LUXURY LIABILITIES

A surveyor carried out a pre-purchase survey and sea trial on a yacht in the Indian Ocean, and a joint survey to confirm the condition of the vessel prior to handover to the new owner in the Mediterranean four months later.

Neither survey included an internal inspection of the machinery. Unfor tunately, immediately after handover, the starboard main engine failed. The seller and the surveyor were put on notice of a claim by the buyer.

The seller considered that the yacht was at the buyer’s risk after sale in accordance with the terms of the MOA, and also because the engine failure had occurred subsequent to a sea trial full survey and final inspection.

So was the surveyor liable?
 
The manufacturers were summoned and inspected the engine. Their conclusion was that the problems were caused by the failure of an engine-driven seawater pump seal, which could not have been inspected without removing the pump. The scope of work which the surveyor had contracted to perform did not include internal inspection, so the cause of the engine failure was outside that scope. The US$150,000 repair costs had to be borne by the unfortunate buyer.

It is important for surveyors to clarify the exact scope of the intended survey, and also to set out explicitly what the survey does and does not cover.