In 1989, Dalton and Miles Ferguson founded the record label Half A Cow and opened an associated bookshop in Sydney. In 1990, Robyn St Clare, bass guitarist for The Hummingbirds took leave from that band during her pregnancy, and Dalton filled in during a tour of Australia supporting visiting American band The Lemonheads. Lemonheads' lead singer Evan Dando formed a friendship and musical collaboration with Dalton and his Sneeze bandmate Tom Morgan, and the results of Dando and Morgan's songwriting collaboration formed much of the Lemonheads' 1992 album 'It's a Shame about Ray'.
'It's a Shame About Ray' featured Juliana Hatfield on bass and backing vocals, as Dalton was unable to get to the US in time for the album's recording schedule. When Hatfield continued with her solo career, Dando asked Dalton to join the band as its bass player. Dalton agreed, despite having formed the bands Sneeze and Godstar around the same time. Dalton played with the Lemonheads for two-and-a-half years and played on the band's 1993 album 'Come on Feel the Lemonheads'. He co-wrote the song "Dawn Can't Decide" with Dando. The remaining songs on the album were written by Dando and Tom Morgan, except for the album's hit single "Into Your Arms", which was written by Robyn St Clare and originally appeared on the Love Positions' 'Billiepeebup' album (a collaboration between Dalton and St Clare released in 1990).
After touring with the Lemonheads for the 'Come-on Feel' album, Dalton left the band and returned to Australia. Dalton insisted there was no falling out between himself and Dando; rather, he felt he had to get back to his family, friends and label in Sydney. He rehearsed with Dando and Dinosaur Jr. drummer Murph for the recording of the 'Car Button Cloth' album in 1996, but ultimately decided to decline Dando's offer to remain in the band. Dalton played bass for Dando during his 2003 solo tour of Australia but fell seriously ill after one show in Melbourne. Reviews of the show noted Dalton's demeanour, and reported that Dalton had been sacked and not replaced in the subsequent shows, but according to Dalton, he had suffered an undiagnosed brain hemorrhage the day before.
In 1998, Dalton left Sydney and moved to a farm on the outskirts of the village of Morongla (near Cowra in central west New South Wales) with his girlfriend, writer Lucy Lehmann. He closed the Half A Cow bookshop but continued to run the record label from the farm, while working on a second solo album. Dalton and Lehmann ended their relationship in April 2003, and Dalton continued to work on the album, setting himself a deadline of his 40th birthday for its recording. The album, titled 'Home of the Big Regret', was recorded between July and November 2004 with a bluegrass band Dalton called the Gloomchasers. Despite their break-up, Lehmann remained involved with the album, having co-written several of the songs and writing the liner notes for the CD.
A second album 'Play All Night' was released in December 2010 and the band continued to play - with a revolving line-up - until November 2019. Dalton joined Ratcat on bass guitar in 1998. After a year in Melbourne, Dalton moved back to Sydney in 2006 and formed a new line-up of the Gloomchasers, as well as joining lounge act the Handlebars. In 2011 he formed a "bubblegum band for kids" called The Sticker Club with Alison Galloway, Ben Whitten, Nellie Afford, Damien 'Dizzi' Cassidy and Ruby Firmstone. Their album 'Scratch 'n Sniff' was a joint release by ABC Kids and Half A Cow Records. Dalton also released two albums, in 2015 and 2017, under the name Chewee.
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