Two clarifications.

1) by Port boat, I mean P was on "Port Tack" ie....with the boom and sails out to the starboard side of the boat and the wind coming from the port side of the boat.

2) P was not quite on the layline, and could have tacked, but initially did not feel that to be neccessary as P felt he could bear away fast enough. Also important to point out that even after S bore away, causing P to steer back up to go above, had S maintained that new course, all would have been clear and P would have avoided by going above (the safer position all the way around).