The Electoral Commission v City of Westminster Magistrates' Court

The forfeiture power under section 58(2) of the Political Parties, Elections and Referendums Act 2000 does not create a presumption that an impermissible donation must be forfeited. The Magistrates’ Court must identify and advance the statutory purposes, while ensuring that forfeiture is proportionate.

The court must determine whether the donation was prohibited and accepted, then decide whether forfeiture is appropriate. Relevant considerations may include the harm caused, the party’s culpability, deterrence, future risks, and the party’s current position. For each donation the power is all or nothing: the court may order forfeiture of an amount equal to its value, or make no order. Adequate reasons are required.

The Electoral Commission applied for judicial review of a decision by the City of Westminster Magistrates’ Court concerning donations received by the United Kingdom Independence Party from an individual who was not registered on an electoral register. The Magistrates’ Court had ordered forfeiture of some donations but not others, principally by reference to the party’s awareness of their impermissibility.

The Commission challenged the decision on construction, discretion, irrationality, an erroneous date, and inadequate reasons. The central issues were the proper construction of section 58(2) of the Political Parties, Elections and Referendums Act 2000, the matters relevant to forfeiture, and the extent of the Magistrates’ Court’s duty to give reasons.

1. The claim succeeded in part. The Magistrates’ Court’s decision was quashed and the Commission’s application was remitted for fresh consideration.
2. Section 58(2) involves three stages. The court must first decide whether the alleged donation was one which section 54 prohibited the party from accepting. It must then decide whether the party accepted it. Only if both questions are answered against the party does the discretionary forfeiture question arise.
3. There is no presumption in favour of forfeiture. The court must advance, rather than frustrate, the purposes of the Political Parties, Elections and Referendums Act 2000, but must make an order only where it would be proportionate and reasonable. The principle in R v Tower Hamlets LBC, ex parte Chetnik Developments Ltd [1988] 1 A.C. 858 did not justify importing such a presumption.
4. Although preventing foreign donations was an important motive behind Part IV, Parliament adopted a more precise policy for individuals: they generally had to be registered on an electoral register when the donation was received. Section 58(2) principally enforced that policy and also served deterrent purposes. The Magistrates’ Court had therefore misdirected itself by giving insufficient recognition to the registration requirement.
5. Potentially relevant considerations included the nature and extent of the harm, the party’s knowledge or culpability, previous breaches, whether the conduct was isolated, deterrence, future evasion, prompt remedial action, and the party’s current position. The donor’s belief, the party’s belief, financial circumstances, and the foreign or non-foreign character of the donation were not automatically irrelevant.
6. For any individual donation, section 58(2) was an all-or-nothing power. The court could order forfeiture of an amount equal to the donation’s value, but could not order forfeiture of a lesser sum. If full forfeiture would be disproportionate, no order could be made for that donation.
7. The Magistrates’ Court had a duty to give reasons engaging with the principal arguments on both sides. The reasons given were too brief, particularly on the alleged presumption, statutory purpose, and the party’s repeated failures to respond to the Commission’s concerns.

City of Westminster Magistrates’ Court: ordered forfeiture of certain donations received by the United Kingdom Independence Party.

High Court (Administrative Court): quashed the Magistrates’ Court’s decision and remitted the Commission’s application for fresh consideration.