Not a class act

The design of a small aluminium ship was undertaken by a naval architect, who was insured by ITIC. The owner advised that the ship was to be capable of achieving a specific commercial survey class.

In order to obtain registration from the relevant maritime authority, the owner was required to submit certificates attesting to the design and stability of the ship. The owner relied on the naval architect to provide these documents, which were subsequently approved by a surveyor.

The owner later discovered that the ship was not able to achieve the class required, and claimed that a number of design faults were to blame.

Proceedings were commenced against both the naval architect and the builder of the ship, in which the owner claimed around USD 100,000 plus interest and costs, which they said represented their losses suffered as a result of the negligent design and certification of the ship.

Lawyers were appointed by ITIC to defend the naval architect and the opinion of an independent expert was sought. The expert advised that whilst the naval architect may have been negligent, the builder and the surveyor bore a greater portion of the liability. Unfortunately, by this stage, the builder was no longer trading and had no funds or assets, and the surveyor had been declared bankrupt.

By the time a mediation took place, the claim, including costs, had increased to USD 160,000. Evidence also came to light that suggested the surveyor may have, in fact, been engaged by the naval architect, who was therefore responsible for any negligence attributable to the surveyor. Furthermore, the owner had obtained their own expert’s report which was quite critical of the architect. At the mediation, a settlement was agreed at slightly less than 50% of the claim, for which ITIC reimbursed the naval architect, along with the legal costs which had been incurred.