7 Member Supreme Court Gives Guidance on Forfeiture of Political Donations

29/07/10

Electoral Commission v. United Kingdom Independence Party [2010] UKSC 40

On 29 July 2010, the Supreme Court gave judgment in an appeal arising from the first ever claim by the Electoral Commission ("Commission") for the forfeiture of impermissible donations received by a political party under the Political Parties, Elections and Referendums Act 2000 ("PPERA").

The United Kingdom Independence Party ("UKIP") received donations amounting to £363,697 that it was prohibited from accepting under PPERA because the donor was not on the electoral register at the time the donations were made, although he was entitled to be so registered. On the Commission's application, the City of Westminster Magistrates' Court ("Magistrate") ordered forfeiture of donations amounting to £14,481 but refused to do so in relation to donations amounting to £349,216. Following judicial review proceedings challenging the Magistrates' decision brought by the Commission, and an appeal from the decision of the Administrative Court, the Court of Appeal held that on the true construction of PPERA the scope of the discretion to order forfeiture of impermissible donations was narrow such that there was a presumption in favour of forfeiture which could be rebutted only by exceptional circumstances and PPERA did not permit the court to make a forfeiture order of less than the impermissible donation.  The Court of Appeal also held there were no circumstances in the present case that could justify the Magistrate's refusal to order forfeiture of all the impermissible donations.

As a result of the significant public importance of UKIP's appeal, a seven member panel of the Supreme Court was convened.  Three members of the Supreme Court agreed with the Court of Appeal. However, four members of the Supreme Court allowed UKIP's appeal and restored the order of the Magistrate.  The President of the Supreme Court, Lord Phillips, gave the leading Judgment for the majority in which he held that the court could make a partial forfeiture order and that while there was a presumption in favour of forfeiture, it could be rebutted if the donor was entitled to be on the register but was not registered at the time of the donation.  If the presumption was rebutted then the failures to comply with the relevant requirements of PPERA and their nature will be relevant to determine the appropriate forfeiture order.  Lord Kerr agreed with the outcome proposed by Lord Phillips but held that the court had a power to order partial forfeiture which enabled it to set the level of forfeiture to reflect the circumstances of the case.

The dissenting Judges, Lords Rodger, Brown and Walker, held that the language of PPERA was clear that it did not permit an order for partial forfeiture to be made and that the court's discretion was narrow to ensure that any political party could not retain money that it could not lawfully receive.

The judgment is here.