18 Aug 2017
The world of valuation extends far beyond the land we walk and live on, in fact, it extends right out to sea. Meet Captain Ed Geary FRICS, chartered surveyor, maritime enthusiast and valuer of some of the world’s most elaborate ships, both above and below the sea.
While the valuation of property is often complex, maritime valuations are no less daunting and come with their own set of intricacies and challenges. It spans a huge variety of vessels: antique or classic sailing and yachts (both super and small), diving chambers used by NASA, naval vessels, cruise ships, conventional commercial vessels and large oil tankers. The diversity of this portfolio necessitates appraisals of the highest integrity, diligent research and careful analysis to ensure precision and compliance.
Maritime history in motion pictures
One of my most fascinating assignments involved the valuation of the replica of HMS Bounty, which was constructed by MGM Studios and was used in the 1962 motion picture ‘H.M.S. Bounty Sails Again!’ starring Trevor Howard and Marlon Brando.
The original British warship was built in 1784 at Blaydes Shipyard, East Yorkshire, at a cost of £1,950, but was sadly destroyed by fire in 1790. Many years later, an accredited valuation appraisal of the replica, owned at the time by Ted Turner of CNN fame, was required by the US Internal Revenue Service for purposes of taxation in the ship’s donation to a charity.
Sadly, on 29 October 2012 the replica sank during Hurricane Sandy, with the loss of her master and a crewmember. In the event of such an insurance claim, the determination of the ship’s residual value exposes the appraiser to a plethora of important issues relating to value, which include the extent of damages, repair and restoration costs, availability of repair facilities and the time needed to carry out the repairs.
Having an RICS-qualified chartered surveyor accredited and qualified in admiralty and maritime to assist not only ensures that all measures of an environmental nature are carefully addressed, but that proper designs of berthing, security, safety and shore-side facilities are in place.
Another of my more interesting assignments involved the valuation of a submersible undersea lab and diving chamber that had been used for deep-sea research in the Caribbean Sea, in an area known as the Puerto Rican Trench. In addition to aquatic research, the submersible had also been used to train NASA astronauts. Following its use by NASA, the submersible was taken to the Florida Keys where it was employed as a privately owned underwater hotel.
Seeking a business tax deduction, the owners claimed what appeared to be an excessive fair-market value of the underwater hotel that was questioned and challenged by the US Internal Revenue Service (IRS). As an internationally recognised expert in maritime valuation, I was retained by the IRS to determine its true value. Using scuba gear, I conducted an underwater inspection of the hotel to determine the hull’s structural condition and its sub-sea operating components. Following the initial survey and then applying the cost approach, I researched its background and history to determine its in-use residual fair-market value going back some 10 years.
When the case went to trial in the US Tax Court in Miami I was confronted with the owner’s expert report, which was dismissed by the judge, but was supported by testimony from witnesses, including former astronauts. Based on my report and testimony, the court agreed with my methodology and findings and ruled in favour of the IRS.
What does it take to be a maritime surveyor?
To arrive at a true fair-market value, an accredited and certified maritime appraiser must not only be fully qualified and conversant with the engineering principles and practices of design and construction, but must also have expertise with flag administration requirements and statutory and regulatory compliance.
Private clients, law firms, underwriters, lending institutions, owners, and prospective purchasers rely and have confidence on receiving accurate, comprehensive and unbiased reports of valuation that will be accepted by the courts on both sides of the Atlantic. In the case of agreed values in insurance policies, over-valuation presents a moral hazard where under-valuation precariously exposes the insured to become a co-insurer.
Our valuation standards and guidance cover all areas of surveying and embody best practice. Browse our full list of guidance notes and practice statements
Maritime surveying is one of the many fascinating facets that exist within the world of surveying. Do you do anything a little different or quirky in your role? We want to know about it — comment below.
Image credit: Lyle Vincent on Flickr
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