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FLASHLIGHT - November 2002 Edition
No: 14
"Marine Surveying is a tough job. It demands a high level of fitness and stamina. It requires keen observation, scrupulous honesty, an eye for detail, an open mind and ears, a closed mouth and common sense" (John Guy) CONTENTS (for full stories, select a headline)
FLASHLIGHT is a free monthly emailed newsletter for Marine Surveyors. It is circulated to anybody who wishes to receive a copy, eg, Marine Surveyors, P&I Clubs, their correspondents, Underwriters, Professional Institutes, Admiralty Lawyers, etc. Please pass it on to any of your contacts who you feel might be interested in receiving it. If you do not wish to be included in the circulation list, please contact the Editor at the email address below. Past editions can be viewed on http://www.asiaconference.biz Letters, opinions and articles on our profession are welcomed for including in the newsletter. New members this month. Richard Newman, Gordon, Giles and Company Ltd. The Law of Tug and Tow, 2nd Edition. By: Simon Rainey QC Price: GBP210/US$357/HK$2785 The Law of Tug and Tow has been fully revised to provide an updated source of information for all the important decisions both in the general law of towage and in the general law which affects a significant amount of the text since the last edition six years ago. Includes: - The Towcon or Towhire forms in particular of the BIMCO "knock-for-knock"
liabilities clause, clause 18 Two new chapters have also been added to the book, providing commentary of two further forms; namely: - The international Salvage Union's "Salvcon" and "Salvhire"
forms relating to the sub-contracting in of tugs to assist in salvage
sevices Ed: Highly useful reference and invaluable reading for anyone involved
in tow approvals. CONTRACT TERMS AND OTHER WAYS TO MANAGE THE RISK What I hope the example demonstrates, however, is that although we may not be aware of doing it, an intrinsic part of our decision making process is to identify, analyse and evaluate risk. I’m here today to discuss these three processes in relation to what I consider to be a marine surveyor’s ultimate risk, investigate to what extent you may already be implementing them, suggest what I consider to be the key area where they are being overlooked and generally suggest ways in which you as marine surveyors can manage YOUR risk. Risk ? what is it? Let’s start, however, with a definition of the term “risk”: A risk is a hazard, a danger, a chance of loss or injury. On the whole, we tend to think of risk as something negative but it’s important to remember that not everyone views risk in this way. Take the people who frequently feature in the adverts for Pepsi Max, the ones addicted to extreme sports like bungee jumping or paragliding. They seek heightened risk to sense the thrill of the event. We’ve heard about the Chinese market these past couple of days, both from speakers and from surveyors during the coffee breaks. The risk of entering a new, unknown and untapped market should be counteracted by the larger rewards there are to be reaped. Again, we’ve witnessed people being driven by the risk/ reward ratio. Napoleon epitomized this when he said “Qui ne risque rein n’attrape rein” …he who risks nothing, wins nothing. So people PERCEIVE risk in different ways. Whilst I worry about being late, the man next to me may think that’s a small price to pay if he could’ve reduced costs. We all have different THRESHOLDS for risk and this threshold will differ under varying circumstances, eventually being determined by the “worst case scenario”. Based on my experience of underwriting professional indemnity (errors and omissions) insurance for surveyors, it is how marine surveyors perceive risk, or how they don’t, as the case may be, that concerns me. Now I don’t care about how you make your travel plans. I don’t even care about the big picture, about the events affecting the marine surveying industry globally. There are other forums to discuss these broader market conditions. I’m only concerned with what you might call the smaller picture. The snapshot of your individual firm and the threat that professional liability risks present to its existence. What is professional liability? Perhaps before I continue I should spend a brief moment defining professional liability for those who may not be entirely familiar with its meaning. Professional liability concerns the responsibility you have to those to whom you owe a duty of care. At its most simple, it refers to the financial losses arising from an error or omission in the exercise of your professional duty and this extends not only to those suffered by your clients but others who could reasonably have been expected to rely on and thus be affected by a breach of this duty. By holding ourselves out as professionals or experts in our respective fields, we imply that we will perform our services to a minimum standard. It’s not enough to simply do your best. There is a level to be met and failing to reach the grade exposes you to being held professionally liable. Of course, the fact that this minimum standard can’t be defined, that a survey can’t be measured, means you need to be ever more wary. The relationship between risk and the marine surveyor The relationship between risk and the marine surveyor is a unique one and a contradictory one at that. On the one hand, depending upon your areas of expertise, risk is your LIVELIHOOD. If your clients weren’t exposed to risk, you wouldn’t have a role to play. There’d be no loading supervision, no need to check cargo holds for cleanliness and condition surveys would be pointless. You benefit from the exposures that ship owners, shippers and underwriters face. The irony, however, (and I need to be careful what I say here because I appreciate there are many more of you than me!) is that whilst surveyors spend their lives making themselves aware of the risks their clients face, they overlook those posed to their own operations. From the 500 or so insurance applications that I see from marine surveyors and consultants every year, I know this to be the case. Precious few surveyors correctly incorporate their trading conditions for each job, if indeed they have any, or are limiting their liability, despite the disproportionate relationship between the risk you face and your survey fees. What’s more, I see some surveyors who operate under contracts that have so blatantly been drafted by their client’s lawyers. This is not only contributing to the rise in the number of claims being made against surveyors, but it is proving problematic for us underwriters when it comes to defending these claims. I’m going to discuss trading conditions in more depth in a moment. For now, realize that the evidence suggests surveyors are not looking sufficiently at the way their own operations are running. Why surveyors don’t consider their own risk So why are surveyors arguably paying less attention to the risks that face their business than those of their clients? I think there are a number of reasons for this. First, and perhaps most obviously, we have the historic reason. For decades surveyors have served a most valid function, albeit one which maintains a low profile. Shipping is, after all, a very gentlemanly industry (on the surface at least!), where appointments are given verbally and accepted swiftly and in good faith. Any misunderstandings that present themselves in the course of the performance of services have traditionally been simply and discretely resolved over a drink at the end of the day. Perhaps it didn’t occur to customers to ask too many questions so, in this respect shipping isn’t dissimilar now from how the medical and legal professions used to be ? and look at the disputes going on in those callings. For some reason, we always seem to be a couple steps behind every other industry ? whether we are prepared to admit it or not! Unfortunately, the time has passed when a handshake really meant something, when someone gave you “his word”. Combined with this is a resistance to new approaches ? “that’s the way we’ve always done things ‘round here”. The establishments offering education in marine surveying are limited. Time is another important factor. It’s easy to think up good ideas and undergo brainstorming exercises but let’s face it, when do we have the time to see these through? We’re struggling as it is keeping to the old methods! Additionally, the “structure” of the surveying industry exacerbates this. As the profession includes many one man bands and small firms vying for business, the time pressures on the few personnel are not conducive to the examination of these exposures. There also isn’t a catalyst for surveyors to be assessing their exposures. In truth, this should be irrelevant. I don’t assess the exposures facing my company just because someone checks up on me. If I’m honest, I place little value on such independent bodies because I am of the belief that whilst any help is welcome, the best judge of the risks facing my firm is me. Yet it’s a contributory factor that in most countries marine surveyors aren’t regulated by a governmental or other independent body. The trade associations that do exist tend to offer voluntary membership and their purpose is perhaps more geared towards the sharing of market information. Again, I must keep in mind those present here today, but I’ll add that even the clients appointing you as surveyors do little in the way of vetting prior to appointment. If they aren’t happy with the services you’ve provided, they just won’t hire you again. Shouldn’t they assess their risk to prevent such dissatisfaction from arising in the first place? Finally, the classic example of why surveyors overlook their own exposure to risk, the adage “it’ll never happen to me”. For those firms who have never encountered troubles, and I congratulate those who haven’t, you are perhaps floating in a false sense of security. I’ve lost count of the number of people who, once they’ve been told what I do for a living joke “I don’t need to know you, I never make mistakes”. The irony is that the last laugh is usually on them. People do make mistakes. You are not excluded from this group. You are not the exception. If you think you don’t make mistakes, you’ve just made your first. Why should surveyors be aware of professional liability? Marine surveyors should be taking a closer look at their operation simply because it is in their interest to do so; your livelihood depends upon it. The consequences are not simply financial ?although these are not to be underestimated - you may have to wind up your company. One of the larger claims I have dealt with was for US$ 1.5m. This involved a yacht being carried as cargo on deck. The voyage met with heavy weather and the predictable happened ? the yacht fell overboard and was never seen again. When the ship owner limited his liability using the on deck clause in the bill of lading, the surveyor who advised on the lashing was placed in the frame for blame. The litigation, which incidentally is not in the US, has named both the surveyor’s firm and the surveyor as an individual. Hardly fair when he was paid about $500 for his time and advice but nonetheless, the suit was served. At the last forum I addressed, one of the delegates confided that a claim of $20m had been made against his firm. For those that fear you misheard that figure, I’ll repeat it…$20m. Admittedly, at least from what I could gather, it was with little foundation and in fact eventually settled at a figure of thousands rather than millions, but he was walking on thin ice for a time because don’t forget that claims hit you in four ways. Firstly, they squeeze the purse strings, secondly you lose that client (which may or may not be a great loss), thirdly they consume an excessive amount of your time and fourthly, they damage your reputation. You can’t put a value on recommendations. Your world and your survival in it are founded on word of mouth. Identifying, analysing and evaluating risk So having determined that surveyors should be more aware of their exposure to professional liability claims, let’s return to the practice you should all be undertaking if you are not already: Identifying, analysing and evaluating risk. As well as discussing these stages generally, I want to re-introduce trading conditions and consider how these can be a useful tool in the three step process. Identifying: I guess before you can consider what risks pose a professional liability threat, you have to first establish who you are t risk from. There are fundamentally two groups of people who could bring a professional liability claim against you: Your clients ? these will usually be ship owners, cargo interests or
underwriters However, if you are considering who you are actually at risk from, I think you have to include yourselves in this category. Sometimes we can be our own worst enemy. Now I must confess that I have never been a marine surveyor and so I certainly don’t profess to know every pitfall that exists for you. In any event, the activities of a surveyor can be diverse and each service will have its own peculiar risks so I’m afraid I can’t do all the work for you! Yet having analysed the claims that have been reported to me, I can tell you some common causes of professional liability claims. From that, I hope you can apply them to your operations to identify your exposure: Education & training ? technologies are changing and these changes
may be more prevalent in some areas rather than others. If you are offering
a specialist survey, you need to keep abreast of any developments because
your client will expect you to. Analysing: Once you’ve identified the risks you are exposed to in your working lives, the next stage is to exercise some analysis. I mentioned thresholds for risk earlier. You’ll be able to determine which risks are worth taking and which may be too detrimental to bear. There are three ways of dealing with risk: Eliminate ? ultimately where the risk is too great, you should simply
refuse to accept an appointment or refrain from performing a certain class
of survey Transfer ? for marine surveyors, this will mean purchasing professional indemnity insurance. You can decide which of these solutions is most appropriate. There’s no denying that you’ll need to contribute your time to such analysis. However, whilst it is by no means the only loss preventative measure you should consider, drafting standard trading conditions is an excellent exercise because at the end of it, you should be able to deal with a fair amount of the professional liability risks you can become exposed to as a marine surveyor, or at the very least, put yourself in a stronger position for defending yourself against such claims. By way of illustrating this point, let’s revert to some of the roots of professional liability claims that I have just alluded to: Education & training -OK, you should be keeping yourself aware etc. But what if technology develops between the time you performed a survey and the time that your client makes a claim? Specify that the survey solely relates to the date and time when you provided the service. Expectations Spell out the parameters of your appointment. If you prefer, you could incorporate definitions of different surveys to minimize any misunderstandings. Getting the client to confirm in writing his acceptance of your terms, like other professionals such as accountants and lawyers do, is preferable. Not knowing when to say “no”/ Ability - Learn to say “no” ? women have been doing it for years! If you do decide to take on a job which may be slightly outside your reach, make that clear. For example, “this report will not comment on the suitability of the design of the vessel”. International -Again, having something down in writing, and supplemented with definitions, should avoid misunderstandings. However, if there is going to be a dispute, specify which jurisdiction the claim should be brought in. Added extras ? Learn to curl your silver tongue! Silence is golden. If you’ve defined your services, the client will know not to expect anything other than what you have specified. The mystery client -This will primarily concern your own purse strings rather than professional liability per se. Note the condition of payment, perhaps in advance of releasing your report if you don’t know who you are dealing with. The surveyor next to you - Time bar claims for professional negligence. The statutory time bar will differ depending on the jurisdiction. In the UK, it is six years. However, there is nothing to stop you limiting the time in which a claim can be made, and provided it is reasonable and adequately incorporated, it should hold in a court of law. Of course, in the case of third party claims this may be more difficult to enforce but it’ll still contribute to the minimization of risk. This list, of course, is not exhaustive. There are other points you should consider when drafting your standard trading conditions, the most important of which I would suggest are: i) I would recommend you spell out the losses for which you will not
assume liability, for example, loss of profit and consequential losses.
Quite frankly, you are not paid enough to take these on board. There are two further points I’ll mention here before continuing to discuss the evaluation of risk: Once you’ve drafted your terms, beware the following pitfalls: 1 INCORPORATE YOUR TERMS ? To begin to be able to rely on them, you will have to be able to demonstrate that they were incorporated into your contract at the time of your appointment. Listing the conditions on the reverse of an invoice, which will end up in someone’s accounts department is certainly not adequate. Furthermore, your report should refer to the conditions governing it. The reference should be at the front of the report and not in print so small you’d need a magnifying glass to read it. 2 We suggest your publicity material DOES NOT MENTION YOU CARRY PROFESSIONAL
INDEMNITY INSURANCE ? this is an invitation for professional liability
claims. It tells clients there is a pool of money set aside for them so
if the make a claim, the chances are that underwriters may have to pay
out something just to make the claim go away. Obviously I have my underwriter’s
hat on here but don’t forget, if you carry insurance your deductible
will be at the forefront of any Evaluation: I don’t want to dwell on this stage, although it is vital that you recognize this as a vital and valuable part of the overall process. Learn from your mistakes, your near misses and from those of others in your profession. Your operation is changing and so are the risks associated with your business. Looking at your exposure to professional liability is therefore not a one off exercise. It is ongoing and requires constant evaluation. What could have minimised your risk yesterday may exacerbate it today. By implication therefore, you will also have to keep an eye on your trading conditions ? these will need to be reassessed from time to time so that they respond to the lessons that you have learned. Conclusions To summarise, I hope you will all be more aware of your exposure to professional liability claims. Re-evaluate your perception of this risk. It’s not something to be feared. It’s a type of exposure which faces any professional. Having identified the problematic areas, deal with them head on and recognize that you cannot underestimate the benefits of operating under well drafted standard trading conditions. This may be a new practice for you and you may be concerned that you’ll meet resistance from your customers. However, this is unlikely to be the case and any client worth his salt will appreciate having the appointment clearly defined. Standard trading conditions are used by many and in a number of other industries. We can learn from the experiences of others in different trades to ours. I would suggest seeking the assistance from a suitably qualified lawyer to help you draft some bespoke terms would be a good investment but bear in mind that as your operation develops, so does your exposure to professional liability claims. It is therefore essential that you continually take time to assess this risk. Listen to what underwriters and trade associations have to say but remember that YOU are the best equipped person to assess your exposure. (If anyone would like a loss prevention circular or a copy of a Galatea’s
specimen marine surveying contractual terms, these are available upon
request.) Fairplay Solutions With a dearth of literature available to marine surveyors on their activities and responsibilities, it is good to report that 'Fairplay Solutions' is still alive and kicking. This publication monthly publishes incidents and accidents reported by marine surveyors with background, causes, consequences and ways of preventing reoccurrences. Well worth a read if you get chance as we can all learn from the case histories and articles. Damnet Surveyors can also contribute their experiences to Dammet on the web
at: www.damnet.org/ where you have
an opportunity to contribute to a database of information on marine incidents. Wind Song passengers rescued THE sail cruise ship Wind Song, operated by Carnival Corp subsidiary Windstar Cruises, was under tow to Papeete today after passengers had been evacuated following an engine-room fire. The fire started early yesterday morning when the ship was 10 n-miles from the island of Tahaa in French Polynesia. Soon after a local ferry evacuated the 127 passengers and 92 crew and took them to the island on Raiatea. The passengers, about three-quarters of whom were from the US, have been flown to a hotel in Papeete, a spokesman for the operator in Sydney said. Windstar Cruises said there were no casualties and the evacuation was carried out "in a safe and orderly fashion". The cause of the fire remains unclear. Windstar Cruises operates three other sailing cruise vessels, the 148-passenger Wind Spirit and Wind Star and the 308-passenger Wind Surf. (Ed: You can imagine the scene in the lifeboats "Did anybody bring the petit fours?"!) We would be grateful if you could possibly mention our website / company on future bulletins: www.gordongiles.com (marine engineers and ship surveyors, specializing mainly in litigation work but will "go anywhere, do anything" within our areas of expertise. Regards Richard Newman, Gordon, Giles and Company Ltd This section of our newsletter is intended for those looking for jobs and those looking for people. It is also hoped to include information of movements of people in our business. When disaster strikes we are all horrified and scared to hear that any of our friends are casualties. Just as with 9-11 we all knew somebody who was affected, so with the Bali atrocity. We are pleased to report that David Fielder of Panalpina, Hong Kong, has returned to work after being injured in the bombing. David is a keen rugby referee and was in Bali for the rugby tournament. We wish him a full recovery. John Kingdom, Ship Surveys, was recently promoted to Director at Tindall Riley, Managers for the Britannia P&I Club. When you are next travelling overseas on a job, why not contact Seafacs and let your clients know where you are to increase your chances of obtaining more work and cutting the clients expenses. SIR ? Seafacs Information & Research PO Box 317, Welwyn Garden City,
Herts AL8 6DP telephone: 01707 334192 fax: 01707 324615 email: seafacs@sir.co.uk
web: www.sir.co.uk If your (marine surveying) company has a web site, let us know and we will try to mention it. Below are some web pages we believe might be useful to marine surveyors. www.gordongiles.com www.lrfairplay.com
That pulls up a list; if you then click on the word 'free' in the right hand column you are linked through to the relevant website. If your readers know of any companies with sites that we do not list (or that we have an out-of-date address for) we would like to have details to update the database.
NAMS 34th Annual National Marine Conference West The National Association of Marine Surveyors, Inc., (NAMS) held its 34th Annual National Marine Conference West from Sunday through Tuesday, September 22-24, 2002, at the Radisson Hotel Fisherman’s Wharf, San Francisco, California. As is normal with NAMS, there was a meeting of the Board of Directors of the National Association of Marine Surveyors, Inc., on Sunday, September 22, 2002. PROGRAM “Rules and Regulations” The following is a summary of the program: Monday, 23 September 2002 Welcome Address and Introductions were given by Bill Hansen--RVP, Ronald Reisner, President, and Lorne Gould, Vice President Mr. Andre Mouledoux, Mouledoux Brand Lagrand and Brackett - U.S. Supreme Court Ruling on Fed-OSHA Jurisdiction of Uninspected Vessels Captain Mike Seward, U.S.C.G. - New Regulations Dealing With Terrorist Threats Mr. Jerry Aspland (Hull & Machinery), Former President of Arco Marine, Inc., and President Emeritus of the California Maritime Academy - International Safety Management Code Regulations and Their Effect on Shipping Mr. Steve Canright (Yachts & Small Craft), San Francisco Maritime Park - The original construction and repair rules for the “C. A. THAYER”, a wood lumber schooner Mr. Joe Epstein (Cargo), President of Metals USA - Federal Regulations and Their Impact on the Steel Import Industry. Mr. Don Perkins (Yachts & Small Craft), Fire Cause Analysis, Inc.- Fire Cause Analysis Rules Mr. Len Cardoza (Hull & Machinery), Port of Oakland Dredging Program - Regulations on Dredging. Professor Robert Asaro (Yachts and Small Craft), Division of Structural Engineering, University of California - Rules of Fire Degradation of Fire Composites Mr. Bill Drake (Yachts & Small Craft), Marino Electrical Products – ABYC Electrical Standards Mr. Steve Baxter (Cargo), U.S. Customs - New Regulations for Port Security and Cargo Handling The President’s Reception was held at the San Francisco Maritime Museum on the Monday evening, 6:30 to 8:30 p.m., which included cocktails and hors d’ oeuvres. Tuesday, 24 September 2002 Members Only Breakfast and NAMS Annual Meeting Mr. Rich Morgan (Yachts & Small Craft), FIS Marine - Boat Builders Risk Insurance Mr. Fred Carr (Hull & Machinery), Partner with Cox Wooton Griffin Hansen and Poulos - Federal OSHA Requirements on Uninspected Vessels LCDR. Kristin Williams, U.S. Coast Guard; Mr. Tom Roberts, Senior Judge, U.S. Sailing Association; Mr. Jeff Earwill, U.S. Coast Guard – New Towing Regulations, Rules of the Road, Sailing Racing Rules. Afternoon - Round Table Sessions (Yachts, Hull & Machinery and Cargo) Unfortunately, NAMS do not distribute copies of the speakers' papers
so that you will have to contact the authors to obtain copies. December 4 to 6, 2002, International WorkBoat Show, New Orleans USA.
The world's largest trade show and conference focused on the construction
and operation of commercial vessels 120 meters or less in length. To plan a visit to the show or for more information, please contact Meg
Handlin, NAMS 41st National Conference East, 13-15 April 2003, Tremont Hotel,
100 East The Seaman Between the innocence of infancy and the recklessness of adultery comes that unique specimen of humanity known as the Seaman. Seamen can be found in bars, in arguments, in bed, in debt and intoxicated. They are tall, short, fat, thin, dark, fair, but never normal. They dislike ship's food, Chief Engineers, writing letters, sailing on Saturdays and dry ships. They like receiving mail, paying off day, nude pin-ups, sympathy, complaining and beer. A Seaman's secret ambition is to change places with the Owner for just one trip, to own a brewery and to be loved by everyone in the world. A seaman is a Sir Galahad in a Japanese brothel, a psychoanalyst with "Readers Digest" on the table, Don Quixote with a discharge book, the saviour of mankind with his back teeth awash, Valentino with a fiver in his pocket and democracy personified in a red Chinese prison cell. A Seaman is a provider in war and a parasite in peace. No one is subjected to so much abuse, wrongly accused, so often misunderstood by so many as a Seaman. He has the patience of Job, the honesty of a fool and the heaven-sent ability to laugh at himself. When he returns home from a long voyage no one else but a Seaman can create such an atmosphere of suspense and longing as he walks through the door with the magic words on his lips ... "Have you got the ale in then?" ANON What a difference 30 years makes 1972: Long hair 1972: The perfect high 1972: KEG 1972: Acid rock 1972: Moving to California because it's cool 1972: Growing pot 1972: Trying to look like Marlon Brando or Liz Taylor 1972: Seeds and stems 1972: Popping pills, smoking joints 1972: Killer weed 1972: Hoping for a BMW 1972: The Grateful Dead 1972: Going to a new, hip joint 1972: Rolling Stones 1972: Being called into the principal's office 1972: Screw the system 1972: Disco 1972: Parents begging you to get your hair cut 1972: Taking acid 1972: Passing the drivers' test 1972: Whatever Disclaimer: Articles and reports reflect the views of the individuals who prepared them, and, unless indicated expressly in the text, do not necessarily represent the views of the editor. Whilst every effort has been made to ensure that the information in this publication is accurate, the editor makes no representation or warranty, expressed or implied, as to the accuracy, completeness or correctness of such information. The editor accepts no responsibility whatsoever for any loss, damage or other liability arising from any use of this publication or the information which it contains. The contents of the publication are the responsibility of the editor alone. News, views, enquiries, suggestions, articles and letters for inclusion
in Mike Wall |
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