What's going on at Discovery yachts?

[Lightwave395]

They are still listed as having a stand and 3 boats at the Dusseldorf Boat show next month

Exhibitiors & Products 2020

I think the guy on here whose build was being followed was due to have his boat on display there

 

[pvb]

I doubt that the yacht owner will get the money awarded by the Court.

 

[cardinals]

Judgement in full here (it is a link to the Bailii database)

(1) Andrew France (2) Elusive Yachting Limited v (1) Discovery Yacht Sales Limited (2) Discovery Yachts Group Limited [2019] EWHC 3552 (Comm) (19 December 2019)

 

[guardian]

So from reading the above, the yacht cost £1.5m new & is now estimated to be worth £850k 3 years later with £240K worth of repairs to be made to her,............yet another reason to buy a well-sorted newly new boat instead.

 

[DownWest]

OK..Mail reporting, but not a lot of that made sense. A cable passing through a watertight bulkhead flooded a cabin?? Mr France had a lot of sea experience... Diving is not close to yacht sailing. I would have thought that the case could have been defended rather better. Fuel guages a bit inaccurate? Mast boot causing serious leaks? The back story would be interesting, as to why the minor sounding problems were not fixed on the occasions that work was done.

Ah..Just read the judgement in Cardinal's post.. So no surprise that Mr France won.

 

[pvb]

Judgement in full here (it is a link to the Bailii database)

(1) Andrew France (2) Elusive Yachting Limited v (1) Discovery Yacht Sales Limited (2) Discovery Yachts Group Limited [2019] EWHC 3552 (Comm) (19 December 2019)

Interesting judgement. But I suspect the yacht's owner will still not see a penny from Discovery Yachts, which will simply go bust and be resurrected as a new company with no liability for the original company's debts.

 

[Whitelighter]

Bye Bye Discovery Yachts 2 (already Pheonixed once)

Hello Discovery Yachts 3 no doubt with all the assets and non of the liabilities.

Who would by a new yacht from these people (or anyone for that matter)

 

[guardian]

Bye Bye Discovery Yachts 2 (already Pheonixed once)

Hello Discovery Yachts 3 no doubt with all the assets and non of the liabilities.

Who would by a new yacht from these people (or anyone for that matter)

This is the go-to scam in construction, usually small house builders / one man band property devs - go broke, take all the subbys down with them on Friday then start a fresh Monday..........................

 

[Seven Spades]

The strange thing about that judgement is that the judge decided that an entity with whom he did not have a contract but offered to put thing right out of good will was also partially liable.

What I don't understand is how it got to this situation in the first place. Other Discoverys were not built this way. Something must have happened, a change of personnel or something as not sealing wood it not their usual practice. Then their failure to just put it right, the Damage to their reputation is far worse than the cost of correcting these issues. There is no getting away with mistakes, if you cock something up you have to out it right.

The difference between a good company and a bad one is how you deal with mistake as all companies make mistakes.

 

[matt1]

There is often more than two sides to a story.....
but why did the Discovery companies decide not to appear in court? Internal strife at Discovery?
Why did the purchaser set off from the UK so fast after taking delivery? Had they put Discovery under pressure to meet some customer deadline (such as a Caribbean season)? Any experienced buyer of big yachts would know that a work-up period of several weeks is advisable to learn how to operate the boat systems and to ensure they are working as desired.
At a quick read through, most of the problems would have been easily sorted if in the Solent.
How much was in fact due to operator error?

So Mr Langdon is gone today and a new investor has been found? Cannot wait for the next instalment in this gripping saga.

Seems very odd to me. How on earth do you get to £432k in legal fees for a start? The company I work at didn't get to that much taking a US corporate to court for a $31m debt!

As to the faults, unfortunately SW glitches in instrumentation / pilot's etc is sadly all too common and probably common across many different makes. Fair enough maybe DYG didn't do enough to rectify in a timely fashion, but it's not like a major structural fault. As for "lifeboat dragging in the water" I guess they mean a liferaft came adrift and deployed. New liferaft =£ 2k......still can't see how you get to £900k + £260k to rectify. We obviously don't have the full story here but on the face of it, it seems a completely disproportionate judgement to me.

 

[Resolution]

What I don't understand is how it got to this situation in the first place. Other Discoverys were not built this way. Something must have happened, a change of personnel or something as not sealing wood it not their usual practice.

The difference between a good company and a bad one is how you deal with mistake as all companies make mistakes.

To hazard a guess as to how they got into the situation:

• This was the first time the buyer had bought a big yacht , it represented much of his total wealth, and he was going to live on it. Choosing the detailed specifications became slow and complicated.
• MD of Discovery, John Charnley, was in the process of being bought out and top management had their eyes off the ball.
• Production took too long, the buyer became agitated (plans for the Caribbean season under threat) and completion was rushed.
• Work up commissioning in the Solent was abandoned and instead they all agreed to finish this during the first voyage , to the Caribbean.
• Maybe Discovery needed the final payment instalments to be included in their accounts before the public fund-raising?
• The buyer did not appreciate that complex hand made bits of engineering are very different from robot made things like cars.

In short, the buyer was too keen to take delivery of his new toy, and Discovery were too keen to let it go. Sorting out relatively minor problems becomes much harder away from the factory.

Spades, I very much agree with your last comment.

 

[pvb]

In short, the buyer was too keen to take delivery of his new toy, and Discovery were too keen to let it go.

The boat was supposed to be handed over in October 2016, but wasn't in fact completed until January 2017. Discovery didn't exactly rush the build.

 

[Resolution]

The boat was supposed to be handed over in October 2016, but wasn't in fact completed until January 2017. Discovery didn't exactly rush the build.

"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."

I did say that production took too long, but a 3 month over run in a 12 month contract period isn't exactly unusual. Especially as there were variations to the original contract.

 

[Concerto]

The problem with the court case and why the award was so large was because Discovery Yachts did not appear in court. The judge had to decide the case on what was presented to him by Mr France. In this case there was only the claimants side of the story as no one was there to enter a defence. The whole matter would have been totally different result if a defence against the claim had been made.

Reading through the Judgement ((1) Andrew France (2) Elusive Yachting Limited v (1) Discovery Yacht Sales Limited (2) Discovery Yachts Group Limited [2019] EWHC 3552 (Comm) (19 December 2019)) makes very interesting reading. This is my resume of what was presented in court over 3 days. Please note I have used Mr France as the owner and Discovery to refer to the builder. I am not from the legal profession, but I have made a few personal comments that are my thoughts.

Elusive Yachting Limited, a special purpose vehicle through which Mr. France owns the Yacht, took delivery of the Yacht in Guernsey. If this was to be his floating home, why did he need a limited company? Was this part of a plan to avoid/evade taxation. either on purchase or later.

The yacht was launched on 12 Jan 2017 in Southampton and started its maiden voyage on 15 Jan from Guernsey. The skipper Mr Eustace was contracted and "would continue the commissioning and complete the extensive list of outstanding jobs". To me this is an unrealistically short time to check all of the systems on such a complex yacht. The buyer was being unreasonable in my opinion.

A cable through the anchor locker had not been sealed and was discovered on 15 Jan. The mast collar leaked and repairs in La Coruna on 18 Jan did not solve the problem. The generator failed on 30 Jan, one day out from Las Palmas. The following day Mr Eustace emailed Discovery that "we are suffering problems never experienced before and the general feeling is that the boat is not fit." If this was the case, why did Mr France not return the yacht back to the builder to allow rectification work?

There were further problems in February and March whilst sailing across the Atlantic to Martinique, where Mr Eustace left the yacht on 6 March. At that time Mr. France informed Discovery that he had "lost all confidence in the boat" and felt that "it is not fit for purpose". 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. By the end of May 2017 Mr. France had to sail north, for insurance purposes, to avoid the hurricane season. On 1 July Discovery suggested that the repairs be carried out either in Mystic or in Annapolis. By 15 August 2017 the Yacht had reached Chesapeake Bay. Some repairs were carried out in Annapolis but by an email dated 14 September 2017 Mr. France noted that several items were outstanding.

Mr France was asked if the repairs could be completed and the boat shown at the Annapolis Boat Show in October 2017. He agreed, then changed his mind on 29 Sept as he wanted to be paid to move off his boat. He was paid $2,500 for accommodation and travel. Mr France submitted a 6 page schedule of outstanding repairs. Not all of the repairs had been completed when on 17 October 2017 the yacht left for the Caribbean. In November Discovery said repairs were difficult with the yacht in the Caribbean. In January Mr France sought legal advice and was advised by a naval architect that the Yacht was unseaworthy and that no voyages out of sight of land should be undertaken. The yacht was transported back to England (presumably by ship) in June 2018.

So many of the problems seem to be caused by Mr France expecting a complex hand built yacht to have no faults on delivery. He allowed no time to check the boat over before departing for an Atlantic crossing. He then expected Discovery to be at his beck and call to fix things wherever the yacht was in the world.

The question of damages also raises plenty of points.

The original contract price was £1,375,000, but later variations chosen by Mr France raised this to £1,521,113.

A yacht broker valued the yacht without seeing it at £1,000,000 in 2018. The same broker valued the yacht at £825,000 to £875,000 when he viewed it in Sept 2019 having noted her current condition, her styling and appearance and the fact that she had a feeling of being slightly neglected. This also assumed all outstanding faults had been fixed.

A marine consultant (surveyor), inspected the yacht on her return to England in June 2018 and again in January 2019, both times he was accompanied by someone from Discovery. The consultant found the deck hatches leaked, allowing lockers to fill with water and to impact stability. Other leaks exposed equipment, especially electrical equipment to damage and reduced habitability. The lack of a reliable electrical supply compromised the Yacht's ability to navigate safely, to make water and to store provisions. The inaccuracy of gauges rendered it difficult to predict endurance range in planning passages. Chain plate bolts required replacement and the integrity of the deck structure required to be checked. Engine testing was required. Quotations for the costs of repairs had been received which totalled £120,058. But in addition it would be necessary to coat or seal the end grain of the wood laminate. It was difficult to estimate the cost of doing so. It could double the cost of repairs to £240,000 with a margin of error of plus or minus 20%. In addition there was a risk, when repairing, of damaging the hull flange and flexing the hull which could crack the laminate. If that occurred a fresh hull would be required and the potential cost could exceed that of a replacement yacht. So we all know surveyors look on the gloomy side when assessing any yacht, but this does seem a massive bill.

The judge decided the damages should be the difference between the cost of the yacht and the current value. The judge set the unrepaired value of the yacht assessed by the broker as £850,000 less the costs of repair as assessed by the marine consultant of £240,000 making the current actual value of £610,000. The damages of £911,113 is made up by the purchase price of £1,521,113 less the £610,000 current market value. This does no allow anything for depreciation or beneficial use of the yacht. Who would like to buy a new yacht and not suffer any depreciation?

Hope this makes sense of this complex one sided legal case. Yes there were problems with this yacht, but most could have been fixed by the builder if allowed to use their own staff and facilities. Pity Discovery did not put up a defence in court. I would expect any appeal would change the level of damages massively.

 

[pvb]

Hope this makes sense of this complex one sided legal case. Yes there were problems with this yacht, but most could have been fixed by the builder if allowed to use their own staff and facilities. Pity Discovery did not put up a defence in court. I would expect any appeal would change the level of damages massively.

There's unlikely to be an appeal. The reason Discovery didn't turn up at Court must simply be because they'd already decided to go bust to avoid having to pay out anything.

 

[Stemar]

OK, I was never likely to be buying one of their boats new anyway but, should they be resurrected as the same but different, I certainly wouldn't go near them now. Not because of the faults; they're disappointing, especially when most of them seem to be due to poor quality control, but shit happens in the best run companies. It's the fact that they're running away from their liability.

In no way am I any sort of expert, but I do have to wonder if the faults - which seem to have started off as pretty minor - weren't exacerbated by the insistence of the owner in setting off across the Atlantic in an ill-prepared boat. Call me a pessimist, but I wouldn't consider setting out without at least a couple of months shakedown in the Channel to make sure everything's ready. If that means I put off my trip until after the hurricane season, so be it.

 

[doris]

Maybe post #2 might explain things

 

[Bobc]

Maybe he should have bought a Bavaria ;-)

 

[pvb]

Maybe he should have bought a Bavaria ;-)

Ha! Maybe not the boat for his intended lifestyle. But the new Bavaria I bought 5 years ago has (with one exception*) been fantastic - no leaks, no creaks and groans, nothing has broken, it just works. Superb quality of manufacture.

* The one exception was an option I'd specified which Bavaria didn't fit. It got retro-fitted later, in the UK, by a team of guys sent from Germany, at considerable cost to Bavaria.

 

[Resolution]

Ha! Maybe not the boat for his intended lifestyle. But the new Bavaria I bought 5 years ago has (with one exception*) been fantastic - no leaks, no creaks and groans, nothing has broken, it just works. Superb quality of manufacture.

* The one exception was an option I'd specified which Bavaria didn't fit. It got retro-fitted later, in the UK, by a team of guys sent from Germany, at considerable cost to Bavaria.

Machine made vs hand made?