"He got really quite competitive. He had a boat built for racing. That's the boat he's come to grief on."
Mr Carter said members of the Nelson sailing community were shocked by their friend's death.
"Charlie's quite a careful man when it comes to sailing."
He had been sailing for about 25 years and was familiar with the Marlborough Sounds.
It must have been quite a big wave to wash him over the side, Mr Carter said.
Mr Gallagher's love of sailing meant his family had also spent plenty of time on the water.
" He was a home dad for a long time. When he wasn't racing when he was cruising. He used to take the boys across the [Abel Tasman National] Park on his boat."
Mr Carter was unsure why Mr Gallagher, a father of four, was without his lifejacket yesterday afternoon.
"In a lot of cases, when you're sailing, you're harnessed on to the boat with a lifeline around your waist.
"The lifejacket is a bit of a hindrance sometimes so you take your jacket off so you can get around with your line on...[because] you're already attached to the boat."
Nelson Harbour tug master Kevin Skelton said he regularly competed against Mr Gallagher on the water.
"He was a good adversary. He was well-known in yachting circles."
Mr Gallagher was with his flatmate on his boat when he went overboard, Mr Skelton said.
"It was just a routine weekend delivery."
"He was certainly a good club member and a lot of fun, and certainly we raced against him a lot in the last seven years. He was a good hard competitor and good guy."
Mr Carter and Mr Skelton said Mr Gallagher had competed in many races around the Nelson, Wellington and Bay of Islands areas. He had also sailed from Nelson to Vanuatu.
Police said Mr Gallagher's death had been referred to the coroner.
When he was swept overboard, his sailing companion managed to secure a tether to him but was unable to pull him back on the yacht.
"A mayday call was made and emergency services responded, with the Westpac rescue helicopter from Wellington first to arrive," police said.
Mr Gallagher was winched from the water but he could not be revived.
The Coastguard then helped take the yacht to Picton.