King Alfred's College in Winchester has won a legal action against Southampton City Council over unpaid accommodation bills for the Millennium Youth Games.
The higher education college sued the council after it failed to pay £22,280 towards the housing of 500 athletes in Winchester in August 2000.
College bosses said it had a binding contract with the city council.
The council denied liability, claiming that the college's contract was with a London company, LEA Sports and Leisure Ltd, that it had contracted to run the event in which nearly 7,700 children took part.
LEA Sports went out of business soon after the games in August 2000.
Judge Anthony Thompson QC, sitting at Winchester Law Courts, ordered the council to pay £22,281, interest of £4,010 and costs of about £14,000.
The judge said it was strange that the council had entered into a contract with a "worthless" company, recently formed and with no trading history. He said the college had not been made sufficiently aware that it was signing a contract with LEA Sports and not with the council.
College vice-principal Tommy Geddes said: "We thought long and hard about whether we would take the risky and costly route of legal action. But we weren't prepared to accept the council's acting with impunity when it takes on fly-by-night companies that go bust after acting on its behalf."
A council spokesman called the judgment "disappointing and unfair".