Kakavas v Crown Melbourne Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

MAJOR TORTS LIST

No. S CI 2007 04964

HARRY KAKAVAS	Plaintiff
v
CROWN MELBOURNE LIMITED (ACN 006 973 262), JOHN WILLIAMS and ROWEN CRAIGIE	Defendants

- and-

CROWN MELBOURNE LIMITED (ACN 006 973 262)	Plaintiff by Counterclaim
v
HARRY KAKAVAS	Defendant by Counterclaim

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JUDGE:	HARPER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	18-21, 25-28 MAY 2009, 1-5, 9-11, 15-19, 22-24 JUNE, 17-19 AUGUST 2009
DATE OF JUDGMENT:	8 DECEMBER 2009
CASE MAY BE CITED AS:	KAKAVAS v CROWN MELBOURNE LTD & ORS
MEDIUM NEUTRAL CITATION:	[2009] VSC 559

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EQUITY – Unconscionable conduct – Casino sued by a VIP gambler – Whether gambler subject to a special disability – Pathological or problem gambling - Casino’s knowledge of any disability – Whether gambler’s past diagnosis as a pathological gambler still applicable at the relevant time - Plaintiff’s conduct, supported by expert opinion, in representing he had overcome his gambling problem – Ability to self-exclude - Whether unequal bargaining position between the parties – Whether a scheme to lure - Plaintiff’s conduct in negotiating favourable terms – Effect of inducements – Alleged concealment of breach of Casino Control Act 1991 - Whether plaintiff demonstrated an ability to make decisions in his own best interests and to control his impulse to gamble – Effect of interstate exclusion order – Forfeiture of winnings – Attribution of knowledge - Blomley v Ryan (1956) 99 CLR 362 and Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 applied - Reynolds v Katoomba RSL Services Club Ltd (2001) 53 NSWLR 43 adopted - Fightvision Pty Ltd v Onisforou & ors (1999) 47 NSWLR 473 considered - Casino Control Act 1991, ss. 68, 75, 77, 78, 78A and 78B – Trade Practices Act 1974 (Cth), s. 51AA.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff/Defendant by Counterclaim	Mr A.J. Myers QC with Mr L. Glick SC and Mr P. Zappia	Strongman & Crouch
For the Defendants/Plaintiff by Counterclaim	Mr N.J. Young QC with Mr N. Hopkins	Minter Ellison

Table of Contents

Judgment Summary

Introduction

The pleadings

The decade of the 1990’s

Plaintiff’s Self Exclusion from Crown and Reports of Mr Watson-Munro

Reports of Dr Darmody

Reports of Mr Healey

The Plaintiff’s County Court Plea

Revocation of Crown Self Exclusion Order

The Plaintiff’s Applications to Revoke the WOL

The Jupiters Casino Exclusion

The Star City Exclusion

Mr McHarg’s Intervention

The period between 2001 and 2004

The Plaintiff’s Gambling at Interstate Casinos

Burswood Casino
Sky City Casino, Adelaide
Jupiters Casino

Plaintiff’s Las Vegas Gambling

Plaintiff’s Contact With Crown Officers

Meeting in 2003 with Mr Ratnam

Revocation of Withdrawal of Licence 2004

The Plaintiff’s Financial Standing as a Factor in Crown’s Position

Meeting of “Persons of Interest Committee”

Reconnecting with the Plaintiff

Letter Requesting Revocation of WOL & Brooks Report

Restoration of the Licence to Enter and Remain

Plaintiff’s Visit in January 2005

Silent Bookings

Early Negotiations

Plaintiff’s Gambling in Las Vegas 2005

The Nature of High Stakes Baccarat

Loss Rebate Program v Commission on Turnover Program

Crown’s Program for Problem Gamblers

The Plaintiff’s Gambling Visits to Crown

Visit to Crown Casino 24 June 2005 (Program 1)

Visit to Crown Casino 1 to 3 July 2005 (Programs 2 & 3)

Visit to Crown Casino 1 September 2005 (Program 4)

Visit to Crown Casino 8 September 2005 (Program 5)

Visit to Crown Casino 9 September 2005 (Program 6)

Visit to Crown Casino 12 September 2005 (Program 7)

Visit to Crown Casino 16 September 2005 (Program 8)

Visit to Crown Casino 4 & 5 October 2005 (Program 9)

Plaintiff’s Break From Gambling at Crown – October 2005 to March 2006

Visit to Crown Casino 6, 7 & 10 March 2006 (Program 10)

Visit to Crown Casino 11 March 2006 (Program 11)

Visit to Crown Casino 12 March 2006 (Programs 12 & 13)

Visit to Crown Casino 13 March 2006 (Programs 14 & 15)

Visit to Crown Casino 17 to 19 March 2006 (Program 16)

Visit to Crown Casino 30 March to 3 April 2006 (Program 17)

Visit to Crown Casino 13 April 2006 (Program 18)

Visit to Crown Casino 27 April 2006 (Program 19)

Visit to Crown Casino 3 to 5 May 2006 (Program 20)

Visit to Crown Casino 11 and 12 May 2006 (Program 21)

Visit to Crown Casino 18 May 2006 (Program 22)

Visit to Crown Casino 24 to 26 May 2006 (Program 23)

Visit to Crown Casino 31 May 2006 (Program 24)

Visit to Crown Casino 6 July 2006 (Program 25)

Visit to Crown Casino 11 & 12 July 2006 (Program 26)

Visit to Crown Casino 19 July 2006 (Program 27)

Visit to Crown Casino 5 August 2006 (Program 28)

Visit to Crown Casino 11 August 2006 (Program 29)

Visit to Crown Casino 17 August 2006 (Program 30)

The Plaintiff’s Gambling Activities After 17 August 2006

Is the Plaintiff Under A Disability?

The Legal Principles

Relevance of Expert Evidence on Whether the Plaintiff is Under a Disability

Crown’s Knowledge of Any Special Disability

The Aldridge Admission

Knowledge of the Plaintiff’s Background

Horman’s Statement
Early Debt Problems
Esanda Fraud
Referral to Crown Assistance Program
Self-Exclusion Orders
The Plaintiff’s Gambling in Las Vegas

Revocation of the WOL

Crown Concern About a Gambling Problem
The Psychologist’s Report Requirement
Knowledge of Mr Healey’s Position
The Janine Brooks Report
Is Wilful Ignorance an Issue?

The Plaintiff’s Gambling Behaviour at Crown

The Plaintiff as a Recreational Gambler
The Gaming Bank Defence

The Interstate Exclusion Order (“IEO”)

Exploitation of Any Special Disability

Initiating Contact and the Scheme to Lure

Inducements

The Jet
Accommodation, Food, Beverages and Limousine Services
Lucky Money
Provision of Credit
High Betting Limits
Rebates and Commissions

Allegations Crown Concealed Mr Kakavas’ Gambling

Southbank Investments
The Use of “Harry Kay”
The $345,000 Cheque to PBL

The $450,000 Special Commission Arrangement

Irregularities in Advancing Chips

The Plaintiff’s Ability to Exercise Control

Accessorial Liability and Defence of Illegality

Conclusion

HIS HONOUR:

Judgment Summary

The plaintiff, Harry Kakavas, was and is a problem gambler. Indeed, a diagnosis which I accept has him as a pathological gambler; and I also find that the first defendant, Crown Melbourne Ltd (“Crown”) cannot divorce itself of some knowledge of his condition. Within weeks of the opening of the Casino in Melbourne on 30 June 1994, Crown had enrolled him as a patron. Less than five months later, however, on 29 November 1994, Crown had to write to him about bounced cheques totalling $47,500. He says - and I accept - that, during the negotiations that followed, he told Crown about his gambling problem. Shortly before that, on 10 November 1994, he had been interviewed by police and charged with defrauding a finance company, Esanda Finance Corporation Ltd, of $286,000. Crown came to know about that too, and to know also that he attributed his criminal conduct to a gambling addiction.

Crown was nevertheless sceptical. It believed that, although his love of a bet may have swayed Mr Kakavas’ judgment at times, even to the point of criminality, his elevation of it to the status of an addiction was a mere pitch, calculated to gain the sympathy of the judge who sentenced him for the Esanda fraud. Nevertheless it was at Crown’s suggestion, or at the least with Crown’s active acquiescence that, on 8 November 1995, a year after being charged, Mr Kakavas took out a self-exclusion order. This is a simple process made available by the Casino Control Act 1991 by which patrons who wish to avoid the temptation to gamble may ban themselves from entering or gambling at a casino.

Crown was involved with Mr Kakavas and his gambling problem in other ways too. In July 1996, he became a patient of Dr J P Darmody, a psychologist nominated by Crown as specialising in the treatment of problem gamblers. Crown became aware of the patient/consultant relationship. Crown was involved, too, when on 23 January 1998, Mr Kakavas came up for sentence for defrauding the financier. But, consistently with its scepticism, Crown in a report prepared for the sentencing judge referred to Mr Kakavas’ gambling only as something for which he had an “inclination”.

Following his sentence, Mr Kakavas was imprisoned for four months. Almost immediately upon his release, he applied in writing to Crown to have his self-exclusion order revoked. By signing the form of application, he agreed (among other things) that he had not been encouraged to apply for revocation, that he had given the matter careful consideration, and that he would contact Crown immediately if he had any concern about its consequences. He put himself forward as a man untroubled by any gambling problems. And, as the evidence clearly shows, he continued to present to Crown in this way.

The application to resume gambling at Crown was supported by an expert opinion. Mr Timothy Watson-Munro, another of the psychologists who had treated Mr Kakavas, wrote to Crown on 3 June 1998. That letter stated, in effect, that the plaintiff had made so much progress in overcoming the gambling problems from which he had previously suffered that “he now feels … that he now has both the insight and requisite behavioural skills to maintain his involvement at the Casino at no more than that of a recreational gambler.” Moreover, as Mr Watson-Munro reported, he had taken Mr Kakavas carefully through the form of application to revoke the self exclusion order. The result, in the psychologist’s opinion, was that his client had “a clear understanding of the relevant matters in that document and attendant to this, his duties and obligations to the Casino”. Crown was entitled to accept this as true – which, I find, it did. It follows, then, that Crown was also entitled to act on Mr Kakavas’ “authorisation” and “direction” (to use the terminology of the form of application) to revoke that order. This it did by letter dated 18 June 1998. On the same day, however, it told him that his licence to enter or remain on any part of Crown premises, whether the Casino or the Crown Towers Hotel or anywhere else, had been withdrawn.

Crown contends that its withdrawal of Mr Kakavas’ licence to enter its premises had nothing to do with any concern that he was a problem gambler. According to Crown, that was not a consideration. Rather, the withdrawal of licence had everything to do with the fact that Mr Kakavas had by then been charged with another serious offence – armed robbery. If indeed this crime had been committed, its victim was both a tenant of Crown and a high roller patron of the Casino. In any event, the charge against Mr Kakavas was dismissed at the subsequent committal proceeding, and nothing further has come of it. As at June 1998, however, Crown had reason to fear that the alleged victim and one of the alleged perpetrators might meet on its premises. I find, therefore, that the withdrawal of licence was warranted. Despite Mr Kakavas’ attempts, which he vigorously pursued until 2001, to have his licence restored, Crown did not finally give it back until January 2005. This was some five months before his return to the Casino as a patron – a return during which, over the following 14 months or so, Mr Kakavas turned over $1.479 billion (sic).

Mr Kakavas did more, in the period between June 1998 and the ending of his relationship with the Casino in August 2006, than merely present himself to Crown as a man whose gambling problems had been overcome. From about the year 2000 he also held himself out to the world as a very successful Gold Coast businessman who, in the years following his concentration on property development in Queensland, had managed seamlessly to combine the roles of real estate salesman and recreational gambler. And this picture had more than an element of truth. Admittedly, he had during this period self excluded from a number of casinos, and the police had intervened to exclude him from the Star City Casino in Sydney. But he attributed his self-exclusion from Burswood Casino in Perth to a disagreement with staff rather than to a gambling problem, and – it seems - did not broadcast the other exclusions. Crown nevertheless knew about at least some of them.

Despite his agreement to contact Crown with any concerns he might have about the revocation of his self-exclusion order, Mr Kakavas did not at any time before he recommenced gambling at the Casino suggest, or even hint, to Crown that he had any gambling problems. Indeed, for about three years following June 1998, he applied repeatedly to resume his patronage of the Casino; and when that failed, he applied for permission to enter the remaining areas within the Crown complex. This was at a time when he had independent reasons for wanting such permission. Auctions of real estate were conducted there, and Mr Kakavas - who was then a real estate consultant - had a commercial interest in attending them. Until January 2005, his requests were denied.

By the end of 2004, however, Crown’s opposition to Mr Kakavas’ attempts to return was wavering. Indeed, with the possible exception of one or two Crown executives, Crown then took the view that his return was to be encouraged. He was, to Crown’s knowledge, a high roller at other casinos, including casinos in Las Vegas. It also knew, or at least believed, that he was wealthy. Crown therefore wanted his business.

It is this set of circumstances which now forms the core of the plaintiff’s case. He maintains that, when his wealth and his journeys to Las Vegas came to Crown’s attention, its previous indifference towards him transmogrified into a desire to exploit what it remembered as his addiction for the gaming tables. Crown, he asserts, therefore determined to prey upon that addiction by enticing him to return to Melbourne for as long and as often as it took for his fortune to fall into Crown’s lap.

I do not accept this account. Although the plaintiff contends otherwise, Crown was in no position to prey upon him. Despite his attempts to persuade me to the opposite conclusion, he was not a person so helplessly entrapped by his love of cards that he found it impossible to resist Crown’s attentions. On the contrary, as Crown was well aware, many other casinos were happy to accommodate Mr Kakavas and his money. Crown knew that, unless it offered him terms that matched those of the opposition, he would without a qualm ditch Crown for another willing suitor. Moreover, he had another and particularly potent, weapon. He could self-exclude. This, necessarily, gave Mr Kakavas a lot with which to bargain. He seized it.

It is true, and I so find, that Crown had in mind its earlier assessment of Mr Kakavas as a sometime problem gambler. It accordingly prepared a letter in which it had him disavowing any continuation of those problems. It asked him to sign that letter. He willingly did so. Crown also required that he obtain an assessment from a psychologist or a psychiatrist to the effect that he was not a problem gambler. Mr Kakavas, albeit grudgingly, acceded to this. He saw a psychologist (Ms Janine Brooks) on the Gold Coast, where he lived. She was unfamiliar with him. Although she was prepared to write a report about her consultation with him, she therefore declined to make a professional assessment. Much was made of this by counsel for Mr Kakavas; and it is the fact that, in the result, Crown allowed Mr Kakavas to resume his patronage of its Casino without first being furnished with any kind of expert assessment about his status as a problem gambler. On the other hand, the report prepared by Ms Brooks was 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. That is what he told her. He was perfectly capable of disclosing to her any vulnerability about which he was concerned. He did not.

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 should have realised that he was a fraud. Indeed, it should have realised even more than that. It should have known – it did know - that he was living a lie. In particular, it should have known that, whereas he had demonstrated in the past a capacity to self-exclude, that capacity had somehow now completely deserted him.

Mr Kakavas contends that Crown concocted a predatory scheme with long-term implications. He does not allege that Crown sought to entice him into an occasional gambling foray. Such an allegation could not have been sustained. He would not have been especially attractive to Crown as a once in a while patron, because the odds were that the Casino would not benefit much from such patronage. Rather, Mr Kakavas’ case is that Crown had a purely predatory purpose which it intended would be played out over the long term. It was to entrap him into becoming a regular visitor for as long as it took for him to gamble his fortune out of his hands and into the coffers of Crown. Then a triumphant Casino would tell him that, much as it valued his custom, it would be best if he put some distance between his empty wallet and a seat around its tables.

It is therefore not the plaintiff’s case that he, a person with limited financial capacity, was inveigled into a few gambling transactions with Crown. Rather, it is his case that he, being helpless to resist the lure of the gambling salon – indeed, being so helpless that he could not even take the straightforward path to self-exclusion - was enticed by Crown, and against his better judgment, to become a regular, long-term patron of the Casino, and to gamble there for as long as it took to exhaust his admittedly extensive funds.

This proposition cannot survive close examination. Crown was acutely aware, when contact was made with Mr Kakavas in late 2004, that in any negotiations which followed, he might not accept the conditions Crown wished to impose upon him; and that, if he came to that view, he would not recommence, or would withdraw, his patronage. He had available to him, and he was fully aware of, his right to self-exclude. And he, being fully alive to his negotiating strength, used the implied threat of the withdrawal of his patronage as a legitimate, but effective, negotiating weapon. There was none of the inequality of bargaining position about which Deane J spoke in Commercial Bank of Australia Ltd v Amadio[1], and which is of the essence of a claim that a person with a special disadvantage or disability has been unconscientiously exploited.
[1](1983) 151 CLR 447 at 474.

This case, then, depends upon the plaintiff being able to prove on the balance of probabilities that he could not resist the inducements deliberately and unconscientiously dangled before him by Crown. Captured by his pathological gambling addiction, he could not resist Crown’s initial or any subsequent approach, even though he knew that in the self-exclusion process he had readily to hand a means of avoiding the consequences of his addiction.

The facts tell a different story. Between June 2005 and mid-August 2006, Mr Kakavas never suggested to Crown that he was other than financially capable of maintaining his high roller status, and keen to do so. Nor did he ever attempt to employ the self-exclusion mechanism. He contends that he was so much in the grip of his addiction that he was incapable of protecting himself even by this simple means. Yet he was quite capable of negotiating hard with Crown about the terms of his patronage, and of declining – not for a week or even a fortnight, but for the whole period between the end of January 2005 and the following 24 June - to visit the Casino when Crown refused to meet those terms. Mr Kakavas thus demonstrated a capacity to participate in the cut and thrust of offer and counter-offer, to reject certain Crown proposals and accept others, and to win terms more consonant with his wishes but which Crown was reluctant to concede. If he had that capacity, then it must follow that he also had the capacity to self-exclude. And if he could self-exclude, then Crown could not be said to have taken unconscientious advantage of him when seeking his patronage.

That there was relative equality of bargaining power is apparent from the history of the relationship between Mr Kakavas and Crown. Mr Kakavas had as his bargaining chip the implied threat that he would cease his patronage of the Casino if Crown failed to give him what he wanted. Crown negotiated on this basis. It never believed that it had Mr Kakavas in its power, so that his patronage of the Casino could be secured by an enticement or two. Because it wanted his custom, but knew that he could - and feared the he might - remove it, Crown was prepared to go some distance to reach terms acceptable to him.

Another difficulty for the plaintiff is that he has produced no evidence at all of any conspiracy by Crown to exploit him in the way about which he complains. He can point to no collective, or corporate, or even individual, decision to that effect. It is true that, in part, he relies on a valid proposition: that he had a gambling problem, and that Crown once knew about it. But his case also depends upon the invalid contention that, when he and Crown made contact in November 2004, Crown’s motive was to exploit unconscientiously his disability to the point that he would become, and then continue as, a patron until his funds were exhausted, with Crown retaining his losses. The evidence cannot sustain the inference of corporate decision-making upon which his case relies.

Crown certainly wanted his custom. People like him fed its business. Crown executives, including the individual defendants, were involved in planning for his return as a high-rolling patron. But Crown had no conception of Mr Kakavas as suffering from any kind of relevant disadvantage. There was, indeed, no inequality of bargaining power, and no exploitation of, or any plan to exploit, any special disability from which Mr Kakavas might have been suffering.

Mr Kakavas was, at the end of 2004, legally disentitled from gambling at the Casino. There were two bases for that exclusion. The first was that his licence to enter the premises had been withdrawn by Crown in June 1998, and had not been restored. The second was that he had been excluded from the Star City Casino in September 2000 by order of the Chief Commissioner of Police of NSW, or his delegate. Following an amendment to the Victorian gaming laws which came into effect on 19 June 2002,[2] persons who are excluded from an interstate casino by an order of the kind made by the Commissioner in 2000 (designated by the Casino Control Act 1991 as an “interstate exclusion order”) are automatically excluded from Victorian casinos as well.
[2]Gaming Legislation (Amendment) Act 2002.

There is another important consequence of an interstate exclusion order. It was introduced into the legislative scheme by the Gambling Regulation Act 2003. From 1 July 2004, any person who is the subject of such an order and who enters or remains in a casino, shall forfeit to the State all gaming winnings paid or payable to that person.[3]
[3]Casino Control Act 1991, s. 78B.

Neither Mr Kakavas nor Crown appreciated that he was caught by these amendments. This was an omission on the part of both, but more particularly Crown. It was one of a number of examples of the lack of appropriate substance in Crown’s protestations that it is a world leader in the promotion of responsible gambling (alternatively, if the claim is true, then other casinos leave even more to be desired).

Any casino that is serious about responsible gambling would ensure that it knew precisely who was and who was not subject to an interstate exclusion order. Crown knew enough about Mr Kakavas to know that gambling had presented problems for him in the past, and that he had been self-excluded from its own Casino. Indeed, it knew by no later than 5 November 2000 that the Star City exclusion order had been made. That, it is true, was before interstate exclusion orders had been invented; and when, on 19 June 2002, this species of exclusion entered the Victorian legislative scheme, no-one at Crown made the connection between that scheme and its effect on Mr Kakavas’ right to enter the Casino. This is not surprising, since he was not then a Crown patron. Nor was he a patron when, on 1 July two years later, his right to retain any winnings was removed. Nevertheless, Crown should have made appropriate enquiries preceding the restoration, in February 2005, of his licence to enter the premises. Had those enquiries been made, the Star City exclusion order would have been rediscovered.

The fact that Crown was seriously careless does not, however, constitute a basis for any of the claims made by Mr Kakavas. Rather, he contends that Crown acted unconscientiously in allowing – indeed, encouraging – him to gamble at the Casino when it knew or ought to have known that he would be required to forfeit any winnings. Had he known the true position, he would of course have declined to have anything to do with the Casino. It would be madness to gamble when you could lose but could not win. He suggests that Crown was keenly aware of this, but failed to warn him for the very reason that Crown wanted his patronage.

This contention fails in the face of the evidence that Crown did not at any time bring to its collective mind the connection between Mr Kakavas and the interstate exclusion order which had been made in September 2000. In the absence of this connection, Crown cannot be guilty of taking unconscientious advantage of any disability from which Mr Kakavas suffered as a result of his ignorance of the effect in Victoria of the NSW order. In any event, Mr Kakavas did not forfeit his winnings. Consistently with its failure to appreciate the effect of the interstate exclusion order, Crown not only allowed Mr Kakavas into the Casino, but credited him with everything he won. He forfeited nothing. He therefore suffered no loss arising from the carelessness of Crown.

For these reasons, when read together with those set out in the balance of this judgment, Mr Kakavas’ claim must be dismissed. Mr Kakavas having admitted that, if his claim should fail, he is indebted to Crown in the sum of $1,000,000, there must be judgment on Crown’s counterclaim in that sum.

Out of an abundance of caution, I conclude this summary by stressing not only that it must be read with the balance of the judgment, but also that this litigation is concerned with a point of equitable principle as that principle is applied by the courts. It is not concerned with matters properly within the political sphere - such as setting general policies of responsible gaming. For very good reason, these are not within the courts’ field of responsibility or power.

Nor is a general examination of Crown’s conduct within the scope of the present litigation. Crown does present itself as a world leader in responsible gambling. Its relationship with Mr Kakavas does not give one any confidence that it deserves that status. On the other hand, his is one case among many. The Court therefore has no warrant to come to any general conclusions on this topic.

Introduction

The plaintiff, Harry Kakavas, was once among the elite of Australian patrons of gambling casinos. He was the highest of this country’s high rollers. And he spread his wings. His gambling took him from the Gold Coast not only to Melbourne, Sydney, Brisbane, Adelaide and Perth, but also to Las Vegas, Hong Kong, Macau and the Bahamas.

Very large amounts of money were necessarily involved: over a 16 month period he turned over $1.479 billion in Melbourne alone. He enjoyed some spectacular wins. In the end, however, he lost all he won, and more. Now he claims that some of those losses should be repaid by the defendants. The first of these is Crown Melbourne Limited, which operates a casino (“the Casino”) in Melbourne. The second is John Williams, one of the casino’s senior executives and, between 2 September 2003 and 16 March 2007, its Chief Operating Officer - International. The third is Rowen Craigie, its Chief Operating Officer between 1 April 2000 and 8 January 2002, and thereafter a director and, until 5 March 2007, its Chief Executive Officer.

$1.479 billion is a huge sum to pass through the hands of an individual person in the space of some 14 months. This is a point strongly made by Mr Kakavas. It demonstrates, he claims, the extent of his addiction. He also contends that the amounts he was wagering, together with the manner in which he engaged with his favoured game of baccarat and the betting with which it was and is associated, constituted an unmistakable sign, which Crown must have noticed, that it had on its hands a patron with a very serious gambling problem. Crown, he says, made the unavoidable observation. Having observed, Crown then came to the inescapable conclusion to which that observation necessarily gave rise; and having done so, resolved to exploit unconscientiously the disability thus revealed. And Crown actively took advantage of that disability to wring $20.5m. from Mr Kakavas. He contends that it should not now be permitted to retain those ill-gotten funds.

In these circumstances, I have devoted a large portion of this judgment to an analysis of Crown’s records of Mr Kakavas’ gaming activities at the Casino. One can through such an analysis gain an appreciation of the scale and speed of the plaintiff’s playing of baccarat and the betting associated with it. More importantly, one can thereby better evaluate Mr Kakavas’ claim that he was exploited.

The analysis to which I referred in the previous paragraph is preceded by an examination of the pleadings. This enables the reader to understand how each side pitched its case as the trial began, and to follow how that case maintained its connection with, or deviated from, the evidence subsequently called. I then outline the plaintiff’s history insofar as it is relevant to the issues raised by the pleadings, and consider other relevant matters. Following the analysis of Mr Kakavas’ behaviour at the gaming tables, I consider the evidence going to his status as a gambler and to the disability under which, as he alleges, he suffers. Crown’s knowledge of that disability and its extent is examined, as is the alleged exploitation of it, before final conclusions are drawn.

The pleadings

Mr Kakavas contends that he has been subjected to the unconscientious behaviour of all three defendants. More than that, he has succumbed to it. According to his second further amended statement of claim (“the statement of claim”) he has an uncontrollable and compulsive urge to gamble. He alleges, in paragraph 4 of the statement of claim, that in 1994 he told the Casino about this problem, and sought and obtained its “assistance, advice and counselling” about means by which he could avoid the temptation of resorting to its gaming tables. One of those to whom he turned – in about late 1994 - was William Horman, Crown’s General Manager, Community Affairs. Mr Horman told the plaintiff that all Australian casinos operated a self-exclusion scheme, by which patrons could apply for an order from the casino forbidding their entry.

The issue was, by October 1995, a particularly pertinent one. On 10 November the previous year, the plaintiff had been charged with obtaining a financial advantage by deception. He made a full confession, and had pleaded guilty to having defrauded Esanda Finance Corporation Ltd of the sum of $286,125.65. That money, the plaintiff asserted both to the authorities and in the particulars under paragraph 4(2) of his statement of claim, had been used for gambling; and the episode was evidence of his being in thrall to his passion for baccarat. In those circumstances, and with a prison term being a distinct possibility when Mr Kakavas came up for sentence, the obvious step was to self-exclude. Any plea in mitigation would seem hollow unless the plaintiff, before the plea was heard, had removed himself from the temptation to repeat the fraud.

It was against this background that, on or about 8 November 1995, Mr Kakavas voluntarily applied to Crown for a self-exclusion order prohibiting him from entering, or remaining in, the Casino. The application was successful (as it was bound to be). As is asserted by paragraph 5 of the statement of claim, it was followed by a self-exclusion order issued by Crown. It is not in contention that the order was issued on 8 November. It is also accepted by all parties that Mr Kakavas did not gamble at the Casino again until June 2005, a period of almost 10 years.

Although the plaintiff was charged in November 1994, there followed a very long delay before he was sentenced. A principal reason for this – one not pleaded, but revealed in the evidence - was a deterioration in the mental health of the plaintiff. It was not until 23 January 1998 that Mr Kakavas was sentenced to two years’ imprisonment, 20 months of which was suspended. He was released on 23 May 1998. On 3 June that year, he wrote to Crown with a request that his self-exclusion order be revoked. He pleads in his reply to Crown’s amended defence to the second further amended statement of claim that the application was made at the suggestion of Mr Horman.

The application was successful. It was, nevertheless, a Pyrrhic victory. On 19 June 1998, at the same time that Mr Kakavas was handed the documents that confirmed the revocation of the self-exclusion order, Crown served him with a notice that his licence to enter or remain on any part of Crown’s premises, including the Casino, had been withdrawn for an indefinite period.[4]
[4]Statement of claim, paragraph 6.

The facts surrounding the revocation of the self-exclusion order and the withdrawal of licence are not in dispute. Indeed, the plaintiff’s written application for revocation of his self-exclusion is a document upon which (in paragraph 6(b) of its defence) Crown relies. It contains an acknowledgement that Crown had not encouraged Mr Kakavas to make the application, and that he would contact Crown immediately if, at any time, he had any concern about his decision to have the self-exclusion order revoked, or about his use of Crown’s gaming facilities. It also releases Crown from any liability which may otherwise arise in connection with the revocation or the plaintiff’s use of Crown facilities.

Mr Kakavas does not, in his reply or otherwise, contest the allegations made by Crown about the wording of the application to revoke. Nor is there any challenge to the propositions, put in paragraph 6 of Crown’s defence, that the application was accompanied by an opinion in support provided by a consultant psychologist named Timothy Watson-Munro, and that, at the time the application was made, the plaintiff was facing a charge of armed robbery. In his reply, however, the plaintiff pleads – as was the fact - that this charge was dismissed at the conclusion of his committal proceeding in late 1998.

The statement of claim (by paragraph 8) then turns to September 2000. In that month, as the parties accept, the Chief Commissioner of Police of New South Wales, through a delegate, issued an order excluding the plaintiff from entering or remaining in the Star City Casino in Sydney. At that time, such an order had no impact on interstate casinos. On 19 June 2002, however, s. 12 of the Gaming Legislation (Amendment) Act2002 came into operation. It introduced into the Casino Control Act the concept of an “interstate exclusion order”, or “IEO”, into which category the New South Wales order of September 2000 squarely fell. By this means, Mr Kakavas became subject to an IEO, and also became thereby subject to the statutory regime applicable to it. Among other things, he was from 19 June 2002 (and remains) prohibited from entering or remaining in the Casino, and Crown was (and is) obliged to include his name in a constantly updated list of names of persons who are so prohibited. The prohibition remains in place until revoked by the person who imposed it. Until that time, no promotional material relating to the Casino may knowingly be sent or directed “by any means” to the excluded person.[5]
[5]Casino Control Act 1991, s. 78A(1).

Another effect of an IEO (or any other exclusion order) was pleaded by all parties - in paragraph 10(8) of the statement of claim, and paragraph 10(b) of each of the defences. It was also closely examined by both sides in submissions in this case. If, after 1 July 2004 (incorrectly said in the statement of claim to be 19 June 2002), a person gambles at a casino from which he or she is excluded then, by s. 78B(2) of the Act, all winnings paid or payable to that patron must be forfeited to the State (for payment into the Community Support Fund under the Gambling Regulation Act 2003).

Although the allegations of self-exclusion (made in paragraph 11 of the statement of claim) are not admitted, the plaintiff in fact (as I find) made an application to self-exclude from Jupiters Casino on the Gold Coast and from the Treasury Casino in Brisbane on 6 August 2000; from the Burswood Casino in Perth on 6 April 2001; and from the Sky City Casino in Adelaide on 7 September 2004. He was in each case successful, as he was bound to be.

According to the statement of claim, from about July 2004 Mr Kakavas has suffered from a psychiatric condition known as “pathological gambling”. This is said to be “characterised by a continuous impairment of his ability to control the frequency with which he gambled and the amount of money that he wagered.”[6] It is also alleged 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.” While not admitting the plaintiff’s condition, the defendants do accept that, after July 2004, Crown was “aware that there was literature identifying a condition described as pathological gambling”.[7] The individual defendants make a like, but not identical, admission.
[6]Statement of claim, paragraph 12.
[7]Defence and counterclaim, paragraph 14.

Paragraph 15 of the statement of claim makes allegations about the width and breadth of the defendants’ knowledge. It covered, according to the plaintiff, all the pleaded facts going to the plaintiff’s gambling history with Crown, his relationships with senior Crown officers, his self-exclusion from Crown and other casinos, and his exclusion from the Star City Casino – together with the legislatively-imposed consequences of the latter exclusion. The defendants, in response, admit knowledge only of the plaintiff’s patronage of the Casino, his self-exclusion and its revocation, and the withdrawal of his licence. In his defence, Mr Craigie answers the allegations made against him in paragraph 15A of the statement of claim, a paragraph directed specifically to him, by disavowing knowledge of any of the details of either the self exclusion or its revocation; and he adopts the same approach to the allegation that he knew about the withdrawal of licence. He also limits his admission about knowledge of the plaintiff’s patronage of Crown; he accepts no more than that he knew that it commenced “some time prior to 2004”.[8]
[8]The third defendant’s amended defence to the second further amended statement of claim, paragraph 15A.

By paragraph 16A, the statement of claim next alleges that, during the first half of 2004, the plaintiff lost “enormous” amounts of money while gambling recklessly and excessively in Las Vegas. This, according to the statement of claim, “was indicative of a person suffering from pathological gambling” with its consequent loss of ability to control the frequency, and the amounts, with which he gambled. The defendants admit that the plaintiff gambled at the place and during the period specified, but do not otherwise make any admissions to these allegations.

Details of the extent of the defendants’ knowledge about Las Vegas, about the plaintiff’s exploits there, and about his vulnerability as a pathological gambler, are the subject of paragraph 16 of the statement of claim. It is a long paragraph, and it makes many allegations. Among them is the charge that each of the defendants knew not only of the fact of the Las Vegas visits and their purpose, but also of the reckless and excessive gambling in which Mr Kakavas then indulged, and of the special disability – pathological gambling, with all its associated symptoms and behaviours – which was indicated by this reckless and excessive conduct. The defendants further knew that the plaintiff had previously sought Crown’s assistance in overcoming his problem gambling, had self-excluded as a means to that end, and as a result of his compulsion to gamble had defrauded Esanda. They knew that he “would be vulnerable to approaches by the defendants to recommence gambling at the Casino, and would be easily exploited into recommencing gambling at the Casino.”[9] They knew that he did not seek to have restored his right to enter the Casino. If he did return, he would, as the defendants knew, engage in extravagant gambling over an extended period. In particular they knew that, were he permitted to place bets as high as $300,000 per hand, the dam would burst; and money – his money, in “enormous amounts”[10] - would flow into the depths beyond, where Crown would be waiting to gather it in. In these circumstances, he was – again, as the defendants knew – unable to meet the requirements which applicants for revocation of self-exclusion orders must meet; in particular, that Crown be provided with a letter from a properly qualified expert to the effect that his gambling problems had been overcome.
[9]Statement of claim, paragraph 16(6).
[10]Statement of claim, paragraph 16(10).

Paragraph 16 then turns to the Star City exclusion. The defendants, it claims, knew about it. They also knew that, as a consequence of that exclusion and of the relevant legislative amendments, the plaintiff was not only prohibited from entering the Casino, but also that all his winnings there would be forfeited to the State.

Consistently with their position in relation to paragraph 16A of the statement of claim, the defendants admit none of this, except their knowledge of the Las Vegas gambling and except to the extent that relevant admissions have been made elsewhere in their pleadings. They likewise deny the allegations contained in paragraphs 17 and 18 of the statement of claim.

Those paragraphs are preceded by the heading “The scheme designed to lure the plaintiff back to the Casino”. Paragraph 17 alleges that, in or about late 2004, the defendants devised and gave effect to a scheme “to exploit and take advantage of the fact that the plaintiff suffered or may have suffered from pathological gambling … in order to induce [him] to recommence gambling at the Casino”. Crown, in its defence, seeks to meet this head-on. It alleges that, in or about late 2004, Mr Kakavas took the initiative by himself applying for re-admission.

It is not in dispute that such an application was made, and that it was accompanied by two letters. One was dated 9 December 2004 and signed by Mr Kakavas. It is set out in the particulars under paragraph 18 of the statement of claim. In it, Mr Kakavas expresses a wish to once again be permitted to enter the Crown precinct, states that he no longer has any problems with his gambling, and refers to “a letter from my psychiatrist/psychologist” which, it says, is “enclosed”.

In fact, no letter was enclosed. Nevertheless, a Gold Coast psychologist did provide a letter, albeit that she was not Mr Kakavas’ psychologist, and albeit that she never made any assessment of him. In a letter dated 23 December 2004 from a psychologist named Janine Brooks, Crown was told that the plaintiff presented to her on 20 December 2004. He sought an assessment but, since she had never seen him before, she declined to give one. She did, however, state that Mr Kakavas “explained that he was a compulsive gambler between the years of 1990 to 1998”. Since that time, he had turned his life around. The letter continued: “He states that he has conquered the gambling problem and if he ever had a relapse of this compulsion he would again self-exclude himself from the Casino”.

Both sides rely on this correspondence. The plaintiff contends that the 9 December letter was composed by Crown and presented to him for signature at Coolangatta airport. He signed it not because it was true, but because Crown had indicated to him that it was part of the necessary preliminaries for his return. And it was, as he alleges in paragraph 4 of his reply, prepared as part of the exploitative scheme described in paragraph 17 of the statement of claim. The letter of 23 December from Ms Brooks was forwarded by him to Crown because that too, having been obtained at the suggestion of Crown, was part of the process decreed by Crown to be necessary. Even so, its terms were not such as to support an application to be allowed to return to the Casino as a patron, and it therefore should not have been employed as if it did.

Crown, by contrast, puts the correspondence forward to bolster its assertion that, far from being unwilling, or even reluctant, to return to the Casino as a patron, Mr Kakavas asked Mr Horman to effect the revocation of Crown’s withdrawal of his licence, and used the letters in support of this approach. In its answer to the allegation in paragraph 18A that Crown knew of the deficiencies in Janine Brooks’ letter, Crown asserts that it was written to support the plaintiff’s application to revoke the withdrawal of his licence to enter the Casino, and obtained by him for that purpose. Otherwise, the defendants deny the allegations in that paragraph (which, as I note in passing, follows paragraph 18, whereas paragraph 16A precedes paragraph 16; and this explains the order in which the allegations they make are dealt with here).

I referred in paragraph [43] above to the fact that (by s. 78A of the Casino Control Act) a casino operator must not knowingly direct any promotional material to anyone subject to an exclusion order (which now includes an IEO). Paragraph 19 of the statement of claim alleges three separate breaches of this provision. One was constituted by an invitation to attend the 2005 Australian Men’s Open Tennis final. Crown responds with a denial; but neither the fact of the visit nor the fact that it was Crown which issued the invitation (whether on its own initiative or at the request of Mr Kakavas) was in dispute at the trial. I therefore take it that Crown simply denies the characterisation of the invitation as “promotional material”. It is not alleged that Mr Kakavas gambled when at the Casino on that occasion. On the contrary, the undisputed evidence is that he did not. Indeed, Mr Kakavas in his reply asserts that “Crown did not permit the plaintiff to gamble at the Casino until about 24 June 2005”.[11] He and friends of his were, however, not only provided with tickets to the tennis final, but also (or so he alleges) received complimentary accommodation, food and drink at the Casino, and the use of a limousine.
[11]Amended reply and defence to counterclaim, paragraph 4(2)(c).

The second of the three allegations of breach is pleaded by paragraph 19(2) of the statement of claim. It is there alleged that, during the visit to the Open, Mr Kakavas at the invitation of Crown and in breach of ss. 77 and 78 of the Casino Control Act, entered the Casino’s private gaming salons. These sections forbid a person the subject of an exclusion order from entering or remaining in a casino, and require Casino officers to remove such a person should he or she enter.

Each defendant denies each element of this (the second) allegation.

Crown also denies the third “promotional” allegation. It is made by paragraph 19(3), and is that, in breach of s. 68 of the Casino Control Act, lines of credit were - on specified dates - extended to the plaintiff. Then, by paragraph 20A, the plaintiff claims that, in order to induce him to continue to gamble at the Casino, Messrs Craigie and Williams approved an application made by him on 2 July 2005 for a cheque cashing facility, and subsequently approved his applications for changes to that facility.

Crown’s response to these allegations is elaborate, and is set out in paragraph 19(c) of its defence. It there pleads (in effect) that, pursuant to s. 68, it is entitled to establish a deposit account to which are credited deposits made by the patron in whose name the account is held. Crown is thereafter entitled to issue to the patron either money or gaming chip purchase vouchers not exceeding in value the amount in credit; and it may also issue such vouchers to the patron in exchange for a cheque of equivalent value. These entitlements were, on Mr Kakavas’ application, exercised in relation to him on a number of specified occasions.

One of these occasions was on 2 July 2005. The plaintiff then (according to paragraph 19(c)(iv) of Crown’s defence) made an application for a “cheque cashing or facility limit change”. This, on its acceptance by Crown, re-activated a cheque cashing facility which in 1994 had been established for Mr Kakavas. Having done that, Crown accepted a cheque from the plaintiff drawn in the sum of $345,000, and issued him with gaming vouchers to that value. On 4 July, after Mr Kakavas had “made a telegraphic transfer of funds to the first defendant”, Crown returned his $345,000 cheque.

The plaintiff in his reply and defence to counterclaim takes issue with this account. The story, as recounted in paragraph 10 of that pleading, is that on 1 July or thereabouts, he transferred $1m to Crown as the pool from which he intended to fund his gambling. It is known in the industry as “front money”. The immediate source of these funds was Mr Kakavas’ account with the Commonwealth Bank. A standard “Premium Player Agreement” was then made by him with Crown. It did not include the provision of a cheque cashing facility, the benefit of which Mr Kakavas therefore did not then have.

According to the reply and defence to counterclaim, with some added colour injected during the trial, the plaintiff had, by the morning of 2 July, lost both his front money and an additional $200,000 which Crown had furnished to him as a rebate on his losses. But Crown’s blood was up – or, as the plaintiff contends, it wanted Mr Kakavas to continue his run of bad luck. So Howard Aldridge, a Crown executive who at that time was standing in for John Williams, approached the plaintiff with a question: “How much money could he [the plaintiff] kick in to continue gambling?” Mr Kakavas replied that he could contribute $345,000. Mr Aldridge said that, if he made that contribution, which should be by bank cheque made payable to “PBL Finance”, Crown would add “the same amount as gambling credit”. This would give Mr Kakavas $690,00 with which to continue his gambling.

The reply goes on to allege that the plaintiff fell in with this plan. On that morning, 2 July 2005, the plaintiff handed to Crown a bank cheque made out as requested. He was then provided with gaming chip purchase vouchers and chips valued at $690,000. He subsequently did Crown the favour of losing the lot. Before the bank cheque was presented for payment, however, Mr Kakavas paid, by other means, the full amount of $690,000. The PBL cheque was for this reason returned to him.

The individual defendants do not plead to paragraphs 19(1) or 19(2) of the statement of claim. They do, however, respond to the allegation made in paragraph 20A that they approved Mr Kakavas’ application for a cheque cashing facility, and thereafter approved a series of financial transactions to which he was also a party. They each admit that they were among those Crown employees who between July 2005 and May 2006 were authorised to give such approval, and that they subsequently did so in accordance with Crown’s standard operating procedures (which, according to particulars supplied by all three defendants, had been approved by the Victorian Commission for Gambling Regulation or “VCGR”). Crown makes like admissions. All three defendants otherwise deny the allegations made in paragraph 20A.

Other inducements - in addition to the tickets to the Australian Open, the invitation to visit the private gaming salons, and the extension of credit - are alleged by paragraph 20 of the statement of claim to have been proffered to the plaintiff by Crown. They include the use of the Crown jet on approximately 30 occasions (including trips to Manila); receipt of boxes or carry bags of cash (on about 11 occasions, the amounts ranging from $30,000 to $50,000); and complimentary accommodation, food, drink, tickets to “events” (a soccer match in May 2006 between Australia and Greece is mentioned in the particulars), butler services and “limousine transportation”. The particulars also specify an arrangement pursuant to which Crown promised that for every $100,000,000 turned over by the plaintiff, up to $400,000,000, Crown would give Mr Kakavas $100,000.

Crown admits much of all this: the jet (14 – not 30 - occasions, plus two Manila flights and one internal Philippines journey); tickets to events; and food, beverages, limousine transport, accommodation and butler services. It admits, in addition, that cash was paid as alleged, although it explains those payments in terms of complimentary allowances to which Mr Kakavas was contractually entitled. The allegations made by paragraph 20 of the statement of claim are otherwise denied.

Harry Kakavas was, from September 2000, subject to an interstate exclusion order. From 19 June 2002, he was thereby, and by force of s. 77(3) of the Casino Control Act, forbidden to enter or remain in any casino. It is alleged by paragraph 21 of the statement of claim, and denied by paragraph 21 of the first defendant’s defence, that Crown nevertheless procured his entry into the (forbidden) territory of its Casino.

From the allegations in paragraphs 17-20 of the statement of claim, the plaintiff proceeds to an assertion that, induced by the conduct of Crown as described in those paragraphs, he recommenced gambling on about 24 June 2005 and continued to gamble at the casino until “about August 2006”.[12] Crown in response admits that the plaintiff gambled at the Casino between 24 June 2005 and 17 August 2006, but denies the inducement.
[12]Statement of claim, paragraph 22.

The plaintiff and Crown experienced both sunlight and sorrow during those 16 months. In the end, however (as, in effect, paragraph 23 of the statement of claim asserts) the plaintiff paid a net $36,712,717.00 (approximately) for the pleasure of losing bets while being a Crown VIP; and Crown benefited in the same sum for the pleasure of having him as a patron. Crown demurs. According to its defence, the true figure is $20,539,484. This is calculated on the basis that Mr Kakavas’ gross losses amounted to $30,216,720, but he received rebates totalling $9,677,236. The individual defendants plead the same figures. In paragraph 13(1)(b) of his reply, the plaintiff reduces the amount of the claimed net loss to “approximately $30 million.”

The next allegation in the statement of claim is to be found in paragraph 24 and falls under s. 2.3.5 of the Gambling Regulation Act 2003. It is that, by devising the (alleged) scheme to lure the plaintiff to the Casino by the exploitation of his special disability, and by putting it into effect, Crown engaged in ill-practice. The consequence of this is spelt out in the section. It is that Crown is taken as having obtained those winnings by false pretences with intent to cheat or defraud – something Crown denies.

Mr Kakavas’ status as an excluded person is the subject of paragraph 25 of the statement of claim. The plaintiff there alleges that (“in circumstances where Crown was aware of this matter and the plaintiff was not aware of this matter”) Crown failed to tell him that, being the subject of an IEO, it was unlawful for him to gamble at the Casino.[13] Nor did Crown provide him with the (very important) information that, if he entered the Casino and, while there, gambled and won, he would forfeit his winnings to the State. To add insult to these injuries, Crown procured Mr Kakavas’ re-entry “when it knew that there was no material from a suitably qualified professional person supporting the plaintiff’s ability to control his gambling urges and condition, and that the plaintiff had not satisfied any of Crown’s own requirements for revocation of a self-exclusion order.”[14] At the same time, “Crown procured and encouraged the plaintiff to gamble at the Casino when it knew of the plaintiff’s condition and gambling history.”[15] As a particular of this knowledge, the statement of claim alleges that, during a conversation with the plaintiff “in about the middle of August 2006, Williams on behalf of Crown told the plaintiff to have a rest from gambling and seek professional help.”[16] The paragraph concludes with the statement that among the “special inducements” offered by Crown were cash payments and “the ability to wager bets of $300,000 per hand and a rebate of 20% on all losses.”
[13]Statement of claim, paragraph 25(1).
[14]Statement of claim, paragraph 25(3).
[15]Statement of claim, paragraph 25(4).
[16]Statement of claim, paragraph 25(4), particular (B)(ii).

Of the three defendants, only Crown makes a substantive response to any of this. The others simply contend that these allegations are not directed at them. Crown, however, admits that it did not bring to the attention of the plaintiff either the unlawfulness of his gambling at the Casino, or the requirement that he forfeit his winnings. It contends that it was not required to do so. It otherwise denies the allegations contained in paragraph 25 of the statement of claim. In his reply, the plaintiff refers to the provisions of ss. 76(1) and 78AA(2) of the Casino Control Act which imposed relevant duties on Crown in relation to the plaintiff as a patron who was subject to an interstate exclusion order.

Under the heading “Unconscionable Conduct”, which appears above paragraph 26 of the statement of claim, the plaintiff alleges (and each of the defendants deny) that, because he suffered from the condition known as pathological gambling, and from the impairments associated with it, he “was at a special disadvantage in his dealings with Crown in that his ability to make decisions and judgments as to what was in his own best interests, and to act accordingly was significantly impaired.”[17] Each of the defendants either knew this or “knew of facts which would cause a reasonable person to form the opinion that it was more probable than not that the [pleaded] facts … were true.”[18] Crown’s conduct was therefore both unconscionable at common law and in contravention of s. 51AA of the Trade Practices Act 1974 (Cth). Had it not been for such contravention, Mr Kakavas would not have entered the Casino, would not have gambled, and would not have lost.
[17]Statement of claim, paragraph 26.
[18]Statement of claim, paragraph 28.

Each defendant seeks to answer the proposition that the plaintiff was prohibited from entering or remaining in the Casino. Each seeks, in paragraph 31A of the relevant defence, to do so by alleging that, if he was so prohibited, then each time he entered the Casino between January 2005 and August 2006 he was in breach of the Casino Control Act - and for that reason disentitled from obtaining any relief “in respect of gaming losses he [then] incurred”. In his reply, Mr Kakavas alleges that he told Crown of his exclusion from the Star City Casino: he told Mr Horman about this on about 14 November 2000, and on 22 December that year Mr Horman forwarded (by email) the same information to Mr Craigie. Again, in late 2004 or early 2005, Mr Kakavas (as he contends) spoke to Mr Williams about his Sydney exclusion. He had a like conversation with Mr Horman at about the end of January 2005.[19]
[19]Amended reply and defence to counterclaim, paragraph 14A.

The statement of claim concludes with allegations that, in contravention of the Trade Practices Act, each of the two individual defendants aided, abetted, counselled or procured, and was directly and knowingly concerned in, Crown’s breaches of the Act. These allegations are denied.

The first defendant has a counterclaim. It opens with a reference to its 2006 “cheque cashing facility”. This, it alleges, had certain terms which governed its operations. These are set out at paragraph 34 of the pleading. These, however, do not appear to be particularly relevant. The cause of action upon which the counterclaim is based is simply that, on or about 11 August 2006, “Crown accepted a cheque from the plaintiff made payable to Crown in the amount of $1,000,000 … and issued to the plaintiff gaming chip purchase vouchers of [an equivalent value].[20] On presentation, however, the cheque was dishonoured. Crown therefore claims the sum of $1,000,000, together with interest at the appropriate rate calculated in accordance with the cheque cashing facility.
[20]Amended reply and defence to counterclaim, paragraph 19(c)(xvii).

The plaintiff admits that the $1,000,000 has not been paid, but denies any liability to do so.

The decade of the 1990’s

On 30 June 1994, the Casino opened its doors for the first time. Construction of the building which was to become its permanent home was not then complete, so the Crown Galleria was pressed into temporary service.

Harry Kakavas was one of Crown’s first patrons. On 6 July 1994, he was provided by Crown with a cheque cashing facility (with a limit of $30,000). At about the same time he was issued with an identification number (no.1558) which he thereafter retained throughout his patronage. It was also about this time that he first met the second defendant, John Williams, who was then a trainee blackjack dealer as well as a host in one of the Galleria’s more refined gaming areas: the Oak Room, where gentlemen were required to wear a jacket and tailored trousers.

The evidence is that the plaintiff’s gambling had already spilled into trouble. As he told a consultant psychologist, Mr Tim Watson-Munro, in early 1994 he had gambled and lost some $110,000 of his father’s money; and in May that year he commenced, and over a three month period continued, to defraud Esanda Finance Corporation Ltd of a total of about $286,000.

It was not long before the fraud was discovered. On 10 November 1994, Mr Kakavas was interviewed by the Victoria Police. His evidence is that, during the interview, he made “full and frank admissions”. Moreover, following that interview, he (as he said in his evidence) told Mr Howard Aldridge – who was then the manager of VIP casino operations - about his involvement in the fraud, and that he was not in a position to pay about $47,500 then owing to Crown. He also told Mr Aldridge that the fraud had been committed “because I had a gambling problem and I found it very, very difficult to resist the temptation of the gaming tables.”[21] Mr Aldridge maintained that he was unable to recall speaking to the plaintiff in October and November 1994 about the latter’s paying three cheques totalling $47,500,[22] although he agreed that it was his role at the time to deal with such matters. He denied that the plaintiff told him anything about having a gambling addiction; nor did he have any involvement in the plaintiff’s self-exclusion application.[23]
[21]T.133-134.
[22]CB.198.
[23]T.1671-1672.

The plaintiff was duly charged. He was, however, granted bail - one of the conditions of which was that he not enter the Casino. For reasons not explained to me, this condition was subsequently removed; and Mr Kakavas took advantage of his new birth of freedom. He resumed his gambling career at Crown. Consistently with the dictates of fate, he continued to lose.

It was at Crown, in early 1995, that the plaintiff first met Mr Bill Horman, who was then Crown’s Head of Security. Mr Horman had been asked by Crown’s chairman, Mr Lloyd Williams, to deal with Mr Kakavas after the latter had filed a subpoena for Mr Williams to give evidence at the application to vary his bail conditions. Mr Horman’s account of his first contact with the plaintiff was in the following terms:

The initial contact involved me introducing myself to Mr Kakavas, telling him what my role was, advising him that I understood that he had subpoenaed the chairman and that the chairman wanted me to deal with him and deal with the matter.[24]

[24]T.1381.

It is submitted on behalf of the plaintiff that Mr Horman was so often the point of contact between Crown and Mr Kakavas that the former’s knowledge “was the company’s knowledge under the primary rules of attribution.”[25] I accept that that is so. What Mr Horman knew about the plaintiff, Crown also knew. The same is true of the second and third defendants (Messrs Williams and Craigie) as well as Mr Aldridge. In 2004, Mr Aldridge was Crown’s Senior Vice-President of Domestic Marketing.
[25]Plaintiff’s written submissions, Part 3, paragraph 72.

Plaintiff’s Self Exclusion from Crown and Reports of Mr Watson-Munro

Meanwhile, back in 1995, the criminal trial lay somewhere over the horizon. A firm of solicitors (Pryles & Defteros) were retained to act for the defence. On 8 November 1995 the plaintiff applied for self-exclusion from the Casino.[26] The application was witnessed by Mr Peter Pryles of that firm, and by Mr Horman. The self-exclusion order was made by Mr Horman that same day, and served at 5.10pm in the presence of Mr Pryles.[27]
[26]CB.199.
[27]CB.200.

There is some debate about who suggested the self-exclusion process, and in particular, the role that Mr Horman played. According to the plaintiff, it was at one of the three or more meetings which the plaintiff had with Mr Horman during 1995 that the latter told him about Crown’s self-exclusion program. Mr Kakavas gave evidence about the discussion which followed. He said:

I basically opened up my heart to him and basically explained to him that I was borrowing funds that I couldn't repay, that I was stealing money that I should not be stealing and I said to him, “Bill, I don't know what to do, I feel trapped” and at one of those meetings during the course of 1995 he said, “Harry, we have an exclusion program at the Casino.” By this time of course I had no idea what an exclusion program was because I had never self-excluded myself ever before from any venue. Mr Horman went on to say that the Casino offered … a self-exclusion program to problem gamblers and he thought it would be a good idea if I was part of that program.[28]

[28]T.144.

Mr Horman denied that he and the plaintiff discussed any gambling problem the latter might have had, or that Mr Kakavas ever said that he had an addiction to gambling.[29] In relation to how the subject of the self-exclusion process arose, Mr Horman gave the following evidence:

I recall being contacted by Mr Defteros. He explained to me that he was acting for Mr Kakavas. He asked me to explain the self-exclusion program at one time and I went through that in detail with him. He also, and it could have been a further conversation, asked me if I would be prepared to go to his office for the purpose of carrying out the self-exclusion process.[30]

Mr Horman later gave a description in a memorandum prepared in 1998 consistent with his evidence about these events.[31] Mr Horman recalled that, at the meeting on 8 November 1995, Mr Defteros said something to the effect that the self-exclusion order would be put by way of mitigation at the plaintiff’s forthcoming trial.[32]

[29]T.1383.

[30]T.1384.

[31]CB.183-185 at CB.184.

[32]T.1388.

On 19 September 1995, Pryles & Defteros referred Mr Kakavas to Mr Tim Watson-Munro. The plaintiff thereafter attended sessions with his new therapist “on a fairly regular basis”.[33] In a report dated 12 March 1996 and addressed to the solicitors, Mr Watson-Munro wrote that Mr Kakavas first presented to him with a history of being charged with serious theft by deception “arising from a severe and untreated, until recent times, gambling addiction”[34] which had reached a “severe and pathological level”.[35] He also suffered from significant emotional problems to the extent that at times he was in such a state of agitation that communication with him was difficult. In Mr Watson-Munro’s opinion, the criminal charges faced by Mr Kakavas were brought about by “the delusional belief that he would be able to gamble his way out of debt and repay his father, as well as the capital that was fraudulently obtained from Esanda Finance.”[36] He expressed the view that the plaintiff had made “some progress in relation to facilitating a remission in his gambling addiction during the course of treatment” and noted that he had received “some counselling from Mr Bill Horman … and through discussions with him and myself have a complete ban placed upon his attendance at the Crown Casino and other casinos around Australia.” [37]
[33]Exhibit D2 (CB.201-209).
[34]CB.201.
[35]CB.208.
[36]CB.204.
[37]CB.202.

According to the plaintiff, he told Mr Watson-Munro (and the other psychologists he consulted) that he was banned from the Casino and he had “asked Mr Horman if he could ban me from the other casinos throughout Australia.”[38] He denied saying that he had banned himself from every casino in Australia. However, he agreed that he lied to Mr Watson-Munro when he told the psychologist that, over the previous twelve months, he had managed to curtail his gambling activities.[39]
[38]T.540.
[39]CB.206; T.545.

In a further report, on this occasion dated 12 June 1996, Mr Watson-Munro recorded that the plaintiff had undergone treatment with a Dr Parekh at the Melbourne Clinic at Vaucluse Hospital. This included the administration of Valium. Mr Watson-Munro continued:

On a more positive note, it would appear that [Mr Kakavas] has continued to refrain from his strong desire to [gamble], suggesting that with ongoing treatment his prognosis is reasonable in relation to this consideration.[40]

[40]CB.214.

Despite an annotation on Mr Watson-Munro’s reports asking that they not be disclosed to the client without the author’s permission, the plaintiff gave evidence that he saw both of these reports on about the dates they bear.[41]
[41]T.146-147.

Reports of Dr Darmody

According to the plaintiff, Mr Horman suggested that he see a psychologist, Dr Jack Darmody,[42] who was running a program for problem gamblers which was funded by Crown and known as the “Crown Assistance Program”.[43] Mr Horman’s evidence was that he did no more than hand the plaintiff a Crown Assistance Program brochure which had a contact telephone number on it. While Dr Darmody was likely the person “on the end of the phone of the number provided”,[44] his name did not appear on the brochure, although Mr Horman may have mentioned his name during discussions held in Mr Defteros’ office.[45] I accept that Mr Horman was instrumental in pointing Mr Kakavas in Dr Darmody’s direction. At all events, the plaintiff saw Dr Darmody at least twelve times, at intervals of roughly a week or a fortnight, about his gambling problems. I am satisfied that Crown was the vehicle through which contact was first made.
[42]Dr Darmody has a post-graduate doctoral degree.
[43]T.1504: according to Mr Horman, Dr Darmody was employed by Access Programs, which in turn was paid a fee by Crown for Dr Darmody’s services.
[44]T.1394.
[45]T.1536.

Dr Darmody prepared two reports for Pryles & Defteros. They are dated, respectively, 17 July 1996[46] and 29 July 1996.[47] The plaintiff asserted in cross examination that they are, in part, fundamentally false - and that he takes responsibility for it. He says that he lied to Dr Darmody about the success of his treatment.[48] Dr Darmody’s reference in his first report to the plaintiff’s “considerable progress ... in that he is now abstaining from gambling” was, according to Mr Kakavas, wrong: far from abstaining from gambling, he continued (he said) to indulge throughout the period of his treatment.
[46]CB.215.
[47]CB.217.
[48]T.553.

Mr Kakavas contends that he had a motive for his mendacity. He wanted to continue to gamble,[49] and he feared that, if he told the truth, steps would be taken to force him to stop. Be that as it may, both Dr Darmody and Mr Watson-Munro were satisfied that an adjournment of his plea would afford him an opportunity to receive more intensive treatment. Dr Darmody was, in addition, of the view that further delay would enable Mr Kakavas to benefit from regular attendance at Gamblers Anonymous, and restore to Esanda the funds stolen from it.
[49]T.555.

In his second report Dr Darmody notes that, in the context of the plaintiff’s anxiety and agitation, Mr Kakavas expressed “a fear of having no control over his life at the moment” and had an impaired ability to “address issues rationally and logically.” He continued:

Until he is able to demonstrate the ability to address all aspects of his defence and maintain his emotional control while still accepting the fact that a custodial sentence is a possible outcome, I believe he will be unable to give detailed and reliable instructions to his legal representatives. It is difficult to attach any time interval to the change process, but I would suggest a delay until at least early October will be necessary.

Despite this, Dr Darmody expected that the plaintiff would “soon be able to approach the future with a much higher level of emotional control.” He also noted that Mr Kakavas’ motivation to abstain from gambling was “supported by his request to be banned from all major casinos in Australia.” According to the plaintiff, this was a request that he had made to Mr Horman, even though he knew that in order to be banned he had to make his request to each and every casino in question.[50]
[50]T.554.

The plaintiff saw each of Dr Darmody’s reports at about the time they were prepared. He also asserted that he not only showed them to Mr Horman but, because the latter indicated an interest, discussed them with him. Whether that discussion included references to what Mr Kakavas now claims were their false assertions about his abstinence from gambling is something he did not address in his evidence. I do not believe this. It seems to me to be highly unlikely that the plaintiff would have confessed to Mr Horman that Dr Darmody’s optimistic assessments of Mr Kakavas’ progress were based upon a body of lies consistently told to the psychologist. If, during treatment, Mr Kakavas’ gambling continued unchecked, then he would not have refrained from telling his counsellor while at the same time confessing all to his confidant.

For his part, Mr Horman denied ever seeing any of the reports prepared by Dr Darmody – or, for that matter, any of those prepared by Mr Watson-Munro and Mr Healey.[51] I accept Mr Horman’s evidence on this point. He also said that, although the plaintiff told him that he was under Dr Darmody’s care, he never discussed the psychologist/patient relationship in detail. He did, however, speak to Dr Darmody from time to time about patients, including the plaintiff, who had consulted the psychologist under the Crown Assistance Program; but issues of confidentiality prevented any descent into detail. Mr Horman agreed that he knew that Mr Kakavas was seeing Dr Darmody regularly, but pointed out that – as he understood it - this was as a private patient, and therefore at the plaintiff’s expense.[52]
[51]T.1521, T.1527.
[52]T.1504-1505.

During his cross examination it was put to Mr Horman that a reference to “update re Dr J Darmody” in notes he made of a conversation with the plaintiff on 14 August 1996 supported the plaintiff’s evidence that he kept Mr Horman informed about the treatment he was receiving. Mr Horman’s evidence about this entry, which in general I believe, was as follows:

I don't recall any details other than he had seen Mr Darmody and he went on to say he had seen someone else but at that stage, as my notes indicate, I was unable to continue [writing] details of what was being said and he went on to another topic.
…
I wrote "update" because he started to say he had been talking to Dr Darmody. I wrote the word "update".
Q:Mr Horman, "update" was your summary of what had happened, wasn't it?
A:No, it was my starting of what he may have been going to go on and talk about but didn't and went on to another matter which was another person who at that stage I couldn't even recall or record who [it was] and he then went on to a different topic.[53]

[53]T.1531-1532.

Mr Horman said that he and the plaintiff discussed the latter’s admission to the Melbourne Clinic at the Vaucluse Hospital, but no mention was made in that context of any gambling problem.[54] The discussions they had related to why Mr Kakavas had either refused to go to the Melbourne Clinic, or went and refused to stay. The admission to that clinic was to deal with the plaintiff’s mental and emotional state.[55] Mr Horman explained:

At the time I had concerns about his mental well-being. He displayed a number of symptoms which caused me concerns. He was also making serious threats against various people. He was also talking about self-harm or committing suicide.[56]
[54]T.1405.
[55]T.1406.
[56]T.1644.

The plaintiff agreed in cross examination that while at Vaucluse Hospital, Dr Parekh was treating him for depression and anxiety, and was not treating him for any issues concerned with problem gambling.[57]
[57]T.559.
Reports of Mr Healey

By a letter dated 24 August 1996, Dr Darmody referred the plaintiff to Mr Bernard Healey, a clinical psychologist who specialised in gambling related diseases. The letter referred to the plaintiff’s “difficulties which have arisen as a result of an addiction to gambling.” While Dr Darmody expressed the view that Mr Kakavas then exhibited “less emotional fragility” than when first seen, it was Dr Darmody’s opinion that the plaintiff needed continuing treatment from someone who could represent him in court when his plea was heard.[58] Mr Healey gave evidence that he has dealt with around 1,000 problem gamblers over the course of 40 years of practice, a number of whom were referred to him “from the legal system where they had been involved in acts of dishonesty and fraud and had to face court in relation to those matters.”[59] Around 50% of his work comprises giving evidence in court and providing reports for that purpose. Many of those court appearances and reports have been provided in support of a plea in mitigation of sentence. He agreed in cross examination that he could be described as “a psychologist who specialises in the forensic area”.[60]
[58]CB.222.
[59]T.1001.
[60]T.1045-1046.

The plaintiff first consulted Mr Healey on 29 July 1996. In an unaddressed report prepared on 9 June 1997,[61] the psychologist noted that, at the time of his initial presentation, Mr Kakavas was too stressed and excitable to undergo testing. Subsequent consultations and testing took place through the remainder of 1996 and into early 1997. The result, according to Mr Healey, was “significant progress” and “continuing steady recovery … strengthened over time.” Mr Healey nevertheless concluded, on the basis of these consultations and after reading the police record of interview, that the plaintiff had become “a classical pathological gambler” who was “still very vulnerable to the lure of addictive activity and the precarious solace and support it provides”. He also described the “illusion of control” which led the plaintiff to continue to gamble, despite substantial wins, in the hope that he could achieve the “big win” to enable him to repay the funds obtained from his father and from Esanda. He noted that the plaintiff’s addiction -

... will remain with him for many years to come, that he will need to be very vigilant. There remains a residual level of anxiety, and a hypomanic trend still, which in the past had reached distressing proportions, where he had great difficulty controlling the impulsivity associated with his excitability, which of course was significantly exacerbated by the ‘hype’ of the casino environment.[62]

Mr Healey also observed that the plaintiff “has come to realise that any thought or suggestion of gambling is unacceptable in his case”. Not only that, but he had taken steps to enforce a self imposed ban on casino attendance. As one result, “he hasn’t gambled again”, while as a second he was making restitution to Esanda. Mr Healey thought it significant that the plaintiff was “devastated by his actions to the extent where he voluntarily had himself banned from all casinos throughout Australia”.

[61]CB.247-259.

[62]CB.249.

Having been told by Mr Healey that he was a classic pathological gambler, Mr Kakavas continued to see him for treatment “many, many, many times”[63] (in cross examination, however, Mr Healey accepted that no consultation took place between 9 June 1997 and the following November).[64] Mr Healey wrote a further report dated 15 January 1998, in which he recorded that Mr Kakavas had had telephone contact on several occasions and that he “has not been involved in any kind of gambling, indeed, his attitude, his more settled functioning and clearer objectives were seen as being consistent with absent gambling and maintained insight into the nature of his addiction.”[65] Mr Healey described the plaintiff as being “at peace with himself” and having a “more settled lifestyle” and steady work.
[63]T.149.
[64]T.1051.
[65]CB.264.

In my opinion, the provision of the Southbank account falls into the same category as the provision of other services and benefits offered to VIP players. It is not unconscientious to provide a legal and widely emulated benefit to a patron who credibly asserts that he has overcome his past gambling problems and is capable of making independent judgments.

The Use of “Harry Kay”

The plaintiff relies upon the use of the alias “Harry Kay” in Crown internal working documents and the hotel accounts, as well as the “silent” bookings. These, he contends, are further indicators that Crown engaged in underhand tactics so as to conceal its egregious conduct in exploiting and exacerbating the plaintiff’s pathological gambling problem. Yet another example of Crown’s determination to conceal the fact that it was permitting a banned person from gambling at the Casino in contravention of the Casino Control Act was the provision of a private gambling salon.

According to the plaintiff, I should reject the evidence of Mr Williams that the silent bookings were made at the request of the plaintiff because he wanted to conceal from outsiders the levels at which he was gambling. This evidence, he submits, is not compatible with the use of a silent booking during his stay at Crown Towers in January 2005. Gambling played no part in that Melbourne sojourn – the plaintiff merely attended the Australian Open. Nor is it consistent with the fact that Crown used the alias for its internal records. In addition, Mr Kakavas points to the lack of any evidence that such a ploy had been used for his visits to other casinos.

I have found (in paragraph [236] above) that the request for silent bookings was initiated by the plaintiff. I do not accept that the use of “Harry Kay” was a device employed by Crown to conceal the plaintiff’s gambling. The plaintiff in his submissions seeks to avoid this conclusion by asserting that that alias was used in Crown’s internal working documents. But that is only partly true. A careful examination of the three large folders containing the program bundles tendered by Crown[992] shows that, with the exception of one player funds record, the only records which use either “Harry K.” or “Harry Kay” were the handwritten turnover records for the eight visits on, respectively, 24 June 2005, 1 July 2005, 1, 8, 9, 12 and 16 September 2005, and 4 October 2005. These were compiled by hand during the pressure of play, when time demanded that every reasonable means of shorthand be employed. Thereafter, with the introduction of electronic turnover records, the plaintiff’s full name was used, as it was on all the other Crown documents for those eight, and all the later, trips. So, for the first visit on 24 June 2005, the name “Harry Kakavas” appears on the Crown “Interstate Premium Player Arrival Schedule” (which notes at its foot that it is to be faxed to, inter alia, the VCGA), the “Booking Authorisation”, the Premium Player Agreement itself, the “Premium Player Funds Record”, the “Premium Player Settlement Sheet”, and on the various account deposit and withdrawal slips, patron receipts and commission chip purchase vouchers. This pattern appears consistently throughout all the Crown player records produced. The plaintiff’s full name also appears on all the gaming chip vouchers and associated records. Had the VCGR or the VCGA examined Crown’s records, the plaintiff’s identity would have been patently obvious.
[992]Exhibit D28.

In any event, the use of the description “Harry K.” or “Harry Kay” would have been an unsophisticated and ineffectual means of concealing the plaintiff’s identity; even less useful than referring to him as “John Smith” or “Abraham Lincoln”. I reject the plaintiff’s submission that it is highly probable that the reason for the “alias” was “to shield the fact that [Crown] was permitting a banned person who was subject to an interstate exclusion order to gamble at [the Casino], in contravention of the Casino Control Act.”[993] It is, I think, clear that the use of “Harry K.” or “Harry Kay” was a form of shorthand used by the compilers of the handwritten records prepared on the gaming floor purely for in-house purposes as they recorded each bet. I doubt very much that the relevant gaming authority would go to the lengths of scrutinising individual turnover records. Those records are merely used as the basis for calculating rebates or commission, and would be of only passing interest to anyone else.
[993]Plaintiff’s closing submissions, Part 4E, paragraph [100].

The $345,000 Cheque to PBL

I have examined, under the heading “Provision of Credit” above, the drawing on Saturday 2 July 2005 of an ANZ bank cheque for $345,000. It was made out to PBL Finance. The plaintiff contends that it is an example of the lengths to which Crown went to exploit his “uncontrollable urge to gamble (and to cover its tracks by seeking to conceal the truth from the Court)”.[994] When on 2 July the plaintiff ran out of funds, but wanted to continue gambling, Crown told him that the ANZ Bank had a Melbourne CBD branch which opened on Saturdays. Crown did more. It drove him from Southbank to LaTrobe Street, where the branch was situated, so that he could withdraw money in order to keep gambling. In addition, (so the plaintiff’s argument continues) Crown provided an incentive to keep playing by matching, dollar for dollar, the funds contributed by Mr Kakavas. It did so by way of a cheque cashing facility.
[994]Plaintiff’s closing submissions, Part 4E, paragraph [102].

It is, Mr Kakavas submits, significant that, until evidence was adduced from the ANZ Bank itself to support the drawing of the ANZ bank cheque and its subsequent re-deposit, Crown had maintained that Mr Kakavas was lying about this episode. And indeed, Mr Williams subsequently had to admit that he did direct the plaintiff to the ANZ Bank on that Saturday.

The defendants’ account of things is that this line of argument is an attempt by the plaintiff “to try and turn the mundane events of 2 July 2005 on their head”.[995] They would have me accept that, having run out of money on Friday 1 July, the plaintiff made it known to Mr Williams that he would like to continue gambling. Mr Williams saw it as part of Crown’s (and his) customer service obligations to do what could be done to assist. The subject of a cheque cashing facility having been raised, arrangements were made to transport Mr Kakavas to the ANZ Bank, where he obtained a bank cheque for $345,000. As things happened, this was never used. It was therefore returned to him at the close of play. The interpretation given to the events by Mr Kakavas – namely, that it was Crown who instigated the arrangement through Mr Aldridge and that it engineered hiding the use of the funds by telling him to make out the cheque to PBL Finance – was (the defendants contend) “another example of the plaintiff seeing an opportunity to make allegations of impropriety against Crown by manipulating and inventing a few facts.”[996]
[995]Defendants’ closing submissions, paragraph [560], page 212.
[996]Defendants’ closing submissions, paragraph [565], page 214.

I find that it was Mr Kakavas who initiated the activity which resulted in the issue of the ANZ cheque. He indicated that he wanted to continue at the tables; Crown was happy to accommodate that wish; and things moved on from there. It was Crown which facilitated his access to the ANZ Bank. It was Crown which granted him a cheque cashing facility. Similarly, I find that when Mr Kakavas sought a means to conceal the destination of the funds from the ANZ Bank, Crown suggested the use of PBL Finance. But the ANZ account to which Mr Kakavas thus had access was his own account, or that of one of his corporate bodies. And none of these actions involved any impropriety or illegality on Crown’s part; again, it acted in a manner consistent with a casino keen to receive the plaintiff’s patronage in circumstances where it regarded him as a person capable of making independent decisions in his own best interests.

The $450,000 Special Commission Arrangement

It will be remembered that the terms of the plaintiff’s Casino visits of 12 September 2005 (program 7) and the following 16 September (program 8) were unusual. They constituted, Mr Kakavas now asserts, another example of Crown’s determination to exploit his gambling problem. And it is true that they gave him the high hand limit he sought ($300,000). It must also be noted, however, that those terms eliminated the rebate or commission that patrons enjoyed under a standard Premium Player Agreement.

At first, the plaintiff did not care about rebates or commissions. His willingness to enter into this arrangement was consistent with his preoccupation with high hand limits. They mattered above all; and this attitude towards them is, the plaintiff emphasises, “a classic behaviour characteristic of a pathological gambler”.[997] But when, on 16 September, he not only lost $2.3m, but also (because this is what the terms of the program provided) missed out on a rebate on loss of $460,000, he decided that he did care. He felt cheated; and Crown understood why. On 12 September, Crown had waived the need to provide front money, and yet at the same time had granted his wish to bet up to the maximum hand limit of $300,000. The trade-off was the removal of discounts and rebates.
[997]Plaintiff’s closing submissions, Part 4E, paragraph [118].

On 16 September, by contrast, the plaintiff brought with him front money of $2.3m. Yet no discounts or rebates were restored. It is true that Mr Kakavas remained entitled to bet up to $300,000 per hand. It is equally true that he had agreed to the 16 September terms. But when he voiced his dismay, not to say disgust, at the initial refusal by Crown to allow a rebate of $460,000 on his 16 September loss, Crown in early October gave way in order to appease him. And so the arrangement for payment of $450,000 by way of “extra commission”, to which he was not legally entitled (and to which I referred in paragraph [320] above), was made. Significantly, he argues, it “was premised upon the basis that [he] would continue gambling uncontrollably in the future.”[998] So, in order to be paid each $100,000 tranche, the plaintiff would need to turn over $100m. The plaintiff also maintains that, in coming to this special arrangement, Mr Williams was prepared to act irregularly and without proper authority. He points out that the arrangement was not documented, nor was it admitted by the defendants until the trial.
[998]Plaintiff’s closing submissions, Part 4E, paragraph [118].

The plaintiff submits that his evidence about the reconciliation which resulted in his return to Melbourne and the Casino on 4 October, and about the context in which reconciliation was reached, should be preferred over that of the defendants. He says that, after he complained on 16 September 2005 about being “cheated” out of $460,000 in commission, and in addition threatened to ban himself from the Casino, Mr Williams foisted $50,000 on him, despite his protests. Crown then added to its catalogue of sins by pursuing him by telephone, including calls made both before and after he left Australia to gamble in Macau. This is supported by the telephone records which show Mr Williams called him 29 times between 16 and 30 September, while Mr Kakavas called Mr Williams “numerous times”.[999] Ultimately, during a conversation on 2 or 3 October 2005, they agreed to the arrangement for payment of a total of $400,000. Together with the $50,000 already provided (on 30 September), that made a total of $450,000 which Crown agreed to give to Mr Kakavas, albeit on terms. These terms were accepted by the plaintiff, and he therefore returned to the Casino to gamble.
[999]Plaintiff’s closing submissions, Part 4E, paragraph [115].

The defendants’ version is that, far from being an exploitation of Mr Kakavas’ vulnerability, this arrangement showed that he was able to negotiate “aggressively and persistently to advance his own best interests.”[1000] There was no inequality between Mr Kakavas and Crown. On the contrary, he secured not only a large payment to which he was not legally entitled, but also a better deal than that enjoyed by other high roller players. It was not, therefore, a case of exploitation of him by Crown. Rather, if there was any exploitation, it was of Crown by him.
[1000]Defendants’ closing submissions, paragraph [24], page 10.

If the defendants are right, the special arrangement was a compromise. It removed what they characterise as Mr Kakavas’ “manipulation of the system”, but retained his high hand limit. On his first Casino visit following this new arrangement (12 September 2005), Mr Kakavas had won $2,040,000. There has never been any suggestion that, in this gambling episode, he was exploited. That does not surprise: winners do not usually attribute their wins to their having been exploited by someone else. The arrangement to pay $450,000 was made after the plaintiff bitterly complained of being cheated following his loss on 16 September. And even then he did not storm out; he stayed on at Crown for several days. Again (or so the defendants maintain) this is an attempt by the plaintiff to turn the evidence on its head.

The defendants further submit that it was not Mr Williams who initiated contact after 16 September. The telephone records show that Mr Kakavas did indeed telephone Mr Williams “numerous times” between 16 and 30 September: on any view, 41 calls in the week after 16 September, and then 22 unanswered calls between 19 and 23 September, can properly be characterised as “numerous”.

Mr Ratnam gave evidence that, on 27 September, the plaintiff called him to complain that he could not contact Mr Williams. I accept this evidence. The subsequent telephone records then show that it was the plaintiff who telephoned Mr Williams while the former was in Macau. This, the defendants would have me accept, was not the behaviour of someone who had decided to sever all contact with the Casino. They further paint as incredible the plaintiff’s evidence that, despite his protests, he received the $50,000. Mr Kakavas was not the complaining type when it came to his being showered with gifts. What he got, according to the defendants, was no more than that which was in line with part of the deal which he agreed with Mr Williams.

There is no doubt that, when Harry Kakavas - having won $4.5m - left the Casino on Saturday 10 September 2005, Crown wanted him to return; and the sooner the better. No matter that Crown’s cheque for his winnings had not yet been cleared; no matter that the plaintiff protested that he was neglecting his work; no matter that he could not supply front money because the winning cheque could not be cleared over a week-end; despite all these considerations, the Crown jet was ready to fly Mr Kakavas back to Melbourne at a moment’s notice. Crown was, in addition, prepared to waive front money, and to concede the plaintiff’s wish for a $300,000 hand limit. I accept the plaintiff’s evidence that this was the message conveyed to him by Mr Williams. I also accept that, persuaded by this Williams pitch, the plaintiff succumbed when in other circumstances he would not have returned to Crown’s doors as early as Monday 12 September.

Crown was equally anxious to retain Mr Kakavas as a patron after he expressed his anger at not receiving any rebate on his 16 September loss. This explains its willingness to negotiate, if needs be long and hard, before and during his absence in Macau, and to offer him not only the sum of $450,000 - to which he was not strictly entitled - but in addition 0.65% commission on turnover.

The plaintiff is, it seems to me, justified in pointing out that turnover was an important element in the offer made by Crown. Yes, he would get the near equivalent of the $460,000 which he failed to receive following his loss on 16 September. On the other hand, each $100,000 of that sum except the first $50,000 would only come to him if he turned over $100m in bets. So Crown, he argues, put him where it wanted him to be: at its tables, preferably on a losing streak. Otherwise, he would not get his $450,000.

There is some force in these submissions. It is indicative, I think, of Crown’s desire to placate an irate Mr Kakavas that it agreed to make good, even when not obliged to do so, the rebate notionally (that is, notionally as he would see it) referable to his 16 September loss. It is also indicative of Crown’s desire, if not anxiety, to seize the main chance, that it tied the notional rebate to the plaintiff’s continuing as a patron and a high roller.

On the other hand, it must be acknowledged that Mr Kakavas received his $450,000 even though the payment of the four tranches of $100,000 was on every occasion made before the stated threshold of a turnover of $100m had been reached. It may be inferred from this that Crown had decided to make up for the claimed deficiency whether or not its published terms were met.

The plaintiff at one point suggested that an agreement such as that negotiated by Mr Williams with Mr Kakavas for the granting of the substitution rebate of $450,000 was outside his actual or ostensible authority. I disagree. If Mr Williams did not have either actual or ostensible authority to do what he did, then it is remarkable that he was not disciplined for it. There is no evidence that he was. In any event, the argument that he had no requisite authority does not assist the contention that the defendants were involved in a conspiracy to unconscientiously take advantage of Mr Kakavas’ disability.

Indeed, I see nothing in this evidence to substantiate a such a claim. Notwithstanding the October reconciliation, Crown imposed a reduction in Mr Kakavas’ hand limit from $300,000 to $200,000. Crown did this in the face of Mr Kakavas’ desire to keep the limit at its September level. In addition, Crown declined to restore to the plaintiff his former rebate on loss privilege. Instead, it limited him to a 0.65% commission on turnover. These are not the actions of an organisation intent upon squeezing all the blood out of a patron who it regards as under a disability.

Irregularities in Advancing Chips

The plaintiff submits that Crown’s preoccupation with ensuring that he kept gambling is illustrated by the fact that three times in the early hours of 18 March 2006 one of its employees engaged in irregularities when advancing chips to him. Gaming chips to a total face value of $500,000 ($200,000 x 2 + $100,000) were advanced to him between 2.05am and 2.20am without cash payment being tendered, or a chip purchase voucher being executed. Crown admitted this irregularity and was subsequently fined $15,000 for breach of the Casino Control Act.

The defendants say that this was an honest mistake by the relevant Crown employee. Mr Kakavas admitted that he had asked for the chips and that he later signed a chip purchase voucher for them. Crown self-reported the breach to the VCGR. In these circumstances, the defendants submit, the plaintiff’s assertion that the chips were given to him to maintain his losing momentum is yet another example of him “seizing on an innocent mistake by a dealer and then trying to elevate it into some sort of unconscientious plan by Crown to exploit him at the gambling tables”.[1001]
[1001]Defendants’ closing submissions, paragraph [576], page 219.

The plaintiff says he signed the chip purchase voucher because he did not want to get anyone into trouble. Further, this was not an honest mistake; these were the deliberate actions of the employee in question “made in full knowledge of facts relevant to Crown.”[1002] That is borne out, it is submitted, by the matters outlined in mitigation contained in a letter dated 13 October 2006 written to the VCGR by Crown’s General Counsel. The letter includes the statement that the employee’s “intimate knowledge of the funds that were available to” Mr Kakavas was such that the employee “was certain that payment would be made”.[1003]
[1002]Plaintiff’s closing submissions, Part 4E, paragraph [121].
[1003]Exhibit P26, page 11.

I do not accept that this was part of a scheme to entrap the plaintiff into further gambling when, deep down, he wanted to stop – or when he was so enveloped in his addiction that even the obscured desire to cease had been overcome, with the consequence that only outside intervention could release him from addiction’s grip. I do not accept that this was part of any scheme at all. Mr Kakavas asked to be given the chips. He later signed for them. There is no evidence that the Crown employee was acting pursuant to any direction to that end. While the decision made by the Crown employee may have been deliberate, it was made in a mistaken effort to cater for Mr Kakavas’ demands as a high roller player, knowing that the plaintiff had the necessary funds available. I accept the statement contained in the Crown letter to the VCGR that:

Crown acknowledges that despite what [the employee] may have considered to be the best of intentions and an effort to provide good customer service, his actions were a breach of the Act, one in no way condoned by Crown.[1004]
[1004]Ibid.

The Plaintiff’s Ability to Exercise Control

I have already considered (in paragraph [520] and following, above) in the context of Crown’s knowledge of any special disability, the defendants’ submissions about the plaintiff’s ability rationally to control his gambling. I concluded that there were many instances where the plaintiff apparently conducted himself in a controlled manner while gambling, and walked away even before his funds were exhausted. Two particularly telling examples of this are, first, the period of six months between the time when the WOL was lifted and the first gambling trip in June 2005; and, secondly, the five months between October 2005 and March 2006 when the plaintiff’s father was gravely ill. In neither of these periods is there any evidence of pressure by Crown on the plaintiff to use its gaming facilities, with the exception perhaps of the invitation to the Australian Open, and the tour of the facilities which followed (this was undoubtedly a marketing exercise, but no gambling took place). Overall, it is I think accurate to say that each of these periods is inconsistent with the picture, painted by the plaintiff, of the defendants unconscientiously exploiting Mr Kakavas’ irresistible urge to gamble.

Moreover, it was open to the plaintiff 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. It is no answer to point to the evidence of the experts that bouts of abstinence are not inconsistent with problem or pathological gambling. That is not the issue here. 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 plaintiff’s evidence that his desire to gamble was suppressed for five months while his father was ill demonstrates that he could, when necessary, decide to put aside his own pleasure, and his need for excitement, in favour of his filial obligations and responsibilities. This is not the behaviour of a gambler so in thrall to his addiction that his ability to bargain on an equal footing, or make rational judgments in his best interest, was overborne. Nor, as I have already observed, was there any evidence that Crown sought to exploit his disability.

By way of the Janine Brooks letter to Crown in December 2004, the plaintiff had represented that he had conquered his past gambling problem and was able to self regulate, and had in fact self regulated, by self-excluding. I have found that Crown was entitled to rely on this representation. Nor, in my opinion, was it alerted to any change in that position before August 2006. The defendants submit that after the plaintiff raised concerns for the first time on 17 August 2006 about his losses, Mr Williams counselled the plaintiff to stop further gambling and withdrew permission for him to attend the Casino to gamble. Such conduct was “potent evidence that Crown and Williams took responsible gaming issues seriously and acted according to conscience.”[1005]
[1005]Defendants’ closing submissions, paragraph [616], page 238.

There is no doubt that 17 August 2006 was the last occasion on which the plaintiff gambled at the Casino; but there is a dispute about the circumstances of that cessation, and about the content of the conversation held between the plaintiff and Mr Williams on that day. As I have noted in paragraph [417] above, Mr Williams gave evidence that the conversation occurred as the two of them walked to the plaintiff’s hotel room before Mr Kakavas started to gamble. For the first time, Mr Kakavas seemed downbeat; not surprising, given that the topic of his conversation was his loss of between $20m and $30m. But when Mr Williams suggested the plaintiff take a break from the cards, Mr Kakavas responded with a philosophical reference to arrangements already made and a course already set. The plaintiff’s version, on the other hand (as I set out in paragraph [418] above) was that any relevant conversation occurred not before, but after, he had gambled (unsuccessfully). It concerned his failure to pay a $1m cheque cashing facility upon which he had drawn during an earlier visit. Mr William’s focus was not on the plaintiff’s welfare; it was on whether the plaintiff’s financial attractiveness to Crown was coming to an end.

The defendants point to the fact that, under the terms of the cheque cashing facility, the cheque was not to be presented until 21 August, and was not dishonoured until 23 August. It was not credible, therefore, for the plaintiff to speak as at 17 August of Mr Williams being concerned that the plaintiff had no remaining funds. Nor is it consistent with the fact that Mr Kakavas subsequently sought to gamble at the Casino at least three times in November 2006, on each occasion expressing the desire to deposit front moneys.

In my opinion, the fact that the cheque cashing facility did not require reparation by Mr Kakavas until 23 August provides compelling evidence against the plaintiff’s version. Of course it is highly unlikely that Mr Williams would be talking about a failure to pay when no such failure had occurred. I find that the events of August 2006 were not the finale to a set-piece drama in which the victor, having vanquished its weaker prey, left the loser to fend for himself. On the other hand, I do not believe that Crown’s only concern at that time was the plaintiff’s welfare. Crown simply did not see Mr Kakavas as having any immediate commercial interest. So it happily told him, in effect, to go away until he could pay his $1m debt, and afford to provide the front money expected of a high roller.

Accessorial Liability and Defence of Illegality

It follows from my findings as set out in this judgment that no question of accessorial liability under the Trade Practices Act 1974 (Cth) or otherwise arises in this case. Similarly, the reliance of the defendants on the unlawfulness of the plaintiff’s entry into the Casino was unnecessary. Although the plaintiff was subject to the IEO which followed his exclusion from the Star City Casino in Sydney, his claim against the defendants fails for independent reasons. At the same time, it seems to me that the plaintiff’s status as a person who is subject to an interstate exclusion order has the consequence that he could not lawfully retain any winnings to which he might otherwise have been entitled as a result of his activities at Crown.

Conclusion

For the reasons set out above, I find that Crown did not seek to exploit the plaintiff’s gambling disability. It knew of a problem. It might have acknowledged, if asked in 2004 whether the problem would re-surface when Mr Kakavas returned to the Casino, that that was a possibility. If asked, it ought to have acknowledged that his was a disability which on the balance of probabilities would be to its advantage were Mr Kakavas to remain as a patron over the medium to long term. It should now accept that its structures for dealing with its own desire to have Mr Kakavas resume his patronage were inadequate. Informal meetings of committees the jurisdiction of which and even the names and identities of which are uncertain, and which meet without an agenda or proper minutes, are a pathetic excuse for world’s best practice in dealing with the possible return of gamblers with a history of problems. In the end, however, nothing emerges from this miss-mash to indicate the existence of a scheme to exploit. More significantly, Mr Kakavas wanted to return to the Melbourne Casino, and (with some fluctuations in his position) wanted to remain a patron thereafter. He took the relevant decisions. Crown did not dictate the outcome of his deliberations about those decisions. Of course it sought to influence them. But it did not have the power to have him do that which he in truth did not want to do. He now seeks to blame Crown for his own decisions; to place upon it responsibility for failing to do for him that which he failed to do for himself. But this is not something to which equity can accede. The responsibility was his. In the words of the Brooks report: he knew how to self-exclude, and he would do it if that was his wish.

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[2009] VSC 559

8 DECEMBER 2009