Kakavas v Crown Melbourne Limited
[2010] VSCA 102
•30 April 2010
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No S APCI 2009 3907
| HARRY KAKAVAS | |
| Applicant | |
| v | |
| CROWN MELBOURNE LIMITED (ACN 006 973 262) & ORS | Respondents |
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JUDGES: | WARREN CJ and BONGIORNO JA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 30 April 2010 | |
DATE OF JUDGMENT: | 30 April 2010 | |
MEDIUM NEUTRAL CITATION: | [2010] VSCA 102 | |
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APPLICATION ON SUMMONS
APPEAL – Notice of Appeal filed for stay of execution of judgment pursuant to Rule 64.25 - Discretion - Exceptional or special circumstances required to be demonstrated to justify a grant of a stay - Narain v Euroasia (Pacific) Pty Ltd [2008] VSCA 195 – Impecuniosity and potential bankruptcy – Loss of ‘business reputation’ – Exceptional circumstances not made out.
PRACTICE AND PROCEDURE - Application for expedition of hearing of appeal – Requirements for expedition not demonstrated – Elders Rural Finance Ltd v Smith (1995) 38 NSWLR 395 – Order for security for costs pursuant to Rule 64.24(2).
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr A Myers QC with Mr P Zappia | Strongman & Crouch |
| For the Respondent | Mr N Young QC with Mr N Hopkins | Minter Ellison |
WARREN CJ:
I invite Bongiorno JA to deliver the first judgment.
BONGIORNO JA:
On 8 December 2009 Harper J in the Trial Division determined a proceeding in which Harry Kakavas sued Crown Melbourne Limited and two of its employees for damages being losses incurred by him in gambling at their Casino between June 2005 and August 2006. His claim was $20.5M and Crown, for its part, counter‑claimed against Mr Kakavas for $1M.
Mr Kakavas’ claim against Crown was based on s 51AA and to a lesser extent s 52 of the Trade Practices Act1974. He alleged that his gambling losses had been caused by unconscionable conduct on the part of Crown and/or by its having engaged in misleading and deceptive conduct. His claim against the other defendants was based on their alleged liability as accessories to Crown’s conduct.
Mr Kakavas was a serious gambler. On his own admission he gambled and lost millions of dollars in casinos in many parts of the world. He became a patron at Crown not long after it opened in 1994. His case against Crown was that he was a gambling addict, that such addiction was a known medical condition which constituted a ‘special disability’ (as that term has been used in cases such as Commercial Bank of Australia Ltd v Amadio[1] and Blomley v Ryan[2]) and which placed him at a material disadvantage in dealing with Crown. He claimed that Crown knew of that disability and acted unconscionably in taking advantage of it by continuing to gamble with him. His case involving s 52 of the Trade Practices Act was that Crown offered him gambling facilities when he was, in fact, a prohibited person as far as its casino was concerned and could not legally keep his winnings if he was successful. Crown’s counter claim for $1M was a debt claim for money advanced to Mr Kakavas to enable him to gamble at the casino.
[1](1983) 151 CLR 447.
[2](1956) 99 CLR 362.
Harper J dismissed Mr Kakavas’ claim and upheld Crown’s counter claim for $1M, added almost half a million dollars to it for interest and ordered Mr Kakavas to pay Crown’s costs on various bases. Harper J’s reasons for judgment ran to 244 pages and I will not attempt to summarise them in any way in these reasons. It is sufficient for present purposes to observe that a perusal of them reveals a close examination by his Honour of Mr Kakavas’ relationship with the casino and of his gambling at its tables. He found that Crown did not act unconscionably towards Mr Kakavas.
On 22 December 2009, Mr Kakavas filed a notice of appeal in this Court. The grounds of appeal are lengthy and allege error in Harper J’s determination of the main issues in the proceeding and can be grouped as follows: the applicant’s special disability; the respondents’ knowledge of the special disability; the respondents’ unconscientious conduct; and the interstate exclusion order, each of them forming different bases for appeal.
By a summons filed on 12 February 2010, Mr Kakavas seeks a stay of execution in respect of Crown’s judgment against him pending the hearing and determination of his appeal, and expedition of the appeal. By a summons also filed on 12 February, Crown seeks an order for security for its costs of the appeal.
Mr Kakavas relied on nine affidavits. They were two which he swore on 11 February 2010 and 31 March 2010; one of his solicitor Andrew Joseph on 14 April 2010; one of Antoinette Josephine Austin on 14 April 2010 concerning costs; four of Emma Louise Murphy of 12 February 2010, 1 April 2010, 16 April 2010 and 29 April 2010; and one of Margaret Cairns Gourlay of 12 February 2010, who is also a costs consultant.
Mr Myers QC for the appellant drew attention to Mr Kakavas’ frank concessions as to his impecuniosity. In his affidavit of 22 February 2010, Mr Kakavas deposed to his not having the funds to meet Crown’s judgment debt. In his second affidavit of 31 March he went further and specified his debts in some detail. He said that he was by profession a consultant to the real estate industry and had been involved in real estate development, marketing and sales, specialising in residential and commercial real estate. He operated through a company called Elite Property Investment Group Pty Ltd and said that he was very successful. Elite’s sole asset was an office building situated at 16 Queensland Avenue, Broadbeach in Queensland which was mortgaged to the extent of $15.7M and which someone at least had said was worth $5.2M. Whether that was right or not is a matter of some contention but they are the figures.
As well as suing Crown, Mr Kakavas was sued by Paradise Enterprises Ltd, a company which operated in the Bahamas in the casino business. It sued him for something just over $US1M. That case was tried by Davies J in this Court, who gave judgment on 16 February 2010, that judgment being for $AUD1.28M, with interest of $152,999, against Mr Kakavas. Mr Kakavas in his affidavit deposed to enquiries which he says the solicitors for Paradise had made concerning him for the purposes of serving a bankruptcy notice and I might interpolate that Mr Young informed the Court Paradise now has an order for substituted service of that bankruptcy notice.
Mr Kakavas went on to describe other financial problems that he had: something known as the ‘McCracken litigation’, which was litigation in the Supreme Court of New South Wales before Schmidt J, which resulted in judgment against Mr Kakavas for $1.25M. He referred to a claim by the Australian Taxation Office for $4.342M, of which he was disputing $1.56M, leaving something just under $3M undisputed, presumably. He referred to debts which he owed to United States casinos totalling some $US5M and then deposed to a debt of approximately $25M, plus or minus 20 percent, which he said he owed to family and friends and which he lost in gambling between 2000 and 2006. He said that these debts were not documented in any way and that was why he could not be more certain about their extent. He said that at the time he swore that affidavit at the end of March, no bankruptcy notice had been served upon him. He said that some of his legal costs were being paid by third parties, who ‘consider I have been exploited by the gambling industry.’
Without a successful appeal, Mr Myers said his client will be bankrupt. Mr Myers put in argument matters which he said made this appeal important. There was, he submitted, a divergence of views between Davies J, who heard the Paradise case, and Harper J as to Mr Kakavas’ illness and more importantly as to its legal effect on a casino which gambles with him. In that context this appeal raised questions of the duties of a casino to its patrons. He said that so far as Harper J’s judgment is concerned, his Honour had misapplied or mistook the principles of law derived from cases such as Commercial Bank of Australia Ltd v Amadio and Blomley v Ryan. Mr Myers submitted that the appeal will not involve a close examination of issues of fact, but he demonstrated what he submitted was a strong case by reference to various matters decided by his Honour. He referred to the appellant’s exclusion from Star City Casino in Sydney in 2000 and its effect in Victoria subsequently after Victoria’s legislation was changed. He referred to the circumstances in which Mr Kakavas was invited back to Crown and to the inducements which were offered when Mr Myers said they knew he was addicted. He referred to an occasion when the casino had sent Mr Kakavas to an ANZ Bank on a weekend where he was able to obtain $345,000 to gamble with, a sum which the casino matched.
Mr Young QC for the respondents conceded that the case on appeal is not hopeless and for present purposes it is sufficient for me to say that on a ‘rough and ready assessment’ the appellant has some chance of success, although it seems clear that, contrary to Mr Myers’ submissions, that chance will only produce fruit if a successful attack can be made on a number, perhaps a very large number, of the trial judge’s findings of fact – a task not easily accomplished. Mr Myers said that the special or exceptional circumstances which can be shown to merit a stay arise out of the appellant’s impecuniosity and the possibility of him going bankrupt, thus suffering not only the financial consequences of that event but also damage to his business reputation. However, just what business reputation a self-confessed addicted gambler of Mr Kakavas’ accomplishments – who has been to gaol for theft, has admitted largely unsecured debts, including gambling debts of almost $50M, and who has not worked for three or more years – has, Mr Myers did not specify.
I am not satisfied that Mr Kakavas’ impecuniosity can be totally attributed to his losses on the tables at Crown. Although they must have contributed to his debts, on his own affidavit his other debts far outweigh his Crown losses. Mr Kakavas has not demonstrated any special or exceptional circumstance which would warrant a stay of execution on Crown’s judgment debt.[3] There is no need to examine Mr Young’s contention that a stay should not be granted to enable Mr Kakavas’ creditors to take bankruptcy proceedings, thus permitting a trustee to determine whether to proceed with the appeal, and in any event allow a just distribution of any proceeds to be made to all his creditors. Mr Kakavas has failed to establish the fundamental requirement for a stay.
[3]Narain v Euroasia (Pacific) Pty Ltd [2008] VSCA 195.
So far as expedition is concerned, there is not in my opinion sufficient need for this case to be placed ahead of those other cases in the list in which litigants are waiting for a resolution.[4] In the circumstances, I would refuse the application for expedition but would refer the appeal generally to the Acting Registrar of the Court of Appeal for management in such form and in such way as to her seems appropriate.
[4]Elders Rural Finance Ltd v Smith (1995) 38 NSWLR 395; National Office Products Ltd v Bourke [2002] VSCA 129.
I turn to the question of security for costs. It seems to me that the question of security for costs eventually resolved itself into a question of quantum, once Mr Kakavas’ financial circumstances were fully examined. On any view, he is insolvent and has not shown any reason why an audit for security should not be made, other than he could not put up the amount. The two competing affidavits as to the quantum of security are at vastly different ends of the spectrum. One deponent, Ms Gourlay, puts the appropriate figure for costs as at the commencement
of the hearing of the appeal at about $348,000 whereas Ms Austin, on Mr Kakavas’ solicitor’s instructions, estimated a sum of $146,000 against the same criterion.
Having examined both of the reports, and the bases upon which they were made, and in particular Ms Austin’s criticism of some of the disbursements allowed in Ms Gourlay’s estimate, I would order the amount of $210,000 for security for the respondents’ costs up until the date of hearing of the appeal and would reserve leave to the respondents to seek such further order for security as they are advised at the appropriate time.
The orders which I would make are:
1. That the summons seeking a stay of execution and expedition filed on behalf of the appellant be dismissed.
2. That the summons seeking security for costs be allowed and there be an order that, by 31 May 2010, the appellant provide in a form acceptable to the Prothonotary of this Court security for the respondents’ costs of this appeal up until the commencement of the hearing of the appeal including mediation, in the sum of $210,000 and in default of such security being provided that the appeal be stayed.
3. There will be liberty to the respondents to apply for such further security as and when they may be advised.
WARREN CJ:
I agree with the reasons and the orders proposed by Bongiorno JA.
The Court will further order:
4. That the appellant pay the respondents’ costs of both summons.
5. The appellant have leave to amend the title of the proceeding to substitute Crown Melbourne Limited for the first respondent.
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