As OnTheWight has previously reported, in November 2013, after being told not to make any further payments to Pihl (the contractor for Cowes Enterprise College who had filed for bankruptcy in August that year), a member of staff at Isle of Wight council paid £517,878 to Pihl’s bank account.
Making a payment in error after a company has gone into administration is not an easy mistake to rectify, however, the cash-strapped council sought to reclaim the payment from the administrator through the courts (see background).
Latest court ruling
Alan Limb (a Licenced Insolvency Practitioner from BRI Business Recovery and Insolvency who lives and works on the Island) has kindly pointed OnTheWight in the direction of the latest episode in the saga.
The latest administrator’s progress report, reveals that on 7th October 2015, the court found in favour of the administrator retaining £120,000 of monies paid, with £305,422 being returned to the Isle of Wight council.
Two years after the payment was made in error, the council will now see around 60% of the money paid in error minus legal fees (and of course officer time).
OnTheWight understands that the money, now returned, can only be used to pay for works at Cowes Enterprise College, as it would have come from the original Government grant to build the £32m school.
Of course, we must not forget that when Pihl went bankrupt, they left behind an incompleted contract and unfinished school, which the Isle of Wight council has to find the cash to complete.
When court proceedings commenced, the administrator claimed that at date of administration, the Isle of Wight council owed Pihl a total of £577,997. This broke down to £425,422 on retention and £152,575 contract monies.
And so, because there were catalogue of items the council were unhappy with on the Cowes Enterprise project, the use of officer time and legal fees to recover the money started.
First court decision
In April 2015, the court found in favour of the administrators for contract monies.
This meant the council would not see £152,575 of the money paid in error returned to them.
The IWC continued to fight to reclaim the remaining figure, with the latest ruling being the outcome.
OnTheWight will be seeking detail of legal costs and officer time.
Image: © TaxRebate.org.uk