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Trade Practices Law News June 2013

Situations where courts may not find that one party took unconscionable advantage of the other in trade or commerce

Kakavas v Crown Melbourne Limited ACN 006 973 262 & Ors [2013] HCA 25 gives some insight

This decision involved the High Court’s unanimous dismissal of an appeal from a decision of the Victorian Court of Appeal. The State Court had found that the defendant Crown Melbourne, which owns and operates a casino in Melbourne, had not acted unconscionably in permitting Mr. Kakavas to squander significant sums of money gambling at the casino.

Between June 2005 and August 2006, Mr. Kakavas cycled through some $1.479 billion at the casino’s baccarat tables. His overall loss for the period was roughly $20.5 million. Kakavas had instituted proceedings in the Supreme Court of Victoria in an effort to recover this amount from the casino’s owner. He argued that the conduct of the casino and two of its employees amounted to unconscionable conduct pursuant to s51AA of the former Trade Practices Act 1974 (Cth) (which was in force at the time of the loss) and the common law of unconscionability. 

At first instance, Mr. Kakavas claimed that Crown had known he was a problem gambler, and had enticed him to gamble at the casino with certain incentives. These included use of the casino’s private jet.

The trial judge, however, found that Mr. Kakavas’ gambling addiction was not a ‘special disadvantage’ rendering him vulnerable to exploitation as understood by the Act and the common law. Nor had Crown tried to exploit any disadvantage on Mr. Kakavas’ part. There was nothing ‘unfair, unjust or unreasonable’ in Crown’s conduct. This finding was upheld by the Court of Appeal.

Both the trial judge and the Court of Appeal effectively found that Crown was entitled to treat Mr. Kakvas as he appeared: a highly successful and capable businessperson.

On appeal to the High Court, Kakavas stressed that Crown, in permitting him to gamble at the casino, had exploited his pathological urge to gamble. This pathology, he argued, rendered him unable to make sound decisions in his own best interests while he was engaged in gambling. 

The High Court upheld the findings and decisions of the lower Courts, ruling that Mr. Kakavas was not suffering from any special disadvantage and that Crown had not engaged in any unconscionable conduct by exploiting any perceived special disadvantage in Mr. Kakavas.

If you or someone you know has been coerced, pressured or confused into entering into a Contract or agreement because of a language difficulty, drug or alcohol dependence or other disability, please contact us for a confidential discussion. We will also be happy to assist lenders and other commercial parties to ensure that their contracts and other documents are in order and comply with applicable trade practices legislation.

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