Commercial Bank of Australia v Amadio

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Citation: Commercial Bank of Australia v Amadio (1983) 151 CLR 447

This information can be found in the Casebook: Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 929-37 [36.30-36.35] or here


Background facts

  • The Respondents [Amadio] signed a mortgage for the Appellant [Bank of Australia] to secure loans for their son.
  • They were not well informed about the details of the mortgage, and clearly had no idea what's going on.
  • They were both Italian and spoke very little English, being pretty much illiterate.
  • When the Appellant attempted to seize the house, the Respondents attempted to challenge the validity of the of the mortgage


  • The Respondents allege that the mortgage was procured as a result of unconscionable dealing: the Respondents were in a disadvantageous position because of their lack of English skills and old age, and the Appellant used this in order to procure an unfair contract.

Legal issues


Mason J:

  • "[R]elief on the ground of 'unconscionable conduct' is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage."[1]
  • What distinguishes unconscionable dealing from undue influence is that in unconscionable dealing "advantage is taken of an innocent party who, though not deprived of an independent and voluntary will, is unable to make a worthwhile judgment as to what is in his best interest."[2]
  • "It goes almost without saying that it is impossible to describe definitively all the situations in which relief will be granted on the ground of unconscionable conduct."[3]
  • It is established that the lack of education (at least in English) and the old age of the Respondents made them in a disadvantageous position.
  • Firstly, the court inquires whether the bank was aware of this condition:[4]
    • Obvious that they are Italian, old, and bad at English.
    • Obvious that their son acts as adviser and obvious that he absolutely needs the mortgage so he's doesn't have their best interests in mind.
    • Inquiries by the Respondents made it clear that their Son didn't explain the terms properly.
    • Obvious that the transaction was not thought through by the Respondents
  • Thus, "In these circumstances it is inconceivable that the possibility did not occur to Mr. Virgo [rep. of the Appellant] that the respondents' entry into the transaction was due to their inability to make a judgment as to what was in their best interests"[5]
  • "As we have seen, if A having actual knowledge that B occupies a situation of special disadvantage in relation to an intended transaction, so that B cannot make a judgment 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."[6] The same applies if A does not have actual knowledge, but has reason to believe.
  • The Appellant acted unconscionably by taking advantage of the Respondents' clear inability to make a proper judgment. Therefore, the contract is rescinded.
  • The Appellant fails.

Deane J:

  • The requirements for unconscionable dealing are:
    1. "a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and
    2. that 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."[7]
  • "Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable."[8]
  • The judgment is mostly similar to Mason J's (above).


  1. (1983) 151 CLR 447, 461
  2. (1983) 151 CLR 447, 461
  3. (1983) 151 CLR 447, 461
  4. (1983) 151 CLR 447, 466
  5. (1983) 151 CLR 447, 466-7
  6. (1983) 151 CLR 447, 467
  7. (1983) 151 CLR 447, 474
  8. (1983) 151 CLR 447, 474
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