Yacht rulings left to arbitration

Lawyers for an American millionaire say a leading New Zealand superyacht building firm acted in contempt of court when its workers cut up moulds for the millionaire's $18.5 million boat.

The latest act in a long-running dispute between Sensation Yachts and Tony Marnell was played out in the High Court at Auckland yesterday.

The case concerns the construction of a 40m motor yacht, Mea Culpa - Latin for "My Fault."

Mr Marnell, the chairman and chief executive of a Nevada-based construction company, seized the hull of the boat in September last year after a dispute over payments and delays.

Both sides issued default notices against each other.

Yesterday, Bruce Stewart, QC, acting for Mr Marnell's firm, Marnell Corrao Associates, asked Justice Tony Randerson to find Sensation Yachts had been in contempt of court when workers cut up moulds for the boat's superstructure in July last year.

Another judge, Justice John Wild, said last year that he found it difficult to see "how this court could, if and when that issue comes before it, view that as other than a contempt of court."

Justice Wild slashed Sensation Yachts' $5.4 million lien claim over Mea Culpa to $2 million, and ordered Mr Marnell to give a $2 million security over the hull while the dispute went to arbitration.

Mr Marnell was yesterday asking the High Court to fine Sensation Yachts $235,000 for destroying the moulds, saying this action was in contempt of even earlier court rulings.

Sensation's lawyer, David Williams, QC, asked Justice Randerson to throw out the contempt action, as the whole issue was going to arbitration.

He said that if Justice Randerson made a decision about contempt of court, it would have an impact on the arbitration process.

After arguments, Justice Randerson adjourned the contempt of court charge until after the arbitration hearing, saying that if he made decisions on the contempt case, it could prejudice the arbitration.

The arbitration, which was due to run for six weeks in July, has been put off until March next year, partly as a result of Mr Marnell's unsuccessful attempt to bring the contempt action.