A district judge was right not to make a costs order against the police after it withdrew an application for forfeiture, the High Court has ruled.
It also stopped pursuing a possible wasted costs order against the defendant’s solicitors after the client refused to waive privilege on the advice they had provided to him.
Bennett v The Chief Constable of Merseyside Police  EWHC 3591 (Admin) was an appeal by case stated from a magistrates’ court in Liverpool against its decision to make no order for costs after the Chief Constable of Merseyside Police withdrew an application for forfeiture of nearly £45,000 seized from the appellant.
Most of the money had been found from Mr Bennett’s home after the police arrested him at a house that had been used as a cannabis farm.
In R (Perinpanathan) v City of Westminster Magistrates‘ Court  EWCA Civ 40, the Court of Appeal said there was no presumption that a private party who successfully resisted proceedings brought by a public authority acting in the public interest would be awarded its costs.
On the contrary, the starting point was that no order for costs should be made provided that the public authority has acted reasonably and properly.
Applying these principles, the district judge here found that the chief constable had reasonable grounds to believe that the cash was recoverable property under the Proceeds of Crime Act 2002, both at the time when the cash was seized and when the forfeiture application was issued.
The district judge also found that, once all the relevant financial material had been disclosed by the appellant, the chief constable was swift to act and to confirm that the application for forfeiture would be withdrawn.
The High Court was asked whether Perinpanathan required some active investigation to supply a proper base for the allegations – the appellant argued that the police were content simply to leave it to him to explain how he had come by the amount of cash seized, and that this was an unreasonable approach for the police to adopt.
Lord Justice Leggatt, sitting with Mrs Justice Andrews, said: “There will be cases where the very fact that an individual was found in possession of a large sum in cash together with the circumstances in which it was seized will call for an explanation and raise an inference that, in the absence of a reasonable explanation, the cash is recoverable property.
“On the findings made by the district judge, the present case was, in my view, manifestly such a case.”
The circumstances, “on any view”, provided reasonable grounds for suspecting that the cash was the proceeds of crime, in particular of drug dealing.
Further, his solicitors undertook to explain the provenance of the cash but then failed to do so. “In these circumstances, I cannot see how it could credibly be suggested that it was unreasonable for the police to commence forfeiture proceedings when they did.”
The proceedings had been adjourned pending the outcome of criminal proceedings, where eventually no evidence was offered. The appellant then served a forensic accountant’s report that showed the cash was generated by his business.
“It cannot, in my view, properly be argued – let alone with any realistic prospect of success – that the police acted other than reasonably and properly throughout their conduct of the proceedings. The appeal on that aspect of the case is therefore completely hopeless.”
The court then held a further hearing ( EWHC 3611 (Admin)) to decide whether the appellant’s solicitors, DDE Law, should pay the chief constable’s £15,000 of the appeal, and also some or all of the costs incurred by Mr Bennett in pursuing the proceedings in the magistrates’ court and the appeal. Its bill of £105,000 – solicitors’ fees of £36,000, counsel’s fees of £43,000 and £8,000 for the forensic accounting expert, plus VAT – appeared “wholly disproportionate”, Leggatt LJ said.
However, having taken advice from separate solicitors, Mr Bennett told the court that he would not waive privilege.
Leggatt LJ said: “We are satisfied that Mr Bennett has made an informed decision not to waive privilege in relation to any of his communications with his legal representatives. Moreover, he has expressed his entire satisfaction with all the work done by his legal representatives and with the reasonableness of the costs incurred and he has done so after having heard the concerns expressed by the court as well as the reasons why the court found the appeal to have been totally without merit. In these circumstances, there is no reason for the court to pursue the matter further.
“Accordingly, the direction requiring Mr Bennett’s legal representatives to attend and show cause why they should not be personally liable for some or all of the costs will be set aside and no further hearing will be listed.”
Mr T Forte (instructed by DDE Law) for the appellant; Ms A Whyte QC and Mr P Sigee (instructed by the Merseyside Police Force Solicitor) for the respondent.