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-Why cheap shoe strings can’t be used as belts? A Case study why one should charge an appropriate fee for the scope of diligence required and risks involved during an independent Marine survey appointment.

Though the following account refers to a cargo hold condition survey, the lessons learnt by it for an independent marine surveyor apply as much to any condition or “fit for purpose” survey.

In 1985, a New Zealand company ordered a parcel of fertilizer, about 22,000 MT, at a cost and freight value of USD 4.2 million. The consignment was partly loaded on a year 1977 built bulk carrier, in Sweden, and the balance from Tampa, Florida.

An independent Marine survey company of worldwide repute, were appointed to certify the vessels holds as clean, dry and fit to load the fertilizer.

The vessel arrived Napier and was initially refused permission to discharge by the NZ government cargo inspectors on account of diseased Barley grain found in all five holds. Although the government authorities subsequently relented, they imposed a number of restrictions on the fertilizers sale within New Zealand.

Understandably, importers refused to accept receipt of the cargo due to these restrictions.

After several weeks, a buyer was found for the cargo in “as is” condition, the ship left Napier after two months to discharge the contaminated fertilizer to the buyer in Antwerp, Belgium.

The loss on the actual sale of the fertilizer amounted to a little under USD 1 million, but with extra steaming, port costs and damages under the charter party, the claim amount reached USD 2.4 million.

A claim came before the New York district court, where the independent Marine survey company was sued, it being alleged that the surveyor failed to detect grains of Barley in the holds and should not have declared that the holds were fit to receive the cargo of fertilizer.

As is known, the difficulties associated with this type of survey are well known to us and it is difficult, if not sometimes impossible, to be satisfied that all residue of previous cargo, and significant rust, is not present in the holds. These surveys require considerable time and care, often even assistance and equipment to carry them out properly.

In this claim, the Independent Marine survey company were grateful the district court judge lay 50% of the blame on the shippers, who apparently failed to draw attention to the extremely high standards of cleanliness required by New Zealand authorities.

The judge also contended that the shippers should have assumed a responsibility because a much higher fee should have been expected to be paid if the survey company was expected to assume a much higher standard of responsibility — or else they should have expected the independent Marine survey company to decline the survey in the absence of an appropriate fee.  The fee declared by the independent Marine survey company to the shippers was a mere USD 50/- per hold, upon profuse bargaining by the appointed local agents trying to impress his principals ship Master.

Nevertheless the judge was also critical of the independent Marine survey company that the fees charged should have had no connection with the diligence required and the risks involved.

Independent marine survey-Lessons learned for all independent Marine surveyors:

In his judgement, the district court judge also pointed out that the attending surveyor should have only stated what he actually saw and should have specifically reported only on those areas where he could gain access.

This is sound advice to us independent Marine surveyors; surveyors should make it clear that whenever and whatever, for one or various reasons, we have been unable to carry out the survey to the required standards. This should be clearly written down.

In some surveys of cargo, it is often difficult, impractical or at times expensive to examine every item. 

Surveyors may thus be obliged to form an opinion on a limited sighting or sampling and that may be quite acceptable BUT we need to say so in the report and express any limitations, and this is of utmost importance.

This applies to all ‘fit-for purpose’ surveys where there are often reasons (operational, commercial, structural) why the extent of a survey is restricted BUT it is important that our clients are made aware of them.

Making the appropriate remarks to this effect in the survey report is essential, but there are times when the surveyor’s responsibility may raise much before our client receives and reads the report. In this case, and many others, the written report may have arrived too late for the client to make a decision on what could have been done as a consequence of the limitations of the survey.

Prompt notification is therefore essential prior all condition surveys of holds or structural integrity surveys.

Although mention is made of situations where an independent Marine surveyor may be constrained with restrictions on the extent of his reporting, this should not be construed as an opportunity or an easy excuse for not bothering to do everything reasonable to overcome those restrictions. The professional “duty of care” MUST prevail at all times.

The use of disclaimers in reports where a little more care and trouble might have resulted in a better survey, will rarely be of much protection for the surveyor. He can expect to pay the price for his lack of care and attention and most importantly, due diligence.

To summarize the take away from this blog: 

  1. SEEING IS SURVEYING – Surveyors should have a look, miss nothing, then stop and write notes.
  2. Report only what you see, and absence of anything you would expect to see, and this should be noted in the formal report.
  3. Try and refrain from forming opinions on limited sightings, as far as possible and not without expressing limitations. “Hear and Say” reporting is NOT what one sends us on board for.
  4. Disclaimers made in reports are no excuse for the extra effort required to overcome survey restrictions. Discuss, email and point out what should have had to be covered.

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