Survey scope under scrutiny

A New Zealand marine surveyor carried out a commissioning survey on a passenger ship and confirmed that it met the applicable Maritime NZ standards. The ship subsequently entered service conducting sightseeing and dolphin-watching trips.

Following an onboard incident that resulted in a passenger injury, Maritime NZ launched an investigation and alleged deficiencies in the scope of the survey. It was further alleged that incorrect Maritime NZ standards had been applied and that, had the correct standards been used, the ship would not have been approved to operate. The surveyor was required to attend a Maritime NZ disciplinary hearing and faced potential penalties, including substantial fines and the loss of approval to act as a surveyor. ITIC appointed specialist lawyers to defend the surveyor’s position. Following representations made on the surveyor’s behalf, Maritime NZ took no further action and the matter was closed.

Defence costs of approximately NZ$18,000 were incurred and reimbursed by ITIC, subject to the applicable deductible. Although defence costs for disciplinary hearings are technically not covered, the costs of minimising or avoiding liability can be. Therefore, by assisting with the disciplinary hearing and obtaining a good result, a much larger claim from either the injured passenger or ship operator can be avoided - as was the case here.

Regulatory investigations can arise even where surveyors believe they have acted appropriately. Maintaining clear records of the survey scope and the reasoning behind key decisions can be invaluable when responding to regulatory scrutiny.