Reynolds v Katoomba RSL All Services Club Ltd

[2001] NSWCA 234

Reported Decision: (2001) Aust Torts Reports 81-624
53 NSWLR 43

New South Wales

Court of Appeal

CITATION:	REYNOLDS v. KATOOMBA RSL ALL SERVICES CLUB LIMITED [2001] NSWCA 234
FILE NUMBER(S):	CA 41030/99
HEARING DATE(S):	02/05/2001
JUDGMENT DATE:	20 September 2001
PARTIES :	Christopher Reynolds (Appellant) Katoomba RSL All Services Club Limited (Respondent)
JUDGMENT OF:	Spigelman CJ at 1; Powell JA at 50; Giles JA at 133

LOWER COURT JURISDICTION :	District Court
LOWER COURT FILE NUMBER(S) :	DC 2475/98
LOWER COURT JUDICIAL OFFICER :	Hogan A-DCJ

COUNSEL:	I.D. Temby QC/J. Stoljar (Appellant) C.J. Birch SC/Ms. N. Butler (Respondent)
SOLICITORS:	S.J. Moran, Public Interest Advocacy Centre (Appellant) Pigott Stinson Ratner & Thom (Respondent)
CATCHWORDS:	NEGLIGENCE - Duty of care - Economic loss - Absence of physical injury to person or property - Licensed club - Gaming machines and other forms of gambling - Club cashing third party cheques as well as cheques drawn by member on own bank account - Proceeds of cheques used for gambling in club premises - Whether club liable to repay member amount of gambling losses - No relevant duty of care owed by club to member D
LEGISLATION CITED:	Casino Control Act 1992 Liquor Act 1982 Registered Clubs Act 1976 Trade Practices Act 1974 (Cth)
CASES CITED:	Agar v. Hyde (2001) 201 CLR 552 American Express International v. Famularo 19 February 2001 Naughton DCJ unreported Caltex Oil (Australia) Pty. Limited v. The Dredge "Willemstad" (1975-1976) 136 CLR 529 Christopher v. The Motor Vessel "Fiji Gas" (1993) Aust Torts Reports 81-202 Crimmins v. Stevedoring Industry Finance Committee (1999) 200 CLR 1 G-NOC Corporation v. About (1989) 715 F.Supp 644 Greate Bay Hotel & Casino v. Tose (1994) 34 F 3d 1227 Hakimoglow v. Trump Mahal Associates (1990) 70 F 3d 291 Hawkins v. Clayton (1988) 164 CLR 539 Kirkham v. Chief Constable of Greater Manchester Police [1990] 2 QB 283 Orange v. Chief Constable of West Yorkshire Police [2000] EWCA C 10611 Perre v. Apand Pty. Limited (1999) 198 CLR 180 Prast v. Cottesloe (2000 22 WAR 474 Preston v. Star City Pty. Limited [1999] NSWSC 1273 Reeves v. Commissioner of Police of the Metropolis [2000] 1 AC 360 Rootes v. Shelton (1967) 116 CLR 303 Tepko Pty. Limited v. Water Board (2000-2001) 75 ALJR 775; 178 ALR 634
DECISION:	Appeal dismissed with costs

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 41030/99
DC 2475/98

SPIGELMAN CJ

POWELL JA

GILES JA

20 September 2001


REYNOLDS v. KATOOMBA RSL ALL
SERVICES CLUB LIMITED

JUDGMENT

1    SPIGELMAN CJ: The facts and issues in this appeal are set out in the judgment of Powell JA which I have read in draft. Subject to the following additional observations, I agree with his Honour’s reasons.

2    In his submissions to the Court, Mr Temby QC, who appeared on behalf of the Appellant, identified the conduct of the Respondent which was said to be in breach of duty as threefold:

(i) Failure to advise him to resign his membership. This submission accepted that, for so long as the Appellant was a member, the club could not preclude his entering club premises.

(ii) Failure to warn him, on each occasion that he was observed to be gambling, of the lack of prudence in his doing so.

(iii) Permitting the Appellant to cash cheques on the premises and making what were said to be advances of cash to the Appellant. (A submission that the Appellant should have been prevented from using the ATM machine on the premises was withdrawn.)

3    The findings of fact by Hogan ADCJ are set out in full by Powell JA. A number of findings are particularly pertinent.

4    The trial judge found that after a certain point Mr Gianisis, the Secretary Manager of the club, ought to have been aware of the fact that the Appellant was a problem gambler. His Honour also found that the Appellant told Mr Gianisis words to the effect:

“I have a problem. I can’t control myself. Once I start I can’t stop. Please don’t cash my cheques or give me credit to start me off, even if I beg you.”

5    Furthermore, his Honour accepted evidence that the Appellant’s father had had three conversations with Mr Gianisis. In one he had informed Mr Gianisis that his son had a major gambling problem and was attending Gamblers Anonymous and asked him not to provide any credit at the club. Mr Gianisis replied:

“Okay, that won’t be a problem.”

On another occasion he asked Mr Gianisis not to cash any more cheques for his son and Mr Gianisis replied:

“I can’t do it. There is no way I can stop him. He is over 21.”

6    On the third occasion, towards the end of the relevant period, the Appellant’s father approached Mr Gianisis and asked him to stop cashing cheques and to bar the plaintiff from the club. Mr Gianisis replied:

“I can’t bar him because he hasn’t done anything wrong.”

7    His Honour’s findings of fact about the Appellant being a “problem gambler” did not extend so far as finding that in some way he had been deprived of the ability to control his own actions. Dr Allcock was a consultant psychiatrist who gave evidence about psychiatric aspects of gambling. His Honour found:

“The plaintiff, however, was a free citizen, and a member of the club. He was responsible for his own actions. I do not accept the submission that he did not have a free will to exercise. I do not understand Dr Allcock to say so, and even if he had, I would not have been persuaded.”

8    The case is one of economic loss and should be decided in accordance with the guidance for cases of this character set out in the respective judgments of the High Court in Perre v Apand Pty Ltd (1999) 198 CLR 180.

The Interests to be Protected

9    On the approach of Gummow J, with whom Gleeson CJ agreed with additional observations, in my opinion the Appellant fails in limine. Save in an extraordinary case, economic loss occasioned by gambling should not be accepted to be a form of loss for which the law permits recovery. I make allowance for an extraordinary case, without at the present time being able to conceive of any such case.

10    In Modbury Triangle Shopping Centre Pty Ltd v Anzil (2001) 75 ALJR 164, Gleeson CJ said at [14]:

“In some cases, where there is a problem as to the existence and measure of legal responsibility, it is useful to begin by identifying the nature of the harm suffered by a plaintiff, or which a defendant is said to be liable.”

(1993) Aust Torts Reports 81-202 was a case of pure economic loss. McPherson JA said at 61,967:

“It remains a weakness of the common law approach that in attempting to define the limits of liability in this area it tends to concentrate on the actions of the defendant.”

12    In Perre v Apand Gummow J said at [191] that there “is much to be said” for this observation of McPherson JA. His Honour added:

“Rather, there first should be identified those interests which are sufficient to attract the protection of the law in this field.”

13    Gummow J went on at [191] to refer to the judgment of Gaudron J in Hawkins v Clayton (1988) 164 CLR 539 including her Honour’s observations at 278:

“In actions in negligence for economic loss it will almost always be necessary to identify the interests said to have been infringed to determine whether the risk of loss or injury to that interest was reasonably foreseeable and whether a sufficient relationship of proximity referable to that interest was present so as to establish a duty of care.”

14    In Perre v Apand Gummow J proceeded to identify the interests for which the appellant in that case sought protection. His Honour referred at [193] to the property owned by the appellants and their family companies and at [194] to the loss of sales, the incurring of expenses to mitigate loss and to the loss of income occasioned by the circumstances that had arisen in that case. His Honour said at [195]:

“The business activities of these parties depended in varying degrees upon the occupation and utilisation of land and the turning of the produce thereof to effective economic account. The substance of their complaints is that the continued pursuit of those activities was impeded significantly by the denial of access to the principal and lucrative market for that produce. … the point of importance at this stage is that interests of the nature I have identified are susceptible of protection by the tort of negligence against injury, albeit economic in nature. Such injury is recognised as a kind of detriment which, if negligently caused, may attract compensation.”

15    In the present case there is no interest of the character identified by Gummow J in Perre v Apand. The interest sought to be protected is the avoidance of a risk of loss of money through gambling. That risk, when it came to pass, was entirely occasioned by the Appellant’s own conduct. It is not an interest which, in my opinion, the law should protect.

16    In Perre v Apand Gaudron J identified categories in which recovery for pure economic loss will be granted. Her Honour referred to the established category of negligent misstatement at [28]-[30] and concluded, at [34]-[42], that an additional category should be recognised in a case where there is a “loss or impairment of legal rights”. I am unable to discern any “legal right” of the Appellant in the present case which has been impaired. The freedom to spend one’s money as one chooses, is not a “right” in the sense I understand her Honour to use that word.

17    In my opinion the law should not recognise a duty of care to protect persons from economic loss, where the loss only occurs following a deliberate and voluntary act on the part of the person to be protected. There may be, however, an extraordinary case where a duty should be recognised. The present case is not such.

18    A diversity of approach appears in the judgments of Perre v Apand. A wide range of considerations were taken into account in the judgments in the High Court when determining whether a duty of care existed in the circumstances of that case. A similar range of considerations was referred to in the subsequent decision of Agar v Hyde (2000) 201 CLR 552 which, although it concerned liability for personal injury, is relevant for present purposes because of the element of knowing acceptance of risk by a would-be plaintiff.

19    Hogan ADCJ and Powell JA refer to a number of different considerations. The present case can be determined by focusing on two matters which it is convenient to describe as “Autonomy” and “Vulnerability”.

Autonomy

20    In Perre v Apand McHugh J said at [114]:

“One of the central tenets of the common law is that a person is legally responsible for his or her choices. It is a corollary of that responsibility that a person is entitled to make those choices for him or her self without unjustifiable interference from others. In other words, the common law regard individuals as autonomous beings entitled to make, but responsible for, their own choices. The legal doctrines of duress, undue influence and criminal liability are premised on that view of the common law. In any organised society, however, individuals cannot have complete autonomy, for the good government of a society is impossible unless the sovereign power in that society has power in various circumstances to coerce the citizen. Nevertheless, the common law has generally sought to interfere with the autonomy of individuals only to the extent necessary for the maintenance of society. In the law of liability for economic loss, we have a notable example of the common law’s concern for the autonomy of individuals.”

21    His Honour went on to say at [115]:

“As long as a person is legitimately protecting or pursuing his or her social or business interest, the common law will not require that person to be concerned with the effect of his or her conduct on the economic interests of other persons. And that is so even when that person knows that his or her actions will cause loss to a specific individual. Thus, a consumer owes no duty to a trader not to cause loss to that person by withdrawing custom. However, where other indicia of duty are present, the cloak of immunity cannot extend to conduct which cannot be fairly described as a legitimate pursuit or protection of a person’s interests.”

22    The significance of the common law’s protection of autonomy of the individual has been forcefully restated in the joint judgment of Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde. That case concerned the liability of sporting administrators to participants in a sport. Their Honours said:

“[89] … If the laws of the game define the conduct to which an adult participant consents, the law-makers should not liable because they could have made the activity that the participant chose to undertake less dangerous. The absurdity of this proposition is highlighted by the fact that, in many activities, the danger is part of the activity’s attraction. The participant may therefore not have chosen to engage in the activity at all if it was less dangerous.
[90] The decision to participate is made freely. That freedom, or autonomy, is not to be diminished. But with autonomy comes responsibility. To hold that the appellants owed a duty of care to Mr Worsley would diminish the autonomy of all who choose, for whatever reason, to engage voluntarily in this, or any other, physically dangerous pastime. It would do so because it would deter those who fulfil the kind of role played by the IRFB and the appellants in regulating that pastime from continuing to do so lest they be held liable for the consequences of the individual’s free choice. The choices available to all would thus be diminished.”

23    The court held unanimously in that case that it was not arguable that a sporting administrator owed a duty of care with respect to the promulgation of rules.

24    The significance of autonomy was also emphasised by Lord Hoffmann in Reeves v Commissioner of Police of the Metropolis [2000] 1 AC 360 at 368C-D:

“… there is a difference between protecting people against harm caused to them by third parties and protecting them against harm which they inflict upon themselves. It reflects the individualist philosophy of the common law. People of full age and sound understanding must look after themselves and take responsibility for their actions. This philosophy expresses itself in the fact that duties to safeguard from harm deliberately caused by others are unusual and a duty to protect the person of full understanding from causing harm to himself is very rare indeed.”

25    In that case the House of Lords was concerned with a duty to prevent a prisoner in custody from committing suicide. There was actual knowledge of risk on the part of the authorities, arising from unsuccessful attempts at suicide by the prisoner concerned. Accordingly, the case before the court was one of those “rare” cases. However, the interest being protected in that case was the risk of physical injury. Circumstances in which there is a duty to protect from the self-infliction of economic loss must, at the very least, be even rarer. Indeed, as presently advised, I am unable to conceive of such a case.

26    In many respects the tort of negligence is the last outpost of the welfare state. There have been changes over recent decades in the expectations within Australian society about persons accepting responsibility for their own actions. Such changes in social attitudes must be reflected in the identification of duty of care for purposes of the law of negligence. The recent authoritative statements in Perre v Apand and Agar v Hyde give greater emphasis, in the development of the law of negligence, to the acceptance by individuals of a personal responsibility for their own conduct, than may have been given in the past.

27    This Court should be very slow indeed to recognise a duty to prevent self-inflicted economic loss. Loss of money by way of gambling is an inherent risk in the activity and cannot be avoided. (See e.g. Rootes v Shelton (1967) 116 CLR 383 at 385 per Barwick CJ; Prast v Town of Cottesloe (2000) 22 WAR 474 at [32] per Ipp J.) Nevertheless, whether a duty arises in a particular case must depend on the whole of the circumstances, even in the case of an inherent risk. (See Rootes v Shelton (supra) at 390 per Kitto J and Agar v Hyde (supra) at [14] per Gleeson CJ.)

28    The only feature of the present case which could create a duty of care arises from the express knowledge on the part of the Respondent of the Appellant’s gambling problem. Furthermore there were express requests made to the club not to permit him to cash cheques. I have set out the findings of fact above.

Vulnerability

29    Knowledge of vulnerability is a pertinent factor entitled to weight when deciding whether the circumstances of a particular case create a duty. As I have noted above, in English cases concerned with suicides in custody, specific knowledge of vulnerability has been found to create a duty of care to guard even against self-inflicted harm, at least where the harm is physical injury. (Reeves (supra); Kirkham v Chief Constable of the Greater Manchester Police [1990] 2 QB 283; c/f Orange v Chief Constable of West Yorkshire Police [2000] EWCA Civ 611.)

30    Vulnerability is also relevant in establishing whether a duty to avoid pure economic loss exists. This consideration was discussed in various terms in all the judgments in Perre v Apand .

31    Gleeson CJ said:

“[10] … Moreover, knowledge (actual, or that which a reasonable person would have) of an individual, or an ascertainable class of persons, who is or are reliant, and therefore vulnerable, is a significant factor in establishing a duty of care.
[11] Vulnerability can arise from circumstances other than reliance. In Caltex [Oil (Australia) Pty Ltd v The Dredge ‘Willemstad’ (1976) 136 CLR 529] , the obvious vulnerability of a specific plaintiff was influential in a number of the judgments. This was not merely an arbitrary method of solving the problem of potentially indeterminate liability. It was an application of what Lord Oliver later discussed as the idea that in a given case, the degree (and nature) of foreseeability may have an important bearing on whether there is a duty of care.”

32    His Honour went on to agree with the reasons of Gummow J and placed particular emphasis on certain matters, including:

“[13] The acknowledgment, in the internal communications of the respondent, that there was a need to be careful so as not to damage the interests of those involved in potato growing on land within 20 km of a farm that might be affected by bacterial wilt, is not merely a matter of legally irrelevant prejudice. It shows actual foresight of the likelihood of harm, and knowledge of an ascertainable class of vulnerable persons.”

33    Gaudron J referred to this consideration when her Honour identified the duty in a particular case as turning in part on the fact that a person said to owe the duty knew or ought to have known that the other person “is in no position to protect his or her own interests” (at [42]) and “powerless to protect their own interests” (at [41]).

34    McHugh J said:

“[104] What is likely to be decisive, and always of relevance, in determining whether a duty of care is owed is the answer to the question, ‘How vulnerable was the plaintiff to incurring loss by reason of the defendant’s conduct?’ So also is the actual knowledge of the defendant concerning that risk and its magnitude. If no question of indeterminate liability is present, and the defendant, having no legitimate interest to pursue, is aware that his or her conduct will cause economic loss to persons who are not easily able to protect themselves against that loss, it seems to accord with current community standards in most, if not all, cases to require the defendant to have the interests of those persons in mind before he or she embarks on that conduct.

[105] The principles concerned with reasonable foreseeability of loss, indeterminacy of liability, autonomy of the individual, vulnerability to risk and the defendant’s knowledge and its magnitude are, I think, relevant in determining whether a duty exists in all cases of liability for pure economic loss. In particular cases, other policies and principles may guide and even determine the outcome. But I do not think that a duty can be held to exist in any case of pure economic loss without considering the effect of the application of these general principles.”

35    His Honour returned to the issue of “Vulnerability” later in his judgment and said:

“[118] … In many cases, there will be no sound reason for imposing a duty on the defendant to protect the plaintiff from economic loss where it was reasonably open to the plaintiff to take steps to protect itself. The vulnerability of the plaintiff to harm from the defendant’s conduct is therefore ordinarily a prerequisite to imposing a duty. If the plaintiff has taken, or could have taken steps to protect itself from the defendant’s conduct and was not induced by the defendant’s conduct from taking such steps, there is no reason why the law should step in and impose a duty on the defendant to protect the plaintiff from the risk of pure economic loss.
[119] In Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [(1997) 188 CLR 241], an important factor in denying a duty of care was that the plaintiffs were sophisticated investors well able in the circumstances to protect themselves. On the other hand, this Court found a duty in Hill v Van Erp [(1997) 188 CLR 159] and in Pyrenees Shire Council v Day [(1998) 192 CLR 330] partly because of the defendant’s control (and knowledge) and relative inability of the plaintiffs to protect themselves.
The law of contract
[120] In determining whether the plaintiff was vulnerable, an important consideration will be whether the plaintiff could easily have protected itself against the risk of loss by protective action, particularly by obtaining contractual warranties. Pecuniary losses are one of the ordinary risk of business and, for that matter, ordinary life. Business people frequently take, or are easily able to take, steps to minimise their business or economic loses. Taking these steps will often be a more efficient way of dealing with the risk of these losses than requiring defendants to have regard to the risk that others may suffer economic loss. The economic efficiency of a society requires that the person best able to deal with or avoid the consequences of an economic risk from a cost view should be responsible for the risk and its consequences. … Where another body of law can effectively deal with economic loss, a court should be slow to use negligence law to impose a duty of care on a defendant. This is particularly important where to do so would interfere with a coherent body of law in another field.”

36    His Honour also said:

“[125] In my view, reliance and assumption of responsibility are merely indicators of the plaintiff’s vulnerability to harm from the defendant’s conduct, and it is the concept of vulnerability rather than these evidentiary indicators which is the relevant criterion for determining whether a duty of care exists. The most explicit recognition of vulnerability as a possible common theme in cases of pure economic loss is found in the judgment of Toohey and Gaudron JJ in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [(1997) 188 CLR 241 at 263-264].
[126] Reliance may therefore be seen - for the purposes of duty of care - as an indicator of vulnerability: the plaintiff is specially vulnerable to the words and/or conduct of the defendant because he or she reasonably relied on the defendant. Reliance may also, of course, be relevant to causation. In terms of a duty of care, however, it is not reliance that is relevant but, its consequence, vulnerability. That is so even though in certain situations ‘reasonable reliance’ will be the appropriate test for determining whether the plaintiff was vulnerably exposed to harm from the defendant’s acts or omissions.
…
[129] The degree and nature of vulnerability sufficient to found a duty of care will no doubt vary from category to category and from case to case. Although each category will have to formulate a particular standard, the ultimate question will be one of fact. The defendant’s control of the plaintiff’ right, interest or expectation will be an important test for vulnerability. That test was applied by Gummow J in Pyrenees where his Honour noted that like the situation in Hill v Van Erp, there was no evidence of actual reliance.”

37    Under the heading “The salient features of the present case”, Gummow J said:

“[216] The Perres had no way of appreciating the existence of the risk to which they were exposed by the conduct of the Apand experiment and no avenue to protect themselves against that risk. They thus stood in quite a different position from that of the financier in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords which had the power to deal from a position of strength in ordering its commercial relationship with the party to whom it provided financial accommodation. Here, the relevant risks to the commercial interests of the appellants was in the exclusive control of Apand. Its measure of control was at least as great as that of the Shire in Pyrenees Shire Council v Day.”

38    His Honour concluded that the combination of a range of factors, including that factor, was such as:

“[217] … to bring the Perres and Apand into such close and direct relations as to give rise to a duty of care owed by Apand for breach of which purely economic loss may be recovered.”

39    See also the references to vulnerability at [296] per Kirby J; the reference to a “known class” at [341] per Hayne J and references to powerlessness on the part of the appellants “to prevent the occurrence of the loss to which they were subjected” at [416] per Callinan J.

40    The issue of vulnerability also arose in Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 in which a regulatory authority was found to have breached a duty of care with respect to a waterside worker who contracted a disease by reason of exposure to asbestos. The authority was not the employer, but had a range of regulatory functions which the court found created the common law duty.

41    McHugh J, with whom Gleeson CJ agreed, said:

“[51] The statutory authority owed a duty of care to the worker because it directed him to places of work where there were risks of injury of which the authority was, or ought to have been, aware and in respect of which, the authority knew or ought to have known that the worker was specially vulnerable. The worker’s vulnerability arose as a result of the casual nature of his employment and his obligation to obey the authority directions as to where he worked.”

42    See also at [93] and [104] per McHugh J; at [44] and [46] per Gaudron J and [233] per Kirby J.

43    McHugh J elaborated on the concept of vulnerability:

“[100] Except in cases where a statutory authority has assumed responsibility, taken control of the situation or is under a statutory obligation to act, it seems an essential condition for imposing a duty of care on an authority that the plaintiff is vulnerable to harm unless the authority acts to avoid that harm. I use the term ‘vulnerable’ in the sense that, as a practical matter, the plaintiff has no or little capacity to protect himself or herself. In earlier cases, it was common to refer to the concept of general reliance or dependence as a necessary condition for imposing a duty of care on a statutory authority. As I remarked in Perre v Apand Pty Ltd, however, while the concept of general reliance has been criticised, properly understood, the concept was merely one way of testing for an important requirement in the determination of duty of care – how vulnerable is the plaintiff as the result of the defendant’s acts or omissions. In a context of the common law liability of statutory authorities, general reliance is a combination of the requirements of the existence of powers in the statutory authority to ameliorate harm and the vulnerability of the plaintiff to that harm. In that sense it was an important element for all the justices in Pyrenees. Similarly in [Sutherland Shire Council v Heyman (1985) 157 CLR 424], it was an important, even decisive, consideration that the plaintiffs in that case were able to protect their own interests by making inquiries, requesting a certificate and retaining experts. In Yuen Kun Yeu v Attorney-General (Hong Kong) [[1988] 1 AC 175], the Judicial Committee of the Privy Council held that one of the factors relevant to denying a duty of care was that the plaintiff could have potentially protected themselves by inspecting publicly available records or consulting investment advisors. Similarly in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords, I thought that the likelihood of harm to the plaintiff was minimised by its capacity to protect itself.”

Conclusion

44    The trial judge found that the Respondent knew that the Appellant was a problem gambler and, in that sense, was aware of his vulnerability. Furthermore, the trial judge found that both the Appellant and his father had asked the Respondent to prevent the Appellant gambling to excess, specifically by refusing to cash cheques.

45    This knowledge and these requests, according to the Appellant’s submissions in this Court, created a duty to advise the Appellant to resign from the club or to warn him whenever he appeared at the club and was gambling. There was also, it was submitted, a duty to refrain from making funds available by means of cashing his own or third party cheques.

46    This knowledge of vulnerability must be placed in a context that the duty is to prevent the self-infliction of harm by an individual whose autonomy the common law respects. It is also to be placed in the context where the Appellant had available to him other means of obtaining cash, perhaps not as immediate or convenient, but other means did exist. Furthermore, other clubs and forms of gambling were available to him.

47    The discussion of vulnerability in the judgments in Perre v Apand and Crimmins, and the authorities cited therein, place considerable emphasis on the practical inability of the injured party to take steps to protect him or her or itself, whether because of ignorance of the risk or otherwise. There was no such practical inability in the present case.

48    It may well be that the Appellant found it difficult, even impossible, to control his urge to continue gambling beyond the point of prudence. However, there was nothing which prevented him staying away from the club. The suggested duty on the club to advise him to resign his membership emphasises the point. He could have resigned at any time. The requests to refuse to cash cheques when asked, did not shift his personal responsibility for his own actions to the club. There was no reason for the club to honour one request rather than the other.

49    In my opinion this combination of circumstances is such that no duty of care was owed of the character for which the Appellant contended. The risks were obvious. As Gleeson CJ said with respect to the analogous situation of a participant in sport: “The only way to avoid risk of injury is not to play” (Agar v Hyde at [18].) The Appellant must accept responsibility for his own actions. There was no duty of care. There was no unconscionable conduct. The appeal should be dismissed with costs.

50    POWELL JA: This is an appeal from a Judgment delivered and orders made by Hogan A-DCJ on 14 December 1999, on which day his Honour dismissed with costs the proceedings which had been brought by the Appellant ("Mr. Reynolds") seeking to recover from the Respondent ("the Club") damages in respect of a variety of causes of action.

51    Although the bases upon which, in the Amended Statement of Claim (RAB 1-7) which was filed on his behalf, Mr. Reynolds sought to found his claim for damages were more extensive, in his Judgment Hogan A-DCJ recorded (RAB 14) that "as the case was finally conducted (Mr. Reynold's) claim was based upon negligence, breach of statutory duty and unconscionability" - the District Court has had the same jurisdiction as the Supreme Court in proceedings for "any equitable claim or demand for recovery of money or damages, whether liquidated or unliquidated … in an amount not exceeding $750,000" since clause (h) was introduced into s.134(1) of the District Court Act 1973 by the District Court Amendment Act 1997, that clause coming into operation on 22 August 1997.

52    In order that one might more readily understand the bases upon which Mr. Reynolds sought to advance those claims, it is necessary that there be provided a more extended history of the factual background leading up to the commencement of the proceedings than is normally called for in a case founded in negligence.

53    In July 1990, the relevance of which date will shortly appear, Mr. Reynolds was a young man a few months short of his 26th birthday, he having been born in September 1964. Although the materials which are before the Court do not indicate the extent of Mr. Reynolds' secondary education or any employment history prior to 1984, such materials as are before the Court would indicate that, in 1984, when he was 19 years of age, Mr. Reynolds commenced employment at the Katoomba Golf Club as a trainee golf professional. During his time as a trainee gold professional at the golf club Mr. Reynolds became familiar with poker machines and other forms of gambling and, so he said, on occasion he gambled recreationally at the Golf Club. After leaving the Golf Club Mr. Reynolds worked for a golf club manufacturer and, then, for a time, as a policeman. During the latter two periods, so Mr. Reynolds said, he continued to gamble recreationally.

54    In July 1990, Mr. Reynolds commenced to operate in partnership with his father ("Mr. Reynolds Senior") a milk-run which had been earlier acquired, the purchase price of the milk-run being provided by a loan from the State Bank in the name of Mr. Reynolds Senior and his wife, that loan being secured by a mortgage over their home. As, in such a case, would not be unexpected, the bank account for the business was a joint account with the State Bank to which both Mr. Reynolds and Mr. Reynolds Senior were signatories.

55    Although the milk-run business was carried on in partnership, Mr. Reynolds was responsible for its operation - and, seemingly, was intended to receive all the profits from it - since Mr. Reynolds Senior already owned and operated another business. The milk-run, which had about 8 wholesale customers and 250-300 retail customers, had a turnover of about $5,800.00 per week and returned an average weekly profit of approximately $1,300.00 per week. Customers were billed weekly and paid either in cash or by cheque, but mostly by cheque.

56    Servicing the milk-run involved wholesale deliveries being made during the morning, they being finished by about 11.00 a.m, and home deliveries being done in the mid to late afternoon and early evening commencing about 4.00 p.m. As a result, Mr. Reynolds had a lot of spare time during the day.

57    At the time when the milk-run was acquired, Mr. Reynolds was living with his parents in Katoomba. Because of the amount of spare time which he had during the day Mr. Reynolds started going to the Club for lunch.

58    In a statement (Exhibit "A" - Blue AB 72ff.) which had been prepared for use, and which was tendered, on the hearing, Mr. Reynolds wrote (inter alia) as follows:

"4. … I started going to the Club for lunch and would stay about two hours at the most. There were regulars at the Club and I would socialise with a group of people I got to know well. Some of these regulars were gamblers and I also started to play the poker machines or bet on the TAB or Keno. If I had a win I would leave, but if I was losing I would stay longer.
5 When I went to the Club I obtained cash from the autoteller in the Club and had some cash on me to pay for my gambling.
6. By 1991 I was going to the Club to gamble every day. Initially I would lose around $100.00 a visit though sometimes I won, broke even, or lost less, either playing the poker machines or betting on the TAB or Keno. My losses each visit became progressively higher.
7. Around 1991 I was at the Club with my friend Donald McCliskey. He was one of the regulars at the Club that I had made friends with. While we were betting on the horses Donald got his cheque book out and told me words to the effect of 'I'm just going to cash this cheque with Mark' (Mark Gianisis was the General Manager of the club). I then replied words to the effect of 'Oh, can you do that here.'. He replied 'Yes' and left to cash the cheque. Some minutes later he returned with cash and continued gambling. I saw Donald do this on many occasions.
8. I saw Donald write out cheques on numerous occasions and go to Mark Gianisis for his authorisation. Mark Gianisis signed the cheques and then Donald went to the cashier to cash the cheque. The cashier was in the gaming room. This process usually took place while we were all in the gaming room.
9. In 1991 I approached Mark Gianisis and asked him to cash a personal cheque for me. He said 'Okay'. I made out the cheque to 'Cash' or 'Katoomba RSL' and Mark would sign the back of the cheque. I then took the cheque to the cashier to obtain the money. The cashier would not cash the cheque unless it was authorised by Mark or another member of the management of the Club."

59    Thereafter it became common for Mr. Reynolds to have personal cheques cashed for him at the Club, sometimes more than one such cheque being cashed on the same day.

60    Although, as I have earlier recorded, at first Mr. Reynolds would go to the Club only in the middle of the day, in late 1991 he commenced going to the Club in the evenings after he had finished home deliveries at about 7.00 p.m, staying at the Club until after the last race or closing time. At the same time he commenced to drink heavily and, as he recorded in his statement, when he started drinking heavily he became more reckless in gambling, chasing his losses, betting more to try to recover them and so losing more.

61    Later in his statement, Mr. Reynolds' wrote (inter alia):

"17. I was gambling so much that I was regularly bouncing cheques on my account. I also had several binges of gambling. At these times I also cashed, at the Club, cheques drawn on our business account, as I did not have sufficient funds in my own account to support my need to gamble. My own account was overdrawn by several thousand dollars as the Bank had honoured some of my cheques even though there were no funds in the account.
18. Often if I drew cheques on the business account I ripped the cheque butts out of the cheque book to avoid there being a record of the cheques I had spent on gambling. I was desperate to obtain money to gamble and I hid the fact that I was taking it from the business. I would take cheques from the middle of the cheque book, remove the cheque butt, destroy other paper records and remove transactions from the computer records.
19. Around April/May 1992, I had a big gambling binge and lost between $20,000.00-$30,000.00. I remember the dates as it occurred while my parents were away on holidays at Ayer's Rock. I gambled with cash and I cashed personal cheques and cheques from the milk-run account. I was deeply depressed and suicidal when they returned.
20. As a result of the binge, in May 1992 I borrowed $25,000.00 from my cousin to put into the business to keep it going. I had not paid the milk bill for some weeks, amongst other things."

62    A schedule of payments, together with associated documents, prepared by Mr. Reynolds' solicitor for the purposes of the hearing (Blue AB 104ff) records that between 1 April 1992 and 3 July 1992 - the relevance of which latter date will shortly appear - Mr. Reynolds' personal account with the State Bank of New South Wales at its Katoomba branch was in debit, the debit rising from $2,747.66 on 1 April 1992 to $3,865.41 on 3 July 1992, the principal contributors to that increasing debit being five cheques totalling $1,500.00 debited to the account between 6 April 1992 - three cheques totalling $900.00 debited on 6 April 1992 and one cheque for $200.00 debited on 7 April 1992 - and 16 April 1992 - one cheque for $400.00.

63    The same payments schedule, and supporting documents, discloses that between 21 April 1992 and 27 May 1992, eleven cheques either drawn to cash or drawn in favour of the Club for sums totalling $9,540.00 were debited to the business account with the State Bank of New South Wales at its Katoomba branch - of those cheques, one - No. 00412444 for the sum of $1,000.00 had originally been deposited by the Club for the credit of its account with the National Bank of Australia at its Katoomba branch on 18 May 1992, was dishonoured on presentation on 20 May 1992 but later honoured on 27 May 1992. The schedule also discloses that between 11 June 1992 and 3 July 1992 seven cheques drawn on the business account either to cash or in favour of the Club for sums totalling a further $12,600.00 were debited to the business account - of those cheques, one - No. 00712000 for $2,000.00 - was originally deposited by the Club for the credit of its account with its bank on 22 June 1992, was dishonoured on 23 June 1992 and finally honoured on 3 July 1992.

64    The $25,000.00 which, so Mr. Reynolds said, he had borrowed from his cousin appears to have been part of the sum of $25,743.01 which was deposited to the credit of the business account on 21 May 1992.

65    In his statement, Mr. Reynolds further recorded:

"21. When my parents returned from Ayer's Rock they discovered the size of the problem. My mother contacted Lifeline to find out about Gamblers Anonymous ('GA') and persuaded me to attend their meetings. They met once a week, on Monday nights in Penrith. My parents also attended separate meetings for the families of gambling addicts.
22. For about a month after I started at Gamblers Anonymous I did not attend the Club at all. I then started to go to the Club on Wednesday nights for the Karaoke evenings.
23. While I was going to GA I went to the Club and told Mark Gianisis that I had a gambling problem and that I had started going to GA. As part of the GA programme, I was encouraged to put in place measures that could prevent me having access to money for gambling. I told Mark Gianisis words to the effect of 'I have a problem. I can't control myself. Once I start I can't stop. Please don't cash my cheques or give me credit to start me off, even if I beg you'. His response was words to the effect of 'Yeah, OK mate'.
24. Around July 1992 my father took over the financial management of the milk-run in order to prevent me from having access to money. I was no longer a signatory for the milk-run account. For about a period of about two weeks my father came on the milk-run with (sic) taking payments from customers. He could only do this while he was on leave from his work.
25. I did not gamble at all for around 3 months after I started with GA. I was given a badge when I had not gambled for 60 days straight. I attended GA for approximately three months and then, thinking I was cured, I stopped attending GA meetings."

66    Mr. Reynolds' statement as to the conversation which he then had with Mr. Gianisis was accepted by Hogan A-DCJ, as also was his statement as to similar conversations which he had with Mr. Gianisis on later occasions (RAB 19).

67    In a statement (Exhibit "C"- Blue AB 81ff) prepared prior to and tendered at the hearing, Mr. Reynolds Senior wrote (inter alia):

"4. In early 1992 a number of cheques drawn on the account were not met by the Bank but rather referred to drawer. I became concerned and confronted Chris. I said to him words to the effect of 'What is the problem? You have been bouncing cheques.' He replied that 'He had been gambling money from the business and losing'. He said to me words to the effect 'I gamble at the Katoomba RSL during the daytime. I have been using money from the business. I can cash cheques there drawn on the account'. I said to Chris words to the effect 'You've got to control yourself, you've worked hard and got the business doing well, you don't want to loose (sic) it all. You shouldn't go to the Club during the day, then you won't be tempted'.
5. Subsequent to this for a month or two I did not notice any more problems and I thought Chris' gambling was under control. However, around June 1992 there were more cheques referred to drawer and became apparent that Chris was gambling again. I had another conversation with him about stopping gambling. He would listen and appear to try to stop but the problem continued.
6. Around August 1992, I paid approximately $4,000.00 to clear Chris' personal account at the State Bank as he was overdrawn. It was clear to my wife and I (sic) that he had a serious gambling problem.
7. My wife and I were desperately trying to find a solution. She suggested that attending Gamblers Anonymous might help. My wife and I then did attend regular meetings of Gamblers Anonymous with Christopher at Penrith over a period of approximately six months in 1992 …. Whilst we were going to meeting (sic) Chris appeared not to be gambling. Eventually Chris said words to me to the effect 'Okay, I think I've beaten it, I can't keep going every Monday night to the meetings, I think I'm all right now.' We then stopped going to Gamblers Anonymous meetings.
8. Around July 1992 we were going to the Gamblers Anonymous meetings, I attended the bank where the milk-run's account was held. The Manager there was a long-term friend. I removed Chris as a signatory to the milk-run account so that he could not write cheques on it. I also asked the Manager to keep an eye on the account for me.
9. I wanted to do everything I could to prevent Chris' gambling. Around June 1992, I telephoned the secretary manager of the Club, Mark Gianisis. I said words to the effect of 'My son Christopher has a major gambling problem and is attending Gamblers Anonymous. I would appreciate it if you would not provide any credit to Chris at the Club. I would also like for you to call me when Chris goes to the Club so that I can come and pick him up'. Mr. Gianisis said words to the effect 'Okay, that won't be a problem'".

68    Despite Mr. Gianisis' denial of having had any conversations with Mr. Reynolds Senior, Hogan A-DCJ was disposed to accept the evidence of Mr. Reynolds as to this conversation and as to later similar conversations (RAB 19).

69    The matters to which I now refer cast more than a shadow of doubt over Mr. Reynolds' assertion that he did not gamble at all for around 3 months after he started with Gamblers Anonymous.

70    In his statement Mr. Reynolds said:

"27. Soon after this I started gambling excessively again. I continued with the same methods of financing my gambling, namely cashing personal cheques and using cash. As I could not write cheques out from the business account and I had limited funds in my own account I decided to ask Mark Gianisis if I could cash third party cheques.
28. Around late 1992 or early 1993 I asked Mark Gianisis if he would cash a cheque from one of my milk-run clients. I approached Mark and said to him words to the effect of 'Can you cash this if I sign the back?'. He looked at it and said 'OK'. He agreed to cash other third party cheques on subsequent occasions. Third party cheques were drawn by customers of the milk-run and were generally payable to B.J. and C.J. Reynolds Milk Suppliers. These cheques were usually for larger amounts up to $1,000.00. They were mostly from the wholesale customers of the milk-run. They included A & S Cheeseman who had the handy store, W. Barrett who also had the handy store before the Cheesemans, A & M. Hair Pty. Ltd who had the Little Company Guest House, B.R. & D. Goodman who had a service station, K & B Carstairs Pty. Ltd. who had the Alpine Motor Inn, the Blue Mountains City Council, G & M Bechara Pty. Ltd who had a service station, the Ampol Service Station at Leura, and the Wentworth Area Health Service which ran the Blue Mountains District Anzac Memorial Hospital.
29. The third party cheques were made out to C.J. Reynolds and B.J. Reynolds, C.J. Reynolds or Reynolds Milk Supplies. Mark Gianisis only required me to endorse these cheques (on the back) and never queried the fact that the cheques were made out in favour of joint payees. He got me to write on the back of the cheque 'Please Pay Cash to Katoomba RSL Club'. He then signed the back of the cheque and I would take it to the change counter. They would check that he had signed the back and then pay me the amount of the cheque.
30. As well as cashing cheques, Mark Gianisis also provided me with credit. On a few occasions I borrowed directly from Mark Gianisis. I would say words to the effect of 'Can you lend me $500 to $1,000?'. He would agree and then loan (sic) me amounts usually between $500 to $1,000. I am not sure if these sums came from the Club or if they personal loans from Mark (sic). A few times when I got loans from Mark he took me into the office area away from the crowds. Then he actually gave me the money himself.
31. This pattern of using cash, personal cheques and third party cheques to finance my gambling at the Club continued for the rest of 1993 and much of 1994."

71    The payments schedule to which I have earlier referred reveals that the first third party cheque which was endorsed by Mr. Reynolds was one for $115.00 drawn by A & M Hair and deposited to the credit of the Club's account with its bank on 10 August 1992, that cheque being followed by one for $140.00 drawn by Alpine Motor and deposited to the credit of the Club's account with its bank on 15 September 1992, one for $47.95 drawn by A & M Hair and deposited to the credit of the Club's account with its bank on 6 October 1992, by one for $660.00 drawn by the Wentworth Area Health Service and deposited to the credit of the Club's account with its bank on 16 October 1992 and another for $869.30, also drawn by the Wentworth Area Health Service and deposited to the credit of the Club's account with its bank on 30 November 1992.

72    Although the payments schedule does not record any personal cheque or cheque drawn on the business account between 3 July 1992 and the end of December 1992, it does record that, on 7 January 1993, four cheques, one for $200.00 and three each for $300.00 drawn by Mr. Reynolds on his account with the State Bank of New South Wales at its Katoomba branch were deposited by the Club to the credit of its account with its bank. Two further cheques, one for $1,000.00 and the other for $100.00 drawn by Mr. Reynolds on his account were deposited by the Club for the credit of its account with its bank on 13 January 1993, but they were dishonoured, as were two further cheques, one for $1,000.00 and the other for $500.00 drawn by Mr. Reynolds on his account and deposited by the Club to the credit of its account with its bank on 14 January 1993.

73    Despite Mr. Reynolds’ assertion (para. 21 (above)) that the pattern of using cash, personal cheques and third party cheques to finance his gambling at the Club continued "for the rest of 1993 and much of 1994", the payments schedule reveals only five third party cheques negotiated to the Club in the period 1 January 1993 to the end of October 1993, they being a cheque for $150.00 drawn by one Hands deposited by the Club to the credit of its account with its bank on 7 January 1993, a cheque for $200.00 drawn by W. Barrett deposited by the Club to the credit of its account with its bank on 11 February 1993, a cheque for $750.00 drawn by the Wentworth Area Health Service and deposited by the Club to the credit of its account with its bank on 22 February 1993 and two cheques, one for $140.00 drawn by K. & B. Castairs, and the other for $240.00 drawn by the Blue Mountains District Anzac Memorial Hospital, deposited by the Club to the credit of its account with its bank on 7 June 1993. What, in the schedule, appears to have been a third party cheque for $2,627.00 deposited by the Club to the credit of its account with its bank on 24 February 1993 is said by Mr. Reynolds Senior (Blue AB 83) to have been a cheque paid by him to the Club to clear his son's then debt to the Club.

74    It is difficult to determine from the payments schedule the nature of some of the amounts said to represent moneys paid by Mr. Reynolds to the Club for gambling purposes and debited to Mr. Reynolds' then account with the Advance Bank at its North Sydney branch between 7 January 1993 and the end of October 1993. Five amounts appear to represent the proceeds of cheques - for $50.00, $20.00, $200.00, $200.00 and $300.00 deposited by the Club to the credit of its account with its bank on 27 August 1993, 3 September 1993, 14 September 1993 and 21 September 1993 ($200.00 and $300.00) respectively - while eleven sums - $50.00, $50.00, $100.00, $200.00, $300.00, $50.00, $200.00, $100.00, $50.00, $100.00 and $300.00 debited to that account on 13 August 1993, 8 September 1993, 15 September 1993, 16 September 1993 ($200.00 and $300.00), 18 September 1993 ($50.00 and $200.00), 6 October 1993 and 21 October 1993 ($50.00, $100.00 and $300.00) - are noted in the relevant bank statements (Blue AB 197-203) as "RTL TRN Katoomba RSL Club Katoomba", a notation to be contrasted with "WDL ATM 99 Katoomba Street, Katoo" which latter notation would clearly indicate a withdrawal made at a bank's automatic teller machine; perhaps the notation "RTL TRN" records the use by Mr. Reynolds at the Club of a Bankcard in order to obtain cash or records an EFTPOS debit.

75    In his statement (Blue AB 78-80) - which appears to contain a number of inaccuracies - Mr. Reynolds continued:

"32. During 1993 and 1994 the Club still continued to cash my personal cheques … Sometimes I would write a cheque knowing that I did not have sufficient funds in my account. On these occasions I asked Mark Gianisis to hold the cheques for several days before cashing them so that I could put money into my account. On other occasions the Club would cash the cheque anyway and it would often bounce.
33. Mark Gianisis was still the person I dealt with most consistently. A couple of times Mark Gianisis would refuse to give me credit or cash cheques. He would say words to the effect of: 'No, you've bounced a couple of cheques, you owe us money, we're not going to cash anymore (sic) until you've paid up'. However there was no consistent limit that he placed on me in terms of the amounts of money that I could run up as a debt to the Club.
34. On 25 November 1993 I asked the Club to cash two cheques in the sum of $1,000 during the course of my visit. The cheques were drawn from my personal cheque account and made out to cash. The cheques were subsequently dishonoured and I therefore owed the Club $2,000 plus $18.00 in dishonour fees for the two cheques.
35. I repaid this debt to the Club by instalments. A running total was maintained by Jean Field at the Club on a small piece of paper indicating payments made, and attached to the front of the cheques and the dishonour notices. They also issued me with receipts for part-payments of the debt. They were attached as part of the bundle. I cannot recall whether receipts were issued for the other payments made.
36. I repaid this debt over a period of 2½ months, although my credit arrangement was not suspended during this period."

76    The two cheques, each drawn to "cash" were deposited by the Club to the credit of its account with its bank on 30 November 1993 and were dishonoured on the following day. The $2,018.00 representing the amount of the cheques and the dishonour fee on each was not repaid by Mr. Reynolds in full, only $1,218.00 being repaid by instalments of varying amounts paid in March, April, May and June 1994 - the balance of $800.00, as I will later show, formed part of a cheque for $6,800.00 paid by Mr. Reynolds Senior to the Club in early August 1994.

77    In his statement, Mr. Reynolds continued:

"37. In November 1993, I borrowed $10,000 from my former employer, Keith Knox, to help cover my gambling losses.
38. On 27 November 1993 I had a bad bust at the Club. Mark Gianisis cashed two separate cheques for me, both in sums of $1,000 which I lost on Keno. I then wrote another cheque for $1,000 for the Club to cash, knowing that I had no funds left in my account to cover it. I told Mark Gianisis words to the effect of 'I don't have enough money in my account to cover the cheque, but can you give me another $1,000 and hold the cheque until later'. He said words to the effect of 'Yes'. I wrote four more cheques, three in sum (sic) of $1,000 and one in the sum of $2,000, which were also cashed on the understanding that they could not be presented until I had funds in my account. All these funds were used to play Keno. Each cheque was signed on the back by Stuart Fitzgerald, the bar manager. This authorised the change bar to credit me with the money to play Keno.
39. My father found out that I owed the Club this $6,800 about one week later.
40. I ended up owing the Club a debt of $8,000, as I incurred further debts in addition to the $6,000 I already owed. Mark Gianisis contacted both myself and my father about this debt several times, asking when it was going to be paid. I managed to pay $1,200 of the debt in small repayments.
41. In mid-July 1994 the milk-run was sold for $65,000. My parents had put up their home as surety when we borrowed from the State Bank at Katoomba for the business. They sold the milk-run to pay off the loan and clear their home.
42. I did not return to the Club to gamble. I stopped gambling in approximately May 1994 …"

78    In his statement (Blue AB 83-84) Mr. Reynolds Senior wrote:

"16. In November 1993 I approached Mr. Gianisis in person. I said words to the effect of 'Would you please stop cashing cheques for Chris. You are breaking the law by cashing third party cheques at the Club. You are also breaking the law by holding Chris' cheques knowing that there are no funds in the account. I don't think you are allowed to cash cheques in the excess (sic) of $200.00 for members in any one day'. In saying that I was in part basing it on my understanding of what was done at the Katoomba Golf Club where I was a Director at one stage and was in part bluffing. Mr. Gianisis said words to the effect of 'I don't know anything about those laws'. I then said words to the effect of 'Can you bar Chris from the Club please?'. He said words to the effect of 'I can't bar him because he hasn't done anything wrong'.
17. In late 1993 or early 1994 Keith Knox, an old friend of mine, called me and told me that he had lent Chris around $10,000. He said that Chris had originally been repaying him but that he had not made repayments for several months. I told Keith that I would start making the payments.
18. In mid-1994 I was forced to sell the milk-run business as a result of the problems caused by Christopher's gambling. I had to sell it at a loss, for an amount less than it was worth. I had to sell it to account for the gambling debts incurred by Christopher. As the loan I had obtained in order to buy the business was secured over our house I could not risk further losses.
19. On 5 August 1994 I attended Katoomba RSL to pay them an amount in excess of $6,000 to account to cheques of Chris' that he had left with them and which remained uncashed and a couple of cheques that had bounced. When I attended to do so I spoke to the assistant manager at the Club, Mrs. Jean Field, about the matter. I said words to the effect of 'You can't cash anymore (sic) cheques, I can't continue to pay'. She said words to the effect of 'I am sorry for the way things have gone, but I have no control over it, credit facilities are at the discretion of the secretary manager, Mr. Gianisis'."

143    It must be appreciated, then, that a duty of care of the nature for which the appellant contended is not a duty to take care to protect another’s rights, as the duty of care in Perre v Apand Pty Ltd was a duty to take care to protect the rights of the potato farmers to earn their livings. It is a duty to harm the gambler’s rights, his rights to gamble at the club and to spend his money in gambling rather than on other avenues of gratification and, if he chooses, to enter into debt so that he can do so. It is a duty to infringe his individual autonomy. And it would be impractical to impose the duty of care. The club is unlikely to know, or to be able to find out, the gambler’s financial position and priorities in expenditure, in order to decide whether to advise against gambling or that the facility of cashing cheques should be denied to the gambler. The gambler is under no obligation to follow the advice, and even if the club denies to the gambler the facility of cashing cheques there will be many other ways in which the gambler can obtain funds for gambling. That is illustrated in the present case. The appellant said that his total losses were of the order of $250,000. He claimed the amount of the cheques cashed with the respondent. He must have gambled with much money obtained elsewhere. And if he chooses, the gambler can go somewhere else to gamble.

144    These matters are such, in my view, that in ordinary circumstances there will be no duty of care owed by a club to a gambler to advise him against gambling, to decline to cash cheques or to limit the cashing of cheques. Does it make a difference when the club is told by the gambler that he (the gambler) is “a problem gambler” and is asked not to cash cheques? I will assume in favour of the appellant that this conveys that the gambler is losing money he can not afford to lose and is going into debt.

145    The practicality of the duty is enhanced, in that the club has some knowledge of the gambler’s financial position and (at least at the time of the telling) his priorities in expenditure, although the absence of any obligation to follow the advice and the gambler’s ability to obtain funds for gambling in many other ways and gamble elsewhere remain. But the duty of care is still a duty to harm the gambler’s rights. In later gambling and asking that cheques be cashed the gambler is exercising his rights, including what can properly be regarded as a right to revoke his earlier request not to cash cheques.

146    What is added is first, that to the knowledge of the club cashing cheques is (at least at the time of telling) thought by the gambler to be disadvantageous to him and is likely to be disadvantageous to him, although loss to the gambler is not certain and any loss may well be suffered even if the advice is given and cashing cheques is declined; and secondly, that to the extent indicated by the description of a problem gambler and the request not to cash cheques followed by asking for cheques to be cashed, the gambler’s own control over the exercise of his rights is compromised.

147    The appellant characterised this as vulnerability, appealing to the reasons in Perre v Apand Pty Ltd while accepting that the vulnerability was of a different kind from the vulnerability in that case. The potato farmers were vulnerable because they did not know about the bacterial wilt in the seed potatoes, could not do anything to prevent the introduction of the disease or otherwise protect themselves from loss because of its introduction, but would suffer loss if the disease were introduced, whereas the supplier of the seed potatoes knew of the risk of the disease and could have not supplied the seed potatoes. The gambler is not vulnerable in this way. He knows gambling brings losses. He knows of his gambling problem and, as later noted, can do something to prevent his gambling. Further, if the club gives the advice or declines to cash cheques, that will not mean that the gambler will not gamble. The appellant’s reliance on vulnerability is much weaker than the reliance in Perre v Apand Pty Ltd.

148    The gambler’s vulnerability comes from the extent to which his control over the exercise of his rights is compromised. The club has the indication that the gambler’s control over the exercise of his rights, that is, his ability to prevent his gambling and suffering loss, is compromised. That directs attention to the nature of the gambler’s condition and whether recognition of a duty of care is an appropriate response to the condition.

149    The condition is ordinarily neither permanent nor constant in its effects. The evidence of a consultant psychiatrist spoke of a gambling problem in terms of difficulty stopping gambling, but did not suggest total absence of control or inability to regain control. As the course of the appellant’s gambling shows, at some time a gambler can with assistance or by his own will cease to be a problem gambler, and when a problem gambler there is a range from relatively harmless, albeit undesirable, indulgence, to harmful over indulgence. The law pays regard to physical and mental disabilities, and for example to impulsiveness and less than rational conduct of the very young, in fashioning duties of care, but the gambler’s disability is of a different character. Control ultimately rests with the gambler, and society encourages the problem gambler to regain control. In the present case, with the benefit of the evidence of the consultant psychiatrist the trial judge did not accept that the appellant “did not have a free will to exercise”, and the appellant’s counsel expressly said that the case was not put as one in which the appellant “had lost a capacity to make choices for himself” or “had been deprived of all choice of action in every respect”.

150    That highlights the continued impracticality of a duty of care sustaining recovery of the compensation claimed by the appellant. Even with knowledge of problem gambling, how is the club to know, when asked to cash a cheque, whether the anticipated gambling is the unwanted but compulsive craving of a problem gambler or the choice of a sometime problem gambler then in control of his indulgence? How is the club to know what the gambler can really afford? Must the club inquire, and what if the club is told that it is none of its business?

151    Going a little further, if a known problem gambler asks a financier for funds ostensibly to buy a car, must the financier interrogate the gambler or otherwise satisfy itself as to the purpose, or must it refuse the gambler in any event because that addition to the gambler’s funds will free up an equivalent amount for gambling? Outside the context of gambling, if a known rake and spendthrift asks his club to cash a cheque, must the club satisfy itself that the expenditure will be for his benefit, or refuse to cash the cheque because his control over the exercise of his rights to obtain gratification from wine, women and song is compromised? Even when there is knowledge of the gambler’s vulnerability as earlier noted, the questions (and similar questions can be asked) suggest that the law should not impose on persons with whom the gambler deals the burden of these inquiries and the decisions which then must be made. It is not the place of the law of negligence to oblige persons with whom the problem gambler deals to provide society’s encouragement to regain control, and compensating the gambler for his losses will be counter-productive to that outcome.

152    In my opinion these are sound reasons telling against a duty of care sustaining recovery of the appellant’s economic loss. In the circumstances of the present case, my judgment is that a duty of care of the requisite content should be held not to have been owed.

Unconscionability

153    The appellant’s argument was that he suffered from a special disadvantage, problem gambling, of which the respondent took unconscientious advantage. This, he said, entitled him to relief in equity. Whether and how that relief should be by an order for payment of compensation was left rather unclear, and it seemed to be put that the relief would be by requiring the respondent to disgorge the benefits it obtained from the series of contracts coming into existence when it cashed cheques and from permitting the appellant to gamble at the club.

154    The respondent did not obtain direct benefits from the series of contracts. It received a cheque for $100 in return for giving cash of $100. It may have obtained benefits from the consequential gambling and other gambling by the appellant, but the appellant’s losses from gambling at the club were not obviously the measure of those benefits. It is unnecessary to explore either the nature of the equitable relief or how, if it could be by an order for payment of compensation, the compensation should be assessed. The matters to which I have referred in connection with negligence lead to the conclusion that the respondent did not take unconscientious advantage of the appellant.

155    I concur in the orders proposed by Powell JA.

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