and the Respond had equal bargaining power as he had negotiated the terms upon which he was readmitted to the Respondent’s casino. Lastly, the Appellant argued against the finding that the Respondent had not in any way taken advantage of the Appellant’s special condition and vulnerability by inducing him to gamble and that the Respondent had acted in its ordinary legitimate course of business. 

  • Analysis of the decision

Upon hearing the Appeal presented to it, the High Court, like the previous Courts, found no merit in the Appeal and dismissed it. The Court’s reasoned that the Appellant’s condition did not take away his ability to decide and that the Appellant was capable of making rational decisions with regard to the relationship between him and the Respondent.  According to the Court, the Appellant’s condition would only have been prejudicial if it negatively affected his bargaining power relative to the Respondent. 

The Court further noted that the Appellant had previously admitted that the Respondent was not aware of his special condition and as such, the Respondent did not in any way take advantage of the Appellant.

  • Final decision and orders

In view of its analysis and findings, the High Court dismissed the Appeal against the decision of the Court of Appeal of Appeal with costs.

  • Ratio decidenti 

The Court’s decision was informed by the reasoning that a mere pathological gambling condition could not lead to a special disadvantage unless the same was capable of making the Appellant vulnerable and unable to make rational decisions in his best interests. 

  • Obiter Dictum

In the course of deciding the Appeal, the Court laid down a number of rules. First, the Court addressed itself to the applicability of the doctrine of constructive notice, heavily relied on by the Appellant and held that while the doctrine was applicable in cases relating to priority of property interests, the same could not be extended to pure commercial transactions such as the one between the Appellant and the Respondent.  Lastly, the Court formulated the rule that commercial transactions may not be impeachable unless there is proof of actual exploitation.

 

Bibliography

  • Journals 

Robinson, Ludmilla, “The Conscience of the King: Kakavas v Crown Melbourne Ltd [2013] HCA 25 (5 June 2013)” (2013) 17 University of Western Sydney Law Review.

  • Legislation 

Casino Control Act 1991 (Vic)

Trade Practices Act 1974 (Cth)

  • Cases 

Kakavas v Crown Melbourne Ltd [2012] VSCA 95 (21 May 2012).

Kakavas v Crown Melbourne Ltd [2013] HCA 25. 

Kakavas v Crown Melbourne Ltd [2009] VSC 559 (8 December 2009).

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