1 Thursday, 23 November 2017 2 (9.30 am) 3 (Proceedings delayed) 4 (9.35 am) 5 CHAIR OF THE INQUIRY: Mr Lake. 6 MR LAKE: My Lord, the first witness this morning is 7 Ian Laing, who, as you can see, is with us by means of 8 videolink. 9 MR IAN LAING (sworn) 10 (Evidence given via videolink) 11 CHAIR OF THE INQUIRY: Good morning, Mr Laing. Or probably 12 good evening as far as you are concerned. 13 Mr Laing, you're going to be asked some questions by 14 Counsel to the Inquiry, Mr Lake. As you will 15 appreciate, if you simply listen to the questions and 16 answer as directly as possible. If you can keep 17 a measured pace for the sake of the shorthand writers 18 who have to keep up with you. 19 Examination by MR LAKE 20 MR LAKE: Mr Laing, can I first just start by checking what 21 documents you have available to you. I think you now 22 have a folder with hard copy prints of the documents 23 referred to in your questions and answers; am I correct? 24 A. You are correct, Mr Lake. I have them in date order. 25 Q. What I would like to do, however, at the start is look 1 1 at the two versions of the question and answers you 2 provided. The first one, for purposes of those of us in 3 the Inquiry room, has reference TRI00000088_C. 4 I don't know, Mr Laing, if you have that available 5 to you by means of that reference, do you? 6 A. I don't, Mr Lake, I'm afraid. 7 Q. Do you have a statement prepared -- question and answer 8 prepared by you and signed on the final page with the 9 date of 30 June 2017? 10 A. I do. 11 Q. Then also for the purposes of those of us in the Inquiry 12 room, if you could look at reference TRI00000184. Is 13 that a three-page further set of answers with questions 14 that's been signed by you and dated on the final page, 15 22 November 2017? 16 A. That is correct. 17 Q. Are you content that those two sets of questions and 18 answers be accepted as your evidence for the purposes of 19 this Inquiry? 20 A. I am. 21 Q. I would like to ask you some additional questions. We 22 have heard evidence at the Inquiry about an agreement 23 reached by clients at Wiesbaden in December 2007. 24 I think you said in your answers that you were not at 25 that meeting; is that correct? 2 1 A. That is correct, I was not at that meeting. 2 Q. Can you recall when you were told about that agreement? 3 A. My first recollection of being aware of that 4 agreement -- I'm not aware of the date, Mr Lake, but it 5 was certainly after it was signed, and I was sitting in 6 a meeting room at DLA's offices in Edinburgh, and I was 7 provided with a copy by my client at that point. 8 I can't tell you the date, I'm afraid. 9 Q. Now, we -- 10 A. I think I said in my evidence, Mr Lake, that -- in my 11 written evidence from yesterday that that would have 12 been certainly obviously after it was prepared, but 13 before a document of 4 February 2008. So there's 14 a five-week window there, and I must have received it at 15 some point in that window. 16 Q. Just to see if it's possible to narrow it down at all, 17 you have referred there to the draft of Schedule Part 4 18 that was sent out by you on 4 February. You make 19 reference to that in your statement? 20 A. I think it was sent by Scott McFadzen, but yes, there 21 was a version sent out on 4 February. 22 Q. You're correct. It was sent out by Scott McFadzen to 23 people at tie and yourself on 4 February? 24 A. Correct. 25 Q. Had you had the Wiesbaden Agreement some time before 3 1 that or was it provided to you only for the purposes of 2 preparing the document sent out on 4 February? 3 A. I don't recall, Mr Lake. I suspect it was provided to 4 me for the purpose of preparing that draft. 5 Q. Prior to the Wiesbaden Agreement, to what extent had 6 work been done to complete Part 4 of the Schedule to the 7 Infraco contract? 8 A. To my recollection, none at all. 9 Q. Were you made aware of what the understanding was after 10 Wiesbaden as to how Part 4 would be completed? For 11 example, who would prepare the first draft? 12 A. As I -- no, I have no recollection of a conversation 13 where I was instructed in that way, but as I said in my 14 evidence from yesterday, I clearly drafted the version 15 that was attached to Scott McFadzen's email of 16 4 February, as I recognise the style of the document. 17 Q. I'll come to that version in a moment, but I'm just 18 trying to look at things in broadly chronological order, 19 which is the same order they are in, in the questions 20 and answers? 21 A. Of course. 22 Q. What I would like to start with is a document sent out 23 on 16 January. If we could have on the screens here 24 document CEC01447268. Is that reference sufficient for 25 you to find it, Mr Laing, or do you need other 4 1 information to find it? 2 A. I think I would need other information. A date would be 3 helpful. 4 Q. This is 16 January 2008, an email from Bob Dawson to 5 Scott McFadzen and Michael Flynn. 6 A. I have that email. Unfortunately my papers do not have 7 the attachment to that. 8 Q. We can see that it refers to an attachment. Could we 9 look, for the purposes of the screens in the Inquiry, at 10 document reference CEC01447269. 11 Now, what we can see, and I know that you can't, 12 Mr Laing, is a document which is just headed "Schedule 4 13 CONTRACT PRICE ANALYSIS". At the foot of the page it 14 says sheet 1 of 19. Do you have any means of 15 identifying that within the papers that you have, or 16 access to an electronic version of this file? 17 A. I don't, Mr Lake. I apologise. 18 Q. My Lord, I think there's going to be a difficulty 19 arising here because I'm going to need to refer to 20 attachments which are not part of the emails. We are 21 going to get into very immediate difficulty. 22 I mistakenly assumed that Mr Laing had access to things 23 by means of the doc ID reference, for example in the 24 electronic files, and I can immediately see that it's 25 not practical -- 5 1 A. I have all the other attachments, I think. It's that 2 one, Mr Laing, that I don't appear to have. 3 Q. Is it just that one? 4 A. It's just that one. 5 Q. If you could bear with me a minute, Mr Laing. 6 Do you have access to email, Mr Laing? 7 A. I do. 8 Q. I wonder if we can arrange for that to be emailed to 9 you. I think the Inquiry will have a note of your email 10 address. 11 A. If not, I can provide it. 12 Q. Excuse me. I think we have another technical issue 13 emerging here. 14 MS FORSTER: My Lord, I wonder if we could email the 15 document to him. 16 MR LAKE: My Lord, Ms Forster, if that was possible to do 17 that, it might get through more quickly. Could that be 18 done while we sit here? 19 MS FORSTER: Yes, I think it can be done. 20 CHAIR OF THE INQUIRY: Did you hear that, Mr Laing? I think 21 there's going to be an attempt to email you with the 22 document. 23 A. Thank you, my Lord. I did manage to hear that. 24 MR LAKE: What I'll do is I will move on to use the time. 25 Perhaps if that email comes through in the next minute 6 1 or so, you can let me know. 2 A. I will do. 3 Q. If we could look at the document that was then the 4 correspondence that took place on 4 February. If we 5 could look at document CEC01448377. 6 A. I have that, Mr Lake. 7 Q. We see this is an email that was sent out by 8 Scott McFadzen, sent to personnel at tie and copied to 9 yourself, indicating that it was providing a response 10 with a version of Part 4 of the Schedule as drafted by 11 you; is that correct? 12 A. That's correct. 13 Q. Pardon me, I'm running ahead of myself. If we just wait 14 for it to come to screen here. 15 It's CEC01448377. 16 We are not getting much luck here either. 17 We will go straight to the attachment to that email, 18 please. It's document CEC01448378. 19 Do you have here the draft -- what we should be 20 looking at is the draft here of Schedule 4 -- Part 4 -- 21 start again. 22 It is described here as Schedule 4 Part 1 to the 23 Infraco contract, and it was a draft that you had 24 prepared and was sent out under cover of your letter -- 25 under the email, pardon me, of 4 February; is that 7 1 correct? 2 A. That is correct, Mr Lake. 3 Q. If we could look forward in this, please, to page 2. 4 A. Yes. 5 Q. We see a number of Base Case Assumptions. 6 A. Yes. 7 Q. Now, although it's covered in a little in your 8 supplementary statement, could you explain what your 9 purpose was in including Base Case Assumptions? 10 A. The purpose of all of the Base Case Assumptions was 11 twofold in essence. One was to reflect the risk 12 allocation that Bilfinger Berger and its joint venture 13 partners were willing to accept in relation to the 14 contract and the contract price, and the second element 15 of that, as I said in my supplementary statement, would 16 have been to reflect elements of the Wiesbaden 17 Agreement. 18 Q. Now, I think -- we'll come back to it later when the 19 email comes through, but no assumptions had been 20 included in the draft that was sent to you by tie. Was 21 there any discussion as to the use of assumptions prior 22 to you including them in this draft? 23 A. Not with tie that I'm aware of, no. 24 Q. I think it's fair to say those assumptions changed or 25 were developed over time to a significant extent. 8 1 A. That is correct. 2 Q. But if we look at the moment at the assumption we see on 3 page 2, under (a)(ii), towards the top of the screen? 4 A. Yes. 5 Q. We see that, if I read from letter (a), but read short, 6 that the design prepared by the SDS provider will, (ii): 7 "Not, in terms of design principle, shape, form 8 and/or specification, be amended from the Base Date 9 Design Information." 10 Now, you have noted in your statement that that 11 particular wording was lifted from the Wiesbaden 12 Agreement. I think that's correct, isn't it? 13 A. That's correct. It's obviously been adjusted a little, 14 but those words are certainly lifted from the Wiesbaden 15 Agreement. 16 Q. I think in the Wiesbaden Agreement, it was stated that 17 normal design development would be included in the 18 price, but those words were used for the purposes of 19 defining normal design development. 20 Here you're using them to define a situation in 21 which there will be an entitlement to vary the price. 22 A. That's correct. 23 Q. Was there any discussion of that change prior to you 24 using -- making that change? 25 A. There will have been a discussion certainly with the 9 1 consortium members. I'm afraid I don't recall the 2 specifics of that discussion. 3 I think the logic of the approach was simply to 4 ensure that there was clarity as regards what was 5 included or excluded, and one can either approach that 6 based on what is included or -- obviously what is 7 excluded. 8 It seemed to me that the best way -- it would have 9 seemed to me that the best way was to look at what was 10 excluded. 11 Mr Lake, if I may help, I seem to have that email 12 now if that is helpful to you. 13 Q. If possible then, could we look at what I assume will be 14 the attachment to that email. On the Inquiry screens 15 here we have CEC01447269. 16 A. It's just taking a moment to load on the system here, 17 Mr Lake. I apologise. It is a large PDF document. It 18 may take a minute. 19 Mr Lake, if it would be convenient to you, if I may 20 just leave the room for 30 seconds and try to print it 21 off at my desk, that may be quicker. 22 Q. Yes, we're fine if you do that. 23 CHAIR OF THE INQUIRY: By all means. 24 A. I'll be back. (Pause) 25 Apologies, Mr Lake, I have that document now. 10 1 Q. Thank you, Mr Laing. Just to check we are looking at 2 the same thing, it should be a document, on the front 3 sheet it says "Schedule 4", underneath that, in block 4 capitals, "CONTRACT PRICE ANALYSIS". Towards the foot 5 of the page, sheet 1 of 19. Is that what you have? 6 A. Yes, that's what I have. 7 Q. Could we look at the second page of that? 8 A. Yes. 9 Q. We just see a contents page with a number of different 10 clauses setting up the scope; is that correct? 11 A. That is correct. 12 Q. And the third page. We see here a heading -- 13 A. "Introduction". 14 Q. "Introduction", and it says: 15 "The majority of the Infraco Construction Price is 16 on a 'fixed and firm' lump sum basis and not subject to 17 variation unless changed pursuant to one of the 18 following clauses." 19 Then we see a list of six clauses given thereafter. 20 Do you see that? 21 A. I see that. 22 Q. It then notes: 23 "However certain items are not 'fixed and firm' or 24 alternatively are conditional upon certain criteria 25 being fulfilled. This Schedule sets out the various 11 1 categories of items that will be subject to change, 2 together with a mechanism for adjustment." 3 Do you see that? 4 A. I see that. 5 Q. What I just want to look is rather than read through the 6 text of it, just to look at the headings of the various 7 sections hereafter, to identify the various matters that 8 were considered by the agreement. We have got, under 9 section 2, is provisional sums. Section 3, over the 10 following page, provisional quantities. Section 4, 11 identified value engineering, and section 5, further 12 value engineering. Section 6, identified tie changes 13 required under third party agreements. And if we go 14 over the page, section 7 is transfer of MUDFA scope. 15 Section 8, ground conditions. Schedule 9, schedules of 16 rates. 17 On page 6 we have -- 18 A. I see that, yes. 19 Q. Construction price analysis, phase 1b and final account 20 requirements. 21 A. Yes. 22 Q. Now, that would give you an indication of what tie 23 understood the scope of this agreement as being; is that 24 fair to say? 25 A. That is fair to say. 12 1 Q. Now, without -- I'll start again. 2 Is it fair to say that when we come to the draft 3 that was sent out on 4 February that we looked at just 4 a minute ago, it has quite a different scope for Part 4 5 of the Schedule? 6 A. That is correct. 7 Q. So when you had your draft, the impression is that you 8 really didn't start with the tie draft at all. You 9 started afresh. 10 A. Indeed, that would appear to be the case. There is 11 little similarity between the two. 12 Q. Now, if the Inquiry were to hear evidence that the tie 13 draft started with the exchange of -- with the Wiesbaden 14 Agreement, what was your starting point for the Schedule 15 Part 4? 16 A. The Wiesbaden Agreement will have been part of the 17 starting point to Schedule Part 4. It's referred to 18 within the Schedule, and a number of the Base Case 19 Assumptions can be tracked back in one way or another to 20 Wiesbaden, although perhaps refined in language. 21 It's clear, however, that a number of other Base 22 Case Assumptions have been introduced in the draft that 23 I prepared, and that will almost certainly have come 24 from the technical team for the consortium. They are 25 mainly technical matters on which I would not have any 13 1 ability to input. So I can only assume that they came 2 from the technical team. 3 Q. I think the Wiesbaden Agreement itself doesn't contain 4 any assumptions. Was that your understanding? 5 A. That is my understanding. Clearly there are elements 6 within the Wiesbaden Agreement that are then reflected 7 in these assumptions. So in that respect they are 8 translated. 9 Q. Would you accept that even your first draft of the 10 Schedule Part 4 innovates quite markedly upon the 11 Wiesbaden Agreement? 12 A. Yes, I would accept that. 13 Q. Thereafter, from your first draft onwards, to what 14 extent did you understand the Wiesbaden Agreement was 15 relevant to the development of the terms of Part 4 of 16 the Schedule? 17 A. The Wiesbaden Agreement -- and this is not recollection, 18 I'm afraid, Mr Lake, but more putting together the 19 various documents and supposition, the Wiesbaden 20 Agreement clearly is a record of agreements reached by 21 the principals at a point in time. 22 A number of things can have happened in that regard. 23 The language of the Wiesbaden Agreement certainly is 24 imprecise as one often finds in such documents. The 25 legal teams were not involved in Wiesbaden, and 14 1 therefore I would have felt it entirely appropriate 2 to -- to interpret that in a way which gave greater 3 certainty. 4 But I have no recollection in particular of going 5 back to the Wiesbaden Agreement from time to time and 6 seeing it as something that we had to adhere to on an 7 ongoing basis, not least because the factual 8 circumstances were continually changing throughout the 9 negotiation of Schedule 4. 10 Q. Thank you very much. 11 Could I ask you now look at a different document. 12 For the purposes of those of us in Edinburgh, it's 13 reference CEC01448752. 14 A. Could you possibly help me identify that, Mr Lake, by 15 the date? 16 Q. What we have got, it's an email, it should be at the top 17 of it, from Richard Walker to Geoff Gilbert with a date 18 on it of 12 February. 19 A. I have that, yes. 20 CHAIR OF THE INQUIRY: Just before you were asked about 21 that, Mr Laing, you said that the legal teams or 22 representatives weren't present at Wiesbaden. We have 23 heard that the principal lawyer for Bilfinger, the 24 in-house lawyer, was present. Do you know if the 25 Wiesbaden Agreement was drafted by Bilfinger or by 15 1 someone else? 2 A. I don't know how it was -- how it was drafted, my Lord, 3 I'm afraid. 4 CHAIR OF THE INQUIRY: Thank you. 5 MR LAKE: This is an email, I don't know if you've 6 identified it now, from Mr Walker to Mr Gilbert, dated 7 12 February 2008. 8 A. Yes. 9 Q. Do you have that? What we can see is that -- actually, 10 if we go further down the page and look at the email 11 that led to it, there's an email from Bob Dawson to 12 Richard Walker dated 11 February. 13 A. I do. 14 Q. What Mr Dawson says is: 15 "Further to the voicemail messages that I left on 16 your office telephone and mobile, we need to confirm 17 arrangements for going through the balance of your 18 points on Schedule 4." 19 If we look at the response to that further up, it 20 was to the effect that: 21 "Geoff, last Thursday we signed a document where we 22 committed to holding our price. Schedule 4 was clearly 23 dealt with, why is Bob trying to re engage? The matter 24 is closed." 25 I think you say in your written answers that the 16 1 reference to signing a document, that was probably a 2 reference to what was known as the Rutland Square 3 Agreement? 4 A. Yes. That seems to be correct from the dates. 5 Q. Although this was being sent on out 12 February, was it 6 the case that the Schedule Part 4 continued to develop 7 thereafter, throughout the remainder of February and 8 through into March? 9 A. Yes. 10 Q. Were you told why -- was it ever said to you that there 11 should be no further development of Schedule Part 4 12 after the Rutland Square Agreement? 13 A. No. 14 Q. Okay. Could we then look, please, at a further email. 15 This one is from you to Geoff Gilbert, Andrew Fitchie 16 and Bob Dawson and has a date of 22 February. 17 A. Yes, I have that. 18 Q. What you say there is: 19 "Geoff" -- 20 CHAIR OF THE INQUIRY: What's the reference? 21 MR LAKE: It's CEC01449876. 22 If we look at the upper half of the screen here, 23 what we have is an email that's from you, Mr Laing, to 24 Geoff Gilbert, Andrew Fitchie and Bob Dawson and you 25 have dated it 22 February 2008. Do you see that? 17 1 A. Yes, I have that. 2 Q. I think you note here that you're sending out a mark-up 3 of Schedule 4 issued subject to your client's 4 instructions. Do you see that also? 5 A. Yes, I see that. 6 Q. Are you able to look at the attachment to that, please? 7 It's got a reference, for the purposes of those of us 8 here, of CEC01449877. 9 A. Yes, I have that. 10 Q. Just to check we are all looking at the same thing, do 11 you have a document which has the heading, "SCHEDULE FOUR", 12 and in bold underneath it, "PRICING", and in the top 13 right-hand corner: 14 "Schedule 4 - pricing (issued to BBS 15 19 February 2008)". 16 Is that what you have? 17 A. Yes. 18 Q. Could you look at page 11 of this, please, and turn to 19 that in the Inquiry room as well. 20 A. Yes. 21 Q. There's text here beginning on the third line with the 22 words, "we are not clear". In the version that we have, 23 it is coloured blue, as if it's a mark-up. Do you have 24 a colour version, Mr Laing? 25 A. I don't, but I can see it's a mark-up. 18 1 Q. Would that be a mark-up prepared by you or by Pinsents? 2 A. Again, looking at the language, I would assume that was 3 me. 4 Q. You say: 5 "We are not clear why the drafting proposed by BBS 6 hasn't been adopted here. Clause 80 contains 7 a procedure which in practice is unlikely to be 8 appropriate for pricing assumptions. The reason is that 9 clause 80 envisages a change mechanism and agreement as 10 to the price of the change prior to the change being 11 implemented. This, in turn, envisages that there may be 12 circumstances where the change is then withdrawn. That 13 would not be an option for a notified departure. If the 14 concern is to link the valuation to the methodology set 15 out in clause 80, the intention of the BBS drafting was 16 to capture this principle. We will also require 17 a discussion as to payment for actual costs as they are 18 incurred in the event that there is a dispute as to the 19 value of the impact of the notified departure. As has 20 been discussed previously, BBS cannot assume the cash 21 flow risk on notified departures." 22 Now, this appears to indicate at quite an early 23 stage here we have concerns as to how Notified 24 Departures were to be priced or the value of them was to 25 be agreed. Is that a fair comment? 19 1 A. Not -- not so much how they would be priced. More -- 2 more the issue was that Clause 80 and the mechanism of 3 Clause 80 of the Infraco contract envisaged 4 a circumstance, as noted there, that tie could withdraw 5 a change if the price that they received wasn't to their 6 liking. 7 The difficulty with a Notified Departure, if one 8 comes across, for example, a soft spot or a void, it 9 must be dealt with in order to allow the works to 10 proceed. Therefore, it has to -- it had in my view to 11 appear in this way. 12 As regards pricing, the concern I think that's being 13 referred to here is not so much how the price may be 14 arrived at or agreed, more that the time it would take 15 for the -- to do that whilst works were ongoing and who 16 was bearing cash flow risk during the time it would take 17 for that procedure to be gone through. 18 Q. I think you continued to have an involvement with the 19 contract and the works in the period of the works 20 actually being carried out. Am I correct? 21 A. A very limited amount, to be honest, Mr Lake. My 22 involvement largely ended with the signing of the 23 contract, and colleagues within my firm assisted 24 thereafter. I did have some limited ongoing 25 involvement. Obviously I left the UK in early 2009. 20 1 Q. Were you aware that issues did in fact arise under the 2 contract about the agreement of estimates for carrying 3 out of works that were considered to be Notified 4 Departures, and the need to use the Clause 80 procedure? 5 A. I was aware. But only second-hand. 6 Q. Now, that tends to indicate that the concerns you had 7 here were never resolved. Was it a deliberate decision 8 on your part or on the part of your clients to accept 9 the position that existed in relation to Clause 80 that 10 you note here? 11 A. As regards the cash flow risk issue, I can only assume, 12 as it does not, from memory, appear later, that the 13 consortium did decide to accept the cash flow risk. As 14 regards the need to address circumstances where tie 15 could not withdraw a change, I think that was adequately 16 addressed through the drafting, and ultimately how the 17 Notified Departure mechanism appeared in Schedule 4 as 18 concluded. 19 Q. Do you recall discussions about how the Clause 80 20 mechanisms for agreeing the value of changes would be 21 applied in practice? 22 A. I don't. 23 Q. I should say, when I say discussion, I mean with tie, 24 not with your client. 25 A. I don't, Mr Lake. The reason for that, to explain, is 21 1 that there were a number of ongoing parallel work 2 streams. Around the February/March time I was focusing 3 my attention on Schedule 4. It seemed to me to be 4 a priority document from the consortium's point of view. 5 My colleague Suzanne Moir was engaged in continued 6 discussions as regards the drafting of the Infraco 7 contract itself, and we did liaise, as regards the 8 relationship between Clause 80 and Schedule 4, but I did 9 not sit in the meetings with tie to discuss that. 10 Q. Could we look, please, at your -- the first of the two 11 question and answer documents you provided. It's the 12 one with the date of 30 June. I would like to look at 13 question 10, please. 14 For the purposes of the Inquiry, that's page 5 of 15 the -- this is a statement. It was reference 16 TRI00000088_C. It's page 5 of that, please. 17 If you could look at the answer to question 10. 18 A. Yes. 19 Q. The question that has been posed to you in relation to 20 the fact that it was to be a meeting to decide what was 21 meant by normal design development, why did this matter, 22 and in response to it you said: 23 "The need to consider what amounted to 'normal 24 design development' was so that both parties had clarity 25 on the degree of design development which was included 22 1 in the price, and what was excluded." 2 I just want to be clear about this, what your 3 understanding was about the role of normal design 4 development and what was included in the price. Why did 5 it matter? 6 A. It mattered -- sorry to repeat -- I don't mean to repeat 7 simply what I said in my statement. It mattered clearly 8 because the parties needed to have a clear understanding 9 of -- of what was normal in that context. 10 I remember a number of times, at least in general 11 terms I remember, asking technical people what was 12 normal design development, and I don't remember ever 13 getting an entirely consistent answer, and so it seemed 14 to me important that there was a consistent view, and it 15 was clearly defined so that the parties knew where the 16 line was. 17 Obviously the term "normal design development" was 18 something referred to in the Wiesbaden Agreement, and 19 I don't know if that answers your question, Mr Lake. 20 Q. If I could jump forward a moment and look at a document 21 with reference, in the Inquiry, it's CEC01545414. For 22 you, Mr Laing, it's an email from your colleague, 23 Suzanne Moir to Bob Dawson, Geoff Gilbert and 24 Andrew Fitchie, dated 13 March 2008. 25 A. Yes, I have that. 23 1 Q. What Suzanne Moir says is: 2 "Bob, this document contains the "legal" drafting as 3 discussed yesterday." 4 If we could look at the attachment to that, the 5 reference for the screens in the Inquiry room is 6 CEC01545415. 7 I'm hoping what you will have, Mr Laing, is 8 a document with the heading, "Schedule 4 PRICING", and 9 in the top right-hand corner, it looks like something, 10 63.ntv.doc, and some text crossed out next to it. Is 11 that what you have? 12 A. Yes, I have that, yes. 13 Q. What I would like to do is go to page 2 of this, and we 14 can see "SCHEDULE FOUR PRICING", and the contents laid out. 15 Then if we go to page 4, we see a heading, "GENERALLY", 16 and at clause 1.1, beginning: 17 "The Construction Works Price is detailed in 18 Appendix A to this Schedule 4." 19 Do you see that also? 20 A. Yes, I see that. 21 Q. What happens here, although this was sent out by 22 Pinsents, this has gone back to the version of the 23 document first sent out by tie, and isn't a mark-up of 24 the version that you sent out in February, 4 February. 25 It appears as if two different drafts of this 24 1 agreement are being used while you are trying to 2 negotiate its terms. Is that what was happening? 3 A. That is certainly as it appears, Mr Lake. 4 I'm afraid I can't help as regards whether that was 5 intended or accidental. I don't remember particularly 6 the version that is there that we're looking at. But it 7 certainly does appear that there are two competing 8 versions after that point. 9 Q. If we could look also at page 9 of this agreement. This 10 is clause 3.3. If you could look at the upper half of 11 the screen here, it is: 12 "The Assumptions in pricing of the Construction 13 Works Price are (a) design." 14 The first bullet point is: 15 "The Infraco Construction Works Price includes for 16 any impact thereon arising from the normal development 17 and completion of designs based on the design intent for 18 the scheme as represented by Base Date Design 19 Information." 20 If we read forward to the fourth bullet point it is: 21 "That the Design Prepared by the SDS Provider will 22 not: 23 "in terms of design principle, shape and/or 24 specification be materially amended from the drawings 25 forming the Infraco Proposals." 25 1 Then there is text in brackets. 2 Now, we've got in the first bullet point a reference 3 to normal development and completion of designs and in 4 the later bullet point, a statement that it shall not 5 change in terms of design principle, et cetera. 6 Now, at the time, can you recall how these two were 7 intended to relate to one another? 8 A. I can't remember at the time, Mr Lake, no. 9 Q. It might be said that if there was to be the -- if 10 primacy was given to the later assumption in terms of -- 11 there would be no change in terms of design principle, 12 et cetera, it rather deprives the question of normal 13 development and completion of designs of any effect. 14 Would you agree? 15 A. I wouldn't agree or disagree, Mr Lake. I think that's 16 a technical question that an engineer could answer. 17 Certainly what amounted to normal development, 18 normal design development was something, I think, you 19 can see through the drafts that -- that I was concerned 20 about in order to understand what the parties meant by 21 it, and what technically it meant by it. 22 But as the lawyer advising the client, I don't think 23 I would be in a position to know if that had the effect 24 that you suggest. 25 Q. If I put it another way, from reading these drafts and 26 1 what you've said so far, and the concern about normal 2 design development, was your view that normal design 3 development as a generality would all be included within 4 the construction price? 5 A. I can't recall what I thought at the time, but I would 6 answer the question by saying with reference to the 7 Wiesbaden Agreement, I think the answer is no. 8 The Wiesbaden Agreement -- and we can go back and 9 look at it, I guess -- I think says that the price -- 10 sorry, apologies. Maybe I'm wrong there. There is 11 a reference to normal design development in that 12 document. 13 Q. Do you have a copy of the Wiesbaden Agreement available 14 to you? 15 A. I do, yes. I do. 16 Q. Could we have it on the screens here, please, then. 17 It's reference CEC02085660. 18 If you go on the Inquiry screens to page 5, what 19 I would like you to do, Mr Laing, if you can, is look at 20 clause 3.3 of the agreement, which is on page 3 of the 21 paper version? 22 A. Yes. 23 Q. Now, what -- 24 A. I have that, thank you, Mr Lake. 25 Q. It's stated by way of an inclusion that: 27 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 25 November 2007." 8 We see all that. Do you see that, Mr Laing? 9 A. Yes. 10 Q. That's stated as something that is included within the 11 price. But if we go over to the following page -- 12 A. That ... 13 Q. Sorry, Mr Laing, I didn't catch that? 14 A. I was agreeing with you, Mr Lake. 15 Q. If on the Inquiry screens we could go forward to page 5 16 of the digital version -- it's page 7 of the digital 17 version, which is page 4 of the paper version. We see 18 a proviso to the clause: 19 "For the avoidance of doubt normal development and 20 completion of designs means the evolution of design 21 through the stages of preliminary to construction stage 22 and excludes changes of design principle, shape and form 23 and outline specification." 24 Do you see that? 25 A. I see that. 28 1 Q. Now, in the Wiesbaden Agreement that wording operates to 2 define what is normal design development. Would you 3 agree? 4 A. I would agree. 5 Q. And normal design development is something which is 6 specifically included within the price? 7 A. That is correct, although, of course, normal development 8 of design excludes changes in design principle, shape, 9 form and outline specification. 10 Q. Indeed. Then if we could go back to the version of 11 Schedule Part 4 we were looking at a moment ago, with 12 reference CEC01545415, for your purposes, Mr Laing, 13 that's the one attached to the email of 13 March 2008 14 from Suzanne Moir? 15 A. Yes. 16 Q. If we could all look at page 9 of that, so we see 17 clause 3.3. 18 If we could scroll down a little bit so we can see 19 the top. 20 Now we can see that we have the normal development 21 of completion of designs in the first bullet point, and 22 the question of design principle, et cetera, in 23 a different bullet point, so that the relationship 24 between them is less clear. Would you agree? 25 A. I would agree. 29 1 Q. If we go forward to a much later version of the 2 agreement, if you could try looking at -- it will be an 3 email from Stewart McGarrity to Alastair Richards of 4 TEL, which I think has been provided to you. It's dated 5 2 April 2008. It has further in the chain another email 6 from you. 7 A. Yes. I have that. 8 Q. If you read down the chain to see that the email from 9 you to yourself, Philip Hecht of DLA Piper, Steve Bell 10 and others, dated 2 April. Do you see that? 11 For the purposes of the Inquiry, it's reference 12 CEC01423746. 13 A. Yes, I have that, Mr Lake. 14 Q. We are just catching up here a little. I have gone 15 ahead and left the electronic versions behind. 16 Enlarge it and go to the lower half of the page. 17 Scroll down a little. 18 We can see it's an email from you, Ian Laing, to 19 yourself and others. It's dated 2 April, and the text 20 of the email is: 21 "Please find attached the latest draft of Schedule 4 22 for discussion (and hopefully final resolution) 23 tomorrow." 24 Do you see that? 25 A. I see that. 30 1 Q. What I would like to do then is look at the attachment 2 to that. It will have a reference for Inquiry purposes 3 of CEC01423747. 4 Do we have here a document that's headed "Schedule 4 5 PRICING" and underneath that it has a key which 6 identifies the meaning of text highlighted in yellow and 7 the text highlighted in green. Do you have that, 8 Mr Laing? 9 A. Yes, I have that, yes. 10 Q. What I would like to do is move forward to page 7 of 11 both the electronic version and the paper version. We 12 can enlarge the upper part of the page here and look at 13 clause 3.4. We see in largely its final form, Pricing 14 Assumption Number 1 is now: 15 "The design prepared by the SDS Provider will not 16 (other than amendments arising from the normal 17 development and completion of designs): 18 In terms of design principle, shape, form and/or 19 specification be amended from the drawings forming the 20 Base Date Design Information ..." 21 You go forward then to find a proviso that: 22 "For the avoidance of doubt normal development and 23 completion of designs means the evolution of design 24 through the stages of preliminary to construction stage 25 and excludes changes of design principle, shape and form 31 1 and outline specification." 2 Now, what I want to look at is the relationship 3 between normal development of design and the requirement 4 that there be no change of design principle, et cetera. 5 I think we agreed when we looked at the previous 6 draft that it was slightly unclear how the two of them 7 would relate to one another. Do you recall that? 8 A. I do. 9 Q. When we come to look at this, do you think the 10 relationship between those two concepts has changed or 11 been clarified? 12 A. I think ultimately the drafting is reasonably clear. It 13 is inelegant, for sure, and, as is the nature with 14 negotiated documents, that is often the case. 15 Obviously there is a repetition to some extent of 16 the wording one sees in 1.1, and for the avoidance of 17 doubt, wording at the end of Pricing Assumption 1. 18 But I think the avoidance of doubt wording is 19 necessary in order to capture the concept of what normal 20 design development excludes, and the reason for that is 21 the bracketed wording at the beginning of the Pricing 22 Assumption. The effect of the wording other than 23 amendments arising from normal design -- sorry, normal 24 development completion design could be to bring within 25 the price changes in -- sorry, I'm just trying to read 32 1 this now -- in principle, shape, form and/or 2 specification of the design. 3 So I think it's inelegant, but I think the 4 relationship is clear enough. 5 Q. Just if we can break it down a little, if we just look 6 at the initial part of the clause and ignore the text in 7 brackets for the moment, the first assumption is that: 8 "The design prepared by the SDS Provider will 9 not ... in terms of design principle ... be amended from 10 the drawings forming the Base Date Design Information." 11 That might be said to be the core of this 12 assumption; would you agree? 13 A. I agree. 14 Q. You then -- sorry, I interrupted you? 15 A. I was simply agreeing, Mr Lake. 16 Q. You then add a qualification to that: 17 "... (other than amendments arising from the normal 18 development and completion of designs)." 19 Would you agree that's intended as a qualification 20 to that general prohibition? 21 A. I would. 22 Q. So now the role of normal development and completion of 23 designs has been changed to an exemption from 24 a prohibition, rather than an inclusion; would you agree 25 with that? 33 1 A. I would. 2 Q. Now, in terms of wanting to know the scope of that 3 exemption or exclusion, ie what is meant by normal 4 development and completion of designs, you have to look 5 at the text after 1.3, don't you? 6 A. You do. 7 Q. That tells you that normal design and development -- 8 normal development and completion of designs does not 9 include changes of design principle et cetera? 10 A. That's correct. 11 Q. So what that means is if you start with your 12 prohibition, you think there has been a change of design 13 principle, et cetera, so it infringes the prohibition, 14 you might want to see if you can apply the saving 15 provision in the brackets. Would that be what you might 16 do? 17 A. Yes. 18 Q. When you discover the saving provision in brackets, you 19 will find it always means that whenever there is 20 a change of design principle, et cetera, it's not normal 21 development and completion of designs. Would you agree? 22 A. That is correct. 23 Q. In short the text in brackets is completely redundant, 24 isn't it? 25 A. It is. 34 1 Q. So really, by the time we get to this version of the 2 draft, normal development and completion of designs is, 3 on a literal reading of this, irrelevant to the 4 operation of the clause? 5 A. Unless there is a difference, a technical difference 6 between -- and I can't answer that, Mr Lake -- between 7 what normal development is and changes to design 8 principle, shape, form and/or specification. 9 Q. But -- 10 A. It may be -- apologies, Mr Lake. It may be that there 11 are changes that don't fall within that test. That 12 might be said to be normal design development. 13 Q. But are we not told by the legal drafting after 14 paragraph 1.3 that normal development and completion of 15 designs cannot, as a matter of agreement, include 16 changes of design principle, et cetera? 17 A. Yes. But there may be other -- there may be other ways 18 in which the design development doesn't fall within that 19 test. That's a technical matter, Mr Lake, and this was 20 a document, you will understand, that was being 21 negotiated between a technical and legal team together. 22 Q. But the proviso as to normal design development is only 23 intended to apply, is only relevant, where there has 24 been a change of design principle, shape, form and/or 25 specification; is that not correct? When we're looking 35 1 at subparagraph 1.1, I should say. 2 A. Sorry, could you repeat that, Mr Lake? I didn't follow. 3 Q. The proviso in brackets, insofar as it applies to 4 paragraph 1.1, could only be relevant where there was 5 a change of design principle and it's defined that 6 that's precisely the situation where it cannot apply 7 also. 8 A. I'm not sure I follow, Mr Lake. I still read the 9 document, rightly or wrongly, as indicating that there 10 are -- there is the possibility of a development of 11 design which is not a change in the design principle, 12 shape, form and/or specification that would not be 13 caught by this Pricing Assumption. 14 Q. So looking at something that's caught by 1.1, how might 15 that -- how might normal design -- normal development 16 and completion of designs operate to stop that being 17 a Notified Departure? Just 1.1. 18 A. I can't answer that, Mr Lake. As I've said, that is 19 a technical question, and this was a document which was 20 prepared by a combined technical and legal team. 21 Q. So what did you understand the technical input would be 22 in relation to that? 23 A. In relation to the drafting, Mr Lake? 24 Q. No, what technical information would you require in 25 order to make sense of that and determine when it would 36 1 apply? Would you simply be asking what was normal 2 design development and completion? 3 A. Maybe, yes. 4 Q. What I would like to do is if we could look at the 5 second of the two sets of questions and answers you 6 provided, within the Inquiry that's the document with 7 the reference that ends 184, if that makes it easy. 8 If we could look at the third page of this -- if we 9 could go back, pardon me, to the previous page to get 10 the context for this. I would like to look at the text 11 that's in answer to question 14 in the right-hand 12 column, starting with the second paragraph there. It's: 13 "The reference to 'normal design development' does 14 not appear to have been omitted in the document I have 15 been provided with. The wording has been moved within 16 the body of the draft but has not been altered. Looking 17 at the draft, we (by which I mean Bilfinger Berger, me 18 and the Siemens team) appear to have had two key 19 concerns in relation to Notified Departure Number 1, 20 namely (1) the reference to the 'design intent of the 21 scheme' as being part of the test for 'normal design 22 development', which looking at it now appears to be 23 imprecise and so I am sure that will have been my view 24 at the time, and (2) the reference to 'design principle, 25 shape, form and/or specification'. I do recall some 37 1 unease within the Bilfinger Berger technical team that 2 this did not exclude all the risks that it needed to. 3 In particular, I recall that Scott McFadzen was 4 concerned that this did not cover the scope of the works 5 and he was keen to include that." 6 My question was, I just wanted to understand what 7 you meant there by the scope of the works when referring 8 to Mr McFadzen's concern. 9 A. My -- my recollection is somewhat hazy, Mr Lake, 10 a question in Scott's mind would have been whether, if 11 one is looking at a change to the base document, a set 12 of drawings, and one is testing whether there has been 13 a change to those, if there was a new element of works 14 introduced to -- an altogether new element of works 15 introduced by a new design, whether that could be said 16 to be a change or a development of that design as it was 17 entirely new. 18 Q. That was a concern as far as you recall he expressed to 19 you at the time? 20 A. Yes. 21 Q. I want to come back then to, if I can, to look at the 22 email we looked at one moment ago. The first email on 23 the chain is the one from Stewart McGarrity to 24 Alastair Richards dated 2 April, but it's forwarding an 25 email from you, Mr Laing, also dated 2 April. 38 1 For the purposes of the Inquiry, it's reference 2 CEC01423746. 3 Could we look, please, in the electronic version at 4 page 3. What I'm looking for, Mr Laing, is the part of 5 the chain that's an email from you to Philip Hecht and 6 Steven Bell and others dated 26 March 2008. 7 For the purposes of the electronic version -- 8 A. I have that. 9 Q. This is spanning a page on the electronic version. If 10 you could just look at the foot of the previous page, 11 we'll see, just so we can identify it in the Inquiry 12 room, an email from you dated 26 March, timed at 16.23 13 to Philip Hecht and others. I take it you have that 14 also, Mr Laing? 15 A. I do. 16 Q. What you say there, if you go over the page on the 17 electronic version, is: 18 "As we discussed earlier today, the Design Delivery 19 Programme that will be V28. The Pricing Assumption in 20 Schedule 4 of the Infraco Contract assumes that the 21 Design Delivery Programme will not change from V26. It 22 follows that there is the possibility that there will be 23 an immediate Notified Departure on contract execution. 24 Given the unusual position that we are in, please can 25 you confirm that this is understood and agreed by tie." 39 1 Now, if there was to be a change in the Design 2 Delivery Programme from V26 to V28, it's not really 3 a matter that the -- there's a possibility that there 4 would be an immediate Notified Departure. There would 5 be an immediate Notified Departure, wouldn't there? 6 A. Strictly speaking, yes, Mr Lake. If I may amplify 7 though, in order for a contractor in those circumstances 8 to intimate a Notified Departure, it would obviously 9 have to have a financial impact. 10 The question of whether it has a financial impact 11 obviously is only answered on an analysis of the new 12 version of the design programme. That is what I meant. 13 Q. I understand. 14 A. But obviously in terms of triggering a Notified 15 Departure, I've written, yes, it would. 16 Q. You have said in your written answers that you 17 understood that some of the Pricing Assumptions would 18 not be correct, and therefore there would be scope for 19 generating Notified Departures. Have I understood that 20 correctly? 21 A. You have. 22 Q. Are you able to recall now which Pricing Assumptions 23 were in your mind at the time as ones that would not 24 hold true? 25 A. At the time I think I had two -- two Notified Departures 40 1 that I thought would cause a risk of immediate 2 notification following execution of the contract. 3 The first obviously is this change in the Design 4 Delivery Programme. The second, and I do recall it, was 5 the question of whether the SDS design as prepared met 6 the Employer's Requirements. And there was an ongoing 7 exercise, which I believe was called an alignment 8 workshop or something similar, where there was 9 a recognition of a need to work further to bring the SDS 10 design into line with the Employer's Requirements. 11 That exercise, as I recall, was ongoing at the 12 execution of the contract, and therefore there was 13 a risk that that would trigger a Notified Departure. 14 There's no others that I recall from the time. 15 Q. If we look back to the email chain, and we look to the 16 next email in time, that's the one higher up in the 17 chain, on page 2 of the electronic version in the 18 Inquiry room, it's an email again from you, Mr Laing. 19 This time it's to yourself, Philip Hecht and others, but 20 dated 31 March 2008, timed at 10.20. 21 Do you have that? 22 A. I do. 23 Q. We can see comments addressed to Steven/Jim: 24 "Please can you let me have confirmation that the 25 position on the Notified Departure in relation to the 41 1 Design Delivery Programme is understood and agreed by 2 tie." 3 I take it from that that you hadn't had a response 4 to your earlier email? 5 A. I have reloaded my inbox from around that time and 6 checked, and I have no record of receiving a response to 7 either the initial email or that chaser email. 8 Q. Why did you send these emails? What were you hoping to 9 achieve by putting tie and DLA on notice in this way? 10 A. I think, and I still think it to this day, one of the 11 risks, the greatest risks when one is approaching 12 complex and long-term procurement, is that the parties 13 enter into it without a common understanding. 14 Obviously also in the context of any procurement, 15 the idea that a contractor will sign a contract and 16 immediately make a claim is not one that might give rise 17 to good relations, and good relations are important over 18 a long procurement period. 19 I suspect what I was trying to do was ensure that if 20 that claim was made, it would have been a clear 21 expectation of it. Therefore there would be no adverse 22 reaction to it, and it wouldn't affect the relationship 23 between the parties. 24 Q. You explained helpfully already you didn't get a 25 response to either of your emails seeking clarification 42 1 about the Notified Departure, including the one on 2 31 March. But as we work through this chain earlier, 3 we'd seen that on 2 April, if you go back to page 1 of 4 this, both versions, we already looked at it. On 5 2 April you sent out a further draft of Schedule 4. Do 6 you see that? 7 A. Yes. 8 Q. If we could just look at that draft once again, it's 9 reference CEC01423747. What I would like to do this 10 time is look at page 5 in both the paper and the 11 electronic version, and clause 3.2, if we could enlarge 12 that. 13 That says: 14 "It is accepted by tie that certain Pricing 15 Assumptions have been necessary and these are listed and 16 defined in Section 3.4 below. The Parties acknowledge 17 that certain of these Pricing Assumptions may result in 18 the notification of a Notified Departure immediately 19 following execution of this Agreement. This arises as 20 a consequence of the need to fix the Contract Price 21 against a developing factual background. In order to 22 fix the Contract Price at the date of this Agreement, 23 certain Pricing Assumptions represent factual statements 24 that the Parties acknowledge to represent facts and 25 circumstances that are not consistent with the actual 43 1 facts and circumstances that apply. For the avoidance 2 of doubt, the commercial intention of the Parties is 3 that in such circumstances the Notified Departure 4 mechanism will apply." 5 Now, would you agree that that's quite an unusual 6 clause to see in a contract? 7 A. I would. 8 Q. Have you ever included it in another contract? 9 A. I have not. 10 Q. Why did you include it in this one? 11 A. There are, I think, two reasons. One is a firm 12 recollection. The other is really piecing together the 13 chain of events. 14 The firm recollection first was a conversation with 15 a partner of mine in relation to a recent decision of 16 the Scottish courts on a case called, as I recall, EMCOR 17 Drake & Scull v Edinburgh Royal Joint Venture, which was 18 considering qualifications and design qualifications 19 made by a tenderer in a bid which qualifications were 20 incorporated, and my memory is a little hazy, but 21 incorporated in the contract, but interpreted against 22 the contractor. 23 We had a concern and wanted to be clear that we 24 weren't going to fall foul of the logic within that 25 case. 44 1 The second, which is more a question of piecing 2 together the facts, is I suspect I didn't get a response 3 from tie in relation to those emails, and therefore 4 I was taking one of the few courses that was left to me 5 and put it in the contract so that it was plainly there 6 for everybody to see. 7 Q. Was there a concern on your part and that of your 8 clients that these -- the view that these Notified 9 Departures might become a substantial issue because 10 large sums of money were being claimed once the contract 11 work started? 12 A. I can't speak for my clients on that, Mr Lake. I don't 13 recall a discussion around numbers of claims or 14 valuation of them. 15 I don't remember having a particular concern that 16 this would lead to, frankly, the kind of issues that 17 eventually materialised. 18 I do remember having a concern that we had an 19 unusually large number of qualifications to the price, 20 and that the parties needed to understand clearly what 21 the consequences of that would be. 22 Q. But going so far as to get an express acknowledgment 23 that the facts and circumstances may not be consistent 24 with actual facts and circumstances, and the intention 25 is that in such circumstances, the Notified Departure 45 1 mechanism will apply. Was there a concern that if large 2 claims started to come in, the view would be taken this 3 couldn't have been what the parties intended? 4 A. Yes. 5 Q. Just for the avoidance of doubt, to be quite clear, were 6 you aware or did you have an inkling even that it was 7 likely that large claims would be generated by the 8 Notified Departure mechanism? 9 A. I was not aware of that, no. 10 Q. Did this clause 3.2 or the emails that preceded it give 11 rise to discussions that you had, that you personally 12 had, with either the legal advisers at DLA or the people 13 at tie? 14 A. Not that I recall, Mr Lake. 15 Q. Thank you very much, Mr Laing. 16 A. Not that specific wording, anyway. 17 Q. I don't mean, sorry, just about specific wording. 18 I mean about the whole issue as to the likelihood of 19 claims arising from inaccurate Pricing Assumptions. 20 A. I had discussions with -- or I recall a discussion where 21 it was -- where I had confidence that tie at least 22 understood there were a significant number of potential 23 avenues for increase in price and time, and therefore at 24 least understood the effect of Schedule 4. 25 I had a separate conversation with Andrew Fitchie, 46 1 very close to execution of the contract, which gave me 2 confidence that he understood, and in turn that CEC 3 understood, what the effect of the draft was. 4 Q. Just dealing with some issues arising out of that, what 5 was said to you -- can you remember approximately even 6 what was said to you -- that gave you confidence that 7 CEC understood the effect of the draft? 8 A. I recall -- as you can imagine, Mr Lake, there are in 9 events like this, ten years ago, some things that stick 10 in your mind more than others, and this is one. 11 I can't remember the precise date, but a number of 12 days, literally days, before execution of the contract, 13 there was a public hearing of Edinburgh District 14 Council, and there was a report given in that public 15 meeting in relation to the tram project. I didn't 16 attend that meeting. I believe it was a short report. 17 It was attended by one of our trainees, and the report 18 came back to me as regards what was said. 19 My recollection of my understanding at the time was 20 that the Council had been told in the public meeting, 21 although I'm sure that's a matter of record, that the 22 contract was nearing finalisation and it was a lump sum 23 fixed price contract. 24 As matters had developed at that time, and although 25 I can understand that phrase, I think there was 47 1 a risk -- I thought there was a risk that that may be 2 misunderstood. 3 I spoke one to one with Andrew Fitchie. I expressed 4 concern about the report to the Council, and I expressed 5 concern as to what Edinburgh District Council knew as 6 regards the mechanism within the contract. 7 Andrew was always a polite man, but it sticks in my 8 memory because he was somewhat irritated by my enquiry. 9 He essentially told me it was none of my business what 10 the Council were being advised by their legal advisers, 11 and in any event certainly as they didn't know exactly 12 how the contract worked, and I left it at that. 13 Q. The earlier part of the answer a little while ago was 14 that you had confidence that tie at least understood 15 there were a significant number of potential avenues for 16 increase in price and time. And therefore tie at least 17 understood the effect of Schedule 4. 18 Who was it -- 19 A. Perhaps, if I may -- sorry. 20 Q. No, do you want to clarify something? 21 A. (inaudible) answer your question. 22 Q. Is there something that you want to clarify? 23 A. Yes, please. Sorry. The delay is difficult. 24 Q. It is. 25 A. Perhaps as a corporate body, if I may rephrase that, 48 1 tie -- I can't say what tie knew or didn't know. 2 What I can -- what I definitely recall, and again 3 it's one of those things that sticks in one's mind 4 because it's a phrase that was particularly memorable, 5 was again reasonably close, I think, to close of the 6 contract, was Jim McEwan, who was one of the senior 7 people within tie responsible for negotiation, 8 commenting that the contract had more holes than 9 a teabag, and that they knew fine well that it did. 10 That phrase, as you can imagine, sticks in my mind. 11 Q. You anticipated the question I was about to ask you, 12 which is although you refer to tie having knowledge, tie 13 is obviously a collection of individuals, and I was 14 wondering which individuals you considered had knowledge 15 about the significant number of potential avenues for 16 increase in price. 17 You have mentioned Mr McEwan. Were there others, 18 particular individuals with whom you'd had discussions, 19 or of whom you were aware had the knowledge? 20 A. Not in a similar way, Mr Lake, but bluntly, anybody 21 engaged within the negotiations of Schedule 4 ought to 22 have known that the impact of the Schedule gave rise to 23 potential for greater money and more time being awarded 24 to the contractor. 25 Clearly my email intimating the possibility of one 49 1 of the Notified Departures, as it's introduced in -- the 2 email refers to "as we discussed", and I'm perfectly 3 sure that those attending those meetings will have 4 understood, by which it would, in my memory, have been 5 Jim McEwan, Steven Bell, and Geoff Gilbert. 6 Q. Did you ever hear anyone saying to tie what the 7 additional cost under the contract was likely to be? 8 A. No, I did not. 9 Q. Did you have any discussion with Mr Fitchie as to what 10 the additional cost under the contract might be likely 11 to be? 12 A. No, I did not. 13 MR LAKE: Thank you, Mr Laing. 14 My Lord, I've got no further questions for Mr Laing. 15 CHAIR OF THE INQUIRY: I don't know if there are any -- 16 I don't think there is any comments. 17 MR DUNLOP QC: My Lord, there's a very short series of 18 follow-up questions on the import of Wiesbaden that 19 I would welcome the opportunity of asking. No more than 20 five minutes. 21 CHAIR OF THE INQUIRY: Very well. Anyone else? 22 MR FAIRLEY: I wonder, my Lord, if I might consult with my 23 instructing solicitor. There was a point that I may 24 wish to raise, but I may not. I can do that while 25 Mr Dunlop is asking his questions. 50 1 Examination by MR DUNLOP QC 2 MR DUNLOP QC: Mr Laing, good evening to you. You mentioned 3 a short while ago the EMCOR Drake & Scull case. 4 Am I right in understanding that that was a decision of 5 Lord Drummond Young in which there had been a dispute, 6 amongst other things, a dispute as to what a contract 7 meant regarding the extent to which parties were bound 8 by drawings in a tender package? 9 A. That is my recollection, Mr Dunlop. 10 As I said in my response, the drafting -- I think 11 I said the drafting of that particular clause was 12 something I consulted with my partners about, and those 13 who were more familiar with that case, having been 14 involved in it, as I recall. 15 Q. The question of the extent to which parties might be 16 bound by drawings in this particular case would 17 obviously have been a point of some concern and 18 something that needed to be clarified? 19 A. That is logical, yes. 20 Q. Then thinking about Wiesbaden, am I right to understand 21 that while the language needed to be sorted, Wiesbaden 22 indicated the view as to what BBS were prepared to 23 accept in terms of risk? 24 A. I think that -- as I said, Mr Dunlop, I wasn't there. 25 That is a perfectly sensible and logical interpretation 51 1 of Wiesbaden, yes. 2 Q. In his evidence, Mr Walker was very clear that he was 3 prepared to accept certain aspects, but was very 4 dogmatic as to what he was and wasn't prepared to accept 5 in terms of risk. 6 Does that accord with your recollection at the time? 7 A. It does. 8 Q. Am I right in understanding that following Wiesbaden, 9 there was no alteration in Mr Walker's position as to 10 what risks he was prepared that BBS should accept? 11 A. Yes, I think that is fair. I cannot think of him 12 changing his view as he went through the negotiation. 13 Q. Finally, am I right in understanding that as we track 14 through the changes and wording post Wiesbaden, while 15 the language changes, am I right to understand that 16 there is no concession on the question of risk adverse 17 to the interests of BBS? 18 A. Correct. 19 MR DUNLOP QC: I'm obliged. 20 I'm obliged, my Lord. 21 CHAIR OF THE INQUIRY: Mr Fairley? 22 MR FAIRLEY: No, my Lord, I don't need to ask any questions. 23 CHAIR OF THE INQUIRY: Thank you very much, Mr Laing. We 24 are very grateful for your co-operation in this 25 videolink. 52 1 A. Thank you, my Lord. 2 CHAIR OF THE INQUIRY: You're technically still under your 3 citation. It would be possible to recall you if 4 anything arises. Hopefully that won't be necessary, but 5 in the meantime, thank you very much, and enjoy the rest 6 of your evening. 7 A. Thank you very much. 8 (The witness withdrew) 53 1 INDEX 2 PAGE 3 MR IAN LAING (sworn) .................................1 4 5 Examination by MR LAKE ........................1 6 7 Examination by MR DUNLOP QC ..................51 8 9 MR NEIL RENILSON (continued) ........................53 10 11 Examination by MR LAKE (continued) ...........53 12 13 MR ROBERT BURT (sworn) .............................119 14 15 Examination by MR MCCLELLAND ................119 16 17 18 19 20 21 22 23 24 25 179