Kakavas v Crown Melbourne Ltd: Unconscionable Conduct and Problem Gambling

This case analysis discusses the legal proceedings of Kakavas v Crown Melbourne Ltd, where the appellant claimed unconscionable conduct based on problem gambling and interstate exclusion. The High Court dismissed the appeal with costs on the appellant, and the decision was based on section 20 of the Australian Consumer Law.

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Kakavas v Crown Melbourne Ltd
a) A brief statement of material facts
The appellant in this case- Harry Kakavas was known to have a gambling problem and a
chequered past. His main claim was that he suffered from a pathological impulse which
pushed him to gamble more often. According to the gambling industry, he was commonly
referred to as a ‘high roller’. In the period between June the year 2005 and August 2006, he
lost $20.5 million in a Melbourne Casino while playing baccarat. This casino was under the
operation of Crown Melbourne Limited.
On 6th March 2007, he attempted to recover the loss from Crown Melbourne Limited.
Kakavas issued proceedings against Mr. John Willams, the Crown Company and Mr. Rowen
Craigie. His main basis being that the company had been involved in ‘unconscionable
conduct’ by its employees hence contravening s 51 AA of the Trade Practices Act 1974, now
under section 20 of the Australian Consumer Law1.
Further, during the trial, the appellant proposed that he was incited by Crown to gamble at
their Casino knowing very well that he was a problematic gambler by giving him incentives,
like using the company’s corporate jet and also getting rebates on the, loses he incurred.
These claims were dismissed by the judge with instructions for $1 million to be paid by the
appellant as damages to Crown Company as its debts2.
1 Skead, Natalie, Tracey Atkins, and Penny Carruthers. "Analysing Mortgagor Protections in Equity and
Under Statute." (2017).
2 Bigwood, Rick. "Kakavas v. Crown Melbourne LTD; Still Curbing Unconscionability: Kakavas in the
High Court of Australia." Melb. UL Rev. 37 (2018): 273.

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B) History of the proceedings, full citation of prior decision
The first instance court, in this case, is the High Court of Australia with Justice Harper as the
trial judge. The Appellant, in this case, was Harry Kakavas and the respondents being Mr.
John Willams, Mr. Rowen Craigie, and the Crown Melbourne Limited. According to the facts
presented to the high court, Kakavas was known to be a problem gambler, (Bigwood, 2018,
273). The judge also accepted him to be a ‘pathological gambler’. Also, the judge accepted
that Crown had the knowledge of the respondent being a having the condition3. In 1994,
Kakavas received bounced cheques from Crown and this led to the mention of his gambling
problem. As such, the claim that his addiction to gambling did not convince Crown. In the
year 1995, Kakavas decided to take a self-exclusion order. After being imprisoned for fraud
in 1998, Kakavas decided to apply to the Crown so that it could revoke the exclusion order.
By doing this, the judge noted that the application could expressly show how Kakavas did
not have any gambling problems.4 In addition, an examination was done by a psychologist
who ascertained that the problem of gambling had been reduced hence Kakavas ability to
operate as a ‘recreational gambler’. By accepting these facts, Crown also withdrew Kakavas’
license, which was later reinstated in January 2005.
3 Bedi, Rahul. "The Tim carmody affair: Australia's greatest judicial crisis [Book Review]." Ethos:
Official Publication of the Law Society of the Australian Capital Territory 245 (2017): 61.
4 Toole, David. "Fiduciary obligations: 40th anniversary republication with additional essays [Book
Review]." Ethos: Official Publication of the Law Society of the Australian Capital Territory 245 (2017): 60.

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At the Appellate Court, Harry Kakavas Was the Appellant and Mr. John Williams, Mr. Rowen
Craigie and the Crown Melbourne Limited being the respondents. On the other hand, the
judges were French Cj, Crennan, Hayne, Kiefel, Bell, Keane Jj, and Gageler
The trial judge- Justice Harper did not accept Kakavas’ argument that the Crown Company
was exploiting his addition. As such, he stated that Kakavas was not entrapped by his
passion for playing cards to the extent that he could not show resistance to the intentions of
the crown, (para 11). In addition, the judge held that Kakavas was aware of his power and
right to exclude himself by using his bargaining powers so that he could be able to threaten
the withdrawal of any form of patronage.5 There was also no existence of unequal
bargaining power which could have exploited his disability or disadvantage, (para 16). He
also stated that the Crown did not conceive of any kind of suffering or disadvantage when
Kakavas returned to the Casino and as a result, there was no any form of exploitation or
inequality in bargaining power as claimed by him, (para 21). On ‘unconscionable conduct
based on interstate exclusion’, the judge stated that Crown omitted this factor significantly
on the basis that the company was not aware in the interstate exclusion order hence not
making a connection between the new scheme and the exclusion. This, however, did not
have any impact on the case hence not making Crown guilty of taking advantage if any form
of disability or unconscientious disability.6
c) Appeal Grounds and issues to be decided by the High Court
5 Barnett, Katy. "Thorne v Kennedy: A Thorn in the Side of ‘Binding Financial Agreements’?" (2018).
6 Babie, Paul, and Michael Trainor. Neoliberalism and the Biblical Voice: Owning and Consuming.
Routledge, 2017.

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The main grounds that Kakavas had presented before the High Court was ‘unconscionable
conduct based on problem gambling’ and ‘unconscionable conduct based on interstate
exclusion’. It is also worth noting that during the appeal, other issues that were raised
include the issue of ‘constructive knowledge of special disability’, ‘constructive notice of
special disadvantage’ and the issue of ‘Special advantage’
d) Decision and analysis of reasoning behind the unanimous judgement
The decisions made were mainly based on the fact whether the appellant had the capacity
to stop the addiction, and if his claim of disability could hold, (Barnett, 2018). It was mainly
found out that the ability to make decisions for himself and continue participating in
gambling activities showed how capable and able he was thus scrapping away the issue of
disability and being at a disadvantaged point. According to Bongiorno JA, the nature of
gamblers involving themselves in gambling is well known to them. They are aware of the
losses or wins they may face when taking part7. As such, his trips to the casino were
consistent with his state of pathological gambling hence the capacity to conserve the
interests he had. By virtue that he wanted to be accepted, the Crown had to oblige owing to
the fact that they did not see any form of disability in Kakavas.
e) Final decision of the High Court and its orders
The High court dismissed the appeal with costs on the appellant by making a unanimous
decision. As a result, it was held that Kakavas should pay all the debts amounting to $1
million
7 Pearson, G. (2017). Further challenges for Australian consumer law. In Consumer Law and
Socioeconomic Development (pp. 287-305). Springer, Cham.

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f) Ratio decidendi
This is defined as the rule of law in which the decision made by the court is based on. This
case was mainly based on section 51AA of the Trade Practises Act of the year 1974. This
provision was however replaced with section 20 of the Australian Consumer Law8. It states
that; in situations of commerce, or trade, corporations must not involve themselves in
certain conducts that are unconscionable. Section 20 in the new Australian Consumer Law
states that one should not take part in a conduct that is deemed to be unconscionable, from
one time to the other under the unwritten law.
g) Obiter dictum
These are hypothetical facts which do not have a crucial meaning or issues unrelated to law.
These can be words introduced with the help of illustrations and mainly a not form the
subject in decisions9. As such, this can be identified when one asked whether the ruling
could have had the same meaning if a certain phrase, sentence or word was omitted. In this
scenario, the issue of suffering from pathological impulse was mainly brought up. The
appellant based his case on the fact that he was suffering from pathological impulse hence
the addition to gambling and as a result, a form of disability10. It is this aspect that the
appellant claims that the Crown exploited him by allowing him to play in the casino, with
incentives such as using the company airplane.
8 Bryan, Michael, Vicki Vann, and Susan Barkehall Thomas. Equity and trusts in Australia. Cambridge
University Press, 2017.
9 Flacks, Simon. "Making drug harms: Punishments for drugs offenders who pose risks to
children." European Journal of Criminology (2018): 1477370818775291.
10 Dorfman, Avihay. "Private Law Exceptionalism? Part II: A Basic Difficulty with the Argument from
Formal Equality." Canadian Journal of Law & Jurisprudence 31, no. 1 (2018): 5-32.

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Bibliography
Skead, Natalie, Tracey Atkins, and Penny Carruthers. "Analysing Mortgagor Protections in
Equity and Under Statute." (2017).
Bedi, Rahul. "The Tim carmody affair: Australia's greatest judicial crisis [Book
Review]." Ethos: Official Publication of the Law Society of the Australian Capital Territory 245
(2017): 61.
Toole, David. "Fiduciary obligations: 40th anniversary republication with additional essays
[Book Review]." Ethos: Official Publication of the Law Society of the Australian Capital
Territory 245 (2017): 60.

Surname 8
Barnett, Katy. "Thorne v Kennedy: A Thorn in the Side of ‘Binding Financial Agreements’?."
(2018).
Babie, Paul, and Michael Trainor. Neoliberalism and the Biblical Voice: Owning and
Consuming. Routledge, 2017.
Pearson, G. (2017). Further challenges for Australian consumer law. In Consumer Law and
Socioeconomic Development (pp. 287-305). Springer, Cham.
Bryan, Michael, Vicki Vann, and Susan Barkehall Thomas. Equity and trusts in Australia.
Cambridge University Press, 2017.
Flacks, Simon. "Making drug harms: Punishments for drugs offenders who pose risks to
children." European Journal of Criminology (2018): 1477370818775291.
Bigwood, Rick. "Kakavas v. Crown Melbourne LTD; Still Curbing Unconscionability: Kakavas
in the High Court of Australia." Melb. UL Rev. 37 (2018): 273.
Dorfman, Avihay. "Private Law Exceptionalism? Part II: A Basic Difficulty with the Argument
from Formal Equality." Canadian Journal of Law & Jurisprudence 31, no. 1 (2018): 5-32.