A judge has ruled there was "some misappropriation" of funds at a cemetery in Cheshire, after a court hearing in December.
Middlewich Town Council has been locked in a legal row with the Middlewich Cemetery Joint Committee Board, which used to run the site until it returned to the local authority's control.
Deputy High Court Judge Edmund Burge KC has ruled that some funds had been "misappropriated" and a further hearing was needed to investigate the matter.
It comes after a town clerk found cash from the cemetery had been used by the board for non-cemetery business, including on legal costs.
The town council reclaimed full control of its cemetery following a long-running legal dispute in 2026.
It has been run for many years by a committee that the local authority said "had managed to separate" from the council.
The mayor of Middlewich, Simon Whittaker, said the legal proceedings had been a "long journey".
It was discovered in 2022 the situation was unlawful and proceedings were initiated, with an agreement being put in place which was later also discovered to be unlawful.
The current case is between the town council and seven defendants, including members of the Middlewich Cemetery Joint Committee Board and six named individuals.
A preliminary ruling by the judge in December said the cemetery land was owned by the town council, and that the cemetery was not "and had never been" a private cemetery, as had been argued by some of the defendants.
The town clerk had found more than £109,000 had appeared to have been used for non-cemetery business, or paid into bank accounts which were not held by the cemetery.
But the judge said although his findings made it clear that "there has been some misappropriation of cemetery funds" that did not necessarily apply to the full sum identified by the town clerk.
A further hearing will need to take place to identify the total sum of money misappropriated and whether and to what extent five of the defendants will be ordered to repay.
The first six defendants were ordered to provide signed affidavits confirming they have provided all material to the town council.
The judge said it was clear one of the defendants did not "play any part in the management or operation of the cemetery".
Councillor Simon Whitaker said "many things" would have slipped through the net if it had not been for the council's clerk Safia Kauser and her "substantial investigations".
"Although the council has won its case, the monetary value of misappropriated funds combined with our legal fees is to be determined and recovered via the courts," he said.
Representatives for Middlewich Cemetery Joint Committee Board have been approached for comment.