Investors in a failed marina on South Australia’s far west coast have been awarded more than $1 million in damages after a court ruled they had been tricked into putting their money into the project.
- David Balatti and other family members invested $1.3 million in the Ceduna Keys marina development in 2016
- The previous main investor removed his $750,000, leading to the development company’s collapse
- A judge has awarded the Balattis’ company $1 million in damages
The previous major shareholder in the Ceduna Keys project, Umilo Bria, removed his $750,000 investment in the marina development soon after the new investors put in their money, which “led directly to the applicant’s losses”, the District Court found.
Mr Bria, the respondent in the case and the chief executive of the project, lied about the financial viability of the development, Judge Jo-Anne Deuter said.
In his defence, Mr Bria claimed a broker representing the development, Laurence Pace, went too far in promoting the investment to David Balatti, the aggrieved investor.
The development involved transforming 170 hectares of land and sea just north of Ceduna into a marina for commercial and recreational boating. It would be surrounded by 630 homes and commercial properties.
Investment sought for project
The South Australian Government declared Ceduna Keys a major project in 2003 and it was provisionally approved in 2005 after an environmental impact statement (EIS) process.
The provisional approval required steps to manage environmental and other issues associated with moving the Eyre Highway so that it was diverted around the marina development — a major cost and a complicated process.
Struggling for investors, Mr Balatti was among a group of potential investors approached in 2016 in an effort to raise $4.2 million to get work started.
Mr Balatti and other family members agreed to invest $1.345 million in the company developing the project, called CKD Pty Ltd.
The Balattis’ company, CKD Investors Pty Ltd, alleged at trial that Mr Bria misled them about the project’s development status, along with liabilities associated with it, what the land was like and the expected returns.
Mr Pace did not appear at the trial last November because of difficulties travelling from Western Australia due to border restrictions brought on by the coronavirus pandemic.
‘True facts’ made less appealing
In her decision published on Monday, Judge Deuter said Mr Bria engaged in “misleading and/or deceptive conduct”.
“I have found that he engaged in deceptive conduct when he formed the intention to remove $750,000 from the investment funds soon after they were transferred to CKD Pty Ltd, instead of using them to progress the marina development,” she wrote in her judgement.
“The investment being offered was in fact into a project where there was no development approval for the development plan being promoted, the Ceduna Lakes and Keys Plan, and where a very detailed, lengthy and expensive EIS process was required.”
Mr Bria’s conduct in relation to the investment “led directly to the applicant’s losses”, Judge Deuter said.
“He was actively involved in the losses by his lies regarding the financial viability of the marina development and CKD Pty Ltd, and by his deliberate actions to remove investment monies from the company for his own purposes,” she wrote.
“That removal of over half of the investment funds was clearly causative of the applicant’s loss.”
She awarded CKD Investors Pty Ltd $1.014 million, which was all they money it had invested, minus the $331,000 reclaimed in CKD Pty Ltd’s liquidation in 2019.