Eversheds will be forced to defend a professional negligence claim from Newcastle International Airport (NIA) in the Court of Appeal (CoA) after NIA was given the green light to take the case to the appellate court.
The High Court threw out the claim in October, rejecting allegations 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 (2 October 2012).
At a subsequent costs hearing NIA was ordered to pay £500,000 of Eversheds’ legal costs into a holding account pending the outcome of a possible appeal (29 October 2012).
The council could be held liable for all Eversheds’ legal costs, which could run to more than £1m should the appeal fail.
The case has been floated for an outing at the CoA in June (17 June).
The case concerns advice given to Parkin and Friis on a refinancing deal by NIA with RBS. The two former executive directors at the airport, which is part-owned by seven local authorities, were 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.
In her October judgment against NIA, Mrs Justice Proudman ruled that “Eversheds acted in good faith on the basis of the instructions which it was entitled to accept”.
At the High Court Eversheds turned to Clyde & Co professional indemnity chief Sarah Clover to defend the case. She instructed 4 New Square’s Ben Patten QC.
Ward Hadaway partner Tim Toomey instructed 4 New Square’s Nicholas Davidson QC for the airport.