NEWCASTLE Airport's six-year legal battle to prove a law firm was responsible for £8.5m in bonuses claimed by two executives has ended with the international hub being awarded just £2 in damages.

The Court of Appeal found that Eversheds LLP had breached its duty of care by not providing explanatory notes to the airport's remuneration committee on the impact of bonus deals negotiated by John Parkin and Lars Friis.

However, judges ruled that committee chairwoman Rosemary Radcliffe would probably not have read or understood the documents even if it had.

Consequently, the law firm was ordered to pay nominal damages of only £2.

Newcastle International Airport Ltd (NIAL), which is majority owned by seven local authorities including Durham County Council, had appealed a High Court ruling made last year that found Eversheds was not to blame for chief executive Mr Parkin and finance director Lars Friis walking away with multi-million pound bonuses.

Lord Justice Rimer ruled on Thursday that the law firm had breached its retainer by failing to provide any explanatory memorandum to Ms Radcliffe.

But he agreed with the High Court that the error would not have caused the airport to incur substantial losses because of Ms Radcliffe's practice of not reading documents or misunderstanding their contents.

The judge said Ms Radcliffe's failure to read an important document from another company “almost defied belief”, adding: “She chose not to read the most material part, preferring instead to make an unjustified assumption as to what it said. That was carelessness of an unusual degree.

“In other cases, even when she did read documents, she misunderstood them.”

Commenting on the ruling, Newcastle Airport said it had vindicated its view that Eversheds LLP was negligent in respect of its advice given in 2006.

It added: “NIAL has a new management team in place that is working successfully with both its local authority and new AMP Capital shareholders to deliver new air routes, significant capital investment and an award winning regional airport for the North-East.”

Further hearings will now take place to decide who pays the huge legal costs from the case, although the airport confirmed that the costs would be covered by insurance if it lost.

Eversheds said it was pleased that the Court of Appeal had upheld the earlier decision in the firm's favour that airport executives had authority to instruct the company.

It added in a statement: “The court found that although Eversheds had been entitled to accept instructions from the executives, they should have provided an explanatory memorandum to NIAL’s remuneration committee.

“As a result, the firm has been ordered to pay nominal damages of £2. However, the Court of Appeal accepted the earlier finding that the lay chair of the remuneration committee would not have paid attention to a memorandum.”

During his five years in charge from 2002, Mr Parkin presided over the rapid expansion of the airport.

He and Mr Friis, who has since died, shared £8.5m in bonuses arising out of a £377m refinancing deal in which a 49 per cent stake in the airport was sold to Copenhagen Airports.

However, he was suspended in March 2007 during an internal investigation into "personal contractual issues", which led to legal action to recover the cash.

Mr Parkin quit the airport to take over the reins at Leeds-Bradford Airport.

After an out-of-court settlement in 2009, the payout was reduced to £3.8m, with more than £2m going to Mr Parkin and the rest to the estate of Mr Friis.