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The present case concerns exactly the situation of a donor who was entitled to be registered but was not actually on the register. Ratio |
Although he had previously been registered, Mr Alan Bown was not registered in any electoral register between 1 December 2004 and 2 February 2006. Ratio |
During that period he made a number of donations to UKIP which amounted in total to almost 350,000. Ratio |
Since Mr Bown was not registered to vote, by virtue of section 54(1)(a), UKIP were bound not to accept the donations. Ratio |
In terms of section 56(2)(a), the party should therefore have returned them to Mr Bown within thirty days and pointed out to him that they could not accept the donations until he was on the register again. Ratio |
When the party duly reported the donations to the Electoral Commission, the Commission drew their attention to the fact that Mr Bown did not appear to be on the register. Ratio |
The party none the less retained the donations. Ratio |
So they have made a gain of roughly 350,000 by accepting donations which they were prohibited from accepting under section 54(1)(a). Ratio |
Lord Phillips deprecates the use of the phrase wrongful gain to describe this type of gain. Ratio |
He would apparently confine any such description to gains made from donations by foreign donors who are not entitled to be on the electoral register in this country because the true object of section 54(1)(a) is to prevent parties receiving donations from such persons. Ratio |
But that is to substitute the ultimate aim of the legislation for the means by which the legislation seeks to achieve that aim. Ratio |
The ultimate aim is indeed to catch foreign donors. Ratio |
But the legislature has chosen to pursue that aim by prohibiting parties from accepting donations from all except a narrowly defined class of permissible donors. Ratio |
That class excludes foreign donors who are not entitled to be registered, but quite deliberately it also excludes donors, like Mr Bown, who are entitled to be, but are not, registered. Ratio |
As the White Paper explained, there were good practical reasons for adopting that legislative approach. Ratio |
In these circumstances it is not open to the courts to second- guess Parliament and to proceed on the footing that some impermissible donors are less impermissible than others. Ratio |
Since UKIP kept the donations from Mr Bown which they were prohibited from accepting, the Electoral Commission eventually applied to the City of Westminster Magistrates Court in terms of section 58(1) and (2): (1) This section applies to any donation received by a registered party (a) which, by virtue of section 54(1)(... |
(2) The court may, on an application made by the Commission, order the forfeiture by the party of an amount equal to the value of the donation. Ratio |
In the case of England and Wales the court in question is a magistrates court. Ratio |
Where a party have accepted a donation which they are prohibited from accepting and they show no sign of being willing to return it, the starting point must surely be that the court will take steps to ensure that the party are deprived of the gain which they are determined to keep in defiance of the law. Ratio |
In other words, an order will be made for the forfeiture of the whole value of the unlawful donation. Ratio |
And that is exactly what section 58(2) says: the court may order the forfeiture of an amount equal to the value of the donation. STA |
Had parliamentary counsel intended to give the court power to order the forfeiture of a lesser sum, as Lord Brown points out, there is a variety of other phrases which could have been used to embody that intention. STA |
The same words are to be found in section 65(6) (quoted at para 59 above) and in para 12(4) of Schedule 7 to the Act. Ratio |
Both of these provisions deal with a situation where there has been a deliberate failure to comply with the relevant reporting requirements in order to conceal the existence, or true amount, of a donation. Ratio |
In such a situation, also, it is hard to see why forfeiture of a sum which is less than the donation would be appropriate. Ratio |
So these provisions tend to confirm the straightforward interpretation of the equivalent words in section 58(2). Ratio |
Like Lord Brown, I have no hesitation in agreeing with Walker Js conclusion on this issue. Ratio |
Lord Phillips takes a different view. Ratio |
He goes back to the report of the Neill Committee who first suggested the idea of forfeiture, but described the sum to be forfeited in various ways (a sum not exceeding the unreported donation and a sum not less than the donation). Ratio |
The committee may well have envisaged the court selecting what it regarded as the appropriate sum to be forfeited in the particular circumstances. Ratio |
On this basis, Lord Phillips considers that the better interpretation is to treat the words in section 58(2) as implicitly including the power to order forfeiture of a lesser sum. Ratio |
The Neill Committee report stands, however, at two removes from the text of section 58(2) which embodies the law enacted by Parliament. Ratio |
Moreover, as Lord Phillips himself points out, the Act radically changed the scheme envisaged by the committee. Ratio |
In these circumstances their report cannot displace the plain meaning of Parliaments words. Ratio |
The system is all or nothing: either the court orders the forfeiture of the value of the donation or it makes no order. Ratio |
Having armed the court with a discretion to award a lesser sum, Lord Phillips proceeds to construct an elaborate scheme for the exercise of this discretion. Ratio |
If the donation is not from a permissible donor, the onus will be on the party to show why it should not be forfeited. Ratio |
If the donation is from a foreign donor, then the party will not normally be able to show this, since it can properly be assumed that retention of the funding would defeat the policy underlying the legislation. Ratio |
But if the party can show that the donor was in a position to qualify as a permissible donor by registering on an electoral register, the initial presumption in favour of forfeiture will have been rebutted. Ratio |
In that situation the court will have to see whether there have been failures to comply with the requirements of the Act that are designed to ensure that impermissible donations are not accepted and, if so, the nature of those failures. Ratio |
If the donation is large, significant shortcomings are likely to be required to make forfeiture of the donation a proportionate response. Ratio |
In other words apparently the larger the impermissible donation, the less likely it is that the party will have to give it up. Ratio |
It seems to me unlikely to say the least that Parliament would have intended that a provision, which is designed to ensure compliance with the statutory scheme, should operate so as to make large impermissible donations harder to forfeit than small impermissible donations. Ratio |
That apart, many may admire the scheme outlined by Lord Phillips which might have commended itself to the Neill Committee. Ratio |
Indeed, had it been proposed to Parliament, it might well have been enacted. Ratio |
But there is not the slightest hint of such a scheme in the wording of the provision which Parliament did enact and, in fact, as I have already explained, the wording of section 58(2) is inconsistent with a scheme of that kind. Ratio |
Moreover, it would have been surprising if such a nuanced decision had been left to the magistrates court. Ratio |
For these reasons I would respectfully reject Lord Phillips construction of the subsection. Ratio |
If a party return an impermissible donation after the end of the thirty-day period, under section 56(5) they are treated as having accepted it for the purposes of section 58(2). Ratio |
It might well be, however, that the Electoral Commission would often not make an application to the court in such a case. Ratio |
And if it did, the context for the exercise of the courts discretion would be significantly different from the situation where the party had kept a donation. Ratio |
Similarly, the rationale of any forfeiture order would be to mark some blameworthy failure to comply with the regulations and pour encourager les autres. Ratio |
I would therefore reserve my opinion on whether there is room for the court to exercise its discretion differently in such cases. Ratio |
In a case, like the present, however, where the party have held on to the donations, the real difficulty, as Lord Brown points out, is to see how the court could properly do other than make an order for forfeiture, since forfeiture so clearly promotes the statutory object of preventing parties from accepting donations ... |
Moreover, since the party had no right to the donations in the first place, there is no room for an argument that taking them away infringes article 1 of the First Protocol to the European Convention on Human Rights. Ratio |
Consideration of the exact scope of the courts discretion is not made any easier by the lack of any real indication in the Act of how the forfeiture order takes effect. Ratio |
As Lord Phillips points out, the discussion at the hearing proceeded on the (unexamined) premise that it would create a debt to be met out of the partys funds, as and when monies are paid into them. Ratio |
Although it is tempting to think of the Act as concerned with the major parties, it actually applies to a large number of political parties, many of them very small. Ratio |
Some may well have shaky finances. Ratio |
It is therefore quite conceivable that a forfeiture order would tip a party into insolvency and so cause at least as much prejudice to the partys unsecured creditors as to the party. Ratio |
So the creditors might argue that, for this reason, the court should exercise its discretion not to make an order. Ratio |
In that connexion it may be worth noting that section 60(1)(b) and (c) envisage that rules of court may allow persons affected by any possible forfeiture order to be joined as parties to the proceedings in the magistrates court. Ratio |
Since, however, the point does not arise for decision and was not argued in this case, I merely raise the possibility that such circumstances might have a bearing on the way that the court exercised its discretion under section 58(2). Ratio |
For these reasons, and for those given by Lord Brown, with which I agree, I would dismiss the appeal. RPC |
I agree with the judgments of Lord Rodger and Lord Brown, and for the reasons which they give I would dismiss this appeal. RPC |
The funding of political parties has long been the subject of public and parliamentary concern. Ratio |
In October 1998 the Commission on Standards in Public Life under the chairmanship of Lord Neill of Bladen QC reported on the matter to the Prime Minister. Ratio |
The Governments response by way of a White Paper was presented to Parliament in July 1999 with a Draft Bill annexed. Ratio |
There followed the Political Parties, Elections and Referendums Act 2000 (the Act), Part I of which provided for the establishment of the Electoral Commission (the Commission), Part IV for the control of donations to political parties. Ratio |
This appeal centres on Chapter II of Part IV under the heading, Restrictions on Donations to Registered Parties, and more particularly on donations from people not permitted to donate which a party nevertheless accepts (impermissible donations as I shall henceforth refer to them). Ratio |
Section 58 of the Act applies to such donations and by subsection (2) provides: The court may, on an application made by the Commission, order the forfeiture by the party of an amount equal to the value of the donation. STA |
At the heart of this appeal is the proper construction and application of that provision. Ratio |
Everyone agrees that it invests the court with a discretion: no one contends that may here means must. Ratio |
There are, however, two core questions arising. Ratio |
First, whether the court has power to forfeit part only rather than the whole of the value of any impermissible donation, i.e. can equal to be construed as up to? Secondly, how wide is the discretion conferred? Is there a presumption that impermissible donations will be forfeited and, if so, how strong is that presumpt... |
I put the two questions in that order because to my mind they are closely related: if the court has no option but to forfeit all or nothing, that seems to me to strengthen the argument for a presumption in favour of forfeiture. Ratio |
That said, it may be noted that Walker J at first instance, despite holding that the courts power is to forfeit all or nothing, nevertheless decided that the discretion whether to order forfeiture is a wide one. Ratio |
Walker Js holding that this is an all or nothing power was not contested before the Court of Appeal. Ratio |
That Court, however, reversed his decision on the width of the discretion to exercise the power, holding that, for the legislative purpose to be served, the power should be exercised to order forfeiture of impermissible donations in all save truly exceptional cases. Ratio |
It is against that decision that UKIP now appeal. Ratio |
With those few introductory paragraphs let me turn next to the other provisions of the Act dealing most directly with impermissible donations received from known individual donors (as opposed to impermissible donations from corporate donors, unidentified donors or, indeed, by way of bequest). Ratio |
Section 54, under the heading Permissible donors, provides that for the purposes of Part IV of the Act an individual registered in an electoral register is a permissible donor (section 54(2)(a)) and that: A donation received by a registered party must not be accepted by the party if - (a) the person by whom the donatio... |
In short, so far as identified individual donors are concerned, the party is prohibited from accepting any donation unless that donor is registered in an electoral register. Ratio |
Section 56(1), under the heading Acceptance or return of donations: general, provides that where a donation is received and not immediately refused the party must forthwith take all reasonable steps to verify the donors identity and whether he is a permissible donor (and certain other details as to his address for the ... |
Section 56(2) provides that if the party receives a donation which it is prohibited from accepting, it (or a payment of an equivalent amount) must be sent back to the donor within 30 days of when it was received. STA |
(The mention of an equivalent amount is explicable by reference to the wide definition of donation in section 50 to include a variety of benefits such as the provision of property, services or facilities.) Section 56(3) provides that if a party fails to return an impermissible donation within 30 days (as required by se... |
Indeed, until the Act was amended by the Political Parties and Elections Act 2009, this was an absolute offence. STA |
Now, by a freshly inserted subsection (3A), it is a defence to prove that (a) all reasonable steps were taken by or on behalf of the party to verify (or ascertain) whether the donor was a permissible donor, and (b) as a result, the treasurer believed the donor to be a permissible donor. STA |
Although I have already (at para 74 above) summarised the effect of section 58 of the Act, the provision at the core of this appeal, I should perhaps set out subsection (1): This section applies to any donation received by a registered party - (a) which, by virtue of section 54(1)(a) . STA |
. STA |
. STA |
, the party are prohibited from accepting, but (b) which has been accepted by the party. STA |
And I should note that by section 56(5) For the purposes of this Part a donation received by a registered party shall be taken to have been accepted by the party unless - (a) the steps mentioned in paragraph (a) . . . STA |
of subsection (2) are taken in relation to the donation within the period of 30 days mentioned in that subsection. STA |
Section 58(4) provides that a forfeiture order can be made whether or not criminal proceedings are brought (most obviously under section 56(3)). STA |
The one other provision of the Act which I would notice at this stage is section 65(6) which states: Where the court is satisfied, on an application made by the Commission, that any failure to comply with any such requirements in relation to any donation to a registered party was attributable to an intention on the par... |
The requirements here in question are those placed upon the party by section 62 to prepare quarterly donation reports (or under section 63 to prepare weekly such reports during general election periods) in respect of all relevant donations and benefits, and by section 65 to deliver such reports to the Commission within... |
What, then, in the context of these legislative provisions is the nature of the discretion conferred upon the Court by section 58(2)? It is recognised by both parties that it is a discretion which the Court is bound to exercise having proper regard to the policy and objects of the Act. Ratio |
This principle is, of course, established by high authority, most notably the judgments of the House of Lords in Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997. Ratio |
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