Shetland Islands Council and Lerwick Port Authority (LPA) are working towards a possible out-of-court settlement over the harbour trust’s multi-million pound compensation claim in the wake of the Bressay bridge fiasco.
The Shetland Times can confirm that the council has accepted that obtaining an interim interdict which forced the LPA to abandon its planned dredging of the north mouth of Lerwick harbour in August 2005 has left it legally culpable.
Having acknowledged that the port authority would be liable to win any case in court the council is now certain to have to hand over a cheque for a substantial seven-figure sum, but it is hoping to limit the damage to some way below the full £5.9 million being claimed by the LPA.
The matter has been working its way through the Court of Session in Edinburgh for some time and though a court date for a hearing had previously been set for this month, that has now been put back and the matter is again in the hands of the parties’ respective lawyers.
Both the SIC and LPA said they were unable to make any comment at this stage, but the inevitable outcome will be another fairly colossal drain on the public purse. While a new date at the Court of Session is to be arranged for sometime in early spring, it is understood that both parties have indicated a preference for settling the matter out of court.
Although it has effectively accepted that there was a “cock-up”, the SIC is believed to be challenging some aspects of the LPA’s insurance claim and is hopeful that it can settle for somewhere between £1 million and £5.9 million.
The SIC had obtained the interdict four and a half years ago because of concern that the dredging work would jeopardise its plans to build a £22 million bridge across the harbour to Bressay. It led to a hugely damaging fall-out between the two organisations, with relations deteriorating to such an extent that at one point they ceased communicating with one another.
The project was resisted strongly by the LPA because it feared the bridge would hamper its own business activities and was later scrapped in favour of a tunnel – which itself has subsequently been put on the back burner.
After the LPA had awarded the dredging contract to Belgian firm Jan de Nul nearly five years ago, the dispute forced it to scrap that deal, pay the company an abandonment fee and then re-award the contract at a higher cost.
The interdict was lifted in January 2007 and the north mouth of the harbour was eventually dredged the following summer, but the LPA was left with a £1.6 million claim from Jan de Nul. Last year LPA chief executive Sandra Laurenson said the fallout with the council had cost it over £700,000 in legal expenses. The council is now understood to be absorbing the LPA’s ongoing legal costs.
Two of the officials involved in the decision to seek the interdict, former chief executive Morgan Goodlad and ex-director of infrastructure Graham Spall, have now left the council.
But having to cough up a substantial sum for what one observer this week described as an “eminently avoidable” situation looks likely to intensify pressure on SIC convener Sandy Cluness, who was a strong advocate of building the “iconic” bridge. Mr Cluness believed a fixed link would have allowed the council to open up chunks of Bressay for new development including housing.
The money set to be lost to the LPA comes on top of spending approaching £2 million on the aborted bridge project, which was first formally earmarked back in 2003. In addition, European grants of up to £4.7 million also fell by the wayside. It means the worst case scenario is that – without any work being carried out – the community could have lost out on as much as £12.6 million.
During the period when Lerwick North councillor Allan Wishart – who had been LPA chief executive during the debacle – was at the helm of transport partnership ZetTrans, councillors’ preference for a fixed link to Bressay shifted.
After officials and elected members attended a fact-finding mission to Faroe in 2007, an increasing number became minded that a subsea tunnel would be the most appropriate, and cost-effective, solution. Building a tunnel – which the LPA had consistently argued in favour of – was adopted as official council policy in June 2008.
The capital cost could be as much as £44 million, but would be significantly cheaper than continuing to run ferries between Lerwick and Bressay in the long run. However, little progress is likely in the short-to-medium term due to the large number of other capital projects on the council’s wish list.