A coffee chain that opened a branch in The New Art Gallery Walsall got away without paying rent and utilities for years as council bosses never finalised the contract, it was revealed today.

Costa Coffee opened in the gallery in August 2007 but the deal was left unsigned. As result, the chain made no rental or utilities payments to Walsall Council for more than two years.

The blunder was revealed in an internal audit report, which also criticised the gallery's collection records. Watchdogs said some valuable artworks were unable to be located due to inaccurate and misleading records.

Auditors said the failings on the Costa Coffee contract had caused "loss of income, unauthorised arrangements, failure to secure full contractual benefits to the council and a lack of contractual security".

Gallery bosses today said they had now introduced a range of improvements, with the Costa Coffee agreement now finalised and all owed money recovered.

The Express & Star asked Walsall Council how much money it had to recover from the coffee chain but was told the details could not be released as they were "commercially confidential".