Barnet Council has lost its High Court legal action against Barnet FC to try to gain a greater share from any future sale of the club's Underhill stadium.

Judge George Bompas ordered the council to pay £35,000 in costs and said borough officials were to blame for a costly error in the drafting of the contract for the sale of the stadium's freehold for £10,000 under the council's previous Labour administration in 2002.

"This is a tale of failure and mismanagement by the London Borough of Barnet, of which Barnet FC Holdings Ltd has been the witting beneficiary," said Judge Bompas on Friday.

It is a vindication for the club which is now free to keep all of the profits if, for any reason, Underhill is sold ten years after the current freehold contract was signed on February 27, 2002.

Moving out of Barnet remains a long-term possibility for the club, as it has asked in vain for the council to provide it with another suitable site for a stadium. Its plan for a new £10million stadium on the Green Belt south of Underhill was scuppered by the Tories when they won power in Barnet in 2002. Previous plans for a new stadium at the council-owned Copthall Stadium in Mill Hill were blocked on planning grounds by Deputy Prime Minister John Prescott.

A spokeswoman for the council said: "The council is disappointed and surprised at the outcome of the case. Subject to further advice, we are considering an appeal. Strenuous efforts were made by the council to resolve this dispute before it reached court. Unfortunately these efforts ultimately proved unsuccessful because the council was asked to provide guarantees that it simply could not make by providing an alternative stadium site.

Club chairman Tony Kleanthous criticised the council for bringing the action at a time when council tax bills are soaring and services are being cut as a result of a shortage of funds.

"I feel so vindicated I can't tell you," he said. "But they want to appeal, can you believe that? What bothers me in all of this is that they have wasted all this money, and they are still trying to find reasons to waste more."