When Keith Schellenberg woke up one morning in 1994 to find his prized 1927 Rolls-Royce Phantom burnt to a cinder, he realised that his dream of being the benevolent laird of Eigg had also gone up in smoke. The Inner Hebridean island was put up for sale, to the delight of most of its inhabitants.

A rambunctious millionaire businessman from Yorkshire who competed for Great Britain in bobsleigh at the 1956 Winter Olympics and approached most things in life as if he were careering down the Cresta Run, Schellenberg had settled into his estate with supreme confidence after buying the 8,000-acre island in 1975 for £265,000 as “a challenge to my middle age”.

After all, he had survived a series of madcap adventures that would have shamed Baron Munchausen, including a mission to the Sahara to retrieve a historic biplane that had crashed in the desert in 1933, competing in the London to Sydney rally in a vintage Bentley, and saving Kaiser Wilhelm II’s dilapidated steamship Scharhorn from a German breakers yard and somehow piloting it back to Britain while wearing an imperial German admiral’s uniform.

Schellenberg’s mission on Eigg was to create a thriving economy as a triumph of free enterprise. He began restoring buildings, attracted young families, established a ferry service to the mainland, 14 miles away, opened shops and boosted tourism. The population doubled to about 80.

The ebullient laird of Eigg would regally traverse his five-mile-long island in the Phantom, his scarf flapping in the wind. On summer nights he would take his children to the top of the 1,200ft mountain An Sgurr (gaelic for “Pinnacle of the Lord”) and light bonfires that could be seen from the surrounding islands.

Schellenberg survived a series of madcap adventures that would have shamed Baron Munchausen.

Schellenberg had approached the venture with big-heartedness and romanticism. He claimed that he had invested heavily in it, but the dream turned sour. Tenants started complaining that promises to restore their cottages and issue long-term leases had been broken. Others described him as having undergone a King Lear-esque transformation, increasingly autocratic and capricious in the way that he ran the affairs of the island.

Divorce from his second wife, Margaret, and a subsequent legal dispute with her over the ownership of Eigg created fault lines in Schellenberg’s vision. She raised a legal action for division and sale of the estate. Whether it was this that stymied his restoration plans is not known, but even the original Eigg inhabitants, who had to that point mainly been loyal to Schellenberg, began to turn against him.

Journalists sniffed the story on the Hebridean wind. Articles portrayed him as a Toad of Toad Hall character who used the island as a playground, putting on entertainment for visiting friends, including a “Hanoverians versus Jacobites” battle with tennis balls. Never politically correct in his humour, Schellenberg regaled a German visitor by unfurling a huge swastika from the balcony of his home on Eigg.

When it became clear that most of the island’s inhabitants had declared war on their landlord, Schellenberg responded in kind, calling his detractors “barmy revolutionaries”, good-for-nothing hippies and “reds”.

In a final act of defiance he refused to sell to a trust that had been set up by the islanders (bolstered by an anonymous contribution of £750,000). It was bought instead by an eccentric and, as it turned out, impecunious German artist called Marlin Eckhard Maruma, who within a year had sold Eigg to the trust for £1.5 million.

Schellenberg was not finished. In 1999 he sued The Sunday Times and The Guardian, alleging that they had defamed his integrity as a landlord.

The High Court heard evidence from an elderly woman who claimed that her cottage on Eigg was so run-down that she was forced to drown rats in her sink.

Another woman, who had been threatened with eviction, told of receiving a Christmas card with “Isle of Eigg Bailiffs Plc” on the front, along with a picture of Schellenberg flanked by two burly men in Father Christmas costumes wielding croquet mallets. Inside it read: “We specialise in recalcitrant tenants, squatters, junkies, weirdos, hippies, New Age travellers and reds.”

He saved Kaiser Wilhelm II’s dilapidated steamship and somehow piloted it back to Britain while wearing an imperial German admiral’s uniform.

Schellenberg said that he had been “just trying to make fun”, but after being warned by the judge that he was likely to lose the libel action, he abandoned the case, incurring heavy costs.

Having dusted himself down, he settled in grade II listed St Nicholas, a historic house in Richmond, North Yorkshire, with famed gardens overlooking the River Swale.

While Schellenberg had his fair share of “scrapes”, he was cherished by friends and family for his charisma, maverick sense of fun, bravado and ability to persuade them to aid and abet his impulsive adventures.

Clifford Keith Wain Schellenberg was born in Marton, Middlesbrough, in 1929 into a family with German roots; his ancestors settled in Britain in the 1860s. His grandfather had made a fortune from glue-making on Teesside, before his father, Clifford Robertshaw Schellenberg, brought more prosperity by producing gelatine needed for vital reconnaissance photography during the Second World War. His mother was Doris (née Richardson).

Keith attended Oundle School, then entered the family business. A natural salesman, he built up a client base of chocolatiers, including Rowntree’s and Terry’s of York. He did his National Service in the Royal Artillery in 1948-49, but not before he had formed a motorcycle display team during his officer training at Aldershot.

In the best traditions of amateur sport, Schellenberg segued from family skiing holidays in Switzerland to captaining the Britain bobsleigh team at the Winter Olympics in Cortina d’Ampezzo. Between high jinks in the evenings, he competed in the two-man and four-man events, finishing 11th and 12th. He would go on to compete in the men’s singles, in the luge, at the 1964 Winter Olympics, finishing 25th, captain the Yorkshire rugby team and race powerboats.

In 1961 Schellenberg bought Nesham’s, which operated dealerships for Ford in the north of England, and employed more than 250 people. He took on other businesses, including the revival of the run-down Whitehall shipyard in Whitby, and selling livestock feed and agricultural chemicals. He also restored Udny Castle in Aberdeenshire, his second wife’s estate.

Schellenberg segued from family skiing holidays in Switzerland to captaining the Britain bobsleigh team at the Winter Olympics in Cortina d’Ampezzo.

He was a man of decided, though not always predictable views. He became a vegetarian after witnessing a friend kill a water rat with a catapult; at the time the only other vegetarians he knew of were Adolf Hitler and Mahatma Gandhi. He was, also like Hitler, vehemently anti-smoking. For reasons that were not entirely clear, he always abstained from singing songs on rugby tours and drank milk rather than beer.

In the general elections of 1964 and 1966 he stood as a Liberal candidate in Richmondshire, one of the country’s safest Conservative seats, driving around the rural constituency in his Bentley and towing a caravan in which to meet the voters.

Indeed, many of his adventures involved his huge, 1930 eight-litre Bentley. The bonnet of the gas guzzler bore the legend: “Conserve the world’s resources. Build cars to last.” Schellenberg certainly got plenty of use out of it — he competed in it in the London to Sydney Marathon in 1968, but abandoned the race after a series of mishaps, including a road collapsing under the weight of the vehicle, the interior being cleaned out by Turkish bandits and the car being buried under a landslide.

It is not recorded what the indigenous people of Saharan Algeria thought when they encountered an Englishman wearing a pith helmet driving through the desert in a Bentley. Schellenberg was on a mission to find a Southern Cross biplane that had crashed there in 1933 while its pilot, William Newton Lancaster, was trying to set a record for an England-to-Australia flight. Schellenberg found the aircraft perfectly preserved and retrieved it for posterity, and his adventure was made into a documentary.

When thieves stole the Bentley from outside a restaurant in Chelsea while Schellenberg was having lunch, he chased them through the streets. Forced to stop at traffic lights, they abandoned the car, and Schellenberg rugby tackled one of them outside Harrods, to cheers from passersby.

Schellenberg’s first wife was Jan Hagenbach, whom he married in 1957 and with whom he had two daughters: Sophie, who runs Sophie’s Wild Woollens, a knitting business in Cumbria; and Serena, who works in advertising. The couple separated in 1962.

His second marriage, two years later, was to Margaret Udny-Hamilton, with whom he had a son, Nicholas, a restorer of historic properties, and two daughters: Amy, an interior decorator; and Rosie, a documentary film-maker. They divorced in 1979. His third wife was Susan (Suki) Urquhart, whom he married in 1981 and divorced in 1994.

He is survived by his fourth wife, Jilly (née Miller), whom he married in 2001 and who looked after him in his final years when he was suffering with Alzheimer’s. He is also survived by two nephews, Charles and Alexander, whom he helped to raise after the early death of his sister, Joan.

Being married to him could be challenging — he was liable to befriend everyone in a railway carriage, take them home and announce to his wife that they were all invited to dinner. And being his child could be embarrassing — his daughter Rosie recalled wanting to disown him on family skiing holidays as he tramped up a mountain in plus-fours, tweeds and wooden skis.

Every year he would take about 100 friends on a jaunt to St Moritz. In 1989, outraged that the Palace Hotel had raised its prices, he put his guests up in a cheaper hotel. He devised a game in which his guests were to raid the Palace in dinner jackets; the winner would be the one who returned with the best “trophy”. Hours later friends returned with a door, a double bed and even the owner’s dog; the winner presented a rock star — Stewart Copeland, the drummer of the Police.

In his seventies Schellenberg raced his Bentley at Silverstone and tobogganed in the Alps, perhaps somewhat chastened by his misadventure on Eigg, but otherwise undented in spirit — his scarf still flapping.