A $6.5m yacht 'bought as seen' scuppers telecoms tycoon
FOR most people, the concept of "buyer beware" usually applies to a second-hand family saloon, but for one multimillionaire American entrepreneur, caveat emptor has taken on a whole new meaning with a blighted luxury yacht purchase and subsequent High Court battle.
When telecoms tycoon Michael Hirtenstein bought the 46ft yacht Candyscape from London property tycoon Christian Candy for the knock-down price of €4.5m (AU$6.5m), he thought he was "stealing" the vessel from the One Hyde Park owner. This was in July 2010, during the financial crisis and a slump in luxury yacht values. The American had planned to travel to Europe to collect his prize and propose to his girlfriend on board.
Instead, within an hour of doing the deal, when the yacht was 12 miles out to sea in international waters, the starboard engine of his new toy, now called Il Sole (in defiance of superstitions about the risk of renaming boats), suffered catastrophic failure.
This month, in a rare insight into the secretive world of luxury yachts and their even more secretive wealthy owners, the case ended up in the High Court in London, with Mr Hirtenstein suing his own lawyers Hill Dickinson for their failure to obtain a guarantee over the condition of the yacht.
Hill Dickinson partner James Lawson, who arranged the purchase from Mr Candy's company Candyscape Ltd, had assured Mr Hirtenstein that it came with a personal guarantee. However, after a two-week hearing, Mr Justice Leggatt has ruled that no such guarantee existed.
Mr Hirtenstein, who in court described the yacht as a "vanity purchase", made his fortune with the sale of his telecoms start-up for $270m in 2005 before establishing a New York property empire.
Christian Candy used to own the yacht Christian Candy used to own the yacht The yacht, which Mr Candy purchased for $12.45m in 2005, was originally advertised for €17m, but sold for only €4.5m as an "as is, where is" purchase to Mr Hirtenstein in what was described in one court document as an "emergency fire sale".
The court heard how, before the sale, Mr Hirtenstein had said that the yacht "should only retain or increase in value since I am stealing it". But after the engine failure, estimates for repair or replacement came in at more than $450,000 after Il Sole was towed back to shore, reportedly in Italy, before Mr Hirtenstein subsequently transported the yacht to New York and invested more than $2.5m in a complete refit and replacement of both engines in June 2011.
The Independent on Sunday understands it is now available for charter from $135,000 per week, and according to maritime Tracking services it is currently cruising the coves and bays off the Hamptons on Long Island in New York.
However, while Mr Justice Leggatt ruled that while Hill Dickinson was liable for legal negligence, which the firm accepted, he said that this had not caused Mr Hirtenstein to suffer any loss. He was entitled only to nominal damages, partly because the claimant would have bought the yacht in any event. The judge's ruling also found that Mr Hirtenstein didn't specifically ask for a guarantee.
A costs hearing is expected in October, when the "nominal damages" amount will be determined, with a source close to the defence case saying this is expected to be "a peppercorn amount". The source added that Hill Dickinson considered the case a victory over Mr Hirtenstein and would be "pursuing him for substantial costs",
In a statement Hill Dickinson said: "Hill Dickinson regrets that a mistake was made in this matter. The firm highlighted the error to the client as soon as it came to their attention and was satisfied that it had caused the client no loss. This position has been vindicated in the judgment."