Once the task triggers, a messenger will be present in the Great Hall, to the left of the Steward. The messenger will inform you that you have been summoned to the Ducal Palace in the First Fires district. The reason is that Lord Gathbin disputes your lordship over the stronghold on the basis that you did not inherit by noble birthright. The dispute will be mediated by Erl Bodemer of the Grasp.
Next, you must speak to Chancellor Warrin and Marshal Forwyn, who are at #8 on the Ducal Palace. You can begin the conversation with Aggressive, Diplomatic or Rational replies.
Lord Gathbin, and his Elven bodyguard, will arrive once you no longer have any questions and will assert his ancestral claim to Caed Nua. You can make a Clever reply along the way. The Erl ultimately rules that Lord Gathbin can take back Caed Nua, but only if he pays you compensation first. He will refuse, whereupon you can choose Aggressive, Stoic or Passionate responses. He ultimately leaves, and Caed Nua will remain yours.
Once he leaves, you can either pay Lord Gathbin 1,000gp for Benevolent disposition, threaten him and his servants to stay off your land to earn Cruel disposition, or invite him to a formal dinner to earn Clever disposition.
The rewards for the task include an xp bonus, plus a Soulbound scepter called Gyrd Haewanes Stenes.
Completion of the task also leads to the quest called A Return to Court.
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"*Your WILL is strong. But you lack DISCIPLINE. Your WILL is YOUR will, not the will of LAW. There is nothing I may show you that you would SEE or UNDERSTAND.*" -Vhailor, Planescape: Torment