Preston v Star City Pty Ltd

[1999] NSWSC 1273

CITATION:	Preston v Star City Pty Ltd [1999] NSWSC 1273 revised - 26/06/2000
CURRENT JURISDICTION:	Common Law
FILE NUMBER(S):	20334 of 1998
HEARING DATE(S):	21/9/99
JUDGMENT DATE:	22 December 1999
PARTIES :	Alexander Preston Star City Pty Ltd
JUDGMENT OF:	Wood CJatCL

LOWER COURT JURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S) :
LOWER COURT JUDICIAL OFFICER:	Master Harrison

COUNSEL :	Plaintiff/Respondent: P. Semmler QC, J. Keesing/N. Mullany Defendant/Applicant J.C. Campbell QC. Gageller
SOLICITORS:	Gells Sydney Coudert Brothers
CATCHWORDS:	Appeal from Master Harrison; Strike Out motion
DECISION:	Appeal dismissed.; Motion of defendant dismissed so far as it relates to the statutory count. So much of the statement of claim as deals with that aspect to be struck out. Plaintiff granted leave to file amended statement of claim.

N THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

No. 20334/98

WOOD CJ at CL

WEDNESDAY 22 DECEMBER 1999

PRESTON v STAR CITY PTY LTD

JUDGMENT

1 WOOD CJ at CL: This matter comes before the Court by way of an appeal from Master Harrison, refusing to strike out the plaintiff’s statement of claim, pursuant to Part 15 r 26 of the Supreme Court Rules, other than for three paragraphs relating to the adequacy with which the plaintiff’s claim for damages was pleaded. The plaintiff was given an opportunity to amend the statement of claim in order to cure the deficiencies identified in these three paragraphs. Costs of the motion were ordered to be costs in the cause. 2 The plaintiff has take up the opportunity offered, and has filed an amended statement of claim dealing with the paragraphs struck out, but also alleging matters in support of additional causes of action, based upon undue influence/unjust enrichment, and unconscionable conduct. So far as the amendments relate to the manner in which the plaintiff has pleaded or particularised his claims variously for aggravated damages, exemplary damages, interest, or recoupment of gambling losses, it was agreed that they need not be dealt with in this appeal. It is confined to the existence of the causes of action pleaded in the initial statement of claim, as supplemented in the amended statement of claim, it being the defendant’s submission that no relevant duty of care, or other basis upon which recovery might be pursued, exists in law, and that as a result, “no reasonable cause of action” has been disclosed, as that phrase appears in Pt 15 r 26 (1)(a). 3 The parties agree that, although the Master has not given consideration to the fresh causes of action pleaded, it is convenient for the matter to be dealt with by me as a whole. To permit that to occur, a notice of motion seeking orders for the striking out of the new amendments has been filed, and made returnable before me. Although I have some hesitation in dealing with the matter partly as an appeal, and partly afresh, on the whole the course suggested appears convenient and such as to avoid unnecessary delay and cost. It is upon that basis that I will proceed.

AMENDED STATEMENT OF CLAIM

4   In substance, the plaintiff alleges that he was regular patron of the casinos operated by the defendant, a licensed casino operator trading as Sydney Harbour Casino, and later as Star City Casino, between about November 1996 and about March 1998.

Breach of Statutory Duty

5   The plaintiff alleges that, between about January 1997 and about March 1998, the defendant, in breach of a statutory duty arising under S 70 of the Casino Control Act 1922 (NSW) induced him to take part in gaming in its casinos by:

(i) informing him that if he remained a ‘high roller’ patron it would make available various business contracts related to its procurement needs or promotions, including contracts for the design of merchandise bearing the Star City logo, for the purchase of works of arts for the Casino, for the supply of prints and for the supply of Christmas gift packages for VIP members; as well as his appointment as a licensee to manufacture and sell products bearing the logo of Star City.
(ii) supplying him with complimentary products, services and privileges including liquor free of charge; and
(iii) providing a cheque cashing facility for his use. (para 10(a))

6 Additionally, or alternatively, he alleges that in breach of the same statutory duty, it induced him (by means of the same inducements) to continue to take part in gaming in its casinos, when it knew or ought to have known that he had already suffered substantial gaming losses. (para 10 (b)). 7 Next, he alleges that, between about November 1996 and about March 1998, the defendant, in breach of a statutory duty arising under s 163 of the Casino Control Act, and under reg 20(1) of the Casino Control Regulations 1995, supplied liquor free of charge to him and permitted him to take part in gaming in its casino while he was intoxicated. The particulars supplied in relation to this allegation go somewhat beyond matters of breach, so far as they allege additional matters of fact more relevant to the claim which is made later and which is dependent upon the existence of a general duty of care. For convenience they included allegations to the effect that the defendant:

(i) allowed him to gamble when it knew or ought to have known that he was intoxicated, knowing that this could

(a) have a detrimental effect on his ability to take part in such activity;

(b) impair his judgment, reasoning and control;

(c) impair his appreciation of the consequences of the offer, and acceptance, of inducements, and

(d) increase the prospect that he would continue to gamble and lose;

(ii) supplied him with alcohol on its premises, when it knew or ought to have known that he was intoxicated, switched his orders for non alcoholic drinks with alcoholic drinks, and influenced him to order alcoholic drinks, in each case with the intention of causing him to be further intoxicated; or with reckless indifference to the consequence, knowing that this could have the effects outlined in (i)(a) to (d) above. (Para 11)

General Duty of Care

8   The plaintiff next alleges that the defendant knew or ought to have known: · that he was a regular high roller patron and problem gambler · of the potential for its casinos to cause harm to the public interest, including financial, social and personal harm to its patrons, and in particular to its regular and high roller patrons, due to problem gambling; · of the importance of conducting its operations in a manner consistent with the minimisation of the potential for such harm, and so as not to increase or exacerbate that potential;

and that, as a consequence of these matters, its operations, its statutory duties, and the fact that the plaintiff was a regular patron of its casinos, it owed him a duty to exercise reasonable care and skill:

· not to induce him to take part, or to continue to take part, in gaming in its casinos;

· not to provide him with liquor free of charge in the general casino area, in the absence of a direction from the Casino Control Authority;

· not to permit him to take part in gaming while intoxicated;

· to conduct its operations in a manner consistent with the minimisation of the potential for harm to him identified, and in a manner which did not increase or exacerbate that potential. (paras 12 and 13) 9   The plaintiff alleges that the defendant breached its duty of care in the several ways already identified in respect of the statutory counts; and in addition, in failing to display appropriate consumer protection warnings and notices at the entrance to its casinos, and or in the VIP rooms, and/or near the cashiers and/or near the bars, stating that:

· the consumption of alcohol can have a detrimental effect on the ability of patrons to take part in gaming in a manner which maximises their prospects of winning, and can impair judgment, reasoning and control;

· patrons should not take part in gaming while under the influence of alcohol;
· patrons who have gambling problems can telephone identified help lines for assistance. (para 14)

Undue Influence/Unjust Enrichment

10   The plaintiff alleges that the defendant was a large financially secure corporation experienced in commercial and financial matters, and specifically the business of operating a casino licence to maximise profit, and that between about November 1996 and about March 1998, he was:

(a) a regular patron of its casinos;

(b) a “high roller” and problem gambler;

(c) allowed by the defendant through its servants or agents, to gamble at its casinos while intoxicated;

(d) supplied by the defendant through its servants or agents, with alcohol on its premises when intoxicated;

(e) supplied by the defendant with ‘switched’ (alcoholic) drinks;

(f) influenced by the defendant to order alcoholic drinks instead of non alcoholic drinks. (paras 15 and 16)

11   He alleges that the defendant engaged in the conduct referred to in (c) above knowing that this could:

· have a detrimental effect on his ability to take part in gaming in a manner which did not diminish his prospects of winning;

· impair his judgment, reasoning and control, and impair his appreciation of the consequences of the offer and acceptance of inducements, and

· increase the prospect that he would continue to gamble and lose. (para 17). 12   He next alleges that the defendant engaged in the conduct referred to in (d) to (f) with the intention of intoxicating or further intoxicating him, or with reckless indifference as to whether it had such effect and with the knowledge referred to in the preceding paragraph. (par 18). 13   He alleges that between about January 1997 and March 1998, as a regular patron, high roller and problem gambler, he was induced by the defendant to take part in gaming by:

(i) informing him that if he remained a high roller patron, it would make available to him the business contracts mentioned above, by supplying him with complimentary products and services and by providing a cheque cashing facility for him, and
(ii) did so, when it knew or ought to have known that he had already suffered substantial gambling losses. (para 19)

14   He next alleges that by reason of the matters pleaded in paras 15-19, he was unable to exercise an independent, objective and “informed judgment and control” concerning his decisions whether or not to take part in gaming, or to continue to take part in gaming, when he had already suffered substantial gaming losses, concerning the size and number of bets he placed, and concerning the manner of his gaming generally; and in particular was unable to appreciate whether those decisions were, in all the circumstances reasonable, prudent and in his overall best interests; and that the defendant knew and ought to have known of these circumstances. (paras 20-21) 15   By reason of the matters so pleaded, he alleges that the defendant was in a relationship which permitted it to exercise undue influence over him, and that it did in fact exercise that undue influence over him, in relation to decisions of the kind mentioned. (para 22) 16   The plaintiff further alleges that between November 1996 and March 1998, he suffered gambling losses in the defendant’s casinos, and that by reason of the matters so alleged, the defendant was unjustly enriched at his expense.

Unconscionable Conduct

17   By reason of the same matters relied upon as constituting unjust enrichment, the plaintiff also alleges that the defendant was guilty of unconscionable conduct. (Paras 23 to 25)

Damages

18   The plaintiff alleges that by reason of the matters relied upon as constituting breaches of the defendant’s statutory and common law duties, unjust enrichment and unconscionable conduct, he suffered gambling losses and psychiatric injury, which was said to have resulted, inter alia, in impairment of his future earning capacity. He seeks restitution of his gambling losses; ordinary, exemplary and aggravated damages; equitable compensation, and interest. The particulars of those losses have not been provided, and in particular it is not clear whether, in relation to the recoupment of any gambling losses, the plaintiff has set off any winnings during the period in question. 19   In its present form, the amended statement of claim is not well drafted, being somewhat repetitive, inconsistent in relation to dates, and in some paragraphs combining matters constituting averments going to the existence of a duty and matters going to breach. Additionally, it does not clearly differentiate between those matters said to give rise respectively to exemplary and/or aggravated damages, as distinct from ordinary damages, or compensation according to equitable principles. 20   However, these are matters of detail that do not go to the heart of the application now before the Court which concerns the question whether any reasonable cause of action has been disclosed. In the event of that question being resolved in favour of the plaintiff, then I would be minded to allow him a period of time within which to formulate a Statement of Claim in a more precise and clearly articulated form.

STRIKE OUT APPLICATION - THE PRINCIPLES APPLICABLE

21 Part 15 r 26 of the Supreme Court Rules provides:

“(1) Where a pleading -
(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;
(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or
(c) is otherwise an abuse of the process of the Court,
the Court may at any stage of the proceedings, on terms, order that the whole or any part of the pleading be struck out.”

22   It is well settled that the powers to strike out a pleading as disclosing no reasonable cause of action under this rule, and to summarily dismiss proceedings for the same reason under the somewhat broader Supreme Court Rule Part 13 r 5, are reserved for plain and obvious cases. In General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 (a strike out case) Barwick CJ, after referring to the review that he had made of the case law on this subject, observed (at 129:

“It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; ‘so obviously untenable that it cannot possibly succeed’; ‘manifestly groundless’; ‘so manifestly faulty that it does not admit of argument’; ‘discloses a case which the Court is satisfied cannot succeed’; ‘under no possibility can there be a good cause of action’; ‘be manifest that to allow them’ (the pleadings) ‘to stand would involve useless expense’.”

23   His Honour later noted, in relation to the earlier decision of the Court in Dey v Victorian Railways Commissioners (1949) 78 CLR 62,

“Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.

24   In Webster v Lampard (1993) 177 CLR 598, (a summary judgment case) Mason CJ, Deane and Dawson JJ said in their joint judgment (at 602) that “the issue before the learned Master on the application for summary judgment”, in that case, “was not whether (the plaintiffs would probably succeed in their action against (the defendant). It was whether the material before the Master demonstrated that the action should not be permitted to go to trial in the ordinary way because it was apparent that it must fail.” 25 Their Honours continued (at 602-603):

“The power to order summary judgment must be exercised with ‘exceptional caution’ (14) and ‘should never be exercised unless it is clear that there is no real question to be tried.’(15)

As Dixon J commented in Dey v Victorian Railways Commissioners (16):
‘A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.”
Nowhere is that need for exceptional caution more important than in a case where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact. In such a case, it is essential that ‘great care … be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal.”(17)
(14) General Steel Industries Inc v Commissioner for Railways ( NSW) (1964) 112 CLR 125 at 129; ( 15) Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99;(16) (1949 78 CLR 62 at 91;(17) General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR at 130; see also Church of Scientology Inc v Woodward (1982) 154 CLR 25, at 31)”

26   The highly demanding nature of the test imposed upon a party seeking summary disposal of a claim was noted by Rolfe AJA, with whose reasons Priestley JA agreed, in Air Services Australia v Zarb NSWCA 26 August 1998 unreported, a case decided under District Court Rules Part 11A r 3, a provision similar to SCR pt 13 r 5. As his Honour there observed:

“The demanding nature of the test is in no way lessened in circumstances where there are the (sic) potential for difficult factual and legal issues to arise. Rather, as the decision in Webster made clear, it is heightened: see also Wickstead & Ors v Browne (1992) 30 NSWLR 1 and Esanda Finance Corporation Limited v Peat Marwick Hungerfords (1997) 188 CLR 241.”

27   The first of the cases cited by Rolfe AJA (Wickstead) was concerned with a claim based upon several alleged causes of action, two of which were found by the majority (Handley JA and Cripps J) to give rise to triable issues, and others of which were not. Kirby P dissented only so far as his Honour considered that there was utility in allowing an alternative claim in negligence which the majority considered untenable, to proceed. 28   In reaching this conclusion Kirby P had in mind the evolving nature of the law of negligence, a circumstance made all the more acute and relevant by recent decisions on this subject in the High Court - viz Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313; Pyrenees Shire Council v Day (1998) 192 CLR 330; Romeo v Conservation Commission of the Northern Territory (1998) 192 CLR 431, and Perre v Apand Pty Ltd (1997) 73 ALJR 1190), as well as by the extent to which the historical divide between law and equity has become blurred if not breached.(at pp 6-7) In relation to the blurring of the lines between recovery under tort law and equitable principle, reference may also be made to Elna Australia Ltd v International Computers (Australia) Pty Ltd (1987) 75 ALR 271. 29 The need for caution in emerging areas of the law was also noted by Master Allen as he then was, in Hospitals Contribution Fund of Australia v Hunt (1984) 44 ALR 365 at 373-4, in a passage cited with approval by Badgery-Parker J in Gibson v Parkes District Hospital (1991) 26 NSWLR 9 at 35/36:

“…It is not by any means rare in the history of the development of the common law that a high appellate court, in enunciating a novel development in the law, albeit one avowedly based on a miscellany of old cases, has chosen to use general words of imprecise limits in meaning to facilitate the arrival, in later cases, of the final form of the development without the need to overrule what earlier had been stated. That being so I am of opinion that a court at first instance should be particularly astute not to risk stifling the development of the law by summarily throwing out of court actions in respect of which there is a reasonable possibility that it will be found, in the development of the law, still embryonic, that a cause of action does lie. The risk of injustice to the plaintiff, which summary termination of his claim would entail, is real. One cannot predict, with firm assurance, what the future holds as the final formulation of the new development.”

30   In NRMA Insurance Ltd v A.W. Edwards Pty Ltd, NSWCA 11 November 1994, the Court of Appeal reversed a decision of Cole J (as he then was) in a case that was likely to turn upon developing doctrine, in relation to the extent to which tortious liability can exist concurrently with contractual liability, and its application to a relationship between a contractor and builder, so as to allow the action to continue. Kirby P, with whom Powell JA agreed, said (at p7):

“… the more complex and arguable is the legal point, and the more dependent it may seem to be upon debatable factual premises, the less likely is it that the peremptory relief sought by a party will be appropriate to the circumstances of the case, particularly where it would have the consequence of terminating proceedings altogether or terminating them forever against one party.”

31   It is clear that the General Steel test remains the primary touchstone for a strike out application, and that more is required of the defendant, upon whom the onus rests, than demonstrating that a plaintiff’s chance of success are slim: per McHugh J in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 271 (and see also Gummow J at 293). 32 It is a test that is not only in accordance with earlier authority in this country, but it is one that has been consistently applied: see Burton v President of the Shire of Bairnsdale (1908) 7 CLR 76 at 92, 95 and 98; TPC v Allied Mills Industries Pty Ltd (1980) 32 ALR 570 at 577 per Sheppard J; Hodges v State of NSW (1988) 77 ALR 1 at 2 per Brennan J; Brimson v Rocla Concrete Pipes (1982) 2 NSWLR 937 at 942 per Cross J; Panizutti v Trask (1987) 10 NSWLR 531 at 536-537 per Kirby P; Rajski v Powell (1987) 11 NSWLR 522 at 524 per Kirby P and Rajski v Bainton (1990) 22 NSWLR 125 at 158 per Mahony JA. 33 Moreover, the formulation of the test, in terms which requires the defendant to show that the plaintiff’s claim is so untenable that he cannot possibly succeed, or is obviously or almost uncontestably bad, is also in accordance with a long line of authority in the United Kingdom, including e.g. in the Court of Appeal, Dyson v Attorney General (1911) 1 KB 410 at 419 per Fletcher Moulton LJ, and Nagle v Fielding (1966) 2QB 633 at 651 per Salmon LJ; and in the House of Lords Williams & Humbert v W. & H. Trade Marks (Jersey) Ltd (1986) 1 AC 368 at 435-436 and at 441. Lord Templeman and Lord MacKay of Clashfern there noted that, where a strike out application involves a prolonged and serious argument, it should not be entertained unless the Judge not only considers it likely that he will reach the conclusion that the pleading should be struck out, but also that such an order will obviate the necessity for a trial, or will so reduce the burden of preparing for a trial, or so simplify it, as to make it worthwhile to proceed with the application. 34 This is not to contradict the view expressed by Barwick CJ in General Steel, and otherwise embraced for example in Edwards, that argument, even of an extensive kind, may be necessary in order to determine whether a plaintiff’s claim is so clearly untenable that it cannot possibly succeed. The extent to which argument should be permitted will depend upon the nature of the cause. In the present instance, lengthy argument in relation to the possible availability, in law, of each of the causes of action relied upon, has been allowed, both before the Master and on appeal to me. 35   The strike out power is not appropriate in a case where the issue primarily relates to a conflict as to matters of fact or of credit, notwithstanding that one may have a strong prima facie view as to the ultimate result: Sidebottom v Cureton (1937) 54 WN (NSW) 88, Bank of New South Wales v Murray (1963) 80 WN (NSW) 272 and Spellson v George (1992) 26 NSWLR 666 at 678 per Young AJA, observations made in relation to SCR Pt 13 r 5, but equally applicable to SCR Pt 15 r 26. 36 The present is a case where significant issues of fact and of credit are likely to arise, but they have not been addressed upon the application, nor have I taken that circumstance into account. The defendant’s application assumes, for the purpose of the motion, that the facts alleged can be made good. 37   The question for determination, in accordance with the authorities, seems to me to come down to the question whether a reasonable cause of action is disclosed, ie a cause of action which has some chance of success, or which could conceivably give the plaintiff a right to relief, or which, although weak, is properly debatable, and has some apparent legitimate basis, if the facts upon which it is alleged to be based are made good: Dadswell v Jacobs (1887) 34 ChD 278 at 281 per Cotton LJ; Drummond-Jackson v British Medical Association (1970) 1 WLR 688 at 696 per Lord Pearson; Coe v The Commonwealth (1979) 53 ALJR 403 at 407 per Gibbs J; Brimson at 942 per Cross J; Munnings v Australian Government Solicitor (1994) 68 ALJR 169 at 171 per Dawson J; and State of Western Australia v Bond Corporation Holdings Ltd (1991) ATPR 41-129. 38 It is one thing to strike out a case which is clearly doomed to failure. The jurisdiction to do so was properly described by Kirby P in Edwards (at 7) as a “beneficial one … designed to relieve parties of the expense, anxiety and distraction of meritless litigation”. It is another thing, however, to deprive a litigant of having an arguable case heard at trial. As Kirby P also said, in the same case (at p8):

“Unless the remedy is effectively confined to cases ‘for protecting a defendant from vexation by the continuance of proceedings which must be useless and futile’, it would have the consequence of substituting summary judicial impression for determination on the merits, having heard both evidence and argument in the normal way of our courts. See Spellson v George & Ors (1992) 26 NSWLR 666(CA) 673.”

39   Moreover, as his Honour pointed out (at p11) an examination of the detailed facts going to the precise relationship between the parties, and a full understanding of their dealings, may be important in discerning the extent of any duty of care which a claimant can establish in relation to an opponent. The observation has some relevance in relation to the present case, as the bare bones pleaded may need to be fleshed out to reveal the precise manner in which the defendant dealt with the plaintiff as a gambler, and as a “high roller” (if that is what he is shown to have been). 40   In this regard, it is not to be overlooked that the application is to be approached by reference to the consideration whether it would be open to the plaintiff, upon the pleadings, to prove additional facts at the trial which would support a reasonable course of action: PanContinental Mining Ltd v Pasgold Investments Pty Ltd (1994) 121 ALR 405 at 4124 per Beaumont J, applying Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1970) 122 CLR 628 at 631. 41 So far as the defendant’s application goes to matters of form in relation to the clarity or particularity with which the plaintiff’s claim is pleaded, the essential test is one of intelligibility - a test that turns upon the question whether the nature of the case that the plaintiff wishes to make has been stated with sufficient clarity so as to allow the defendant to know what it is that it must meet: Banque Commercial SA in Liquidation v Ahkil Holdings Ltd (1990) 169 CLR 279 at 286, per Mason CJ and Gaudron J. So far as any deficiency might arise in relation to the particularisation of the matters alleged, that is a matter appropriately left for subsequent amendment rather than a strike out of the pleading, so long as what is alleged sufficiently identifies a reasonable cause of action: Jingellic Minerals NL v Abigroup Ltd (1992) 7 WAR 566; Co-Ownership Land Development Pty Ltd v Queensland Estates Pty Ltd (1973) 47 ALJR 519 at 521. 42 These then are the principles that I intend to apply in determining the appeal and the application brought by the defendant.

BREACH OF STATUTORY DUTIES

43 The plaintiff relies, for this cause of action, upon the following provisions of the Casino Control Act 1992 (NSW) (“the Act”) or of the Casino Control Regulations 1995 (NSW) made under the Act:

(i) S70(1)(g) which provides:

“70. Conduct of Gaming
(1) It is a condition of a casino licence that the following provisions are complied with in the casino and the casino operator is to be considered to have contravened that condition if they are not complied with:
….
(g) A person who is at or in the vicinity of the casino and is an agent of the casino operator or a casino employee must not induce patrons to enter the casino or take part in gaming in the casino.”

(ii) S163, which provides:

“163 Conduct in casino
(1) A casino operator must not:
(a) permit intoxication within the gaming area of the casino, or
(b) permit any indecent, violent or quarrelsome conduct within the gaming area of the casino, or
(c) permit an intoxicated person to gamble in the casino;
Maximum penalty: 100 penalty units.
(2) A member of the staff of a casino must not:
(a) sell or supply liquor to an intoxicated person who is in the gaming area of the casino, or
(b) permit an intoxicated person to gamble in the casino.
Maximum penalty: 20 penalty units.
(3) If a person within the gaming area of a casino is intoxicated the casino operator is taken to have permitted intoxication within the gaming area unless it is proved that the casino operator took all reasonable steps to prevent intoxication within the gaming area.”
(iii) Regulation 20(1) of the Regulations which provides:

“(1) A casino operator, a casino employee or an agent of the casino operator must not provide a casino patron with liquor free of charge (or at a substantial discount) unless the liquor is provided in accordance with any direction that the Authority may from time to time give to the casino operator for the purposes of this clause.
Maximum penalty: 50 penalty units.
(2) Subclause (1) does not apply in respect of liquor provided to a casino patron in:
(a) an area of the casino designated (in the plans, diagrams and specifications for the time being approved by the Authority under section 65 of the Act) as other than the general casino area, or
(b) a part of the general casino area that is for the time being reserved (as indicated by means of ropes and signs) for the use of certain casino patrons only.”

44   There are other provisions of relevance in relation to licence conditions, including for example S29(2) which has the effect of including as a condition of a licence a requirement that the casino operator comply with any written direction of the Authority that “relates to the conduct, supervision and control of operations in the casino”. 45   Further there is S72, which provides:

“72. Assistance to patrons
(1) It is a condition of a casino licence that the casino operator must ensure that:
(a) at the request of a casino patron, a copy of the rules of gaming in respect of any particular game (as approved for the time being under section 66) is made available for inspection by the patron, and
(b) there is prominently displayed in the casino such advice or information concerning gaming rules, mode of payment of winning wagers, the odds of winning for each wager and such other advice or information to the player as may be directed by the Authority, and
(c) at the request of a casino patron, a brochure summarising the rules of gaming in respect of a game played in the casino (in accordance with the text approved by the Authority) is provided to the patron, and
(d) there is prominently displayed at each gaming table or location related to the playing of a game a sign indicating the permissible minimum and maximum wagers pertaining to the game played there, and
…”

46 The imposition of conditions in a casino licence (the authority for which derives from S22 of the Act) has a relevance so far as a contravention may constitute grounds for disciplinary action, on the initiative of the Casino Control Authority (“the Authority”) including cancellation or suspension of the licence, the imposition of a pecuniary penalty of up to $1m, amendment of the terms or conditions of the licence, or the issue of a letter of censure, (under S23 of the Act). 47 Additionally, under S34 of the Act, the Supreme Court is given jurisdiction, on the application of the Authority, to restrain conduct that constitutes or would constitute, inter alia, a contravention of a condition of a casino licence, or of a provision of the Act. 48 So far as the provision of credit, and the offering of inducements are concerned, it may be noted that the Act provides:

“74 Credit prohibited
(1) A casino operator must not, and an agent of the operator or a casino employee must not, in connection with any gaming in the casino:
(a) accept a wager made otherwise than by means of money or chips, or
(b) lend money, chips or any other valuable thing, or
(c) provide money or chips as part of a transaction involving a credit car or a debit card, or
(d) extend any other form of credit, or
(e) except with the approval of the Authority, wholly or partly release or discharge a debt.
(2) It is a condition of a casino licence that the casino operator must not contravene subsection (1) and must not cause, permit, suffer or allow an agent of the operator or a casino employee to contravene that subsection.
(3) It is a condition of a casino licence that an automatic teller machine or any like device is not to be installed within the boundaries of the casino.
(4) This section does not limit the operation of section 75 (Cheques and deposit accounts).
75 Cheques and deposit accounts
(1) …
(2) A casino operator may establish for a person a deposit account to which is to be credited the amount of any deposit to the account comprising:

(a) money, or

(b) a cheque payable to the operator, or

(c) a traveller’s cheque.
(3) A casino operator may issue to a person who establishes a deposit account and debit to the account chip purchase vouchers, money or a cheque made payable to the person, not exceeding in total value the amount standing to the credit of the account at the time of issue of the vouchers, money or cheque.
(4) A casino operator may, in exchange for a cheque payable to the operator or a traveller’s cheque, issue to a person chip purchase vouchers of a value equivalent to the amount of the cheque or traveller’s cheque.
(5) A cheque accepted by a casino operator may, by agreement with the operator, be redeemed in exchange for the equivalent in value to the amount of the cheque of any one or more of the following:
(a) money
(b) a cheque payable to the operator
(c) chip purchase vouchers
(d) chips.
(5A) For the purposes only of subsection (5), electronic funds transfer of an amount to an account operated by the casino operator is taken to be payment of that amount in money to tho operator.”
76 Junkets and inducements
(1) The regulations may make provision for or with respect to regulating or prohibiting:
…
(b) the offering to persons individually of inducements to take part in gambling at a casino.

(2) In particular, the regulations may:
(a) impose restrictions on who may … offer inducements, and
(b) …
(c) require any contract or other agreement that relates to … the offer of an inducement to be in a form and contain provisions approved of by the Authority, and
(d) …”

49 In Division 2 of Part 3, of the Act detailed provision is made in relation to the offer of or entry into contracts including contracts by a casino. This has some relevance so far as the plaintiff contends that one of the inducements offered to him were certain business contracts. The Division extends to contracts for the “supply of goods or services to a casino”, and creates a scheme for notification, to the Authority, of controlled contracts, and for their investigation (and objection thereto) by the Authority. It also makes provision for the notification of “notifiable contracts” i.e. contracts which would be controlled contracts, unless exempted under the Act. 50 Pursuant to the Regulations, a contract relating to the supply of goods or services is prescribed to be exempt from the definition of a controlled contract if the amount payable under it (together with the amount payable under any other similar contract with the same supplier) is less than $200,000 (Reg 9). 51 The following provisions may also be noted as part of the regulatory framework. The Casino Control Authority established under the Act, and having the powers previously noted, has among its other specific objects, an object:

“to maintain and administer systems for the licensing, supervision and control of a casino, for the purpose of:
(a) …
(b) ensuring that gaming in the casino is conducted honestly, and
(c) …
(d) containing and controlling the potential of a casino to cause harm to the public interest and to individuals and families.”

52 Under S170 of the Act, regulations may be made in respect of the matters specified in Schedule 3 to the Act, including:

“11 Counselling
Notices to be displayed in a casino with respect to the availability of counselling in respect of social problems that may arise in connection with gambling.

53   So far as counselling is concerned the Regulations provide:

“27 Information concerning counselling
A casino operator must ensure that there are at all times prominently displayed in all gaming areas of the casino signs identifying, and providing the telephone number of, one or more counselling services available in the State in respect of social problems that may arise in connection with gambling.
Maximum penalty: 100 penalty units.”

54 Again these provisions have a relevance for the present case so far as the plaintiff contends that there was a breach of the general duty of care in the absence of sufficient warning signs as to the dangers of gambling, and so far as the existence of a provision of this kind underlines the legislative acceptance of the social problems associated with legal gambling. 55 The provisions of the Liquor Act 1982 identified in the Regulations are made applicable to casinos, as modified in the respects provided (see also S89 of the Act). 56 I accordingly turn next to note the manner in which the Act deals with the obligations of the casino in relation to the supply of liquor, so far as these might be seen to supplement S 163 and Regulation 20. The modified provisions include the following statement of the primary object of the Liquor Act as adopted in its modified form:

“2A Harm minimisation is a primary object of the Act
A primary object of this Act is harm minimisation, that is, the minimisation of harm associated with misuse and abuse of liquor (such as harm arising from violence and other anti-social behaviour). The Authority, the Director, the Commissioner of Police and all other persons having functions under this Act are required to have due regard to the need for harm minimisation when exercising functions under this Act.”

It is the Authority that is the body entrusted with the power to grant a licence for the sale or supply of liquor within a casino (S 18).

57   Pursuant to Reg 103 a licensee may refuse to admit, or turn out, any person who is, inter alia, intoxicated. This has a relevance in so far as it shows that the casino has a lawful fight to refuse further patronage to an intoxicated gambler. 58   Regulation 125 provides:

“125 Conduct on licensed premises
(1) A licensee must not:
(a) …
(b) permit intoxication, or any indecent, violent or quarrelsome conduct, on the licensed premises.
Maximum penalty: …50 penalty units …
(2) …
(3) A person (whether or not the person is the licensee) must not, on licensed premises, sell or supply liquor to any person who is at the time in a state of intoxication.
Maximum penalty: 50 penalty units.
(4) If a person is intoxicated on licensed premises, the licensee is taken to have permitted intoxication on the licensed premises unless the licensee proves that the licensee and his or her employees took the steps set out in subsection (5) or all other reasonable steps to prevent intoxication on the licensed premises.
(5) For the purposes of subsection (4), the following are the relevant steps:
(a) asked the intoxicated person to leave the premises,
(b) contacted, or attempted to contact, a police officer for assistance in removing the person from the premises.
(c) refused to serve the person any alcohol after becoming aware that the person was intoxicated.

59   Provision is made for complaints, and for disciplinary action, concerning non compliance with the provisions of liquor licenses held in relation to casino premises, and the commission of offences under the modified provisions applicable to the licensed operations of the casino. Among the specified grounds for complaint are those nominated in S68(1):

“68 Grounds for complaint
(1) The grounds upon which a complaint may be made under section 67(1) in relation to a licensee or a manager of licensed premises are:
(a) …
(b) that the licensee or manager has been guilty of a breach of a condition of the licence concerned.
(c) that the licensee or manager has failed to comply with a direction or order of the Authority given or made under this Act and specified in the compliant.
(d) (e) …
(f) that the licensee or manager has engaged in conduct or activities that are likely to encourage misuse or abuse of liquor (such as binge drinking or excessive consumption),
(g) that intoxicated persons have frequently been on the licensed premises or have frequently been seen to leave those premises, ….”

60   The Regulations continue:

“69 Disciplinary powers of Authority
(1) The Authority is to consider and determine the matter of a complaint and any submissions duly made in relation to the complaint and, if it is satisfied that the ground upon which the complaint was made has been established may, unless subsection (4)applies, do any one or more of the following:
(a) reprimand the licensee or manager,
(b) order the licensee or manager to pay to the Crown a monetary penalty not exceeding 500 penalty units or, if circumstances of aggravation exist in relation to the complaint, not exceeding 1,000 penalty units,
(c) impose a condition to which the licence is to be subject or revoke or vary a condition to which the licence is subject,
(d) suspend the licence for a specified period,
(e) cancel the licence,
(f) disqualify the licensee from holding a licence for such period as the Authority thinks fit,
(g) in the case of a manager of licensed premises, withdraw the manager’s approval by the Authority to manage licensed premises,
(h) in thecae of a manger of licensed premises, disqualify the manager from being the holder of an approval to manage licensed premises,
(i) where the ground established is the ground referred to in section 68(1) (e) or (n), give such directions as to the exercise of the licence as it thinks fit, or
(j) takes no action.
(2) …
(3) Where the Authority determines under subsection (1) that the matter of complaint has been established, the Authority may, whether or not it acts under that subsection:
(a) reprimand:
(i) a person required by section 67 (7) (b) or (c) to be served with a copy of the complaint, or
(ii) a person who occupies a position of authority in the body corporate that holds the licence, or
(iii) a director of, or shareholder in, a proprietary company required to be so served, or
(iv) a director of, or shareholder in, a corporation that, within the meaning of the Corporations Law, I is a related body corporate of a proprietary company referred to in subparagraph (iii),
(b) order a person, director or shareholder referred to in paragraph (a) to pay to the Crown a monetary penalty not exceeding 500 penalty units or, if circumstances of aggravation exist in relation to the complaint, not exceeding 1,000 penalty units,
(c) disqualify, for a period commencing on a specified day, a person, director or shareholder referred to in paragraph (a) from being:
(i) a person interested in a business, or in the profits of a business, carried on pursuant to a licence (within the meaning of section 38(3)) or a person who occupies a position of authority in a body corporate that holds a licence, or
(ii) a director of, or shareholder in, a proprietary company so interested or a corporation that, within the meaning of the Corporations Law is a related body corporate of such a proprietary company,
unless it is proved that the person, director or shareholder had no knowledge of the matter upon which the complaint was made out and used all due diligence to obviate the necessity for the complaint.”

61 These provisions take their place alongside S79 of the principal Act, pursuant to which a casino operator may give an order prohibiting a person from entering or remaining in a casino, of its own motion (S79(1), or upon the person’s voluntary application (S79(3). An exclusion order made under this provision is subject to review (S80). A person who contrary to an exclusion order, enters or remains in a casino is liable to a pecuniary penalty (S84) and an obligation is imposed upon the person in charge of the casino, agents of the casino operator and casino employees, to remove a person whom they know to be the subject of an exclusion order (S85). This provision similarly has relevance so far as it confers an additional lawful right, in the casino operator , to ban certain persons. 62 It is in the light of this comprehensive regulatory framework that the Statutory counts need to be considered. The broad submission of the defendant is that, within a context in which only one casino is to be licensed at any given time (S6), in which a Casino Control Authority is established with comprehensive objects and powers designed to regulate and control every aspect of the operations of the casino, in which penal and disciplinary consequences exist for breaches of the Act, Regulations and licence conditions, and in which obligations arise for the payment of a casino duty (S 114) as well as of a community benefit levy (S 115), the Act cannot be construed as having been intended to give a private right of action for damages. In this regard, it was pointed out that the Act and regulations are silent as to the existence of any such right. 63 The question whether a breach of a duty arises under Statute was the subject of consideration in Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397, where Kitto J said, at 404 to 406:

“In the case of an enactment … prescribing conduct to be observed by described persons in the interests of others who, whether described or not, are indicated by the nature of a peril against which the prescribed conduct is calculated to protect them, the prima facie inference is generally considered to be that every person whose individual interests are thus protected is intended to have a personal right to the due observance of the conduct, and consequently a personal right to sue for damages if he be injured by a contravention: see Whittaker v Rozelle Wood Products Pty Ltd (1936) 36 SR (NSW) 204; 53 WN 71. At least this is so where the evil provided against is one of personal injury and the relationship existing between the person enjoined and the person protected is one which is recognised by the common law as giving rise to a duty on the part of the former to take precautions for the safety of the latter: O’Connor v S.P. Bray Ltd (1937) 56 CLR 464 at 478. But at the outset of every inquiry in this field it is important, in my opinion, to recognise … that the question whether a contravention of a statutory requirement of the kind in question here is actionable at the suit of a person injured thereby is one of statutory interpretation. The intention that such a private right shall exist is not, as some observations made in the Supreme Court in this case may be thought to suggest, conjured up by judges to give effect to their own ideas of policy and then ‘imputed’ to the legislature. The legitimate endeavour of the courts is to determine what inference really arises, on a balance of considerations, from the nature, scope and terms of the statute, including the nature of the evil against which it is directed, the nature of the conduct prescribed, the pre-existing state of the law, and, generally, the whole range of circumstances relevant upon a question of statutory interpretation: see Martin v Western District of the Australasian Coal and Shale Employees’ Federation Workers’ Industrial Union of Australia (1934) 34 SR (NSW) 593 at 596, and cases there cited. It is not a question of the actual intention of the legislators, but of the proper inference to be perceived upon a consideration of the document in the light of all its surrounding circumstances. …
A particular difficulty arises where the enactment which prescribes the conduct is accompanied by the express provision of a criminal sanction for the enforcement of its requirements. On the prima facie principle that expressio unius est exclusio alterius there is ground for a countervailing inference of an intention that in the event of a contravention the specifically provided remedy shall be the only remedy; cf Cutler v Wandsworth Stadium Ltd (1949) AC 398.

64   Earlier, in O’Connor v S.P. Bray Ltd (1937) 56 CLR 464, Dixon J said (at 477-478):

“The received doctrine is that when a statute prescribes in the interests of the safety of members of the public or a class of them a course of conduct and does no more than penalise a breach of its provisions, the question whether a private right of action also arises must be determined as a matter of construction. The difficulty is that in such a case the legislature has in fact expressed no intention upon the subject, and an interpretation of the statute, according to ordinary canons of construction, will rarely yield a necessary implication positively giving a civil remedy. As an examination of the decided cases will show, an intention to give, or not to give, a private right has more often than not been ascribed to the legislature as a result of presumptions or by refluence to matters governing the policy of the provision rather than the meaning of the instrument. Sometimes it almost appears that a complexion is given to the statute upon very general considerations without either the authority of any general rule of law or the application of any definite rule of construction … In the absence of a contrary legislative intention a duty imposed by statute to take measures for the safety of others seems to be regarded as involving a correlative private right, although the sanction is penal, because it protects an interest recognised by the general principles of the common law. After the full discussion of the authorities by Jordan CJ in Martin v Western District of the Australian Coal and Shale Employees’ Federation Workers Industrial Union of Australia (Mining Department ) (1934) 34 SR (NSW) 593 at 596 et seq; 51 WN (NSW) 203 at 204 and Whittaker v Rozelle Wood Products Pty Ltd (1936) 36 SR (NSW) at 207 et seq; 53 WN (NSW) at 71, 72, it would be superfluous to refer to them. Whatever wide rule may ultimately be deduced, I think it may be said that a provision prescribing a specific precaution for the safety of others in a matter where the person upon whom the duty laid is, under the general law of negligence, bound to exercise due care, the duty will give rise to a correlative private right, unless from the nature of the provision or from the scope of the legislation of which it forms a part a contrary intention appears.”

65   Reference may also be made to Stubbs v NRMA Insurance Ltd (1997) 42 NSWLR 550, where Mason P cited the passage extracted from the judgment of Kitto J, in Sovar above noted. 66   Reliance was placed by the plaintiff upon the report of Sir Lawrence Street AC KCMG “Inquiry into the Establishment and Operation of Legal Casinos in New South Wales” (‘the Street Report”) and upon the second reading speech in relation to the Casino Control Bill in the Legislative Assembly, on 5 March 1992. In the Street Report, there was a great deal of discussion in relation to the impact of problem gambling on individuals and families, and as to the existence of serious human costs relating to this form of activity (para 4.4.23). The report also noted the problem of junkets and inducements when used to attract and hold gamblers, and made reference to the desirability of the Authority giving consideration to guidelines in this connection (para 4.6.13). 67 Additionally, there was reference to the desirability of widening the objects of the Authority to include consumer protection initiatives, and to the taking of reasonable steps to control the potential of harm to the public interest and to individuals and families (para 4.7) - a matter taken up in S 140(d) of the Act noted earlier. 68 In the second reading speech, Mrs Cohen, the Chief Secretary, recorded the concerns of the government about the social impact of legalised casino gambling, which had led to the public inquiry. Reference was made to the recommendation of the Inquiry to amend the draft legislation, in order to widen the objects of the Authority, so as to meet this concern. 69 Together, it was the plaintiff’s submission that the report and the speech, to which reference might legitimately be had under S 34 of the Interpretation Act 1987 (NSW), set an environment in which acceptance by the Legislature of the existence of legitimate concern for the potential impact of the casino upon individuals should be inferred, and the Act and regulations should be construed in that context. 70 In relation to the provision of free alcohol as an inducement to a potential gambler, reliance was placed in particular on S 163 and regulation 20. Those provisions, as I have observed, are supplemented by the modified provisions of the Liquor Act. The defendant, however, submitted that even if it were to be accepted that S 163 was intended to protect intoxicated persons from suffering financial loss through gambling, and that regulation 20 was intended to dissuade the casino from encouraging persons to gamble by the offer of free alcohol, it did not follow that there was any legislative intent to confer a private right of action for breach of any such provision. 71 It was submitted first that the cases, where an implied right to bring an action for damages for breach of statutory duty has been recognised, have been mainly in the area of the regulation of standards of work, where there is not only a risk of physical injury, but also a general common law duty of care. The difference was said to lie in the circumstance that in the case of a casino which is open to the public at large, there is no particular class of persons in respect of whom the protection is intended. The plaintiff however replied that there is such a class of person, namely those who are prone to gambling while intoxicated or to being lured into that activity by the blandishment of free alcohol. 72   By analogy the defendant referred to certain authorities in relation to analogous provisions under State or Territory Liquor Licensing legislation which prohibited, under penalty of an offence, the sale or supply of liquor to an intoxicated person. In Chordas v Bryant (Wellington) Pty Ltd (1988) 20 FCR 91, the Full Federal Court held that such a provision (S 79 of the Liquor Ordinance (ACT)) did not confer a private right of action for damages resulting from its breach. 73 Applying Sovar and following Abela v Giew (1965) 65 SR (NSW) 485 (a decision in relation to a breach of a regulation made under the Motor Traffic Act 1909 (NSW)) it was held (at 102) that no such right of action was conferred because the Section “was enacted in the general public interest not for the protection of persons who may be injured by the conduct of intoxicated persons”. The Ordinance in which the regulation appeared was intended, so it was held, to “protect the public interest by regulating the sale of intoxicating liquor, so as to protect those who by over indulgence or because of youth or mental ill health are at risk from its abuse: see Commissioner of Police v Cartman (1896) 1 QB 655 at 657; Cundy v Le Cocq (1884) 13 QBD 207 at 209 and Luff v Oakley (1986) 82 FLR 91 at 101.” 74 In Soutter v P & O Resorts Pty Ltd (Court of Appeal Queensland, 13 March 1998 unreported) the Court accepted that, while it may have been reasonable to treat a provision in the Liquor Act 1912 (Qld) creating an offence for a licensee to allow various classes of undesirable persons, including drunken persons, to be upon licensed premises (S 78), as having been intended to protect a particular class of persons, namely the reputable patrons of the licensed premises, from harm or annoyance at the hands of those persons, it was difficult to take the next step to impute an intention to create a civil cause of action. 75   Pincus J, with whom McPherson JA and Fryberg J agreed, said (at 111):

“Courts have been very ready to treat statutes governing conditions at places of work as conferring a right of action as for a breach of statutory duty upon injured employees, but it does not appear to me that the spirit of those cases has ruled in other areas. A strong example of that attitude is the view which was favoured in Hargrave v Goldman (1963) 110 CLR 40, as to the effect of a statute requiring the occupier of land to extinguish certain fires… Although the purpose of that legislation must surely have been, or included protection of neighbouring properties, that was apparently thought not to be enough to give rise to a cause of civil action. In Abela v Giew (1965) 65 SR (NSW) 485, it was held that regulations governing the behaviour of operators of motor traffic do not confer any private right of action upon injured persons.”

76   His Honour also noted that in: R v Deputy Governor or Parkhurst Prison, ex parte Hague(1992) 1 AC 58, there had been a denial of the proposition that the question is simply whether the legislature intended to confer protection from damage, and continued:

“To find a right of action one must go further and consider whether the intention was to confer one: see at 159, 170, 171. The question is said not to be exactly one of construction: Stovin v Wise (1996) AC 923 at 952.
Where the Statute prescribes a relatively modest penalty for breach it may sometimes seem harsh to impose upon the offender, as within the legislative intention, an unlimited liability for damages as well. It will not necessarily be right to do that where the offender would not otherwise be liable to pay damages, for example, on the ground of negligence. (at pp 111-112)

77 Master Harrison considered it arguable that these decisions might be distinguished upon the basis that the liquor legislation was concerned with the problems associated with the consumption of alcohol per se, and not with the problems attributable to its consumption in combination with the activity of gambling; and upon the further basis that the present legislation was directed to the protection of a particular class of persons, namely intoxicated gamblers, and not the public at large. 78 When considering the question of construction, the Master thought it necessary to view the relevant provision (which was then S 163, but now also includes Regulation 20) in the light of the other provisions of the Act, including S 140(d) (wrongly referred to in the reasons as S 143(d)). That section states that one of the objects of the Authority is to maintain and administer systems for the licensing, supervision and control of a casino for the purpose of containing and controlling its potential to cause harm to the public interest and to individuals and families. In those circumstances, and in circumstances where the full facts were as yet unexplored and there had been no judicial determination of the extent of the obligations and responsibilities of the Authority, or of casino operators towards patrons, the conclusion by the Master was reached that the plaintiff’s argument was not untenable. 79 In relation to S 70(1)(g) (the provision said to be applicable so far as the financial inducements were concerned) Master Harrison expressed the view that this provision seemed to have been intended to establish whether a casino operator had complied with the conditions of its licence (under pain of the disciplinary action provided for in S 23) rather than having been intended to apply to protect patrons who were subject to inducements. Although weak, the conclusion was reached that such a claim could not be dismissed as untenable or hopeless. 80 I have come to a contrary conclusion to the Master in relation to the statutory counts. To determine the question of construction referred to in Sovar and O’Connor it is necessary to have regard to the Statute as a whole: see King v Goussetis (1986) 5 NSWLR 89 at 93 per McHugh JA and Byrne Australia Airlines Limited (1985) 185 CLR 410 at 424 per Brennan CJ and Dawson and Toohey JJ, where their Honours said:

“A cause of action for damages for breach of statutory duty arises where a statute which imposes an obligation for the protection or benefit of a particular class of persons is, upon its proper construction, intended to provide a ground of civil liability when the breach of the obligation causes injury or damage of a kind against which the statute was designed to afford protection”.

81   The question of construction posed is not, however, answered by asking whether the enactment is for the protection of the public at large, or for the benefit of a class of persons of which the plaintiff is a member: see Onus v Alcoa of Australia Limited (1981) 149 CLR 27 at 67-68. 82 As noted earlier, there is a presumption that, when an enactment creates an obligation and provides a means for securing compliance with the obligation, then the remedy so provided is exclusive: Doe d Rochester (Bishop) v Bridges (1831) 1B and Ad 847 at 859; 109 ER 1001 AT 1006; Pasmore v Oswaldstwistle Urban District Council (1898) A C 387 at 394-395; and Kinzet v McCourt (1999) 46 NSWLR 32 at 43 per Spigelman CJ. In Josephson v Walker (1914) 18 CLR 691, this presumption was said by Griffiths CJ (at 697) to be:

“… a very strong presumption which may be rebutted if there are sufficient grounds for thinking that the language of the Act itself shows that the legislature intended that the mode of enforcing the obligation should be the only mode, but that the party should also be entitled to have recourse to any ordinary means of enforcing it under the general law”.

83   In this regard a criminal penalty has been regarded as a means of enforcing obligations of the kind which Griffiths CJ had in mind: Cutler v Wandsworth Stadium Ltd (1949) A C 398 at 407-408, 411 and 413. 84   It may be accepted, as the plaintiff, submitted that this principle has been progressively watered down, it having been held in a number of instances, especially in the field of employer-employee relations, that the existence of a penalty for breach of a relevant prohibition or obligation, did not exclude the existence of a private right of action. So it was that Dixon J in O’Connor observed that, in the absence of a contrary legislative intention, the existence of a duty imposed by statute to take measures for the safety of others seemed to be regarded as involving a correlative private right, even though the sanction was penal. 85   The existence of such a sanction is accordingly but one factor to be taken into account.
86 It was submitted in support of the Master’s conclusion that it was proper to take into account when construing the Act, matters of underlying policy as identified in the Street Report, and the Second reading speech, concerning the need for the protection of gamblers and their families and society at large, and in that regard to give effect to a construction that would promote the purpose or object underlying the legislation, in preference to one that would not have that result (S 33 of the Interpretation Act 1897). 87 In my view, however, the comprehensive regulatory scheme set up under the Act and Regulations, which includes the establishment of a body charged with monitoring legal casino gaming in the State and supervising compliance by casino operators and staff, and which provides for criminal and civil sanctions, as well as for disciplinary action in the event of any contravention of the Act, Regulations or licence conditions, is such that the requisite legislative intention to confer a private right of action for damages is lacking. The Street Report and the second reading speech point, in my view, towards the establishment of a regulatory scheme as the means of addressing the negative impacts of legalised gambling. There is nothing in that material, or in the Act itself, to suggest that there should be a private right of action additional to the obligations imposed upon casino operators. Indeed, the presence within the Act of S 34, under which jurisdiction is vested in the Supreme Court, at the suit of the Authority, to restrain contraventions of the Act, or of licence conditions, points in the opposite direction. 88 An examination of the specific provisions upon which the plaintiff seeks to rely does not assist his argument. So far as he relies on S70, it can be seen that the contravention alleged is of a licence condition. It is difficult to see how a private right to damages could apply in relation to an obligation so created, even though non compliance could lead to action by the Authority. In any event it appears to me that this provision is directed towards ensuring that touts and urgers are not deployed outside or within casino premises. Any wider interpretation would place restrictions on the use of promotional material, advertising and the like, that would be unwarranted. 89 The legislative scheme does in fact contemplate the offer of individual inducements - see SS 76 and 75 noted above. So far as regulation 20 is concerned, the prohibition of the offer of free liquor is also not absolute, an exception being permitted for its provision in accordance with a direction of the Authority (sub par 1), or within certain designated or reserved areas (sub par 2). The existence of a maximum penalty for a breach of this regulation of 50 penalty units ($5,500 as at 2 July 1997), the authority for the making of which is derived under SS 76(1)(b) and 170 (1) of the Act, points in my view

against the existence of a private right of action.

90 In relation to the remaining inducements, ie the offer of business contracts for the provision of services to the casino, it is to be noted that the entry into controlled contracts and into notifiable contracts is the subject of a regulatory mechanism. Whether the contracts alleged in the present case fall into this category does not appear, upon the face of the statement of claim. The point, however, is that there is no absolute prohibition upon the casino entering into any contract of this kind, with a person such as the plaintiff. 91 The final matters of relevance under this head of claim are the provision of free liquor to the plaintiff (contrary to Reg 20), the provision of liquor to him while intoxicated (contrary to the modified provisions of the Liquor Act noted above); and selling liquor to him while he was in the gaming area, and permitting him to gamble, in each case while he was intoxicated (contrary to S 163). 92 I am not persuaded that the present case differs, in any material respect from those of Chordas and Soutter, where upon the construction of the analogous provisions under licensing laws, it was held that no private right for damages was conferred. 93   Accordingly, I am of the view that the statutory claims are untenable, and that so much of the statement of claim as depends upon them should be struck out. 94   I observe in passing that I have not found it necessary in coming to this conclusion, to deal with the further argument of the defendant to the effect that if, upon their proper construction, the regulations relied upon do confer a private right of action for damages, then they would be ultra vires, cf Darling Island Stevedoring & Lighterage Company Limited v Long (1957) 97 CLR 36, Utah Construction and Engineering Pty Ltd v Pataky (1966) A C 629 at 640-641, and Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 461-462.

COMMON LAW DUTY OF CARE

95   The claim in negligence, it was submitted by the defendant, was for pure economic loss, and since there was no decision recognising the existence of a duty of care on the part of a casino operator in the present context, this part of the statement of claim should also be struck out. 96   As formulated, its submission was that the bare fact that it was foreseeable (as it clearly is) that someone who gambled at a casino might lose money, is insufficient to impose a duty of care. It also submitted that the offering of inducements to attract patrons or customers is a recognised and ordinary part of commercial activity, as is the entry into transactions by which one party may stand to benefit financially while the other may not. To impose a duty of care in those circumstances, it was argued, would be to place impediments in the way of ordinary commercial activity, and to risk the creation of an indeterminate liability. Moreover, it was suggested, policy considerations did not require the addition of a tortious remedy to the regulatory framework previously mentioned, either in the overall public interest or to protect individual gamblers from their own carelessness or rashness. 97   The field of liability for economic loss is still evolving. So far as the research of Counsel showed there is no authoritative decision of direct assistance in the present context. One decision touching upon some of the issues has however been delivered since my judgment was reserved. It is the decision of Hogan ADCJ in Reynolds v Katoomba RSL All Services Club Ltd 14 December 1999, to which I will return later in the reasons. 98   In Bryan v Maloney (1995) 182 CLR 609, Mason CJ and Deane and Dawson JJ said (at pp 618-619):

“… the field of liability for mere economic loss is a comparatively new and developing area of the law of negligence. In that area, the question whether the requisite relationship of proximity exists in a particular category of case is more likely to be unresolved by previous binding authority with the consequence that the ‘notion of proximity … is of vital importance’ ( San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340 at 355, per Gibbs CJ, Mason, Wilson and Dawson JJ. As Stephen J indicated in Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad’ (1976) 136 CLR at p 575, it is the ‘articulation’, in the different categories of case, ‘of circumstances which denote sufficient proximity’ with respect to mere economic loss, including ‘policy considerations’ which will gradually provide ‘a body of precedent productive of the necessary certainty’. Inevitably, the policy considerations which are legitimately taken into account in determining whether sufficient proximity exists in a novel category will be influenced by the courts’ assessment of community standards and demands.( see, e.g. Hedley Byrne & Co v Heller & Partners Ltd (1964) AC 465 at 536; Dorset Yacht Co v Home Office \ (19700) AC 1004 at pp. 1038-1039, 1058, Caltex Oil (Australia) Pty Ltd v The Dredge ‘Willemstad’ (1976) 136 CLR at p 575, Sutherland Shire Council v Heyman (1985) 157 CLR at p 497.
One policy consideration which may militate against recognition of a relationship of proximity in a category of case involving mere economic loss is the law’s concern to avoid the imposition of liability ‘in an indeterminate amount for an indeterminate time to an indeterminate class’. Ultramares Corporation v Touche (1931) 174 NE 441 at p.444, per Chief Judge Cardozo, Caltex Oil (Australia) Pty Ltd v The Dredge ‘Willemstad’ (1976) 136 CLR at p 568, 591; Hedley Byrne & Co v Heller & Partners Ltd (1964) at p 527 and see also Sutherland Shire Council v Heyman (1985) 157 CLR at p 465. Another consideration is the perception that, in a competitive world where one person’s economic gain is commonly another’s loss, a duty to take reasonable care to avoid causing mere economic loss to another, as distinct from physical injury to another’s person or property, may be inconsistent with community standards in relation to what is ordinarily legitimate in the pursuit of personal advantage. Jaensch v Coffey (1984) 155 CLR at p 578; Sutherland Shire Council v Heyman (1985) 157 CLR at p 503. The combined effect of those two distinct policy considerations is that the categories of case in which the requisite relationship of proximity with respect to mere economic loss is to be found are properly to be seen as special. Commonly, but not necessarily, they will involve an identified element of known reliance (or dependence) or the assumption of responsibility or a combination of the two. See generally, Sutherland Shire Council v Heyman (1985) 157 CLR at pp 466-468, 501-502, Hawkins v Clayton (1988) 164 CLR 539 at pp 545, 576, 593.

99   Toohey J observed in the same decision (at pp 658-660):

“The area of the law relating to recovery of pure economic loss has been one of development, with the courts conscious of the need to strike a balance between compensating an injured party for economic loss but at the same time confining liability within manageable limits. The law began by limiting liability to cases of physical loss or injury. ( Cattle v Stockton Waterworks Co. (1875) LR 10 QB 453). Later in Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964) AC 465 liability was extended to pure economic loss in an action for negligent misstatement. But reliance was at the heart of the decision in that case.
…
In Australia, at least since Caltex Oil (Australia) Pty Ltd v The Dredge ‘Willemstad’ (1976) 136 CLR 529 there has been a recognition (albeit in a different context) that it may be possible to recover economic loss where no physical damage is involved, even though there has been no reliance on the part of the plaintiff: cf Opat v National Mutual Life Association of Australasia Ltd (1992) 1 VR 283. However, the emphasis in the judgments in that case is on foreseeability that a particular person will be likely to suffer damage as a result of the negligence. Mason J said (at p591. See also Sutherland Shire Council (1985) 157 CLR at 466, 493, 502):
‘The problem is to yield compensation to the individual who suffers financial loss not necessarily consequential upon damage to his property when that loss is closely connected with the failure to take care and yet at the same time to deny compensation ‘in an indeterminate amount ... to an indeterminate class’, in particular, to a large class of person whose loss arises because their use of a public utility or facility has been interrupted’.
Stephen J thought that recovery for pure economic loss must depend upon ‘policy considerations’ (1976) 136 CLR at 574) His Honour went on to say: (ibid at p 575)
“But in the general realm of negligent conduct it may be that no more specific proposition can be formulated than a need for insistence upon sufficient proximity between tortious act and compensable detriment. The articulation, through the cases, of circumstances which denote sufficient proximity will provide a body of precedent productive of the necessary certainty; the gradual accumulation of decided cases and the impact of evolving policy considerations will reflect the ‘courts’ assessment of the demands of society for protection from the carelessness of others.’”

100   His Honour noted that McLachlin J, in Canadian National Railway Co v Norsk Pacific Steamship Co Ltd (1992) 1 S.C.R. 1021, had classified the cases in the United States where damages had been awarded for economic loss as:

“those where the economic loss is closely related to physical damage; pollution cases where on grounds of public policy, economic loss has been awarded to commercial fishermen and others; and certain product liability cases, at least where the defective product creates an unreasonable risk of harm to persons or property and such harm materialises”.

His Honour favoured the incremental approach to the application of the principle to new situations, that had been preferred by McLachlin J, who had suggested that it was more consistent with the approach of the common law, and was ‘sensitive to dangers of unlimited liability’.

101   In Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad’ (1976) 136 CLR 529 the High Court held that damages are recoverable for economic loss where the defendant has the knowledge or means of knowing that a particular person, not merely as a member of an unascertained class, will be likely to suffer economic loss as a consequence of his negligence. The presence of a particular relationship was held to be the factor giving rise to the duty of care. In this regard, Stephen J said (at 574) that there was a need for “some control mechanism based upon notions of proximity between tortious act and resultant detriment.” 102 The concept of proximity as a universal identifier of the existence of a duty of care has been questioned in the decisions noted above (para 28). Its applicability to an economic loss claim was considered in Hill v Van Erp (1997) 188 CLR 159, an action brought by an intended beneficiary against a solicitor who caused a will prepared for his client, to be attested in a way that left the proposed disposition to the plaintiff null and void. Brennan CJ based his decision upon the foreseeability of damage to another if the task which the solicitor was contractually bound to perform for his client was carelessly performed. His Honour made it clear (at p 167) that the fact of assumption of responsibility, and reliance upon it, that had laid the foundation for the decision in Hedley Byrne & Co, Ltd v Heller & Partners Pty Ltd (1964) AC 465 did not exhaust the circumstances in which damages for economic loss could be recovered. It was one type of such case but it did not deny the possibility of recovery in other types of case (at 170). 103 Dawson J, with whose reasons Toohey J agreed, described the proximity test as a useful term for signifying the process of reasoning which needs to be undertaken to establish a duty of care, but said that to hope that it can describe a common element, underlying all categories of cases in which a duty is recognised, is to expect more of the term than it can provide (at 178). His Honour observed, (at 178-179):

“Where a new category is suggested, regard should be had in the first place to the established categories which may be helpful by way of analogy in determining whether to recognise a duty of care. This is how incremental development takes place. (see Dorset Yacht Co v Home Office (1970) AC 1004 at 1058-1059, per Lord Diplock). The process is affected by relevant policy considerations, such as the need to avoid indeterminate liability or the placing of impediments in the way of ordinary commercial activity. It is also important that the tort of negligence should not be regarded as providing an all-enveloping remedy, supplanting “other torts, contractual obligations, statutory duties or equitable rules in relation to every kind of damage including economic loss’. In the end, policy considerations will settle the outer limits of the tort.
As Lord Pearce said in Hedley Byrne & Co v Heller & Partners (at 92):
“How wide the sphere of the duty of care in negligence is to be laid depends ultimately upon the courts’ assessment of the demands of society for protection from the carelessness of others.”

104   Toohey J, said that the general conception of proximity:

“… does operate as a limitation on any notion that liability in negligence arises simply from a duty to avoid harm that is reasonably capable of being foreseen, at any rate in cases not involving direct physical injury or damage. It designates ‘a separate and general limitation upon the test of reasonable foreseeability in the form of relationships which must exist between plaintiff and defendant before a relevant duty of care will arise’. (at 189)

105   Gaudron J observed, (at 192-193):

It is well settled that where, as here, a plaintiff sues in negligence to recover pure economic loss - ‘financial loss which is not ‘causally consequent’ upon physical injury to the plaintiff’s own person or property”: Bryan v Maloney (1995) 182 CLR 609 at 657, per Toohey J, referring to Feldthusen, Economic Negligence 2nd ed (1989) p1. - he or she must establish more than the foreseeabililty of loss. As earlier indicated, the focus of this court in that regard has been directed to the relationship of proximity and it has been said authoritatively that ‘the categories of case in which the requisite relationship of proximity with respect to mere economic loss is to be found are properly to be seen as special”: ( Bryan v Maloney (1995) 182 CLR 609 at 619. See also Hawkins v Clayton (1988) 164 CLR 539 at 576.
The need for a special relationship in cases of pure economic loss derives from two policy considerations. The first is the need ‘to avoid the imposition of liability ‘ in an indeterminate amount for an indeterminate time to an indeterminate class’: Bryan v Maloney 609 at 618 referring to Ultramares Corporation v Touche (1931) 255 NY 170 at 179 (174 NE 441 at 444) per Chief Judge Cardozo. See also Caltex Oil (Australia) Pty Ltd v The Dredge ‘Willemstad’ . The other is that:
“In a competitive world where ‘one person’s economic gain is commonly another’s loss, a duty to take reasonable care to avoid causing mere economic loss to another ... may be inconsistent with community standards in relation to what is ordinarily legitimate in the pursuit of personal advantage”. ( Bryan v Maloney (1995) 182 CLR 609 at 618. See also Jaensch v Coffey (1984) 155 CLR 549 at 578; Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 503.

106   The desirability of bringing the law of this country into line with authority in other common law countries, the policy considerations relating to the proper transmission of property from one generation to the next, and the categorisation of the intended beneficiary’s loss as a loss of a legal right (to have the testator’s estate properly administered in accordance with the terms of the proposed will) were factors that encouraged her Honour to find that the circumstances were such as to give rise to a duty of care. 107   Her Honour similarly noted that although the main focus for the purpose of proximity, in relation to cases of pure economic loss, has been on the assumption of responsibility and reliance, it has been established that they are not the only criteria. The importance of control as a factor in proximity, and as a factor in governing the content of the duty of care, was said to be apparent. In some respects it was said to provide a ‘more stringent test’ than assumption of responsibility (at 198-199). 108   Notwithstanding the limitations upon the use of proximity as an identifier of the duty of care, and the attempts by Kirby J in Pyrenees Shire Council v Day (1998) 192 CLR 330 and Perre v Apand Pty Ltd (1999) 164 ALR 606 to develop a test in the place of proximity that was dependent upon the three stage approach offered in Caparo Industries Pty Ltd v Dickman (1990) 2 AC 605, (resisted by other members of the High Court) the plaintiff pointed, in this case, to the existence of:

(a) physical proximity between himself and the defendant, or its servants or agents, at the times when he alleged breaches of duty occurred, in the sense that he was gambling in premises under the exclusive control and management of the defendant; and in the sense that it dealt directly with him in physically supply him with complimentary products, services and privileges, including alcohol and a cheque cashing facility;

(b) circumstantial proximity in the sense that the defendant was the provider of facilities and services and he was a consumer of those facilities and services;

(c) causal proximity in the sense that the acts complained of (namely inducing him to gamble, and encouraging or permitting him to become intoxicated while doing so) led to the losses and injuries he sustained.

109   Further, the plaintiff submitted that:

(a) the case was not one purely of economic loss in that the plaintiff also claims to have suffered psychiatric injury in the form of anxiety, depression and otherwise, as a result of the breaches of duty, with the sequelae pleaded;

(b) the class of persons to whom the duty is owed - either those patrons who are permitted entry to the casino, or at least those patrons who are known, or ought reasonably to be known, as problem gamblers, is not an indeterminate class;

(c) the foreseeability of loss on the part of a gambler, particularly a problem gambler, who is induced to continue gambling, or whose capacity to make informed decisions and to exercise self control is impaired when plied with liquor while intoxicated, is so obvious as to be beyond argument and could not be dismissed as far fetched or fanciful.

110   Arguments along these lines were accepted by Master Harrison, leading to the conclusion that, in an area of evolving jurisprudence, the plaintiff’s claims could not be said to be hopeless or untenable. In coming to this conclusion, the Master paid particular regard to the view noted earlier that the Court should be astute not to risk stifling the development of the law, by too ready an exercise of the strike out power. That is a view with which I express my complete agreement. 111   The appeal and motion do need to be considered in the light of the circumstance that there is a lack of consensus in the High Court, as recently as Perre v Apand Pty Ltd concerning the existence of any unifying marker as to the existence of a duty of care, and in the light of the evolving category of cases where recovery has been permitted for economic loss and for psychiatric injury. In the instant case there is good reason to assume that reasonable foreseeability of the risk of loss could be established, as well as a relationship of proximity in the three aspects identified by Deane J in Jaensch v Coffey (1984) 155 CLR at 584-585, and adopted by the plaintiff in its submission. 112 Of the circumstances that have been identified as necessary in addition to foreseeability and proximity, in economic loss cases, are those of control and vulnerability: see Burnie Port Authority v General Jones Pty Ltd (1994)) 179 CLR 520 (at 551); Hill v Van Erp (at 198-199 and 234), and Perre v Apand Pty Ltd (e.g. at par 38 per Gaudron J, paras 118, and 124-129 per McHugh J, and para 406 per Callinan J). 113   If these are the relevant additional criteria, then again it seems to me well arguable that they could be established by the plaintiff. The defendant had the capacity, and the responsibility to exercise close control over its operations, of its staff and of those patrons who were allowed to enter its premises for the purpose of gambling. It set the rules for the games, it provided the machines and chips which gamblers were to use, and it had the power to allow people to remain at its tables, or to warn them off the premises. 114   It is also well arguable that as a high roller with an unhealthy addiction or attraction for gambling, the plaintiff was vulnerable, particularly if allowed to gamble while intoxicated, or if supplied with further liquor, especially free liquor, when in that state. Again, no great imagination is needed to conclude that an intoxicated gambler is less able to exercise judgment and control over his decision to turn to the tables at all, let alone to make informed judgments as to the way he should play any game of chance. While all such games do depend to a great degree upon fortune, they do not wholly do so since there is usually some room for an exercise of skill and judgment. 115   The extent of that control and vulnerability, it might fairly be said, would be significantly affected if the facts alleged by the plaintiff are established, as to him being deliberately plied with alcohol when intoxicated, or as to his drinks being deliberately ‘switched”. Similarly if the plaintiff can show that he was identified by the casino as a problem gambler and deliberately targeted with inducements, whether of free alcohol or business contracts or otherwise, so as to encourage him to continue betting in a disastrous way. 116   Additionally there is the factor of knowledge of the risk and of its consequences which Kirby J considered relevant: Perre v Apand Pty Ltd at par 132. If the plaintiff can establish the allegation that the defendant knew of his losses and vulnerability, and of those of similarly addicted gamblers, then that knowledge could legitimately, in my view, be taken into count in determining the existence of a duty of care. 117   So far as reference to policy considerations arise as a separate issue, and are not subsumed within the proximity inquiry, it seems to me that:

(a) this is not a case where there is a danger of indeterminate liability, ie so long as the duty of care is confined to those who are known to be problem gamblers, a phrase sufficiently recognisable to permit of realistic calculation: Perre v Apand Pty Ltd at paras 106/107 per McHugh J, and para 336 per Hayne J.

(b) the imposition of a duty of care to such persons would not, to my mind, place an unreasonable burden upon the autonomy or commercial enterprise of the appellant, or constitute an unreasonable impediment on its commercial activities and its economic freedom, or interfere with the competitive operation of the marketplace: Perre v Apand Pty Ltd at para 33 per Gaudron J, paras 133 and 300 per Kirby J. Problem gamblers are not necessarily of value to a casino, and there are any number of persons able to use its facilities in a moderate or acceptable way.

(c) There is good reason to give effect to the concerns as to the deleterious social impact of gambling, in permitting a right of recovery, at general law, where the controls laid down in the Act or regulations, and encouraged by the Street Inquiry, are contravened to the detriment of the kind of gambler for whom those concerns were largely entertained.

(d) The social utility of gambling as an enterprise to be actively encouraged is not immediately apparent - at best it might be an opportunity for entertainment for some and means of raising revenue, but at worst it is an unproductive activity that panders to self interest and greed.

(e) There is no occasion to suppose that any damages which might be awarded if a duty of care was imposed would be “unfair, or unreasonable or disproportionate” in all of the circumstances: Perre v Apand Pty Ltd at 427 per Callinan J. In this regard, sight should not be lost of the availability of the defence of contributory negligence in a case based upon a breach of a duty of care, under which due allowance could be made for the extent to which a plaintiff has failed to exercise reasonable care for his own interests. Nor should sight be lost of the reasoning which led to a verdict for the defendant in Morgan v Sherton Pty Ltd (1999) 46 NSWLR 141, where the plaintiff’s conduct can properly be regarded as foolhardy or reckless. The common law in these respects has the capacity to place brakes on unlimited recovery and to adjust for the extent to which a gambling plaintiff can reasonably be said to have contributed his own misfortune.

118   In the circumstances outlined I am not persuaded that the common law count is so manifestly groundless or untenable as to justify striking it out. The evolving nature of the tort of negligence, and the incremental approach that appears to be favoured (Perre v Apand Pty Ltd at par 28 per Gaudron J; par 93 and 94 per McHugh J; par 232 per Kirby J; par 333 per Hayne J and par 405 per Callinan J) make it inappropriate to take this step merely because no category of case of this kind has been recognised in this country. 119   There is some precedent elsewhere for the existence of a duty for care within this context. In GNOC Corp v Aboud 715 F Supp (1989) the US District Court (District of New Jersey) held that a common law duty was owed by a casino to refrain from knowingly permitting an invitee to its casino to gamble when he was obviously intoxicated. In doing so it acted by analogy to the duty recognised as being owed by tavern owners who had been held responsible at law for injuries resulting from the negligent service of alcoholic beverages to patrons who were obviously intoxicated: see in this context, R Solomon and J Payne “Alcohol Liability in Canada and Australia: Sell, Serve and be Sued” (1996) 4 Tort Law Review 188. 120   The Court there said (at 655-656):

“… under the circumstances of this case, the Golden Nugget should reasonably have foreseen the type of harm sustained by Mr. Aboud. In a gambling parlour environment, the risk that an obviously intoxicated and/or drugged patron might not appreciate the consequences or substantiality of his endeavours is great. The relevant inquiry is not, as the Gold Nugget suggests, whether a gambler knows the odds of winning in a casino are against him/her, but rather, whether a gambler comprehends the consequences of continued protracted gambling. There is nothing fundamentally unfair about imposing upon a casino the duty to prevent patrons such as Mr Aboud from gambling while patently intoxicated, for they are in the best position to do so. Indeed, casinos are already under an obligation not to serve visibly intoxicated patrons pursuant to New Jersey’s common law dram shop liability as well as the statutory framework and administrative regulations which govern alcoholic beverage service in casinos.
In sum, a casino has a duty to refrain from knowingly permitting an invitee to gamble where that patron is obviously and visibly intoxicated and/or under the influence of a narcotic substance. Here there are allegations of patent and overt inebriety coupled with the consumption of a powerful narcotic medication prescribed by physicians summoned by and paid for by the casino itself. While under the influence of drugs or alcohol, one suffers a deficit, to varying degrees, of cognitive faculties such as the power to reason sensibly, to appreciate the danger of activities engaged in and/or to exercise sound judgment. Cf.Buckley v Estate of Pirolo, 101 NJ 68, 79, 500 A.2d 703(1975). The potent effects of intoxicating substances on reasoning and judgment are not lost on casino proprietors like the Golden Nugget who make liquor readily and plentifully available to patrons while they are in the act of gambling.
It is indeed curious that the appropriate ‘beverages of choice’ are seldom available to patrons on a complimentary basis outside the gambling parlour. Consequently, in justice and fairness, a casino which negligently breaches this duty should be answerable, by applying traditional negligence concepts, for the damages that flow therefrom.

121   This decision was followed in Tose v Greate Bay Hotel and Casino Inc 819 F Supp 1312 (1993), although upon the facts the case was lost. The US Court of Appeals (Third Circuit) recognised (34 F 3d 1227 at 1232) that:

“a reasonable argument can be made that a casino owes a common law duty to a patron to prevent him from gambling when it knows he is intoxicated”,

as did the same Court in Hakimoglou v Trump Taj Mahal Associates 70 F 3d 291 (1995) although somewhat curiously it eventually came to the conclusion that no duty was owed. The issue raised has also been the subject of examination in an article by JC Hallam, “ Rolling the Dice: Should Intoxicated Gamblers Recover their Losses?” (1990) 85 North Western University Law Review 240.

122   It was submitted by the defendant that the duty of care that had been recognised concerning hoteliers or hosts, and the supply of liquor to their patrons or guests, is of a different genus being concerned with the risk of physical injury, rather than with economic loss. Granted that this is so, but I do not regard it as a fatal argument particularly as the boundaries between recovery for physical injury and economic injury narrow. Nor do I regard it as an answer that the whole point of a casino is to give people an opportunity of winning money and conversely, of accepting the risk of losing money. That consideration may well exclude, so it seems to me, the existence of a duty of care expressed in broad terms of avoiding placing any patron whomsoever at the risk of losing money. It does not, however, follow that, within a limited area, a duty should not be owed to a vulnerable class of patrons. Moreover, it overlooks the circumstance that what is asserted here is not the exposure to a risk of losing money simpliciter, but to a seriously enhanced risk of doing so, because the conduct complained of was deliberate and likely to cloud the plaintiff’s judgment and to interfere with his control and capacity for sensible decision making. 123   It may certainly be accepted that it will not be easy to state the duty of care with precision - for example in defining the persons who fall into the category of a problem gambler, in determining at which level of intoxication or impairment of mental acuity the duty cuts in, in deciding whether similar obligations exist in relation to minors or persons who have some other form of illness or intellectual impairment, and in determining what is required by way of actual or constructive knowledge on the part of the defendant. These are, however, matters of detail, to be worked out and do not of themselves exclude the existence of a duty of care. 124   Finally, on this aspect of the case I note that I have given attention to the decision of Hogan, Acting DCJ in Reynolds v Katoomba RSL, a case concerned with an attempt to recover gambling losses sustained over a period of two years and three months. The plaintiff claimed to have a gambling problem, which was known to the club, more particularly the club secretary, who irrespective of that knowledge, permitted him to exchange cheques for cash, to obtain cash through an ATM on the club premises, and to make direct payment of cash to the club. In each instance the money so provided or deployed was used to play machines at the club. Evidence was given, and accepted, that he made his problem known and asked the club, either directly, or through his father, to not cash his cheques or to give him credit, and at one stage asked it to bar him from its premises. In finding in favour of the defendant, Hogan ADCJ identified two major issues , those of causation, and the existence of a duty of care. 125   As to causation, his Honour found that the provision of money to the plaintiff did not cause him economic loss - that occurred when, in the exercise of the free choice available, he elected to use it gambling. 126   As to the duty of care his Honour said that the circumstances of the present case did not come within any category which had been held to give rise to a duty of care. He was not prepared to extend any existing category of case. Of significance to his decision, it would seem, was the risk of placing unreasonable burdens on the autonomy of individuals, as noted by McHugh J in Perre v Apand Pty Ltd at paras 114 to 117. His Honour considered that this freedom of choice and the responsibility for its consequences rested upon the plaintiff as much as upon the defendant. 127 He noted a number of pragmatic considerations that might apply, including the limited responses available to the club in stopping him from losing his money, the doubts whether it had at law any right to take those steps, the problems in identification of the class of persons to whom the duty would be owed, and so on. 128 Also of importance, it would seem, was the conclusion, upon the facts, that the club did not induce the plaintiff to gamble with the money that he obtained - it being his choice whether or not to use its facilities, and whether or not to place a limit on his activities. 129 In a summary fashion, his Honour also dismissed causes of action based upon a statutory count, (dependent upon a breach by the club of the conditions in its licence arising under the Registered Clubs Act) and upon the unconsciability of its conduct in providing the plaintiff with the means of gambling, at his request. 130 The present case involves somewhat different considerations, so far as the plaintiff alleges an active inducement and deliberate conduct, on the part of the casino, designed to take advantage of his personal failings. Moreover, the regulatory framework, which can also be taken into account in determining a claim brought pursuant to a tortious count (Chordas at 102) is not the same for a casino as it is for a registered club. Without expressing any view as to the correctness of the decision in Reynolds, I am not persuaded that the matters identified by his Honour are sufficient to exclude the existence of a duty of care in the context of the present case. 131   The precise limits of the duty of care owed in the present case, and of any breach, are likely to depend upon the facts proved - most particularly upon the extent to which the defendant had knowledge of any propensity on the part of the plaintiff to be a problem gambler, and upon the extent to which it sought to take advantage of him. Additionally, it is likely that there would be a reference to matters such as industry practice, economic consequence, practicability and a variety of social and policy factors. Although it may well be that the duty of care would be confined to problem gamblers, and not one owed to gamblers at large, that does not affect this case, since it is the circumstance of the plaintiff being a problem gambler and one who was susceptible to alcohol, that is at the heart of his action. 132   It is certainly arguable that any duty of care in this context would not go so far as to require the warning off or the declining of the business of high rollers or gamblers who regularly lose, or denying to them facilities available to gamblers at large, including those permitted under the legislation and regulations. It may also not go so far as preventing the offer of a limited or reasonable range of inducements and complimentary services. At a minimum, however, I am of the view that it is strongly arguable that it would extend to a prohibition on the provision of further liquor to a problem gambler, who is seen to be intoxicated, or to be behaving in a manner that is obviously totally rash, as well as to the ‘spiking’ or ‘switching’ of his drinks. Equally arguable, in my view, is its extension to the provision of significant credit facilities or excessive encouragement through incentives, of a person who has specifically asked to be barred or to go beyond a limit that he has asked the casino to set. 133   So restricted, this would not prevent casinos from dealing with high rollers, or even with gamblers who are known to have a strong gambling habit, so long as those dealings are fair and so long as those gamblers are not unduly or improperly pressured or encouraged into gambling in a way that is obviously reckless and potentially destructive of themselves and their families. I do not decide, at this stage, that the duty of care will necessarily be formulated in these terms. I hold only that such a case is well arguable, and cannot be dismissed as untenable. 134   It may be that not all of the particulars of breach e.g. those relating to the supply of consumer protection notices and warnings, and to the provision of opportunities for business contracts or of cheque cashing facilities, will be made out. Those matters do not, however, go to the existence or non existence of a duty of care, which is at the core of this application. Whether they were or were not breaches of the duty are also matters properly reserved for the trial. The allegations concerning the provision of liquor to the plaintiff while intoxicated, and of ‘switching’ his drinks, are sufficient to take the case into the category of one that is sustainable. The other matters of inducement cannot be dismissed as unarguable, being largely dependent upon identification of the nature and extent of those inducements, the timing of their offer, the knowledge of the defendant of the plaintiff’s vulnerability, and the effects they had upon him. 135   Although there are a number of areas in which the present statement of claim is defective, in particular so far as there is an overlap of matters going to the existence of the duty and of matters going to breach, as well as an inadequacy in the definition of the plaintiff’s vulnerability and of the occasions on which breaches and losses are alleged, those are matters that could be cured by further amendment. It is appropriate to grant leave for this to occur. 136   These submissions do need to be considered in the light of the circumstance that there is a lack of consensus in the High Court, as recently as Perre v Apand Pty Ltd concerning the existence of any unifying marker as to the existence of a duty of care, and in the light of the evolving category of cases where recovery has been permitted for economic loss and for psychiatric injury. In the instant case there is good reason to assume that reasonable foreseeability of the risk of loss could be established, as well as a relationship of proximity in the three aspects, identified by Deane J in Jaensch v Coffey (1984) 155 CLR at 584-585, and adopted by the plaintiff in its submission. 137 Of the circumstances that have been identified as necessary in addition to foreseeability and proximity, in economic loss cases, are those of control and vulnerability: see Burnie Port Authority v General Jones Pty Ltd (1994)) 179 CLR 520 (at 551); (198-199 and 234), Hill v Van Erp (at ….) and Perre v Apand Pty Ltd (e.g. at par 38 per Gaudron J, paras 118, and 124-129 per McHugh J, and para 406 per Callinan J). 138   If these are the relevant additional criteria, then again it seems to me well arguable that they could be established by the plaintiff. The defendant had the capacity, and the responsibility to exercise close control over its operations, of its staff and of those patrons who were allowed to enter its premises for the purpose of gambling. It set the rules for the games, it provided the machines and chips which gamblers were to use, and it had the power to allow people to remain at its tables, or to warn them off the premises. 139   It is also well arguable that as a high roller with an unhealthy addiction or attraction for gambling, the plaintiff was vulnerable, particularly if allowed to gamble while intoxicated, or if supplied with further liquor, especially free liquor, when in that state. Again, no great imagination is needed to conclude that an intoxicated gambler is less able to exercise judgment and control over his decision to turn to the tables at all, let alone to make informed judgments as to the way he should play any game of chance. While all such games do depend to a great degree upon fortune, they do not wholly do so since there is always some room for an exercise of skill and judgment. 140   The extent of that control and vulnerability, it might fairly be said, would be significantly affected if the facts alleged by the plaintiff are established, as to him being deliberately plied with alcohol when intoxicated, or as to his drinks being deliberately ‘spiked’. Similarly if the plaintiff can show that he was identified by the casino as a problem gambler and deliberately targeted with inducements, whether of free alcohol or business contracts or otherwise, so as to encourage him to continue betting in a disastrous way. 141   Additionally there is the factor of knowledge of the risk and of its consequences which Kirby J considered relevant: Perre v Apand Pty Ltd at par 132. If the plaintiff can establish the allegation that the defendant knew of his losses and vulnerability, and of those of similarly addicted gamblers, then that knowledge could legitimately, in my view, be taken into count in determining the existence of a duty of care. 142   So far as reference to policy considerations arise as a separate issue, and are not subsumed within the proximity inquiry, it seems to me that:

(a) this is not a case where there is a danger of indeterminate liability, ie so long as the duty of care is confined to those who are known to be problem gamblers, a phrase sufficiently recognisable to permit of realistic calculation: Perre v Apand Pty Ltd at paras 106/107 per McHugh J, and para 336 per Hayne J.

(b) the imposition of a duty of care to such persons would not, to my mind, place an unreasonable burden upon the autonomy or commercial enterprise of the appellant, or constitute an unreasonable on its commercial activities and its economic freedom, or upon the competitive operation of the marketplace: Perre v Apand Pty Ltd at para 33 per Gaudron J, paras 133 and 300 per Kirby J. Problem gamblers are not necessarily of value to a casino, and there are any number of persons able to use its facilities in a moderator acceptable way.

(c) There is good reason to give effect to the concerns as to the deleterious social impact of gambling, in permitting a right of recovery, at general law, where the controls laid down in the Act or regulations, and encouraged by the Street Inquiry, are contravened to the detriment of the kind of gambler for whom those concerns were largely entertained.

143   (d) There is no occasion to suppose that any damages which might be awarded if a duty of care was imposed would be “unfair, or unreasonable or disproportionate” in all of the circumstances: Perre v Apand Pty Ltd at 427 per Callinan J. In this regard, sight should not be lost of the availability of the defence of contributory negligence in a case based upon a breach of a duty of care, under which due allowance could be made for the extent to which a plaintiff has failed to exercise reasonable care for his own safety. Nor should sight be lost of the reasoning which led to a verdict for the defendant in Morgan v Sherton Pty Ltd (1999) 46 NSWLR 141, where the plaintiff’s conduct can properly be regarded as foolhardy or reckless. The common law in these respects has the capacity to place brakes on unlimited recovery and to adjust for the extent to which a gambling plaintiff can reasonably be said to have contributed his own misfortune. 144 In the circumstances outlined I am not persuaded that the common law count is so manifestly groundless or untenable as to justify striking it out. The evolving nature of the tort of negligence, and the incremental approach that appears to be favoured (Perre v Apand Pty Ltd at; par 28 per Gaudron J; par 93 and 94 per McHugh J; par 232 per Kirby J; par 333 per Hayne J and par 405 per Callinan J) make it inappropriate to take this step merely because no category of case of this kind has been recognised in this country. 145   There is some precedent elsewhere for the existence of a duty for care within this context. In GNOC Corp v Aboud 715 F Supp (1989) the US District Court (District of New Jersey) held that a common law duty was owed by a casino to refrain from knowingly permitting an invitee to its casino to gamble when he was obviously intoxicated. In doing so it acted by analogy to the duty recognised as being owed by tavern owners who had been held responsible at law for injuries resulting from the negligent service of alcoholic beverages to patrons who were obviously intoxicated: see in this context, R Solomon and J Payne “Alcohol Liability in Canada and Australia: Sell, Serve and be Sued” (1996) 4 Tort Law Review 188. 146   The Court there said (at 655-656):

“… under the circumstances of this case, the Golden Nugget should reasonably have foreseen the type of harm sustained by Mr. Aboud. In a gambling parlour environment, the risk that an obviously intoxicated and/or drugged patron might not appreciate the consequences or substantiality of his endeavours is great. The relevant inquiry is not, as the Gold Nugget suggests, whether a gambler knows the odds of winning in a casino are against him/her, but rather, whether a gambler comprehends the consequences of continued protracted gambling. There is nothing fundamentally unfair about imposing upon a casino the duty to prevent patrons such as Mr Aboud from gambling while patently intoxicated, for they are in the best position to do so. Indeed, casinos are already under an obligation not to serve visibly intoxicated patrons pursuant to New Jersey’s common law dram shop liability as well as the statutory framework and administrative regulations which govern alcoholic beverage service in casinos.
In sum, a casino has a duty to refrain from knowingly permitting an invitee to gamble where that patron is obviously and visibly intoxicated and/or under the influence of a narcotic substance. Here there are allegations of patent and overt inebriety coupled with the consumption of a powerful narcotic medication prescribed by physicians summoned by and paid for by the casino itself. While under the influence of drugs or alcohol, one suffers a deficit, to varying degrees, of cognitive faculties such as the power to reason sensibly, to appreciate the danger of activities engaged in and/or to exercise sound judgment. Cf.Buckley v Estate of Pirolo, 101 NJ 68, 79, 500 A.2d 703(1975). The potent effects of intoxicating substances on reasoning and judgment are not lost on casino proprietors like the Golden Nugget who make liquor readily and plentifully available to patrons while they are in the act of gambling.
It is indeed curious that the appropriate ‘beverages of choice’ are seldom available to patrons on a complimentary basis outside the gambling parlour. Consequently, in justice and fairness, a casino which negligently breaches this duty should be answerable, by applying traditional negligence concepts, for the damages that flow therefrom.

147   This decision was followed in Tose v Greate Bay Hotel and Casino Inc 819 F Supp 1312 (1993), although upon the facts the case was lost. The US Court of Appeals (Third Circuit) recognised (34 F 3d 1227 at 1232) that:

“a reasonable argument can be made that a casino owes a common law duty to a patron to prevent him from gambling when it knows he is intoxicated”,

as did the same Court in Hakimoglou v Trump Taj Mahal Associates 70 F 3d 291 (1995) although somewhat curiously it eventually came to the conclusion that no duty was owed. The issue raised has also been the subject of examination in an article by JC Hallam, “ Rolling the Dice: Should Intoxicated Gamblers Recover their Losses?” (1990) 85 North Western University Law Review 240.

148   It was submitted by the defendant that the duty of care that had been recognised concerning hoteliers or hosts, and the supply of liquor to their patrons or guests, is of a different genus being concerned with the risk of physical injury, rather than with economic loss. Granted that this is so, but I do not regard it as a fatal argument particularly as the boundaries between recovery for physical injury and economic injury narrow. Nor do I regard it as an answer that the whole point of a casino is to give people an opportunity of winning money and conversely, of accepting the risk of losing money. That consideration may well exclude, so it seems to me, the existence of a duty of care expressed in broad terms of avoiding placing any patron whomsoever at the risk of losing money. It does not, however, follow that, within a limited area, a duty should not be owed to a vulnerable class of patrons. Moreover, it overlooks the circumstance that what is asserted here is not the exposure to a risk of losing money simpliciter, but to a seriously enhanced risk of doing so, because the conduct complained of was likely to cloud the plaintiff’s judgment and to interfere with his control and capacity for sensible decision making. 149   It may certainly be accepted that it will not be easy to state the duty of care with precision - for example in defining the persons who fall into the category of a problem gambler, in determining at which level of intoxication or impairment of mental acuity the duty cuts in, in deciding whether similar obligations exist in relation to minors or persons who have some other form of illness or intellectual impairment, and in determining what is required by way of actual or constructive knowledge on the part of the defendant. These are, however, matters of detail, to be worked out and do not of themselves exclude the existence of a duty of care. 150   Finally, on this aspect of the case I note that I have given attention to the decision of Hogan, Acting DCJ in Reynolds v Katoomba RSL, a case concerned with an attempt to recover gambling losses sustained over a period of two years and three months. The plaintiff claimed to have a gambling problem, which was known to the club, more particularly the club secretary, who irrespective of that knowledge, permitted him to exchange cheques for cash, to obtain cash through an ATM on the club premises, and to make direct payment of cash to the club. In each instance the money so provided or deployed was used to play machines at the club. Evidence was given, and accepted, that he made his problem known and asked the club, either directly, or through his father, to not cash his cheques or to give him credit, and at one stage asked it to bar him from its premises. In finding in favour of the defendant, Hogan ADCJ identified two major problems, those of causation, and the existence of a duty of care. 151   As to causation, his Honour found that the provision of money to the plaintiff did not cause him economic loss - that occurred when, in the exercise of the free choice available, he elected to use it gambling. 152   As to the duty of care his Honour said that the circumstances of the present case did not come within any category which had been held to give rise to a duty of care. He was not prepared to extend any existing category of case. Of significance to his decision, it would seem, was the risk of placing unreasonable burdens on the autonomy of individuals, as noted by McHugh J in Perre v Apand Pty Ltd at paras 114 to 117. His Honour considered that this freedom of choice and the responsibility for its consequences rested upon the plaintiff as much as upon the defendant. 153 He also noted a number of pragmatic considerations that might apply, including the limited responses available to the club in stopping him from losing his money, the doubts whether it had at law any right to take those steps, the problems in identification of the class of persons to whom the duty would be owed, and so on. 154 Also of importance, it would seem, was the conclusion, upon the facts, that the club did not induce the plaintiff to gamble with the money that he obtained - it being his choice whether or not to use its facilities, and whether or not to place a limit on his activities. 155 In a summary fashion, his Honour also dismissed causes of action based upon a statutory count, (dependent upon a breach by the club of the conditions in its licence arising under the Registered Clubs Act) and upon the unconsciability of its conduct in providing the plaintiff with the means of gambling, at his request. 156 The present case involves somewhat different considerations, so far as the plaintiff alleges an active inducement and deliberate conduct, on the part of the casino, designed to take advantage of his personal failings. Moreover, the regulatory framework, which can also be taken into account in determining a claim brought pursuant to a tortious count (Chordas at 102) is not the same for a casino as it is for a registered club. Without expressing any view as to the correctness of the decision in Reynolds, I am not persuaded that the matters identified by his Honour are sufficient to exclude the existence of a duty of care in the context of the present case. 157   The precise limits of the duty of care owed in the present case, and of any breach, are likely to depend upon the facts proved - most particularly upon the extent to which the defendant had knowledge of any propensity on the part of the plaintiff to be a problem gambler, and upon the extent to which it sought to take advantage of him. Although it may well be that the duty of care would be confined to problem gamblers, and not one owed to gamblers at large, that does not affect this case, since it is the circumstance of the plaintiff being a problem gambler and one who was susceptible to alcohol, that is at the heart of the case. 158   It may well be the case that not all of the particulars of breach e.g. those relating to the supply of consumer protection notices and warnings, and to the provision of opportunities for business contracts or of cheque cashing facilities, will be made out. Those matters do not, however, go to the existence or non existence of a duty of care, which is at the core of this application. Whether they were or were not breaches of the duty are matters properly reserved for the trial. The allegations concerning the provision of liquor to the plaintiff while intoxicated, and of spiking his drinks, are sufficient to take the case into the category of one that is sustainable. The other matters of inducement cannot be dismissed as unarguable, being largely dependent upon identification of the nature and extent of those inducements, the timing of their offer, the knowledge of the defendant of the plaintiff’s vulnerability, and the effects they had upon him.

159   Although there are a number of areas in which the present statement of claim is defective, in particular so far as there is an overlap of matters going to the existence of the duty and of matters going to breach, as well as an inadequacy in the definition of the plaintiff’s vulnerability and of the occasions on which breaches and losses are alleged, those are matters that could be cured by further amendment. It is appropriate to grant leave for this to occur.

UNDUE INFLUENCE/UNJUST ENRICHMENT

160   The matters giving rise to this head of claim overlap, to a considerable degree, the matters that I consider capable of being litigated in relation to the count in tort. It was submitted by the defendant that there is no Australian or English decision which has ever recognised that there can be a relationship of undue influence between a casino and its patron. 161   The whole notion of playing a game of chance at a Casino, it must be accepted, involves an inherent opposition between the interests of the casino and of the player, albeit one which is permitted under the law. By definition, any gaming transaction is potentially improvident, and upon a simple statistical basis the casino stands to benefit from the relationship, since the odds favour it. 162   Upon that basis it could not be said that the relationship was of a kind that answered the description of being fiduciary in nature. Mason J identified the features of such a relationship in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 when at 96-7 he said:

“The accepted fiduciary relationships are sometimes referred to as relationships of trust and confidence or confidential relations; Phipps v Boardman (1967) 2 AC 46 at 127; viz trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and partners. The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions ‘for’, ‘on behalf of’ and ‘in the interests of’ signify that the fiduciary acts in a ‘representative’ character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal.”

163   The central distinguishing feature, namely that the purpose of the relationship is to serve exclusively the interests of a person or group of persons, is obviously missing in the present instance. 164   Moreover, the relationship does not fall within any of the categories of presumptive undue influence identified in Meagher, Gummow & Lehane Equity Doctrines and Remedies 3rd ed (para 1511). So much was conceded by the plaintiff in his submission, this aspect of the case being pursued upon the basis of the alternative of actual undue influence noted in Allcard v Skinner (1887) 36 Ch D 145 - instances of which can be seen in Torte v Williamson (1866) 2 Ch APP 55 at 61; Tufton v Sperni (1952) 27 TLR 516 at 522; Goldsworthy v Brickill (1957) Ch 378 and Lloyds Bank v Bundy (1975) QB 326. 165 In Bank of Credit & Commerce International SA v Aboody (1990) 1 QB 923 the Court of Appeal said (at 967):

‘Lindley LJ in Allcard v Skinner 36 Ch.D 145, 183, said that no court has ever attempted to define undue influence. Lord Scarman gave a warning against any attempt at comprehensive definition in National Westminster Bank Plc v Morgan (1985 AC 686, 709. We heed this warning …
Leaving aside proof of manifest advantage, we think that a person relying on a plea of actual undue influence must show that (a) the other party to the transaction (or someone who induced the transaction for his own benefit) had the capacity to influence the complainant; (b) the influence was exercised;(c) its exercise was undue; (d) its exercise brought about the transaction.”

166   The plaintiff focussed accordingly, on what he identified as unconscionable behaviour on the part of the casino in exploiting its position, as the provider of gaming facilities, to its advantage. So pursued, his claim of undue influence appears to meld into the alternative way that he seeks to plead the case based upon unjust enrichment and the notion that the defendant obtained, by reason of its position, an unconscionable benefit in its dealings with him. 167   In formulating this claim, the plaintiff relied upon the modern remedy of restitution to secure the reversal of what was said to be an unjust enrichment of the defendant gained at his expense. The measure of damages was said to be recoupment of the benefit or gain of the defendant rather than compensatory damages: Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 75. 168 Although framed in the terms of the restitution of his ‘gambling losses”, this left at large the question whether the amounts to be recouped were every losing transaction, or the net loss over the period (taking into account any occasions on which the plaintiff left the casino in front). 169 The need to identify particular occasions on which relief is sought upon the various legal and equitable bases under which this head of claim is formulated, leads to something of a practical problem, since there may well have been occasions when the plaintiff was not intoxicated, or was successful. This, however, is not of relevance for the purpose of the present application. Nor is the question going to the possible need for the plaintiff to bring winnings to account, either as part of the assessment of the defendant’s gain, or by reference to equitable principles which require a plaintiff to do equity as a price of receiving it (see also Valdasz v Pioneer Concrete (SA) Pty Ltd (1995 184 CLR 102, at 113-114. 170 The plaintiff submitted that there were two alternative paths to restitutionary relief available to him:

(a) unjust enrichment by wrongdoing (dependent unjust enrichment)

Although this involves the concept of “waiver of the tort” it contemplates the plaintiff suing on the tort by which the defendant has acquired a gain, but electing to recover a restitutionary remedy rather than compensatory damages.

(b) unjust enrichment by subtraction (independent or autonomous unjust enrichment).

This involves the plaintiff ignoring the tort and bringing the action independently of it by reference to the circumstance that the defendant unjustly enriched itself at his expense (ie extracted monetary benefits from him).

171   The underlying principles the plaintiff submitted, were part of a new and developing subset of the law of obligations, and of emergent areas for the operation of restitutionary damages noted for example in the Law Commission Consultative Paper No 132 (1993), Aggravated, Exemplary and Restitutionary Damages Pt vii; A Burrows The Law of Restitution (Butterworths 1993) Chs 7 and 14; AS Burrows, Remedies for Torts and Breach of Contract (2nd Ed, Butterworths 1994) pp 288-307; G.Jones (ed) Goff and Jones: The Law of Restitution (5th Ed, Sweet & Maxwell Ltd 1998) Chs 11 and 36; P. Birks An Introduction to the law of Restitution (Clarendon Press 1989) pp 184-185; and K. Mason and J.W. Carter Restitution Law in Australia (Butterworths 1995) pp 640-658. 172   Since David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378-379, it has not been legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. That is not, however, to say that recovery cannot occur when one party can be shown to have been unjustly enriched. What it does mean is that recovery in such a case depends upon the existence of some qualifying or vitiating factor: Hill v Van Erp at 239. 173   This is said to exist in the present case by reason of the improper exercise by the defendant of its position of advantage, in the face of knowledge of the plaintiff’s vulnerability. 174   The plaintiff submits that it could also derive assistance from equitable doctrine concerning the concept of unconsionability, or unconscientious use of power in a relationship where there was weakness on one side, and extortion on the other side, lead to a transaction that was neither fair nor reasonable: see Earl of Aylesford v Morris (1873) LR 8 CHAPP 484 and Hart v O’Connor (1985) AC 1000 at 1024. In this regard, reference was made to Alec Lobb Ltd v Total Oil GB Ltd (1983) 1 WLR 87 where Peter Millet QC sitting as a Deputy High Court Judge said (at 94-95):

“The plaintiffs next submitted that the transaction of lease and lease-back was a harsh and unconscionable bargain of a kind which a court of equity will not allow to stand. In such a case the court is concerned, not with the reality of the weaker party’s consent, but with the conduct of the stronger; for the word ‘unconscionable’ seems to relate both to the terms of the bargain and to the behaviour of the stronger party. It is not enough to show that the bargain was a hard or unreasonable one; it must be shown that ‘one of the parties to it has imposed the objectionable terms in a morally reprehensible manner, that is to say, in a way which affects his conscience’ Multiservice Bookbinding Ltd v Marden (1979) Ch 84 11O, per Browne-Wilkinson J.
It is probably not possible to reconcile all the authorities, some of which are of great antiquity, on this head of equitable relief, which came into greater prominence with the repeal of the usury laws in the 19th century. But if the cases are examined it will be seen that three elements have almost invariably been present before the court has interfered. First, one party has been at a serious disadvantage to the other, whether through poverty, or ignorance, or lack of advice, or otherwise, so that circumstances existed of which unfair advantage could be taken: see, for example, Blomley v Ryan (1954) 99 CLR 362, where, to the knowledge of one party, the other was by reason of his intoxication in no condition to negotiate intelligently; secondly, this weakness of the one party has been exploited by the other in some morally culpable manner: see, for example, Clark v Malpas (1862) 4 De G.F. & J 401, where a poor and illiterate man was induced to enter into a transaction of an unusual nature, without proper independent advice, and in great haste; and thirdly, the resulting transaction has been, not merely hard or improvident, but overreaching and oppressive. Where there has been a sale at an undervalue, the undervalue has almost always been substantial, so that it calls for an explanation and is in itself indicative of the presence of some fraud, undue influence, or other such feature. In short, there must, in my judgment, be some impropriety, both in the conduct of the stronger party and in the terms of the transaction itself (though the former may often be inferred from the latter in the absence of an innocent explanation) which in the traditional phrase ‘shocks the conscience of the court,’ and makes it against equity and good conscience of the stronger party to retain the benefit of a transaction he has unfairly obtained.”

175   At the core of equitable relief for unconscionability, as set out in Commercial Bank of Australia v Amadio (1983) 151 CLR 447, are two elements: a disadvantage suffered by a weaker party who is inveigled or coerced into the transaction; and notice fixed upon the stronger party that such a disadvantage exists, and is operating: see also Teachers Health Investments Pty Ltd v Wynne (NSW CA) 16/7/96 unreported, for a discussion of the extent to which the stronger party need actual notice of the existence of the disadvantage. 176   A distinction exists between undue influence and unconsionable dealing or conduct. So it was that in Bridgewater v Leahy (1998) 194 CLR 457, Gaudron, Gummow and Kirby JJ said, (at 477-479):

“On occasion, both doctrines may apply in the one case. ( Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 461). Each doctrine may be seen as a species of that genus of equitable intervention to refuse enforcement of or to set aside transactions which, if allowed to stand, would offend equity and good conscience. However, there are conceptual and practical distinctions between them and these were insufficiently expressed by the primary judge.
In Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 474, Deane J said that the two doctrines are distinct, undue influence looking to ‘the quality of the consent or assent of the weaker party’, whilst unconscionable conduct looks to the attempted enforcement or retention of the benefit of a dealing with a person under a special disability. Further, the recognition of certain special relations, the existence of any of which would itself support a presumption of undue influence, (the examples of such relations given by Latham CJ in Johnson v Buttress (1936) 56 CLR 113 at 19 included parent and child, guardian and ward, solicitor and client, physician and patient, ‘and cases of religious influence’. Cf as to presumptions of advancement, Nelson v Nelson (1995) 184 CLR 538 at 574-567, 583-586, 600-603), could provide a particular forensic advantage to plaintiffs.
Sir Anthony Mason, with reference to the well developed Australian body of authority on the subject, has contrasted the two doctrines as follows, (Mason “ The impact of Equitable Doctrine on the Law Contract ”, Anglo American law Review, vol 27 (1998) 1 at p.66-8.
‘My understanding of undue influence … is that it denotes an ascendancy by the stronger party over the weaker party such that the relevant transaction is not the free, voluntary and independent act of the weaker party ( Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 461, 474) In other words it is the actual or presumed impairment of the judgment of the weaker party that is the critical element in the grant of relief on the ground of undue influence. (see Peter Birks and Chin Nyuk Yin, “ On the nature of Undue Influence” in Beatson and Friedmann (eds ) Good Faith and Fault in Contract Law pp 57 et seq.
…
Unconscionable conduct, as the term suggests, focuses more on the unconscientious conduct of the defendant. As a ground of relief in England unconscionable conduct has been confined largely to ‘catching bargains’ with expectant heirs and others in particular categories of disadvantage eg those who are illiterate … In Australia, it has been recognised that unconscionable conduct is a ground of relief which will be available ‘whenever one party by reason of some condition or circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious advantage is taken of the opportunity thereby created’ ( Amadio (1983) 151 CLR 447 at 462).
In Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 474, Deane J spoke of unconscionable conduct as occurring where, in the circumstances, it is unconscientious to ‘procure, or accept, the weaker party’s assent to the impugned transaction’. It also should be noted that in Hart v O’Connor (1985) AC 1000, an appeal from New Zealand, the Privy Council described unconscionable conduct which provided a basis for equitable relief as ‘victimisation, which can consist either of the active extortion of a benefit or the passive acceptance of a benefit in unconscionable circumstances.” ( Hart v O’Connor (1985) AC 1000 at 1024 (emphasis added).”

177   As was noted in this decision, these doctrines may overlap in any given case. The plaintiff submits, in essence, that this is what should happen in the instant case, which reduced to its essentials involves the following propositions:

(a) the plaintiff was the weaker party, being a problem gambier, with an addiction to that activity and prone to the blandishments of alcohol;

(b) the defendant was aware of the matters in (a);

(c) the defendant chose to take advantage of the plaintiff’s vulnerability by offering him inducements to gamble with it, by plying him with free alcohol, by serving him with alcohol when he was intoxicated, and by supplying him with alcoholic beverages when he had ordered soft drinks;

(d) by reason of these inducements, and in particular the alcohol, his judgment was clouded and his self control and decision whether to gamble, and how to go about that activity, were impaired;

(e) knowing his judgment and capacity for control and decision making were impaired, the defendant allowed the plaintiff to gamble with it, and in fact encouraged him to do so;

(f) the plaintiff did gamble in a way that was unsuccessful, and

(g) the defendant received the benefit of his losses.

178   The plaintiff’s position as a problem gambler (being a person addicted to that activity) in particular when intoxicated, it was submitted, could be equated to that of a persons with a mental weakness, which was there for the exploitation, and was in fact exploited. 179   A similar practical difficulty to that noted previously arises in relation to any claim for relief upon this basis, since the right in equity is to set aside any individual contract that was vitiated by the unconscionable conduct, i.e. an identified gaming transaction or series of transactions on a particular night. It is not a remedy available to found a free standing claim in damages: Mulcahy v Hydro Electric Commission (1988) 85 FCR 170 at 245 per Heerey J. 180 Similarly to the plaintiff’s claim in tort, the various bases upon which restitutionary relief is sought, fall into an area of law which can still be said to be evolving, although not necessarily to the same extent. There is a degree of overlap and also a need for the plaintiff to establish the fact of any unconscionable abuse by the defendant of its position. Most likely this will turn upon the extent of its knowledge concerning the plaintiff’s vulnerability (if established), and upon whether it did deliberately encourage him to become intoxicated, or to continue gambling while in that state). 181 I am not persuaded that his claim formulated in the various ways identified, can be said to be untenable. Accordingly, I dismiss the appeal and the motion of the defendant, save so far as it relates to the statutory count. I direct that so much of the statement of claim as deals with that aspect be struck out. I grant the plaintiff leave to file an amended statement of claim, and direct that such document be filed and served on or before 18th February 2000. 182 Having regard to the fact that each party has succeeded in part, I order that the costs of the motion, and of the appeal, should abide the costs of the proceedings, ie. they should be paid by whichever party is ultimately successful.

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Last Modified: 06/26/2000