Marine Link
Friday, October 28, 2016

Marine Surveyors at Peril, Unless ...

June 9, 2014

File photo

File photo

Having an excellent set of Standard Terms and Conditions (Terms) in your desk drawer or on your website, is all very well, but unless you have incorporated them into your dealings with your client, they will not form part of your legal relationship with your client and you will not be able to rely on the terms should a dispute arise.  It is therefore very important that you incorporate your Terms into your dealings, advises intermediaries professional indemnity insurer ITIC.

In the latest issue of its Claim Review, ITIC cites the case of a marine surveyor instructed by the shippers of a cargo of wheat to survey and certify the holds of a bulk carrier as fit for loading. The surveyor issued a certificate of fitness to load, and 70,000 metric tonnes of wheat was loaded.

Following the arrival of the ship at the discharge port, the local authorities ordered the stevedores to stop discharge operations because they suspected that the cargo was heat-damaged. A subsequent survey report, obtained by the shippers, indicated that the cargo was contaminated by de-laminating paint, rust, dirt and paint powder from the ship’s holds.

The shippers negotiated a reduction in price with the receivers as a result of the deterioration of the cargo, and pursued a claim against the shipowners under the terms of the contract of carriage. That dispute was resolved at mediation, but the shippers then brought a separate claim against the surveyor.

They were seeking to recover alleged losses in excess of $1m, including loss of sale proceeds, additional hire paid to the owners, and costs, on the basis that the surveyor had negligently certified the vessel as fit for loading in circumstances when it was not.

ITIC says it appointed lawyers, and expert evidence was sought. That evidence suggested that the damage may have been caused by bobcats used in cargo discharge operations. The surveyor had terms and conditions which – if properly incorporated into its business dealings – would have reduced its liability to a fraction of the shipper’s claim. Unfortunately, the surveyor had not explicitly made the shipper aware of the terms and conditions, so it was unlikely that a court would find that these had been incorporated into the business dealing.

It also became apparent that, after the surveyor had inspected the vessel, customs inspectors had carried out their own inspection and had ordered that the vessel be cleaned prior to loading. This was both helpful and unhelpful for the surveyor: while it was a strong indication that the surveyor had failed to properly carry out its survey, it also arguably meant that it was not the surveyor’s report that the shippers were relying on, but rather customs’ approval to load.

A mediation took place, but the claim could not be settled. Negotiations continued nevertheless, and the matter was resolved with the surveyor contributing to around 30 per cent of the claim, which was covered by ITIC. 

Source: Maritime London/ITIC

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