Taxpayers face footing a £1 million legal bill after West Midlands Police lost a six-year court battle with a businessman.
The case began when garage boss Ben Wood sued the then Chief Constable, Sir Edward Crew, for libel over a statement written by a detective.
The High Court in London found in favour of Mr Wood and awarded him damages of £45,000. But the chief constable took the matter to the Court of Appeal - and lost.
Now the force must pay the costs of the hearings on top of the damages awarded to Mr Wood - and the bill will be passed on to taxpayers.
Mr Wood's legal team incurred just less than £900,000 in costs, while police spent £150,000, on account of the case being handled by in-house lawyers.
The total figure of more than £1 million would be enough to pay for 50 extra probationary police officers on the streets of the West Midlands for a year.
A West Midlands Police spokesman said the force would be lodging a formal appeal against the legal costs which it considered to be " disproportionate".
The dispute arose after the arrest of Mr Wood's business partner at Cradley Heath recovery firm Vehicle Salvage Group, Gary Hart, in 1999 for allegedly handling stolen cars.
There was never any suggestion that 61-year-old Mr Wood was involved in criminal activity. Mr Hart was acquitted after the trial against him collapsed in 2001.
But Mr Wood sued after he learned of letters sent out to leading figures in the insurance world, including the Association of British Insurers, by Detective Chief Inspector Paddy Mulligan.
These letters detailed the charges against Mr Hart and read: "I would ask that you also circulate his details in order that he is unable to use a legitimate front to disguise a criminal venture."
The letters failed to mention Mr Wood by name but, as a director and the public face of VSG, he believed he was seen to be connected with it.
Mr Hart was acquitted after the trial judge slammed the letter by Mr Mulligan - now a detective superintendent at force HQ in Birmingham - as "thoroughly ill-judged."
Mr Wood's solicitor, Hanna Basha, said: "My client only ever wanted an apology. The way the police behaved beggars belief, and that's why they've been left with a bill of £1 million."