THE former manager of a troubled theatre has won a payout from the council that sacked her.

Durham City Council is believed to have paid £10,000 to Janice Marthen, who used to manage the Gala Theatre, in Durham.

The deal was struck to settle a claim for unfair dismissal that Mrs Marthen was due to take to an industrial tribunal.

She took charge of the multi-million pound venue after the collapse, with huge debts, of the firm that the city council hired to run it.

Her dismissal followed a Halloween Night party held in the theatre after-hours by staff.

The Liberal Democrat-run council said the party was held without permission and was an inappropriate use of the venue, which has suffered ongoing losses.

A council investigation found that claims that a cake made from cannabis was taken to the party were unfounded.

Shortly after the launch of the inquiry, the council's chief executive Colin Shearsmith, regarded as the driving force behind the Gala scheme, retired on health grounds.

A council spokesman said of the latest development: "There has been an out-of court settlement but it is part of the agreement that neither side will disclose the details.''

The theatre is being run for a year by Darlington Borough Council's leisure department.

The city council hopes to reduce the subsidy that the venue requires but has blamed the previous Labour administration for setting an unrealistically low budget last year.

The Darlington team is looking at the theatre's operation and has told councillors there were shortcomings in its management.