Fishing for answers: When a faulty survey nets a claim

A marine surveyor was engaged by the buyer of a tuna fishing ship to survey the ship to confirm that it met the standards of the relevant maritime safety authority.

The surveyor relied on information provided by a sub-contracted naval architect to calculate the ship’s freeboard.

The information that the surveyor relied on was incorrect, meaning that the surveyor incorrectly stated the freeboard and in turn this showed the ship to have a heavier lightship than a previous survey had indicated.

The surveyor, not realising that the freeboard measurement was an error, advised the buyer that the ship’s current stability book (which stated the lower lightweight) was incorrect and as such the ship would have to be re-surveyed before going into service.

In fact, there was no issue with the stability book and the surveyor, had they been relying on correct freeboard measurements, would have been able to issue a “clean” survey report, without the need for a new survey.

The buyer brought a claim for the costs of the second survey, as well as alleged losses they had suffered through not having been able to put the ship into employment for three fishing trips. The survey costs were straightforward, however in respect of the “loss of income” claim, ITIC had to consider:

• Whether there was sufficient evidence of the lost income;

• Whether the surveyor had a legal liability for these indirect losses.

Unfortunately, the naval architect (who had made the error) was an individual with no insurance of their own. There was no contract in place between the naval architect and the surveyor and it was felt that there was little chance of obtaining a contribution towards the claim from them.

The buyer was able to provide evidence of net income earned from the following three fishing trips after the ship went into service. This provided an indication of what income might have been earned had it not been for the “missed” trips.

In terms of the surveyor’s liability for loss of profit, if those losses would have been reasonably contemplated by the parties at the time the contract was entered into, then the surveyor may have been liable for them. There was a risk that a court would find liability on the surveyor’s part, and on this basis the claim was settled for US$70,000.

It is common for standard trading conditions to exclude liability for consequential losses as opposed to direct losses – consequential or indirect losses usually being loss of profits. Unfortunately, in this case, the surveyor did not operate under any such conditions.

ITIC has recently updated its recommended standard trading conditions for surveyors and consultants and is happy to advise members of how to incorporate these into their business dealings.