Former Brampton mayor Susan Fennell will drop her legal challenge against the City of Brampton after the city agreed to cover her legal costs and return money withheld from her by an earlier council resolution.

The City of Brampton and Fennell released a joint statement Wednesday afternoon. It said the city will pay Fennell $25,000 to cover her legal costs, along with three months of her salary and $144,000 in chauffeur costs she argued the city improperly took from her.

“She’s been completely vindicated by the settlement,” David Shiller, Fennell’s lawyer, told CP24.com Wednesday afternoon. “It’s a capitulation by the city.”

After an external audit in 2014 found Fennell violated city spending rules in the amount of more than $170,000, council passed a resolution in November 2014 docking Fennell 90 days’ pay — the maximum amount allowed — and ordered her to pay back $144,000 in fees associated with a limousine the city paid for her to use.

A report penned by former Toronto integrity commissioner Janet Leiper later found Fennell was responsible for only $3,500 in improper spending.

In a statement, the City of Brampton said it considers the resolution that penalized Fennell “to be inconsistent with Ms. Leiper’s findings” and that Leiper’s findings supersede the previous report.

“As a result, Council is repealing the Resolution and Ms. Fennell will receive all amounts withheld under that Resolution. We believe that the City of Brampton has settled this matter on terms that are fair to all parties.”

Fennell was defeated by former Ontario cabinet minister Linda Jeffrey in the October municipal election. 

“Finally the people of Brampton can see the truth,” Fennell said in a news release. “At long last, this issue is now behind me. It is my fervent hope that Council will finally move on. The citizens of Brampton deserve no less.”