Tyne & Wear

Newcastle Airport to pay Eversheds legal dispute costs

Newcastle International Airport Ltd
Image caption Newcastle International Airport is part-owned by seven local authorities

Newcastle International Airport Ltd has been ordered to pay the legal costs of its dispute against a law firm.

It accused Eversheds of failure in duty after two former airport directors were allowed to negotiate £8m in bonuses.

The airport lost its initial case but after an appeal it was ruled Eversheds had failed to explain contract changes. Nominal damages of £2 were awarded.

The legal costs of both sides, estimated at millions of pounds, must now be paid by the airport.

A spokeswoman for the law firm said: "Eversheds has been awarded costs for both the first trial and the appeal."

Newcastle Airport, which is partly owned by local authorities, said taxpayers would not bear the burden of costs, as it had taken out an insurance policy.

It sued Eversheds in relation to contracts entered into with former chief executive John Parkin and former finance director Lars Friis in 2006.

Mr Parkin and Mr Friis, who has since died, were paid £8m between them after securing an airport refinancing deal.

'User-friendly language'

In October 2012, a High Court judge dismissed a claim for damages for alleged negligence against the solicitors.

However, in June, Court of Appeal judges ruled in the airport's favour on one point relating to the summary memorandum.

They said "part of Eversheds' duty" had been to ensure finished drafts given to the airport's chairwoman were accompanied by a "memorandum explaining, in user-friendly language", changes to original contracts.

The ruling in 2012 had said that even if that had led to the chairwoman "picking up the position", contracts would still have been signed containing the same bonus entitlements.

Considering that ruling, appeal judges said the original judge had not been wrong to reach that conclusion.

Following the postponed decision on costs, Newcastle Airport said in a statement it was "disappointed at this outcome", but it put in place "legal expenses insurance, designed to ensure there will be no call upon company finances, or the public purse, as a result of these proceedings".

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