Settlement in sight in the case of IT millionaire Sean Howard, the $8.5 million super yacht and the failed beef company

Multimillionaire entrepreneur Sean Howard is finally paying up for a dispute over a luxury yacht that was built 12 years ago after Alpine Beef, the company Howard used to finance the boat building, entered into a confidential settlement.

Howard made his fortune founding OzEmail, Australia’s second biggest internet service provider at one stage, along with Malcolm Turnbull and Trevor Kennedy.

OzEmail was sold for $520 million in 1999 and Howard now focuses his business interests on retirement homes and holiday resorts.

The settlement comes as a relief to the major creditors of Alpine Beef, boat builders Peter and Sari Ullrich.

The Ullrich’s built the $8.6 million luxury yacht, China Grove II, for Howard in May 2001 through their company BoatSpeed.

Soon after its launch, the hull of the 26-metre pilothouse cruising sloop erupted in a mass of blisters; a consequence of the builders applying a polyester resin finish on top of unwaxed vinyl ester.

BoatSpeed made repairs to the boat in 2002 and offered to make further repairs, but Howard took the dispute to the Federal Court, rejecting a proposed settlement of $100,000 before trial and suing the Ullrichs for $300,000 damages.

In the 2010 court case, Justice Flick found despite the blisters the Ullrichs followed what was considered ”the then-best practice of boat building” and there was not enough evidence to say that ”Mr and Mrs Ullrich did anything other than bring to the construction of China Grove II a considerable wealth of experience”.

Justice Flick found there was no breach of contract, as Howard had alleged, because Alpine Beef was not the company that contracted the Ullrichs to build the yacht.

As well, the judge said, while an allegation of breach of the Trade Practices Act might succeed, Howard’s claim was barred by a six-year statute of limitations.

He ordered Alpine Beef to pay part of the Ullrichs’ legal costs on an indemnity basis.

However, despite this finding the Ullrichs were left financially devastated after Howard liquidated Alpine Beef, which owed them $469,000, five months later.

Alpine Beef had no assets and it owed more than $1 million, including the amount owed to the Ullrichs and $567,534 to another company wholly owned by Howard and his wife, Dani.

At the time, the Ullrichs told Fairfax the court case had left them financially devastated and had cost them more than $600,000 as they had not received any of the costs awarded by the court.

Now it seems the Ullrichs will finally get a pay day after the liquidator of Alpine Beef, Lawler Partners, announced a meeting of creditors for July 31.

Liquidator Christopher Wykes told SmartCompany he had commenced litigation against Alpine Beef’s holding company, owned by Howard, over the ownership of China Grove II and the matter was now settled.

“There will be a distribution paid to the litigant, the builders of the yacht, the Ullrichs at around 60 cents in the dollar,” Wyke says.

“There was litigation; it ended up in mediation and a settlement. The money has been received and money will be paid in the next 10 days and the liquidation will be finalised as soon as possible soon after.”

Wykes would not reveal how much the Ullrichs would receive from Alpine Beef saying the amount owed was confidential.

Apart from Alpine Beef’s accountant, who was owed $1,000, Wykes says the only major creditor was the Ullirchs and Alpine Beef’s holding company, with the only creditor to participate in this dividend being the Ullrichs.

Peter Ullrich told SmartCompany he was unable to comment on the settlement as the Ullrichs were subject to a confidentiality agreement.

He says the Ullrichs endured a year of litigation followed by protracted negotiations to get their money back.

“The court awarded us costs in a case against Alpine Beef and the directors of Alpine Beef elected to liquidate the company rather than pay the costs,” Ullrich says.

“It was a substantial amount of money and obviously not having it restricts you from doing a lot of things.

“We are glad to see an end to it, obviously.”

The Ullrichs sold their company BoatSpeed in 2008 and are now retired.

Howard was contacted by SmartCompany for comment but failed to respond prior to publication.