Plaintiff v Defendant

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

1 On 23 November 2006, the defendant ("Mr Kakavas") went to The Commonwealth of The Bahamas ("the Bahamas") where, over the next 3 days, he gambled large amounts of money at the Atlantis Paradise Island Casino ("the Casino"),[1] using a US$1 million line of credit that the Casino had provided to him and his winnings from play there, which he had deposited with the Casino as "front money".[2] Mr Kakavas lost it all in around five hours of gambling on 26 November 2006. The Casino has sued Mr Kakavas for payment of US$1,013,300. Mr Kakavas has admitted his use of the line of credit but contends that the Casino is not entitled to recover any amount from him, on the basis that the Casino acted unconscionably in providing him with the line of credit and in allowing him to draw down on it to gamble. Mr Kakavas has contended that he suffers from a psychiatric condition known as "pathological gambling", characterised by a continuous impairment of his ability to control the frequency with which he gambles and the amount of money that he gambles. He alleges that the Casino knew, or ought to have known, about his condition and that it took uncontentious advantage of his inability to resist the urge to gamble by offering and providing him with credit. He also contends that the loan is unenforceable both under the laws of the Bahamas and the laws of Victoria.

2 I have concluded that there is no merit in any of the defences and that the Casino is entitled to judgment in its favour. I now set out my reasons.

3 It was common ground[3] that the laws of the Bahamas apply to the claim and defences raised to that claim. The Casino led expert evidence[4] on the content of the relevant Bahaman laws with respect to relief for unconscionable conduct and the lawfulness and recoverability of loans made to persons for the purpose of gambling. I deal with that evidence under the relevant heads of defence.

(1) Unconscionable conduct under the laws of the Bahamas

4 The expert witness, Mr Ferron Bethell, whose evidence was not challenged on this point, reported that the common law of England applies in the Bahamas, unless the common law has been altered by statute.[5] Mr Bethell stated that as there are no statutes in the Bahamas which affect the question of whether an agreement may be set aside by reason of unconscionable conduct, the courts of the Bahamas would look to and apply English law and authorities on unconscionable conduct.

5 On the content of the law, Mr Bethell said that the courts of the Bahamas would apply the principles set out by the Privy Council in Boustany v Pigott[6] when deciding whether an agreement should be set aside by reason of unconscionable conduct. In Boustany v Pigott the Privy Council, on appeal from the Court of Appeal of the Eastern Caribbean Supreme Court (Antigua and Barbuda), expressed "general agreement" with the following propositions:[7]

(1) It is not sufficient to attract the jurisdiction of equity to prove that a bargain is hard, unreasonable or foolish; it must be proved to be unconscionable, in the sense that "one of the parties to it has imposed the objectionable terms in a morally reprehensible manner, that is to say, in a way which affects his conscience": Multiservice Bookbinding v Marden [1979] Ch 84, 110; [1978] 2 All ER 489.

(2) "Unconscionable" relates not merely to the terms of the bargain but to the behaviour of the stronger party, which must be characterised by some moral culpability or impropriety; Alec Lobb (Garages) Limited v Total Oil (Great Britain) Limited [1983] 1 All ER 944; [1983] 1 WLR 87, 94.

(3) Unequal bargaining power or objectively unreasonable terms provide no basis for equitable interference in the absence of unconscientious or extortionate abuse of power where exceptionally, and as a matter of common fairness, "it was not right that the strong should be allowed to push the weak to the wall": Alec Lobb (Garages) Limited v Total Oil (Great Britain) Limited [1984] EWCA Civ 2; [1985] 1 All ER 303; [1985] 1 WLR 173, 183.

(4) A contract cannot be set aside in equity as "an unconscionable bargain"[8] against a party innocent of actual or constructive fraud. Even if the terms of the contract are "unfair" in the sense that they are more favourable to one party than the other ("contractual imbalance"), equity will not provide relief unless the beneficiary is guilty of unconscionable conduct: Hart v O'Conner [1985] UKPC 1; [1985] AC 1000, [1985] 2 All ER 880, applied in Nichols v Jessup [1986] NZCA 84; [1986] NZLR 226.

(5) "In situations of this kind it is necessary for the plaintiff who seeks relief to establish unconscionable conduct, namely that unconscientious advantage has been taken of his disabling condition or circumstances": per Mason J in Commercial Bank of Australia Limited v Amadio [1983] HCA 14; (1983) 46 ALR 402 at 413.

It is apparent that the law in England on unconscionable conduct, as reflected in these propositions, is the same as it is under Australian general law in this area. In Bain v Thompson,[9] to which Mr Bethell referred, the Court of Appeal of the Bahamas observed that the law on unconscionable conduct in the Bahamas is the same as it is in England, Australia and New Zealand.

6 The authorities referred to in Boustany v Pigott make it clear that relief for unconscionable conduct involves showing that one party was unable, or had an impaired ability, to look after his or her interests in dealing with the other party, by reason of some condition or circumstance affecting that person's judgment "with the consequence that there was an absence of any reasonable degree of equality between [the parties]".[10] Equity will intervene where that disability was known, or was "sufficiently evident"[11], to the other party and that party took unconscientious advantage of that disability.

7 It is necessary to show that the disability placed a person in a position of "special disadvantage" vis-à-vis the other party. Kitto J in Blomley v Ryan[12] stated that unconscionable conduct:

... is a well-known head of equity. It applies whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands.[13]

Mason J in Commercial Bank of Australia Limited v Amadio[14] qualified the word "disadvantage" by the adjective "special":

... in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasise that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgement as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effects on the innocent party.[15]

The nature of the "disadvantage" is in the party's inability to judge what is in his or her interests[16] and thus the circumstances that may cause such an inability are not susceptible of comprehensive catalogue.[17] Unconscionable conduct lies in the exploitation of that person's weakness, that is, in taking unconscientious advantage of that person's inability to make a judgment as to his or her own interests.[18]

8 There was no dispute between the parties about the relevant principles to be applied. It was accepted for Mr Kakavas that he must show that he had a seriously impaired ability to make a judgment about his own interests in obtaining the line of credit from the Casino for the purpose of gambling there and in drawing down on it to engage in play. It was also accepted for Mr Kakavas that he must show that the Casino exploited that impaired ability in an unconscionable way and that this element requires proof that his impairment was known, or should have been sufficiently evident to, the Casino.[19]

(2) Was Mr Kakavas suffering from the condition of "pathological gambling"

9 Expert evidence was led for Mr Kakavas from a psychologist, Mr Bernard Healey about the condition of "pathological gambling". The condition is recognised in the American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders. The fourth edition ("DSM-IV") defines the condition as follows:

The essential features of Pathological Gambling is persistent and recurrent maladaptive gambling behaviour (Criterion A) that disrupts personal, family, or vocational pursuits. The diagnosis is not made if the gambling behaviour is better accounted for by a Manic Episode (Criterion B).[20]

Persistent and recurrent maladaptive gambling behaviour is indicated by five or more diagnostic criteria, which are set out in DSM-IV. These are explained as follows:

The individual may be preoccupied with gambling (e.g., reliving past gambling experiences, planning the next gambling venture, or thinking of ways to get money with which to gamble) (see Criterion A1). Most individuals with Pathological Gambling say that they are seeking "action" (an aroused, euphoric state) or excitement even more than money. Increasingly larger bets, or greater risks, may be needed to continue to produce the desired level of excitement (Criterion A2). Individuals with Pathological Gambling often continue to gamble despite repeated efforts to control, cut back or stop the behaviour (Criterion A3). There may be restlessness or irritability when attempting to cut down or stop gambling (Criterion A4). The individual may gamble as a way of escaping from problems or to relieve a dysphoric mood (e.g., feelings of helplessness, guilt, anxiety, depression) (Criterion A5). A pattern of "chasing" one's losses may develop, with an urgent need to keep gambling (often with larger bets or the taking of greater risks) to undo a loss or series of losses. The individual may abandon his or her gambling strategy and try to win back losses all at once. Although all gamblers may chase for short periods, it is the long-term chase that is more characteristic of individuals with Pathological Gambling (Criterion A6). The individual may lie to family members, therapists, or others to conceal the extent of involvement with gambling (Criterion A7). When the individual's borrowing resources are strained, the person may resort to anti-social behaviour (e.g., forgery, fraud, theft or embezzlement) to obtain money (Criterion A8). The individual may have jeopardised or lost a significant relationship, job, or educational or career opportunity because of gambling (Criterion A9). The individual may also engage in "bailout" behaviour, turning to family or others for help with a desperate financial situation that was caused by gambling (Criterion A10).[21]

DSM-IV states that the condition must be distinguished from social gambling and professional gambling.[22] Specifically the report notes that in professional gambling:

... risks are limited and discipline is central. Some individuals can experience problems associated with their gambling (e.g., short term chasing behaviour and loss of control) that do not meet the full criteria for Pathological Gambling.[23]

10 Mr Healey has had intermittent clinical consultations with Mr Kakavas since 1997, when he diagnosed Mr Kakavas as suffering from the condition of pathological gambling. Although Mr Healey was not treating Mr Kakavas in 2006, it was Mr Healey's opinion, expressed in a report prepared in October 2008 to Mr Kakavas' solicitors, that Mr Kakavas in November 2006 "would have been suffering from a psychiatric condition known as 'pathological gambling' characterised by continuous impairment of his ability to control the frequency with which he gambled and the amount of money he wagered".[24] His professional opinion was that Mr Kakavas had suffered from the condition since 1993 and "is at the uppermost point of pathological gambling". He stated his view that this type of gambling addiction never dissipates and can only be controlled by strict adherence to abstinence from all types of gambling and that Mr Kakavas would remain at risk of relapse for the rest of his life.

11 For the Casino it was submitted that the Court should not accept that Mr Kakavas had established that he did, in fact, suffer from the condition of pathological gambling in November 2006. That submission was based on:

(a) the lack of contemporaneous medical evidence of Mr Kakavas' condition in November 2006; and

(b) Mr Healey's candid acknowledgment in cross-examination that he had been lied to by Mr Kakavas about matters that were quite significant in relation to Mr Healey's opinion about Mr Kakavas. The acknowledgment in part concerned a report that Mr Healey had provided in January 1998 to Mr Kakavas' then solicitors in which he stated that:

Harry has had 'phone contact with me on several occasions, he has not been involved in any kind of gambling, indeed his attitude, his more settled functioning and clearer objectives were seen as being consistent with absent gambling and maintained insight into the nature of his addiction.[25]

It appears that Mr Kakavas had painted a rosier picture to Mr Healey than in fact was the case.

12 Although Mr Healey did not clinically consult with Mr Kakavas for the purpose of the report he gave to Mr Kakavas' solicitors. I am satisfied on the basis of Mr Healey's diagnosis in 1997 that Mr Kakavas suffered from the condition at that time and I accept Mr Healey's evidence that this type of condition does not dissipate, although it can be controlled, and that Mr Kakavas is at risk of relapse throughout the rest of his life. I am also prepared to accept that a person suffering from that condition may have an impaired ability to control the frequency of gambling and the amount of money wagered. That is to say, that the condition is capable of characterisation as a special disability for the purposes of the doctrine of unconscionable dealing.

(3) Did the condition seriously affect Mr Kakavas' ability to look after his own interests?

13 It was submitted for the Casino that suffering from the condition did not necessarily place Mr Kakavas under a special disability. It would appear, based on DSM-IV, that a diagnosis of pathological gambling does not necessarily carry with it the implication that the person must not have control over his or her behaviour at any particular time.[26] Thus it would appear that a pathological gambler may not necessarily have an impaired ability to make a judgment about his or her own best interests. Mr Healey thought it was "a difficult question" as to whether Mr Kakavas could make a judgment about his own best interests. Certainly there was before me a body of evidence that indicated that Mr Kakavas was, from time to time, able to control his addiction by self-exclusion and periods of absences from the casinos. That is to say, that he could keep away from casinos and had been able to do so.

14 The evidence also showed that Mr Kakavas was able to and did exercise some measure of control in his gambling sessions at the Casino. The evidence, which was common ground, was that over the three day period Mr Kakavas was able to stop gambling for long periods and undertake other activities between gambling sessions. On 24 November 2006, Mr Kakavas played mini baccarat for ten minutes from about 3:26pm to 3:36pm, then again for two and a half hours from about 4:49pm until 7:22pm. He recommenced gambling at 10:12pm and played for twenty-eight minutes. On 25 November 2006, he commenced gambling at 1:55pm and was there for one hour and fifty minutes. He resumed playing at 8:30pm for a two hour and fifty minute session and played again briefly from 11:20pm to 11:21pm. On 26 November 2006, he commenced gambling at 2:30pm and had a four hour session followed by a break of approximately two hours and forty five minutes before recommencing at 8:45pm for another one hour session. The evidence also showed that Mr Kakavas could exercise control over his gambling when he was ahead. On 24 November 2006 his total winnings were $762,500 of which $160,000 was profit after redeeming the money wagered using the line of credit, which he deposited with the Casino. On 25 November 2006 his total winnings for the day were $1,173,900 of which $560,000 was profit, after redeeming the money wagered using the line of credit, which he deposited with the Casino.

15 But on 26 November 2006, the pattern was different. On that day, he started gambling at 2:30pm. Over a four hour period he wagered and lost all his front money and most of the Casino funds. By 6:30pm he had losses totalling $1,564,000. He then took a two hour and fifteen minute break and recommenced gambling at 8:45pm, drawing a marker for the remaining $85,000 of available credit which he lost within the hour.

16 For the Casino it was submitted that no evidence had been led sufficient for a factual finding that Mr Kakavas could not control his own behaviour. In my view, Mr Kakavas' conduct on 26 November 2006 provides evidentiary foundation for the finding that Mr Kakavas had an impaired ability to look after his interests once he started losing money. Whilst the gambling records for the previous days' gambling showed that he was able to quit once he was ahead, this day was different because he did not recoup his losses. He did not walk away when he had used up his winnings but continued to chase his losses and thereafter gambled on credit until all the funds were exhausted. In my view, it may reasonably be inferred that his ability then to judge his own best interests was seriously affected. I am prepared to find that the condition of pathological gambling that Mr Kakavas suffered from seriously impaired his ability to control the amount that he wagered when he was chasing losses.

(4) Did the Casino have knowledge of Mr Kakavas' condition?

17 The doctrine of unconscionable dealing is predicated on the exploitation of a person's special disability. A key element of unconscionable dealing is that the other party knows of that special disability or ought to have known of the existence of that condition and of its effect on the person.[27] It is not necessary to show that the other party had actual knowledge of the special disability. In Commercial Bank of Australia Limited v Amadio,[28] Mason J observed that:

As we have seen, if A having actual knowledge that B occupies a situation of special advantage in relation to an intended transaction, so that B cannot make a judgement as to what is in his own interests, takes unfair advantage of his (A's) superior bargaining power or position by entering into that transaction, his conduct in so doing is unconscionable. And if, instead of having actual knowledge of that situation, A is aware of the possibility that that situation may exist or is aware of facts that would raise that possibility in the mind of any reasonable person, the result will be the same.[29]

Mason J observed that the requirement of knowledge would be satisfied:

[If] the facts as known to [the bank manager] were such as to raise in the mind of any reasonable person a very real question as to the respondents' ability to make a judgment as to what was in their own best interests.[30]

Similarly, Deane J thought it sufficient that the special disability was "sufficiently evident to the stronger party to make it prima facie unfair or "unconscientious" that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it".[31] He stated that "[i]t would, at least by that stage, have been plain to any reasonable person, who was prepared to see and to learn, that he was put on inquiry".[32] Thus, deliberate exploitation may be shown not only by establishing that the other party had actual knowledge of a person's special disability but also where that other party's knowledge of circumstances should reasonably have put that other person on notice of the disability.

18 For Mr Kakavas it was submitted that the evidence plainly established that the Casino knew of Mr Kakavas' gambling addiction and that on any view, the Casino was aware of facts that would have raised that possibility in the mind of any reasonable person. It was submitted that "a stronger case of wilful blindness is hard to imagine". I reject that submission. In my view the knowledge element has not been made out on the evidence before me.

(i) The expert evidence on observable signs of a problem gambler

19 Mr Kakavas called expert evidence from Dr Paul Delfabbro, a PhD in psychology on gambling behaviour, on the observable signs of a problem gambler. Dr Delfabbro was involved in a research project undertaken in 2006/7 funded by Gambling Research Australia (Victorian Department of Justice) which examined whether there were any reliable indicators that could be used by gaming venue staff to identify problem gamblers within the venues. The first part of the research involved Dr Delfabbro and his colleagues developing a list of possible indicators of problem gambling, which fell into several categories:

• Frequency, duration and intensity: How often, how long, and how much the person gambled. For example, did the person gambling continuously, very fast, make large rash bets, gamble for 3 hours or more, or almost every day?

• Impaired control and choice: To what extent did the person appear to have control over when they stopped gambling? How strong was their apparent urge to gamble? For example, did the person gamble through normal meal times, find it hard to stop when the venue was closing, or arrive when the venue was opening?

• Social Behaviours: How did the person react towards others? For example, did the person ignore other people, react rudely when interrupted, and did other people inquire about the person's gambling at the venue?

• Raising Funds/Chasing Behaviour: Did the person seem abnormally pre-occupied with raising funds? For example, did the person frequently visit ATMs or cash facilities, leave the venue and come back, rummage for the last coin in their bags, try to borrow from others, seek credit, or sell property?

• Emotional Responses: How did the person react to losing? Did the person become very angry, emotional, or strike the tables or machines?

• Irrational Behaviours: Did the person blame the venue for losing, e.g. the croupier or the machine?[33]

This list was developed in consultation with the gambling industry, counsellors and problem gamblers themselves and then provided to gaming venue staff and counsellors for their comment. Dr Delfabbro reported to the Court that "almost" all of the indicators were endorsed by venue staff and counsellors, with venue staff, in particular, placing a strong emphasis on social and emotional responses, such as patron anger or blaming staff for losing. He also reported that venue staff drew attention to the importance of looking for changes in patron appearance and behaviour. Dr Delfabbro said that the research showed that it was "theoretically possible" to identify problem gamblers if venue staff observed the indicators, but inherent in this was the assumption that venue staff had sufficient training to be aware of the indicators and sufficient time and opportunity in which to observe someone.

20 Senior counsel for Mr Kakavas sought to elicit through Dr Delfabbro, by reference to those indicators, that the staff at the Casino would have been, or should have been, put on notice about Mr Kakavas' condition. Dr Delfabbro's view was that certain aspects of Mr Kakavas' behaviour pointed to a gambling problem and that this could have alerted venue staff. Whilst I do not doubt the validity of the research that Dr Delfabbro conducted, I did not, however, find the evidence of Dr Delfabbro helpful on this issue. There are a number of reasons:

(a) these indicators were developed to assist in identifying the observable signs of problem gambling, not maladaptive gambling behaviour ;

(b) the study did not look at professional gamblers but, rather, at small time gamblers, which was the target group for the research. Dr Delfabbro agreed that the indicators may not be applicable to professional gamblers;

(c) his oral evidence did not have regard to the realities of high end gambling. In my view Dr Delfabbro's statement in paragraph 20 of his report was more reliable:

A fundamental challenge for [the Casino] staff, however, is that many of the visible indicators are also likely to be consistent with 'high end' gambling rather than problematic gambling.[34]

(d) the indicators were simply that: in other words, the observance of one or more would not necessarily be reason for someone to be put on notice of problem gambling in a given circumstance, as Dr Delfabbro acknowledged in his report to the Court. In other words, Mr Kakavas's special disability may not be evident from observation of some or more indicators.

21 For the above reasons, I did not find Dr Delfabbro's evidence probative of the matters that I must determine. It is necessary to examine the facts as they happened to determine whether the Casino knew, or should have been on notice about, Mr Kakavas' special disability.

(ii) What the Casino knew about Mr Kakavas before he arrived in the Bahamas

22 Mr Kakavas had not been a patron of the Casino. He had not gambled at the Casino before his stay in the Bahamas between 23 and 27 November 2006 and the Casino had no prior dealings with him. Thus, importantly, the Casino had no history of dealings with Mr Kakavas, although it had been forewarned of Mr Kakavas' proposed visit to the Bahamas and of his reputation as a high roller gambler. Some weeks earlier John Kirk, a Vice President of the Casino, had organised accommodation for Mr Kakavas at the One and Only Ocean Club ("the Resort").

23 The relevant events commenced in late 2006 with the planning for Mr Kakavas' honeymoon. Mr Kakavas' evidence was that he left the arrangements to his wife as "it was her time and it was special for her so whatever she wanted, I did". She, apparently, wanted to visit the Bahamas and to stay at the Resort. When Mrs Kakavas was unable to make a reservation, Mr Kakavas suggested that his wife contact Mit Supakul, the Senior Vice President of International Marketing at the Bellagio Casino in Las Vegas for his assistance. It appears that Mr Supakul was able to arrange the accommodation with the assistance of Jorge Tise from the Mandalay Bay Casino in Las Vegas who contacted Mr Kirk. Mr Kirk learnt through Mr Tise that Mr Kakavas was a big player in Las Vegas who was coming to the Bahamas on his honeymoon. Mr Kirk was also told by Mr Tise that Mr Kakavas probably would not gamble. Criticism was made of the Casino for not calling Mr Kirk or Mr Tise as witnesses. For Mr Kakavas it was submitted that as a result of Mr Kirk and Mr Tise not giving evidence, Mr Kakavas "was unable to test the veracity of the evidence as to what the Casino knew about Mr Kakavas prior to him arriving at the Casino". I draw no adverse inference from either of these people not giving evidence. It was not part of Mr Kakavas' case that Mr Tise did tell, or that it could reasonably be expected that Mr Tise would have told, Mr Kirk more about him than the fact that he was a high roller, that he was coming to the Bahamas on his honeymoon and probably would not gamble. Furthermore, it is entirely probable that nothing more was passed onto Mr Kirk as the case for Mr Kakavas was that his wife chose the location because she wanted to honeymoon there, that he had left her to make all the arrangements and that he had not intended to gamble there. It was also not part of Mr Kakavas' case that Mr Tise would have known about his condition and would have been expected to pass on that information to Mr Kirk.

24 The evidence was that Mr Kirk told Richard Waters, Senior Vice President, Casino Operations and Marketing and Roderick Colebrook, a Director of Casino Marketing about Mr Kakavas' proposed visit and that Mr Waters authorised a credit search to be done on Mr Kakavas. It was put to Mr Waters in cross examination that the Casino was keen to get Mr Kakavas to gamble at the Casino. Although Mr Waters denied this, it may reasonably be concluded that Mr Waters authorised the credit search in the anticipation that Mr Kakavas would in fact gamble at the Casino and that Mr Kakavas would ask for a line of credit to be established for that purpose.

25 The credit search was done through a credit reporting agency, Central Credit LLC which reported to the Casino on 22 November 2006, the day before Mr Kakavas arrived in the Bahamas. The report came up with eleven casinos where Mr Kakavas had a credit history. There were no flags indicated, meaning no "derogatory information" such as the failure to pay a debt. Of the eleven casinos, the Mirage Hotel was shown to be owed US$50,000 by Mr Kakavas. Five casinos, all based in Las Vegas, had the notation "pref", indicating that they would have to be contacted directly by the Atlantis Casino for information. The remaining casinos had nothing shown as outstanding to them. It appears that contact was made with the five Las Vegas casinos as there are handwritten notations on the gaming report indicating that Mr Kakavas had current debts of US$1,524,000 to the Bellagio, US$1.5million to the Venetian and US$2.3million to the Wynn Las Vegas from recent gambling sessions. No amounts were owed to the other two casinos, the Mandalay Bay and MGM Grand Hotel/Casino where Mr Kakavas had a US$4.5million line of credit and had also gambled there recently. Those gambling sessions were confirmed by Mr Kakavas who said in evidence that he had gambled in Las Vegas before travelling to the Bahamas. It appears also that the Casino followed up with the Mirage Hotel about the US$50,000 shown as outstanding and was told that the credit balance was, in fact, "clear".

26 Whilst it may be concluded that the report must have confirmed for the Casino that Mr Kakavas was a big player in Las Vegas, who had been provided with, and used, substantial lines of credit to gamble substantial amounts of money. There was, in my view, nothing in that report or the follow up inquiries made by the Casino to put the Casino on notice that Mr Kakavas may have suffered from a serious disability affecting his judgment and control over his gambling activities.

27 Sophia Rolle-Kemp from the credit department reported back to Mr Waters on the results of the gaming report. Mr Waters then asked her to do an internet search of Mr Kakavas. His evidence was that Ms Rolle-Kemp reported back that Mr Kakavas "appeared to be a man of significant wealth, that he had just sold his house for millions of dollars and he was known to be very successful in the real estate business". Significantly that search did not disclose that Mr Kakavas had self excluded himself from any casino, although the fact was that Mr Kakavas had excluded himself from some casinos in Australia. Criticism was made of the Casino for not calling Ms Rolle-Kemp as a witness. I draw no adverse inference from her not being called as a witness. It was not part of Mr Kakavas' case that an internet search would have brought up the fact of his self exclusion or other matters that should have, or would have, put the Casino on notice of his serious disabilities or alerted the Casino to the possibility.

28 The evidence also showed that the Casino anticipated that Mr Kakavas may ask for credit or at the least readied itself for such a request as, apart from the credit search and follow up inquiries, someone in the credit department had his name and residential address printed on a blank credit application form on 22 November 2006.

29 None of this evidence, however, supports a finding that the Casino was armed with information about Mr Kakavas before he arrived in the Bahamas that would have, or should have, put it on notice that Mr Kakavas may have an impaired ability to control his gambling and what he wagered. The provision of credit by the Casino was an ordinary incident of gambling activity there. There was nothing untoward about a patron seeking funds from the Casino to gamble and the evidence showed that the credit was given because of his good credit rating with other casinos. No credit or other issues had come to the attention of the Casino.

30 On 23 November 2006, Mr and Mrs Kakavas arrived at the Nassau Airport in the Bahamas where a limousine, organised by the Resort or someone at the Casino, was waiting for them. When they arrived at their room at the Resort, Mr Kakavas said he could see a message light flashing on the telephone. His evidence was that the message was from a person who announced himself as Roderick Colebrook, a casino host, inviting Mr Kakavas and his wife to visit him at the Casino.

31 Mr Kakavas said that he did not leave the resort that day, although his wife left to go shopping with US$5,000 cash that he gave her.

32 The Casino records for Mr Kakavas' player number showed that the first play at the Casino was at 5:55pm on 23 November 2006 at the mini baccarat table. The game was played for 25 minutes with an average bet of US$700. The player bought in with US$3,800 cash and left the game with US$6,300 with winnings of US$2,500 on the play. Mr Kakavas denied that he played that day. His explanation for the play recorded on his player number was that his wife must have played and that the player number would have come from the room key at the Resort, as the reservation was in his name only. Mrs Kakavas was not called to corroborate that she gambled on 23 November 2006, not her husband.

33 I do not accept Mr Kakavas' evidence that he did not gamble that day. The evidence is inconsistent with evidence from a casino employee, Roderick Colebrook, that Mr Kakavas told him the following day that he had played on 23 November 2006. For reasons that are set out later, I have preferred the evidence of Mr Colebrook to that of Mr Kakavas. But whether it was Mr Kakavas or his wife who played that day, I am satisfied on the evidence that nothing occurred on 23 November 2006 which would have, or should have, put the Casino on notice about Mr Kakavas' impairment caused by the psychiatric condition of pathological gambling.

34 Mr Kakavas gave evidence that he first went to the Casino in the early afternoon of 24 November 2006 "to seek out Mr Colebrook who had previously left a message on the phone ... to thank him for arranging the accommodation". He said they had a lengthy discussion during which Mr Colebrook asked him whether he wanted to gamble. His evidence in chief was as follows:

MR ANDERSON: What did he say to you and what did you say to him as best you can recall?

MR KAKAVAS: --- Your Honour, I thanked Mr Colebrook for organising the accommodation for us. Mr Colebrook was extremely professional, he welcomed me to the Bahamas. He enquired to whether or not I was going to gamble whilst I was in the Bahamas. I informed Mr Colebrook that I didn't have any intention of gambling, I didn't have any money to gamble with. I informed Mr Colebrook that I had outstanding markers at other casinos. I informed Mr Colebrook, Your Honour, that I had banned myself from casinos in Australia because I didn't want to be too easily tempted to gamble ...

...

I told Mr Colebrook I was there for my honeymoon, I told Mr Colebrook that I had no intention of gambling, I told Mr Colebrook that I had no money to gamble with. I told Mr Colebrook that I had outstanding markers from other casinos, I told Mr Colebrook I was excluded from other casinos in Australia because I didn't want to be too tempted to gamble...

MR ANDERSON: What did Mr Colebrook say to you, in return?

MR KAKAVAS: --- In return, Your Honour, Mr Colebrook said to me that the casino was aware of who I was. Mr Colebrook said to me that the casino was aware of the amounts I was wagering and losing in Las Vegas, Mr Colebrook said to me, because of my background, credit could be arranged. Mr Colebrook said to me that up to $1 million worth of credit could be arranged. Mr Colebrook said to me that the casino was aware that I had already in excess of US$5 million in outstanding markers at other casinos, they are the sort of things that Mr Colebrook said to me.

MR ANDERSON: Did Mr Colebrook speak to you about gaming at the Atlantis Casino?

MR KAKAVAS: --- Mr Colebrook did ask me if I wanted to gamble. I said to Mr Colebrook I didn't have any money to gamble and I had no intention of gambling and I was on my honeymoon and Mr Colebrook said to me he could organise a credit facility of up to $1 million.

MR ANDERSON: What then happened after he said that to you?

MR KAKAVAS: --- After he said that, I said to him that - not to speak about any gambling related activities in front of my wife or any credit application in front of my wife...

...

MR ANDERSON: Why did you say that?

MR KAKAVAS: --- Because I knew my wife was about 15 minutes behind me. I had gone to the casino just before - I went to the casino prior to my wife arriving there and I never thought that I would find that type of warm reception, so to speak, so I was taken by surprise and I asked Mr Colebrook not to say anything to my wife, because obviously I didn't want my wife to know I was gambling.

MR ANDERSON: What else did you discuss or did Mr Colebrook discuss with you during this conversation you've described to Her Honour?

MR KAKAVAS: --- A couple of other casino related matters, Your Honour. The casino had - off memory they had a limit of about $20,000 that you could bet. I said to Mr Colebrook that if they were to give me the credit that I requested or offered ...

So he said to me that - I asked him if the minimum bet could be increased, Your Honour from 20 or $25,000, I can't be precise, to $50,000, I can be precise about that and he, Mr Colebrook said to me he would speak to John Kirk and organise that and he also said to me that RFB, which is room, food and beverages, could be made available to me and a 10 per cent rebate on my loss would also apply. If I lost $1 million, for example, being the credit facility, I would get a discount of about $100,000.

MR ANDERSON: In relation to the food and beverages, what did he say would apply?

MR KAKAVAS: --- They were all complimentary.

35 I found Mr Kakavas' evidence disjointed and contradictory, significantly with respect to whether it was Mr Kakavas or Mr Colebrook who initiated the credit request. It was not a cohesive recount of the conversation that he had with Mr Colebrook.

36 It is plain from Mr Kakavas' version of events that he left the first meeting with Mr Colebrook on the basis that the Casino would consider a credit application for US$1 million. This was evident from his evidence in chief that about an hour later he went back to the Casino to find out whether "[his] credit had been approved". He said that on his return, Mr Colebrook told him that credit was approved and "he brought out a credit application document and [he] remember[ed] signing it", but maintained that he did not fill out the form. He also could not remember whether the signatures of casino staff authorising the credit appeared on the second page of the form. He recalled that the only person who was present when he signed the form was Mr Colebrook.

37 He then gave evidence in chief that after handing back the signed form and waiting in the credit office for chips that he "may have spoken to David Peralta". He recalled that when he signed the application form that"was the time [he] met Mr Peralta ... [he could] just put those two events together, that [he] walked into the casino credit office ... to see how [his] application went and [he] just remember[ed] Mr Peralta". Mr Kakavas was asked what he remembered of that conversation with Mr Peralta. Mr Kakavas said "[b]asically the same things [he] discussed with Mr Colebrook. [He] basically introduced [himself] to him, basically the same conversation." When asked to recall as best as he was able what Mr Peralta said to him, Mr Kakavas gave the following evidence:

MR KAKAVAS: --- Your Honour, he welcomed me to the casino, he enquired whether or not I may be gambling or if I wanted to gamble. He told me that if there was anything I needed, I should look towards him. He said to me that the casino knew who I was. He said to me that he was aware that I was wagering and losing large sums of money in Las Vegas. He said to me that he could organise credit facilities for me. He said to me that if there's anything I ever want, to get in contact with him, he was there to look after me. That was the gist of the conversation. He was doing his job as a host, he was very hospitable.

MR ANDERSON: What did you say to him?

MR KAKAVAS: --- Just before I get there, he told me that he knew - he told me that either he or the casino knew that I had over $5 million worth of outstanding markers at other casinos. He also said to me that because of my background and because the casino knew who I was, credit could be arranged.

MR ANDERSON: I ask you then, what did you say to him in response to what he said to you?

MR KAKAVAS: --- Your Honour, basically I repeated again what I said to Mr Colebrook, that I was there for my honeymoon, I had no money to gamble, I had no intention of gambling, that I had outstanding markers at other casinos; it was just the same old conversation. He was just being a host, we were just talking.

38 Mr Colebrook gave evidence for the Casino. Mr Colebrook's version of events was somewhat different to Mr Kakavas' recollection. Mr Colebrook is a director of Casino Marketing. He described his job as "basically entail[ing] meeting with all the high rollers or many of the gamblers that come through the [C]asino, to work with them, deal with them and help them out as much as we can." Asked in what way he works with them, he responded "Meet and greet and maybe arrange dinner reservations and help them out with anything they may need". Mr Colebrook said that he already knew who Mr Kakavas was from his earlier discussion with Mr Kirk, who had told him that he should look after Mr Kakavas and attend to any of his needs. Mr Colebrook said that he understood that to mean that Mr Kakavas was a high roller and if he needed assistance, that Mr Colebrook was to help him out as much as he could.

39 According to Mr Colebrook, Mr Kakavas asked him at the first meeting for US$1 million of credit because he was a high roller and he wanted to play and that Mr Kakavas had said that he had played on 23 November 2006 but "he was fooling around" because he did not really have any money. Mr Colebrook said that he told Mr Kakavas that he could fill out an application for credit with the credit office. According to Mr Colebrook, Mr Kakavas went to the credit desk, which was situated near to his room, took the credit application form which he then filled out in front of Mr Colebrook whilst they had a conversation about "personal things", "like he did sales of homes and he was one of the largest salesmen in terms of homes". Mr Colebrook said that all Mr Kakavas told him about his gambling was that he was a high roller.

40 In response to specific questions asked of Mr Colebrook in examination in chief, Mr Colebrook:

(a) said that it was not his function to organise credit;

(b) denied that he had left any telephone message for Mr and Mrs Kakavas at the Resort;

(c) denied that he had a discussion with Mr Kakavas about the amount of money he owed to other casinos;

(d) denied that Mr Kakavas told him that he had outstanding markers at other casinos. But, whether or not Mr Kakavas did tell him, the fact was, in any event that this was known already by the Casino because of the credit check that had been done by the credit department;

(e) denied that Mr Kakavas had told him about his self exclusions;

(f) denied that Mr Kakavas had said anything to him about not wanting to be tempted to gamble;

(g) denied that Mr Kakavas saying anything to him about increasing the maximum bet. In fact the maximum bet was increased but Mr Colebrook said that he had nothing to do with that issue as "that's operations";

(h) denied that he said anything to Mr Kakavas about rebating losses as "that's something that's done based on play";

(i) denied that he said anything about providing complimentary room, food and beverages as "that's based on his play".

41 Mr Colebrook was extensively cross examined. His evidence remained consistent, although it appeared that Mr Colebrook also had left out parts of the conversation he had with Mr Kakavas at the first meeting. Notably, he agreed when it was put to him in cross examination that Mr Kakavas told him not to speak about gambling or the credit application before Mrs Kakavas.

42 The fact that both witnesses left out details of what was discussed is not surprising given that the conversation was some three years ago. I have not formed the view that either witness was untruthful but in my view Mr Colebrook's recollection of the initial meeting is more reliable and is to be preferred. Significantly Mr Kakavas' account of his conversation with Mr Colebrook provides no explanation for his conduct later that afternoon, which on his evidence was that he went back to the Casino later that day "to see how [his] application went". I have no reason to doubt the truthfulness of that answer, which is entirely consistent with Mr Colebrook's version of events. In my view, it is entirely plausible that Mr Kakavas signed an application for credit at the first meeting.

43 I have also concluded that Mr Kakavas has elided his recollection of the events of 24 November 2006. It is not plausible that Mr Kakavas would have had the conversation he maintained he had with Mr Peralta on 24 November 2006 at the time he had just been told that he had been granted credit by the Casino. Mr Kakavas did accept in cross examination that he could not be sure when he had met Mr Peralta. Mr Peralta on the other hand was adamant in his evidence that he did not meet Mr Kakavas until the morning of 25 November 2006. The conversation that Mr Kakavas said that he had with Mr Peralta was not put to Mr Peralta. The fact of that conversation ever having happened must be refuted.[35]

44 I do not accept the submission for Mr Kakavas that Mr Colebrook was an unsatisfactory witness. I find that Mr Kakavas did tell Mr Colebrook that he had gambled on 23 November 2006. I also find that Mr Kakavas asked Mr Colebrook for US$1 million dollars of credit and that the initiative did not come from the Casino. I further find that Mr Kakavas signed the credit application form during that first meeting with Mr Colebrook which was then submitted to the credit department for processing. I find that Mr Kakavas did not say anything to Mr Colebrook or Mr Peralta about not wanting to be tempted to gamble or about his self exclusions.

45 The line of credit of US$1million was established in the afternoon of 24 November 2006. Mr Kakavas went straight away to the gaming room where he played mini baccarat for two and a half hours. At 4:49pm he signed a marker for $95,000 worth of chips. At 4:59pm he signed a marker for $100,000 worth of chips. At 5:32pm he signed another marker for $100,000 worth of chips and at 6:08pm he signed a marker for $205,000 worth of chips. At 7:22pm he redeemed $500,000 worth of chips. He recommenced gambling at 10:11pm after dining with his wife and played for twenty-eight minutes. At 10:11pm he signed a marker for $100,000 worth of chips, at 10:40pm he redeemed $100,000 in chips and at 10:58pm he deposited $100,000 front money with the Casino.

46 The records for 24 November 2006 also include a 10 minute session at the mini baccarat table at 3:26pm. According to casino records, Mr Kakavas played with $2,500 cash and won $4,800. Mr Kakavas said that it was his wife who played that session, not him. I do not accept that evidence. Mrs Kakavas was not called to corroborate it and the documentary evidence, such as there is in the form of the player records, showed the player as Mr Kakavas. Absent Mrs Kakavas' evidence, in my view, the player records should be accepted as the more reliable evidence than the word of Mr Kakavas.[36]

47 The total winnings on 24 November 2006, including the 10 minute session at 3:26pm were $762,500, of which $160,000 was profit.

48 For Mr Kakavas, it was submitted that the information contained in the credit report, his conversation with Mr Colebrook and his conversation with Mr Parolta should have alerted the Casino to Mr Kakavas' pathological gambling addiction. I have found that I have preferred the evidence of Mr Colebrook and that Mr Kakavas did not have the conversation that he maintained he had with Mr Peralta. But even if Mr Kakavas' version was accepted, I find that nothing was said in either conversation which would have conveyed to Mr Colebrook or Mr Peralta that Mr Kakavas may have a psychiatric condition . Neither the credit report nor those conversations would have put the Casino on notice that Mr Kakavas was a gambler who could not control his decisions to borrow money and to gamble, as opposed to a heavy gambler with substantial means who, if Mr Kakavas' evidence is accepted, had taken means to curb his temptation to gamble. That in itself suggested a person who had the ability to control when and where he would gamble.

49 Much was sought to be made for Mr Kakavas of his request to Mr Colebrook that Mr Colebrook not tell his wife of the extension of credit or of the fact of his gambling. It may be accepted that this put Mr Colebrook on notice of something, but it is a far cry from Mr Colebrook being alerted to the possibility that Mr Kakavas may have suffered from this condition. There may be many reasons for that request. After all, Mr Kakavas was on his honeymoon and on his evidence that was the reason he was there, rather than to gamble. Moreover, Mrs Kakavas must have known that her husband was there gambling as she accompanied him to the Casino, met with casino staff that day and had dinner with Mr Kakavas between gambling sessions that night.

50 The evidence does not support the contention that the Casino was on notice of impaired control over his gambling or that this should have been sufficiently evident to the Casino. The Casino was on notice that Mr Kakavas was a wealthy and successful real estate dealer, that he was a high roller, that he had borrowed money from other casinos in substantial amounts, that he had a reputation for repaying his markers and that his outstanding debts to Las Vegas casinos were still current. The provision of credit by the Casino was a usual occurrence. Mr Kakavas demonstrated on 24 November 2006 that he had the ability to control his gambling by playing for only part of the day and taking breaks.

51 Mr Colebrook accessed Mr Kakavas' player records on 24 November 2006 and knew how he was playing. But Mr Kakavas' gambling that day indicated a person who was in control of his playing. At least, there was nothing to indicate that he was not in control.

52 I do not accept that the evidence of the events on 24 November 2006, separately or cumulatively with the knowledge the Casino had already about Mr Kakavas, substantiate that the Casino was put on notice of Mr Kakavas' impaired control over his gambling.

53 Mr Peralta was called for the Casino. Mr Peralta is the Vice President of Player Development for Atlantis Casino Marketing. He explained his role as:

[A] player development executive that brings in players, people that are willing to gamble or risk a certain amount to the casino in the Atlantis. I will take care of their rooms, their food and beverage, assist with establishing credit lines, setting up limo reservations, anything that they need up-front and on the back end, if their play warrants it, take care of additional ... [t]hat means if they have a certain amount in charges that are not coped to begin with, if they qualify based on their play, I will pick it up - I will authorise the casino to pick it up.

54 Mr Peralta gave evidence that he first became aware of Mr Kakavas on 25 November 2006 when sitting in the credit office when Mr Kakavas came in and asked for Mr Colebrook. Mr Colebrook was not in. Mr Peralta assisted Mr Kakavas with a spa reservation. Mr Peralta knew that Mr Kakavas was a high end player as he had looked up the player card that Mr Kakavas gave to Mr Peralta to identify himself. Mr Peralta saw him later that afternoon playing baccarat in the Casino and introduced himself to Mr Kakavas again. He did review his gambling records for 25 November 2006 and recalled Mr Kakavas had substantial winnings.

55 On 25 November 2006 Mr Kakavas again demonstrated control over his playing. Mr Kakavas does not dispute that on 25 November 2006 he commenced gambling at 1:50pm and was there for about one hour and fifty minutes. At 1:50pm he withdrew the $100,000 front money he had lodged the previous day. He also signed a marker for $100,000 worth of chips. At 3:49pm he redeemed $100,000 worth of chips and lodged $500,000 in chips as front money. He recommenced gambling at 8:30pm, after dinner with his wife, for a two hour and fifty minute session. At 8:30pm he withdrew $100,000 of front money. At 9:11pm he withdrew another $100,000 of front money and at 9:32pm withdrew $200,000 of front money. At 11:59pm he paid in $550,000 worth of chips as front money. Total winnings for the day were $1,173,900 of which $560,000 was profit.

56 Mr Kakavas' evidence was that Mr Peralta on that day arranged the markers for him. Mr Peralta's evidence was that Mr Kakavas never asked him to get a marker. Whether he did or did not, in my view the evidence did not demonstrate that anything transpired in the playing session which should have put Mr Peralta on notice of Mr Kakavas' Mr Kakavas' impaired control over his gambling.

57 Mr Kakavas did not contend that any incident occurred other than his playing session on 25 November 2006 on which he relies to support his "knowledge" case.

58 I find that the events of 25 November 2006 would not, in themselves or as cumulatively acquired knowledge, have put the Casino on notice of Mr Kakavas's special disability.

59 Mr Peralta's next contact with Mr Kakavas was on 26 November 2006 when he gave Mr Kakavas a courtesy call at around 10:00am to make sure everything was all right. Mr Peralta observed Mr Kakavas playing that day. He was aware that Mr Kakavas was drawing on markers but he denied that Mr Kakavas asked him to organise a marker for him. I reject the submission that Mr Peralta was "less than forthcoming and evasive". I am satisfied that he gave his evidence to the best of his recollection.

60 On 26 November 2006 Mr Kakavas commenced gambling at 2:21pm and had a four hour session. He withdrew $100,000 of front money at 2:21pm and again at 2:56pm; at 3:05pm he withdrew $200,000 of front money and at 3:23pm he withdrew $250,000 of front money. At 3:32pm he signed a marker for $100,000 worth of chips and at 4:23pm another marker for $100,000 worth of chips. At 4:28pm he signed a marker for $300,000 worth of chips and at 5:15pm a marker for $500,000 worth of chips. The average bet during this time was $40,000. At 6:30pm he had losses totalling $1,564,000. He recommenced gambling at 8:45pm and within the hour had lost the balance of the credit funds.

61 I reject the contention that those involved in providing the further lines of credit on 26 November 2006 either knew or should have been alert to the fact that Mr Kakavas was a pathological gambler because he was "chasing his losses". It may be accepted that the demand for credit and the chasing of losses are recognised as indicia of pathological gambling but equally so, they are an ordinary incident of gambling activities. Significantly, even Dr Delfabbro was of the view that the pattern of gambling on 26 November 2006 was not a strong indicator, in its own right, of whether or not Mr Kakavas was a problem gambler.

62 I find that Mr Kakavas' condition would not have been "sufficiently evident" from the playing sessions in the afternoon of 26 November 2006, even in light of the cumulative knowledge of the Casino.

63 Mr Kakavas did not play on 27 November 2006. On his departure that day, Mr Peralta authorised the complementing of Mr Kakavas' room, food and beverage expenses plus airfare and informed Mr Kakavas that the Casino would pick up all his costs, except retail purchases. The evidence was that this was a standard service offered by the Casino based on the level of Mr Kakavas' play and Mr Kakavas said in evidence that he had expected this would occur although it was not formalised until 27 November 2006.

64 Mr Kakavas also placed reliance on the Casino code of conduct for responsible gambling in support of his knowledge case. That code notes that the Casino will provide opportunities for patrons to revoke their privileges for specific casino services such as casino issued markers and player club/card privileges. The code also notes that the Casino will "make reasonable efforts to honour a written request from any person that it not knowingly grant that person access to gaming activities". But it was not part of Mr Kakavas' case that he requested revocation of any of those services. To the contrary, the evidence showed that Mr Kakavas intentionally sought those privileges. I have already found that it was Mr Kakavas who approached the Casino for credit, not the other way around. Moreover, the evidence showed that Mr Kakavas played at the Casino with the expectation that the Casino would meet all his expenses and that he took active steps on 27 November 2006 to ensure that his expenses were paid. He gave no indication to the Casino that he should not be offered those privileges because it would tempt him to gamble.

65 It was submitted for Mr Kakavas that the Casino had relevant knowledge of Mr Kakavas' background such that it knew or ought to have known of his pathological gambling condition. The most relevant factors were contended to include:

(a) Early debt problems;

(b) Outstanding debts owed to other casinos; and

(c) Self exclusion orders.

66 The early debt problems was a reference to US$295,000 that Mr Kakavas lost on 24 November 2006 between 4:49pm and 6:08pm. I reject that contention. As the experts stressed, it is not whether the gambler wins or looses that is indicative of a gambling problem, let alone the psychiatric condition of pathological gambling. It is the gambler's response. On 24 November 2006, after losing US$295,000, Mr Kakavas went onto win on his bets and at 7:22pm he redeemed all the markers out of his winnings. He then went off to have dinner with his wife. Neither the fact of the initial loss nor the magnitude of the markers would have stood out as indicators that Mr Kakavas had impaired control.

67 I reject the contention that the Casino's knowledge of Mr Kakavas' outstanding debts to other casinos should have alerted the Casino to Mr Kakavas' condition. Mr Kakavas was and projected himself as a high roller gambler. The Casino frankly acknowledged that it was aware of the debts but the evidence revealed that it was prepared to establish a line of credit for Mr Kakavas because other casinos had established substantial lines of credit and the credit report showed that Mr Kakavas paid his debts. The only debts outstanding were from recent gambling in Las Vegas just prior to Mr Kakavas visiting the Bahamas.

68 I reject the contention that the Casino was put on notice because of Mr Kakavas' history of self exclusion. I have already found that I prefer the evidence of Mr Colebrook and that Mr Kakavas did not tell Mr Colebrook at the first meeting that he had self excluded himself from other casinos. But even if he had, it showed that Mr Kakavas had the ability to control his gambling sessions. Mr Kakavas could have asked, but did not ask, to be excluded from the Casino so that he was put out of temptation.

69 For Mr Kakavas it was contended also that the Casino had knowledge, or was on notice, of his special disability by reason of his gambling behaviour at the Casino. The warning signals were alleged to be:

(a) Requests for credit;

(b) Asking for increased table limits;

(c) Gambling the table limit or near to the table limit;

(d) Concealment of gambling;

(e) Mr Kakavas' pattern of gambling;

(f) Chasing losses; and

(g) All of this whilst on his honeymoon but without his wife being present.

70 I reject that contention. Mr Kakavas' conduct was equally explicable by reference to his reputation as a high roller which he projected whilst at the Casino. Specifically, Mr Kakavas met with senior casino staff to discuss the possibility of having a high stakes baccarat tournament at the Casino with first prize winner takes all of $10 million. He put the idea to the Casino but the Casino said it was too small to hold such a tournament. Mr Kakavas was asked in cross-examination whether he was trying to give the impression that he was a high roller. Mr Kakavas repeated that he did not need to do that because the Casino knew already from its credit search on him. Whether or not he actively sought to reinforce his reputation, certainly there is no evidence that Mr Kakavas sought to disavow the Casino of his reputation as a high stakes gambler.

71 I am satisfied on the evidence before the Court on the balance of probabilities that Mr Kakavas' impaired ability to control his gambling was not known to the Casino at any point of time during his stay there. I am also satisfied that his impaired ability would not have been "sufficiently evident" to the Casino either from the information that the Casino had on Mr Kakavas or his behaviour during his stay there.

72 In the absence of showing knowledge the claim based on unconscionable conduct must fail. It is unnecessary to deal with whether the Casino took unconscientious advantage of Mr Kakavas' condition knowing or having been put on notice that he suffered from it. However I will set out my view, in case this may become relevant.

73 The evidence did not show, in my view, that the Casino took unconscientious advantage of Mr Kakavas' condition. The evidence fell far short of demonstrating that the Casino deliberately exploited and took advantage of Mr Kakavas' condition.

74 In the first place, the Casino did not entice Mr Kakavas to the Bahamas. He went there of his own volition.

75 For Mr Kakavas, much was sought to be made of the phone message from Mr Colebrook that Mr Kakavas said in evidence was waiting for him when he arrived at his hotel on 23 November 2006. Mr Colebrook denied that conversation and consistently maintained his denial in cross-examination. It is not fanciful that Mr Colebrook may have made that phone call to Mr Kakavas and it does explain how Mr Kakavas knew who to approach at the Casino on 24 November 2006 in order to arrange his credit. I am satisfied on the balance of probabilities that the phone message was left but the call, could not be characterised as improper conduct. There was no suggestion that Mr Colebrook did anything other than introduce himself and invite Mr and Mrs Kakavas to meet him at the Casino. It was an entirely voluntary act on Mr Kakavas' part to take up that invitation.

76 For Mr Kakavas it was submitted that the evidence established that the Casino provided significant inducements to Mr Kakavas to encourage him to start gambling and to continue gambling. It was put that in doing so the Casino not only exploited Mr Kakavas' pathological gambling condition but in fact contributed to it and actively exploited it. The inducements were submitted to be:

(a) Limousine: The provision of a limousine service to accommodate Mr Kakavas to and from the airport. However, Mr Kakavas could not say in evidence who organised the limousine. For all he knew it was organised by the Resort where he and his wife were staying. The provision of the limousine had no discernable connection with the Casino as such.

(b) Complimentaries: It was not until 27 November 2006 after Mr Kakavas had finished gambling, that the Casino informed him that it would pick up the tab for all his expenses and his airfares. Mr Kakavas may have had an expectation before then, but Mr Kakavas' expectation can hardly constitute a deliberate act on the part of the Casino to induce Mr Kakavas to gamble there.

(c) Credit: This as I have found was provided at the request of Mr Kakavas and was a service commonly provided by the Casino to patrons. The provision of the credit was an ordinary incident of the Casino services for its patrons.

(d) High Betting Limits: The maximum bet that Mr Kakavas could place was increased for him but at his request, not as something offered by the Casino to him. But even if it had been, the fact of the offer would have to be considered in the context of the Casino's knowledge that Mr Kakavas was a high roller gambler, a reputation that Mr Kakavas did not attempt to dispel but rather sought to maximise.

(e) Rebates: Mr Kakavas was given a 10% rebate on his losses. The evidence showed that the offer of the rebate was a usual incident of the services that the Casino provided to high rollers and not out of the ordinary.

77 For Mr Kakavas it was also submitted that Mr Kakavas took active steps to conceal his gambling from his wife, including requesting casino staff not discuss his gambling or the provision of credit. The only evidence touching on this matter was the conversation he had with Mr Colebrook in which he asked Mr Colebrook not to discuss his gambling or his credit facility with Mrs Kakavas. I have found that Mr Kakavas did not have that conversation with Mr Peralta. But it cannot be doubted that Mrs Kakavas knew that Mr Kakavas was gambling at the Casino. In my view it is implausible that Mrs Kakavas was not aware herself of her husband's whereabouts during the periods he was gambling. The inference may properly be drawn from the evidence, in my view, that not only was she aware of her husband's gambling activities, but that the Casino was not complicit in hiding the fact of his gambling from her. The evidence showed that she met him there from time to time, including in the foyer area outside the credit office, she had dinner with him during his breaks from playing sessions, she had organised, through Mr Kakavas, a spa treatment at the Casino and she met with casino staff including Mr Peralta and on the evidence of Mr Kakavas, was taken on a tour of the Casino grounds by Mr Colebrook. The submission for Mr Kakavas that the Casino facilitated Mr Kakavas' gambling by hiding the fact of his gambling from his wife is to be rejected.

78 Accordingly, Mr Kakavas' defence based on unconscionable conduct must fail.

79 Mr Bethell reported that in the Bahamas the lawfulness of gaming and enforceability of loans made for the purpose of gaming is exactly the same as that in England under the common law, as amended by the Gaming Act 1710, 9 Anne, c 19 ("1710 Act"). The Bahamas has adopted and enacted into its statute laws the provisions of the 1710 Act under the title of the Gaming Act, Statute Law of The Bahamas c 388 ("Gaming Act"). Relevantly, s 2 of the Gaming Act[37] states:

1. All notes, bills, bonds, judgments, mortgages or other securities or conveyances whatsoever given granted drawn or entered into or executed by any person or persons whatsoever where the whole or any part of the consideration of such conveyances or securities shall be for any money or other valuable thing whatsoever won by gaming or playing at cards, dice, table-tennis, bowls or other game, or games whatsoever or by betting on the sides or hands of such as do game at any of the games aforesaid or for the reimbursing or repaying any money knowingly lent or advanced for such gaming or betting as aforesaid or lent or advanced at the time and place of such play to any person or persons so gaming or betting as aforesaid or that shall, during such play [so play] or bett shall be utterly void frustrate and of none effect to all intents and purposes whatsoever any statute law or usage to the contrary thereof in anywise notwithstanding.[38]

There are no cases in the Bahamas on s 2 of the Gaming Act.[39] However, s 1 of the 1710 Act has been judicially considered.

80 Mr Bethell opined that at common law, gaming and wagering transactions are lawful and enforceable.[40] Mr Bethell opined that the common law position was not altered by the 1710 Act. In his expert view:

As can be seen from its terms, the [1710 Act] avoided securities given for gaming debts, but did not control the underlying gaming so as to render it illegal ... [a]ccordingly, in my opinion, gaming in The Bahamas was not rendered unlawful by the adoption in The Bahamas of the common law and of the [1710 Act].

the better view is that, under English law, the [1710 Act] does not invalidate the underlying loan, albeit that it taints any security given for the loan, including a cheque or marker.

The "better view" was predicated on the Court of Appeal decision in CHT Limited v Ward[41] which, in obiter, expressed the view that Carlton Hall Club v Laurence[42] wrongly held that s 1 of the 1710 Act made the underlying loan as well as the security irrecoverable.

81 Mr Bethell went on to report that the principle enactment which controls gaming in the Bahamas is the Lotteries and Gaming Act 1969, Statute Laws of The Bahamas c 387 ("Lotteries and Gaming Act"). Mr Bethell opined by reference to the provisions of the Lotteries and Gaming Act that any gaming is lawful if conducted at any premises where there is enforced a licence under s 33 of that Act to carry on business of gaming on the premises, provided that all applicable regulations affecting such gaming are observed. That opinion was not challenged and should be accepted. Here, relevantly, the gaming licence for the Casino was tendered into evidence.

82 Mr Bethell's opinion on the content of the law with respect to the lawfulness and enforceability of gaming debts was challenged for Mr Kakavas on the basis that the law in England is that as stated in Carlton Hall Club and that the conclusion of the Court was supported by dicta in Moulis v Owen,[43] Applegarth v Colley[44] and Saxby v Fulton.[45] It was further submitted that although the correctness of the decision in Carlton Hall Club was doubted in CHT Limited, this was mere obiter and that the case is distinguishable. I reject that contention and accept the expert view of Mr Bethell.

83 In Carlton Hall Club the plaintiff sued to recover the amount of loans made by the plaintiff to the defendant for the purpose of wagering at the plaintiff's social club. The Court considered whether money lent in order that the borrower may make a gaming bet was recoverable. It was held that the weight of opinion was in favour of the view that money cannot be sued for in England because s 1 of the 1710 Act avoided not only the security but "by implication" the consideration also.[46] In so finding, the Court considered that it was bound by the view of the majority of the Court of Appeal in Moulis v Owen.[47]

84 In fact in Moulis v Owen, the Court had considered whether an action could be maintained upon the security and it was in obiter that the Court also considered whether the consideration was unenforceable. The majority held that the consideration was unenforceable, citing Applegarth v Colley for the proposition that the 1710 Act avoided a gaming security and also "by necessary implication, the contract as well as the security".[48] Fletcher Moulton LJ, in a dissenting judgment, stated after review of the authorities on s 1 of the 1710 Act that:

The only case I have found which conflicts with [the line of authorities that the Gaming Act 1710 avoids the security only, not the debt] is Applegarth v Colley, where the point was not necessary for the decision of the case, but in which Rolfe B. indicated the view that the [Gaming Act 1835, 5 & 6 Will 4, c 41] avoided the contract as well as the security, whether the [1710 Act] did so or not. He bases this conclusion upon reasoning which cannot, I think, be defended, and, as I have said, it is in conflict with the earlier authorities (references omitted).[49]

The Gaming Act 1835, 5 & 6 Will 4, c 41 ("1835 Act") had provided that:

every note, bill or mortgage which [by the 1710 Act] would have been absolutely void, shall be deemed and taken to have been made, drawn, accepted, given, or executed for an illegal consideration;

Fletcher Moulton LJ observed that the 1835 Act was passed to modify the effect of s 1 of the 1710 Act which was found to work an injustice because it operated to invalidate security taken by a person without notice of the illegality of the consideration. This legislation was said by Fletcher Moulton LJ "to invalidate [the security] in the hands of a payee or a person taking them with notice of the illegality of the consideration, but would not affect the rights of an innocent holder for value".[50]

85 In Applegarth v Colley it was argued that the wagering of a transaction was unenforceable under s 1 of the 1710 Act by implication of the 1835 Act. Rolfe B, in obiter, stated:

[W]hatever might have been the opinion of this Court as to the true construction of the clause in question, if we had been called upon to balance the authority of the earlier decisions against each other, and to decide between them, it is now not necessary to do so. For we think that the legislature in passing the [1835 Act], has in fact pronounced its decision on this point.

That act, while it repeals so much of the [1710 Act] as makes the securities void, it expressly enacts that they shall be deemed to have been given on an illegal consideration; and it is impossible to impute to the legislature an intention so absurd, as that the consideration should be good and capable of being enforced, until some security is given for the amount, and then that by the giving of the security the consideration should become bad.[51]

The "absurdity" was said to be that the security should be invalid but that the consideration should be enforceable. His Honour continued:

We assume, therefore, with the defendant, that the [1710 Act], in connexion with the [1835 Act] must be taken to avoid all contracts for the payment of money won at play.[52]

86 The Court in Applegarth v Colley did not refer to Quarrier v Colston[53] which had been decided some weeks beforehand. In Quarrier v Colston the Court of Appeal, after consideration of the cases on the 1710 Act, had held that money lent for the purpose of lawful gaming abroad was recoverable in England, applying a line of authority on the meaning of s 1 of the 1710 Act before its reconsideration on the enactment of the 1835 Act.

87 In Saxby v Fulton,[54] the Court of Appeal expressly followed Quarrier v Colston[55] in holding that money lent in Monte Carlo for the purpose of playing roulette, where the game was lawful, was recoverable in England. Saxby v Fulton[56] was followed in Societe Anonyme des Grands Etablissements du Touquet Paris-Plage v Baumgart.[57]

88 In CHT Limited Davies LJ giving the judgment for the Court, in dicta, after reviewing Applegarth v Colley, Quarrier v Colston, Saxby v Fulton and Moulis v Owen stated:

The result of these authorities appears, therefore, to be that money lent abroad in order to take part in gaming which is lawful abroad is recoverable in this country.

Mr Hawser, for the defendant, sought to distinguish the present case on the ground that the loan and the gaming with which we are presently concerned took place in this country and so was subject to the provisions of the Gaming Acts, 1710 and 1835, which could have no extra-territorial effect upon transactions abroad. But it is difficult to see any logical distinction in principle between a loan abroad for gaming lawful abroad and a loan here for gaming which is now lawful here. No security was given in the present case, so the question whether the giving of a security invalidates a loan which would otherwise be good does not arise.

There remains for consideration the decision of the Divisional Court in Carlton Hall Club Ltd v Laurence ... The judgment of Shearman J. appears to proceed on the basis that the gaming was lawful. He based his decision on the observations of the majority in Moulis v. Owen and concluded with these words: "the curious position, therefore, arises that though the decisions on foreign gaming should logically apply to legal games in this country, the better authority is that the consideration cannot be sued on, because it is avoided under the [1710 Act]. The result is not a very satisfactory one but we are bound to follow the decision in Moulis v. Owen."

But, as we have indicated, the actual decisions upon claims for money lent for lawful gaming abroad - leaving out any case where any securities were given - are to the effect that such loans are recoverable. The question whether these authorities correctly interpret and apply the statutes with regard to either sort of loan may be a matter for consideration elsewhere. Whether in any event it is in the public interest that either sort of loan should be recoverable might be a matter for consideration by Parliament. But, as the law stands, it would seem that, if the true nature of the transaction in the present case were that the plaintiffs had advanced money to the defendant for the purpose of lawful gaming, the plaintiffs would have been entitled to succeed (references omitted).[58]

89 Mr Bethell's expert view was that in light of the discussion of Carlton Hall Club in CHT Limited "the Bahamian Court would be unlikely follow Carlton Hall Club v Laurence". He then opined that the Bahamian Court would be likely to adopt the same interpretation of the 1710 Act as the majority of the pre-1835 English cases as the 1710 Act "merely addresses the validity of the securities and does not address nor in terms affect the underlying loan" and, in his opinion, "there is no convincing argument why it should in any manner affect such loans". I accept Mr Bethell's expert view. The weight of authority, supported by the strong dissenting judgment of Fletcher Moulton LJ in Moulis v Owen, in which his Lordship explained the legislative purpose of the 1835 Act, is against the correctness of Applegarth v Colley.

90 Accordingly, I conclude that the loan is lawful and recoverable by the Casino under the laws of the Bahamas.

(2) Whether unenforceable by reason of s 3 of the Money Lending Act?

91 Next it was contended for Mr Kakavas that the loan was unenforceable by reason of s 3 of the Money Lending Act, Statute Law of the Bahamas c 340. Section 3 states:

3. (1) If proceedings are taken in any court by any person for the recovery of any money lent after the commencement of this Act ... in respect of money lent, and if there is evidence which satisfies the court that that interest charged in respect of the sum actually lent is excessive, or that the amounts charged for expenses, inquiries, fines, bonus, premiums, renewals or any other charges, are excessive, and that, in either case, the transaction is harsh and unconscionable, or is otherwise such that a court of equity would give relief, the court may -

(a) re-open the transaction and take an account between the lender and the person sued;

(b) notwithstanding any statement or settlement of account or any agreement purporting to close previous dealings and create a new obligation re-open any account, already taken between them, and relieve the person sued from payment of any sum in excess of the sum adjudged by the court to be fairly due in respect of such principle, interest and charges, as the court, having regard to the risk and all the circumstances, may adjudge to be reasonable;

(c) if any such excess has been paid, or allowed in account, by the debtor, order the creditor to repay it;

(d) set aside, either wholly or in part, or revise, or alter, any security given or agreement made in respect of money lent;

(e) if the lender has parted with the security, order him to indemnify the borrower or other person sued.

...

(4) The foregoing provisions of this section shall apply to any transaction which, whatever its form may be, is substantially one of money lending.

92 As neither of the conditions are satisfied for the exercise of the Court's discretion and as I have held that the provision of the loan facility was not unconscionable, s 3 does not apply.

(3) Whether unenforceable by reason of Victorian public policy

93 Finally, it was argued for Mr Kakavas that the loan is unenforceable as being against the public policy of Victoria because, if it had been governed by Victorian law, it would have been illegal. The short answer is that the agreement was governed by the laws of the Bahamas. Reference to the law in Victoria governing the conduct of gambling here is not apposite to determining whether a gaming loan made in another country in which it is lawful and recoverable would be unenforceable as being against public policy in Victoria. In my view there is no basis for the argument and the argument must fail.

94 It was not disputed that the plaintiff had made out its entitlement to relief in the event that the defendant's defences failed. I am satisfied on evidence before me that the plaintiff is entitled to judgment.

95 Accordingly, there will be judgment for the plaintiff.

[1] The plaintiff is the licensee of the Atlantis Paradise Island Casino as indicated by the licences granted by the Commonwealth of the Bahamas dated 21 December 2005 and 21 March 2008.

[2] "Front money" being cash held for Mr Kakavas' credit by the Casino.

[3] See Further Amended Defence and Counterclaim filed 18 November 2009 [5k]; Further Amended Reply filed 20 November 2009 [1k].

[4] National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209, 226 (Gummow J); Allstate Life Insurance Company v Australia and New Zealand Banking Group Limited (No 6) (1996) 64 FCR 79, 83 (Lindgren J); Commissioner of Taxation v Lamesa Holdings BV (1997) 77 FCR 597, 603.

[5] Declaratory Act, Statute Laws of the Bahamas 2 December 1799 c 4, s 2.

[6] [1995] 69 P. & C.R. 298; cited with approval in Irvani v Irvani [2000] 1 Lloyds Rep 412, Buxton LJ [155].

[8] In the UK, the phrase "unconscionable bargain" is used rather than "unconscionable conduct" or "unconscionable dealing". Nothing turns on the different expressions.

[9] Bain v Thompson [1985] BHS J. No. 127 CA[21].

[10] Commercial Bank of Australia Ltd v Amadio & Anor [1983] HCA 14; (1983) 151 CLR 447, 474.

[12] [1956] HCA 81; (1956) 99 CLR 362.

[14] [1983] HCA 14; (1983) 151 CLR 447.

[16] Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362, 392 (McTiernan J).

[17] Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621, 637 (Deane J); Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362, 405 (Fullagher J); Commercial Bank of Australia v Amadio & Anor [1983] HCA 14; (1983) 151 CLR 447, 461 - 462 (Mason J).

[18] Commercial Bank of Australia v Amadio & Anor [1983] HCA 14; (1983) 151 CLR 447, 462 (Mason J); Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362, 415 (Kitto J), 392 (McTiernan J).

[19] Commercial Bank of Australia v Amadio & Anor [1983] HCA 14; (1983) 151 CLR 447, 462 (Mason J), 474 (Deane J), 486 (Wilson J); Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621; Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362; Australian Competition and Consumer Commission v Radio Rentals Ltd [2005] FCR 1133 [18] - [21].

[20] American Psychiatric Association, Diagnostic and Statistical Manual of Mental Disorders, (4th revised ed, 2000) 671.

[24] Letter from Mr. B Healey to Strongman & Crouch, undated.

[25] Letter from Mr B Healey unaddressed, 15 January 1998.

[26] American Psychiatric Association, Diagnostic and Statistical Manual of Mental Disorders, (4th revised ed, 2000) XXIII.

[27] Commercial Bank of Australia v Amadio [1983] HCA 14; (1983) 151 CLR 447, 462 (Mason J).

[28] [1983] HCA 14; (1983) 151 CLR 447.

[33] Letter from Dr Delfabbro to [Kliger] Partners, 27 April 2009 [5].

[34] Letter from Dr. P Delfabbro to [Kliger] Partners Lawyers, 27 April 2009 [20].

[35] Browne v Dunn [1893] 6 R(HL) 67.

[36] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298; Kordan Pty Ltd v FCT [2000] FCA 1807 [47], [48], [51].

[37] Gaming Act 1799, Statute Law of The Bahamas c 388.

[38] Gaming Act 1799, Statute Law of The Bahamas c 388, s 2.

[39] Gaming Act 1799, Statute Law of The Bahamas c 388.

[40] Moulis v Owen [1907] 1 KB 746, 758; CHT Limited v Ward [1965] 2 QB 63, 81.

[41] [1965] 2 QB 63.

[42] [1929] 2 KB 153.

[43] [1907] 1 KB 746.

[44] [1842] EngR 1168; [1842] 152 ER 663.

[45] [1909] 2 KB 208.

[46] Carlton Hall Club v Laurence [1929] 2 KB 153, 164.

[47] [1907] 1 KB 746.

[48] Moulis v Owen [1907] 1 KB 746, 751, 755.

[49] Moulis v Owen [1907] 1 KB 746, 767.

[51] [1842] EngR 1168; [1842] 152 ER 663, 667.

[53] [1842] 41 ER 587.

[54] [1909] 2 KB 208.

[55] [1842] 41 ER 587.

[56] [1909] 2 KB 208.

[57] (1927) 96 LJKB 789.

[58] CHT Limited v Ward [1965] 2 QB 63, 85, 86.