Andrew France v Discovery Yacht Sales Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Teare,Mr Justice Teare |
| Judgment Date | 19 December 2019 |
| Neutral Citation | [2019] EWHC 3552 (Comm) |
| Date | 19 December 2019 |
| Docket Number | Case No: CL 2018 000288 |
| Court | Queen's Bench Division (Commercial Court) |
[2019] EWHC 3552 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Justice Teare
Case No: CL 2018 000288
N.G. Casey (instructed by MFB Solicitors) for the Claimants
The Defendants did not appear and were not represented
Hearing dates: 11,12 and 16 December 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
The Honourable Mr Justice Teare
Introduction
By a Purchase Agreement dated 21 October 2015 Mr. Andrew France, the First Claimant, agreed to buy and Discovery Yacht Sales Limited (“DYSL”), the First Defendant, agreed to sell a Yacht for the sum of £1,375,000. The Yacht was to be built by a related company, Discovery Yachts Limited (“DYL”). On 12 January 2017 the Second Claimant, a special purpose vehicle through which Mr. France owns the Yacht, took delivery of the Yacht in Guernsey. By reason of variations to the contract the purchase price had increased to £1,521,113. The Yacht was to be used for “global blue water cruising” and Mr. France intended to live on the Yacht, as he had informed the First Claimant. Delivery had no doubt been taken in an air of some optimism. But within a very short time a very large number of serious defects materialised.
In about April 2017 there was a management buy-out whereby the managing director of DYL, Mr. Sean Langdon, purchased, through his company, Tradewinds Marine Limited, the shares in DYSL and the assets and goodwill of DYL. An entity which described itself as Discovery Yachts Group assured Mr. France that it would support him. Many of the defects were repaired but some were never repaired, at any rate satisfactorily. Although an agreement was reached in September 2017 whereby it was agreed that the outstanding repairs would be carried out in return for Mr. France agreeing that the Yacht could be shown at the Annapolis Boat Show in October 2017, the repairs were not completed.
Mr. France received advice that the Yacht was unseaworthy and so the Yacht had to be transported back across the Atlantic to this country. The Defendants have failed to carry out the repairs and on 30 April 2018 Mr. France and his company began this action in which he claimed against DYSL, for breach of contract and in particular its obligations under the warranty clause in the Purchase Agreement, and against Discovery Yachts Group Limited (“DYGL”) for breach of the September 2017 agreement.
Both DYSL and DYGL defended this action until shortly before the trial. But neither company appeared at the trial to pursue its defence. Shortly before the trial notice of an intention to place DYGL into administration was served. On the first day of the trial I ordered that the stay of the claim against DYGL which that notice had generated should be lifted and permitted the proceedings to proceed up to and including judgment. Notice of that order was given to DYSL and DYGL and the trial was adjourned until the following day so that the Defendants had a further opportunity to appear. But on the next day neither Defendant appeared. I was asked to strike out the Defence pursuant to CPR 39.3 and did so. The trial continued. The Claimants did not seek summary judgment in circumstances where the Defence had been struck out but sought to prove their claim. Counsel took me through the most relevant documents and Mr. France and other witnesses stated on oath that their statements were true. Submissions were made both as to liability and quantum.
The Purchase Agreement
Clause 1 stated that DYSL agreed to sell the Yacht. It did not state in terms that it also agreed to build the Yacht but it is clear from other clauses that the Yacht was to be built in accordance with a specification and that the price was to be paid by instalments due at certain stages of the building; see clauses 1.2, 2 and Schedule 2. Clause 5 provided that the Yacht was to “be completed and ready for delivery” at the place and on the date stated in Schedule 3. Thus although the Purchase Agreement did not state expressly that DYSL was to build the Yacht it must have impliedly assumed an obligation to ensure that the Yacht was built in accordance with the Specification. Clause 7 concerned access to the Boat Builders' premises but extended to “those parts of the Sellers' premises necessary for the inspection” of the Yacht.
Clause 8 contained a warranty that the Yacht will be “of satisfactory quality and reasonably fit for the purpose(s) made known to the Sellers in writing”. Clause 8.3.2 obliged the Sellers to “repair or replace any defect in the workmanship, materials or equipment”. Although clause 8 did not refer to Schedule 5, that Schedule contained further details of the Sellers' warranty. It disclaimed responsibility for consequential damages including the cost of transporting the yacht. It also stated that all berthing fees were not covered.
Schedule 3 anticipated that delivery would be in October 2016 and that DYSL would provide a skipper/instructor for a period of 28 days for training and boat handling purposes.
The Purchase Contract also contained the terms implied by the Consumer Rights Act 2015, sections 9 and 10, that the Yacht would be of satisfactory quality and fit for purpose.
The events before and at delivery
It is apparent from emails internal to DYSL, the First Defendant, dated 16 December 2016 that there was concern as to whether the Yacht would be ready for delivery in early January 2017. In the event delivery took place on 12 January 2017. Mr. France noted in an email sent on that day that “we are now in reality commissioning the boat and snagging as we go” and that he had only signed the delivery and acceptance note on condition that the contracted skipper, Mr. Eustace, “would continue the commissioning and complete the extensive list of outstanding jobs”.
Events after delivery
On the first day of her maiden voyage the mast collar began to leak and on 15 January 2017 the forward cabin was flooded with water because of an unfinished cable penetration in the watertight bulkhead. Repairs were required on 18 January 2017 in La Coruna but were not successful. On 30 January 2017, one day out from Las Palmas, the generator failed. Mr. Eustace, the skipper provided by DYSL, reported on 31 January 2017 that “we are suffering problems never experienced before and the general feeling is that the boat is not fit.” Mr. Charnley, the former beneficial owner of Discovery Yachts, informed Mr. Eustace in an email drafted by Mr. Langdon that “with regard to the issues, there is a definite need for better checking of the yachts prior to them leaving, more likely even during construction and we all need to work together to find the best way to achieve this within our system.”
Further problems developed in February and March when the Yacht crossed the Atlantic with the assistance of Mr. Eustace. He left the Yacht in Martinique on 6 March 2017. At that time Mr. France informed DYSL that he had “lost all confidence in the boat” and felt that “it is not fit for purpose”. He understood that the management buy-out had occurred and sought confirmation that that did not affect his rights and that the warranty was not compromised. In a reply either drafted or sent by Mr. Langdon, Mr. France was told that the “MBO in no way effects your rights and the company going forward, but rather secures its future in the hands of a new strong team going forward”. The only way in which the MBO could not affect Mr. France's rights was if the new owners intended to ensure that DYSL would perform its obligations under the warranty. On 13 March 2017 Mr. Langdon gave Mr. France his “unequivocal apology for the issues that you have faced.”
Having purchased the shares in DYSL and the assets and goodwill of DYL Mr. Langdon incorporated two new companies. One was Discovery Group Yacht Sales Limited and the other was Discovery Shipyard Limited which was to hold the assets and goodwill of DYL. Those companies were subsidiaries of the Second Defendant, DYGL, of which Mr. Langdon and others were the beneficial owners. At the same time it appears that Mr. Langdon was also acquiring other brands, namely, Southerly Yachts and Bluewater Yachts.
The Yacht was sailed to Antigua where Mr. France hoped that she would be repaired. On 17 April 2017 Mr. France provided a list of 45 defects. He received a reply which contained an apology for “so many problems and failures” and informed him that “we remain absolutely committed to resolving all the problems you are experiencing and we will try and do this as quickly as possible.” On 25 April 2017 the emails to Mr. France began to be signed on behalf of “Discovery Yachts Group”.
By 3 May 2017 Mr. France requested that the warranty work be expedited. In an internal email of 4 May Mr. Langdon said that he hoped that Mr. France would have been sent a plan by now of when and who will be fixing his boat. He said “put simply if he was to reject the boat we would be finished as a company”.
By the end of May 2017 Mr. France had to sail north, for insurance purposes, to avoid the hurricane season. On or about 1 June 2017 he was told that “Discovery Yachts is as always firmly on your side”.
On 1 July Mr. Langdon suggested that the repairs be carried out either in Mystic or in Annapolis. He added that he would welcome the opportunity to show the Yacht at the Annapolis Boat Show and that it was “our intent to make sure that your Yacht would be show ready….We will get everything sorted.” This...
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