Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience.
You refer to erroneous information from your managing agent leading to the release of £30K too much. Could you clarify who made the error and briefly what the error(s) was please?
For the avoidance of doubt, do I understand correctly that the contractor accepts that £30K too much has been paid and the contract value was only £300K (using your rounded numbers)?
Is the contractor financially solvent to your knowledge?
I appreciate we are using round numbers here but do I understand correctly that they have £30K too much but are owed £9K as the final stage payment following completion of snagging? In other words assuming the full final stage were to be released to them the net amount of £21K is due back to the company?
Finally I assume you have a formal JCT or similar contract in place which provides for a retention subject to snagging and under the terms of that contract the final retention is not yet due because the snagging has not been completed and the RTM company is not overdue in respect of the timescale provided for snagging - i.e. you are not delaying snagging?
Thanks - could you lastly just confirm the position regarding the JCT or similar contract above?
thank you. Based on what you say, this is a relatively simple matter whereby the contractor has been overpaid and therefore they have no option but to refund the money without delay; the only frustrating factor to the otherwise above simple position is that of the contractor attempting to use the return of the above monies as leverage in rspect of its obligations under the contract.
on the basis you have a formal JCT agreement however this makes things simpler. JCT agreements as you will likely be aware provide for a formal structure to the building payment process whereby the contractor is only entitled to payments in certain stages once each stage is complete and not before.
based on what you say, if slagging has not yet been completed and the RTM company is not overdue in its obligations under snagging, then no snagging payment is due at this stage and the contractor is not entitled to leverage payment using funds it has incorrectly received nor is it entitled to hold a lien over that incorrectly received money
it seems to me there are two ways in which you can proceed from here. The first is to insist that the provisions of the contract are complied with precisely whereby no final payment is yet due, and monies transferred incorrectly to the contractor must be repaid immediately and snagging and the final payment will be dealt with in the usual way failing which the RTM company reserves its right to charge interest and issue a statutory demand for the money and/or court proceedings.
the alternative approach is what might be considered at least by the contractor if not the RTM company a more practical approach is that you could require the return of the money less the final retention immediately with snagging being dealt with in the usual way. this however may not be practical from your point of view because the contractor may be less keen to ensure that any final matters are dealt with as efficiently as they may be if they had not yet been paid so there is no reason to agree to this approach
finally, if you can identify negligence and the part of one of your advisers, there is also potential claim for negligence against that party by the company. This is probably not overly useful in practice but may be so if you are not able to recover monies or costs from the contractor in recovering monies
if the contractor is solvent and wishes to remain so, a simple approach might be to serve a statutory demand on the company which is a formal demand requiring them to pay what is owed within 18 days of receipt or face the possibility of a winding up order. Such a notice requires them to formally apply to set the notice aside in court within 18 days of receipt or they will be vulnerable to an application for a winding up order
Your solicitor could assist with this if needed though it is very straightforward and there is no cost other than that you must send it using a recorded or special delivery.
This is the form you need assuming the contractor is also a limited company:https://www.gov.uk/government/publications/statutory-demand-insolvency-form-41
Does the above answer all your questions or is there anything I can clarify or help you with any further?
I am finally at home so easier to respond now. Much appreciate your detailed response. It certainly answers my query and I am going to discuss this with the rest of the directors. I will rate this now. One final little question if possible - am happy to raise a new question if you suggest. In the period between the RTM requesting our property management initiate this action (assuming we do not do it directly from the RTM), as the property management sent their client funds (the RTM's) based on the erroneous information
can we ask/expect the management company to immediately reimburse the funds whilst the action is taken? As they are responsible for the bank account etc ?