Marine Surveyors' Liabilities

As a marine surveyor it may seem you are there to be shot at by just about everyone! Not only may those who have instructed you try and hold you liable if things go wrong but you may find that third parties claim to have suffered as a result of something you have done.

It is, perhaps, the unique position of a marine surveyor, as someone who will produce a report which may be seen and possibly relied upon by parties other than his original client, that has given rise to questions as to the extent of a surveyor's liabilities.

The purpose of this article is to examine briefly the extent of those liabilities and to give what we hope will be some obvious suggestions about how potential problems could be avoided.

The surveyor's duty

You will have been retained by your client either verbally over the telephone, or in writing, or a combination of the two. The written contract may just be an exchange of correspondence or something more detailed.

Whether the terms of the contract expressly say so or not there will be, implied in every contract, a term that the surveyor will carry out his work with the due skill and care of a competent surveyor in the circumstances of a particular case.

The circumstances which will be taken into account by the court will be the extent of the surveyor's instructions from his client. In other words, a court would look at what the surveyor had been asked to do. Oral evidence will often be important.

Whether the survey is a pre-purchase inspection of a vessel, an on or off-hire survey in relation to a charterparty, or a cargo survey, it is in the surveyor's interests to define for his clients, at the very outset, the precise extent of the work he is to undertake and specifically what matters are to be excluded. We have seen a number of disputes between a surveyor and his client as to the extent of the work that had been agreed to be carried out where the client's expectations invariably exceeded those of the surveyor! To avoid such difficulties we cannot emphasise enough the need to be specific about the extent of the work to be undertaken.

Quite apart from the duties the surveyor will owe under his contract with his client, he also owes him a duty of care under the law of tort. It is for this reason that many claims are framed in negligence as well as in breach of contract. The extent of the duty is the same as in the contract, namely to carry out the job with the reasonable skill and care of a competent surveyor in the circumstances of the case.

Although the duty is the same in both contract and tort, there is a legal difference when it comes to the question of a breach of those duties. There may be differences in damages where a claim is framed in contract rather than in negligence. The most significant difference is, that, under his contract, the surveyor owes the duty only to his client whereas a duty of care is not necessarily so confined. It is, therefore, important to see if the law allows the surveyor to be liable to someone other than his own client.

To whom is the duty of care in tort owed?

There is, of course, no question that the duty of care extends to the surveyor's client but, given that the duty is independent of a contractual relationship, need the surveyor fear attack from any other quarter?

The law of negligence is part of that body of English law that is under continual review by the English courts. The courts are bound by a system of precedent formed by previous legal decisions going back over many years and it is up to the courts to develop that precedent as new factual situations come before them. As far as a surveyor's task is concerned he will be making statements, usually in a written report, upon which someone is going to rely and a claim will usually arise when the party relying on those statements claims to be out of pocket as a result of them. The courts have always been reluctant to restrict situations in which liability can arise for financial loss through statements negligently made. They have done so by restricting the duty of care to situations where a ''special relationship'' exists between the innocent party and the wrongdoer. Under this restriction liability would arise only where the wrongdoer was aware of the transaction that the innocent party had in mind and knew that the innocent party would rely on his advice.

It may seem, therefore, that a surveyor, who knows his report may be seen and relied upon by a third party, would have a liability to that third party if he suffered financial loss.

Fortunately for surveyors and those involved in a similar advisory capacity, the courts have further restricted the duty of care as highlighted by the 1990 landmark case of Mariola Marine Corporation - v- Lloyds Register of Shipping ("Morning Watch"). In that case a Lloyds surveyor had given an 80 foot steel hulled motor yacht, the "Morning Watch", a periodical special survey and had passed her as 100 A1. The surveyor knew that a purchaser was  interested in the yacht at the time and that purchaser decided to rely on the class certificate as confirming the yacht's good condition at the time he purchased her. Subsequently after delivery the owner discovered substantial defects with the yacht which were enough to take her well outside Class. The purchaser looked to Lloyds to reimburse him for the substantial repair costs. He had, after all, relied on the Lloyds surveyor's report, as the surveyor well knew.

Lloyds declined to reimburse the purchaser and the case went to court. The purchaser argued that the necessary "special relationship" existed and the court accepted that the surveyor had been negligent. The court, however, decided that Lloyds did not owe a duty of care to this purchaser, or indeed to any future purchaser of a vessel who was likely to rely on a pre purchase classification certificate issued by Lloyds. Whilst it would appear that public policy played no little part in the decision it produced an important precedent greatly limiting the possible liability of a surveyor whose reports may be relied upon by those other than his client.

Conclusion

Although the range of possible parties from whom a Surveyor might face claims is limited, he would still owe a duty to his client.

To minimise the likelihood of such a claim the surveyor's starting point must be a careful definition at the outset of the services to be provided. Particular consideration should also be given to making quite explicit in the survey report any limitations to the investigation to which the surveyor had been subject. He should also advise where further investigation by the client or a specialist expert would be considered prudent. Where a client may be present at the time of survey then no reliance should be placed on any oral comments made to the client which could later be denied. Instead it is important to ensure that everything found at the time of the survey finds its way into the written report.