Almost 35,000 people have been issued illegal fines for parking in Melbourne's CBD between 2012 and 2014, costing Melbourne City Council $3.2 million.
The council admitted the administrative error, first committed in June 2012, would affect 34,800 drivers who mistakenly received fines even after nominating another driver.
It has already refunded 16,200 people at a cost of $1.46 million. A further 18,600 drivers who are yet to pay their fine will have the offence withdrawn.
The fines are invalid because they came from two officers who had their authorisation to reissue parking notices revoked in error in 2012, without council realising.
Lord Mayor Robert Doyle called the error "a huge stuff up", and said the two staff members should not have had their authority revoked in the first place.
"It's a mess, it's a gigantic error. I can't make any excuses for it, or rationalise it away," he told radio station 3AW.
He admitted that "something had gone wrong in every layer of the organisation".
"It's a perfect storm," he said.
However, he said the drivers had parked illegally, and that valid infringement notices had been issued at the time.
"These were people who parked illegally, and then got a ticket," he said.
"I think we're being pretty fair in saying no ifs, no buts, we'll refund your ticket."
Although withdrawals would be issued quickly, refunds could take some time, Cr Doyle said.
"We need to find out if they're [the drivers] at the same address, how they want to get paid and so on," he said.
The council had records of all affected drivers, who would be individually contacted win the coming months.
“We will work to refund any fines already paid as soon as possible, but it is a complex process that could take several months to complete," a spokesman for the council said.
The two staff members had been re-authorised and no-one will lose their job, Cr Doyle confirmed.
The $3.2 million hit to the council’s budget will eat up most of the $4 million surplus left over from the 2013-2014 financial year.
Councillor Stephen Mayne said the council would be able to take the money from a stash of $100 million the triple-A rated municipality has sitting in the bank.
He said it would have no impact on the current year’s surplus, forecast to be $6.37 million.
Cr Mayne, the chair of the council’s finance and governance committee, said he felt for the two council officers who had worked for two years, only to have all their fines refunded.
“It is completely not their fault and we’re not blaming them,’’ he said.
‘‘At the end of the day it is a windfall for those people that parked in the city illegally and can now get away with it.”
Cr Mayne said he and Lord Mayor Robert Doyle were first made aware of the error last week, and on Tuesday night they briefed other councillors in a confidential meeting.
Cr Mayne said it was important council were open and transparent about their mistake.
“You don’t do a Daniel Andrews and duck shove,” he said.