Peters Opal. Appeal Court ruling

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Not sure if this has been covered in the original thread but if anyone is buying a boat with £100 000 that is sufficient to insist on your own separate client trust account.

That is the Broker/Dealer sets up a new bank account in trust solely to accommodate your funds.

The funds could be withdrawn for another purpose but it would be clear fraud easy to prove and get locked up for.

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True - or have legally witnessed document signed by both Dealer and You stating that moneys are placed in Specific Client Account #xxxxxxxxxxxx and that moneys are not available for any other purpose than the intended payment for craft. Words similar etc.
 
They still get away with it if they do good job and dont leave any money to pay Administrator fees to look for the trail of cash.
 
I would suggest that in the present climate I would be loathe to part with any serious cash particularly as a deposit without some pretty clear understanding where the cash was going and what my rights would be.

As an aside I had an interesting one some years ago when buying a house from a company, and my cash was in an escrow account for some time to protect me from the company going into receivership.

The key thing to remeber is that it is your cash and it is up to you and no one else to protect it, and certainly the bloker/agent/dealer does not work for you.
 
here we go.... The court made the ruling it did for 2 very good reasons. 1. The case law on contructive trusts, 2. A whole section of the economy would potentially fall over. Think what would happen if every payment made in part payment was held to belong to the original payee in the event that the goods were not delivered. If as a supplier you have the risk of your invoiced payment for parts or services being clawed back from the angry customers of your customer then you will not do business with anyone who potentially funds their business on deposits. As a secretary at peters opal doing the filing you potentially have the prospect of some wealthy bav buyer clawing back your wages because it belonged to them all along and shouldn't have been paid to you. Now that would really make sense!
 
Fair points but why should only the customer who makes a deposit be at risk, the reality is that where the company robs peter to pay paul there does need to be some legal sanction, and those sanctions need to be applied. Of course there needs to be some give and take and trust or no business will take place, but cases like Pters Opal where moneys appear diverted from one purpose to another and the least protected creditors lose most actually does more to destroy the trust needed than hauling a few company officer of to jail now and then. At present it would appear the risk to a company officer from diverting funds from one purpose to another contrary to customer instructions and agreement is close to zero, this will reduce the confidence of future customers in the same market. Not good for the business.
 
Precisely, that is why it is less secure buying from a dealer than the manufacturer. The normal BMIF type contract specifically allows stage payments to be transferred into ownership - indeed that they should not be made until the buyer is satisfied that the boat has progressed to the point that requires a payment.

Using a client account properly is a way of trying to ensure that the buyer gets some control when he is not dealing directly with the manufacturer. The stage payments are intended to finance the building of his boat, not the running costs of the intermediary.

The situation would have been completely different if indeed the deposits had gone into a client account first and then taken out to be paid into a general account - or in this case reduce the overdraft.
 
Yes it did. They own their part complete boats. The problem as the recent thread shows is then getting them finished at a sensible price.
 
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That is really sad.

The boat manufacturing industry should be truly ashamed of itself, as should be the appropriate trade bodies.... they've had plenty of time since the Opal debacle to get this basic issue sorted out.

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As should possibly the yachting press. This has got to be the biggest story in the yachting world at the moment, and has been for some time.

Would it hurt advertising revenues to cover it in an investagative journalist approach taking the side of the consumer??
 
Nothing can remove this kind of risk. The distinction here is that in the Peters situation people lost all their money. In the Sadler situation they own the part completed boats. The fact that they have little market value in their current state is not something that can be dealt with in a build contract.

This sort of risk arises in just about any transaction when a job or product is being produced specifically for you. You see it in property builds all the time. I had a house built many years ago to a fixed price contract - and the builder went bust just after he completed my house. The buyers of 4 other houses nearby were not so lucky and it took ages to get their houses completed.

You also have to remember that there are many boat builds that go through without a problem.
 
I don't agree.

There could be insurance policies that protect the boat buyer, if negotiated across the industry, potentially at quite low costs.

As an alternative, a viable manufacturer or distributor could have lending in place against trust account funds... (if they couldn't get the lending, against cash in an account, then that says something about their vaibility to start with).... the lending being repaid upon completion and hand over when the trust releases its funds to the distributor or manufacturer

I am sure that in the current climate, a combination of builders, distributors and purchasers would be willing to fund the marginal extra cost for the certainty it would provide, and the added confidence it would bring to the boat buying public.
 
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That is really sad.

The boat manufacturing industry should be truly ashamed of itself, as should be the appropriate trade bodies.... they've had plenty of time since the Opal debacle to get this basic issue sorted out.

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As should possibly the yachting press. This has got to be the biggest story in the yachting world at the moment, and has been for some time.


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The BMF, the yachting press, ... the silence is deafening.
/forums/images/graemlins/mad.gif /forums/images/graemlins/mad.gif
 
No different from stage payments in having a boat built. When I was involved in custom boat building all our contracts had stage payments against work to date verified by the buyers surveyor. Title for work completed to date passed to the buyer.

The big difference with houses is that once you get the legal side sorted you can engage a builder to finish.

A minority interest boat with a lot of specialist equipment and fittings is much more difficult. As I understand it the tooling and materials for the Sadler were bought by another company which is either unable to finish the part complete boats or is asking an uneconomic price.
 
There are too many issues here for a simple answer - if there was one it would have been found already!

Insurance would only be low cost if the risk were low - and it clearly isn't!

As I have tried to point out the risks involved with dealers are different from those involved dealing direct with a builder. Payments made before delivery have a different purpose in the two types of transactions and the failures in the process are different.

For example how would an insurance policy work when your contract is with a dealer, but he could fail to perform because the builder failed. All you could expect is your deposit back, which would happen anyway if it was in a ring fenced client account, or more securely held in an Escrow account.

If the contract is direct with a builder, your title to work done equivalent to your stage payments is secured through your contract. The risk is the builder failing to complete the bit you have not yet paid for. Don't think an insurance company would be prepared to take that sort of risk.
 
The Judge's ruling was very clear and unambiguous. As the money was not put into the client account it does not have the protection afforded to money in that account.

The second thing is that whilst Peter Opal had a moral duty to put client money into the client account it may not have had a legal one. It would depend upon the contract.
 
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It smacks that the directors were only too aware of what was happening and did all they could to minimize there own personal loss, they probably had personal guarentees against the overdraft.

[/ QUOTE ] A redneck could consider that this is the time to send 'Big Lou and his mates' around to the Directors for some negotiation and reconciliation. /forums/images/graemlins/cool.gif
 
The real problem here is that the boat selling industry is seriously undercapitalised. When boats are as standard as most are, you should be able to buy ex stock and indeed can do so from some dealers. Then its quite simple - payment by debit card against bill of sale. Just like buying a car. Almost no risk.
 
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