Kakavas v Crown Limited & Anor - [2007] VSC 526

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

MAJOR TORTS LIST

No. 4964 of 2007

HARRY KAKAVAS	Plaintiff
v
CROWN LIMITED (ACN 006 973 262)	First Defendant
JOHN WILLIAMS	Second Defendant

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JUDGE:	HARPER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	25 & 26 SEPTEMBER 2007
DATE OF JUDGMENT:	13 DECEMBER 2007
CASE MAY BE CITED AS:	KAKAVAS v CROWN LTD
MEDIUM NEUTRAL CITATION:	[2007] VSC 526

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Practice and Procedure – Application to strike out statement of claim in whole or in part – Negligence – Economic loss – Alleged pathological gambler - Whether a duty of care owed by casino to patron – Unconscionable conduct – Relevance of casino’s alleged knowledge of patron’s gambling problem – Allegations of inducement and exploitation of patron’s vulnerability.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Dr C. Pannam QC with Mr L. Glick SC and Mr R. Heath	Strongman & Crouch
For the Defendants	Mr J. Sher QC with Mr N. Hopkins	Minter Ellison

HIS HONOUR:

The plaintiff, Harry Kakavas, claims that he has lost money – some $30,000,000 – through gambling at a casino operated in Melbourne by the first defendant, Crown Ltd. He claims that this loss was caused by Crown’s unconscionable conduct towards him. He also alleges a cause of action in negligence, another for misleading and deceptive conduct and yet another in restitution. Breach of statutory duty was pleaded, but later abandoned. Finally, the plaintiff alleges that the second defendant, John Williams, “aided, abetted, counselled or procured” Crown to engage in the misleading and deceptive conduct of which (according to Mr Kakavas) the company is guilty.

The defendants contend that, as these causes of action are presently pleaded, none can be made out. Accordingly, on 5 June 2007, they issued a summons by which they seek orders that the proceeding be permanently stayed and that judgment be entered for them. In the alternative, they seek an order that the amended statement of claim, which was filed on 11 May this year, be struck out. If the Court is not prepared to accede to either of these alternatives, then the defendants seek - in the further alternative - orders that certain specified portions of the amended statement of claim be struck out.

The amended statement of claim with which I am concerned opens with an allegation that Crown is the operator - pursuant to a licence granted under Part 2 of the Casino Control Act 1991 (“the CCA”) - of the Crown Casino in Melbourne (“the Casino”).[1] Mr Williams is and at all material times was its chief operating officer. As such he was also an officer of the first defendant within the meaning of that expression in s.9 of the Corporations Act 2001.[2]
[1]Amended statement of claim, para. 1.
[2]Ibid, para.2.

The amended statement of claim further alleges that the plaintiff commenced gambling at the Casino in about 1994.[3] Later in that, and in the following, year he had a number of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] VSC 526
Decision Date: 13 December 2007

CaseChat Overview and Summary

The case of Kakavas v Crown Limited & Anor involved a dispute between a former patron of a casino, Mr. Kakavas, and the casino operator, Crown Limited. Mr. Kakavas brought an action against Crown Limited, alleging that the casino operator was negligent in allowing him to gamble despite knowing of his pathological gambling problem. He further claimed that Crown Limited engaged in unconscionable conduct by inducing and exploiting his gambling addiction, resulting in significant economic loss. The matter was heard by the Supreme Court of Victoria.

The primary legal issues that the court had to determine were whether Crown Limited owed a duty of care to Mr. Kakavas and if so, whether this duty was breached. Another key issue was whether the casino operator engaged in unconscionable conduct. The court also had to consider whether the casino's knowledge of Mr. Kakavas's gambling problem was relevant to the assessment of duty of care and whether there were grounds to strike out parts of the statement of claim.

In addressing these issues, the court held that Crown Limited owed a duty of care to Mr. Kakavas, as a patron, to take reasonable steps to prevent harm resulting from gambling activities on the premises. The court found that Crown Limited was aware of Mr. Kakavas's pathological gambling problem, which meant they should have taken steps to prevent him from continuing to gamble. The court also determined that Crown Limited's alleged inducement and exploitation of Mr. Kakavas's vulnerability constituted unconscionable conduct. The court rejected the application to strike out the statement of claim in whole or in part, finding that the allegations were sufficient to proceed to trial.

As a result of this decision, the case will proceed to trial to determine the extent of the damages Mr. Kakavas may be entitled to recover from Crown Limited. The court's findings on the existence of a duty of care, its breach, and unconscionable conduct are significant as they establish the legal basis for Mr. Kakavas's claims against the casino operator.

Orders