Members of the council’s infrastructure services committee were told all avenues, including taking the matter to the EU in a bid to resolve the wrangle without the council having to pay, have now been exhausted.

Problems over council backing for a hall support scheme came to light in April, 2002, when the executive queried the eligibility of council grants awarded after December 31, 1999.

During the second phase of the initiative, the council awarded 20 grants to 17 hall committees as part of a strategy to bring them up to modern standards and encourage greater use.

Grants handed out totalled £82,580, with Angus entitled to reclaim £40,000 from the European Regional Development Fund.

The council accepted a grant offer from the executive on December 24, 1999, after having been told it only had to provide a list of potential hall recipients.

Officials later learned grant offers should have been made to each hall committee and accepted within a week. Council chief executive Sandy Watson said previously the project would not have moved forward had the authority been aware of this.

He wrote to the executive in September advising that the timescale for processing grants had been unacceptable, given it was over a holiday.

Councillors learned that, in response to the letter, the executive had given a firm refusal to making any payment to cover the costs incurred by the authority.

Mr Watson said it brought to an end the negotiations to secure the grant help.

Infrastructure services convener Councillor David Selfridge said, “This is bad news. We will have to pick it up.”