(1) Andrew France (2) Elusive Yachting Limited v (1) Discovery Yacht Sales Limited (2) Discovery Yachts Group Limited

Factual and Procedural Background

By a Purchase Agreement dated 21 October 2015, the Plaintiff agreed to buy and the First Defendant agreed to sell a Yacht, to be built by a related company. Delivery was taken on 12 January 2017 in Guernsey, with the purchase price increased due to variations. The Yacht was intended for global blue water cruising and as the Plaintiff’s residence. Shortly after delivery, numerous serious defects emerged.

In April 2017, a management buy-out occurred whereby the managing director of the builder company purchased shares and assets, forming a new group identified as the Discovery Yachts Group, which assured the Plaintiff of support. Some defects were repaired but many remained outstanding. An agreement was reached in September 2017 for outstanding repairs in exchange for the Yacht being shown at a boat show, but repairs were not completed.

Following advice that the Yacht was unseaworthy, it was transported back across the Atlantic to the country. The Plaintiff commenced proceedings against the First Defendant for breach of contract and warranty, and against the Second Defendant, the holding company of the Discovery Yachts Group, for breach of the September 2017 agreement.

Both Defendants initially defended the action but failed to appear at trial. The court struck out their defence and allowed the trial to proceed on the evidence presented by the Plaintiff. Submissions on liability and damages were made.

Legal Issues Presented

1. Whether the First Defendant breached the Purchase Agreement and the implied terms under the Consumer Rights Act 2015 by delivering a Yacht with serious defects and failing to repair them.
2. Whether the Second Defendant was bound by the September 2017 agreement to complete outstanding repairs and if it breached that commitment.
3. The appropriate measure of damages payable by each Defendant for their respective breaches.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court analysed the Purchase Agreement, noting that although it did not expressly state that the First Defendant was to build the Yacht, it impliedly assumed an obligation to ensure the Yacht was built to specification, of satisfactory quality, and fit for purpose. The court found that the Yacht was delivered prematurely and without adequate sea trials, leading to numerous defects that rendered it unseaworthy.

Regarding the Second Defendant, the court examined communications and corporate structure, concluding that the Second Defendant, as the holding company of the Discovery Yachts Group, had assumed liability for the outstanding repairs through the September 2017 agreement. The court found that the Second Defendant’s commitment was a commercial decision to maintain goodwill and market reputation, rather than a contractual obligation arising from the original Purchase Agreement.

In assessing damages, the court considered expert valuations and repair cost estimates. It accepted that the First Defendant’s breach caused depreciation in the Yacht’s value and that the Plaintiff’s reliance on repair promises prevented rejection of the Yacht, thereby shifting the risk of depreciation to the Defendants. For the Second Defendant, damages were limited to the cost of outstanding repairs and consequential expenses arising from the breach of the September 2017 agreement.

The court also accepted the need for a declaration that the Second Defendant indemnify the Plaintiff against further reasonable repair costs caused by the repairs themselves.

Holding and Implications

The court rendered judgment as follows:

• Against the First Defendant: Damages assessed at £911,113 for breach of the Purchase Agreement and implied terms.
• Against the Second Defendant: Damages assessed at £262,957 for breach of the September 2017 agreement, including repair costs, repatriation, storage, and berthing fees, plus an indemnity for further reasonable repair costs.

The Second Claimant had no separate claim as the Plaintiff remained party to both agreements. The Defendants were ordered to pay the Plaintiff’s costs of the action. The court reserved the amount of interim payment on account of costs to be determined.

No new precedent was established; the decision primarily resolved the contractual liabilities and damages between the parties based on the facts and agreements before the court.