A NINE-MONTH North-East drugs case collapsed last night - leaving taxpayers to foot a bill that could be as high as £20m.

Scores of detectives were involved in a long running investigation into drug dealing on Teesside.

Undercover officers spent months tailing suspects and eavesdropping on conversations as part of the operation which was run by the National Crime Squad with help from Cleveland Police.

Teesside Crown Court heard how a Mercedes car belonging to security firm boss Joe Livingstone was bugged.

Experts also bugged Mr Livingstone's home.

The court was told how the National Crime Squad received permission to carry out electronic surveillance on the basis that Mr Livingstone had allegedly orchestrated the murder of Middlesbrough man Lee King.

Thirty-two year old Mr King was shot in the back and the head near his home in the town's Park End area three years ago.

Detectives described the murder as "a cold blooded and premeditated killing".

Although Middlesbrough man Keith McQuade was jailed for life after admitting possessing the shotgun that killed Mr King, he was acquitted of murder. Officially the case remains open.

When police arrested Mr Livingstone in November 2001, they produced thousands of hours of secretly taped recordings.

Mr Livingstone, of Woodvale, Coulby Newham, Middlesbrough, and 11 others were charged with conspiracy to supply Class A drugs between June 2000 and November 2001.

Mr Livingstone and his 11 co-defendants all pleaded not guilty.

But the case sensationally collapsed last night when lawyers successfully argued the men had been denied a fair trial.

The case hinged on a recent decision by the European Court of Human Rights in Strasbourg.

In July, it ruled that two British men convicted after police stings were denied a fair trial because information vital to their defence was withheld.

The general rule is that defence lawyers are entitled to see any prosecution material relevant to the defence.

Last night, after the nine-month pre-trial hearing, Judge Peter Armstrong threw the case out ruling: "It was decided that a trial of the defendants would be unfair.

"I halted the trial on the basis that there seemed to be no alternative way of proceeding."

Police applied for an order preventing publication of the case but were over-ruled by the judge.

His decision came as a bitter blow to the National Crime Squad and Cleveland Police, who said the collapse had come about as a result of a legal technicality.

However, Mr Livingstone's solicitor, Jimmy Watson, had harsh words for the police operation.

Of the secret recordings, he said: "Mr Livingstone said some uncomplimentary things about Cleveland Police but in the main the contents were innocuous."

As to Mr Livingstone's alleged involvement in the murder of Lee King, he said: "Nothing could be further from the truth."

A spokesman for the National Crime Squad said: "The case has been stayed on a legal technicality. The judge has made his ruling and we will be studying it carefully with the Crown Prosecution Service before deciding whether to proceed any further."

Cleveland Police said: "This was a National Crime Squad operation. Obviously we are disappointed with the outcome.

"The trial collapsed as a result of a recent European decision on disclosure which meant the court procedures, whilst previously fair, had now become unfair.

"However, we will continue to use all lawful means to tackle drug dealing within the community."

The spokeswoman said the force could not comment on the extent of surveillance used during the investigation.