Friday 14th December 2012
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Jim Delegat, managing director of winemaker Delegat's Group, has failed in a High Court attempt to recover payments on an incomplete yacht from a director of failed luxury yacht maker Salthouse Marine.
Justice Mark Woolford ruled that Perth-based naval architect Christopher Norman didn't breach his director's duties under the Companies Act while a director of Salthouse between December 2008 and February 2010.
The judge also ruled he didn't engage in misleading or deceptive conduct under the Fair Trading Act by telling Delegat in October 2009 that he wouldn't regret the purchase of the 70-foot Salthouse 68 yacht.
Jim Delegat told BusinessDesk he hasn't yet done an analysis of the judgment to decide on any options open to him.
The Jim Delegat Business Trust made payments totalling $1.23 million to a subsidiary of Salthouse set up specifically to build the yacht. When Salthouse failed in February 2009, the trust was left with an incomplete hull worth between $150,000 and $455,461, the judgment says.
The trust set up its own company to finish the yacht over two years, reportedly at a cost of an additional $4.7 million. No recovery was possible from either Salthouse, or the subsidiary Boat 93.
Salthouse typically financed its boat building by setting up single-purpose subsidiaries for each build though it operated what the judgment called "a centralised treasury with funds being transferred between the boat building subsidiaries themselves" or with Salthouse.
The arrangement was likened to a Ponzi scheme with deposits from later boats being used to complete earlier ones, though this was rejected by the judge, who said the temporary surplus funds were effectively gross profit that Salthouse was entitled to draw down however it wanted.
The judgment says Norman himself was the biggest loser from the failure of Salthouse, since his interests had advanced about $3.3 million and taken on a debt of $699,500 only to lose his total investment.
The judgment also means no follow-up cause of action against Julie Salthouse, the other director and general manager of the company as well as director of all the subsidiaries. While she wasn't named in Delegat's suit, Norman had her added as a third party in the event he was found liable.
Norman was described as "a distinguished naval architect" and also one of the founders of Austal, an ASX-listed boat builder with a market value of A$166 million. He was also a yachting enthusiast with his own luxury yacht broking business, Yachts West, based in Fremantle.
Delegat's family interests own 66 percent of the Delegat's winery group.
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