It has launched a High Court case against her previous employer Rhondda Cynon Taff CBC, accusing it of 'negligent mis-statement' in relation to a reference provided on its behalf.
Cheltenham also launched a claim for damages against Ms Laird in respect of 'costs incurred by the council as a result of the employment dispute between the council and Mrs Laird'.
One leading human resources manager said legal action over a council job reference was very unusual.
Cheltenham said litigation had continued since Ms Laird left in August 2005, and the latest proceedings followed many months of evidence-gathering.
Ms Laird left after an investigation into allegations of misconduct, when the council said her employment ended 'by operation of law', and that 'no extra contractual payment has been made to Mrs Laird in respect of the cessation of her employment'.
She joined Cheltenham from Rhondda Cynon Taff in February 2002 and the following May Andrew McKinlay (Lib Dem) became leader.
Bitter disputes between them culminated in March 2004 when Ms Laird unsuccessfully sought a restraining order to prevent Mr McKinlay entering one floor of the council building.
Ms Laird could not be reached for comment.