Francis Doherty Snr, 54, was employed as caretaker of Kangaroo Spinney and Gipsy Lane travellers' sites, near Wellingborough, when he was let go by the council and accused of money laundering and cheating the public revenue. He has since been acquitted of all charges.

His solicitors now plan to sue for "substantial and undisclosed damages" at the High Court for breach of contract and are also considering legal action for malicious prosecution.

A spokesman said: "Mr Doherty effectively managed both sites and turned them around.

"Further, he had been in that role for a number of years, was invited to tender for a substantial contract and this was awarded to him."

In 2003, Mr Doherty was awarded a £366,000 council contract to refurbish the two sites, but by 2006 the council claimed the work was either incomplete or sub-standard and that all the money had disappeared.

Investigations later revealed the authority had not only paid in cash, but Mr Doherty had benefited from a £60,000 overpayment and a £30,000 loan of taxpayers' money.

He was dismissed from his job, as was David Entwistle, the council's head of countryside services.

But the case against both men, as well as Rhona Doherty, 50, and the Dohertys' two sons, collapsed in December.

Mr Doherty, from Rushden, said: "It was disgraceful what they did to us.

"I lost my job and was made redundant. It weakened my health, my wife's health and caused a lot of distress.

"There was no evidence from the beginning and they still charged us."

The prosecution failed after a key witness revealed a "culture of cover-up" at the local authority.

And a month later, the trial judge dismissed the case, saying: "The Crown cannot prove any of this money was the product of crime."

A county council spokesman said: "We're not aware of any legal challenge at this time but if legal proceedings are pending then it would be inappropriate to comment."


'Prosecution case built on sand'

The case against the Doherty family was dismissed when the trial judge threw it out saying there was "no case to answer".

Judge Ian Alexander QC discharged the jury in December after more than two months of prosecution evidence.

In dismissing the case and recording not guilty verdicts, he stated the prosecution "was undoubtedly built on sand".

He said: "If the county council had disclosed what it should have and if council officers had been a little more frank with the police, the whole thing may have been very different.

"On the face of it, the council's failure to disclose evidence is contempt of court."

Mr Doherty was accused of using his job as caretaker to obtain the £366,000 refurbishment contract, secure payments for the work and of defrauding the council tax payer, as well as the Inland Revenue.

Judge Alexander said: "The evidence does not support this as it turned out.

"It is, of course, no fault of the prosecution that the county council's evidence transpired to be seriously defective."

In December 2008, investigating officers secured a production order demanding the county council disclose all relevant evidence, yet months into the trial, the authority finally disclosed 26 ringbinder files of new evidence.

Judge Alexander has still to decide whether the council was in contempt of court and should pay the wasted costs of the trial.