R (on the application of the Electoral Commission) v City of Westminster Magistrates Court and The United Kingdom Independence Party

The Supreme Court considered the proper construction and scope of the forfeiture power in section 58(2) of the Political Parties, Elections and Referendums Act 2000. The Court held that (i) an initial presumption in favour of forfeiture arises when a political party has accepted a donation from an impermissible donor, (ii) that presumption is rebuttable by evidence that the donation was not, in substance, the foreign funding at which the provision is directed (for example because the donor was entitled to be on the electoral register), and (iii) the magistrates’ court has power to order forfeiture of a lesser sum than the full value of the donation where total forfeiture would be disproportionate. The Court applied purposive interpretation, relying on the object of preventing foreign funding and giving effect to the statutory scheme (notably sections 54, 56 and 58 of the Act), and required the court’s discretion to be exercised to further those objects while taking account of culpability, size of donation and effect on the party.

This was an appeal by the United Kingdom Independence Party against the Court of Appeal’s approach to the application by the Electoral Commission for forfeiture under section 58(2) of the Political Parties, Elections and Referendums Act 2000. The factual background was that a long-standing UKIP donor, Mr Alan Bown, had ceased to appear on any electoral register between 1 December 2004 and 2 February 2006 and during that period made donations totalling £349,216. The Commission applied to the City of Westminster Magistrates’ Court for forfeiture of that amount; the Senior District Judge ordered forfeiture only of a modest sum. The Commission sought judicial review and Walker J remitted to the magistrates’ court for further consideration. The Court of Appeal held that the magistrates’ court’s discretion was tightly circumscribed and that there was a strong presumption in favour of total forfeiture absent exceptional circumstances ([2009] EWCA Civ 1078).

Relief sought: the Commission applied for a forfeiture order under section 58(2) of the Act (forfeiture of an amount equal to the value of the donation).

Issues before the Supreme Court:

• Whether the court’s discretion under section 58(2) is to order forfeiture of the whole donation only (“all or nothing”) or whether it implicitly includes power to order partial forfeiture;
• Whether there is a strong presumption in favour of forfeiture (the "presumption issue") or a broader discretion to decline or reduce forfeiture in appropriate cases;
• How the court should exercise any discretion having regard to the objects of the statute.

Reasoning and outcome: applying a purposive construction (with reference to the Neill Report and the White Paper), the majority concluded that Parliament’s primary object was to prevent foreign funding and that section 58(2) confers a discretion which must be exercised to further that object. The existence of a rebuttable presumption in favour of forfeiture was recognised: proof that the donor could have been a permissible donor (for example entitlement to registration) rebuts the presumption and requires a careful evaluation of culpability, proportionality and other circumstances. The Court further held that the court has power to order partial forfeiture where total forfeiture would be disproportionate. On the facts the majority restored the Senior District Judge’s order and allowed the appeal by UKIP, effectively permitting UKIP to retain the larger part of the disputed donations.

Appeal allowed. The Court held that section 58(2) should be read purposively: acceptance of a donation from an impermissible donor gives rise to an initial presumption in favour of forfeiture, but that presumption is rebuttable. Where the donor can demonstrate entitlement to be registered (or otherwise rebut foreignness), the court must consider culpability, the size and effect of forfeiture and proportionality. Section 58(2) implicitly permits a magistrates’ court to order partial forfeiture rather than only an all-or-nothing outcome. The Senior District Judge’s order was restored as adequately reflecting the facts.

First instance and judicial review in the Administrative Court: Walker J [2009] EWHC 78 (Admin) (remitted to magistrates' court for further consideration). Court of Appeal allowed the Commission's appeal: [2009] EWCA Civ 1078. Appeal to the Supreme Court: [2010] UKSC 40 (this judgment).