A High Court dispute between Queen Mary, University of London, and the Higher Education Funding Council for England has ended with both parties claiming victory.
Queen Mary went to the High Court to challenge a decision by Hefce to take back tens of thousands of pounds it said that it had wrongly paid the university.
A judicial review has now quashed Hefce's move to recover the research cash. The court ruled that the wrong person at Hefce had made the decision to reclaim the money, but it did not say the decision itself had been wrong or unreasonable.
Hefce wanted to claw back up to £852,000 it had awarded to Queen Mary in 2006-07 for medical research because, in its view, the university had breached a condition of the grant. Hefce awards research money in proportion to income universities have raised from charities, but only if the charity funding is won in "open competition".
When applying for the grant, Queen Mary included in its total charitable research income £3.8 million from St Bartholomew's and the Royal London Charitable Foundation. The foundation makes awards to three organisations only - Queen Mary, St Bartholomew's School of Nursing at City University and a National Health Service trust - and its research advisory panel consists solely of people from the institutions.
When Hefce became aware of the circumstances of the £3.8 million grant it argued that as the cash was available only to the three bodies, it had not been won in "open competition". It suggested it would make adjustments to the university's future funding to take account of this.
The university argued that it fulfilled Hefce's own definition of open competition - that the grant was "open to competitive bids from more than one institution".
But the High Court agreed with Hefce that the foundation's grant-awarding processes did not count as open competition.
Queen Mary also argued that the decision was invalid because it had not been made by Hefce's chief executive, the only person authorised to make it. The court agreed on this point and remitted the decision to the chief executive for reconsideration.
Queen Mary said: "We are pleased that the Hefce decision has been quashed on the grounds that it did not follow its own decision-making processes correctly and that the matter has been referred back to Hefce to reconsider."
Hefce said: "We are pleased to have won this case. The High Court has approved Hefce's processes, and confirmed that it is for Hefce and not the Court to determine if our terms and conditions have been complied with. We will now consider whether and how, as a matter of our discretion, to recover overpayment."
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