Diversorium Ltd, which owns the Downe Arms in Wykeham pleaded guilty to two offences under Food Hygiene and Safety Regulations at Scarborough Magistrates' Court on Tuesday.
The charges were brought by Scarborough Borough Council's Environmental Health team after complaints from the public.
Mark Robinson, prosecuting, told the court that its team had been contacted by an employee of Yorkshire Bank, which had held a Christmas party at the hotel on December 17 2016.
He said: "The employee said that herself and a number of other staff had fallen ill following the night there.
"The only common food item they had all eaten from the Christmas menu was the chicken liver pâté."
He said that 18 people had fallen ill, with nine of them being medically diagnosed as suffering from campylobacter poisoning.
The council started an investigation and visited the Down Arms in January of this year.
Mr Robinson added: "During the visit other issues were identified, which included cooked and raw meat cutting boards being stored next to each other and cooked and raw meat being stored together."
He said there was no pâté left in the kitchen to test and the chef could not provide any proof that the terrine had reached the 74-degree temperature for three minutes required before serving. There were also missing entries from the restaurant's Safer Food, Better Business Diary.
He added that the hotel's hygiene rating had been dropped from four to one following the visits in the early part of 2017, but was now back at four out of five.
Environmental Health concluded the pâté was "almost certainly" the cause of the outbreak.
In mitigation, Robert Vining told the court the chef had been sacked following the incident.
He said: "My client had bought the hotel a few months before Christmas and was stuck with the staff and menu for Christmas as bookings had already been taken.
"The head chef was very experienced and had worked previously at Gleneagles in Scotland so was left to run the kitchen. They thought, wrongly it now seems, that he would be able to use basic equipment like a thermometer."
He said the director, Phillip Dark, who was in court, was "horrified" by what had happened and had replaced the chef and a number of the staff.
Mr Vining also hit out at Scarborough Council.
He added: "The council are prosecuting for poor record keeping but its own hygiene officers visited the premises in October 2016 and gave it four stars. There was no mention of poor record keeping. After the people fell ill then there were."
He told the court the Downe Arms had been bought for Â£915,000 and had turned over a small profit despite its business rates jumping up to Â£75,000 a year from Â£25,000. The company's insurance company has put aside Â£29,000 to pay compensation to those who fell ill.
In conclusion, he said: "In my words, this regrettable incident was down to a chef who was wholly incompetent. Thankfully the owners have now put that right."
The court fined Diversorium Ltd Â£8,000 and ordered it to pay Â£2,170 in costs.