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

A seller of a yacht may be liable for failing to ensure that the yacht is built to specification and is of satisfactory quality and fit for its disclosed purpose. Where a related company objectively assumes responsibility for outstanding repairs in return for a customer’s promise to promote the business, that commitment may be contractually binding. Damages against the original seller may be measured by the difference between the purchase price and the yacht’s actual value where assurances caused the buyer not to reject it. Damages against the later contracting company are measured by the reasonable repair costs and consequential losses arising from its separate commitment.

The first claimant bought a yacht from the first defendant for use in global blue-water cruising. The yacht was delivered with numerous serious defects. The first defendant failed to perform its warranty obligations. After a management buy-out, the second defendant’s representatives agreed that outstanding repairs would be completed in return for the yacht being exhibited at the Annapolis Boat Show. The repairs were not completed.

The defendants initially defended the proceedings but did not appear at trial. Their defence was struck out under CPR 39.3. The court determined liability, the appropriate measure of damages against each defendant, and whether the second claimant had any additional claim.

Judgment was given for the first claimant against both defendants. The second claimant had no additional claim because the first claimant remained party to both agreements.

1. Liability of the first defendant. Although the Purchase Agreement did not expressly state that the seller would build the yacht, its terms necessarily implied an obligation to ensure that it was built in accordance with the specification. The yacht was delivered before it was ready, without adequate sea trial or commissioning, and failed to comply with the contractual warranty and the terms implied by sections 9 and 10 of the Consumer Rights Act 2015.
2. Liability of the second defendant. The September 2017 agreement was construed objectively. The request to exhibit the yacht was made to promote the new Discovery Yachts Group and its brands. The second defendant was the holding company with the relevant commercial interest, and its representative therefore acted on its behalf. The agreement required the outstanding repairs to be completed.
3. Damages against the first defendant. The proper measure was the difference between the price paid and the yacht’s actual value after deducting reasonable repair costs. The first defendant’s assurances caused the claimant not to reject the yacht and were an effective cause of the subsequent depreciation. No credit was allowed for use because the claimant obtained no real benefit comparable with that contracted for.
4. Damages against the second defendant. Its liability was limited to the separate repair commitment. The recoverable loss comprised the reasonable cost of the agreed repairs and consequential expenses, including repatriation, expert advice, a reasonable period of storage and maintenance, and agreed berthing fees. The second defendant was also required to indemnify the claimant for reasonable further repair costs caused by damage arising during the known repairs.
5. The first defendant was ordered to pay £911,113 and the second defendant £262,957. The defendants were ordered to pay the first claimant’s costs.

not stated in the judgment.