A layup manager arranged the blanking of sea valves for a vessel going into cold layup.
The manager, as agent for the owners, arranged for a contractor to fit internal blanks to the sea valves. The main engine flooded when the valve to the main cooling sea water line was accidentally opened, causing serious damage to machinery and electrics. The damage survey found that the internal blanks were not fitted by the contractor correctly. The owner brought a claim against the contractor for about US$ 3 million. There was concern that the contractor would not be able to meet such a claim.
The owner then turned their attention onto the layup manager. They alleged that good practice would be for all sea valves to be fitted with internal blank flanges. In addition external sea suctions should be closed off by divers using fibreglass blanks fitted with neoprene seals. The layup manager had not arranged for the external suctions to be blanked. The owner argued that had the manager arranged for the external blanks to be fitted, there would have not been any flooding.
The contractor had clearly failed to do their job properly and was primarily liable for the claim. The layup manager contributed US$ 250,000 to the overall settlement. The payment was reimbursed under their ITIC cover.
The case also illustrates how the outcome of claims can depend on how a manager contracts. In this case the manager had appointed the contractor as agents on behalf of the owner. The owner’s claim lay directly against the contractor. If the manager had agreed to provide the blanking on a lump sum basis, the outcome could have been very different. The manager would have been liable for the actions of the contractor and left to pursue the contractor in a recovery action.