(1) Flannery (5+ hearts, 4+ spades, 11-15 pts)
(2) Explained when asked later in the auction as "takeout"
(3) Explained when asked later in the auction as "2+ hearts, no interest in higher things"
(Calls 1-3 were all alerted.)
During the auction NS asked further questions about the first double. North wanted to know what East would do with a good diamond suit, and West said "bid diamonds, I suppose".
NS are both very experienced players, but are a new partnership. EW are certainly not novices, and seem to be an experienced partnership. They don't play Flannery, but they are familiar with the convention (which is very uncommon in England).
West led ♦3 to the king; East returned a club to the ace in dummy; ♥Q was run to the ace; West now led ♠8.
South went up with dummy's ace, expecting East to have ♠K1074 for his takeout double, trying to avoid a two-trick defeat, and so went one off when he could have made the contract. When it turned out that West had the spades, he called the director, claiming to have been misled by the explanation.
How should the TD rule?

Help

..P..2♦(1).X(2).2♥(3)
.3♦...4♥....5♦....P
..P....5♥.....P.....P
..X....P......P.....P