Newcastle Airport has lost its High Court battle with a law firm over multi-million pound bonuses paid to former executives.
The airport attempted to claim nearly £5m from Eversheds, the lawyers who advised the airport committee on a £377m mortgage deal with the Royal Bank of Scotland in 2006.
The airport, which is part-owned by the region’s seven councils, alleged that Eversheds allowed former chief executive John Parkin and former finance director Lars Friis to be paid £8.5m between them simply for organising the refinancing deal.
Newcastle Airport argued that the law firm was in breach of its duty when it accepted the huge bonuses for the directors.
But a High Court Judge ruled in favour of Eversheds, claiming the remuneration committee responsible for approving the deal “failed”.
The committee was made up of board chairman Rosemary Radcliffe, Iain Malcolm, now leader of South Tyneside Council, local councillor Norman Ross, who has since died, and foreign businessmen Kjeld Binger and Niels Boserup.
In the judgment Mrs Justice Prodman said: "The real reason that Newcastle International Airport Ltd suffered loss was because its non-executive directors failed to carry out their obligations. The claim therefore fails."
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Mr Parkin, now chief executive of Leeds Bradford Airport, received 2 percent of the loan amount and Mr Friis received 1 percent.
A spokesman for Newcastle Airport said: "Newcastle International Airport Ltd respects, but is disappointed with today’s High Court judgement in its claim against Eversheds LLP relating to dealings with NIAL's former executive management in late 2005/early 2006.
"We will now enter into discussions with our legal advisors and consider whether or not we will lodge an appeal.
"Consequential orders, such as costs, have yet to be determined and may well be the subject of a number of further court hearings."
A spokeswoman for Eversheds 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."
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