The Good Law Project, R (On the Application Of) v Electoral Commission & Ors

For the purposes of referendum spending controls, an expense may be incurred by making a voluntary payment as well as by assuming a liability. A donation is not automatically a referendum expense, but a donation may qualify where it is sufficiently connected with particular qualifying goods or services. The critical question is whether the donor has a legal obligation to fund or reimburse specified qualifying expenditure, or the recipient is legally obliged to use the money for that expenditure. A direct payment to a supplier for services ordered by another campaigner may therefore be a referendum expense of the payer. General donations, which the recipient may spend freely, are not referendum expenses of the donor.

The claimant sought judicial review of the Electoral Commission’s decision not to investigate campaign spending by Vote Leave Limited and Mr Darren Grimes in connection with the 2016 EU referendum. Vote Leave paid £620,000 directly to AggregateIQ to meet advertising costs incurred under contracts made by Mr Grimes. The Commission treated the payments as donations by Vote Leave rather than referendum expenses incurred by it.

Permission was granted on one ground: whether the Commission had misinterpreted the definition of “referendum expenses” in section 111(2) of the Political Parties, Elections and Referendums Act 2000, as modified by the European Union Referendum Act 2015.

1. Claim allowed. The court declared that the Electoral Commission had misinterpreted section 111(2) of the Political Parties, Elections and Referendums Act 2000.
2. “Expenses incurred” ordinarily includes both an outflow of assets and the assumption of a liability. The distinction between incurring, paying and contracting expenses in the statutory scheme does not confine the phrase to expenses arising from contractual liability. The principle against doubtful penalisation is an important interpretive consideration, but it may be outweighed by other objective indications of legislative intention.
3. The separate statutory controls on donations and referendum expenses do not prevent one transaction from falling within both regimes. The legislation regulates donations from the recipient’s perspective and referendum expenses from the donor’s perspective. It does not impose a general rule that a donation can never be a referendum expense.
4. The phrase “in respect of” requires a sufficiently close connection with a matter listed in Part I of Schedule 13. A direct payment to a supplier for qualifying advertising, made with the agreement of the campaigner who ordered it, satisfies that requirement. The same applies where the donor pays or reimburses the recipient under a legal obligation to fund specified qualifying goods or services, or gives money on terms legally binding the recipient to use it for that purpose.
5. By contrast, a general donation which the recipient is free to use as it chooses is not incurred “in respect of” a qualifying matter and is not a referendum expense of the donor. The distinction is required to give coherent effect to spending limits, donation controls and the principle of certainty in penal legislation.
6. The AIQ Payments were made at Mr Grimes’s request for the agreed purpose of paying for advertising ordered from AIQ. They were therefore expenses incurred by Vote Leave, incurred in respect of advertising and for referendum purposes, irrespective of whether they were also common plan expenses under Schedule 1, paragraph 22 of the European Union Referendum Act 2015.

A declaration was made recording that conclusion.

First-instance judicial review proceedings. The court referred to an earlier permission judgment, [2018] EWHC 602 (Admin), which limited the claim to the statutory interpretation ground.