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A later illustration of the principle to my mind of some assistance in the present context is the Houses decision in R v Tower Hamlets London Borough Council, Ex p Chetnik Developments Ltd [1988] AC 858 (Chetnik) where (at 873G) Lord Bridge said: . . . Ratio |
before deciding whether a discretion has been exercised for good or bad reasons, the court must first construe the enactment by which the discretion is conferred. Ratio |
Some statutory discretions may be so wide that they can, for practical purposes, only be challenged if shown to have been exercised irrationally or in bad faith. Ratio |
But if the purpose which the discretion is intended to serve is clear, the discretion can only be validly exercised for reasons relevant to the achievement of that purpose. Ratio |
It is necessary, therefore, to consider what is the statutory purpose of Part IV of the Act and more particularly whether there is a clear purpose to be served by conferring on the court a power under section 58(2) to order the forfeiture of impermissible donations. Ratio |
In large measure this purpose is to be discerned from the statutory provisions themselves. Ratio |
To a limited extent, however, I would accept that some light may be thrown upon these by their legislative history, namely the Neill Report and the White Paper which followed it. Ratio |
But it is unnecessary to spend much time on these. Ratio |
So far as individual donations are concerned, the Neill Report recommended and the White Paper agreed that the underlying principle should be that only those with a stake in the United Kingdom should be permitted to donate; foreign donations were to be outlawed. Ratio |
How then should that be achieved? Again, both agreed that this should be done by defining the permissible source of donations. Ratio |
At that point, however, the two documents diverged. Ratio |
Whereas the Neill Report recommended that the permissible source of individual donations should be defined to include not merely registered UK voters but also those who are eligible to be put on an electoral register in the United Kingdom, the White Paper proposed instead what is now section 54(2)(a) of the Act. Ratio |
This provision, the White Paper noted (para 4.5), departs from [the Neill Reports] recommendation by providing that registered political parties may accept donations only from those individuals whose names appear on the electoral register. Ratio |
Entitlement to register, whether as a resident or overseas elector, will not qualify an individual as a permissible source. Ratio |
The White Paper then continued (para 4.6): Checking that a particular donor appears on the electoral register offers a test that is both conclusive and simple to administer. Ratio |
It would be far less straightforward for political parties to verify that a donor not appearing on the register was nevertheless entitled to do so. Ratio |
It is in the interests of the parties to have available a test which offers certainty as to the eligibility of a donor. Ratio |
As for the section 58 forfeiture order itself, the White Paper said this (para 4.15): Clause 51 [enacted as section 58] provides a power for a magistrates court . . . Ratio |
to order the forfeiture of a sum equal to the value of a donation received from other than a permissible source. Ratio |
This will apply whether such a donation was accepted knowingly or not. Ratio |
Under clause 51(2) [section 58(2)] it will be for the Electoral Commission to make an application to the court for a civil forfeiture order. Ratio |
It will readily be seen that the forfeiture power exists in respect of an impermissible donation once the 30 days allowed for its return by section 56(2) are up even, indeed, if the donation was subsequently returned to the donor. Ratio |
This is so, moreover, whether or not the donation was accepted knowingly there is no precondition of forfeiture (as under section 65(6)) that the party intended to conceal something, nor any defence (as now under section 56(3A)) that all reasonable steps were taken to verify that it came from a permissible donor. Ratio |
It will also readily be seen that, unless by the time the court is called upon to exercise its section 58(2) discretion the donation has in fact been returned to the donor, it necessarily follows that the party will have received a donation which by virtue of section 54 it was prohibited from accepting, that it failed ... |
In these circumstances, the sole effect of a forfeiture order in respect of the whole of the donation is no more and no less than to require the party to disgorge that which the law plainly forbids it to have retained. Ratio |
By the same token, were the court to refuse such an order, it would be allowing the party to retain that to which it is plainly not entitled and which the law long since required it to have surrendered. Ratio |
With these considerations in mind let me return to Chetnik for the assistance it seems to me to provide. Ratio |
Chetnik concerned the proper construction and application of section 9 of the General Rate Act 1967 which so far as material provides: . . . Ratio |
where it is shown to the satisfaction of a rating authority that any amount paid in respect of rates . . . Ratio |
could properly be refunded on the ground that . . . Ratio |
(e) the person who made a payment in respect of rates was not liable to make that payment, the rating authority may refund that amount or a part thereof. Ratio |
The Court of Appeal had said of that power ([1987] 1 WLR 593, 602): We think it clear that, in broad terms, the purpose of section 9 and its predecessor was to enable rating authorities to give redress and to remedy the injustice that would (at least prima facie) otherwise ordinarily arise, if they were to retain sums ... |
Holding in the light of that purpose that the discretion to withhold repayment in such a case could only be exercised for some valid reason, the Court of Appeal had quashed the rating authoritys refusal to repay the overpaid rates and had directed them to reconsider the matter. Ratio |
Affirming the Court of Appeals approach, Lord Bridge (with whom the other members of the Committee agreed) said: Parliament must have intended rating authorities to act in the same high principled way expected by the court of its own officers and not to retain rates paid under a mistake of law . . . Ratio |
unless there were, as Parliament must have contemplated there might be in some cases, special circumstances in which a particular overpayment was made such as to justify retention of the whole or part of the amount overpaid. Ratio |
(877D). Ratio |
Later in his speech (880G), having said that the most difficult aspect of the problem was to give guidance as to the positive factors relevant to the exercise of the section 9 discretion which might be considered in whole or in part to displace the prima facie justice of refunding overpayments, and that such factors co... |
He then said (881E-F) that he had not found it an easy case and in particular cannot envisage circumstances which, on the principle I have indicated, would point to a partial refund of overpaid rates as just and appropriate. Ratio |
On the latter point, however, (the express power of partial refund under section 9) Lord Goff drew on general principles of restitution law and wondered whether the fact that the rating authority will have, for example, employed a substantial part of its rate income to meet precepts by other authorities, would provide ... |
(882G). Ratio |
Let me come, then, to the first of the two questions I posed at the outset: Has the court power under section 58(2) to order forfeiture of part only of an impermissible donation? UKIP contends that it does, essentially on the basis that the greater impliedly includes the lesser unless the context compels a different co... |
With the best will in the world, this seems to me an impossible contention. Ratio |
Where, as here, the draftsman has explicitly chosen the words an amount equal to the value of the donation (words he then repeats in section 65(6)), it can hardly be thought he intended them to mean an amount up to that value, or an amount not exceeding that value, or (the words used by the draftsman of section 9 of th... |
Why would he not have used one of these expressions had he intended to provide a power of partial forfeiture? The words of section 58(2) seem to me clear and unambiguous. Ratio |
I agree with Walker Js conclusion on this issue at first instance and am unsurprised that in the Court of Appeal counsel then appearing for UKIP did not seek to challenge that conclusion. Ratio |
With regard to Mr Lawrence QCs subsidiary submission that such a construction amounts to an impermissible interference with article 1 of the First Protocol to the European Convention on Human Rights (para 69 of his case) I am at a loss to see how the forfeiture of a donation which by definition the party should never h... |
Even assuming, however, that in certain circumstances it could, the court always has the option and on that hypothesis would be bound to make no forfeiture order at all. Ratio |
These considerations apart, I find myself sharing Lord Bridges difficulty in Chetnik (although there, of course, the power to make partial refund was expressly provided for) in envisaging circumstances which would point to such an order as being just and appropriate at any rate where the party still retains the benefit... |
Recognising, therefore, that the forfeiture power is an all or nothing power, I pass to the second core issue arising: Is there a presumption that impermissible donations should be forfeited and, if so, how strong is that presumption? Ratio |
The Court of Appeal concluded (at para 50) that there was only a narrow discretion not to order forfeiture. Ratio |
As Sir Paul Kennedy put it in the Courts only reasoned judgment: . . . Ratio |
it might assist a party which, for reasons beyond its control, such as illness of staff, was unable to complete its inquiries within 30 days, or a party which was misled by an inaccurate entry in an electoral register [that perhaps refers to a fraudulent entry or an erroneous statement from some apparently responsible ... |
Maybe there would also be room for the exercise of discretion if a donation or its value were to be returned to the donor out of time but before any forfeiture was sought, because Parliament clearly did not intend a party to surrender the value of a donation more than once. Ratio |
That essentially is my view too. Ratio |
In most cases, certainly in any case where neither the benefit nor its value has ever been returned, it is difficult to see how the discretion could properly be exercised other than by an order for forfeiture. Ratio |
How, in those circumstances, could a court properly allow a party to retain the value of a donation which Parliament has plainly ordained that it should never have accepted? How could this be thought consistent with the policy of the legislation? To my mind, indeed, given the ease with which electoral registers can be ... |
If on account of staff illness a donation was returned late (after the 30 day limit), that no doubt could justify not making a forfeiture order. Ratio |
But I am here considering cases like that presently before the Court where the donation has never been returned. Ratio |
For my part I would accept that the discretion not to award forfeiture would arise altogether more readily in the final situation envisaged by Sir Paul, where a donation or its value is returned to the donor out of time but before any forfeiture was sought. Ratio |
By the time forfeiture is sought, of course, it is almost inevitable that the party will have had ample opportunity (on the facts of the present case more than a year since the final impermissible donation was accepted) to discover its mistake (here, indeed, it had been several times alerted to it) and return the benef... |
Return after that time, therefore, might suggest no more than a naked attempt to escape the forfeiture provision. Ratio |
One should note in this regard an obvious further purpose underlying the forfeiture power (besides its principal purpose of confiscating unlawfully retained benefits), namely as part of the mechanism for policing the control of political donations. Ratio |
To allow the return of the benefit after forfeiture has been sought to save a party from an order, would, except perhaps in very special circumstances, more likely thwart than promote that additional purpose. Ratio |
That question is, however, academic in the present case: quite simply UKIP still retains donations which it should never have accepted. Ratio |
On the Commissions forfeiture application the Senior District Judge allowed UKIP to keep almost all of the 350,000 odd total of impermissible donations it had accepted from Mr Bown. Ratio |
In common with the Court of Appeal although not, as now appears, with the majority of this Court I find that a surprising and unsatisfactory outcome to this regrettable affair. RPC |
In agreement with Lord Phillips and Lord Kerr, I consider that the appeal should be allowed. Ratio |
Their reasoning and conclusions are broadly consistent, although, like Lord Kerr, I would be inclined to regard the question, whether forfeiture is possible of a sum less than the full amount of a donation, as central to the enquiry whether the discretion to order forfeiture is broad or narrow. Ratio |
The discretion introduced by s.58(2) is on its face an open discretion, capable of responding to different circumstances, in particular the difference - important in the light of the mischief to which this Part of the Act was directed - between foreign donations and donations such as the present made irregularly by a p... |
The words may . Ratio |
order the forfeiture . Ratio |
of an amount equal to the value of the donation are in my view capable of implying discretion to order forfeiture of part as well as all or nothing of the donation, rather than compelling a conclusion that the only discretion involved a blunt choice between all or nothing. Ratio |
The use of the word may in s.58(2) is coupled with provisions in s.59(2) and (3) which permit an appeal by a registered party unhappy with a magistrates court decision under s.58(2) and which provide that any such appeal shall be by way of a rehearing, and the court hearing such an appeal may make such order as it cons... |
These provisions to my mind also suggest a flexible power of appreciation in relation to the order made, according to the circumstances. Ratio |
The provisions in s.60(1)(b) and (c) for rules to be made for the giving of notice to and joinder of persons affected also tend to suggest that it was understood that the exercise under s.58 and 59 might be a nuanced one, taking account of others interests. Ratio |
The words any amount in s.60(3) and (5)(c) can of course be read consistently with either partys case. Ratio |
A conclusion that partial forfeiture is possible and that discretion is broad, is in my view more consistent with the policy of the legislation than that adopted by the Court of Appeal or by Lord Rodger and Lord Brown. Ratio |
Parliament preferred the simpler test of registration to a test including entitlement to register for pragmatic reasons: it would be simpler for parties to verify actual registration, simple for persons entitled to register to do so and little is lost by the proposed departure from the Neill Committees recommendation. ... |
The underlying aim of the legislation remained to eliminate inappropriate foreign donations. Ratio |
Lord Phillipss and Lord Kerrs analysis is in this light consistent with the principle that legislation should be construed to serve its statutory purpose: R v Tower Hamlets LBC ex parte Chetnik Developments Ltd. [1988] 1 AC 858. Ratio |
The different analyses adopted in that case and the present flow from differences in context and in the nature of the issues. Ratio |
The refunding by a rating authority of overpaid rates to the person paying them and the forfeiture to the state of an irregular donation made by a member of the public, who is eligible for registration but by mistake not registered, do not raise identical considerations. Ratio |
The Commission submitted that, even if the law was as the majority of the Court now holds, any reasonable judge must inevitably order forfeiture of the whole of these donations. ARG |
I do not agree. ARG |
In my view and as Lord Phillips explains, it was appropriate for the level of forfeiture to reflect the circumstances. ARG |
These include the fact that Mr Bown was entitled to be on the electoral register, and would have corrected the position and made the same donations had he been aware of the mistake which led to him not being on the register (or had the donations, after being made, been returned to him, as should have occurred). ARG |
They also include the circumstances that it appears questionable, from what the Court was told, whether UKIP could find the monies to meet any order or survive, if the total sums donated were forfeited. ARG |
Walker J observed (in last two sentences of para 121) that the District Judge did not expressly deal with some factual aspects, most significantly for present purposes emails from the Commission dated 19 April and 13 May 2005 asking about Mr Bowns status, following which UKIP did not take steps eliciting and confirming... |
On the other hand, the picture presented by the correspondence between the Commission and UKIP throughout 2005 and into 2006 is not one suggesting any real urgency, still less a risk of any forfeiture; and it is also common ground that the District Judge erred to UKIPs disadvantage in taking 19 June 2005, instead of 13... |
UKIP did not appeal in respect of this error. Ratio |
Both parties agreed before the Supreme Court that there should be no re-hearing of any save the most formal sort before the District Judge, and that the Court should if necessary make up its own mind. Ratio |
On that basis, I agree with Lord Phillipss proposal that the order made by the District Judge should simply be restored. RPC |
There are three possible outcomes to the debate about the correct interpretation of section 58(2) of the Political Parties, Elections and Referendums Act 2000. Ratio |
The first is that the discretion given to the court as to whether to order forfeiture is wide and that it is open to the court to make an order for forfeiture of less than the full amount of the donation. Ratio |
The second is that the discretion is narrow and that an order of forfeiture, if made, should be for the entire amount of the donation. Ratio |
The third is that the discretion is wide but if an order of forfeiture is made it must be for the total sum. Ratio |
Of these three possible interpretations, the third seems to me to be the least likely. Ratio |
A wide discretion to permit the making of an order that there should be no forfeiture of any sum whatever does not sit comfortably with what can be discerned to be the purpose of the legislation viz to eliminate the receipt by political parties of donations from sources considered to be unsuitable. Ratio |
The debate must focus, therefore, I believe, on the first and second of the mooted interpretations outlined above. Ratio |
Lord Phillips considered that the primary issue was what he described as the presumption issue i.e. whether section 58(2) conferred a broad discretion on the court as to whether it should make a forfeiture order, or whether there was a strong presumption in favour of forfeiture. Ratio |
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