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Eversheds has defeated a High Court negligence claim brought against it by Newcastle International Airport.
Mrs Justice Proudman ruled today that “Eversheds acted in good faith on the basis of the instructions which it was entitled to accept”.
The firm had instructed Clyde & Co partner Sarah Clover to defend the claims. She brought in 4 New Square’s Ben Patten QC.
Patten faced setmate Nicholas Davidson QC, who was instructed by Ward Hadaway partner Tim Toomey for the airport.
It had alleged that Eversheds had been in breach of its duty to the airport when it accepted instructions from former airport chief executive John Parkin and former finance director Lars Friis, who has since died.
The firm had advised the pair on a refinancing deal by Newcastle International Airport with Royal Bank of Scotland (RBS). Two former executive directors at the airport, which is part-owned by seven local authorities, are alleged to have received multi-million pound bonuses for securing a £377m mortgage as part of the deal with RBS.
The airport had contended that as its instructed firm Eversheds was aware that its executive directors held interests distinct from the airport and that those interests conflicted with it because they were aiming to get the best possible terms in new employment contracts.
It was alleged, therefore, that when the firm was amending executives’ employment contracts the firm should have first contacted the independent remuneration committee to ensure that the instruction was correct.
Proudman J said that remuneration committee chair Rosemary Radcliffe was made aware of the changes but that she had not bothered to read the material properly. The judge stated: “Miss Radcliffe did not bother with the minutiae; she concerned herself only with the broader picture.
“In the course of oral evidence she used the expression of ‘legalease’ in a contemptuous and dismissive manner on countless occasions […] If she read the documents at all she only skim read them […] She seemed to think it was not her job to read any documents which could be categorised as legal documents.”
The judge added that as Radcliffe had not noticed anything unusual about the contracts Newcastle Airport had broken the chain of causation.
“I therefore agree that the loss which undoubtedly sustained arose not out of any breach of duty by Evershes but as a result of failings on the part of others for whom NIAL [Newcastle international Airport Ltd] is responsible,” the judge concluded.
An Eversheds spokesman said: ““The judgment clearly states that Eversheds acted in good faith on the basis of instructions which it was entitled to accept. Furthermore it adds that the real reason Newcastle Airport suffered loss was because its non-executive directors failed to carry out their obligations to the company.
“All of our lawyers are trained to and do deliver work of the highest quality. We hope that this now concludes this matter.”