In the case of Kakavas v Crown Limited Melbourne [2013] HCA 25, the High Court of Australia considered equitable unconscionable conduct and whether Kakavas had been the victim of a stronger party exploiting his special disadvantage (being a problem gambler).
Facts
Kakavas was a wealthy property developer and problem gambler who had previously gone to great lengths to voluntarily ban himself from all Australian casinos in an attempt to avoid further gambling losses.
Subsequently, Kakavas approached Crown Melbourne and went to great lengths to convince the casino operator he no longer suffered from his afflicition. Unsurprisingly the lure of a gambling whale was too much for Crown to resist and Kakavas was welcomed back to the casino's tables. Indeed, not only was he allowed to return, he was showered with high-roller inducements including turnover rebates, free accommodation in Crown's $30,000/night suite, a private gaming room with his own private gaming staff and access to Crown’s private jet.
Claim
After sustaining further losses of more than $20m at Crown's baccarat tables, Kakavas brought proceedings against the casino alleging they had acted unconscionably in enticing him back to the tables when they knew, or ought to have known, he had a significant gambling problem and was vulnerable to exploitation.
Decision
After previously being unsuccessful in lower courts, the High Court of Australia also dismissed Kakavas’ final appeal - holding Crown had not acted unconscionably in welcoming him back to its gaming tables.
Discussion
In dismissing Kakavas’ appeal, the High Court noted:
Kakavas had held himself out as a man in control of his finances and decision-making, a person no longer suffering from a special disadvantage or vulnerable to being victimised.
Crown did not nefariously approach a man trying to avoiding gambling. Instead, Kakavas had already returned to other Australian casino's gaming tables and Crown were therefore entitled to legitimately compete for his high-roller business.
While Kakavas was indeed a pathological gambler, the court was satified he retained the capacity to make worthwhile decisions in his own interests when it suited him and had on a number of occasions displayed an ability to refrain from gambling.
The court acknowledged that Kakavas’ heightened state of excitement while gambling was indeed a ‘special disadvantage’, but took the view it was he whom had voluntarily chosen to place himself in that situation and indulge his special disadvantage prior to entering that environment/state - therefore being responsible for his decision to sit at a gaming table in the first place.
The court opined: The gambling industry was a rare and unique business, one where both parties openly try to inflict financial ‘harm’ on the other.
The conduct of Crown was honest, and there was no general duty on them to protect Kakavas from his own worst impulses.
Takeaways
The uniqueness of the gambling industry in the High Court's consideration of unconscionable conduct must be noted. Having said this, the case shows that a person who is cognisant of their own special disadvantage and actively takes steps to conceal it or indulge it, will have a hard time establishing another party has taken advantage of that vulnerability.
By Sam Williams, Louise Gehrig and Rob Norton