Port authority and council set for autumn court battle over multi-million pound dispute

Lerwick Port Authority and Shetland Islands Council are expected to finally come face-to-face in an Edinburgh court this autumn in a multi-million pound dispute in the aftermath of the local authority’s abandoned Bressay Bridge project.

The port authority lodged a £5.9 million compensation claim against the council for losses incurred after the SIC obtained an interim interdict forcing the LPA to abandon its planned dredging of the north mouth of Lerwick harbour in August 2005.

Following a raft of delays and seemingly endless discussions between lawyers on both sides, an eight-day stint at the Court of Session in the Scottish capital has now been pencilled in. It is due to begin on 9th October.

LPA chief executive Sandra Laurenson said she does not believe there will be any further delays as there has been “plenty of time to prepare for that date”. Before then, “without prejudice” talks will be held, but it is thought unlikely that an out-of-court settlement will be reached.

The council has privately acknowledged its culpability, meaning a substantial hit to the public pursue looks inevitable. But two years ago sources suggested the local authority was confident of limiting the settlement to some way below the full £5.9 million sum.

Relations between the two organisations broke down after the LPA strongly resisted the council’s plans for a £22 million bridge across the harbour to Bressay in the middle of last decade. The port authority feared the bridge would hamper its own business activities.

After awarding the dredging contract to Belgian firm Jan de Nul in 2004, the dispute with the council forced the LPA to scrap that deal, pay the company an abandonment fee and then re-award the contract at a higher cost.

The council’s 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. In 2008 Ms Laurenson said the dispute had cost it more than £700,000 in legal costs.

Two of the officials involved in the decision to seek the interdict, ex-chief executive Morgan Goodlad and former director of infrastructure Graham Spall, no longer work for the council.

One of the key LPA figures involved in the quarrel, Allan Wishart, is now a senior councillor and chairs transport partnership ZetTrans, which has subsequently settled on subsea tunnels as its preferred means of providing fixed links between islands.

In addition to the expected huge LPA payout, nearly £2 million of SIC cash was spent on the aborted bridge project, first formally earmarked in 2003. In addition, European grants of up to £4.7 million also fell by the wayside. In the worst case scenario, without any building work carried out the community could have lost out on as much as £12.6 million.