In Bennett v Chief Constable of Merseyside [2018] EWHC 3591 (Admin), the High Court confirmed that a district judge was correct to make no order for costs against the police after it withdrew its Proceeds of Crime Act 2002 (‘POCA’) s.298 application for cash forfeiture. In considering the decision of the district judge, the High Court reaffirmed three points:

(i) The starting point is that no order for costs should be made provided that the public authority has acted reasonably and properly;

(ii) In determining whether the police acted reasonably and properly, the court should scrutinise the behaviour of the police with care; and

(iii) It may be justifiable to award costs against the police, particularly where the successful private party would suffer substantial hardship if no order for costs were made in their favour.

Background facts

In June 2015, Mr Bennett was found and arrested at a property that was being used as a cannabis farm. The police found and seized £960 cash from his person, and a further £44,000 cash from his home. Mr Bennett made no comment at interview. With no explanation as to the origin of the cash, the Chief Constable detained it under s.295 POCA and issued an application under s.298 POCA for its forfeiture.

Subsequently, Mr Bennett’s accountants produced a forensic report of Mr Bennett’s company accounts, supporting Mr Bennett’s contention that the cash had been generated lawfully by his business. On sight of documents referenced in the forensic accountancy report, the Chief Constable agreed to withdraw the cash forfeiture application. Mr Bennett then sought an order for costs against the police. The application was dismissed. He appealed the decision. 

High Court’s decision

Leggatt LJ and Andrew J dismissed Mr Bennett’s appeal as being “totally without merit”. They noted, first, that the magistrates’ court had the discretion to order costs as it considered just and reasonable. They noted that the principles on which that discretion should be exercised had been set out by the Court of Appeal in R (Perinpanathan) v City of Westminster Magistrates’ Court [2010] EWCA Civ 40; [2010] WLR 1508.

Leggatt LJ held that “the starting point is that no order for costs should be made, provided that the public authority has acted reasonably and properly”. In determining whether the police have acted reasonably and properly, magistrates should “scrutinise the behaviour of the police with care”. There may, said the court, be instances which justify the making of an order for costs, “in particular where the successful party would suffer substantial hardship” without such an order [20].

Here, the district judge was held to have correctly applied these principles. She had found that the Chief Constable had acted reasonably and properly, having reasonable grounds for believing the cash fell within the scope of POCA both when seized and when making the forfeiture application. Further, the Chief Constable had acted swiftly in withdrawing the application on sight of the relevant documentation. Finally, there was no evidence that Mr Bennett would suffer hardship if no order for costs was awarded [21].

Counsel for Mr Bennett accepted that the police had acted reasonably in seizing the cash but submitted that it was unreasonable for them not to have actively investigated the provenance of the cash rather than to have left it for Mr Bennett to provide an explanation. Leggatt LJ dismissed this argument, stating that that Muneka v Customs & Excise [2005] EWHC 495 (Admin), on which the applicant sought to rely, “does not establish any principle that there must be active investigation” by the police in order to provide reasonable grounds for bringing or pursuing forfeiture proceedings [25].

Counsel for Mr Bennett further submitted that the district judge had applied the wrong test for financial hardship. Leggatt LJ reaffirmed the test set out by Lord Bingham in City of Bradford Metropolitan District Council v Booth [2000] EWHC Admin 444 and applied by Stanley Burton LJ in Perinpanathan, that the successful party must suffer “undue financial prejudice”. This is over and above the financial prejudice necessarily or normally incurred in litigation [34].

It was on this basis that Leggatt LJ, with whom Andrew J agreed, decided that “this appeal is entirely without merit and must accordingly be dismissed” [37].

Conclusion

This judgment reaffirms the high threshold faced by successful parties challenging a POCA s.298 forfeiture application. The police must have acted reasonably and properly in bringing the forfeiture application. However, that does not require their actively investigating the circumstances or provenance of the cash to establish a reasonable belief that the cash is recoverable. Respondents who have had their cash seized may feel short-changed - given that the purpose of s295 is to permit continued detention prior to an application for forfeiture pursuant to s298. They can take some solace from the fact that it may, nonetheless, still be justifiable to award costs against the police. where they suffer undue financial prejudice and that courts must consider and scrutinise police explanations on costs with care.