A man from Northern Ireland has made claims that he was ‘grossly exploited’ by lap dancing club Spearmint Rhino, after they plied him with alcohol resulting in him spending a third of his salary in one night.
The man who will not be named, spent £7,500 at the club in August last year during a friends stag night, claims the staff members at the club took advantage of him in a ‘vulnerable position’. He entered the club however the staff led him to a private booth and plied him with alcohol, until he became unaware of his actions.
Subsequently he made 13 separate credit card transactions amounting to £7500, many of which were in minutes of each other, and most of which he does not remember. After an investigation last month is was also discovered that the club routinely breached many of their own licence restrictions including rules relating to touching and sitting on customers and other dancers – which may also have induced the man to spend more money.
Since the incident occurred last year, the unnamed individual has battled to regain his money and to receive a satisfactory explanation from the club. This post looks at whether under the Scottish legal system, any breach of the law has occurred and what remedies would be available to a claimant in such a position.
Would these practices break the law?
Generally, the courts will not set aside a contract because of intoxication unless they become completely incapable of decision making and can prove this. This is best illustrated by the old and well known case of Taylor v Provan.
However, in this circumstance it is possible that under Scot’s law a fraud has been committed, and that the contract for services was induced by fraudulent misrepresentation. In this context, the fraud is a civil wrong rather than criminal, and can be grounds for a contract being void. This will be the case where the error induced by the fraud is essential to the contract. If it is not essential, the contract will be voidable and dependent on circumstance.
In the Spearmint Rhino case, the victim of the potential fraud claims that the workers deliberately induced a high level of intoxication in order to extort sales from him. This gave the club workers a fraudulent advantage and thus they may be in breach of the law of contract and also the law of delict.
If reduction of the contract is not possible due to restitutio in integrum being impossible, (it is not possible to give the workers their time or indeed dances back) the victim of the fraud is entitled to sue for damages – fraud being a delict in itself. In the case of Sim v Smith 1954 SC 357, this right to damages for the victim of fraudulent misrepresentation was upheld even where it was possible for the contract to be set aside.
Furthermore, in the case of Spence v Crawford 1939 SC (HL) 52 the courts showed that they are less likely to insist on perfect restitutio in integrum, and may allow a hybrid of restoration and damages – this may mean that the workers would be allowed some form of payment for their time, but not the entire amount that may have been taken fraudulently from the customer
Note also that new legal advice site Unlock The Law has published a legal guide to the contract law and licensing law issues involved in this strip club exploitation dispute here.
What would need to be proven?
In order to prove that a fraudulent misrepresentation had occurred, the man would be required to prove mala fides – bad faith. It would have to be shown on the balance of probabilities, as is the civil standard of proof, that he was in fact fraudulently induced to make these purchases at the club.
