Aldous, inside the Duke's Demesne, has received some disturbing news. Watch the cutscene, after which the quest starts:

Honor and Treachery
Travel to the Waycastle

Objective
A messenger has come to Aldous bearing grim news, you must make for the mountain waycastle at once

Details
Make for the Mountain Waycastle to learn the nature of the crisis from the men there.

Exit Gran Soren, and head southwest towards the Mountain Waycastle. After crossing the Canyon, when you reach the bridge, you get intercepted by Ser Ravenn. He tells you that you have new orders, you are return to the capital immediately. A cutscene shows that Gran Soren is on fire. Turns out the messenger's urgent summons was a ruse. Go back to the capital, using a ferrystone if you have one.

The capital is under attack by a Cockatrice. Go to the Craftsman's Quarter. You need to slay the rampaging cockatrice while safeguarding the duke's tribute  (you cannot leave till the monster has been dealt with)

Defeat the Cockatrice. Aim at his head. Also you can try climbing on to it and striking it from on top. There is a chance that you or your pawns might get petrified. Using Cockatrice Liquor can cure the petrification status of the entire party.

Once you have defeated the Cockatrice. go back and report to Aldous.

You learn that the Cockatrice was revived inside the city by an agent of Salvation. Aldous thanks you for rescuing the city, and you get experience proportionate to how well you contained the Cockatrice's damage. This completes the quest, Honor and Treachery.