Delighted council chiefs are celebrating a £500,000 payout after a four-year legal battle with an international computer company.

Castle Point Council will receive the money as a result of "considerable difficulties" it had with a council tax computer system supplied by ICL in 1992.

The system had to be replaced, said the council, leading to major disruption in the tax collection system and finally forcing the council into suing the firm. A trial was due to start at the end of this year.

Yesterday it was revealed the case had been settled out of court, with the company paying the authority £500,000 as well as its legal costs, expected to run into many thousands of pounds.

The council alleged breach of contract and misrepresentation, claiming damages for the cost of a replacement system, increased working costs, wasted management and staff time and lost interest and disrupted collection of council tax.

It is understood the money will be ploughed back into the council's reserves - improving the borough's financial position. The council is now using a different council tax computer system.

Dave Robinson, chair of the finance and policy committee, said he was delighted with the settlement and thanked the council's officers who "ensured a firm stand was taken."

London-based information technology solicitors Bird and Bird represented Castle Point in its dealings with ICL.

Graham Smith, partner, said: "We are very pleased to have been able to achieve a satisfactory resolution of this dispute for Castle Point."

Council leader Dave Wells (Lab, Benfleet St George's) said: "We have finally got what we wanted after several years of tough negotiation.

"This is the final piece in the jigsaw. During the last four years we have increased reserves from £700,000 to £2 million, cleared the council debt from £14 million to £9 million, paid off £600,000 on the council offices and increased services."

An ICL spokesman said the problem with the software had been solved and was now running fine for more than one hundred other councils.

A spokesman for ICL said: "ICL, the information technology service company has agreed to pay a sum of £500,000 to Castle Point Council in an out of court settlement in connection with problems to do with council tax software.

"The problem with the software was resolved several years ago, and the council tax system concerned is used at over 100 other local authorities across the country."

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