Kakavas v Crown Melbourne Limited and Ors

[2013] HCATrans 70

[2013] HCATrans 070

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M117 of 2012

B e t w e e n -

HARRY KAKAVAS

Appellant

and

CROWN MELBOURNE LIMITED (ACN 006 973 262)

First Respondent

JOHN WILLIAMS

Second Respondent

ROWEN CRAIGIE

Third Respondent

FRENCH CJ
HAYNE J
CRENNAN J
KIEFEL J
BELL J
GAGELER J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 5 APRIL 2013, AT 10.00 AM

(Continued from 4/04/13)

Copyright in the High Court of Australia

____________________

FRENCH CJ:   Yes, Mr Young.

MR YOUNG:   May it please the Court, I wish to move to the third and fourth propositions on our list of propositions to be advanced orally.  They concern the appellant’s ability at all times to self‑exclude.  Self‑exclusion is a simple procedure provided by the Casino Control Act 1991 (Vic). It is provided by section 72(2A) and (3). There are copies of the relevant provisions at the rear of our written submissions. There are a number of versions at different dates, but I do not think it matters which one the Court goes to. All it requires under subsection (2A) for an order to be made by the casino operator excluding a person is that person’s “voluntary application” and under subsection (2B), the application:

must be in writing and signed by the applicant in the presence of a person authorised –

That is all that is required for a person with concerns about his gambling to exclude himself from the casino.  That mechanism is part of the detailed regulatory scheme in Victoria for the regulation of casino gambling.  There are similar simple expedients in other States under their legislation to obtain exclusion.  It is the mechanism by which society through Parliament has struck a balance between the business of gambling and its economic benefits on the one hand, and the potential adverse consequences for some individuals of gambling.

That procedure was available to Mr Kakavas at all times.  He was extremely familiar with it.  He had used it previously in Victoria in 1995, and he had used it in other States to limit or control his access to gambling venues as he saw fit, and he had used it as recently as in 2004 in South Australia.  Not only did he know it was available, he was acutely conscious of it at all times through 2005 and 2006, as the evidence shows, and I will go to some of that material in his Honour’s findings but, moreover, he gave assurances to Crown that he would use the procedure if he ever felt any concerns about his gambling.  His Honour found at trial that Mr Kakavas never mentioned any such concerns until 17 August for the first time when Crown immediately took action to assist Mr Kakavas.

He gave such assurances in various places but, amongst others, in his application in 1995 to revoke the self‑exclusion from Crown, he gave written assurances to that effect.  The learned trial judge refers to them at pages 2407 to 2408 of his judgment in paragraphs 113 and 114.  The salient parts of the application for revocation of self‑exclusion are extracted by his Honour.  The Court will see them extracted at about lines 20 to 30:

4.You have given this matter careful consideration and will contact Crown Limited immediately, if, at any time, you have any concerns about your decision to have your Self‑Exclusion Order revoked and your use of Crown Limited’s gaming facilities.

There was a notation that it “is an important document”.  Paragraph 114 is his Honour’s finding about what happened with the psychologist.  Mr Watson‑Munro took Mr Kakavas carefully through the form, including those extracted provisions.  He provided a written report as well in support of the application for revocation and, again, relevant parts are extracted at the top of page 2408, the essence being the:

Treatment has been very successful –

with the appellant –

now no longer feeling the pathological compulsion to gamble –

In the next passage:

both the insight and requisite behavioural skills to maintain his involvement at the Casino at no more than that of a recreational gambler.

A number of years later – it is just under two years – Mr Kakavas made a similar application to Jupiters in Queensland for revocation of a self‑exclusion and again it was supported by similar documentation, including a 2000 report by Mr Watson‑Munro to similar effect.  That document, for the Court’s assistance, is at volume 5 of the appeal book, page 2047, but I do not intend to go to it; it has the same thrust.

The trial judge found in passages I will come to that Crown relied on that assurance and later assurances to the similar effect.  At page 2556 of the trial judgment, his Honour dealt with the Brooks’ report, but his Honour made an important finding at paragraph 504, in the last sentence, which is that as at late 2004, Mr Kakavas would have told a consultant – that is any psychologist he consulted:

whatever was most likely to bring about that result.

That the psychologist reported and assessed him as being in a condition where he could return to Crown and, not only that that the person had a relapse plan that he would exercise his right of self‑exclusion if ever he felt any concerns.  So in effect a similar sort of assurance is given in 2004.  His Honour records that at the previous page, 2554.  His Honour at 499 refers to our submission about the assurance.  In the second‑half of that paragraph his Honour accepted that such a representation was made at paragraph 500. There are other findings to similar effect to what is set out in paragraph 500.

Now, his Honour placed reliance upon the fact that the appellant at all times had the ability to protect his own interests through use of the self‑exclusion mechanism.  It has not been mentioned by our learned friend but it is a very important consideration when one is assessing whether, in all the facts surrounding these events, whether the appellant was, in fact, able to make judgments as to his own interests and not only that, easily and effectively implement that judgment before he attended at Crown by the simple expedient of obtaining a self‑exclusion order.  None of those abilities were affected by any pathological gambling pattern of behaviour. 

There are numerous findings by his Honour - the Court will have seen many.  I will go to a few of them but I will list them if I may.  At paragraph 7 and paragraph 11, both the use and the ability to self‑exclude are referred to by the trial judge.  At paragraph 13, which is at 2373, his Honour referred to the Brooks report at about line 18.  His Honour described the Brooks report as:

the best possible evidence of what Mr Kakavas himself was asserting that time.  His clear message was that any previous tendency towards problem gambling had been overcome.  What is more, if it resurfaced, he had readily available the means to deal with it:  he would again self‑exclude.

Then at paragraph 13:

Mr Kakavas told Ms Brooks the truth when he asserted, in effect, that he knew how to secure a self‑exclusion order, and would do so if in his judgment his gambling problem re‑surfaced.  Yet he now contends (in effect) that Crown should have seen through Ms Brooks’ entire report as false.

It is clear that his Honour is rejecting the submission along those lines in what follows.  A similar conclusion is arrived at by his Honour at paragraph 16 on the next page.  In the middle of that paragraph his Honour finds:

He had available to him, and he was fully aware of, his right to self‑exclude.

Then again at paragraph 18 his Honour finds:

The facts tell a different story –

concerning this alleged inability.  He refers to the negotiations that Mr Kakavas regularly engaged in about the terms of his patronage, but in the course of paragraph 18 he mentions two findings.  Mr Kakavas never attempted “to employ the self‑exclusion mechanism” in 2005 and 2006.  In the last few lines:

If he had that capacity –

to negotiate for all these advantageous terms –

then it must follow that he also had the capacity to self‑exclude.

I do want to refer the Court to some evidence that Mr Kakavas gave concerning his use of self‑exclusion.  There is a passage in volume 1 of the appeal book at page ‑ ‑ ‑

FRENCH CJ:   How does self‑exclusion actually fit into the larger scheme?  I mean is his use of it something which goes to his capacity to say “no”, in a general sense, whether or not independently, the existence of such a mechanism?

MR YOUNG:   Yes.

FRENCH CJ:   So what more does the availability of the mechanism tell us about his situation in relation to unconscionable conduct?

MR YOUNG:   Well, it is several things, your Honour.  It is the availability, the past use, the regular references to it by Mr Kakavas during 2005 and 2006 as to its availability, his ‑ ‑ ‑

FRENCH CJ:   All of that feeding into his capacity to say “no”.

MR YOUNG:   Yes and plus his assurances to Crown that he would use it if he had any concerns feeds into the allegation of unconscientious exploitation as well.  The allegation is that there is a breach of duty by not stopping him gambling at the threshold of the door, whether the first time he was going to come or before he came the second time et cetera, when he was negotiating the terms and conditions.

Now, to say that Crown should have excluded him when he had the complete unfettered ability to exclude himself at all times, and he was conscious of the procedure, that it was available, and he did in fact use it to protect himself in the ways I am about to refer to in the evidence, indicates both that he had the ability to make judgments as to his own interests, he could with ease exercise that ability, he had done so elsewhere, there is no reason why he could not do it in relation to Crown.  He threatened to do it in relation to Crown as a bargaining chip in negotiations.

All of that feeds into both the fact that he had at all relevant times the ability to make judgments as to his own best interests to exclude himself from gambling.  Secondly, through the assurances Crown was entitled to take that into account, and knowing those matters it is something that feeds into the absence of any unconscientious exploitation of this alleged disability.  So it is relevant at both levels, your Honour, at which these principles are said to operate.

Can I go to volume 1, if the Court pleases?  I will just be very brief.  The passage is at 242, I want to go to.  It is lines 1 to 11.  Here, the appellant is giving evidence in‑chief and referring to why he took out an exclusion order in Queensland from two casinos, Brisbane’s Treasury and the Gold Coast Jupiters.  The answer was:

I knew I had a gambling problem and I wanted to protect myself from that gambling problem . . . I had made a decision at that time that the Gold Coast would be my base . . . and I wanted to ban myself from the nearest facility.

So he used it as a mechanism by which he conserved his own interests.  There is another passage in this volume, while we have it, that he accepted the boundaries set by the self‑exclusion process.  That is at page 217, lines 9 to 11.  So he regarded it as an effective mechanism by which he could protect his own interests.  In volume 2 of the appeal book, there is another passage at 569 to 570 along the same lines.

FRENCH CJ:   So what are we doing here?  Are we reinforcing a finding of the judge or ‑ ‑ ‑

MR YOUNG:   I am sorry, your Honour?

FRENCH CJ:   What is the purpose of this exercise?

MR YOUNG:   It is to deal with – his Honour’s finding is perhaps all we need ‑ ‑ ‑

HAYNE J:   Well, you are challenging it or you are not, Mr Young, so what are we doing?

MR YOUNG:   No, we are not challenging it, of course, your Honour.  If your Honour pleases.

KEANE J:   I suppose, Mr Young, you say this material you have shown us goes to the point that was being made yesterday that your client was not entitled to take Mr Kakavas at his word ‑ ‑ ‑

MR YOUNG:   Yes, your Honour.

KEANE J:   ‑ ‑ ‑ and in particular the Brooks report, when it was said that he knows about self‑exclusion and will do it, if in need.  I suppose this goes to demonstrating that the idea that your client could not take him at his word and was duty bound in some way to invade his privacy and his autonomy to satisfy itself about these things is an argument that we should not accept.

MR YOUNG:   Yes, your Honour.  It goes to the absence of any unconscientious exploitation of his position by Crown.  It also demonstrates in our submission that the appellant’s arguments are seeking to move the debate into the realm of negligence, rather than dealing with unconscientious exploitation of a known special disadvantage vis-à-vis the other party in relation to a particular dealing.

KEANE J:   Are there any cases in this unconscientious dealing discourse that deal with this question of the party with the greater power not being entitled to take the other party at his or her word when that party says “I’m okay”?

MR YOUNG:   No, your Honour.  No, there are not.  There are cases where the stronger party – if I can use that terminology – has manipulated a particular state of affairs - that is Louth v Diprose I am thinking of - or a situation like the bank in Amadio, where the bank knew that the company being guaranteed was insolvent and did not disclose that fact.  So there are non‑disclosure cases like that, but nothing of the kind that your Honour asks me about.

KEANE J:   Because that sort of case would open up the question, would it not, of just how far one invades the privacy of the other party? 

MR YOUNG:   Yes, but it all comes back at the end of the day to the proposition that these principles concerned with unconscionable dealing are a branch of equities jurisdiction in relation to equitable fraud.  The cases speak of these situations as one tainted with equitable fraud and that is why expressions are used like “victimisation” which was used in ‑ ‑ ‑

CRENNAN J:   Exploitation.

MR YOUNG:   Yes, in Hart v O’Connor.  It was used in Bridgewater v Leahy.  You need to find conduct that shocks and offends the conscience and that is in language that Sir Anthony Mason used in an extra‑judicial article.  The proposition that it is enough to say that one party was on inquiry or it had a duty to exclude somebody when all of the assurances and all of the conduct are indicating that the person is entirely able to make worthwhile judgments as to that party’s own best interests, that is a different area of debate than the area of debate we are concerned with, with this aspect of equitable fraud.  That is how we would put it, your Honour.

CRENNAN J:   I suppose one point that might be made about the self‑exclusion orders made in the past and the capacity to apply for one in the future is that the self that is going to be doing the excluding has this pathological gambling problem which would affect the ability to make a self‑exclusion.

MR YOUNG:   Well, there was no evidence to that effect.  There was no evidence at all from the appellant or anyone else that his ability to make a decision to go along and self‑exclude was impaired in any way.  There was no evidence led to that effect.  There was no attempt to exercise self‑exclusion during 2005 and 2006 when it had been accessed in previous years as a protection mechanism.

CRENNAN J:   As you showed us, he, himself, gave evidence about the way he had gone about obtaining self‑exclusion orders and their subsequent revocation, as I understand his evidence.

MR YOUNG:   Yes, your Honour, yes.  I was going to the passages because our learned friends say that self‑exclusion is irrelevant because it is clearly a right that could be exercised.  They said below there was no impediment to exercising it, but that was not something that could be accessed actually at the gambling table was the way they now put it.  But their complaint is that the casino should have closed the door to him and not let him in in the first place.  He had the ability to exclude himself from coming near the casino. 

I will not trawl through all of the findings but there are other relevant findings by his Honour to it.  His Honour referred to the valuation by Mr Healey in 1997 that Mr Kakavas had learned a valuable technique to prevent exploitation.  He was referring to self‑exclusion.  That is at page 2404 paragraph 108 of the judgment.  At 162 of the judgment, page 2424, the judge found that Mr Kakavas excluded himself from Burswood casino, in part, as an “attempt to close off one avenue for gambling”.  This, of course, was known to Mr Kakavas, not known to anyone else.  His Honour found he could self‑exclude “with ease”.  That is paragraph 534 at 2567.  At paragraph 655 at 2609, he found it was open to Mr Kakavas:

at any time, and most particularly during these two substantial periods of absence, to take steps to self‑exclude.  He knew the procedure, and he had been able to do so in the past – in relation both to Crown and to other casinos.

Finally, at 661, 2612 is the page, Mr Kakavas:

knew how to self‑exclude, and he would do it if that was his wish.

But he essentially just chose not to.  I mentioned consciousness by Mr Kakavas of the availability of the process during 2005 and 2006.  He referred to it and his Honour made findings about it in two places.  One relates to September 2005.  The passages are at 2484 of the appeal book, paragraphs 315 and 316.  This was in the context of the dispute about the rebates.  Mr Kakavas had attended without front money and foregone any rebate and it turns out he was upset about that.  At 2484, the very foot of the page, the judge refers to the appellant’s evidence about that. 

There was a similar passage from July 2006 recorded in a finding by the judge at 543 which is at page 2571.  The Court of Appeal considered those findings and reached the same result.  I would refer to Justice Bongiorno’s judgment at paragraph 205 at 2708 to 2709.  Referring to the use of self‑exclusions, amongst other things, his Honour said:

These are not the characteristics of someone unable to conserve his own interests.

This is simply a case where that ability was not affected by any gambling condition or behavioural problem.  He simply chose not to exercise it, vis‑à‑vis his dealings with Crown in 2005 and 2006.  The availability of a power to exclude has been considered to be important in the Reynolds decision. Can I ask the Court to go to 53 NSWLR 43?

HAYNE J:   With a view to demonstrating what proposition of law?

MR YOUNG:   That in assessing unconscientious conduct the availability of a power to exclude is a very relevant consideration.

HAYNE J:   To mix fact and law how does it grapple with the finding made by the trial judge that the expert opinions are to be accepted and with Professor Blaszczynski’s findings at 2313?

MR YOUNG:   The observations by the court were based on a like situation where Professor Blaszczynski gave evidence and the court considered that such evidence does not go to an ability to exclude.  The ability existed, notwithstanding such a diagnosis and the availability of a power to exclude existed, notwithstanding such a classification of a persistent pattern of behaviour.  It is a like situation, your Honour.

GAGELER J:   But from the last sentence of paragraph 149 the case seems to have been put really rather differently – looking at Reynolds, page 87, paragraph 149.

MR YOUNG:   Your Honour, that is the way it is put here in relation to self‑exclusion.  It is not put that there was any inability to self‑exclude.  There was no suggestion that that power had been lost.  There was no evidence directed to the loss of that power at trial.

CRENNAN J:   Is not what has been said something like this that the fact that there had been multiple self‑exclusions in the past, coupled with the sort of high turnover and other matters, it was evidence to be considered in the context of the pathological gambling problem?

MR YOUNG:   Yes, but along with all of the other factors that the trial judge considered that the exclusions were in the past, that assurances were given about his ability to control his gambling and his intention to exercise a right of self‑exclusion, should any concerns emerge, and then the pattern of conduct was generally consistent with a person in control.  His Honour has borne all of those matters into account and reached the findings he did.

The point we make is that the ability to self‑exclude cannot be excluded from the consideration of the whole of the evidence relevant to the existence or non‑existence of an ability to control.

BELL J:   His Honour accepted the expert evidence in an unqualified way but concluded that it was largely irrelevant to the issues that were presented.  To the extent that he made findings about the apparent capacity to exercise control and the various indicia of a person able to pursue a successful business career and, as it were, gamble as a recreational gambler were findings made in the context of Crown’s knowledge as distinct from consideration of Mr Kakavas’ disability, which his Honour accepted.

MR YOUNG:   We would not entirely accept either proposition, your Honour.  If I may explain why?

BELL J:   Yes.

MR YOUNG:   Firstly, his Honour accepted the ultimate diagnosis of the experts.  His Honour did not accept their evidence is the way your Honour put the proposition to me.  His Honour did not go into an analysis of either the process of reasoning or the foundations for the view that were arrived at.  He simply accepted, at 443, the diagnosis.

HAYNE J:   What are we to make of the third sentence of 444?

MR YOUNG:   That he was a person having that condition or behavioural disorder described ‑ ‑ ‑

HAYNE J:   Paragraph 444:  “I accept their evidence”.  What are we to make of that?

MR YOUNG:   I am suggesting, your Honour, that that relates to the conclusions arrived at by the experts.  The previous sentence says:

Expert witnesses have been called, and have said so.

That is to say, the appellant is suffering from that condition or disorder and then his Honour describes it.

BELL J:   In the absence of analysis explaining the respects in which he did not accept the evidence, why would one not take the sentence as meaning exactly what it says?

MR YOUNG:   Your Honour, there are numerous reasons why this should be regarded as an acceptance of that conclusion, that diagnosis.  There are other references in the judgment to his Honour accepting the diagnosis.  That is how it is put elsewhere.  The further reasons are that the diagnoses are based on a set of assumptions or out‑of‑court assertions which differ, when one goes through them, in significant respects from the actual findings his Honour has made, having heard the evidence.  So one arrives at a situation where there are factual assumptions used by the witnesses which are to the contrary of what his Honour found were the actual facts.  One would have to go through a lengthy analysis of those matters.  I can do it if the Court wishes, but ‑ ‑ ‑

KIEFEL J:   But his Honour’s finding is that whatever the expert said it was irrelevant in all of the circumstances of the case because Crown did not know about it.  His Honour was concerned with how Mr Kakavas presented to Crown, which is to say whether they are on notice about any evident difficulty in controlling his behaviour.  That seems to be the way in which his Honour determined it.

MR YOUNG:   No, that is, we would say, part of it, your Honour.  That is an important part.

KIEFEL J:   But that is what paragraph 444 says.  As Justice Bell said, why should we not take that on its face and determine the matter on the basis that the medical evidence was accepted in whole and then consider whether or not there was sufficient there to put Crown on notice?

MR YOUNG:   His Honour’s findings go beyond that.  In the sentence that follows after “present as such”, his Honour is dealing with a fact:

And on the evidence before me, his level of functioning . . . was at that time unremarkable.

When his Honour goes through the actual conduct, he makes actual findings that this is not the conduct indicative of a person unable to make judgments as to his own best interest.

CRENNAN J:   But, Mr Young, are you making these submissions from the point of view of saying that you accept the diagnosis and the finding about the diagnosis, but Mr Kakavas did not have a special disability for the purposes of triggering the equity?

MR YOUNG:   No.  We accept the diagnosis.  We accept that Mr Kakavas suffered from a persistent and recurrent maladaptive pattern of gambling behaviour according to the experts, characterised by a failure to control the urge to gamble.

CRENNAN J:   That is a special disability which, in some circumstances, might trigger the equity?

MR YOUNG:   No.  Can I take it in a smaller step than that, your Honour?  It is a disability which, in some circumstances, can lead to a failure to control gambling at a particular time, but at other times and in other circumstances the condition will not so operate.  We accept all that which is exactly what the experts said concerning their opinion.  But that does not lead to the conclusion that when in a particular month or on a particular program Mr Kakavas was gambling - and take one instance when he walked away with winnings - that he was then afflicted in relation to those transactions with any inability to control or to make judgments about his own best interests.  It does not follow.

KIEFEL J:   Are you saying that we should infer from his Honour’s reasons that his Honour understood the medical evidence to draw a distinction between a failure to control and an inability to control and that his Honour was finding as a fact that there was a failure to control but that the medical reports did not go so far as to say that.

MR YOUNG:   Yes, your Honour.  That is all that his Honour says in 443 and 444, but if I were to take up Justice Bell’s point and look at what their actual evidence was about whether the classification of that disorder conveys anything about failure to control, every one of them said it did not.

KIEFEL J:   But they went further than the DSM‑IV classification, did they not?  They made a clinical diagnosis of their own.

MR YOUNG:   But applying DSM‑IV and accepting that their diagnosis in their oral evidence was necessarily subject to the caveat that it does not convey anything concerning the ability to control.

KIEFEL J:   I see.  You are saying that their ultimate diagnosis took it no further than what DSM‑IV conveys?

MR YOUNG:   Exactly, your Honour, yes.  They applied the criteria for the purposes of a DSM‑IV classification.  They arrived at a DSM‑IV classification, retrospectively looking back at this past period of a pattern of behaviour, and they explicitly in their oral evidence, every one of them, accepted the limitation that that diagnosis conveys no necessary implication about ability to control.

BELL J:   In Professor Blaszczynski’s report at appeal book 2313, paragraphs 56 and 57, there are expressions of opinion about Mr Kakavas’ ability to make a judgment as to his own best interests.  At paragraph 57, the professor expresses the opinion that that ability “would be severely and seriously impaired” in a situation in which a casino offered an inducement for Mr Kakavas to visit the venue for the purpose of gambling.

MR YOUNG:   Yes, but this is one area where his Honour has made findings of fact that bear directly upon that because his Honour made findings of fact concerning the inducements, how they were sought by Mr Kakavas, how they were negotiated, where they fitted within the high‑roller programs, that they were standard, that they operated to Mr Kakavas’ advantage, and his Honour found that the inducements conveyed nothing to indicate any lack of ability to control.  His Honour made explicit findings about that.  So that is where you get ‑ ‑ ‑

BELL J:   But how does one reconcile an acceptance of paragraph 57 of the report with a conclusion that Mr Kakavas’ ability to judge his own best interests was not “severely and seriously impaired”?  It is one thing to have concluded that Mr Kakavas was able to negotiate with Crown to get conditions respecting lucky money and jets that appealed to him, and another to give consideration to the effect of paragraph 57.

MR YOUNG:   Can I first refer your Honour to what his Honour the trial judge said, 2587 and 2588, 591 firstly at 2587, and then at 2588 from about line 14 to the end of the paragraph.  So his Honour took into account the inducements and arrived at the finding that Mr Kakavas:

was perfectly capable of resisting the urge to lay one more bet, and where he demonstrated an ability to play in a controlled manner consonant with the behaviour of a recreational gambler.

Then he concluded by finding “a reasonable degree of equality” and made findings in the next paragraph about Mr Kakavas’ demeanour.  So his Honour has considered inducements, he has looked at the actual evidence about inducements and not a set of assumptions and he has made findings.

BELL J:   Implicitly rejecting parts of Professor Blaszczynski’s expert evidence?

MR YOUNG:   Yes, to the extent it was based on a set of assumptions or generalised assertions made out of court.

FRENCH CJ:   Explicitly to the extent that he has put in quotes the words “virtually impossible to resist his urges to resume gambling”.

MR YOUNG:   Yes, your Honour.  So there are many other instances I can go through where there is an assumption made by the expert but his Honour has made actual findings of fact about it.  What his Honour has done is to accept a retrospective diagnosis that, yes, there was a pattern of behaviour; yes, based on what the experts were told he did fail, but his Honour never found he was unable to exercise control.  He found to the contrary having reviewed the actual evidence, whereas the experts did not have that actual evidence in front of them.  They had a set of assumptions of the vaguest and most general kind and then some generalised assertions out of court, unrecorded precisely by Mr Kakavas.  It is just that some of the assertions are referred to ‑ and they are more or less assumptions ‑ in these paragraphs of the report.

I can give your Honour another example of that.  Professor Blaszczynski referred to repeated unsuccessful attempts to self‑exclude.  In his report at 2312, paragraph 46:

Mr. Kakavas reported patterns of behaviour that are consistent with a gambler suffering an excessive preoccupation and severe impaired capacity –

It is footnoted then, paragraph 10, it refers to:

repeated unsuccessful attempts to cease (through voluntary self‑exclusion orders) that was interpreted as evidence of his impaired control.

Now, the professor was cross‑examined about that.  He said he was referring to the self‑exclusions from prior years that he had no evidence and no material before him about any attempt at self‑exclusions in 2005 and 2006, yet he accepted elsewhere that it was critical that the relevant events be related to the period that he is talking about.  So this was a globalised expression of view about the period 1994 to 2006, whereas he was asked to look at three distinct periods. 

His cross‑examination about those matters – I will just give the references – at volume 3 of the appeal book, pages 940 to 941.  Professor Blaszczynski also gave evidence in the Foroughi Case where he said that current unsuccessful attempts to stop gambling are what is important, and unless there are current unsuccessful attempts you would not classify somebody as a pathological gambler.  So I mention that simply because it is an important consideration.

KIEFEL J:   Did anyone ask the professor or any of the other expert witnesses whether high rollers – that is to say, wealthy people who gamble heavily, regularly and who lose large amounts of money – all fall within the classification?

MR YOUNG:   No.

KIEFEL J:   It might have been interesting to know.

MR YOUNG:   Nor was the professor directing himself to people who had these prearranged programs where they accessed very substantial complementary benefits and status aspects by putting a certain amount of money at risk upfront.  He was not asked about that category of gambler.  There are reasons why the Court should not read his Honour’s findings at trial as rising any higher than the finding in 443 about a pattern of behaviour involving an actual failure to control of the kind I have mentioned.

There are other reasons I will just note.  One is that the assessments were retrospective.  They were made in the period 2007 to 2009 in a litigation context based on Mr Kakavas’ assertions about his feelings in the past.  All that means is that there is a certain caution that this Court has emphasised time and again that needs to be exercised when you have that kind of retrospective evidence.  I mentioned Rosenberg v Percival 205 CLR 434.

Secondly, the experts did not distinguish the factors or criteria operating within each of the periods.  They tended to roll it all up.  Some of the factors in question are completely internal to the individual and not evident to an outsider.  Indeed, his Honour drew attention to that at paragraphs 518 to 519 at pages 2561 to 2562.  All of the experts said that problems in gambling or a pathological behaviour of gambling cannot be readily detected by outsiders by any third party.  His Honour extracts some of the evidence.  So that is an instance where his Honour has made an express finding agreeing with one particular passage in reasoning, but there is nothing like that about the passages your Honour was asking me about.

HAYNE J:   Does this not bring us to a quite fundamental point about DSM‑IV and the condition which is described?  It would go to 2313, Professor Blaszczynski’s report, particularly paragraph 54.  The real sting in the opinion lies in the second‑last line:

influencing his capacity to make rational decisions regarding all aspects of his behaviours –

DSM‑IV describes, does it not, firstly, behaviours?

MR YOUNG:   Yes, your Honour.

HAYNE J:   Behaviours which are judged to fall outside a range identified as normal behaviours.

MR YOUNG:   Disorders.

HAYNE J:   They are put beyond a range of the normal, whatever that is.

MR YOUNG:   Well, I am not so sure that that is entirely correct, your Honour.  For instance, that passage your Honour refers me to mentions personality traits and personality traits are obviously a normal thing.  Everyone has particular personality traits and in many normal individuals they might include overinflated confidence.  I would not describe that as abnormal.

HAYNE J:   I would not touch that subject in this place, Mr Young.  The proposition advanced in 54 proceeds from a premise that viewed objectively the decision to gamble is not rational.

MR YOUNG:   No, I do not – I think that is going too far, with respect, your Honour.  Gambling is obviously a risky transaction but it does not mean that it is irrational.

HAYNE J:   But there is the point, is there not, that DSM‑IV is ascribing to certain behaviours a classification on a premise that viewed objectively the decision to gamble, in those circumstances, in that way, is not “rational”.

MR YOUNG:   No, your Honour, that is going too far.  If one goes to DSM‑IV, the classification is inextricably linked to the adverse consequences that it may have for the individual.  It is not about the rationality of gambling, per se.

KIEFEL J:   If the assumption that large losses of money are generally not good for you and it is an improvident decision, is that what it comes down to?

MR YOUNG:   No.  Your Honour, the diagnosis, if I can go to 2226 in DSM‑IV.  It is the combination of persistent and recurrent gambling.

FRENCH CJ:   It resembled some elements of pyromania.

MR YOUNG:   Yes, that has the disruptive consequences mentioned.  It is the combination both of the recurrency of gambling but with that pattern of behaviour producing disruptive consequences.  That is what his Honour emphasised in paragraph 443.  Now, gambling per se, your Honour, is clearly risky but in the case of baccarat it is equally risky for - almost equally risky for the casino as for the gambler. 

BELL J:   What is the business model, Mr Young?  What is the business model?  Is it not based on a certain assumption respecting the house’s advantage?

MR YOUNG:   The house advantage, as his Honour found in the long term, across all gamblers was 1.33 per cent, but hand by hand it is essentially 50/50 and that was the effect of the evidence.

HAYNE J:   Well, every event is an independent event.  If you toss two coins, it is an independent event.  We know that.

MR YOUNG:   Yes.  But, your Honour, my ‑ ‑ ‑

HAYNE J:   But, the point I want to drive to, Mr Young, can we come to grapple with ‑ ‑ ‑

MR YOUNG:   Yes.  I am trying to, you Honour.

HAYNE J:   What we are seeking to have applied here – what the plaintiff seeks to have applied here is a proposition that it is unconscientious to deal with this man.  It is unconscientious to deal with him because he suffers from a disorder.  The disorder is one which is identified by reference to whether his choice to gamble, his decision to gamble, is rational.

MR YOUNG:   No, your Honour.  That is where we disagree.

HAYNE J:   Well, there you are.

MR YOUNG:   The condition is defined in terms of a:

persistent and recurrent maladaptive gambling behaviour . . . that disrupts personal, family, or vocational pursuits.

It is a pattern of behaviour that involves a failure to control.  It is not about gambling per se on the presupposition that all gambling is irrational.  It is a risky transaction - there is no doubt about that – where the house has, in the long run, an edge.  I am not seeking to get away from that at all, but the diagnoses our learned friends rely upon do not rise higher than paragraph 443.  His Honour has made findings that this particular individual was in a position, while gambling, or before deciding to come to the casino, to make rational decisions as to his own best interests and actually did so.

HAYNE J:   Well, the point to which I wanted to come, Mr Young, which I had thought to be a point that may bear upon the case, was that the doctrine which it is sought to invoke is one which would have the casino decide for the gambler what was rational for the gambler.

MR YOUNG:   Well, that is the way in which it is put, your Honour.  Our learned friend’s case is that the casino has to make the judgments that the individual is perfectly capable of making himself.

FRENCH CJ:   I suppose when one talks of rationality in this context, it is important to identify the framework within which rationality is being judged.  If you talk in terms of economic rationality, for example, an economist might well say that all gambling is irrational where the house has the edge.  There may be some other frameworks in terms of non‑economic rewards – feelings of euphoria or enjoyment of risk or so forth that might inform a wider concept of rationality.

MR YOUNG:   Yes, your Honour.  That is true.  A gambling transaction is entered into by gamblers knowing it is risky for their own personal reasons of satisfaction or excitement or whatever it may be, but they get a return in other non‑financial ways from the transaction including by purchasing, effectively, status, in the case of high rollers.

KIEFEL J:   Rationality as choice – as evidenced by choice.

MR YOUNG:   By his evidence by choice.  Yes, your Honour.  The choices were being made here constantly.

FRENCH CJ:   A person may choose to acquire an asset at a greatly inflated price which, from an economic point of view, may be irrational but it confers some kind of status.  We have seen plenty of examples of that.

MR YOUNG:   Yes, your Honour.

FRENCH CJ:   Probably the media industry is one.

MR YOUNG:   Yes, and equally, people may choose to engage in a very risky transaction such as purchasing a contract for difference or other financial instruments that, perhaps, are more akin to a bet than an investment.  But people make those choices because they make their own assessment of risk and reward and they have a high appetite for risk.

KIEFEL J:   Looking at the diagnostic features at appeal book 2226 of DSM‑IV it is hard to resist the conclusion that his Honour was making findings about the actuality of Mr Kakavas’s life which were contrary to some of those features.

MR YOUNG:   I am sorry, what page did your Honour refer to?

KIEFEL J:   Where we were looking for the diagnostic features of DSM‑IV at appeal book 2226.

MR YOUNG:   No, that is “Pyromania”.

KIEFEL J:   “Pathological Gambling” at 312.31.

MR YOUNG:   Yes, but the criteria are at 2229.

KIEFEL J:   That is the “Diagnostic criteria for 312.31” which takes you back to page 2226.

MR YOUNG:   Yes, but the classification, its definition is at 2226.  The criteria by which psychologists arrive at such a classification are listed at 2229.

KIEFEL J:   Yes.  I appreciate that, but we were talking before – you mentioned before about the diagnostic feature of disruption of personal, family and vocational pursuits.

MR YOUNG:   Yes.

KIEFEL J:   What I had in mind was that his Honour made specific findings about how Mr Kakavas would appear not to have produced that result.

MR YOUNG:   Yes, your Honour.  He said in every one of those respects his functioning - I think was his word - was unremarkable.

KIEFEL J:   Yes.  At 2004.

MR YOUNG:   Yes.  At 2004 and 2005 he said.

KIEFEL J:   So it is difficult to resist the conclusion that his Honour’s findings were inconsistent in some sense.

MR YOUNG:   With?

KIEFEL J:   Well, with the basis or DSM‑IV.

MR YOUNG:   With the basis for the diagnosis.  His Honour accepted the diagnosis, as a retrospective diagnosis looking ‑ ‑ ‑

KIEFEL J:   What did he do, put it to one side in favour of findings of observed conduct which the – it leaves this Court in a bit of a difficult position because we are not quite sure – it is difficult for us to say exactly how his Honour ‑ ‑ ‑

MR YOUNG:   Yes, but his findings were directed to the key questions about was there an inability to make worthwhile judgments during the relevant period, based on the actual evidence of what occurred.  That is a different exercise than the diagnosis which is simply to say, as the experts did looking back from 2008 and 2009, was there a pattern of behaviour that in the end had disruptive consequences.  His Honour was directing himself to what has to be addressed by Amadio.  The classification is not doing that.  That is why his Honour thought there was a ‑ ‑ ‑

KIEFEL J:   Are you saying it might be as simple as if his Honour considered it was irrelevant, because of the self‑expressed limitations in DSM‑IV, for legal purposes?

MR YOUNG:   Amongst other things, your Honour, yes, but as well his Honour’s own much more detailed examination of all of the evidence, where the experts were working on assumptions, led him to a different conclusion concerning the ability to make worthwhile judgments.

KIEFEL J:   Is one of the ‑ ‑ ‑

MR YOUNG:   The experts are not addressing that.  They are addressing whether there has been a pattern of behaviour that in the end had disruptive consequences.

KIEFEL J:   Is there any explanation in DSM‑IV or within the evidence of the experts to explain further the limitation on a DSM‑IV diagnosis for the purposes of legal forensics, that is to say, is there any discussion, for instance, that coming to a diagnosis on the limited basis that psychologists or psychiatrists can, by reference to what happens, might be a different forensic exercise than that undertaken by a court?

MR YOUNG:   To this extent, yes, your Honour.  They all accepted that their diagnosis does not stand as any conclusion about ability to control during these relevant periods.

KIEFEL J:   Well, that might be the key to his Honour’s findings, you say?

MR YOUNG:   Yes, it is certainly part of it, your Honour, but for the other reasons I have given, there are other considerations also that led his Honour to say, having made findings of fact, inconsistent with the assumptions the experts acted on, but it was not particularly relevant.  Can I give those references – I will not go to them, your Honour – Professor Blaszczynski in his transcript at these pages of the appeal book, 933 to 934, 936 to 937 and 938.  Mr Healey at appeal book 1029 to 1030, Dr Coman at appeal book 1995 and in Mr Allcock’s case, his report was to the effect that this was a person choosing not to control.  He was making choices.  That is paragraphs 23 to 27 and 36 of his actual report at appeal book 2320 to 2322.

Just to complete what I want to say about this, could I just give those paragraphs from the two cases dealing with the limited utility of the classification as the Court saw it in both Reynolds and Foroughi.  In Reynolds, it is Justice Giles at paragraph 149.  In Foroughi, it is Justice Jacobson at paragraph 119.

Just before I leave the area of pathological gambling, can I refer to one particular matter that Mr Myers referred to, and his Honour dealt with, about the size of hand limits.  The evidence was that Mr Kakavas’ request for high hand limits was completely in line with the practice of the cohort of high rolling gamblers who sought such limits, and casinos sought to resist the request.  His Honour deals with it at paragraphs 249 to 251 at pages 2458 to 2460.  His Honour made a finding about it at 541, which is 2570, I think – yes.  Your Honour Justice Gageler asked Mr Myers a question about the last few lines of paragraph 541.  His Honour considered that the request for high hand limits was equivocal, but his Honour went on to find:

there was not here clear indicia of a person not able to conserve his own best interests.

That is directing himself, the trial judge, directly to the principle as stated by Justice Mason in Amadio, and there are numerous other passages like that.  He went on –

I do not think that, on this evidence, Crown was placed on notice that Mr Kakavas was burdened by a special disability.

So his Honour was not confining himself to a narrow concept of actual knowledge either.  That would seem to embrace knowledge of facts which pointed to the existence of a special disadvantage vis‑à‑vis the other party, but in any event the clear evidence was that Mr Kakavas often exercised his discretion to bet at less than the maximum limit he had negotiated.  Appeal book 674 to 675, 771 and 740 are examples of such evidence.  So contrary to the pleaded case that he could not resist an urge to always bet at the maximum, the evidence was in fact he did make judgments and exercised discretion to bet at less than the maximum he negotiated.

His Honour also made findings that the event of large wins or large losses over a short period of time merely indicates the nature of high stakes baccarat; each hand takes about five seconds.  His Honour made findings in that regard at 246, page 2457, at 250 to 251, pages 2459 to 2460, and again at 537 to 539, page 2569.  That is another respect, Justice Bell, in which his Honour’s findings differ from the experts.  The experts seem to assume that simply the large turnovers, the large wins and losses, was a factor.  His Honour found it to be entirely equivocal.

I want to move to the next stage.  I have dealt with the propositions concerned with self‑exclusion and pathological gambling.  I want to go back to proposition 5 and proposition 6 briefly.  They are concerned with the appellant’s argument that the trial judge misapplied the established law.  There are two points we wish to make, if I can summarise them at the outset.  The first is that the trial judge did not reject the established authorities.  He set out and applied the Amadio principles.  The Court of Appeal was right to say that that is what the judge in fact did.  I will develop that point in a moment.

The second point is that the criticism is beside the point.  The Court of Appeal applied the principles as stated both by Justice Mason and Justice Deane.  As the Court of Appeal pointed out, the findings of fact by the trial judge are decisive against the appellant on an application of the principles stated by both judges.  Justice Mandie said that at paragraphs 32 and 33, pages 2652 to 2653, and Justice Bongiorno said that at paragraphs 202 and 205, pages 2708 to 2709.  The Court has been taken to those passages so I will not go back to them.

The first point I want to make in developing the first of those points is that the relevant legal principles do not focus on a person’s psychological make‑up in isolation.  It is always, in all the cases, linked to the particular dealing that is sought to be impugned.  The focus is on what the stronger party did by way of unconscionable exploitation of the other party in relation to the particular dealing.

That is why the courts repeatedly speak of a serious disadvantage vis‑à‑vis the other party.  All of the cases do exactly what Justice Harper did, review all of the actual facts and circumstances surrounding the dealing to see what that conveys about the person’s actual position and then whether or not it was unconscientiously exploited by the other party. 

The trial judge was responding to the arguments that were made at trial, which do not match those raised here.  He was responding to a case that the appellant was the victim of a scheme to lure him to attend the casino and he was responding to arguments that factors such as the ability to self‑exclude at all relevant times and the ability and the actual negotiation of the terms and conditions of play were totally irrelevant.  You should just focus on the person’s psychological makeup.  So his Honour was addressing that kind of debate. 

In the result, what his Honour did was to make findings directed to the principles stated by both Justice Deane and Justice Mason.  On his Honour’s approach, he did not limit himself to the question whether they met on equal terms but he had regard to all the relevant facts to determine whether the appellant had, during the relevant period, the ability to make worthwhile judgments as to his own best interests and whether, in fact, he did that in ways that were evident to the other party. 

Now, those submissions are borne out by what his Honour said about ability to make judgments in various places.  Can I give a few examples of that?  This is by no means exhaustive.  Paragraphs 521 to 522 at page 2562 to 2563, his Honour sets out a submission we made and various factors we rely upon at 520.  The conclusion of the submission was that all those factors indicated that the appellant was:

entirely capable of making independent decisions and judgments in his own best interests.

That is at the top of page 2563.  His Honour accepted the broad thrust of that submission and that is directed to the very language used by Justice Mason, as his Honour then was, in Amadio.  Then, at paragraph 525, this is on a slightly different point but in the third sentence his Honour ‑ ‑ ‑

BELL J:   Could we have the page number again, I am sorry?

MR YOUNG:   I am sorry, 2564, your Honour, paragraph 525, third sentence.  There is no disconformity between that approach and the approach that falls out of both judgments in Amadio.  At 526, the actual:

behaviour in June provided no foundation for a conclusion that he was vulnerable.

That is addressing the issues in Amadio.  Then at page 2570 – I have referred to this earlier.  The last passage in 541 speaks of conserving “his own best interests” and then over the page at 542, his Honour is addressing whether the conduct demonstrated that he was:

incapable of making decisions or judgments to conserve his own best interests.

That is lines 10 to 12.  That is the very proposition our learned friends say that the judge departed from.  Then at 592 at 2588 – I have mentioned this passage earlier this morning, it is the last five lines of the first passage at 2588, in paragraph 592 and then at 655 at page 2609, line 27:

The question is whether it is unconscientious for Crown to encourage or allow a person to return to gambling where that person gives every appearance of being in an equal bargaining position and of having the ability to make judgments in his own best interests.

The criticism of the judge is that he did not address the last leg of that proposition, but he clearly did.  Can I go back to the passage that appears at page 2529 that Mr Myers started with?  This culminates in paragraph 434 at 2530, where his Honour says he prefers the approach of Justice Deane.  His Honour was not there talking about the ultimate legal inquiry about conserving his own interests.  He is talking about the evidentiary approach by which one arrives at that issue.  In 431, his Honour speaks of Justice Mason appearing:

to favour the view that the relevant disadvantage is best discerned –

by going straight to that question.  Paragraph 432 – he doubts whether that is the best approach and speaking of best approach, his Honour is adopting the language of Justice Deane in Amadio at 476 point 9 to 470, where Justice Deane, having set out the relevant principles, himself addressed the question of what is the evidentiary approach I should adopt.  What is the pathway to the final application of those principles?  Justice Deane said it is best approached by a comparison of the relative positions.  That what his Honour was saying he was going to do by way of an evidentiary pathway – an approach to address the ultimate issues.

His Honour’s concern, as paragraph 432 reveals, is that he was dealing with a particular case of gambling which has the problem that some would say that gambling is never in the best interests of anybody except those who set the odds.  It was in that context that his Honour thought that it was best to undertake a wide and exact survey of all of the relevant evidence to approach the matter in that way and then ultimately reach the conclusion whether the individual at relevant times was able to make worthwhile judgments as to his own best interests.

That is what his Honour did and, in our submission, there is no departure from the authorities, and in the result he applied the governing principles.  There was criticism of the use of the term by his Honour “met on equal terms” or like expressions.  That phrase is an often used description in the cases to describe the wide inquiry that is necessary.  It is used, for instance, by Justice McTiernan in Blomley at 386 point 3.  Indeed, it is extracted in a passage from White and Tudor’s equity cases, met on equal terms.  It is used by Chief Justice Gibbs in Amadio at 459, point 6, and it is used in the joint judgment of Justices Gaudron, Gummow and Kirby in Bridgewater v Leahy at paragraph 123 at page 493.  Here it was used by his Honour in other places at 439, page 2532 and at 593, page 2588 where he spoke of “a reasonable degree of equality”.

The next question I need to come to is the question of unconscientious exploitation.  The starting point for that though, in our respectful submission, is that which we embody in paragraph 6 of our propositions; that is to say that the governing principles are rooted in the concept of equitable fraud.  They are aimed at conduct that amounts to victimisation.  We put that word in quote because it appears regularly in authorities in this Court; Louth v Diprose used it at 638, point 9, and Bridgewater v Leahy at paragraphs 35 and 76 in both joint judgments.  That requires unconscientious exploitation of the other party’s known inability to make a worthwhile judgment about the impugned transactions.

GAGELER J:   How do you deal with constructive knowledge, which is really at the heart of your opponent’s case?

MR YOUNG:   I am going to immediately come to it, your Honour, but can I just lay a few pieces of groundwork for it?  I can come to it immediately, but it may be best if I do it as intended.

GAGELER J:   So long as you are getting there, that is fine.

MR YOUNG:   I am, your Honour, yes.  There are numerous cases in addition to the ones I have mentioned that support the need for unconscientious exploitation using such strong language.  Hart v O’Connor is one in the Privy Council, and the passages are at 1024, B to D and 1027, G to H.  Bell v Westpac in Justice Owens decision gathers the relevant authorities together in a helpful way, at paragraphs 4919 and 4924. It is discussed in a Western Australian case, Permanent Mortgages Pty Ltd v Vandenberg 41 WAR 353 at paragraphs 224 to 230, and also by Chief Justice Spigelman in Attorney‑General of New South Wales v World Best Holdings 63 NSWLR 557, paragraph 120.

Our learned friends seek to set the standard low, very low, in their submissions by talking about a mere effect on ability, a mere influence on ability.  To make a judgment is sufficient.  That falls well short of the authorities and what they require.  If one goes through the cases, they are all cases where the individual, the plaintiff, was unable to make a worthwhile judgment as to the person’s best interests.  Now, Blomley, for instance, at 407, point 3, Fullagar described the situation as one where the old man was “incapable of forming a rational judgment”.  In Amadio Justice Mason referred to the Amadios as being “unable to make a worthwhile judgment” at 461.

In Louth v Diprose it was a case where the individual was so “dependent upon” the other person “as to disregard entirely his own interests”; that is Chief Justice Mason at 626, point 6.  In ACCC v Berbatis Justices Gummow and Hayne at paragraph 46 referred to the person being “unable to make a worthwhile judgment”.

That is the level that the serious effect on the person’s ability to make judgments must rise to, in our submission.  It is not a question of whether his attitudes are influenced by something.  I mention that because of our learned friend’s reliance upon what the judge said about Mr Kakavas’ views being overly influenced by a liking for gambling.  That is at 440 of the trial judge.

I will come to knowledge and at a pace go to constructive knowledge.  Firstly, and importantly, in our respectful submission, the starting point is that knowledge is an aspect of the inquiry.  It is not the be‑all and end‑all of the inquiry.  It is an aspect of the inquiry into whether there has been an unconscientious exploitation of the other party’s position of a special disadvantage, vis‑à‑vis the stronger party in relation to the transaction.

The next question is knowledge of what?  It is not just knowledge of a person’s psychological makeup or past behaviour.  The cases are clear that it must be knowledge that the other person’s special disadvantage is having an operative effect on the person’s ability to make a worthwhile judgment about the particular transactions.  That is emphasised by Justice Mason in Amadio at 462, point 8 and by Justice Deane in Amadio when he speaks of the disadvantage flowing through to and affecting the transaction at pages 480, point 5, and 481, point 8.  Again, authorities have followed that and applied the requirement that there must be an effect on the transaction.  The authorities are again gathered by Justice Owen in Bell v Westpac 39 WAR 1 at 4936 to 4938.

Turning to constructive notice, because we are concerned with a branch of equitable fraud we are concerned with conduct that affects conscience.  It does not extend to constructive notice – and I use “notice” advisedly.  I am talking about that species of constructive knowledge where a person is put on inquiry.  Equitable doctrines rooted in equitable fraud have never extended to constructive notice.  It is not enough that a person might be put on inquiry – I am not speaking about wilful ignorance or closing one’s eyes to the obvious.  I am speaking about the kind of situation the appellants now contend for in their written submissions.

GAGELER J:   How do you deal with what Justice Mason said in Amadio at page 467, point 8?

MR YOUNG:   Yes, I will deal with that directly, your Honour.  I will need to go to the case for that.  If I could turn to Amadio, your Honour, it is our respectful submission that the passage our learned friends rely upon particularly needs to be read in context.  That probably goes without saying, but can I point out the aspects of context that we would point to?  Firstly at 461 at the opening of Justice Mason’s judgment at about point 4 on the page, his Honour refers to:

a party makes unconscientious use of his superior position or bargaining power –

Later on that same page at about point 8 or 9, his Honour refers to the weaker party being:

unable to make a worthwhile judgment as to what is in his best interest.

Then of course, before his Honour gets to the passage, he has approached the task of ascertaining those matters on the facts by looking in detail at the dealings between the two parties and at 466, point 9, has particular regard to the bank’s knowledge, including the improvidence of the transaction in circumstances where the debtor being guaranteed was insolvent, and non‑disclosures by the bank.  So that is the background in which his Honour comes to this issue.  The immediate context of 467 includes these elements:  Firstly, at point 3, the facts as known to Mr Virgo from the bank:

were such as to raise in the mind of any reasonable person a very real question as to the respondents’ ability to make a judgment –

Those facts included facts that made it clear to Mr Virgo that the Amadios had an incorrect understanding of the transaction and its unlimited nature because of the questions they asked.  Then Justice Mason turns to Owen and Gutch, which was a wilful ignorance case of somebody turning their eyes away from an obvious fraud.  That is apparent in the description:

if the dealings are such as fairly to lead a reasonable man to believe that fraud must have been used in order to obtain” [the concurrence of the surety], “he is bound to make inquiry –

The passage goes on to refer to “wilful ignorance” which has always been regarded as a class of actual knowledge, not constructive knowledge.  His Honour then turns to “fraud in equity” in the passage that follows the quotation.  As to the particular passage your Honour Justice Gageler asked me about, the first part of it is actual knowledge that “B cannot” – and we underscore the word “cannot”‑ make a judgment.  So that is actual knowledge that the person cannot make a judgment as to what is in his own interests.  Then the extension is:  instead of having actual knowledge of that complete inability to make a judgment, “A is aware of the possibility that that situation may exist” – that is, the possibility that the person cannot make a judgment at all, but:

A is aware of the possibility that that situation may exist or is aware of facts that would raise that possibility in the mind of any reasonable person, the result will be the same.

What is the result?  Reading the whole lot in context, the result is such that the facts tell one that fraud must have been used – if you look at Owen and Gutch – or that there is a very real question as to the respondents’ inability to make a judgment.  The point we make, reading this in context, is that you cannot dislodge the reference to possibility from the context in which his Honour was using it.  He was referring to something less than a certainty of a complete inability to make a worthwhile judgment.

FRENCH CJ:   This may come back to the question that Justice Hayne put to you earlier in relation to rational judgments.  What is the kind of judgment which is the subject of the knowledge of which we are speaking in this context?  What is the judgment about?

MR YOUNG:   It is a judgment about making decisions as to whether to gamble at all, whether to exclude from gambling, whether to stop when ahead, whether to confine yourself to your prearranged front money that you intended to put at risk, whether to leave with money in hand, whether to take breaks from gambling, and so on.

HAYNE J:   Well, as pleaded against you it was in part that:

the plaintiff’s ability to make rational decisions concerning the frequency with which he gambled and the amount of money that he wagered was significantly impaired.

See appeal book 65, paragraph 13(4).

MR YOUNG:   Yes.  Here, your Honour, on the facts as found, he did make judgments about the frequency with which he gambled.  He took lengthy breaks and he made decisions that he would come and gamble and put a certain amount of money at risk and he made decisions to leave with winnings in hand.  But the way it is pleaded, your Honour, was not that any gambling at all was what was at issue, it was an inability to control the frequency of gambling.  He always had that ability by simply deciding not to gamble or deciding to self‑exclude.

FRENCH CJ:   In the end, the case is run on a transaction‑by‑transaction basis?

MR YOUNG:   No.  The case at trial was not run on that basis.  The case at trial was not run – it was ‑ ‑ ‑

FRENCH CJ:   It was pleaded on a more general basis.

MR YOUNG:   Yes, it was run on a more general basis.  In final address there were submissions made about passive acceptance of gambling but until final address it was run on the wider basis.  There is a passage indeed where Mr Myers expressly accepted that at volume 5 of the appeal book, 1794 to 1795.  His Honour made a ruling and at the top of 1794 Mr Myers queried an aspect of it, lines 4 and 5:

Your Honour referred to knowledge of Crown and enticement.  Certainly that’s one way we are putting it –

The enticement was the luring back to the casino case, and he went on to say at lines 7 to 8:

we do say ought to know and we do say consistently with the authorities, permit.  You don’t have to entice, [it is enough to] permit –

gambling.  I took exception to that from line 24, lines 26 to 27:

That is a case of enticement and that’s the only case alleged –

Mr Myers, over the page at 1795 said he agreed with me.  Now, in submissions, the case did widen to one of passive acceptance of gambling transactions but in the Victorian way, your Honour, we put our submissions first, they followed, so, yes, it was part of what his Honour addressed,  It was part of the submissions.  Mr Myers says I went second.  He may be right and I may be confused about that.  I do not think it matters.  It was debated in submissions, we accept that.

The case that is now put that it is control at the gambling tables is a different case than the case that was put below.  It always involved the aspect of getting Mr Kakavas to gamble again at Crown.  Hence, the emphasis on the inducements, and so forth that has fallen away completely.  That aspect of the case has been abandoned.

KEANE J:   Mr Young, when one is talking about knowledge of the effect of the relative disadvantage upon the ability to make worthwhile decisions there has been discussion about rationality.  If it is not just about economic rationality, it is about conduct in which other satisfactions are being pursued by the gambler, particularly the high roller category where there are other things in play; the glamour, all the ‑ ‑ ‑

MR YOUNG:   The privileges.

KEANE J:   ‑ ‑ ‑ compliments, the privilege, the use of the jet, et cetera and how good that makes one feel.  Would not the relevant knowledge need to encompass, at least in part, that the gambler cannot afford it?

MR YOUNG:   Yes it would, your Honour.  I am coming to some evidence about that.

KEANE J:   Yes, but it just seems to me that a situation might be different between the high rollers who, on the face of things, keep turning up with enormous quantities of money and do not complain about losing and the widow who comes in with the ‑ ‑ ‑

MR YOUNG:   The pension cheque.

KEANE J:   ‑ ‑ ‑ the pension cheque and, on the face of things, obviously cannot afford to be gambling that sort of money.  May not that be the sort of knowledge that the casino needs to have.  That is to say that whatever it is that the gambler is getting out of it whether it is the thrill, the rush of hazarding this money, the thrill of choosing not to control oneself.  I mean, narcissism can be expensive.  May not that be the difference that the casino needs to know that whatever it is that the gambler is seeking to get out of the exercise, the gambler cannot afford it?

MR YOUNG:   Yes, we would accept that, your Honour, but, can I turn it around slightly as well by saying that if the communications from the gambler to the casino are to the effect that he can afford it ‑ ‑ ‑

KEANE J:   Quite.

MR YOUNG:   ‑ ‑ ‑ and he has set aside money for the purpose and the casino takes that into account that is a very good reason – well, one of many reasons – why one does not conclude there has been any unconscientious exploitation of the gambler who has declared, strongly and repeatedly, that he can afford it.

HAYNE J:   It is not the declaration that matters; it is the presentation of the front money.  It is the front money which is the critical thing in that thing.  You can say, yes, I can afford this but actually stumping up a bank cheque for X million ‑ ‑ ‑

MR YOUNG:   Yes, that is the key to the privileges.  That is what gets you the free accommodation, free accommodation for guests, free meals, transport and so on.

HAYNE J:   But at the risk of returning to the matters that you were previously disposed to push away, the doctrine would have the casino decide what was rational for the gambler in the sense of whether gambling would be disruptive of his “personal, family or vocational pursuits” - I quote from DSM‑IV.  The question that then arises is how does any of that sit with the fact that the gambler presented, at least on most of the occasions, perhaps all of the occasions, with a substantial amount of front money as the amount he was prepared to hazard? 

MR YOUNG:   The fact, as your Honour mentioned, means that the case as presented has little to do with equity and unconscientious exploitation of a person’s disadvantage, it is really attempting to say there should be a duty of care to look after people who may have that particular psychological makeup in the absence of circumstances where the casino was aware of matters such as his finances, his ability to afford the wager, his reasoning processes as to why he wants to gamble as a high roller and so on.  This is really an attempt, and increasingly it has become an attempt as we have moved through the appeal courts, to rely upon arguments that really lie in the realm of duty of care, in our submission.  A duty of care in this field has been rejected, as this Court knows, in Reynolds, amongst other cases.

Can I come back to Justice Gageler’s question for one minute?  I did want to make one other observation.  The notion of constructive notice would produce a real disconformity in the field of equity because nowhere have the equity cases in the concept of unconscionability gone so far as to include constructive knowledge or notice in the sense of being put on inquiry because that is divorced from the notion of exploitative, unconscientious conduct. 

Indeed, many of the authorities urge that knowledge should be confined to actual knowledge including wilful ignorance and we have included in our authorities a reference to Professor Parkinson’s text in that regard.  The lower court cases reject constructive knowledge, ACCC v Radio Rentals 146 FCR 292, paragraphs 17 to 22, is an example. Justice Kirby rejected constructive notice in Garcia v Nabb 194 CLR 395 at 430.

So, in our respectful submission, the relevant doctrines do not extend as far as our learned friends’ do either by pointing to constructive notice or by pointing to a freestanding concept of a possibility arising out of a known past problem when the circumstances and the facts that are of immediate currency disavow that situation.

In the end, his Honour, the trial judge, applied a “know, or ought to know” test - ought to know in the sense of know of facts which point to or tell of a real position of special disadvantage in relation to the particular dealing.  His Honour made findings about that which are our way.  We embrace them.  There is no reason to disturb any of those findings and that is the correct approach.

In addition to the “no conception at all” finding, his Honour addressed specifically wilful ignorance.  Mr Myers went to the passages at 502 to 506.  His Honour posed the test in terms of disability of which it was, or should have been aware at paragraph 525 and I went to that passage earlier today.  I have been to the other passages, I think, as well this morning, at 539 and 541.  It was in the face of those findings that Justice Bongiorno rightly said that there was no duty to inquire further.  There is no scope for any further extension of “constructive knowledge” at paragraph 224.

Can I come back to your Honour Justice Keane’s question about knowledge of his finances?  The trial judge accepted that Mr Kakavas had boasted that he had a gambling bank.  That appears at paragraph 557 at page 2575.  This may be less decisive than putting up the front money in the sense that it is a claim rather than an action, but it is, nonetheless, relevant to an overall assessment of whether there was any unconscientious exploitation of the situation by Crown.

His Honour recounts, under the heading, “Gaming Bank Defence” at 2572, the evidence from three witnesses who gave evidence to similar effect that Mr Kakavas made statements to the effect that he had set aside a certain amount of money for gambling.  His Honour expressed reservations about one account from Mr Horman, but he did, in respect of Mr Aldridge, accept that he was generally an impressive witness.  I want to turn briefly to his account.  His Honour’s conclusion was that the appellant did promote himself in that way.  It is at 557.

HAYNE J:   Well, what do we need to know more than that finding for this branch of your argument?

MR YOUNG:   No, your Honour does not need to know more than that finding, but I was going to simply refer specifically to 552 where Mr Aldridge’s account of the conversation appears.  He was accepted as an impressive witness.

But where you have a gambler, a high roller in particular, saying, “I’ve set aside 10 million or I still have 10 million to gamble and when I’ve lost that, I’ll stop”, Crown is entitled, in our respectful submission, to take that as truthful.  It was completely consistent with all of his conduct throughout.

In addition, there were numerous findings by his Honour that there was no exploitation and no unconscientious use of power, including paragraphs 21, 619, 655 and 661.  I am not sure whether the Court will want me to say this, but I will mention the point.  There are, revealed in his Honour’s findings as well, numerous instances where Crown or Crown employees acted in ways that are totally inconsistent with unconscientious exploitation.

I can list them.  It was the combined evidence, the common evidence of Horman and Mr Kakavas which his Honour recounts at paragraph 363 of his judgment at page 2502 that when Kakavas told Mr Horman in March 2006 that he had just won $10 million, Mr Horman told him to take a break; take the winnings and go.  Mr Kakavas did not, but that was his choice.  But Crown told him, conscientiously, “Why don’t you take a break?”  They both gave evidence to that effect.  That is hardly consistent with unconscientious exploitation.

There are numerous other instances where Crown refused to agree to arrangements that Mr Kakavas wanted for particular privileges that caused him to gamble elsewhere.  If they are unconscientiously exploiting his position and wanting him to gamble at every opportunity, on the other side’s case the natural thing they would have done was to agree to every privilege that Mr Kakavas sought, but that was not what occurred and it did not occur time after time right through the relevant period.

In early 2005, terms were refused, at 242 to 243 of the judgment.  The jet was refused in the first six months.  That is 595 and 597 of the judgment.  The maximum bet “on the tie” was declined, at judgment 289.  In October, hand limits were reduced and rebates were changed to a commission, which Mr Kakavas regarded as a negative.  That is at judgment 325 and then 620 to 621.  There was no encouragement for him to return during the period between October 2005 and March 2006.  On 17 August, when he first mentioned concerns about gambling, Crown immediately acted to ensure that he took a break from gambling at Crown.  He chose to gamble elsewhere, but at every point, in our respectful submission, the hard evidence is that Crown acted conscientiously.

Your Honour Justice Gageler also asked a question about fair, just and reasonable.  Can I briefly deal with that?  The cases have always accepted that if special disadvantage in relation to the dealing is demonstrated and there is an acceptance of the dealing the onus shifts to the stronger party to establish that the dealing is fair, just and reasonable.  That aspect of the principle is repeated in Blomley, Amadio, Louth v Diprose and also appears in the earlier cases.  That concept of “fair, just and reasonable” is a wider concept than whether consideration moves which is the contractual concept.

In the guarantee case consideration moved in the sense that the bank gave consideration to the debtor by extending the debt and that was the consideration for the guarantee but the guarantee was not fair, just and reasonable because the bank did not reveal the insolvency of the debtor and did not reveal, did not disclose, the unlimited nature of the guarantee when it was clear that the Amadios were acting under a misapprehension in that regard so it was not fair, just and reasonable. 

But, as Justice Fullagar said in Blomley at 405, point 9, it is often a specially important consideration and his Honour thought it was likely to be decisive in a case of intoxication and there is no reason to think that it should not be decisive in the kind of case mounted here where there is a background relied upon of this pathological situation. 

There was a risk of win or loss on every transaction both for the casino and for the gambler.  There is nothing untoward about any of the transactions, indeed, the odds were substantially adjusted by the rebate programs in favour of the gambler and he was treated in the same way as every high roller.  One thing I should have mentioned, and it is our written submissions, but prompted by some questions yesterday, Mr Kakavas, on the evidence, was not in the top 30 high rollers operating at Crown in the relevant period.  The citation is in our written submissions.

I need to deal with two other matters.  I think I have covered everything down to proposition 17.  The two remaining issues I need to address fairly briefly are a defence of illegality and/or unclean hands and causation of loss.  I put to one side, as your Honour the Chief Justice asked me, any arguments about whether an IEO constituted a special disability but the IEO situation remains relevant to illegality. 

As Justice Bongiorno pointed out, the appellant committed an offence each time he entered the casino and he committed a continuing criminal offence by remaining in the casino to gamble. That is the effect of section 77(2) or (3) at relevant times in the Casino Control Act.

The Act also provides a power for Crown to remove him if it is aware that he is the subject of an exclusion order, and notify the relevant authorities, the police or the gaming commission, for them to effect the removal, and there is the forfeiture provision in section 78B.  Our simple submission is that it is clear from the scope of those provisions that the appellant’s gambling at the casino was, at all relevant times, impliedly prohibited by the Casino Control Act.  The alternative submission is that if that is not correct, the gambling was contrary to the clear policy of the Act that it should not take place, and therefore the common law would regard it as the subject of a prohibition or, in effect, consequences of illegality would follow.

The prohibition fell on the appellant only.  He was the person the subject of the IEO, and under the Act, it was his responsibility to comply.  Crown had limited obligations.  They were to maintain a list of persons of whom it was aware was the subject of an IEO, and to notify the relevant authorities if it becomes aware of the presence of such a person.

Here, in effect, this claim is seeking to recover net losses from gambling at the casino where that gambling was impliedly prohibited or contrary to the policy of the statute.  It was integral to the appellant’s case that he plead and establish the gambling transactions at Crown, and that is what the pleading does.  The consequence of all that is, in our submission, to foreclose relief, whether at law or in equity – so it affects both the trade practices claim under section 82 and the alternative claim for equitable damages.

The implied prohibition, in our submission, is a necessary inference from the fact that the Act targets and prohibits essential preconditions to gambling, that is to say, entry to the casino, or remaining in the casino are prohibited.  Sanctions are imposed – forcible removal from the casino, forfeiture of any winnings, plus there is a criminal penalty for the offence.  The sanctions fall on the individual, the subject of the IEO.

So, in our respectful submission, this is a first or second category Yango or Nelson v Nelson class of illegality.  It is not a case of purpose or policy.  It is a direct prohibition.  It is a prohibition because it is a necessary inference from the provisions that do exist that gambling is also prohibited.  It is exactly that sort of case spoken of in Nelson v Nelson 184 CLR 538, where what is prohibited is an essential step towards the transaction. In Nelson, in the joint judgment of Justices Deane and Gummow, the issue of an implied prohibition is introduced with some citation of authority at 551. We refer to the first extract on that page.

At 552 the Yango categories are set out.  The first category includes a case where the prohibition fastens “upon some act which is essential”.  That is line 3 at 552 I am looking at.  Then at 555.3, that is expanded upon in the second complete paragraph at about point 4 on the page:

a statute itself may prohibit the creation of an express trust.

in that case.  Here it is gambling:

It may do so in direct terms or by forbidding the taking of a step necessary for the formation of such a trust –

in that case.  Here what is forbidden is the taking of a step necessary to achieve gambling that is entering and remaining at the casino.

FRENCH CJ:   How does the principle engage with the Trade Practices Act provision which is a prohibition from engaging in unconscionable conduct?  You say it in your outline at 20:

This principle applies whether damages are sought under the TPA or in equity –

and you refer to 91and 92 of the submissions, but I do not know that that question is addressed.

MR YOUNG:   The provision operates, your Honour, because where the claim in relation to unconscionable conduct under the Trade Practices Act relates to an activity which is illegal and prohibited by the Victorian legislation and that illegality is the foundation for the claim to recover net losses from prohibited gambling.  In our respectful submission, you do not read section 51AA or section 82 as the provision that authorises the recovery of relief for unconscionable conduct where it is founded upon an illegal transaction. 

FRENCH CJ:   The prohibition in 51AA is not qualified, is it?

MR YOUNG:   No, but it simply adopts the general law in relation to unconscionable dealings.  There is a Full Federal Court decision in ACCC v Samton saying that ‑ ‑ ‑

FRENCH CJ:   Yes, I know about it.

MR YOUNG:   Yes, your Honour will be familiar with it, saying that, in effect, your Honour will no doubt correct me if I am wrong; the effect of section 51AA is to give a right of relief in respect of any situation in which equity would give a right of relief for unconscionable conduct.

FRENCH CJ:   It imposes a statutory prohibition on a corporation in trade or commerce engaging in unconscionable conduct by reference to the unwritten law of the States and so forth, which picks up the doctrines but there is a prohibition.  There is also, then, if the contravention is made out, the statutory right to compensation.  I am just wondering where the illegality argument kicks in?

MR YOUNG:   The illegality argument kicks in, your Honour, because if Victorian legislation makes the transaction that is sought to be impugned under 51AA an illegal transaction, in our respectful submission, the proper construction of the scope of section 51AA is that it does not authorise relief in circumstances where the unconscionability is founded under ‑ ‑ ‑

FRENCH CJ:   The section does not authorise relief at all.  The section imposes a prohibition.  Sections 82 and 87 authorise relief.

MR YOUNG:   Yes, I understand that, your Honour, but the prohibition ‑ ‑ ‑

FRENCH CJ:   Using the old numeration.

MR YOUNG:   Yes, but the question ultimately becomes – given the statutory position under 51AA and the Casino Control Act – will a court or should a court grant relief under section 82 by way of damages in circumstances where the relief is founded on illegal gambling transactions.

HAYNE J:   It is a rather different proposition from the one which I thought you were advancing, namely, that the reach of 51AA was somehow limited by the State statute, which was an interesting proposition.

MR YOUNG:   No, no, your Honour.  I was trying to deal with the fact that 51AA operates by reference to the written and unwritten law.  You still get to the question of whether relief should go and the court, under principles concerned with illegality, we would say, still has to ask itself the question should relief be granted in these circumstances. 

The same issue, your Honour the Chief Justice, would arise because of equitable doctrines of unclean hands because this illegality has a direct and immediate relation to the relief that is sought.  The relief is to recover by way of equitable damages the net losses from illegal gambling transactions.  So, your Honour, insofar as 51AA picks up equitable doctrines concerning unconscionable dealing, it will pick up all of the equitable rules and principles concerned with the circumstances in which relief were to be withheld and so it will become relevant there.

FRENCH CJ:   Well, what you are saying, it seems to me, and I do not want to pursue this too much is that unconscientious or unconscionable conduct falls outside the prohibition if the victim of the unconscionable conduct is engaged in illegal conduct.

MR YOUNG:   Yes, that is one way of putting it, but the alternative, your Honour, is that even if that were not so, the question still arises at the relief stage.

FRENCH CJ:   Yes.

MR YOUNG:   Whether pursuant to the legal doctrine of illegality or the equitable principle of unclean hands.

FRENCH CJ:   Well, you would have to find a discretion in section 82.  You can find one in 87, but not in 82.

MR YOUNG:   Well, we would beg to differ for this reason, your Honour.  Section 82, in conjunction with 51AA, is surely picking up the kind of principles according to which equity would grant or withhold relief.  The alternative way in which we put it is this.  If there is no implied prohibition because necessary steps are prohibited – necessary steps towards gambling – then it is, nonetheless, conduct that is in conflict with the statutory purpose and/or policy to the effect that relief should not be granted to recover losses from this kind of gambling activity.  To do so would frustrate or defeat or be inconsistent with, or incongruous measured against, the statutory provisions that prohibit entry remaining in and allow removal, et cetera.

That is simply a question of would it result in incoherence for relief to be granted in these circumstances when one considers the provisions of the Victorian Act, the federal Act, and/or concepts of equitable damages.  Of course, the principle of incoherence has recently been referred to by this Court in Miller v Miller and Equuscorp.

There is a wider principle mentioned in the cases to this effect.  In applying those sorts of concepts, the court should not be seen as removing a restraint to crime.  These provisions are to be viewed in that light.  They are restraints to crime and to grant relief for net losses is to effectively give an indemnity in circumstances where the policy of the statute is that there really should be some deterrence, some restraint to crime, rather than an indemnity that gives the appellant all the benefits of having engaged in illegal conduct.  That view of things has been mentioned in Yango 139 CLR at 428, point 3 and 429, point 4. For the record, ACCC v Samton is 117 FCR 301 and the passages at paragraphs 49 to 50.

Finally, I wanted to make a very brief submission about loss and damage.  There was some discussion by your Honour Justice Keane about the causation situation yesterday with my learned friend.  The court’s findings are clear.  If not at Crown, Mr Kakavas would have gambled elsewhere, as he did during 2005 and 2006, and then after 17 August 2006.  He could at all times have avoided any losses by the simple expedient of choosing not to gamble, or to self‑exclude.  There was no evidence that but for gambling at Crown he would not have entered into gambling transactions elsewhere of a similar high‑roller category.  Nor was there any evidence that gambling transactions elsewhere would have been more beneficial or less risky.

In those circumstances, in our submission, a causal nexus is not made out either for the purposes of section 82 or section 87, both of which require that the loss be caused by the contravening conduct.  An indication to that end is the Court of Appeal decision in England, Calvert v William Hill Credit (2009) 2 WLR 1065. I will not go through the case, but there the court concluded that the losses would have been suffered elsewhere in any event, and so no causal nexus was made out, at paragraphs 47 and 48.

On the alternative claim for equitable damages there is, as this Court has said, no equitable bypass of the need to establish causation.  The same question arises:  but for the alleged default in duty, would the same loss have been incurred?  The alleged default in duty is that we should have stopped him at the front door.  Had we stopped him at the front door, the findings of fact are that he would have gambled and made some losses elsewhere.

GAGELER J:   Is this causation point covered in your written submissions?

MR YOUNG:   Very briefly at the end, your Honour.  It is the last proposition in our propositions, and it is cross‑referenced – it is at paragraphs 93 and 94 of the written submissions.

GAGELER J:   Thank you.

The only point I want to make about equitable damages is that equity awards damages as at the date of judgment with the full benefit of hindsight.  So one, at the point of judgment, looks back and says, “Knowing all we know, would the same losses have been suffered elsewhere?”  In our submission, the conclusion follows from his Honour’s findings that yes, they would and therefore causation was not made out.  Unless there is something further I can assist the Court with, those are our submissions.

FRENCH CJ:   Thank you, Mr Young.  Yes, Mr Myers.

MR MYERS:   There are a few matters to deal with, but I will be as succinct as possible and try not to treat them as a grab bag that does not have any particular connection one thing with another.  As to causation and damages, I do not want to add anything to our written submissions, which are paragraph 19 of the reply.

On the question of illegality, working backwards, I wish to add just a few things to our written submissions at paragraphs 15 to 18 of the reply.  They may be stated quite succinctly, I think.  If your Honours have the Casino Control Act, you will see in section 6(1):

Subject to this Act and the Gambling Regulation Act 2003, the conduct and playing of a game . . . is lawful when the game is conducted . . . in a casino by or on behalf of the casino operator.

So it makes lawful the baccarat.  Section 78B proceeds on the assumption that the contract that is formed by the wager is a lawful contract, because it says in (2):

If a person to whom this section applies enters or remains in a casino in contravention of this Act, all winnings . . . paid or payable to the person . . . 

(a)      are forfeited -

Now, winnings can only be paid or payable if there is a valid wagering contract, so the contract is certainly not made illegal.  Section 78B stands in contrast with section 79 which provides that certain persons, authorised persons they are called, who are associated with the conduct of the casino “must not gamble or bet”, so their conduct may be illegal, the conduct of the Mr Kakavas is not made illegal and we say for that reason, and for the other reasons that are advanced in our written submissions, the point that our friend has made is unfounded.

We also say - and I can be chastised for saying that this is irrelevant – they sued for the million dollars that was owing on 17 August and got judgment for it.  If it was so illegal, they would not have succeeded in that claim.  Now, we have not appealed in these proceedings, but the fact is that they got judgment off their counter‑claim for a million dollars in what they now say was illegal.  Could I ask your Honours to just consider again for a moment what was said by Justice Mason in Amadio at pages 467?  This is the passage to which my friend applied an exegesis of great subtlety, an invention.  The difficulty with it, we say, or a difficulty with it appears from the last words on page 467 when Justice Mason is dealing with the facts.  He says:

The knowledge of Mr. Virgo was the knowledge of the bank.  Whether we treat Mr. Virgo as having knowledge of the possibility already discussed or as having knowledge of facts which would raise that possibility in the mind of any reasonable person the inevitable conclusion is that the bank was guilty of unconscionable conduct by entering into the transaction without disclosing such facts as may have enabled the respondents to form a judgment for themselves and without ensuring that they obtained independent advice.

So the way that the generalised observation that my friend analysed was actually applied by the judge is, we say, inconsistent with the analysis that he engaged in.  My learned friend made some observations about the gaming bank and particularly he referred to the position of Mr Horman.  Would your Honours be good enough to go to page 1575 of the appeal book in volume 4?  This is where Mr Horman gives evidence about the so‑called 25 million gambling bank.  If we can go to the middle of the page it is put to him that no note has been made of the 25 million statement.  At line 20:

You made no note whatsoever of that mention of $25 million?---Not that I recall, no.

You yourself would not have placed any reliance upon an assertion of that kind by Mr Kakavas, that he had $25 million to gamble, would you?---I wouldn’t necessarily have believed or accepted that it was 100 per cent accurate.

You are smiling, aren’t you?---Yes, I am.

Because you regarded him as a con man, didn’t you?---I did and do.

Then Mr Horman was asked about a note that he prepared, which is not in the court book and I do not need to take your Honours to it, in relation to the conversation.  If your Honours look at page 1576 at line 22:

Would you look at page 483 of the court book.  Is that the email to which you refer?---It is, sir, yes.

You refer to Mr Kakavas as “our friend”?---Yes.

This is a reference to the conversation -

Why did you refer to him as your friend?---It’s why I put it in inverted commas.

It was ironic, wasn’t it?---I’m sorry, I don’t understand your question, sir.

You didn’t mean to convey that he was really your friend or Mr Williams’ friend, did you?---It’s – I didn’t mean to relay it in relation to myself and that’s why I put it in inverted commas.

You were contemptuous of Mr Kakavas, weren’t you?---I think it’s probably fair to say yes.

But throughout, you maintained the appearance of friendliness so as to better serve the interests of Crown?‑‑‑Correct.

So that is the extent of Mr Horman’s belief in the gambling bank.  Your Honours, could I go back to this morning and the matter of a power to exclude?  My learned friend said there was no evidence.  I think it was in the context of the experts – no expert evidence regarding the effect of the power to exclude.  He was mistaken in that because the expert whom Crown briefed and called, Dr Allcock, at appeal book 2321 was asked a question that no other expert was asked - that is question 9B and he did deal with that.  I do not want to read it but he said that the power to exclude is a sort of curate’s egg.  It may or may not, in the circumstances, be of any significance. 

Mr Blaszczynski also in paragraph 56, that is appeal book 2313, and this has already been adverted to by your Honours in argument, really touched upon this power to exclude.  We deal with the power to exclude in paragraph 26 of our written submissions and I just want to remind your Honours of that and in our reply submissions in paragraph 5.  We rely in particular – no, I withdraw that. 

I am dealing with the power to exclude and in paragraph 26 of our written submissions and paragraph 5 of our reply submissions, we point out and this is a matter we respectfully say that your Honours must consider in relation to the power to exclude, that contact was initiated with Mr Kakavas by Crown.  There is no doubt about that.  They cast a lure to him.  He had not been in contact with the casino since 2001 and they contacted him when they found he was losing a lot of money at Las Vegas.  We rely for establishing that initiation of contact on the facts referred to in paragraphs 6(q) to 6(t) of our written submissions.

The question about whether Mr Kakavas could be taken at his word when he said “Look, I am cured” - one of the indicia with this condition of pathological gambling – it is No 7 – is lying to family, friends and therapists.  The idea that one approaches the person who is inherently unreliable to get his word that he is safe to bring back – if that is the right way of putting it – is incorrect.  The reason that a report was sought from a psychologist or a psychiatrist – and addressing your Honour Justice Keane’s question to my learned friend – is evidently because you could not rely upon what Kakavas said.  Why else would you want an independent professional assessment of him?

The way in which the learned trial judge dealt with the question of the experts’ evidence has been debated and I do not want to re‑plough that ground except to remind your Honours that there are two things in particular.  The first is that the learned trial judge certainly, in our respectful submission, took a different approach to the law.  He rejected the approach that Justice Mason proposed and he said that one looks to see whether there is an equality of bargaining power and, in doing so, the main indication, the casino has got its gaming tables and he has got his custom and so they meet as equals in bargaining.  That is not the correct approach. 

The second matter, and it touches upon what your Honour Justice Kiefel said this morning, I think your Honour referred to paragraph 441 of the reasons for decision, and there the learned trial judge shows the other reason why he was not concerned about the expert’s opinions, and it is that he had concluded that Crown did not know, and perhaps was not put on notice, of the disability that he had.  In assessing the expert evidence, we ask the Court to remember that two of the experts, Dr Allcock and Mr Coman, were called by, and their evidence was tendered by, Crown, and this morning I think I detected a slight move away from whether that evidence could be relied upon.

One matter further from this morning, my learned friend made some observations about betting at the maximum level, the $300,000 per hand when Mr Kakavas could get it.  Now, Mr Kakavas was permitted the exceptional right to bet at 300,000 a hand on those occasions that I mentioned yesterday.  But Crown said, “You can only bet at that level if you give up your right to a rebate of losses”.  Now, if ever there was an irrational decision that must have been it.  Mr Kakavas agreed to that, as appears from paragraph 312 at appeal book 144, and I do not want to read it.  Afterwards, Mr Kakavas repented of that and said that he was very upset that he had lost his rebate and the 300,000 per hand was taken away and he was given a different sort of rebate.

Yesterday, my learned friend said right at the beginning that we did not put a case of constructive knowledge.  That is incorrect.  Indeed, it appears from paragraph 571 of his Honour’s reasons that he analyses that.  It also appears from a discussion which is in the appeal book at page 990, line 40, through to 994 and, although his Honour’s ruling on the matter is not reported, the ruling was in favour of the appellant.  In that discussion my learned friend, Mr Young, who must have forgotten about it, contended that there was no case of constructive knowledge and certain questions could not be asked, and the judge ruled against him.

Furthermore, and I am sorry to burden the Court in this way but we must do so in the circumstances, may we hand forward our written submissions at the trial which show that the issue of knowledge was put, not only as actual knowledge but also as constructive knowledge.  Furthermore, we put a case of passive acceptance of benefit as being sufficient – another matter that our learned friend said we did not raise – and, in fact, his Honour in his reasons deals with the passive acceptance argument at paragraphs 438, 431 and 525 of his reasons for decision. 

Concerning the fact that Mr Kakavas stopped gambling on some occasions, he gave evidence that he needed time to build up his gaming bank from time to time.  That is found at appeal book page 387 at line 24 and following.  At appeal book 457 Mr Kakavas points out in his evidence how he used the commissions also as a source of funds to gamble. 

My learned friend said yesterday that there were only three occasions on which Mr Kakavas went beyond his front money in gaming.  Now, this

is an indication that the gambler is going beyond what the gambler intended to gamble when he comes to the casino and, indeed, perhaps in many cases going beyond what he is able to find in ready cash.  A quick look at the information that is contained in the judgment disclosed at least seven occasions where Mr Kakavas went beyond the front money that he took, and I will just mention the dates because they are all set out according to dates, and it is very easy to identify what has happened.  1 July 2005 – that was the ANZ and going and getting money at the bank on Saturday – 4 October 2005, 6 March 2006, 27 April 2006, 3 and 4 May 2006, 24 and 25 May 2006 and 31 May 2006.  One should add, no doubt, an eighth occasion because the day that he finished gambling he left with a debt of a million dollars for credit that had been extended to him in connection with that gambling episode.  They are the matters that I wish to refer to by way of reply.

FRENCH CJ:   Yes, thank you, Mr Myers.

MR MYERS:   Thank you, your Honours.

FRENCH CJ:   The Court will reserve its decision.  The Court adjourns until 10.15 am, Tuesday, 9 April.

AT 12.39 PM THE MATTER WAS ADJOURNED