Surveying the risks
For the serious surveyor, professional indemnity or PI cover is certainly highly desirable but just how much at risk is the average surveyor? Chris Spencer of C.F. Spencer has helped to defend several claims against his fellow surveyors. As he explains, although the eventual outcome is often a successful judgement for the defence, this is frequently of little consolation for the financial worry and damage that can be done to a surveyor’s good name.
One argument is that if you are uninsured then you may not be sued since the primary reason for suing someone is to obtain money. If there is no fund to draw on then there is no purpose in litigating. Just make sure your house is owned by the youngest child and isn’t in your name.
The other side of the coin is, in my view, the sensible one. Obtain good cover at the best price and add the cost into your overheads. Your clients will not mind a slight increase in charge out rate that allows you to stay in business and thereby continue to provide them with their service. The potential for getting it wrong should not be underestimated. The most usual scenario is the misunderstanding between a client’s expectation of the result and your understanding of the instruction…a difference, that is all. However, if the client feels that what he paid for isn’t what he received then he may feel justified in claiming for that difference.
Small craft surveys are fraught with difficulty in that many surveyors do not explain clearly what the client will get, i.e. there is no understanding of the contract. It is only surprising there are so few claims. There are also instances of the “try on” to just collect some settlement fee and ease a client’s cash flow. Not many claims go all the way and most settle out of court. The amount may not be great but it will still hurt if you do not have a policy to fall back on. In the big ship world, it is equally easy to miss something. It is no good burying one’s head in the sand and assuming that because you have good clients, good surveyors and good relationships that it will always continue thus. The maxim is “you are only as good as your last job” and to be realistic, anyone can make a mistake.
An on or off hire survey could be found lacking if too much faith is placed on the Chief Engineer’s figures. Charterers will have no compunction in collecting what is theirs. Damage that has been missed could have the same consequence if later found and disputed by one party. There are numerous cases of mistaken calculations in oil inspections relating to bill of lading, ship’s and outturn figures.
Sometimes it must surely be easier to sue the party making the mistake rather than the owner or the charterer. Clausing of contracts with exclusions may help but the law will decide in the end just what is excluded and what is not. Pre-shipment inspections are also a ready market for mistakes, steel being a prime candidate. A vast array of other pre-shipment inspection goods are shipped on the back of a surveyor’s attendance and certification that all is correct. If once the cargo arrives it is found not to be as shipped commercial pressures may mean that the supplier will put it right. He may also, however, choose to sue the surveyor for the cost difference of having to undertake this far from his own base. As surveyors our task is not made any easier, by the fact that cost appears too often to be an overriding factor. We need to educate our clients to their problems and all surveyors should avoid rate cutting, as it doesn’t do anyone any good, least of all the client. To satisfy the client we have to get the job done properly; that means well-trained and motivated surveyors and in turn means clients who understand our problems. It is necessary to keep the dialogue running to ensure that there is no misunderstanding of instructions. The client should be advised of the surveyor’s view on the matter under instruction as soon as possible. He may discard it, but at least he had it to think about and cannot claim later he didn’t know.
Part of the records one keeps should include precisely the sort of information that will later justify your actions and conclusions; without it you may not be able to defend your position no matter how justified. Notes of telephone conversations, verbal instructions, times and dates, copies of diary entries, notes made in the surveyors’ notebook are all vital to the “audit trail”.
Chris Spencer of C. F. SPENCER & CO. LTD contributed this article.