Torridge District Council has been told to pay damages which could total hundreds of thousands of pounds because of sewage treatment shortcomings.
The council was taken to court by Kivells Limited, which leases the £6million Holsworthy AgriBusiness Centre and claimed it had lost money because of an ineffective animal effluent treatment system.
In a High Court decision published on Thursday, October 31, Judge Russen QC found in favour of Kivells and ruled the council must pay damages to the agricultural auctioneers.
The council said there were 'no winners' in the case but that it had to defend the claim.
Kivells moved into the new centre and livestock market in 2013 after working with the district council on a project to relocate from the old livestock market site in the town.
The dispute with the council arose because the company said it had been agreed a 'reed bed system' be installed to take away effluent waste from the animals, but instead a cheaper 'activated sludge system' was installed.
According to the court documents, this has caused issues since it was installed and required various repairs.
The long and complex ruling by Judge Russen included extracts of emails that said a 'minimal treatment plant' for the site would cost Kivells £1,532 per week in trade effluent costs, compared with £260 for the 'greater treatment plant' costing £500,000.
Judge Russen ruled Kivells could recover these extra operating from the council, which equated to £21,795 a year, over the 21 years of the lease, as well as the money it had spent on repairs.
An exact figure was not put on the damages and the judge invited the two parties to come to an agreement over what should be paid, otherwise the matter would be brought back to court.
If the system was not repaired and the costs ran over the whole lease, it would mean a bill of more than £457,000 for the council.
According to Torridge, which said it had made offers to settle out of court that were rejected, the initial claim by Kivells against the council was £1.1m.
TDC senior solicitor Staci Dorey said: "It saddens all of us to realise that such a positive asset - the new cattle market - in which over £7m has been invested is now the subject of such negative press.
"This was a flagship product and bespoke building design which was for the benefit of Kivells and the local community. It saddens us that despite such a significant investment Kivells insisted on proceeding with a claim against TDC."
Ms Dorey claimed the council had offered to upgrade the system in 2016 but Kivells chose not to accept this.
She said: "TDC have a responsibility to ensure that the precious resources we have as a council are not unnecessarily diminished where we are justified in preventing this. The public would expect nothing less of us and that is why we had to defend this claim.
"We feel that there are no winners when it comes to litigation."
The Gazette has contacted Kivells for a statement.