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UKIP has been granted leave to appeal to the Supreme Court by an appeal panel comprising Lady Hale, Lord Hope and Lord Brown.

The case concerns the infamous donations to UKIP amounting to approximately £363,000 from party member Alan Brown. The Political Parties, Elections and Referendums Act 2000 (“PPERA”) provides that political parties cannot accept donations in excess of £200 from individuals who are not currently registered on an electoral register. Political parties are obliged under PPERA to take all reasonable steps to verify the position of the donor and section 58(2) of PPERA provides that where a political party has accepted an illegal donation, a Magistrates’ Court may on the application of the Electoral Commission order the forfeiture by the party of an amount equal to the donation.

Unfortunately for UKIP, Alan Brown was not on an electoral roll at the time of making the donations to UKIP and UKIP therefore faced a forfeiture order from the Magistrates’ Court.

For the avoidance of doubt, forfeited donations are not returned to the donor but are retained by the Electoral Commission.

Senior District Judge, Judge Workman, held in the Magistrates’ Court that it was not appropriate to order forfeiture of the entire £363,000. Instead the Judge ordered forfeiture of approximately £18,000 which had been donated by Mr Brown after a meeting had taken place between the Electoral Commission and UKIP, at which it had been made clear that Mr Brown was not registered to vote. In so deciding, Judge Workman held that he was satisfied that Mr Brown’s failure to register had been a genuine inadvertent error. UKIP had admitted to the Court that it had not taken all reasonable steps to make sure that the donor was registered to vote, however, the Judge accepted the evidence of UKIP that they had sought an assurance from Mr Brown that he was registered. The Judge also had in mind, in exercising his discretion, that the applicable legislation in his view had been designed to prevent foreign donations, which was not an issue in the case before him.

UKIP made no complaint about the order of Judge Workman. However the Electoral Commission challenged the decision by way of Judical Review, on the grounds that the Judge had erred in his interpretation of PPERA, had not validly exercised its discretion and had failed to give adequate reasons.
The Review was heard by Mr Justice Walker, who gave judgment on 22 January 2009. Mr Justice Walker held that there was no presumption in favour of forfeiture and relevant considerations in exercising the discretion under section 58(2) PPERA include the following:
  1. The type and degree of harm caused by the breach. Has the party got a benefit it should never have had? Is the donor foreign?
  2. The extent to which the party’s action or inaction deserves blame. Did the party know at the time that the donation was impermissible? If not, should it have known? Have there been previous or related transgressions? If so, what happened?
  3. Concerns as to what may happen in the future. Is it desirable as a deterrent to order forfeiture even after return of a donation by the party?
  4. The stance and current position of the party. Did the party promptly admit its error and take remedial steps? That could militate against forfeiture, but every registered party of whatever size ought to ensure that its resources are deployed so as to fulfil its obligations under PPERA.
The Judge held that Judge Workman’s decision had not been found to be irrational although it was defective. However, adequate reasons had not been given and on that basis the decision was quashed and the matter returned to the Magistrates’ Court for reconsideration in the light of Mr Justice Walker’s judgment.
The Electoral Commission then appealed to the Court of Appeal on the basis that Mr Justice Walker’s conclusions on the exercise of section 58(2) were mistaken and should be corrected before the matter went back to the Magistrates’ Court.
The Court of Appeal, comprising Lord Justice Waller, Sir Paul Kennedy and Lord Justice Goldring, reached very different conclusions about the factors which should be taken into account. Sir Paul Kennedy, giving the judgment of the Court, held that all of the following were irrelevant factors for the purposes of the Court’s discretion under section 58(2):
  1. Whether or not the donation came from a domestic as opposed to a foreign source;
  2. Whether or not the donor was entitled to be registered to vote;
  3. Whether the party was aware that the donation was illegal; and
  4. The party’s resources.
Sir Paul Kennedy went on to say that the discretion was a very narrow one and that there was nothing in the current facts which should lead the Magistrates’ Court to do anything other than order forfeiture of all of the donations. The Magistrates’ Court was then ordered to reconsider the matter on the basis of the Judgment of the Court of Appeal.
Leave has now been given to UKIP to appeal to the Supreme Court and the matter is due to be heard in June of this year.
It is anticipated that this case will excite considerable controversy. The Blog Editorial directs readers to the discussion to date in the Telegraph and on Iain Dale’s Diary blog which also highlight the possibly disastrous financial consequences for UKIP of a negative ruling.
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