85 Removal of excluded person from casino
(1) This section applies to the following persons in a casino:
(a) the person for the time being in charge of the casino,
(b) an agent of the casino operator,
(c) a casino employee.
(2) A person to whom this section applies must, as soon as practicable after it becomes known to the person that a person the subject of an exclusion order (including an exclusion order given on the voluntary application of a person under section 79(3)) is in the casino, notify an inspector, and then remove the person, or cause the person to be removed, from the casino.
Maximum penalty: 20 penalty units.
(3) It is lawful for a person to whom this section applies, using no more force than is reasonable in the circumstances:
(a) to prevent a person the subject of an exclusion order from entering the casino, and
(b) to remove such a person from the casino or cause such a person to be removed from the casino.
79 Part 8 of the Casino Control Act provides for a casino duty to be paid to the Casino Control Authority on each casino licence: s 114(1). It also provides for the payment of a responsible gambling levy on each such licence: s 115(1).
80 The levies paid under s 115 are to be paid by the casino into a Responsible Gaming Fund. The moneys are required to be dealt with under a trust deed containing provisions approved by the Minister for Gaming and Racing relating to the expenditure of the money for purposes related to responsible gambling: s 115(5) and (6).
Misleading conduct
81 It follows from my rejection of Mr Foroughi's evidence and my acceptance of the evidence of Messrs Craze, Mackay and Harding that the claim of misleading conduct under s 52 of the Trade Practices Act fails. It is unnecessary for me to say anything further about this cause of action but I will make three additional observations.
82 First, Mr Craze's incident report contains contemporaneous documentary evidence to support the finding that the exclusion order was explained to Mr Foroughi. The incident report indicates that the exclusion process took 35 minutes, of which Mr Mackay was present for approximately 15 minutes. This reinforces the view I have reached that the explanation given by Mr Craze and Mr Mackay was thorough and detailed.
83 Second, Mr Foroughi accepted that Mr Mackay's usual procedure was followed. The lengthy passage of the transcript which I have reproduced at [34] was taken from Mr Mackay's affidavit. Mr Foroughi agreed with each of the propositions put to him.
84 Third, Mr Foroughi claimed in his oral evidence that he was told by a staff member that penalties, including the possibility of a gaol sentence, attached to a breach of the voluntary exclusion order. In fact, no criminal penalties attached to a contravention of such an order (only to the contravention of a casino exclusion order). It is therefore unlikely that any responsible staff member such as Mr Craze, Mr Mackay or Mr Harding would have made that statement.
Reliance
85 It is plain from Mr Foroughi's own evidence in chief that he placed no reliance on any representation he claims to have been made to him. The evidence set out at [15] above makes it quite clear that he went back to the casino to test the exclusion order. When he was not detected, he remained in the casino and returned on other occasions.
86 Mr Foroughi's counsel submitted that the effect of his evidence was that he expected to be excluded. I do not consider that this correctly conveys the substance of Mr Foroughi's evidence. But even if it does, in my view, any reliance ended as soon as Mr Foroughi entered the gaming areas and commenced gambling.
Reasonable grounds
87 The representations alleged by Mr Foroughi were both as to future matters: see s 51A of the Trade Practices Act. Since I have come to the view that the representations were not made I do not need to address the question of reasonable grounds. Nevertheless, I will do so briefly.
88 Star City's evidence of the systems it had in place to detect excluded patrons and its evidence of the size of the casino and volume of patronage, shows that there was no guarantee that excluded patrons would be detected. Mr Clark accepted that this was so.
89 It follows that if Star City had represented to Mr Foroughi that it would be able to detect him in the event he entered the casino, it would not have had reasonable grounds for the representation. In my opinion, the evidence shows that Star City would have had reasonable grounds if it had an intention to place Mr Foroughi's name and photo immediately on a hot list, but that was not part of the system in place. The hot list was only used in case of repeat violations or other problems.
90 However, in my view, there would have been reasonable grounds for the alleged representation that Star City would remove Mr Foroughi from the casino as soon as practicable after it knew that he was present. This is borne out by the evidence of the number of security cameras, the role of the Surveillance and Security Departments and Mr Clark's table which evidences some measure of success in detecting excluded patrons. Mr Lorraway's evidence was to similar effect.
Trade or commerce
91 In its defence, Star City claimed that even if the alleged representations were made, they were not in trade or commerce. It would follow that s 52 of the Trade Practices Act could not have been engaged.
92 The High Court observed in Concrete Constructions (NSW) Pty Limited v Nelson (1990) 169 CLR 594 at 602-604 that s 52 was not intended to extend to all conduct in which a corporation may engage in the course of, or for the purposes of, its trading or commercial business.
93 Section 52 of the Trade Practices Act is concerned with the conduct of a corporation towards persons with whom the corporation has or may have dealings, in the course of those activities which bear a trading or commercial character: see Concrete Constructions at 604.
94 It is true, as the High Court said, that the dividing line may not always be clear and may require identification of what imports the requisite trading or commercial character to the impugned conduct. In the present case, the point was not fully argued and accordingly I do not propose to express a concluded view on this question.
Statutory duty
95 The claim for breach of statutory duty under s 85 of the Casino Control Act was not argued at the hearing. In any event, the legislative history and the case law indicate that the intention of the Casino Control Act was not to confer a private right of action for damages on problem gamblers who may enter a casino in breach of an exclusion order.
96 The enactment of the Casino Control Act was preceded by an inquiry into the Establishment and Operation of Legal Casinos in New South Wales conducted by Sir Lawrence Street. Sir Lawrence's recommendations were adopted when the Casino Control Bill was introduced by the Minister; see Second Reading Speech, 5 March 1992, Legislative Assembly, pp 513, 514 and 516.
97 Sir Lawrence said in plain terms that the provisions dealing with exclusion orders should not include a requirement that a casino be required by law to exclude persons whose gambling appeared to be out of control. He considered that this may be seen as creating a statutory duty with a correlative right of action upon the gambler to sue the casino for damages, which he rejected. These comments applied in equal terms to voluntary and non-voluntary exclusion orders: see the report of the Hon. Sir Lawrence Street AC KCMG, "Inquiry into the Establishment and Operation of Legal Casinos in New South Wales" (27 November 1991) at [4.6.6] to [4.6.10] ("the Street Report").
98 Moreover, in Preston v Star City Pty Ltd [1999] NSWSC 1273 at [87], Wood CJ in Common Law referred to the Street Report to support the view that the requisite legislative intention to confer a private right of action was not to be found in the Casino Control Act.
99 Prestonwas not concerned with a breach of s 85 of the Casino Control Act, which was pleaded in the present case. Nevertheless, his Honour's remarks at [87] were directed at the establishment of the regulatory scheme as a whole. He said that the Street Report and the Second Reading Speech point towards "the establishment of the regulatory scheme as the means of addressing the negative aspects of legalised gambling." He continued by saying:
"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."
100 Even if a private right of action exists against Star City, no such cause of action was established in the present case. In Rixon v Star City Pty Ltd [2001] NSWCA 265, Sheller JA (with whom Priestley and Heydon JJA agreed) said that s 85(2) of the Casino Control Act combines two prerequisites of knowledge on the part of the casino operator, or other person to whom the section applies.
101 These requirements are, first, knowledge that a particular person is in the casino, and, second, knowledge that the person is the subject of an exclusion order: see Rixon at [33].
102 Here, with the exception of the two occasions on which Mr Foroughi was detected in the casino in early 2006, the evidence disclosed only one occasion on which Mr Foroughi was present in the casino to the knowledge of Star City, after the exclusion order was made. That was on 16 December 2005 when he said he was offered admission to the high rollers' facilities.
103 Mr Foroughi was not challenged on that evidence, although the reliability of his evidence as to the actual dates of entry stated in Mr Foroughi's schedule were put directly in issue by Star City.
104 I am not bound to accept Mr Foroughi's evidence of what took place on 16 December 2005 even though it was unchallenged in cross-examination; Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 at 586-588. I reiterate what I have said about Mr Foroughi's credit. But even on his version of what took place on that day, the evidence does not establish that Star City knew that Mr Foroughi was gambling in the casino in breach of the terms of his voluntary exclusion order. Thus, s 85 would not have been engaged.
Whether Mr Foroughi is a pathological gambler
105 Mr Foroughi called evidence from Mr Ross Colquhoun, a clinical psychologist, to support his case. Mr Colquhoun saw Mr Foroughi on 2 and 9 November 2006 and, with the assistance of a colleague, took a history and administered a series of psychological tests.
106 Mr Colquhoun concluded that Mr Foroughi met the diagnostic criteria for pathological gambling stipulated in the Diagnostic and Statistical Manual of Mental Disorders (4th ed text revision, American Psychiatric Association Washington, 2000) ("DSM‑IV").
107 Mr Colquhoun went on to say that the essential feature of pathological gambling is persistent and recurrent maladaptive gambling behaviour that negatively affects personal, family and vocational functioning. In his view, Mr Foroughi suffers from this disorder, which he said is synonymous with other addictions. He stated that neuroscientific evidence indicates that, over time, pathological gamblers suffer from long-lasting structural changes to the brain with reduced capacity to make rational decisions to cease gambling.
108 Star City's expert psychologist, Professor Blaszczynski was, until recently, the Head of the Department of Medical Psychology at Westmead Hospital. Since December 2006 he has been a full time academic, holding the Chair in Psychology at the University of Sydney. His curriculum vitae reveals a high level of specialised knowledge in the area of problem gambling in which he has written and worked extensively.
109 Professor Blaszczynski agreed that the essential feature of pathological gambling is persistent and recurrent maladaptive gambling behaviour. He also agreed that Mr Foroughi demonstrated five of the ten diagnostic criteria for pathological gambling under DSM-IV, a number consistent with the disorder's diagnosis.
110 Although Mr Foroughi met five of the formal criteria stated in DSM-IV, Professor Blaszczynski expressed the clinical opinion that he is more correctly described as a problem gambler than a pathological gambler. Professor Blaszczynski came to this view principally because Mr Foroughi did not exhibit an important feature accepted as indicating impaired control, namely repeated unsuccessful efforts to control, cut back or cease gambling. Professor Blaszczynski expanded on his views in a second report dated 21 August 2006.
111 In my view, Professor Blaszczynski's opinion is amply supported by the evidence. In particular:
· Mr Foroughi agreed that he told Professor Blaszczynski that he did not make any repeated genuine or concerted efforts to address his gambling problem.
· Mr Foroughi was given a package of information listing problem gambling services that were available at the time when the exclusion order was made yet he did not go to any of those services.
· Mr Foroughi understood on 18 May 2004 that he was undertaking to the casino to seek the assistance of a qualified gambling counsellor but he did not do so. He accepted that, apart from seeking expert evidence for these proceedings, he did not seek the assistance of a recognised and qualified problem gambling counsellor.
112 Senior counsel for Mr Foroughi made a strenuous attack upon Professor Blaszczynski's evidence. He suggested that Professor Blaszczynski should have treated Mr Foroughi's prayers to cease gambling as indicating active steps to overcome his gambling problems. In my opinion, Professor Blaszczynski was correct to reject this suggestion.
113 Professor Blaszczynski concluded that Mr Foroughi's gambling was not motivated by a desire to escape problems or relieve dysphoric moods; his gambling was motivated by excitement and a desire to win, not to prevent or reduce distress or some dreaded event.
114 These conclusions were supported by statements made by Mr Foroughi to Professor Blaszczynski. In particular, Mr Foroughi told Professor Blaszczynski that he was motivated to gamble because he found the activity exciting and it provided him with an opportunity to win and recoup losses.
115 Professor Blaszczynski was an impressive witness and I accept his evidence in preference to the views of Mr Colquhoun. Whilst I thought Mr Colquhoun was doing his best to assist the Court, I have taken into account the relative experience and learning of both expert witnesses.
116 Professor Blaszczynski's curriculum vitae contains a compelling statement of his expertise. He has received awards for his contributions to research on pathological gambling, as well as a large number of grants to carry out studies in this field. He has also published widely in the area.
117 I reject Mr Laughton's attack on Professor Blaszczynski that "there is no evidence of the extent of his clinical experience." The Professor's curriculum vitae is ample testament to his clinical experience.
118 Indeed, Mr Colquhoun's experience in the field of problem gambling is relatively slight. He says his expertise is in "addictions generally" with a main focus on drugs and alcohol. There is little in his curriculum vitae that specifically relates to problem or pathological gambling. His experience appears to be limited to some work he did in the area of gambling for the Department of Corrective Services approximately 10 years ago and in oral evidence he stated:
"I have seen a number of gamblers over time and treated them…and I've written a number of reports…mainly regarding the criminal activity attached to gambling."
119 Even if I were to accept that Mr Foroughi is a pathological gambler, Professor Blaszczynski's evidence is that such persons can exercise control and limit or cease gambling if they choose to do so. I accept this opinion which is supported by Mr Foroughi's own evidence that he felt able to keep away from the casino without professional assistance and, indeed, that he had been able to do so for a period of six months prior to seeing Mr Colquhoun.
Negligence: No duty of care
120 The duty of care was not adequately pleaded, but the claim, as particularised, appears to be that the content of the duty was to detect and remove Mr Foroughi from the casino as soon as possible. Mr Foroughi's counsel submitted that the duty was to take reasonable steps to prevent an excluded person from entering the casino.
121 The question of whether a registered club owed a duty of care to a member who it knew, or ought to have known, to be a problem gambler, to protect the person against financial loss from gambling was considered by the NSW Court of Appeal in Reynolds v Katoomba RSL. The Court (Spigelman CJ, Powell and Giles JJA) was unanimous in holding that no such duty was owed.
122 Chief Justice Spigelman observed that, save in an extraordinary case, an example of which he was unable to conceive, economic loss occasioned by gambling should not be accepted to be a form of loss for which the law permits recovery.
123 In support of this view, his Honour pointed at [26] to authoritative statements of principle by the High Court in Perre v Apand Pty Limited (1999) 198 CLR 180 and Agar v Hyde (2000) 201 CLR 552 in which emphasis was placed, in the development of the law of negligence, on the acceptance by individuals of personal responsibility for their own actions.
124 Chief Justice Spigelman continued at [27] by stating that the Court should be slow to recognise a duty to prevent self-inflicted economic loss. He pointed out that this is especially so where the loss is suffered in gambling because such loss is an inherent risk of the activity and cannot be avoided.
125 The following paragraphs of the conclusion of Spigelman CJ are instructive and I will set them out in full:
47 The discussion of vulnerability in…Perre v Apand Pty Ltd…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 Hydeat 563 [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."
126 In Reynolds v Katoomba RSL, the Court refused to recognise a duty of care notwithstanding the trial judge's finding that the club knew that the plaintiff and his father had asked the club to prevent him from gambling to excess, in particular by refusing to cash cheques: see at [4] - [6], [44] and [49].
127 In my view the present claim is indistinguishable from the decision of the Court of Appeal in Reynolds v Katoomba RSL which I respectfully follow. While it is true that the question of whether a duty of care exists must depend on all the circumstances of the case, the claimed duty in the present proceedings is on an even weaker foundation than that which was relied upon by the plaintiff in Reynolds v Katoomba RSL.
128 Here, Mr Foroughi expressly and voluntarily undertook responsibility for his own conduct in agreeing not to enter the gaming areas of Star City and to seek assistance and guidance of a qualified and recognised counsellor.
129 More recent authority does not assist Mr Foroughi's claim. In Preston v Star City Pty Limited (No 3) [2005] NSWSC 1223, Hoeben J permitted a claim in negligence to proceed to trial because the allegations went beyond those made in Reynolds v Katoomba RSL. The claim was that Star City knew of the plaintiff's problem and actively encouraged and exploited it. No such claim is made in the present proceedings.
130 Nor does recent American authority to which I was referred by Star City's counsel assist Mr Foroughi's claim. I do not propose to refer to it in my reasons.
No breach of any duty of care
131 Since I have come to the view that Star City did not owe Mr Foroughi a duty of care, it is unnecessary to deal with the question of breach. However, I will address it briefly.
132 I set out above the principal parts of the evidence of Star City's systems for detection of excluded patrons. I accept that evidence.
133 The gravamen of Mr Foroughi's attack on the adequacy of the systems was that Star City should have put in place a card entry or facial recognition system or a longer hot list.
134 The effect of Star City's evidence was that facial recognition technology is not sufficiently accurate or suitable for use in casinos. This evidence is found in the affidavits of Mr Clark and Mr Lorraway. Evidence of Ms Russell is to the same effect.
135 The evidence of Mr Clark and Mr Lorraway on the issue of personal identification measures is that they are unsuitable for use in casinos. Mr Mackay's evidence under cross-examination on this topic was to the same effect as that of Messrs Clark and Lorraway.
136 Mr Lorraway also gave evidence that the hot list is limited to ten persons so as not to dilute its effectiveness as a tool in the detection of excluded persons
137 I accept Star City's evidence of the adequacy of these measures. However, it is necessary to mention one caveat. This is, that as Mr Lorraway observed in his evidence, the Casino Control Authority in its 2003 report under s 31 of the Casino Control Act was critical of limitations of a system that relies on human beings to detect excluded persons.
138 As Mr Lorraway pointed out, the Casino Control Authority Report of 2003 did not recommend any changes to Star City's system at that time. It is not for me to find otherwise on the evidence in these proceedings. That is not to say that in the light of more recent developments in technology, more effective measures may or may not be appropriate. That question is one for the regulatory authority.
Unconscionable Conduct
139 The claim of unconscionable conduct under ss 51AA and/or 51AB of the Trade Practices Act was not properly pleaded. However, senior counsel for Mr Foroughi conceded that the claim was based on the same matters as are the subject of the claim for misleading conduct. Reference was made in Mr Foroughi's written submissions to well-known authorities including Commercial Bank of Australia Ltd v Amadio and Anor (1983) 151 CLR 447.
140 I do not consider that Mr Foroughi was under any special disability. Nor do I consider that Star City took advantage of him within the well-known statements of principle in Amadio. The findings I have made about the circumstances in which the exclusion order was made are quite inconsistent with any suggestion of unconscionable conduct.
141 The present case bears no resemblance to the factual findings made by Judge Naughton in American Express International v Famularo (unreported, District Court of NSW, Norton DCJ, 19 February 2001). In any event, Powell JA doubted the correctness of that decision in Reynolds v Katoomba RSL at [115].
Contract
142 The only contract in place is to be found in Mr Foroughi's application for the exclusion order, which was made in consideration for Mr Foroughi's personal undertakings. The terms included those set out in the application in which Mr Foroughi recognised that it was his responsibility not to enter or gamble within the gaming areas.
143 Mr Foroughi breached the terms of his undertakings set out in the application for an exclusion order. Even if there were a term of the contract under which Star City agreed to take reasonable steps to apprehend and remove Mr Foroughi, I do not consider that Star City was in breach of it.
Loss
144 Any loss suffered by Mr Foroughi was caused, not by Star City, but by Mr Foroughi's deliberate and voluntary conduct in entering the casino and gambling in breach of his written undertakings.
Quantum
145 Even if Mr Foroughi had succeeded on any of the causes of action, he did not put forward any reliable evidence of his losses.
146 He gave a number of inconsistent statements of the calculation of his losses and, except for two amounts totalling $900, he failed to include any winnings in his calculations. Bank withdrawal slips put to him in cross-examination demonstrated that he could not have been present at the casino at some of the times set out in his schedule of losses.
147 Mr Foroughi's method of calculation of his loss was to say that all substantial cash withdrawals from his bank account represented gambling losses. However, it is plain that he used at least some of these funds to pay sub-contractors in the course of his business. Also, it appears he spent $500 to $1,000 a week, presumably in cash, in the pursuit of a somewhat decadent lifestyle.
148 Moreover, his tax returns disclosed negligible income whereas he claimed to have lost over $600,000 gambling at the casino in less than two years.
149 For these reasons, I cannot accept Mr Foroughi's evidence of the losses said to have been sustained by him.
Conclusion and orders
150 All of Mr Foroughi's causes of action fail. In the ordinary case, a gambler who enters a casino in breach of a voluntary exclusion order and suffers losses will have no redress in the form of a damages claim against the casino. That is not to say that the casino does not have some obligation to try to detect such persons and remove them. However, the question of what measures the casino should have in place is, essentially, a matter for the Casino Control Authority.
151 The orders I will make are that the application be dismissed with costs. Star City agreed not to pursue its cross-claim against Mr Foroughi. Accordingly, I will order that the cross-claim be dismissed, and I will not make any order as to its costs.
I certify that the preceding one hundred and fifty-one (151) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.