There was little certainty for Wanderlust’s future as we retreated to San Francisco for the 2016-2017 winter. On the repairs side, the legal dispute with the builder had frozen our ability to have the needed work done on our boat. There was no end to the dispute in sight. Indeed, if anything, the two parties had moved further apart.
Before we left France we had been told that it was common for disputes to be settled after the first report from a surveyor was issued. Most boating professionals realize that when a reputable surveyor supports credible claims they will be difficult and expensive to dispute. In our case, it would not be so simple.
If the dispute progressed or headed to court the legal expenses alone could quickly outstrip the costs of the claims. By design it is in neither parties interest for a dispute to go to court. It is usually best for a company being sued to accept the reasonable claims, find the middle ground on the debatable issues, and negotiate an acceptable financial settlement. Going to court or continuing a legal dispute to quibble over details is expensive and counterproductive.
The issuance of our surveyor’s report to the builder could have led to the resolution of the dispute. There was sufficient documentation for the merit of the claims to be established. Nevertheless the builder decided that he wanted to have Wanderlust examined by his own surveyor. Inspecting Wanderlust with a surveyor of his own choosing was certainly the builder’s right but the boating professionals we talked to were surprised that the he would choose to do it. The professionals had seen the problems firsthand and knew that they were significant. They couldn’t see the rationale for the builder to incur the additional expense (£3,000+) of adding another surveyor into the dispute.
To us it was particularly odd that the builder did not choose to first inspect Wanderlust on his own. Under the terms of the build contract the builder had the right to inspect in the event of a dispute. It’s not like her location was an issue. Wanderlust was centrally located in France during the dispute. The builder had traveled close by during the last year to work on several other boats. Nor was the timing a problem. It had been more than a year and half since the dispute had begun and Wanderlust was available for inspection for all but about five months of the time.
Nonetheless the builder felt the need to incur the expense of a first inspection with a surveyor. Perhaps the builder believed that a surveyor would provide more leverage in the dispute. If so it was an expensive and risky gambit.
Thus at the end October in 2016, nearly six months after the originally scheduled date, the builder arrived at the pontoon in Saint-Jean de Losne France where Wanderlust was moored. With the builder was the surveyor he had hired to serve as his expert. Others had warned us that the builder’s chosen surveyor, a Brit well known in the barging circles, would do us no favors. That turned out to be true, but it was not entirely as we expected.
After the survey there was a long wait. Finally, after three months, the builder’s surveyor’s report arrived in our email inbox.
As we read through the report we found that it supported several issues in our claim that we expected the builder to dispute. Indeed, the surveyor also made points at times that supported small increases in the claim. We promptly accommodated these in the Table of Issues, the official log of Wanderlust’s problems at dispute.
With the little gifts in the surveyor’s report there were bigger problems. Though the builder’s surveyor generally noted the same observations as our surveyor, the suggestions for remedial works varied dramatically, most notably for the expensive to repair items.
Many of the surveyor’s proposed solutions were unworkable. For example, in several places in the report where it was proposed to add ballast to bow to adjust Wanderlust’s trim. This, according to the report, would correct numerous problems, including the fuel blowback issue and the drainage problems in the deck storage lockers. The problem is the deck lockers needed Wanderlust to tilt more to the stern to the drain and the fuel vent and fill pipes needed more of an angle to the bow to drain to the tank. Unless the ballast was somehow magical it could not change Wanderlust’s trim to the bow and stern at the same time.
Indeed, it was even suggested that a bathroom counter design issue that kept the toilet seat from staying vertical in the master bathroom could be resolved by adding ballast at the bow; it was far more expensive option than simply moving the toilet slightly. And maybe adding ballast could have kept the toilet seat up. But it would have taken a lot of ballast, tens of tons of dead weight. By my calculations we would need to add around 30,000 kilograms at the bow to fix the slope of the toilet seat. This amount of ballast, if it didn’t immediately sink our 41,000-kilogram barge, would have lifted the stern of the boat such that the propeller was left spinning in the air.
Inspiration for adding ballast to resolve some of Wanderlust’s problems likely came from the fuel blowback issue. Earlier, when we reported diesel being expelled from the fueling port during fuel fills, the builder asked us whether the freshwater tank at the bow was full. The idea here was that weight at the bow would increase the slope of the vent and fill lines so that they drain more effectively to the fuel tanks. The question in and of itself was a de facto admission that the slopes of the vent and fill pipes to the fuel tanks were marginal at best.
We had answered the builder’s questions at the time telling him the water tank, to the best of our recollection, was always full or near full during the fuel fills. The water tank was certainly brim full during most fills. And in France you always keep the water tank as full as possible as you never know where you are going to next find water.
Besides the Recreational Craft Directive states, “Fuel filling systems shall be designed to avoid blowback of fuel through the fill fitting.” It does not say, “Fuel filling systems shall be designed to avoid blowback of fuel through the fill fitting unless the freshwater tank at the bow is empty.” We needed to be able to fuel up Wanderlust without blowback no matter the state of the freshwater tank at the bow.
Somehow the message that the water tank was full never registered; the builder apparently continued to believe we would have no blowback problem if we filled the fuel tank only when the freshwater tank was full. This idea seemed to have made its way to the surveyor who expanded on it and used the concept in other places in the report.
There is also very practical consideration as to why these suggestions to add ballast to the bow were ill considered. There is no space for significantly more ballast in Wanderlust’s forward bilge. We couldn’t fit 500 kilograms more let alone the 2000 needed just to compensate for the times when the water tank was empty.
Adding magical ballast might have seemed a workable solution to a layperson in court. But in real life it was a bogus suggestion. It was simply unworkable.
It’s easy enough to laugh off crazy remedial works recommendations. But in the midst of the dispute they were a distraction from a meaningful discussion on how to resolve difficult issues. Even the most poorly thought out wrong-minded ideas had to be countered by our surveyor. There was considerable time, effort, and especially cost involved in crafting responses to the dubious off-the-cuff assertions in the builder’s report.
In other areas of his report the builder’s surveyor addressed the very expensive deck paint issue. He generally agreed that there were issues; it is the extent of the issues where he disagreed.
Disappointingly the surveyor channeled Mr. Magoo when it came to the underlying causes of the deck paint problems. The report dedicated three and half pages of single lined text on the paint and the generalities of its application. In the text the surveyor stated, “saw no evidence of any failure of the substrate coatings”. This statement contradicted the opinions of all of the paint professionals who had examined Wanderlust’s paint. The professionals had pointed out the problem areas of osmotic blistering and failure of the substrate coats caused by poor preparation and the use of inadequate amounts of paint. These areas were hard to miss. Indeed, I had carefully flagged the bad spots with marking tape prior to the survey lest there be confusion during the survey. It was to no avail. The builder’s surveyor seemed to have missed it all.
In terms of the repairs the issue of whether there was a failure of the substrate coatings was enormously significant. The advice we had repeatedly received was to grit blast the decks to the steel and redo the paint build-up from the primer out. Otherwise we risked future coating failures and further problems. But according to the builder’s surveyor, we could abrade the paint and reapply the topcoat. There’s an enormous cost difference between those two action plans, along with a big gap in the likelihood that the repair would be robust.
The surveyor’s report included a long treatise on why it was difficult to the interface between the stainless steel and mild steel. It made it sound like paint adhesion in these areas was an impossible to reach goal. Yet all of the other experts that had seen the problem had a much simpler explanation: There was no evidence that the welds had been prepped prior to painting. They didn’t say that the welds weren’t properly prepared. They said the welds where the paint was visibly separating didn’t show any evidence of preparation at all. Getting good adhesion in these areas would always be challenging but there was no chance if there was no attempt to make the surface rough enough for the paint application.
In other areas the report danced around and confused major issues.
The major issue of the diesel leaks was covered in four sentences. It did not include a workable plan to fix the fuel leaks.
The report’s first sentence on the topic mischaracterized the fuel in the bilge as red diesel, coming from the forward heating and generator tank. The diesel in the bilge was clearly white diesel.
In the second sentence the surveyor stated that he understood that the fuel tanks would be pressure tested in due course. It was a suggestion that showed a lack of understanding of the underlying principles of fuel tank testing, which must be done on either completely empty or completely full tanks.* In this sentence the surveyor was lending support to the use of a technically flawed pressure test apparently to rule out an issue that was quite clearly visually evident without the need of any test.
Craziest of all was the suggestions included in the surveyor’s third and fourth sentences on the topic. Here it was said that the diesel in the bilge could have come from overflowing the heating stove in the salon. It didn’t matter that the stove uses red diesel and the fuel in the bilge was white diesel. Nor did it matter that Wanderlust’s Reflek’s stove is more than seven meters away from a point where diesel could have found a way into the bilge. In between it’s all wood flooring and cabinetry. For the diesel to reach the bilge from the stove, as claimed possible by the surveyor, a huge amount of diesel, literally hundreds of liters, would have had to overflow from a stove. For this to happen the shut off valve on the stove needed to be faulty. The diesel would then have to pool up before it could climb over the barriers that blocked its access to the bilge. Such a large amount of diesel would have permanently inundated the cabinetry and wooden flooring. Without redoing the interior of the boat, evidence of a diesel would have been apparent during the surveyor’s visit.
In some sense the suggestion of a clearly impossible diesel flood of our own causing was the source of the diesel in the bilge was comical. At least until you think about the underlying claim: It was being suggested by an expert who was willing to stand before a judge to present his report that it was a possibility that we might have fraudulently misrepresented a massive diesel flood as a fuel leak. This insinuation did not sit well with us then or now. We are not happy the surveyor would willfully make such a scurrilous claim of malfeasance against us without even the smallest likelihood that it could be true.
Surveyors within their reports pledge an overriding duty to the Court. In effect they pledge to the Court to let their eyes and reports be an accurate representation of the underlying issues. We well understood that a surveyor would seek to represent the defensible views of the party that hired them. That’s natural and expected. But in our opinion creating fanciful scenarios that broke the laws of physics to suggest misdeeds on the part of the boat’s owners went too far. In doing this the surveyor had been done us no favors. At the same time he was also doing a major disservice to his client, as his credibility would have been strongly challenged in court.
It is unfortunate. A well-considered fact-based report from the builder’s surveyor would have moved the dispute towards a settlement. In any dispute there are obvious gray areas that warrant discussion. A well-crafted report would push the gray area issues to the builder’s side while proposing creative, plausibly sound, workable and inexpensive solutions for the other issues. In the end the goal would have been to reduce the builder’s costs. But that is not what we were presented with. Indeed, the report did the opposite.
There was an up side; the report was so clearly flawed and inattentive in so many areas that we felt that it would be trivial to discredit the surveyor to a layperson in court. In that sense such a weak report could be a good thing. It certainly emboldened us against the prospect of a court case. But in the short run a flawed report was not helpful.
We were now forced to counter the numerous spurious arguments in the 23-page report. The flaws in the report were obvious to us but it would take considerable time to articulate and cost to put this into a written form acceptable to the courts. Between our follow-up surveyor reports and solicitor’s fees this one report generated by the builder’s surveyor created over £22,000 of additional legal costs for us. The builder undoubtedly incurred significant costs also.
It is normal for the parties in a dispute to review their surveyor’s findings before the report is released. In our case there were numerous corrections to the surveyors’ reports including the removal of sections that supported our claim but where technically flawed. Our intent was for the reports to be as accurate, rigorously reasoned, and defensible in court as possible. This, we felt would speed the resolution of the dispute and save costs. Unfortunately the builder did not appear to share this philosophy.
With the back and forth on the reports there were efforts made to end to the dispute through a settlement. The release of the builder’s surveyor’s report came coupled with a round of three different offers. We were hopeful when they were received but quickly disappointed when we read them.
In one offer the builder offered to buy the boat back. Oddly the offer was substantially less than we actually paid. Very unusual as buy back offers from manufacturers almost always come at the price paid. But in this case we were being asked to take a significant discount to have the builder took back our defective barge. Add in that we had added well more than £20,000 in permanent items to the boat. There were things like a sofa, mattress, spare parts, and AV equipment that were effectively associated with Wanderlust and could not practically be sold separately. With that was £4,000 for repairs of defects that we had paid for already. Our legal costs, which at that point were in excess of £11,000, would not be reimbursed. All this cost comes from buying a barge from a builder who was unwilling to honor his legal and warranty commitments.
There were other financial considerations for us if we accepted the buy back offer. Brexit occurred between the date of Wanderlust’s launch and the date of the buy back offer. Consequentially we would have suffered a substantial post-Brexit pound to dollar currency conversion loss in repatriating our funds. All told we figured that if we had accepted this offer by the builder to take back a defective boat we would have lost well over £135,000 in three and a half years use. That comes out to something around £6,200 per month of time on board.
On the builder’s end, even after paying for shipping, he would have a boat that he could “refurbish” and sell for close to what his new barges sell for. It would have been a great deal for him. It was not a great deal for us.
There was another offer to take the barge back to the builder’s plant in the UK Midlands to do remedial works. The issue here for us was that this offer is that it keyed back into the builder’s surveyor’s report.
Per the builder’s offer, fanciful solutions that the surveyor suggested, like adding ballast to the bilge to correct the blowback problem, would be considered an equally viable repair option that the builder could choose to use. It did not matter if the repairs worked. There were no assurances or process set forth in the offer to test that the repairs made were actually successful or done to a reasonable standard. And if we accepted this offer we would have no further recourse if the repairs did not work.
Under the wording in the builder’s remedial works settlement offer the builder was required to do very little. Per his surveyor’s report the builder could add 50 kg of ballast to Wanderlust’s forward bilge and increase slightly the bore of the tank vent hoses. Having done this he could declare the blowback problem fixed in the method described his surveyor’s report.
If we accepted this offer we’d be on the hook for our legal costs, past and future. We’d also not be reimbursed and the expenses we’d already incurred in making repairs, even if the builder had already agreed to pay. If we signed the agreement we would have been out of pocket more than £15,000 at the start and would incur considerable additional costs due to the loss of use of our home during repairs. Realistically we were conservatively facing expenses of well over £35,000 to get the builder to honor his warranty commitment.
The remedial works settlement offer was clearly unworkable. We wondered whether this was the intent. The offer was so disingenuous it was hard to understand why the builder put the effort into generating it in the first place. Indeed, we could only conclude that the only reason the offer was advanced was so the builder could tell future potential customers that they had offered to take Wanderlust back and we had refused. It is the truth; they did offer to take Wanderlust back, under terms that no reasonable person would accept.
The third offer we received was for a cash settlement. This offer came with the possibility of reimbursement for some of our legal costs. The upside was that the offer was more than our previous offer to settle at £25,000, an amount that the builder had not accepted and we had withdrawn when we realized that the cost of repairs would be more than four times that figure.
Though the builder’s offer was higher, the new settlement proposed by the builder was even further from covering our work costs, on both an absolute and percentage basis. The underlying costs to resolve Wanderlust’s issues had gone up significantly. The number of issues had increased. With the delays we had time to look through past communications with the builder and were reminded of several serious issues that had been ignored. And with greater clarification of the extent of the underlying issues and better repair estimates we had a better feel for the full extent of the costs of the remedial works. (The paint issues, in particular, looked to be very expensive to resolve.) By my calculations the builder was now looking to buy us off at something less than 20 pennies on the pound.
There was no way that we would accept this offer. The builder must have understood this when the offer was generated.
After reading the three offers we felt that we were further from a settlement than we imagined. It did not appear that the builder had any intent of letting reason prevail. The only thing that the offers did with certainty was to increase the fees collected by the solicitors and surveyors. It upped the ante for both parties.
At this point we had made an effort to compromise down on our claim to reach a conclusion to the dispute. Indeed, prior to receiving the latest round of offers we had discussed settling the claim for something in the neighborhood of £70,000 just to end the aggravation. With this round of offers from the builder and the subsequent increased costs that possibility went out the window.
We were now prepared to take the case to court if need be, even if it were a net money losing venture for us. Early estimates put our court costs alone at £150,000 to £200,000. We’d expect that the builder would have at least half to three-quarters of that amount on the line in legal defense costs alone. Add in the costs included in the claim, which exceeded £200,000, and the total amount at risk was over £500,000. The builder had maneuvered himself from a situation that could have been reasonably repaired or settled for £25,000 into a possible court case worth £500,000. That, in my opinion, was not good business.
Though court was looking increasingly inevitable, we went through considerable effort to make reasonable buy back, remedial works, and cash settlement counter offers. The builder’s offers were a small opening, which was rare indeed in this dispute. We would take this window of opportunity to advance counters to each of the builder’s offers.
The counter to the builder’s buy back offer was to let the builder buy back Wanderlust at our full cost that we had in. This included legal expenses, compensation for the exchange rate fluctuation, sale of the attached items in the boat at price depreciated from their purchase price, and various other small costs.
This definitely not our preference; Wanderlust is our home.
Undoubtedly the exchange rate fluctuation was going to be a sticking point. We were willing to compromise some on this issue, but otherwise we would need to receive back all of what we had into the boat.
Constructing a remedial works counteroffer took more than a week of work to prepare. It incurred considerable surveyor and solicitor costs. Our counter needed to address the numerous deficiencies in the builder’s offer. We strove to produce a plan that would both incentivize proper work and would provide a clear path for resolving any conflicts that might develop.
Some of the larger issues such as the exterior paint application and the fuel blowback had been persistent problems with other barges constructed by the builder over the years. There was no reason to believe that the builder held the technical expertise to be able to do the job properly. Nor would they have the incentive to do quality work. Once the repairs were done, properly or not, the dispute would be over. There would be no further recourse.
There was a clear need to involve experts for the technical planning and execution of the remedial work plan. Our proposal included the use of surveyors to arbitrate and validate the work done by the builder. Though this would be added expense, the proposal was configured to be intrinsically fair to both parties. Under the circumstances it seemed the only reasonable course of action.
Several acceptance test clauses were included in our offer. For example, our proposal specified that the effectiveness of the fuel tank venting arrangement would be tested under real world conditions prior to acceptance. The results would show that Wanderlust’s fuel system conformed to the governing RCD standards, as was the legal requirement at launch.
Included in the proposal was a warranty for the remedial paintwork. It would be difficult for us to be certain that the paintwork was done properly; paint problems often don’t appear immediately. Trusting the builder to apply the paint correctly after they failed to do it in the first place was not an acceptable option. We had been burnt by blind trust; it would not happen again.
The cash settlement was the most straightforward to counter. We advanced an offer to settle at £110,000. This figure represented a substantial discount from what we would have asked for if the dispute had gone to court.
All of our offers included a clause for the repayment of our reasonable legal costs (solicitor and surveyors). In practice this meant that a significant portion of the costs, but not their entirety, would be reimbursed. We’ve been told that 50 to 75% is a typical rate of reimbursement. It was annoying that we would have to pay for some of the legal costs of a dispute that had not chosen to be in, but that is the way that things work.
In retrospect it should have been no surprise that none of the offers were accepted. More surprising to us was that there were no counterproposals offered by the builder for months. There was no attempt to negotiate or narrow the dispute. Our carefully considered remedial works plan was ignored without comment or response. Much later, the builder dismissed the entire works proposal because they said that they did not want to warranty their paintwork for more than a year. (How many customers would buy an expensive boat where the exterior’s paintwork was only guaranteed for a year?)
Particularly odd to us was that the builder did not counter our financial offer to settle. If the case advanced to court and it was ruled that the builder had made a fair financial offer to settle that we did not accept, we would be liable for a greater share of the legal costs. The legal system is set to encourage settlements. There was benefit to the builder’s case if they made us a counter offer that was close enough to ours to make it difficult to turn down. It is basic negotiating. In the end, if they had done this, it figures that they would have saved themselves £20,000 to £40,000.
With the lack of a response it appeared that the dispute was headed to the courts. On our side we doubled down on assembling as strong a package as possible. Each of our two surveyors issued strong point-by-point responses to the builder’s surveyor’s report. Our principal surveyor had not seen Wanderlust in nearly a year since which time the number of problems on our Table of Issues had more than doubled. Thus we arranged for him to make a follow-up visit.
At the same time, on the recommendation of our principal surveyor, we brought in a paint expert to look at Wanderlust’s paint. So far we had had over ten boat and paint professionals look at Wanderlust’s paint. The conclusions had been universal; the preparation was not properly done and far too little paint was applied. The solution was to grit blast and re-apply the coatings. Though we knew the origins of the problems, we needed a well-documented report from an expert that we could use in court. Our general surveyor would have done the paint survey if needed but he suggested an alternative; he suggested that we hire a dedicated paint expert to give the most weight to the report.
There was good reason for this. If the expensive paint dispute came down to a court battle between the opinions of general surveyors the waters would be muddy. Neither party was fully expert and the decision by the court could go either way. We needed a dedicated coatings expert. Thus we hired a paint surveyor and arranged to have Wanderlust taken out of the water so her coatings could be inspected.
This proved to be a pivotal moment in the dispute. Over the winter the dispute seemed frozen. Though we didn’t know it at the time, a thaw as on the horizon as spring arrived.
* There are several technical issues with doing a pressure test on a partially full tank. Generally tanks are pneumatically tested when completely empty: Liquids retard the release of the air so measuring an air pressure drop to rule out any leaks is not possible unless the tank is rigorously empty, something that was not possible without considerable effort. The surveyor could have proposed a hydraulic test but with the blowback and configuration of the tank it would have been near impossible to remove all of the trapped air, as necessary.
(Hydraulic tank tests measure the change of pressure of a small volume of compressible air over a non-compressible liquid. Sensitivity of the test depends on the air volume being as small as possible.)
The builder’s technical expert was proposing a flawed tank test to prove that there was no leak. Indeed, in the report and during the inspection the surveyor and the builder both did not demonstrate an understanding of how to perform a basic pressure test legally required for compliance with the Recreational Craft Directive. Further, this test would be done in the face of clear evidence that there was a leak. There was diesel in the bilge already.
If our dispute proceeded to court, we would have confidently challenged the technical credibility of the surveyor on this and several other points. We felt that this would have been strongly too our advantage.
We later, in 2018, learned that the proposed pressure test would have found a leak. There was a large leak from the fill pipe that was below the usual level of fuel in the tank. That said the pressure test performed in the manner suggested would not have found the ten additional fuel leaks that were later found from the white diesel tank.