Rahme v Commonwealth Bank of Australia

Rahme and the Commonwealth Bank of Australia were the parties in this matter before the High Court of Australia. The dispute concerned the validity of a mortgage over certain land, which the plaintiff, Rahme, sought to have declared void. The plaintiff alleged that the mortgage was procured by undue influence and unconscionable conduct.

The central legal issues before the Court were whether the mortgage was voidable on the grounds of undue influence or unconscionable conduct. Specifically, the Court had to determine if the Bank had taken unfair advantage of the plaintiff's special disadvantage, or if the plaintiff had been subjected to undue influence in entering into the mortgage agreement.

Deane J, in his judgment, considered the principles of undue influence and unconscionable dealing. His Honour noted that for undue influence to be established, it must be shown that the plaintiff was under a special disability in dealing with the other party, and that the other party knew or ought to have known of this disability and took unfair advantage of it. His Honour also referred to the equitable doctrine of unconscionable conduct, which requires a party to show that they were under a disability which affected their ability to make a judgment in their own best interests, and that the other party unconscionably took advantage of that disability. The application of these principles to the facts of the case led to the conclusion that the mortgage was not voidable on these grounds.

The High Court dismissed the appeal, upholding the validity of the mortgage.