Settle now or pay later
A bank appointed a surveyor member of ITIC to confirm the value of a vessel under construction and to certify that additional funds could be drawn down during the construction period. The bank confirmed that the role of the surveyor was not to monitor the standard or quality control of the ship’s construction nor its conformity with design.
Defects were found in the ship after construction and the owners sued the ship builder, the surveyor attending to the quality control of the build and also ITIC’s member who was only acting on behalf of the bank. Legal proceedings against all the parties took two and a half years to conclude.
In order to finalise this matter, the club agreed to contribute EUR 35,000 towards the total settlement of over EUR 300,000 which was negotiated at mediation. A further EUR 30,000 was incurred in legal costs.
This is an unfortunate example of where a surveyor can end up contributing to a settlement even though his instructions and responsibilities were clear from the very beginning.