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The dispute centres around the claim that contractor MJ Gleeson was overpaid by more than £8m on the £35m development, which was the largest project to be built in Sheffield for 10 years when it was completed in 2004.

MJ Gleeson was employed by Devonshire to work on the design and build of apartments, retail and leisure works. It was Capita’s duty to ensure interim payments were carried out correctly, according to the High Court writ.

But Devonshire claims Capita negligently failed to comply with the payment procedure specified in the contract.

The dispute began after the price Gleeson charged jumped from £43.6m to about £52m by the time it finished. Devonshire challenged the extra £8.4m, claiming it was entitled to an £8.3m rebate from Gleeson. In 2006 it launched court proceedings.

The case settled in May 2008 when Devonshire accepted £6m plus costs from Gleeson.

Now Devonshire says Capita was in breach of contract by failing correctly to operate the payment system, despite the developer issuing it a letter as a reminder. It says it was forced to apply for a series of bank loans to finance payment for the project and overpayments to Gleeson.

Devonshire is claiming more than £7.5m, including £2.6m for bank finance costs, almost £900,000 in legal costs, £340,000 in wasted management and time costs and £1.8m for failing to settle its final account with Gleeson more favourably.

Capita Symonds declined to comment and Devonshire was unavailable.