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Newcastle International Airport Ltd v Eversheds LLP [2012] EWHC 2648 (Ch) 2/10/12


In the context of amending service contracts, solicitors were instructed on behalf of the remuneration committee by one of the directors whose service contract was among those being amended to include a bonus provision in the event of a successful refinancing of the company. The company then alleged that because the solicitors knew of the company's remuneration committee and its function and the conflicting interest of the director and the company as to the terms of their contracts, it should have established direct contact with the remuneration committee rather than accepted instructions from the director. On the facts the remuneration committee through its chairman had held out the director as being authorised to give instructions and given him apparent authority. Given it appeared to be common practice for remuneration committees to instruct solicitors through their executive directors the solicitors were entitled to assume that the remuneration committee had been properly briefed, it had followed the proper procedures for fixing the director's remuneration and exercised due care and diligence and that the chair or company secretary had ensured that all members were aware of their obligations to the company. There was no duty to advise the company directly of the effect of the changes to the contract as advice to the director was sufficient. As it was the drafts had been sent to the head of the remuneration committee for approval and signature.