AN investigation into a North-East council chief's controversial land deal has uncovered an atmosphere of "poison, feuding and ill-feeling" in the corridors of power.

Tiny Snowdrop Cottage, in the exclusive County Durham village of Castle Eden, was transformed into a large detached home, despite being in a conservation area.

The planning application was granted by Easington District Council, despite opposition from local people who feared the home would become an eyesore.

And the man who owned Snowdrop Cottage was Bill Scorer, one of the council's three executive directors.

Last night, the long-awaited report by Local Government Ombudsman Patricia Thomas was published.

In it, the local authority watchdog said in all her experience she had never encountered "such feuding and ill- feeling within a council".

Ms Thomas urged staff and members to address what she described as the "poisoned atmosphere" as a matter of priority.

The seething council in-fighting was uncovered during the 18-month inquiry prompted by a complaint over Mr Scorer's planning application. Despite being opposed by local residents and the parish council, the plan still received the go-ahead when it went before district councillors.

It also led to a dispute between the authority and its own Chief Legal Officer, James Sheerin, who felt certain members of the planning committee should not take part in deciding the application because they had a non-pecuniary interest.

Mr Sheerin's advice was ignored and the development was given the go-ahead in February, 1999.

Mr Sheerin was then suspended from his job pending a hearing by the council's complaints committee. A few weeks after the inquiry, without any findings being released, it was announced that he had resigned.

Meanwhile, neighbours of Snowdrop Cottage lodged a complaint of maladministration with the Local Government Ombudsman and an inquiry began.

The fraud squad was called in, but police concluded there was no criminal case to answer.

In the 18 months since then, Mr Scorer has taken early retirement. The council has also appointed a new chief executive in preference to three executive directors.

In her report, Ms Thomas says the authority was guilty of maladministration on three counts: that the planning committee had not been told of a relevant local plan policy; that the planning application contravened the local plan; and that a councillor - Thomas Crowley - had failed to declare an interest in the application and withdraw from the meeting.

Ironically, she goes on to say that the local plan probably would not have been sufficient reason to reject the application and it would have still been approved. Therefore the decision had not caused injustice to the resident who objected.

Her report also concludes that another councillor and a senior officer "unwisely involved themselves in the application".

Last night, council officials said they shouldered responsibility for the damning criticisms. Many improvements had now been introduced.

A new regime had taken over and an "open and honest" policy had gained a strong foothold.

Chief Executive Paul Wilding said the authority had introduced a system to enable confidential "whistle blowing" as well as establishing an ethical standards panel chaired by independent member, the Reverend Neville Vine. Coun Crowley's actions are to be referred to the panel.

Dealing with the "poisoned atmosphere", he said: "The council has introduced formal policies to promote respect and dignity and equality of opportunity."

Yesterday a specially-convened meeting of the council considered the implications of the report.