Ship agent liable for negligence leading to excessive dunnage disposal charges

International Transport Intermediaries Club (ITIC) has recently reported a dispute in which a ship agent in Australia was held liable to its shipowner principal for excessive charges demanded by a contractor for the disposal of dunnage and other materials related to the packing of cargo.

The agent was asked by its principal to arrange for the disposal of the materials upon the arrival of the principal’s ship in Australia, where strict local quarantine regulations apply. The agent engaged the services of a licensed disposal company which, although it had previously been used to dispose of ship’s garbage and other more hazardous waste, was not the company the agent normally used to dispose of dunnage.

The agent instructed the disposal company by telephone, without verifying the total cost. The materials were disposed of and the disposal company submitted its bill for approximately Aus$70,000. When the owner questioned the unusually high charges, the disposal company said it had charged its usual rate for licensed waste disposal. Subsequent enquiries by the agent, meanwhile, confirmed that the amount which its usual dunnage disposal company would charge to deal with dunnage and packing materials would have been approximately Aus$7,000.

The owner was unwilling to pay more than the reasonable costs which should have
been incurred. Because the agent had been negligent in its selection of the disposal company, ITIC reimbursed it the balance of the invoiced sum, amounting to Aus$63,000, which the agent was liable to pay the owner.

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

Superyacht refit overspend dispute illustrates danger of acting outside contract

International Transport Intermediaries Club (ITIC) has warned against the dangers of marine service providers informally offering advice which falls outside the scope of their contracts.

ITIC cites the case of a yacht manager contracted to provide crew management and ISM consultancy for a superyacht. Although the manager was not contracted to provide technical management, the owner sought its advice on two refits. The manager reviewed the scope of works and the budgets from the refit yards as a favour to its client.

Unfortunately, both refit budgets overran and the owner claimed that the manager had been in breach of its duty of care by failing to recommend suitable repair yards, failing to budget properly and failing to properly supervise the refits. The owner alleged that, while the management contracts had said that the manager was not providing technical management, it had in fact done so.

The owner made a formal claim against the manager for EUR900,000 and a sole arbitrator was appointed by the parties. The manager denied that it had accepted any responsibility for the refits, maintaining that the owner’s own staff had chosen the yards. The manager had commented on the scope of works and the budgets provided and, far from managing the refits, had simply been kept in the loop in correspondence, despite the owner’s claim that it had expected the manager to take an active role.

The arbitrator found that the majority of overspend was due to the works which were required by the yacht’s classification society. The owner had not suffered a loss due to the alleged negligence of its manager, and the owner was obliged to pay the costs to keep the yacht in class. Ultimately, ITIC agreed to the payment of $25,000 in settlement, much less than the owner claimed it had incurred in legal costs. ITIC also paid the cost of defending the claim of over $110,000.

ITIC says, “Although the owner’s allegations lacked merit, the claim is an illustration of the dangers of informally providing advice outside the scope of the contract.”

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com