A community council has spent £18,000 in legal fees - more than its annual income - unsuccessfully defending a court case over a £4,600 unpaid bill.
The council will meet on Tuesday to discuss its next move
Manorbier Council in Pembrokeshire contested the fee from a local firm for a report on a survey of how residents wanted the community improved.
One councillor has branded the decision to fight the case "a scandal" and said it had cost each household about £40.
The council said it was considering appealing against the judge's ruling.
Haverfordwest-based ICT Marketing submitted a bill in 2005 for £4,600 for a report it produced based on a community survey.
At a meeting in November that year councillors voted to contest the bill, despite advice from their solicitor that they should look to negotiate a settlement.
The case came before Haverfordwest County Court last October and this week the judge found in favour of the marketing company.
On top of the £18,000 the council has spent in legal fees in the past year it has now been ordered to pay the company the £4,600 plus £700 in interest.
Martin Davies, who was one of two councillors who voted against contesting the case, said: "The fact we have spent £18,000 on a bill that was £4,500 in the first place is absolutely scandalous.
"The precept [the money from the council tax which goes to the community council] for 2006/07 was set at £16,500 and we have spent in excess of that on one legal case.
"This means that the residents of this small rural community will pay the equivalent of in the region of £40 to £50 per household to cover the legal bill."
Among the council's regular outgoings are financial support towards maintaining the village hall and playing field and providing a community Christmas tree.
Councillor David Neads, on behalf of the community council, said at the time the decision was taken to fight the case members had a number of issues with the council's financial reports and procedures.
There are about 550 households in the community of Manorbier
"They therefore took a very cautious approach in dealing with the financial matters that came before them," he said.
"The council decided that they were unable to pay out public funds on this basis and felt obliged to defend the claim.
"This was a complicated matter resulting in the judge taking two days to hear the case and almost three months to reach a decision.
"The court's decision will be considered by the council at a public meeting on Tuesday.
"The council's barrister has advised that there are sufficient grounds for the council to make an appeal."
Debbie Garside of ICT Marketing claims the saga has damaged her business and reputation.
"It's not as if I have won anything - all that has happened is that I have been awarded the money that was due to me," she said.
"It really has been the most awful case.
She said she was considering whether to take the matter further and issue a claim for damages.