BUSINESSMAN Paul Ward was on the crest of a wave when he picked up the new boat he had bought at Southampton Boat Show.

The sleek Meridian 341, a four-berth motor yacht with two state rooms and all mod cons, was every sailor’s dream.

But that dream quickly turned into a nightmare when just 15 minutes after picking up the £269,000 vessel from a boat yard in Hampshire, Paul, 61 and his crew member, John Innes, were leaping for their lives, their clothes in flames, as the yacht exploded beneath them.

Then, as they shivered in a life raft on a freezing cold February day they watched in horror as the blazing boat, by now a ball of fire, sank beneath the waves before their eyes.

They were rescued by an RNLI lifeboat and rushed to Southampton General Hospital with serious burns.

Paul and his partner Dawn Roads are now suing dealers MGM Marine Ltd, trading as MGM Boats, and Dun Laoghaire Yacht Services for more than £300,000.

A writ lodged at the High Court claims the yacht was defective.

Paul shuddered as he relived the moment he thought he and John were about to die.

He said: “It was touch and go. First there was the explosion, then the smoke and flames. If we hadn’t jumped clear just when we did we would have had it.

“In fact, as we watched it turn into a fireball within minutes I just couldn’t believe how close we had come to death.”

Paul, who runs his own coach firm ferrying pop and rock bands around Britain, Europe and parts of Asia, had collected the 39ft yacht, a demonstration model with only 18 hours on the clock, from MGM Boats at Hamble Point Marina on February 8, 2010. The trip to Rye in East Sussex, where he lived, should have been plain sailing.

He said: “We plodded down the Hamble into Southampton Water where I opened her up a bit with no problems. Everything was fine and I said to John ‘let’s have a cuppa, I’ll take her up to 16 knots’.

“But as I pushed the throttle forward, there was an odd noise and I turned to John and said ‘The engine didn’t sound quite right’.”

Within a short time the boat was in flames and Paul and John were preparing to abandon ship near Calshot Spit.

“I said to John ‘we are going to have to get off here quick’,” Paul recalled.

By this time the whole of the bottom of the boat was in flames and as John was making his way towards the life raft the cockpit canopy exploded showering him with burning plastic and vinyl which set his jacket and hair alight.

Paul said: “I started to beat out the globules of flame stuck to his hair and clothes – burning my hands quite badly, in the process.

“I flung the raft into the water and pulled on the rope to inflate it but by this time the flames were at our backs and my jacket and hair caught fire.

“For ten minutes we were drifting on the raft waiting for the lifeboat to pick us up and we watched the boat sink.”

Describing his injuries, Paul said: “My face was just one huge blister. I am still having trouble with my breathing and in the sunshine my face flares up and goes different shades of bright red.”

Paul, now of Woking, Surrey, and Dawn have taken out a writ seeking damages to include the cost of the boat at £269,000, surveyors and consultants’ fees of £25,000, forensic expert’s fees of £9,136.67, storage costs of £3,935.31, and other expenses.

When that is out of the way he intends to take further action for damages concerning his injuries and psychiatric damage.

A spokesman for the Coastguard said: “When we first saw the boat in flames from our air/sea rescue helicopter we were convinced nobody could have escaped alive. It is a miracle anyone survived.”

John O’Kane, managing director of MGM Boats UK, said: “At this stage we have absolutely no comment to make.”