Bennett v The Chief Constable of Merseyside Police

In cash-forfeiture proceedings under the Proceeds of Crime Act 2002, there is no presumption that a successful private party will recover costs from a public authority acting in the public interest. The starting point is normally no order for costs where the authority acted reasonably and properly. The court must scrutinise the authority’s conduct, without hindsight or imposing an unduly exacting standard. An order may nevertheless be justified by substantial or undue financial prejudice. The Act does not require the police to undertake an active investigation of the suspect’s financial affairs before commencing or pursuing forfeiture proceedings. Possession of a large amount of cash, combined with suspicious surrounding circumstances and the absence of a satisfactory explanation, may itself provide reasonable grounds for proceedings.

The appellant appealed by case stated from a magistrates’ court decision making no order for costs after the Chief Constable withdrew an application under section 298 of the Proceeds of Crime Act 2002 to forfeit cash seized from him. The cash had been found in circumstances connected with suspected cannabis cultivation, and the appellant initially failed to provide an explanation of its provenance.

After criminal proceedings were withdrawn, the appellant served a forensic accountant’s report and supporting documents. The Chief Constable then withdrew the forfeiture application. The district judge found that the police had acted reasonably, honestly and properly and that no undue financial prejudice had been shown. The central issues were whether the police required an active financial investigation before pursuing forfeiture and whether the district judge had applied the correct costs test.

1. Appeal dismissed. The district judge’s decision to make no order for costs was not erroneous or irrational.
2. The governing approach was that stated in R (Perinpanathan) v City of Westminster Magistrates’ Court [2010] EWCA Civ 40; [2010] 1 WLR 1508, following City of Bradford Metropolitan District Council v Booth [2000] 164 JP 485. A private party who successfully resists proceedings brought by a public authority acting in the public interest has no automatic entitlement to costs. The usual starting point is no order where the authority acted reasonably and properly. The authority’s conduct must be scrutinised carefully, but without hindsight or an excessively demanding standard. Substantial or undue financial prejudice may justify a costs order.
3. The police had reasonable grounds to suspect that the cash was recoverable property. The large amount of cash, its discovery at premises associated with cannabis cultivation, the appellant’s association with another cannabis farm, his decision to make no comment in interview and his failure to provide the promised explanation justified commencing the forfeiture proceedings.
4. Muneka v Customs & Excise [2005] EWHC 495 (Admin) did not establish a requirement for active investigation of the suspect’s financial affairs before forfeiture proceedings could properly be brought or pursued. The facts could themselves call for an explanation and support an inference that the cash was recoverable property.
5. The district judge used a legally correct formulation by asking whether the appellant would suffer undue hardship or financial prejudice. Her factual findings were binding on the appeal and provided no basis for interference. The police acted reasonably in awaiting the accountant’s report and requesting documents referred to in it before withdrawing the application.
6. The appeal was entirely without merit. Costs of the appeal were awarded to the Chief Constable in the reduced sum of £15,000, with the question of who should bear the costs, including the substantial costs incurred below, stayed for further consideration.

1. High Court (Administrative Court): the appeal by case stated was dismissed. The court upheld the district judge’s decision to make no order for costs and made further directions concerning the costs of the appeal and the magistrates’ court proceedings.