LAW 2502 Lecture Notes - Lecture 6: Unconscionability, Problem Gambling, Gambling

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23 May 2018
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UNCONSCIONABLE TRANSACTONS
Difference between UI and UC
UI: will of innocent party not independent and voluntary because it is overborne
UC: focus on conduct of D
STEP 1: ELEMENTS of UC
1. UC is a ground of relief which will be available 'whenever one party by reason of some condition or
circumstance is placed at a special disadvantage vis-à-vis another such that they cannot make a
judgement as to their best interests, and the party other knowingly takes unfair or unconscientious
advantage the opportunity thereby created Amadio
2. Three fundamental elements of UC outlined by HCA in Amadio and Kakavas:
(1) A is under a special disability or disadvantage;
(2) B has knowledge of A’s special disability or disadvantage; and
(3) exploitation or victimisationthe other party proceeded to exploit or victimise the other party’s
disadvantage unconscientiously in order to obtain their consent to the transaction
STEP 2: Because UC falls under the doctrine of unconscionability, it is necessary to consider the
definition unconscionability in equity before proceeding
1. The threshold for ‘unconscionableconduct is not just a lack of good conscience, justice or fairness.
Rather, a high level of moral obloquy in unethical circumstances is required AG v World Best
Holdings
2. The doctrine of unconscionability will not protect people
a. Disadvantaged by a mere difference in bargaining power Amadio; Kakavas
b. From their own mistakes Anderson v McPherson
c. From the consequences of their own foolishness Louth v Disprose
STEP 3: FIRST element- Special disadvantage
1. MENTION:
a. Impossible to satisfactorily classify all the situations in which relief will be granted- Circumstances
are of great variety.
b. Presence of one or more characteristics in a party will not automatically amount to a special
disadvantage in all cases. What is required is that the characteristic amount to a position of
disadvantage against the other party Blomley v Ryan; Anderson v McPherson
2. DEFINE the characteristics of the disabling condition or circumstance
a. Fullagar J’s non-exhaustive list in Bromley v Ryan
i. Poverty/ need of any kind
ii. Sickness
iii. Age
iv. Sex
v. Infirmity of body or mins
vi. Drunkenness
vii. Illiteracy or lack of education
viii. Lack of assistance or explanation where assistance or explanation is necessary
Amadio: son expected to explain to parents, but he hadn’t seen the doco so there was no way
the bank could’ve believed it was explained
ix. Lack of sufficient, independent advice Amadio
b. Problem gambler - Kakavas- unable to control his pathological urge to gamble; couldn’t make
worthwhile decisions in his own interests while engaging in gambling
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c. Elderly Italians - Amadio’s - were advanced in years, poor written English, relied on son, were
approached in their kitchen by the bank, misled by independent advice (from son)
d. Elderly uncle Bridgewater tendency to want to give gifts to young
3. CONSIDER the disadvantage in light of the surrounding CIRCUMSTANCES
a. ‘atmosphere of crisis’ Louth
b. Gambling is a rare situation
4. DESCRIBE HOW the combination of the weaker’s disability + the circumstances seriously affected
their ability to exercise judgement as to their own best interests Amadio
5. COMPARE the relative positions of the parties- show why the weaker party has a serious, special
disadvantage Amadio
a. Their age (elderly), limited English (italian), circumstances in which it was presented (long doco, in
their kitchen, expected to be signed immediately with no legal advice), their lack of knowledge and
understanding of contents of doco (thought it was limited to 50k for 6 months), meant that their
disability was PLAIN to the bank, and the manager could see it
i. FACTS: Here, (weaker party’s)…. combined with… means that it was plain to the (stronger
party)
Knowledge
1. transaction is prima facie unconscientious for the stronger to have entered into if the special disability/
circumstance of weaker was sufficiently evident to the stronger party Louth v Disprose
2. and they knew or ought to have known of its existence and serious effect on the ability of innocent
party to make a judgement as to his own best interests
a. actual knowledge
i. KNEW: when would it be plain to a reasonable person that a transaction has not been properly
explained?
weaker party’s comments when entering transaction which reveal lack of knowledge
should put stronger on notice, obliged to enquire Amadio
b. Constructive knowledge
i. First expressed in Amadio: if D didn’t have actual knowledge, but was aware of the possibility
that the situation may exist/ is aware of facts that would raise that possibility in the mind of any
reasonable person, result is the same as though they had actual knowledge
ii. HA in Kakavas states this constructive knowledge’ referred to in Amadio should be approached
with caution- Knowledge of facts which would put a reasonable person on notice is not enough
for unconscionable conduct- there needs to be wilful ignorance on the part of the stronger
party
Don’t know about the facts, don’t care about the facts, make no effort to enquire about the
facts
Stronger party intentionally closes mind to enquiries a reasonable person would have made
iii. Kakavas’s limitation: sufficiently evident’
Disadvantage must present to stronger Kakavas if Special disadvantage didn’t present to
stronger party, they did not see it not susceptible to exploitation
casino dealt with gambler who presented as a ‘high roller’ who could afford to lose $ -
ordinary course of business for casino to entice such gamblers who presented themselves
to gamble Kakavas
finances seemed great, nothing in the way he presented suggested there was a problem
consider extent of abnormality of weaker’s behaviour
would their behaviour present as abnormal to a reasonable person? Were they confident?
Anything to suggest they couldn’t make decisions?
Weaker cannot rely on a hidden psychological impairment (problem gambling in Kakavas)
Because Crown referred Kakavas to psych- K signed voluntary order stopping him from
gambling at crown- BUT they allowed him to gamble because they thought he recovered-
psych letter said K had been successfully treated for his gambling addiction,
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Document Summary

Difference between ui and uc: ui: will of innocent party not independent and voluntary because it is overborne, uc: focus on conduct of d. Step 2: because uc falls under the doctrine of unconscionability, it is necessary to consider the definition unconscionability in equity before proceeding: the threshold for unconscionable" conduct is not just a lack of good conscience, justice or fairness. Rather, a high level of moral obloquy in unethical circumstances is required ag v world best. Holdings: the doctrine of unconscionability will not protect people, disadvantaged by a mere difference in bargaining power amadio; kakavas, from their own mistakes anderson v mcpherson, from the consequences of their own foolishness louth v disprose. Casino dealt with gambler who presented as a high roller" who could afford to lose $ - ordinary course of business for casino to entice such gamblers who presented themselves to gamble kakavas.

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