The cost of innocence

An innocent surveyor has to pay

A surveyor in Australia was appointed by a bank. The instructions provided to the surveyor were clear. They were to confirm the value of the vessel being built at a local yard and to certify to the bank when additional funds could be drawn down during the construction period. The bank confirmed that the surveyor was not required 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 the surveyor acting for the bank. Legal proceedings against all parties took two and a half years to conclude. A settlement of US$ 235,000 was reached at mediation with all parties contributing. The Club agreed to contribute US$ 23,500 towards the total settlement and a further US$ 25,000 was incurred in legal costs. 

ITIC always instructs marine surveyors to obtain clear instructions and/or to confirm in writing the exact services they are to provide. Unfortunately this does not always protect surveyors from legal action. This is an unfortunate example of where the cheapest option is for a surveyor to contribute to a settlement even though his instructions and responsibilities were clear from the very beginning.

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