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The council has set up a 拢500,000 warchest to fund a legal battle with T&T.

The consultancy advised on the Visual Arts Facility, which will be 拢10m over budget and three years late when it is completed next year.

The local authority has yet to lodge a claim, but needed to agree a warchest to get the legal process under way before the statutory time limit expired.

Ian Vipond, executive director of Colchester, said: 鈥淭he council has acted on [my] recommendation to protect the potential to recover substantial public funds, which it considers should not have to have been expended if the local authority had been advised correctly.鈥�

There are significant prospects of recovery of substantial sums

Ian Vipond, Colchester Council

In a report to the council, Vipond wrote: 鈥淭he advice obtained [is] that there are significant prospects for the recovery of substantial sums from T&T which has 鈥� professional indemnity insurance.鈥�

The council did not make the claim earlier because it was using T&T as an adviser during its legal battle with the gallery鈥檚 original contractor, Banner Holdings.

Although the local authority won the case, and would normally have been awarded costs, it had to pay the 拢500,000 legal fees itself because Banner went into administration in June.

The firm鈥檚 directors blamed the Colchester project for its demise, and Banner still owes large amounts to legal firms.

Mace has been brought in to complete the gallery, but the project still has problems.

Last week fitted plasterboard had to be removed because it became water-damaged when the building was left exposed during the council鈥檚 dispute with Banner.