Investors win legal battle over failed Italy property development

Some 185 British and Irish investors in a failed holiday property development in Calabria, Italy have won a legal battle in the UK’s Court of Appeal. 

The case, which dates back almost a decade, centered around a property development known as the Jewel in the Sea. Investors were lured into putting cash deposits ranging from £30,000 to £105,000 into properties that they were told would be built as part of the development, after being tempted by glossy brochures featuring images of what their holiday homes would look like.

But, as the Daily Mail reported yesterday, in a profile of one of the unlucky investors, “instead of sun-soaked holidays, they’ve been left out of pocket and caught in a legal nightmare”, which has included reports of mafia involvement as well as that of “a convicted IRA terrorist”.

According to the Daily Mail and other sources, including the law firm Clyde & Co, the problems stemmed from the fact that the law firm to which the investors had entrusted their deposits, an Italian firm known as Giambrone, had provided advice to the investors and therefore bore liability when the development ran into trouble.

There was no suggestion that Giambrone Law was involved in criminal activity, the Daily Mail noted in its article.

Also of note, Clyde & Co noted in its assessment of the case, was that “the Court of Appeal upheld the duty of the firm to advise clients of the risk of crime affecting the transaction, in light of the fact that the claimants were resident in a different jurisdiction to that in which the transaction was taking place.”

Another problem was that the law firm failed to receive from the developer the necessary assurances that the investors’ money would be safe, before handing it over, nor were the investors informed of upfront agents’ fees of 62%, according to the various reports and court documents.

Problems ‘almost immediately’

As has been the case with many other off-plan, overseas holiday development schemes in recent years, the Jewel in the Sea project ran into difficulties almost immediately, with the result that only a small number of units were completed, and planning permissions were suspended altogether in June, 2008. In March, 2013, the Italian authorities stepped in, and the first court cases in the UK soon followed.

The Giambrone Law firm closed its doors in 2009, and according to the Daily Mail, Gabriele Giambrone, the firm’s main solicitor, said the problems came after Giambrone Law in 2007 “became the target of a complex fraud perpetrated by skilled and devious criminals”.

“We were caught in the crossfire of  organised criminals allegedly involved with the IRA and mafia,” Giambrone added.

“We stopped working in Calabria when our suspicions about money laundering were alerted.”

Still unclear, according to the reports, is how much the insurance company in the case is prepared to pay.

To see the Court of Appeal’s judgment in the case, known as Main & Ors v Giambrone & Law, click here.

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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