Salvage Surveys

The Salvage Surveyor will normally be involved in considerably greater detail with the circumstances leading to the casualty; also, with repair times, prices, and work specifications, including dimensions of replacement material. Salvage Agents or Associations wilt sometimes furnish the Surveyor special guidance and sample reports tor these surveys. Following are guidance notes originated from a major Salvage Association which will apply in most cases.

The purpose of the survey is to produce a report which serve will to guide the underwriters in his decision as to whether a claim falls within the scope of his coverage, and if so, to assist the Average Adjuster in apportioning the details of work and costs involved to the respective policies.
For this reason it is important to state the cause of damage in a detailed manner. The first guide as to cause of damage is a perusal f the log books, not only in relation to a specific claim by the Owner, but also to assesses the relevant history of the vessel. It is customary in this respect to make examination of log books back to the last dry-docking. This examination may not always be conclusive but usually al the survey it is not convenient to examine records earlier than the last dry-docking, and where such earlier reference is required, it may be made by the Average Adjusters’ consulting Engineer and the opinion of the Surveyor then sought on any relevant matter. Reasons for this close attention to causes of damage may be cited as follows:

An Owner may claim for damage to the bottom of a vessel, say due to heavy weather pounding; and examination of the log book may reveal that prior to the alleged heavy weather, the vessel had been aground in a manner which could have caused damage similar to that from heavy weather, although possibly such damage may have been more likely due to the grounding. In such a case, it may have happened that the vessel was not insured at the time of grounding, or that if insured, the risk was carried by underwriters other than those insuring the ship at the time of heavy weather. The Surveyor should be reminded however, that it is not intended that he be informed on the details of the insurance coverage, it is fell that he can be more objective if he is not.

This example will serve to show that, if liability exists, it should fall where it properly belongs. Pursuing this example, the Surveyor should stale in the report whether, in his opinion the damage may be attributed to the alleged cause.

If the Surveyor has not been able to examine the lag books, he should say so in his report, this will direct those concerned to make such scrutiny, but wherever possible the Surveyor should examine the log books.

In certain cases, particularly for machinery damage, claims may be made based upon an, alleged accident whereas examination of the facts in the light of the Surveyor’s technical knowledge may show that the defect claimed is in fact wear and tear. The scope for such claims is fairly wide, but examples are cited as follows:

An Owner may claim collapsed furnaces in a boiler due to heavy salt deposits examination of the condenser may reveal wastage of the lubes so that the admission of sea water to the boiler was due to this wear and tear condition.

A common claim is one made for failure of crank bearing bolts, alleged due to heavy weather. Examination of the log book will show whether (he vessel was loaded or in ballast at the time of the alleged heavy weather, and if loaded, the Surveyor will consider from his own experience,. whether it was likely that an engine would in fact race if the vessel was of deep draught He will also consider He will also consider that the governor would probably arrest racing in excess of 10% of the regular engine speed. This point is mentioned for the Surveyor will know that these bolts may be considered to have a finite service life and often fail due to fatigue induced by too -long usage in ordinary running conditions; in some circumstances, the accident obliterates the evidence as to causes. It has also happened that the ship’s staffs have disposed of vital parts which may have furnished evidence as to cause of damage; in such cases the Surveyor cannot state concurrence with the alleged cause when the evidence is incomplete.

As stated, there is a wide field in which claims may be made and the Surveyor should safeguard the underwriters’ interests to protect them from improper claims by furnishing the fullest factual data he can obtain.

It is no part of a Surveyor’s duty to interpret or apply the conditions contained in any policy and he should never attempt to do so. Because of its importance, the point is again mentioned that The Surveyor is never to report that anything claimed is “Underwriters’ Liability”. It is proper however, that the Surveyor should have some idea of what are usually referred to as “Perils insured against”,

There are:
· Collision
· Stranding or Grounding and efforts to refloat
· Fire
· Heavy Weather
· Negligence
· Striking or Contact
· Latent Defect
· Machinery Breakdown

Damage from acts of war, loss of hire, marine pollution, and other Types of losses may also be insured against and require special reporting guidance.

Collision: Contact between Ship A and B, even though either may be moored.

When acting on behalf of underwriters on ship A. the Surveyor should obtain all possible information leading to the incident, e.g. date, time, state of weather, speed, whether loaded or light, course, avoiding action taken, etc. It frequently happens in home ports that a lawyer representing Owners will attend and obtain all the information, with statements, but in a foreign port this may not always be possible and the Surveyor, without setting up himself as a lawyer, should obtain such information as may assist a court at a later date, if court action is decided upon. Particular attention should be paid to the angle of the blow and the speed of the respective vessels and this information embodied in the report Sketches are always useful in this respect and it is customary to have photographs taken and the Surveyor should recommend same to the Owner or his agent.

If however, the Surveyor is surveying Ship A on behalf of those concerned in ship B, the survey must be held, and so reported, without prejudice and the Surveyor has no authority to recommend any course of action nor to peruse the lag books of ship A. His duties will consist of reporting in fullest possible detail, the course of action being taken in respect of ship A and if he notes any action being taken which in his opinion is not associated with the alleged collision, he will state so.

The time factor is very important in collision cases where claims for demurrage may be involved and the Surveyor should see that repairs are carried out expeditiously if work other than the alleged collision damage is carried out, the Surveyor should slate whether such work had the effect of protracting repairs and should stale in his report how long, in his opinion, the alleged collision damage repairs would have taken if effected alone.

If, as is frequently the case, the repairs involve dry-dock hire, he should slate how long such repairs would have required in dry-dock, as distinct from the overall time required for work, i.e., if the vessel could have been undocked when underwater work was completed and superstructure work dealt with afloat.
Grounding or Stranding and Efforts to Refloat: Contacting the bottom of the sea.

The damage resulting from an alleged grounding or Stranding is usually self-evident.
A mast important point is to keep separate the damage which may have resulted from grounding, from the damage resulting from efforts to refloat the vessel while she was in a position of peril the former damage is known as Particular Average and the latter as General Average. It must here be said however, that the Surveyor should not use these terms in his report, it will suffice to refer to items as “alleged due to grounding” or “alleged due to efforts to refloat”. In the latter instance it simply means that if a vessel is ashore and in a position of peril and if a sacrifice of machinery and gear is voluntarily made in efforts to get the vessel and her cargo etc. out of the position of peril, then any damage resulting from this voluntary sacrifice may have to be made good at the expense of all who benefited by the sacrifice. The reason for separating these items and their cost will thus be apparent to the Surveyor, because the underwriter and the Average Adjuster may rely on his advice as to what is fair in this respect.

Fire

The remarks concerning stranding may “broadly” be applied to Fire Damage, Some repair may be necessary due to fire only, some sacrifice may have been voluntarily made such as cutting holes in good material for the insertion of hoses to reach the seal of the tire in efforts to save ship and cargo, and segregation of these items is required in the report.

In both grounding and tire, it may be that certain items are common to both PA and GA and these should be shown under yet another heading indicating what percentage applies to the accident and what percentage to efforts to minimize damage or rescue the vessel from the consequences of the accident.

Heavy Weather

It will of course be appreciated that items likely to be claimed under this heading cannot be defined in advance; The Surveyor should carefully consider whether the items drawn to his attention may reasonably have been damaged by heavy weather or whether same are due to some other cause. In examining log books in this connection, the Surveyor should pay particular attention to wind forces for, in broad terms the state of weather may be regarded as “Heavy” if the wind force is 7 or over on the Beaufort Scale, and the report would naturally be questioned if a vast amount of repair was claimed when the log book disclosed perhaps half a day with wind force 6 to 7.
Negligence

This also is extremely difficult to define. In simple terms it may be said that, if the Surveyor is confronted with a claim under this heading he will consider whether that which is claimed was in good condition before the alleged negligence and ceased to be in good condition solely by want of due diligence on the part of the Master or crew. It would happen that some item was actually in poor condition, in such a condition that all diligence possible could not have averted failure to the item so that rack of diligence did not in fact contribute to eventual failure. The scope for claiming under this heading is wide and sometimes ingenious reasons are put forward to support the claim, but the Surveyor will draw upon his technical knowledge in considering how well founded such a claim may be.
Striking or Contacting: Contacting something other than another vessel or the bottom of the sea.

It sometimes happens that claims under this heading are excluded from an ordinary policy and are covered separately under what is known as a Protection and Indemnity (P & I) policy or it may be that if covered under this heading, the Owner has contracted to pay some proportion of each and every claim. The Surveyor may not be aware of the conditions, but as with all other claims, should be carefully study the facts. It may be that he is asked to note large area of damage as being the consequence of one accident. Examination of that area may show evidence of new contact in one place and adjacent areas possibly indented but palpably of old standing. In such cases he should limit any statements of agreement with the alleged cause only for the area which he considers to be the new damage.
Machinery Breakdown: Includes “bursting” of boiler (e.g. tube failures), electrical damage, and breakage of shafts.

If in these types of casualties, on a ship where you have conflict of the Surveyor is of opinion that what he has seen was due in part or fully in consequence of wear-and-tear, he should so advise the Owner’s representative and if the latter is not in agreement, turn to the matter over to the nearest salvage association representative, in order to avoid conflict of interest.

Latent Defect

If some part of a vessel fails due to a latent defect, i.e. an existing defect which could not have been seen, detected or anticipated by normal due diligence on the part of the Owner, he may be able to recover the consequences of this defect but not the part itself, e.g., a tailshaft breakage resulting in the loss of a propeller. The tailshaft, if it failed due to a latent defect, would normally have to be replaced al Owner’s expense. The propeller, being the consequence of the breakage, may in appropriate circumstances be recovered under this policy.

It might here be said that metal fatigue may not be considered a latent defect condition even though it is imperceptible. A boll, for instance, may be perfectly sound when manufactured, free from inherent defect and if due to ordinary use, a stale of fatigue is induced in the material of the bolt its eventual failure may be said to be the consequence of ordinary wear-and-tear. By due diligence the Owner might have anticipated deterioration of a bolt exposed to fatigue conditions and taken appropriate steps to safeguard against its failure by renewal after the appropriate number of running hours (or cycles).

General

Dealing with the general duties of a Surveyor, it must be said that he has no authority to put any work in hand and therefore has no authority to let a contract or agree of the terms or cost of such work.

He may recommend to the Owner, or approve the work being done (except when acting without prejudice as stated), if he is satisfied with the propriety of what is being done, and he may approve the costs as being considered fair and reasonable, again if he is satisfied as to the correctness of same. If he is not satisfied with the repairs, he should immediately advice the Owner and so state in his report.

The Surveyor will normally be instructed to attend by the salvage association’s agent, e.g. Lloyd’s Agents, and he will therefore furnish art advices and reports to this agent, who in turn will transmit the information to the salvage association.

Cases have occurred where Average Adjusters have written direct to the Surveyor for some information concerning a Survey Report. The Surveyor must not reply direct to any such communication but should prepare a proposed reply and route it, together with the inquiry, to the experience Surveyor for review and transmittal to the salvage association in general, the inquiries will be requesting the Surveyor’s opinion on matters, about which a Class Survey of, even though acting on behalf of a salvage association, may be constrained to statements of fact.

If during the examination of a vessel or consideration of claim, the Surveyor becomes aware of conditions which may be inimical to the Class society or underwriter’s interests, he should notify the Chief Surveyor, who in turn may notify the salvage association, as deemed appropriate. Although (he Class Surveyor may note a vessel is “fit to proceed”, he should never include this phrase in a salvage report the word “seaworthy” should not appear in either salvage association reports.
Painting

Where there has been disturbance of the structure of a vessel, such as far steer work, it is customary to apply priming coals of paint lo new and disturbed work. The Surveyor is sometimes asked to approve the full painting of the vessel, however. By this, it is meant the recoating such as is normally and periodically done. Such approval should never be given. If the Owners insist on the inclusion of painting, other than prime coating, the Surveyor should exclude such cost from the repair account, and show same separately in his report with the remark that this item is noted entirely without prejudice, in so far as the Surveyor is concerned, he may take it that painting, other than prime coating, is never recoverable. If it should be it is not in the Surveyor’s power to say so and the item will be dealt with by the Average Adjuster.

A note here on Average Adjusters may be opportune. The Average Adjuster is a highly skilled person who specializes in the interpretation of marine insurance policies and presentation of claims and acts quite impartially. He usually has considerable technical knowledge but in any case, where advice on technical points is required, he makes use of skilled Consulting Engineers and Marine Surveyors. It will thus be seen that, in the interpretation or presentation of any claim, he relies on technical advice to some extent and the Surveyor can assist, indeed is expected to, in furnishing a report with all details which will be of use to the Adjuster. By incorporating this information in his report, the Surveyor may avoid considerable correspondence which may come at a time when the details of a case are no longer fresh in a Surveyor’s mind.
Reports should contain all dimensions of steel work, the grade, and clear identification of the part of the structure in question. By this is meant that where for example shell plates are identified H8 or A3, etc. it must always be made clear whether these are numbered from forward or aft, and the frame numbers. The same of course applies lo frames, floors or any other part about which confusion may arise. Also, in the case of partial renewals of plates, the description should include which the new butts and which are the original butts. The reason for this identification is that, although the Surveyor may be unaware of it, the Owner may have had to disclose lo the Adjuster some other casualty affecting the same part of the structure.
Estimated Costs

Here can lie either a difficult problem or one quite within the ability of a surveyor, according to his approach to the problem.

Fortunately, the usual damage sustained by vessels run on normal lines and can be dealt with by standard published repair costs, which it is hoped. Surveyors will regularly obtain from the various shipyards in their district. Thus if the unit rate is known to the Surveyor, the Cost of the work is but a matter of calculation against the weigh. It must be mentioned that unit rates are to be regarded as maximum and where there are contiguous plates, for instance, a percentage reduction should be applied. The drydock rates will also be supplied lo the Surveyor so that the hire charges should be easily ascertained. Haul days will be differentiated from lay days.

The difficulty in estimating may arise on items to which no schedule can be applied and the guiding principle must be the number of man-days considered necessary and the local rate per day per man.

Surveyors should not be guided by the contractor’s estimate solely, for it will always be realized that the contractors usually tends to error the high side, he has nothing to lose that way. Recently, for instance, a contractor proposed that the chargeable time to rewood a stern bush would be 80 man-days, broken down as 10 men for 8 days such a suggestion necessarily called for revision.

As regards materials, these can only be assessed in the light of ruling costs in the local repair area and Surveyors are recommended lo keep on-going records of the costs of steel, timber, electrical cable, while metal, etc., so that it becomes a question of only assessing what quality is necessary for any given job and the appropriate cost taken from records.

It has been fund by experience in some areas such as the U.K., that very broadly, on an average job involving steel work and machinery opening out, the ratio of labor to material is about 60/40 but obviously this cannot be applied to particular jobs, e.g. drawing a tailshaft would be almost entirely labor whereas renewing the saloon mirror the other way round. Another rough estimating rule is that the ratio of internals to plate on side and bottom shell steel renewals often runs about 25 to 30%. An increase in cost must also be given far single curvature plate over flat plate, and double curvature (or compound a curvature) plate over single curvature plate.
In protection of underwriters’ interests, the Surveyor should always recommend competitive bids or lenders where a repair is likely to be sizable, but should ensure that the specification is comprehensive lo avoid troublesome extras.

Overtime

Wherever overtime is worked on any claim, the excess cost of same must be shown separately in respect to each claim. This applies equally to work done by tender or work done on a labor and material basis.