I would contest the matter in court. If the police have provided statements saying there was no damage, that will help. Bear in mind the standard of proof in criminal law (ie careless driving) is beyond reasonable doubt. make sure you seek disclosure of the accident report that was filling in by the police at the time (if any).
Given that I assume you are insured, the Magistrates have no power to award compensation. This will be dealt with by your insurance company - if necessary through the civil courts.
Your relative should also record full details of the officer he/she spoke to who said they would not take it further, since there is scope there for an abuse of process argument. You may need to involve a solicitor.