A MULTI-MILLION pound legal wrangle between two councils may now go to the Court of Appeal.

The dispute between Durham County Council and Darlington Borough Council, over the fallout from local government reorganisation in 1997, ended yesterday at London's High Court.

A judge ruled that Durham should take responsibility for the contaminated former Creebeck landfill site which the two authorities had each sought to off-load.

But Darlington failed in its attempt to extract a £1m plus interest payment from County Hall.

The ruling may not mark the end of the bitter six-year struggle, with Darlington now considering whether to contest its loss in the Court of Appeal.

The county council failed in its argument that Darlington was responsible for the former waste disposal facility, which had a "substantial negative value" and could have clean-up costs of £1.5m.

However, the judge upheld Durham's challenge to an arbitrator's decision to award Darlington £1.1m in interest it claimed it was owed on a £2.2m settlement paid earlier this year.

He said there was an injustice that Darlington had been "kept out of its money for some six years" but ruled that under law, the arbitrator had no power to award the borough council interest.

Councils affected by the local government shake-up were supposed to agree property and liabilities between themselves, but an arbitrator was brought in after Durham and Darlington failed to reach a deal.

Durham was ordered to hand shares in Teesside and Newcastle airports and Durham County Waste Management Company to Darlington during arbitration.

Jubilant council bosses in Darlington last night said they were delighted at making a total gain from the dispute, in cash and assets, of £13.7m.

Leader John Williams said: "The arbitration process has delivered an excellent result for Darlington people because it has awarded them what is rightfully theirs."

He said the council would consider going to the Court of Appeal over the interest verdict as the judge had agreed that the law in this case was "unjust".

But Durham said it had also made gains and that the decision vindicated its stance not to "hand everything to Darlington on a plate".

A spokesman said: "Had we done so, the council tax-payers of County Durham would have been £1.2m out of pocket.

"Had we not adopted this approach, which resulted in the decision regarding the payment of interest, we would have given Darlington Borough Council more than a million pounds to which it was not entitled and when there was absolutely no need to have done so."