Paradise Enterprises Ltd v Harry Kakavas - [2010] VSC 25

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT

LIST C

No. 2040 of 2008

PARADISE ENTERPRISES LTD	Plaintiff
v
HARRY KAKAVAS	Defendant

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JUDGE:	DAVIES J
WHERE HELD:	Melbourne
DATE OF HEARING:	16 – 19, 26 November 2009
DATE OF JUDGMENT:	16 February 2010
CASE MAY BE CITED AS:	Paradise Enterprises Ltd v Harry Kakavas
MEDIUM NEUTRAL CITATION:	[2010] VSC 25

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FOREIGN LAW – Applicable law the Law of the Bahamas – Expert evidence on the content of the law – Application of English law and authorities.

EQUITY – Unconscionable conduct – Whether Defendant suffered from the condition of pathological gambling at the relevant time – Whether pathological gambling a special disability – Whether the Plaintiff knew of or ought to have known of the special disability – Whether the Plaintiff took unconscientious advantage of special disability.

GAMING – Gaming in a foreign country – Whether money lent for the purpose of gambling recoverable under the Laws of the Bahamas – Gaming Act 1710, 9 Anne, c 19 - Gaming Act 1835, 5 & 6 Will 4, c 41 – Declaratory Act, Statute Laws of the Bahamas 2 December 1799 c 4 – Gaming Act, Statute Law of The Bahamas c 388 – Lotteries and Gaming Act 1969, Statute Laws of The Bahamas c 387 – Money Lending Act, Statute Law of the Bahamas c 340 – Moulisv Owen [1907] 1 KB 746 – Applegarth v Colley [1842] 152 ER 663 – Saxby v Fulton [1909] 2 KB 208 – CHT Limited v Ward [1965] 2 QB 63 – Carlton Hall Club v Laurence [1929] 2 KB 153.

GAMING – Whether loan for gambling purposes that is lawful and recoverable in the Bahamas is enforceable in Victoria – Whether enforcement in Victoria is contrary to Victorian public policy.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr. S Horgan SC with Ms. C Harris	Kliger Partners
For the Defendant	Mr. S Anderson SC with Mr. J Kohn	Stongman & Crouch

HER HONOUR:

On 23 November 2006, the defendant (“Mr Kakavas”) went to The Commonwealth of The Bahamas (“the Bahamas”) where, over the next 3 days, he gambled large amounts of money at the Atlantis Paradise Island Casino (“the Casino”),[1] using a US$1 million line of credit that the Casino had provided to him and his winnings from play there, which he had deposited with the Casino as “front money”.[2] Mr Kakavas lost it all in around five hours of gambling on 26 November 2006. The Casino has sued Mr Kakavas for payment of US$1,013,300. Mr Kakavas has admitted his use of the line of credit but contends that the Casino is not entitled to recover any amount from him, on the basis that the Casino acted unconscionably in providing him with the line of credit and in allowing him to draw down on it to gamble. Mr Kakavas has contended that he suffers from a…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2010] VSC 25
Decision Date: 16 February 2010

CaseChat Overview and Summary

In the matter of Paradise Enterprises Limited versus Harry Kakavas, the Federal Court of Australia was tasked with determining the enforceability of a loan made for gambling purposes in the Bahamas and its legality under Victorian law. The central issue was whether the loan, made under the laws of the Bahamas, was recoverable in Victoria and whether enforcing such a loan contravened Victorian public policy. The case also delved into the defendant's condition of pathological gambling, assessing whether this constituted a special disability and whether the plaintiff had acted unconscionably by exploiting this condition.

The court addressed several legal issues, including the applicability of Bahamian law and the interpretation of various statutes, such as the Gaming Act 1710, the Gaming Act 1835, and the Lotteries and Gaming Act 1969. It examined whether pathological gambling was recognised as a special disability under Bahamian law and whether the plaintiff had knowledge of this condition. The court also considered English authorities such as Moulis v Owen and Applegarth v Colley, which were cited to interpret the Bahamian statutes. Additionally, the court had to determine whether enforcing a loan for gambling, lawful in the Bahamas but not in Victoria, would violate Victorian public policy.

The court concluded that under Bahamian law, loans for gambling were recoverable if the gambling was lawful in the Bahamas. The court found that pathological gambling did not constitute a special disability under Bahamian law and that there was no evidence that the plaintiff was aware of or ought to have known about the defendant's condition. The court held that enforcing the loan in Victoria did not contravene Victorian public policy as it did not encourage or facilitate unlawful gambling in Victoria. Consequently, the loan was deemed enforceable under Bahamian law, and the defendant was ordered to repay the loan to the plaintiff.

Orders