Birmingham City Council has failed in three different courts in its bid to repossess seven council houses that were allegedly given “unlawfully” to 12 families by a housing officer five years ago.

The taxpayer now faces a huge legal bill of at least £250,000, which has been described by the man who took up the tenants’ case as a “scandalous waste of public money.”

The 12 tenants used human rights laws to keep the houses they were given between May 2005 and March 2006.

The council claimed that the 12 men and women, who still live in the homes, were wrongly granted seven different properties ahead of a 30,000-strong council house waiting list.

It alleged that the housing officer allocated the empty properties to the “tenants of his choice”.

The housing officer involved, who was responsible for viewings and lettings, has since been sacked for misconduct.

But the council was unable to find any evidence of payments or inducements and they acknowledged that the tenants had done nothing improper.

Andrew Arden QC, for the council, claimed that the officer had entered false information into a computer system, which wrongly showed that the tenants had come to occupy their homes by direct exchange or succession from a previous tenant.

The local authority took the tenants to the Civil Appeals Court in London after a Judge ruled against the council at Birmingham County Court in October 2008. They also tried to take their appeal to the new Supreme Court, who ruled against them.

The 12 used the Human Rights Act to argue that evicting them would amount to a breach of their fundamental human right of respect for their homes and family life. Before the hearing the council said it had a duty to be fair to more than 30,000 people who are waiting for a council house.

Graham McGrath, from McGrath and Co, who represented ten of the 12 tenants, said: “The reality is that the city council got a kicking in the County Court and in the Court of Appeal and then tried to take it to the Supreme Court.

“It is a scandalous waste of public money. These families were facing eviction because the city council could not handle its staff properly.

“The council said it would pursue this, whatever the costs. How is that a sensible use of public money?

“The Supreme Court decided that they did not need to look at the decision from the lower courts. The families have had this hanging over their heads for years.

“They can now, at last, relax and can get on with their lives.”

A spokeswoman for Birmingham City Council said: “We are disappointed with the Court of Appeal’s decision since we had already proved that these properties were allocated outside the council allocation policy in the county court.

“We now have a housing waiting list of more than 32,000. We have a duty to ensure all tenants live in homes that suit their needs and have been secured in a fair and transparent way- something we had strong reason to doubt in this scenario.

“The individual responsible for the serious errors in allocating the properties was dismissed as a consequence.

“The ruling will not have any impact on our allocations policy.”

In the original judgement, Deputy District Judge Matthew Brunning, said the lettings for people who did not have priority showed a “fundamental weakness in procedures and poor management arrangements” from the city council.