1 Thursday, 7 December 2017 4 MR LAKE: My Lord, the next witness is Brandon Nolan. 5 MR BRANDON NOLAN (sworn) 6 CHAIR OF THE INQUIRY: You appreciate you are going to be 7 asked some questions by Mr Lake, Counsel to the Inquiry. 8 If you just listen to the question and answer it as 9 directly as possible. Speak into the microphone so 10 everyone can hear what you are saying and speak at 11 a reasonable pace, so the shorthand writers can keep up 12 with you. 13 A. I'm obliged, my Lord. 14 Examination by MR LAKE 15 MR LAKE: Mr Nolan, could you state your full name, please. 16 A. My full name is Brandon Edward Nolan. 17 Q. I would like you to look at a document, please. You'll 18 have a hard copy in front of you, but I'll also have it 19 on the screen. It's reference TRI00000114_C. 20 Is that a copy of the questions and answers that 21 you -- the questions provided to you and the answers you 22 gave for the purposes of this Inquiry? 23 A. It looks like it, it's certainly the first page which is 24 up, but it does look like it. 25 Q. Is the paper copy the whole of that? 114 1 A. Indeed. 2 Q. I think on the final page it has your signature; is that 3 correct? 4 A. It does. 5 Q. Are you content that that be adopted as your evidence 6 for the purposes of this Inquiry? 7 A. I do. 8 Q. I would like to ask you some further questions of 9 clarification about some parts. If we could first look 10 at page 5, and the lower half of the page, in response 11 to a question about your initial impressions, your 12 answer is: 13 "My first involvement was through challenge meetings 14 when it became immediately apparent that the Pricing 15 Assumptions and specifically Pricing Assumption 1 16 presented significant problems for tie." 17 Now, the Inquiry has already heard a little bit 18 about Pricing Assumption 1, but what did you see at the 19 outset were the significant problems it presented for 20 tie? 21 A. Well, primarily in relation to Pricing Assumption 22 number 1, it was the exclusionary words at the end in 23 relation to defining design development, normal design 24 development. And on a literal interpretation, if 25 anything fell within the category of those exclusionary 115 1 words, on the face of it that wasn't normal design 2 development. 3 Q. Was that apparent -- you say it was immediately 4 apparent? 5 A. Well, the first challenge session that I attended was, 6 I think from memory, on or about 10 August 2009. 7 The purpose of that challenge session was in 8 relation to Gogarburn Bridge, and during the course of 9 the discussion at the challenge session, I asked about 10 how they would cater for the words at the end, and I was 11 informed that the expert witness, a Mr McKittrick, 12 I think his name was, was of the view that as a matter 13 of engineering expert evidence, we didn't transgress 14 those words at the end. 15 It was a point that I raised because it was of 16 crucial importance, but that was what I was told. 17 Q. I'll come back to look at that challenge session in 18 a little bit more detail in a moment, but first of all 19 I would like to look at the challenge function more 20 generally, please. 21 If you could look over the page to page 6, and your 22 answer to question 14. You note that: 23 "When McGrigors were appointed by tie it was to 24 attend challenge meetings in relation to matters that 25 were intended to be taken to adjudication." 116 1 What factors determined which issues were selected 2 for Dispute Resolution Procedures, not which disputes, 3 but which issues were the ones to be considered? 4 A. I'm afraid I don't know. 5 Q. Were you involved in that question at all? 6 A. No. 7 Q. Were you given any guidance as to what the objectives 8 were in taking matters to the Dispute Resolution 9 Procedure? 10 A. No. 11 Q. Prior to attending the challenge meetings, the first 12 ones you were involved in, were you provided with the 13 legal advice that had been given to tie up to that date 14 from DLA and the Council? 15 A. From memory, I don't think so. 16 Q. Can you recall at what stage you were provided with that 17 advice? 18 A. I think it was after the initial challenge session. So 19 we went through the first two or three or four, and 20 I can't specifically remember seeing any advice. 21 Q. I'm going to come later on in the questions I have to 22 the report on contractual issues that was prepared by 23 McGrigors in March the following year. But for the time 24 being, what I want to know is: were you asked to 25 consider or evaluate the legal advice that had already 117 1 been given? 2 A. No. What I was asked to do was to attend these 3 challenge sessions with a fresh pair of eyes, if you 4 like, and on the merits of those particular issues, 5 which were going to be taken forward, principally 6 through to adjudication, to stress test issues as 7 I thought appropriate. 8 If I may say so, the way it unfolded was that I was 9 just about to go on holiday in July 2009 and I can't 10 remember whether I received an email or a telephone 11 call, it was one or the other, from Steven Bell of tie. 12 I was asked if as a matter of urgency I could attend 13 tie's office, which I did. He asked me a bit about my 14 own experience in construction law. I answered those 15 questions, and then he explained that they were going to 16 go through a process which was to assertively deal with 17 specific issues, potentially through adjudication. 18 So that in effect was my briefing. 19 I then departed on holiday for a fortnight. Before 20 I went off, I did a letter of engagement, and I left it 21 in the hands of colleagues, and the first challenge 22 session actually took place when I was abroad. 23 So that, if you like, was the run-up. 24 Q. When Mr Bell spoke to you, he didn't give you any 25 indication as to what the purpose of the DRP was to be? 118 1 What tie hoped to achieve? 2 A. Well, I think the purpose was to achieve success through 3 the DRP process. But it was no more profound than that. 4 No specific issues were raised with me at the initial 5 meeting. I was told about Princes Street and that there 6 were major problems. One could read about that in the 7 Edinburgh Evening News. 8 So everybody knew about that. 9 But beyond that, there was no specification, if you 10 like, about particular issues. These only emerged when 11 we had the challenge sessions. 12 Q. Who attended the challenge sessions? 13 A. From memory, it would be Steven Bell, Dennis Murray, 14 I think Richard Jeffrey. I don't think he attended all 15 of them, but he certainly attended some, or if he would 16 attend, he might attend for part of it, and then depart. 17 Then there were people from DLA. Principally 18 Andrew Fitchie. I think Stuart Jordan attended from 19 time to time. He may not have been at all of them. 20 Keith Kilburn of DLA. And I think that was probably 21 about it. 22 Susan Clark may have attended some of the meetings, 23 and I think I've already mentioned Dennis Murray, 24 perhaps. 25 Q. You mentioned earlier reference to the particular 119 1 challenge meeting in relation to Gogarburn and 2 Carrick Knowe, or one of them. 3 If you could turn particularly to looking at the 4 paper that was prepared in relation to Gogarburn. Could 5 we look at CEC00805684. 6 We can see this is an email from you to 7 Dennis Murray of 24 August, where you provide your 8 comment paper in relation to case 5a. 9 A. That's right. 10 Q. Go and see what that comment paper is, please. That's 11 document reference CEC00805685. Can we enlarge the 12 upper half of this? 13 Is this a document that you have prepared? 14 A. I prepared this document. 15 Q. In terms of the analysis, you set out that: 16 "In order to come within the definition of a 17 Notified Departure, it would have to be established that 18 the IFC drawings in question differed from the Base Case 19 Assumptions and that that was not due to a breach of 20 contract by the Infraco, an Infraco Change or a change 21 in Law. 22 Infraco say that they come within the above 23 definition due to the changes in the drawings being 24 outwith normal development and completion of design 25 process." 120 1 Then you note: 2 "In terms of the Pricing Assumptions, which forms 3 part of the Base Case Assumptions, Infraco's contention 4 is relevant and the issue turns on the facts." 5 Do you see that? 6 A. Yes. 7 Q. If we just, still looking at the facts, if we just look 8 down a little bit, we will come back to the terms of 3.4 9 in a moment, but if we look at paragraph 6 you say: 10 "Infraco have not thus far elaborated on their bald 11 assertion that the IFC drawings go beyond the normal 12 development and completion of design process. However, 13 tie's position is that the drawings do not go beyond 14 normal design development and in particular there are no 15 changes of design principle, shape and form and outline 16 specification." 17 Do you see that? 18 A. Yes. 19 Q. Now, if we just turn for a moment to look at the terms 20 of Part 4 of the Schedule, that's document USB00000032. 21 You will recognise Schedule Part 4, I'm sure, from 22 looking at it many times? 23 A. Yes. 24 Q. Could we look at page 5 of this, please. In the lower 25 half of the page we see there Clause 3.4 is the Pricing 121 1 Assumptions, and the first is: 2 "The Design prepared by the SDS Provider will not 3 (other than amendments arising from the normal 4 development and completion of designs): 5 in terms of design principle, shape, form and/or 6 specification be amended from the drawings forming the 7 Base Date Design Information ..." 8 Now, seeing what you've said in paragraph 6 of your 9 position paper that the evidence that tie have is that 10 there were no changes of design principle, shape, form 11 or outline specification, did issues of normal design 12 development arise at all in relation to this, on that 13 factual basis? 14 A. I suppose what I had primarily in mind was the 15 exclusionary words at the end. 16 Q. Of the Pricing Assumption? 17 A. Of this particular Pricing Assumption. 18 Q. If we go over the page, just to look at those, if we 19 enlarge the upper half of the page, please, we can see 20 the proviso: 21 "For the avoidance of doubt, normal development and 22 completion of designs means the evolution of design 23 through the stages of preliminary to construction stage 24 and excludes changes of design principle, shape and form 25 and outline specification." 122 1 That's what you had in mind? 2 A. Indeed. 3 Q. Now, clearly that exclusion expressed there doesn't 4 apply if there was no change in design principle, 5 et cetera? 6 A. That's one way of interpreting that provision. 7 Q. I just want to be clear, because, as you say in your 8 position paper, the factual basis, which I presume is 9 the one on which matters are discussed at the challenge 10 session, was that there was no change of design 11 principle, et cetera? 12 A. Indeed. That's what I was told at the meeting. 13 Q. I accept you weren't being asked to form a view on that 14 because that was a technical matter? 15 A. And that's why I referred in that paper to the 16 requirement to get appropriate expert evidence in 17 relation to the issue. 18 Q. But if there was no change of design principle, 19 et cetera, not only would that not trigger the exclusion 20 there, but if we go back to the previous page, it would 21 mean that the -- there was no variation from the Pricing 22 Assumption anyway, would it? It wouldn't engage 23 paragraph 1.1? 24 A. Yes. 25 Q. So was there any discussion to the fact that if tie were 123 1 right on their principal contention, that -- on the 2 facts, the proviso was irrelevant? 3 A. Well, I think the position was that as far as Infraco 4 were concerned, Gogarburn Bridge triggered a Notified 5 Departure, a mandatory tie change pursuant to Clause 3.5 6 of Schedule Part 4. 7 So their position was that there was design 8 development in moving from BDDI in respect of the 9 Gogarburn structure to IFC. 10 I guess they would regard that as normal design 11 development in terms of complying, if you like, with the 12 provisions of 1.1, but their position was that the 13 exclusionary words at the end were triggered by how that 14 design developed, if you like, in terms of design 15 principle, shape, form and so on. 16 Q. Just to follow that through, I want to be quite clear as 17 to why it was that tie thought that there was a Notified 18 Departure. Did they consider that that triggered 19 Clause 1.1, just the terms that we see on the screen in 20 front of us? 21 A. I don't actually know what they thought on that point. 22 I think the position was simply that they were 23 confronted with a position on the part of Infraco that 24 we were in the territory, as far as they were concerned, 25 of a Notified Departure, and they wanted to test the 124 1 point. It was them who were actually going to take this 2 adjudication forward, and they wanted to test it before 3 an adjudicator. 4 So I think the context for all of this was Infraco's 5 position was this was a Notified Departure. tie on the 6 other hand did not take the view that Pricing Assumption 7 number 1 was applicable. 8 Q. I'm just trying to understand how on the one hand it 9 could be a Notified Departure, on the other hand Pricing 10 Assumption number 1 is not applicable. Can you assist 11 with that? 12 A. I'm not sure if I follow that, because Infraco's 13 position was that this was a Notified Departure, and 14 there was design development as a matter of fact because 15 the BDDI transformed itself into the issued for 16 construction status of the drawings. So there was an 17 evolution. 18 The critical question then became whether that 19 transgressed or gave life, if you like, to Pricing 20 Assumption number 1, and in terms of the opening words 21 of Pricing Assumption number 1, as you point out, it 22 says that the design, in order to be normal development, 23 would be in terms of design shape, form and 24 specification. 25 But then what you come on to in the last paragraph 125 1 is almost like a definition of design development, 2 normal design development, which excludes certain types 3 of changes, and that's what we were concerned with over 4 here. That was the battleground, if you like, on 5 Gogarburn between Infraco on the one hand and tie on the 6 other. 7 Q. I think this is something you have noted in your 8 reports, that if clause -- Pricing Assumption 1 as 9 a whole is given a literal interpretation, the effect of 10 that proviso on the page following the one on screen is 11 that normal development and completion of designs can 12 never save a change of design principle as normal design 13 development? 14 A. That was the problem. 15 MR LAKE: My Lord, I see it's past 1 o'clock. That would be 16 a -- 17 CHAIR OF THE INQUIRY: Do you think we'll finish this -- 18 MR LAKE: I think originally it was intended that 19 Mr Weatherley would start his evidence first thing this 20 morning, and obviously that wasn't the case. I'm 21 hopeful we may finish today, but I wonder if a shorter 22 lunch break would assist with that. 23 CHAIR OF THE INQUIRY: Yes. We'll resume again at 1.45. 24 (1.03 pm) 25 (The short adjournment) 126 1 (1.45 pm) 2 CHAIR OF THE INQUIRY: You're still under oath, Mr Nolan. 3 MR LAKE: Thank you, my Lord. 4 Mr Nolan, before lunch we were talking about the 5 challenge session in relation to Gogarburn. You said 6 you raised the issue about the difficulties in the 7 literal interpretation of Pricing Assumption 1? 8 A. Yes. 9 Q. What was the reaction to that? 10 A. The reaction from Steven Bell was that he did not think 11 or believe that the change from BDDI to IFC transgressed 12 the exclusionary words at the end of Pricing Assumption 13 number 1. 14 Q. That is that they wouldn't fall within the design 15 principle, shape, form or specification qualification? 16 A. Correct. The definition, if you like, of design 17 development is contained at the end of that particular 18 Pricing Assumption. So normally design development 19 doesn't include anything which involves a change in 20 shape and design principle and so on. 21 Q. But he felt that that was not going to present a 22 problem, as I understand that's what you're saying? 23 A. Correct, yes. 24 Q. Did you get any impression, or was it even said to you 25 directly, whether or not that had been the subject of 127 1 advice given to tie previously? 2 A. I can't recall that. I know that advice was taken from 3 Counsel, but I think the discussion in relation to that 4 came after the Gogarburn challenge session. I know 5 Calum MacNeill QC gave advice on various things and so 6 on. So there was a bundle, if you like, of advice notes 7 and DLA notes and such like, but I do not think that was 8 available at the time when we had this session. 9 Q. Either at that session or afterwards, was it ever said 10 to you that there had been advice in relation to the 11 dangers of Pricing Assumption 1 before the contract was 12 concluded? 13 A. No. 14 Q. To be quite direct about it, was it ever said to you 15 that Andrew Fitchie had warned tie about the dangers 16 that lay in Pricing Assumption 1? 17 A. No. 18 Q. Are you sure about that? 19 A. I'm absolutely positive. I had many discussions with 20 Andrew Fitchie. And in relation to Pricing Assumption 21 number 1, his belief was that you had to look at the 22 Employer's Requirements, and if you looked at the 23 Employer's Requirements, the price somehow correlated 24 with that. 25 And that's -- that was my understanding of his 128 1 position. 2 I didn't really discern anything in relation to 3 Pricing Assumption number 1 from Andrew Fitchie. 4 Q. He never said to you: I warned tie at the time that this 5 was a problem and now it's come home to roost; or 6 something like that? 7 A. No. 8 Q. Did he seem surprised when you raised the issue at the 9 challenge session? 10 A. I can't recall any surprise. No. 11 Q. The challenge session we have noted, or at least the 12 email with the paper, was in August 2009. I want to 13 look at a report you prepared in October 2009, please. 14 It's reference CEC00797337. 15 Now, do you recognise this as a report that you 16 prepared? 17 A. Yes. 18 Q. It's referred to in your statement. 19 If we look at page 7 of this, we see the date of 20 16 October 2009. Is that correct? 21 A. Yes. 22 Q. Could we look, please, at page 5 of this. In particular 23 at paragraph 34. The conclusion that you give is: 24 "The Infraco will therefore not be entitled to 25 a Mandatory tie Change where the change has arisen as 129 1 a result of design development of the BDDI produced by 2 the SDS Provider. Whether change falls within design 3 development (using the guidelines in Schedule Part 4 4 referred to above) will be a question of fact, and in 5 particular, engineering judgement." 6 Now, that appears to indicate that there's not 7 a great danger to tie provided we're looking at design 8 development of the BDDI; do I understand that correctly? 9 A. No. I think you have to read the two sentences 10 together. So the starting point is looking to see how 11 the design has developed, and then the critical question 12 is whether the change falls -- whether it falls within 13 the design development guidelines, which is the last 14 paragraph of Pricing Assumption number 1. And I refer 15 specifically to the challenge notes in the footnote. 16 That's footnote 11. 17 Q. When it refers to the comment on papers DRP, cases 5a? 18 That's the one we've just been looking at. 19 A. 5a is Gogarburn. 5b is Carrick Knowe. 20 Q. We will come and look at the others in just a moment, to 21 be clear. 22 When we looked at your statement earlier, it noted 23 that as soon as you read it, you thought there were 24 significant problems. I'm just trying to reconcile your 25 view on the one hand there's significant problems with 130 1 what you're saying here, that whether or not there's 2 design development is all a question of fact in 3 a particular engineering judgement. Why did you think 4 that was a significant problem? 5 A. I suppose the reason why I saw it as a significant 6 problem was simply the reaction to what I said at the 7 challenge session, where I seem to be a bit of a prophet 8 of doom, if you like. I was raising a point which 9 didn't seem to have -- really be considered in any 10 detail. 11 When I raised the point, I was informed that there 12 was no need for concern because, as a matter of 13 engineering, this didn't go into any of the exclusionary 14 words at the end. 15 Increasingly after that I saw the same issue in 16 Carrick Knowe, and Russell Road retaining wall. So 17 I can't remember, the timing of this may have come after 18 the decision, I don't know if you know the decision of 19 Gogarburn. 20 Q. No, this was prior to the decision in Gogarburn? 21 A. This is prior to it, yes. 22 Well, I saw an issue in relation to these Pricing 23 Assumptions, and the words that precede this, these are 24 known to not exist, if you like, that there will be 25 departures from them is a matter of fact. And therefore 131 1 I regarded the whole of Pricing Assumption number 1, not 2 Pricing Assumption number 1, the opening preamble to it, 3 as raising a huge question mark as to what the 4 quantification of all of this could potentially be. 5 Q. When you say the quantification, you mean what the 6 ultimate cost -- 7 A. Yes. But we were still feeling our way through this 8 process. This note -- I think this is a mark-up of 9 draft 2. There is a final version of it, I think, a few 10 days later or a few weeks later. 11 The first version of it, I can't remember the date 12 of. But what we were trying to do was grapple with 13 a number of different provisions, not just Pricing 14 Assumption number 1, but how the Employer's Requirements 15 and the Infraco Proposals worked together. That's the 16 preceding pages of this note. 17 How they tie in. Misalignment as a concept, where 18 there was known to be things in the Employer's 19 Requirements -- sorry, in the Infraco Proposals which 20 were at variance with what was in the BDDI, and I give 21 an example of that. And how that falls to be addressed. 22 So this note was designed to cover quite a number of 23 issues, as well as Pricing Assumption number 1. 24 Q. Sticking with Pricing Assumption number 1, and looking 25 at the other disputes we have made reference to, if we 132 1 could look at the challenge paper for Carrick Knowe, 2 please. First of all, the covering email, CEC00805916. 3 Pardon me, I have read the wrong reference. Could 4 we have CEC00805738. 5 You can see that this is an email from you dated 6 26 August to Dennis Murray, and this attaches your 7 comment paper in relation to 5b? 8 A. That's right. 9 Q. If we look at the attachment for that, it's reference 10 CEC00805739. Is that the challenge paper you drafted in 11 respect of case 5b, which was the Carrick Knowe Bridge? 12 A. It is indeed. And you'll notice that it's shorter than 13 the first one because it refers back to it. The same 14 principles applied. 15 Q. If you enlarge the analysis part of it, we can see 16 paragraph 3 begins by noting: 17 "The position in respect of 5b turns on the same 18 issues which we have commented upon in relation to 5a 19 subject to one important difference. In 5b it is 20 accepted that a Notified Departure exists but only in 21 respect of the Galleries which involved amendment from 22 the drawings forming the BDDI ..." 23 In 7 you note that: 24 "The comments in respect of 5a are entirely 25 applicable ..." 133 1 A. Yes. 2 Q. There was an additional issue here though, if you look 3 at paragraph 5. You say: 4 "It is intended to invoke Clause 80.15. However, it 5 is recognised that Infraco may argue (on a literal 6 interpretation) that Clause 80.15 is only applicable 7 where a Notified Departure is accepted and it is only 8 the Estimate that has been referred to the DRP for 9 determination. It would not be possible to carry out 10 the work in relation to the Galleries without building 11 the new structure." 12 You say, paragraph 8: 13 "It may be difficult to successfully invoke 14 Clause 80.15 if Infraco challenge this for the reasons 15 set out in paragraph 5 above." 16 Do you know whether there was an attempt to actually 17 require works to be done in accordance with 18 Clause 80.15? 19 A. I don't. I was just making the -- I think the obvious 20 point that if it's one component of a bigger structure, 21 it's difficult to see what the point of making progress 22 on the one component is, because presumably you have to 23 do the other work as well. It was no more profound than 24 that. 25 Q. Can you remember, from the challenge session, was there 134 1 any discussion as to whether or not Clause 80.15 issue 2 should be sent to adjudication? 3 A. No. I can't recall any discussion about that. 4 Q. For completeness, if we look at the third of the ones 5 mentioned in the report, firstly, the covering email 6 will be CEC00805916. This is dated 4 September 2009, 7 from you to Dennis Murray. You say you attach your 8 comment paper in relation to case 5c? 9 A. That's right. 10 Q. If we look at the paper that was attached to that, it's 11 reference CEC00805917. If we enlarge the analysis 12 section, we can see in paragraph 3 once again you note 13 that 5c turns on the same issues which have been 14 commented upon in relation to 5a and 5b. 15 A. That's right. 16 Q. If we look at paragraph 5 and 6, you can see once again 17 you refer to the issue of invoking Clause 80.15. 18 Although it's noted that Infraco might argue that 19 Clause 80.15 is only applicable where a Notified 20 Departure is accepted and it is only the estimate that 21 has been referred to the DRP for determination. 22 In paragraph 8 you note that it might be difficult 23 to invoke 80.15 if Infraco take that argument. 24 Can you recall, was Clause 80.15 the subject of 25 discussion as to whether or not it should be referred to 135 1 adjudication? 2 A. The fact that I'm mentioning it seems to suggest that it 3 was discussed, but I have -- sitting here just now, 4 I have no recollection of the actual discussion other 5 than what I'm reading on the screen. 6 Q. I'm finished with that document. 7 Now, Carrick Knowe Bridge and Gogarburn Bridge were 8 both decisions made by Mr Hunter, the adjudicator? 9 A. That's right. 10 Q. In respect of each of them, I think there's no dispute 11 that the outcome was that he determined that there had 12 been a Notified Departure? 13 A. That's right. 14 Q. Can we look at what your statement says in this regard. 15 Could we go to page 10, please, and enlarge the answer 16 to question 19. You note there: 17 "These decisions ..." 18 That's the two I referred to: 19 "... held that the development of the design from 20 BDDI to IFC came within the ambit of the final sentence 21 of Pricing Assumption 1 as a matter of fact. It was 22 therefore unsurprising that the Adjudicator gave 23 a literal interpretation to the final sentence of 24 Pricing Assumption 1. - see my answer to question 15 and 25 to my comment papers in respect of Gogarburn and 136 1 Carrick Knowe." 2 Now, firstly, just to be sure I'm understanding the 3 first sentence, is it simply to the effect that the 4 adjudicator's view was that the changes between these 5 two sets of drawings did amount to changes of design 6 principle, shape, form or specification? 7 A. Precisely. 8 Q. You say there: 9 "It was therefore unsurprising that the Adjudicator 10 gave a literal interpretation to the final sentence ..." 11 Why did the view he took of the facts make it 12 unsurprising that he chose a literal interpretation? 13 A. I think the question in relation to that was examined 14 very carefully by us after this when we carefully 15 considered whether these words really were meant to be 16 given a literal interpretation. But in a swift DRP 17 process like adjudication, it didn't seem to me to be 18 surprising that if one could show a change in shape, for 19 example, then the adjudicator would form the view that 20 that actually makes it a Notified Departure because 21 you're outwith the ambit of normal design development 22 because it's a change in shape. 23 Q. That danger, that if the adjudicator decided on the 24 facts that it was a change in design principle, 25 et cetera, he would also conclude it was a Notified 137 1 Departure -- 2 A. Yes. 3 Q. -- to give a literal interpretation, was that something 4 that had been discussed beforehand, that danger? 5 A. Yes. That's the fundamental point, that if any of these 6 words which are said to be the definition of normal 7 design development, what I call the exclusionary words, 8 if any of them arise, then you're not within the ambit 9 on a literal interpretation of Pricing Assumption 10 number 1 of normal design development. 11 Q. Leaving aside the question of the technical 12 interpretation of whether or not it was a change of 13 design principle, what was your view of the 14 interpretation? Was it correct to take a literal 15 interpretation, or did you think -- at that time, did 16 you think it should be a different interpretation? 17 A. At that time I hadn't given it the level of thought that 18 we subsequently gave it, because in effect I was 19 reassured by what was said, that: don't worry about 20 this, our expert engineer doesn't think it's a change in 21 shape, design principle or whatever. 22 I said: whatever you do, you have to speak to the 23 expert, and make sure, if you like, that his advice is 24 this doesn't come within the exclusionary words. If it 25 does, then we have a problem. 138 1 Q. I think there was some consideration as to whether or 2 not these decisions, Mr Hunter's decisions, should be 3 reviewed. 4 A. I'm sure there was. 5 Q. Were you involved in that? 6 A. I don't think so. No. Our focus -- this was 7 a disaster, these two initial results, as viewed by tie. 8 And I remember vividly when the decisions were handed 9 down attending a meeting which Richard Jeffrey chaired, 10 and he said: well, this has come as a huge surprise to 11 everybody, maybe not you, Brandon, but the rest. 12 And our focus thereafter went into considering the 13 words very carefully in their context to see if some 14 other formulation could be arrived at on an objective 15 basis to try and avoid a situation where every single 16 movement from BDDI to IFC was going to fall within these 17 words at the end and trigger a Notified Departure. 18 Q. Was there discussion of what the consequences would be 19 for the project if that was the view, that all BDDI to 20 IFC changes triggered Pricing Assumption 1? 21 A. I think there was a recognition in the room that this 22 would have a huge impact on price. We weren't so much 23 concerned with time at that point because Infraco were 24 proceeding with the works. That came later. The 25 problem on -- in relation to Clause 80 and that process 139 1 incrementally came into sharp focus, particularly at 2 a point in time where Infraco more or less ceased work. 3 But that was in the autumn of 2008. 4 Q. I'll come to Clause 80 -- 5 A. Sorry, 2010. 6 Q. -- Clause 80 and Clause 34 in due course, but just stick 7 with the Pricing Assumption 1 for the time being. 8 From what you described at the adjudication, there 9 were two issues. There was the technical issue for 10 engineering evidence and there was a legal issue of 11 interpretation. What you've described is further work 12 was done to see whether or not the legal issue could 13 be -- whether a different answer could be obtained. 14 Do you know whether any work was carried out on the 15 technical side, to see whether an argument might be 16 upheld that the BDDI to IFC change wasn't a change of 17 design principle, et cetera? 18 A. Absolutely. Engineering, expert engineering involvement 19 on that was taken forward. Robin Blois-Brooke was 20 an expert engineer employed by tie, and he gave 21 consideration to that. 22 Q. Do you know when he was engaged? 23 A. I can't remember when it took place. I can't even 24 remember whether it was me who suggested him or not. 25 Robin Blois-Brooke was an engineer I have used many 140 1 times and is a leading UK expert, so I was keen to get, 2 you know, a top person, if you like, looking at the 3 issue. 4 But one of the motivations for that was some comfort 5 in terms of how Mr Wilson in the Russell Road retaining 6 wall had approached the issue from an engineering 7 perspective, and he took -- from our perspective, as 8 tie, a more rounded view based on technical engineering 9 judgement as to what constituted a change in, for 10 example, shape. 11 Q. We will come to the Russell Road retaining wall in 12 a moment, but in the initial consideration of 13 Mr Hunter's decisions, was there a view taken as to 14 whether it would be possible to get different decisions 15 in future? 16 A. I think that would be a function of how the engineering 17 analysis would evolve, and also how the legal analysis 18 would evolve. Something had to change from tie's 19 perspective. We couldn't keep arguing just the same 20 thing. We would have to develop new lines of argument. 21 Q. Was there a view as to whether or not it would be 22 possible to generate new lines of argument, either on 23 engineering or the legal side? 24 A. Well, that's essentially what I was doing. I was 25 looking to see if I could come up with any further legal 141 1 analysis, and we did; as a function of not only speaking 2 to Richard Keen, as he then was, but also finally with 3 Helen Davies QC of Brick Court Chambers. 4 Q. I want to come and look at both of those, but first, can 5 we look at another document, please. It's reference 6 CEC00591754. 7 This is, you can see, a document titled "REPORT FOR 8 TIE LIMITED ON CERTAIN CONTRACTUAL ISSUES CONCERNING 9 EDINBURGH TRAM PROJECT", with a date of 23 March 2010. 10 And it's from McGrigors, your firm? 11 A. Yes. 12 Q. Is it a report prepared by you? 13 A. It was. I was assisted by other people, but I was 14 responsible for the report. 15 Q. Who had requested this within tie? 16 A. It was a stream of work which was one of many prongs to 17 something called Project Pitchfork. 18 Q. Can we look at page 13, please. Look at the upper half 19 of the page. You start in paragraph 7.1 by noting that: 20 "There are a number of difficulties with Infraco's 21 literal interpretation of Pricing Assumption No 1 22 which suggests that something has 'gone wrong' with the 23 words. This is because Infraco's literal reading 24 produces a result which, it is contended, a reasonable 25 person would not have understood tie and Infraco to have 142 1 intended at the point that the contract was entered 2 into." 3 I think you go on there to set out a number of the 4 considered absurdities; is that correct? 5 A. Yes. 6 Q. On the following page at paragraph 7.8, you say: 7 "It makes no commercial sense to arrive at 8 a conclusion that the 'lump sum fixed and firm price' 9 referred to in clause 3.1 of Schedule Part 4 extends 10 only to that part of the Infraco Works as may have been 11 the subject of design information drawings issued up to 12 25 November 2007. There is a tension between, on the 13 one hand, the provision for a fixed lump sum for the 14 delivery of the Employer's Requirements, as against, on 15 the other, the risk of the evolution of the design 16 sitting with tie." 17 You say that it makes no commercial sense that the 18 price was only for the subject of design information 19 drawings at 25 November. Were you ever made aware of 20 correspondence in which the consortium has said they 21 weren't willing to take the risk of design development? 22 A. Well, as a function of producing this report, I went 23 back to the prior communings, because putting it as 24 shortly as I can, it seemed that if one was adopting 25 a literal interpretation of Pricing Assumption number 1 143 1 and the significance of the words at the end, you 2 emasculated normal design development of pretty much all 3 content. It was deprived of any content. 4 The question that we were engaged with was: has 5 something gone wrong with the words? Could we actually 6 look to have it judicially revised? And if you like, 7 this was -- the immediate aftermath of Chartbrook and 8 cases like it, in the Supreme Court, where Lord Hoffmann 9 said there's no limit to the amount of red lining 10 a judge can make and so on. 11 So we were looking very carefully, because the 12 matter was of such significance, to test whether 13 something had gone wrong with the words, and that took 14 us back in time to before the contract was formed. 15 The results of our forensic investigation are 16 contained in a schedule to this report, but very 17 importantly, where it took us directly to eventually was 18 seeing for the first time the executed Wiesbaden 19 Agreement which had the same exclusionary words in at 20 the end. 21 So in terms of rectification, either under a statute 22 or judicially, we kind of hit the buffers in relation to 23 these words. 24 Q. I'll come back to the Wiesbaden Agreement in a moment. 25 But the effect of which interpretation was given to 144 1 Pricing Assumption number 1 determined which party was 2 to bear the risk of design development. Is that 3 something you agree with? 4 A. Yes. 5 Q. If we look then at an email prior to the execution of 6 the Wiesbaden Agreement, it's CEC00573351. 7 Look at the lower half of the page first of all. We 8 can see -- could we go out to the whole email a second. 9 Pardon me, yes. 10 Could we look at the email above that from 11 Richard Walker dated 20 December. 12 We are looking at an email here from Richard Walker 13 of 20 December to Geoff Gilbert and his colleague -- 14 that's Richard Walker's colleague -- Scott McFadzen, 15 dated 20 December 2007. Do you see that? 16 A. Yes. 17 Q. What he says is: 18 "Geoff, we still have issues with accepting design 19 risk. We have not priced this contract on a design and 20 build basis, always believing until very recently that 21 design would be complete upon novation. With the 22 exception of the items marked provisional which we have 23 now fixed by way of the 8 million we cannot accept 24 more ..." 25 It says "drain development": 145 1 "... other than minor tweaking around detail." 2 Do you see that? 3 A. Yes, I do. 4 Q. Would you agree that that appears to indicate that, as 5 far as the consortium were concerned, they did not want 6 to accept the design risk? 7 A. Yes. 8 Q. And that being so, trying to interpret Pricing 9 Assumption 1 on the assumption that the design risk was 10 to lie with the consortium in a sense was begging the 11 very question it was supposed to answer? 12 A. Yes. I follow that line. What, if you like, we were 13 trying to do was building on the back of Russell Road, 14 and Mr Wilson's comments, developing the engineering 15 analysis through Robin Blois-Brooke, speaking and taking 16 advice from Richard Keen, was to see how on earth we 17 could interpret this provision in a manner which was 18 more favourable to tie. 19 In doing that, I tried to identify things which 20 would have been absurd, such as if tie changed the 21 design -- sorry, not tie, Infraco changed the design for 22 their own reasons to improve buildability and suchlike, 23 and that changed the shape, just using that as an 24 example, and it cost more money, would that properly be 25 a Notified Departure under these provisions? Because 146 1 that doesn't seem right. 2 Equally, and it's an example that I used repeatedly, 3 was the example of the bat box, boxes at Gogarburn. 4 Sadly, the cost of the bat boxes was not huge. So in 5 terms of practical impact, it wasn't a great example, 6 but the Employer's Requirements explicitly required to 7 observe endangered species and suchlike, and bat boxes 8 therefore had to be provided, and if they were missing 9 at BDDI, the proposition was, since that was clearly 10 flagged up in the Employer's Requirements, why should 11 the cost of that be laid at the door of tie through this 12 mechanism? 13 So if you like, it was building a list of issues 14 which made the words on a literal interpretation too 15 broad, and we were looking to see how it could be 16 ameliorated. 17 The best position that we ended up in on the law, on 18 the legal analysis, was a note that I prepared and sent 19 to tie, and it's a synthesis of the advice that we got 20 from Brick Court Chambers. I could not improve on that. 21 There was no silver bullet, obviously. It would have to 22 be done on a case-by-case basis, and it would involve 23 engineering judgement, and that's kind of what the note 24 says. 25 Q. I'll come to look at that with you in a little while. 147 1 Just if we look at the Executive Summary, for 2 convenience, back in your report, your report was 3 CEC00591754. Look at page 5 this time. 4 Enlarge paragraph 1.5. 5 Bringing perhaps the argument in relation to seeing 6 whether or not -- the absurdities to a conclusion, you 7 say: 8 "Whilst there is a stateable argument that something 9 has gone wrong with the wording, this meets only part of 10 the required test. What is also required is to 11 determine the result which must rationally have been 12 intended, and to propose the wording that would achieve 13 that result. Whilst that may appear straightforward, it 14 is an extremely difficult exercise. That exercise is 15 not assisted by the factual background which has 16 presented in relation to the execution of the Wiesbaden 17 Agreement. This issue is still under consideration by 18 McGrigors LLP in conjunction with Richard Keen QC." 19 A. Yes. 20 Q. Now, you've mentioned already the Russell Road retaining 21 wall dispute. That was a question in which I think the 22 adjudicator accepted that that something had gone wrong 23 with the wording, and it would have to be given 24 a rewrite. Is that a fair comment? 25 A. I'm not sure if I would put it quite like that. The 148 1 engine -- Mr Wilson listened to the engineering experts 2 and I think he himself, I think, was an engineer. 3 Although I could be wrong. 4 What he did was he looked at these words, the 5 exclusionary words, from an engineering perspective. So 6 it wasn't so much a matter of words going wrong. It's 7 from an engineering perspective whether something falls 8 within shape, form and so on. 9 Q. Could we look at the decision of Mr Wilson. It's 10 reference CEC00034842. 11 Now, it's a long decision. I'll direct you to 12 different particular sections. If there's something you 13 think is not correct or there's something else you want 14 to look at, by all means indicate. 15 But if we can go firstly to page 20, and enlarge the 16 lower half of the page. You'll see a heading, 17 "Conclusions". This is in relation to the contract 18 interpretation issue. 19 He says: 20 "It appears that something has gone wrong with the 21 language of Section 3.4.1.1 as, on the face of it, on 22 a literal reading some part must be redundant to give 23 it meaning. I consider that the formulation advanced by 24 tie most nearly expresses the true intention of the 25 parties as can be discerned; namely that Pricing 149 1 Assumption Section 3.4.1.1 should read that the 2 'Design prepared by the SDS Provider will undergo 3 the normal development and completion of design and will 4 not in terms of design principle, shape, form and/or 5 specification be amended from the drawings forming the 6 BDDI (except in relation to Value Engineering)'." 7 In the following paragraph he says: 8 "As to 'normal' development, I consider that this is 9 the progression towards the Employer's Requirements as 10 would be expected by an experienced contractor and his 11 designer. If this results in amendment of the design 12 principle, shape, form and/or specification shown on the 13 BDDI drawings then it becomes a Notified Departure, 14 subject to the following paragraphs." 15 We will look at the following paragraphs in just 16 a moment, but what did you take from this decision for 17 the purposes of tie and its effect on the carrying out 18 of the project? 19 A. Can I firstly say that the use of the language that 20 something had gone wrong potentially with the words, 21 I think I introduced into the argument. It's the one -- 22 the Gogarburn and Carrick Knowe, having attended the 23 challenge session, that was it. We had no involvement 24 in the adjudications at all. 25 In relation to Russell Road, we were asked to 150 1 contribute -- it had to be done very quickly, overnight, 2 into a rejoinder, and I provided a two-page note which 3 mentioned some well-known cases about how you interpret 4 commercial contracts and words not having their normal 5 meaning, or something went wrong with the words. 6 So we took comfort from this decision in the sense 7 that Mr Wilson seemed to be more aligned, if you like, 8 to think about these words in a broader context, and not 9 just to give it a literal interpretation which would 10 emasculate or deprive design development from all 11 content. 12 Q. Mr Wilson does, from his paragraphs I have read, make it 13 plain that if normal design development leads to 14 a change of design principle, et cetera, it's still 15 a Notified Departure. 16 A. Yes. 17 Q. So what comfort did you take from this? 18 A. The comfort we took, and there may be other bits in this 19 which I would need to look at, I haven't looked at this 20 decision for a long time. But there were certainly bits 21 in it which involved a more sophisticated consideration. 22 So we did draw comfort from it -- we being tie and 23 McGrigors -- but it still left us -- this is the point 24 I want to make fairly and squarely. There was still 25 a massive problem. We lost the adjudication. tie lost 151 1 the adjudication. 2 So the issue remained, if you like. 3 That didn't divert the ongoing stream in terms of 4 trying to get an expert engineer of standing in the UK 5 to look at these words from an engineering perspective, 6 and that, if you like, was the key going forward for us. 7 If we could get an engineer to say these words from 8 an engineering perspective can be given content, and 9 just changing one minor point here or there from an 10 engineering perspective wouldn't result in a change in 11 shape or design principle and so on, that, if you like, 12 was the avenue, along with whatever we could do in terms 13 of legal analysis. 14 Q. Just to be clear, do I understand then what -- the 15 engineer would assist you in an interpretation of what 16 was meant by design principle, what was meant by shape, 17 what was meant by form and what was meant by 18 specification? 19 A. Yes. 20 Q. Because we see that Mr Russell (sic) does go on to 21 consider those points in paragraphs 103 and 104 of his 22 decision. 23 A. That's right. 24 Q. Did you consider there was room for going beyond that 25 with the benefit of additional engineering evidence? 152 1 A. That's what we were hoping for prospectively, that we 2 hadn't achieved that at this point. This decision came 3 out, I think, in early January. 4 Q. Yes. 5 A. So I think there was a stream of work which was then 6 being taken forward in terms of Robin Blois-Brooke. 7 Q. You've been quite candid in saying that this decision 8 still left a massive problem for tie. Was that 9 something that you discussed with representatives from 10 tie? 11 A. Yes. 12 Q. That it was still a problem? 13 A. Absolutely. 14 Q. Who did you discuss it with? 15 A. With Richard Jeffrey, Steven Bell, Dennis Murray. The 16 whole team. There was no doubt that there was a massive 17 problem. When the first two decisions came out, there 18 was huge demoralisation, and understanding for the first 19 time that there was a major issue. 20 My understanding was that tie's view was that normal 21 design development risk lay with Infraco. That seems, 22 as best as I can put it, the summary of their position. 23 So losing these first two adjudications was 24 a massive blow, and then it spawned a stream of work 25 which we were involved in, in looking to see how that 153 1 could be ameliorated as best as one could make it, given 2 the terms of the contract. 3 Q. The first two adjudications were the -- both the ones 4 from Mr Hunter? 5 A. Indeed. 6 Q. And this -- did you consider this had improved the 7 situation much in that regard? 8 A. Well, I think it did a bit, yes. I should say, 9 Mr Hunter has a high reputation. These adjudicators are 10 well known, and they are of standing. So that didn't 11 help at all from our perspective, looking at it from 12 tie's angle. 13 Q. If you go back to your report -- sorry, that was 14 reference CEC00591754, page 16. 15 Sorry, it's page 16 of the printed pages. It's page 16 20 of the electronic. If we look at the lower half of 17 the page. You note in paragraph 9.20 that: 18 "Recent experience in the Supreme Court suggests 19 that if the first limb of the test can be overcome 20 (something has gone wrong with the words), then the 21 court may be prepared to go quite far in what it will 22 imply or add." 23 That's a reference to the Chartbrook case? 24 A. Yes. 25 Q. Which is perhaps a high-water mark of judicial 154 1 intervention and interpretation? 2 A. If you look at subsequent Supreme Court decisions, they 3 say that nothing has changed. It's still the same. 4 Although in reality I think Arnold v Britton does push 5 the pendulum back. 6 Q. In the following paragraph you say: 7 "Whilst there is a stateable argument that something 8 has gone wrong with the wording, this meets only part of 9 the required test." 10 A. Yes. 11 Q. Would you accept that to anyone involved in litigation 12 or disputes, as soon as you see the expression 13 "stateable argument", it tends to indicate the view that 14 the prospects are not good? 15 A. Yes, I can -- I can agree with that. I concur with 16 that. 17 Q. Is that the way that you use these terms, that it was at 18 best stateable? 19 A. Yes. What we were involved in was the best damage 20 limitation that could be achieved in the circumstances. 21 That was the task. There was no silver bullet, as 22 I have indicated. It was trying to prepare a series of 23 premises, if you like, upon which we could go forward 24 with other adjudications potentially. 25 I should say that in terms of what McGrigors were 155 1 doing, we were simply producing this report and that was 2 it. I had no ongoing continuous brief, if you like. So 3 from the challenge sessions and the earlier results, we 4 moved on to this Project Pitchfork stream, and we 5 continued with that to a certain point, and then that 6 was it really for a while. 7 Q. Were you involved in any follow-up advice clarifying 8 this report that you gave? 9 A. Yes. There were two notes. One was a note which had 10 been approved by Richard Keen, and the second was the 11 advice from Helen Davies. 12 Q. We will come to look at those in just a moment, but one 13 of the things you consider in this report is whether or 14 not you could get another decision in the matter, 15 a decision from a court, because this was a matter of 16 some critical importance. Were you involved in 17 discussions with tie as to whether or not court 18 proceedings should be raised to seek a clarification of 19 this issue? 20 A. You know, I honestly can't recall whether I was or 21 I wasn't. The problem would be time. I mean, this was 22 in 2010, in March 2010, I think. I'm not sure how long 23 it would take to get a declarator in the Court of 24 Session, but it would take many, many months. Others in 25 the room will know better than me, but it couldn't be 156 1 done swiftly. 2 So one potential was, I guess, another adjudication, 3 but very carefully formulated with engineering advice. 4 Q. What would the benefit of another adjudication be if 5 there were competing decisions? 6 A. The benefit of another adjudication, if we won it, on 7 a different basis, would help our cause in relation to 8 the ongoing debate with Infraco. 9 Q. Even having a Court of Session action pending, was there 10 any consideration given as to whether it would send 11 a message to the consortium that tie believed in their 12 argument and were willing to fight it in court? 13 A. I gave no -- I was not involved in any such discussion, 14 from memory. 15 Q. Were you involved in discussion? Did you give advice as 16 to whether or not a Court of Session action should be 17 raised? 18 A. I'm sure we touch upon it in this note. 19 Q. If we look at the bit of the note that considers it, if 20 we look at page 18 -- sorry, that will be page 22. It's 21 page 18 of the printed version. 22 Paragraph 10.9 -- 23 A. I think from memory we talk about time period perhaps. 24 Q. Mm-hm. There is discussion of time. 25 Was there advice given that the danger in proceeding 157 1 to court was simply that tie were likely to lose? 2 A. The reason why I would not have favoured -- and I say 3 would have because I'm -- it was eight years ago or 4 seven years ago. I did not want to proceed unless we 5 had confidence that we had come up with the best 6 analysis possible, both from a legal perspective and an 7 engineering perspective. 8 In terms of the legal analysis, I think we landed -- 9 I was confident that we'd landed in the best position 10 through the advice synthesised through Helen Davies, if 11 you like. 12 On the engineering side, I think there was still 13 a stream of work going on, which I wasn't involved in at 14 that point in time, with Robin Blois-Brooke. 15 What happened, as a matter of fact, is that by the 16 time we got to March, there was a shift away from 17 launching more adjudications on Pricing Assumption 18 number 1 into a different stream altogether, which was 19 primarily the Remediable Termination Notices, and 20 a flow, if you like, through the summer into Project 21 Carlisle. 22 Q. So just to come back to the core point of my question, 23 were you ever involved in giving advice that the danger 24 of taking the matter to the Court of Session was that 25 the decision would be against tie and that would be game 158 1 over? 2 A. Yes, I'm pretty sure I would have said that. 3 Q. Now, you've also mentioned that there were arguments 4 that arose perhaps later on about getting the consortium 5 to actually carry out the works as they weren't willing 6 to do things, and reliance was placed, I think, on 7 Clauses 34 and 80. 8 A. Yes, the extremity of that particular problem was 9 building up by the time we get to March. It manifested 10 in its full sense in September and October, when works 11 actually came to a standstill, apart from the Gogar 12 depot, I think. And the issue was -- revolved around 13 Clause 80, and whether an instruction could be given to 14 proceed with the works, and in short, as you will know, 15 I gave advice that there was another provision which 16 could be employed, and that was 34, Clause 34.1. 17 Q. Mm-hm. 18 A. And that had not been tested, and I thought this was 19 meritorious. We should try. 20 I think I wrote a paper or an advice note on the 21 matter, and the advice note or my paper was appended as 22 a paper apart. I didn't actually know that's the way it 23 was going to be done, but that's the way it was done. 24 Q. Can we look at a letter that's dated 24 May 2010. It's 25 reference CEC02083927. 159 1 You can see here this is a letter that runs from 2 Edinburgh Trams, as the logo then styled them, to the 3 consortium with the date of 24 May 2010. 4 Is this letter immediately familiar to you? 5 A. Yes, it is. And I think this letter has the paper apart 6 at the end. 7 Q. If we look at page 6 of this letter, is that the paper 8 apart that you drafted? 9 A. Yes. 10 Q. So the arguments we see here in relation to -- we can 11 see 34.1 on that page, and if we look at the following 12 page, Clause 80.13, those were arguments that you had 13 prepared for tie? 14 A. Indeed, they were. 15 This was also advocacy. We were trying to advocate 16 the strongest position possible, and this was what 17 I came up with. 18 But I didn't realise, I should say, that this was 19 going to be disseminated in the form of a paper apart. 20 Q. Just for completeness, if we go to the following page, 21 you also set out again the arguments in relation to 22 Part 4 of the Schedule, contract in relation to pricing? 23 A. And this captures the advice that we got from 24 Helen Davies. 25 Q. Now, in relation to Clause 80, and the difficulties that 160 1 were arising to get work progressed, did you have 2 discussions about that clause and its origins with 3 Andrew Fitchie at the time? 4 A. I probably did. 5 Q. Did he ever suggest to you that that clause was 6 redrafted by tie at the 11th-hour in the weeks before 7 the contract was actually concluded and it was all their 8 wording? 9 A. I can't recall that. I certainly know that in relation 10 to the Pricing Assumptions he wasn't -- he said he 11 wasn't involved at all in relation to Wiesbaden, and 12 I think that seems to be clear. 13 Whenever I discussed it with him, he sort of 14 described it as a contract within a contract which he 15 hadn't been involved in. 16 Q. Just to be clear, I'm not looking at the Pricing 17 Assumptions in Schedule Part 4 here, I'm looking at 18 Clause 80? 19 A. I was coming to Clause 80, sorry. 20 He could well have done. I really can't remember. 21 I think what I do remember in terms of discussing 22 matters with Andrew Fitchie was that he felt very 23 strongly that the words at the end which I think say "or 24 otherwise direct" had to be given some utility, and 25 therefore that could be used as the technique for 161 1 directing that work should proceed. 2 Q. In relation to the adjudication decisions, by which 3 I mean Mr Hunter's two decisions and Mr Wilson's 4 decision, were you involved in the decision as to 5 whether or not they should be challenged, either -- 6 I know you have said there shouldn't be a court action 7 raised, but specifically in relation to those decisions, 8 rather than re-litigating the issue? 9 A. I am not sure what you mean by challenging the 10 decisions. 11 Q. Well, in some sense considering whether or not they had 12 been wrongly decided, whether there was an excess of 13 jurisdiction or it hadn't been exhaustive? 14 A. No, I never gave any consideration -- I think that would 15 not be tenable, to be perfectly honest. 16 Q. In relation to another adjudication concerning Notified 17 Departure in Tower Bridge, a concession was made that 18 change in question did amount to a Notified Departure. 19 Were you involved in advice as to whether or not that 20 concession should be made? 21 A. No, I can't recall Tower Bridge at all. 22 Q. There was another adjudication which took place before 23 Gordon Coutts QC in relation to drainage issues, where 24 an argument was advanced that if a matter wasn't shown 25 in the BDDI at all, and there was changes, that couldn't 162 1 amount to an amendment of the BDDI. Were you involved 2 in that? 3 A. No. But I should say that if you look back at the 4 paper, the first paper that I wrote, which you referred 5 me to earlier on, I did moot an argument that if -- if 6 there was virtually no design, the question is: could 7 you say that there's a change in shape, if you like, if 8 there is no design in the first place or very limited 9 design. I think that sounds like an extension of the 10 argument that I had toyed with at that point in time. 11 Q. I didn't take you specifically to the paragraph, but you 12 were aware that that was a matter which -- Mr Wilson had 13 seemed to express some sympathy for that approach in the 14 Russell Road retaining wall? 15 A. I think that does ring a bell, yes. 16 Q. Were you aware of the decision that was taken by 17 Mr Coutts QC in relation to the drainage adjudication? 18 A. I probably -- I probably was aware of it after the 19 event, but we had no involvement in the adjudication at 20 all. I think by that time these challenge sessions ran, 21 I think, for probably until November at the latest and 22 then they ceased. There was no further challenge 23 sessions as such. 24 Q. I want to look at a note that was supplementary to the 25 report we've just been looking at, please. Firstly, if 163 1 you look at the covering email, it's CEC00592602. You 2 can see this is from you to Richard Jeffrey, Tony Rush, 3 Steven Bell and Susan Clark with a date of 4 31 March 2010. In it you say: 5 "I attach a Note which follows on from our Report 6 and also from the discussion that we had with 7 Richard Keen QC last Thursday evening." 8 Do you see that? 9 A. Yes. 10 Q. Also, if we look at the end of the second paragraph, in 11 relation to Pricing Assumption 1, perhaps if I read from 12 halfway: 13 "Whilst Richard Keen QC considered that there were 14 arguments that could be utilised to support this 15 formulation (some of these are referred to in the Note) 16 he was not confident that a court would uphold it. 17 Further consideration is required and I think the point 18 has now come where I would like to test all of this with 19 leading Counsel in London from a commercial set as they 20 have the greatest experience of Chartbrook type 21 arguments and you will see that I am proposing that we 22 use Helen Davies QC." 23 A. Yes. 24 Q. Looking at the note that's attached to that, it's 25 reference CEC00592603. If we enlarge the upper half of 164 1 the page. 2 In paragraph 1.2 you once again begin by saying: 3 "There is a stateable argument that something has 4 gone wrong with the words of Pricing Assumption 5 No 1." 6 Again, that perhaps, as someone who understands how 7 that term would be used, indicates not very much 8 confidence in the argument at all. 9 A. It's how much is the something. That's really the 10 point. 11 Q. In what sense? 12 A. Well, the bat box sense and the buildability sense. So 13 those were two examples where the wording seems to have 14 gone wrong because if a bat box was there in the 15 Employer's Requirements and was supposed to have been 16 priced, then -- and if it wasn't mentioned in the BDDI 17 in November, introducing a bat box or two or three or 18 how many, should that result in a Notified Departure? 19 And our position on that was we didn't think so. 20 I think increasingly some concessions were made by 21 Infraco in relation to some of these issues. The 22 buildability argument was another one. 23 So I think that there is a stateable argument, as 24 I expressed it over here, the full rigour of the 25 wording, something had gone wrong. The problem, the 165 1 absolutely fundamental problem was: how do you come up 2 with a different analysis or interpretation which can be 3 objectively arrived at? That was where we had a huge 4 problem. 5 Q. Now, when you're talking about buildability or bat 6 boxes, the way you've presented your answer there, it 7 sounds like you think there was a reasonable argument in 8 relation to those matters? 9 A. I think so, yes. 10 Q. But when you describe it in this note as a stateable 11 argument, that gives the impression that you don't have 12 much confidence in the argument? 13 A. The problem with the bat box issue was it wasn't of 14 broad application. So it was a sort of minuscule point. 15 And in terms of buildability, it wasn't clear at all to 16 me that Infraco were changing design for the purposes of 17 their own buildability. So ... 18 Q. Looking at the matter broadly, is it, as you say, your 19 view is that it was stateable with all that that 20 imports? 21 A. Yes. The prospects were -- were not good. It was 22 a stateable argument, one that on an iterative basis 23 which was being refined, but at this point in time 24 nobody could come up -- Richard Keen couldn't come up 25 with anything, I couldn't come up with anything, which 166 1 would create an objective method of analysing the words 2 on a different basis. 3 Q. If we look at page 3, you carry that to a conclusion in 4 paragraph 3.1. In relation to the heading "Prospects", 5 you say that having looked at various possible 6 formulations of words, you say: 7 "Whilst this formulation of words appears to satisfy 8 the considerations discussed above, the prospects of 9 this wording being upheld by a court are uncertain. 10 This is because it can be said that the contract does 11 not contain express wording which apportions the risk of 12 change in the way contended for: the express wording 13 places almost the whole of the risk of design change on 14 tie." 15 A. Yes. 16 Q. Now, you do go on to recommend that there would be 17 a consideration of advice of Helen Davies, but did you 18 get a reaction from tie to your advice that it was 19 uncertain, and that the express wording placed the whole 20 of the risk of design on tie? 21 A. I mean, this came as no surprise in this advice note. 22 Q. To the people at tie? 23 A. To tie. It came as no surprise at all. This is where 24 we'd been for a while. 25 Q. Is that where you'd been since you got Mr Hunter's 167 1 decision? 2 A. Pretty much so. 3 Q. Dealing with the advice from Helen Davies then, you have 4 a covering email. Could we look at it, please, 5 CEC00323248. 6 This is from you to Richard Jeffrey and -- 7 Steven Bell, Andrew Fitchie, Tony Rush, Dennis Murray 8 and Susan Clark, with a date of 29 April 2010. 9 A. Yes. 10 Q. Then you attach a summary of your preliminary 11 discussions with Helen Davies QC and a draft letter to 12 Infraco. 13 Could you look at the summary of the discussions 14 with Helen Davies. It's document reference CEC00323249. 15 If we could enlarge the middle part of the page, in 16 looking at the issues arising out of interpretation, you 17 draw it in paragraph 7 to be that: 18 "That is likely to involve the exercise of 19 engineering judgement to some extent. The parties 20 intended that to be the case in invoking the concept of 21 normal development and completion of design, which 22 inherently requires the exercise of that engineering 23 judgement." 24 This was a view of Helen Davies, I take it, that's 25 recorded here? 168 1 A. Yes. 2 Q. If we go right to the end and look at the summary of 3 this, paragraph 25 on page 4, it's that: 4 "Whilst both the foregoing constructions of Pricing 5 Assumption No 1 have much to commend them the 6 prospects of a court upholding either one or other of 7 them must be regarded as uncertain. It will be seen 8 that both approaches require the application of 9 engineering judgement on a case by case basis." 10 I think that's what you were saying the advice was? 11 A. It was, yes. Getting a declaration from the court was 12 unlikely on the balance of probabilities to have been 13 with us, if you like. And it was a matter of looking at 14 every single Notified Departure, eventually there were 15 about 850 of them, on a case by case basis. 16 Q. Presumably, because of the number of them, and the need 17 for a case-by-case analysis, that presented a huge 18 problem to tie? 19 A. Very much so. 20 Q. Did they indicate that to you? 21 A. Well, it was obvious. We all knew that. They knew it. 22 I knew it. 23 Q. So while this advice holds out some hope that there 24 might be some cases where the test can be met, how was 25 the advice as a whole viewed by tie in its effect on 169 1 deliverability of the project? 2 A. I have some difficulty answering that question in terms 3 of what -- how tie viewed it as delivering the project. 4 What was crystal clear was that there was a major, 5 major problem, and potentially what may have lain ahead 6 was many more adjudications. 7 The problem wasn't so extreme or critical when 8 Infraco were proceeding with the works. The problem 9 critically arose when work stopped. 10 Q. The problem we're considering is one of what price would 11 be payable for the works. The Schedule 4 Pricing 12 Assumption 1; is that correct? 13 A. Well, that would certainly be an issue, of course. 14 Q. So irrespective of whether or not Infraco were carrying 15 out the works or were not, you had been looking for some 16 time to try and see if there was a way round a legal 17 interpretation to get round the literal wording of 18 Pricing Assumption 1. Have I understood that correctly? 19 A. Yes. 20 Q. And in essence what you're being told here, there is no 21 legal way round. It's going to be fact-specific, case 22 by case? 23 A. Yes. 24 Q. Now, did that not appear to you that that was going to 25 present an almost insurmountable difficulty in 170 1 administering a contract where there were 800 or so 2 claims? 3 A. Yes, a huge problem. 4 Q. So irrespective of whether or not Infraco were carrying 5 out the works, in terms of estimating the cost or likely 6 outturn, what was the effect of this? 7 A. Substantial. It had a huge impact. And this -- this, 8 if you like, was the problem that tie were wrestling 9 with, not from 29 April 2010, but prior to that, when 10 the first adverse decisions were issued. 11 Q. Even before you get to the stage where the Infraco 12 contractors started to down-man the site and stop 13 working, was there not what appeared on the face of it 14 to be an irresolvable problem in the conclusion of the 15 project. 16 A. It was for that reason, because of the problem, that tie 17 embarked upon two different strategies. 18 Q. That being termination and Carlisle? 19 A. One was issuing Remediable Termination Notices. And the 20 other was Project Carlisle. 21 MR LAKE: My Lord, if we were going to take a break this 22 afternoon, that would probably be an appropriate time. 23 CHAIR OF THE INQUIRY: Are we still on time for finishing if 24 we have 15 minutes? We will break for the shorthand 25 writers for 15 minutes and resume again at 3.15. 171 1 (3.00 pm) 2 (A short break) 3 (3.15 pm) 4 CHAIR OF THE INQUIRY: You are still under oath, Mr Nolan. 5 MR LAKE: Mr Nolan, in relation to the disputes over Pricing 6 Assumption 1, could we look back at your statement, 7 please, and page 11 of that. 8 I'm interested in question 23 and the answer to it. 9 The question was concerned with the fact that the 10 adjudication decisions were not challenged and you were 11 asked questions about that. 12 In the second paragraph of your answer you stated 13 that: 14 "tie were keen for some kind of dispute resolution 15 process in relation to Pricing Assumption 1 but we 16 recommended against expert determination, and also said 17 that the legal issues need to be pinned down first. The 18 conclusions reached in relation to Pricing Assumption 1 19 meant that the dispute resolution procedure was not 20 pursued and was overtaken by the mediation." 21 We've seen the conclusions that were released in 22 relation to Pricing Assumption 1 starting with 23 Mr Hunter, and then Mr Wilson right at the start of 24 2010. But the mediation -- there wasn't a resolution to 25 mediate until November 2010. 172 1 Was there something that happened in between that 2 time which resulted in the conclusion that there was no 3 merit in arguments regarding Pricing Assumption 1? 4 A. Well, two points, I think. The first is, and I'm 5 reminding myself by seeing my answer, that someone must 6 have mentioned expert determination as a way forward. 7 And I wasn't keen on that, for the reasons that we've 8 been over. 9 What happened when we were producing the long report 10 that we looked at just before the break and the further 11 advice notes from Richard Keen and Helen Davies was that 12 tie's focus had actually moved on a bit into the 13 Remediable Termination Notices, and whether there was 14 any form -- sorry, whether there was any prospect of 15 reaching a solution, a consensual solution with Infraco, 16 and that was Project Carlisle. Which I think started in 17 about June 2010. 18 So if you like, that's where the focus went. 19 I, in terms of McGrigors, ceased really to have much 20 of an involvement, if any at all, once we issued the 21 Helen Davies advice note as synthesised by us, other 22 than in respect of a number of specific ad hoc matters 23 and one particular adjudication, INTC 109, before 24 Lord Dervaird. 25 Q. Now, the issue in the adjudication before Lord Dervaird 173 1 was what reliance could be placed on Clause 80.13; is 2 that correct? 3 A. That's the way it worked out. That was never the 4 intention. That's what happened. My intention in the 5 report that I issued was to try and focus the matter on 6 Clause 34.1. 7 What was selected in terms of 109 was unfortunately 8 not that -- although Clause 34.1 was mentioned, it 9 really was under the banner of Clause 80.13. 10 I hadn't -- I hadn't proposed an adjudication on 11 80.13. But I was -- I thought 34.1 was worthwhile. 12 Q. If we could just go to Lord Dervaird's decision, it's 13 reference BFB00053462. 14 You will recognise that as Lord Dervaird's decision? 15 A. I do. 16 Q. If we could look at page 3 of it, if you look at 17 paragraph 8, we can see that the letter which formed the 18 subject matter of the dispute was from tie dated 19 19 March, and had squarely been entitled, the 20 Clause 8.013 instruction. 21 A. Yes. 22 Q. But if we put that paragraph back into its place so we 23 can look at the page as a whole, we can see that 24 Clause 34.1 was there in the arguments and is referred 25 to lower on the page. 174 1 A. Yes. What happened in order to give you some context 2 very briefly was that I'd advised going down the 34.1 3 route, and tie issued a letter and instead of putting 4 34.1 at the top, I think it was a draft, I said 34.1 has 5 to go at the top of the -- in the heading, if you like, 6 and unfortunately that didn't happen. 80.13 was put in, 7 and therefore in this particular adjudication, whilst 8 there was an attempt to bring 34.1 into it, it was 9 really decided on the basis of Clause 80.13. 10 Q. And it was decided against tie? 11 A. It was, yes. 12 Q. Now, that once again would have been open to have that 13 matter reconsidered by a court? 14 A. Yes. 15 Q. And particularly before a court to ensure, as far as 16 possible, that the Clause 34 argument was put in issue? 17 A. Yes, but the faster way of doing it would be just to 18 launch another adjudication on 34.1. I don't think we 19 were -- I don't think in terms of jurisdiction there was 20 a problem with that. The four corners of 21 Lord Dervaird's decision was on 80.13, so that would 22 have been the way forward. 23 What happened as a result of this decision was 24 I crafted four different letters where a Notified 25 Departure was disputed, and there was no estimate, 175 1 and I went through every permutation. So there were 2 four letters. 3 A letter also went to Infraco very shortly after 4 this decision, identifying those four permutations, and 5 setting out tie's position in relation to each of those. 6 I think that was in August. I can't -- this 7 decision, I think, was 10 August or something like that, 8 8 August. 9 Q. 7 August. 10 A. 7 August, yes. I do comment on this decision. There 11 are three notes, including one from Richard Keen. 12 But that's how the matter was left in mid-August. 13 There were the four permutations and that's how 14 everything was going to be classified going forward. 15 Is it disputed that there is a Notified Departure? 16 If it's not disputed, has an estimate been given? 17 Because there were quite a large number of cases where 18 there was no estimate. Clause 80 requires an estimate 19 to be given within 18 business days, unless Infraco say 20 that more time is needed. So there was a huge time lag. 21 Many of these adjudications, if I may say so, turned 22 on Notified Departures which were intimated a year 23 before. There was quite a large time lag between 24 notification of a Notified Departure and actually 25 a Dispute Resolution Process. 176 1 Q. As you say, there was advice given after Lord Dervaird's 2 decision to the effect that he hadn't determined the 3 Clause 34 argument. 4 A. Yes. 5 Q. But I think it's correct to say that there was no 6 adjudication launched even in relation to the Clause 34 7 issue by the time you got to mediation -- 8 A. Correct. 9 Q. -- in November? 10 A. Yes. 11 Q. Was there a decision taken not actually to pursue the 12 Clause 34, Clause 80 arguments any further? 13 A. I don't know because I wasn't involved. I came back 14 into this to run that one adjudication, and when I did 15 that, I came back out. 16 So we had no ongoing involvement. 17 Q. You came in later in the year in relation to the 18 question of termination. We will come to that in 19 a moment. 20 A. Indeed. 21 Q. Were you given any indication then as to whether or not 22 a decision had been -- an express decision had been 23 taken on Lord Dervaird? 24 A. No. I'm unaware of any such decision. 25 Q. There was also a strategy that was adopted by tie for 177 1 a while at least, being what might be termed 2 contractually assertive. Was that a strategy that 3 McGrigors had a hand in implementing and determining? 4 A. No. 5 Q. So you wouldn't have been aware of what the objectives 6 were in taking such a strategy? 7 A. No. 8 Q. Now, in relation to the question of termination or 9 project resolution, as it came to be called, I think, as 10 you say, McGrigors were brought back in and you advised 11 in relation to that towards the end of 2010. 12 A. That's right. 13 Q. Now, by the time you were brought in, I think it's 14 correct to say that it was some months since Remediable 15 Termination Notices had first been served? 16 A. Yes. 17 Q. You describe the purpose of looking at termination as 18 looking at the various options that were open? 19 A. Yes. 20 Q. But in fact it was an option that had been pursued for 21 some months. Was it explained to you why you were being 22 brought in at that stage, months after it had been 23 pursued? 24 A. The reason why I was brought back in was because by the 25 time we get to the end of October, I think 178 1 Andrew Fitchie was no longer attending meetings. 2 I can't recall precisely when that happened. 3 But it looked as if big decisions had to be made 4 round termination as one example, and I can't remember 5 how it came about, but I received a call from either -- 6 I think it was Richard Jeffrey, who asked me if I could 7 become re-involved in the matter. 8 Q. Could you look, please, at a document, TIE00080959. 9 I think this is another report that's prepared by 10 you. This has the date of 14 December 2010. It's 11 a report for tie Ltd on certain issues concerning 12 Edinburgh Tram Project? 13 A. It was, and it went through a number of iterations. 14 This was the final verse, I think. 15 Q. One of the things -- its purpose was to consider the 16 termination provisions of the contract? 17 A. Indeed. 18 Q. If we look at the Executive Summary on page 4, and the 19 conclusion in paragraph 1.5, it was to the effect that: 20 "To the extent that Remediable Termination Notices 21 have already been issued, it would be unsafe to rely on 22 them: 23 (a) Without the benefit of the outcomes of the 24 forensic exercise referred to above; and 25 (b) Because there is a material risk associated 179 1 with the formulation of the Remediable Termination 2 Notices (based on the sample which has been considered 3 by McGrigors and Richard Keen QC)." 4 A. Yes. 5 Q. Were there concerns both as the substance and form of 6 the notices? 7 A. Yes. 8 Q. In terms of the substance, if we look further up the 9 page at paragraphs 1.3 and 1.4 to see what the exercise 10 referred to is, 1.3, you say that: 11 "Establishing that an Infraco Default has occurred 12 requires detailed forensic analysis; the issue will be 13 subject to intense scrutiny in the context of any 14 ensuing dispute, which is ultimately likely to be 15 ventilated before the courts." 16 If we go forward to paragraph 1.4, you say: 17 "The exercise referred to in the foregoing paragraph 18 includes the compilation, review and analysis of all 19 relevant written material as well as witness evidence. 20 Expert input is also required in relation to technical 21 and planning issues. That exercise has now been put in 22 train." 23 Had you put it in train? 24 A. Yes. 25 Q. Was it a surprise to you that if Remediable Termination 180 1 Notices had been served, that that hadn't already been 2 done? 3 A. It was more a matter of disappointment and the reason 4 why I mention that is that I think in March, when 5 I issued the last report that we looked at, I think 6 I attended two more meetings at tie's offices, and it 7 was mentioned that RTNs or Remediable Termination 8 Notices were going to be embarked upon, and I said at 9 that meeting: you have to approach this with proper 10 forensic caution. You need to have the facts in place. 11 And you need to be very specific in the default. It's a 12 bit like drafting an interim interdict or 13 a declarator -- sorry, not a declarator. Specific 14 performance is the word I'm looking for. So that the 15 recipient understands precisely what the default is, and 16 what is required to rectify that default. 17 I think what I said caused a bit of annoyance, to be 18 perfectly honest. 19 Q. Is that what you said at the early part of 2010? 20 A. That's what I said in March, I think. But I wasn't 21 invited back to any further meetings. That was it. 22 And I did come back into it in October, and when we 23 reviewed the Remediable Termination Notices and the 24 responses, the advice I gave was I didn't think these 25 were sufficient, and we had to recast them and further 181 1 work was required. 2 Q. You said your advice in the early part of the year 3 caused annoyance. On whose part? 4 A. I'm just trying to -- there were many people in the 5 room, but basically, the impression I got was 6 that: never mind, we're embarking upon this stream. 7 I recall it vividly because I said: if you want to 8 ask my advice, I'll give it, and if you don't like my 9 advice, then don't ask me. 10 I remember that distinctly. 11 Q. Mm-hm. 12 A. That was the last time I attended a meeting for a while, 13 until I did the adjudication involving Lord Dervaird. 14 Q. Can you remember at all who it was who -- 15 A. I can't -- honestly I can't. It could have been any one 16 of a number of people. Tony Rush was there. 17 Dennis Murray. Steven Bell. I don't think 18 Richard Jeffrey was there. 19 Q. What was the reaction when you gave your report in 20 December, saying that it would be unsafe to rely on 21 these notices, both in form and substance? 22 A. I don't think there was any adverse reaction. I think 23 the view then was termination, if we're seriously 24 thinking about it, it is absolutely vital and critical 25 that we get this right. 182 1 Richard Keen had given his advice. So I think 2 people round the room just accepted it, that this is 3 what we had to do. 4 Q. Was there some -- 5 A. I also think that some of these meetings may have been 6 attended by people from CEC. I think Carol Campbell and 7 Nick Smith may have attended some of these meetings. 8 Q. When you say these meetings, which ones are you 9 referring to? 10 A. The ones where we discussed this report that we're 11 looking at on the screen. When we were talking about 12 termination, and being locked in and suchlike. I'm 13 pretty sure that not only was Richard Keen at the 14 meeting, but also Carol Campbell and Nick Smith of CEC. 15 Maybe David Anderson as well potentially. 16 Q. Was there any discussion as to why the things that you 17 said you were advising in December had to be done, why 18 they hadn't been done months after the service of the 19 Remediable Termination Notices? 20 A. No. 21 Q. I want to turn now to the question of the mediation. 22 We're finished with that document. 23 You were involved in the mediation that took place 24 at Mar Hall? 25 A. I was. 183 1 Q. Was there an articulated objective to that mediation on 2 tie's part or the Council's part? 3 A. Yes, I mean, I think it was to achieve a successful 4 Project Phoenix result as it was referred to, 5 a solution. 6 Q. Was there a strategy, a clearly defined strategy for the 7 mediation? 8 A. Well, in the run-up to the mediation, like virtually 9 every other mediation I have been involved in, one 10 analyses the strengths and the weaknesses of your 11 position, and then one articulates that as best one can, 12 in a mediation statement. 13 My principal involvement was actually to draft the 14 mediation statement, which is a production. And there 15 were many exhibits to that mediation statement. So not 16 only did I draft the mediation statement, but there were 17 various exhibits that -- when I say I, McGrigors drafted 18 a number of those exhibits. 19 Some of them revolve round the Helen Davies advice 20 on Notified Departures. Others involved Clause 34.1. 21 But overall the strategy was to find a consensual 22 solution because the situation that had been reached was 23 that no work was proceeding at all virtually, and we 24 were locked into a contract, and that had been fully 25 interrogated and understood, I think, both by CEC and by 184 1 tie. 2 So it was to find a solution. 3 Q. In terms of the mediation statement that was drafted, 4 did that, is it fair to say in essence, repeated the 5 arguments that had already been advanced in 6 correspondence over the previous year, both in relation 7 to Pricing Assumption number 1 and Clause 80/Clause 34? 8 A. Yes. 9 Q. There was nothing new in it in that regard? 10 A. There might have been the odd twist or turn, but by and 11 large it was pretty much what we had done over the 12 previous year. 13 Q. Now, that certainly as regards Pricing Assumption 14 number 1 was the -- were the arguments that had not 15 fared well at adjudications? 16 A. Yes. 17 Q. In terms of the Helen Davies advice, it was something 18 you had described as the stateable argument? 19 A. Yes. 20 Q. Was there any great confidence in those arguments? As 21 part of the tie Council team? 22 A. Not on our side of the fence, but I thought it was worth 23 advocating and putting forward in the context of the 24 mediation. 25 Q. Was there an understanding on the part of those 185 1 involved -- I'll say the Council, by which I mean 2 Council and tie generally -- was there an understanding 3 on those involved on the Council side that those 4 arguments were not strong? 5 A. Yes. 6 Q. Was it anticipated that they would be perceived as not 7 strong by the consortium team? 8 A. Yes. I don't think there was any thought process on the 9 part of tie that Infraco would come to the mediation 10 with anything other than confidence in their existing 11 positions. 12 Q. You were advancing arguments that had been put forward 13 unsuccessfully in adjudications, and in which -- 14 internal advice to tie had indicated concerns about 15 their strengths. 16 That being the case, what was the strategy to try 17 and get past that to a solution? Was it -- 18 A. Well, I'm sorry. The arguments as per Helen Davies 19 weren't advocated at Gogarburn and Carrick Knowe. 20 Q. Mm-hm. 21 A. And not -- not particularly in terms of Russell Road. 22 These had not been advocated in any adjudications that 23 I'm aware of. 24 Q. But it was the internal advice indicated, as you 25 discussed before, it was described as stateable? 186 1 A. It was stateable. The paper apart that we looked at 2 was -- remember the letter with the paper apart. 3 Q. Mm-hm? 4 A. In relation to Notified Departures, that was, I think, 5 the only communication to Infraco which pulled the 6 arguments together in that fashion. 7 CHAIR OF THE INQUIRY: You said that there wasn't any 8 thought process on the part of tie that Infraco would 9 come to the mediation with anything other than 10 confidence in their existing positions. 11 What about CEC? Because it was really CEC who were 12 running this mediation, wasn't it? 13 A. I suspect, my Lord, that CEC were of the view that the 14 status quo was just unacceptable, and that the arguments 15 had been lost at adjudications, and I don't think -- 16 I can't remember having the discussion with anybody at 17 CEC, but I suspect that their feeling was that this was 18 not sufficiently strong to make it viable in terms of an 19 argument in court, and given where the city of Edinburgh 20 was with the streets being dug up and no work 21 proceeding, the driver was definitely to try and find 22 a solution at the mediation on the best terms. 23 CHAIR OF THE INQUIRY: I appreciate that, but looking at the 24 strength or weakness of their position, are you saying 25 that CEC appreciated that they didn't have a strong 187 1 case? 2 A. I think they did, yes. 3 CHAIR OF THE INQUIRY: So that they were going into this 4 mediation, what, to achieve the contract being 5 completed -- 6 A. I think the Project Phoenix was the preferred course 7 which was completion of the contract with Infraco. 8 CHAIR OF THE INQUIRY: At any cost? 9 A. Well, I wouldn't say at any cost, no. No, definitely 10 not. 11 CHAIR OF THE INQUIRY: Well, was that discussed? 12 A. Well, there was work streams, substantial work streams 13 going on in terms of financial modelling. In terms of 14 how much -- how much the work done to date, if you like, 15 amounted to, and really they fed into what was called 16 the deckchair reports. I'm not sure if -- I think that 17 term has probably come up. 18 So you had people like Steven Bell feeding into 19 that. So tie did a lot of work in relation to that. So 20 did Alan Coyle. 21 And then latterly, in terms of CEC, I think 22 Colin Smith was looking at that as well very carefully. 23 CHAIR OF THE INQUIRY: So was there a ceiling on CEC's 24 commitment, financial ceiling, on their objective of 25 getting this contract under way? 188 1 A. I'm not privy to that. I don't know. 2 CHAIR OF THE INQUIRY: Thank you. 3 MR LAKE: In relation to the question from his Lordship 4 there, could I refer you to document WED00000197? Is 5 this a document that you prepared? 6 A. It was actually prepared by one of my assistants. 7 Q. We can see that the title is "Note of Key Points Arising 8 at Mediation Preparation Meeting on 28 February 2011"? 9 A. Yes. This followed receipt of Infraco's Project Phoenix 10 Proposal. 11 Q. If we look down to the foot of this page, please, we'll 12 see at point number 2, with the heading "Price 13 Certainty", the second bullet point is: 14 "tie ..." 15 Which we could also read "the Council": 16 "... needs to be clear about the financial line 17 beyond which it will not cross." 18 A. Yes. 19 Q. Did you ever get informed what was the financial line 20 beyond which it would not cross? 21 A. No, that was my point, that the financial thinking, if 22 you like, wasn't a matter that I was involved in in 23 terms of giving any advice. It was -- it was 24 essentially a core team comprising the people 25 I mentioned. 189 1 What I did do was in terms of the deckchair studies, 2 there were certain specific issues upon which legal 3 advice was given. For example, there was an advance 4 payment at the beginning of the works, and it was 5 unclear under the contract exactly how that -- what the 6 basis of that was. 7 And we looked at it in order to try and form a view 8 as to what would happen if there was a termination or 9 a separation, would monies come back in relation to that 10 advance payment? 11 There was also issues concerning preliminaries. So 12 there were specific things we had input on as requested, 13 but beyond that, in terms of the financial calculations, 14 they were complex and I certainly wasn't at the centre 15 of those discussions. 16 Q. When the Project Phoenix Proposal was received from the 17 consortium, I think you expressed some surprise at the 18 sums being claimed by Siemens, expressing the view that 19 they were double their original estimate. Do you recall 20 that? 21 A. I don't recall expressing surprise. Surprise was 22 expressed by Tony Rush. So this note that we have on 23 the screen was immediately preceded, I think the day 24 before, by a two-page email from Tony Rush to, I think, 25 about 12 people, including myself, and he'd read the 190 1 Infraco Phoenix Proposal, and had a list of comments, 2 and one of them was in relation to Siemens. 3 We then had this meeting the following day. 4 Tony Rush was out of the country. That's why he sent 5 his email. And my assistant took this note, and one of 6 the action points for me was to write an email to 7 Fraser McMillan of Pinsent Masons. Siemens were 8 actually represented by Biggart Baillie, but the channel 9 of communication for the mediation was all through 10 Pinsent Masons. 11 Q. You did engage in correspondence with Fraser McMillan 12 about the Siemens price? 13 A. I did. 14 Q. Did you get any explanation from anyone at tie of 15 discussions they had had with people at Siemens about 16 how the price was calculated? 17 A. No, I can't recall that. I have to say, in the run-up 18 to the mediation, I was flat out in terms of drafting 19 the statement, and co-ordinating everything concerning 20 the mediation, including all the exhibits, some of which 21 were being prepared by tie. 22 So that was pretty much it. 23 Q. Were you involved in consideration of what the Council's 24 position would be if there was no negotiated agreement? 25 A. Well, for that reason, all the streams that were ongoing 191 1 in -- because that didn't stop. There were further 2 INTCs, and a very substantial one which involved more 3 time. I think it was INTC 536, maybe; where the sum of 4 GBP40 million was claimed, plus more time. 5 So I had colleagues who were -- by this time we'd 6 taken over most things from DLA. So we were running 7 with all of that simultaneously, and both 8 Robin Blois-Brooke and Robert Burt of Acutus were 9 feeding information into McGrigors. If a deal hadn't 10 been done, we were back into further adjudications and 11 suchlike. 12 Q. Were you involved -- I think it's correct to say you 13 were involved in consideration of what the costs of 14 litigation would be in the event there was an attempt to 15 terminate the contract? 16 A. No. 17 Q. You don't recall that at all? 18 A. No, I received an email. It may have been 19 Stewart McGarrity, I think, Andrew Fitchie had given 20 an estimate. I can't remember giving any estimate. 21 Q. If we look at that email, it's reference CEC00043521. 22 If we look towards the lower half of the page, we'll see 23 there's an email from Stewart McGarrity to 24 Joanne Glover, who was at DLA, and yourself, dated 25 4 November 2010; do you see that? 192 1 A. Yes, I see that. 2 Q. He says: 3 "Thanks for this Jo. What this is about is 4 a reasoned estimate of the legal cost associated with 5 litigation following a termination. - I need to produce 6 one for CEC and they want a corroborated opinion. 7 Below I've pasted a previous email from Andrew (and 8 follow-up comments from Tony).- We've been telling the 9 Council GBP50 million to include for expert witness fees 10 is as good an estimate as any just now but that feels 11 very heavy to me." 12 First of all, you see that's what Mr McGarrity was 13 saying to you. 14 If you scroll down to see the advice from Tony Rush, 15 this is an email, we can see, 2 September 2010 to 16 Andrew Fitchie and Richard Jeffrey. 17 If we go over the page to see the text of the email, 18 you see here, in a very short email, he gives 19 an estimate of GBP30 million to GBP50 million for legal 20 costs. Do you see that? 21 A. Yes. 22 Q. Below that we see the email from Andrew Fitchie to 23 Richard Jeffrey and Tony Rush dated 2 September 2010. 24 He says GBP50 million would be at the top end, and in 25 the second paragraph: 193 1 "My own estimate for a case coming to a full hearing 2 over a two year period with a hearing lasting, say, 3 three months, would be in the GBP15 million to 4 GBP20 million range, with some cost recovery in the case 5 of a win" 6 Next paragraph: 7 "If there were appeals, then costs would reflect 8 this, but not in multiples, since appeals do not involve 9 the groundwork of evidence preparation and 10 preliminaries. Add another 5 million perhaps." 11 Did you comment on these estimates? 12 A. I don't think I did actually. I see that I was invited 13 to, but I can't recall any response. 14 I think 50 million is not realistic. That wouldn't 15 have been my estimate. 16 Q. Even the rather more modest, if it can be put that way, 17 estimate of Andrew Fitchie? 18 A. Yes. 19 Q. Would you agree that still seems quite extraordinarily 20 high for a litigation in the Court of Session? 21 A. Indeed. 22 Q. Shortly before the start of the mediation at Mar Hall, 23 there was a dramatic increase in the estimate of costs 24 of termination. Were you involved in that? 25 A. I remember it, but I can't remember -- by being 194 1 involved, I think I was aware of it, but I don't think 2 I was actually doing anything. 3 Q. The effect of increase in costs of litigation for 4 termination is to make that option obviously appear much 5 less attractive. 6 A. Yes. 7 Q. Was there a desire at that time amongst the parties 8 generally to make the option of not getting an agreement 9 appear as unattractive as possible? So as to pave the 10 way for getting an agreement of some sort? 11 A. No, that's not my recollection at all. My recollection 12 was that the focus was on finding a solution. That's 13 where I think all the primary effort went, and that was 14 the aim of the mediation, to find a solution. Not at 15 any price though. 16 I think CEC would have had prices in mind as 17 a function of the deckchair reports and the work 18 continued right into Mar Hall. Steven Bell and others 19 from tie were in a separate room, working away on 20 laptops and coming up with other figures, and 21 discussions with Alan Coyle and so on. 22 Q. How was the final settlement figure arrived at at the 23 meetings? 24 A. I don't know, is the short answer. 25 What happened, and I remember this vividly, the 195 1 mediation started on the Tuesday, and it was due to 2 finish on the Thursday, and on Wednesday Sue Bruce, Dame 3 Sue Bruce and Vic Emery, who were the two principals who 4 would go into private meetings with their counterparts, 5 I think, primarily, Joachim Keysberg and 6 Dr Schneppendahl of Siemens; there had been that going 7 on all day, if you like, and then at about 1.30 am on 8 Wednesday morning, a proposal was made by Sue Bruce and 9 Vic Emery -- 10 CHAIR OF THE INQUIRY: Was that Thursday morning? 11 A. Sorry, Thursday morning. My apologies, my Lord. 12 And I think that was -- I think that was their final 13 shot, if you like, at doing a deal. But I could be 14 wrong. 15 When we came back the following morning, on Thursday 16 morning, the feedback that was given to the two of them 17 was that, yes, we can work with these figures and a deal 18 was done on that basis. 19 We then had about, I don't know, 20 minutes, half 20 an hour, to try and write something up, and that's what 21 we call the agreed principles which had those figures in 22 them. 23 MR LAKE: The agreed principles, could we look at 24 CEC02084685. 25 Is that the document that you're talking about? 196 1 A. That's the document. 2 Q. We can see there the figures of GBP362.5 million in 3 Clause 1, and as it was then, GBP39 million in Clause 2. 4 Do you have any idea how those figures were arrived 5 at, to put them to the consortium? 6 A. All I can say is that those figures were the product of 7 the deckchair reports and all the analysis that was done 8 in the run-up to the mediation, potentially even at the 9 mediation itself. And it was a compromise between, 10 I think, CEC's position and Infraco's position. A deal 11 was done. 12 Q. It took very little money off the consortium position, 13 didn't it? 14 A. I think there were a number of points. One is rebasing 15 the contract going forward so that we no longer had -- 16 sorry, the Infraco contract no longer contained the 17 Pricing Assumptions, and we had a proper fixed price in 18 relation to the off-street works. Not the on-street 19 works. They were a target price which was to be agreed. 20 But the other aspect to it was a restoration, if you 21 like, a commitment one to another that going forward, 22 the breakdown in the relationship was going to be 23 resolved. That going forward, they would work together 24 in a true spirit of partnership. 25 What had happened up until this point is that the 197 1 relationship had broken down completely between tie and 2 Infraco. 3 Q. That rebasing, and improvement of the relationship, came 4 about because the sum offered was almost all of what the 5 consortium had been asking for, wasn't it? 6 A. Well, I can't say yes or no to that. 7 Q. Why not? 8 A. Because it involves speculation. I don't know. 9 Q. Was the sum almost all the consortium -- 10 A. I can't remember. If I could be referred to their 11 Project Phoenix offer, we could look at it. 12 Q. You were aware that the arguments in relation to 13 Schedule Part 4 were the ones that had the bearing on 14 the price? 15 A. It wasn't just that. It was the extension of time 16 claims as well -- 17 Q. Mm-hm. 18 A. -- arising from MUDFA. That was one of the primary 19 causes of delay alleged by Infraco. 20 Q. If you take it from me that the price that was agreed 21 was broadly equivalent to the price at close, plus the 22 full value of all the INTCs claimed, that would give the 23 impression that essentially it was accepted that Infraco 24 were broadly right, right down the line? 25 A. If that's the case, yes. 198 1 Q. Was there express discussion to that effect, that 2 essentially it was going to be accepted that they were 3 right on all these arguments? 4 A. No, not in front of me. 5 Q. Was there a discussion that their position would just 6 have to be accepted if the tramline was going to be 7 built? 8 A. I don't think so. I think the aspect that I need to 9 bring back into this equation was the advice that we 10 were locked into a contract and therefore, if 11 a consensual solution was not achieved, then we were 12 stuck in a situation where there was no deal. We 13 couldn't terminate at that precise moment in time. 14 Even if we could terminate on the basis of default, 15 and the other side, Infraco, didn't accept that, we 16 would be in court potentially for a year or two. At 17 interim, potentially no work would proceed. It was just 18 intolerable. 19 Q. All in all, was there an understanding by the people on 20 the Council team that it was a big grim position that 21 the Council were in? 22 A. I think so, yes. 23 Q. Did that dictate the idea that essentially this had to 24 be settled at virtually any cost? 25 A. Well, the principals would be best placed to answer that 199 1 question. 2 CHAIR OF THE INQUIRY: Sorry, there's a technical problem. 3 I wonder if we can have a brief adjournment for that. 4 MR LAKE: There's a technical problem and we're not being 5 able to record a transcript at the moment. So we will 6 just stop for a few minutes until it's rectified. 7 A. I don't need to leave the room? 8 CHAIR OF THE INQUIRY: We will just stay and see. 9 (3.58 pm) 10 (A short break) 11 (4.03 pm) 12 CHAIR OF THE INQUIRY: I think we seem to be ready now. 13 MR LAKE: To give you an opportunity to answer the question 14 I previously asked, Mr Nolan, I had said, first of all, 15 we'd agreed there was an understanding by the people on 16 the part of the Council team that it was a grim 17 position. Then I said: did that dictate the idea that 18 essentially this had to be settled at virtually any 19 cost, and you were answering that when we were 20 interrupted. 21 A. Well, I think my answer is I don't think that it would 22 be at any cost. But as I have said before, in terms of 23 the figures and the proposal, all I can say is it was 24 the product of all the work that was done beforehand, 25 and decisions were made by CEC, Sue Bruce and Vic Emery, 200 1 I guess, as to where they wanted to position the figure 2 that they put eventually in the early hours of Thursday 3 morning. 4 Q. You refer to the decision being taken by Sue Bruce and 5 Vic Emery. Were these the two individuals who 6 ultimately took the decision as to what was to be put 7 forward? 8 A. I think the decision-making was informed by discussions, 9 and Tony Rush was involved in this. There was a big 10 table and the people round the table were Tony Rush, 11 Vic Emery, Sue Bruce, Mr McGougan of CEC. And there may 12 have been two other -- Richard Jeffrey was in the room 13 as well. 14 Q. What was your role? 15 A. My role was documenting -- if we had to document 16 something straight away, I would have done it 17 immediately that night, in the early hours of the 18 morning. 19 Q. Did you give advice on the merits of tie's position on 20 the various contractual arguments? 21 A. That was beforehand. 22 Q. Did you give any further during the course of the 23 mediation? 24 A. No, there was no further advice on that. 25 Q. You had given a note before the mediation as to the 201 1 extent to which the adjudications were binding upon tie? 2 A. Yes. 3 Q. But other than that, the matters simply rested on the 4 basis of the adjudication decisions and your indication 5 of where they wouldn't necessarily bind the company? 6 A. That's correct. I should say there were discussions 7 with the CEC team in late January. That was my first 8 meeting with Sue Bruce. I think it was on a Saturday. 9 There was an all-day Saturday event, I remember that 10 well, and Colin Smith was there, and David Anderson and 11 various others, and also the tie people, where we ran 12 through some of the background and the difficulties and 13 issues which Pricing Assumption number 1 posed in 14 particular. I remember that. 15 So if you like, the briefings in terms of that, and 16 also separately to Vic Emery when he came on board, he 17 came to my office, and I spent two or three hours with 18 him downloading information, and I think Tony Rush then 19 saw him. 20 So if you like, the briefings and the analysis to 21 those coming into it, like Sue Bruce and Colin Smith, 22 took place in January and February, before arriving at 23 Mar Hall. 24 MR LAKE: I think we may have another problem, if we wait 25 one second. 202 1 CHAIR OF THE INQUIRY: Sorry, we seem to be still having 2 a problem with the recording. So we will have to have 3 another brief adjournment. 4 (4.07 pm) 5 (A short break) 6 (4.14 pm) 7 CHAIR OF THE INQUIRY: We seem to be ready to start again. 8 Before Mr Dunlop asks you any questions, there's one 9 matter that -- one point you asked Mr Lake if he could 10 refer you to the figures in the Project Carlisle or 11 Project Phoenix, I think it was. 12 I wonder, if you look at SIE00000184, now, that's 13 a schedule showing the original position of Bilfinger 14 Berger, Siemens and SDS, and as I understand it, the 15 figures on the left-hand column are what was originally 16 claimed, and the next column is the discount. So 17 from -- I wonder if it could be blown up. 18 So that you see that the original claim was 19 231,837,822 for Infraco, and the discount was 20 10 million. 21 And the claim for Siemens was 136,881,719, and the 22 discount was 11 million. 23 Does that help you in any way? 24 A. Well, I can see the figures, my Lord. And I can see the 25 figures which were part of the agreed principles. And 203 1 if the question is: do those figures look like they 2 approximate one to another; then the answer is yes. 3 CHAIR OF THE INQUIRY: Well, I think the question is: do you 4 think that the discount in relation to the claim is 5 substantial or not? 6 A. It's better than if the claim was ventilated and was 7 successful. 8 CHAIR OF THE INQUIRY: You mean it's better than if the full 9 amount was paid. 10 A. Yes, that's what I mean, my Lord. 11 CHAIR OF THE INQUIRY: But the question is -- there is 12 a discount. Do you think it's a significant discount 13 when compared with the original claim? 14 A. Well, it's GBP10 million, my Lord. 15 CHAIR OF THE INQUIRY: So you think it is? 16 A. It's -- yes, it is better than 5 million or -- the truth 17 of the matter is that when the offer was made in the 18 early hours of the morning, there was no grasping it by 19 Infraco. We all went away and it wasn't until the 20 following morning that in principle the figures were 21 accepted. 22 We then took all day Thursday into Friday, into 23 Saturday, before we were able to negotiate and arrive at 24 the settlement Heads of Terms. 25 CHAIR OF THE INQUIRY: Yes, but the figures -- 204 1 A. The figures remained the same, my Lord. 2 CHAIR OF THE INQUIRY: I don't understand what you say about 3 there not being any grasping. I understood that the 4 figures were arrived at by Sue Bruce and Vic Emery in 5 the early hours of Thursday morning. Was that in 6 discussion with the Infraco? 7 A. Yes. They put the proposal to Infraco, my Lord. In the 8 early hours of the morning. 9 CHAIR OF THE INQUIRY: Then everyone adjourned, went to bed 10 and got up in the morning -- 11 A. Yes. 12 CHAIR OF THE INQUIRY: -- and then the figures were 13 accepted? 14 A. But in the context of the other wording. So if we go 15 back potentially to where we were, the agreed 16 principles -- I don't know what the number is. 17 I apologise, my Lord -- one would see that they were 18 subject to various terms and conditions. 19 Sorry, I'm not sure if anybody is trying to get it 20 back on the screen. 21 Really what the big issue was, was whether -- 22 CHAIR OF THE INQUIRY: There you are. 23 A. Thank you very much. It says right at the end, 24 "pursuant to ..." 25 This manuscript wording was added, I think, by 205 1 Fraser McMillan of Pinsent Masons, and what became clear 2 when the words "pursuant to Project Phoenix" were used 3 is that when we received the first draft of the Heads of 4 Terms, the fixed price element was still subject to 5 various caveats. And that's what took all day Friday to 6 nail down. We wanted there to be no qualification, for 7 obvious reasons, at all. 8 This was a massive point. 9 Unfortunately, Dr Schneppendahl had left on the 10 Thursday, and Dr Keysberg had left as well, and it took 11 until about 11 o'clock on Friday night. We had decanted 12 to another hotel. We only had Mar Hall for the three 13 days. And at about 11 o'clock at night, I was informed 14 the principals -- the head of the various companies had 15 been spoken to, and they were prepared to drop their 16 qualification, and that paved the way for the Heads of 17 Terms to be finalised, again starting fairly early on 18 the Saturday morning, this time in my office, in 19 Glasgow, that the numbers became smaller and smaller. 20 And it took until 4 o'clock in the afternoon before 21 we reached agreement. 22 So whilst the figures were arrived at in the early 23 hours of the morning and accepted the following -- later 24 that morning, the deal itself underwent further 25 substantial negotiations. 206 1 CHAIR OF THE INQUIRY: I can appreciate that, but the 2 payment, the sum that was ultimately paid was never 3 changed? 4 A. Indeed, my Lord. 5 CHAIR OF THE INQUIRY: Mr Dunlop? 6 Examination by MR DUNLOP QC 7 MR DUNLOP QC: I'm obliged, my Lord. Mr Nolan, there has 8 been some criticism of DLA in acting for tie while at 9 the same time professing a duty of care to City of 10 Edinburgh Council. As a matter of professional 11 practice, do you see anything -- any difficulty with 12 that sort of arrangement? 13 A. No. And I can explain that because we also had a duty 14 of care letter, we being McGrigors, to CEC. And it's no 15 more than what we do in many occasions. It's just 16 a collateral warranty. 17 So the duty of care that we owed to tie in relation 18 to what we did and were instructed to do by tie in terms 19 of being exposed to a liability for professional 20 negligence through the collateral warranty, which 21 existed in favour of CEC, they would have recourse 22 against us potentially if we breached our duty of care. 23 Q. Yes. 24 A. There's nothing unusual about it in my opinion. 25 Q. Just for completeness, if we put on screen, please, 207 1 document CEC00774999. Is that the letter that you've 2 just mentioned? 3 A. It is indeed. 4 Q. So that's the letter dated 20 August 2009. 5 I think we see your reference there, BEN; is that 6 right? 7 A. Yes. 8 Q. We see that in the introductory paragraph: our client 9 has told us of the requirement that our duty of care be 10 owed not only to them but also to the Council. 11 Then paragraph 1, we see wording which may seem 12 familiar to anyone who has looked at the duty of care 13 letter by DLA. It's basically saying that on the basis 14 that the interests of tie and CEC are currently aligned 15 and will remain aligned, McGrigors owe a duty of care to 16 CEC as the sole shareholder of tie, et cetera; is that 17 right? 18 A. Yes. I don't think it was derived from another duty of 19 care letter by DLA. This was a formulation of words 20 which I received from the relevant person within 21 McGrigors who advised on this sort of thing. 22 Q. Yes. Do you know, is that just a standard wording? 23 A. I think it is standard form wording. 24 Q. And then paragraph 2 there's an importation of 25 a limitation of liability, so that the limit imposed on 208 1 tie would apply also to CEC? 2 A. Indeed. 3 Q. Just over the page, please, we see that it was to be 4 signed by Edinburgh Council, but doesn't seem to have 5 been. Was that the case? 6 A. I think what happened was I gave it -- can we -- it was 7 the date of this letter 9 August -- 8 Q. I think 20 August 2009. 9 A. 2009. So that's when we first became involved. So at 10 the same time as my terms and conditions, my appointment 11 letter, McGrigors' appointment letter was accepted. At 12 the same time as I issued that, I issued this, and 13 I think there was some delay in actually providing the 14 letter to CEC, because I think it was quite a while 15 after that that Stewart McGarrity or somebody, I think 16 Carol Campbell may have asked tie for it and it was 17 issued. 18 Q. Should we understand then that that is how matters 19 proceeded thereafter with McGrigors advising tie but 20 acknowledging it owed also a duty of care to the 21 Edinburgh City Council? 22 A. Yes. 23 Q. You've indicated that in your dealings for tie, there 24 were several meetings often attended by Nick Smith? 25 A. No. That only happened right at the end. I think the 209 1 first such meeting was in October, late on, mid-October 2 onwards, in 2010. 3 Q. Right. Did that meeting with Mr Smith express any 4 disaffection with the dual role that was being played by 5 McGrigors? 6 A. I didn't actually have a dual role, just to be clear. 7 My appointment was with tie, but I had a duty of care. 8 Q. Yes. 9 A. So CEC weren't giving me instructions. My instructions 10 and what I did was derived from tie, but I had a duty of 11 care to CEC. 12 Q. Did Mr Smith at that meeting express any desire that 13 independent legal advice be provided other than by 14 McGrigors? 15 A. No. 16 MR DUNLOP QC: Thank you, Mr Nolan. I'm obliged, my Lord. 17 CHAIR OF THE INQUIRY: Thank you very much, Mr Nolan. That 18 concludes your evidence. 19 You're still subject to the citation. So if it were 20 necessary, you could be recalled. Hopefully that won't 21 be required. 22 A. Indeed. 23 CHAIR OF THE INQUIRY: In the meantime, you're free to go. 24 Thank you very much. 25 I think some people have been wondering 210 1 understandably about the arrangements for the festive 2 season. The intention is that we've got evidence next 3 week, which is on the programme, and the intention is 4 that after Thursday of next week there wouldn't be any 5 more evidence sessions until next year. 6 I can't be more precise about when in January we'll 7 start. It will not be the beginning of January because 8 we are in discussions with witnesses at the moment. It 9 looks like the second and third -- maybe the 15th, the 10 week of the 15th and the week of the 22nd. That depends 11 on the availability of witnesses who -- we're still 12 discussing their availability. 13 As soon as we know -- we're having a meeting next 14 week. So as soon as we know, we'll put that on the 15 website and send a note round core participants, 16 indicating when oral hearings will resume. 17 MR DUNLOP QC: My Lord, in a similar vein, I wonder if I can 18 ask whether there's any indication as yet as to when 19 your Lordship is likely to require written submissions 20 by? I ask because -- your Lordship will anticipate 21 this -- the unanticipated spilling into January is 22 already causing certain diary clashes. I think it is 23 inevitable that I won't be here in January. I'm very 24 hopeful that Mr Walker will be. We are just wondering 25 what is the likely timescale. It may be impossible to 211 1 say at the moment. 2 CHAIR OF THE INQUIRY: I think it is impossible to say at 3 the moment. 4 The plan was that once we had heard all of the 5 evidence, we would adjourn for a period which I really 6 haven't firmed up on, but maybe three or four weeks, to 7 enable parties to prepare written submissions, and then 8 to exchange them, and then there would be a further 9 period of a fortnight or so to enable you to take into 10 account any aspects of the other participants' written 11 submissions, and then we would have short oral 12 presentations. 13 So -- but obviously the starting point is the end of 14 the evidence. 15 It wouldn't be fair to guesstimate at this time. 16 MR DUNLOP QC: When your Lordship convened the oral hearing 17 back in September, there was some mention of the 18 possibility of a short adjournment and then some expert 19 evidence, and then another adjournment for the written 20 submissions. Is it still envisaged we may have expert 21 evidence? 22 CHAIR OF THE INQUIRY: There may be. That's a matter that 23 we will discuss next week. But if we do, we'll try to 24 get it in as part of the evidence. There may not be 25 a break between other witnesses and any experts. That's 212 1 something we've still -- we'll adjourn until next week, 2 next Tuesday at 9.30. 3 (4.30 pm) 4 (The hearing adjourned until Tuesday, 12 December 2017 at 5 9.30 am) 6 213 1 INDEX 2 PAGE 3 MR AXEL EICKHORN (continued) .........................1 4 5 Examination by MR MCCLELLAND (continued) ......1 6 7 MR JULIAN WEATHERLEY (affirmed) .....................40 8 9 Examination by MR LAKE .......................40 10 11 MR BRANDON NOLAN (sworn) ...........................114 12 13 Examination by MR LAKE ......................114 14 15 Examination by MR DUNLOP QC .................207 16 17 18 19 20 21 22 23 24 25 214