This is tricky! In principle, councillors are able to reclaim out of pocket expenses. Most town and parish councillors do not claim.
Where a claim is made, it is up to the council to decide whether a claim is reasonable, and this would often be delegated to the clerk. In your case, the clerk may not be independent of the chairman. Or a decision could be made by the council - it cannot be made by an individual councillor, or even a group of councillors not in a formal meeting.
Usually, such matters can be resolved with goodwill and common sense. In your case that may be difficult. There is no obvious way to resolve this.