117 Despite the extraordinary breadth of this legislation, I am unable to conclude that the case which the defendants sought to establish was made out. In this case it was not, at the end of the day, complaints about any terms of the contracts themselves which were in issue. The defendants were not deprived of the opportunity to make an informed decision about their investments. To the contrary, they made decisions which they did not disclose to the plaintiff. They also exercised a choice about the investments which they finally made with Skyder, in circumstances not disclosed to the plaintiff. They suffered from no incapacity and were legally advised. Nor is it any conduct of the plaintiff, about which complaints were pressed, other than the conduct involved in accepting the Skyder document provided by the defendants themselves, in order to satisfy the condition imposed and thereupon making the loan. The real complaint, put in various ways, was that the plaintiff failed to protect the defendants from Mr Hraiki and the consequences of the loss of their $1.6 million investment, as the result of his fraud.
118 The defendants claim that their position is the result of the plaintiff advancing them the loan they sought, allowing them to fall into the hands of a fraudster, but they accept that the plaintiff was also misled by Mr Hraiki. That acceptance can only have related to the advice which he gave as to the Skyder investment strategy, which the defendants themselves provided the plaintiff and which it accepted as having satisfied the condition it had imposed. It was not claimed that the plaintiff was aware that Mr Hraiki was a fraudster, or that any investigation undertaken at the time could have uncovered the fraud which the defendants claim that he later came to perpetrate.
119 While the Skyder investment clearly failed, why it failed; why the other investments which the Crokers made with Skyder did not; and what happened to the $1.6 million invested was not explored in the evidence. What steps the Crokers took to investigate what became of their investment or to recover their money was also not revealed. There was no evidence that Mr Hraiki has been convicted of any fraud. Mrs Croker made a statement to the police, but that Mr Hraiki has been charged with any fraud in relation to the matters the subject of these proceedings, is not apparent.
120 As discussed by Johnson J in Tobaji v National Australia Bank Ltd [2009] NSWSC 41 at [177] - [178], in these proceedings the conduct of the parties is being seen through the prism of hindsight (Rosenberg v Percival [2001] HCA 18; 205 CLR 434 at [16]). Here, too, there was a certain air of unreality about the way in which the defendants sought to portray their own conduct and how they sought to distance themselves from the consequences of informed decisions which they have made, even against express legal advice, advice from their accountant and the requirements imposed by the plaintiff. Mr Hraiki may have been a fraudster who duped them, but that the plaintiff could have foreseen whatever it was that he did, or that it may justly be made responsible for the consequences, was simply not established.
121 The defendants' case was advanced on the basis of a complaint that they were farmers, not experienced in making commercial investments, who were enticed by Mr Hraiki into making a risky investment, in circumstances where the plaintiff ought to have taken steps to protect them, by putting them on notice of the considerable risk which they were taking in making the investment they proposed to pursue with their borrowings. The difficulty with the claim, so advanced, is that the defendants were on notice of the nature of the risks they were taking in pursuing the investment which they were contemplating. That was their solicitor's advice. They understood the risk, but regarded this approach to be too cautious. Had the plaintiff also given them the obvious advice that the investment was a high risk one, it is difficult to see on their own case that would have protected them. The plaintiff did impose a condition on the loan that they provide to it a copy of an investment strategy from a financial planner. It was the defendants who chose to take such advice from Mr Hraiki. The plaintiff cannot fairly be held responsible for that choice.
122 In truth, the defendants' case is not that the investment failed because of the high risk nature of the investment proposed by Skyder, but rather that it failed because Mr Hraiki was a fraudster. The evidence of Mr Curnow and Mr McCluskey that returns of this kind were available in the marketplace at the time, was not challenged. How Mr Hraiki dealt with the $1.6 million Mrs Croker gave him, was not revealed. How his subsequent conduct was something which the plaintiff could have detected, or warned the defendants about, is not apparent. Contrary to the approach adopted for example in Permanent Trustee Company Ltd v O'Donnell [2009] NSWSC 902, in this case no evidence was led as to what in fact became of the money which was invested with Skyder. All that is known is that the proposed lending terms were varied by agreement between the defendants and Mr Hraiki, after the plaintiff had advanced the loan, with the result that initially the first 6 months interest on $1.6 million was paid up front and that thereafter, the repayments on the entire loan were for a period made direct by Mr Hraiki.
123 The security which the plaintiff had required was not put in place before the money was advanced. The result was that the intended first charge was not obtained. It is not even clear that if that had occurred, that the Crokers' investment would not have been protected. Perhaps it would have.
124 The difficulty with the claim advanced in relation to the second loan, was that it was the result of an approach to the plaintiff by the defendants' then broker and pursued by the defendants themselves on a basis they had developed. They proposed to subdivide and sell a part of their property, in order to enhance its value and sell it to reduce their borrowings. The second loan facilitated this, by enabling the defendants to repay the interest outstanding on the first loan, the extension of the first loan, and the payment of further interest which they would incur on that loan, while the subdivision of that property was undertaken. It was only when the plaintiffs were unable to sell the land, that they again fell into arrears.
125 Having put a commercial proposal to the plaintiff, to advance them further monies so that they could reduce their borrowings by a redevelopment and sale of part of their property, that the development which the defendants pursued failed, when they were unable to sell the land, made the further loan unjust, is impossible to see.