A designer was appointed to provide outline design services in respect of an upgrade to a ferry service and then to advise the client on technical matters during the subsequent build.
Once the ferry was in service, the client alleged that it suffered from multiple issues. The main issues were allegations that there were problems with the hydraulics and engines. There were also reports of excessive noise. Ultimately, the client claimed that all of these issues forced them to close the service and that they would likely have to scrap the ferry entirely and build a new one as the costs of fixing the issues would be so expensive. The designer disputed that any of the issues arose from their design or that they had been negligent in providing the design.
The client commenced proceedings against both the designer and the builder of the ferry for £13.2m (£8.6m against the designer). Lawyers appointed for the designer advised that the merits of the claim were weak and suggested that a settlement value of around 12% should be sought, which was approximately £1m. The client was also looking for interest and costs.
Lawyers also advised that the costs to litigate this claim would be extremely high - approximately £3m per party, due to the technical nature of the claims and the quantity of documentation and number of experts required. Therefore, a trial should be avoided if possible.
A settlement was reached at a mediation whereby the client accepted a joint offer of £2.8m from the designer and builder in full and final settlement of their claim, interest and costs. This was split 50/50 between the two defendants.
ITIC reimbursed the designer £1.4m less the policy deductible.