Durham County Council and Darlington Borough Council were today engaged in a titanic struggle at the High Court over which must take responsibility for a contaminated former landfill site that neither of them wants.

Durham, which currently owns the site of the former Creebeck waste disposal facility, says it is in Darlington's area and wants shot of it. But, in a dispute which goes back more than six years to nation-wide local government re-organisation in 1997, Darlington is fighting its corner tooth and nail, arguing Durham will have to live with its responsibility.

The councils are also rowing over a million-pound interest payment an arbitrator ordered Durham to pay Darlington last year.

Both councils agree that Creebeck is an "onerous property" and, whoever is responsible for it, the clean-up bills could be very substantial. Creebeck was used for waste disposal between 1978 and 1984 and Durham bought the site's freehold in 1993 with the intention of cleaning it up and eventually selling it for agricultural purposes.

Darlington's counsel, Richard Drabble QC, said Durham had "magnanimously" bought the site out of a sense of "moral responsibility" and argued the purchase had nothing to do with its statutory waste disposal duties.

He argued it was effectively "surplus land" over which Durham continued to be the "custodian authority" and Darlington could not be landed with any liabilities relating to the site.

But Timothy Straker QC, for Durham, insisted the site had been bought in the exercise of Durham's statutory functions and should have been transferred to Darlington along with other assets and liabilities when it became a unitary authority in April 1997.

Durham is also challenging an arbitrator's decision to award Darlington £1 million in interest on a £2.2 million "transitional payment". Mr Straker argued the arbitrator simply had no legal power to award interest.

Darlington became a fully independent unitary authority as part of local government reorganisation in April 1997.

Councils effected by the shake-up were supposed to agree between themselves how property and liabilities should be split between them but, when Durham and Darlington failed to reach a deal, the dispute went to arbitration.

Durham was incensed when arbitrator, Malcolm Spence QC, ordered it to hand over to Darlington a substantial part of its shareholding in Newcastle International Airport Ltd, Teesside International Airport Ltd and the Durham County Waste Management Company Ltd.

The shares were estimated to be worth £13.5 million, but Durham's challenge to the artibrator's decision they had to be transferred to Darlington was stopped in its tracks by a High Court judge in July this year.

Now the dispute between the councils centres on the Creebeck site - which Mr Spence ruled remaines Durham's responsibility - and the £1 million interest payment which was last year awarded to Darlington by another arbitrator, Christopher Cochrane QC.

The hearing before Mr Justice Stanley Burnton continues at London's High Court and is expected to last two days. The judge will almost certainly reserve his decision until a later date.