OIL STATES INDUSTRIES (UK) LTD AGAINST "S" LTD AND OTHERS [2022] ScotCS CSOH

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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> OIL STATES INDUSTRIES (UK) LTD AGAINST "S" LTD AND OTHERS [2022] ScotCS CSOH_52 (04 August 2022) URL: http://www.bailii.org/scot/cases/ScotCS/2022/2022_CSOH_52.html Cite as: 2022 SLT 919, [2022] CSOH 52, [2022] ScotCS CSOH_52, 2022 GWD 25-354

OUTER HOUSE, COURT OF SESSION

[2022] CSOH 52

CA85/21

OPINION OF LORD BRAID

In the cause

OIL STATES INDUSTRIES (UK) LIMITED

Pursuer

against

(FIRST) "S" LIMITED; (SECOND) LAGAN BUILDING CONTRACTORS LIMITED (IN

ADMINISTRATION); JOHN HANSEN and STUART IRWIN, the joint administrators

thereof

Defenders

Pursuer: Dean of Faculty; McAndrew Brodies LLP

First Defender: G Walker QC, Byrne; DAC Beachcroft Scotland LLP

4 August 2022

Introduction

[1]

In 2013, the pursuer wished to develop new office and production facilities at

Heartlands Business Park, Whitburn. It appointed the first defender to provide project

management services, including the provision of advice as to the most appropriate means of

procuring the project and the subsequent administration of the procurement process. In the

course of delivering these services, the first defender, on the pursuer's behalf, appointed the

second defender as building contractor. The project was eventually completed, but has

given rise to a number of disputes. The pursuer contends that the first defender failed in its

duties in a number of respects and sues for damages of just under £12 million.

[2]

Although there are other grounds of action, a material part of the pursuer's claim

(reflected in its first conclusion seeking payment of, in round terms, £10.5 million), is

founded on an allegation that the award of the building contract to the second defender was

procured by bribery; specifically, by the giving of bribes in the form of cash, and the

provision of free building services, to Paul Galbraith, a project manager employed by the

first defender, who ran the procurement process and whose decision it was to appoint the

second defender. The first defender's position is that it knows nothing of any bribes given

to Mr Galbraith, who is now a former employee.

[3]

A proof before answer has been fixed for 2 November 2022 (but see paragraph [96]

below). However, for a variety of reasons (including the involvement in the action, at that

time, of Michael Lagan, who had been convened by the first defender as a third party being

the eponymous individual within the second defender who had allegedly paid the bribes), I

considered it expedient to fix a preliminary proof to resolve the issue of whether bribes were

given. If not, the bulk of the pursuer's claim would fall away; and if bribes were given for

which it is liable, it is advantageous that the first defender learn that sooner rather than

later.

[4]

Perhaps not surprisingly given the nature of the allegation which was the subject of

the preliminary proof, parties found the co-operation of some witnesses to be elusive. Not

all of the potential witnesses who were contacted chose to give witness statements, and

some, I was told, were evading citation, including Tom O'Hare, who was employed by the

second defender at the material time and who features heavily in this opinion. The

witnesses who did co-operate, for the pursuer, were: Garry Stephen, the pursuer's

managing director; Kenneth Scott, chartered surveyor, who at the relevant time was a

partner in EPPS Consulting LLP, the pursuer's agent and quantity surveyor on the project;

Police Sergeant David Porter, who as a detective constable at the time had been the lead

investigator into the allegations of bribery (the outcome of which was that no charges were

brought against any person); and Mark Fegan, a Contract Manager employed by Apple

Orchard Construction Ltd. They all provided witness statements which they adopted as

their evidence in chief, supplemented by oral evidence which was given in most cases in

person although Mr Fegan gave his evidence by video link to the court. Lynsey Cole,

Mr Galbraith's sister, also provided a witness statement which was agreed to constitute her

entire evidence. Evidence for the first defender (insofar as relevant to the issues which are

still live) was given by video link by Stephen Parr, who had not provided a witness

statement. In fairness to Mr Lagan, who at that time was a party to the action, he did

provide a witness statement (in which he denied knowledge of any bribes) but, though

available, he was not called to give evidence, nor were any of the other alleged principal

actors in the payment and receipt of bribes. This is a topic to which I will return since one of

the issues between the parties is what inferences (if any) fall to be drawn from the failure to

call those witnesses.

[5]

After the pursuer had closed its case, the third party claim against Mr Lagan was

dismissed by agreement on a no expenses due to or by basis, and I need not refer to it again.

The pleadings

[6]

The pursuer's bribery case appears at articles 12 and 13 of condescendence. In

article 12, the pursuer avers that cash bribes were paid to Mr Galbraith by or at the behest of

Mr Lagan at two meetings. The first was at Morton's Club in London on or around

12 December 2013, when no-one else was said to have attended. The second meeting was

attended by Mr Galbraith, Mr Lagan and others at the Witchery Restaurant in Edinburgh on

5 May 2014. In article 13, the pursuer avers that a further part of the bribe took the form of

the carrying out of building works worth £70,000 to £80,000 to a property in Gourock owned

by Mr Galbraith's sister, Lynsey Cole, in 2014; and that the work was carried out on the

second defender's instructions by Apple Orchard Construction, who invoiced the second

defender but who did not at any time seek payment from Mr Galbraith. Subject to an

admission that the meetings mentioned took place, those averments are not known and not

admitted by the first defender.

The pursuer's case

[7]

There is no direct first-hand evidence of any cash bribes having been paid (although

there is direct evidence of the building works at an address in Gourock having been carried

out and paid for by the second defender). The pursuer invites the court to hold the

allegations of bribery proved on a combination of (a) circumstantial evidence surrounding

the appointment of the second defender as building contractor, (b) the evidence of the

building work and (c) hearsay evidence that bribes were paid (some, although not all, of

which was from an anonymous source).

The issues

[8]

There are two main issues. First, did Mr Galbraith receive a bribe? To decide that, it

is necessary to explore (a) what precisely is a bribe in our law, (b) whether, on the evidence,

it has been established that Mr Galbraith received benefits from the second defender and

Mr Galbraith did receive a bribe or bribes, the first defender is vicariously liable to the

pursuer for any damages to which it may be entitled. A further issue which arose after this

opinion was prepared is whether, following resolution of the dispute by parties after the

proof had concluded, publication of this opinion remains appropriate. I will consider each

of these areas in turn.

The law

What is a bribe?

[9]

In law, a bribe is a gift to a confidential agent with the view of inducing the agent to

act in favour of the donor in relation to transactions between the donor and the agent's

principal, and that gift is secret as between the donor and the agent, that is to say, without

the knowledge and consent of the principal: Hovenden & Sons v Millhoff [1900-3] All ER

Rep 848, Romer LJ at 851.

[10]

The essential ingredients of a bribe have more recently been described as (1) receipt

of money or a valuable benefit (2) by a person who owes a fiduciary duty of loyalty to a

principal with whom the donor wishes to transact business (3) which is kept secret from the

principal and (4) which places the recipient in a position where his interest may potentially

conflict with the fiduciary duty owed to his principal: Airbus Operations Ltd v Withey

[2014] EWHC 1126 (QB) at [88].

[11]

A bribe is, then, a form of secret commission or secret profit paid to an agent,

(although not all secret commissions are bribes: Airbus, 82; cf Trans Barwil Agencies (UK) Ltd

v John S Braid & Co Ltd 1988 SC 222 at 227).

[12]

Gloag on Contract (2

Ed) at page 522, in a passage dealing with secret commissions,

states that to give a commission to an agent in the knowledge that he is taking it without the

principal's consent, amounts to a fraud on the part of the person who gives it, for which he

is liable in damages. Gloag goes on to quote from the English case of Grant v Gold

Exploration and Development Syndicate Ltd [1900] 1 QB 233. It is clear that what Gloag is

discussing in this passage is bribery.

English law

[13]

In English law, it has long been established that bribery is a cause of action in itself:

Grant and Mumford, Civil Fraud (1

Ed), at 7-013. Proof of fraud is not required: Clark and

Lindsell on Torts, (23

Ed), at 17.58. Certain consequences follow, of which two are relevant

for present purposes. The court will not inquire into motive; and the court will irrebuttably

presume that the agent was influenced by the bribe: Hovenden, above, Romer LJ at 851.

[14]

The principles underpinning the English law of bribery are (i) the existence of a

fiduciary relationship between the recipient of the bribe and his principal such that there is a

relationship of trust and confidence; and (ii) the equitable principal that an agent must not

make a profit out of his trust and must not place himself in a position where his duty to his

principal and his own interests may conflict, without the informed consent of his principal:

Civil Fraud, above, 7-006.

[15]

Dealing with each of those in turn, the person bribed must be someone who was

acting on behalf of a principal to whom he owed a fiduciary duty of loyalty and good faith;

and, in the context of a bribery claim, the term fiduciary relationship should be understood

in a wide and loose sense: Reading v Attorney General [1951] AC 507 at 516. Whether a

fiduciary relationship was owed is a fact-specific inquiry: see, generally, the discussion in

Airbus at [95] to [101]. The essential element of a fiduciary relationship is one in which one

person the fiduciary has undertaken to act for another in a particular manner in

circumstances which give rise to a relationship of trust and confidence: Airbus, [96] quoting

Millet LJ in Bristol and West Building Society v Mothew [1998] Ch 1 18.

[16]

However, the conflict of interest point is also an important one, particularly in the

context of the current case. An apposite hypothetical example is given in Airbus at 92, of a

supplier needing help in preparing a complicated tender, who pays a reasonable fee to the

agent of the principal who invited the bids to help him prepare the tender, that arrangement

not being disclosed to the principal. Even such a payment would be a bribe or secret

commission. Three reasons were given as to why this is so. First, the court should not have

to make nice judgments as to whether the fee paid was fair remuneration or was over

generous. Second, the court cannot be expected to engage in speculation as to what would

have happened if the agent had not helped the supplier to complete his tender. That would

be an "investigative minefield" in many cases and for policy reasons the courts decline to

investigate hypothetical situations in this area. Third the principal was entitled to expect

that his agent would not (without disclosing what he was doing) help one bidder in

preference to another and risk distorting the level playing field of the tender process. The

principal was entitled to the disinterested loyalty of his agent when assisting him in

organising the tender. I note in passing that this example is a fortiori of what is said to be the

position in the present case in that it postulates the payment of a reasonable fee to the agent

for a service rendered rather than any corrupt motive.

Scots law

[17]

The foregoing description of English law is not in dispute (the first defender quibbles

that Airbus is not authoritative, but it contains an extensive and useful discussion of the case

law) but the parties diverge on the extent to which, if at all, the above principles form part of

Scots law. The pursuer submits that there is no good reason why Scots law should not

develop along English lines, having regard to the similar approach taken in both

jurisdictions to the circumstances in which a fiduciary duty is held to exist; the reliance by

Gloag and other writers (and by the courts) on English authority; and the absence of any

good policy reason as to why bribery should be treated differently in the two jurisdictions.

While Gloag used the term "fraud", that resonated with the nomenclature adopted in

England at that time, but Gloag's approach was fundamentally in tune with that taken in

English law and it was significant that he founded on English authority. The first defender

submits that Gloag's reference to fraud makes clear that bribery, in Scots law, is simply a

species of fraud and therefore that the essential ingredients of fraud, in particular mens rea,

must be proved, as must the fact that the payment of the bribe induced Mr Galbraith to

award the contract to the second defender.

[18]

In deciding this issue, the starting point is to observe that Gloag referred to and relied

upon English authority in his passage dealing with secret profits and that the remedies in

both Scots and English law were the same at that time. If he had thought that there were

differences in the law of bribery, he might be expected to have said so. Further, the rule

against secret profits, including bribes, plainly derives from the existence of a fiduciary

duty: McGregor, The Law of Agency in Scotland, 6-31 where it is also stated that:

"In common with other cases of breach of fiduciary duty, the breach occurs not

because the agent has caused a loss to his principal, but rather because the agent has

placed himself in a situation where he may be tempted to favour his own interests

over those of the principal."

[19]

Thus, in Scots law, just as in English law, we see an underpinning of the rule against

secret profits including bribery by the concepts of fiduciary duty and the notion that the

recipient may be placed in a position of temptation to favour his interests over those of his

principal: in other words, by creating a conflict of interest between himself and his principal.

[20]

As regards the situations in which a fiduciary duty may be held to exist, this is fact -

specific in Scotland, as in England. The categories of fiduciary are not closed and can apply

in a wide range of relationships: Stair Memorial Encyclopaedia, Trusts, Trustees and Judicial

Factors (Reissue/2) 171; McGregor, 2-01. In MacRoberts LLP v McCrindle Group 2017 SC 1,

Lord Brodie said at [48] that "the core feature of a fiduciary relationship is that it is

fundamentally an obligation of loyalty", going on to quote Millet LJ in Bristol and West

Building Society, above, at p18E where he said that breach of a fiduciary duty connotes

disloyalty or infidelity. Lord Brodie went on to refer, in paragraph [49], to fiduciary duties

arising from a relationship of trust and confidence. Finally, a fiduciary obligation may be

owed by an employee who holds a post in which he is able to influence, in the sense of

materially affect, the course of business between his employer and the donor of a secret

payment: Airbus, above, paragraph 416.

[21]

Drawing all of this together, having regard to the fact that bribery in both

jurisdictions is underpinned by the same principles, the heavy reliance in the case law and

by authors of Scottish textbooks (including Gloag) and the absence of any good reason why

it should be more difficult to prove fraud in Scotland than in England, I conclude that there

is no distinction between English and Scots law in the treatment of bribery. In both, it is the

temptation to act against the interests of one's principal which is the mischief struck at. In

both, a bribe is but one species of secret profit received without the consent of a person to

whom the recipient owes a fiduciary duty. That being so, there is no requirement to prove

the mens rea of fraud. The same policy considerations which preclude the court from an

inquiry into what might have happened had the bribe not been paid, and which promote

the undivided loyalty of a fiduciary to his principal apply equally in Scotland as in England.

Thus there are sound policy reasons for the irrebuttable presumption which exists in

English law, and, as I find, also in Scots law, that the recipient of th e bribe was influenced by

it.

[22]

In summary, I find that bribery is a free-standing cause of action, distinct from any

cause of action arising out of fraud, and that once payment of the bribe is established, it is to

be irrebuttably presumed that the recipient was influenced by its payment.

[23]

Even if I am wrong in both of these conclusions, as will be seen, the outcome of this

case is unaffected given the strength of the evidence of fraud; and an abundance of

circumstantial evidence giving rise to a legitimate (and unanswered) inference that

Mr Galbraith was influenced by bribery to award the contract to the second defender.

Agreed or undisputed facts

[24]

It is convenient to begin by setting out facts which are either agreed by joint minute,

or which cannot be disputed because they derive from contemporaneous correspondence,

including emails.

"Starter for ten" - the "sweeties" emails

[25]

Police recovered deleted emails from a laptop, including emails between

David Irvine of Odin Consulting Engineers and his son, Graeme Irvine, also of Odin

Consulting Engineers, which alluded to the receipt and giving of "sweeties". Odin were

part of the team engaged in the project. The first email, from David Irvine to Graeme,

bearing the heading "Petrol Counties", sent on 21 May 2013, stated:

"Fuckin phone all but grubbed again

We have green light re above but there is a complication

My new best pal expects a bag of sweeties"

On 24 May 2013, Graeme Irvine emailed David Irvine stating, among other things:

"Here is my starter for ten

Oil States needs a contractor lots of industrial.

Lagans would be ideal and are looking to continue at new LE project

We do our utmost to get Lagans in on Oil States possible sweeties to Paul Galbraith

from ML, Mike runs the job for them, we get some sweeties for making it happen,

Mike returns the favour to Lagan by making sure they get LE2, we get more sweeties

.................. it is fucking beautiful."

David Irvine's reply to that (in large bold font, underlined) was:

"Absolutely fuckin brilliant!!!!!!

Greame (sic) I am looking forward to tomorrow.....

BELIEVE IN YOURSELF !!!!!!!!!!!!"

[26]

At this stage, I observe that a clearer reference to the possible payment of bribes can

scarcely be imagined. "Petrol Counties" was a somewhat jejune disguised reference to "Oil

States" (none of the witnesses who gave evidence was aware of any other company or

project going by that name). "Sweeties" in context, not least that it is described as a

complication, is likely to mean some form of financial inducement, rather than an

expectation of confectionery. ML is Michael Lagan. The reference to Paul Galbraith is self-

explanatory. Everything which follows must be read in the context of those emails.

The procurement process

[27]

On 24 May 2013, the date of Graeme Irvine's email, tender pre-qualification

documentation (PQD) was issued by Ken Scott of EPPS to fifteen potential contractors for

the project. The second defender was not one of these fifteen. Mr Scott emailed a copy of

the PQD to Mr Galbraith. On 30 May 2013, at 12:24, Graeme Irvine, at the request of his

father, emailed details of the second defender to Mr Galbraith. That day, Mr Galbraith

forwarded Graeme Irvine's email to Mr Scott by email, and asked if the second defender

could be added to the list of potential contractors for the project. Mr Scott confirmed to

Mr Galbraith that it could be added, commenting that he had a mate that had worked with

them, and that they were "very civils geared". Mr Scott also emailed a copy of the PQD to

the second defender and updated Mr Galbraith accordingly.

[28]

On 19 June 2013, EPPS sent the first defender a pre-qualification report on the tender

returns. The report records inter alia that (i) "The responses were generally all of good

quality and all companies demonstrated good capability of [sic] the project Principal

Contractor role"; and (ii) the second defender scored 59 points, which was the lowest score

out of the 11 responses that were received from potential contractors. On 19 June 2013,

Mr Galbraith emailed the pre-qualification report to David Irvine, without comment.

[29]

On 20 June 2013, David Irvine forwarded that report to the second defender stating

(again in large bold font, underlined):

"P&C

LORENE

PLEASE KEEP ABSOLUTELY P&C OFF THE RECORD

CAN YOU LET TOM AND MICHAEL SEE THIS PLEASE"

The references to Tom and Michael are to Mr O'Hare and Mr Lagan.

[30]

On 2 August 2013, seven stage one tenders were received. On 5 August 2013,

Mr Galbraith emailed Mr Stephen to advise him that, on reviewing and scoring the seven

stage one tenders received, five had been put forward for interview on Thursday 8 August

2013. The five invited to interview were: Balfour Beattie, Galliford Try (otherwise known,

and hereinafter referred to, as Morrison Construction, or simply Morrison), Ogilvie

Construction, the second defender, and Robertson Construction.

[31]

On 8 August 2013, interviews of the five contractors were held. On 9 August,

Mr Stephen emailed Mr Scott Moses stating that Morrison would likely be selected.

[32]

On 9 August 2013, EPPS sent Mr Galbraith a financial appraisal of the Work Package

Estimate for the Stage 2 Tender on-costs by email. Mr Scott advised that the second

defender's estimated on-costs were "sticking out higher".

[33]

On 11 August 2013, at 10.14, Mr Scott sent abbreviated Minutes for Morrison and

the second defender to Mr Galbraith and to David Irvine. Mr Scott described Morrison and

the second defender as "the two currently favoured interviewees". Mr Irvine forwarded

that email to Mr Tom O'Hare of the second defender at 11.39, stating:

"ABSOLUTELY P&C

There is little in this

Morrisons majored on M&E stuff that's why Paul asked the question to you

There (sic) idea re the CBR increases etc is maybe useful but we have good quality

material available for free And there are lots of bunds to put the crap"

[34]

On 12 August 2013, EPPS sent its Stage 1 tender report to the first defender by letter

for the attention of Mr Galbraith. Mr Scott had previously emailed the draft report to

Mr Galbraith and David Irvine on 11 August at 12.10. Mr Irvine forwarded that email, and

the draft, to Mr O'Hare at 11.39 on 11 August at 12.13, again with the heading

"ABSOLUTELY P&C".

[35]

On 28 August 2013, Mr Scott sent an e-mail to Mr Galbraith with a comparison of the

second defender and Morrison. Mr Scott observed inter alia "Morrisons clearly ahead!"

Mr Scott also observed that "it's clear however that both of them have significant queries

and qualifications outstanding and needing bottomed out before any acceptance".

[36]

Later on 28 August 2013, at 18.49 Mr Scott emailed Mr Galbraith with a draft of final

questions for Morrison. At 20.04 Mr Galbraith forwarded that email to David Irvine, and

at 21.07 Mr Irvine forwarded it to Mr O'Hare.

[37]

At 18.05 on 30 August 2013, Mr O'Hare emailed a revised programme to Mr Scott

(copying in Mr Galbraith). Fifteen minutes later, at 18.20, Mr Scott emailed Mr Galbraith

describing the programme as a "pile of pish" which did not understand the procurement

route. At 19.05, still on 30 August 2013, Mr Scott emailed Mr Galbraith again, stating that he

did not think the second defender's programme was achievable unless it was heavily

accelerated. He expressed criticisms of the second defender's tender submission in

comparison with other tender submissions. In particular, he said:

"I don't believe the Lagan Programme is achievable unless it is heavily accelerated.

We will pay for this in the procurement of 2

stage Work Packages. 6 companies

telling us about 50 weeks + and one company telling us 43 does concern me in terms

of their limited experience of this type of Facility. Having read through their Quality

submission again this afternoon, I believe it was without doubt one of the poorest

submissions ..."

Four minutes later, at 19.09, Mr Galbraith forwarded that email to David Irvine stating

simply "FYI".

[38]

Meanwhile, at 18.43 on 30 August 2013, Eddie Robertson of Morrison had emailed

Mr Scott offering to reduce Morrison's programme by three weeks. He emailed again

at 12.35 on 31 August 2013, this time copying in Paul Galbraith, and attaching his email of

the previous day, with further changes to the programme. Less than an hour later, at 13.29

on 31 August, Mr Galbraith forwarded that email chain to Mr O'Hare.

[39]

At 19.59 on 31 August, Mr O'Hare emailed Mr Scott, copying in Mr Galbraith,

attaching a detailed draft programme, providing further information about how Lagan

would achieve its programme. At 21.19 on 31 August, Mr Galbraith replied to Mr O'Hare's

email in these terms: "Tom, without being patronising, this is what I meant! Good return.

Paul". Mr O'Hare replied to that email at 20.41 on 31 August stating "Paul, Defiantly (sic)

not. Lesson learnt. Thanks. Tom"

[40]

On 3 September 2013, EPPS sent a letter to the first defender (for the attention of

Mr Galbraith) with its Stage 1a tender report. Among other things, it reported (a) that the

"tenders received" figures were: Lagan - £6,829,180.47 and Morrison - £7,023,543.39;

(b) that the provisional sums in each tender for superstructure steelworks were:

Lagan - £1,268,902.76 and Morrison - £1,414,000, but that Morrison's figure was realistic and

Lagan's was unrealistically low; (c) that the real tender comparison was:

Lagan £14,357,777,72 and Morrison - £14,194,543.39 and (d) that adding the estimated

Stage 2 Work Package, the effective comparative totals were: Lagan £14,357,777,72 and

Morrison £14,194,543,39. After making further comments for and against each tender, this

section of the report concluded that: "Morrison Construction are the clear winner at this

stage and would normally receive our Recommendation to proceed to Stage 2 Tender."

[41]

On 3 September 2013, Paul Galbraith emailed Mr Stephen to inform him of the

Stage 1 costs and proposed Programme of both the second defender and Morrison

Construction. He reported the "tenders received" figures, and the respective completion

dates of 29 July 2014 for Lagan and 10 October 2014 for Morrison. He did not report the

other figures reported by EPPS nor did he report their recommendation that Morrison be

appointed. He described Lagan as being "streaks ahead" on their delivery.

[42]

On 5 September 2013, Mr Galbraith e-mailed Mr Stephen to tell him that he had

informed the second defender of its success in being appointed to progress to stage 2 and

Main Contractor status the previous night. Mr Galbraith also indicated to Mr Stephen that,

as per an earlier email, he would formulate a letter of intent with an indemnity limit which

he would pass by the legal team and Mr Stephen for approval prior to issue.

[43]

On 5 September 2013, Mr Galbraith e-mailed all of the design team, Mr Stephen and

Mr O'Hare to inform them that the second defender had been appointed preferred

contractor. Mr Galbraith stated that the pursuer was "extremely happy with the progress

and delighted to have [the second defender] on board to deliver this important project".

[44]

On 5 September 2013, Mr O'Hare emailed all of the design team and Mr Stephen.

[45]

On 17 September 2013, Mr Scott of EPPS emailed Mr Galbraith expressing concerns

over the information issued by the second defender.

[46]

On 11 November 2013, the first defender, acting on behalf of the pursuer, issued a

Letter of Intent to the second defender.

[47]

In September and October 2014, after concerns had been expressed about the second

defender's performance (including that the completion date had been revised to April 2015,

from the originally proposed date of July 2014) Mr Galbraith conducted a further

procurement exercise involving not only the second defender but also Morrison (again) and

another company, Bowmer & Kirkland. During this period, the second defender threaten ed

to walk off site if a contract was not signed.

[48]

On 15 October 2014, the pursuer entered into a building contract with the second

defender for the design and construction of the Heartlands project.

Meetings

[49]

On 12 December 2013, Mr Lagan met Mr Galbraith at Morton's Club in London. On

5 May 2014, Mr Lagan met Mr Galbraith, and David Irvine, at The Witchery restaurant in

Edinburgh.

Conversion Works

[50]

On 23 January 2014, Mr O'Hare contacted Mr Galbraith by email looking to make

contact with Mr Galbraith's sister, Lynsey Cole, in order to view her loft conversion. That

was a reference to works to be undertaken at a property in Gourock, which was owned by

Ms Cole. Loft conversion works to that property were carried out by Apple Orchard

Construction under the instruction of the second defender between around February and

May 2014. Mr O'Hare provided Mr Galbraith with an update on the progress of works to

"Lynsey's house" by email dated 22 May 2014. Apple subsequently invoiced the second

defender in respect of the loft conversion works in the total amount of £66,028.56 plus VAT.

Ms Cole did not make payment to the second defender of any sum attributable to the works

carried out by Apple to her property.

Other evidence

The anonymous letter

[51]

The first inkling the pursuer had that the contract might have been procured by

bribery came from an anonymous letter sent to Oil States International, Inc in Houston and

forwarded to Mr Stephen, who spoke to its terms. In brief, the author, a self-proclaimed

whistle-blower, made a specific allegation that a bribe was taken by Mr Galbraith in the

form of the second defender carrying out building work to his sister's house in Gourock, in

return for being selected as the contractor for the Heartlands project. The letter further

alleged (a) that Tom O'Hare asked the second defender's workers to carry out the building

works in Gourock before and after work started at Heartlands, in January 2014 and that the

work was worth around £70,000 to £80,000 and (b) that Mr Galbraith later asked Mr O'Hare

for further bribes in the form of "brown envelopes" of cash . The letter clearly implicated

Mr O'Hare as the person who had paid/arranged the bribes and finished by saying that he

had left the business suddenly on 31 July 2016 having been forced to resign or to face being

sacked.

[52]

In parenthesis, I observe that we know, from the agreed or undisputed facts, that

much of what is stated in the letter was true. The second defender did carry out building

work to Mr Galbraith's sister's house, worth between £70,000 and £80,000.

Hearsay evidence

[53]

Receipt of the letter prompted Mr Stephen to contact the police, and to instigate his

own enquiries. In his evidence, he spoke to two occasions on which he was given

information about bribes. The first was in September 2016, when John Stirling, an employee

of the pursuer, told him that Steve Parr, of the Parr Group (which had installed the electrical

equipment) had something to tell him. Mr Parr duly met Mr Stephen and told him that he

knew about "the brown envelopes as well as the loft conversion", which he clarified as

being the loft extension of Mr Galbraith's sister's house. He said that the second defender

had offered the work to him but he had declined it. He also said that he was aware of

meetings in London where cash was passed from Lagan to Mr Galbraith. He knew this

because he was friends with Tom O'Hare, who had said he was at meetings in London

where cash was given to Mr Galbraith. Mr Lagan was behind the bribes. The second

occasion when Mr Stephen was given information was at a meeting with Tom O'Hare at

Belfast Airport in early 2017, arranged at Mr O'Hare's request. He had made detailed notes

of the meeting shortly after it concluded, and he spoke to the terms of these, as follows.

Mr O'Hare had alleged that he was aware of two meetings between Mr Lagan and

Mr Galbraith where two brown envelopes were handed over. The first was in London at

around Christmas time in "2014" (sic) and the second was at the Witchery in Edinburgh

in 2014. Mr Lagan told him that he had met Paul and given him his Christmas present.

Mr O'Hare also said that the project had initially come through David Irvine. At the time it

first appeared, Mr Irvine advised him that the price for the project was £500,000 which

should be factored into the project to be paid at some point to Paul. He then contacted

Colin Loughran, of the second defender, who said that Mr Lagan should be contacted. He

believed David Irvine had been paid cash lump sums as well as Paul. Mr O'Hare was also

aware of the loft conversion, which he said was carried out at the direction of Mr Lagan to

Mr Loughran to Mr O'Hare then to Dean Gordon then to Orchard, who carried out the

work. The value of the works, £76,000, was not just the loft conversion but was rework

throughout the property and included white goods. Mr O'Hare said that the second

defender only won the contract due to the information received at the proposal stage from

Mr Galbraith and David Irvine, the flow of information typically being from the former to

the latter, and then on to him. The information related to the other proposals put forward

from the other contractors quoting for the project.

[54]

Again, I pause to observe that much of what Mr O'Hare told Mr Stephen is now

known to be true, not only in relation to the loft conversion but in relation to the flow of

information from the Irvines to the second defender. Not only did the recovery of deleted

emails by police confirm that that was exactly what had h appened, but Mr Stephen could

not possibly have known those details at the time of his meeting with Mr O'Hare; thus, his

note is likely to be an accurate record of what he was told by Mr O'Hare in that and in other

respects.

[55]

In cross-examination, Mr Stephen acknowledged that there were fundamental

differences between the accounts given by the author of the anonymous letter, Mr Parr and

Mr O'Hare and that he had not challenged Mr O'Hare on these differences. He also

acknowledged that he had no means of knowing which, if any, of the accounts were true. It

was not put to him that the meeting with Mr Parr had not taken place or that he was lying,

or mistaken, in relation to it.

[56]

Mr Parr also gave evidence, although he had not provided a witness statement. He

did not remember any meetings with Mr Stephen when allegations of bribery or corruption

were discussed. He thought he would remember such a meeting had it taken place. He

volunteered a question of his own, "Was this not at the stage where Mr Galbraith had

already been questioned?" In cross-examination, Mr Parr said he did not know who

John Stirling was, and the suggestion that he had mentioned brown envelopes and the loft

conversation did not "ring any bells". He would know if he had said something like that;

he was not saying it did not happen but he had no recollection of it; and he repeated that he

was sure he would remember such a conversation if it had occurred. When asked why he

had asked about the stage of Mr Galbraith being questioned if he knew nothing about the

meeting he was being asked about, he replied simply that "it was common knowledge".

[57]

I did not find Mr Parr to be a satisfactory witness. Although he attempted to explain

his own question away by saying that "it was common knowledge", the fact that he asked it,

and the manner in which he did so, tended to suggest that he did well remember the

meeting which he had with Mr Stephen. His evidence vacillated between denials that a

meeting had taken place, and an inability to remember wh ether it had. He professed an

inability to remember things that happened six years ago, although was sure he would

remember "something like that". Although he was confident he had not told Mr Stephen

about any bribes, he declined to go so far as to say that Mr Stephen must be lying. He

appeared more concerned to ensure that no blame attached to his company although none

was ever suggested than with candidly answering the questions put to him (as evidenced

for example by his replies "we were not involved" and "there was an investigation and

nothing to do with our company").

[58]

By contrast, Mr Stephen gave his evidence in an open, non-combative and

unassuming manner. He would have no cause to fabricate evidence that Mr Parr had made

bribery allegations, and it was not suggested to him that he had. Given the view I have

formed of their respective credibility and reliability, I have no hesitation in accepting

Mr Stephen's evidence in preference to that of Mr Parr. (Even if I had not formed such a

negative view of Mr Parr's evidence, I would have accepted Mr Stephen's evidence, given

the failure to challenge his account of the meeting in cross-examination: Browne v

Dunn (1893) 6R 67; McKenzie v McKenzie 1943 SC 108, LJC Cooper at 109.) I therefore find

that Mr Parr did make allegations of bribery to Mr Stephen at a meeting in 2016. Further,

the fact that Mr Parr mentioned the loft conversion to Mr Galbraith's sister's house, one fact

which is known to be true, demonstrates that the information he had (at least to that extent)

came from a reliable source.

Other evidence given by Mr Stephen

[59]

Mr Stephen also said that he was not given the stage 1 report sent by Mr Scott to

Mr Galbraith on 2 September 2013. Nor was he told of Mr Scott's concerns over the second

defender's tender. He did not learn of the second defender's appointment, by the first

defender, until after the event.

The police investigation

[60]

In his witness statement, Police Sergeant Porter spoke to the police investigation, in

the course of which a number of people, including David Irvine, Graeme Irvine,

Mr Galbraith and Mr O'Hare had been interviewed and various documentation recovered.

That included the sweeties emails and the other emails referred to above, between the

Irvines, Mr O'Hare and Mr Galbraith. Sergeant Porter also said that a number of payments

had been made by Paul Galbraith to David Irvine. The dates of payment were 13 June 2013,

19 June 2013, 22 August 2013, 29 August 2013, 24 October 2013, 4 November 2013 and

13 June 2014.

Supporting evidence of cash payments to Mr Galbraith

[61]

Further evidence that Mr Galbraith received cash bribes came from Sergeant Porter,

who said that on 24 November 2017 he was contacted by telephone by a female who said

she was Janna Galbraith, Mr Galbraith's daughter. While the purpose of her call was to

provide a character reference for her father, she also said that he had made numerous trips

to Belfast and that she had seen a safe in his room which contained Northern Irish

banknotes. She said that he had told her that he would be given a large bonus on the

Heartlands project "no matter what".

Mr Scott

[62]

There were aspects about Mr Scott's witness statement which were unsatisfactory. It

became evident during his cross-examination that although there had been video meetings

between him and the pursuer's solicitors, the statement had been prepared by the latter and

was not in Mr Scott's own words; and that he did not have all the documents to hand when

he approved, and subsequently signed, it. This was doubly unsatisfactory in relation to

those parts which were pejorative of Mr Galbraith. Thus, for example, where he said at

paragraph 4.1 of his statement that he did not know anything about the second defender,

that was not accurate: he was constrained to admit that what he meant was that he did not

know a great deal about them but that he was aware they were "civils geared". At

paragraph 5.9 of his statement, he referred to one section of his report which stated that the

second defender's costs were 25% more expensive than Morrisons, without having referred

to later sections, where adjustments had been made, showing that the adjusted differential

was only 12.5%. Mr Scott put this down to his not having had his report to hand when he

read over his statement. The higher figure was the comparison of tenders received, before

adjustments had been made. Mr Scott conceded that the report gave a fair impression and

his witness statement did not. Then again at paragraph 5.36 of his witness statement,

Mr Scott referred to an email from Mr Galbraith to Mr Stephen dated 3 September 2013

which referred to stage 1 costs for Lagan and Morrisons respectively of £6.829m and £7.023.

Mr Scott said in his witness statement that he did not know where Mr Galbraith had got

these figures from but in cross-examination he conceded that they were the "tender

received" figures and that he could see where they came from. He accepted that the

statement contained pejorative language suggesting Mr Galbraith had invented figures,

which he had not done.

[63]

Mr Scott was plainly uncomfortable at having to make these concessions. It is

unfortunate to say the least that the person who prepared his witness statement chose to use

pejorative language and plainly either did not have the relevant documents to hand or paid

inadequate attention to them. It is also unfortunate that Mr Scott accepted his draft witness

statement at face value without checking from the underlying documents that what had

been stated was accurate. Those documents ought to have been sent to him.

[64]

To the extent that Mr Scott's witness statement makes pejorative comments about

Mr Galbraith, I therefore discount it. However, it does not follow that his evidence carries

no weight or that I should refrain from drawing my own inferences from Mr Galbraith's

somewhat selective approach to the sharing of information with Mr Stephen. In his oral

evidence, I found Mr Scott to be doing his best to tell the truth and to be mostly reliable. As

he correctly pointed out, Mr Galbraith did not give a balanced view of the figures to

Mr Stephen. The point about the figures quoted above is not that it was not known where

the figures came from but that to give the tenders received figures rather than the adjusted

figures was at best a half-truth.

[65]

I do not find it necessary to repeat Mr Scott's evidence at length. As was submitted

for the pursuer, its principal significance was: (i) he was unaware of the backroom dealings

shown in the emails; (ii) such backroom dealings would not be expected in ordinary

contract procurement; and (iii) quantum valeat, his reaction to being shown those backroom

dealings was one of "horror".

[66]

Senior counsel for the first defender spent some considerable time in cross-

examination securing a series of concessions to the effect that many of Mr Galbraith's

actions were ones which might reasonably have been taken ; for example, that it was part of

Mr Galbraith's role to test offers (both the second defender's and Morrison's); that there

were significant questions to be asked of Morrison also; and that the quicker programme

offered by the second defender was a significant advantage (although Mr Stephen said in

his evidence that a reliable date was more important to him than an early date). This was all

apparently designed to show that Mr Galbraith's decision to accept the second defender's

tender was a reasonable one. Be all that as it may, it misses the point, which is not whether

Mr Galbraith might have been entitled to award the contract to the second defender but

whether he was influenced (or is irrebuttably presumed to have been influenced) by

payment of a bribe or bribes. If he did in fact receive a bribe, it is nothing to the point that

he might have awarded the contract to the second defender even had no bribe been paid.

Mark Fegan

[67]

Mr Fegan said that Apple had invoiced the second defender in three invoices, in

April, May and July 2014, for a total sum of £61,258.56 plus VAT. When the invoices were

not paid, he chased Brian Cowan of the second defender for payment, who told him to wait

until he took instructions from head office. Mr Cowan came back to Mr Fegan and told him

to re-invoice the work to the Heartlands project. Mr Fegan asked his staff to remove the

reference to the address of the property from the invoices and to reissue them. The sum

claimed was subsequently paid for by the second defender by cheque. The cross-

examination of Mr Fegan by senior counsel for the first defender was directed to

establishing who had given the instruction to re-invoice the work, rather than challenging

the credibility and reliability of Mr Fegan's evidence that he had been instructed to, and did,

re-invoice the work. I accept Mr Fegan's evidence.

Lynsey Cole

[68]

In her witness statement, Ms Cole said that work had been done to her house in

Gourock, which her brother, Paul Galbraith, had agreed to pay for. She was unaware of the

identity of the builder until receiving an invoice from the second defender, which was for

more than she had expected. She had passed it to Mr Galbraith who had taken care of it.

Approach to the evidence

[69]

Before considering what facts are established by the evidence, it is first necessary to

resolve the two issues of principle between the parties as to how I should approach it,

namely, first, the standard of proof, or more accurately, the extent to which cogent and

compelling evidence is required before the court is entitled to conclude that bribes were

given; and, second, who should bear the consequences of the failure to call the alleged

wrong-doers, principally Messrs Galbraith, Lagan, O'Hare and the Irvines.

Standard of proof and the weight of evidence required

[70]

The parties agreed, correctly, that the requisite standard of proof is balance of

probabilities: Mullan v Anderson 1993 SLT 835. The first defender's submissions thereafter

were largely if not entirely predicated on the proposition that the payment of bribes by

businessmen was inherently improbable. That proposition requires to be tested.

[71]

To adapt and expand Lord Hoffman's example in Secretary of State for the Home

Department v Rehman [2003] 1 AC 153 at paragraph 55, the sighting of a lioness in Regent's

Park might be inherently improbable, but perhaps would be less so if a lioness was known

to have escaped from London Zoo a short time before. So, here, the originating email "...

starter for ten ... we get sweeties for making it happen" is indeed a starter for ten, and

colours all subsequent events. It removes, at a stroke, any inherent improbability which

might otherwise have existed. (For that matter, Mr Galbraith's conviction and subsequent

imprisonment for a separate fraud committed in the course of the Heartlands project also

substantially reduces the improbability of his accepting a bribe). Thus the first defender's

argument on this point does not get off the ground. However, in deference to the

submissions made, I will deal with it briefly.

[72]

Senior counsel for the first defender submitted that where a court was being asked to

conclude that something inherently improbable had occurred, cogent and compelling

evidence was required. Hearsay evidence, although competent, should not be accorded any

weight. The best evidence rule required direct evidence. Although the Inner House, in

Scottish Ministers v Stirton 2014 SC 218 had said that the quality of evidence required would

depend on the circumstances of the case, this overlooked certain passages in the speeches of

Lord Hoffman and Baroness Hale in In Re B [2009] 1 AC 11 to the effect that inherent

improbability should be the starting point.

[73]

In Stirton, which is binding on me, Lord Justice Clerk Carloway (as he then was), in

delivering the court's opinion, said at [117] and [118] that where the alleged facts are

inherently improbable it may be more difficult to prove they are more probable than not,

but proof of unlawful conduct does not fall into any special category and there is no

presumption that serious crime is inherently improbable. Accordingly, even apart from the

sweeties emails, I would not have taken as a starting point that bribery was inherently

improbable or that the approach to deciding whether it had probably occurred or not should

be approached differently from any other essential fact which must be proved.

[74]

That is sufficient to sweep away the bulk of the first defender's submissions on this

point. To the extent that the first defender argued, at least in its written submissions, that

the best evidence rule required a certain type of evidence, or precluded reliance on hearsay,

that was, with respect, misconceived although senior counsel for the first defender modified

that position in oral argument by submitting that it was simply a matter of weight. As the

Dean of Faculty submitted for the pursuer, the best evidence rule is merely an exclusionary

one, which in some circumstances precludes the admission of evidence which is not the best

evidence (such as oral testimony about a written contract which is known to exist), although

even that has been weakened by section 2 of the Civil Evidence (Scotland) Act 1988, which

rendered hearsay evidence admissible. Since no objection has been taken to the

admissibility of any of the evidence relied upon by the pursuer, it is available for the court

to consider. The best evidence rule is not a rule which literally requires a party to lead the

"best" evidence before a particular fact can be held to be proved.

[75]

While I accept that hearsay evidence must be treated with caution, I do not accept

that no weight whatsoever falls to be attached to it. Where some parts of a hearsay

statement, particularly one against interest, are corroborated by other evidence (which is the

case here, in relation to the hearsay evidence of what Mr O'Hare said), it is more likely that

other parts of the statement are also true. I accept that the hearsay statements are available

as adminicles of evidence. I exclude from this the evidence of DS Porter about what

Janna Galbraith (or more accurately, a person claiming to be Mr Galbraith's daughter) told

him about bank notes, to which I attach no weight. If the pursuer had wished to rely on that

evidence, relating to a fact of which there is no other evidence whatsoever, it ought to have

called Ms Galbraith to give evidence: cf Davies v McGuire 1995 SLT 755, Lord Gill at 757D.

[76]

Perhaps more fundamentally, I do not accept the inherent assumption in the first

defender's submission that direct evidence is "better" than indirect evidence. The standard

written directions to juries in criminal trials include a direction that:

"where circumstantial evidence is based on accurate observation, it can be powerful

in its effect. Individually each fact may establish very little but in combination they

may justify the conclusion that the accused committed the crime charged".

Substituting "accurate observation" with "contemporaneous documentation", that applies

with equal or greater force to the present case. It has long been recognised that evidence of

contemporaneous documentation is a better means of getting at the truth than oral

testimony: see, for example, Simetra Global Assets Ltd v Ikon Finance Ltd [2019] 4 WLR 112,

Males LJ at paragraphs 48 and 49, where he referred not only to documents passing between

the parties but "internal documents including emails [which] tend to be the documents

where a witness's guard is down and their true thoughts are plain to see". As he went on to

add, such documents are generally regarded as far more reliable than oral evidence of

witnesses, far less their demeanour. In the present case, the emails between David and

Graeme Irvine were internal documents, and the same can be said of those between

Mr Galbraith and the Irvines, and between David Irvine and Tom O'Hare, in the sense that

none of these were ever intended to see the light of day insofar as third parties (the pursuer)

were concerned. Quite what the evidence of Mr Galbraith, either Irvine or Mr O'Hare

would have added to the pursuer's case, or what might have been added by the "turn of

their eyelids" (cf Clarke v Edinburgh and District Tramways Co Ltd 1919 SC (HL) 35, Lord Shaw

of Dunfermline at 37) is not immediately obvious.

Failure to call witnesses

[77]

That said, it may well be that if any of the "missing" witnesses had been called, one

of more of them might have been able to give exculpatory explanations for what otherwise

appears to be incriminatory. This leads on to the second point of controversy between the

parties which is who must bear the consequences of a failure to lead evidence from the

alleged wrongdoers. Each party asserts that a negative inference should be drawn against

the other, where neither called the witnesses in question.

[78]

Senior counsel for the first defender submitted that because it was caught in the

middle between the pursuer and second defender, and had n o first-hand knowledge of

whether bribes had been paid or not, common sense required the pursuer to call the alleged

wrong-doers. Had they been called there might have been an innocent explanation for what

might otherwise have appeared suspicious. It would be unfair on the wrong-doers to find

that they had committed a fraud when they had not had the opportunity of being heard.

[79]

These arguments can be disposed of swiftly. As I have explained above in

paragraphs [74] to [76] there is no requirement on a pursuer to lead direct evidence. If it

chooses to peril its case on circumstantial evidence, it may do so. If the facts proved give

rise to a presumption that the facts necessary for success exist, the evidential burden of

proof will shift to the defender, who must either lead evidence to rebut the presumption

against him or fail in the action or issue of fact in question: Walker and Walker, The Law of

Evidence in Scotland (fifth ed), paragraph 2.6.1. There is no suggestion in that passage, or in

any of the other authorities to which I was referred, that a pursuer must adduce evidence

from the alleged wrong-doer, whether to bolster its case, or to prove that there is no

exculpatory explanation. Such a requirement would run contrary to the very essence of an

adversarial system, and there is no such practice (cf historical sexual abuse cases, in which it

would be repugnant if the pursuer were obliged to call his or her abuser). It follows that no

adverse inference falls to be drawn against a pursuer who does not call an alleged wrong-

doer as a witness. Depending on the facts of the case, it may be that the pursuer runs the

risk of leading insufficient evidence to discharge the evidential burden, but that is a separate

issue (cf Efobi v Royal Mail Group Ltd [2021] 1 WLR 3863, a racial discrimination claim, where

the burden of proof was held not to have shifted to the employer, and so the question of

which party bore the consequence of not calling the decision -maker did not arise for

determination. If the burden of proof had shifted, the employer might have been placed in a

position of difficulty: Lord Leggatt, paragraph 47). For completeness, it is nothing to the

point that the witnesses at one time featured on the pursuer's witness list, or that somewhat

anodyne summaries were given of what they might speak to. That did not amount to an

assurance that they would be called and no unfairness arose in this case in any event,

because the first defender was given notice before the proof that the pursu er no longer

intended to call the witnesses. Equally, nothing turns on the first defender's decision to

release the third party from of the action after the pursuer's case had closed, which was a

tactical decision for it, and it alone, to take.

[80]

As for the suggestion that it is unfair to the witnesses to make any finding against

them that they were party to bribery, the simplest answer to that is to observe that no

finding I make in this action can be binding upon them in any future proceedings in which

they might be involved. That is sufficient to obviate any unfairness which might otherwise

have arisen. I have considered whether I should anonymise their details but since the

pursuer's case is that bribes, simply being a type of secret profits, were paid, not that there

was any criminality, I have decided that it is not necessary to do so.

[81]

A more difficult question is to what extent if at all should a negative inference be

drawn against the first defender because of its failure to lead evidence from the witnesses in

question. I was referred to case law to the effect that where a defender fails to lead

evidence, the court is at the very least entitled to draw inferences favourable to the pursuer

(O'Donnell v McKenzie 1967 SC (HL) 63 at 71, 73; Davidson v Duncan 1981 SC 83 at 89; Royal

Bank of Scotland Plc v Carlyle 2010 CSOH 3 at paragraph [36]). The precise extent and ambit

of any such rule was not explored in the cases cited, but where it applies the court is entitled

to draw positive inferences from a party's evidence, in favour of that party. When that is

understood, the rule appears to be simply another way of saying that a defender who fails

to discharge an evidential burden which has shifted to it is likely to fail.

[82]

A different question, which has been explored in English cases to which I was either

referred, or which are referred to in those cases, is the extent to which a negative inference

may be drawn against a party who fails to call a particular witness, which might then be

used to bolster the case against that party. It is unnecessary to refer to that line of authority

in any detail, but it is apparent that views vary as to whether this is a matter governed by

legal criteria or whether it is simply a matter of "ordinary rationality": see Efobi, above,

Lord Leggatt at paragraph 41. Either way, factors to be taken into account include the

availability of the witness, what relevant evidence it is reasonable to expect the witness

would have been able to give, what other evidence there is in the case, and the significance

of these points in the context of the case as a whole.

[83]

In the present case, the extent to which the witnesses were available to give evidence

is unclear. Apart from Mr Lagan, who was present within the court precincts, the witnesses

were proving difficult to cite. Where the witnesses were not under the first defender's

control, so to speak, (with the possible exception of Mr Galbraith, whom the first defender

might have been expected to ask whether he had received benefits, and if so, could they be

explained), and the first defender (without their co-operation) had no means of knowing

what evidence they would give, for which it cannot be blamed, I do not consider that this is

a situation where it would be fair on the first defender to draw an inference adverse to it,

due to its not having called the witnesses in question. However, it does not follow that I am

not entitled to draw positive inferences from the pursuer's evidence, standing the state of the

evidence, and I turn to that in the next section.

Conclusions on the evidence

[84]

The following facts lead to an inference that Mr Galbraith received benefits, and that

they influenced his award of the contract to the second defender:

The "sweeties" emails, which (in effect) mention bribes at the very outset of

the procurement process, and contain a reference to Paul Galbraith.

The Irvines' other communications, in particular the references to "P&C" and

"off the record", redolent of shady goings-on.

The payments passing from Mr Galbraith to the Irvines, confirming that there

was a link between the two, and the absence of a plausible legitimate

explanation therefor.

The highly irregular sharing of price sensitive information with Mr O'Hare

during the procurement process, all stemming from Mr Galbraith although

often conducted through the medium of the Irvines.

Of particular note, Mr Gilmour's email of 31 August 2013 sharing price

sensitive information with Mr O'Hare.

The whole timeline of the emails on 30 and 31 August 2013, described in

paragraphs [36] to [39], which read together found a clear inference that

Mr Galbraith was assisting the second defender with its bid, as shown, for

example, by the otherwise curious comment "Tom, without being

patronising, this is what I meant" in the email of 31 August 2013.

The selective nature of the information passed by Mr Galbraith to

Mr Stephen, and the half-truths told.

The fact that the second defender was awarded the contract.

The anonymous letter received by Mr Stephen, of limited weight in itself but

available as an adminicle of evidence.

Mr Stephen's hearsay evidence of what Mr O'Hare told him, another

adminicle, entitled to some weight given the support it derived from the

emails subsequently recovered.

The works undertaken on Mr Gilmour's sister's house, which provided the

clearest possible evidence that a bribe had been paid to the tune of £66,000

plus VAT in the shape of work by Apple on the instruction of the second

defender, paid for by the second defender, then re-invoiced to the Heartland

project on the instructions of someone at Lagan, so that it was charged to the

pursuer.

Senior counsel for the first defender submitted that these facts did not bear the conclusions

the court was being invited to draw. The hearsay evidence was not best evidence and was

of limited value. Mr Scott's evidence showed that the choice of the second defender as the

stage 2 contractor was a reasonable one. David Irvine was part of the interview team and,

as such, was entitled to receive information. The pursuit of Bowmore & Kirkland in 2014,

when Mr Galbraith was apparently losing patience with the second defender undermined

the pursuer's case it showed that Mr Galbraith was not at that stage favouring the second

defender.

[85]

While those are all legitimate points, the facts listed above, taken together, lead to a

strong inference not only that benefits were given to Mr Galbraith but that they induced him

to award the contract to the second defender. In the absence of any contradictory evidence

from the first defender which might have (for example) explained away the payments, or

otherwise displaced the natural inference which falls to be drawn, I am entitled to, and do,

conclude that that was precisely what happened. While I have held that proof of fraud is

not required, I also infer that Mr Galbraith did have the requisite mens rea for fraud, which

can be inferred from his whole actings, but in particular (a) the invoicing of the work done

on his sister's house and (b) the withholding of information from the pursuer, in the

knowledge that price-sensitive information was being shared with the second defender. In

that latter regard, as was said by Lord McNaughten in Gluckstein v Barnes [1900] AC 240

at 250-251, sometimes half a truth is no better than a downright falsehood.

Did the benefits given to Mr Galbraith amount to bribes?

[86]

While I have from time to time used the terms "bribe" and "bribery" in the foregoing

discussion of the evidence, it remains for me to consider whether the payments made

amounted, in law, to bribes, and if so, whether the first defender is to be held accountable

therefor.

[87]

The first of those questions need not detain us long. Although the first defender did

not, as I understand it, concede that the benefits said to have been given to Mr Galbraith, if

proved, were bribes, it is difficult to see how they could not be, since they fall within the

classic definition of bribery. Mr Galbraith owed a duty of trust and confidence to the

pursuer, being a fiduciary duty in the widest sense. He was in a position to affect the course

of business between the pursuer and the second defender. He was the very person

entrusted with ensuring a level playing field in the tender process, and the pursuer was

entitled to his disinterested loyalty, as a matter of extreme importance. He set himself up as

the gatekeeper between the pursuer and others, most notably EPPS. Mr Scott said that he

regarded the first defender as his client. All communications to the pursuer were to pass

through Mr Galbraith. Even if the payments and benefits given to him constituted a

reasonable fee for his efforts in assisting the second defender to win the tender (cf the

example given in Airbus above), they ought to have been disclosed to the pursuer, but were

not. At best for him, Mr Galbraith was placed in a situation where his own interests

conflicted with those of the pursuer. There is no question but that the cash payments, and

benefits in kind, to him amounted, in law, to secret profits or bribes.

[88]

Turning to the second question, whether the first defender is liable for

Mr Galbraith's actions in receiving bribes which induced him to award the contract to the

second defender, I heard submissions on the extent to which the first defender itself owed a

fiduciary duty to the pursuer. The first defender disputed that it did, arguing that it was

merely a project manager, not an agent. Insofar as it matters, I consider that it did owe a

fiduciary duty. The first defender was appointed as project manager by virtue of an

appointment agreement dated 28 July 2014. Clause 9.1 of the agreement conferred express

authority on the first defender (among other things) to make financial decisions in relation

to the project and to negotiate and execute the building contract. The services provided

were defined in Schedule Part 2 as including the provision of assistance and advice to the

pursuer on all elements of the project throughout its lifecycle. Although the procurement

phase had been substantially completed by the time the agreement was executed, clause 2.3

provided that the appointment was deemed to have commenced from the time the first

defender began to perform any services covered by the appointment. Thus, for the

purposes of the procurement exercise leading to the selection of the second defender as

contractor, it was an agent with power to bind the pursuer (as it did), and thus that it owed

a duty of loyalty.

[89]

However, the primary cause of action is not so much that the first defender breached

its fiduciary duty, but, more straightforwardly, that the contract was procured by bribery

(which as we have seen, is a cause of action in itself). The real issue is whether or not the

first defender is vicariously liable for Mr Galbraith's actions in accepting bribes.

Vicarious liability

[90]

Where a corporate entity is employed to provide services, it is possible that the bribe

will be taken by an employee without the knowledge and approval of its directors. A

company will nonetheless be vicariously liable for intentional wrong doing by one of its

employees if his wrongs were so closely connected with his employment that it would be

fair and just to hold the employers vicariously liable: Lister v Hesley Hall Ltd

[2002] 1 AC 215, Lord Steyn at [28] as applied by the Inner House in Wilson v Exel (UK) Ltd 2010

SLT 671 at [25]. The sufficiency of the connection may be gauged by asking whether the

wrongful actings can be seen as ways of carrying out the work which the employer had

authorised: Lister, Lord Clyde at [37]; Wilson, Lord Carloway at [27]. A broad approach

should be adopted, looking at the context of the act complained of, not just the act itself

(Wilson, [28]).

[91]

The facts of the present case are not dissimilar to those in Petrotrade Inc v Smith

[2000] Lloyds Rep 486, (which therefore pre-dated Lister and Wilson), where employees of the

defendant, who had authority to enter into port agency contracts on the defendant's behalf,

bribed an employee of the claimant to secure a port agency contract for the defendant. The

court held at [21] that the relevant contracts could be categorised as "the conclusion by

illegitimate means of a transaction that they were authorised to conclude by legitimate

means" and thus that the defendant was vicariously liable.

[92]

The present case, of course, involves the converse situation where the question is

whether the employer of the recipient of the bribe, rather than the person who made it,

should be held vicariously liable, but it is difficult to see why there should be a different

outcome. Mr Galbraith was authorised by the first defender to administer the procurement

process on behalf of the pursuer, the very service which the first defender was contractually

obliged to provide. Not only Mr Galbraith, but the first defender itself, owed a fiduciary

duty to the pursuer. In awarding the contract to the second defender, he was carrying out

work he was authorised to do, but in an unauthorised way. In all these circumstances,

Mr Galbraith's wrongful act was so closely connected with his employment that it is fair and

just to hold the first defender vicariously liable for payment of the bribes.

[93]

Finally, and for completeness, Petrotrade is authority, if any be needed, that even if

the controlling mind of the second defender did not instruct the bribes, it would be

vicariously liable for the actions of its employees in paying bribes to Mr Galbraith. For that

reason, it is unnecessary for me to make any finding as to which of its directors or

employees instructed or paid the bribes.

Conclusion and disposal

[94]

In summary, for all of the foregoing reasons, I have decided:

(i)

that Mr Galbraith received benefits from the second defender, in the form of

cash payments of unknown amounts and building services, which were not

disclosed to the pursuer;

(ii)

that Mr Galbraith owed a fiduciary duty to the pursuer and that the said

benefits therefore constituted bribes;

(iii)

that in any event, were it necessary to do so, the mens rea of fraud has been

proved on a balance of probabilities;

(iv)

that there is an irrebuttable presumption that the bribes induced the award of

the contract for the Heartlands project to the second defender;

(vi)

even in the absence of such a presumption, it has been proved on a balance of

probabilities that the bribes induced the contract;

(vii)

the first defender is vicariously liable to the pursuer for the loss caused (yet

to be established).

[95]

I have therefore sustained the pursuer's second plea-in-law and repelled the first

defender's third plea-in-law insofar as directed at the pursuer's first conclusion.

Postscript settlement, publication and anonymisation

[96]

The proof concluded on 6 July 2022. On 3 August 2022, parties were notified that my

opinion would be issued on the following day, and it was duly emailed to agents at 9am on

4 August 2022. At 8.57am that morning an email was received by the court stating that the

parties had reached an extra-judicial settlement. The email was received too late to prevent

the opinion from being issued (even if that would have been appropriate in relation to a

finalised opinion which had already been signed) since, apart from anything else, I was not

made aware of the settlement until some hours later. However, at the first defender's

request, I was able to delay publication of the opinion to afford some breathing space, and

to give parties the opportunity to address me on whether publication was appropriate and,

if so, to what extent, if any, the opinion should be anonymised.

[97]

Parties have now had that opportunity at a by order hearing fixed for that purpose.

In the first place, senior counsel confirmed that a settlement of the entire action had been

agreed. The terms of that settlement are confidential between the parties, but the settlement

was made without any admission of liability. As a result of the settlement, no judicial

determination of the parties' dispute is now required.

[98]

That said, given that the opinion had in fact been finalised and issued, senior counsel

for both parties agreed that it was appropriate that it should be published. Reference was

made to the English cases of Barclays Bank plc v Nylon Capital LLP [2012] Bus LR 542 and

Jabbar and another v Aviva Insurance UK Ltd [2022] 4 WLR 68. In broad terms, those cases

suggest that in circumstances akin to the present the relevant factors in deciding whether an

opinion should be published are (a) whether the opinion deals with a point of law of some

potential general interest; (b) whether it is in the public interest that some exposure of

wrongdoing or other activity (which need not amount to criminality) be exposed; (c) the

state of preparation of the opinion (which is of less weight than the other factors, but

nonetheless relevant); (d) the reasons for any desire to avoid a judgment; and (e) whether

the opinion is that of an appellate court or a court of first instance (which cuts both ways,

since an appellate court's judgment will be binding on other courts, but the justification for

publication may be stronger in the case of a court at first instance where the wrongdoing, if

such there be, will not yet have been the subject of any public judgment). Finally, Jabbar

makes clear that there is no need to show exceptional circumstances before publishing a

judgment after a case has settled.

[99]

Taking those factors into account in the present case, I agree with parties that

publication is appropriate. The case does raise a novel point of law on which this opinion, if

nothing else, may stimulate academic discussion; the case was litigated in public and does,

in the most general sense, expose wrongdoing (short of criminality); neither party wishes to

stop publication; and, quantum valeat, the opinion had already been completed before the

settlement was reached.

[100]

The sole contentious issue is whether or not I should anonymise the opinion by

referring to the first defender only by an initial, which is the extent of anonymisation sought

by it. The pursuer does not consent to any anonymisation. In this regard the Dean of

Faculty referred to the requirement for open justice, described by the Inner House in BBC v

Chair of the Scottish Child Abuse Inquiry 2022 SLT 385 at [44] as "a cornerstone of the legal

system". The Dean also referred to the leading modern authority on anonymisation in

Scotland, MH v Mental Health Tribunal 2019 SC 432, and to Lord Rodger's question in Re

Guardian News [2010] 2 AC 697 at paragraph 63: "What's in a name? `A lot', the press

would answer."

[101]

At the outset, it must be understood that there is no question of the court making, or

being asked to make, any form of anonymity order, or an order preventing publication of

the first defender's name. The proof was conducted in public and to that extent the name is

already in the public domain. There is no restriction on publication of any detail about the

case. Thus the issue here is different from that which was before the court in MH, where an

anonymity order was sought. The distinction between an anonymity order, and simple

anonymisation of a judgment is clear from MH at [21] where it is stated that the court has

the power at common law to withhold information, including the names of parties, from

opinions which are published in hard copy or on the internet but that this power cannot

operate as a means of press censorship.

[102]

That said, open justice requires that in general the parties' names should be

published, unless there is a good reason for anonymisation. In considering whether there is

a good reason, I accept the submission of senior counsel for the first defender that there are

three factors underlying the requirement for open justice. First, it ensures that the court is

open to scrutiny; second, it is important that wrongdoing where it exists is uncovered, and

third, the media should be able to name names where that is important. I also accept that

where, as here, a party wishes to preserve its anonymity, the court must carry out a

balancing exercise. In that regard, it is highly relevant in the present case that the court is no

longer required to judicially determine the dispute between the parties, settlement having

been reached. It is difficult to see that the public interest demands publication of the first

defender's name in an opinion on the internet when there would have been no publication

of any sort had settlement been reached earlier. Putting that another way, there is less need

for public scrutiny of the court where the opinion issued is, by that time, merely of academic

interest. It is also highly relevant that the first defender itself is not a wrongdoer. There is

no need to name it for the public to understand the events in question, and who did what .

The public interest is met by the publication of all other details in the case.

[103]

Drawing all of this together, I accept that the first defender has a legitimate interest

in not having its name forever associated with a case in which bribery has been found to be

established. I do not consider that the principle of open justice is compromised in any way

by referring to the first defender only by an initial, and I have therefore anonymised this

opinion to that very limited extent.

Scottish Court of Session Decisions