Kakavas v Crown Melbourne - Assignment Example

Research Report on an Australian High Court Case: Kakavas v Crown Melbourne LTD[2013]HCA 25 (5th June 2013) Name of student Institution affiliation Date Table of Contents Introduction 2 Summary of the Facts of the Case 3 Summary of the Judgment of the Case 4 The High Court Judges who Decided the Case 6 The Agreement of the Judges 6 The Type of Laws the Case Focused on 7 Five Cases Referred to within the Case 7 Reasons for Referring to the Cases 9 Effect of the Cases in Distinguishing the Case of Kakavas 9 The Principal Used from the Cases 9 References 10 Introduction Kakavas v Crown Melbourne Company [2013]HCA 25 (5th June 2013) is one of the high profile cases in Australia that was decided by the High Court1. The subject matter of the case related to the Law of Contract. Harry Kakavas had a severe problem of gambling. He made claims of suffering from a mental instinctive motive to gamble and between 2005 and 2006, he lost $20.5 million for playing baccarat at one of the casino in Melbourne which was run by Crown Melbourne Limited. Thus, his claim to recover the money from the company was based on the notion that Crown, with the use of its employees, absorbed him into ‘unconscionable conduct’, which contravenes section 20 of Australian Consumer Law2. From the High Court & Court of Appeal, Kakavas maintained the argument that Crown contravened s20 of the Australian Consumer Law because it repeatedly preyed on his addition to gambling not only for its benefit but also unconscionably. Further, he claimed that Crown lured Kakavas into gambling at their casino by use of deceptive incentives such as free accommodation, use of their private jet, and giving him rebates on losses. Summary of the Facts of the Case Kakavas has a mental addiction to gambling and made a cumulative loss of over $20 million while taking part in playing of baccarat at Crown’s casino in Melbourne (Bigwood, 2013). The duration between which he lost this money was June 2005 & August 2006. He won during some instances and at times he would chose to stay away without gambling. However, he argued before the courts that Crown make effort to engage him in some unconscionable conduct with regard to his addiction to gambling. In this case, Kakavas sought to be compensated for all the losses that he suffered. The trial judge, admitted that Kakavas was an addicted gambler before and Crown had knowledge about his condition (Kakavas, 2013). However, Kakavas was later imprisoned for fraud and made an application to Crown so that his self-exclusion order would be revoked. The trial judge also noted that while Kakavas was making this application, he presented himself as someone who is not troubled by any gambling mental addiction. This application was supported by an expert opinion by a psychologist who effectively stated that Kakavas had advanced in overcoming his problem and therefore, had the required capacity to participate as a ‘recreational gambler’. In the case, the appellant also made an argument that his earlier judges erred because they gave insufficient attention to findings that he was a problem gambler, and he wanted the court to address whether he had equal power to bargain with Crown (Kakavas, 2013). The appellant further argued that at the time he was making the losses, he was suffering from another special disadvantage of being under an interstate exclusion order that was made by Commissioner of Police at New South Wales3. The respondent made contentions that its employees did not take advantage of the appellant’s abnormal addiction to gamble and instead made submissions that the appellant presented himself as a businessman who was successful and who would afford to take part in high stake gambling. What is more, the respondent dismissed the appellants claim to recover the losses he suffered during his gambling activities on the basis that his gambling was not allowed by law. Therefore, the judges decided to listen to the substance of the case in order to establish the existence of unconscionable conduct. Finally, the trial court, the high court and the court of appeal came to an agreement the appellant was of sound mind and therefore, not under special disadvantage. The high court dismissed the charges at cost. Summary of the Judgment of the Case The court, while analyzing the case, undertook an in-depth overview of the rule of equitable fraud. Their Honours , while considering this rule, stated that the primary aim of the court was to investigate whether in the course of the entire dealing between Crown and Kakavas, the reasons of the plaintiff’s loss would be ascribed to the unconscientious nature or conduct on the side of the defendant4. Further, the court ruled out the following guidelines: 1. When the principle is out to invoke the conscience on basis of equity, the conduct of both the defendant and the plaintiff are looked into in accordance with the law. 2. The courts have to closely examine some of the facts and even the circumstance surrounding the parties in the dealing. 3. The court also decided that mere hardship or loss is not enough to relieve the aggrieved party of the impacts of a transaction that is improvident. The hurdle that Kakavas had to beat was the fundamental fact that the activity of gambling is a commercial venture where parties participate for the principle purpose of inflicting some loss on the other party in order to gain (Kakavas, 2013). Therefore, casinos in this judgment were viewed in the moral and social context as places for business victimization for those gamblers who chose to regularly participate. Regardless of this view, this business activity is absolutely legal and that does not render any immunity to the party participating in fraudulent activities or engaging in any unconscionable motives. Although the primary judges established that Kakavas was mentally addicted to gambling, the court realized that he many times established his ability to master his addiction, and most important, when he was stopped by Crown some time back, he established his mental wellbeing to Crowns. Therefore, based on these reasons, the High Court would not come to a conclusion that Kakavas had a special disadvantage while engaging with Crowns in the casino. The ruling treated the incentives he used to receive form Crown as products of his skillful negotiation, and therefore, it would not be interpreted that Crown was taking advantage of the alleged condition. In the end, the court took into consideration the argument of Kakavas that if Crown had no knowledge of his special gambling disadvantage, it should have known it or else it had a constructive notice. Further, Kakavas depended on Mason J’s statement that if Party A has the actual knowledge that party B has some special disadvantage with regard to an intended transaction, and exploits party B unfairly, such a conduct in so doing is considered unconscionable. However, with regard to this position, the court pointed out that constructive notice only applied in determination of priorities on matters touching competing interest on a property. It also noted that constructive notice does not apply to commercial transactions. Therefore, the appeal court dismissed the case with costs. The High Court Judges who Decided the Case The case was decided by High Court Judges who include: Keane J, Gageler J, Bell J , Kiefel J, Hayne J, and Crennan J, French CJ. Later the case went to the Victoria Supreme Court of Appeal where it was further decided by the Judges who were Bongiorno JA, Almond AJA, and Mandie JA. The trial of the case was heard by Justice Harper. The Agreement of the Judges The primary courts and the court of appeal were in agreement on the subject of dismissing the appellant’s claims. Kakavas’ claims were rejected by the trial judge after established that Kakavas has presented himself a successful businessman who had managed to overcome his addition. Further, it discovered that Crown was not aware of this situation at the time of engagement. Further, the high court unanimously rejected that the appellant had no pathological addiction to gambling. He was able to make sound decisions. For instance, the appeal did not find errors in the primary judgment. This meant that the appellant was not at all under any special disadvantage which the defendant would take advantage of in the transactions. In fact, it is the plaintiff who established the improvement of his mental through an expert psychiatrist. Therefore, there was consistency of judgment from the trial judge, High Court Judges and the appeal judges. The Type of Laws the Case Focused on The case focused on a number of laws such as which Gamming Legislation Act 2002(Vic) came into effect as an amendment to Casino Control Act. According to this law, any individual under an interstate exclusion order shall be excluded from all manner of casinos. Crown included the list of all the excluded persons on its list. When it barred Kakavas from participation, we worked hard to get back the license and was allowed to participate (Bigwood, 2013). Later in 2003, this regulation was amended to include forfeiture to the state of all the winnings payable or paid to an individual who is subject to interstate exclusion order. Trade Practices Act of 1974 was also referred to by the appellant who claimed that Crown committed an unconscionable conduct which is a violation of this act under general law. The argument extended was that Crown knows the addiction to gambling which Kakavas was suffering and went ahead to lure him into gambling at their casino by providing him with incentives on losses. However, these claims were dismissed by the primary judge who held that Kakavas’ issue of gambling was not out of a special disadvantage that would render him susceptible to any exploitation by the casino. Further, when the appellant proceeded to appeal, he failed to demonstrate that the judgment of the primary judge had an error or that the transactions they had were unreasonable or unjust. Five Cases Referred to within the Case The case of Bank of Australia Limited v Amadio5 was referred to and this satisfied Judge Mason on principle that the doctrine Equity applies in dealings where one party is disadvantaged by some circumstance or condition which is unfairly taken advantage of by the other party. In other words, Kakavas had a mental interest in gambling but would not establish to the courts that Crown went beyond the reasonable bounds of luring him into Casino for its advantage. The case of Loath v Diprose was also used to strengthen the position under which the above principle of Amadio applies. In Amadio case, Jeane J offered an explanation as to the basis under which the conscience of equity can apply. He suggested that equity is not intervened merely for the purpose of relieving the plaintiff from the losses suffered as a product of his foolishness. Its aim is to prevent victimization. The case of Blomley v Ryan was referred to following the ruling of Fullagar J that there are some instances of disability such as sickness, sex, age, needy situation, drunkenness, and lack of assistance, lack of education or mind infirmity. In this case, these conditions would be cited to place one party in a special disadvantage against the other, who may take advantage in the dealing. However, given the defendant’s submission that it was dealing with a successful businessman who was sound in the mind and had patronage skills in his dealings, this case law did not hold water in defending him for recovery of losses. The case of Watkins v Combes or Morrison v Coast Finance Limited illustrate the fact that undue influence, just like duress under common law, evaluates the quality of assent on the side of the weaker party or in general the quality of consent between the parties. This case was referred to for the purpose of explaining the application of equitable principles that relate to relief against any unconscionable dealings. However, the plaintiff’s claims, as investigated, did not stand the truth of being under any special disadvantage. Finally, the case of O’Rorke v Bolingbroke, as referred herein, did not succeed in defending the plaintiff. In this case, it was held that all transactions the expectant heir had engaged in without adequate protection against the pressure of poverty were set aside. The jurisdiction under this case extends to circumstance where a party takes advantage of another party in the dealings due to the other party’s disability. This case was applied in trying to establish as to whether Kakavas was under pathological desire for gambling upon which he needed protection under this jurisdiction in order to claim his cumulative losses. Reasons for Referring to the Cases In general, the five cases above were majorly aimed at establishing the basis upon which to claim the plaintiff’s losses based on the argument that he was under pathological desire for gambling. However, the previous records established that he was mentally right to right decisions, including the decision for recreational gambling. He would patronage his activities without duress or unfair advantage of another party. Effect of the Cases in Distinguishing the Case of Kakavas Although the cases had firm support for the principle of unconscionable conduct, Kakavas failed to establish that he was under a mental addition to gambling and therefore, his claims would not be substantiated. All the judges unanimously dismissed his claims. The Principal Used from the Cases The main principle used from the cases was determination of unfair advantage taken by Crown in exploiting Kakavas and the existence of unconscionable conduct. The court did not establish the existence of any unreasonable and inequitable dealing between the two parties and further recognized that casino is certainly a legal act. Thus, the cases remained irrelevant in defending the plaintiff. Other cases where this case has been followed This case has formed a precedent upon which other cases have been cited. For instance, the case has been cited in Nand v Fuji Ltd [2014]FCCA 1300, and in Donnelly v Australia & New Zealand Bank Group Limited [2014] NSWCA 145. Both cases cited lack of plaintiff to establish special disadvantage which the concerned party would have taken unfair advantage of. Therefore, lack of substantiation of claims should mean dismissal of any claim based on the principle of unconscionable conduct. Conclusion This case stands as an authority for the proposition that any unconscionable conduct heavily depends on the context and that means the courts will examine both the conduct and circumstances of the parties involved and their mental states. Despite the fact that Kakavas had serious addiction to gambling, he exposed himself to Crown as someone who is under control, and that Crown was entitled to rely purely on his presentation. This ruling gives effect to the proposition that conscience of equity will examine the conduct of the parties and not just the defendant’s and that equity principle does not come in to relieve the damages suffered as a result of improvident transactions. That means that it is difficult to invoke the principle of unconscionable conduct between the casino operator and the gambler. The nature of the transaction is meant for the parties to inflict financial losses on each other and since the gambler walks into this situation with his eyes both open, the claims made for loses may not be recovered under the law. In short, the court did not accept that Kakavas had a gambling addiction and therefore, dismissed his claim as baseless. References (2013). Kakavas v Crown Melbourne Ltd (Equity; Gaming and Liquor) ([2013] HCA 25). The Australian Law Journal. 87, 708-754. (2013). Kakavas v. Crown Melbourne LTD Case NoM117/2012, 2013 HCA 25; BC201302838 (High Court of Australia; 5 June 2013). GAMING LAW REVIEW AND ECONOMICS. 17, 765-787. Amadio (1983) 151 CLR 447, 467. BIGWOOD, R. (2013). 'Kakavas v Crown Melbourne Ltd' Still curbing unconscionability: 'Kakavas' in the High Court of Australia. Melbourne University Law Review. 37, 463-508. Kakavas (2013) 298 ALR 35, 39 [16] Retrieved from http://www.austlii.edu.au/au/cases/cth/HCA/2013/25.html on 23rd September 2014. Read More