1 Tuesday, 10 October 2017 2 (9.30 am) 3 CHAIR OF THE INQUIRY: Good morning. 4 MR LAKE: My Lord, the first witness we have this morning, 5 in fact the only witness today, is Andrew Fitchie. 6 MR ANDREW FITCHIE (affirmed) 7 CHAIR OF THE INQUIRY: You've got a folder there. Can you 8 just leave it on the floor beside you. 9 A. That's exactly where it's going. 10 CHAIR OF THE INQUIRY: Yes, Mr Lake. 11 Examination by MR LAKE 12 MR LAKE: Mr Fitchie, will you state your full name, please. 13 A. Andrew Sutherland Fitchie. 14 Q. The Inquiry has your address details. What is your 15 present occupation? 16 A. I'm retired. 17 Q. Could I ask you to look at a document with me. It's 18 document TRI00000102. It should be shown on the screen 19 in front of you. 20 A. Yes. 21 Q. Do you recognise that document? 22 A. I recognise the table of contents. 23 Q. If we look at the last page of this document, it should 24 be page 371, the one before that? 25 A. This is a list of the Inquiry's questions. 1 1 Q. Could we look, please, at page 364. We see there 2 a signature page which bears your signature and the date 3 of 14 July this year. 4 A. Yes. 5 Q. I think you also have in front of you a paper copy of 6 that statement, which again you should have, on 7 page 364, your signature? 8 A. That is my signature. 9 Q. I think in addition to the statement, you've also been 10 through it and discovered a number of corrections that 11 you seek to make and provided to the Inquiry a document 12 listing those? 13 A. I did, and that work was done in August. 14 Q. Now, with the benefit of those corrections applied to 15 the statement, are you content that that be taken as 16 your evidence to this Inquiry? 17 A. I am. 18 Q. Could I ask you, please, then did you could you look at 19 page 50 of this statement. Could we highlight 20 paragraph 4.50. You refer here to Inquiry question 92? 21 A. Yes. 22 Q. And whether or not you suggested at any stage that the 23 Council should obtain independent legal advice or if you 24 think that it would have been a good idea. 25 You say: 2 1 "This was not an issue for DLA Piper to advise on or 2 consider. This is precisely why the DLA Piper duty of 3 care letters are worded as they are. Did I think it 4 would have been a good idea: an answer - covering a nine 5 year period - enters a realm of speculation and hindsight 6 and judgments about the Council's organisational 7 processes and internal skills and responsibility 8 allocation that I do not believe I can enter helpfully." 9 Do you see that? 10 A. I do. 11 Q. It clearly involves hindsight, doesn't it? 12 A. Answering the question? 13 Q. Yes. 14 A. Yes. 15 Q. But rather than speculate, you were very well aware of 16 the issues that arose, for example, leading up to the 17 conclusion of the contract, aren't you? 18 A. I was definitely aware of the issues leading up to the 19 signing of the contract. 20 Q. Separate advice to the Council would have been able to 21 focus in particular on the Council's position as funder? 22 A. Yes. 23 Q. It would have been able to focus upon the Council's 24 particular concerns, if it's found that they had them, 25 of ensuring that the contract price was fixed? 3 1 A. Is that a question, sorry? 2 Q. Yes, it was. 3 A. Could you repeat for me. Sorry. 4 Q. It would have been able to focus in particular on the 5 Council's concerns, if found that they had them, of 6 ensuring that the contract price was fixed? 7 A. The advice -- if the Council was going to take 8 independent advice, my view on that would be it would 9 not simply be legal advice that would be necessary. 10 Q. But the legal advice, should they have taken it, would 11 have been able to focus upon particular concerns as to 12 fixed costs? 13 A. Had they taken it, and had they instructed those lawyers 14 to focus on those issues, yes. 15 Q. Yes. 16 A. My Lord, they would have. 17 Q. The advice would have also been able to focus on 18 ensuring or advising on -- as to the implementation of 19 the procurement strategy? 20 A. We -- your question seems to be moving -- your question, 21 my Lord, seems to be moving away from fixed price. It's 22 now talking about -- 23 CHAIR OF THE INQUIRY: I think don't you worry about the 24 questions. Mr Lake will ask the questions. 25 A. Okay. 4 1 CHAIR OF THE INQUIRY: If you answer them directly, subject 2 to any qualifications you wish to give afterwards, just 3 do that. If it's not a relevant question, I will 4 intervene. 5 MR LAKE: I will ask it again, Mr Fitchie. 6 A. Thank you. 7 Q. Advice that the Council obtained themselves would have 8 been able to focus on, in particular, issues of whether 9 or not the procurement strategy was being implemented? 10 A. Yes, it would. They would have been able to get the 11 benefit of that advice. 12 Q. If the Council had separate advice up to the state of 13 contract close, it's quite likely they would have 14 considered part 4 of the Schedule to the contract? 15 A. Yes. 16 Q. You would have expected that advice to examine change 17 provisions within the contract? 18 A. Yes. 19 Q. To have advice on these two critical elements of the 20 contract would have been of benefit to the Council? 21 A. Yes. 22 Q. So really one doesn't need to enter into the realm of 23 speculation at all. It's quite clear that the Council 24 having independent legal advice would have been of 25 benefit to them at contract close? 5 1 A. I would answer that part of your question, rather your 2 summary of the question, by saying that it was for the 3 Council to decide whether they needed that advice. When 4 I say entering the realm of speculation, I didn't know 5 and still don't know what internal resources the Council 6 actually had to get advice on these matters. And so 7 asking me whether I think the Council should have got 8 advice puts me in a situation where I cannot answer 9 whether I think the -- the questions you have asked me, 10 my answer to those is yes. If the Council had obtained 11 that advice, they would have had the benefit of it. 12 Should they have done it is, I believe, is 13 a slightly different question, and it's asking me to 14 pass an opinion on whether, with the resources the 15 Council had, with its Legal Department and so on, they 16 should have had independent legal advice. And I can't 17 answer that question. 18 What I can say, my Lord, is that having read 19 Rebecca Andrew's evidence or her testimony, I noted that 20 the Council was having an internal discussion for 21 virtually the whole of the first half of 2007 as to 22 whether they should get external legal advice, and the 23 decision of the Council Solicitor at that time was no, 24 they didn't need it. 25 CHAIR OF THE INQUIRY: I think, Mr Fitchie, the question 6 1 really was directed to whether you thought that the 2 Council having independent legal advice would have been 3 of benefit to them. 4 A. Whether I thought at the time. My answer is I did not 5 know. 6 CHAIR OF THE INQUIRY: Well, now -- 7 A. Now, yes. 8 CHAIR OF THE INQUIRY: Thank you. 9 MR LAKE: Thank you. 10 Now, we know that tie was wholly owned by the 11 Council. That's your understanding? 12 A. Yes. 13 Q. The management of that company, as the management of 14 most companies, would be in the hands of the directors 15 of that company or their delegates? 16 A. Correct. 17 Q. Those directors had various duties which, taken broadly, 18 mean that they're supposed to act in the benefit of 19 interests of the company? 20 A. Yes. 21 Q. Which would encompass here acting in the interests of 22 their sole owner, the Council? 23 A. Yes, with -- yes, with the reservation that I am not the 24 company's law specialist. 25 Q. But nonetheless, from your experience of law in general, 7 1 you will be aware that disputes can exist between parent 2 companies and subsidiaries? 3 A. Yes. 4 Q. And that there can be litigation between shareholders 5 and those companies, usually in insolvency where 6 financial problems arise? 7 A. I've certainly seen cases where that happens. 8 Q. So the fact that tie was wholly owned by the Council 9 didn't rule out there being a divergence of interest 10 between the Council on the one hand and tie on the 11 other, did it? 12 A. I don't -- did the ownership of tie by the Council, 13 100 per cent ownership of tie, rule out divergence? My 14 view on that, my Lord, is that there was an Operating 15 Agreement between these parties which essentially said 16 that tie was acting in all relevant matters, ie the 17 signature of these big contracts, in the Council's 18 interests or for and on behalf of the Council. 19 I have provided the Inquiry with my thoughts on 20 these matters in answer to question 90. Part of that 21 answer was the issue surrounding how tie was set up and 22 what its position is in terms of being delivery agent 23 for the Council, ie under procurement law it needs to be 24 doing the Council's bidding. Otherwise there would be 25 an issue in terms of it not -- that appointment as 8 1 project delivery agent not having been subject to a full 2 European Union regulated procurement. 3 So my answer to the question sits in my views given 4 in clause -- excuse me, my answer to question 90. 5 Q. You referred to European Union -- 6 CHAIR OF THE INQUIRY: I think what we're interested to 7 know, Mr Fitchie, is: did the ownership of tie by the 8 Council and the existence of the Operating Agreement 9 rule out the risk of a dispute between them? 10 A. Could not rule those matters out. 11 CHAIR OF THE INQUIRY: Thank you. 12 MR LAKE: When you refer to the European Union procurement 13 matter, is that what's sometimes known as the Teckal 14 doctrine? 15 A. The doctrine of a single purpose company. 16 Q. The European case of Teckal? 17 A. Yes. 18 Q. You referred there to the Operating Agreement. I think 19 if you look at page 9 of your statement, if we enlarge 20 paragraph 2.12, you refer there to the detailed 21 Operating Agreement that was agreed between tie and the 22 City of Edinburgh Council. You note it is stated that: 23 ""tie will enter into ... contracts in its own name 24 but will be acting on behalf of the Council". It is 25 difficult to conceive of a clearer expression by the two 9 1 parties themselves of the congruity of interests between 2 TIE and its 100% legal parent." 3 A. Mm-hm. 4 Q. That's no guarantee that tie won't in fact enter into 5 a way that was of harm or divergent to the Council's 6 interest, is it? 7 A. I agree with you, and my evidence doesn't suggest that 8 it is a guarantee. It says it's difficult to conceive 9 of a clearer expression of congruity of interests. And 10 I think I give more -- this is the executive summary 11 part of my statement you are looking at, my Lord. This 12 is one piece of what I have said in answer to these 13 types of questions. 14 Q. When was the Operating Agreement signed? 15 A. Two days before the close of the contract. The Infraco 16 contract. 17 Q. 2008, May 2008? 18 A. That is my recollection, and I believe it's in the 19 records as well. 20 Q. Could you look, please, at another document. It's 21 reference CEC01567396. You might not have seen this 22 document before, Mr Fitchie. You will see it's headed 23 "SUPPLEMENTARY PAPER GOVERNANCE ARRANGEMENTS FOR 24 TIE LIMITED" and is a document which was prepared by 25 Colin MacKenzie of the Council. Have you in fact seen 10 1 this document before? 2 A. I have not seen this before, and what date is it, 3 please? 4 Q. I would have to go back and check. I'm not immediately 5 sure. But what I want to look at is the lower half of 6 the page, please. There's a paragraph: 7 "When the respective roles of the Council and TIE 8 were identified it appeared that the Council would 9 merely be exercising an approval function in respect of 10 statutory matters such as Planning Prior Approvals and 11 Traffic Regulation. All other matters were to be 12 undertaken by tie. Increasingly, officials have found 13 it necessary to take a much closer and proactive role in 14 seeking to protect the Council's interests. It cannot 15 always be said that TIE's close focus on the Tram 16 project, and the Council's wider interests, are at one." 17 Now, that recognition of possible divergence of 18 interests is an obvious one, isn't it? 19 A. Before answering the question, I would like to know when 20 this document was written. 21 Q. Could you just answer the question, please, Mr Fitchie, 22 unless you can explain how the answer has any impact on 23 the question I have just asked about divergence of 24 interests? 25 A. My concern is not giving you the answer that is the most 11 1 accurate one. But let's pass that. You want me to 2 concentrate on this paragraph. 3 Q. If you can explain any way in which you consider the 4 accuracy of your answer will be affected by the date of 5 the document, why don't you explain it to me. 6 A. I will explain it to you succinctly in one sentence, and 7 that is what tie was doing as a delivery agent and for 8 the Council and other projects it was working on, 9 changed from time to time. And so it's important to 10 know when Colin Mackenzie was talking about. 11 However, you seem anxious for me to concentrate on 12 this without knowing the date. So -- 13 CHAIR OF THE INQUIRY: I think Council said that he will get 14 the date and someone has gone to check that. So if you 15 would just answer the question. 16 A. Thank you, my Lord. 17 This is a statement by Colin MacKenzie, a senior 18 solicitor in the Council, about divergence of interests, 19 and I take what he says. 20 MR LAKE: Can we come to the question which I asked 21 originally. 22 CHAIR OF THE INQUIRY: When you said you take what he 23 said -- 24 A. I understand what he said. 25 CHAIR OF THE INQUIRY: And do you agree with it? 12 1 A. I agree with it. 2 MR LAKE: And I asked you: was that not quite an obvious 3 divergence of interests? 4 A. It may be for the Council. I have difficulty in 5 agreeing with you that it is obvious. It is a way that 6 there might be a divergence of interest, yes. 7 Q. It's an obvious way there might be a divergence of 8 interest, that tie is focused on one project and the 9 Council has much wider interests? 10 A. There would have to be a position where the Council's 11 wider interests clashed with the tram project in my 12 opinion. 13 Q. And that's a possibility, isn't it? 14 A. Yes, it is a possibility. 15 Q. Did you recognise that possibility? 16 A. No, I did not. I wasn't advising CEC. I was advising 17 tie. 18 Q. Were you ever advising CEC? 19 A. The answer to that question is no. I was not advising 20 CEC, and I have given in my statement reasons why 21 I believe that was the case and why it continued to be 22 the case. 23 When I advised CEC, I was instructed to do so by tie 24 in accordance with the duty of care letters. 25 Q. So can we be quite clear about this. Is your evidence 13 1 to this Inquiry, you want me to take from it, that you 2 were never involved in advising CEC other than when 3 particularly directly requested to do so by tie? 4 A. That is my honest recollection. If there are documents 5 which show that I was advising CEC directly without 6 instruction to tie -- excuse me, without an instruction 7 from tie, then my memory has failed me. 8 Q. Let's look at another document now. It's got reference 9 DLA00006301. 10 Sorry, before moving on to that, can I say for the 11 record that the report we have just looked at is sent 12 out under cover of an email dated 18 July 2007. 13 If you could look, please, at that other document. 14 Enlarge the upper half of the page to make it 15 generally more readable. 16 There you will see this is a letter that's addressed 17 to Alex Macaulay at tie. If you scroll down a little 18 bit, you can make out from the top right-hand corner 19 that this comes from DLA Piper Rudnick Gray Cary which 20 was the name of DLA Piper at that time? 21 A. Correct. 22 Q. It's dated 23 June 2005. 23 If we go on to the second page of it, we can see 24 that it's a letter that runs in your name. Do you see 25 that? 14 1 A. It is. 2 Q. Let's look back at the first page. Let's see what you 3 wrote. Under the heading "THE CITY OF EDINBURGH COUNCIL - 4 DUTY OF CARE", you say: 5 "Following your call on Tuesday morning and our 6 exchange of emails, I have discussed the issue with 7 Mark Swindell, my Group Head, our UK Risk Management 8 Director and Bruce Westbrook, Joint Managing Partner in 9 Scotland. 10 "Please find attached a draft letter which we are 11 ready to provide to tie. An explanation in brief." 12 Then paragraph 2: 13 "We need to continue to advise tie (as a sole source 14 of instructions), whose interests (and therefore the 15 fiduciary duty of its Board) may not fully coincide with 16 CEC's objectives and interests; this is a judgment only 17 tie can make." 18 That seems to be a recognition back as far as 2005 19 on your part that the interests of tie and the Council 20 might not coincide? 21 A. You are right. 22 Q. If that arose, that might give rise to a situation 23 where -- could give rise to a situation in which the 24 Council, it would be appropriate that the Council should 25 have separate legal advice to protect their divergent 15 1 interests? 2 A. I agree with you. 3 Q. If you can look at the letter that's attached to this 4 one, it's reference DLA00006300. 5 This now, we can see once again from the top 6 right-hand corner, it comes from your firm. This time 7 again it's addressed for the attention of Alex Macaulay 8 at tie. It's got a date on of 23 June 2005? 9 A. Mm-hm. 10 Q. If we just read under the heading, "EDINBURGH TRAM 11 NETWORK (the "Project)", you can see: 12 "We refer to our appointment as legal adviser of 13 tie Limited (the "Appointment") as confirmed by your 14 letters of 25 November 2002 and 7 March 2003 in connection with 15 the Project. 16 You requested on 21 June 2005 that in respect of 17 our work on the Project pursuant to the Appointment we 18 acknowledge a duty of care owed to the City of Edinburgh 19 Council ("CEC"), your corporate parent entity, such duty 20 of care to be the same as the contractor duty of care we 21 owe to you. 22 This letter confirms that as from December 5th, 2003 23 onwards, DLA Piper Rudnick Gray Cary Scotland LLP has 24 owed and owes the same contractual duty of care to CEC 25 as owed to tie Limited pursuant to Clause G.3.1(a) of the 16 1 General Conditions governing the appointment on 2 condition that: 3 "1. DLA Piper's primary responsibility has been and 4 is to advise tie limited and DLA Piper may at all times 5 and for all purposes rely on tie's instructions given to 6 us under the appointment as being identical to CEC's 7 instructions as if emanating from CEC itself and as 8 taking into account CEC's objectives and best interests; 9 2. DLA Piper remains expressly authorised to 10 receive and seek all instructions (and any 11 clarifications) under the Appointment solely from tie as 12 Project manager and agent for CEC and in the absence of 13 specific written instruction from tie, DLA Piper has not 14 been and is not under obligation to advise CEC staff or 15 members directly." 16 Let's pause there. A number of matters arise. This 17 firstly is the letter that was attached -- the draft 18 letter that was attached ... 19 CHAIR OF THE INQUIRY: That's the standard fire alarm. 20 MR LAKE: I'll start that again. This is the draft letter 21 to go to the Council that was attached to the previous 22 letter. 23 A. Can we scroll -- would it be possible, my Lord, to 24 scroll to the bottom of the letter? 25 Q. We can go over the page if you wish also. 17 1 A. Thank you. 2 Thank you, yes, that's right. And I just note the 3 last paragraph in the letter: 4 "In order to put this undertaking into effect, 5 please arrange for the enclosed copy to be signed by 6 duly authorised officers of tie Limited and CEC and 7 returned to us." 8 For my attention. 9 Q. Yes. Let's go back to the first page. If you look at 10 the numbered paragraph 1? 11 A. Yes. 12 Q. This is dealing with the question of instruction, isn't 13 it? 14 A. Correct. 15 Q. It reflects the fact that although you might have a duty 16 of care owed to the Council, in terms of taking 17 instructions, you could simply do whatever you were 18 asked to do by tie? 19 A. Yes. I would also mention the last -- the last phrase 20 in that paragraph: 21 "... and as taking into account CEC's objectives and 22 best interests;" 23 Meaning -- 24 Q. So -- carry on. 25 A. Meaning that in terms of receiving instructions from tie 18 1 under the appointment, we are entitled to treat those as 2 being CEC's instructions and those instructions are 3 taking into account CEC's objectives and best interests. 4 Q. However, situations could arise where in implementing 5 those instructions, it becomes apparent that it is not 6 going to be in the Council's interests? 7 A. My Lord, this is where I move into a difficult area in 8 answering this question, because that question assumes 9 that there is a duty and responsibility, and indeed 10 a way in which DLA Piper can find out on its own account 11 a divergence between the Council's objectives and best 12 interests, or a divergence between tie's interests and 13 the Council's interests. DLA finding that out itself. 14 And I have taken a position in my statement on that. 15 Q. Well, Mr Fitchie, with respect, why don't we just stick 16 on the question I asked you, which is not dealing with 17 any particular concrete situation where a divergence has 18 or has not arisen, but at least dealing with the 19 possibility that the instructions might give rise to 20 a situation in which there was a divergence of interest? 21 A. Yes, this could do. 22 Q. The second paragraph here, second numbered paragraph, 23 makes provision for written instruction from tie to your 24 firm to provide advice to the Council directly? 25 A. Correct. 19 1 Q. These are dated 2005. I would like now to move to 2007. 2 If we could look, please, at a document reference 3 CEC01711054. 4 Enlarge the upper half of the page. Just scroll 5 down a little so we can see the very top. That's it. 6 We can see that this is an email that runs from you 7 to Gill Lindsay at the Council and it's dated 8 16 August 2007? 9 A. Yes. 10 Q. Can you recall what was Ms Lindsay's role within the 11 Council at the time? 12 A. I believe Gill Lindsay was a recently appointed 13 Council Solicitor. 14 Q. The subject of the matter is CEC Mandate. Do you see 15 that? 16 A. I do see that, and I see that as a fairly loose 17 expression, but -- 18 Q. A mandate is not quite the same as a duty of care, is 19 it? 20 A. This is a heading -- you are right. This is a heading 21 in an email. 22 Q. Okay. Let's read on the rest of the email: 23 "Gill, I very much appreciated you call and the 24 direct contact. 25 As discussed, I attach a draft of the letter 20 1 I would propose to send to the Council to affirm our 2 duty of care and the joint client status. It is based 3 on the letter I mentioned we had provided to tie (and 4 intended to have been provided to the Council) in 5 June 2005. Please let me know if there is anything you 6 would wish to add or alter." 7 Firstly, you're quite clear here that we're talking 8 about a duty of care and joint client status, aren't 9 you? 10 A. Well, the letter, I believe, that I'm talking about, 11 this -- it is based on the letter I mentioned we had 12 provided -- 13 Q. Mr Fitchie, could you answer my question, please. 14 You're quite clear in this email that you're looking at 15 a duty of care and joint client status? 16 A. And the joint client status. And that refers to the way 17 the letter is set out. The letter we have just been 18 looking at, on 23 June. 19 Q. Well, this is a letter -- email dated 16 August 2007. 20 And it's referring to a draft of the letter that's 21 attached to that email, isn't it? 22 A. It is. 23 Q. It's saying that it deals with the -- affirmed the joint 24 client status? 25 A. That's what it says in the email. 21 1 Q. Presumably it's what you intended when you wrote the 2 email, Mr Fitchie? 3 A. It is, but what I'm focused on is the letter itself. 4 Q. We will come to that in a moment. If you look at the 5 second paragraph, you say: 6 "I do not envisage any conflict of interest here; to 7 the contrary - in closing the required supply contracts 8 as part of the procurement process, there needs to be 9 complete commonality of interests and objectives among 10 the Council, tie and TEL. That is not to say that there 11 will be and will have been detailed discussions (in 12 which we would have our role as advisers for the 13 Project) on key issues in order to reach that 14 commonality." 15 A. Mm-hm. 16 Q. Just pausing there, the need for such discussions tends 17 to recognise that there might not in fact be commonality 18 of interests and it would be necessary to take action to 19 bring that about? 20 A. I agree with you. 21 Q. If we look then, please, at the letter itself, the draft 22 letter, it's got a document reference CEC01711055. We 23 can see at the top right-hand corner again, it appears 24 to come from your firm, although now called DLA Piper 25 Scotland LLP? 22 1 A. Correct. 2 Q. It's addressed to the City of Edinburgh Council, and 3 because this is a draft letter, the date is simply 4 blank. 5 A. Correct. 6 Q. If you look at the text, if we read from the third 7 paragraph: 8 "This letter reconfirms that as from 5 December 2003 9 onwards, DLA Piper Scotland LLP has owed and owes the 10 same contractual duty of care to CEC as owed to tie 11 Limited pursuant to Clause G.3.1(a) of the General Conditions 12 governing the Appointment. We acknowledge CEC as joint 13 client with tie Limited on the basis that:" 14 We will go and look at the basis in a moment, but 15 that letter is quite unequivocal that the Council are to 16 be joint client along with tie? 17 A. Correct. 18 Q. The first numbered paragraph is that: 19 "DLA Piper's primary responsibility has been to 20 advise tie Limited and DLA Piper may at all times and for 21 all purposes rely upon tie's instructions given to us 22 under the Appointment as being identical to CEC's 23 instructions as if emanating from CEC itself and as 24 taking into account CEC's requirements, objectives and 25 best interests." 23 1 That is once again a clause making the same 2 provision as before, entitling DLA to take instructions 3 solely from tie? 4 A. Correct. 5 Q. In the second paragraph: 6 "DLA Piper remains expressly authorised to receive 7 and seek all instructions (and any clarifications) under 8 the Appointment from tie as Project manager and agent 9 for CEC. In the absence of specific written 10 instruction, DLA Piper has not been and is not under any 11 obligation to advise CEC officers or members directly, 12 under exception that DLA Piper will brief CEC officers 13 at regular intervals as instructed by tie Limited, or as 14 required by CEC." 15 Now, those five words at the end are clearly new, 16 aren't they? 17 A. You're right. 18 Q. So we've got two differences to this letter. We've got 19 the Council are now joint client and the specific 20 provision that as required by the Council, you will 21 advise the Council? 22 A. I need to -- I have to agree with you. 23 Q. So if you look back to your statement, please, page 48, 24 we can look at paragraph 4.37, what you say there about 25 these letters is: 24 1 "Two years later in August 2007, the same letters 2 were then re-issued at the request of Gill Lindsay of CEC 3 Legal. They appeared to have been lost by CEC. On 4 16 August 2007, I sent an email to Gill Lindsay with an 5 attached draft duty of care letter." 6 We will see the document reference for the two 7 documents we have just looked at. They are clearly not 8 the same letter as existed in 2005, are they? 9 A. You're right. They have had that adjustment made to 10 them. 11 Q. It is a quite a significant adjustment to bring in the 12 Council expressly as joint client? 13 A. Yes. 14 Q. And it recognises now that you will advise the Council 15 whenever the Council requested? 16 A. My answer to that question is: yes, it does, but in 17 practical terms, my Lord, that is not actually what 18 happened. 19 Q. If this letter -- if the Council simply come back and 20 say we are happy with the terms of this letter, I assume 21 from the fact you sent it out that you would have been 22 happy to sign it and send it to the Council? 23 A. I cannot disagree with you. 24 Q. Now, in fact I think it is the case that this wasn't -- 25 you weren't given -- a request for a signed copy of the 25 1 letter wasn't in fact made to you, and you did not 2 provide a signed copy of this letter? 3 A. This letter, as far as I can tell, was lost, and another 4 one was lost. So you are right, this letter was never 5 returned to DLA Piper signed. 6 Q. It's really a request to you, so that you would provide 7 a signed copy of the letter to the Council; is that not 8 what you were asking for in your email? 9 A. Can we just look at the bottom page of the letter just 10 to remind myself? 11 Q. Is it the letter you want to look at or the email? 12 A. I would like to look at the letter itself, just to see 13 how it finishes. 14 Q. That's document CEC01711055. If we could look at 15 page 2. 16 A. Yes, thank you for finding that. There's a signature 17 block there for DLA Piper and for the Council and for 18 tie. So I'm asking the Council essentially to sign this 19 up. I'm asking tie to sign it up and send it back. 20 I hope that answers the question. 21 Q. It does. 22 A. Just to be clear, as I said, my Lord, this never came on 23 my desk. 24 Q. But these were the terms you had written to the Council, 25 indicating the terms under which you would be happy to 26 1 provide services? 2 A. That's right. 3 Q. There was never any dissent from that that you are aware 4 of? 5 A. No, nor was there any answer to it. 6 Q. Could we go back to your statement, please. If we could 7 look at -- it will be the next page. Look at 8 paragraph 4.41. That's where you note that: 9 "... letter was never signed. It was never 10 commented on. It was never sent back by CEC Legal." 11 A. That's right. 12 Q. Can we then go on to look further down at 13 paragraph 4.45. 14 A. Mm-hm. 15 Q. You say: 16 "Graeme Bissett, in his email dated 1 July 2008 17 mentions that he is not aware of arrangements which DLA 18 may have with CEC as regards provision of legal 19 services." 20 You refer there to a document. Can we look at that 21 document, please. It's CEC00114232. 22 If we look at the -- I should look at the top to 23 identify. This is from Graeme Bissett, to you, and it's 24 dated 1 July 2008? 25 A. Yes. 27 1 Q. We look at the second paragraph, it notes: 2 "I understand that DLA are also contracted to 3 provide services to CEC. tie has no direct locus in 4 that arrangement but we would appreciate being informed 5 of any work directed by City of Edinburgh Council for 6 the purposes of orderly coordination." 7 So we see that. It's not suggesting, as you 8 mentioned, that Graeme Bissett mentions that he is not 9 aware of arrangements which DLA may have with the 10 Council. He's saying as far as he's concerned, he 11 believes that there is an arrangement by DLA to provide 12 services to the Council. 13 A. I'm sorry. This may not be the answer to your question, 14 but the second sentence in that paragraph, Graeme says: 15 "tie has no direct locus in that arrangement." 16 The letters we have just been looking at does give 17 tie a direct locus in that arrangement as, say, a medium 18 for instruction from the Council to DLA Piper. I'm 19 sorry, could you just take -- my Lord, sorry. 20 CHAIR OF THE INQUIRY: Mr Fitchie, I think the point is 21 quite simple. 22 A. Yes. 23 CHAIR OF THE INQUIRY: You referred to a passage in your 24 statement which specifically referred to this document. 25 A. Yes. 28 1 CHAIR OF THE INQUIRY: You seem to think that that document 2 indicated that Mr Bissett wasn't aware that there was 3 any arrangement or link with CEC, whereas this 4 document -- 5 A. Says the reverse. 6 CHAIR OF THE INQUIRY: Says the reverse. 7 A. I'm sorry, could we just go back to my statement? 8 MR LAKE: Yes. It's page 49 of the statement. It's 9 paragraph 4.45. 10 A. You're right. That's an error on my part. 11 Q. As a generality of practice in solicitors, situations 12 may arise where they're acting for more than one person 13 and become aware that the interests of the persons for 14 whom they act diverge? 15 A. I agree with you. 16 Q. In that situation, there are fairly established rules as 17 to what solicitors should do? 18 A. Correct. 19 Q. One of those is when they determine a divergence of 20 interests, is to make a recommendation to at least one 21 of the parties, possibly all of them, that they seek 22 independent legal advice? 23 A. Correct. 24 Q. So if a situation were to emerge where it appeared to 25 you that there was a divergence of interest, it would 29 1 have been appropriate to recommend that the Council seek 2 independent legal advice? 3 A. I cannot disagree with you. 4 Q. Could we look at another document, please. It's 5 CEC00098268. Can we look at the lower half of the page, 6 please, enlarge to make it more readable. Thank you. 7 What I'm looking at here in this section is an email 8 sent from you to Nick Smith, who I think was a solicitor 9 with the Council; is that correct? 10 A. Yes. 11 Q. It's dated 2 September 2010 and it's headed "Clause 12 80.20"? 13 A. Yes. 14 Q. It begins by saying: 15 "Following our meeting yesterday with Carol, I set 16 out our views on Clause 80.20 in the context of where 17 the imperatives for administration of the Infraco 18 Contract sit today, namely the maximising of commercial 19 pressure on BSC to view a negotiated outcome on Carlisle 20 as the most attractive option when compared with 21 termination or the status quo." 22 Just pulling out various parts of that, the 23 reference to Carol, would that be a reference to 24 Carol Campbell, another solicitor within the Council? 25 A. I honestly don't recall, but now you put the surname 30 1 with the Christian name, yes. 2 Q. And the reference to Clause 80.20, that was one of the 3 provisions of the Infraco contract which dealt with 4 variations to the works? 5 A. Correct. 6 Q. The reference to an outcome on Carlisle, that would be 7 to Project Carlisle which was a project that was put in 8 place to try and modify the contract so that only part 9 of the line would be completed for a new cost and on 10 a new financial basis? 11 A. This was Tony Rush's initiative, to, yes, negotiate 12 a solution with BSC, and a component of that negotiated 13 solution was to have a line -- a line that was shorter, 14 scope of project that was smaller. 15 Q. If we look at the paragraph following, it starts to move 16 on to advice given to tie, and says: 17 "We did indeed provide advice to tie regarding the 18 operation of this provision at intervals between 19 August 2008 and quarter 1, 2009, by which time matters 20 had polarised between the parties. Revisiting all of 21 that advice to tie here is not entirely on point - as 22 we discussed when we met - since it was treating 23 a particular resolution being pursued by tie at that 24 time." 25 Pausing at the reference to that meeting, the way 31 1 it's written here appears to be a meeting between you 2 and the solicitors at the Council. 3 A. As we discussed when we met, it's referring to the first 4 line in the email: 5 "Following our meeting yesterday with Carol ..." 6 Q. So is this a meeting that you had with Council 7 solicitors? 8 A. This is a meeting I had with Council solicitors which 9 Richard Jeffrey asked me to have. 10 Q. We go on further: 11 "I will summarise that advice under separate cover, 12 with attachments so that you can review the 13 circumstances. The immediacy you were interested in was 14 the provision's potential application now." 15 That is clearly referring to something that 16 Nick Smith was interested in? 17 A. Mm-hm. 18 Q. What you're saying there is you will in future provide 19 a note of the advice that you had given to tie. If you 20 go back to the preceding page. 21 You will provide a summary of the advice to tie 22 under separate cover. 23 Do you see that? 24 A. I do see that, and I say with attachments so you can 25 review the circumstances. So what I'm referring to is 32 1 advice that had been given to tie, this is -- I'm sorry, 2 this is difficult to know exactly the context, my Lord, 3 of this -- these meetings. But it appears that what I'm 4 saying is I will summarise the advice that was given to 5 tie, and give Mr Smith some attachments. I'm not clear 6 what those would be, to be honest. 7 Q. After you refer to the attachments, you go on to say: 8 "The immediacy you were interested in was the 9 provision's potential application now." 10 So that's moving on to Mr Smith's own concerns, 11 which I presume he discussed with you during the 12 meeting? 13 A. Correct. 14 Q. Can we look at the next page, please. Just generally 15 look at the scheme of this, we can see paragraph 1, 16 where you discuss clause 80.20 generally, and describe 17 it as a reactive clause. Then you look down, you will 18 see paragraph 2 starts with the question: 19 "Can we interpret the clause to mean that BSC is 20 obliged to proceed during the 20 BD [business days] 21 allowed for production of the estimate?" 22 Paragraph 3 also has the qualification about the 23 80.20 language? 24 A. Mm-hm. 25 Q. Paragraph 4 is dealing with commercial reasons against a 33 1 certain interpretation, and paragraph 5 notes that the 2 crux of the matter ... 3 Reading all that, without going into the detail, 4 this is quite clear that this is providing advice to 5 Mr Smith in response to his request? 6 A. It is, and it's under instruction from Richard Jeffrey. 7 Q. There's no mention anywhere in that email of any 8 instructions from Richard Jeffrey, just a reference to 9 a meeting you had with Mr Smith? 10 A. That's right, my Lord, but at this point there was quite 11 a mixture of instruction going on. We were working with 12 tie. We were being asked to brief CEC. We were being 13 asked to make sure that CEC were informed in relation to 14 taking senior counsel's advice. 15 So that is my best recollection of the source of the 16 instruction to actually give this -- to have the meeting 17 with the CEC solicitor -- CEC solicitors and to provide 18 this very specific advice on clause 80.20. 19 Q. If you look back to your statement, please, at page 52, 20 and we could look, please, there at paragraph 4.60 in 21 the centre of the page, you can see you talk about this 22 document by saying: 23 "Question 96 suggests that my email to Nick Smith of 24 2 September 2010 is evidence that in 2010, I was taking 25 a more direct role with regard to CEC. I do not agree 34 1 with this proposition. I was sending materials and 2 reports and copies of Instructions to Counsel to CEC 3 Legal because Richard Jeffrey - as the CEO of 4 DLA Piper's client - had instructed me to do so and to 5 keep CEC Legal informed directly regarding Infraco legal 6 matters on which DLA Piper was working for TIE and with 7 Tony Rush." 8 From the email we have seen, it goes a great deal 9 beyond any of the things you describe in that paragraph. 10 You're not merely passing over matters. You're 11 responding directly to queries from Mr Smith? 12 A. Yes, I am responding directly to Mr Smith in the context 13 of a number of initiatives that tie had moving, and on 14 a general instruction from Richard Jeffrey for me to 15 provide CEC with legal support or to provide -- to 16 provide CEC Legal with what they wished to have in terms 17 of information and advice that tie was -- that tie was 18 receiving from DLA Piper, and also on issues which CEC 19 were particularly interested in. 20 Q. That's going on really rather farther than just saying 21 about provision of information, when you said in your 22 answer there you were providing CEC Legal with what they 23 wished to have in terms of information and advice. 24 So as far as you're concerned, there was a general 25 instruction from Richard Jeffrey that you would provide 35 1 CEC Legal with advice? 2 A. Well, the proposition I come back to, the factual 3 situation that I come back to, is that we were 4 working -- the context. We were talking with Tony Rush 5 in relation to Project Carlisle. We had been working 6 for a considerable period of time with Tony Rush on what 7 was called Project Notice. We were working still, 8 2 September 2010, we were not active on a -- there may 9 have been one DRP that DLA Piper were dealing with at 10 that point. 11 The point I'm trying to make is that this is 12 a situation where DLA was doing its best to support the 13 project, and if that involved meeting and dealing with 14 Council solicitors, I was quite prepared to do that, and 15 did so; without sitting behind and saying: Richard, 16 I need a letter from you or an email from you to give me 17 an instruction to meet with them. 18 Q. Just looking back at paragraph 4.60 in your statement, 19 you refer there to sending materials and reports and 20 copies of instructions and keeping CEC Legal informed 21 regarding legal matters on which DLA was working for 22 tie. 23 What you appear to be saying now is it goes very 24 much beyond that, that it was a question of directly 25 advising the Council. 36 1 A. I didn't regard it as that at the time, and that is why 2 my evidence in 4.60 says what it does. 3 Q. But looking at it now, it's quite clear, isn't it, that 4 that's exactly what it was, providing advice to the 5 Council? 6 A. I can't disagree with you that that particular email 7 that we have looked at is a piece of advice for 8 Nick Smith at the Council and Carol Campbell. 9 Q. Let's look at another email, this time from 10 Richard Jeffrey to you. Can we look at production 11 CEC00097692. Enlarge the upper half. 12 You can see this is an email from Richard Jeffrey? 13 A. Mm-hm. 14 Q. It's dated 11 August 2010. It's addressed to both you 15 and Nick Smith. Do you see that? 16 A. I do. 17 Q. What Mr Jeffrey, the CEO of tie says, is. 18 "Andrew, in discussions with CEC yesterday, and in 19 light of the developing situation, CEC have asked, and 20 I have agreed, that CEC Legal liaise directly with you 21 on legal matters. We are all aware of the potential for 22 confusion when effectively dealing with a multi-headed 23 client, but this risk can be managed, and the benefit is 24 that CEC legal will be more involved and informed and so 25 in a better position to advise CEC on any issues which 37 1 may require CEC decisions." 2 A. Mm-hm. 3 Q. Now, that's going quite further, isn't it? It's setting 4 up direct legal liaison between you on the one hand and 5 CEC Legal on the other? 6 A. You're right. 7 Q. It goes far beyond what you have talked about in 8 paragraph 4.60 of your statement? 9 A. "CEC legal liaise directly with you on legal matters". 10 I don't agree with you that it goes beyond what I'm 11 talking about. If it said that CEC can come to you 12 directly and ask for advice, I would agree with you. 13 But I do need to be particular about what words are used 14 here. I don't think "liaise" is saying -- giving 15 a direction to give legal advice directly to CEC. 16 I do agree with you that September email that we've 17 looked at is a piece of advice to Nick Smith and 18 Carol Campbell. That's the CEC solicitors. 19 Q. This is against a background of a relationship whereby 20 at that time they were joint client? 21 A. Correct. 22 Q. If you look at the second paragraph of this email, it 23 says: 24 "I am happy to be told different, but I wonder if 25 arranging a regular update (say once a week) might be 38 1 a sensible way to ensure that things don't get confused. 2 Currently I hold a weekly briefing of CEC officers at 3 1 pm every Tuesday (which can often spend quite some 4 time of legal issues). I suggest that an additional 5 meeting of me, CEC Legal, and DLA takes place 6 immediately before this, say at 11.30 every Tuesday. 7 I would envisage this as being in addition to direct 8 contact between CEC and DLA for matters that cannot wait 9 until the weekly meeting." 10 A. Mm-hm. 11 Q. So just that last sentence. It's clearly supposing 12 there's going to be some form of direct contact between 13 you and CEC? 14 A. I agree with you. 15 Q. And that would be presumably for provision of advice? 16 A. I don't know, and to be honest, I don't -- my Lord, 17 I don't recollect having 11.30 every Tuesday meetings 18 with CEC Legal and DLA, and the number of occasions on 19 which I met Nick Smith in this period were limited. And 20 you have certainly alighted on one where I did meet CEC, 21 on 10 September, sorry, the email refers to the meeting 22 that took place. I would need to go through -- maybe 23 you're intending to do that -- each and every contact 24 with CEC during that period to find out exactly what it 25 was that DLA Piper were providing them with. 39 1 Q. I'm not going to look at everything, but let's look at 2 a few more documents. Could we look at CEC01496537. 3 A. Before we look at that, my Lord, may I just make one 4 observation on this. 5 In this 11 August email from Richard Jeffrey, he 6 talks about multi-headed client and managing risk, 7 confusion. 8 There is, I believe, on file, and dealt with in my 9 statement, although the paragraph escapes me now, where 10 essentially there is a complaint from Richard Jeffrey to 11 Donald Anderson at the Council, saying the intervention 12 by CEC Legal, but I can't find the exact text from that 13 email, but it's essentially saying that this is 14 intrusive, unhelpful, and the Council Solicitor he is 15 talking about is Nick Smith. 16 I would place that email at around this period. 17 CHAIR OF THE INQUIRY: Do you think it was Donald Anderson 18 or David Anderson? 19 A. My understanding was that it was whoever was city -- the 20 Director of City Development. 21 CHAIR OF THE INQUIRY: David Anderson. 22 A. David Anderson, I'm sorry. So that email is there, 23 which doesn't, in my opinion, demonstrate plain sailing 24 in this arrangement. 25 CHAIR OF THE INQUIRY: Thank you. 40 1 MR LAKE: I think we've now got the other email I was 2 looking for. If we could start with the lower half of 3 the screen, please, we can see this is an email from 4 Colin Mackenzie. It's dated 30 January 2008. So we are 5 going back to a time before the contract was closed. 6 A. Yes. 7 Q. And it was addressed to you? 8 A. So this is two years earlier or more. Two and a half 9 years earlier. 10 Q. What Mr MacKenzie said is: 11 "Andrew, following today's meeting of the 12 Chief Executive's IPG, I'm writing to you requesting 13 a discussion on the above matter." 14 The above matter being the Edinburgh tram contract 15 and consents. You see that? 16 A. I do see that. 17 Q. "This is one of the critical issues still to be resolved 18 to the satisfaction of the Council. It is felt that 19 there would be mutual benefit in Gill, Duncan and myself 20 meeting with you in the next couple of days to reach 21 a common understanding about how the consents and timing 22 thereof fit in with the SDS and BBS contracts, and the 23 overall ... profile. It is important that you are fully 24 briefed on the Council's position before the 25 negotiations with BBS are concluded. Ideally, the 41 1 Council wishes this matter to be addressed by all 2 parties and covered appropriately in the Infraco 3 contract, rather than leaving room for uncertainty and 4 dispute during the execution of the contract." 5 We will come to your reply in a moment, but can you 6 just see there that it's quite clear Mr Mackenzie was 7 seeking to brief you on the Council's position so 8 that -- account could be taken of that during the course 9 of contract negotiations? 10 A. That's what he says in his email. 11 Q. If we look at your response in the upper half of the 12 page, it actually goes not to Mr Mackenzie, but to 13 various officers within tie, Graeme Bissett, 14 Willie Gallagher, Matthew Crosse and Geoff Gilbert, but 15 it is the same day, 30 January 2008. 16 What you say is: 17 "Gents, we need to discuss this as a matter of real 18 urgency. tie's team has been attempting to negotiate 19 a close on the position on Consents. 20 tie is at the blackjack table and are playing; not 21 sitting in a ante room considering which deck of cards to 22 use." 23 What did you mean by that reply? 24 A. What I meant, my Lord, was that I was astonished to get 25 an email from the Council, or one of the Council 42 1 solicitors, who I understood was dealing with the tram 2 project, on 30 January 2008 -- this is two months after 3 the appointment of BSC as preferred bidder -- saying 4 that essentially they didn't understand how the consents 5 provisions worked in the Infraco contract. 6 "tie is at the blackjack table and are playing, not 7 sitting in a anteroom considering which deck of cards to 8 use." 9 Yes. What I meant was the procurement is under way 10 and it's extremely urgent, and at this point, on 11 30 January 2008, tie had already reset the potential 12 close date for the contract from memory at some point in 13 February. 14 I didn't understand why -- could we scroll down to 15 Colin Mackenzie's email? I'm sorry, my Lord, I have 16 dealt with this in my statement, and I hope I'm not 17 boring people by repeating what I say in my statement. 18 But this is somewhat typical of many contacts that came 19 from the Council legal department, which to me indicated 20 there was a lack of co-ordination between the Council. 21 Consents was something which the Council Planning 22 Department had a major role. They were the -- not the 23 only, but the primary approval body dealing with 24 consents. 25 The way in which we communicated to the Council 43 1 during this period was we provided the Council with 2 issues lists, Council legal, because Council Legal 3 Department was my sole contact, DLA Piper's sole contact 4 within the Council. 5 We provided the Council Legal Department with issues 6 lists showing exactly where contract negotiations were. 7 The Council had a full set of the Infraco contract and 8 its various schedules, and they also had the opportunity 9 to come to the legal affairs -- Legal Affairs Committee 10 meetings on a regular basis to get this type of 11 information from the horse's mouth. 12 Now, the consent and the timing thereof is not 13 a legal question. That is a programming, design and 14 engineering question, in which the Council itself, 15 Planning Department, was playing a main role, and so 16 asking DLA Piper this question is odd. Or contacting 17 DLA Piper at this point is odd. 18 Q. What Mr Mackenzie clearly believed is that he should be 19 in a position to brief -- should be in a position to 20 brief tie -- he should be in a position to brief DLA as 21 to the Council's interests, so that they could properly 22 be reflected in contract discussions. We see that from 23 his email. 24 A. Well, I think my answer remains the same. 25 Q. Moving on now to a different document. If we could 44 1 look, please, at CEC01003720. 2 If we could enlarge the upper half of the page, we 3 can see that this is an email from you. It's dated 4 20 April 2009 to Gill Lindsay? 5 A. Mm-hm. 6 Q. It's headed "Strictly Confidential and [Freedom of 7 Information Scotland Act] Exempt". Do you see that? 8 A. I do. 9 Q. You say: 10 "Gill, I am attaching the paper which we have 11 prepared summarising the DRP position at the moment." 12 If you read over to the third paragraph: 13 "I am out of the office tomorrow abroad - but back on 14 Thursday. In the meantime, please let Chris Horsley 15 know if you require refinement on the paper or 16 a different focus and detail. 17 I should also mention (you will know) that we were 18 asked on Friday afternoon by Nick to prepare a separate 19 paper on the consequences of ETN project scope 20 truncation or the termination of the Infraco Contract as 21 an adjunct of not proceeding with the tram project." 22 Then the final sentence: 23 "I have asked Nick for a discussion on the level of 24 detail required here but was not able to reach him 25 today." 45 1 All those passages speak of you providing advice 2 directly to the Council in 2009? 3 A. They do. The first one obviously is a reset on advice 4 that tie had, and I come back to the proposition that 5 all of these contacts with CEC legal were first cleared 6 with tie. 7 tie, and I deal with this in my statement, so 8 I won't take up time, my Lord, going back to that -- 9 with the fact that tie all the way through this project 10 were extremely sensitive about DLA being contacted by 11 the Council or Council legal because they felt that that 12 deflected our ability to work on tie matters, and caused 13 confusion. 14 This is not an example, but there were many times 15 when the Council Legal Department came to DLA Piper and 16 asked them things or asked DLA Piper things which were 17 not legal matters or legal questions. 18 Q. You said there at the start, the first matter -- I think 19 you described it as a reset on advice that tie had? 20 A. Mm-hm. 21 Q. Are you referring there to the paper prepared 22 summarising the DRP position at the moment? Is that -- 23 A. Well, I'm referring to -- this is very much a reprise on 24 advice sitting with tie at present, but it should serve 25 to give you the facts as they are. 46 1 So my recollection at this point, without going into 2 those documents, is not good. But it looks like this 3 was some kind of update, and Gill Lindsay was requiring 4 information for an internal report of some description 5 within the Council. I can't say. There were frequent 6 occasions when we got urgent requests from CEC Legal to 7 provide documentation or information so that they could 8 complete some internal reporting. 9 Q. Can we look back at your statement, please, at page 50. 10 If you could enlarge paragraph 4.51 and the 11 subparagraphs. 12 The first one -- this is in relation to the Council 13 having independent legal advice -- is that: 14 "CEC Legal were in the best position to decide if 15 their client organisation should be receiving 16 independent legal advice, on top of the legal advice 17 that their project delivery company was receiving. CEC 18 Legal were also in the best position to understand any 19 particular matters of concern to CEC staff or 20 departments and to tell TIE this. This was in part why 21 the Legal Affairs Committee meetings were arranged." 22 Would it not be fair to say that no one had had 23 a better view of the contracts as they were being 24 negotiated than you? 25 A. Yes, it would. 47 1 Q. No one really better placed to know if something in 2 those contracts was -- might create a problem than you? 3 A. Might create a problem? Could you ask me again saying 4 what type of problem? 5 Q. There might be something in the contracts which would 6 work in a manner adverse to the interests of the 7 Council? 8 A. My Lord, that presupposes that I have complete knowledge 9 of what the Council's interests are and the concerns 10 are, and I did not. I was certainly the best person to 11 explain the contract, give advice on the contract to 12 whoever wanted it, but I do not accept that I was in the 13 best position to determine whether something was arising 14 in the contract that was not in the Council's best 15 interests. 16 Q. You were aware of the procurement strategy that had been 17 adopted for the tram project. You say that in your 18 statement. 19 A. Yes. 20 Q. And that one of the elements of that was that the price 21 should be as far as possible fixed? 22 A. Yes. 23 Q. You were aware that the Council would be funding any 24 excess over budget? 25 A. Yes. 48 1 Q. So if there was a situation which appeared to you that 2 the costs might not be fixed and the Council were 3 exposed to an increased financial obligation, that is 4 a matter which you would know was against their 5 interests? 6 A. Yes. 7 Q. You would be in the best position of anyone to know 8 whether or not the contract presented such a risk to the 9 Council? 10 A. I would say that making judgments on whether the 11 contract was fixed price or not is something that 12 requires a financial, commercial and engineering view as 13 well. 14 Q. Mr Fitchie, you're a person providing legal advice on 15 the contract to protect the client's interests. You 16 would be able to take a view on whether or not the 17 contract was fixed price, wouldn't you? 18 A. Yes, I would. 19 Q. As the person dealing with the wording of the contract 20 to allocate risks and responsibilities, you would be 21 particularly well placed to do that, wouldn't you? 22 A. Yes. 23 Q. Taking account of the risks and responsibilities is part 24 of your responsibility in drafting the contract, isn't 25 it? 49 1 A. Yes. 2 Q. So as the drafter of the contract, you would be 3 particularly well placed to know what the view is as to 4 where those risks and responsibilities would lie? 5 A. Yes. 6 Q. You would be particularly well placed to know if the 7 effect of the contract would be that the price wasn't 8 fixed and you would know that the Council would bear the 9 brunt of that? 10 A. Yes, I would. I would be -- yes, I would. I would know 11 that. 12 Q. Could we look over the page at page 51 of your 13 statement, please. Could we look at 4.51.4. This is 14 still under the general heading of your observations 15 about the Council obtaining independent legal advice, 16 and what you say is: 17 "The Project governance structure comprised at least 18 three different bodies containing City of Edinburgh 19 Council officers and officials - who were all in 20 a position to discuss and decide if CEC required 21 separate legal advice." 22 A. Mm-hm. 23 Q. How does the fact that non-lawyers sitting on governance 24 bodies mean that the Council would know if they needed 25 separate legal advice? 50 1 A. These people were in the best position to decide -- what 2 we've just been talking about is how the contract 3 operates in relation to fixing a price. But what I'm 4 talking about here is the ability of people who were in 5 supervisory role on the contract to decide whether or 6 not it needed separate legal advice, and needing 7 separate legal advice in my opinion requires there to be 8 something which is a divergence of interest or something 9 which is wrong, and the information flow between tie, 10 the project delivery company, and these various bodies 11 and officials, I have discussed that in my statement. 12 It was not something that I was involved in, but my 13 view on that would be that these governance bodies and 14 different officers and officials were receiving 15 sufficient information in order to make that judgment 16 without DLA Piper needing to get involved in it. 17 Q. Which officers and officials do you consider were in 18 a position to make a judgment as to whether or not the 19 Council needed separate legal advice? 20 A. I would regard the Council Solicitor as somebody who was 21 in a position to take that decision. I would regard the 22 Tram Monitoring Officer as somebody who would be in 23 a position to take that decision. And I would also 24 imagine that there are members of the Tram Project Board 25 who would recognise when there was a divergence of 51 1 interest and ask those questions, and I come back to 2 a point I made earlier, and that is that in a principal 3 finance officer's evidence to the Inquiry, there is 4 a statement confirmation that the Council looked for 5 approximately four to five months, after receipt of the 6 first bids under the Infraco procurement process, at the 7 possibility of appointing external legal advisers. 8 So it's clear from that, in my opinion, that there 9 were people within the Council, and within the 10 governance structure, who were capable of making that 11 assessment. 12 Q. Were any of the people you referred to in a position as 13 good as you to understand development of the draft 14 contracts and the risk that they presented to the 15 Council? 16 A. My answer to that is no. However, if I may say this, 17 my Lord, the Council Solicitor and the Council Legal 18 Department, who are DLA's primary contact throughout 19 this entire procurement process, were receiving 20 information direct from DLA Piper in relation to how the 21 contract was developing, what the risks were, what the 22 issues were that were being discussed, what was 23 sticking, what was being resolved, and generally how the 24 contractual negotiations were proceeding. 25 I do not recall one instance during that period, 52 1 from when DLA Piper came back on to the project after 2 a five-month stand-down, from late September through to 3 the close of the contract, I do not recall one instance 4 of receiving an enquiry from the Council Legal 5 Department, our primary and only contact within the 6 Council, about any of these matters, the information 7 they were being sent. 8 Q. So what you're saying there, I think, is that you were 9 providing information to other people. That being so, 10 those people couldn't be in a better position than you, 11 could they? 12 A. No, but they were certainly in a position to make 13 a judgment of their own. 14 Q. Could we look, please, at page 129 of your statement. 15 There's a heading on the previous page which deals with 16 procurement of the Infraco contract up to autumn 2006. 17 If we could look, please, at paragraph 7.15, you note 18 there: 19 "I consider that TIE had its own imperatives for 20 progressing the deal also. It had been managing the 21 Project for around four and a half years and needed to 22 show undeniable progress to real implementation. CEC 23 had spent a considerable amount of money on Bill 24 promotion, and TIE was squarely in the public eye as 25 Project manager, the party acquiring land for 53 1 construction of the scheme and in charge of protecting 2 third party interests. TIE needed to show results. 3 Royal Assent for the Tram Acts had come in spring 2006, 4 so that CEC, and therefore TIE, had the clear legal 5 authority to proceed." 6 Now, what you identify there, in the third last 7 line, tie was in a position where it needed to show 8 results, that in itself is indicative of a divergence of 9 interests between tie on the one hand and the Council on 10 the other, isn't it? 11 A. I don't agree with you. 12 Q. Okay, then. 13 A. Can I finish my response. 14 Q. Certainly. 15 A. Thank you. tie needed to show results, tie needed to 16 show results to its owner, and junior funder in the 17 project, the Council, that things were moving ahead, and 18 the Council also needed those results to be moving 19 ahead. 20 So I don't see that sentence as demonstrating 21 potential divergence of interests. 22 Q. Could we look at paragraph 220 then. This is jumping 23 forward from -- sorry, page 220, paragraph 7.467. This 24 is jumping forward to the stage in early 2008, and there 25 had been an agreement reached called the Rutland Square 54 1 Agreement? 2 A. Yes. 3 Q. You say: 4 "Since TIE had determined it would (or had to) 5 accede to a price increase demand, the prime intent (of 6 DLA Piper advice) within the Rutland Square Agreement 7 was to at least give TIE an obvious agreed base line with 8 which to stop BBS eroding contractual protections TIE 9 had in the draft Infraco Contract and to try and set out 10 proper negotiation rules." 11 A. Something not quite right in the text. 12 Q. "Despite the specific inclusion in my advice of 13 a provision (Clause 7) that BBS could lose preferred 14 bidder status for not adhering to the Rutland Square 15 Agreement, TIE never used this sanction nor even 16 threatened to. This can only have served to send an 17 unmistakable signal to BBS that TIE was wanting - above 18 all else - to award the Infraco Contract." 19 Accepting that that was a message that tie were in 20 effect sending, that might well indicate that the 21 interests of the Council needed protection, wouldn't it? 22 A. The context of this part of my statement was in 23 February, early February 2008, when effectively Siemens 24 came, and I deal with this in my statement in quite 25 a lot of detail, so I'm not going to use up time, 55 1 my Lord, repeating it. But I do deal with this in quite 2 a lot of detail. 3 The context here is the Rutland Square Agreement and 4 what became known as a price grab, and Siemens came and 5 asked for more money. 6 Yet again in my statement I refer to what I was 7 trying to do to stop this or give tie ways to stop it. 8 Council -- CEC officials were directly involved in 9 discussion about this price increase, and I was not 10 party to all of those discussions, but I was certainly 11 on phone calls and I do remember one phone call with -- 12 involving the Council Chief Financial Officer, 13 Donald McGougan, talking about this. 14 So the idea that there was a divergence of interest 15 and the Council didn't know about it and a warning 16 should come from DLA Piper that that was happening, on 17 this occasion was not real because the Council knew 18 perfectly well that this price increase had been 19 demanded, and the Rutland Square Agreement was a way to 20 try and put a line in the sand. 21 What I would say on this is that there were numerous 22 occasions when I felt that the Council as the funder of 23 the project, as the owner of the project, for its own 24 reasons, didn't appear at pricing negotiations, didn't 25 appear when German senior management came over from 56 1 Wiesbaden to discuss another price increase. 2 So I was puzzled to know what exactly CEC desired, 3 because here was a moment to come into the room with 4 tie, in a negotiation scenario, and thump the table -- 5 Q. Perhaps they assumed they had solicitors protecting 6 their interests, Mr Fitchie. Could that be possible? 7 A. I think on that occasion -- 8 Q. Could you answer the question, please? 9 A. I don't -- my Lord, I need some guidance on that 10 question. I will answer it. But it seems to be 11 a direct challenge to DLA Piper being on the line to 12 protect the Council's interests in relation to a price 13 increase. 14 A price increase is something which relates to what 15 the contractor justifies as extra equipment, more 16 manpower, whatever it is. That isn't something that 17 a project finance lawyer would be protecting their 18 client from. They would need financial information. 19 They would need commercial information. They would need 20 engineering information, to present a case, to protect 21 the client's interests. 22 CHAIR OF THE INQUIRY: Would they need legal information? 23 A. I'm sorry? 24 CHAIR OF THE INQUIRY: Would they need legal advice as well? 25 A. As a component of that, and in this case, my Lord, tie 57 1 got it, and so did CEC on the telephone from me, 2 discussing this meeting, and I have dealt with this in 3 quite a comprehensive way in my statement. 4 CHAIR OF THE INQUIRY: Mr Fitchie, you keep saying that. We 5 appreciate that you've got a very lengthy and detailed 6 statement which we've all read, but the purpose of the 7 hearing is to go into matters in a bit more detail or to 8 try to focus your mind on particular issues that the 9 Inquiry is interested in. 10 So it may well be that you've said lots of things, 11 but if you could just focus your mind on the question 12 that's being asked, and please answer it. I think 13 this -- 14 A. The question, to repeat it, my Lord, I think was they 15 thought, the Council thought, thought that they would 16 have -- the solicitors would be protecting their 17 interests; am I right? 18 CHAIR OF THE INQUIRY: Yes, something along those lines. 19 A. I don't know what the Council thought about solicitors 20 protecting their interests in relation to a price 21 increase. 22 CHAIR OF THE INQUIRY: I think that might be a convenient 23 point. 24 We'll adjourn now for 15 minutes to give the 25 shorthand writers a break. We will resume again at 58 1 11.20. 2 (11.05 am) 3 (A short break) 4 (11.24 am) 5 CHAIR OF THE INQUIRY: You're still under oath, Mr Fitchie. 6 Mr Lake? 7 MR LAKE: Thank you, my Lord. 8 Could we go, please, to your statement, please, at 9 page 135. Dealing now with the question of your 10 secondment to tie. 11 A. Yes. 12 Q. In late 2007 into 2008. If you enlarge paragraph 7.53, 13 you refer there to: 14 "The secondment gave TIE 90% exclusivity on 15 my time. I still worked on other DLA Piper client work, 16 in a partner supervisory capacity for four days a month. 17 The secondment agreement mainly related to money and how 18 much was paid to DLA Piper for how much time at what 19 rate." 20 Now, you refer there to a secondment agreement. Was 21 there a concluded agreement in relation to your 22 secondment? 23 A. To the best of my recollection, no, there was never 24 a written agreement which was concluded. 25 Q. Was there an exchange of emails to establish the terms 59 1 or basis on which that secondment would take place? 2 A. There was certainly exchanges of -- there were 3 face-to-face meetings, both between myself and 4 Colin McLauchlan, who was the HR Director at tie, and 5 probably one meeting between myself and Willie Gallagher 6 after the contact had been made that tie wanted this in 7 early September 2008. 8 I recall that there was some email traffic about 9 this, but I don't recall that being conclusive in any 10 way. 11 Q. Can I just check, you mentioned there in your answer 12 that the meeting "between myself and Willie Gallagher 13 after the contact had been made that TIE wanted this in 14 early September 2008". Would that be -- 15 A. Sorry, 2007. A decade ago. 16 Q. I just want to try and understand the basic outline of 17 this secondment. 18 DLA had, as we've seen, a contract to provide legal 19 services to tie? 20 A. Mm-hm. 21 Q. You were, as you narrate in your statement, the key 22 person in relation to those services? 23 A. Yes. 24 Q. Now, from the discussions here, we understand there was 25 some desire to move on from that or to change that in 60 1 some way; is that correct? 2 A. No. 3 Q. Well, what was its purpose of the secondment agreement? 4 What changes -- 5 A. Essentially what tie wanted -- may I put this in context 6 very briefly. 7 This was at the end of a period in which DLA Piper 8 had been disinstructed on the Infraco procurement for 9 five months. It was at the end of a period, we 10 understand now, or I understand now, and I did not know 11 at the time, that CEC had been going through an internal 12 debate as to whether they needed solicitors or 13 independent solicitors, and they decided they did not. 14 The idea behind the secondment agreement, and it 15 came from tie -- sorry, one further observation on the 16 five-month period. It was a period in which driving the 17 two bidders together in relation to contractual 18 negotiations, as would normally be done during 19 a negotiated procedure, European -- EU Directive 20 procurement. 21 tie had a procurement team. I presume that they had 22 decided to do this in-house. That procurement team 23 being direct had not only not achieved the objective 24 within those five months. It had actually gone 25 backwards, and I can give two specific examples. 61 1 Q. Mr Fitchie, I'm anxious to make use of the limited time 2 we have available at the Inquiry and I wondered if you 3 could really come to the crux of this, which is: what 4 changes was it intended to bring about between the 5 relationship between tie on the one hand and you/DLA on 6 the other? 7 A. Exclusivity of time and presence in tie's office, to be 8 there, to be available. 9 Q. You say in fact during the secondment, you in fact 10 worked in your own offices, the DLA offices quite a bit 11 anyway. So that didn't seem to change very much? 12 A. I used quite a lot of shoe leather during that period, 13 and it's one reason why I explain in my statement that 14 I actually over that eight-month period worked on 15 average six days a week, 13 hours a day, and so the 16 answer to your question is: I was in both places, often, 17 and often all day in tie's offices. Some days in 18 DLA Piper's offices because of the negotiations there, 19 and because there was limited space in tie's offices for 20 project negotiations. 21 Q. Why could that not be dealt with under the current 22 arrangement between tie and DLA Piper? 23 A. Because the arrangement with DLA Piper, the appointment 24 mandate, did not give tie exclusivity on my time. And 25 it didn't give tie necessarily a fixed rate per day, 62 1 sorry, per month, for my time. This did. 2 Q. Right. 3 A. So it was essentially a financial and exclusivity 4 arrangement. 5 Q. Could we look at a document, please. It's CEC01656650. 6 Now, we can enlarge the upper half of this to make 7 it bigger. You can see this is an email from 8 Lorna Tweedie within DLA Piper. Who is she? 9 A. I think it says under her name, Team-Co-ordinator, 10 Finance and Projects. She was effectively my PA and 11 other people's support. 12 Q. It's dated 21 September and it goes to Willie Gallagher 13 and Colin McLauchlan. He was an HR person within tie; 14 is that correct? 15 A. He was the HR Director at tie, my Lord. 16 Q. We can see the text of it just says: 17 "Willie/Colin, Andrew is in Leeds today but has 18 asked me to send on to both of you the secondment 19 proposal. Andrew will be in touch ..." 20 If we look at the attachment to this, which is 21 document reference CEC01656651. We can enlarge the 22 upper half of this. This is the proposal that DLA Piper 23 have sent to tie. We can see that your position was to 24 be acting Commercial Director reporting to the Executive 25 Chairman. Do you see that? 63 1 A. I do see that. 2 Q. That sounds like something a little bit more than 3 providing the same services, albeit 100 per cent of the 4 time or closer to 100 per cent of the time? 5 A. It does, and if I can respond to the question by saying 6 this was a -- shall we call it Heads of Terms or 7 proposal, and if you turn to the second page, my Lord, 8 of this document, and we may not want to do that at the 9 moment. 10 Q. By all means. 11 A. You will see at the bottom of the second page, at the 12 very bottom: 13 "Secondment to be formalised in written agreement 14 under Scots Law. Terms to be proposed by DLA Piper for 15 tie approval." 16 So this document was essentially -- I call it 17 a straw man. This is something that came out of the 18 discussion with Colin McLauchlan at tie. When 19 Willie Gallagher contacted me, I didn't really 20 understand exactly what it was that they wanted. And so 21 the first half of this document, the first page of it, 22 are Colin McLauchlan's idea of scoping a job function 23 for me. The second page is more in line with my 24 thinking as to what might happen. 25 As I say, this was a discussion document. 64 1 Q. Can we look back at the email, please. It was the 2 previous document, CEC01656650. This doesn't appear to 3 be something that's been prepared by anyone within tie. 4 This is very much something that's been prepared within 5 DLA and sent to tie. That's correct, isn't it? 6 A. No, it's not, because the timing of this, 21 September, 7 by that time I had had a meeting with Willie Gallagher 8 and with Colin McLauchlan. Otherwise I wouldn't have 9 been copying Colin on this email. Colin was delegated 10 responsibility for this. 11 So my recollection, my best recollection, is that 12 this Heads of Terms document came about as a result of 13 me meeting with Colin McLauchlan, and when I met Colin, 14 I wasn't entirely clear if Willie Gallagher had briefed 15 him at all about thinking on this. 16 So the document is a product of that meeting. 17 Q. Let's look at another document then. Could we look at, 18 please, CEC01658860. 19 My Lord, I'm advised that document is not available 20 at the moment. I'll come back to it later in the day. 21 What was the difference between your position and 22 that of Sharon Fitzgerald, once the secondment had been 23 put in place? 24 A. I remained, while the secondment arrangement was in 25 place, as I said, as a financial and exclusivity 65 1 arrangement, I remained the partner in charge of the 2 project group in Scotland in DLA Piper's offices. 3 Sharon was at that time, in September 2007, a senior 4 associate within DLA Piper's project team. So my second 5 in command, as it were. 6 You asked what the difference was. 7 Q. Yes? 8 A. There was no difference in terms of how we worked. 9 Sharon reported to me and we worked closely together on 10 the project. 11 Q. Could you look at page 139 of your statement, please. 12 A. Yes. 13 Q. Paragraph 7.67. 14 A. Mm-hm. 15 Q. In the third last line of this paragraph you say: 16 "Sharon was my alter ego sitting in the office when 17 I was on secondment." 18 Normally having someone as your alter ego would 19 denote that you were no longer in your role within the 20 office. Are you telling us otherwise today? 21 A. I'm not sure I used the words alter ego in 22 a particularly intelligent way. 23 What I mean there is that Sharon was the senior 24 person in the office if I wasn't there, and that would 25 be the case whether I was on secondment or not. 66 1 Q. Who were advising CEC throughout the period of your 2 secondment insofar as they were getting advice? 3 A. CEC were receiving legal advice -- we return to the 4 theme of these duty of care letters, I think, and 5 I didn't finish -- 6 CHAIR OF THE INQUIRY: I think the question is quite simple, 7 Mr Fitchie. You could -- 8 A. I was advising -- CEC were receiving legal advice under 9 instruction -- with DLA Piper under instruction from tie 10 to provide that advice. That's how it worked as 11 a matter of practice. 12 If CEC Legal came to me and said: we wish to talk 13 about such and such; I went to tie and said: this is 14 what is required. CEC were also receiving legal advice 15 in terms of attending or having access to what the 16 situation was on the project, contractual negotiations, 17 through the meetings and the information that was being 18 sent to them, as I've said earlier. 19 MR LAKE: Did you as an individual continue to provide 20 advice to the Council while you were on secondment to 21 tie? 22 A. That wasn't -- under instruction from tie, yes. That 23 was not the purpose of the secondment, however. That 24 was -- purpose -- 25 CHAIR OF THE INQUIRY: You weren't asked what the purpose -- 67 1 the question was: did you as an individual continue to 2 provide advice when you were on secondment. I think the 3 answer is yes, isn't it, under instructions. 4 A. As a partner in DLA Piper, yes. Under instruction from 5 tie. 6 MR LAKE: If it was DLA Piper who were the entity providing 7 legal services, is it not odd that you were offered and 8 accepted a personal bonus payment? 9 A. My statement covers the bonus issue, my Lord. 10 Q. No, could you answer my question? 11 CHAIR OF THE INQUIRY: Don't say that. Just listen to the 12 question and answer. 13 A. Thank you for the guidance, my Lord. 14 Could you say again, Mr Lake? Thank you. 15 MR LAKE: If it was DLA Piper who were the entity providing 16 legal services, is it not odd that you were offered and 17 accepted a personal bonus payment? 18 A. It may be odd, but not exceptional. I have no -- I have 19 nothing really further to add on that subject. 20 Q. If there was a reward for your services, ought it not 21 properly have gone properly to DLA Piper? 22 A. As I say in my statement, I discussed it with DLA Piper 23 at the time, and my understanding was I had clearance to 24 accept the bonus. I accepted it, and as I say in my 25 statement, I declared it in the usual way, and that's 68 1 where we got to. 2 Q. What do you mean, declared it? 3 A. Declared it to the firm and declared it for tax 4 purposes. With the firm's tax unit. 5 Q. The way you put it there was you -- "my understanding 6 was I had clearance" at the time "to accept the bonus". 7 Did that understanding change later? 8 A. No. 9 Q. So tie were always happy that you had accepted the 10 bonus -- sorry, DLA were always happy that you had 11 received a personal bonus? 12 A. I had clearance, and so that's what I took to be the 13 ability to accept the bonus. 14 Q. And did they remain happy that you accepted the bonus or 15 did they later express unhappiness about it? 16 A. They certainly expressed concern about it, what had 17 happened. 18 Q. When did they express concern about it? 19 A. In -- late -- late 2010. 20 Q. And what form did that concern take? 21 A. An inquiry into what had happened as far as me accepting 22 the bonus when I was on secondment at tie. 23 Q. What was the outcome of that? 24 A. The outcome of that inquiry was that the personal bonus 25 that I'd received was -- that I'd received from tie was 69 1 put back out of my tax reserve account at DLA Piper. 2 Q. The money was recovered from you? 3 A. The money was recovered from me at that point. 4 Q. If it was a block purchase of your time, how did it come 5 to be that you sought payment for additional time that 6 you'd spent on the project? 7 A. I -- I have mentioned the amount of work that was done, 8 and the hours that were spent on the project. 9 I approached tie at the end of the secondment and said: 10 as you can see, this secondment has been covered off by 11 the monthly payments; however, the bookable time or the 12 recorded work in progress for me as a DLA partner on 13 this is a very large amount of time above the 14 secondment, maximum amount. And I discussed with tie 15 whether they thought that was fair in terms of the 16 remuneration to DLA Piper, and as I say in my statement, 17 we negotiated a fixed additional amount of GBP114,000. 18 Q. So there had originally been a fixed daily rate and then 19 you went back for an additional fixed sum? 20 A. There had been an additional -- you said daily rate. 21 There had been a fixed amount per month on the basis of 22 an eight-hour day. And as I've said in my evidence 23 earlier, I was working 13-and-a-half-hour days, and tie 24 recognised that, and were prepared to remunerate 25 DLA Piper by reason of that time. 70 1 Q. Could you look at another production with me, please. 2 It's reference USB00000006. 3 This is a pack of pages for the Tram Project Board 4 for the meeting on 26 September 2007. We can see that 5 you're not included on the distribution list of that. 6 I think later you did sit on the Project Board and you 7 did receive papers for that; is that correct? 8 A. The Tram Project Board sat periodically. It wasn't 9 clear to me exactly how often it sat. I did -- 10 CHAIR OF THE INQUIRY: Mr Fitchie -- 11 A. I did attend -- 12 CHAIR OF THE INQUIRY: Mr Fitchie. 13 A. Yes, my Lord. 14 CHAIR OF THE INQUIRY: The question is: did you at some 15 point sit on the Tram Project Board or receive papers 16 for it. That's simple. Yes or no. 17 A. My Lord, the answer is I attended one or two Project 18 Board meetings. I was not sitting as a permanent member 19 on the Project Board. 20 CHAIR OF THE INQUIRY: Thank you. 21 MR LAKE: Were you aware of times when it was planned that 22 you would be sitting on the Tram Project Board on a more 23 detailed -- on a more routine basis? 24 A. I was never approached by tie to say: we want you on the 25 Project Board on a routine basis. 71 1 Q. In this document could you look at page 32, please. You 2 may not have seen this before, but you can see it's 3 a paper to the tie Board, the Tram Project Board, the 4 TEL Board and the Council, on the subject of project 5 governance, and this is a draft dated September 2007. 6 Can you see all that? 7 A. I can see it. I have never seen this document before. 8 Q. If you look at page 42, and enlarge first of all the 9 upper half of the page, where it says "Appendix 6 10 Composition of main governance bodies". Underneath 11 that, towards the right-hand side, we can see the 12 various bodies, the TEL Board, the Tram Project Board, 13 and the various Tram Project Board committees. Can you 14 see that? Can you see that clearly? 15 A. Yes, I can. 16 Q. If we scroll to the -- you can see it even on this page, 17 towards the lower part, where the cursor has been put, 18 there's your name and reference to the designation 19 Commercial Director, and it shows you sitting in respect 20 of a number of -- against the Tram Project Board and 21 a few of its sub-committees. Were you ever made aware 22 of that? 23 A. No. 24 Q. Okay. 25 I want to move on to a different matter now, looking 72 1 at advice that was given in the period up to the end of 2 2007. 3 Now, you have said in your statement that 4 Richard Walker of the consortium told you in 5 December 2007 that the project would cost an additional 6 GBP80 million. 7 A. That is right. 8 Q. Can you remember to whom, precisely to whom, you passed 9 on that information? 10 A. I believe I have covered that in my statement. And the 11 answer is to the tie management group, and if we're 12 talking about the conversation which took place in the 13 Isambard room when Ian Laing was on his telephone, that 14 particular conversation, because there were actually two 15 conversations with Richard Walker, I reported it 16 immediately to tie personnel. Senior personnel. 17 Q. Because this -- an 8 per cent increase would be on top 18 of a contract price which at the time stood at 19 GBP208 million. 20 A. I'm sorry, I can't help on this. At this point I had no 21 knowledge of what contract price was. I had been not 22 included in any of the bidder valuations in relation to 23 commercial and financial matters. I didn't know at this 24 point in early December what the contract -- what the 25 provisional or at that point heavily reserved contract 73 1 price was. I didn't -- I couldn't have commented, 2 I couldn't have made a calculation such as Mr Lake has 3 made. 4 Q. If you take it from me for the moment then that it was 5 GBP208 million, an additional GBP80 million is clearly 6 a huge uplift on that? 7 A. You are right. 8 Q. Were you aware that it was quite such a dramatic uplift 9 at the time, or from what you are saying today, were you 10 not? 11 A. Well, GBP80 million, no matter what the project is, is 12 a substantial amount of money. 13 Q. Would it surprise you if the personnel from tie whom you 14 refer to have no recollection of being told by you about 15 the proposed increase? 16 A. It would surprise me greatly. 17 Q. Because it's a matter you think anyone would be aware of 18 that the contract price was going to go up quite so 19 much, isn't it? 20 A. Yes, I do think that. 21 Q. Is it the sort of thing that would have been more 22 appropriately reflected in writing, so there was 23 a written record of what happened? 24 A. This was a side bar conversation after a long 25 negotiation session, and I didn't feel the need to write 74 1 this because one of the ways in which my secondment work 2 worked was I was there to give on the spot oral advice. 3 Q. But you were nonetheless, you've told us, a solicitor, 4 a partner at DLA giving advice to them, so there was 5 a degree of formality about that, was there not? 6 A. A partner at -- no. I don't agree there was a degree of 7 formality about it. This was an informal discussion, 8 and I have said in my statement that it surprised me 9 that Richard Walker was talking to me, the lawyer on the 10 job, as opposed to the Finance Director or the 11 Engineering Director of tie. 12 Q. Your conversation with Richard Walker was informal; is 13 that what you're saying? 14 A. Correct. 15 Q. But in terms of relaying something of that importance to 16 tie, would some degree of formality not be appropriate? 17 A. There was no degrees of formality, my Lord, in my 18 commentary or my advice or my -- my presence in tie's 19 office meant that I delivered advice in the best way 20 I could to the most appropriate people, and that is what 21 I did here. 22 Q. Did you not think that advice that was particularly 23 important should be appropriately recorded in writing? 24 A. I didn't know -- this was not advice. This was a piece 25 of information. I had no ability to advise on this. 75 1 I repeat, I was the project lawyer, and this was a piece 2 of financial information about the contract price given 3 to me by the Managing Director. 4 Q. Did it seem important to you? Did it seem important to 5 you, an increase of GBP80 million? 6 A. Yes, and that's why I walked across the corridor and got 7 into conversation, with, I think, Stewart McGarrity and 8 later, in a meeting to debrief on negotiations, we 9 reviewed this conversation. 10 Q. Dealing with another bit of advice, a suggestion of 11 a moratorium or delay on an award of the Infraco 12 contract, that would clearly be quite a significant 13 matter as well, wouldn't it? 14 A. Yes. 15 Q. You put it in your statement that you raised it with 16 Geoff Gilbert. What did you mean, you raised it with him? 17 A. I discussed it with him and said: how is this being 18 dealt with in the procurement programme that MUDFA is 19 late, SDS is late; you haven't given me a date in that 20 question, my Lord, to focus in on exactly what the 21 context of that conversation was, but I have various 22 conversations and advice given to tie on the question of 23 a moratorium at different stages in the procurement. 24 Q. Again, if the Inquiry hears evidence that there's no 25 recollection by the tie personnel of any such 76 1 conversations had taken place, would that surprise you? 2 A. Yes. 3 Q. If it was important advice that needed to be taken 4 seriously, would that not have been better recorded in 5 writing? 6 A. I think we come back to the same proposition, my Lord, 7 which is the advice that I was giving was constant and 8 it was recognised that I was delivering that advice 9 verbally. 10 Q. Can we look please in your statement at page 99. If we 11 could go to paragraph 5.139. You refer here to a due 12 diligence report or a report, and this starts on the 13 second line, about: 14 "BBS produced a report saying that the design was 15 only 60% complete (at outline stage only). So: 16 basically at the very least 40% of the tram 17 scheme scope had been unavailable to bidders at Best and 18 Final Offer and even that was available was to a large 19 extent not mature in terms of the requirements of the 20 SDS Contract, ie at detailed design stage. This report 21 was dated a few days before the Wiesbaden Agreement in 22 December 2007." 23 The report we are talking about there, saying the 24 design is only 60 per cent complete, might that have 25 been the due diligence report that was in fact produced 77 1 in January? 2 A. It may well have been, my Lord, but there was definitely 3 information about this, because I recall hearing of it 4 and it being discussed as an issue in a management 5 meeting that BBS were -- had produced this report and it 6 was being looked at by their management, and indeed it 7 had been produced, I believe, by German engineers from 8 Wiesbaden. 9 So the fact that in my statement now, here, I'm 10 saying it was a few days before the Wiesbaden Agreement, 11 the exact date of that report being in January, 12 I believe it was available to tie at around that time 13 because I recall it being discussed in the context of 14 the SDS contract, and I recall also it being discussed, 15 the fact that SDS and Bilfinger essentially, not so much 16 Siemens, the ITN allowed bidders to have contact with 17 the designer. So that is my evidence, that I'm aware -- 18 I was aware of the report in mid-December 2007. 19 Q. Now -- 20 A. I have also -- sorry. I've also seen a date mentioned 21 for that report in February, but was not -- it was not 22 a report that I was involved in scrutinising. 23 Q. That would mean in mid-2007 you were aware that 24 a significant plank of the procurement strategy for 25 completion of design was not going to be in place at the 78 1 time of the Final Business Case? 2 A. The date of this -- the date of this report given here 3 is December. I think you said in mid-2007. 4 Q. I'm just going from the answer you have given me, 5 Mr Fitchie. If you were aware of it in December, that 6 would mean you were aware the design was going to be 7 incomplete at the Final Business Case; yes or no? 8 A. Yes. 9 Q. Yes. That means that you were aware that a part of the 10 procurement strategy was not going to be achieved; yes 11 or no? 12 A. Yes. 13 Q. Now, the technical and commercial aspects of that might 14 be the responsibility for people within tie, but you 15 would be best in a position to determine how that would 16 affect the proper operation and administration of 17 contracts, weren't you? 18 A. At that point in December I was aware of the fact that 19 this was going to cause difficulty in the negotiation 20 with BSC. And it might be, depending on how those 21 negotiations went, the fact that it would affect the way 22 in which the contract was drawn up. 23 Q. You would know as a lawyer how that could affect the 24 implementation of the contract and administration of the 25 contract? 79 1 A. Yes. 2 Q. We've seen -- the Inquiry have seen no written record of 3 any advice provided by you in relation to that. Did you 4 provide any? 5 A. In relation to ... 6 Q. The difficulties that would be faced for the contract as 7 a result of not having a design? 8 A. Contract not having design? I believe -- at this 9 point -- my answer to the -- I'm sorry. The answer to 10 your question is: I'm not sure what I committed to 11 writing in relation to this matter. I'm absolutely 12 certain that I reported my view on what it was doing to 13 the procurement programme, and in fact, on 12 December, 14 I attended a meeting with tie at CEC's offices to meet 15 senior people at CEC, and I made it absolutely clear 16 what my view of the state of design at that point would 17 do in terms of the procurement strategy, in terms of the 18 possible alteration to the -- a responsibility for time 19 and cost on design in the Infraco contract. 20 At that meeting was City Development -- the 21 development of City Director, Andrew Holmes. So I'm not 22 sure that higher authority was needed to report to on 23 that matter from me. 24 Q. Let's look at what you say about that -- 25 CHAIR OF THE INQUIRY: Who else from the city was present at 80 1 that meeting? 2 A. My Lord, I recollect, and I think I have tried to give 3 an indication in my statement, I believe that certainly 4 there was -- Rebecca Andrew, Principal Finance Officer, 5 was there. I believe possibly that Alan Coyle, also 6 a Finance Officer, was there. Gill Lindsay was 7 certainly there, the Council Solicitor. And that, 8 without going to my statement, where I deal with who was 9 there, or who I recollect was there, I can't do better 10 than that. 11 MR LAKE: Perhaps to help you with the question of the 12 meetings, if you go to page 156 within your statement. 13 We see in the top -- the uppermost part of the page 14 there, you note that on 12 December you had two 15 back-to-back meetings, a short meeting at tie's office, 16 but then you attended a meeting at CEC's offices. 17 A. Mm-hm. 18 Q. To go to the details of the CEC meeting, if you go to 19 the following page, and we look at paragraph 7.158: 20 "The meeting with CEC officers was held in a large, 21 modern glass-windowed conference room overlooked by the 22 old Scottish Executive building on Waterloo Place. The 23 attendees were to the best of my recollection: 24 Andrew Holmes, Gill Lindsay, Rebecca Andrew (CEC 25 Finance), Willie Gallagher, Graeme Bissett, David Mackay 81 1 (who was at the time, I believe, Chairman of TEL and 2 succeeded Willie Gallagher as CEO of TIE in 3 November 2008), Stewart McGarrity and me." 4 Was that the meeting you were referring to? 5 A. It is. 6 Q. Now, it's one thing to say that the various people 7 within the Council were aware that the design was going 8 to be late and would have to deal with various perhaps 9 technical or commercial aspects, but in terms of the 10 legal consequences of that, that was something which you 11 would be best placed to advise, would you not? 12 A. Yes, I would, my Lord. And I return to the fact that 13 this meeting is taking place in December 2007, and at 14 that point I was, as is clear from the documentation, 15 I was not in a position to advise whether or not the 16 various deadlines that tie was setting could be 17 achieved, and it required bidder engagement to form 18 a view on what was going to happen in relation to SDS 19 and MUDFA delay. We were not getting proper bidder 20 engagement, because as soon as BBS were appointed 21 preferred bidder, they took rather a different attitude 22 towards negotiating. They were quite happy to engage 23 before preferred bidder to a limited degree in the six 24 weeks that I had after DLA came back on the job. 25 After the -- 82 1 Q. Mr Fitchie, if I could interrupt to save some time 2 because my question wasn't going into the background of 3 that. It was dealing with once the situation was made 4 known in relation to the bidders and design, what the 5 consequences of that would be. 6 Perhaps it would assist if you could look at 7 paragraph 7.150 on page 156. 8 A. 7.150? 9 Q. Yes. This is at the meeting that took place at tie 10 before the meeting of the Council? 11 A. Mm-hm. 12 Q. "Willie Gallagher then talked about 'deal parameters'. 13 I took this to mean TIE's strategy to get BBS to remove 14 qualifications from their pricing, construction 15 programme and Proposed Service Commencement Date for 16 trams. He said that the CEC staff report to be 17 submitted by 14th December 2007, in two days' time - 18 prior to the Full Council meeting - would have to be 19 qualified as to scheme scope, design delivery/risk 20 (transfer) and BBS construction programme. I understood 21 from this that TIE would not - and could not - be 22 reporting a fixed price for construction to [TIE] and 23 Transport Scotland." 24 CHAIR OF THE INQUIRY: CEC. 25 MR LAKE: To CEC and Transport Scotland. 83 1 Now, that may be the factual situation that existed 2 but what I'm keen on is in terms of the analysis of 3 legal consequences of that, you were the person best 4 placed to advise? 5 A. Yes, I was. And I come back to the proposition that at 6 this point, I couldn't advise what the contract would 7 look like because there was absolute lack of clarity 8 here. 9 Q. Insofar as the contract strategy had been to proceed on 10 the basis of a detailed design, and it wasn't there, an 11 experienced lawyer would know there could be 12 consequences of that, wouldn't they? 13 A. Yes. 14 Q. That lawyer could advise on the consequences of that, 15 couldn't they? 16 A. Yes. And I did. And you say that you haven't found any 17 advice in writing from DLA Piper on this subject. 18 Q. Were you involved in the identification of which 19 documents were to be provided to the Inquiry by or on 20 behalf of DLA? 21 A. No. 22 Q. Do you know who undertook that task? 23 A. Messrs Brodies. 24 Q. Would you regard the giving of this sort of advice as a 25 matter of some importance? 84 1 A. The people I was advising, my Lord, in my opinion, and 2 we've discussed this question of joint client, the 3 people I was advising about these matters directly were 4 tie. And that advice in relation to what this was going 5 to do to the contract and the structure of the contract, 6 the scheme of the contract, was given to tie by me, and 7 that is my answer to the question. 8 Q. Okay. Move on then to the question of the negotiation 9 of Part 4 of the Schedule to the contract. 10 If we look at page 175 of your statement, 11 paragraph 7.241, you open that paragraph by saying: 12 "I didn't like any of SP4 ..." 13 Which is Part 4 of the Schedule: 14 "... but particularly PA1 [pricing assumption] and 15 the wording ..." 16 Which you then quote? 17 A. Mm-hm. 18 Q. Why didn't you like it? 19 A. Why did I not like it? 20 Q. Yes. 21 A. I didn't like SP4 because essentially, as far as 22 DLA Piper's knowledge of matters, it came out of the 23 blue. I have explained how this happened and how it's 24 presented to me and to DLA Piper in my statement. 25 I didn't like the idea that this document had been 85 1 drafted and put together without any input from 2 DLA Piper at this point, and I didn't like the fact that 3 design was treated on the basis of creating a situation 4 whereby we had a base date design information, a drop 5 date of November 2007, and we were now well past three 6 months, four months. So designs had been evolving 7 during that period clearly because SDS were under 8 pressure, and I didn't know what tie had been able to do 9 in relation to understanding what would happen if this 10 language and this pricing assumption was put into 11 effect. 12 Q. But you say you didn't know what tie had been able to do 13 in relation to understanding what would happen. That 14 would be in part a matter of legal advice, wouldn't it? 15 A. No, what I'm meaning there, my Lord, is an analysis of 16 what design had been doing since November 2007. And the 17 legal analysis of -- if the question is about the legal 18 analysis of this particular language, yes, and I say 19 there: 20 "I made my views on this and what it had done to 21 risk allocation clear to what I believed were the 22 relevant TIE senior management - and more than once as 23 I explain." 24 Q. Did you ever record that in writing? 25 A. No. 86 1 Q. Could we look at some emails, please. Could we start 2 with one that's reference CEC00592614. 3 At the start of the lower half of the page. You see 4 the email goes from Scott McFadzen at Bilfinger, dated 5 4 February. It goes to Bob Dawson, who I think was at 6 tie, and it's copied to a number of other people, both 7 within tie, within Bilfinger, and Bilfinger's legal 8 advisers and Siemens' legal advisers as well, I should 9 say? 10 A. I see that. 11 Q. Then if we scroll further up the page, we can see that 12 Bob Dawson forwarded that on 6 February 2008 to you. Do 13 you see that? 14 A. I do, at 9 o'clock in the morning. 15 Q. Then if we move forward through a number of emails, we 16 come to one which is CEC01448355. Enlarge that. 17 We can see that from the uppermost email, this again 18 is from Bob Dawson, again on 6 February, but later in 19 the day, and it's to you and others. And just notes: 20 "Andy's comments have now been added in turquoise." 21 And if we go in fairness to your reply to this, 22 CEC01513659, you can see this is actually a response to 23 the first of the emails, because it's dated 9.23 in the 24 morning of 6 February. It runs from you to 25 Geoff Gilbert and Matthew Crosse within tie, but is also 87 1 copied to Bob Dawson. Do you see that? 2 A. I do. 3 Q. You note there that since you have never seen Schedule 4 4 before: 5 "my ability to contribute detail at the 10 am 6 meeting this morning is going to be pretty limited." 7 A. I think I deal with this situation in my statement, 8 where I say this was the first time I had seen Schedule 9 4 and I had 20 minutes to consider it before the 10 meeting. 11 Q. And so at that meeting, as you say, you would have 12 limited chance to make any contribution to that? 13 A. Correct. 14 Q. But if you look at the document that was attached to the 15 second of those emails we saw from Bob Dawson, if we 16 look at CEC01448356, I appreciate you haven't -- you 17 hadn't had long to consider the document at the time, 18 but presumably you've had longer to consider it over the 19 years since then. Are you familiar with this document? 20 A. I'm familiar with the document, but I'm not sure which 21 version of the document this is, because the Inquiry has 22 asked me many questions about Schedule Part 4 drafts. 23 So yes, I am familiar with it and I'm not familiar 24 with -- I cannot say when this version appeared. I'm 25 sorry. 88 1 Q. If you take it from me that this is the one that was the 2 attachment to the second email of 6 February 2008 that 3 we've just been referring to, what I'm interested in is 4 to look at some of the -- the terms that were inserted 5 here. If we could go to page 2 of this document, 6 please. We can see that things here called Base Case 7 Assumptions, mean the following assumptions. Did you 8 understand that these were certain assumptions that had 9 been made, on the basis of which the price had been 10 provided by BSC? 11 A. I did, and I assumed that this must be the Wiesbaden 12 Agreement being translated into the Pricing Schedule. 13 Q. Had you had that briefing on the Wiesbaden Agreement at 14 this time? 15 A. No. 16 Q. We can see it begins: 17 "that the Design prepared by the SDS Provider 18 will: (i) be issued by the SDS Provider to Infraco Ready 19 for Construction [definition later] by no later than the 20 earlier of ..." 21 It gives various dates. If I read on to number (ii): 22 "not, in terms of design principle, shape, form 23 and/or specification, be [add materially] amended from the 24 Base Date Design Information." 25 The comment has been added to that: 89 1 "what about any specific issues that we know about 2 such as VE? Given that a substantial amount of design 3 requires to be presented, reviewed, etc, this 4 clearly will not happen. Agree with Bob's comment." 5 What do you understand by all this? 6 A. Are we talking about a period in which I have had 7 an opportunity to look at these documents and think 8 about them for the purposes of this Inquiry, or are you 9 talking about 9.00 am on 6 February 2008. 10 CHAIR OF THE INQUIRY: No, I think it's been accepted that 11 you didn't have time. So we're looking at them now. 12 A. What do I think about all this? Was your question, 13 my Lord, I think. 14 MR LAKE: If I start by taking a slightly different tack, 15 Mr Fitchie, if you're struggling. You didn't have time 16 to look at it for the 9.00 am meeting. 17 A. I did not. 18 Q. Did you look at it after that? 19 A. Of course, and we looked at it during the meeting. 20 Q. When you looked at it at the time, when you did get 21 round to looking at it, what did you think about this? 22 A. I thought that -- I thought that tie had agreed 23 something which had very direct and serious contractual 24 implications, which I was struggling to understand in 25 that meeting and immediately after it. And I fairly 90 1 quickly recognised that having a base case assumption in 2 relation to design was an area where this would 3 create -- it was likely to create a large cost and time 4 implication for tie. 5 As I said in my statement, I didn't understand or 6 like the -- what is in this document on this page, 7 (a)(ii). 8 Q. Now, the persons who had been involved in that email 9 exchange, we saw Bob Dawson; what was his role within 10 tie? 11 A. Bob Dawson, as far as I was aware, was the Procurement 12 Manager. I think that was his title, and he reported to 13 Geoff Gilbert. 14 Q. What was his skill set or expertise? 15 A. My Lord, I'm sorry, I don't know what Bob Dawson's exact 16 skill -- he may have been a quantity surveyor. I don't 17 know. 18 Q. We saw reference to Geoff Gilbert; what was his role and 19 expertise? 20 A. Geoff Gilbert was a Commercial Director. Again, I'm not 21 sure what his exact qualifications were, but Geoff had 22 demonstrated both during the bidder valuation process 23 and during the limited time that we had to negotiate 24 with bidders pre-Christmas 2007 that he was a commercial 25 man who was well-versed in commercial and contractual 91 1 matters. 2 Q. I think we also saw reference to Stewart McGarrity. 3 What was his role within tie? 4 A. Stewart McGarrity, my Lord, was tie's Finance Director, 5 and he had essentially two people working for him. 6 Q. Matthew Crosse? 7 A. What date are we talking about here? I need guidance, 8 my Lord, on when we're talking about. 9 Q. We were talking about an email, remember, sent on 10 6 February 2008? 11 A. Matthew Crosse was the Tram Project Director within tie. 12 Q. Jim McEwan? 13 A. Jim McEwan was -- Jim McEwan's exact role was unclear to 14 me, but when Schedule Part 4 appeared, Jim McEwan began 15 to take a role in particularly the value engineering, 16 but he seemed to have a floating role in supporting 17 engineering and quantity surveying matters which were 18 attended to by Steven Bell and Dennis Murray. 19 Q. And finally, you mentioned Dennis Murray there. What 20 was his role and his expertise? 21 A. Dennis Murray was a quantity surveyor, experienced 22 quantity surveyor, and I believe that his -- I believe 23 his title within the organisation was Contracts Manager. 24 I honestly don't recall or know whether I ever knew what 25 Dennis's title was. 92 1 Q. None of these people who were included on the email 2 traffic on tie's side clearly had any legal experience. 3 That was -- you were the one with all the legal 4 experience and expertise? 5 A. Correct. 6 Q. And yet you say in your statement a number of times that 7 the negotiation of Schedule 4 was very much, to 8 paraphrase it, left to the others within the company. 9 Why was that? 10 A. Left to the others in the company? You're paraphrasing 11 my statement? 12 Q. Yes, I am? 13 A. I don't think my statement says that, my Lord. I think 14 what my statement says is that Schedule Part 4 was 15 a document which had been created immediately after 16 Wiesbaden, negotiated between essentially tie, 17 Geoff Gilbert, Scott McFadzen at Bilfinger Berger, and 18 produced and went through, although I have no knowledge 19 of this, went through a number of drafts before it 20 landed on -- came to me on 6 February 2008. 21 Q. Between 6 February 2008 and contract signature on 22 13 May 2008, what input did you provide to Schedule 23 Part 4? 24 A. I believe that I'm going to end up paraphrasing what 25 I have said in my statement, that my input into Schedule 93 1 Part 4 was it was very clear that tie at the beginning 2 didn't wish to have lawyers involved in Schedule Part 4. 3 My input to Schedule Part 4 on instruction from 4 Geoff Gilbert and Steven Bell was to provide one of my 5 team to be in meetings to essentially help produce the 6 next version of Schedule Part 4, and I had a role in 7 Schedule Part 4 which was somewhat unclear to me, as 8 I said in my statement, because I was copied versions of 9 Schedule Part 4, not included in distribution of 10 documents, and not included in meetings. 11 Q. Well, you said there was representation from -- one of 12 your employees at DLA Piper did attend the Schedule 13 Part 4 meetings? 14 A. Mm-hm. 15 Q. You attended some of them as well? 16 A. I have dealt with those meetings that I remember 17 attending. You say some of them. There were three. 18 Q. And did you -- 19 A. 6 February, 7 -- 11 March and 5 February. Those were 20 the Schedule Part 4 meetings that I attended. 21 Q. You said 5 February. Are you sure that's correct? 22 A. 6 February -- 23 Q. 11 March and -- 24 A. Mm-hm. 25 Q. Just you said 6 February was the first date on which you 94 1 received the Schedule Part 4. It would seem odd that 2 you'd met to discuss it the day before? 3 A. I'm embarrassed, my Lord. It's in my statement. And it 4 is one of the matters where I made a minor adjustment to 5 dates. 6 Q. We can come back to that. But you were copied in, as 7 we've seen, to the email of 6 February. Someone thought 8 with worthwhile copying you, the lawyer, into the 9 discussions on Schedule Part 4, which is hardly 10 consistent with a desire to exclude legal advice. 11 A. The decision to exclude legal advice came about as 12 a result of that meeting, and I have dealt with it in my 13 statement, and it was essentially that Schedule Part 4 14 was presented by Pinsent Masons and tie took exception 15 to that and wanted to take control of the discussions 16 and negotiations on Schedule Part 4. 17 Q. Now, you said, when you started -- you came into 18 secondment, you discovered that DLA had been engaged in 19 discussions on the Infraco contract for a while. When 20 you came back in, the bidders objected that you were 21 going back on matters that had been agreed; do you 22 recall that? 23 A. In my statement, yes. That is exactly what happened. 24 Q. If you were unhappy with the Schedule -- 25 A. And if I may, two of the things the bidders objected to 95 1 were the fact that when DLA Piper came back into the 2 negotiation, we saw that tie had agreed that the 3 performance bond would be an adjudication bond and not 4 an on demand bond, and we saw that tie had agreed to 5 a liability cap and other matters, commercial matters, 6 or large scale commercial matters. 7 You can't agree a liability cap unless you know what 8 the contract price is going to be. 9 Q. When you came in, you gave legal advice and you pushed 10 back on these things -- 11 A. Some of them were corrected -- 12 Q. Let me finish my question. It was the case that these 13 matters were subject to further renegotiation; is that 14 not right, Mr Fitchie? 15 A. Yes. Exactly. 16 Q. The same would have been possible had you chosen to do 17 it in relation to Part 4 of the Schedule? 18 A. I disagree with you for the reasons I have given in my 19 statement, that there was a categoric push back and 20 refusal to negotiate in particular this design 21 development, the language that became pricing assumption 22 1, 3.4. 23 Q. Are you aware that the wording continued to develop in 24 the period from 6 February 2008, up to the time when the 25 contract closed on 13 May 2008? 96 1 A. I think I have discussed that in my statement. 2 CHAIR OF THE INQUIRY: I think, Mr Fitchie, just bear in 3 mind what I said before we broke. You don't need to 4 qualify everything by you think you have discussed it in 5 your statement. 6 A. I'm sorry, my Lord. 7 CHAIR OF THE INQUIRY: These questions are directed to 8 points that we are interested in. 9 A. May I ask, my Lord, for Mr Lake to repeat the question. 10 MR LAKE: You are aware that wording for Part 4 of the 11 Schedule continued to develop in the period from 12 3 February 2008 up to the time when the contract closed 13 on 13 May 2008? 14 A. It didn't develop right up until the time of the 15 contract signature. It developed probably until about 16 20 March. 17 Q. While it was developing, that was during the period that 18 you were involved in receiving correspondence and 19 various iterations of the draft? 20 A. I received iterations of the draft. I did not receive 21 instructions either orally or in writing to get involved 22 in it. 23 Q. You were on secondment to tie at the time, weren't you? 24 A. Yes. 25 Q. You were aware that they were placing some reliance on 97 1 you as their legal adviser, weren't you? 2 A. Yes. 3 Q. Could we look, please, at another document. It's 4 CEC01513659. 5 We can see this is an email from you. 6 A. This was the email we have seen before. 7 Q. I have read the wrong number. My apologies. I should 8 have read a different number. It's CEC01448511. 9 We can see this is an email from Bob Dawson, within 10 tie, it's 11 February 2008. It's to Richard Walker, 11 copied, amongst others, to you. 12 A. Mm-hm. 13 Q. It says: 14 "Richard, further to the voicemail messages that 15 I left on your office telephone and mobile, we need to 16 confirm arrangements for going through the balance of 17 your points on schedule 4. 18 Geoff said tomorrow and suggests the following 19 attendees: You, Scott, someone from Siemens ... either 20 Andrew Fitchie or Phil Hecht, Dennis Murray, Geoff and 21 me." 22 There was clearly a proposal that you would be at 23 that meeting at the time. 24 A. That's right. 25 Q. Now, what do you say your role was to be at that 98 1 meeting? 2 A. To support -- if that meeting happened, and if I was at 3 it, I don't recollect the meeting of 11 February, but 4 clearly my role, if that was what tie instructed, was to 5 support Geoff Gilbert, who generally led for tie in 6 these meetings. 7 Q. Could you look back at your statement, please, page 181. 8 A. Mm-hm. 9 Q. Enlarge paragraph 7.273. You note there: 10 "My instructions from TIE were to represent TIE on 11 the Infraco Contract main terms negotiations. I did not 12 attend SP4 meetings unless specifically asked to by 13 Geoff Gilbert or Steven Bell. TIE requested that 14 I provide a lawyer to take the job of handling SP4 15 travelling redrafts - but not to provide advice since TIE 16 wanted to restrict legal input from Pinsent Masons or 17 Biggart Baillie at these meetings." 18 If the intention was to restrict legal advice, it 19 was rather strange in our last email that Mr Dawson was 20 saying he would either have you or Mr Hecht, isn't it? 21 A. Yes -- 22 Q. Having you there was consistent with wanting legal 23 advice, isn't it? 24 A. I'm sorry? 25 Q. Having you there is consistent with a desire to have 99 1 legal advice, isn't it? 2 A. What my statement says is when I was specifically asked 3 by Geoff Gilbert and Steven Bell, this is one occasion 4 where clearly there was a desire to have me there, and 5 as I have said, I cannot recollect now the meeting of 6 11 February, whether I attended it or not. 7 Q. When you look at your paragraph 7.273 there, you say: 8 "Represent TIE on Infraco Contract main terms 9 negotiations ..." 10 Schedule Part 4 is essentially the price, isn't it? 11 A. Yes, it is. 12 Q. Can you think of anything that's really much more of 13 a main term than the price of a GBP200 million plus 14 contract? 15 A. Yes, Schedule 4 was an important schedule. 16 Q. It was a main term, wasn't it? 17 A. What I'm -- 18 Q. It was a main term, wasn't it, Mr Fitchie? 19 A. Yes, my Lord, it contained the Pricing Schedule which 20 had been empty all the way through since the ITN was 21 issued, passed BAFO, and well into 2008. 22 Q. It was empty and now it was being filled in, wasn't it? 23 A. Correct, without DLA Piper at this point on 11 February 24 having had a proper opportunity to understand where it 25 had come from and what tie had been doing. 100 1 Q. This process of agreeing Part 4 of the Schedule was 2 a process of agreeing one of the principal terms of the 3 Infraco contract? 4 A. Well, a distinction was made between the other terms of 5 the contract and this document. 6 Q. Did you think the pricing was unimportant? 7 A. No, I did not. 8 Q. Could we look, please, at another email. It's 9 CEC00592619. 10 If we could go to the second page of this, this 11 email exchange wasn't copied to you, but what I'm 12 interested in is the email from Mr Walker towards the 13 upper half of that page to Geoff Gilbert, dated 14 12 February 2008. 15 A. Mm-hm. 16 Q. We can see he says there: 17 "Geoff, last Thursday we signed a document where we 18 committed to holding our price. Schedule 4 was clearly 19 dealt with, why is Bob trying to re-engage. The 20 matter is closed." 21 I'll accept that wasn't sent to you, but I'm just 22 trying to understood the meeting that took place. Would 23 that be the meeting designed to produce the 24 Rutland Square Agreement? 25 A. "Last Thursday we signed a document where we 101 1 committed to holding our price. Schedule 4 ..." 2 I can't answer that question, my Lord. I don't 3 know. I would need to look at what last Thursday was. 4 It may well be -- it may well be a reference to that. 5 Q. Were you involved in the preparation of the 6 Rutland Square Agreement? 7 A. Yes, I was. I drafted it on tie's instructions. 8 Actually, may I pull that back. I drafted it because 9 I advised that something was necessary at that point to 10 try and arrest BBS's approach to contract negotiations 11 and BBS's approach to price. And tie accepted that that 12 should be put in place. It was not something that tie 13 thought of. 14 Q. Could we look, please, at a copy of the Rutland Square 15 agreement. It's CEC00205642. Do you recognise this as 16 the Rutland Square Agreement, as it came to be called? 17 A. This is the signed version? 18 Q. If you look at page 5 of it. 19 A. Yes. 20 Q. We can see the date there of signature was 21 7 February 2008? 22 A. Yes. 23 Q. Look at the operations of the Agreement, we can see that 24 Schedule, if we look at page 7 first of all, is where it 25 starts. Just to provide some context. 102 1 If we look over to page 8, and enlarge clause 2.5 2 and its sub-clauses, we can see that it contains 3 a provision there as to Schedule 4 of contract price 4 analysis and sets out six different things which must be 5 contained within Schedule Part 4? 6 A. Mm-hm. 7 Q. Were you involved in those negotiations to reach that 8 conclusion? 9 A. I was involved in 2.5.2, 2.5.3 and 2.5.4, which were the 10 result of the meeting on 6 February, the day before. 11 Q. Point 2 and point 3 seek to exclude certain pricing 12 assumptions that had been included within what was then 13 the draft part 4? 14 A. Correct. 15 Q. Point 4 deals with the question of how any changes that 16 arise are to be handled under the contract? 17 A. Correct. 18 Q. So this is some indication that you had had success in 19 qualifying the assumptions that were to be made for the 20 purpose of pricing? 21 A. Yes, very limited success because limbs (n) and (o) in 22 the draft that they presented were -- my memory fails 23 me, but they were rather inconsequential. One of them 24 was an obvious point which resulted in the possibility 25 of the Infraco -- my memory fails me here, but it is in 103 1 my statement, and (n) and (o) were minor points. 2 As far as the notified departures being dealt with 3 under Clause 80, yes, but Clause 80 was modified 4 significantly two months later as a result of tie's 5 agreement that Pinsent Masons would present a revision, 6 something that was done without reference to DLA Piper. 7 Q. We will come to Clause 80 in a moment. If we could go 8 down to another document, it's CEC01540594. We can see 9 this is an email from you to Ian Laing, who I think was 10 one of the solicitors acting for Siemens? 11 A. Mm-hm, acting for BBS. For Bilfinger. 12 Q. It's dated 12 February 2008. It says: 13 "Ian, in the flurry of activity last week, I omitted 14 to thank you for our private conversation about the need 15 to get Schedule 4 on the table quickly. Could not have 16 agreed more." 17 A. Mm-hm. 18 Q. What had you been discussing with Mr Laing about getting 19 Schedule 4 on the table quickly? 20 A. What I had been discussing -- what this was a reference 21 to was the first meeting about Schedule Part 4, which 22 happened on 6 February, which I attended. And it was 23 a reference to -- this email was thanking him to say 24 that he knew this document was coming on 5 February. 25 The sequence here, my Lord, defeats me slightly, 104 1 because there was a private conversation with Ian Laing 2 of Pinsents which I remember very clearly. It happened 3 on 6 February and it was about my reservations, serious 4 reservations about what Schedule Part 4 was intended to 5 do, and that was the meeting in which I was told that 6 the language in Schedule Part 4 relating to design was 7 not negotiable, because it had been agreed by tie at 8 Wiesbaden and post Wiesbaden. 9 Q. But it's fair to say, isn't it, that nonetheless 10 negotiations did continue on that wording? 11 A. It's not fair to say that. Some discussion took place 12 in relation to that language and it remained pretty 13 static. In fact other than discussion about the 14 introduction of the word "materially" which Pinsents -- 15 from what I read, objected to it and said we're not 16 introducing that concept, and it was dropped. That's 17 the only -- I was not participating. I was not 18 following these negotiations to the letter, my Lord. 19 And what I would say is copying Andrew Fitchie on 20 a document he hasn't seen before or merely copying me on 21 documents is not asking for legal advice. 22 Q. Why do you think they were copying them to you? 23 A. To keep me posted as to what was happening. I was 24 asked -- 25 Q. Why would they keep you posted on what was happening? 105 1 A. My evidence is I don't know why I was being copied, 2 because -- 3 Q. Is there not another explanation, that this was, as you 4 recognise, one of the main terms of the contract and 5 they thought it might be useful if they had a solicitor 6 retained on secondment if he took a look at it? 7 A. I cannot answer that question. I was not asked to look 8 at Schedule Part 4. I was asked not to be in the 9 meetings. 10 Q. So do we understand that unless you got a direct request 11 to do something in unequivocal terms, you would simply 12 do nothing in respect of it? 13 A. No, that is not correct. That was an example of where 14 I sent tie a message saying: what you're negotiating 15 goes beyond the original premise of Schedule Part 4, the 16 original engagement, and I found this extremely 17 difficult. 18 Q. Do you consider that Schedule 4 went further than the 19 Wiesbaden Agreement, what was contained within the terms 20 of the Wiesbaden Agreement? 21 A. The Wiesbaden Agreement was 200-page pre-contract 22 agreement. I do not believe that anything in Schedule 23 Part 4 went further than the Wiesbaden Agreement. My 24 ability to judge that in these months or in these weeks 25 was limited. 106 1 Q. Could we look at the Wiesbaden Agreement, please. It's 2 reference CEC02085660. 3 Now, this is the Wiesbaden Agreement, isn't it? If 4 we look to the next page, you see it's a blank one. 5 Look over to the page following. Just to get an idea of 6 the terms of this Agreement, if we could look to the 7 next page. It will be blank again, I think. And then 8 to the one following. That's got some contract terms on 9 it. 10 If we look to page 4, it will be blank. 5 will have 11 terms. You can see there's some handwritten changes on 12 that one. 13 If you look to the next page, it will be blank? 14 A. If I can just remark, that's Geoff Gilbert's 15 handwriting. 16 Q. Now, we can see there there's a signature on page 5, 17 Mr Gallagher. If we look to the following page, we see 18 the signature of Mr Walker there, with the date given in 19 the -- and others, I should say, on the consortium side 20 of it. 21 So that's really the end of the various contract 22 terms. We then go on to various schedules, the value 23 engineering and the like. 24 A. This is a document that I didn't see in its entirety 25 until -- 107 1 Q. Mr Fitchie, you describe it as a 200-page document. Can 2 we be quite clear that the legal terms, the contract 3 terms, are contained on six pages? 4 MR DUNLOP QC: My Lord, I apologise for intervening, but my 5 learned friend reacted quite irascibly when he thought 6 Mr Fitchie was interrupting his question. My learned 7 friend has on a number of occasions now interrupted when 8 Mr Fitchie has attempted to give an answer. In order to 9 have fairness, could we each allow the other to finish. 10 CHAIR OF THE INQUIRY: Assuming Mr Fitchie sticks to the 11 question. 12 A. I shall do my very best to be succinct, my Lord. 13 MR LAKE: The contract terms of the Wiesbaden Agreement are 14 contained on six pages, are they not? 15 A. No, I don't think they are. I think there are contract 16 terms spread out through -- or contract information and 17 positions that are spread out through this document. 18 CHAIR OF THE INQUIRY: Do you distinguish in any way between 19 information and contract terms? 20 A. My Lord, I'm embarrassed. I would need to look at this 21 document properly, and I don't think it's fair to ask me 22 to agree to a proposition on a document which I was 23 trying to say I didn't see in its entirety until 24 probably late 2009/2010, when tie made an investigation 25 into what had happened at Wiesbaden. 108 1 What I had was some pages of this document, with 2 blank appendices, before leaving on holiday to Hong Kong 3 on 19 or 18 December, 19 December. 4 Could we, in order to help, my Lord, could we go 5 back to the front pages, and I will -- I will answer the 6 question. 7 CHAIR OF THE INQUIRY: Go back to the first page. Go back 8 to the start of the text of the Agreement. Just tell us 9 when you want to turn a page. 10 A. Just turn. Yes. 11 Yes. 12 I would agree that these are the main terms in this 13 document, subject to the reservation that these main 14 terms function in collaboration with parts of the rest 15 of the document. 16 MR LAKE: You think there are other contract terms later in 17 the Agreement? Is that your evidence to this Inquiry? 18 A. I have -- my evidence to the Inquiry is I believe there 19 is information contained in the balance of the statement 20 that -- excuse me, in the balance of this document which 21 are directly relevant to what is being agreed. What is 22 set out in these provisions. 23 CHAIR OF THE INQUIRY: I think the question was: do you 24 think there are other contract terms in other parts of 25 the document beyond the signed page 5? 109 1 A. My evidence is: I don't know, my Lord; to your question, 2 which is: are there other contract terms in the rest of 3 the document? I do not know. I'm sorry not to be more 4 helpful. 5 MR LAKE: I think I understood from an earlier answer you 6 hadn't seen this Wiesbaden Agreement at the time you 7 negotiated Part 4 of the Schedule. Did I pick that up 8 correctly? 9 A. Yes, I said that I believed that I had not seen this 10 full agreement until much later in the piece. 11 Q. So you weren't really in a position to know whether the 12 terms of Schedule Part 4 were being dictated by 13 Wiesbaden Agreement, were you? 14 A. What I had seen was -- 15 Q. Answer my question. 16 A. I was not -- I was not in a position to pass through 17 this document, no, because I didn't have it. 18 Q. So there was no reason to feel trammelled by this 19 document when you were approaching Schedule Part 4? 20 A. Sorry, I don't understand the question, my Lord. 21 Q. I'll ask another one then. 22 Let's look at another document. Could we look, 23 please, at CEC01449876. 24 We can see this time we have got an email from 25 Ian Laing dated 22 February. And it goes to 110 1 Geoff Gilbert, yourself and Bob Dawson. It's copied to 2 many other people besides; do you see that? 3 A. I do. 4 Q. The subject matter is Schedule 4 pricing. Do you see 5 that also? 6 A. I do. 7 Q. What it says is: 8 "Geoff, please find attached our mark-up of 9 Schedule 4 which is issued subject to client 10 instructions in order to keep things moving." 11 Did you receive this email? 12 A. I received it, my Lord. It's clear. 13 Q. Did you do anything about with it? Did you open the 14 attachment and read it? 15 A. I assume, yes. I would need to see what the attachments 16 are. If I didn't -- if I hadn't opened it, that would 17 seem very strange. 18 Whether I opened it on that day, immediately, 19 I can't say because we have already had a discussion 20 about what main contract terms negotiations were. They 21 were ongoing in parallel to this. 22 Q. If you look at the attachment to this email, it's 23 reference CEC01449877. 24 A. My Lord, before we look at this document, could I have 25 a convenience break? 111 1 CHAIR OF THE INQUIRY: Yes, certainly. 2 MR LAKE: My Lord, looking at the time, I wonder whether it 3 would be better to break early for lunch rather than to 4 try and come back and then to adjourn. 5 CHAIR OF THE INQUIRY: Yes. We will resume again about 1.55 6 after lunch. 7 (12.55 pm) 8 (The short adjournment) 9 (1.55 pm) 10 CHAIR OF THE INQUIRY: You're still under oath, Mr Fitchie. 11 .Yes, Mr Lake. 12 MR LAKE: My Lord, just before I turn to the attachment 13 I was looking at with Mr Fitchie, can we just go back to 14 the email in question. It was document reference 15 CEC01449876. We can look at the upper half of that, 16 please. 17 This is the email from Ian Laing, a partner of 18 Pinsent Masons, to Geoff Gilbert, yourself and 19 Bob Dawson. Do you recall that? 20 A. Yes, I recall it. 21 Q. It says: 22 "Please find attached our mark-up of Schedule 4 23 which is issued subject to client instructions in order 24 to keep things moving." 25 I read past the last paragraph: 112 1 "We can wait for a meeting as you suggest but 2 I suspect we could make useful progress when you have 3 had a chance to consider the attached mark-up and 4 I think there are a number of mechanical issues that the 5 lawyers need to assist on to make this schedule work 6 with the remainder of the documentation." 7 We can see there that Mr Laing, as a lawyer, 8 perhaps, anticipated that there were matters that the 9 lawyers could usefully consider and work on. Did you 10 understand that? 11 A. I understood that he was saying there are a number of 12 mechanical issues that the lawyers need to assist on. 13 Q. Did you provide assistance in relation to this draft? 14 A. I don't recall, my Lord, providing direct assistance in 15 relation to the draft that was attached to this email. 16 Q. Perhaps we could look at that draft, please. It's 17 document reference CEC01449877. I should say that this 18 is one of the ones that has been provided on the 19 additional drive. 20 It's loaded this way in program so that we can 21 better see the mark-ups. 22 Could we turn to page 5 of this, please. Could we 23 scroll up, please, and go further towards the start. 24 I'm sorry. That was my fault. It was further down 25 I should have gone, rather than further up. 113 1 If I could stop there, I can see there's going to be 2 a difficulty here with -- the software in question is 3 renumbering it. 4 My Lord, I wonder if what I could do to make things 5 easier is have things put on the camera, have a hard 6 copy print-out and provide it to all parties that way. 7 I think the problem is that the software which has 8 been used to display the documents has converted things 9 to black and white, and therefore we lose the colours 10 and the markings-up as to who has done what, which makes 11 it harder to read? 12 CHAIR OF THE INQUIRY: Is the document that you have given 13 to the technician the same reference number that 14 you've -- 15 MR LAKE: It is. It's exactly the one that I have referred 16 to, but it's a colour print. 17 We can see the front page of it here. With 18 a reference in the right-hand corner where it says: 19 "Schedule 4 - Pricing (issued to BBS 20 19 February 2008), which may be useful for people tying 21 it up later. 22 If we could look at page 5 of this, and in 23 particular at Clause 2.4, can you read that adequately, 24 Mr Fitchie? 25 A. I can see it, yes. 114 1 Q. We can see that there's been a large block of text added 2 in blue saying: 3 "Conceptually, the pricing assumptions are 4 statements which underpin the build-up of the Contract 5 Price. They are not statements as to what BBS will or 6 will not do in carrying out the Infraco Works 7 (ultimately BBS is required to deliver the whole of the 8 Infraco Works). So, in that regard, we consider that the 9 correct approach is not to state here what is included 10 for or excluded from the Contract Price but to make 11 factual statements as to the assumptions upon which that 12 price is based. This approach will require an 13 alteration to the way in which many of the pricing 14 assumptions are expressed but has no impact on the 15 commercial intention." 16 Did you consider that at the time this was sent to 17 you? That was at the end of February 2008. 18 A. Yes. 19 Q. Did you form a view on the switch that they're saying 20 what was included or excluded from the price to the 21 matter of making assumptions? 22 A. Well, the way I read this document, my Lord, was tie had 23 produced a different document, a different approach, and 24 this was BBS coming back, saying what they wished to 25 have. That is my answer to the question. 115 1 Q. What was your view on what BBS wished to have, its 2 desirability from the tie standpoint? 3 A. Well, my conclusion on this is that BBS are simply 4 defending the position that the pricing assumptions 5 would be, as they say, will or will not do, they will be 6 things which, if they fall, then that would be 7 a notified departure, in simple terms. 8 Q. Did you form a view as to whether or not that was 9 desirable from tie's standpoint? 10 A. I had already formed a view on Schedule Part 4 which we 11 discussed earlier, which was I didn't like it because 12 it -- excuse me. It contained pricing assumptions. So 13 my view on what was going on here was the same as it had 14 been when I first saw this schedule and had 15 an opportunity to consider it. 16 I find it, I must say, very difficult to dip in and 17 out of drafts in this way. 18 Q. Nonetheless, this is what I'm doing in the course of 19 your evidence to try and find out what you wanted to say 20 about it. 21 Now, you were sent this draft in February. The 22 change from what is described as what is included in the 23 price to the actual statements of the assumptions that 24 are to be made, were you aware at that time the basis on 25 which the Wiesbaden Agreement had been concluded? 116 1 A. I was aware that the -- I was aware that the Wiesbaden 2 Agreement had certain assumptions in it, but that 3 Schedule Part 4 had laid out from an engineering and 4 commercial standpoint, with the exception of pricing 5 assumption 13.4, which was a design pricing assumption 6 in relation to BDDI, but there was a list which had 7 expanded in relation to what this is talking about, 8 which is the pricing assumptions had no impact on the 9 commercial intention. 10 So the rest of the -- I believe, 43 assumptions in 11 Schedule Part 4 are engineering and commercial matters. 12 Q. Let's approach it a different way. Let's go to the 13 Wiesbaden Agreement. It's CEC02085660. If we leave 14 that document on the camera, we will come back to it. 15 A. While we are waiting, my Lord, may I just add to the 16 last response. 17 That is that -- sorry, my Lord, I'll wait. I beg 18 your pardon. 19 CHAIR OF THE INQUIRY: No. 20 A. It will come back to me. Thank you. 21 MR LAKE: You can see the cover sheet there. Could we go to 22 page 5 of the electronic version. You can see about 23 just above halfway down the page, there's a heading, 24 "Basis of the Price". If we go to the foot of the page, 25 you can see there's a clause 3.3: 117 1 "The BBS price for civils works includes for any 2 impact on construction cost arising from the normal 3 development and completion of designs based on the 4 design intent for the scheme as represented by the 5 design information drawings issued to BBS up to and 6 including the design information drop on 7 25th November 2007." 8 It then states certain exclusions? 9 A. Mm-hm. 10 Q. It's clear that what's been done in the Wiesbaden 11 Agreement is to state what the price will include and 12 what the -- basically what that includes is normal 13 development and completion of designs? 14 A. Mm-hm. 15 Q. Now, if we go back to the other document, the one that 16 was on camera with reference CEC01449877, page 5, we can 17 see that what's happening here is that BBS is 18 saying: no, we are not going to say what's included or 19 excluded from the contract price, but we'll make factual 20 statements as to the assumptions upon which the price is 21 based. 22 A. Mm-hm. 23 Q. Did you express any view on the change from saying that 24 the price includes for normal development or completion 25 of designs to this new statement of assumptions? 118 1 A. I cannot say I remember making any specific reference to 2 this, bearing in mind what I have discussed in relation 3 to the evolution of Schedule Part 4. 4 Q. In terms of the evolution, this is an example of changes 5 being made not even to the terms, but to the whole 6 approach of this part of Schedule 4, isn't it? 7 A. But this has no impact on commercial intention. 8 Q. This is an example of a change to the terms and 9 structure of Schedule Part 4, isn't it? 10 A. Yes. 11 Q. If we see what it says underneath the highlighted 12 paragraph, at the moment it says: 13 "(a) Design. The Infraco Construction Works Price 14 includes for any impact thereon arising from the normal 15 development and completion of designs based on the 16 design intent for the scheme as represented by the 17 design information drawings ..." 18 That's essentially the same wording as we'd 19 previously seen in the Wiesbaden Agreement? 20 A. Yes, there appear to be a couple of notes against that 21 particular paragraph. 22 Q. Yes. What I'm asking about is does that wording appear 23 to you to be broadly the same as what we'd seen in the 24 Wiesbaden Agreement? 25 A. Look, I need to be careful here, my Lord, because -- 119 1 yes, but I need them side by side to say these are the 2 same. 3 CHAIR OF THE INQUIRY: You want them side by side on the 4 screen? 5 A. I'm concerned about simply saying yes when this is 6 a draft. It's got different parties' comments on it, 7 and I'm being asked: do I think this is a fundamental 8 change. 9 CHAIR OF THE INQUIRY: Do you want to see them both on the 10 screen together, if that's possible? 11 A. Is it possible? 12 CHAIR OF THE INQUIRY: I'll check. 13 MR LAKE: I'm afraid, my Lord, because it's coming from two 14 different systems, one from the camera and one from the 15 software, it can't be put side by side. 16 CHAIR OF THE INQUIRY: It appears not to be possible, sorry. 17 MR LAKE: What I could do is put them side by side without 18 the benefit of the colour, if that would assist. 19 Could we have two documents on screen then. First 20 of all, it's document CEC01449877 at page 5 and the 21 other one is CEC02085660, also page 5. 22 The Wiesbaden Agreement is the one on the left. The 23 draft of Schedule 4 is the one on the right? 24 A. Thank you very much. (Pause) 25 Is it possible to go over the page on the right-hand 120 1 screen? 2 I agree with you that the first part of the wording 3 appears to be the same. And what I would also say is 4 that in between this draft and the Wiesbaden Agreement 5 were other drafts which all brought forward in them the 6 Wiesbaden Agreement wording on normal development and 7 completion of designs. 8 This ... 9 Have I answered the question? 10 Q. Yes. Could we go back to looking at the version of the 11 document CEC01449877 that's on the camera, so we can see 12 the colour mark-ups; and go to page 6, the following 13 page. 14 Looking here at the lower half of the page, where we 15 can see a bullet point, and then it says: 16 "that the Design prepared by the SDS Provider will 17 not ..." 18 The first thing is: 19 "in terms of design principle, shape, form and/or 20 specification ..." 21 The word "materially" has been crossed out, and 22 then: 23 "... amended from the drawings forming the Infraco 24 Proposals." 25 Do you see that? 121 1 A. I do. 2 Q. Then in the following sub-bullet point, following two 3 sub-bullet points, once again, the word "materially" has 4 been deleted? 5 A. Mm-hm. 6 Q. Did you give any advice on the deletion of the word 7 "materially" in this context? 8 A. In this context my understanding on this draft which has 9 been marked up by the parties, the process which I was 10 not part of and indeed DLA, I don't believe, were part 11 of it, this was an exchange between the parties. 12 The word "materially" appeared in a parallel draft 13 which tie had produced, and I believe that this is 14 Bilfinger Berger rejecting that, and saying this departs 15 what was in the Wiesbaden Agreement and translated into 16 the first version of Schedule Part 4. 17 I do believe I commented on this to tie, and I do 18 believe part of that advice was that I had been told, as 19 we've looked at earlier, that this particular part of 20 Schedule Part 4 was not subject to negotiation since it 21 had been agreed by tie's senior managers in Wiesbaden 22 and then translated by the Commercial Director of tie 23 into the first version of Schedule Part 4 in conjunction 24 with a counterpart at BBS. 25 Q. So in that regard did you understand the wording of 122 1 these sections that we've been looking at as essentially 2 fixed? 3 A. I understood that anything that departed from the 4 ideas -- from the language in here was not to be touched 5 in the course of Schedule Part 4 moving through to its 6 conclusion. 7 Q. Can we look at page 9 of this marked-up version. 8 In subparagraph (g) you see that it says: 9 "that in relation to Utilities that the MUDFA 10 Contractor shall have completed the diversion of all 11 Utilities Apparatus so as to ensure that the Infraco 12 shall not be required to undertake any works to 13 Utilities Apparatus in carrying out the Infraco Works." 14 I should say, I'm reading the final version there 15 with the mark-ups. 16 A. Mm-hm. 17 Q. Do you see that's what it says? 18 A. Mm-hm. 19 Q. Again, were you aware whether or not completion of the 20 MUDFA works had been part of the Wiesbaden Agreement? 21 A. I believe it was, and by this point, on 22nd -- this is 22 issued to BBS on 19 February, but this draft is BBS's 23 response on the 22nd. I had definitely had a discussion 24 with both Geoff Gilbert and Steven Bell about the fact 25 that tie or the contract was transferring the entire 123 1 risk of MUDFA works being incomplete. That's my 2 position, my Lord, and I would like the benefit, and at 3 lunchtime I tried to retrieve and look at the Wiesbaden 4 Agreement, the 200-page document. If I had been able to 5 do that, I would have been in a better position to 6 answer this question. But I cannot answer it with 7 certainty at this moment. 8 Q. Can I ask you to look at another document then. If we 9 could look at CEC01449710. 10 Now, if we just look at the whole page, we can see 11 in the lower half of that page it's got the email from 12 Ian Laing we have just been looking at? 13 A. Yes. 14 Q. Above it, we see that you forwarded that on to 15 Steve Bell and copied it to Graeme Bissett and Dennis 16 Murray and Stewart McGarrity. What you say is: 17 "Geoff will have head down at the moment and will 18 probably already have shared this with you. It arrived 19 on Friday afternoon from BBS (legal). I have not had 20 an opportunity to go over this with Geoff yet, nor 21 have I been substantially involved in its development." 22 First of all, why were you sending it on to 23 Steve Bell? 24 A. Steven Bell was involved in virtually all the Schedule 25 Part 4. Steven Bell being the -- at that point, 124 1 22 February -- 25 February was, according to 2 Willie Gallagher's announcement in January, the Tram 3 Project Director elect. Matthew Crosse was still 4 around, but wasn't very visible. 5 So I am sending this document to Steven Bell in his 6 capacity as Tram Project Director elect, and also 7 Engineering Director, and Steven had been involved in 8 all of the engineering parts of Schedule 4 discussions, 9 in other words sitting with BBS, going through the 10 pricing assumption lists. That's why I'm sending it to 11 him, because I wasn't aware -- I didn't know whether 12 he'd had it. 13 I don't know what the dates are, but arrived on 14 Friday. This is presumably 22 February. So I'm not 15 quite sure of the dates, but that is my answer. 16 Q. 22 February was a Friday. The date of your email, 17 25 February, would presumably be the Monday. 18 A. Right. 19 Q. Now, you have also said you've not had an opportunity to 20 go over this with Geoff yet. Did you go over all 21 various iterations of Schedule Part 4 with 22 Geoff Gilbert? 23 A. I doubt it very much because it was not my role, as we 24 have discussed earlier. 25 Q. But you were intending to go over this one with him? 125 1 A. My Lord, I can't say exactly what I was intending to go 2 over with Mr Gilbert here. These are -- this question 3 is picking on words which I fired out in an email 4 quickly to get this on Geoff Gilbert's radar. 5 Geoff Gilbert at that point was also engaged in the 6 Infraco -- I have been corrected that this is an Infraco 7 main term. But he was involved in those discussions as 8 well as Schedule Part 4, and I recall that there was 9 some kind of transition going on at the moment here 10 because Geoff's time was conflicted. He had commercial 11 negotiations on the Infraco terms and he had involvement 12 in this document. 13 Q. You say that Mr Laing's email was sent to Mr Gilbert, 14 wasn't it, the one on the lower half of the screen? 15 A. Yes. 16 Q. So it was already on his radar. 17 A. Well, the main point -- sorry. I interrupted. Please. 18 Q. I'm wondering why you're then saying to Steve Bell that 19 you haven't had an opportunity to go over this with 20 Geoff Gilbert yet. What interpretation would you put on 21 that, other than the fact you were intending to discuss 22 that with Geoff Gilbert? 23 A. There could have been a number of things that I needed 24 to go over with Geoff Gilbert. As I come back to, this 25 is an email fired out quickly. 126 1 The email from Ian Laing is suggesting there should 2 be a meeting involving lawyers, thinking there are 3 a number of mechanical issues that lawyers need to 4 assist on to make this schedule work with the remainder 5 of the documentation. 6 At this point my involvement in Schedule Part 4 had 7 been limited and I needed to discuss with Geoff Gilbert, 8 I imagine, what my involvement in an upcoming meeting 9 might need to be. That's what I'm saying. 10 Q. Okay, let's look at another document then. It's 11 CEC01450544. 12 If we look at the upper half of the page? 13 A. Yes. 14 Q. We can see that this is an email from Bob Dawson within 15 tie which goes to a number of people, including you, 16 dated 10 March 2008. Is that correct? 17 A. Yes. 18 Q. What he says is: 19 "Further to my e-mail on Thursday I note below the 20 wording agreed during the telephone conference with 21 Geoff and Dennis." 22 It's got the wording of clause 3.4: 23 "The Construction Works Price has been fixed on the 24 basis of inter alia the Base Case Assumptions noted 25 herein. If now or at any time the facts or 127 1 circumstances differ in any way from the Base Case 2 Assumptions (or any part of them) such Notified 3 Departure will be deemed to be a mandatory tie Change in 4 respect of which tie will be deemed to have issued a tie 5 Change on the date that such Notified Departure is 6 notified by either Party to the other." 7 We can see the use of various capitalised terms 8 there. 9 A. Yes. 10 Q. You understand that to be a reference to -- 11 A. Schedule Part 4. 12 Q. Yes. This is saying that as soon as there's 13 a departure, it will be deemed to be a notified 14 departure or mandatory tie change; do you understand 15 that? 16 A. Yes. 17 Q. If these were to be automatic changes, and you, as you 18 said, knew the design was incomplete, what did you see 19 that the effect of this would be? 20 A. The effect of this was -- the effect of this would be 21 that as soon as base case assumptions changed -- 22 changed, and that included Pricing Assumption 1, then 23 there would be a mandatory tie change. I am not sure at 24 this point on 10 March -- I believe it was, but I'm not 25 sure that the definition of mandatory tie change had 128 1 been keyed into the change mechanism, but that is what 2 I understood was going to happen, and that is indeed 3 what did happen in relation to the version change. 4 Q. You knew if the pricing assumption stayed as it was, 5 that there were going to be changes from the base date 6 design information, didn't you? 7 A. I knew that if there were changes from the Base Case 8 Assumptions, there would be Notified Departures. 9 Q. You knew that those changes would happen, those 10 departures would happen? 11 A. As -- as far as pricing assumption 1, 3.4 was changed, 12 yes, because the SDS design was incomplete and so there 13 would be design development that would trigger 14 a Notified Departure. 15 I wasn't in a position to judge which of the 16 remaining 42 assumptions in Schedule Part 4 would result 17 or -- the facts and circumstances pertaining to those 18 particular pricing assumptions would change or differ. 19 That was not -- that's not a judgment I could make. 20 Q. Let's just stick with pricing assumption 1 for the 21 moment. If you're aware that there are going to be 22 changes, and these would be deemed mandatory tie 23 changes, that would mean that tie would actually have no 24 control over them as and when they arose? 25 A. Correct. This is a contractual mechanism to allow the 129 1 contractor to make a claim, provided the Notified 2 Departure was satisfied. tie didn't have -- did not 3 have an option -- did not have -- was locked into 4 a situation where if this event happened, this base case 5 assumption did not hold good, there would be a change, 6 and tie would need to deal with the consequences of 7 that, once there was an estimate. 8 Q. Did you give advice to tie on what the effect might be 9 on having changes arise automatically, without any 10 ability on the part of tie to control that? 11 A. Yes, I did. 12 Q. To whom did you give that advice? 13 A. Geoff Gilbert, Steven Bell. 14 Q. When did you give that advice? 15 A. Part of that advice would have been given in February, 16 because these -- the idea of a Notified Departure was 17 already in play. And as to -- since Geoff and Dennis 18 have had a telephone conference to agree this wording, 19 without reference to me, without reference to DLA Piper, 20 I think it's a reasonable assumption to understand that 21 they are comfortable with that, and they understand its 22 implications. And I have said that I -- I gave 23 Geoff Gilbert and Steven Bell advice about this. 24 Q. You described earlier the various skills and job titles 25 of the people involved. Do you think that any of them 130 1 were in a position to reach a view on the possible legal 2 consequences of the wording? 3 A. Yes, I do. 4 Q. Who? 5 A. Geoff Gilbert, who was responsible for drafting parts of 6 the Wiesbaden agreement, who was responsible for 7 drafting Schedule Part 4 in January/February, who 8 continued to be responsible and take part in discussions 9 on contractual language in that document, and I believe 10 that Geoff was competent to take that type of decision 11 and to understand the implications of what was going on. 12 Q. Did you take any steps to verify whether or not he 13 understood what the effects would be? 14 A. I saw Geoff's full understanding of how Schedule Part 4 15 was going to work on 31 March, and that was when 16 Jim McEwan wrote to me asking about what would happen if 17 there was a version change from -- to -- from V26 -- to 18 V26. This is the SDS design programme. 19 And I wrote Jim quite a detailed email on 31 May 20 responding to his -- 31 March responding to his 21 question. 22 Q. We will come to that email in a little while. 23 A. If I could finish my response. It is relevant, thank 24 you. 25 My Lord, my -- the only response I got from tie 131 1 and I copied a number of senior managers, was from 2 Geoff Gilbert, who observed what was going to happen if 3 there was this version change, and how tie would need to 4 try and deal with it. 5 So from that email alone, I think it is a reasonable 6 assumption that Geoff Gilbert had the skills and the 7 intellectual application and the commercial 8 understanding to have understood perfectly well what 9 this language is, and I should add that Dennis Murray 10 was a quantity surveyor and he too knew what this type 11 of contractual language would do. 12 Q. So would you equate their understanding with that of 13 a partner of a solicitors' firm? 14 A. No, I would not. 15 Q. So might there be an advantage of someone who is 16 a partner in a solicitors' firm applying his mind to it 17 and advising? 18 A. Yes, and I have said that I did apply my mind to this 19 particular language. 20 One of the difficulties of jumping in and out of 21 documents like this is it misses sequence, and I'm very 22 sure that I had a discussion in relation to Notified 23 Departures with both Steven Bell and Geoff Gilbert. 24 Q. We haven't obviously heard evidence from either of those 25 gentlemen yet, but if we do, and they don't recall such 132 1 a discussion, would that surprise you? 2 A. That would be their recollection, and I haven't had the 3 benefit of seeing their evidence. So I can't comment 4 further. 5 Q. I would like to look at another document, please. Could 6 we look at, firstly, email CEC01451012. We can see in 7 the upper half of the page here, once again this is an 8 email from Ian Laing of Pinsents. It's dated 19 March. 9 It's addressed to Bob Dawson, tie, Suzanne Moir, who 10 I think was Ian Laing's assistant; is that right? 11 A. Suzanne Moir was an Edinburgh-based associate of 12 Pinsent Masons. 13 Q. And you were included amongst the people to whom the 14 email was copied? 15 A. Correct. And I think I have commented on -- yes, you 16 are right. 17 Q. We can see that once again: 18 "In advance of our meeting tomorrow, I attach our 19 mark-up of Schedule 4 in relation to the Pricing 20 Assumptions." 21 A. Mm-hm. 22 Q. If we go then to look at that mark-up that he is 23 referring to, that's reference CEC01451013. 24 We can see the usual heading for Schedule 4 pricing. 25 If we could look at page 7 of this now, we can see here 133 1 that we have quite substantial changes to the clause 3.4 2 that we've previously looked at; do you see that? 3 A. Yes. Although I would say that what the substantial 4 changes seem to be, to my glance in 3.4, there is a lot 5 of red line around, but, for example, the paragraph -- 6 the second paragraph in the document, in this 7 clause 3.4: the avoidance of doubt, normal design, 8 completion of design, means and so on; that paragraph is 9 simply shifted down below. 10 So bearing in mind that this is a document that 11 reflects recent discussions that are going on, and what 12 Ian Laing's preface was, I don't see this as substantial 13 amendments to pricing -- pricing assumption 3.41. If 14 that is the question. 15 Q. Could we keep this document on screen and look at 16 another one alongside it, one you've already looked at. 17 If we could go back to document CEC01449877 at page 5. 18 Now, the older text on the right. We can see what 19 it said is the Infraco construction -- I'm reading the 20 foot of the page, last bullet point: 21 "The Infraco Construction Works Price includes for 22 any impact thereon arising from the normal development 23 and completion of designs based on the design intent 24 for the scheme as represented ..." 25 It goes back to the design information. 134 1 In its new form it says: 2 "The design prepared by the SDS Provider will not 3 (other than amendments arising from the normal 4 development and completion of designs):" 5 Then down to 1.1: 6 "in terms of design principle, shape, form and/or 7 specifications be amended from the drawings forming the 8 Base Date Design Information." 9 It's gone from being that it includes design to now 10 a prohibition on change of design; do you see that? 11 A. My Lord, I'm having difficulty following this because 12 they are draft documents with underlining. This is the 13 kind of discussion that needs to take place with 14 documents in front of me and time to observe this and go 15 through it. 16 I'm sorry to be unhelpful, but that is my position 17 on this. 18 CHAIR OF THE INQUIRY: Are you unable to read the -- 19 A. No, no, I can read it, I just need a lot of time. 20 CHAIR OF THE INQUIRY: I think you're just being asked about 21 this particular clause. 22 A. Right. 23 Yes, there is a change in -- there is a change in 24 the philosophy of the clause, yes. But my view would be 25 that the net effect of that change, and this is a view 135 1 on the hoof now, that the pricing assumption, the effect 2 of the pricing assumption is the same. 3 MR LAKE: Did you not form any view on the matter at the 4 time? 5 A. On the change between the document on the right and the 6 document on the left? 7 Q. Yes. 8 A. I do not recall forming a specific view on these 9 changes, on this document, because, as I have stated, 10 I was not involved in those discussions, which is 11 prefaced by Ian Laing saying: these are the principles 12 that we discussed and agreed. 13 Q. We can see quite a difference in the structure and 14 approach of this clause, and in the wording of it. Is 15 that not an ideal time for you to participate? Because 16 it's clear that there is scope for change. 17 A. If I was instructed to participate, and the instruction 18 was that I was not to get involved in Schedule Part 4 19 until asked to. 20 Q. So can -- who gave you that instruction? 21 A. Steven Bell and Geoff Gilbert. 22 Q. So you're saying you were specifically instructed not to 23 get involved? 24 A. I come back to the proposition, my comment earlier, 25 which is copying me on these documents, Bob Dawson in 136 1 particular obviously in discussion with others, simply 2 copying me on Schedule Part 4, without a request to do 3 something about it, was difficult to respond to. 4 And I did actually ask Steven Bell and Geoff Gilbert to 5 make sure that if they were -- if somebody wished me to 6 be involved in a meeting, given the experience that I'd 7 had on 6 February, could they please ask me to come to 8 the meeting and give me sufficient time to prepare for 9 it, given I wasn't always copied in on things, and 10 wasn't party to discussions. 11 Q. Mr Fitchie, can we be clear about this, because you once 12 said there that you were instructed not to participate, 13 and then you went on to say: well, I was only copied in 14 on them. 15 Are you saying that you were instructed not to or 16 you took it that you shouldn't because you were only 17 copied in? Which is it? 18 A. No, there was a distinct discussion about who from DLA 19 and in what capacity they would attend Schedule Part 4 20 meetings, and this would be probably in mid-March. 21 Q. Let's move on from the meetings now. I'm not discussing 22 about meetings. I'm discussing about drafts that are 23 being copied to you, and are you saying you were 24 instructed not to do anything about them? 25 A. I had asked that if -- if tie wished me to engage on 137 1 Schedule Part 4 in any fashion, and that includes 2 drafting, because my position is that tie had taken 3 charge of this and wanted to be in charge of it. So 4 barring somebody from tie saying: Andrew, we really need 5 you to come to this meeting, here is the document that 6 we're going to be discussing, and can you give you us 7 a view on what you think has been changed from one draft 8 to another; I would not -- I would not have engaged on 9 the document. 10 Bear in mind, in terms of DLA -- sorry, I stop. I'm 11 going on too long. 12 Q. Could we look, please, at another document. 13 CEC01489543. We have just been looking at an email 14 dated 19 March. We can see this is another email dated 15 19 March. It's from you to Geoff Gilbert, Bob Dawson, 16 and Steve Bell. It's copied to your employee, Philip 17 Hecht. It is headed "Schedule 4". 18 "Guys, in my view, there are various entries in this 19 now which to my mind have nothing to do with pricing 20 assumptions. They have to do with possible Relief of 21 Comp [compensation] events." 22 A. I think it's a "Relief or Comp events". 23 Q. "See Assumptions 32, 33, 39, 40. Other variety of 24 points also on: VE [value engineering] and Ground 25 Conditions." 138 1 So you clearly have considered it, and you clearly 2 are offering your comments on it in part, aren't you? 3 A. I think I have commented earlier in my evidence, this 4 morning, and earlier this afternoon, and it's also in my 5 statement, that when I saw something at the end of 6 discussion, the next day, 20 March, there was to be an 7 all parties meeting in order to have the document, 8 Schedule Part 4, up on screen and go through where it 9 had reached. I was not scheduled to be involved in that 10 meeting, but Philip was because he was running the 11 equipment, to have it on a screen so the amendments were 12 easier. 13 This is me saying to Geoff Gilbert, Bob Dawson and 14 Steven Bell that there are some things now which have 15 appeared in Schedule Part 4 which I don't recognise as 16 a matter of principle from other drafts. 17 Q. Which shows you have considered the draft and you're 18 giving your client comments on it; correct? 19 A. Yes. Which draft am I commenting on? 20 Q. Might it possibly be the one you were sent that day? 21 I don't know. 22 A. This is the issue, my Lord. I'm not sure what I was 23 sent and when from that email. I'm sorry, I can't -- we 24 have just looked at four or five different versions of 25 Schedule Part 4, and maybe we'll look at some more, but 139 1 without the document that I was looking at, and had been 2 sent, it's very difficult for me to say: I was engaging 3 on X. We see from the email what I had spotted looking 4 at the document. 5 Q. Did you look at some drafts and not look at others? 6 A. I may have been asked to look at them, my Lord. This 7 one. I may have been specifically asked to look at it. 8 Q. You're simply guessing, aren't you, Mr Fitchie? You are 9 grasping? 10 A. I'm not grasping at anything. 11 Q. Do you know that you were asked to look at it or not, or 12 are you just guessing? 13 A. I do not recall now if I was asked to look at it. What 14 I'm attempting to do is to highlight to the client that 15 there are some things in this document which I had not 16 seen before in previous drafts. That is my evidence. 17 Q. I can understand your position that you weren't 18 instructed to review the draft or you weren't given 19 specific instructions about this matter. But as 20 effectively the in-house lawyer, if you saw a document 21 coming across, which was copied in to you, and as here, 22 you have obviously had a look at it, did you consider 23 that you might have a -- it might be of assistance to 24 your client to point out any difficulties that you saw? 25 A. Yes. I did have that view, my Lord. This is an 140 1 example, and there were other examples. 2 CHAIR OF THE INQUIRY: This is an example of you pointing 3 out to your client -- 4 A. This is an example of me seeing something that I had not 5 seen before. It was very blatant. 6 CHAIR OF THE INQUIRY: So when you saw the terms of Schedule 7 Part 4 changing in the way that we've seen in the 8 various progressive drafts, did you think at that time 9 that it would be useful or helpful to the client to 10 record your concerns? 11 A. My evidence is on Schedule Part 4, my Lord, that I was 12 asked not to be closely involved in it. I understood 13 that instruction. You could say perhaps I took it to 14 the letter. However, there were competing commitments 15 for me at the time, and if I was able to, and somebody 16 asked me about something, I would try and see them, when 17 the pressure of the working day was off. 18 Your question, however, is: did I spontaneously look 19 at all the Schedule Part 4 drafts coming over my desk or 20 coming in to me on the email. No, I didn't, because 21 a number of these were things where there had been 22 a meeting to discuss non-legal elements. 23 MR LAKE: In terms of the difference between the Schedule 24 Part 4 and the Wiesbaden Agreement, I wonder if we can 25 look at a different draft of Schedule 4. Can we look 141 1 firstly at an email, CEC01451053. This is an email from 2 your colleague, Philip Hecht, to various persons within 3 tie, also Ian Laing at Pinsent Masons, and 4 Scott McFadzen, who I think was one of the principals 5 within the Bilfinger group; is that correct? 6 A. Scott McFadzen was the bid man at the BBS, bid manager. 7 Q. He's copied it to you? 8 A. Correct. 9 Q. What he says is: 10 "Please find attached Schedule 4 as agreed today on 11 screen." 12 Which was consistent with what you said, that there 13 was a meeting that took place that day. 14 A. Yes. I did say that. 15 Q. If we look at the attachment to that email, it's 16 reference CEC01451054. If you go to page 6 of this. We 17 can see a clean version of the clause 3.4 which was 18 heavily marked up on the previous version. Do you see 19 that? 20 A. I do. 21 Q. Is that easier for you to read and digest the clause in 22 that format than it was when marked up? 23 A. Significantly easier. 24 Q. I wonder if you could keep that on screen, then, and 25 also put alongside it the Wiesbaden Agreement terms, 142 1 which I have momentarily forgotten the reference for. 2 It's CEC02085660. If we could have page 5 of that. 3 Now, on the right-hand side, we can see the 4 Wiesbaden Agreement that we've seen a few times before, 5 and it states what the price is to include. 6 On the left we can see Schedule Part 4 as it was 7 then drafted at the end of March, saying that the design 8 prepared by the SDS Provider will not, other than 9 amendments arising from normal development and 10 completion of designs, in terms of design principle, 11 shape, form and/or specification, be amended from the 12 drawings forming the base date design information. Do 13 you see that? 14 A. Mm-hm. 15 Q. We can see whereas originally there was reference to 16 design intent in the Wiesbaden Agreement, we've now 17 moved to something rather tighter which refers to design 18 principle, shape, form and/or specification, and 19 includes no reference to intent. 20 A. Yes. 21 Q. Whereas previously it said what the price included, it's 22 now saying that -- setting the parameters beyond which 23 it may not change. 24 A. That's right. 25 Q. Now, beneath the indented paragraphs 1.1, 1.2 and 1.3, 143 1 we can see a provision which begins "for the avoidance 2 of doubt": 3 "For the avoidance of doubt, normal development and 4 completion of designs means the evolution of design 5 through the stages of preliminary to construction stage 6 and excludes changes of design principle, shape and form 7 and outline specification." 8 Do you see that? 9 A. I do. 10 Q. I just want to sort of test the meaning of your 11 understanding of the clause at the moment. 12 If we start by reading from the beginning, but miss 13 out the parenthesis, it's a simple statement that the 14 design prepared by the SDS Provider will not, in terms 15 of design principle, shape, form and/or specification, 16 be amended from -- the base date design information. 17 Then if we add in the parenthesis as a qualification 18 to that, it's the design prepared by the SDS provider 19 will not, other than amendments arising from the normal 20 development of design and completion of designs. Do you 21 see that also? 22 A. Yes. 23 Q. But then if we look at the text, "for the avoidance of 24 doubt" at the bottom, it says that normal development 25 and completion of designs excludes changes of design 144 1 principle, shape and form and outline specification. 2 A. Mm-hm. 3 Q. So the effect of this when put together, that if you try 4 to fall within the parenthesis of normal development and 5 completion of designs, it must be something which 6 doesn't include changes of design principle, shape and 7 form; is that correct? 8 A. There is a contradiction in there. 9 Q. So what's in the parenthesis is in fact entirely otiose. 10 It doesn't add anything to the meaning of the clause. 11 A. There is that difficulty with this clause, you're 12 correct. 13 Q. So really what this clause says now is that the design 14 prepared by the SDS Provider will not, in terms of the 15 design principle, shape, form and/or specification, be 16 amended from the base date design information; is that 17 correct? 18 A. Yes. 19 Q. So we've managed to move from the Wiesbaden Agreement, 20 which includes a normal design development, to something 21 where normal design development becomes completely 22 redundant? 23 A. Right. 24 Q. Do you not think that's the sort of thing that it might 25 have been useful to have a lawyer's advice on? 145 1 A. My position on that, my Lord, is that immediately after 2 the Wiesbaden Agreement, as far as I could understand, 3 there was a production of a version of Schedule Part 4 4 which was close to what we're reading on the left-hand 5 side of the page. So that the Wiesbaden Agreement was 6 a genesis for the idea of this approach on amendment to 7 the design BDDI, but there was another document which 8 was in play in January which was being discussed and 9 negotiated by Geoff Gilbert on behalf of tie, 10 Scott McFadzen, I believe, on behalf of Bilfinger, which 11 had come into existence as what was going to be the core 12 of Schedule Part 4. 13 So comparing the long Wiesbaden Agreement with -- 14 and Mr Lake is asking me about this this morning, and 15 I'm sorry, I tried at lunchtime to have a look at that 16 document to find out whether there were other -- what 17 you call the odd contractual provisions. 18 But in simple terms, there was a step almost 19 immediately after the Wiesbaden Agreement to draft 20 Schedule Part 4 in a way which aligns with the left-hand 21 page we are looking at here. 22 Q. Mr Fitchie, I just showed you -- remember, we had to use 23 the coloured version through the camera, which shows 24 where all the majority of the wording on the left-hand 25 side comes, and the change. 146 1 So we saw in February it was different wording and 2 this all changed in March. Do you recall that or would 3 you like me to go over it again? 4 A. What I recall, my Lord, is a document that had -- was it 5 Wiesbaden Agreement? In this exercise, it is my honest 6 recollection that we are missing a document or missing 7 a document which was called Schedule Part 4, which was 8 prepared in January. 9 What we looked at earlier was documentation which 10 was around in early to mid-February. There is a set of 11 documents that pre-dates that which is the evolution 12 from the Wiesbaden Agreement, and that is my honest 13 recollection, and it is my evidence. 14 Q. I will leave that there then, I think. 15 A. That document exists and I do wish to place on record 16 that it's there. 17 CHAIR OF THE INQUIRY: You say it's there. But where? 18 A. I think it was in amongst the documentation that is on 19 my -- on my SteelNet archive. I think it's there, 20 and I saw it again during Project Challenge, when tie 21 started looking at what had happened in the period 22 between 20 December 2007 and the start of the SP4 23 negotiations in February, and that document was moving 24 backwards and forwards between Geoff Gilbert, 25 Scott McFadzen, with Bob Dawson being tasked by 147 1 Geoff Gilbert to update it and insert things in it. 2 So this is not a fantasy. That document and these 3 emails are there. 4 CHAIR OF THE INQUIRY: We can look for that then. Perhaps 5 Brodies can direct us to it. 6 A. My Lord, these are tie documents. These are not 7 documents that DLA saw. 8 My Lord, can I ask for a convenience? 9 CHAIR OF THE INQUIRY: Yes. We will have a break for 10 15 minutes for the afternoon break. 11 A. I'm sorry about that. 12 CHAIR OF THE INQUIRY: That's all right. We will resume 13 again at 3.15. 14 (2.59 pm) 15 (A short break) 16 (3.15 pm) 17 CHAIR OF THE INQUIRY: Mr Fitchie, you're still under oath. 18 Before Mr Lake asks you any more questions, 19 can I clarify what you were saying about this document 20 on your SteelNet account. You think you mentioned that 21 it was a document which was circulated in January. 22 Can I just be quite clear. Are you saying that this 23 is an earlier edition of the documents that you've been 24 shown here? 25 A. Yes. 148 1 CHAIR OF THE INQUIRY: With the changes? 2 A. I'm saying that it was a kick-off -- it appeared -- 3 well, it is a kick-off version of Schedule Part 4. 4 CHAIR OF THE INQUIRY: Then, was the next thing, just 5 because you won't be here when I get the document, 6 can I just be quite clear what you say is the 7 significance or relevance of this kick-off version. 8 A. The significance of this document is that it has been 9 part of the evidence that I'm being examined on that 10 this document -- sorry. I rephrase this. 11 This version of Schedule Part 4 was a document which 12 was negotiated by the parties in January for -- in 13 January 2008 for, I would say, approximately two to 14 three weeks immediately after Christmas 2007. And it 15 incorporates the -- not all the pricing assumptions 16 because a lot -- many of the pricing assumptions, the 17 engineering and commercial pricing assumptions, appeared 18 during the negotiations. BBS had a shopping list and 19 they pushed that through. This document essentially 20 contains the genesis for the pricing assumption 3.41 21 language. It is more developed than Wiesbaden. 22 CHAIR OF THE INQUIRY: So I would be able to see if there 23 were any changes to the clauses that you've been 24 directed to? 25 A. You should be able to track from that document, the 149 1 document that appears on 6 February. That should relate 2 to the document I'm talking about. And there are 3 several email exchanges between -- amongst the 4 gentlemen, Bob Dawson, Geoff Gilbert and Scott McFadzen 5 about that. 6 CHAIR OF THE INQUIRY: Were you copied into these? 7 A. No, I knew nothing about this. 8 CHAIR OF THE INQUIRY: Thank you. 9 A. But I did see them, my Lord. I saw them in 10 January 2010. 11 CHAIR OF THE INQUIRY: Thank you. 12 Mr Lake? 13 MR LAKE: Could I ask you, please, to look at another email. 14 It's CEC01451185. I can take this shorter if I can go 15 instead to CEC01548431. 16 Can I ask you to go to page 4 of this. You've got 17 different pagination. 18 If we go to the previous page. Look at the email 19 towards the foot of this page, please. You can see it's 20 from Ian Laing? 21 A. Mm-hm. 22 Q. Dated 26 March 2008. It goes to -- it's addressed to 23 Philip Hecht, various people at tie, and you're included 24 as one of the cc's to it? 25 A. Right. 150 1 Q. It says: 2 "As we discussed earlier today, the Design Delivery 3 Programme that will be v28. The Pricing Assumption in 4 Schedule 4 of the Infraco Contract assumes that the 5 Design Delivery Programme will not change from v26. It 6 follows that there is the possibility that there will be 7 an immediate Notified Departure on contract execution. 8 Given the unusual position that we are in, please can 9 you confirm that this is understood and agreed by tie." 10 A. Yes. 11 Q. Now, what action, if any, did you take in response to 12 that? 13 A. The email says "As we discussed earlier today". And 14 that is a reference to a meeting that I believe took 15 place, but since the addressees are Steven Bell and 16 Jim McEwan, and there are other documents that speak to 17 this, there was a meeting between BBS and Steven Bell 18 and Jim McEwan at which they agreed or had discussed 19 this. And now Ian Laing is asking them: is this 20 understood and agreed by tie? 21 The action I took was to answer an email from 22 Jim McEwan about -- yes, about five days later, saying 23 when I was asked, we'd need to look at the email, 24 my Lord, to say exactly what was in it, but I was asked 25 to give a view on what this change between V26 and V28 151 1 would be, and I gave that view in some detail. 2 Q. If we go to that email, at least I think it's the email 3 you're referring to. If we look at CEC01465933. Look 4 at page 3 of this. Right at the top of the page there, 5 we will see the text of the email we've just been 6 looking at. 7 If you go to an earlier page, page 2. 8 A. We see Jim McEwan's request to me. 9 Q. For completeness, we see just beneath halfway down on 10 the page, another email from Ian Laing, this time of 11 31 March? 12 A. Yes. 13 Q. Addressed to various people, copied to you, where 14 he's -- essentially it's a chaser from the earlier one, 15 saying: 16 "Please can you let me have confirmation that the 17 position on the Notified Departure in relation to the 18 Design Delivery Programme is understood and agreed by 19 tie." 20 A. Mm-hm. 21 Q. If you go further up the screen, you can see the email 22 from Jim McEwan to you of the same day, 31 March 2008, 23 in which he says: 24 "Andrew, can you advise on a response to this 25 please what Ian is saying is factually correct albeit 152 1 that we are working to minimise the impact and variance 2 between critical path items. While we accept that the 3 version change will be a notified departure we are 4 concerned to ensure that there will be no gaming of this 5 position by BBS, and that only where the change can be 6 shown to materially change the Infraco programme 7 critical path should we be liable for potential 8 additional charges." 9 A. Mm-hm. 10 Q. Is that the email you've been referring to? 11 A. That is the email that I remember. 12 Q. If we look at your response, we go to page 1, on the 13 lower half of the page here, we can see it's an email 14 from you now to Jim McEwan and Steven Bell dated 15 31 March 2008; do you see that? 16 A. I do. 17 Q. What you say there is: 18 "If the situation is that at this point SDS is 19 unable to produce a design delivery programme which is 20 reliable and static at V26 - and that is indeed the 21 situation that SDS have articulated - and that this 22 programme will need to be varied immediately post 23 contract award, tie needs to endeavour to negotiate with 24 BBS now the specifics of what is or is not to be 25 permitted as a variation to the Infraco Contract and its 153 1 master construction programme, otherwise the Notified 2 Departure mechanism is too blunt and will permit BBS to 3 include everything that they estimate is going to affect 4 them to be priced and to be granted relief. That 5 Estimate is bound to be all encompassing and 6 conservative." 7 That's you giving advice that the estimates are 8 likely to be large in relation to the changes to the 9 design programme. Is that a fair summary? 10 A. It's -- yes, and it's me saying that the Notified 11 Departure mechanism that has been agreed will not go 12 through the process that Jim has outlined in his email. 13 I didn't quite understand -- I tried to clarify with 14 him, but didn't quite understand. But yes, in summary, 15 you're correct that is what I'm saying, that in response 16 to his we don't want BBS gaming, I was saying that the 17 estimate they're going to be producing will be -- will 18 stretch as wide as they can make it. 19 Q. To say that there's a need to negotiate now the 20 specifics of what is or is not to be permitted as 21 a variation to the Infraco contract and its programme, 22 that's really been apparent from a number of the drafts 23 when there's been automatic or mandatory tie changes. 24 A. Sorry, I'm not -- I'm not sure whether I understand the 25 point. 154 1 Q. You are saying here in the middle of the paragraph 2 I have just read: 3 "... tie needs to endeavour to negotiate with BBS 4 now the specifics of what is or is not to be permitted 5 as a variation to the Infraco contract ..." 6 A. Yes. 7 Q. Now, that seems to be trying to put some limitation on 8 what may be a variation to the Infraco contract. 9 A. This is six weeks before the contract was going to be 10 signed, and what I'm saying is that tie are now on 11 specific notice that there will be a Notified Departure 12 as soon as the contract is signed. 13 Q. But that was obvious anyway, wasn't it, Mr Fitchie? 14 A. What was obvious? 15 Q. That there would be variations to the contract under the 16 Schedule Part 4 mechanism? 17 A. Well, yes, but this is a specific variation to -- sorry, 18 it's a specific Notified Departure event which is 19 actually going to take place. Up until this point there 20 had been no notification early saying yes, we are going 21 to serve a Notified Departure -- sorry, a mandatory tie 22 Change Notice on you before the contract is even signed. 23 This one is saying: we have a Notified Departure 24 justification and it's this. And my advice is for tie 25 to try and quantify and engage with BBS before the 155 1 contract is signed, to put some limitations and fence 2 around what the Notified Departure will be. 3 As I say in my evidence, SDS at this point was still 4 tie's designer, and SDS had a contractual obligation to 5 notify tie of the effect of any change to its design 6 programme. As soon as SDS novated, they were then 7 Bilfinger Berger's designer. 8 What I'm saying here is: use your resource now to 9 try and quantify what this will be, and as I say in my 10 evidence, this job of quantifying what V26 to V28 meant 11 in terms of entitlement to extension of time, 12 entitlement to further costs and so on, prolongation and 13 the things that go -- that went in the claim, this -- 14 this exercise was overtaken by V31 pretty quickly, and 15 no estimate was done by tie on what this was going to 16 cost until February 2009. 17 So this was left for nearly a year before any 18 attempt was made to negotiate what the cost effect of 19 this change was going to be. 20 Q. Let's just concentrate on 31 March, and there's no 21 mention there in that first paragraph, is there, of 22 trying to quantify changes. 23 What you suggest is to negotiate with Bilfinger, not 24 the SDS designer, Parsons, to negotiate with Bilfinger 25 the specifics of what is or is not to be permitted as a 156 1 variation to the Infraco contract. What did you mean by 2 that? 3 A. What I meant was quantify -- it is not very elegant 4 language, but what I meant was attempt to quantify now 5 with Bilfinger before the contract is signed what the 6 time and cost effect will be of this V26 to V28 SDS 7 programme change. 8 I think it's axiomatic that SDS is the person that 9 was going to be able to say: look, this is exactly how 10 my programme is going to engage with Bilfinger's 11 construction programme. This is my view as your 12 designer as to what this change is going to happen -- is 13 going to affect you, client. 14 Q. Looking at the next paragraph, what you write is: 15 "The only approach open to tie, in my opinion, is 16 a factual one, not a contractual one (since the 17 mechanism for Notified Departure puts the advantage with 18 BBS by creating an automatic tie Change)." 19 Now, just to pause there, that's the first time we 20 have seen any indication of your view that the Notified 21 Departure gives BBS an advantage by creating an automatic 22 change. Is that something that could not more usefully 23 have been spelled out and addressed earlier? 24 A. My Lord, I did spell it out and address it earlier, and 25 I have given evidence on that, and my advice was oral 157 1 and it was during the process of SP4. 2 Q. We can see what you continue to say is: 3 "To capture as many identified key changes that tie 4 knows will be required and to attempt to fix them and 5 agree their likely programme and/or cost impact with BBS 6 prior to contract award ..." 7 What did you mean by that? 8 A. I think the words are relatively clear. What I meant 9 was that tie needed to meet with BB rather than waiting 10 for the contract signature to come. Contract signature 11 would automatically put the advantage in BBS's hands 12 that they would have been able to think about this, 13 quantify a claim, and put it into the Notified Departure 14 and mandatory change mechanism. 15 What I meant here was tie needs to take advantage of 16 this six-week period -- maybe my dates are wrong, but 17 something like that, for contract signature, to get an 18 agreement with BB, with the assistance of SDS, to try 19 and quantify what the Notified Departure is going to be 20 and agree it so that the price and time consequence of 21 that Notified Departure are locked in before the 22 contract is signed. In other words, there was agreement 23 already on the effect of V26 moving to V28. 24 Q. You are dealing there with the question of V26 to V28, 25 but from what you said it would have been apparent to 158 1 you by then that there were going to be other Notified 2 Departures and other pricing assumptions. 3 A. I didn't say that, my Lord. What I said was there were 4 42 other pricing assumptions which were engineering 5 matters and commercial matters. I had no view on 6 whether the depot, for example, would be dry and 7 excavated to a certain volume. I couldn't have a view 8 on that. I had no view whether that pricing 9 assumption -- 10 Q. I didn't ask about the depot, Mr Fitchie. You have 11 already talked about pricing assumption number 1, and 12 changes to the design and you knew the design wasn't 13 complete? 14 A. My Lord, I'm confused. I was answering a question about 15 what my view was on other pricing assumptions. 16 Q. You know one of the pricing assumptions concerned 17 changes to design from the base date design information, 18 which we have looked at all afternoon? 19 A. Until this -- I'm sorry to interrupt. 20 CHAIR OF THE INQUIRY: I think the question was that you 21 were dealing with the question of V26 to V28. 22 A. Yes. 23 CHAIR OF THE INQUIRY: But from what you said, and I think 24 you did say, that you referred to V31 at one point. 25 From what you said, it would have been apparent to you 159 1 by then that there were going to be other Notified 2 Departures and other pricing assumptions. So it's the 3 design issue that you were being asked about. 4 A. I didn't know until this came up at the end of March 5 that there would be a V26 to V28 change. I did not know 6 that. 7 MR LAKE: Let's leave aside the programme change; okay? And 8 move from the programme to the content of the design and 9 departure from base date design information to other 10 things under Pricing Assumption Number 1. Do you know 11 what I'm talking about, yes? 12 A. Now you put it clearly, I understand and can answer the 13 question, thank you. 14 The question is yes, it was pretty apparent that 15 there would be Notified Departures in relation to Base 16 Date Design Information changing. 17 Q. You didn't think to say anything should be done in 18 respect of that, no warning, no advice? 19 A. Yes, I did, and what I said was since it is apparent at 20 the moment that nobody knows what Base Date Design 21 Information contains, and I deal with this in my 22 statement, we should make -- tie ought to make a real 23 effort to try and find out what Base Date Design 24 Information was, and take a log on how design changes 25 have been made since November 2007 to date, and they 160 1 were not able to do that, and there is documentation 2 well after the signature of the contract that confirms 3 that. 4 Q. But in relation to this email, which is raising one 5 particular concern in relation to the design programme, 6 you didn't feel it appropriate to mention the other 7 problem that might be that the content of the design 8 could be a problem as well? 9 A. I can't recall, my Lord -- 10 Q. You can see this email, can't you? Did you say anything 11 about it in the email? 12 A. I cannot recall whether it came in my mind that I should 13 mention at this point something that I'd already 14 discussed with tie, and it was obvious from a design 15 standpoint. tie were managing SDS. tie had the 16 information to decide whether or not there were going to 17 be changes to design. I don't think that is a matter of 18 legal advice. That is my opinion. It is a factual and 19 engineering and quantity surveying and design issue. 20 Q. There is also a question of interpretation of the 21 contract, isn't there? 22 A. No. In this instance it's not. I think it was 23 absolutely clear that there were going to be changes to 24 design, and that was going to initiate Notified 25 Departures. 161 1 Q. Can we look at production CEC01374219. Enlarge that. 2 It's an email from Dennis Murray of tie. It's two 3 people. You and Stewart McGarrity. It's also copied to 4 Steve Bell? 5 A. Mm-hm. 6 Q. It says Schedule 4 Attached for QA review. Presumably 7 Quality Assurance Review. 8 Now, you have set out in paragraph 3.76 of your 9 statement why you consider you shouldn't be doing 10 quality assurance review on it; is that correct? 11 A. Can I just get to 3.76 in my statement? 12 Q. Yes. 13 A. That is 3.76? 14 Q. Sorry, pardon me. It's 7.376. 15 A. 7.376? Thank you. 16 I do. 17 Q. What you conclude, if we read about the last -- halfway 18 through: 19 "DLA Piper is responsible (under my supervision: 20 Phil Hecht, Chris Horsley, Jo Glover, 21 Nikki Horshall) for the final due diligence and legal 22 QA/QC for the main Infraco Contract and the accuracy and 23 consistency of the entire suite of ancillary 24 documentation, including legal schedules (eg DRP, Third 25 Party Agreement and step down, etc, bonds, 162 1 guarantees, collateral warranties) but not for QA/QC on 2 technical, commercial and financial schedules content." 3 A. Correct. 4 Q. Now, dealing with the question of the price, and I think 5 you have accepted that as a main term, is that not 6 something on which legal input for quality assurance 7 would have been appropriate? 8 A. My answer to that is no. This email is an internal 9 document that tie is dealing with. Quality assurance, 10 as far as -- 11 Q. Sorry, can I just stand there. This is an email to 12 Stewart McGarrity and you? 13 A. Yes, I understand that. 14 Q. And do you regard that as an internal email? 15 A. Well, this is schedule -- 16 Q. Can we be quite clear. It is to an external solicitor? 17 A. I understand. Thank you for being clear. 18 This is Schedule 4 attached for QA review. QA 19 review, as far as DLA Piper were concerned, is what 20 I have set out here. It would be normal in a QA review 21 to look at the document of this type for consistency of 22 language to make sure that it ties into the contract. 23 It would not be normal for a solicitor to be 24 commenting on the pricing that was in that document, 25 unless there's a manifest error somewhere. 163 1 Q. Why did you think it had been sent to you? 2 A. I didn't know. 3 Q. Would it have been sensible to ask? 4 A. I think I may have spoken to Stewart McGarrity about it, 5 but I'm not sure. But we have no other involvement in 6 tie's QA on these type of documents. None. This is 7 22 April. 8 Q. You said you were involved in what you term legal 9 schedules, in that Schedule Part 4 sought to fix the 10 mechanism for determining the price, is that what you 11 might term a legal schedule? 12 A. I stand by what I say in this paragraph. I don't know 13 why I was sent this document. We were not doing that 14 kind of exercise on Schedule Part 4. 15 Q. If we turn to page -- so we have your statement, on 16 screen, please, at page 194. 17 A. My Lord, may I interrupt for one second because we are 18 looking at this quality assurance email. 19 If I look at paragraph 7.397 in my statement. 20 Q. Just so everyone could have it available to them, 21 I should say that's page 205. 22 A. 7.397. 23 Q. Page 205. 24 A. Sorry, I beg your pardon. 7.379. 25 Q. That's page 202. 164 1 A. "The next day, Stewart McGarrity sent his 23rd April 2008 2 email reply to Dennis Murray. DLA Piper was not copied 3 on this, but Stewart did copy: Geoff Gilbert, 4 Steven Bell, Graeme Bissett and Susan Clark - effectively 5 all TIE's senior managers with the exception of 6 Jim McEwan." 7 There was a protocol within tie regarding quality 8 assurance and who was doing it: 9 "This further confirms that TIE was not expecting 10 DLA Piper to carry out or provide input on TIE's 11 internal QA/QC." 12 So that was my complete evidence on the point you 13 were asking me about before. 14 Q. But you wouldn't have known to whom Mr McGarrity was 15 going to copy his reply, when you got the mail from 16 Mr Murray the previous day, would you? 17 A. No, but I'm pointing out, having seen that email -- 18 Q. Which email? 19 A. Having seen that email from Stewart McGarrity during the 20 course of preparing this evidence, I am commenting on 21 what it meant in my opinion. 22 Q. You didn't know about that at the time, so it couldn't 23 have informed your view as to whether or not you thought 24 you were under an obligation at the time? 25 A. I'm not saying that in that statement. What I'm saying 165 1 is it confirms now, in the present tense, that tie was 2 not expecting DLA Piper. I agree with you. I didn't 3 see Stewart's email. 4 Q. Can we go to page 194. Just understand the meaning of 5 Schedule Part 4 if we look at paragraph 7.339. This is 6 a discussion in relation to drafts that were going back 7 in February 2007. I think that should probably be 2008. 8 I'm going to show you the last two sentences of the 9 paragraph. You say: 10 "I had already advised TIE directly on or around 11 6 February 2008 that BBS would not accept any dilution 12 of their right to seek a variation if any SDS design was 13 developed from BDDI. Introducing materiality would have 14 been such a dilution." 15 Was that your understanding of the effect of 16 Schedule Part 4, that any development from BDDI would 17 entitle them to seek a variation? 18 A. This is -- this is sparse, this wording. What is 19 correct is that the dilution -- the point I'm trying to 20 make is the dilution of their right. I accept that if 21 any SDS design was developed from BDDI, would be more 22 handsome if it had some extra language going back into 23 Schedule Part 4 with it. But the point I'm making is on 24 dilution and the introduction of materiality. 25 CHAIR OF THE INQUIRY: I think the question was: was it your 166 1 understanding of the effect of Schedule Part 4 that any 2 development from BDDI would entitle them to seek 3 a variation? What's your answer to that? 4 A. Yes. Yes, although the question comes up as to missing 5 design. In other words, design scope -- design for 6 scope that was not available to BBS at BDDI. 7 MR LAKE: What is the question about that? 8 A. The question about that is how does Schedule Part 4 9 actually tackle that. 10 Q. Did you -- 11 A. And my -- 12 Q. Sorry. Is that something on which you provided advice 13 at the time to tie? At the time, I mean prior to 14 conclusion of the contract. 15 A. I am not sure. That is my honest opinion. My honest 16 recollection. 17 Q. What advice did you give then to people at tie about the 18 effect of Part 4 of the Schedule? 19 A. I think I have covered that in my statement. 20 Q. That being so, is it fair to say that later, in relation 21 to the -- when the disputes arose in relation to 22 Schedule Part 4, you never in emails about that go back 23 to indicate that you had given advice that the effect 24 would be against tie's interests? 25 A. Let's -- a statement covering a couple of years -- 167 1 Q. Put it this way round then. Are you able to point to 2 a single email or minute of meeting in relation to the 3 dispute resolution procedures that went on which records 4 that you had given advice that it would present a risk 5 to tie and the Council? 6 A. Pre contract? 7 Q. That you had given advice pre contract that it would 8 present a risk? 9 A. I don't believe there is such an email. 10 Q. Because it might have been the natural time, when the 11 problems start to arise, to say: this is precisely what 12 I warned you about and this is what we are going to have 13 to do to deal with it. That would have been entirely 14 natural, wouldn't it? 15 A. I'm not sure that it would. I tend not to operate on 16 an "I told you so" basis. 17 Q. You recall in later, going into 2009 into 2010, there's 18 a thing referred to as Project Challenge carried out by 19 McGrigors. 20 A. Yes. 21 Q. Part of that was to investigate the origins of the 22 Schedule Part 4 and the Wiesbaden Agreement. 23 A. Correct. 24 Q. Again, when you were being asked those questions by 25 McGrigors, who were struggling to get to terms with the 168 1 Agreement, you didn't mention that you considered that 2 it had been -- you'd given advice that was going to 3 present a problem to tie? 4 A. I was placed in quite a difficult situation. 5 Q. Could you answer the question first, before you go into 6 difficult situations? Did you indicate, when the matter 7 was under investigation by McGrigors, that you had given 8 advice? 9 A. I don't recall. 10 Q. You don't recall saying yes or no or what? 11 A. I do not recall whether I specifically drew this matter 12 to McGrigors' attention during their Project Challenge 13 phase. But if I'm allowed to qualify that by saying 14 I was placed in an extremely difficult position in 15 relation -- during Project Challenge, and the reason is 16 this. And I think it must come over from my evidence. 17 That my position on this is that Schedule Part 4 and 18 Wiesbaden were documents and contractual, commercial, 19 financial and engineering arrangements that tie wanted 20 to have, and so the responsibility in my mind for doing 21 that lay with tie. And meeting in Project Challenge and 22 having your lawyer tell you in front of another 23 lawyer -- law firm that it's your fault didn't seem to 24 me to be the right way to approach Project Challenge. 25 Q. But if you thought there was a fundamental difficulty 169 1 for tie lying in Schedule Part 4 and Wiesbaden and that 2 was being investigated by McGrigors, would that not have 3 been the time when you were duty bound to raise that, 4 never mind how uncomfortable it was? 5 A. Duty to tie, the client? 6 Q. Yes. 7 A. I would accept that criticism. 8 Q. Could you look at a document CEC00851679. If we just 9 look at the foot of this first page, you can see there 10 is an email from Stewart McGarrity, and it's dated 11 10 September 2009? 12 A. Yes. 13 Q. If you go to the second page, we can see it's addressed 14 to various people within tie, but copied to you. Do you 15 see that? 16 A. I do. Sorry, excuse me. What is the date of this? 17 Q. 10 September 2009. 18 A. Yes. 19 Q. I'm not -- Mr McGarrity's email. It runs over a page 20 and a half and goes into some detail, and it's -- but 21 you can see it starts "Book 1 - Weaselling in 22 Wiesbaden", and it appears, if you take a moment to read 23 through it, it's discussing what happened in Wiesbaden. 24 In fact it may be better if I read it. It says: 25 "Stop me if you think I keep sending history which 170 1 is of little relevance to who prevails going forward. 2 The moral high ground is important in my personal value 3 system as a starting point for anything. I forwarded 4 the ... Preferred Bidder Infraco evaluation report and 5 Board Presentation to most of you on 19th August ... 6 preferred bidder (submission in August 2007) 7 approximately GBP50 million of the BBS price was 8 designated provisional on the basis of insufficient 9 design information ..." 10 CHAIR OF THE INQUIRY: Can you slow down slightly. 11 MR LAKE: "... including GBP30 million on structures, 12 GBP11 million on roads, and GBP3 million on tram stops. 13 Off our intrepid heroes go to Wiesbaden in 14 mid December 2007 and return with tails wagging having 15 negotiated a deal which makes all these previously 16 provisional items firm as long as design completion from 17 25th November 2007 falls to be classified as within 18 "normal development and completion". In return BSC get 19 an GBP8 million increase in the price." 20 There's a reference then to the value engineering 21 register. And then it goes on at the foot of the page 22 to set out the text from Part 4 of the Schedule. And 23 over the page, after the quotation, it says: 24 "In the engagements with BB and S in the dark days 25 before the Princes Street supplemental agreement, 171 1 Mr Walker ..." 2 Who I think was with Bilfinger: 3 "... (God bless him) would not be drawn on what we 4 paid the GBP8 million premium for. Maybe we should be 5 asking for it back. 6 If we had time we might want to commission the 7 following. 8 (1) Go through the final BBS bid submission … and give it 9 a thorough review for qualification of quantities and 10 scope from a QS perspective. 11 (2) Track back through the late changes to the 12 contract in the lead up to Financial Close and satisfy 13 ourselves that at no point did BBS's incredibly smart 14 lawyers manage to sneak in amendments to the contract 15 which effected a complete risk transfer on design back 16 to us without the assembled might of tie's commercial 17 nous and legal Dobermans noticing." 18 Do you see that's what Mr McGarrity has set out, his 19 concerns? 20 A. Mm-hm. 21 Q. And your response to that is on the first page of this. 22 It's dated 10 September, and just addressed to 23 Stewart McGarrity, not the others. Stewart, and if 24 I read from the second paragraph: 25 "In very simple terms, what BSC squeezed on was: the 172 1 introduction of Schedule Part 4 as, in their opinion, the 2 master qualifier. 3 there would be relief for Infraco, with restrictions, 4 through a Compensation Event where (i) SDS failed to 5 produce IFC drawings on time or (ii) SDS was in breach 6 of its obligations under the SDS Agreement as regards 7 design quality. 8 Nowhere is there, in my opinion, is there wording or 9 a combination of provisions in the Infraco Contract that 10 Infraco is not responsible for the production of design 11 or that it can escape the financial consequences of 12 design inadequacies. This, however, is the discussion 13 with Bradon, - as I understand it based predominantly on 14 what the Infraco Contract does not say explicitly as 15 opposed to what it does say." 16 A. Mm-hm. 17 Q. What we can see there is -- you can see the rest of your 18 email. But absolutely no reference to the fact that the 19 Schedule Part 4 has put the -- has put tie and possibly 20 the Council in a difficult position in that, as 21 Mr McGarrity said, the entire design risk for changes 22 has been transferred to tie. 23 If that had been your advice earlier, would that not 24 have been the appropriate time to say it? 25 A. You're right, I can't explain -- I cannot explain the 173 1 absence from -- I think the first bullet, the 2 introduction of Schedule Part 4 is in my opinion the 3 master qualifier, and with the benefit of looking at 4 this now, I should have gone on to say what the master 5 qualifier was. 6 Q. Is one explanation for why it wasn't said is that you 7 hadn't previously given that advice? 8 A. That is an explanation. I don't accept that it was the 9 explanation. 10 Q. But it would be consistent with this letter at least? 11 A. I'm sorry, I didn't understand. 12 Q. Not having given the advice would be consistent with the 13 terms of this email? 14 A. I don't agree. 15 Q. Okay. I have finished with that email. Go to 16 a different matter now. 17 I would like to look at the close documentation 18 generally. Go to document CEC01428730. We can see this 19 is an email from Graeme Bissett. The date on it is 20 11 March. It's addressed to various people within tie, 21 but also you. 22 A. Yes. 23 Q. The title is "Close Report and DLA Report". The text 24 is: 25 "Colleagues, the attached is a consolidated update 174 1 based on your contributions over the last few days, for 2 which many thanks. 3 The email below highlights the main open areas 4 and I would be grateful if the relevant people would let 5 me have a track change update by cob [close of business] 6 tomorrow Tuesday so that we can provide (almost) final 7 copies on Wednesday. There are not many open areas, but 8 one of the most sensitive is the section in Andrew's 9 letter addressing procurement challenge. This requires 10 urgent attention because it is a stick-on question for 11 Tram Project Board/tie/TEL Directors on Wednesday am. 12 Can Andrew, Geoff, Stewart and Jim please collaborate on 13 this." 14 It's quite clear from the terms of that email, would 15 you agree, that it's intended that you would consider 16 the documents being sent to you, and might have some 17 input into them? 18 A. Yes, and I think I have given a lot of evidence on this 19 period, explaining my views on precisely who owned the 20 drafting of these documents, and in fact the draft of 21 a DLA report on Infraco contract suite is not a correct 22 way to describe that document, but I agree with what 23 Graeme Bissett is asking for at 2 minutes past midnight 24 on 11 March is some input into these documents. The 25 email below highlights the main open areas. 175 1 I don't honestly remember collaborating with 2 Geoff Gilbert, Stewart McGarrity, and I'm not sure 3 who -- Jim McEwan, sorry. I believe I produced 4 a section in the letter that DLA Piper sent at that 5 time, I believe the 12 March letter, which sets out 6 DLA's view on procurement challenge. 7 Q. Could I look, please at one of the attachments to that 8 letter. Document reference CEC01428734. 9 We can see here a document which is headed, "DRAFT 10 OF DLA REPORT ON INFRACO CONTRACT SUITE"? 11 A. Mm-hm. 12 Q. Is this the one you think is actually not a DLA report? 13 A. Could we scroll down? Would it be possible to look at 14 the next page? 15 Q. Certainly. Go to the next page, please. 16 A. Maybe also look at the next page. 17 I don't think this is a DLA document. 18 Q. Okay. It certainly seems to be -- I suppose in fairness 19 we should note that on the first page, in the first 20 paragraph of proper text, rather than bullet pointed 21 text, at the end of it, it does refer to extensive 22 support from "our external legal advisers", in 23 DLA Piper's case from late September 2007 onwards, 24 following instructions to disengage in the process in 25 May 2007. 176 1 A. I also note -- 2 Q. DLA are referred to in the third person. 3 A. But I also note that it says: 4 "Council officers have operated in an integrated 5 manner with the main negotiating team." 6 I'm not really sure what that means in connection 7 with DLA Piper's role in the negotiations, because we 8 never had any Council officers or staff working with us 9 in the negotiations. 10 Q. What I would like to look at is if we go to the second 11 page of this, and see that it notes, the top uppermost 12 paragraph: 13 "In broad terms, the principal pillars of the 14 contract suite in terms of programme, cost, scope and 15 risk transfer have not changed materially since the 16 approval of the Final Business Case in October 2007. It 17 is felt that the process of negotiation and quality 18 control has operated effectively to ensure the final 19 contract terms are robust and that where risk allocation 20 has altered this has been adequately reflected in 21 suitable commercial compromises." 22 Now, do you consider it's accurate to say that the 23 principal pillars of risk transfer have not changed 24 materially since the approval of the Final Business Case 25 in October 2007? 177 1 A. I think that's stretching it to say that. 2 Q. It's untrue, isn't it? 3 A. Well, I've made my comment. 4 Q. Well, I'm asking you a more direct comment. It's untrue 5 to say that, isn't it? 6 A. It is inaccurate to say it. 7 Q. Because the risk had changed, firstly, in the Wiesbaden 8 Agreement and then in Schedule Part 4? 9 A. Correct. 10 Q. It continues to say: 11 "It is felt that the process of negotiation and 12 quality control has operated effectively to ensure the 13 final contract terms are robust and that where risk 14 allocation has altered this has been adequately 15 reflected in suitable commercial compromises." 16 What were the suitable commercial compromises you 17 talked about there? 18 A. Being talked about there? 19 Q. Yes. What are they referring to? 20 A. I don't know. 21 Q. Are you sure? 22 A. But I have -- sorry? 23 Q. Are you sure you don't know? 24 A. Yes, I do not -- I honestly do not know what that is 25 referring to, and I think I have raised this point in my 178 1 evidence about tie's view that there had been an 2 exchange in relation to risk allocation. 3 Q. Can I ask you to look at another document, please. This 4 is reference CEC01450478. 5 Look at the upper half. Can you see, we are going 6 back in time slightly here. We are back to 7 9 March 2008. It's an email sent on your behalf to 8 Graeme Bissett and copied to others within tie and the 9 subject is Close Report. Do you see that? 10 A. Yes. 11 Q. What you said is: 12 "Graeme, I'm going to release the first cut on this 13 in the next 15 minutes. It is raw and I will come at it 14 again this evening. I need to take a break for personal 15 matters and then come back to it later. 16 I have commented all except Tramco section for 17 which I am afraid I ran out of steam but will pick this 18 up. I am apprehensive about reporting on some position 19 which are in fact not closed but that is where the 20 project sits tonight. Some of CEC requirements I do not 21 fully understand in terms of selected interest - 22 liability caps would seem to be more interesting than 23 Conditions Precedent or authority to sign, but there we 24 are. 25 The DLA report and Risk Matrix are on the stocks 179 1 but will come out tomorrow morning at some point once 2 I get a window from negotiations to have a look at 3 product overnight." 4 So do you recall drafting or revising this draft of 5 the Close Report? 6 A. I recall making some suggestions, yes. 7 Q. We can see that was an email sent out on 9 March and 8 this email is actually timed at 19 minutes past 5 in the 9 evening? 10 A. I see that. 11 Q. We could look at the attachment to that. It's document 12 CEC01450479. You see this is a document headed, 13 "EDINBURGH TRAM PROJECT REPORT ON TERMS OF FINANCIAL 14 CLOSE ("CLOSE REPORT")" 15 This is the draft of 9 March 2008. It's draft 16 version 6. Do you see that? 17 A. I do. 18 Q. If we go to the next page, we can see the mark-ups that 19 you have made to this document. Is that correct? 20 A. No. These -- these comments, what I'm seeing on my 21 screen is turquoise; is that right? My Lord, do you 22 have that colour, turquoise? 23 CHAIR OF THE INQUIRY: Yes. 24 A. Those are not my amendments. Drafting note: 25 "These sections below highlighted in yellow require 180 1 to be updated by the persons named." 2 I definitely would not be writing that because it 3 wasn't my -- I was not the lead on the production of 4 this. This was Graeme Bissett, I assume, but I can't 5 tell. 6 MR LAKE: We will come back to that later. 7 If we go then, please, to a different set of 8 documents at the financial close itself. Document 9 CEC01338846. We can see this is an email from 10 Graeme Bissett to various people, again copied to you, 11 with a full set of the close documents in it; is that 12 correct? 13 A. It certainly -- certainly has that appearance. I'm 14 sorry, I'm not able to say whether all these documents 15 here that are listed in attachments are the full set of 16 close documentation. This is something that tie were 17 discussing direct with CEC constantly. So there are 18 documents there to do with close. I cannot confirm that 19 that's all the documents that tie was producing for CEC 20 in relation to close. I cannot, because that wasn't 21 part of our role. 22 Q. Could we look at document reference CEC01338851. You 23 see once again this is headed, "REPORT ON INFRACO 24 CONTRACT SUITE"? 25 A. Mm-hm. 181 1 Q. If we look to the second last paragraph on the page, if 2 you enlarge it for convenience, we can see the similar 3 wording we saw earlier to the effect that the principal 4 pillars of the contract suite, this time it is 5 restricted to in terms of scope and risk transfer, have 6 not changed materially since the approval of the Final 7 Business Case in October 2007. 8 Now, had you said anything in relation to that 9 between seeing the earlier draft and seeing this, that 10 you believed it not to be true? Or that it was 11 scratching it, as you put it? 12 A. I believe I had a conversation with Graeme Bissett which 13 was along the lines of: this was not where the contract 14 stood; but ultimately this was tie's document. That was 15 my honest recollection. 16 Q. We've established in evidence this morning that CEC were 17 your joint client. Do you agree? 18 A. We looked at an unsigned letter. Sorry, an unsigned 19 letter waiting for countersignature -- 20 Q. Do you dispute that CEC were your joint client with 21 effect from the time that draft letter was sent to them? 22 A. I wouldn't use the word "dispute". What I'm unclear 23 about is what happened to that letter. It seems to me 24 you made the point, my Lord, the point was made that 25 this was an important change in the style of DLA Piper's 182 1 mandate, because of those small changes that Mr Lake 2 took us to. 3 My position on that is that if CEC didn't respond to 4 that, and gave no indication that that is what they 5 wanted, then I am uncertain what the terms or whether 6 those -- that expansion that Mr Lake is proposing 7 actually took place. 8 That is my position on those letters, and the fact 9 that the letters were lost twice doesn't give me the 10 confidence to say: yes, those letters were unsigned, 11 they weren't signed either by tie, or by CEC, and 12 therefore that's okay; because if they had been signed 13 and sent back, I would have needed to deliver those 14 letters to DLA or report to them, to DLA's internal risk 15 controllers who liaise with professional indemnity 16 insurers, basically. 17 So I didn't do that, and wasn't able to because 18 I didn't have a signed letter. 19 Q. You'd already indicated in your email to the Council you 20 were willing to sign letters on those terms, hadn't you? 21 A. Yes, the covering letter said this -- this -- the 22 covering letter also said this needs signing, and in my 23 view that is quite important. 24 Q. Is there anything to suggest by the Council they were 25 unhappy with the terms of those letters? 183 1 A. I have -- I do not recall having any discussion with the 2 Council or hearing anything from the Council Legal 3 Department as to whether they were content with the 4 letter or not. What I heard was that they had lost 5 them. And could they have a second set of copies, which 6 I provided. 7 Q. Even having in mind that letter, and turning back to the 8 terms of the Infraco contract suite that are on screen, 9 you were aware that someone, either joint client, or 10 even, looking at the earlier letter, to whom you 11 recognised you owed a duty, was having a statement made 12 to them which was untrue. 13 Did that not cry out for some action on your part to 14 make them aware that a statement like this was being 15 made to them? 16 A. In the circumstances that we were in, or DLA Piper was 17 in, where tie was in control of the information that 18 they wished to present to CEC, its owner, I felt that 19 the appropriate place to make the point about these 20 reports was back to tie. We were tie's legal adviser 21 and this was me saying: I don't think that's the right 22 thing to put in this report. 23 Q. You owed a duty to the Council; yes? 24 A. You're saying we owed a duty of care to the Council on 25 the basis that -- 184 1 Q. Do you accept that you owed a duty to the Council? 2 A. On the terms of the June 2005 letters. 3 Q. On any view, you owed a duty to the Council; yes? 4 Whether it's 2005 or 2007; would you agree? 5 A. I don't agree. 6 Q. You don't agree you owed a duty? 7 A. Well, what I'm saying is that the duty that I accept is 8 the one that was in the 2005 letters. 9 Q. Mm-hm. Then when you become aware that that client is 10 going to be misled, do you not at the very least need to 11 tell that client to get their own legal representation 12 on the matter, at the least? 13 A. My Lord, this is a death of the contract. These 14 documents were being exchanged with a view to being used 15 in the Council internal process on 13 March. 16 I had very little time indeed to consider what 17 Mr Lake is putting to me. 18 Q. That's why I took you to the version that was dated 19 11 March, which was two months earlier. You had had two 20 months to consider it by then, Mr Fitchie. Is that not 21 enough time to work it out? 22 A. It's a considerable amount of time. Thank you for 23 reminding me of that. 24 Q. It's plenty of time, isn't it. Why had you done nothing 25 for two months, knowing that this was going forward to 185 1 mislead the Council about the terms of the contracts? 2 A. I do not have an answer to that other than the fact -- 3 Q. Sorry, I interrupted you? 4 A. You don't want me to give the answer? 5 Q. No, carry on. 6 CHAIR OF THE INQUIRY: Carry on. 7 A. Thank you. The answer to your question as to why two 8 months elapsed between the emergence of this document 9 and the emergence -- re-emergence of this document again 10 on -- I forget whether 12 or 13 May, you are levelling 11 a direct criticism at me for not picking this up, and 12 for not contacting the Council and saying tie is 13 misleading you. 14 MR LAKE: I said, or at least to tell them that they needed 15 to get independent legal advice on the matter. 16 A. I -- I'm not sure that the course for me at that point 17 was to say: you need to get independent legal advice. 18 I accept that this language stayed in the Infraco -- 19 this document. I'm not prepared to accept that I owed 20 a duty to CEC to tell them that they needed independent 21 legal advice. 22 Q. So it's okay just to go forward in the knowledge that 23 there was a misrepresentation being made to them as to 24 the basis of the contracts that were about to be 25 concluded? 186 1 A. Well, I believed in fairness that CEC have a tremendous 2 amount of information about what was going -- what was 3 going through, and there were a number of documents that 4 came through to me from tie indicating that there were 5 direct discussions going on through this period between 6 the Council and tie about the contract, about risk 7 allowances, and so I have to say that at this stage 8 I was relying upon tie to produce/provide the 9 information to answer the questions from the Council 10 being put to tie from the Council on risk. 11 CHAIR OF THE INQUIRY: Even if you didn't have a duty of 12 care to the Council as a client or some other way, as 13 a solicitor with a -- as a partner in a firm, 14 a well-established firm, were you quite content for your 15 client to be misleading a third party? 16 A. No. I was disappointed, and -- I was disappointed in 17 myself at this point. I was pretty tired. 18 CHAIR OF THE INQUIRY: What options would be available to 19 you in that situation where you were a partner in 20 a firm, you realise your client is misleading a third 21 party with whom you had no contractual relationship? 22 A. I -- I could have -- I could have spoken to another 23 partner and said: look, I need you to take a look at 24 this, I need you to advise me what the right course of 25 action is in a situation where one client appears to be 187 1 reporting an internal document -- in closed 2 documentation something which is not accurate. 3 CHAIR OF THE INQUIRY: And did you -- 4 A. I did not do that, my Lord. 5 CHAIR OF THE INQUIRY: Thank you. 6 MR LAKE: Could we look at one of the other documents that 7 is an attachment to that email. It's reference 8 CEC01338853. 9 You see this is headed report on Infraco contract 10 suite -- sorry, it's headed, "EDINBURGH TRAM PROJECT 11 REPORT ON TERMS OF FINANCIAL CLOSE ("CLOSE REPORT")." 12 We saw another draft of this earlier. Could you 13 look at page 4, please, and two paragraphs at the foot 14 of the page. It says: 15 "The increase in Base Costs for Infraco is a result 16 of a negotiated position on a large number of items 17 including the contractual interfaces between the 18 Infraco, Tramco and SDS contracts and substantially 19 achieving the level of risk transfer to the private 20 sector anticipated by the procurement strategy." 21 Just pausing there, that's not true either, is it? 22 A. It's inaccurate. 23 Q. It's not true, is it? 24 A. It is inaccurate. 25 Q. They had not achieved -- 188 1 A. The word "substantially" is not -- it's too far. They 2 did achieve risk transfer. Substantially achieving 3 a level of risk transfer to the private sector, 4 anticipated by procurement strategy, I'm honestly not 5 sure I read this language at the time. But I have to 6 agree with you that it is misleading. 7 Q. These reports were intended to inform the Council at the 8 time of financial close, weren't they? 9 A. Yes, although I have to say that in other projects 10 I have been involved in, these types of documents don't 11 emerge on midnight of the day before the financial 12 close. 13 Q. But as we've already seen, drafts emerged beforehand. 14 They didn't just emerge to you on the midnight of close, 15 did they? 16 A. This is -- this question is back to the proposition that 17 I had two months to do something. I'm embarrassed 18 because I don't -- I don't remember which -- we have 19 looked at an email which had a large number of 20 attachments to it. I have to ask, and I'm sorry for it, 21 this document you're showing me now, you are saying is 22 one of those documents that we looked at attached to the 23 10 March letter. Please don't go there to waste time, 24 but -- 25 Q. It's one of the attachments to that email. 189 1 A. Right. So what you're putting to me is that this 2 document here repeated what was in the earlier document, 3 and that I should have picked it up. 4 Q. I have not gone to an earlier version of this document 5 at the moment. I can do so. That will be tomorrow. 6 But what I'm simply saying is that this -- it was 7 known by you and others that this report was to go to 8 the Council and it was intended that it should be 9 something that they relied upon for allowing the 10 contract to go forward and close? 11 A. Yes. 12 Q. The drafts of these documents had been sent out to 13 various parties, including you, in the time prior to 14 midnight before the close? 15 A. Yes, they had been sent to me in March in around the 16 same types of time frame, ie the documents that were 17 sent to me on 10 March were being produced for whatever 18 the projected close date was at that point, which from 19 memory was 28 March, but there was to be a Council 20 meeting, from memory, on 13 or 14 March. 21 Q. Can we -- 22 A. So there was -- there was serious time constraints 23 involved in looking at these documents. I know that you 24 have said they're there two months prior. But these 25 documents appeared in drafts, part drafts, and they were 190 1 difficult to -- they were difficult to follow what was 2 actually happening within the document. There are more 3 drafts of these documents floating around than we have 4 here. That is my recollection. 5 Q. Can we look at page 25. Look at the lower half of the 6 screen. There's a heading, 8.2, "Price certainty 7 achieved". The first paragraph is Tramco, so we will 8 ignore that. It then says: 9 "The Infraco price of GBP233.5 million comprises 10 GBP227 million of firm costs; less GBP12.9 million of 11 Value Engineering initiatives taken into the price with 12 agreement of BBS but with qualifications attached; plus 13 GBP19.4 million of items which remain provisional at 14 Financial Close." 15 The next paragraph notes risk appraisal on Value 16 Engineering initiatives, but if we can go over the page, 17 the upper paragraphs, if you could enlarge them: 18 "Provisional items comprise a defined list of 22 19 items each with a clear process for and programme for 20 resolution. The estimate for each item has been 21 reviewed by tie's technical consultants and by BBS and 22 the risk of understatement is considered to be low. The 23 most significant items are a GBP6.3 million allowance 24 for civil works, including utilities, at Picardy Place 25 as the design for the approved layout is not yet 191 1 complete. (The cost of the actual tramway, tram stop and 2 associated works at Picardy Place are included in the 3 firm element of the price); GBP3.1 million in respect of 4 works which may be carried out on behalf of third 5 parties (eg Forth Ports) and which are recoverable from 6 those third parties and a GBP5 million allowance for 7 Urban Traffic Control works (traffic lights) associated 8 with the implementation of the project." 9 Those provisional items are nothing to do with the 10 mechanism in the Schedule Part 4, are they, in terms of 11 the variance from the base date design? 12 A. I don't know, and this is not a paragraph which -- the 13 question assumes that I had a lot of background 14 knowledge in the way that pricing is built up, and I was 15 not and am not in a position to comment on those 16 paragraphs. 17 Q. Well, reading them, just even as an outsider, 18 particularly with the heading "Price certainty 19 achieved", they give no indication at all of the 20 possibility of substantial additional cost arising from 21 Part 4 of the Schedule, do they? 22 A. No, they do not. 23 Q. And to that extent, they rather misrepresent the 24 financial exposure under the contract? 25 A. Sorry, was that -- was that a question? 192 1 Q. Yes. 2 A. Those items listed there don't misrepresent -- I'm not in 3 a position to say whether those items there 4 misrepresent. What I can comment on is that this 5 paragraph seems to be dealing with price certainty, but 6 it doesn't -- could we go back to the previous page? 7 I'm very sorry. 8 Q. Of course, yes. 9 A. Right. It does not contain a reference to the effect of 10 Schedule Part 4. 11 Q. There's no indication of the additional costs that could 12 arise there, is there? None at all. 13 CHAIR OF THE INQUIRY: Do you want to blow it up in size? 14 A. A wee bit, my Lord, yes. Thank you very much. 15 I agree with you. 16 MR LAKE: Could we look at page 33 of this document as well. 17 We can enlarge the upper half of the page. It notes 18 that: 19 "Negotiations have taken place over a lengthy period 20 of time with the objective of defining a process and set 21 of contractual terms which will enable tie and CEC to 22 manage the risks arising from the overlapping design and 23 construction periods. This problem was not anticipated 24 when the SDS contract was concluded in 2005. The recent 25 discussions have taken place under the umbrella of the 193 1 SDS Novation Agreement, but it is important to 2 distinguish two groups of issues." 3 The two of them are basically cost certainty and 4 outstanding design risk. We can see those. 5 A. Mm-hm. 6 Q. If we look over the page, on the upper half of that page 7 we can see: 8 "The risks which arise from the overlap of design 9 and construction periods are summarised below." 10 The first relates to the standard of the designs 11 causing delay. The second notes they would be of the 12 requisite standard, but the Council failed to provide 13 a consent on time, causing delay. The third is that SDS 14 don't provide packages on a timely basis, preventing 15 consent being given, causing delay. The fourth is that 16 the packages are not provided to the appropriate 17 standard, requiring rework and delay. 18 The fifth is that the Council provides the consents 19 and approvals on time, but SDS fails to provide the 20 issued for construction drawings on time, and the sixth 21 is that SDS provide the outstanding packages on time and 22 to standard, but the Council fail to provide consent 23 timeously. 24 None of these note the risk that also arises from 25 the overlapping design that's inherent in Part 4 of the 194 1 Schedule. 2 A. No. 3 Q. Is that not something that might properly have been 4 drawn to the Council's attention when considering the 5 risks of overlapping design and construction? 6 A. Well, I'm reading the last paragraph, the concluding 7 paragraph in that section: 8 "It is not anticipated that the final outstanding 9 packages will be delivered until autumn 2008 ..." 10 Which is clearly not in line with the procurement 11 strategy: 12 "The option of delaying financial close to eliminate 13 the risk is therefore unattractive." 14 I don't understand that sentence. 15 Could we scroll down. 16 CHAIR OF THE INQUIRY: I think the question: there's no 17 mention here of any possible complication caused by 18 Schedule 4. 19 A. You're right. 20 CHAIR OF THE INQUIRY: Did you not think that it ought to 21 have been included, putting it another way? 22 A. I have to say that this is deep in a document which was 23 not being produced by DLA Piper, and I -- 24 CHAIR OF THE INQUIRY: I understand that, but -- 25 A. I clearly overlooked in reading this the necessity to 195 1 include in there a mention of the Schedule Part 4 which 2 is mentioned in the DLA advice letter. 3 CHAIR OF THE INQUIRY: Mr Lake, is this a convenient point? 4 MR LAKE: Yes, my Lord. 5 CHAIR OF THE INQUIRY: We will adjourn until 9.30 tomorrow. 6 You will be back tomorrow, Mr Fitchie -- 7 A. Yes. 8 CHAIR OF THE INQUIRY: -- to finish your evidence. If you 9 speak to Ms Fraser, she will tell you what the 10 arrangements are. 11 (4.35 pm) 12 (The hearing adjourned until Wednesday, 11 October 2017 at 13 9.30 am) 14 196 1 INDEX 2 PAGE 3 MR ANDREW FITCHIE (affirmed) .........................1 4 5 Examination by MR LAKE ........................1 6 7 197 1 Wednesday, 11 October 2017 2 (9.30 am) 3 MR ANDREW FITCHIE (continued) 4 CHAIR OF THE INQUIRY: Good morning. 5 Good morning, Mr Fitchie. You're still under oath. 6 A. I am. My Lord, if I may, yesterday you set me a piece 7 of homework in relation to some documentation which 8 I said existed in January 2008, and I have references in 9 my statement, and the references to those documents, 10 and I would like to give you them, give the Inquiry -- 11 CHAIR OF THE INQUIRY: You would like to what? 12 A. I would like to give you those references lest I forget 13 during the course of the day. 14 CHAIR OF THE INQUIRY: Yes. 15 A. I know your views on notes, but I couldn't remember this 16 without writing it down. 17 MR LAKE: If I can just interject, I think it may be 18 possible to identify these documents and look at them in 19 trying to work out which ones they may have been. 20 CHAIR OF THE INQUIRY: It might be useful. I'm aware 21 Mr Lake had identified some possible documents. 22 A. Very good. 23 CHAIR OF THE INQUIRY: But if you give me the references so 24 there's no doubt. 25 A. I will do that. And there is one other issue which 1 1 I would like to ask you about. 2 CHAIR OF THE INQUIRY: Just give the references first. 3 A. 7.262.2 in my statement. 7.262.3 in my statement, and 4 7.262.4 in my statement, and the document references 5 which are on -- you asked me, my Lord, yesterday where 6 these documents came from. They're on my SteelNet 7 archive. There is one other document which is a 21-page 8 draft document of Schedule 4, which is CEC01447446-01. 9 That is also on my SteelNet. 10 You asked me, my Lord, when I came to see these 11 documents, and I think I said yesterday, at around the 12 time when tie were doing their internal review of 13 Wiesbaden. 14 I'm not sure that's correct. I think some of these 15 documents I did not actually see until I began working 16 on my statement for the tribunal, for the Inquiry, I beg 17 your pardon. 18 The other issue, my Lord, if I may, and it would be 19 30 seconds. 20 CHAIR OF THE INQUIRY: Yes. 21 A. Yesterday we looked at the Wiesbaden Agreement, the 22 200-page document, and Counsel for the Inquiry was 23 asking me whether I agreed with the proposition that the 24 first four pages of that document were the only 25 contractual terms in it, main terms we were talking 2 1 about, and you expressed interest in that too. 2 I have looked at that document again, and if you 3 look at pages 47, 49 and 51, you will find a lot of 4 material which is directly relevant to Clause 19 and 5 Clause 16 in the Infraco contract, including definitions 6 for compensation events. 7 So my view, and I was hesitant yesterday, is 8 applying Counsel for the Inquiry's view on Schedule 9 Part 4 as a main term, those documents are also, or 10 those parts of that document are also main terms. 11 Thank you, my Lord. 12 CHAIR OF THE INQUIRY: Thank you. Mr Lake? 13 Examination by MR LAKE 14 MR LAKE: Mr Fitchie, if we can look at some of the 15 documents which I think go back to what you say were the 16 exchanges in January 2008 in relation to Schedule 17 Part 4. 18 If we go firstly to CEC01495585. 19 A. Yes. 20 Q. This is an email from Bob Dawson to Geoff Gilbert and 21 copied to Stewart McGarrity. It's dated 22 13 January 2008. Is that correct? 23 A. I agree. 24 Q. This is one of the emails you've been referring to this 25 morning to Lord Hardie? 3 1 A. I have. 2 Q. What it says is: 3 "As just discussed, I done an initial draft of the 4 above as requested." 5 The above is the contract package completion status 6 Schedule 4? 7 A. Correct. 8 Q. "I have incorporated the figures from the email titled 9 "Wiesbaden Deal" that you sent me on Wednesday 10 9 January 2008 but I'll need to have your input on a few 11 things that I don't know the background to and I have 12 made a few comments in red. 13 Unfortunately I can't attach it remotely for some 14 reason but I'll try and send it on my home email. If 15 all else fails I will be on the 6.30 am flight tomorrow 16 (weather permitting)." 17 Do you see that? 18 A. Yes, I do. 19 Q. That's is one of the emails to which you were referring 20 to. 21 If you go to a second email, CEC01447445. 22 You can see this comes from Robert Dawson and the 23 email address is -- although the second part of it has 24 been blanked out, we can see it's different from the 25 normal tie email address he would use? 4 1 A. I think he was at home. 2 Q. It's sent to Geoff Gilbert once again, with 3 Stewart McGarrity being copied in. All it says is: 4 "Attachment as per earlier email." 5 Do you see that? 6 A. I do. 7 Q. If we could look at the attachment to that, please, it's 8 CEC01447446. We can see the front page there, 9 Schedule 4 Contract Price analysis? 10 A. I see that. 11 Q. If we look at the second page of this, you can see that 12 that's simply a contents page identifying various 13 contract clauses and appendices? 14 A. Correct. 15 Q. If you go to the next page, this consists of clauses 16 which are the introduction, provisional sums and 17 provisional quantities. Do you see that? 18 A. I see it. 19 Q. There's nothing about Pricing Assumptions there; is that 20 not correct? 21 A. That is correct. 22 Q. If you look at the next page, do you see anything about 23 pricing assumptions there? 24 A. I do not. 25 Q. If we look at the next page, do you see anything about 5 1 Pricing Assumptions there? 2 A. Not on that page. 3 Q. Can we look at the next page and tell me if you see 4 anything about pricing assumptions there? 5 A. No, clearly not. 6 Q. Next page? 7 A. This page is about provisional sums. 8 Q. That's not the same as the Pricing Assumptions and 9 adjustment of price on that basis, is it? 10 A. My Lord, no, it's not, but the point I was making in 11 drawing these documents to the tribunal's attention is 12 that none of these emails are copied to DLA Piper. 13 This appears to be, and I don't know because it was 14 not shown to us, tie discussing internally what approach 15 they will take to the Pricing Schedule. 16 My point in referring these documents to the 17 Tribunal was I said there was a step between Wiesbaden 18 and 6 February 2008 when Schedule Part 4 first came to 19 my attention. 20 This is part of that step, and all I would say about 21 these documents is that it shows that tie were working, 22 and I would like to put on record that there are 23 a couple of other emails that I recall passing between 24 Geoff Gilbert and Scott McFadzen, about the Wiesbaden 25 Agreement at this period, I believe, or if not, shortly 6 1 after the Wiesbaden Agreement was actually signed. 2 My point was not to say that this document is 3 back-to-back with pricing assumptions. My point was to 4 say that tie had been working on this, not involving 5 DLA Piper. 6 CHAIR OF THE INQUIRY: I think Mr Fitchie, it was in the 7 context of the Pricing Assumptions questions that you 8 mentioned these other documents. I think if you just 9 bear with Counsel and let him take you through the 10 documents so we can confirm what the position is. 11 MR LAKE: Perhaps I can take this short, Mr Fitchie. Did 12 you have an opportunity to look at the documents -- 13 A. These documents? 14 Q. Yes. 15 A. I didn't see them. 16 Q. No, last night. On your SteelNet account. 17 A. My Lord, my purpose was to identify -- 18 CHAIR OF THE INQUIRY: I think the question is: did you -- 19 A. I looked at -- I looked at them, yes, in the context of 20 what I have just explained. 21 MR LAKE: What I can do, I just wonder if we can take this 22 short. If you can't answer this question, do just say 23 so. Is it fair to say that none of the emails that you 24 have referred to in those paragraphs in your statement 25 to Lord Hardie this morning, or the attachments to those 7 1 emails, deal in any way with the question of the pricing 2 assumptions? 3 A. I agree with you. 4 Q. Just leave it there then, thank you. 5 We broke off yesterday, I was looking at the 6 question of the letters issued by DLA to the Council at 7 the time of contract close. If I could turn to that 8 now, I would like to look at document reference 9 CEC01500975. 10 A. This is not at contract close. 11 Q. I didn't catch that? 12 A. This is not at contract close. 13 Q. No, but we are working up. What we'll do is start in 14 December and then go forward, and contract close was in 15 May, wasn't it? 16 A. Okay, I'm sorry. 17 Q. The contract letter in May refers to earlier letters in 18 March, which in turn refer to a letter in December, 19 don't they? 20 A. Correct. 21 Q. It makes sense to start with December? 22 A. Fine. 23 CHAIR OF THE INQUIRY: I think it would be easier, 24 Mr Fitchie, if you just listen to the question and 25 answer it. If I thought it was irrelevant, I would 8 1 intervene. So just assume that the question is 2 relevant, and that Counsel has a particular purpose for 3 asking. 4 A. Yes, my Lord. 5 MR LAKE: We can see this is a letter dated 17 December, 6 addressed to Gill Lindsay, the Council Solicitor. 7 A. Mm-hm. 8 Q. If we go to the fourth page, it's signed in the name of 9 the firm, DLA Piper Scotland LLP, but were you 10 responsible for the preparation of this letter? 11 A. Yes, I was. 12 Q. Could we go back to the first page, please. Enlarge the 13 lower half of the page. 14 We see a heading there, "Core Infraco Contract terms 15 settled and aligned with Tramco Contract"; do you see 16 that? 17 A. I do. 18 Q. The text underneath is: 19 "We are able to report the draft ETN contract suite 20 has been advanced to a point where there are no 21 significant legal issues outstanding on the core terms 22 and conditions which could currently be seen as an 23 obstacle reaching a contract close and signature as 24 programmed by tie." 25 A. Mm-hm. 9 1 Q. Now, as at 17 December, is it fair to say there wasn't 2 even a draft of Schedule Part 4? 3 A. Yes. And what I would say on that, if I may -- 4 Q. Yes. 5 A. Thank you. Core terms and conditions were the core 6 terms and conditions of the contract. 7 I know we have had a discussion yesterday about 8 whether Schedule Part 4 was a core terms and conditions, 9 but I would regard schedules to the contract as 10 different from core terms and conditions, ie Clause 1 to 11 120, whatever it was in the Infraco contract. 12 That is my opinion, and that is what I wrote. 13 Q. Viewing the matter from the standpoint of a recipient of 14 the letter, and dealing with the question of getting the 15 contracts and Condition 2 closed, do you imagine that 16 Gill Lindsay would have expected that the price is 17 something that would have to be settled before close of 18 the contract? 19 A. I'm reading the next sentence: 20 "Work remains to translate commercial and technical 21 positions being settled into agreed detailed drafting 22 and these tasks are being managed and closed out 23 methodically." 24 Q. At this stage you had no drafting at all to reflect the 25 Contract Price; is that correct? 10 1 A. We did not. 2 Q. Thank you. 3 If we go and look at the next letter in time, if we 4 go to CEC01351479. 5 A. If I may just make the point, my Lord, that the Pricing 6 Schedule is not normally something a lawyer would have 7 enormous input into. Thank you. 8 Q. Mr Fitchie, the Pricing Schedule here also has the 9 effect of allocating risk between the two parties, 10 doesn't it? 11 A. It does. 12 Q. In terms of entering into any commercial contract, the 13 allocation of risk is one of the most critical aspects, 14 would you not agree? 15 A. I do, and at this point -- 16 Q. That is something on which a lawyer is particularly well 17 placed to advise the party on how to implement the 18 allocation of risk? 19 A. I agree with you. Here we are on 17 December 2007, and 20 I have agreed with you that there was no Pricing 21 Schedule at that point. So it wasn't possible for me to 22 advise on that here. 23 Q. You could have advised that there was no agreement 24 whatsoever in respect of that matter, couldn't you? 25 A. I'm not sure that would have been part of the purpose of 11 1 this letter. That is my view. 2 Q. If we look at the next letter that I would like to look 3 at, it's CEC01351479. It's on screen now? 4 CHAIR OF THE INQUIRY: Can we go back to the last letter. 5 MR LAKE: Certainly. The reference for that would be CEC -- 6 we have it, it's okay. 7 CHAIR OF THE INQUIRY: Yes. The introduction at the top of 8 the letter. Under "PROGRAMME": 9 "The following was foreseen by tie as enabling 10 Council officers to recommend Full Council authorisation 11 for tie to enter into the ETN contract suite." 12 A. Mm-hm. 13 CHAIR OF THE INQUIRY: So the purpose of this -- or was the 14 purpose of this letter to give reassurance to the 15 Council that their officers could enter into this 16 contract suite? 17 A. I cannot disagree with your reading of that, my Lord. 18 CHAIR OF THE INQUIRY: So the answer is yes? That was -- 19 A. Yes. 20 CHAIR OF THE INQUIRY: Thank you. 21 MR LAKE: Just with this document for a minute, please. 22 Could we go to the second page of it, please. Could we 23 enlarge the heading "RISK" and the text underneath it. 24 You see under the heading "RISK", you say: 25 "We remain of the view (as in both our earlier 12 1 written reports to you) that the contractual allocation 2 of risk and responsibility between tie Limited and the 3 competitively selected private sector providers remains 4 broadly aligned with the market norm for UK urban light 5 rail projects, taking into account: the distinct 6 characteristics of the Edinburgh Tram Network, the 7 technical and commercial state of readiness at ITN issue 8 in October 2006 coupled with the development of scheme 9 engineering and data design since that date. Refinement 10 will be needed within the draft ETN contract suite 11 between now and programmed close to take account of the 12 actual final state of the Employer's Requirements, the 13 matching Consortium's proposals and project specific and 14 Background Information. This exercise is mapped and at 15 present is not expected to either materially alter risk 16 allocation or adjust the core contractual rights and 17 responsibilities." 18 A. Mm-hm. 19 Q. If we just go back to the previous page, I just want to 20 ask you what you meant by. 21 "... the distinct characteristics of the Edinburgh 22 Tram Network, the technical and commercial state of 23 readiness at ITN issue in October 2006 coupled with the 24 development of scheme engineering and data design..." 25 A. My Lord, I know you have asked me not to refer to my 13 1 statement and answer questions, but I am in difficulty 2 here because I answered that question in some detail in 3 my statement, and it would help me answering this 4 question if I could be taken to the part of my statement 5 where it sits. Otherwise I fear I am giving an 6 incomplete answer and I don't want to be in a position 7 where I'm somehow giving an answer that may be 8 interpreted differently to what I said in my statement. 9 CHAIR OF THE INQUIRY: Certainly your statement is available 10 and will be read and taken into account when I'm 11 assessing all of the evidence. I think, Mr Lake, can 12 you help the witness here? 13 MR LAKE: I can find the precise reference within the 14 statement. I'm more interested, though, in whether 15 Mr Fitchie could indicate now as the author of the 16 letter, what he meant when he wrote it, rather than 17 having to refer to his statement. 18 CHAIR OF THE INQUIRY: Can you help us there, Mr -- 19 A. I would rather -- 20 CHAIR OF THE INQUIRY: I know you would rather refer to your 21 statement. If you are not able to answer the question 22 as to what you meant, just say so, and we will just move 23 on. 24 A. I cannot answer the question without referring to my 25 statement. That is my -- I have given my best shot at 14 1 what I meant here in my statement, and that is my 2 evidence, my Lord. 3 CHAIR OF THE INQUIRY: I just wonder about that, Mr Fitchie. 4 Clearly if you've given an answer in the statement about 5 that, you must have been able to understand or recall 6 what you meant by that particular passage, and are you 7 saying now that something has happened in between times? 8 A. Not at all, my Lord. 9 CHAIR OF THE INQUIRY: Did you prepare the statement 10 yourself? 11 A. Absolutely. 12 CHAIR OF THE INQUIRY: So that there shouldn't be any 13 difficulty in telling us what this means. 14 MR DUNLOP QC: My Lord, I think the statement is 11.112, and 15 it is a multifaceted answer that the witness has given, 16 and with respect, it is not a memory test. 17 CHAIR OF THE INQUIRY: I appreciate it's not a memory test, 18 but the witness has written this letter. Surely he 19 knows what it means. Don't bother looking at the 20 statement. 21 A. I shall put the statement away. 22 I will attempt to answer this question, my Lord. 23 The distinct -- the question is what are the distinct 24 characteristics of the Edinburgh Tram Network. Is 25 that -- may I ask, is that -- this -- it's these phrases 15 1 at the bottom of this page. 2 MR LAKE: What did you mean by these and why did you feel it 3 necessary -- this is the second part of the question, 4 a new one -- why did you feel it necessary to add these 5 qualifications? 6 A. What I meant by this was the fact that the Edinburgh 7 tram is being put into streets. It was very different 8 to other light rail schemes where there were segregated 9 ways for use and construction, and therefore this was 10 going to be something that would affect the contractor. 11 The technical and commercial state of readiness at 12 ITN issue was my way of -- I ask the tribunal to bear in 13 mind that I discussed the content of this letter with 14 Ms Lindsay before writing it, and we discussed a number 15 of things which were in my view covered in these or 16 under these rubrics. Its technical and commercial state 17 of readiness. This was the state of the design. May 18 I see over the page -- coupled with the development of 19 scheme -- 20 Q. Yes. If we go to the next page? 21 A. And engineering design since that date. So that is 22 a direct reference to SDS being late, and MUDFA being 23 late. And these were things which I did discuss with 24 Gill Lindsay. 25 That is a very condensed version of what is in my 16 1 statement, I believe. I think there were other things 2 in my statement that I recall. I do ask for the 3 indulgence that this is a very long witness statement, 4 and I'm being asked to remember exactly what I meant ten 5 years ago. 6 CHAIR OF THE INQUIRY: It's not a case of asked to remember. 7 You're being asked to tell us, as you were able to do 8 fairly recently when you produced the statement, what 9 you meant. 10 A. I have tried now to do that, my Lord. 11 CHAIR OF THE INQUIRY: Very well. 12 MR LAKE: Could I ask you to look at the fourth page of this 13 letter, please, the lower half. In signing it off, you 14 say: 15 "We will continue to provide every support necessary 16 to tie Limited and CEC to achieve the successful outcome 17 the project deserves." 18 A. Mm-hm. 19 Q. So the reader of this, the Council Solicitor, perhaps 20 understands that you were also providing assistance to 21 the Council? 22 A. The reader was Gill Lindsay, and we had had a discussion 23 before that as to what our role was. We touched on this 24 yesterday a lot, and my position is that the 25 practical -- the way this operated practically was the 17 1 way it was set out in terms of duty of care in that 2 first set of June 2005 letters. 3 I also note this letter was copied to 4 Matthew Crosse. 5 Q. I'm not going to go back over the letters of duty of 6 care. We covered that yesterday. 7 Could you look now at the next letter in the chain 8 towards close. It's reference CEC01351479. Enlarge the 9 upper half of the page. 10 We can see this is dated 12 March 2008, and again 11 it's addressed to Gill Lindsay, the Council Solicitor, 12 and it comes from your firm. 13 A. Correct. 14 Q. The text of it says: 15 "This letter is our report to update you on the 16 matters which we addressed in our letter of 16 December 17 and to report further on the evolution of the contract 18 documentation towards tie's planned close date of 19 24 March 2008." 20 Now, the letter we have just previously been looking 21 at is dated 17 December, rather than the 16th, but is 22 that intended as a reference to that letter? 23 A. Yes, it is. I think it is a mistake. 24 Q. There is a draft of 16 December? 25 A. There's a mistake. 18 1 Q. If we can go over the page, to the top of page 2. 2 A. Sorry, just on that point, my Lord, the reason there was 3 a draft is because I believe that was shared with 4 Gill Lindsay and tie before it was issued. I'm sorry, 5 Mr Lake, to interrupt you. 6 Q. We can see at the top of page 2, it says: 7 "We are able to report that by close of business 8 today Wednesday 12 March the draft ETN contract suite 9 will have been advanced to a point where there are only 10 limited legal issues outstanding on the Infraco and 11 Tramco core terms and conditions which, after a further 12 full working session scheduled tomorrow, should not 13 prevent the documentation being ready for signature by 14 end of March." 15 Can I ask why you underlined "legal" in that text? 16 A. Because there were -- at this stage there were many 17 technical and commercial issues which were 18 outstanding: financial, commercial, engineering issues 19 outstanding. 20 Q. Were they likely to prevent the -- as at 12 March, do 21 you consider that they might prevent the documents being 22 ready for signature by end of March? 23 A. I would answer that question, my Lord, by saying that 24 this was optimistic, but it was my honest belief at the 25 time that tie was going to drive forward with Infraco to 19 1 try and get there. This isn't a guarantee. 2 Q. Can we look at -- 3 A. The next -- I'm sorry, my Lord. There is -- the rest of 4 that paragraph says: 5 "This forecast will rely also on the cooperation 6 and focus of, and interaction with, the BBS Consortium. 7 Detailed drafting remains necessary to ensure accurate 8 and fully agreed reflection of myriad commercial aspects 9 which have come together in the last 10 days." 10 Q. Would you include Schedule Part 4 in that -- 11 A. I would, my Lord. 12 Q. Could we look at page 4 of the document, please. 13 A. Could I, before we -- sorry, my Lord. 14 CHAIR OF THE INQUIRY: Is it something in relation to 15 a question you've been asked? 16 A. Yes. 17 CHAIR OF THE INQUIRY: What do you want to add? 18 A. We are looking at sections of the letter when there is 19 language in the letter that we don't look at which 20 I consider relevant to the question I've been asked. 21 CHAIR OF THE INQUIRY: If that's the case when you're shown 22 a document, by all means refer to the relevant language. 23 A. That's what I wanted to do now. We've not looked at 24 a paragraph which I think is important. 25 MR LAKE: Which paragraph do you consider we should look at? 20 1 Is it another one or the one you have just referred to? 2 A. The whole of the last half of that -- the last third of 3 that page: 4 "In our view the draft agreements in their current 5 state adequately capture the commercial positions which 6 tie has achieved. In our opinion, in order for tie to 7 issue a notification of intent to award, the following 8 tasks need to be urgently attended to tomorrow ..." 9 And I list them: 10 "Clearly this is a full and ambitious day's effort. 11 BBS should be requested to confirm their commitment to 12 close by latest 26 March ... That commitment would 13 exclude any further visits to any of these core elements 14 of the ETN contract suite." 15 Q. To be quite clear, what it says at the end is "these 16 core elements"; so everything in the bullet points is 17 regarded as a core element of the contract suite, isn't 18 it? 19 A. Correct. 20 Q. That includes completion of pricing negotiations, second 21 bullet point? 22 A. Right. 23 Q. So we can be clear that this is to be seen as a core 24 element of the ETN contract suite? 25 A. Yes, as opposed to terms and conditions, yes. 21 1 Q. Can we now go on and look at page 4, please. Look at 2 the second half of the page, under the heading "RISK". 3 5.1 says: 4 "Our view on the contractual allocation of risk and 5 responsibility between tie and the competitively 6 selected private sector providers remains that the 7 Infraco Contract and the Tram Supply and Maintenance 8 Agreements are broadly aligned with the market norm for 9 UK urban light rail projects, taking into account the 10 distinct characteristics of the ETN and the attitudes of 11 BBS and SDS to novation. The project's state of 12 technical and commercial readiness has matured since 13 Christmas. However, the fact that work still continues 14 on the Employer's Requirements Schedule - the core 15 project scope - at this very late stage (resulting in 16 SDS requiring an instruction to align their designs with 17 tie's Employer's Requirements and the Infraco Proposals) 18 means that technical ambiguity (and therefore delay/cost 19 risk) may exist in the interplay between design, scope 20 and method of execution. There is contractual 21 mitigation available whereby (1) the Infraco is under 22 a duty to bring any ambiguity in technical documentation 23 to the attention of tie; (2) tie's authority to direct 24 resolution of such issues; (3) the precedence of core 25 terms and conditions over Schedules; and (4) the 22 1 exercise of SDS now instructed by tie to align their 2 designs with the Employers' Requirements and the Infraco 3 Proposals so as to eliminate mismatches." 4 Now, the text at the start of that paragraph is in 5 many respects similar to the narrative given in relation 6 to risk in the earlier letter; would you agree? 7 A. Yes, the first -- first sentence, yes. 8 Q. By the time we have got to 12 March, the negotiations in 9 relation to the Schedule Part 4 had advanced; would you 10 agree? 11 A. Yes, sorry, we're at 10 -- we're on the 12 March, yes. 12 Q. Therefore it was apparent, was it not, that there was to 13 be a substantial shift of risk from the contractors back 14 to the Council? 15 A. Correct. 16 Q. No indication of that is given in this letter, is there? 17 A. Well, it is clumsy, my Lord, but that is what I'm trying 18 to do. 19 Q. Can I ask my question again. No indication is given of 20 the shift of risk -- 21 A. There is no sentence in this letter that says Schedule 22 Part 4 is a document which changes time and cost 23 responsibilities. 24 Q. I don't know if you recall when we looked at the 25 previous letter -- go back to it if you prefer -- but 23 1 you said that the exercise, the risk exercise is mapped 2 and at present is not expected to either materially 3 alter risk allocation or adjust the core contractual 4 rights and responsibilities. In fact, the exercise had 5 altered risk allocation? 6 A. It seemed that it was going to. 7 Q. Would that then, standing the statement in your earlier 8 letter that you didn't think there would be such 9 a change, make it all the more important that that 10 change was identified in the 12 March letter? 11 A. May I, before answering that question, look at the top 12 of this page if it's the right page to look at? 13 Q. Scroll up. Go back to the previous page if that will 14 assist you? 15 A. No, this is fine: 16 "BBS have taken a most risk averse stance, due to 17 their developing first hand views on SDS performance to 18 date, in particular in relation to design Consent 19 achievement, but also in relation to important aspects 20 of scheme design quality. 21 BBS have insisted on reinforced contractual 22 protection (in our view overplayed) and commercial 23 support in the form of tie accepting compensation 24 entitlement for BBS in the event of SDS default on 25 its design production and Consent delivery obligations." 24 1 Now, what I would say at this stage is that I -- 2 I have mentioned this in my statement. It was difficult 3 to report to the Council on positions that were not 4 closed, and I endeavour to do that in this letter, in 5 the paragraph -- the paragraph that we've looked at with 6 bullet points. 7 This letter was not intended to be an absolute sweep 8 through all of the contract negotiations and status of 9 those contract negotiations. That's my view, my Lord. 10 Q. If you're going to read that text as you did from the 11 section on page 4, could we look back to see how it's 12 headed. If you look to page 3. You see the foot of the 13 page. All you read out comes under the heading, 14 "CONFIRMATION OF NOVATION STRATEGY". 15 A. That's right. 16 Q. So we have got one section dealing with novation 17 strategy, and the following section headed "RISK" is 18 where you would expect to see any warning about risk 19 transfer, isn't it? 20 A. You would also see -- 21 Q. Could you answer my question, please, Mr Fitchie? 22 A. I'm answering your question. 23 Q. If there was going to be a statement about where the 24 risk had been transferred, you would expect to see that 25 under the heading "RISK", not under the heading 25 1 "Novation"? 2 A. Yes, and you would also expect to find it in paragraph 2 3 on that page where it says "UPDATED RISK ALLOCATION 4 MATRICES". This is the tool that Gill Lindsay told me 5 she referred to use to understand where contract was 6 placed. 7 CEC Legal received on a very regular basis issues 8 lists, revised contract drafting, and updated risk 9 allocation matrices. 10 Q. We will come to the matrix, don't worry. 11 A. I'm merely trying to be complete, my Lord, in what's in 12 the letter. 13 Q. We can then go to the next letter in the chain. It's 14 the one dated 18 March, reference CEC01351480. Now, we 15 can see the letter here is dated 18 March and once again 16 it's from DLA Piper, and it's addressed to Gill Lindsay, 17 the Council Solicitor. 18 A. I agree. 19 Q. We can see the heading is: EDINBURGH TRAM NETWORK, DRAFT 20 CONTRACT SUITE AS AT 13 MARCH 2008. So although it's 21 dated the 18th, it's commenting on a position as at 22 13 March. Do you see that? 23 A. I do. 24 Q. Then the first sentence is: 25 "We write to update you on our report yesterday." 26 1 A. Yes. 2 Q. Now, when it's referring to "yesterday", is that 3 intended to refer to the report of 12 March -- that is 4 the day before 13 March? 5 A. My Lord, this is difficult to recollect. This is ten 6 plus years ago. 7 I'm not sure what "yesterday" means. It would be 8 odd if I was writing "yesterday" in connection with 9 something that had been done on 12 March. 10 I'm not in a position to say what the report was, 11 whether it was -- whether it was a meeting or whether 12 there was a document. I cannot make that connection in 13 my memory. 14 Q. Okay. If we just look at the remainder of this letter 15 for the time being, it gives a narrative on page 1 of 16 the core Infraco and contract terms, says: 17 "There has been measured progress in closing out the 18 core provisions, despite extreme time pressure and 19 interruption for detailed commercial discussion. tie 20 has achieved a level of closure and agreement which will 21 support the notification of intent to award letters 22 being dispatched today." 23 A. Yes. 24 Q. You do narrate within your statement the desire on the 25 part of tie to issue the notification of intent of award 27 1 letters, and your feeling that that was inappropriate at 2 that stage? 3 A. Yes. I had been aware of tie's wish to formalise the 4 march towards close since I came back from leave on 5 8 January, and I had been vocal about this. 6 Q. You then move to the letter of 12 May, the one issued on 7 the eve of the signature of the contract. It's 8 reference CEC01033532. 9 We see this is a letter dated 12 May. It's from 10 DLA Piper, and this time it's addressed to both 11 Gill Lindsay, the Council Solicitor, and 12 Willie Gallagher, the Executive Chairman of tie? 13 A. Correct. 14 Q. If you go to the second page, please -- sorry, pardon 15 me. Can we go back to the first page. For 16 completeness, I should have noted that the first 17 paragraph says: 18 "We are instructed to report to tie and to CEC in 19 relation to the status of the ETN Suite of documentation 20 as at 12 May 2008. You of course have our letters of 12 21 and 18 March, copies of which are appended for ease of 22 reference." 23 Those are the letters we've just been looking at; is 24 that correct? 25 A. Yes. 28 1 Q. You then go to the second page of this. If we look at 2 the upper half, under heading "1.1. Core Infraco 3 Contract Terms", you note: 4 "The Core Infraco terms are closed as to all matters 5 of contractual, technical and commercial principle. BBS 6 legal teams were instructed on 24 April to respond 7 during the final quality assurance period of 7 days 8 in order to remove or refine any omissions or errors 9 co-operatively. No issues have arisen since we last 10 reported which have resulted in any adverse alteration 11 (of consequence) to risk balance." 12 A. Mm-hm. 13 Q. Now, is that you representing that even the conclusion 14 of negotiations on Part 4 of the Schedule had effected 15 no adverse alteration in the risk balance? 16 A. My memory of the close on Schedule Part 4, and I had 17 written on 18 March, was that from 18 March until the 18 end of those discussions, not a great deal happened 19 which was to do with Pricing Assumption 1 -- sorry, 20 Pricing Assumption 1.3.4 which was the main alteration 21 of responsibility for time and cost in Schedule Part 4. 22 Q. So we saw that in the 12 March letter, there was 23 a statement as to risk and responsibility which was the 24 same as had been made in December. Do you recall that? 25 A. Yes. 29 1 Q. Now in May you are saying: no issues have arisen since 2 we last reported to result in any adverse alteration of 3 risk balance. 4 A. Since we last reported, correct. 5 Q. So if you read your letters together -- that's this one, 6 the one on 12 March and the one on 18 March -- the 7 understanding of the reasonable reader would be that 8 there had been no change in risk since 17 December. 9 A. This reader -- 10 Q. Could you answer my question? If you read this letter 11 together with the two it refers to, what this represents 12 to the reader is that there has been no adverse change 13 in risk since December, 17 December. 14 A. I think this letter attaches risk matrixes. 15 Q. We will come to that. 16 A. Yes, there is no -- thank you. 17 Q. Shall I ask my question again? 18 A. I said yes. 19 Q. If you read this letter together -- yes. 20 But in fact the situation was that there had been an 21 adverse change in risk in the form of Schedule Part 4? 22 A. The last sentence of that paragraph says: 23 "As they stand, the terms and conditions represent 24 a clear reflection of the positions which have been 25 negotiated by tie and are competent to protect and 30 1 enforce those positions." 2 Q. Let's see what you do say in respect of this. Could we 3 look at page 3 of the letter, and look at the heading, 4 "RISK", and the text, two paragraphs underneath it. You 5 say that: 6 "Following on from our letter of 12 March, we would 7 observe that delay caused by SDS design production and 8 CEC consenting process has resulted in BBS requiring 9 contractual protection and a set of assumptions 10 surrounding programme and pricing. 11 tie are prepared for the BBS request for an 12 immediate contractual variation to accommodate a new 13 construction programme needed as a consequence of the 14 SDS Consents Programme which will eventuate, as well as 15 for the management of contractual Notified Departures, 16 when (and if) any of the programme related pricing 17 assumptions fall." 18 Now, you refer there to programme assumptions. But 19 clearly Schedule Part 4 also dealt with the content of 20 design as well as the programme for works. 21 A. It did, and I think, my Lord, the first paragraph: 22 "Following on from our letter of 12 March, we would 23 observe that delay caused by SDS design production ... 24 has resulted in BBS requiring contractual protection and 25 a set of assumptions surrounding programme and pricing." 31 1 Q. Yes. Now, what do you consider should be taken from 2 that in light of your previous comments about any new 3 adverse alteration of risk balance? 4 A. I take from that, as this is in the paragraph dealing 5 with risk, that if these assumptions fall, then there 6 will be an effect on programme and pricing. 7 Q. But not any adverse alteration of risk balance, as you 8 said earlier? 9 A. There is no sentence in this letter that specifically 10 says there has been an alteration of risk balance in 11 Schedule Part 4. 12 Q. If you just put it this way, this letter gives no 13 intimation whatsoever of the magnitude of risk transfer 14 that had been effected by Part 4 of the Schedule. In 15 fact it represents there has been none. 16 A. I don't agree with you. 17 Q. Okay. If we go down to page 6, 11.3, it says: 18 "The Pricing Schedule (Infraco Contract Schedule 19 Part 4) has been extensively discussed over the past six 20 weeks and is now settled as to its key assumptions, 21 value engineering items, provisional sums and fixed 22 prices. tie has assessed the likely financial impact of 23 the assumptions not holding true and triggering 24 changes." 25 Again, there's no indication given there of the size 32 1 of the shift brought around by Schedule Part 4, is 2 there? 3 A. That's correct. 4 Q. What was the source for your statement that tie has 5 assessed the likely financial impact of the assumptions 6 not holding true and triggering changes? 7 A. The source of my sentence -- my putting that sentence in 8 the letter was my presence at tie project management 9 meetings and tie executive management meetings, in which 10 tie's quantitative risk assessment process was 11 discussed, seeing minutes of meetings in which 12 individuals were charged at a very early stage to carry 13 out or continue this process through so it could be 14 reported to both the Council and Transport Scotland; and 15 I think it's reasonable to assume, having seen those 16 documents and attended those meetings, for me to be 17 saying that they have made an assessment of the likely 18 financial impact of the assumptions not holding true. 19 Q. Did anyone discuss with you what assessment they had 20 made of the likelihood of those assumptions not holding 21 true? 22 A. No. They did not. 23 Q. Had anyone indicated what value they had attached to the 24 risk of those assessments not -- those assumptions not 25 holding true? 33 1 A. No, they had not. 2 Q. Could we look at the risk allocation matrix that we saw 3 referred to in the letter. It's reference CEC01347795. 4 You can see this is headed -- it's got the logos of both 5 DLA Piper and tie on it. It's headed "EDINBURGH TRAM 6 NETWORK CONTRACTUAL ALLOCATION OF RISKS IN THE DRAFT 7 INFRACO CONTRACT as at 12th May 2008". So this would be 8 the risk allocation matrix you are referring to; is that 9 correct? 10 A. Yes. 11 Q. We just look at the first page as an example. The first 12 item is 2.2: 13 "Failure to serve notice to propose extension no 14 later than 180 days prior to expiry date." 15 There are then ticks in one or more of the boxes to 16 the right-hand side indicating where that risk lies 17 under the contract. 18 A. Yes. 19 Q. Essentially when there's the number in square brackets, 20 that is a reference to a term of the contract? 21 A. Correct. 22 Q. So, for example, if Clause 2.2 requires tie to serve 23 a notice proposing the extension, that's how that risk 24 has been allocated to tie? 25 A. Yes. 34 1 Q. So a large part of this is identifying who bears the 2 responsibility to take certain actions under the 3 contract? 4 A. Yes, or failing to take actions under the contract. 5 Yes. 6 Q. But it refers more to contract terms than identified 7 risks? 8 A. The purpose of the document is to show how the clause -- 9 and I have mentioned this in my evidence -- occasionally 10 it's difficult to decide, and that's why ticks get 11 shared, in passing a clause there may be different 12 circumstances. 13 But the general -- the purpose of this document is 14 to show how in particular or how time and cost 15 responsibility lies in the contract terms. 16 Q. Could we look at page 26, please. If we look at the 17 upper half of the page, we see in the section of the 18 table entitled "Risk : Changes", we see the second item is 19 80: 20 "tie Changes, Mandatory tie Changes and Notified 21 Departures". 22 And the risk there is allocated to public sector? 23 A. Correct. 24 Q. That is for these three items, tie Changes, Mandatory 25 tie Changes and Notified Departures, the public sector 35 1 has to pay for the consequences of those? 2 A. That is correct. 3 Q. Is there any mention in this Risk Allocation Schedule of 4 Part 4 of the Schedule and the Assumptions? 5 A. Not specifically, because this Schedule -- there is 6 a limit to how much information could be put in this 7 Schedule about the -- about the actual contract terms 8 and their text. What this -- this Clause 80 states 9 Mandatory tie Changes. The fall of an assumption would 10 be a Mandatory tie Change. 11 Q. I should say for completeness, if you look at page 22, 12 and we look at the lower table on that page, the heading 13 is "Risk : Relief Events (time) and Compensation Events 14 (time and/or costs)". The first thing is definition of 15 compensation event. Pricing assumption does not hold 16 good. That's allocated to the public sector? 17 A. Correct. 18 Q. Do you think that gives any notice of the effect of 19 Schedule Part 4? 20 A. Yes, I do think it gives an indication. It shows that 21 risk is on the public sector. 22 Q. Okay. We have finished with that. 23 I want to turn to the Dispute Resolution Process? 24 A. Yes. 25 Q. Within your statement, on a number of occasions, you 36 1 express concern that tie were not doing all they could 2 to enforce contract provisions? 3 A. Mm-hm. 4 Q. Including the dispute resolution provisions. Do you 5 recall that? 6 A. I recall in my statement being concerned about the use 7 of the SDS contract, and the use of warning notices 8 and I also -- yes, in relation to the Infraco contract, 9 I give -- my evidence is concerned about DRP. 10 Q. I think you say in that statement that you gave advice 11 to tie that they should go to DRP in late summer 2008? 12 A. Correct. 13 Q. When do you think DRP could first have been used 14 under -- talking about the Infraco contract? 15 A. This means going to Clause 80, and I know you're going 16 to take me to Clause 80 in due time, but when there were 17 Notified Departures arising which caused -- which 18 revealed what BBS's essential strategy was going to be 19 in relation to Notified Departures, some of those 20 Notified Departures, and I'm not in a position to say 21 how many or when the first were, but having talked about 22 this to Dennis Murray very quickly after contract close, 23 we knew of course that there was going to be V6 to V28, 24 and we -- 25 Q. Just for clarity, that's the different versions of the 37 1 SDS Design Delivery Programme? 2 A. Correct, and it was pretty quickly version 31, but we 3 talked about that yesterday briefly. I'm sorry, I'm 4 diverging. 5 The question was when did I think would have been 6 the optimal time for tie to engage on DRP. 7 Given that the Clause 80 provision that deals with 8 the ability to go to DRP has a caveat in it about where 9 SDS -- there are problems with the SDS design, in my 10 opinion the time to have gone to DRP would have been 11 when there was a -- when there was a notice -- when 12 there was a problem with a Notified Departure which 13 related to estimation and perhaps not something that was 14 related to SDS design, otherwise they would have been 15 confronted with that problem. 16 So earlier than -- when I gave my advice, would be 17 my answer to that question. 18 Q. In late summer 2008? 19 A. Yes. 20 Q. Now, in terms of Clause 81 of the issues, affected the 21 contract was whether or not -- partly whether 22 information was provided about Notified Departure, but 23 also whether an estimate of the effect of that had to be 24 provided by Infraco to tie. 25 A. Correct, there were two tiers to that. One was provide 38 1 an estimate, and if tie's opinion was that that estimate 2 was insufficient to be looked at and evaluated and 3 agreed, there was another -- another sub-provision in 4 Clause 80 which allowed the Infraco slightly more -- 5 allowed them, I think, from memory, 18 -- there was 6 a time limit for them to request further time to provide 7 an estimate. 8 Q. Now, before we get to the stage of whether or not 9 estimates have to be provided, there was the issue of 10 course whether or not it was accepted that this was 11 a Notified Departure? 12 A. Correct. 13 Q. And that is something that tie were not accepting at 14 that stage because of disputes about contractual 15 interpretation; is that correct? 16 A. I cannot -- I cannot -- sorry, I cannot recollect the 17 first time the issue of whether or not this was 18 a notified departure arose. That is my -- 19 Q. What is the issue that would have been taken to the 20 Dispute Resolution Procedures in late summer 2008? 21 A. My Lord, I'm not sure I can answer that question because 22 my recollection -- my recollections of precisely what 23 types of disputes had arisen in the late summer of 2008 24 is not -- is far from perfect at this point. I'm sorry, 25 I can't help Mr Lake with that question. 39 1 Q. What difference do you think it would have made, taking 2 a matter to dispute resolution? 3 A. I think it would have made a number of differences. The 4 first difference that it would have made would have been 5 to give BBS notice that tie was going to fight on this 6 issue, and I was concerned and I expressed this concern 7 that it had been clear to me prior to contract award and 8 much before contract award that this contractor was 9 going to use the contract aggressively. And this 10 contractor's hands were tied because BB (UK) Limited was 11 a very small operation, and the people who were actually 12 controlling this were in Wiesbaden. And my experience 13 told me from working in Germany for a major civil 14 engineering contractor for five years that this contract 15 would be engineered by a set of quantity surveyors 16 looking for claims, and that is exactly what happened. 17 So to fight back as soon as possible, and to get 18 a resolution on the DRP if it was a contractual matter, 19 or if it was a quantity surveying matter, would have 20 been useful in my opinion in those two ways. 21 As far as -- I'm sorry, Mr Lake. Your question of 22 what difference would it have made, I cannot speculate 23 at this point, but at that stage the difference that it 24 would have made would have been what I said, which is it 25 would have showed that tie meant what they were saying 40 1 about not agreeing estimates and they were prepared to 2 go and dispute it. 3 Q. Now, in relation to the issue that arose of whether or 4 not a change from the Base Date Design Information 5 intended for construction design information constituted 6 a Notified Departure, you will be aware that in a number 7 of ultimately adjudications, tie were unsuccessful on 8 that? 9 A. I would like to help you on this, Mr Lake. 10 Q. I'll ask the question more precisely. There were 11 adjudications in respect of the Carrick Knowe Bridge, 12 the Gogarburn Bridge and the Russell Road retaining wall 13 where this issue was argued, and in each case tie was 14 unsuccessful. It was held there was a notified 15 departure; do you recall this? 16 A. Yes, I do recall that. 17 Q. So if those -- if that dispute had been brought to 18 a head earlier and started earlier and got that result 19 earlier, tie would have showed they were willing to have 20 a fight and then lost it. What benefit would that have 21 had for tie? 22 A. I think it would have crystallised tie's thinking about 23 how to deal with this matter, this -- these disputes. 24 Q. In what way? 25 A. I have difficulty answering that question because 41 1 I wasn't sitting in tie's project management. I was the 2 lawyer. In fact, in this instance I was the lawyer once 3 removed because as soon as dispute resolution came into 4 being, I consulted internally and got agreement from DLA 5 to -- from the firm to bring a construction contract -- 6 a construction litigation specialist up to handle the 7 dispute resolutions. 8 So my knowledge of the guts of the DRP -- the 9 adjudication awards and so on is understandably 10 second-hand. There was another partner dealing with 11 this. 12 Q. Were you involved in advising tie as to the effects of 13 and best responses to the adjudication awards which went 14 against tie? 15 A. Yes. 16 Q. So could you -- so what I'm interested in is dealing 17 with tie's responses to adverse adjudication decisions. 18 What difference would it have made if those decisions 19 had come earlier, if the adjudication process had been 20 started earlier? 21 A. I have tried to answer that question as best I can. 22 I don't know because I wasn't tie management. 23 Q. Could we go to a bit in your statement now. It's 24 page 249. Paragraph 8.33. 25 A. Could we have it a wee bit larger, my Lord. 42 1 Q. "I am asked in Question 107 to comment on the DLA Piper 2 advice recorded at paragraph 2.8 in CEC00633071 which is 3 the minutes from a 15 April 2009 Tram Project Board 4 meeting. This note records that "DLA Piper were 5 confident of TIE's position with regard to the principle 6 areas of contractual disagreement'. The basis of this 7 view was that DLA Piper considered that an Adjudicator 8 presented with legal submissions and confident expert 9 witness evidence as to how PA1 [pricing assumption 1] 10 should be read from an engineering and technical 11 standpoint would resolve any ambiguity in TIE's favour." 12 A. Mm-hm. 13 Q. Are you happy that your advice was accurately 14 represented there, that you were confident of tie's 15 position? 16 A. The timing of this is 15 April 2009. This note. 17 I am aware that there is advice written -- there is 18 a paper written piece of advice. Maybe you are going to 19 take me to it, Mr Lake. 20 Q. I'm just asking, are you happy -- as at April 2009? 21 A. Yes, I -- yes, and what I was looking for was an 22 engineer's view on this. 23 Q. One moment. I'm concerned to check that date is 24 correct. Yes, it is correct. 25 There were various bits of advice, sorry, being -- 43 1 it's not so much the looking for an engineer's view. It 2 is the basic statement that you were confident of tie's 3 position regarding the principal areas of disagreement. 4 Was that correct? 5 A. The basis of this view was that DLA Piper considered 6 that an Adjudicator presented with legal submissions and 7 confident expert witness evidence -- 8 Q. Were you confident of tie's position with regard to the 9 principal areas of contractual disagreement? 10 A. I wouldn't have phrased it like that, but that is not my 11 document. 12 Q. Were you confident of tie's position with regard to the 13 principal areas of contractual disagreement? 14 A. The principal areas of contractual disagreement, I'm not 15 in a position to say yes or no. 16 Q. You have told us in your evidence yesterday of the 17 concerns you had regarding the effect of Schedule 18 Part 4, and whether or not changes would arise. Whether 19 or not changes would arise was one of the principal 20 areas of contractual disagreement, wasn't it? 21 A. I'm not trying to be difficult, my Lord. I'm just 22 thinking about this. (Pause) 23 Yes, and the reason for those Notified Departures 24 and the claim for those Notified Departures centred 25 around design, a technical issue, and changes to that 44 1 design, which needed to be interpreted by somebody with 2 that expertise. 3 Q. As at the time that you were negotiating Schedule 4 Part 4, you didn't have expert advice available to you 5 in that regard, did you? 6 A. Are you -- you're saying "you". I'm sorry, my Lord. 7 Can the question be clarified so that -- 8 Q. Did you personally have expertise from the design -- 9 regarding the design and technical issues available to 10 you when you formed your view about Schedule Part 4 11 prior to May 2008? 12 A. I did not have expert advice on Schedule Part 4. 13 Q. Why had you not told tie about the concerns you had 14 about the effect of Schedule Part 4 and the changes that 15 would arise? 16 A. What date are you asking me the question at? 17 Q. The date of this Board meeting, 15 April 2009. 18 A. My answer to that, my Lord, is: I'm not sure that I saw 19 this Board meeting. If I was at the board meeting, then 20 it was certainly an error on my part not to correct 21 this. 22 Q. Had you told tie of your concerns as to the effect of -- 23 as at 15 April 2009, had you told tie as to your 24 concerns about the effect of Schedule Part 4 and the 25 changes that could arise under it? 45 1 A. My Lord, yes, I had told tie a year earlier about my 2 concern on the interpretation -- the potential 3 interpretation of Schedule Part 4. 4 Q. Now, I think you went on to take an opinion from Counsel 5 from Calum MacNeill; is that correct? 6 A. I did. tie did. I persuaded tie that Senior Counsel's 7 advice was necessary and we took it. 8 Q. What I would like to do is look at the briefing note 9 that you prepared for taking that advice, and the 10 document for that is CEC00962477. 11 It's apparent that you consulted with Mr MacNeill on 12 or about 1 June 2009. It appears that this brief was 13 prepared and sent out somewhere between 21 May and that 14 date of that consultation, very probably on 21 May; does 15 that broadly accord with your recollection? 16 A. I think I would need to rely on the documentation. So 17 yes. 18 Q. If we could just look at the terms of this, and the 19 introduction, it deals with a lot of issues, so I'm just 20 going to try and -- if we go to page 1. 21 Yes. If we could go to the fourth paragraph here: 22 "A limb of this Infraco positioning, and the Infraco 23 negotiations on other key risk fronts, developed into 24 the late inclusion of a more complicated Schedule Part 4 25 than was originally envisaged [see Counsel's Papers at 46 1 5]. This involved the Infraco requiring a long list of 2 pricing assumptions and notified departures which were 3 intended to shield the Infraco from certain risks that 4 it would otherwise assume under the main provisions of 5 the Infraco Contract." 6 I should ask, did you draft this? 7 A. No, I did not. 8 Q. Do you know who did draft it? 9 A. This was drafted by the contentious construction 10 department associate. I would have read it at the time, 11 certainly. And it was drafted by him and would have 12 gone out under the signature -- under the authority of 13 the senior construction litigation partner who was at 14 that point -- 15 Q. Who was that? Who was that? 16 A. Who was it? 17 Q. Yes. 18 A. Bill Bentley. 19 CHAIR OF THE INQUIRY: Sorry, was he the partner or the -- 20 A. He was the partner, and Keith -- the associate's name 21 was Keith Kilburn, my Lord. 22 MR LAKE: Another one of your colleagues gave advice on this 23 matter, Fenella Mason. What is her role within the 24 firm? 25 A. Fenella Mason was Head of Construction. Sorry -- you 47 1 are shaking your head. 2 Q. I was speaking to someone else. 3 A. At last I have seen you smile, Mr Lake -- 4 Q. Fenella Mason, when you say construction, was that 5 contentious or non-contentious? 6 A. Contentious -- there wasn't really a full -- irrelevant. 7 She was the Head of Contentious Construction, but 8 I'm not sure now, and I would need to be taken to firm 9 records, whether Fenella was still with the firm in the 10 date of this, which is June 2009. I think not. I think 11 Fenella had gone to work for another Scottish firm. 12 Q. If we look at the second page of this, we see there's 13 a heading right at the top, "What is Base Date Design 14 Information?". 15 So this is dealing with a separate issue of trying 16 to identify what the Base Date Design Information 17 actually is? 18 A. Correct. 19 Q. Then if we can jump forward through that, from that 20 part A, if we go to part B on page 8, we can see what it 21 says there is: 22 "The dispute surrounding the Base Date Design 23 Information ..." 24 CHAIR OF THE INQUIRY: Could we maybe just blow it up? 25 MR LAKE: Sorry, the upper half of the page: 48 1 "The dispute surrounding the Base Date Design 2 Information revolves around the Infraco assertion that 3 anything beyond very minor changes to the BDDI after 4 contract signature on 14 May will constitute a Notified 5 Departure under the agreement and therefore give rise to 6 an entitlement on the part of the Infraco to additional 7 time and money. 8 The Infraco has served a number of formal notices 9 under the Infraco Contract. Those notices purport to 10 give notice to tie that a tie Change has occurred - the 11 basis of the tie Change is said by the Infraco to be 12 that a Notified Departure (which is a Mandatory tie 13 Change) has occurred as a result of changes in design 14 from BDDI to IFC stages. This triggers section 3.4 of 15 Schedule Part 4. The difficulty with this 16 interpretation is, in the opinion of Instructing 17 Solicitors, that it results in the Infraco (and its 18 design consultant) enjoying absolute freedom to change 19 the design to serve their own purposes as opposed to 20 achieving compliance with the Employer's Requirements. 21 Instructing solicitors are of the view that the 22 changes in design from BDDI to IFC stages may not, of 23 themselves, give rise to an entitlement on the part of 24 the Infraco to additional time and/or payment." 25 Now, that last sentence, does that accord with the 49 1 advice that you were giving tie? 2 A. That I was giving tie? 3 Q. Yes. 4 A. At what -- at this time? 5 Q. At any time. (Pause) 6 A. Looking at this now, I'm not sure I would have phrased 7 that in that way. 8 Q. Is that not rather avoiding giving a straight answer to 9 the question? What you're telling us now is the advice 10 is quite different from what was recorded here. 11 A. I'm not trying to be awkward, my Lord. I'm thinking 12 about this because it's important, and I accept that 13 this -- this view expressed here is different to the 14 view I had -- I held. 15 Q. But you did not say anything to Mr Bentley or 16 Mr Kilburn, his associate? 17 A. I can't recall discussion on this particular point. And 18 I am -- yes, I am puzzled here and that's all I can say, 19 my Lord. 20 Q. Can we go on to page 10. If we can enlarge the upper 21 part of the page. We see a heading, "What constitutes 22 'normal design development' as intended by Schedule 23 Part 4?" 24 It says: 25 "Instructing solicitors' view is that: The inclusion 50 1 of the drafting phrase 'normal design development' in 2 Schedule Part 4 Price Assumption 3.4.1 should logically 3 be construed to imply that not every change in design 4 from BDDI to IFC will be sufficient to trigger the 5 Notified Departure mechanism. 6 Rather: there must be a standard, set by the 7 application of reasonable engineering judgment and 8 technical expertise, to any particular design change, 9 which represents the magnitude and type of amendment 10 that any design can undergo between preliminary and 11 final readiness before such amendment would be deemed 12 abnormal development." 13 A. Mm-hm. 14 Q. Did you draft this? 15 A. I think you have asked me that question, and the answer 16 is no. 17 Q. I'm just -- particularly that paragraph, because the 18 habit of saying "rather", single word, and then putting 19 a colon is something we see quite a lot in your 20 statement. Are you sure you didn't draft this? 21 A. I'm absolutely confident that I didn't draft this. 22 Q. Continuing through the rest of it: 23 "Instructing solicitors consider that refinement of 24 a design, rather than an alteration to an essential 25 element will, in most cases, be insufficient to be 51 1 deemed abnormal [design] development. The test should 2 be to establish what level of amendment would an 3 experienced designer anticipate to his preliminary 4 design in order to bring that design to a state where it 5 is ready to be issued for construction." 6 Now, that view there, that it in most cases would be 7 insufficient to be deemed abnormal development, is once 8 again quite inconsistent with the view that you're 9 telling us you expressed to tie? 10 A. Yes, this view here, I must say, appears to sidestep the 11 difficulty of the language in 1.3.4. 12 Q. Were you concerned that instructions were going to 13 Counsel to get a view that would guide the company, and 14 the views of your firm are not being accurately 15 expressed? 16 A. As I've said, I cannot recollect at this point reading 17 these instructions closely, but I did attend the first 18 conference with Senior Counsel. There were in fact two 19 consultations -- there was a lengthy consultation in 20 tie's offices attended by Steven Bell, Dennis Murray, 21 I think were the attendees, possibly someone else, 22 myself, Bill Bentley, Keith Kilburn, and what I would 23 say is these instructions do now, reading them, puzzle 24 me. 25 I would have -- if I had read this, I should have 52 1 intervened. However, I do believe that the actual 2 language in Schedule Part 4 on design development was 3 discussed in that consultation. 4 Q. We can see that the last paragraph for completeness 5 notes: 6 "The parties have exposed their basic arguments on 7 this matter in the correspondence which is included at [9] 8 in Counsel's papers. Counsel will note that considerable 9 emphasis placed by the Infraco on the Pricing Assumption 10 1 language excluding any amendment to design principle, 11 shape, form and/or specification." 12 A. Mm-hm. 13 Q. If we go then to look at the -- 14 A. Could I just observe, I think that to some extent keys 15 into what I have just said, and I find some comfort in 16 seeing that language there. 17 I know from memory from that consultation, that it 18 was a discussion in the round. So this was -- what sits 19 in the first couple of paragraphs in these instructions 20 didn't exclude or stop Counsel considering this issue 21 which is exposed in the last paragraph. 22 My Lord, may I ask for a comfort break? 23 CHAIR OF THE INQUIRY: We will have a break for 15 minutes. 24 That gives the shorthand writers a break as well. 25 We will resume again at 11.10. 53 1 A. Thank you very much. 2 (10.55 am) 3 (A short break) 4 (11.12 am) 5 CHAIR OF THE INQUIRY: You're still under oath. 6 MR LAKE: Mr Fitchie, could I ask you to look at a new 7 document, please. It's CEC00901460. You will see this 8 is headed "NOTE BY SENIOR COUNSEL for tie LIMITED". If we 9 go to page 7, we can see it's got Mr MacNeill's name 10 there and the date of 2 June 2009. 11 A. I see that. 12 Q. Do you recall seeing this at the time? 13 A. Yes, and I recall that tie were very anxious to get it, 14 and that as I mentioned earlier, my Lord, there was a -- 15 there was actually a second consultation, I believe. 16 Q. If you go back to the first page, Mr MacNeill begins by 17 saying: 18 "I refer to the consultation held at Citypoint 19 yesterday." 20 That would have been on 1 June. Were you at that 21 consultation? 22 A. Yes, I was. I can't recall now whether I was there for 23 the whole five hours, but yes, I was at the 24 consultation. 25 Q. Could we go to page 4 of 8, please, and the foot of the 54 1 page. You can see there's a heading, "BDDI to IFC stage 2 and "normal development and completion of design"." 3 A. Mm-hm. 4 Q. What Mr MacNeill has said is: 5 "Pricing Assumption 1 in Schedule Part 4 is that the 6 SDS Provider will not change certain things from the 7 BDDI, other than amendments arising from the normal 8 development and completion of designs. The Infraco, 9 therefore, is assumed to have taken into account, when 10 pricing, all the amendments to the design as at the 11 design freeze date which would result from the normal 12 development and completion of the designs." 13 Just to pause there, that's very similar to the 14 solicitor's view as expressed in the briefing note, 15 isn't it? 16 A. You're right. 17 Q. Mr MacNeill continues: 18 "I understand that the Infraco has maintained that 19 every change from the BDDI constitutes a Notified 20 Departure. However, such a claim ignores this important 21 qualification. 22 What constitutes "normal development and completion 23 of design" as opposed to alterations in "design 24 principle, shape, form and/or specification" which do 25 not arise from the normal development and completion of 55 1 design would require to be a matter of professional 2 opinion and, inevitably, judgment. 3 I have also been asked if there is any other 4 phraseology which would help an expert to determine 5 whether a change during this phase would or would not 6 arise from "normal development and completion of 7 design". I would be reluctant to put a gloss on the 8 phraseology, whether by supplementing the words of the 9 contract or paraphrasing, as that would invite the 10 criticism that the actual terms of the contract are not 11 being interpreted accurately." 12 So what we can take from this is that Mr MacNeill 13 appears to reject the approach that has been taken by 14 Infraco, and on the face of it appears to be accepting 15 the view that was put forward in the instruction or 16 brief that was provided to him? 17 A. My Lord, I have to agree with Mr Lake on this. 18 I don't ... 19 Q. Now, did you consider what action should be taken in 20 light of this opinion, you personally? 21 A. I think I had a discussion with Bill Bentley and 22 Keith Kilburn about this when the advice came. I do 23 recall discussing this. I don't -- I honestly do not 24 recall very much about this -- this consultation, 25 although it was five hours. This was -- sorry. Context 56 1 maybe is not important. 2 Q. Did you place reliance on this opinion -- 3 A. I was concerned the advice was incomplete and I believe 4 that is one of the reasons why there was further 5 consultation with the Senior Counsel on this. 6 Q. Did you get further detail of the advice during that 7 consultation? 8 A. I do not remember. 9 Q. Can you remember whether you -- sorry, before I ask 10 that, was this note passed to the client, to tie? 11 A. It would have been. Subject to the fact that the client 12 also wanted to have the further consultation, but yes, 13 it would have been. 14 Let me qualify that. I was not the prime mover at 15 this point on DRP. I have explained that. So it would 16 not have come off my desk because the idea here was to 17 have a separate unit within DLA Piper providing the 18 support for tie. 19 So I can't confirm that definitely the client got 20 it, but it would have been strange if tie had not seen 21 this. 22 Q. What reliance did you and/or tie place on the opinions 23 expressed by Mr MacNeill? 24 A. I am -- I was the client partner. And I have said 25 earlier that I am not somebody who attempts to shirk 57 1 responsibility. It was my responsibility to communicate 2 with tie on this, as well as Bill's. 3 I can only answer that question, I think, by having 4 a look at what happened as a result of the second 5 consultation. 6 Q. Is it the case that what started to happen is that the 7 dispute resolution procedures in respect of some of the 8 BDDI to IFC issues were pursued and were pursued all the 9 way to adjudication? 10 A. My best recollection, my Lord, is that there were six 11 adjudications between -- I think the first one was the 12 Hilton Hotel and I would place that -- dates evade me 13 now, but in 2009/2010, there was an adjudication 14 ongoing. The last one was the Dervaird decision -- that 15 I was involved in would have been the Dervaird decision. 16 I can't say for sure that disputes about BDDI were 17 pursued on this -- only on this basis. There were some 18 disputes that were to do with quantity surveying 19 matters, ie the size of the estimate or the delay in 20 receiving the estimate. 21 I'm not attempting to evade the question. I simply 22 can't answer with precision. 23 Q. Do you remember later on advice being taken from 24 Richard Keen QC? 25 A. I do. 58 1 Q. Were you involved in obtaining that advice? 2 A. I was instrumental in advising tie that advice should be 3 obtained. 4 Q. Could you look, please, at the advice that was provided. 5 Firstly we will look at an email. It's reference 6 CEC00648852. 7 If we go to a different document, it's reference 8 00648853. If you look, please, at a different version 9 of it, it should be CEC00356397. 10 Now, we can see a copy here of an opinion from 11 Senior Counsel for tie Limited, regarding the Edinburgh 12 Tram Network Infraco Contract and Dispute Resolution 13 Procedure. 14 Could we look within that, please, at page 9. We 15 can see this -- the bottom has got Richard Keen QC and 16 the date of 14 January 2010. Will you just take it from 17 me that you were sent a copy of it round about that time 18 by your partner, Bill Bentley? 19 A. I was sent a copy. 20 Q. Do you recall seeing this, or a version of this? It 21 presumably wouldn't have had Nick Smith's name on it? 22 A. I -- this is odd, but my recollections about this period 23 in January 2010 or around about this time of dispute 24 resolution matters are not strong, because somebody else 25 within the firm who was dealing with it. I -- may I see 59 1 the first page again, I'm sorry? 2 Q. Go back to page 1. 3 A. Thank you. 4 I honestly, sitting here this morning, I do not 5 recall seeing this opinion. The matter -- the 6 instructions which I prepared and which went to 7 Richard Keen were to do with the prospect of terminating 8 the Infraco contract. So I cannot say definitely I saw 9 this. 10 Q. Can you recall when you sought the advice in relation to 11 termination of the contract? 12 A. I -- this is -- the consultation date is in my 13 statement. At this point, no, I cannot. It would have 14 been in perhaps September this year, 2010. 15 Q. If you look at that front page, you will see Mr Keen 16 says: 17 "For convenience of reference I set out here the 18 issues which I am expressly instructed to address." 19 The first is: 20 "(1) Which interpretation of Pricing Assumption 1 … put 21 forward by the parties in the Adjudication process is to 22 be preferred." 23 Were you aware that at this time, the start of 2010, 24 that was still an issue? 25 A. Yes. 60 1 Q. You were aware of the outcome of the Carrick Knowe and 2 Gogarburn Bridge adjudications? 3 A. Yes. 4 Q. What was the reaction within tie to those decisions 5 going against them? 6 A. Difficult to describe. From my perspective, sort of 7 shrug of the shoulders, I would describe it. 8 Q. On tie's part? 9 A. Well, tie were disappointed, but that's what I would 10 say. You've asked me for tie's reaction. 11 I personally did not meet within tie to take their 12 reaction, my Lord, on these results. This would have 13 been the disputes team or the DRP team, Bill Bentley and 14 Keith Kilburn. 15 Q. What was your reaction to the loss of those two 16 adjudications? 17 A. I was disappointed, but I had never been -- I was 18 disappointed, and I was not -- I was not -- I was not 19 unduly impressed with the quality of expert evidence 20 that was put forward on tie's case in that -- in those 21 adjudications. And that is why later in this year, 22 I looked at instructing Robin Blois-Brooke as an expert. 23 Q. He's -- provides engineering expert evidence? 24 A. Correct. And he provided a -- one of the last things 25 I did before I went on leave in early November on ill 61 1 health grounds was to instruct Robin and I believe -- 2 sorry, I don't know how relevant this is to your 3 question, Mr Lake. I don't want to waste time. 4 Q. We will move on. The real point is: was there any 5 concern on your part as to what the effect of this would 6 be for all the other disputes that were arising under 7 the Infraco contract? 8 A. Yes, clearly. These losses meant Infraco would be 9 encouraged to take this position in the knowledge that 10 they had won adjudications. 11 Q. Did you give any advice as to what the possible 12 practical or financial consequences could be for tie of 13 that decision -- those decisions running against them? 14 A. The practical consequences were that the engineering of 15 the contract by Bilfinger Berger would be probably even 16 more aggressive than it had been. And the financial 17 consequences, my Lord, I was not in a position to assess 18 the financial consequences other than that they would be 19 negative. 20 I have to say in this period -- I have to say in 21 this -- in this period the -- there was a lot of -- 22 there was a lot of discussion between tie and BBS, 23 I understood, in relation to estimation. In other 24 words, there was negotiation around trying to reduce the 25 claims being made or the Notified Departure claims. 62 1 There was an effort being made at this point, 2 shortly after the arrival of Tony Rush within tie, to 3 get heads together in order to get solutions on 4 exaggerated estimates, and I believe also that some of 5 the adjudications were liability awards, in essence 6 where there had been an adverse finding, but the 7 adjudication had found for less money than the 8 contractor had claimed. 9 So there was, if you like, although losing was ugly, 10 there was a resolution on that particular dispute. 11 Q. Did losing the principle of adjudication that these 12 things were notified departures, did that bring home the 13 fact that the effect of Schedule Part 4 was to make 14 a substantial change to the risk allocation in the 15 contract? 16 A. Yes. 17 Q. Did you discuss that with people at tie? 18 A. Yes, I did. 19 Q. With whom? 20 A. Predominantly with Steven Bell, because Steven Bell was 21 the person or one of the two parties who had had 22 discussions on the effect of Pricing Assumption 1.3.4 23 and these various clauses in -- as I say in my 24 statement, starting in early February 2008. 25 And Steven had -- talk in my statement about 63 1 Steven's work ethic. But Steven had taken a decision, 2 I believe, not to commence DRPs, and I felt that this -- 3 you have asked me these -- you have asked me a series of 4 questions earlier today, my Lord, about what I thought 5 the effect of DRP would be, and in my opinion one 6 thing -- perhaps one thing that was missing from my 7 evidence was if you're going to get bad news, get it 8 early. 9 Q. Returning to Mr Keen's opinion and look at page 8, 10 please. 11 A. Yes. 12 Q. Paragraph 11. This says: 13 "The first issue submitted for my opinion is as 14 follows: Which interpretation of Pricing Assumption 1 … 15 put forward by the parties in the Adjudication process 16 is to be preferred?" 17 The quite blunt opinion is: 18 "In my opinion the interpretation put forward by 19 Infraco is to be preferred to the interpretation put 20 forward by tie." 21 A. I see that. 22 Q. What was the reaction to that on your part? 23 A. I had to accept what Senior Counsel was saying, but 24 I still felt the question of the expert opinion was 25 critical. 64 1 Q. What would the expert opinion relate to? 2 A. What was normal design development and completion and 3 what were changes or the -- what was the meaning of the 4 language to do with the evolution of design and -- to -- 5 from BDDI essentially to IFC, and this exclusionary 6 language about -- I think we know this language by 7 heart, but the exclusionary language, what has been 8 described as the circularity in that clause. 9 Q. That's what I was coming to. If there is that 10 circularity, what is the relevance of normal design and 11 development because it's put in in one part and taken 12 out in the other. So why would expert evidence make any 13 difference? 14 A. I see your point. But I still felt that -- you say why 15 would expert evidence not make any difference. If legal 16 argument -- if there was a legal argument structured to 17 attack that language, and an expert who could give 18 a view on what changes to design shape, form, scope -- 19 sorry, I don't have the language now. That was what 20 I was looking at. And I understand what you're saying 21 to me, my Lord, which is it would have made no 22 difference, but I had a different opinion in the 23 trenches at that point. 24 Q. Did you have discussions with tie about the effect of 25 this opinion, Mr Keen's opinion? 65 1 A. I do not recollect, but I am certain that the 2 construction team would have. 3 Q. Who do you mean by the construction team, Mr Bentley and 4 Mr Kilburn? 5 A. Correct. I'm sorry, my Lord, in relation to this set of 6 instructions -- let's leave it. That's my answer, 7 my Lord. 8 Q. You continued to act for tie in relation to the tram 9 project throughout 2010? 10 A. Correct. 11 Q. What difference did having this opinion make to the 12 approach that they took to the contract? 13 A. I feel that that is a question that tie needs to be 14 asked, or those people who were making decisions within 15 tie. 16 By this time Tony Rush had arrived and had formed 17 very robust views on how to try and deal with the 18 impasses which were still sitting there in relation to 19 Notified Departures. And I think part of my answer to 20 what tie's view was is that we were instructed to assist 21 Tony Rush in all ways possible to push forward on what 22 was called Project Notice and Project Carlisle, and 23 Project Notice, I think, is known, was the use of -- the 24 analysis of notified departures where estimates had not 25 been provided properly or estimates were grossly 66 1 exaggerated, or in some cases during 2010, there was 2 simply a refusal on the BBS's very large quantity 3 surveying team down at Edinburgh Park to provide 4 an estimate. 5 And there was actually correspondence about this in 6 2009, where BBS said that Clause 80 wasn't working, it 7 was too difficult. It was too difficult, it was too 8 onerous on them in relation to production of estimates. 9 So that was one reason why Tony took the view that the 10 way to push Bilfinger Berger contractually was to use 11 the contract terms and build up a case that there was 12 a serial breach of the obligation to provide proper 13 estimates in a timely way under Clause 80. 14 So the change in attitude from tie came with the 15 arrival of Tony Rush. 16 Q. It is a matter which, as you say, can be raised with the 17 people at tie, but are you aware of this advice from 18 Senior Counsel to the effect that the Infraco argument 19 was to be preferred over the tie one, had any effect on 20 their thinking and their -- 21 A. I'm not aware -- I'm sorry if I wasn't clear. I'm 22 neither aware who at tie would have discussed this 23 advice, if indeed you have -- I have taken it that this 24 is a piece of advice that came back as a result of 25 instruction from DLA Piper. 67 1 Q. Yes. 2 A. That is correct. Do we have the instructions that go 3 with it? 4 Q. I'm not proposing to look at them just now. 5 A. But we do have them? 6 Q. Yes. 7 A. Might I have the reference for that. 8 Q. Not offhand, I'm afraid, from memory? 9 A. I'm sorry, I didn't hear. 10 Q. Not from memory, I'm afraid. 11 Could I ask to you look at another document, please. 12 It's CEC00005337. 13 You can see here a document headed "COMMENTARY ON 14 VARIOUS MATTERS REFERRED TO DISPUTE RESOLUTION PROCEDURE 15 UNDER THE INFRACO CONTRACT". Did you draft this 16 document? 17 A. Can I see -- I'm sorry, my Lord. Can I see some other 18 pages? This is a DLA document? 19 Q. Yes. 20 A. No, I did not draft this document. 21 Q. Do you recall having the contents of this document 22 discussed with you? 23 A. I do not. We are -- could I see the end of the 24 document? 25 Q. Of course. 68 1 A. Thank you. And we're -- I have to say this morning, 2 I don't recollect discussing this document. I'm sorry 3 not to be more helpful. 4 Q. I won't ask you any questions about that then. 5 I want to turn to a different matter now. Did you 6 give advice to anyone at tie about confidentiality 7 surrounding the outcome of the Dispute Resolution 8 Process? 9 A. I didn't -- I do not recollect giving that advice. 10 Q. In particular, did you ever give advice to the effect 11 that people at tie were not permitted to disclose 12 adjudication decisions to Council officials and 13 councillors? 14 A. Absolutely not. There was an awareness at tie, a very 15 deep awareness, about leaking of documents and the whole 16 freedom of Scotland -- freedom of Scotland, yes. 17 Freedom of Information (Scotland) Act, and a process 18 evolved which I was aware of in terms of looking at 19 documentation which might be accessible to the public. 20 I never gave any advice to anybody at tie, nor did 21 anybody at DLA Piper give advice, that councillors or 22 the Council should not be privy to information about the 23 DRP. 24 Q. We've previously had some discussion about Clause 80 of 25 the Infraco contract. 69 1 A. Yes. 2 Q. You set out in your statement the circumstances in which 3 at the end of April 2008, Geoff Gilbert from tie gave 4 you a new draft of that? 5 A. I do. 6 Q. Mr Gilbert has no recollection at all of that. Could 7 you explain that? 8 A. I find that extremely surprising. 9 Q. Because in the papers that have been provided by DLA, we 10 don't have any copy of a draft provided by Mr Gilbert to 11 you. Are you aware of that? 12 A. I am aware, I think, of a letter that was sent -- excuse 13 me if this is imprecise, but Messrs Brodies on my behalf 14 after they contacted me sent a letter explaining some of 15 the circumstances here, and I can elaborate on that if 16 that's what you would like. 17 Q. Even after you say you drafted that, there's never an 18 email to Geoff Gilbert or anyone else at tie to 19 say: here is the version of -- here is the redrafted 20 version of Clause 80, or here is the contract with the 21 new Clause 80 that you requested. 22 A. Well, I put this in context of time. The document which 23 arrived with me from Geoff Gilbert, I would time close 24 to 22 April 2008, at which time it had been agreed by 25 the parties that there would be a moratorium on putting 70 1 more material into the contract. 2 I believe that the document that came to me from 3 Geoff Gilbert was in fact Pinsent Masons' drafting of 4 Clause 80 which he had -- had been sent a copy of that, 5 and had worked on it. That is why it's not on the 6 DLA Piper system. 7 I would like to refer the tribunal to a set of notes 8 which Geoff Gilbert made relating to a meeting which he 9 had on 6 March 2008 with Herbert Fettig, who is the 10 German Senior Director of Siemens in Erlangen, and 11 Suzanne Moir. 12 If you look at those notes, you will see a number of 13 things. One is that Geoff invited Suzanne Moir to 14 present drafting on Clause 80, and the date of that is 15 6 March. Nobody from DLA Piper was present at that 16 meeting. 17 He also agreed to the amendment of Clause 4.3 in the 18 Infraco contract, and he said that he was going to 19 redraft Schedule Part 4. This was still in the 20 discussion period of Schedule Part 4. 21 So the absence of a document which represents 22 drafting from Geoff Gilbert to me is in part explained 23 by that, and as to here is the redrafted Clause 80, we 24 were right up to the brink of closing the contract and 25 having a contract which could be proofed properly, and 71 1 my best recollection is that that drafting, after I had 2 discussed it with Geoff Gilbert, went into the contract 3 as the agreed -- the client agreed version, and my 4 evidence is clear that I had discussions with 5 Geoff Gilbert and explained with precision what 6 Clause 80 now meant as far as tie's position was 7 concerned. 8 That, my Lord, is my evidence on that. 9 Q. You see, there's no email round about that time -- 10 that's 2008 -- or even later, which refers to that 11 Clause 80 having been drafted by Mr Gilbert. Even 12 within the tie system. 13 A. Why -- why -- why would there be if he was working off 14 a document that had been given to him by Pinsent Masons 15 and discussed with Richard Walker? And may I add in 16 my -- sorry. I interrupted you. 17 Q. No, carry on. 18 A. Who goes first? Me? 19 Q. Yes. 20 A. I believe in my statement I make it -- I'm sorry. 21 In the communication that was sent, my Lord, to the 22 Inquiry about this, I made the point that nobody at 23 DLA Piper, least of all myself, at that point would have 24 been addressing Clause 80 and amending it and agreeing 25 things. This was very shortly before closeout, 72 1 and I would also make the point that Clause 80 was 2 a clause which I had specifically included in the 3 Rutland Square Agreement as being a no-go area, and it 4 sat there, a no-go area, with a red line -- a line in 5 the sand as being something that Infraco had agreed not 6 to revisit. 7 It sat there until basically this draft arrived with 8 me. I knew that Richard Walker had made representations 9 to Geoff Gilbert about something in Clause 80 that 10 Bilfinger Berger were concerned about. But I had no 11 involvement in those discussions at all, and I believe 12 that the note which I have referred you to, 13 Geoff Gilbert's handwritten note of that meeting with 14 Suzanne Moir and Herbert Fettig, shows the genesis of 15 that document which came to be the amendment. There was 16 an invitation -- I'm sorry. There is a note of what 17 people are going to do, and one of them is that Pinsents 18 are going to redraft, it says Clause 80.24, but it 19 didn't -- what came to me was not a redraft of 20 Clause 80.24. It was a revamp of what I had rejected on 21 tie's behalf earlier, saying Clause 80 is a no-go zone, 22 we may need to make some amendment, as I say in my 23 statement, to incorporate -- to make sure definitions 24 match up with mandatory change, with, I believe, some 25 compensation events. 73 1 But that's it, gentlemen. There's to be no further 2 messing with the contract. 3 That is the sequence of events that I remember, and 4 I'm absolutely clear about it. There was no instruction 5 for DLA Piper to amend Clause 80 at this point. None. 6 Q. At which point, are you saying? At the time of the 7 Rutland Square Agreement, when you -- 8 A. No, Rutland Square Agreement all the way through this 9 period. Clause 80 did not get negotiated at all. It 10 was off-limits and then it came. 11 Q. Could you look, please, at document CEC00619254. 12 Look at the upper half. 13 You can see it's an email from you? 14 A. Yes. 15 Q. To Tony Rush, Steven Bell and Dennis Murray, copied to 16 other people within tie and Brandon Nolan at McGrigors; 17 do you see that? 18 A. Yes. 19 Q. Dated 3 March, and the heading is "Clause 80 and other". 20 What you say in the text is: 21 "Gents, all, please find attached: 1. one element of our 22 advice (of which there is more) given in November 2008 23 on Clause 80.13 in the context of tie's considerable 24 efforts to see if the log jam over BSC's approach could 25 be broken. I believe this note contains a practical and 74 1 succinct explanation of tie's position." 2 A. Yes. 3 Q. We can read past 2, which is just the BSC letter, but it 4 continues: 5 "I will review our other previous advice and see how 6 (if needed) best to summarise this - Tony's fresh 7 opinion on this is very important, as is Brandon's. 8 What struck me on the call this morning was the 9 reference to DLA by Richard Walker in the context of 10 Clause 80. He is dead right. It may not be elegant - 11 because it was heavily negotiated - but we did insist on 12 the final words in Clause 80.13 (bear in mind that there 13 had been various attempts by Bilfinger to entirely 14 recast Clause 80) and there was a heated argument about 15 this at the time - precisely I imagine because Bilfinger 16 recognised it could be used to unpick their desired 17 approach." 18 A. Mm-hm. 19 Q. Now, surely if the wording of Clause 80 had been 20 provided by Mr Gilbert at the last minute, and 21 particularly if it reflected Pinsents’ drafting, that 22 would have been the place to say it? 23 A. It might have been, but I was not concentrating on the 24 precision of where the drafting for Clause 80 came from. 25 What it says is it was heavily negotiated. What 75 1 I meant by that was that it -- Pinsents came with their 2 draft. I had a long discussion with Suzanne Moir about 3 why it was not acceptable, and it was quite a heated 4 discussion. And what I got out of it -- sorry. That 5 then ceased, and I would place that discussion some 6 point in early April, and I come back to the proposition 7 that there was then -- there had been discussions -- 8 immediately prior to that there had been discussions 9 about consents, and -- consents and compensation events 10 and SDS design. 11 I'm drifting off subject. The point I wish to make 12 about this statement here, that this does not contradict 13 anything I have said. 14 The final words in Clause 80.13, and this is the 15 language, "unless tie otherwise directs", was something 16 that I tried to salvage out of this document, to give 17 tie a chance to use that in order to instruct work. 18 Q. I'm more interested in the fact you say "it may not be 19 elegant because it was heavily negotiated". That would 20 tend to indicate that the wording perhaps is a little 21 bit clunky, precisely because it was the input of 22 several different parties? 23 A. No, the concept here that I'm talking about, "it may not 24 be elegant because it was heavily negotiated", is the 25 final language in that Clause 80.13, not the entire 76 1 Clause. And I insist on that. And I know that is true. 2 Q. I want to go back now to an issue relating to reporting 3 to the Council at close. 4 You have explained your view of Schedule 4 -- 5 Schedule Part 4 and the effect it had, and that you gave 6 advice on that matter to people within tie. I think 7 that's evidence you gave yesterday. 8 A. Yes. 9 Q. I think you expressed in your evidence, and also in your 10 statement, the effect that that would entitle Infraco to 11 come back and seek additional money where there was 12 a departure from the assumptions, that the departures 13 were likely and the result was a transfer of risk -- 14 A. Time and cost responsibility, yes. 15 Q. What I want to be clear about is just to whom that 16 advice was given within tie. I may not have asked this 17 very clearly yesterday, but I want to be quite clear. 18 Who did you give that advice to? Did you, for example, 19 give it to Steven Bell? 20 A. I think my statement is clear on who I gave the advice 21 to and when. And I also gave -- and the sequence of 22 what was happening. 23 There was a meeting which I deal with in my 24 statement which happened on 9 May. This was immediately 25 after the meeting with Mr Gallagher about the bonus, 77 1 and I describe where that meeting took place and who was 2 present, and I repeated that advice about Schedule 3 Part 4 in that meeting, and present in that meeting were 4 Steven Bell, Geoff Gilbert, Jim McEwan and 5 Dennis Murray, and possibly also Graeme Bissett partly. 6 I cannot honestly remember. 7 But the other gentlemen were in that room with me, 8 and they didn't like the advice I was giving, and after 9 I had given that advice, along with other commentary on 10 what was going on, which was a meeting where Bilfinger 11 were presenting a claim for an extra 17 -- I believe 17 12 or 19 million, which eventually came to be the agreement 13 known as the Final Price Agreement. But I expressed 14 in -- I expressed my concerns about SP4 in that meeting, 15 and I think I'm clear in my statement about when -- 16 within reason, when and to whom I gave my views on 17 Schedule Part 4. 18 I must stress that the individuals who were 19 receiving that advice at tie had been the people who 20 were negotiating Schedule Part 4 on their own, all the 21 way through this period from, as we've looked at this 22 morning, January 2008 until the closeout, the effective 23 closeout of that document, which was probably in March, 24 20, 22 March. 25 That is my response, my Lord. 78 1 Q. In terms of the people who negotiated it, the names we 2 have seen coming up are Geoff Gilbert, Jim McEwan -- 3 A. Matthew Crosse. 4 Q. My mind has just gone blank on the other name? 5 A. Dennis Murray. 6 Q. Yes, thank you. 7 What I'm interested in is other people. 8 Now, you have said Graeme Bissett might or might not 9 have attended the meeting on 9 May. Did you give the 10 advice to him any other time? 11 A. Graeme, I believe, at that point -- I'm going to give 12 the answer first because I know that you'll like that, 13 and then I'm going to put some context around it. 14 CHAIR OF THE INQUIRY: It's not that we like it, Mr Fitchie. 15 It's the rules. 16 A. It's the truth and the rules, yes. 17 I do not recall specifically giving that advice to 18 Graeme Bissett. However, Graeme Bissett was not 19 a reporting line for me as an adviser on the project 20 contract or the contract team. Graeme Bissett held, 21 I believe, the title of strategic -- Corporate Strategy 22 Director, and Graeme Bissett at that point, I believe, 23 was on a two or possibly -- possibly a two or three-day 24 consultancy to tie. So he was not present at many of 25 the meetings, and he certainly did not attend 79 1 negotiation sessions. 2 So imparting that information to Graeme didn't seem 3 to me something that would change matters. 4 The people who received the advice were Steven Bell, 5 who was Project Director, Engineering Director or acting 6 Project Director, and Geoff Gilbert, who had been 7 responsible for negotiating the document. 8 Yesterday, my Lord, I was asked did I -- essentially 9 the question: did I check out Geoff Gilbert and 10 Bob Dawson's credentials and my answer was no. I would 11 like to add to that answer that I believe it's 12 reasonable for the project lawyer to assume that 13 a vehicle, a company that has been set up in a specific 14 project management role, would have expertise at 15 Commercial Director level to understand what contract 16 drafting meant, and to draft it. 17 MR LAKE: Did you, when you were giving that advice to 18 Steven Bell, to Geoff Gilbert, have any discussion with 19 them as to whether or not it would be passed on to other 20 members of the management, including, for example, 21 David Mackay, Willie Gallagher or Neil Renilson? 22 A. Answering in the order that you've mentioned, I cannot 23 remember a specific discussion with Steven Bell and 24 Geoff Gilbert who were at project directorate level. 25 I think it is reasonable to assume that they would 80 1 have discussion with their management. Bear in mind 2 that I wasn't in charge of how tie communicated 3 internally between its units, between its departments, 4 and I have said in my statement that there were 5 difficulties with that, definitely, which I observed 6 myself. 7 I believe that I had a discussion with 8 Willie Gallagher about Schedule Part 4 at the 9 Rutland Square meetings, when the protocol was joined 10 up, and I have said that in my statement, and I have 11 said why I didn't think he was taking it on board. 12 As far as Neil Renilson is concerned, the only 13 contacts I had with Neil were early in the project when 14 Lothian bus was essentially an objector to the tram 15 project. So I did not feel that -- I had no direct line 16 of responsibility in terms of giving legal advice, 17 passing legal advice to Neil Renilson. 18 David Mackay, who at that point was the chairman of 19 TEL, again, I had no reason to believe that I needed to 20 tell TEL about this information. That is my 21 recollection, and I hope I have answered the question 22 adequately. 23 Q. You have. Just looking then at Willie Gallagher, 24 Steven Bell, Geoff Gilbert and, query, Graeme Bissett, 25 they're the people who might have had direct advice from 81 1 you to the effect -- as to the effect of Schedule Part 4 2 on the transfer of risk? 3 A. Within tie, yes. 4 Q. Within tie. 5 A. Yes. 6 Q. They then would have been in a position to know that 7 there had been a shift in risk between October 2007 and 8 the contract close in May 2008? 9 A. I am absolutely clear that they would have had that -- 10 they would have formed that opinion without my advice. 11 Geoff Gilbert had been essentially the architect of 12 tie's position in Schedule Part 4. 13 I should also include Jim McEwan. Jim McEwan -- 14 Jim's role was somewhat unclear to me, as I said 15 yesterday, but Jim attended the meetings on Schedule 16 Part 4, and Jim was the person who asked me the email 17 question about the effect of Schedule Part 4 after V26 18 to V28. 19 So Jim obviously understood what Schedule Part 4 was 20 doing as prepared by tie commercially. 21 Q. So these people would have been aware that the statement 22 in the reports going to the Council at contract close 23 that there had been no shift in risk since October 2007 24 was untrue? 25 A. So far as Graeme Bissett was concerned, I can't -- 82 1 I don't know. Certainly if he had -- if he was in the 2 meeting room downstairs on the first floor of CityPoint 3 on 9 April as a break-out from that meeting with BBS -- 4 Q. Did you mean 9 May there? You said 9 April. Did you 5 mean 9 May? 6 A. 9 -- 9 April was the meeting I was talking about. We're 7 okay with that? Yes. Okay. 8 Q. So you were talking about -- 9 A. Who had knowledge. I cannot -- I will not attribute 10 full knowledge to Graeme on this because he was not 11 involved in any of the contractual negotiations. In 12 fact, I have mentioned in my statement that I found it 13 odd that the senior figure within the company who was 14 most remote -- who was remote from these transactions, 15 these commercial decisions, was drafting the close 16 report. But that was a delegation that came from, 17 I assume, Willie Gallagher. 18 So far as Jim McEwan was concerned, Jim clearly 19 understood what Schedule Part 4 was doing because he 20 wrote me that email and asked for my advice. Without 21 knowing how Schedule Part 4 was going to work, that 22 email would not have been possible. 23 I am confident that Geoff Gilbert and Steven Bell 24 both understood what my advice had been, and even 25 without my advice, they must have understood it because 83 1 they were -- they were present in virtually every 2 discussion on Schedule Part 4, and Geoff Gilbert had 3 been -- he had been the draftsman on the Wiesbaden 4 Agreement, and he had been the draftsman and negotiator 5 on virtually all of Schedule Part 4 on tie's side, and 6 he had -- shortly after the Wiesbaden Agreement, he had 7 had a series of discussions with Scott Fitzgerald which 8 would -- I believe try to modify what became Pricing 9 Assumption 1.3.4, and I had mentioned that I had not 10 been able to find that email traffic, but I was shown 11 it, or came into knowledge of it, I believe, during 12 Stewart McGarrity's history check of tie archives. 13 Those emails exist. So I would not accept -- 14 I would find it incredible if either of those gentlemen 15 said that they did not understand the effect of Schedule 16 Part 4. 17 CHAIR OF THE INQUIRY: I think the question was: would the 18 people mentioned, putting aside Mr Bissett, that would 19 be Willie Gallagher, Steven Bell, Geoff Gilbert and 20 Jim McEwan, possibly -- 21 A. I would include Dennis Murray, I'm sorry, my Lord. 22 CHAIR OF THE INQUIRY: Would they have been aware at the 23 time of the letters in May to the Council that the 24 information being given to the Council was inaccurate? 25 A. The Close Report? 84 1 CHAIR OF THE INQUIRY: Yes. 2 A. My Lord, I was not party to who was -- yes, they would 3 have known that information was inaccurate. 4 CHAIR OF THE INQUIRY: It's pretty obvious, isn't it? If 5 you say you have told them before then, and they are 6 party to the close report, they must be aware that it's 7 not true. 8 A. Yes, my Lord. 9 CHAIR OF THE INQUIRY: Can you just listen to the question, 10 please, and answer it as directly as possible. Mr Lake. 11 MR LAKE: Going back then to May 2008, you would have been 12 aware that they were knowingly providing false 13 information to the Council. 14 A. You've used a strong word, "false information". And 15 you've said, I believe, "knowingly providing false 16 information to the Council"; I would have been aware 17 that they were knowingly providing false information. 18 I would hesitate to go as strong as that agreeing 19 with you. I agree that the information in those -- in 20 those close reports was deficient. 21 CHAIR OF THE INQUIRY: Well, it's more than deficient, isn't 22 it? It wasn't accurate. 23 A. Yes, my Lord, it was not accurate. 24 CHAIR OF THE INQUIRY: It wasn't true. 25 A. Correct. 85 1 CHAIR OF THE INQUIRY: So it's false. 2 A. Yes. 3 CHAIR OF THE INQUIRY: Is that right? 4 A. I agree with you, my Lord. 5 MR LAKE: Because -- you hesitate there because you know the 6 legal significance of knowingly providing false 7 information to someone, don't you? 8 A. I do. 9 Q. Because it amounts to fraud, doesn't it? 10 A. It potentially is a criminal offence, yes. 11 Q. And you -- 12 A. And a civil one as well. 13 Q. And you were aware of that in May 2008 -- you were aware 14 that's what was happening? 15 A. I read those documents. They were provided to me. 16 I had to form a view as to whether they were fit for 17 purpose. 18 My Lord, I have answered your question as to whether 19 that information was false. I am unwilling to accept 20 the question to me that I knowingly let this go. 21 CHAIR OF THE INQUIRY: Well, I think yesterday you may have 22 accepted that you knew that the information wasn't -- 23 A. Yes. I did, my Lord. 24 CHAIR OF THE INQUIRY: -- accurate when it was being 25 submitted to the Council. 86 1 A. I did. 2 CHAIR OF THE INQUIRY: So does it not then follow that you 3 knowingly permitted this to be submitted to the Council 4 in the knowledge that it was false? 5 A. What I was -- 6 CHAIR OF THE INQUIRY: Could I just ask you to address the 7 question. 8 A. Yes. I allowed that information to go to the Council 9 together with DLA Piper's letter which we've discussed. 10 I think that's my answer. 11 MR LAKE: Thank you, my Lord. I've got no more questions 12 for Mr Fitchie. 13 CHAIR OF THE INQUIRY: I think a number of parties have 14 indicated that they have questions, but a lot of them 15 seem to have been covered. I don't know whether, 16 Mr Martin, do you have any? 17 MR MARTIN: My Lord, I'm very much obliged to Inquiry 18 Counsel who has indeed covered virtually all that I had 19 included in the application of the Council. 20 I wonder, my Lord, if I might suggest that if there 21 are others to ask questions, and I may then have a few, 22 if I could suggest respectfully that the Inquiry allows 23 others to ask the questions, given the significance of 24 this witness to the Council, so that I ask my questions 25 last? I appreciate it's a matter for my Lord, but 87 1 I would make that request. 2 MR DUNLOP QC: On behalf of DLA Piper I have certain 3 clarifying questions I would like to ask. I have not 4 submitted notification in advance because the points 5 arise in a way that I couldn't have anticipated. 6 I would respectfully ask that I get to go last, 7 given the significance of this witness for my clients. 8 CHAIR OF THE INQUIRY: Well, this is not court proceedings, 9 Mr Dunlop, as you appreciate. Are you effectively 10 seeking to re-examine the witness? 11 MR DUNLOP QC: No, my Lord. I seek to clarify in particular 12 three particular points. 13 The witness was asked about certain discussions with 14 certain people regarding Notified Departures, and it was 15 suggested that their evidence might be different from 16 that which the witness deponed to. I wish to explore 17 that with him. 18 It was put to the witness that he hadn't advised 19 various people as to the risks of notified departures 20 and I seek to explore that briefly with him. 21 There was questions this morning being put to him 22 regarding his involvement in the instruction of Counsel 23 and I wish to clarify that point with the witness. 24 None of those, my Lord, could have been anticipated 25 other than as a result of what has happened in the 88 1 course of the last day and a half. 2 CHAIR OF THE INQUIRY: Thank you. 3 Mr Fairley, I think you have also indicated you have 4 some questions. 5 MR FAIRLEY: My Lord, I have a couple of matters of 6 clarification that essentially arise from the questions 7 I have previously given intimation of. I'm quite happy 8 to go first if my learned friends Mr Martin and 9 Mr Dunlop wish to keep their powder dry until they have 10 heard what I have to say, but I doubt anything I have to 11 say will materially affect them. 12 CHAIR OF THE INQUIRY: I don't think anyone else has 13 questions. 14 Mr Fairley, if you go first. 15 A. My Lord, may I have five minutes to avoid an accident? 16 CHAIR OF THE INQUIRY: Certainly. 17 I think we will adjourn for five minutes. 18 (12.13 pm) 19 (A short break) 20 (12.17 pm) 21 CHAIR OF THE INQUIRY: You're still under oath, Mr Fitchie. 22 Yes, Mr Fairley. 23 Examination by MR FAIRLEY 24 MR FAIRLEY: Mr Fitchie, you were taken by learned Inquiry 25 Counsel to a note prepared by Calum MacNeill QC and 89 1 I think we saw in that a neat summary of the position 2 that was being taken by Infraco in relation to 3 Schedule 4. 4 If I have understood Mr MacNeill's summary of that 5 correctly, the position at that time that was being 6 taken by Infraco was that any departure from or addition 7 to Base Date Design Information automatically 8 constituted a Notified Departure. Was that your 9 understanding of the question as it was put to 10 Mr MacNeill? 11 A. Yes. 12 Q. That being a relatively extreme position, when we come 13 to the point when an opinion is taken from Richard Keen, 14 he is asked to consider, is he not, whether there are 15 any exceptions to that very extreme position, or whether 16 it is as stark as Infraco would have it? 17 A. Mm-hm. 18 Q. If we look back at the -- if we could look back at the 19 opinion, please, that was provided by Richard Keen, and 20 the document reference for that I will find in just 21 a moment. 22 The Inquiry reference for that is CEC00356397. 23 I'm sorry, is that document available? 24 Before I look at the content of that document, 25 Mr Fitchie, are you able to explain why it bears 90 1 a watermark that contains the words "reference 23 2 Nick Smith"? 3 A. No. 4 Q. Do you know who Nick Smith was? 5 A. Yes. 6 Q. He was a lawyer within City of Edinburgh Council Legal; 7 is that right? 8 A. Correct. I take it that this document was provided to 9 Nick Smith because the decision to instruct Richard Keen 10 at this point was a decision that tie had, on advice 11 from DLA Piper, given that I am accepting that this is 12 a document which came -- came to DLA Piper, I am 13 accepting that. 14 I don't know why the document is headed "Draft", and 15 the reason it went to Nick Smith is because at that 16 point, and we are, I think, in mid-2010 -- 17 Q. January 2010? 18 A. Thank you very much for the correction. DLA Piper were 19 under instruction from tie to provide CEC with legal 20 advice that was being taken, and for that matter, any 21 reports which we produced. So if this is indeed 22 a DLA Piper -- addressed to DLA Piper instruction, it 23 would have gone to Nick Smith. 24 As I say, I have no knowledge of why it says "draft" 25 on it. That clearly is something that Counsel put on 91 1 the opinion. 2 Q. Yes. 3 Should his Lordship understand then that in 4 colloquial terms, CEC Legal were being kept in the loop 5 of legal advice that was being sought at this time? 6 A. That is correct. 7 Q. Now, one of the questions that Richard Keen, who was at 8 that time the Dean of the Faculty of Advocates was 9 asked, was whether the reasoning of the Adjudicator in 10 the Carrick Knowe and Gogarburn adjudications was 11 correct? 12 A. Mm-hm. 13 Q. Taking this as shortly as I can, the opinion which is 14 expressed in this document, in a passage you were not 15 taken to, is that the adjudicator's reasoning was 16 incorrect. Do you recall that? 17 CHAIR OF THE INQUIRY: It might be easier, Mr Fairley, if 18 you take the witness to the passage. 19 MR FAIRLEY: Yes. If we go to page 5 of this document, in 20 fact it's easier if we start at page 4, I'm sorry. 21 At page 4 Senior Counsel looks at paragraph 6 there 22 at the Adjudicator's analysis of the issue, which he 23 describes as having "a superficial attraction", more 24 particularly -- "a superficial attraction when one comes 25 to consider the provisions of Schedule Part 4 and more 92 1 particularly the definition of terms in that Schedule". 2 He then summarises the Adjudicator's reasoning in 3 paragraph 7. I don't think I need take you all the way 4 through that, because if we then move on to paragraph 8, 5 on the next page, which is page 5, he concludes that the 6 result of the Adjudicator's analysis would be that any 7 part of the design of the Edinburgh Tram Network for 8 work required in terms of the Employer's Requirements 9 which was not incorporated in the base design 10 information drawings issued to Infraco to 25 November, 11 would, on the Adjudicator's analysis, constitute 12 a Notified Departure. 13 So in paragraph 8 there he summarises the 14 Adjudicator's reasoning in the Carrick Knowe and 15 Gogarburn adjudications for finding against tie; do you 16 see that? 17 A. I do. 18 Q. He says in the last two lines of that paragraph: 19 "That conclusion, whatever its superficial 20 attraction, is in my opinion wrong." 21 Do you see that? 22 A. I do see that. 23 Q. So it would appear that what tie are being told by the 24 Dean of Faculty in January 2010 is that the reasoning of 25 the Adjudicator in the Carrick Knowe and Gogarburn 93 1 adjudications is wrong? 2 A. Mm-hm. 3 Q. Do you remember seeing this or being -- of that view at 4 the time, that that was what Richard Keen was saying? 5 A. I think if we look -- I cannot give you the reference 6 for it, and I cannot give you the exact timing of it, 7 but there is a document where DLA Piper, on behalf of 8 tie, drew up an analysis of where the adjudications had 9 taken us; and one part of that analysis, and I do refer 10 to it in my statement, was the position that putting it 11 very simply, the position on -- following this opinion, 12 and agreeing with it, was that if a design didn't exist 13 at 25 November 2007, and it was required to deliver the 14 employer's requirements, then that would not be -- 15 sorry. 16 Yes. So this is -- the design which was not 17 existing at 25 November, but it was required to deliver 18 the Employer's Requirements, wouldn't be a Notified 19 Departure, which is what Richard Keen QC is saying here. 20 I remember that very distinctly in that document. 21 In other words, agreement with Senior Counsel on that 22 point. 23 He says: 24 "I shall now endeavour to set out my own reasoning 25 with respect to this issue." 94 1 I can't tell you, my Lord, whether that reasoning 2 came. But what I do know is that this is one of the 3 grounds that we were looking at in 2010 to appeal DRP 4 decisions, and it is one of the reasons why I went to 5 Robin -- why I was instructed to find an expert, 6 and I found or knew of Robin Blois-Brooke. 7 Q. If we go forward to page 7, please, and could you expand 8 within that subparagraph 4 on that page. Subparagraph 4 9 and the answer. 10 Now, Senior Counsel records there -- the Dean of 11 Faculty, I should say, records there the question that 12 is put to him by DLA on behalf of tie, and it is this: 13 "Is the construction works price ... limited to only 14 what is depicted on the Base Date Design Information?" 15 Do you see that? 16 A. I do. 17 Q. That, I think, if I have understood the position 18 correctly, is the extreme position that was being 19 adopted by Infraco? 20 A. Yes, that is Siberia, definitely. 21 Q. Sorry, what do you mean by that? 22 A. Very cold and very stark. 23 Q. Yes. That's the position that was being taken by 24 Infraco, that if it wasn't on the Base Date Design 25 Information, then it wasn't part of the contract 95 1 works -- construction works price, and therefore they 2 could charge more money for it. That's right, isn't it? 3 That's what -- the position Infraco was taking? 4 A. Correct, and we see that in Calum MacNeill's advice too, 5 I believe. 6 Q. Yes. And when the Dean of Faculty is asked whether or 7 not that proposition is correct, that the construction 8 works price is limited to only what is depicted on the 9 Base Date Design Information, such that Infraco can 10 charge extra for anything that's not on the Base Date 11 Design Information, he says that is not a correct 12 proposition, doesn't he? 13 A. He does. 14 Q. But he says that does appear to be the conclusion 15 reached by the Adjudicator, which is why he says the 16 Adjudicator is wrong? 17 A. Correct. 18 Q. He notes that the Adjudicator's conclusion ignores the 19 rest of the wording of Clause -- of the price assumption 20 paragraph 3.5, which provides that the Contract Price, 21 including the construction works price, is fixed on the 22 basis, and he highlights the words "inter alia", in 23 other words amongst other things, upon the Base Case 24 Assumptions but not upon those alone. 25 A. Mm-hm. 96 1 Q. So is it fair to say then that the Dean of Faculty in 2 this opinion is giving a view which is not consistent 3 with the extreme position that was being adopted at this 4 point by Infraco? 5 A. I agree with you. 6 Q. He goes on to narrate the next question which he's 7 asked, which is: 8 "Can it be said that a Notified Departure has 9 occurred in the circumstances where an item of work is 10 not depicted on the Base Date Design Information, but 11 that item of work is nonetheless called for or required 12 by the Employer's Requirements or referred to in the 13 Infraco proposals?" 14 Do you see that? 15 A. I do. 16 Q. I think this may be the point you alluded to a moment 17 ago, when you talked about DLA having given advice that 18 if something was simply not shown on the Base Date 19 Design Information, but was nevertheless required, that 20 would in DLA's opinion not have been a Notified 21 Departure? 22 A. Correct. And if I can just add one thing, Mr Fairley, 23 if I may, shortly, and that is that the issue with what 24 was the Base Date Design Information, and I have 25 mentioned in my statement that was a problem for SDS and 97 1 tie and BBS in agreeing or producing a composite and 2 accurate list of Base Date Design Information -- was 3 never solved. There was initially, when this came up, 4 the idea of Base Date Design Information. 5 I asked Dennis Murray what is the list for this, how 6 will that be presented in the contract? And there was 7 difficulty for several months in finding CDs and finding 8 that information, such that, as I say in my statement, 9 contract award date -- BBS, Scott McFadzen appeared with 10 about 12 or 15 cardboard boxes saying that is Base Date 11 Design Information. 12 Q. I'm sorry to interrupt, Mr Fitchie, but that is not at 13 all what I'm asking you about here. 14 A. I'm sorry, I misunderstood. 15 Q. What I'm actually asking you about here is the Dean of 16 Faculty's response to the question that was put to him. 17 A. Yes. 18 Q. He appears to agree with, if that's the correct way of 19 putting it, DLA's interpretation of this, which is that 20 simply because an item is not depicted on the Base Date 21 Design Information, that does not inevitably lead to it 22 being a Notified Departure if it is otherwise required 23 by the Employer's Requirements or referred to in the 24 Infraco proposals. Do you see that? 25 A. I agree. 98 1 Q. So again, do we see here that the Dean of Faculty is 2 indicating that he does not assent to or agree with the 3 extreme position on the Pricing Assumptions that was 4 then being taken by Infraco? 5 A. He -- I agree with you. He is, and he's said that that 6 particular -- Adjudicator's decision was superficial. 7 Q. If we just finally, before I leave the Dean of Faculty's 8 opinion, can we look at the question 6 that was put to 9 him: 10 "Can it be said that the Infraco is entitled to an 11 increase in the sums due to it under the Infraco 12 contract in the circumstances where an item of work is 13 not depicted on the Base Date Design Information, but 14 that item of work is nevertheless called for or required 15 by the Employer's Requirements or referred to in the 16 Infraco proposals?" 17 Unsurprisingly, perhaps, given the opinion that he 18 has already expressed in questions 4 and 5, his answer 19 to that is again no. Do you see that? 20 A. I do. 21 Q. This is all part of the Dean of Faculty's reasoning for 22 his conclusion that the Adjudicator, in relation to 23 Carrick Knowe and Gogarburn, got it wrong, bluntly, on 24 the interpretation of the Schedule? 25 A. I agree, and I shared that view at the time. 99 1 Q. Now, when you were taken by Learned Counsel to the 2 Inquiry to this document before, you were taken only to 3 paragraph 11, and we see that on the screen there. 4 A. Mm-hm. 5 Q. What is narrated there is that a question which was put 6 to him was: 7 "Which interpretation of Pricing Assumption 1 put 8 forward by the parties in the adjudication process is to 9 be preferred?" 10 Do you know which part of the Pricing Assumption 11 3.4.1 is being referred to in that question? 12 A. It seems to be being limited to 3.4.1. 13 Q. If I was to suggest to you that it was the part of the 14 Pricing Assumption that begins with the words "for the 15 avoidance of doubt", would you disagree with me on that? 16 A. This is the last paragraph in 3.4.1? 17 Q. You see, if we scroll down this screen, the Dean of 18 Faculty sets out what the respective arguments of the 19 parties were -- 20 A. Mm-hm. 21 Q. -- before the Adjudicator, and taking this as shortly as 22 I can, it seems to have been tie's argument, advanced 23 before the Adjudicator, that provided something 24 constituted normal design development, it could never 25 constitute a change to design principle, shape, form 100 1 and/or specification; do you see that? 2 A. I do. 3 Q. Whereas Infraco were arguing before the Adjudicator that 4 if something was a change in design principle, shape and 5 form or outline specification, it could not be normal 6 design development; do you see that? I think we have to 7 go over the page to see the end of Infraco's argument. 8 A. "The Infraco position is based entirely on a reading of 9 Pricing Assumption 1." 10 Q. Yes. In fact on a reading of the section of Schedule 4, 11 beginning with the words "for the avoidance of doubt", 12 the Infraco position is inevitably correct on that 13 limited point, isn't it? We can look at it if you want. 14 But arguing, as it did, before the Adjudicator that -- 15 can you just go back to the previous page, please. 16 Arguing as it did before the Adjudicator for tie to 17 argue before the Adjudicator that something could not be 18 a change to design principle, shape, form and/or 19 specification if it constituted normal design 20 development, tie was bound to fail in that argument, 21 wasn't it? Because it was wrong. 22 A. Mr Fairley -- 23 Q. Would it helped if you looked at Schedule 4? 24 A. What I'm puzzled about here, if you can help me, is you 25 asked me about the Dean of Faculty's opinion in relation 101 1 to design -- in relation to design which was entirely 2 missing from Base Date Design Information. In other 3 words, there wasn't design, and I agreed with you that 4 there was an argument that could be mounted saying 5 anything which was to do with delivering the Employer's 6 Requirements through the Infraco proposals design is not 7 covered by design -- is not covered by the Infraco's 8 argument. 9 Now you're asking me a different point, I believe, 10 which is essentially saying that tie's argument before 11 this Adjudicator was not fully developed. Am I right? 12 Q. What I'm really putting to you, Mr Fitchie, is that what 13 the Dean of Faculty is saying to tie is you argued the 14 wrong point before the Adjudicator. 15 A. Right. 16 Q. You argued on the basis that if something constituted 17 normal design development, that that was an answer to 18 everything? 19 A. Mm-hm. 20 Q. And that if it was normal design development, it 21 couldn't constitute a change to design principle, shape, 22 form and/or specification. That's what tie argued. 23 The Dean of Faculty is saying you argued the wrong 24 point here, because that, on the wording of the Schedule 25 Part 4, is the opposite in fact of what Schedule 4 says. 102 1 What Schedule 4 says is if it is an alteration to 2 design principle, shape, form and/or specification, it 3 shall not be taken to be part of normal design 4 development. 5 A. Right. 6 Q. If we scroll back up to question 11, when the Dean of 7 Faculty says: 8 "In my opinion the interpretation put forward by 9 Infraco is to be preferred to the interpretation put 10 forward by tie ..." 11 What he is describing there is the conflict of 12 arguments which we see narrated in paragraph 12 below. 13 Do you see that? 14 A. Yes. He's saying what Infraco said to the Adjudicator 15 is a more powerful proposition than what tie argued. 16 Q. Well, he's saying it's correct, isn't he? On any 17 reading of the contract, the Infraco position, which was 18 that, if we scroll down again so I can see the words, 19 please. The Infraco argument was if something is 20 a change to design principle, shape, form and/or 21 specification, it cannot be part of normal development 22 because that's what the contract says. 23 A. Mm-hm. 24 Q. He is saying on that point Infraco was right. tie 25 pursued the wrong point at the adjudication. 103 1 A. Yes. 2 Q. Because if they had focused more closely on the other 3 aspects and the other consequences of the extreme 4 position that Infraco was taking, they would have noted, 5 for example, that if something simply wasn't shown in 6 the Base Design date -- Base Date Design Information, it 7 would not necessarily be a Notified Departure? 8 A. I agree with you. 9 Q. So the Dean of Faculty here is not saying to tie: you 10 are bound to lose all future adjudications because of 11 the interpretation of Schedule Part 4. What he's saying 12 is you pursued the wrong point. You argued the wrong 13 point. 14 A. Mm-hm. 15 Q. Thank you. 16 Now, can I just ask you very briefly about -- you 17 mentioned involvement, I think, with Richard Keen again 18 at a later stage in the process when I think you said it 19 was in connection with grounds for termination; is that 20 right? 21 A. It was in connection with tie's strategy which had been 22 built up by Tony Rush over a period of some months to 23 use, my Lord, what's called in the Contract Remediable 24 Termination Notices. So yes, that consultation and that 25 set of instructions was all about what tie would need to 104 1 produce or have ready in terms of substantive evidence 2 to back up the first stage of the termination, which is 3 a notice saying: you are in breach, please tell us what 4 you're going to do with that -- do about it within 5 30 days. 6 So yes, I was involved in that. 7 Q. Were you also involved in seeking advice from 8 Richard Keen on the Dervaird Adjudication in relation to 9 the effect of Clause 80? 10 A. No, I was not. Because that Adjudication was handled by 11 McGrigors. 12 Q. Did you at any time see a note from Richard Keen in 13 relation to the Dervaird Adjudication round about 14 19 August 2010, or again, was that something that you 15 simply had no involvement in? 16 A. My answer to that is I was asked a question by the 17 Inquiry about did different law firms cause problems. 18 In this instance I was unclear by whom McGrigors had 19 been instructed and whether I was -- whether DLA Piper 20 should get involved in reviewing the Dervaird -- I beg 21 your pardon -- Adjudication. 22 So I don't recall -- sorry, I'll go further than 23 that. I did not see either the Dervaird -- the Keen 24 opinion you have just referred to, nor did I see any 25 writing from McGrigors as to what they thought about 105 1 that arbitration or that Adjudication award. 2 MR FAIRLEY: I won't trouble you with that any further then, 3 Mr Fitchie. If you'll just bear with me for a moment. 4 Thank you. I have no further questions, Mr Fitchie. 5 CHAIR OF THE INQUIRY: Mr Dunlop? 6 MR DUNLOP QC: My Lord, I repeat my request to go last. 7 CHAIR OF THE INQUIRY: I have decided that you -- that your 8 submission -- 9 MR DUNLOP QC: Very well, my Lord. 10 Examination by MR DUNLOP QC 11 MR DUNLOP QC: Mr Fitchie, if I can take the points that 12 I adverted to earlier in reverse order, please. 13 Firstly, can I ask you, you were taken to the 14 instructions to Calum MacNeill QC, and you were asked 15 whether or not you had been involved in drafting the 16 instructions to Mr MacNeill. 17 Could I ask you to look, please, to document 18 CEC00901461. 19 Is that a letter of instruction on DLA -- if we look 20 at the top right-hand corner, DLA notepaper, addressed 21 to Calum MacNeill QC, 21 May 2009; is that correct? 22 A. Yes. 23 Q. If you look to the reference that's given, the 24 right-hand corner, just above the date? 25 A. Yes. 106 1 Q. Is that Keith Kilburn's reference? 2 A. It would be, yes. I'm sorry, it is, my Lord. 3 Q. If we go to the second page of that, please. Do we see 4 that in the pre-penultimate paragraph, the writer says: 5 "Should you require any further information, do not 6 hesitate to contact Keith Kilburn of this office." 7 A. I see that. 8 Q. So does this indicate that it is Mr Kilburn and not 9 yourself that's instructing Mr MacNeill? 10 A. On behalf of the firm it does. 11 Q. Thank you. 12 You were asked about the content of these 13 instructions. Is there anything unusual, Mr Fitchie, 14 about a Litigation Solicitor trying to devise 15 a strategy, perhaps involving a different view as to 16 interpretation of a contract, and taking Counsel's 17 advice to see if that strategy might work? 18 A. No, there is not. I have certainly done that in many 19 times in instructing Counsel. The idea of instructing 20 Counsel and the intellect, called intellect, is to 21 explore ideas. 22 Q. Thank you. If I can move then to the question of 23 identification of risks. You were taken to a document 24 I would like you to look at again, please. CEC01428734. 25 CHAIR OF THE INQUIRY: Is this point 1 or point 2, 107 1 Mr Dunlop? 2 MR DUNLOP QC: This is point 2, my Lord. 3 Do you remember being taken to this document, 4 Mr Fitchie? 5 A. Yes, I do. 6 Q. It has been described in the press as a DLA report, 7 perhaps because it's headed up, "DRAFT OF DLA REPORT"? 8 A. Mm-hm. 9 Q. Was it actually a DLA report? 10 A. No, it wasn't, and I think I deal with this in my 11 statement. 12 The reason that this -- this is a report, I believe, 13 drafted -- yes. It was described in that way because 14 there was a concern that if it went out as a tie report 15 it would be available under FISA, and so it was sent 16 under cover of the DLA Piper letter to give it grounds 17 under the Freedom of Information (Scotland) Act to 18 resist an application for disclosure. 19 Q. Do we see if we look down the page please, in the 20 penultimate paragraph on that page, please, if we can 21 highlight that, thank you. 22 Do we see in the last four lines: the main 23 negotiating team which have also had extensive support 24 from our external legal advisers, DLA Piper. 25 A. Yes, we see that. 108 1 Q. So the report refers to DLA Piper in the third person? 2 A. Correct. 3 Q. If we think about the risks, please, of Notified 4 Departures, the suggestion is that those risks have been 5 actively concealed by others, and that you yourself did 6 not make tie or CEC aware of the risks of Notified 7 Departures. 8 A. Yes. 9 Q. Were tie and CEC aware of the risks of Notified 10 Departures? 11 A. Sorry, Mr -- my Lord, I interrupted Mr Dunlop. I didn't 12 quite hear the beginning of the question. 13 Q. The suggestion is that the risks of Notified Departures 14 have been actively concealed by others? 15 A. Mm-hm. 16 Q. And that you yourself did not make tie or CEC officials 17 aware of the risks of Notified Departures; yes? 18 A. Yes. 19 Q. Were tie and CEC aware of the risks of Notified 20 Departures before contract close? 21 A. Yes. 22 Q. And how were they aware? 23 A. I've been through my evidence in relation to the tie -- 24 the tie management who had my view, a legal view on 25 Notified Departures. I believe that from -- CEC could 109 1 not have been unaware of this at a finance and legal 2 level. 3 This report itself says that senior tie and TEL 4 people have performed a review of terms independent of 5 the main negotiating team. The main negotiating team 6 elsewhere in the close reports is referred to as 7 something wider than tie and including Council staff. 8 Even on that basis it is clear to me that CEC may 9 not have liked what they were hearing about Schedule 10 Part 4 and Notified Departures, and the idea of risk 11 being assumed by the Council or by tie. They knew of 12 it. 13 Q. If I could ask you, please, Mr Fitchie to look at 14 a couple of documents you were taken to. If we could 15 look at them again, please. In the first instance could 16 you look at document CEC01500975. I think this is the 17 letter to the Council Solicitor in December 2007 that 18 you'll recall looking at -- 19 A. Yes. 20 Q. -- previously. 21 Could you go to the final page, which is page 4, 22 please. If we can expand the bottom half of the page, 23 please, and if you look to the -- if we see the indented 24 paragraph 3, and the last paragraph of that indent, we 25 see that: 110 1 "These agreements contain safeguards (to extent 2 tie's team were able to negotiate these either at the 3 parliamentary stage or later) but the project programme 4 and budget will nevertheless remain to some degree 5 vulnerable to any of these stakeholders seeking redress 6 within the limits of their commitments/rights. In 7 short: the actuality of even permissible and expected 8 disruption and inconvenience may result in these 9 stakeholders using their entitlements aggressively. tie 10 is alive to this risk and proper execution of tie's 11 planned management and mitigation strategy should reduce 12 these risks significantly. In negotiations to close, we 13 will continue to explore rigorously with the BBS Consortium 14 how they were prepared to absorb as much responsibility 15 for third party risk as is technically achievable, fair 16 and cost effective." 17 Was that correct at the time you wrote it, 18 Mr Fitchie? 19 A. Yes, it was. 20 Q. Thank you. 21 If you could move, please, to CEC01312366. This is 22 the letter to, again, the Council Solicitor, 23 12 March 2008. Again, you recall looking at this 24 previously. 25 If we could go to page 4 in that document, please, 111 1 and if we could expand the bottom half of that page, you 2 will recall being asked about 5.1. You weren't taken to 3 5.2? 4 A. Correct. 5 Q. Can I ask for your comments on that, please. We see it 6 says: 7 "We are not in a position to comment in relation to 8 the Project Master Programme which remains under 9 development. There is a risk that the SDS exercise in 10 aligning design with Infraco Proposals and Employer's 11 Requirements could have impact on Project Programme both 12 before and after contract award. We are aware that tie 13 is endeavouring to mitigate this risk by careful 14 management of the alignment process." 15 To what were you adverting when you wrote those 16 words, Mr Fitchie? 17 A. The entire -- the entire resistance to risk on design 18 which was coming from BBS and had been coming from BBS 19 consistently since BAFO, and it was one of the reasons 20 why the BAFOs were not -- heavily qualified. 21 So I was referring there to the fact that the SDS 22 design would -- I say could have an impact on project 23 programme. So I was referring to the effect of 24 project -- Schedule Part 4 in part. 25 Q. Thank you. You were asked about the reasonable reader 112 1 of this letter. So far as CEC were concerned, to whom 2 was this letter addressed? 3 A. The letter was -- all DLA Piper letters or all the -- 4 that were asked for at the various false dawns before 5 project close were addressed to Gill Lindsay at the 6 Council, and as my evidence states, a number of these 7 were discussed beforehand as to whether they met the 8 Council's requirements. 9 Q. So the reasonable reader here is a lawyer? 10 A. The reasonable reader here -- I had -- the reasonable 11 reader here is Gill Lindsay and those members of the 12 Council Project Executive Group who she must have shared 13 this letter with them, because those were the people who 14 were discussing with tie, and I saw the emails and 15 correspondence about this, in March, and some later than 16 that. 17 These individuals and staff members -- senior staff 18 members were receiving information and were shown the -- 19 for example, the draft letter of 10 March that DLA 20 produced which was the 12 March original document which 21 I was taken to this morning. 22 So DLA's letters were shared in draft with the 23 Council's, let's say, wider project team, finance, 24 engineering, I assume planning. 25 Q. Thank you. If we could move on, please, to a different 113 1 document, again one that you've looked at before. 2 CEC01466394. CEC01466394. (Pause) 3 MR DUNLOP QC: My Lord, given the time, perhaps we could 4 sort out the numbering over the lunch break. 5 CHAIR OF THE INQUIRY: We will resume again at 2 o'clock. 6 (12.58 pm) 7 (The short adjournment) 8 (2.00 pm) 9 (Proceedings delayed) 10 (2.05 pm) 11 CHAIR OF THE INQUIRY: I'm sorry. I hadn't realised 12 everyone was convened. 13 You're still under oath, Mr Fitchie. Mr Dunlop? 14 MR DUNLOP QC: Obliged, my Lord. I think the numbering has 15 been sorted and Mr Fitchie, we should now have on screen 16 the document that I wanted you to look at. 17 Could we go to the second page, please, first of 18 all. This is obviously an email chain. If we look at 19 the second half of the page, it's email from -- scroll 20 up a little bit, please -- Ian Laing at Pinsent Masons; 21 is that correct? 22 A. Yes. 23 Q. Solicitor acting for Bilfinger Berger? 24 A. He was a partner acting for Bilfinger Berger and as we 25 know, there was another law firm acting for Siemens. 114 1 Q. What he says there is -- this is addressed to 2 Steven Bell at tie and also to Jim McEwan at tie; is 3 that right? 4 A. Yes. 5 Q. "As we discussed earlier today, the Design Delivery 6 Programme will be v28. The Pricing Assumption in 7 Schedule 4 ... assumes that the Design Delivery 8 Programme will not change from v26. It follows that 9 there is the possibility that there will be an immediate 10 Notified Departure on contract execution. Given the 11 unusual position that we are in, please can you confirm 12 that this is understood and agreed by tie." 13 So this, Mr Fitchie, is 26 March 2008; is that 14 correct? 15 A. Correct. This is immediately after a meeting that 16 Steven Bell and Jim McEwan had had with Bilfinger. 17 Q. Mr Laing is -- correct me if I am wrong -- seems to be 18 being entirely candid and upfront and saying there is 19 a real possibility of a Notified Departure immediately 20 on execution of the contract; is that right? 21 A. Correct. The factual situation being that SDS had 22 advised that their Design Delivery Programme was going 23 to change, and since SDS were at that point mandated to 24 tie, they had reported that, and they had reported -- 25 and they were already engaged with BBS dealing with 115 1 design issues and they'd told BBS that that was going to 2 happen. 3 Q. Were tie under any misapprehension as to that real 4 possibility of immediate Notified Departure? 5 A. None, they had agreed it. 6 Q. Go up the page, please. We see a chaser, I think, on 7 31 March? 8 A. Yes. 9 Q. No, sorry, this is -- yes, it is. To Steven and Jim: 10 "Please can you let me have confirmation that the 11 position on the Notified Departure ... is understood and 12 agreed by tie." 13 A. Yes. 14 Q. If we go back to the first page of this document, 15 please, at the foot of that page, do we see Jim McEwan 16 passing it on to you and indeed Steven Bell, Schedule 4, 17 asking for your response, and we have the comment about 18 ensuring there will be no gaming of the position by 19 Bilfingers? 20 A. Correct. 21 Q. Then we have your response. His Lordship can read your 22 response for himself. Am I correct in summarising it by 23 saying that you indicated that there was a real 24 possibility of immediate Notified Departure, and that in 25 the second paragraph of your response, the only approach 116 1 is a factual one, not a contractual one. To capture as 2 many identified key changes as is possible in order to 3 mitigate the potential problem with Notified Departure. 4 A. Yes. The exercise that needed to be gone through, in my 5 opinion, not being a Programme Manager or a contractor, 6 was to look at this new design programme version and 7 look at BB's construction programme and say -- deal with 8 it and try and, as I say, capture the changes that BBS 9 were going to claim and agree them, so that these would 10 not be something that would come up under the Notified 11 Departure mechanism. They would be pre-agreed as having 12 been dealt with. 13 Q. Do we see then at the end of the first paragraph of your 14 response, you indicating that that estimate -- that's 15 the Bilfinger estimate -- is bound to be all 16 encompassing? 17 A. Correct. 18 Q. If we can look at the replies to that, please, which 19 I don't think we have looked at yet, in the first 20 instance, please, document CEC01465933. 21 I think we see in the bottom of that page the email 22 that we've just looked at from you. 23 A. Yes, and I just -- sorry, my Lord. The last paragraph 24 in my response to Jim McEwan, which we're on at the 25 moment, if we could just scroll down to the very last 117 1 few lines on the second page -- I'm sorry, Mr Dunlop for 2 doing this. The next page: 3 "This is one where Steven and Geoff must, I feel, 4 have a better sense of how factually to restrict BBS's 5 ability to exploit this." 6 This being version 26 to version 28: 7 "After this review, we might be able to go about 8 trying to structure acceptable controls in the Infraco 9 Contract." 10 In other words, what I had in mind there was 11 inserting something in the design -- Schedule Part 14, 12 which is essentially a design control document, because 13 Jim had indicated he was worried about gaming. One way 14 to avoid gaming is to get the design to pass through 15 that control process and see whether there is gaming 16 going on. 17 I'm sorry to interrupt. I just was reminded that 18 that was in my mind at the time. 19 Q. This is at the end of March 2008, Mr Fitchie. By this 20 point in time, have you already expressed your concerns 21 about the content of SP4 and the risks that it entails? 22 A. Yes, I have, in February twice to Mr Bell and 23 Mr Gallagher, and -- yes, I have, is the answer to that. 24 Q. Thank you. If we go to the top of the page of the 25 document we're looking at, this is Mr Gilbert's 118 1 response: 2 "My view is that we need to: a) confirm the 3 agreements made with SDS on how the differences between 4 the versions will be dealt with ... b) identify the 5 impact of these mitigations and any unmitigated 6 changes ... c) include the agreed ... mitigations in 7 the Programme Schedule. 8 "This is the best that we can do to pin BBS and SDS 9 down on this issue." 10 So looking at that, Mr Fitchie, do you apprehend any 11 misunderstanding on the part of Mr Gilbert? 12 A. My response is what Mr Gilbert says is what I -- 13 essentially what I have recommended as a lawyer to 14 Jim McEwan, and I see no -- nothing in that letter where 15 it's saying that we need further advice to DLA -- from 16 DLA or anyone else to understand how this is going to 17 operate. 18 Q. Thank you. If we look at another response, please, 19 CEC01465908. 20 If we look at the top of that page, please, 21 Mr Fitchie, we see at the bottom, looking at the middle 22 now, we see that the -- your original email. 23 If we then go to the top of the page, Mr McEwan 24 appears to apply to Mr Bell, without copying you in; is 25 that correct? 119 1 A. There is no copy to me and I have never seen this email 2 before. 3 Q. If I just ask you to look at it just now, what Mr McEwan 4 says to Mr Bell is: 5 "Steven, my view is that if we pursue Andrew's steer 6 on this, we will open up the whole can of worms on the 7 Infraco contract cost overall and that we have to take 8 on the chin that the programme version is not 9 consistent, get the deal signed and then fight the 10 notified departure tooth and nail." 11 So looking at that, and understanding you've only 12 just seen it for the first time just now, Mr Fitchie, 13 what's your comment on that with regard to the question 14 of the knowledge or otherwise of tie of Notified 15 Departures? 16 A. It appears to me what Mr McEwan is saying shows that he 17 understands perfectly what will happen with the change 18 from V26 and V28, and what he's doing is saying it's 19 better to get the contract under our belt and fight the 20 Notified Departure tooth and nail. 21 That's his view, and I strongly disagree with it, 22 because any contractor given a contract underneath them 23 with an automatic -- a change mechanism which allows 24 them to go for design is going to claim, and I find 25 that -- somebody of Jim's experience naive: 120 1 "... we will open up the whole can of worms on the 2 Infraco contract cost overall ..." 3 I don't understand that comment. This could have 4 been in my opinion ring-fenced and calculated, at least 5 part of it, to allow tie to have a sense that this 6 version change is captured in these agreements, and it 7 is not going to -- we have agreed the impacts on the 8 construction programme. So there can be no prolongation 9 cost or prelims cost or compensation events or anything 10 of that nature. It's agreed and it's gone. 11 So I -- "if we're all hopeful of getting this done 12 by 15th April". 13 I see. So I think what that means is if they took 14 my approach, they wouldn't be able to close the contract 15 in 15 days. 16 Q. Looking at that sentence that you've just looked at, and 17 indeed the first sentence, am I right to understand that 18 this appears to be Mr McEwan rejecting the advice which 19 you've given earlier? 20 A. Yes: 21 "I understand Andrew's point, but if we are at all 22 hopeful of getting this done by the 15th April (this 23 year) we cannot take his suggested approach." 24 Q. Yes. Thank you. 25 Another document, please. CEC01312358. If we look 121 1 at the top of the page, this appears to be an email from 2 Graeme Bissett to a number of others? 3 A. Yes. 4 Q. At Edinburgh Council predominantly; is that right? 5 A. Correct. 6 Q. Also copied to others including Susan Clark and 7 yourself? 8 A. Correct. 9 Q. Do we see that this includes -- encloses a number of 10 things, including point 2: 11 "DLA letter effective today, which updates DLA views 12 on Infraco Contract Suite ..." 13 A. Yes. Sorry, my Lord, can I just -- perhaps Mr Dunlop 14 can remind me that the date on this is -- 15 Q. It's 28 April 2008. We see that at the top of the page? 16 A. Yes, I do. 17 Q. Okay. It's referring to DLA advice at that date. If 18 you could now have that before you, please. 19 CEC01246045. Actually that's not what I'm taking you 20 to. If you could have a look at that document, please. 21 01246045. 22 A. This document I'm looking at at the moment says that the 23 text of the approval letters is with CEC Legal for 24 confirmation. So ... 25 Q. Indeed. 122 1 A. Yes. 2 Q. If we could blow that up, please. We see that this is 3 an email a couple of days later from Colin MacKenzie to 4 a number of people, including Nick Smith. What we see, 5 if you look to the bottom of that email, you see it's 6 signed off on behalf of, or kind regards, 7 Colin Mackenzie and Nick Smith; yes? 8 A. I see that. 9 Q. Just looking to the lesser, please: 10 "Further to the meeting this morning, Nick and 11 I have considered the DLA letters dated 12 March, 12 18 March and 28 April. You sought our views on this 13 correspondence. 14 "As you are aware we have from the outset expressed 15 reservations about the ability of DLA to effectively 16 review their own work. In this regard, it is difficult 17 to see how any letter from DLA could give full comfort 18 to the Council. Our preferred route was always that the 19 Council seek independent legal advice. In particular, 20 all of the DLA letters are heavily caveated and refer to 21 instructions from tie or positions achieved by tie. The 22 reality of the contract structure is that the Council is 23 to give a guarantee in respect of all financial 24 obligations being undertaken by tie. Instructions have 25 been given throughout by tie to DLA, with little input 123 1 from Council officers and accordingly no certainty that 2 Council instructions flowed through to DLA." 3 Now, pausing there, Mr Fitchie, I'm taking you to 4 those because I have previously been criticised for 5 ignoring that part of this email. So I want you to see 6 that and to understand it. Do you understand me? 7 A. The top -- the part you have read, Mr Dunlop? 8 Q. Yes. 9 A. Yes, I understand what's being said. 10 Q. What I want your comment on is what follows: 11 "The most recent letter dated 28 April does little 12 to remove doubts and uncertainties. Specifically, that 13 letter appears to give no comfort on the risk profile 14 and acceptability in relation to the market norm. The 15 lengthy letter also narrates matters which appear to us 16 to be risky for the Council and are not fully covered by 17 the QRA." 18 Just looking at that, please, have you seen this 19 document before? 20 A. Never. 21 Q. When it is commenting on your own letter of 28 April, 22 and we will look at that in a minute, the authors say 23 that that letter gives no comfort on the risk profile 24 and acceptability and narrates matters "which appear to 25 us to be risky for the Council". Without being prompted 124 1 by your own letter of 28 April, what was it that you 2 think they are talking about as matters risky for the 3 Council? 4 A. 28 April ... narrates matters that appear risky to the 5 Council. 6 I'm thinking that the letter dealt with the position 7 with design, position with MUDFA, the "not fully covered 8 by the QRA" ... and the fact that I am talking about the 9 contractor, I believe, at that point taking a very 10 adverse position towards risk and design risk in 11 particular. 12 Q. Yes. 13 A. I believe that that would be what they are referring to. 14 Q. Okay. If we could look at the letter of 28 April again. 15 I'm not sure we have seen that as yet. 16 CEC01312368. 17 Is that the DLA letter of 28 April 2008? 18 A. Could I just see the signature block? 19 Q. If you go to the end of that document, please, I think 20 on page 6 of it. 21 A. That is -- that is half of my signature which isn't 22 correct on a DLA Piper Scotland letter. It's DLA Piper 23 ASF. But that is the firm's letter of that date. 24 Q. Okay, thank you. 25 If we go on to -- 125 1 CHAIR OF THE INQUIRY: Could I just clarify what is the 2 point about that? That it's not your signature? 3 A. My Lord, I made -- if you see, there's two bits to the 4 signature. The first initials there. No point. I made 5 an error when I was signing the letter, thinking I might 6 be signing my own name, but it's not a yours sincerely 7 letter. It needs to be signed DLA Piper Scotland LLP. 8 I'm sorry. 9 MR DUNLOP QC: If we go down in that letter, please, to the 10 third page, section 5, "Risk". 11 A. Mm-hm. 12 Q. "Following on from our letter of 12 March, we would 13 observe that delay caused by SDS design production and 14 CEC consenting process has resulted in BBS requiring 15 contractual protection and a set of assumptions 16 surrounding programme and pricing." 17 A. Correct. 18 Q. "tie are prepared for the BBS request for an immediate 19 contractual variation to accommodate a new construction 20 programme needed as a consequence of the SDS Consents 21 Programme which will eventuate, as well as for the 22 management of contractual Notified Departures when (and 23 if) any of the programme related Pricing Assumptions 24 fall." 25 A. Yes. 126 1 Q. So thinking back to what are the matters risky to the 2 Council that have been identified by Messrs Smith and 3 Mackenzie, does that assist? 4 A. It does. I would imagine that's central in their 5 spotlight. As one of the -- they're not specific in 6 their internal communication. This would be one of 7 them. 8 Q. Go to the close report, please, that was looked at in 9 some detail -- 10 A. Sorry, Mr Dunlop. Can you indulge me just for a second. 11 Q. Please? 12 A. Can we look at the list of attachments to this letter. 13 Q. If we go down the -- go to the bottom, it will list the 14 attachments. 15 A. Bearing in mind that CEC Legal and the two gentlemen who 16 were addressed by Colin Mackenzie and Nick Smith's 17 letter were members of what I understood to be a group 18 who had been working in conjunction with tie on the 19 close reports for about five -- four months, what we see 20 here is me sending the Council Solicitor the Infraco 21 Contract and Schedule Parts 1 to 44. 22 Schedule Part 4 would have been included in that set 23 of documents. 24 Q. Is your point that they could therefore have -- 25 A. Yes. My point is that if anybody had wished to find out 127 1 what the contract said about these risks, could have 2 easily used the risk matrices -- the risk matrix and 3 this copy contract to find out precisely what the 4 language in that document said. 5 Q. Yes. Okay. If we go on, please, to the close report to 6 which some reference was made earlier, that is document 7 CEC01338853. 8 You see that's the Close Report that you looked at 9 earlier? 10 A. Yes. 11 Q. Page 25, please. 8.1, under "Overview", just before the 12 bullet points, we see: 13 "The current status of the risks relating to the 14 Infraco and Tramco contracts which have been identified 15 as wholly or partly retained by the public sector beyond 16 Financial Close which are ..." 17 Approvals and consents, interface with the 18 implementation of utility diversion works, delays to 19 design approvals? 20 A. Mm-hm. 21 Q. Stakeholder instructed design changes? 22 A. Mm-hm. 23 Q. Is that not accurate? 24 A. As generality, yes. There are lots of categories of -- 25 yes, my answer is yes. 128 1 Q. Those matters all remained firmly within the risk of the 2 public sector? 3 A. Agreed. 4 Q. Okay. Over the page, please. We looked at 8.1 and we 5 looked at 8.2, Mr Fitchie. Just look at 8.3? 6 A. Yes. 7 Q. Infraco price basis and exclusions: 8 "The Infraco price is based upon the ERs which have 9 been in turn subject to thorough quality assurance and 10 the significant areas where post-contract alignment of 11 the SDS design will be required. Crucially, the price 12 includes for normal design development (through to the 13 completion of the consents and approvals process ...) 14 meaning the evolution of design to construction stage 15 and excluding changes if design principle, shape, form 16 and outline specification as per the Employer's 17 Requirements." 18 A. Mm-hm. 19 Q. Then the next paragraph we see: 20 "Significant exclusions from the Infraco price are 21 items not included in the Employers Requirements in 22 respect of ..." 23 Then a number of matters are identified. 24 A. Mm-hm. 25 Q. Is that correct? 129 1 A. I agree. 2 Q. Including any other scope required by third parties not 3 already included in the Employer's Requirements by 4 virtue of a commitment to an existing agreement; is that 5 right? 6 A. Yes. These are summaries of what is in Schedule Part 4. 7 Q. Yes. 8.4 then deals with responsibility for consents 8 and approvals. 9 A. Yes. 10 Q. If we could again turn the page, please, we should now 11 be on page 27. At the top of that page we highlight 12 number 2: 13 "In respect of consents and approvals outstanding at 14 Financial Close, tie/CEC will bear any incremental 15 construction programme cost consequences of SDS failure 16 to deliver design outputs in a timely and sufficient 17 manner to the consenting or approving authority." 18 Again, is that all correct? 19 A. Yes. 20 Q. We see towards the bottom of the screen, as you now look 21 at it, there's a list of bullets. Immediately above 22 that -- 23 A. Sorry to interrupt. Point 2 at the top of the page: 24 "In respect of consents and approvals ..." 25 That encompasses CEC's planning authority approvals 130 1 and any other approval body. So approval of design. 2 Q. Yes. And equally, at 3 do we see that: 3 "tie/CEC will bear the incremental cost and 4 programme consequences associated with a delay in 5 granting consents or approval having received the 6 required information in a timely and sufficient manner 7 and/or the cost and programme consequences of changes to 8 design principle, shape, form and outline 9 specification ..." 10 A. Yes. 11 Q. Looking then at the bullets towards the foot of the 12 screen, immediately above that, the text reads: 13 "To clearly delineate responsibility and therefore 14 risk allocation, the Infraco contract and associated 15 schedules, including the SDS Novation Agreement, clearly 16 defines in detail and in a manner agreed ..." 17 The last bullet point is: 18 "The programmed dates for delivering information and 19 obtaining the necessary consents and approvals 20 consistent with achieving the overall programme for the 21 project." 22 Again, is that accurate as at the date it was 23 written? 24 A. This is 28 -- 25 Q. This is the close. 131 1 A. This is at close. Yes, that is accurate. 2 Q. After the bullets: 3 "The role of tie in this complex process is to 4 carefully manage the programme of delivery and take 5 mitigating action as necessary to avoid any cost or 6 programme implications from slippage on individual 7 items. tie also retains responsibility for obtaining 8 specific items, including obtaining NR possessions which 9 align with the construction programme agreed with 10 Infraco." 11 Again, is that correct at the date it was written? 12 A. Yes, it is, and a point of detail. The NR, Network Rail 13 possessions. The NR, the Network Rail Agreement was -- 14 entering into discussion with the Network Rail on this 15 matter to have a construction site going on next to the 16 operating railway, was delayed for a long time in the 17 beginning of the project because the Council was 18 concerned about engaging with third parties and spending 19 money on this before royal assent. 20 So we had a problem with Network Rail. I think many 21 people in the construction industry will understand that 22 Network Rail is labyrinthine and difficult to deal with. 23 So obtaining an NR possession took a lot of time and 24 a lot of effort, and we had Clause 16 in the Infraco 25 contract dealing with this matter. 132 1 So this is absolutely up to factual reality. The 2 network possessions at that time were not actually 3 obtained to link with the construction programme. 4 Q. Finally on this document, please, if you could go over 5 to page 28 of the document, and expand the bottom 6 quarter of the page, please and just before the last two 7 bullet points, we see: 8 "tie has assessed these amounts as providing 9 adequately for the residual risk retained by the public 10 sector arising from the Infraco and Tramco works and the 11 post Financial Close consents ... however the risk 12 allowance does not provide for the costs of ..." 13 Two bullet points: 14 "Significant changes in scope from that defined in 15 the Employer's Requirements - whether such changes were 16 to emerge from the consents and approvals process or 17 otherwise; Significant delays to the programme as 18 a result of the consenting or approving authorities 19 failing to adhere to the agreed programme (Infraco/SDS 20 having met their own obligations) or any other tie/CEC 21 initiated amendment to the construction programme which 22 forms part of the Infraco contract." 23 Again, is that all accurate at the time it was 24 written? 25 A. It is, and it represents a significant important set of 133 1 events that could happen, which would initiate claims 2 for -- prolongation claims and delay claims from the 3 contractor. 4 Q. At the end we see: 5 "All other things being equal any such changes 6 falling into these categories would give rise to an 7 increase in the cost estimate for Phase 1a of the 8 project above of GBP508 million." 9 Is that right? 10 A. Yes. 11 Q. Now, you seem to assent, Mr Fitchie, in your evidence 12 earlier, to the proposition that this document, the 13 close report, was knowingly misleading. 14 Obviously his Lordship is going to have to look at 15 it as a whole, but looking at these other aspects I have 16 taken you to, do you retain the view that this document 17 is, read as a whole, misleading? 18 A. No, I don't, and I'm sorry for it. 19 I made a hasty judgment being shown the extracts and 20 shown the document that I was in the way I was earlier. 21 This section is written by a mind that understands 22 where the contract was, and what the risk factors were, 23 and it's dealing with costing risk allowance. 24 Q. Thank you. 25 CHAIR OF THE INQUIRY: I think, Mr Dunlop, it was in 134 1 relation to specific passages, if it was knowingly 2 misleading, and the witness assented to that. 3 I appreciate you are looking at other passages. 4 MR DUNLOP QC: My Lord, a point your Lordship has made to me 5 on more than one occasion already, we must read the 6 document as a whole. I'm simply asking the witness, if 7 he reads it as a whole, does he maintain the view it is 8 knowingly misleading. His answer, I think, is in the 9 negative. 10 CHAIR OF THE INQUIRY: No doubt you can make submissions in 11 your closing submissions about that. 12 MR DUNLOP QC: Indeed so. 13 The Close Report was accompanied by your own letter, 14 I think, of 12 May. If we could look at that briefly, 15 please, Mr Fitchie? 16 A. Yes. 17 Q. CEC01033532. Was that the document -- 18 A. This is what we looked at this morning with Mr Lake, 19 yes. 20 Q. If I can ask you to look again, please, at section 5. 21 It's in very similar terms to section 5 from the last 22 letter. It's on page 3. 23 Just before you look to the text of section 5, the 24 hypothesis that seems to be being put is that in some 25 way, the Council were unaware that there were Notified 135 1 Departures coming straight down the pipe. 2 Now, can we have a look, please, at paragraph 5? 3 MR LAKE: For the avoidance of doubt, I don't think that's 4 what I put to the witness and it wasn't the intention of 5 what I put to the witness. 6 MR DUNLOP QC: On the question, then, of the awareness or 7 otherwise of the Council of what was likely to happen 8 after contract execution, Mr Fitchie, do you -- were you 9 being in any way disingenuous in what you said at 10 paragraph 5? 11 A. No. 12 Q. Did you understand the Council, and Ms Lindsay in 13 particular, to be under any misapprehension as to what 14 was going to happen on contract completion? 15 A. No, I didn't. And I'm taken by the fact that I've 16 forgotten about the letter of 28 April, which is only 17 12 days before this, sending a full draft of the 18 contract as it stood to CEC. 19 But the answer to the question is: I do not know 20 anything which told me that Gill Lindsay, 21 Council Solicitor, could be misled or misunderstand what 22 was going to happen. 23 Q. Thank you. I think the final document I'd like you to 24 look at, with the exception of a couple of statements, 25 is CEC00473790. 136 1 Now, again, Mr Fitchie, just before you look at this 2 document, the context here is, as I understand it, the 3 suggestion that the Council were in some way before 4 contract execution in the dark as to the likelihood or 5 the signs of any Notified Departures that might be 6 coming their way. 7 A. Right. 8 Q. We've heard evidence that this is Mr Smith -- 9 Nick Smith's document, "Trams - A Potted History". If 10 I could ask you to look, if we could have expanded, 11 please, the sixth bullet point looking down the page. 12 We see here that Mr Smith writes: 13 "At that time the contract was very much being 14 presented by tie as being "fixed price". However, the 15 design was less than 40% complete and a warning 16 was flagged at the time that it was very risky to sign 17 up to a fixed price contract where the design was not 18 complete due to the significant possibility of cost 19 overruns." 20 Now, his Lordship can obviously make what he will 21 about knowledge arising from that document, but when 22 Mr Smith says "a warning was flagged at the time that it 23 was very risky to sign up to" this, by whom was that 24 warning flagged? 25 A. It may have been flagged by many people. It may have 137 1 been flagged by those in the Council who had knowledge 2 of the state of the design, since CEC was the prime 3 approvals body, and by this stage there had been claim 4 by the SDS provider for over GBP2.5 million citing CEC 5 as the culpable party. 6 But this less than 40 per cent complete and 7 a warning was flagged, that sounds very much like 8 something that DLA Piper wrote. 9 Q. So do you understand that this is referring to something 10 that you or your firm has flagged? 11 A. Yes. 12 Q. Thank you. 13 I'm now moving on to the last point I wanted to 14 explore with you, Mr Fitchie. 15 You will recall that in your evidence, you were 16 asked about certain discussions that you said you had 17 had with certain people, Geoff Gilbert and Steven Bell 18 in particular, regarding Notified Departures, and you 19 may recall that my learned friend Mr Lake suggested that 20 the evidence of those witnesses might be that they could 21 recall no such discussions. Do you remember that being 22 put to you? 23 A. I do remember that, and I remember saying that I hadn't 24 seen those witness statements. 25 Q. If I could just ask you to look at a couple of them, 138 1 please. Mr Gilbert's -- 2 A. Before, my Lord, before this, I just want to say that 3 I had occasion to learn what Mr Gilbert remembered about 4 these matters in probably February 2010, when I was on 5 a conference call when he was asked about his 6 participation as a Commercial Director, and his 7 recollections were decidedly flimsy. 8 Q. Okay. If I could ask you to look at a statement, 9 please. The document is TRI00000038. You will see that 10 that's the witness statement of Geoff Gilbert, and if 11 you could turn, please, to page 112 in that document. 12 A. Yes. 13 Q. Look to the bottom of the page, paragraph 284: 14 "I have been shown an email exchange dated 20, 26 15 and 31 March." 16 We looked at that earlier, Mr Fitchie: 17 "Part of that chain is an email dated 31 March from 18 Fitchie to McEwan and Bell. Andrew Fitchie noted that if SDS 19 could not commit to adhere to version 26 ... the result 20 would be that a notified Departure would be triggered. 21 I was not copied into McEwan's email to Steven Bell ... but 22 I note that he stated ..." 23 We have seen that already. That's the tooth and 24 nail comment? 25 A. Yes. 139 1 Q. If we then turn the page, please, and if we blow up the 2 top half of that page, please, in the middle of the 3 screen as you are now looking at it: 4 "There were probably discussions taking place on 5 this particular issue. We met fairly regularly. We met 6 before any of the negotiation meetings, so I am sure it 7 was discussed. I do not recall what was decided in 8 respect of the risk that this represented. I am 9 proposing, in my email of 31 March 2008, attempting to 10 understand the differences between potentially 11 conflicting programmes, reconciling them and 12 understanding how the differences between the two SDS 13 programmes would impact ... Ian Laing in his email 14 further down the chain ... is saying 'look at this and 15 understand'. Those emails noted that the effect of 16 Schedule 4 would be that there would be an immediate 17 notified departure ... I was made aware of this at the 18 time by virtue of Andrew's email. I think inevitably 19 there would have been discussion within TIE on this 20 issue." 21 A. Mm-hm. 22 Q. Does this accord with your recollection? 23 A. Yes. I'm quite shocked to read at the bottom of this 24 paragraph: 25 "I was made aware of this at the time by virtue of 140 1 Andrew's email." 2 So the two men that met with Ian Laing's client on 3 25 March or thereabouts to agree the Notified Departure 4 hadn't talked to Geoff Gilbert about it, and everybody 5 knew within tie that Geoff Gilbert was the architect of 6 Schedule Part 4. I find that quite strange, given that 7 we see at the beginning of Geoff Gilbert's statement 8 that he left tie on 23 April. 9 Q. If we could turn the page again, please, top of that 10 page, Mr Gilbert says: 11 "The emails appear to make it clear that because the 12 design programme to be used was not the one in the Base 13 Case Assumptions, it would mean that there was an 14 immediate notified departure on contract signature. 15 I note that I'm not copied into any of the initial 16 emails, but the chain was later copied to me by Fitchie. 17 I have already discussed earlier what consideration was 18 given to the Base Case Assumptions meaning there would 19 be an immediate notified departure on contract 20 signature." 21 Now, we saw earlier that Mr Gilbert has said that he 22 was sure there would have been discussions within tie. 23 Does that accord with your recollection? 24 A. Yes. 25 Q. And again, over the page, please -- 141 1 A. Can I -- could I -- Mr Dunlop, just interrupt, my Lord, 2 to make one point on this. 3 This confirms to me my evidence about there being 4 serious miscommunication within tie. Thank you. 5 Q. Over the page, please, 288, paragraph 288: 6 "I have been shown an email exchange … February … 7 March. I am party to those emails ... I, and other 8 senior personnel … were corresponding directly ... copied 9 Andrew Fitchie in … also been shown two further email 10 exchanges … I was party to the emails in both chains. 11 We were in a series of meetings. Andrew was involved in 12 those meetings (as was Laing ... These emails relate to 13 one of those meetings. Andrew probably summarised the 14 issues and there was an action for me to respond to." 15 Again, does that accord with your recollection? 16 A. It does, although there is a general comment about what 17 meetings I attended, and I've laid out which meetings 18 I attended. 19 Q. At those meetings, were you giving the comments or 20 advice that you say you did under SP4? 21 A. Yes, because those meetings would have been about SP4. 22 Q. Thank you. Mr Bell's statement, please. TRI000000109. 23 This is Mr Bell's witness statement. If you go to 24 page 51, please. 39 has a subparagraph (1). The question 25 asked at 1 is: 142 1 "What was your involvement in the discussions and 2 negotiations in relation to SP4 (both before and after 3 Mr Laing's email)?" 4 The second paragraph after that, halfway through 5 that paragraph, Mr Bell says: 6 "There would probably have been a couple of sessions 7 per week, maybe more depending on what topics were being 8 dealt with and that was, generally, working in a round- 9 table type forum. There would be ourselves, DLA, 10 (usually Fitchie), Pinsent Masons ... Susan Clark and also … 11 McFadzen." 12 Again, at those meetings, would you be discussing 13 and advising on SP4. 14 A. Yes, there would be break-out sessions to discuss points 15 arising. I also see something that I find rather 16 strange relating to the email exchange between 17 Jim McEwan and myself on 31 March. It's the top 18 paragraph there. It says: 19 "I could not find any response from me in the 20 correspondence that was provided to me by the Inquiry. 21 I would have thought, given that Ian Laing, 22 Andrew Fitchie and Jim McEwan commented on this, that 23 I would also have responded, unless we agreed that 24 Andrew would do it on my behalf." 25 But I was being asked by Jim McEwan to give tie 143 1 advice on the effect of V6 to V28. I wasn't being asked 2 by anybody to correspond with anyone on Steven's behalf. 3 What was wanted at that point was Steven to engage 4 with Geoff and possibly Jim and discuss what they were 5 going to do about it. And all we see at the moment is 6 Jim McEwan saying that he in simple terms disagreed with 7 my recommendation. 8 Q. Okay. Over the page, please. Subparagraph 3. The 9 question is asked: 10 "What were your views on the matters noted above?" 11 You say: 12 "Regarding the point "Is there going to be an 13 immediate Notified Departure based on the SDS design 14 programme? we knew and expected that to become 15 a Notified Departure, which I had no issue with." 16 Does that accord with your understanding of 17 Mr Bell's knowledge of the immediacy of the Notified 18 Departure? 19 A. The immediacy of it, yes. It seems that he came to -- 20 I don't understand -- sorry. Yes, is the answer. 21 What I would take issue with there, and would have 22 done at the time, if I'd seen Jim McEwan's -- "which 23 I had no issue with". What I was recommending to the 24 client was that they needed to get their heads together 25 and decide how to tackle it before the contract was 144 1 signed, and using their resource. 2 I remember having a very short discussion about this 3 with Jim, saying: can't you get TSS to take a look at 4 this and sit down with SDS and go through it? And ... 5 Q. Okay. On the same page, please, subparagraph (5): 6 "To what extent, if at all, were CEC advised of the 7 risk/likelihood of Notified Departures under Schedule 4, 8 including the potential number and cost of Notified 9 Departures?" 10 Mr Bell tells us: 11 "Right from the very start, when Schedule 4 was 12 proposed as a mechanic within the contract, CEC, through 13 the Tram Project Board and also CEC Legal directly, were 14 appraised of that. I am sure that was gone through in 15 great detail with Gill Lindsay, CEC’s Head of Legal. DLA also 16 provided specific advice to the Council on the contract 17 in addition to the advice they provided to TIE." 18 Does that accord with your recollection of the way 19 that matters unfolded? 20 A. Yes, although I would have no knowledge of how tie was 21 interacting through its TPB with CEC. I wasn't there to 22 look at how those communications at senior level and 23 between -- essentially Matthew Crosse and 24 Willie Gallagher and the tie Project Director were 25 interacting with CEC. But that is -- that is in accord 145 1 with what I believed was going on. 2 Q. Just thinking back to the SP4, Mr Fitchie, and the 3 wording used in it? 4 A. Yes. 5 Q. Was the immediacy of Notified Departures in any way 6 cloaked in the language used in SP4? 7 A. Sorry, Mr Dunlop, could you just ask me again. 8 Q. If you think back to SP4? 9 A. Yes. 10 Q. What I'm asking is: was the fact that a Notified 11 Departure was inevitable, was it in any way cloaked by 12 the language of SP4 or was it in fact utterly clear from 13 the face of the wording in SP4? 14 A. No. I believe the opening language in what became 15 Schedule Part 4 is a less legalistic explanation about 16 what that document is doing. So the answer to your 17 question is: there was no language which was cloaking 18 how Notified Departures were going to work. 19 Q. Did it rather say: this is based on certain assumptions 20 which both parties acknowledge are false. 21 A. That is essentially the language of the introduction to 22 that document. 23 Q. And went on to say that in the event those assumptions 24 change, then the Notified Departure mechanism will 25 apply? 146 1 A. Correct. 2 MR DUNLOP QC: Thank you. I'm obliged, my Lord. 3 CHAIR OF THE INQUIRY: Mr Martin? 4 Examination by MR MARTIN 5 MR MARTIN: My Lord, I'm obliged, and I shall minimise the 6 questions that I have to ask with appreciation to 7 Counsel to the Inquiry. 8 I should perhaps make it clear for the record that 9 I do so without prejudice to the Council's right in due 10 course to challenge any aspect of the evidence of this 11 witness, whether contained in his Inquiry witness 12 statement or otherwise. 13 To that extent, issues which have not been raised in 14 these questions should not be construed as the Council's 15 acceptance of what has been said in the statement. 16 Now, Mr Fitchie, I have, I think, three topics to 17 raise with you, although the third may be slightly 18 extended as a result of my learned friend Mr Dunlop's 19 question. 20 The first arises out of the duty of care which DLA 21 assumed so far as the Council is concerned. 22 Could you look, please, at your witness statement at 23 paragraph 2.18, which is on paragraph 10. The witness 24 statement is TRI00000102. 25 Now, that paragraph states: 147 1 "In 2005 DLA Piper accepted a request from TIE to 2 confirm that it owed an ancillary duty of care to CEC, 3 despite it not being DLA Piper's client. DLA Piper's 4 letter of 23 June 2005 set out the basis upon which 5 DLA Piper was willing to agree to assume this ancillary 6 duty of care." 7 What did you mean by the word "ancillary"? 8 A. Yes. This letter is 12 and a half years old. 9 I think what I meant by "ancillary duty" was the 10 duty that was set out in the letter that is subject to 11 us being -- the -- in other words, conditions under 12 which that duty of care would be owed. And I accept 13 that this is not elegant language, but that is what 14 I meant. 15 Q. Well, what did you mean? I'm not concerned with its 16 elegance. I want to know what it meant. What does 17 "ancillary" -- I would understand the word 18 "ancillary" -- 19 A. Beside -- 20 Q. Forgive me if I finish my question. Ancillary to mean 21 subsidiary, secondary to, something similar. What did 22 it mean? 23 A. A secondary duty of care. 24 Q. A secondary duty of care. What does that mean? 25 A. A -- a duty of care alongside the duty of care that we 148 1 owed to the primary client. 2 Q. Could you look, please, at the letter that you referred 3 to. I wonder if it's possible to keep the witness 4 statement on the screen, please, along with the document 5 DLA00006301. Thank you very much. 6 Now, I do apologise. Could I have page number 2 of 7 6301. This is the space for your signature, isn't it? 8 A. Yes. 9 Q. Did you sign this letter? 10 A. I never signed this letter. 11 Q. You never signed it? 12 A. Well, sorry, can I go over the page? 13 Q. If we go back to page 1, please? 14 A. Yes, thank you. 15 This is -- this is the cover letter which I sent to 16 Alex Macaulay. 17 Q. That's right? 18 A. Yes. 19 Q. So you will have signed it? 20 A. I imagine so, yes. 21 Q. We don't -- I think there is another version of this 22 letter in the CEC list of documents. It's not signed 23 either, but we assume you signed it because it was 24 a principal letter to Mr Macaulay. 25 In the second paragraph you say: 149 1 "Please find attached a draft letter which we are 2 ready to provide to tie. An explanation in brief: 3 "Paragraph 1. We are happy to extend to CEC the 4 same duty of care we owe to tie." 5 Just stopping there, what's the -- were the contents 6 of the draft letter intended to be accurate? 7 A. Intended to be accurate? 8 Q. Yes. Did you intend them to be accurate, what is said 9 in the draft letter, referred to in that paragraph? 10 A. It is a draft letter which I discussed with my -- as 11 I say, in the opening paragraph, which I discussed with 12 three different parties within the firm, and the reason 13 it's a draft is because if it came back from tie with 14 commentary on it, saying we want something different, 15 I would need to refer to those people within the firm to 16 discuss whether or not we could provide the letter. 17 Q. Was it intended to be accurate, the draft letter? 18 A. Yes. 19 Q. Thank you. Could you then go to the draft letter, 20 please, which is DLA00006300. I'm sorry, I was hoping 21 the witness statement might remain, but leave that ... 22 Thank you. 23 Now, if we go to the final part of this letter, 24 which is page 2, could we do that, please? 25 We can see that this was intended to be signed by 150 1 DLA Piper, et cetera, and also by tie, and also by the 2 Council. Is that right? 3 A. That's right. 4 Q. Could we go back to page 1, please. Can we see that the 5 reference is AF/AF and then a couple of numbers? 6 A. I see it. 7 Q. Why is it "AF" twice, as a matter of interest? 8 A. This is 12 years ago and in truth I'm not really sure 9 why it says AF twice. 10 The 310299 number 1 is the tie client number. 11 Q. Forgive me. I was only asking about the AF, which 12 I take it refers to you. And you don't know why it 13 appears twice? 14 A. I don't. I suspect that this document went to word 15 processing as opposed to my -- our team secretary. 16 Q. Could we then just return to the page, please. 17 If you look at the third paragraph, please, it 18 reads: 19 "This letter confirms that as from December 5th, 2003 20 onwards, DLA Piper ... has owed and owes the same 21 contractual duty of care to CEC as owed to tie Limited 22 pursuant to ..." 23 Then various conditions. 24 A. Correct. 25 Q. Now, I asked you whether that letter was intended to be 151 1 accurate. 2 A. Mm-hm. 3 Q. May we take it that that is an accurate statement? 4 A. Yes. 5 Q. So DLA owed a duty of care to the Council from 6 5 December 2003? 7 A. That is what the letter proposes. 8 Q. With respect, Mr Fitchie, that is not right. The letter 9 isn't proposing a matter of history. That is why I took 10 you to the original letter which you must have signed? 11 A. Mm-hm. 12 Q. And why I asked you to confirm that this letter was 13 intended to be accurate. 14 That is a statement of historical fact, isn't it? 15 A. I'm sorry, my Lord, I'm not -- I'm not with this line of 16 questioning. I don't fully understand what I'm being 17 asked. 18 CHAIR OF THE INQUIRY: I think you're just being asked: does 19 the letter show that DLA Piper Rudnick Gray Cary 20 Scotland has owed a duty of care from December 5, 2003. 21 A. I remember discussing with Alec Macaulay that the 22 Council would want this to run from our date of 23 appointment. I'm not sure, looking at this now, 24 my Lord, why I'm saying December 5, 2003. I think there 25 is an error there because 2002 would be more the date of 152 1 our appointment. I cannot -- I remember some discussion 2 with Alex about this. I cannot now put my finger on it. 3 MR MARTIN: Do you accept or do you dispute, Mr Fitchie, 4 that this letter confirms that DLA, et cetera, has owed 5 a duty of care to the Council since a date stated to be 6 5 December 2003? 7 A. Yes. 8 Q. But perhaps might be a date even earlier? 9 A. Well, I have confirmed, yes, this is what this letter 10 proposes. 11 Q. How can it propose something historical which has 12 already occurred? 13 A. My answer to that is that you can assume 14 a responsibility for something that's happened in the 15 past. 16 Q. Does it say that? 17 A. No, it does not. 18 Q. No. Anyway, that can move on. 19 The letter or the sentence then goes on: 20 "... has owed and owes the same contractual duty of 21 care to the Council as owed to tie ..." 22 So in other words the duty of care being referred to 23 is identical to the duty of care being owed to tie? 24 A. Correct. 25 Q. So if we return to your witness statement at 153 1 paragraph 2.18, which is on the left-hand page, what is 2 ancillary about the duty of care to CEC? 3 A. Nothing, and so I think the answer is I made a mistake 4 in my witness statement at 2.18, using the word 5 "ancillary". 6 Q. Thank you. Indeed, the duty of care existed before the 7 letter of 23 June 2005? 8 A. Which duty of care? 9 Q. Both duties of care in fact, but in particular the duty 10 of care to the Council. 11 A. I disagree with that. 12 Q. Why? 13 A. Because we weren't appointed by CEC. We were appointed 14 by tie Limited. If we were to owe a duty of care to the 15 Council, a contractual duty of care, we would need to be 16 in contract with them under the terms of appointment. 17 We were not. The terms of appointment were signed with 18 tie. 19 Q. Mr Fitchie, I hope you're not going to take up the time 20 of Inquiry and not require me to go back to the letter 21 that you wrote and that we looked at a moment ago which 22 stated: 23 "This letter confirms that as from December 5, 2003 24 onwards, DLA ... has owed and owes the same contractual 25 duty of care to CEC as owed to tie ..." 154 1 A. I'm sorry, I'm really not understanding the point, 2 my Lord. I wonder if you can help me here. 3 This letter, the 23 June to Alex Macaulay, is making 4 a proposal. I thought -- forgive me if I'm wrong. 5 I thought I was being asked as of our date of 6 appointment of December -- let's say November 22, 2002, 7 we owed a duty of care to the Council. We could not 8 have owed such a duty of care to the Council, and that 9 was the whole point of this letter. That we were being 10 asked by tie, because somebody, according to Mr Macaulay 11 whose statement I have read, he was unsure who it was at 12 the Council asked him to get duties of care from their 13 consultants and subcontractors, and this was why this 14 letter was provided. 15 I believe that I have answered the question. No 16 duty of care could have been owed by tie to CEC during 17 the period November 2002 to June 2005 because there was 18 no contractual relationship. 19 Q. So what does the first sentence of the third paragraph 20 in the letter mean? 21 A. It means it's extending a duty of care back in time. 22 Q. Does it say that? 23 A. "has owed and owes the same contractual duty". So the 24 question is: would it be better if the letter said: this 25 letter is going back in time to owe and carry on owing 155 1 the same contractual duty of care? Do I understand the 2 question correctly, my Lord? 3 CHAIR OF THE INQUIRY: Well, I think we'll just move on, 4 Mr Martin. I think I can interpret -- 5 MR MARTIN: Thank you, my Lord. 6 The second matter I want to ask you about, 7 Mr Fitchie, arises out of the evidence that you gave 8 yesterday, and indeed in your witness statement, 9 regarding your secondment to tie. 10 A. Mm-hm. 11 Q. Could you look, please, at paragraph 7.48 to 53 of your 12 witness statement. That's pages 134 and 135. Now, you 13 narrate here the commencement of your secondment, which, 14 according to paragraph 7.52, came into play formally at 15 the end of October 2007? 16 A. Mm-hm. 17 Q. Now, once you were seconded, what was your legal status 18 so far as tie was concerned? 19 A. I was a partner at DLA Piper. I think we were -- I went 20 over this with -- my Lord, with Mr Lake in his 21 questions. 22 I was a partner at DLA Piper. And there was 23 a contract between DLA Piper and tie giving them 24 exclusivity of my time for a fixed fee. 25 Q. Could you look, please, at document CEC01656651. 156 1 CHAIR OF THE INQUIRY: Do you still want the statement left 2 on the -- 3 MR MARTIN: It perhaps might be better. I'm much obliged, 4 my Lord. It's not quite so important as the last one, 5 but yes, it would be helpful if it could be. 6 Now, this we looked at yesterday. 7 A. We did. 8 Q. I think it was dated in September 2007. 9 A. I'm not sure there's a duty on this document. 10 Q. No, but I think by associated emails it's about then. 11 If we can live with that answer? 12 A. I can. 13 Q. The position was described as "[Acting] Commercial 14 Director"; is that right? 15 A. That's what it says on this Heads of Terms document. 16 Q. Is it correct? 17 A. No, it's not. What came into effect was the 18 relationship between DLA Piper, tie and myself as I have 19 described. 20 I think I went through this in my evidence with 21 Mr Lake yesterday, my Lord, and explained that this 22 document was a proposal, a Heads of Terms, if you like, 23 that was discussed between me and Colin McLauchlan. 24 There had been some discussion between Michael Burton, 25 my manager -- my boss, my line manager in London, and 157 1 Willie Gallagher direct. Willie Gallagher had delegated 2 responsibility to organise the secondment to 3 Colin McLauchlan. 4 This part of the document -- my best recollection 5 came about as a result of me trying to understand what 6 it was that tie were saying. 7 The terms of appointment and the fee and matters on 8 page 2 were much more my thinking on how the secondment 9 would work out. That's where I am. I have more to say 10 on the timing of this, but I need to listen to the 11 questions on it, rather than expanding more now. 12 Q. Well, did you ever assume the position of Commercial 13 Director of tie? 14 A. No. 15 Q. Did you ever use that title? 16 A. No. There are some references in tie documentation 17 after close, after May 2008, making reference to 18 Andrew Fitchie as Contracts Director, but these 19 documents were not seen by me and they were -- tie were 20 under some pressure to demonstrate how they were 21 resourcing during the execution -- the implementation 22 period of the contract, and I think that just was put in 23 there because it was convenient to show they had 24 a resource to cover contract manager. 25 But I never assumed any formal position, Director or 158 1 anything else, within tie. 2 Q. Did you take instructions from your joint client, City 3 of Edinburgh Council, on the appropriateness or 4 otherwise of your being seconded to tie in whatever 5 capacity? 6 A. My view at the time was -- 7 Q. Forgive me, Mr Fitchie. Did you or did you not take any 8 instructions from CEC on your assuming, in whatever 9 respect, secondment to tie? 10 A. I think my statement says that I had one conversation 11 with Gill Lindsay about this secondment. Otherwise I do 12 not recall whether I had conversations with CEC about 13 this arrangement. 14 Q. Did you either consider, record, take any instructions 15 on how you could continue to exercise your duty of care 16 towards CEC whilst assuming a position of secondment in 17 one form or another to tie? 18 A. I had a discussion with Gill Lindsay, as I said, and at 19 this time my conversation is in my witness statement and 20 I'm not going to contradict that. 21 What I said was that DLA were not advising the 22 Council directly without instruction from tie. 23 The question from Gill Lindsay was: who would 24 continue advising the Council separately? And my answer 25 was that that would be covered, but DLA's duty of care 159 1 was -- owed to the Council was subject to direction from 2 tie, which was the position set out in the earlier -- in 3 the June 2005 letters, as opposed to the letter you 4 took -- or the -- there was a later letter which I was 5 taken to by Mr Lake which mentions co-client. 6 My position at this point, answering your question, 7 was no, I did not have a direct instruction from CEC on 8 this secondment arrangement. 9 Q. My question asked you whether you gave any consideration 10 to it, and indeed whether you recorded that 11 consideration, to whether you could properly fulfil your 12 duty of care to your joint client CEC while accepting 13 a position of secondment at tie. Did you have such 14 a thing? 15 A. No. 16 Q. Thank you. 17 The third matter I want to ask you about, 18 Mr Fitchie, again arises to some extent out of your 19 evidence yesterday. Could you go to paragraph 7.68 of 20 your witness statement on page 139, please. 21 A. I'm there. 22 Q. This begins dealing with the charging arrangement, and 23 if -- I'm sorry, could we go to the next page too, 24 please. 139 deals with the question of the bonus. 25 Now, you describe in paragraph 7.72 a single 160 1 paragraph -- 2 CHAIR OF THE INQUIRY: I think the next page -- 3 A. I'm confused. 4 CHAIR OF THE INQUIRY: The next page isn't up. Thank you. 5 MR MARTIN: Thank you, my Lord. 6 You describe in a single paragraph, 7.72, the 7 circumstances of the bonus? 8 A. Correct. 9 Q. Is that a full account of all the circumstances relating 10 to the bonus? 11 A. Mr Lake -- Counsel for the Inquiry, my Lord, asked me 12 a question yesterday about were there -- I think the 13 language was: was this raised again? And my answer to 14 that was yes, it was, and the consequence of it being 15 raised -- the client -- there was a disagreement between 16 me and my firm as to whether I had had clearance to take 17 the bonus, and after scrutiny and internal enquiry, the 18 firm took the bonus back, and that was my evidence. 19 Q. Why is that not in your witness statement? 20 A. Does it -- my answer is: I didn't think it added very 21 much to what I was saying. The fact of the matter is 22 that I accepted a bonus. 23 Q. Now, you indicate, because until yesterday we had no 24 evidence on this, there was some sort of internal 25 enquiry within your firm. How was that initiated? 161 1 A. I recall travelling to London to meet with my new 2 manager who is now European Group Head for Finance and 3 Projects, who in fact was a man who I'd met at Cambridge 4 and played football with, and he informed me that the 5 firm was displeased, and that there would be an enquiry. 6 So that's how it initiated. 7 Q. So he must have ascertained it somewhere? 8 A. Ascertained -- 9 Q. The fact of the bonus being paid and accepted by you? 10 A. Well, he ascertained it from the firm's records and the 11 fact that I had -- I had -- my position was I had 12 clearance within the firm. 13 Q. Which is what you say in paragraph 7.72. But that was 14 ultimately not accepted; is that right? 15 A. Yes. It was not accepted by the firm that I had 16 clearance to accept the bonus. There was some confusion 17 about this within the firm, I have to say, but the 18 ultimate -- ultimately, the decision was this was not 19 allowable, and I needed to pay the bonus back to the 20 firm. And I believe also -- I had no role in this 21 whatsoever -- that CEC -- that DLA Piper wrote to your 22 client saying: we have this money, it needs to be 23 reimbursed, how would you like that to happen? 24 And I recall having a conversation some years ago that 25 CEC had not said anything in relation to that letter. 162 1 That is the extent of my knowledge, given that 2 I retired from the firm after a period of illness in 3 November 2010, and I began living in Italy from 4 June 2006, which was my actual -- sorry, June 2011, 5 which was the end of my six-month notice period. 6 Q. My understanding from your evidence yesterday in 7 relation to in particular the emergence within the 8 proposed Infraco contract of the pricing assumptions in 9 Schedule 4, my understanding from your evidence was that 10 you were not instructed in any significant way to play 11 a part in giving legal advice on the effect, on the 12 consequences of these Pricing Assumptions in Schedule 4; 13 is that correct? 14 A. Not exactly. The evidence that I was giving was my 15 participation in negotiation -- the drafting, in the 16 genesis, drafting, negotiation and reaching completion 17 on Schedule Part 4, my role was limited. I think that 18 was my evidence. 19 Q. Yes. That was the period after Wiesbaden, after the 20 beginning of 2008, when Schedule 4 in something like its 21 ultimate form first appeared. Up to the point of 22 contract close in May 2008. Is that correct? 23 A. Yes. Well, I'm sorry, no. The period of negotiation 24 for Schedule Part 4 finished, as I think I have said in 25 my evidence under examination from Mr Lake yesterday, 163 1 my Lord, was in my -- to my recollection around about 2 25 -- 26 March. So it was -- Schedule Part 4, to all 3 intents and purposes, was finished by that date. 4 Q. Now, during that time, as I understood it, you said you 5 were working very hard. I may misrecall it, but 6 I thought you said 13 and a half hours a day; is that 7 right? 8 A. That's what the figures show. 9 Q. We also know that following contract close or at about 10 the point of contract close, April 2008, you were 11 offered this bonus of GBP50,000. 12 A. Correct. 13 Q. What was the bonus in recognition for? 14 A. I'm sorry, I'm looking to see -- 7.72: 15 "He said TIE wished to award me a personal bonus in 16 recognition of my work for TIE on the Project. He said 17 the recommendation was from the TIE Remuneration 18 Committee and that the amount would reflect TIE's 19 appreciation for my work ... He said the Remuneration 20 Committee comprising TIE senior executives and CEC 21 officers had recommended this." 22 It was the recognition for my work on the project 23 from the beginning -- I beg your pardon, from 24 November 2002 until that time. So six years. 25 Q. But to use the word you used a moment ago, you had 164 1 a limited role in relation to Schedule -- the Schedule 2 Part 4, which of course we now know was a critical 3 factor in the significant increase in costs for the 4 project. So you had a limited role in that. 5 My question is a simple one: why were you worth the 6 bonus? 7 A. My word, my Lord. I think I need to answer that 8 question by saying that if you worked in the project 9 finance world, and the projects world, and you've worked 10 on this project, there are many, many, many other things 11 going on in terms of advice, involvement, engagement, 12 making yourself available to CEC to explain what is 13 going on. 14 I'm extremely open person. I'm an extremely 15 dedicated person, and the reason that the bonus was 16 there was not exclusively for Schedule Part 4. I worked 17 very, very, very hard on this project for a long time. 18 CHAIR OF THE INQUIRY: Was the timing of the bonus related 19 to the conclusion of the contract? 20 A. Not at all, my Lord. 21 CHAIR OF THE INQUIRY: Mr Martin, will you find a time to 22 adjourn? 23 MR MARTIN: I'm virtually finished, my Lord. If I may just 24 continue. 25 A. My Lord, on that point, I want to help. I can say three 165 1 things. 2 On 9 April, after this meeting with Mr Gallagher, 3 when he handed me a letter, the next place I went was 4 into a meeting with BSC who tabled a demand for 5 GBP19 million, and we had a break-out meeting in which 6 I discuss in my statement in two places, and the people 7 attending that meeting were Mr Gilbert, Mr Murray, 8 Mr McGarrity -- 9 CHAIR OF THE INQUIRY: I'm just wondering, Mr Fitchie, 10 I just wonder how this relates to the bonus. 11 A. My Lord, you asked me about was the bonus related to the 12 completion of contract. 13 CHAIR OF THE INQUIRY: And you said no, and that's where we 14 are. 15 A. Thank you. 16 MR MARTIN: Thank you, my Lord. 17 You see, I would suggest to you, Mr Fitchie, that 18 the circumstances of this bonus, the amount that it was, 19 the fact that Mr Gallagher and the Remuneration 20 Committee proposed it, is not consistent with the fact 21 that you played only a limited part in one of the most 22 critical elements of the Infraco contract, namely the 23 conclusion of Schedule Part 4 and indeed what its effect 24 would be. 25 A. I disagree entirely with that proposition. 166 1 Q. You see, I have to put to you, and my learned friend 2 yesterday didn't, but when you say you had a limited 3 part in Schedule Part 4, you are not telling the truth. 4 You had a full part, seconded to tie, in frequent 5 contact with the officers of tie, fully aware of the 6 evolving drafts and developments in the contract, and 7 frankly, it's not credible that you did not play a full 8 part, owing a duty of care as the solicitor, in tie in 9 that respect, is it? 10 A. I disagree with you, and I have given my evidence on 11 that point to Mr Lake yesterday, and in my statement. 12 I have nothing further to add on that, my Lord. I don't 13 think I can assist. It's the same type of question as 14 I have answered already. I don't wish to be 15 discourteous, but I feel I have given evidence on this 16 and Mr Martin has that to look at with his client. 17 Q. Well, Mr Fitchie, I'm afraid we have to pursue these 18 matters for the benefit of the Inquiry, not for my 19 client's benefit or for anyone else. 20 I put it to you that you were fully involved in the 21 creation, the ultimate wording, and considering the 22 effects of Schedule Part 4, and indeed we have seen this 23 afternoon Mr Dunlop asking you about various letters in 24 April when you clearly did give advice about Schedule 4 25 which is again consistent with your full engagement 167 1 throughout, isn't it? 2 A. I don't wish to be unhelpful. I have given my evidence 3 on this point and I do not -- your first question 4 was: should I get a bonus or should the -- should the 5 bonus be tailored to the fact that I had limited 6 involvement in Schedule Part 4? My answer to that 7 question is: that is a matter entirely for tie and for 8 the representatives on the Remuneration Committee. 9 Presumably, if somebody on that committee had thought 10 Fitchie is not doing his job properly because he's not 11 fully involved in everything we're doing, they would 12 have said it. 13 The second part of the question is related to what 14 Mr Dunlop took me to, my Lord, and nothing Mr Dunlop 15 took me to undercuts what I have said about the way 16 I was engaged on Schedule Part 4, and I have been very 17 specific about it. I've been challenged by Mr Lake on 18 behalf of the tribunal and tested on that, and I stand 19 by what I said. 20 Q. You were asked by my learned friend Mr Dunlop about 21 a number of documents, in particular the close report? 22 A. Yes. 23 Q. You were referred to a number of passages where it was 24 indicated that there were expected to be immediate 25 Notified Departures; is that right? 168 1 A. Correct. 2 Q. Did we see in any of these documents, a statement along 3 the lines of your saying "and in addition it is likely 4 that there will be an unquantified and potentially 5 unquantifiable number of Notified Departures throughout 6 the carrying out of the Infraco contract by reason of 7 the wording of the Pricing Assumptions in Part 4 of the 8 Schedule"? 9 A. If I understand what you're asking me, the documents 10 that Mr Dunlop took me to were documents that were not 11 drafted by DLA Piper and not drafted by me. 12 Q. Well, what is the answer to my question? Did you 13 anywhere, and there were some documents that did emanate 14 from DLA, not least the letters -- did you at any point 15 draw to the attention of tie or indeed CEC -- put it 16 shortly -- the unquantifiable consequences of the 17 Pricing Assumptions in Schedule Part 4? 18 A. I had a specific exchange which we looked at on 31 March 19 which went to exactly that type of issue on notified 20 departure. 21 I was pressing tie to take a -- to -- to examine 22 what V26 to V28 meant, and yes, I had discussions, as 23 I say, and I have said, throughout this period about 24 Schedule Part 4 and what it meant, and we have seen the 25 evidence of Mr Bell and Mr Gilbert saying they 169 1 understood exactly what I was talking about. 2 So yes, I did. Is it written in precise language in 3 those tie documents? No. But it's pretty evident what 4 the mandatory change and Notified Departure will create, 5 and what those risks are, and we saw Council solicitors 6 taking a view on that as well. 7 Q. So you accept, Mr Fitchie, that there is no written 8 recording of the consequence which I outlined? 9 A. I do not accept that that is the case because the 10 28 April letter contained Schedule Part 4. It contained 11 a risk matrix. It was part of a discussion -- I'm 12 sorry. It was issued after discussions with the 13 Council Solicitor. The draft letters were shared with 14 her. 15 So my answer to the question is: yes, I did indicate 16 that there was going to be Notified Departures if there 17 were departures from assumptions, and I did indicate 18 that BSC had insisted on further contractual protection 19 of this type as a result of the design -- the state of 20 the design and as a result of the position on the MUDFA 21 contract. 22 Q. Do you rely on what is said -- I don't want to go back 23 to it -- of the letter of 28 April? 24 A. I rely on all of the DLA letters, all of the 25 conversations that I had -- if you're asking for 170 1 writing -- is that right? 2 Q. Mr Fitchie, you know perfectly well I started by asking 3 a question about writing. 4 A. Good. Then I rely upon the DLA Piper letters. I rely 5 upon the documents that Mr Dunlop took me through. Yes. 6 That's where I am. 7 MR MARTIN: My Lord, I'm much obliged for the opportunity to 8 ask these questions. I can deal with these matters in 9 submissions. 10 CHAIR OF THE INQUIRY: Mr Fitchie, that concludes your 11 evidence. You are still technically under your 12 citation, and it would be possible for the Inquiry to 13 recall you or to seek further evidence from you in 14 another way. 15 That may or may not be required. 16 A. Thank you, my Lord. 17 CHAIR OF THE INQUIRY: Thank you very much. 18 A. May I just thank you for your patience with me. And 19 thank Mr Lake for his excellent work on asking 20 questions. 21 CHAIR OF THE INQUIRY: We will just adjourn for 15 minutes 22 to enable the shorthand writer to have a break. And we 23 will bring in the next witness. 24 So we'll resume again at 3.50. 25 (The witness withdrew) 171 1 INDEX 2 PAGE 3 MR ANDREW FITCHIE (continued) ........................1 4 5 Examination by MR LAKE ........................3 6 7 Examination by MR FAIRLEY ....................89 8 9 Examination by MR DUNLOP QC .................106 10 11 Examination by MR MARTIN ....................147 12 13 MR STEVE REYNOLDS (affirmed) .......................172 14 15 Examination by MR MACKENZIE .................172 16 17 201