Michael Whittaker, 48, of Kelso, was charged with four counts of intimidation and four counts of larceny on January 10, 2020.

Less than three months later, on April 1, all charges against him were withdrawn by the prosecution, with Mr Whittaker making a cost application against police.

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On Wednesday, Bathurst Local Court magistrate Catherine Follent found "it was just and reasonable" to award costs to Mr Whittaker on the basis police had failed to investigate properly, with key witnesses not approached until weeks after proceedings were initiated.

In ordering costs against police, magistrate Follent took into account s 212, 213 and 214 of the Criminal Procedure Act 1986.

Under s 214, professional costs are not to be awarded unless the court is satisfied as to any one or more of the following:

The investigation into the offence was conducted in an unreasonable or improper manner, that proceedings were initiated without reasonable cause or were in bad faith or were conducted by the prosecutor in an improper manner or the prosecutor unreasonably failed to investigate (or properly investigate) any relevant matter of which it was aware, or ought to have reasonably been aware, and which suggested either the accused person might not have been guilty or that, for any other reason, the proceedings should not have been brought.

In giving her decision, she found police acted unreasonably by failing to take statements from key witnesses until three weeks after Mr Whittaker was charged.

She found submissions made by Mr Whittaker's solicitor, Shane Cunningham, that it was inappropriate for Sergeant Paul McCann to conduct the investigation due to a prior business relationship with Mr Whittaker, did not enliven subsection 1 (b) of the act.

Ms Follent said Bathurst is a small city and it is therefore "was not unusual for people to interact" on a professional basis.

She also found exceptional circumstances had not been met.