The case, which began in mid 2012, revolves around a €38 million loan facility paid by Rothschild’s offshore vehicle, Swallowfalls Ltd to MYT for the completion of a 73m superyacht, Project Nato. Landers is claiming against Swallowfalls for breach of contract and preventing MYT from completing the yacht; Swallowfalls stakes its rights to return of money loaned for the project.
Justice Walker, presiding over hearings at London’s commercial court, Queen’s Bench division, ordered a stay of court proceedings in the latest February hearing until certain matters have been determined in arbitral tribunal. Rothschild’s claim is for €15 million in repayment of loans advanced and Landers' contention is that Rothschild breached the contract and put his company out of pocket to a total of €26.7 million. “There is a great deal of ground to clear,” said J Walker.
A loan facility of €38,327,600 was paid to MYT in 2010 replacing previous agreements commenced in 2007, which were based on money Swallowfalls would pay in stages corresponding to milestones in construction. In July 2011, Swallowfalls wrote to MYT alleging breaches of the construction agreement, including failure to perform work on time. Landers denied this and alleged non-compliance on the part of Rothschild and also sub contractors, Cantieri San Marco, who had previously barred Landers from the yacht for reasons relating to payment, scheduling and claims for 'late stay' charges.
But, shortly after, Swallowfalls demanded immediate repayment of the loan as it stood at that stage, amounting to €15 million, arguing its rights to do so under the contract terms. The company also announced it was stepping in to replace MYT as general contractor.
Landers has argued that Swallowfalls' failure to sign certificates in relation to the milestones achieved was a major cause of the delays. He has said the yacht could have been completed if Swallowfalls had adhered to its contractual obligations and he has disputed the right of Swallowfalls to recall the loan when the yacht was at an advanced stage of build, meaning he had effectively donated millions towards building Rothschild’s yacht.
The judge dismissed the latter claim, however: “the borrower must recognise it runs the risk that the lender may call in the money on demand,” he said.
Landers' argument for breach of contract, on the other hand, is the most ‘far reaching' said the judge.
“If it is sound then MYT will have a strong case, that, in breach of the implied terms of the 2010 loan agreement, Swallowfalls prevented MYT from completing the construction of the yacht and thereby achieving full payment of all that was due to Swallowfalls,” he said.
Stephen Hofmeyr QC, appearing on behalf of Landers at the February hearing said MYT had lost out on millions in profit from the aborted project:
“MYT ought to have made huge profits but outstanding instalments mean that €26.7 million out of the €41.7 million remain to be paid,” he said.
No money has yet been awarded to either side. The court has stayed proceedings to allow matters identified in MYT's re-amended counterclaim to be determined in the arbitral tribunal.
SuperyachtNews.com will report further after arbitration – which is a period of absolute confidentiality on the part of both parties – terminates, and when matters may be taken up once more in court.
If you like reading our Editors' premium quality journalism on SuperyachtNews.com, you'll love their amazing and insightful opinions and comments in The Superyacht Report. If you’ve never read it, click here to request a sample copy - it's 'A Report Worth Reading'. If you know how good it is, click here to subscribe - it's 'A Report Worth Paying For'.