PaulGooch
Well-Known Member
Of course, your boat would cost more money, someone would have to cover the interest.
Of course, your boat would cost more money, someone would have to cover the interest.
Talulah
Well-Known Member
Doesn't work.
If the builder defaults on the loan the bank raid the Clients account.
I believe in the Opal saga the clients account was indeed raided by the bank.
DAKA
Well-Known Member
Yes indeed.
My car also costs more because it has seat belts and air bags just in case but I dont mind seeing as I get extra protection.
If I had the option to buy a cheaper car bodged up in a back street shed I wouldnt take it.
As long as the punter realizes the risks its fine but I expect many boat buying marks are clueless, let down by the various boating associations/federations.
fireball
Well-Known Member
And the Bank will want the loan secured - which if the agent doesn't have enough capital then it will be by the clients account - it won't happen!
There's two sides to the risk - the client is risking the agent/builder not completing or not to standard and the agent/builder is risking the client pulling out ...
DAKA
Well-Known Member
Good point, unfortunately .
Thats why I suggested (correctly formatted clients account) hopefully jfm can help out and let us know if an escrow is any use in this situation.
Tranona
Well-Known Member
'fraid that is not true. This subject has been done to death. Th main problem with Opal was that many of the advanced payments that should have gone into the client's account did not. clients accounts are very clearly ring fenced from the firms operational finances.
There is some suggestion that the balance in the clients account was used to secure part of the overdraft for a time, but if you read the court case over who was entitled to the funds in the client account there was always enough there to meet any legal claims on it. The issue was determining who had a legal claim. AND before anybody starts jumping down my throat again, I am not excusing what went on at Opal, nor the actions of the people subject of this current thread - just trying to focus on where the real problems are. That is paying in advance to limited companies (or sole traders for that matter) with no security where you could end up as an unsecured creditor.
Tranona
Well-Known Member
Your last sentence holds the crux of the issue. Most boats are built against an individual order, if not custom built, so it is high risk for the builder if the buyer defaults on completion. If the bank is financing the building of the boat, then its security is against the purchaser's ability to complete. So stage payments is one way of sharing that risk. It works both ways. If a buyer stops stage payments the builder is stuck with a part built boat which he can neither finish nor sell.
As I said not an entirely satisfactory situation as the owners of the 5 part complete Sadlers found out when Rampart went bust. The reality is that there is always risk in these types of transactions, just as in any others that involve high value built to order artefacts. Minimizing the risk with arrangements that are fair to both parties and legally enforceable should be the aim.
D
Deleted User YDKXO
Guest
Talking specifically about Trader whose manufacturing company is in Taiwan and other brands with manufacturing companies on the other side of the world, which Bank is going to lend to these manufacturing companies based on the stage payments being lodged in a client account on the other side of the world? And why would those manufacturing companies accept such a situation? They need cash in their accounts available when they need it to buy materials and labour as they need it. In the end and however you put conditions on their use, client accounts are administered by the dealer/broker and they have to retain the ability to put money in and take money out (otherwise the account cannot operate) which means that there is always a risk of fraudulent use of the client account by the dealer/broker.
If I was buying a Trader myself (hypothetically because I really wouldnt), I'd insist on a letter of credit arrangement payable against shipping documents direct with the builder with the minimum possible deposit, certainly no more than 10%. The manufacturer can much more easily borrow against a letter of credit for his working capital than against a client account in the UK and his bank knows a LC is an (almost) watertight guarantee of payment. From the buyers point of view, only his deposit is at risk and he knows that the manufacturer wont get paid until the boat is on a ship to the UK. LC's are a universally accepted way of doing business around the globe and every major bank is used to dealing with them. A LC direct on the manufacturer also has the benefit of stopping any money from going through the dealer's account and removes any risk of any of it sticking to his grubby fingers. The dealer then invoices the manufacturer for his commission
MapisM
Well-Known Member
Neither do I. But maybe some are desperate enough with their chinese stuff to offer ANY kind of terms...
DAKA
Well-Known Member
Gludy
Well-Known Member
For the record.
The 42 foot traders are built in China and not associated with the other larger traders built in Taiwan. I think the idea was to carry on with just the Chines boats because the agency for the other ones was lost.
The 42 foot traders are built in China and not associated with the other larger traders built in Taiwan. I think the idea was to carry on with just the Chines boats because the agency for the other ones was lost.
Tranona
Well-Known Member
Here we go again
Why do you have to always query everything I say that is true, without any clear evidence that your criticisms are valid?
It is not a question of reading from any single perspective, just a question of reading the facts.
Your statement that "technically debatable but for the purposes of this forum in layman's terms it is accurate enough" is just arrant nonsense. Do you mean to say that people here are not capable of seeing what is true and what is not? That seems to be your whole problem - you do not seem to understand the subject yourself but rely on constantly stating your own opinion in the hope that people will believe it.
Do you have any evidence money was actually taken from th client account by the bank? If you are unclear about this issue you need to take it up with the administrators as they and the court said that all legal claims on the client account were met.
The failure of some people to reclaim their deposits was NOT because the account was not formatted correctly. It was because certain deposits were not paid into the account as was promised. This is absolutely crystal clear from the case - which was heard to determine whether the claims from those unfortunate people were legal. I am amazed that you have not grasped this yet, given that you have the same copy of the report and commentary as I have.
I know that is not what you want to hear but that is the fact.
There is absolutely no point in you continuing to make the same misguided statements, particularly when this thread was nothing about client accounts, but about unsecured stage payments.
You have made a statement in your last paragraph (which paraphrases what you have said a number of times) without any evidence. It is only your opinion until you produce a documented case to support it. Until then suggest you refrain from making untrue statements.
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Imperial One
Well-Known Member
This is why even though we are members of the BRBA and the BMF we still prefer to use the Dutch HISWA contracts for all our sales of Dutch boats.
Every payment to the builder is lodged against the boat and recorded as paid at the Dutch shipping registry so that irrespective of whatever happens to a builder or how they use the money, the boat and equipment bought for it, whether installed or not, is always the property of the customer from the moment the keel is laid to the moment he takes delivery of the vessel.
At their request, I have sent these contracts to the RYA and the BMF when all this surfaced the last time.....sadly I have to admit that neither outfit did anything with them.
This is a shame because they are so much better for the customer and I suspect even DAKA would be happy with the terms!
benjenbav
Well-Known Member
Here we go again
Just on the Peters case: [BA Peters plc (in administration); Moriarty and another v Atkinson and others]: it isn't really about the failure of a client account. The Court of Appeal's ruling was that money which should have been paid into the client account was actually paid into a current account and the court did not feel able to allow the relevant creditors to use the breach of trust (in failing to pay the money into the right account) to put their claims ahead of other unsecured creditors.
To quote the headnote from the official case report:
"The money paid by the company into its overdrawn current account never formed part of the money in the client account, which was the fund against which the appellants sought to claim. Instead, when the money in the current account was used to reduce the company's liability with the bank it effectively disappeared and there was never any fund on which a proprietary claim could operate...
Furthermore, although the appellants apparently had a good claim against the company for breach of trust for not having paid the money into the client account, that did not mean that they had a proprietary or any other equitable interest or right over that account, since that would mean creating, to the detriment of all the other unsecured creditors, a new class of preferred creditors of those whose money was taken by the company in breach of trust, which ranked behind all secured or trust or proprietary claims but before any ordinary unsecured claims."
Nick_H
Well-Known Member
I'm not at all convinced that finishing off the 7 boats on order on the same terms is the big altruistic gesture its being made out to be. The 7 buyers would all have made stage payments, so they'd all own a chunk of GRP/ancilliaries that needed finishing. The manufacturer would have seven part-finished boats he couldn't sell, so of course the newco is going to arrange completion of the boats, because all parties want them to, and they can do so at a profit. To do otherwise would be like buying a company selling widgets, and rejecting all the existing orders for products.
There's nothing wrong with this of course, any buyer of Tarquin's assets would have done the same, but it has been painted in MBY as some saintly act. They state the potential losses are been covered by the newco's reserves and profits, but it's a new company, so it doesn't have either of those yet. It may be that he has resisted the temptation to try and screw extra payments out of the buyers to bump up profits, and if so that's a pat on the back, but it's very different from covering losses himself.
Now none of this indicates either way whether Toby Chappell is like his dad, and i'm not naive, but has anyone considered that he could be genuine? Has anyone here ever met him? The Trader buyers, who are obviously astute enough to build up the funds to buy large yachts, and would presumably have complete distrust of his father, seem to think he's a straight up chap, in fact two of them were so certain about it that they can now entertain dinner guests with their Victor Kiam impressions. There's just a chance that he's delighted to see the back of his crooked father from the business, so that he can now finally try and run a legit business making the boats he has designed?? Stranger things have happened.
There's nothing wrong with this of course, any buyer of Tarquin's assets would have done the same, but it has been painted in MBY as some saintly act. They state the potential losses are been covered by the newco's reserves and profits, but it's a new company, so it doesn't have either of those yet. It may be that he has resisted the temptation to try and screw extra payments out of the buyers to bump up profits, and if so that's a pat on the back, but it's very different from covering losses himself.
Now none of this indicates either way whether Toby Chappell is like his dad, and i'm not naive, but has anyone considered that he could be genuine? Has anyone here ever met him? The Trader buyers, who are obviously astute enough to build up the funds to buy large yachts, and would presumably have complete distrust of his father, seem to think he's a straight up chap, in fact two of them were so certain about it that they can now entertain dinner guests with their Victor Kiam impressions. There's just a chance that he's delighted to see the back of his crooked father from the business, so that he can now finally try and run a legit business making the boats he has designed?? Stranger things have happened.
Gludy
Well-Known Member
Tony Chappel's son is the one I dealt with most of the time in the build of my boat and I am sure his father kept no secrets from him.
I should have realised what the company was like when the son complained to me that unfortunately no Traders had been damaged in the recent Caribbean hurricane and hence sadly there were no big parts to replace at a handsome profit.
I cannot say what the son is like in the new business - all I know is that from my experience I would never deal with any of them ever again.
I should have realised what the company was like when the son complained to me that unfortunately no Traders had been damaged in the recent Caribbean hurricane and hence sadly there were no big parts to replace at a handsome profit.
I cannot say what the son is like in the new business - all I know is that from my experience I would never deal with any of them ever again.
DAKA
Well-Known Member
The evidence I submit for your consideration is here
http://www.bllaw.co.uk/pdf.aspx?page=14348
Where money is paid into a bank account, which then
becomes overdrawn, the fund ceases to exist. Equitable tracing therefore
cannot be pursued through an overdrawn account, and the beneficiary
cannot claim a proprietary interest in other assets belonging to the trustee
in priority to other unsecured creditors on the ground that his assets had
been misappropriated in breach of trust: see Bishopgate Investment
Limited -v- Homan [1995] Ch.211 per Dillon L.J. 216d-f and 218e – 220-h
In a nut shell we are left with differing opinions on the protection of bodged up Yacht Brokers clients account.
There is very clear case history as I have shown numerous times that says that once money leaves a trust it cant be replaced.
Yacht Brokers (some definitively and possibly most) set up automatic transfers from the clients account to use against their over drafts, that effectively removes the funds from the trust, although I am pleased to agree with you that the administrators didnt pursuit this in the BA Peters case but it doesnt follow that will happen in the future and next time all the clients funds can vanish .
Anyone who hands money to a Yacht Broker/Builder needs to be aware that the money is at risk and should be first checking the Client account is correctly formatted or utilize an escrow account.
Its even more pointless arguing during this thread as I am sure the Chapples had no intention of ever protecting their marks cash.
I hope you dont object to the term Mark on this thread although I could be wrong, we will see once the full details of the current cases are published.
DAKA
Well-Known Member
I am sure I would be happy with it
The arguments between Tranona and myself are crazy, if interest rates were 10-15% I could understand the reluctance of Brokers to relinquish their perceived free access to cash but the current interest rates make the money more of a nuisance to reputable brokers like your good self.
The only Yacht Brokers who are likely to benefit from the current low protection are the dodgy ones, it cant be in anyones interest to protect them other than the Yacht Brokers associations in the interests of maintaining membership incomes, thats a bit short sighted to say the least
DAKA
Well-Known Member
In relation to that particular aspect agreed however there is also a huge great gap in client account protection highlighted in this case which runs parallel to the other issue.
For years I have been posting about how the current situation allows for a Yacht Broker to use the clients funds for day to day business expenses.
It isnt illegal as long as the Yacht Broker says he intends to pay the cash back after he has borrowed it.
We will see what happens to chapple but as long as he maintains he only meant to borrow the cash then he hasnt really broken any laws.
If you read up on the BA Peters case notes you will notice that they were using the clients account to balance the overdrawn working business account.
Although Barclays stopped this just before the bubble burst, thus it is easy to loose focus on that huge great big hole in the so called clients account.
I would like to point out that my arguments are NOT IN ANYWAY against reputable Yacht Brokers.
Lets not forget that BA Peters attempted to pay some money into a clients account in order to protect it however the protection was useless.
My argument is with the various associations who are supposed to recommend to their clients how best to look after their clients funds but either are too stupid to recognise the dangers or prefer to turn a blind eye as they dont want to exclude the not so reputable yacht Brokers from lucrative membership incomes.
benjenbav
Well-Known Member
Pete, I think that's the point to focus on. As I think you know, I am a solicitor. My business handles substantial amounts of client account money and we are acutely aware of our responsibilities and the rules governing the management of that money. However, the absolute bottom line of what stops us from using client money to fund our business (apart - it goes without saying - for our unimpeachable sense of honesty) is the fact that we know that the sanction is that we would be banned from continuing in business as solicitors.
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