Bosses win bonus fight - and get £2

two pounds

Airport chiefs have won a fight with a law firm they had sued for ''alleged negligence'' following a row over multimillion-pound bonuses - and were awarded £2 damages.

The Court of Appeal ruled that solicitors Eversheds should have provided a "memorandum" explaining a summary of changes to contracts given to a chief executive and a finance director.%VIRTUAL-SkimlinksPromo%
But appeal judges questioned whether damage was done to Newcastle International Airport Ltd - the company which runs the airport - and said Eversheds should pay "nominal" compensation.

They said no decisions had yet been made on who should pay the costs of the litigation, first aired in the High Court.

In October last year, a High Court judge ruled against Newcastle International Airport and dismissed a claim for damages for alleged negligence against Eversheds.

Airport bosses asked three appeal judges to overturn Mrs Justice Proudman's ruling at an appeal hearing in London in June.

Mrs Justice Proudman said directors of Newcastle International Airport had not properly understood that they had entered into contracts which allowed a chief executive and a finance boss to claim bonuses totalling £8 million seven years ago.

She said two local councillors on the board had no ''expertise'' in the running of airports. She said one ''nearly had a fit'' when he discovered the size of the bonuses.

Mrs Justice Proudman said non-executive directors had ''failed'' to carry out their obligations.

Airport chiefs had sued Eversheds in relation to contracts entered into with former chief executive John Parkin and former finance director Lars Friis, who is dead, in 2006. Eversheds had said lawyers acted in ''good faith on the basis of instructions''.

The judge said Newcastle International Airport Ltd was owned 51% by local authorities in the north east and 49% by CPH Newcastle Ltd - a subsidiary of a banking group.

And she said the airport had five non-executive directors at the ''material times'': board chairman Rosemary Radcliffe; Iain Malcolm, the deputy leader of South Tyneside Council; local councillor Norman Ross, who is dead; plus businessmen Kjeld Binger and Niels Boserup.

She said Miss Radcliffe had chaired a remuneration committee and the four men were members of the committee.

Mrs Justice Proudman said Miss Radcliffe, who resigned in 2007, had been cross-examined over three days during High Court hearings in London.

''Although she is an honest person, she plainly has what the defendant has rightly termed 'a blind spot of massive proportions' as to her role as chair of the remuneration committee and its significance,'' said the judge.

''An important part of that role was to ensure that new contractual provisions affecting executive directors were subject to independent scrutiny by the remuneration committee.''

The judge said Miss Radcliffe ''did not bother with minutiae'' only the ''broader picture''.

''In the course of her oral evidence she used the expression 'legalese' in a contemptuous and dismissive manner on countless occasions,'' said the judge.

''She seemed to think that it was not her job to read any documents which could be categorised as legal documents.''

And she said councillors Malcolm and Ross were experienced in local government but had not had expertise in the running of airports.

Airport chiefs argued that Mrs Justice Proudman had been wrong on "all issues".

But appeal judges ruled in their favour on one point relating to a "summary" memorandum.

They said "part of Eversheds' duty" had been to ensure finished drafts given to Miss Radcliffe were accompanied by a "memorandum explaining in user friendly language" changes to original contracts.

But Mrs Justice Proudman had said that even if that had led to Miss Radcliffe "picking up the position" contracts would still have been signed containing the same bonus entitlements.

And appeal judges said Mrs Justice Proudman had not been wrong to reach that conclusion.
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