1 Thursday, 9 November 2017 6 MR LAKE: My Lord, the next witness is Tony Rush. 7 MR TONY RUSH (sworn) 8 CHAIR OF THE INQUIRY: You will be asked some questions by, 9 first of all, Inquiry Counsel, Mr Lake. If you just 10 listen to the question and answer it as directly as 11 possible, and if you speak clearly into the microphone, 12 and at a measured pace so that the shorthand writers can 13 keep up with you. Do you understand? 14 A. I shall do my best, my Lord. 15 Examination by MR LAKE 16 MR LAKE: Mr Rush, could you state your full name, please. 17 A. Anthony John Rush. 18 Q. The Inquiry has details of your address. I think you 19 were engaged as a consultant by tie from a period 20 towards the end of 2009 and continued working with them 21 until 2011; is that correct? 22 A. I think the appointment started in 2010 in actual fact. 23 Q. It actually took effect in 2010? 24 A. Yes. 25 Q. What I would like to do is ask you to take a look at 115 1 a document, please. You should have a hard copy in 2 front of you, but it will also be shown on the screen. 3 It's TRI00000141_C? 4 A. Yes. 5 Q. That should be the same document in both places. Is 6 that a copy of a statement that you provided to the 7 Inquiry and which you have signed at the end of it? 8 A. It is, my Lord. 9 Q. Are you content that we take that as your evidence for 10 the purposes of this Inquiry? 11 A. I do. 12 Q. I've got a few additional questions to ask you. I would 13 like to start by looking at page 13 of this statement 14 that you have provided. And the paragraph, the fourth 15 paragraph on that page, beginning "I have no doubt". 16 What you said there is: 17 "I have no doubt that the individuals in the project 18 management team TIE put together were competent in their 19 disciplines. But for such a unique and complex" -- 20 A. I'm old-fashioned enough to have to look at the hard 21 copy, my Lord. 22 CHAIR OF THE INQUIRY: It's all right. 23 A. Sorry, Mr Lake. 24 MR LAKE: "I have no doubt that the individuals in the 25 project management team TIE put together were competent 116 1 in their disciplines. But for such a unique and complex 2 contract they lacked the experience and cohesion that 3 was required, even without the peculiar circumstances 4 surrounding the project. I found TIE's team 5 under resourced for the task facing them. It was 6 necessary to bring "people" in to supplement TIE's staff 7 on a reactionary basis rather than planned from the 8 outset." 9 I just want to take out some of the detail from 10 this, if I can. 11 When you refer there in the second half of that 12 paragraph to tie's team being under resourced, are we 13 talking about manpower or particular skills that were 14 lacking? 15 A. I think, Mr Lake, after this point in time, my memory is 16 not that clear. But I would suggest it was probably 17 both. The contractor was -- as I think you have heard 18 other evidence, was an exceptionally unusual form of 19 contract. And the way the contract was being managed by 20 the contractor required more skills and probably more 21 people than tie had. 22 Q. What skills do you consider were missing that tie 23 required? 24 A. I think -- I think skills and general experience. 25 I think the people that were employed by tie would have 117 1 been generally competent on a normal contract, a normal 2 design and build contract. 3 I think this contract was so exceptional that you 4 need -- you needed a higher level of skill and 5 experience. That's my recollection of it. It's eight 6 years ago. 7 Q. What was it about this contract that meant the 8 additional skill or experience were required? 9 A. The contract form itself. 10 Q. What about it? 11 A. It was highly unusual, to say the least. 12 Q. Why? 13 A. Well, I think it's been reported that the contractor 14 felt that it was unsuitable. I think at one point in 15 time one -- I think Mr Walker said that, and I think 16 that Mr Keysberg said it was a contract that we can hold 17 the -- I'm told that it was a contract where they could 18 hold the client to ransom. 19 The design -- the transfer of design responsibility 20 and risk was not well undertaken, shall I put it that 21 way. That the risk -- that the risk came back to the 22 client and virtually the contract terms were open to 23 abuse. 24 I just felt at the time that the -- that the tie 25 staff were not skilled and experienced enough to take 118 1 that on. 2 Q. Experience is perhaps easy to understand as a matter 3 of -- it's self-explanatory. 4 But what skills did you think were missing? What 5 skills -- which skills would have helped, had they been 6 brought in in addition? 7 A. Well, in actual fact, Mr Lake, I think, as I have said 8 later in my statement, I think it would have been wiser 9 to have a professional project management team, 10 a project management team. I'm not trying to avoid the 11 question. But it's the whole -- it was the whole 12 concept of having this -- this project management team 13 put together when it would have been better to have 14 a professional project management team that had the 15 skills and the experience to run that sort of contract. 16 Q. If I turn that round, what do you consider the advantage 17 would be of bringing in a pre-established external 18 project management team rather than seeking to establish 19 that project management team within tie? 20 A. I think I'm trying to indicate that in the last 21 sentence. This was quite a hurriedly put together 22 document. I may have phrased things differently if 23 I had been given more time. So excuse me for that. 24 But the -- tie were not able to react by building 25 the team that was required to manage the circumstances. 119 1 By this point in time, remember, the contract had been 2 going for some years or two or three years when I got 3 involved. But by this point in time, it would be 4 difficult to have recruited on a short notice more 5 experienced and skilled staff than they had, whereas 6 a project management team, particularly a project 7 management team that had been initially involved in the 8 contract, would have had those people in-house and ready 9 to get involved in the job. 10 Q. Just understanding what I said there -- what you said, 11 you said "particularly a project management team that 12 had been initially involved in the contract, would have 13 had those people in-house". 14 Is that the position if they had used external 15 consultants to come in and do project management? 16 A. I think so, yes, Mr Lake. 17 CHAIR OF THE INQUIRY: When you referred to the original 18 project management team, are you referring to 19 Turner & Townsend? 20 A. I think so, my Lord. I'm pretty sure that's the case. 21 MR LAKE: I want to turn just to the question of costs. 22 It's apparent from your CV you have had lots of 23 experience in relation to construction. How important 24 is it to have a clear idea of your anticipated final 25 cost? 120 1 A. Well, it's obviously essential. But in this particular 2 case, tie were a limited liability company that was 3 specifically put together for this project, as 4 I understand it. 5 I think, as I say elsewhere in my evidence, that one 6 of the big issues on this job was the cap on funding. 7 And there was, I think, GBP550 million to GBP600 million 8 at a stretch available. So I would say on this 9 particular job, there was greater necessity for prudent 10 cost estimating going forward because you have -- in 11 a private -- in a registered company you have the 12 question of solvency, and the directors, I think, should 13 have addressed that. 14 In my experience, as you say, I mean, it's 40-odd 15 years' experience, in my experience a cost consultant 16 would have dealt with that. 17 Q. Is that again a service that might have been available 18 if external -- project management had been through 19 external consultants? 20 A. I think so. To be cynical about it, if I may, my Lord, 21 a cost consultant would be more likely to be prudent 22 because of his PI insurance trying to make the costs 23 suit the budget. 24 Q. Obviously one aspect -- 25 A. Excuse me. 121 1 Q. One aspect of the costs is simply knowing, as you say, 2 that you have got enough money available ultimately to 3 pay. But in terms of managing the project, managing the 4 contractors and the construction, does having a clear 5 view of your anticipated final cost assist in that 6 regard also? 7 A. I mean, I don't -- it wouldn't be injurious to managing 8 the contract. But not having the funds available -- 9 I have to say, until Sue Bruce got involved, I never 10 heard anybody, although the reality was that they were 11 going to -- I mean, even when I got involved, I think it 12 was recognised that the 600 million at a stretch was 13 going to be exceeded. 14 I honestly -- I have thought about this over these 15 last few days. I can't remember anybody talking about 16 how do we get additional funding. Quite the opposite. 17 I mean, I heard a lot about the Scottish Government 18 saying there isn't any additional funding. 19 If you put yourself in the position of the 20 contractor, who -- for whatever reason knew that the 21 budget was going to be overrun, then I have to ask 22 myself the question: what would I have done in terms of 23 progressing the contract, if I thought I wasn't going to 24 get paid? 25 I would like to think that I would have done it on 122 1 trust. 2 Q. That's what you would like to think. What do you think 3 in reality would have happened? 4 A. I think that would be speculation, my Lord. I can't 5 speculate on that. 6 But I certainly think a UK contractor probably would 7 have done more on trust. 8 Q. Sorry, I didn't catch that? 9 A. A UK -- major UK contractor -- UK contractors I had 10 worked for would have done more on trust than these 11 contractors were prepared to do. That's speculation. 12 Q. Returning to the time when you first were engaged in the 13 project, you were presumably given an explanation of how 14 things stood at that time and what the principal 15 problems were facing tie. What were the main points 16 that you were told were to be addressed? 17 A. At that moment in time, my Lord, the whole contract was 18 bedevilled by Pricing Assumption 1 Schedule 4. And 19 this, as I remember it, was the sole -- was the major 20 issue, what did pricing -- Pricing Assumption 1 21 Schedule 4 mean? And I think my initial meeting with 22 the Chief Executive and the Chairman touched on that. 23 At that point in time I remember that the Chairman 24 would not sit in the same room as, I think, the 25 Chief Executive of Bilfinger Berger UK because of that 123 1 gentleman's attitude. 2 So what I was being faced with was a specific 3 contractual issue which was seen to be the principal 4 reason for failure to perform the contract, and a clear 5 breakdown in relationships between the contractor and 6 the -- and the employer. 7 I was thinking about that the other way. The best 8 I can put it, there was no feeling of win/win on this 9 job. It was win and you lose and you surrender, on both 10 sides. 11 Q. I was going to ask you. That was on both sides when you 12 arrived? 13 A. I think so. 14 Q. Did that change during your period with tie? 15 A. Well, you have to go into the process. But from a site 16 point of view, no. I mean, if we get on to Project 17 Carlisle, one of the things that I -- principles I set 18 down in the scope was that it would have to be clean 19 teams, because at that point in time, probably even 20 before that, Mr Lake, I recognised that the teams on 21 site were never going to come together. 22 Q. Just to be clear, when you say clean teams, that meant 23 that new personnel would be brought in by each party to 24 administer the contracts running forward? 25 A. Well, to carry out the scope of Project Carlisle. 124 1 Q. Negotiate it as well? 2 A. Yes. The changes in terms to bring the terms back to 3 terms that could, shall we say, operate properly. 4 So it was necessary to do that, and I recognised at 5 the time, and indeed, I think in -- you no doubt remind 6 me whether this is true or not, Mr Lake, but I think in 7 the revised terms that we agreed with the Infraco's 8 clean team, it required a change in culture on site, and 9 indeed I think that -- I'm certain that got pushed into 10 the final mediated agreement, that there was an 11 agreement to change culture. 12 Q. I would like to look at a document that's referred to in 13 your statement. It's reference CEC00541334. 14 A. Is that going to come up? 15 Q. It will come up on the screen just to your right. 16 We can see this has got the heading "Project 17 Pitchfork", and the date which is just about readable on 18 it is 1 March 2010; do you see that? 19 A. Yes, I do. 20 Q. We've heard that project Pitchfork was something 21 produced within tie to consider the various options 22 going forward, running from about the end of 2009 into 23 the start of 2010. 24 Were you made aware of Project Pitchfork and the 25 various options when you arrived at tie? 125 1 A. This document has some resonance with me because when 2 I got your questions at the end of June, 3 I thought: Project Pitchfork; what is Project Pitchfork? 4 It had gone out of my mind altogether. 5 Q. Has seeing these documents acted to refresh your memory? 6 A. When I started to read through them, I thought: you must 7 be getting too old. 8 I became aware of Project Pitchfork, I think, 9 shortly after I -- after I got involved, and I was asked 10 to give some specific advice on contractual mechanism. 11 I'm not certain when I -- when I actually became 12 involved -- aware of Project Pitchfork, or indeed its 13 reasons. 14 Q. Look within this document, in this report, at page 56. 15 I should say, you will see that this is a draft, and 16 there are many other drafts in existence. But we can 17 look at this one for the time being. 18 If you could enlarge the text towards the centre of 19 the page, and perhaps for ease of reading, could we 20 enlarge further, isolate the paragraph beginning "As 21 a result of the position". 22 You can see what it says there is: 23 "As a result of the position now emerging, tie 24 reported to the Tram Project Board in December 2009 that 25 it had secured the services of Tony Rush, a specialist 126 1 in disputes and claims to work with tie to assist 2 enforcing the full range of commercial mechanisms 3 contained within the contract. This work has resulted 4 in a number of significantly important contractual 5 letters being sent to BSC in the period from mid-January 6 covering the following topics." 7 They are all set out. 8 Now, do you agree that that was one of your roles 9 that you were given at the outset, which was really to 10 assist tie in enforcing the full range of contract 11 mechanisms that were available to it? 12 A. Yes, I think we can get into semantics about enforcing. 13 I have seen elsewhere it referred to -- somebody 14 referred to it is -- not contractual enforcing, but -- 15 my view on what needed to be done at that point in time 16 was to be contractually pedantic. 17 Q. So that was your view? 18 A. That was my view. My impression of what had gone 19 beyond -- before was that there was a whole plethora of 20 correspondence which didn't get down to the contractual 21 basis. And -- so what I was suggesting was that we got 22 pedantic about the -- not just the payment terms, but 23 also the performance terms, because I felt -- I'm 24 speaking from memory here, and I hope I have not got 25 a reconstructive memory, my Lord. But I felt that 127 1 the -- they had to make the contractor aware that you 2 read the contract as a whole, and not just take the 3 payment term and say: that is the term, that lets us 4 hold you to ransom. 5 There were a lot of terms in that contract in terms 6 of programme, design management, best value, that needed 7 to be brought home to the contractor to make them aware 8 that it wasn't just Pricing Assumption 1 Schedule 4. 9 Q. In that connection, if we can look at an earlier page in 10 the same report, can we go to page 20, please, and 11 enlarge. 12 Perhaps enlarge from the -- yes, that will do. 13 We see that what's noted here is: 14 "As described in section 1, a range of fundamental 15 options were addressed by the Tram Project Board in 16 December 2009 and January 2010. It was agreed that an 17 intensive series of eight inter-related workstreams 18 would be instigated to provide a robust basis for 19 decisions of the Tram Project Board meeting on 20 10 March 2010." 21 If we look at the table underneath, we see that item 22 number 4 is noted as -- the work stream is use of 23 contractual mechanisms, and you are the person leading 24 that work stream. 25 Now, that refers to things being done for a Tram 128 1 Project Board meeting particularly on 10 March, but was 2 your responsibility to engage with and ensure the use of 3 contractual mechanism as something that was more 4 general? 5 A. I don't think so, Mr Lake. I think at that point in 6 time -- I think I tried to explain my position at that 7 point in time was contractual pendency, to try and -- I'm 8 talking from memory now, but a lot of the letters pre 9 then had been quite emotive and pointless, and you may 10 say even after then, sadly. But the -- but what I was 11 trying to do was to bring it back to -- to be clearly -- 12 to be -- clearly state the performance requirements in 13 the contract. 14 Q. Is that something you continued to do for tie through 15 your time with them? That's being adhering to or 16 asserting the contract? 17 A. Well, my time with tie, I think, was split into four 18 different periods, wasn't it? There was this period up 19 to March, and then we went into Project Carlisle, and 20 negotiating terms with that. And then we had a term of 21 probably purgatory when there was -- when the contractor 22 appeared to get impatient and put in an offer, and there 23 was a counter-offer and then there's lots of discussions 24 at that time about -- about the rights and wrongs and 25 certainty. We did a lot of work on getting Richard Keen 129 1 QC's opinion and legal opinion. We did a lot of work. 2 We employed Robin Blois-Brooke to look at the design. 3 So I think the -- that period, the third period, was 4 probably important to CEC that they knew that the 5 information that they were going to go forward on was 6 the best they could obtain, and then the fourth period 7 of my involvement was effectively managing the 8 mediation. 9 So this was into those four periods. 10 Now, another part of the scope of Project Carlisle 11 was that the -- that the parties continued, whilst we 12 were discussing Project Carlisle, they continued with 13 their contractual exchanges. So to that extent I would 14 have drafted -- taken a look at some of the letters that 15 were being bandied backwards and forwards. 16 Q. Just understanding the roles you played from time to 17 time, you described there how the continuation of the 18 adherence to the contract role. 19 In relation to the Project Carlisle, that's 20 something that was particularly your responsibility to 21 take forward? 22 A. Yes. I mean, I think, again, I need to be careful not 23 to be reconstructive memory, but my memory of my 24 strategy then was I saw what was happening. I'd 25 listened to Richard Jeffrey about his meeting with the 130 1 two German chiefs, Dr Keysberg and Scheppendahl of 2 Siemens, and I'd been told that Siemens -- that the 3 department that was set up to run this contract was new. 4 It was a new adventure for them. 5 So the view I took -- I tried to put myself in 6 a position that -- of being a Director of those 7 companies in a role that I'd fortunately played in 8 reality. 9 The view I took was I didn't think that Siemens, 10 with wanting to supply their products to trams, 11 railways, wind farms, et cetera, would want to be 12 associated with a contract in Edinburgh that was 13 allegedly holding the city is to ransom. 14 So I took the view that the more we pressurised the 15 pendency on the contract, at some point in time we would 16 see a change in their attitude. 17 Then I think in March, when I think I had had my 18 first meeting with Infraco, that's when I got the 19 telephone call after the meeting from the Siemens 20 Director, suggesting he wanted a private meeting, 21 and I suggested Carlisle. That's where I had secret 22 meetings with the English habitually, at a hotel in 23 Carlisle. 24 So I met him in Carlisle, and that's why it became 25 known as Project Carlisle. 131 1 From there, we developed the idea of Project 2 Carlisle to see if we could -- see how best we could 3 amend the contract to give the CEC or the Council or the 4 client or tie price certainty going forward. 5 Q. In relation to the third stage, which is the one you 6 gave the title "purgatory", I think also involved 7 getting information and legal advice? 8 A. Yes. 9 Q. Were you involved then in the preparation of 10 finalisation of Remediable Termination Notices and 11 under-performance warning notices that were to be served 12 on the contractors? 13 A. I was, Mr Lake, yes. 14 Q. And in getting legal advice in relation to those? 15 A. Yes, Mr Lake. 16 Q. And the fourth stage you said was managing the 17 mediation. When you say managing the mediation, was 18 that producing information to assist? 19 A. Yes. It's a complex mediation in so much that -- 20 I think I have touched on this in my evidence about 21 Nigel Robson. It was a complex mediation in so much as 22 there was several parties to both sides, and at that 23 point in time initially my perception was that there was 24 differences between the Council and tie about the way 25 forward, and the Government, Scottish Government. 132 1 So we almost -- we were facing a situation where we 2 almost had to mediate between ourselves before we 3 mediated with another party, who was presumably also 4 mediating between itself. So it was a complex 5 situation. 6 MR LAKE: My Lord, this would be a good time to take 7 a break, if that's convenient. 8 CHAIR OF THE INQUIRY: How are we placed for finishing this 9 witness? 10 MR LAKE: I'm going to look at matters over lunch to see if 11 I can draw in certain of my questioning with a view to 12 ensure it fits in the afternoon. But if it was possible 13 to start earlier than normal after the lunch break, that 14 would assist. 15 CHAIR OF THE INQUIRY: 45 minutes? Yes. We will have 16 a break now for lunch and we'll restrict it to 17 45 minutes. 18 A. Thank you, my Lord. 19 CHAIR OF THE INQUIRY: And we will resume again at 1.45. 20 (1.00 pm) 21 (The short adjournment) 22 (1.45 pm) 23 CHAIR OF THE INQUIRY: Good afternoon, Mr Rush. You're 24 still under oath. 25 MR LAKE: Mr Rush, could I ask you to look at your 133 1 statement, please, at a passage beginning at the foot of 2 page 4. In the last two lines it begins: 3 "Two alleged circumstances stand out to me which 4 indicate there could have been an unusual level of 5 desperation on the part of TIE's purchasing team." 6 If we look over the page: 7 "1. Legal advice from DLA Piper was set aside. 8 2. There was an alleged private understanding - 9 a "gentleman's" agreement - that there were substantive 10 issues unresolved at the time of Financial Close." 11 I want to ask you a few questions about that. 12 First, when you refer to a level of desperation on 13 the part of tie's purchasing team, when do you think -- 14 when in your view was there evidence of such 15 desperation? 16 A. I obviously wasn't involved at that time, Mr Lake, and 17 it would be very difficult for me to hazard a guess on 18 that. 19 It is certainly not unusual in my experience where 20 contract prices are in excess of budgets, and you've 21 appointed -- a preferred bidder has been appointed, and 22 there's time limits on letting the contract that people 23 get desperate. 24 Q. You referred here to -- I'll come back to that in 25 a moment. 134 1 If we look at the circumstances that you put at the 2 top of page 5, the first is legal advice from DLA Piper 3 was set aside. What advice did you have in mind that 4 you thought was set aside? 5 A. I understood from Mr Fitchie that he'd been asked to 6 stand aside whilst they negotiated the terms of things 7 like Pricing Assumption 4 and the final deal. 8 Q. To be clear, it wasn't a specific piece of advice that 9 was set aside. It was the fact that he was stood down 10 as adviser for the period? 11 A. That's what Mr Fitchie told me, my Lord. 12 Q. I understand that. The second item you refer to here is 13 the alleged private understanding, the gentleman's 14 agreement. 15 What was your involvement in relation to that 16 alleged gentleman's agreement? 17 A. I wasn't involved in that, Mr Lake. This came up -- 18 I think I first became aware of that when Mr Walker had 19 a meeting with the -- with the City Council quite late 20 on, and in that meeting he claimed that there had been 21 some sort of gentleman's agreement that -- that things 22 would be all right on the night, so to speak. New 23 monies would be forthcoming, and the problems that were 24 known about in terms of the contract would be -- would 25 be sorted out. 135 1 Q. The way you put it in this point which we can see on 2 screen or in your hard copy is you describe it perhaps 3 as a private understanding? 4 A. That's -- that's as I understand what Mr Walker was 5 saying to the City Council at that time. 6 Q. It's something that he can be asked about in due course. 7 Could I ask you, please -- I'm going to go slightly 8 back and forward in your statement. 9 If you could look here for a moment -- if we go to 10 page 10, please? 11 CHAIR OF THE INQUIRY: While we are waiting for that, 12 Mr Rush, you said it wasn't unusual for desperation to 13 set in, as it were, when you've appointed a preferred 14 bidder and you're up against it in terms of time. 15 Does that mean that you consider, or do you consider 16 that the preferred bidder decision was taken too soon? 17 A. I don't think the preferred bidder decision was taken 18 too soon, my Lord. That's not my point. 19 I don't think preferred bidder is a sensible way 20 forward in a competitive tender because you remove the 21 element of competition. And so it then becomes 22 a negotiation -- a negotiation. In my experience that's 23 when things get really nasty and tough between the 24 contractor and the -- and the client. My advice has 25 always been, when I've been asked about this in terms of 136 1 advice, is that you should avoid preferred bidder stage 2 in letting a competitive contract. 3 CHAIR OF THE INQUIRY: Thank you. 4 A. Is that clear? 5 CHAIR OF THE INQUIRY: Yes. 6 MR LAKE: If you could look at page 10 on screen. If you 7 could look at the top of this page, please. You say 8 there: 9 "On top of which TIE certified Preliminaries on 10 a basis of monthly tranches without reference to 11 milestones. In effect, I think Bilfinger Berger could 12 get GBP1 million a month even if they did nothing. This 13 could well explain, at least in part, their 14 unwillingness to progress the Works. I instigated 15 a change and TIE stopped paying Preliminaries until what 16 had been paid reflected what had been done. I think 17 this hit Siemens more than Bilfinger Berger." 18 Now, are you aware that the matter of payment of 19 preliminaries was ultimately a matter referred to 20 adjudication and was determined by Lord Dervaird? 21 A. I probably was, Mr Lake. I mean, at this moment in 22 time, I can't recall it. 23 Q. I don't know if you recall then that Lord Dervaird 24 determined that the preliminaries were in fact payable 25 monthly, irrespective of what work was being done, and 137 1 that the consortium were entitled to claim these monies 2 that you had stopped. Were you aware of that? 3 A. I must have been at the time, Mr Lake, but honestly, 4 sitting here, I don't recall that. 5 Q. Okay. I'll move on to a different matter, please. If 6 you could look at page 18 of your statement. This is in 7 response to question 32 within the list of questions 8 that were sent to you. I'll just read that question. I 9 can put the document up on screen, if you prefer, but if 10 you take it from me, it gives a document reference: 11 "... is a written record of a meeting of the two 12 parties on 2 March 2010. Can you comment on this 13 meeting? Its purpose, the issues discussed and what if 14 anything was achieved?" 15 Now, what you said there on page 18 of your 16 statement is that Clause 6.5.1(a) is a step in the 17 contract for parties to review any matter which 18 adversely affected the completion of Infraco works: 19 "The meeting was held on 2 March, as both versions 20 record, in accordance with that requirement. I cannot 21 speculate as to what it achieved, but it was a step in 22 the process which eventually led to settlement a year 23 later." 24 So did you find that at the foot of page 18? 25 A. I've got it. 138 1 Q. I want to ask you about both aspects of it, whether or 2 not you say you can't speculate as to what was achieved, 3 but it was a step in the process. 4 Could we look at the meeting in question, please. 5 It's document reference CEC00574841. You can see here 6 the title page reads: 7 "MEETING NOTES IN RELATION TO A MEETING HELD AT 8 CITYPOINT BETWEEN TIE AND THE INFRACO ON 2 MARCH 2010". 9 The meeting notes have been prepared by 10 Torquil Murray, who I think was someone who formed part 11 of your team. You brought him on board? 12 A. Torquil acted as my assistant initially. 13 Q. If you look at the second page of this, we can see that 14 in attendance were Richard Jeffrey, Stewart McGarrity 15 and yourself from tie, and representatives -- one 16 representative from each member of the consortium. Do 17 you see that also? 18 A. Yes. 19 Q. Now, because you were actually at the meeting, it's not 20 so much asking you -- I'm not asking you to speculate as 21 to what it achieved; can you not form a view as a result 22 of your attendance as to whether or not this meeting 23 achieved anything? 24 A. The -- the reference to Clause 6.5.1 goes back to my 25 point about being pedantic about the terms of the 139 1 contract. There's mechanisms in 6.5.1 to call special 2 meetings for special circumstances. I can't remember, 3 Mr Lake, the exact wording, but it had never been used 4 before. So part of the -- part of following that 5 strategy of applying the contract terms, I felt it wise 6 to -- to operate under that contract and have this 7 meeting to address where we were going with the 8 contract. 9 Q. Presumably, if you were calling the meeting and using 10 the contract terms, you must have had in mind something 11 that you hoped to achieve by that meeting? 12 A. I hoped -- hope beyond hope, probably, but I hoped it 13 would -- it would -- that we would be able to put each 14 party's views to each other in a formal way, rather than 15 through correspondence and other meetings that -- which 16 were not structured. So it was a structured meeting to 17 exchange views about where the contract was going and 18 why it wasn't progressing. 19 Q. Do you think you achieved that objective? 20 A. At that meeting, I don't think we did because I think, 21 if I remember the whole minute correctly, I think 22 I probably got quite frustrated in the end that we were 23 not making any progress. I think I did actually say at 24 some point in time that we were going round in circles. 25 Whether it was part of building up the -- the 140 1 pressure, if you like, on Infraco members to negotiate 2 a settlement of the contract, I can't be certain, but 3 I think not long after this meeting, one senior -- I'm 4 just struggling for his name now -- Kenneth Reid, 5 I think the top Director in Bilfinger had a meeting with 6 David Mackay, the Chairman of tie at that point in time. 7 I can't speculate whether that would have happened 8 or not, but it's all part of -- it was all part of the 9 chain of circumstances that was taking place at the 10 time. 11 Q. If we just look at some of the exchanges in the meeting, 12 if we go to page 3 of the document. If we read from 13 four entries up, at the foot of the page is your name. 14 We can look at more of this if you prefer. I'm just 15 trying to identify things that are particularly 16 relevant. 17 We see you said: 18 "Made comment that it is stated that the proposed 19 agreement that they won't start until the agreement is 20 signed." 21 They being Infraco: 22 "Richard Walker: Responded by saying that the 23 contract states they cannot start." 24 "Anthony Rush: Restated his point that the Infraco 25 won't start work until the agreement is signed. " 141 1 "Richard Walker: Restated his point that the 2 contract states they cannot start." 3 "Michael Flynn [Siemens]: commented that the 4 statement was clear and will not be withdrawn. He noted 5 that they (Infraco) were there to discuss the matter." 6 You: 7 "Stated that it was a clear position (on the part of 8 Infraco). Stated that he was not there to be in 9 a position of hassle but to get the contract on the 10 road. He stated that this was not going to be achieved 11 under threat of duress. Stated that a reply was due to 12 the statement. Restated is the statement correct (no 13 work started until agreement signed) or is it due to the 14 work availability?" 15 If I read past the next few, if you scroll down a 16 little, there's one that starts with you: 17 "Stated that he understood the problems and both 18 parties' positions. Restated the question to the 19 Infraco is the statement withdrawn." 20 "Michael Flynn: Statement won't be withdrawn." 21 "Anthony Rush: Stated if you don't we may have to 22 withdraw from the meeting. Commented that the statement 23 (in the proposed agreement) read as 'Sign up or we don't 24 start work'. Asked the Infraco to withdraw the 25 statement. Noted that this matter had to be addressed." 142 1 "Michael Flynn: Commented that the statement (could 2 be redrafted to) 'so as not to state that we won't start 3 work'." 4 "Richard Walker: Noted problems could arise in 5 starting the works. " 6 "Anthony Rush: Commented that the Infraco could 7 start but not unless TIE agreed to the Supplemental 8 Agreement." 9 Now, we could read through more of it if we wanted, 10 but the impression given, reading that, is that it was 11 something that was quite ill tempered and 12 confrontational. Would that be reasonable reading of 13 it? 14 A. I hope I'm never ill tempered, Mr Lake. 15 Confrontational, probably. 16 I'm just trying to -- actually trying to remember 17 the -- the circumstances here about -- I mean, 18 basically, they were saying the -- they were not 19 permitted under Clause 80 to start work until the whole 20 change order was agreed. And it was our contention that 21 as a solicitor early in the contract had put it, there 22 were savers in the contract, in Clauses 80.13 and 80.15, 23 that permitted tie to instruct work to start even if the 24 change order hadn't been fully agreed. 25 Q. That's what was being discussed at the meeting? 143 1 A. I can't be certain, Mr Lake. That was one circumstance 2 that they were putting forward why they couldn't start 3 work. 4 Another circumstance, and I really am struggling now 5 with my memory on this. Another circumstance was 6 something to do with -- the job was split into, I think, 7 seven sections. And they were saying that they needed 8 access to the whole of the seven sections. 9 Q. The whole of one section of the seven? 10 A. The whole of one section, and we said no, you can start 11 work in part of that section. And I think that was 12 a matter that was upheld, our view on that was either -- 13 was upheld at adjudication. 14 Q. Yes. 15 A. That we were right in that. 16 So it would be one of those two circumstances that 17 we were addressing or even both. I can't be precise. 18 Q. It is not so much the substance of the discussion I was 19 concerned with at the moment, but the characterisation 20 of it as it appears. I think you said not ill tempered, 21 but confrontational in approach. No one appears to be 22 looking for a solution. They appear to be concerned 23 with stating positions? 24 A. Sorry, can you repeat that? 25 Q. Rather than trying to find solutions, the parties appear 144 1 to be wanting to state positions and demand that the 2 other party withdraw statements; is that a reasonable 3 reading? 4 A. I think that probably is a reasonable reading, yes. 5 Although I think I do say we're trying to get the work 6 started. 7 Q. Taking that approach -- 8 A. I don't think -- I'm offering opinion now. I don't 9 think that the minute reads that we were in a position 10 to compromise on something that would get them to start 11 in that minute. Is that fair? 12 Q. No, I don't read it as any compromise is offered. 13 A. It wasn't a compromise we could make. If they were 14 saying we are not starting unless you agree. 15 Q. So that was the position essentially, that there were 16 quite entrenched positions -- 17 A. I'm saying that, reading the minute now, that appears to 18 me to be the case. 19 Q. In taking a confrontational approach, did you have in 20 mind something that you hoped to achieve by means of 21 that approach? 22 A. I didn't say I had taken a confrontational approach. 23 I said meetings were confrontational. I didn't set out 24 to take a confrontational approach. 25 Q. Do you consider that you were asked by management within 145 1 tie to take a -- either one might say firm, assertive, 2 aggressive or confrontational approach with the 3 contractors? 4 A. I have seen that term contractually aggressive, and 5 quite frankly, I do not know what it means. As 6 I explained, I think -- I think you can be contractually 7 pedantic, contractually aggressive, enforce, these are 8 terms. 9 From what I read in the press last night, Mr Jeffrey 10 seems to think that we were -- we were wanting to be 11 aggressive. I don't recollect being instructed to be 12 aggressive. 13 Q. Do you recall being given -- being instructed to take 14 any particular tone or approach in discussions with the 15 consortium? 16 A. I don't, frankly, Mr Lake. I think they probably relied 17 upon me being my natural self. 18 Q. Once the dust had settled after Mar Hall, did you even 19 go so far as to apologise to one of the contractors for 20 the approach that you had taken with them during 21 discussions? 22 A. Did I? 23 Q. I'm asking you? 24 A. I don't remember doing that. No doubt -- I can be 25 a very polite individual at times. 146 1 Q. I want to -- 2 A. I certainly don't remember that. I remember Mr Keysberg 3 in particular coming up and thanking me. 4 Q. In relation to Project Carlisle, what was the -- you 5 have explained what the genesis of that was, and I think 6 it's known that prior to the Mar Hall mediation, that 7 had not borne fruit. 8 What was the block on getting an agreement on 9 Project Carlisle? 10 A. Well, it depends what you call bearing fruit, Mr Lake. 11 Certainly it is set out how the contract could be -- the 12 contract terms could be revised to give the employer 13 price certainty going forward. So from that point of 14 view I would argue that it had borne fruit, and indeed 15 it was the basis on which the mediation went forward, 16 and I think in particular Fraser McMillan made that 17 point clear at the early solicitor's meeting. So from 18 that point of view it had borne fruit. I think you'll 19 also see in my evidence that I deliberately didn't get 20 involved in negotiations on value because I was unaware 21 of how and whether more funding would come forward. 22 I think it was sad that Infraco on site seemed to 23 get impatient and make an offer, and this we talked 24 about earlier, about experience. 25 I mean, I saw any offer from Infraco as being their 147 1 first offer. Indeed, took some comfort from the fact 2 that all their other offers in terms of -- I'm sure we 3 are coming on to the adjudications later -- had been 4 reduced by 40 per cent, that we were somewhere between 5 what we thought was fair value and what they were 6 offering. 7 As I remember, the -- there was general panic in 8 CEC, I think that's not too strong a term, general panic 9 in CEC and tie that they couldn't afford the offer that 10 was being made. 11 Q. In terms of the -- 12 A. So from that point of view, if I may finish, it didn't 13 bear fruit, but at that same time, as we were talking 14 about this, the Infraco went to see John Swinney and 15 I think probably Alex Salmond, and out of that came 16 mediation, and mediation led to a settlement. 17 So it did bear fruit. But there were -- there 18 was -- there was unripe fruit that fell off the 19 branches, as we went along the way. 20 Q. Just dealing with some of the elements of that, I think 21 we know that an agreement was ultimately reached at 22 mediation? 23 A. Mm-hm. 24 Q. At mediation it was referred to as Project Phoenix, but 25 it did in fact take as its starting point some of the 148 1 Project Carlisle discussions or principles that had been 2 agreed; is that correct? 3 A. I think so, yes, sir. 4 Q. But prior to -- prior to the mediation, had a position 5 been reached -- start that again. 6 Prior to mediation, clearly there hadn't been 7 agreement reached on the sum that was going to have to 8 be paid in order to get the works done? 9 A. No, that's the point of mediation. 10 Q. In terms of other matters under the contract, the new 11 contract that would have to be put into the parties, 12 under this project, is your view that there were 13 agreement on all the necessary contract terms? 14 A. There was agreement between Mr Kitzman and ourselves on 15 those terms, and indeed Fraser McMillan, I remember, 16 asked for that to form the basis on which the mediation 17 was -- was run. 18 Q. So when was -- 19 A. But there wasn't any contractual agreement because that 20 was the point of the mediation. 21 Q. You mean there wasn't something written down? 22 A. No, they didn't say: we agree to these terms. At least 23 I don't think they did. 24 Q. But prior to the mediation, was it nonetheless that all 25 those terms were actually settled even if they weren't 149 1 recorded in writing? The parties knew what they were 2 going to be signing up for? 3 A. If they signed up to Project Carlisle terms, yes, 4 I believe so. 5 Q. Do you know when those terms were settled, to use 6 a neutral term, between the parties? 7 A. They were settled with Mr Kitzman sometime in September, 8 I think even in October. 9 Q. September 2010? 10 A. Yes. That's a matter of record. I think we settled 11 them on a Sunday. If I remember rightly. I don't 12 remember which Sunday, but it was a Sunday. 13 Q. Now, in relation to Transport Scotland, you note within 14 your statement that they became more engaged at the end 15 of 2010. Were you involved in engagement with 16 Transport Scotland or was that just being relayed to you 17 by others? 18 A. Above my pay grade, Mr Lake. 19 Q. I'll leave that then. 20 A. No, I wasn't. 21 Q. You've mentioned there, in terms of what ultimately 22 happened out of Project Carlisle, that there was 23 a meeting that took place between representatives from 24 the consortium and Scottish Ministers? 25 A. Yes. 150 1 Q. Had the consortium indicated to you in advance that they 2 were going to do that, and why they were going to do 3 that? 4 A. I honestly don't remember that. They wouldn't indicate 5 it to me personally. But I honestly don't remember 6 whether they had -- I don't even -- I'm not certain that 7 they would. I'm not even certain that the Scottish 8 Government had informed tie, but Richard Jeffrey would 9 know better than me. 10 Q. If we look then, please, within your statement at -- 11 it's answer 28. I'll just get the page reference. 12 A. Answer to -- 13 Q. Sorry, it's page 28 of your statement. It's at the 14 centre of the page, the paragraph beginning "In response 15 to question 70". So to provide some context, I'll just 16 indicate what question 70 says. It said: 17 "The report which is a report on project resolution, 18 was provided to the Tram Project Board. On page 6 there 19 is a statement that the decisions relating to design 20 development had not been clear cut, and also that they 21 had not provided a clear interpretation which gives 22 certainty going forward." 23 You were asked: 24 "Do you agree with this? Do you think it accurately 25 reflects the adjudication decisions in relation to 151 1 Gogarburn Bridge and Carrick Knowe Bridge?" 2 We turn to your response on page 28. You say: 3 "In response to question 70. The question refers to 4 decisions arrived at by various Adjudicators on design 5 development. Defining the meaning of Pricing Assumption 6 3.4.1.1 expended a substantial amount of thought by 7 many, not just Adjudicators, including solicitors and 8 Counsel. I think it is true to say that there was far 9 from unanimous agreement as to its meaning. However, 10 each Adjudicator had to decide upon its meaning." 11 Now, when you say that there was far from unanimous 12 agreement as to its meaning, we've seen the various 13 decisions and the various rationales. Were you aware of 14 any adjudication decision in which tie had achieved the 15 outcome they wanted in relation to Pricing Assumption 16 3.4.1.1? 17 A. I can't say that I was, Mr Lake. I wasn't involved in 18 the adjudications. I think my impression was that there 19 was -- each adjudicator had a different method of 20 arriving at an answer. That's what I'm saying there, as 21 far as I know. 22 But I wasn't deeply involved in it and so I'm not 23 aware -- I can't answer your question positively that 24 I was aware that they'd all found that the contract was 25 right on that matter. 152 1 But certainly most of them had. 2 Q. Could I ask you to look at a letter -- an email, 3 reference CEC00209592. Look at the lower part of the 4 screen here. And just identify, the email we are 5 looking at here is from you to Andrew Fitchie, 6 Richard Jeffrey and David Mackay, also Steven Bell and 7 copied to others. Do you see that? 8 A. Yes. 9 Q. It was sent in September 2010, 23 September 2010? 10 A. Yes. 11 Q. If we can look right to the foot of the page, we can see 12 there's been an excerpt of a letter that's included in 13 quotation marks, but then you go on to add a comment: 14 "It is difficult to knock down their triumphalism 15 when it can be said we have lost heavily on so many 16 DRPs - we can only ignore their tone by not responding as 17 though it concerns us." 18 In what respects did you consider that tie had been 19 losing heavily at the DRPs? 20 A. Can I just read more of the email, please? 21 Q. Of course. If you need it scrolled up or down -- 22 A. No, it's okay. (Pause) 23 I think it was clear, was it, at that time, that in 24 terms of cause, Bilfinger were, as they put it, winning. 25 And it -- it was difficult to -- it would be difficult 153 1 to knock that down, as I put it, because it was a matter 2 of truth. 3 The only way -- the only way we could ignore their 4 tone is by not responding to it, by not throwing back 5 too heavily this idea -- I imagine that's what I was 6 saying there -- this idea that, while they were winning 7 on the cause, but on the effect the employer was winning 8 because they were reducing the amounts claimed by 9 something on average about 40 per cent. 10 I can only think that it was something like that, 11 Mr Lake. I'm sorry I can't be more precise. 12 Q. You note that in relation to the sums that were to be 13 paid by tie to the contractors, there were reductions 14 made in the claims. But in relation to some of the 15 principles, the position was less advantageous to tie; 16 is that a fair comment? 17 A. Repeat it, please. 18 Q. In relation to the size of the sums that tie would have 19 to pay the contractors, they were being reduced? 20 A. By the -- 21 Q. By the adjudications? 22 A. Yes, absolutely. The amounts claimed. 23 Q. Yes. But in relation to the determination of the 24 principles, things were -- 25 A. That's what I'm saying. It wasn't -- it wasn't -- if 154 1 you like, it was a win/win, but not a very pleasant 2 win/win. 3 Q. How did those -- how did those outcomes affect the 4 negotiations that you were having with the consortium? 5 Did they -- 6 A. On the terms? 7 Q. Yes. Or any negotiations of any aspect? 8 A. I was only negotiating on the terms at that time. No 9 effect at all. 10 I mean, I wouldn't -- I wasn't particularly 11 concerned about the adjudication results because, as 12 I say in my evidence, I saw them as first of all as 13 non-binding, and I say in my evidence that this went 14 further, it would be considered -- they would be 15 considered by higher brains than adjudicators. 16 So I wasn't concerned about that. 17 But the other thing is I felt that it was a message 18 to the contractor. Remember, adjudication doesn't pay 19 your costs. And they'd gone through -- was it seven 20 adjudications? 21 Q. I think ultimately more than that. 22 A. But they had gone through a number of adjudications. 23 They may have won on cause, on principle, as you put it, 24 but they weren't winning on value and they weren't 25 getting paid. Now, they'd got something between 500 and 155 1 700 disputes, disputes pending, and again, putting 2 myself in the position of saying what would I be saying 3 if I was a director of that company and they were 4 reporting to me, I would be saying: well, are we going 5 to go through 500 of these cases; we'd better get it 6 sorted out. 7 Q. You make a point there that they were non-binding. 8 I think if we referred back to your statement and look 9 at page 29, and we look under the paragraph under the 10 heading, "Response to questions 75 to 81", in the first 11 paragraph there, reading from the third line, you say: 12 "With respect to the various Adjudicators, I don't 13 think I was overly influenced by their interpretation of 14 the meaning of the contract terms. I realised that if 15 the meaning of certain terms were to be conclusively 16 decided it would be by a much higher authority than an 17 Adjudicator. Moreover, we had the opinion of the 18 solicitors who played a part in drafting the terms, 19 a leading construction solicitor and Leading Counsel." 20 Now, when you say by a much higher authority than 21 the adjudicator, is that contemplating that the matter 22 would be taken into court? 23 A. If this contract hadn't have been settled at mediation, 24 that's where it was going. 25 Q. Was there a consideration of putting the matter into 156 1 court for an authoritative determination in 2010, before 2 the mediation arose? 3 A. Actually I think there was, Mr Lake, yes. I can't 4 remember the outcome, but I think there was. 5 Q. Were you involved in that discussion? 6 A. No. I was -- I'd very little involvement in 7 adjudications at all. 8 Q. Do you know why it was decided not to put the matter 9 into court? 10 A. I don't recollect, Mr Lake. But I think it would be 11 a matter of evidence. 12 Q. In relation to the next paragraph, we can see it on 13 screen at the moment, there was a decision by 14 Lord Dervaird in relation to the meaning of 15 Clause 80.13. Do you see that? 16 A. Yes, I do, yes. 17 Q. Do you remember what Clause 80.13 concerned? 18 A. 80.13 is this last few -- few words at the end of the 19 paragraph saying they shouldn't start unless -- unless 20 otherwise directed by tie. 21 Q. And it was hoped that tie would be able to give 22 a direction to require them to start -- 23 A. That is -- that was the -- that was the position we were 24 putting forward. That -- that tie could -- I think it's 25 not just 80.13. I think under 80.15 as well, tie were 157 1 permitted to instruct the contractor to get on with the 2 work whether -- whether the change had been agreed or 3 not. 4 I think the terms go on to explain what happened in 5 those circumstances. 6 Q. In 80.16? 7 A. Is it? You've obviously read the contract after I have, 8 Mr Lake. 9 Q. You note in that paragraph we've just looked at, you 10 said you were more annoyed than surprised by 11 Lord Dervaird's decision. You don't think he had taken 12 account of the closing words of 80.13, which are "unless 13 otherwise directed by tie"? 14 A. Yes. 15 Q. Were you involved in discussions about whether or not 16 there should be any challenge to that decision? 17 A. No. I think as I say, I don't -- I can't actually say 18 whether he'd been asked. 19 Q. I want to look now at the third stage of the works you 20 carried out, which involved consideration of the 21 Remediable Termination Notices. 22 A. Mm-hm. 23 Q. In your understanding, was the purpose of these notices 24 merely to create a situation in which the consortium 25 might be more amenable to negotiate, or were you 158 1 carrying them out with an intention that the contract 2 should and would be terminated? 3 A. I think the term Remediable Termination Notice is 4 probably unfortunate, because again it's a step in the 5 contract. If there is a defect, the proper course of 6 action was to issue a notice and ask the contractor what 7 their proposals were. 8 One of the options, if the contractor didn't comply, 9 was termination. But it wasn't -- it wasn't -- it 10 didn't follow that non-compliance would definitely lead 11 to termination. 12 It was just to put further pressure from that point 13 of view on the -- on the contractor, but it was 14 a necessary step. I mean, particularly -- I'm 15 particularly thinking there about Princes Street. It 16 was necessary -- it was necessary step to get them to 17 give us a remediation plan to replace the defective work 18 on Princes Street. 19 Q. If I could, I would like to refer you to a document, 20 I think it will be reference CEC00337188. 21 This is to identify an email from Andrew Fitchie. 22 It's dated 22 June 2010. It's sent to Richard Jeffrey, 23 Steven Bell and David Mackay at tie, but you are amongst 24 the people that it's copied to. Do you see that? 25 A. Mm-hm. 159 1 Q. Andrew Fitchie says: 2 "All, I attach a copy of the set of instructions to 3 Counsel that have gone to Richard Keen, as planned. The 4 documentation delivered will be re-copied and delivered 5 to tie in due course in advance of the consultation - two 6 sets. Please let me know if this is to be shared at 7 this stage with CEC." 8 If I ask you then to go and look at the attachment 9 to this, and say whether or not you've seen it, that's 10 CEC00337189. We can see here a document which has 11 headed at the front, "INSTRUCTIONS TO SENIOR COUNSEL TO 12 ADVISE IN RELATION TO GROUND FOR TERMINATION OF THE 13 INFRACO CONTRACT". Do you recall seeing this document 14 at the time? 15 A. Well, I have certainly seen it because it was addressed 16 to me. 17 Q. You were included as someone to whom the email was 18 copied, but I think you said earlier this getting -- 19 considering termination of the notices was a work stream 20 in relation to which you had a particular involvement. 21 Was that correct? 22 A. Yes. 23 Q. If you look at the first page of the text itself, that's 24 page 2 of the document here, and we look at the upper 25 part and see what the instructions are, we see that: 160 1 "Senior Counsel is instructed by Instructing 2 Solicitors who act on behalf of tie Limited and The City 3 of Edinburgh Council. Senior Counsel is respectfully asked 4 to focus initially on his assessment of the set of 5 questions put to him by these instructions. These are 6 intended to assist in forming the advice sought, but are 7 in no sense restrictive or exclusionary." 8 If we go to the questions, they start on page 10. 9 We start with question A, if you look at the upper half, 10 you can see that the first question is: 11 "Applying the contractual test contained in Infraco 12 Default (a) that a breach of any obligations must be 13 having a material and adverse effect on the carrying out 14 and completion of the Infraco Works for it to be 15 a ground for termination: does Senior Counsel agree 16 with Instructing Solicitors view that the BSC breaches 17 of contract set out at 3 and 4 of these instructions and 18 specified in drafts A and B are sustainable and adequate 19 grounds for tie to issue the 90.1.2 Remediable 20 Termination Notice?" 21 Do you recall this being made as a subject of 22 a request for opinion of Senior Counsel? 23 A. I know -- I remember that we took advice from Senior 24 Counsel on Remediable Termination Notices, yes. 25 Q. Just looking at this idea of the scope of what was 161 1 sought, we can see question B, if you go to the foot of 2 the page, is: 3 "Based on a review of the materials before him****, what 4 level of confidence does Senior Counsel have that 5 a Court would uphold tie's decision to terminate ..." 6 I'll just get a range of them. Question C, on 7 page 14, 15 of the document: 8 "Does Senior Counsel share Instructing Solicitors' 9 view that Infraco Default (a) allows for a legitimate 10 termination as a consequence of the cumulative material 11 adverse effect of many lower order breaches by the 12 Infraco, producing a situation in which tie is entitled 13 to form the reasonable opinion that BSC no longer 14 intends to be bound by the Infraco Contract?" 15 Without reading through them, we also see, if we 16 scroll down, there's a question D and a question E 17 there. 18 I would like to look in particular at question F 19 over the page, on to page 16: 20 "Given the scheme of Clause 90.1, does Senior 21 Counsel agree with the approach adopted in the two draft 22 documents (A: cover letter and B: draft Remediable 23 Termination Notice)? If yes, would Senior Counsel 24 recommend any additions or refinements to the two 25 drafts, bearing in mind tie has absolute discretion over 162 1 the acceptance/rejection of a BSC rectification plan 2 submitted pursuant to Clause 9.02?" 3 And there are other questions thereafter. I don't 4 propose to read through them all, but the point is: do 5 you recall advice being sought on the substance of the 6 termination process and also the procedure that would 7 have to be gone through? 8 A. I do. As I said earlier in my evidence, that at this 9 point in time we were seeking the best advice we could 10 on the various options going forward. And certainly we 11 asked the advice of Richard Keen on a number of matters, 12 including termination. 13 Q. Did you get a response to that request? 14 A. I'm sure we did, Mr Lake. My memory tells me that he -- 15 in simple terms advised caution about Remediable 16 Termination Notices leading to termination, but then 17 made the comment: you only want one to stick. So do 18 them in single ones. 19 But my memory also was that he was -- he was very 20 forthright on the possible adverse -- adverse effect of 21 terminating the contract. I think he almost went as 22 far -- you've obviously read the papers you provide me. 23 He obviously went as far as saying it's almost 24 impossible to terminate the contract. 25 Q. If we could look at another document, CEC00101459. 163 1 Enlarge the upper half of this. We will see it's noted 2 as: 3 "Summary of discussions with Richard Keen QC on 4 4 November 2010 in relation to Project Resolution." 5 I think Project Resolution was the new title for 6 seeking to terminate the agreement; is that correct? 7 A. Probably, yes. 8 Q. We can see of all the people in attendance, you are 9 there, along with Richard Keen QC, but also 10 representatives of DLA and McGrigors, and Steven Bell is 11 there from tie. Do you see that? 12 A. Yes. 13 Q. I should also say for completeness there are two 14 representatives of the Council Legal Department. 15 Now, we saw the email attaching the instructions to 16 Counsel was dated 22 June. This is a meeting that took 17 place on 4 November. Can you recall, was there 18 a meeting or other contact with Mr Keen in relation to 19 this issue between the request for advice and this 20 consultation? 21 A. With certainty -- with certainty I can't say I can, 22 Mr Lake. We had a number of meetings with Richard Keen. 23 So with certainty, I can't say whether we did or we 24 didn't. 25 But I would venture that this would be a record of 164 1 any meeting that we had with him in the documents 2 somewhere. 3 Q. If we just look at what was said in the notes of this 4 meeting, under the heading "Scope of exercise to be 5 carried out", it does note, 2.1: 6 "tie have requested that a report be produced (by 7 McGrigors) by the end of November 2010 which will 8 address certain key failures on the part of Infraco 9 which were the subject matter of RTNs. The aim of the 10 exercise is for tie and CEC to understand the various 11 options available and potential exposure flowing from 12 those options." 13 Had you been involved in the decision to request 14 McGrigors provide a report? 15 A. I can't answer that in the affirmative or the negative. 16 Q. Look at paragraph 2.3. It says: 17 "This exercise will require: (a) The ingathering of 18 information to inform a factual matrix; (b) Analysis and 19 recommendations based on the termination provisions of 20 the Infraco Contract. 21 The starting point for Richard Keen is to arrive at 22 a consensus on the model that is envisaged by the 23 contract in the event of termination." 24 Again, do you recall the discussions around these 25 matters at this time? 165 1 A. I don't recall this meeting at all. 2 Q. At all? 3 A. No. I was obviously there, but it was eight, six, 4 seven, years ago. 5 Q. Could we look on, please, to page 3, in section 5 of 6 this note. Could we enlarge heading 5 and the text 7 underneath it. The heading 5 is "Establishing Infraco 8 Default". What it says is: 9 "There was some discussion in relation to the issues 10 which require to be investigated in order to establish 11 the strength of tie's position in relation to the 12 various Infraco Defaults that have formed the subject 13 matter of the RTNs." 14 It's clear from that, obviously, that RTNs had 15 already been served? 16 A. Mm-hm. 17 Q. Yet this is some discussion with Mr Keen, saying it will 18 be necessary to investigate issues in order to establish 19 the strength of tie's position. 20 Were you aware as to why that wasn't done before 21 notices were served? 22 A. If I remember rightly, Richard Keen thought that some of 23 our -- some of our notices could have been improved. 24 I make the comment that we're dealing here with 25 a non-standard form of contract, and without any 166 1 precedent of what was required. I think Richard Keen 2 was saying you need to do this -- you need to do 3 something to improve this, to make it stick. 4 Q. What he seems to be saying here is it's not so much 5 a matter of the question of the notices, it's a matter 6 of the substance? 7 A. Yes. 8 Q. Are the facts good enough to support termination? 9 A. That's what I'm saying. You need to improve the content 10 of the notice. I can't remember what it was 11 specifically, but I'm certain that's the case, that he 12 wasn't exactly critical, but he was offering advice that 13 there needed to be more work done on them to make them 14 stick. 15 Q. Could we look please then at another document. It's 16 reference CEC00207814. 17 I have taken things slightly out of chronological 18 order because we can see this is 23 September 2010, an 19 email from Joanne Glover at DLA to Richard Jeffrey, 20 Steven Bell, David Mackay, you, and Susan Clark, and the 21 subject matter is Keen's opinion on the RTN. Do you see 22 that? 23 A. Mm-hm. 24 Q. What Ms Glover says is: 25 "We have received comments from Richard Keen QC on 167 1 the RTN today (by phone call this afternoon). 2 3 sentences/phrases which he suggested are 3 removed and one typo." 4 Then without reading through all the details, he 5 seems to be making quite detailed comments on the 6 particular paragraphs within the drafts that had been 7 provided by tie; is that correct? 8 A. Mm-hm. 9 Q. It's also noted that: 10 "Keen appeared comfortable with the approach taken 11 in the RTN and raised no concerns ... above ... For the 12 second time, Keen appears extremely engaged on this. 13 "Keen would like an electronic copy of the final RTN 14 which was issued (we can send this on to him if you are 15 comfortable with that). 16 Keen recommends that if there are any instances of 17 disputed NDs which are referred to DRP, the adjudication 18 goes before Howie, as Howie is a 'detailed contractual 19 man'." 20 Now, having received this advice with the comments 21 about the RTNs, what did you take from this advice? 22 A. To be fair, Mr Lake, I would have to see the whole 23 chain. I mean, which RTN is this applying to? I mean, 24 on the face of it, he appeared comfortable with the 25 approach taken in the RTN. I don't know which one it 168 1 is. 2 What would I -- what I would take it from it, 3 I would have taken from it some comfort, I expect, on -- 4 on the approach that we were taking on issuing RTNs. 5 Q. Was he sounding any note of caution at this time in 6 relation to the RTN he'd been issued? 7 A. I honestly can't remember. Richard Keen very often 8 sounds notes of caution. I'm sure he was. 9 Q. Could I ask you then to look at another communication, 10 an email reference CEC00013537. 11 At the bottom half of the screen here, the lower 12 half, we can see there's an email which came from 13 Alastair Maclean, City of Edinburgh Council. It's 14 addressed to Richard Jeffrey, copied to other people 15 within the Council? 16 A. Mm-hm. 17 Q. You go over the page, and look at the upper half, we can 18 see that what Mr Maclean says is: 19 "As requested, I set out below the advice which CEC 20 received in London on Tuesday from Nicholas Dennys QC 21 and which we discussed on Wednesday afternoon." 22 Now, were you made -- I see this email isn't 23 addressed to you, but were you made aware of its terms 24 and the nature of the advice that had been obtained from 25 Nicholas Dennys QC by the Council? 169 1 A. I wasn't, Mr Lake, and neither was -- I remember this, 2 because neither was I made aware of exactly how deep 3 a briefing he had about the contract and the contract 4 terms. 5 Q. When you say that he had about the contract terms, is 6 that Mr Dennys? 7 A. Well, I mean, I didn't know what information he'd been 8 given about the history of the contract and the way that 9 it had been -- and the terms that had been managed by 10 the contractor. 11 Q. Another document to look at, please. TIE00080959. 12 You can see this is headed "REPORT FOR tie LTD ON 13 CERTAIN ISSUES CONCERNING EDINBURGH TRAM PROJECT". It's 14 from McGrigors and it has a date on it of 15 14 December 2010; do you see that? 16 A. Mm-hm. 17 Q. Do you recall having seen this at the time? 18 A. I have seen it at the time, yes, Mr Lake. 19 Q. Could we go over to page 4, please, and enlarge 20 paragraph 1.5. You can see it says: 21 "To the extent that Remediable Termination Notices 22 have already been issued, it would be unsafe to rely on 23 them: (a) Without the benefit of the outcomes of the 24 forensic exercise referred to above; and (b) Because 25 there is a material risk associated with the formulation 170 1 of the Remediable Termination Notices (based on the 2 sample which has been considered by McGrigors and 3 Richard Keen QC)." 4 Now, what was your reaction to getting this advice, 5 which doubts both the content and the form of these 6 Remediable Termination Notices? 7 A. I honestly can't remember what my reaction was seven 8 years ago to that. This was a fluid situation that 9 we -- that we were dealing with. 10 Q. It was something you'd been working on for months, 11 hadn't you? 12 A. Yes. Can you just go to the forensic exercise? 13 Q. Certainly. Can we enlarge paragraphs 1.3 and 1.4. We 14 can see 1.3 is: 15 "Establishing that a Infraco Default has occurred 16 requires detailed forensic analysis; the issue will be 17 subject to intense scrutiny in the context of any 18 ensuing dispute, which is ultimately likely to be 19 ventilated before the courts. The key default is 20 Infraco Default (a), which involves proving not only 21 a breach of the Infraco Contract, but also that the 22 breach has materially and adversely affected the 23 carrying out and/or completion of the Infraco Works. 24 The exercise referred to in the foregoing paragraph 25 includes the compilation, review and analysis of all 171 1 relevant written material as well as witness evidence. 2 Expert input is also required in relation to technical 3 and planning issues. That exercise has now been put in 4 train. Its purpose is to enable an informed decision to 5 be taken on whether tie is likely to be able to sustain 6 an argument that an Infraco Default has occurred." 7 Essentially it appears to be saying there, isn't it, 8 that there is no -- nothing by way of that sort of work 9 has been done, and now it's taking the view that without 10 that, it simply would be not safe to rely on the 11 notices? 12 A. I think that undoubtedly is the meaning of that. At 13 that point in time, December 10, we -- we were embarking 14 on the process of mediation, and I may even have been 15 relieved at this point in time at this advice because it 16 underscored that termination was not -- not the best 17 option. 18 Q. You had been working on termination and preparation of 19 the notices for at least five months when we saw the 20 advice going to Mr Keen; is that correct? 21 A. It seems so. I mean, I don't remember it being five 22 months, to be straight with you. But it seems so from 23 those dates, yes. 24 Q. And during that five months, you had prepared or been 25 party to -- the submission of a request for an opinion 172 1 from Mr Keen, addressing both the merits and the 2 procedure of the termination notices. 3 A. Which he'd expressed satisfaction at. 4 Q. Yes. So when you then got in December a report saying 5 that both McGrigors and Richard Keen agreed that it 6 would be unsafe to rely on them, surely there must be 7 some strong reaction to that? 8 A. If you think so, Mr Lake, but I can assure you I don't 9 remember reacting strongly about it. 10 Q. I want to turn now to questions of the mediation. 11 I think in your statement, putting it colloquially, 12 you expressed some dissatisfaction or unhappiness with 13 the outcome. 14 A. Do I? 15 Q. Were you happy with the outcome of the mediation? Did 16 you think it was a good one? 17 A. I was happy with the outcome of the mediation because 18 the client seemed to be happy with the outcome of the 19 mediation. 20 Q. Did you think it was a good outcome? 21 A. In mediation, Mr Lake, as I'm sure you know, rarely is 22 everybody really happy with the outcome. It's 23 a compromise. 24 I was delighted that the parties had come to an 25 agreement whereby Edinburgh would get some working tram 173 1 network at price certainty. 2 If you ask me if -- if the question is directed, 3 would I like the price to have been less, yes, sure 4 I would. But that, I think, is relatively human nature. 5 Q. The price that was ultimately agreed was very much 6 larger than the price that the Council had said they 7 were willing to pay at the opening of the mediation; is 8 that correct? 9 A. The price that was offered initially was based on our 10 assessment of what the fair value of the contract would 11 have been if all those circumstances had been known and 12 they'd been on those terms at May 2008. So that was the 13 price that was offered. 14 And it was offered under -- and internally there was 15 explanation that one would expect that to increase in 16 settlement. So yes, it was higher than that. 17 But I don't think it was as high as they -- as they 18 claimed. 19 Q. What was the basis on which -- are you aware of what the 20 basis was on which the sum to be paid was increased from 21 the original offer to that finally accepted? 22 A. As I remember the process, Mr Lake, the -- we'd been at 23 it for several days, two or three days, and we were in 24 the middle -- middle of the night/early morning, and we 25 reached -- things had reached a position where it looked 174 1 as though there was going to be complete breakdown. And 2 we put together at that time a shape of the deal and 3 a possible price, and I remember asking Sue Bruce 4 whether that is something she felt she could offer, and 5 she -- she did, and she went in and came back, not too 6 long afterwards, delighted with the outcome. 7 Now, as far as how that sum of money was built up, 8 I'm pretty certain that I did a rough calculation. 9 I don't have a copy of that, but I think Mr Smith has 10 probably got a copy of how it was calculated. 11 Q. So the number that was ultimately -- first of all, for 12 clarity, could we look at page 33 of your statement. 13 And paragraph 6 at the foot of the page there. Is the 14 process you have just described what you noted there, 15 that you drafted a skeleton of what would break the 16 deadlock and Sue Bruce was enthusiastic about it, and it 17 got the backing, is that the one that was ultimately 18 carried forward? 19 A. Yes, I remember it well because it was in my 20 handwriting, and Sue Bruce says she was going to frame 21 it. 22 Q. You said in your evidence to me earlier this afternoon 23 that you'd already -- the terms of the agreement had 24 already been settled or concluded between the parties, 25 even if not formally recorded in the agreement? 175 1 A. What I said was Project Carlisle terms was, and the 2 mediation was based on Project Carlisle. I think -- if 3 I remember rightly, I think the Heads of Agreement we 4 agreed on the night incorporated Project Carlisle 5 specifically. You'll remind me if it didn't, but 6 I think that's right. 7 Q. The skeleton you sketched out, was that simply of the 8 finances, the terms? 9 A. No, no. I think -- I think there was -- I sketched out 10 12 terms, and there was one term added, if I remember 11 rightly, in the note that was the Minute of 12 Understanding and Agreement that was signed between the 13 Directors from Germany and Sue Bruce, Vic Emery and 14 Ainslie McLaughlin. And that included the price of 15 329,000 -- 329 million for -- to Haymarket, and 16 provisionally 39 million to St Andrew Square. 17 Q. Where did you get those numbers? How did you arrive at 18 them? 19 A. I wrote the calculation down, I'm pretty certain. 20 I think Mr Smith has got that. But it would be from my 21 knowledge of the make-up of -- of the contract price and 22 the fair price that we'd arrived at, and looking at 23 their claims, an assessment of what -- listening to what 24 had been said and what sum I thought would definitely 25 get an agreement. 176 1 Q. We -- 2 A. In other words, judgement. 3 Q. You described it as a calculation or a fair price 4 arrived at for the works. 5 That gives the impression that there was an 6 objective basis on which you felt it was a right sum, 7 rather than merely being what, quite crudely, could be 8 called a horse trade? 9 A. I think you could probably be crude. 10 Q. Sorry? 11 A. I think you could probably be crude. 12 Q. It would be crude? 13 A. It was our starting position against their starting 14 position. 15 Q. It was accepted at that time by Infraco and a deal was 16 ultimately -- 17 A. No, no, the fair price, which I think we submitted after 18 they'd made their submission, was our starting position. 19 And that, as I say, was the price -- it's an important 20 price because -- important calculation because it showed 21 what the contract price should have been if the terms of 22 the contract had been -- had been as we'd negotiated in 23 Project Carlisle, and the work content from the airport 24 to Haymarket was -- was as was finally designed. 25 CHAIR OF THE INQUIRY: Can I just clarify, when you say it 177 1 was your starting position, what was your starting 2 position? Was it this figure that you calculated early 3 in the morning of the fourth day? 4 A. No, no, that was the -- that was the Mediation 5 Agreement. But, I mean, in a negotiation, it's not 6 unusual -- in fact it's more normal than not -- that the 7 two parties take extreme views. We put forward, 8 I remember, the fair value as being our starting 9 position, and there is an explanatory note where -- said 10 that we would expect a negotiation to increase on that. 11 But not as far as they were asking for. 12 Always remembering that everything they'd asked for 13 in the past was 40 per cent too high. 14 MR LAKE: Everything they asked for? 15 A. In the past had been 40 per cent too high. I think it 16 was fair to assume that what they were asking for was 17 a negotiating position. As I'm talking I'm remembering. 18 I think that Mr Darcy and the gentleman, the senior 19 gentlemen from Siemens had said they were prepared to 20 negotiate on that price. 21 Q. I'm just trying to understand where the 12 point 22 document that you gave Sue Bruce, where that fits into 23 the overall negotiations. 24 My understanding is -- 25 A. Sorry. Shall I explain that? 178 1 Q. Yes. 2 A. Because the negotiation -- the negotiations at 3 mediation, earlier that morning, Wednesday or Thursday 4 morning, appeared to have broken down. So what I did 5 then was go into a dark corner and write down a draft 6 memo of understanding which amounted to 12 points, and 7 that is on record, I'm sure, or should be. 8 And I said -- I remember saying: would you be 9 prepared to accept an agreement based on these terms? 10 And would you be prepared to accept a price of X, which 11 I think was probably the price that came out of 329,000. 12 And Sue Bruce, I remember, said yes, she could go 13 for that, and I think Ainslie McLaughlin rang 14 John Swinney and got his approval, and then they went in 15 to -- into the side meeting with their principals, and 16 came out shortly afterward and said: we've done the 17 deal, and then that 12 point plan was typed up, 18 a 13th point was added, which had been discussed in 19 their meeting, and that was signed. So there was 20 a signed agreement of the basic terms, as we left the 21 room at Mar Hall, and that was then refined later into 22 the more detailed Minute of Agreement. 23 Q. So when you talk about an initial position and offers 24 and counter-offers, that had all gone on before you got 25 to the stage of thinking that everything had broken down 179 1 and you were writing your 12 points? 2 A. Yes, sure. That was -- that happened in 3 September/October. 4 Q. Had that also happened in the course of the mediation, 5 that there had been offers and counter-offers and they 6 had -- 7 A. No, no. Well, I'm sure there was discussion about that, 8 and I -- I'm pretty certain that Sue Bruce in one of the 9 side meetings would have made some sort of offer to 10 the -- to the Infraco people that wasn't acceptable. 11 But I mean, you know, I'm sure you know about mediation. 12 People like me in that position, wasn't involved in 13 those meetings. I can't for certain say what was 14 discussed. 15 Q. But in terms of the number or numbers that you put into 16 your 12 point proposal, it was really trying to get to 17 the idea of whether those numbers were based on 18 a calculation or an assessment of entitlement in some 19 way, or were they quite, as I have used the rather crude 20 expression, horse trading figures? 21 A. No, they would be judgement figures at that time. 22 Q. Judgement figures in what sense? 23 A. Well, I would judge, from what I was told, and what I'd 24 seen happening at the mediation, what figure should 25 settle it. 180 1 Q. So you were trying to choose the figure that would make 2 it go away, rather than the figure that was -- 3 A. I think that's a bit unfair, go away. I was trying to 4 judge a figure that would settle it. 5 Q. Okay. I'm not going to fight about that terminology. 6 CHAIR OF THE INQUIRY: Could I just ask about this piece of 7 paper or pieces of paper that you wrote down these 12 8 points. 9 You say that Sue Bruce commented about the 10 handwriting and that she might frame it. 11 A. I did it in handwriting to start with, and I was just 12 saying, she was so pleased with the outcome, I remember 13 her saying she was going to have it framed on her office 14 wall. 15 CHAIR OF THE INQUIRY: I'm interested to know what happened 16 to that piece of paper. You say Mr Smith had it. 17 A. Mr Smith was appointed by Sue Bruce to look at 18 commercial matters, I think that was his appointment. 19 And he was keeping a track of the documentation. So if 20 the copy still exists, then it will be with Mr Smith. 21 CHAIR OF THE INQUIRY: So that's Nick Smith who was in the 22 Legal Department? 23 A. No, no, Colin Smith. 24 CHAIR OF THE INQUIRY: Oh, Colin Smith. I beg your pardon. 25 So Colin Smith was in charge of the documents -- 181 1 A. Yes. 2 CHAIR OF THE INQUIRY: -- relating to the CEC's position at 3 mediation? 4 A. Yes. But, I mean, I think I have said in my evidence 5 that I have a gap in my information of the meeting at -- 6 on the Saturday, and my memory is that we handed our 7 documents to Colin Smith afterwards, which is not 8 unusual in a mediation, that for privacy's sake, you 9 give your documents up at the end of the mediation. 10 CHAIR OF THE INQUIRY: So that someone has custody -- 11 A. Somebody has custody. 12 CHAIR OF THE INQUIRY: -- of the documents. Thank you. 13 MR LAKE: I would just like to ask you a few questions about 14 the roles played by various other people in the 15 mediation; the role played by Dame Sue Bruce is quite 16 clear, but what role was played by Nigel Robson? 17 A. As I say in my evidence, I recognised that this 18 mediation was going to be a very complex mediation, 19 unusual mediation. I think there's a note about that. 20 I'd worked with Nigel once before on an expert 21 determination involving termination, and I was impressed 22 with the fact -- he's also the President of the 23 Institution of Arbitrators at that time. And I felt 24 that he was the right person to bring in to advise our 25 parties on the mediation. 182 1 And he played quite a pivotal role with Sue Bruce 2 and Vic Emery in terms of how they conducted the 3 mediation and, from memory, he attended a lot of the -- 4 a lot of the side meetings with Infraco's German 5 Directors. 6 I'm sure Ms Bruce will tell you better than I will 7 what his role was, what role he played, but he was 8 another facilitator on what was an incredibly difficult 9 mediation. 10 Q. What role do you consider that Richard Jeffrey played in 11 the course of the mediation? 12 A. Well, I think you've picked out something. I said he 13 was frozen out. 14 Actually, what role did he play? He played -- being 15 a bit unkind, a sort of bit part in so much as he was 16 involved in all of the discussions, the group 17 discussions on our side. He wasn't involved at all with 18 the -- with negotiations with the other side, the side 19 negotiations. 20 But neither were his -- were his oppos from the 21 other side. It very much became a mediation between the 22 two principal Directors from Germany and CAF's Managing 23 Director one side, Sue Bruce, Vic Emery, and 24 Ainslie McLaughlin. 25 Q. I then want to look at the other two you have mentioned 183 1 there; Vic Emery who was by then the Chairman of tie, 2 and Ainslie McLaughlin. If we first take Vic Emery, 3 what was his role in the mediation process? 4 A. He was very much Sue Bruce's right-hand man, I think, is 5 the best way to explain that. But Sue Bruce -- 6 Sue Bruce was -- if you'll excuse me -- was the man with 7 the money. I mean she was -- no doubt about it, she was 8 leading the mediation, and I was grateful for that. For 9 strong leadership, and Vic -- Vic also allowed that to 10 happen. 11 Q. What about Ainslie McLaughlin from Transport Scotland? 12 What role did he play? 13 A. He was extreme -- he was extremely supportive in the -- 14 in the discussions about the strategy and the 15 negotiations. 16 Q. In what sense? 17 A. Well, he contributed to the discussions. I mean, you 18 know, this was not -- this was over two or three days of 19 quite intense hours, and he contributed very -- very 20 objectively and constructively in those discussions. 21 Q. What -- when it came to the decision as to what to do 22 and what to offer and what to say, did he have 23 a practical involvement in that? 24 A. Yes. So did everybody else. You know, it was almost 25 unanimous decision. I think in fairness to 184 1 Richard Jeffrey, I have to say, I don't think he was in 2 full agreement with -- with the settlement. 3 Q. If Vic Emery represented tie, and the contract was with 4 tie, and Sue Bruce was there from the Council, and as 5 you say, the Council were the ones with the money, they 6 were paying for the whole of the overrun, what was 7 Ainslie McLaughlin's role there? What was he 8 representing? 9 A. The Scottish Government, Transport Scotland. 10 Q. With a view to achieving or ensuring what? 11 A. You would have to ask Ainslie McLaughlin, I think. As 12 I said, I think in my file note of the meeting, he did 13 seek approval from John Swinney. 14 CHAIR OF THE INQUIRY: Was that before the agreement was 15 signed off? 16 A. I think it's before we actually -- they went and made 17 the final offer, but I wouldn't be certain about that, 18 my Lord. 19 CHAIR OF THE INQUIRY: Thank you. 20 A. Certainly he sought approval. 21 MR LAKE: One last matter. You do refer in your witness 22 statement to the fact that Siemens had forward bought 23 materials that they were going to use in the contract, 24 and you were concerned also that they had pricing errors 25 or under-priced the work. 185 1 Just in relation to the forward purchasing of 2 materials, is that something that's necessarily unusual 3 in contracts of this size, if a contractor wishes to 4 give themselves a bit of price certainty as to their 5 outputs? 6 A. And contractors do forward buy materials, yes. It's not 7 unusual. 8 MR LAKE: Thank you very much, Mr Rush. Those are all my 9 questions. 10 Questions by CHAIR OF THE INQUIRY 11 CHAIR OF THE INQUIRY: Could I just ask you something about 12 the mediation. 13 You said that this -- you had reached deadlock 14 really by the early hours of the fourth day or 15 something, and then you came up with this settlement. 16 Can you tell me how many days did this mediation 17 actually last? 18 A. We had an in-house meeting on the Monday, and I think it 19 was the Thursday -- I think the German Directors were 20 catching a plane on the Thursday morning. So we'd gone 21 Tuesday, Wednesday, into Thursday morning. 22 Then we all went home and got some sleep, and then 23 on Thursday and Friday there were certain aspects that 24 needed to be -- I can't remember what they were, but 25 there were certain aspects that needed some 186 1 clarification, and we worked on that, and then on the 2 Saturday we met again to -- to sign up the final 3 agreement. 4 CHAIR OF THE INQUIRY: So -- 5 A. So it's a week really. And they were long hours, 6 my Lord. 7 CHAIR OF THE INQUIRY: As far as time spent at Mar Hall was 8 concerned, was the entire team at Mar Hall from Monday 9 to Thursday or -- 10 A. Yes, my Lord. The team started to get pared down after 11 that. On Saturday I think we finished up with a much 12 reduced number. 13 CHAIR OF THE INQUIRY: The meetings on Friday and Saturday, 14 although pared down, were still at Mar Hall? 15 A. After Mar Hall we went to Gleddoch House, because 16 Mar Hall needed the rooms back. 17 I mean, my experience, it was an unusual mediation. 18 There was huge numbers. In the preliminary meeting, 19 I think there was something like 60 people present. 20 CHAIR OF THE INQUIRY: How many of them were on your side, 21 as it were. 22 A. No one was on my side, my Lord. 23 CHAIR OF THE INQUIRY: I'm sure that's not true. 24 A. I think probably about a third of them. 25 CHAIR OF THE INQUIRY: So about 20 people from the -- 187 1 A. I think so, yes. 2 CHAIR OF THE INQUIRY: -- city team at Mar Hall for about 3 a week? 4 A. I know we got criticised for Mar Hall, but it's 5 difficult to find a venue for those sort of numbers that 6 you could have break-out rooms and a room big enough for 7 joint meetings. 8 CHAIR OF THE INQUIRY: Then when Mar Hall wanted the rooms 9 back, you went to Gleddoch House. 10 A. Yes. We only go to the best hotels, my Lord. 11 CHAIR OF THE INQUIRY: I think there are -- this might be 12 a convenient point to break. 13 MR LAKE: I'm not sure if any parties have any questions. 14 CHAIR OF THE INQUIRY: I've got notes of questions from 15 Beltrami & Co, and also some note of questions from 16 Eversheds on behalf of Siemens. 17 First of all, as far as Eversheds are concerned, 18 could I find out, do you still have the points that you 19 want to raise? 20 MR SPICKETT: Eversheds are not here today. I'm solicitor 21 for Siemens, but the questions have already been put by 22 Counsel for the Inquiry. So no further questions. 23 CHAIR OF THE INQUIRY: Thank you. 24 And Mr Fairley, do you -- the notes of possible 25 questions, have they been covered or are there still 188 1 some outstanding? 2 MR FAIRLEY: They haven't been covered, my Lord, but I'm 3 sure if they're not important enough to be raised by 4 Inquiry Counsel, we can maybe pick them up in 5 submissions. 6 CHAIR OF THE INQUIRY: Fair enough. Thank you very much. 7 Well, Mr Rush, I'm pleased to say that that's the 8 end of your evidence. You've still under citation. So 9 technically you could be recalled if other matters 10 arise. Hopefully that won't be necessary, but in the 11 meantime you're excused, and thank you very much. 12 A. Thank you, my Lord. Thank you, Mr Lake. 13 CHAIR OF THE INQUIRY: So we will adjourn until Tuesday at 14 9.30. 15 (3.09 pm) 16 (The hearing adjourned until 14 November 2017 at 9.30 am) 17 18 19 20 21 22 23 24 25 189 1 INDEX 2 PAGE 3 MR RICHARD JEFFREY (continued) .......................1 4 5 Examination by MR LAKE (continued) ............1 6 7 Examination by MR FAIRLEY ....................82 8 9 Examination by MR MARTIN ....................110 10 11 Questions by CHAIR OF THE INQUIRY ...........113 12 13 MR TONY RUSH (sworn) ...............................115 14 15 Examination by MR LAKE ......................115 16 17 Questions by CHAIR OF THE INQUIRY ...........186 18 19 20 21 22 23 24 25 190