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

Under section 111(2) of the Political Parties, Elections and Referendums Act 2000, “expenses incurred by or on behalf of” a person are not simply all money spent or all reductions in financial resources. “Incurred” conveys responsibility for the expense, although not necessarily strict legal liability. A donation to a permitted participant cannot also be a referendum expense incurred by the donor. The statutory donations and expenses regimes remain distinct. Courts should not create “general” and “specific” donation categories to address perceived loopholes, particularly where the legislation expressly regulates common-plan expenses and criminal liability may arise.

The Electoral Commission appealed against the Divisional Court’s decision granting the Good Law Project’s application for judicial review: [2018] EWHC 2414 (Admin). The Divisional Court had declared that three payments totalling £620,000 made by Vote Leave Limited to AggregateIQ Data Services Limited, to pay for advertising services purchased by Mr Darren Grimes, were referendum expenses incurred by Vote Leave under section 111(2) of the Political Parties, Elections and Referendums Act 2000. The payments had been reported by Mr Grimes as donations received and expenses incurred, but not by Vote Leave as referendum expenses.

The Electoral Commission later investigated the transactions on a common-plan basis, but the statutory-construction issue remained important. The central question was whether a donation to a permitted participant could also be a referendum expense incurred by the donor, and whether a distinction between general and specific donations could properly be introduced.

The Divisional Court’s ancillary declaration was addressed in [2018] EWHC 2553 (Admin).

1. Appeal allowed. The Court of Appeal set aside the Divisional Court’s order, including its declaration that the three payments were referendum expenses incurred by Vote Leave.
2. The phrase “expenses incurred by or on behalf of” in section 111(2) of the Political Parties, Elections and Referendums Act 2000 does not mean every sum spent or every diminution of financial resources. The word “incurred” conveys a degree of responsibility for paying the expense, although strict legal liability is unnecessary. Read harmoniously with the statutory scheme, a donation to a permitted participant cannot also be an expense incurred by the donor. The same money may be a donation by the donor and a referendum expense incurred by the recipient.
3. The Divisional Court’s distinction between general and specific donations was not found in the legislation. The detailed rules it developed crossed the boundary between interpretation and creating a different statutory scheme. Its reliance on contractual and equitable concepts, including a specific-purpose trust of the type recognised in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567, introduced concepts unsuitable for practical administration of electoral law.
4. The potential criminal liability created by section 117 of the 2000 Act required a clear and practically workable construction. The court also gave weight to the fact that Parliament had expressly addressed possible circumvention through the common-plan expenses provisions in paragraph 22 of Schedule 1 to the European Union Referendum Act 2015, together with separate declarations under section 120(4A) and (4B) of the 2000 Act. The courts should not create wider cases of double counting by interpretation.
5. The Cockermouth Division case (1901) 5 O’M & H 155 illustrated that a third party’s payment of ordinary election expenses on behalf of a candidate may count as the candidate’s expenses. That principle did not convert a donation to a permitted participant into an expense of the donor. The volunteer-spending examples considered below did not alter the conclusion, including because unreimbursed volunteer expenses were expressly excluded by paragraph 2(c) of Schedule 13.

1. Court of Appeal (Civil Division): appeal allowed; the Divisional Court’s order and declaration were set aside.
2. Divisional Court, High Court: permission for judicial review was granted on one ground in [2018] EWHC 602 (Admin). The substantive application was granted in [2018] EWHC 2414 (Admin), and an ancillary declaration was made in [2018] EWHC 2553 (Admin).