The Supreme Court handed down judgment in the case of R (The Electoral Commission) v City of Westminster Magistrates Court and Another [2010] UKSC 40 on the 29th July 2010. The case concerned the application of the Political Parties, Elections and Referendums Act 2000 c. 41 (the Act) to donations made to political parties, and the forfeiture of such donations where made from impermissible sources.

S 54(2) (a) of the Act defines permissible donors as those registered on a UK electoral register. S 56(1) obliges political parties to take all reasonable steps to verify that funds have been received from a permissible donor. The appellant received funding from a donor who between 1 December 2004 and 2 February 2006 failed to meet that requirement. Donations in that period amounted to £349, 216.

Before the Senior District Judge, the respondent successfully obtained a forfeiture order, but the order only represented a proportion of the total funds received by the appellant. Challenging this by way of judicial review in the High Court, the matter was remitted for reconsideration. Further proceedings in the Court of Appeal determined that under s 58(1) of the Act, there is a strong presumption in favour of forfeiture and an order must reflect the entire donation.

Appealing to the Supreme Court, the appellant sought to restore the approach taken by the High Court whilst the respondent argued the approach of the Court of Appeal to be correct. Two issues were held to be relevant; firstly, whether there is a strong presumption in favour of forfeiture and secondly, whether a court is permitted to make a partial forfeiture order.

Referring to Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997, the majority found that the discretion in s 58(1) was to be used in promotion of the objects and purpose of the Act. Through discussion of its legislative history, the court found that the primary object of the Act was to prevent donations from foreign sources. The court acknowledged that Parliament also decreed that donors be registered on an electoral register, as this made compliance with the Act’s rules on connection with the United Kingdom easier to determine.

Recognising that individual circumstances of impermissible donations could vary, the court determined that Parliament intended that power to issue forfeiture orders be discretionary to reflect such variation. Considering the reasoning of the Court of Appeal that a strong presumption in favour of forfeiture and an all-or-nothing approach existed, the court held instead that Parliament’s conferral of discretion was such as to engender a careful evaluation of all circumstances. Concluding for the majority, Lord Phillips found that an initial presumption in favour of forfeiture should be applied and onus was on the political party to demonstrate sufficient reasons against forfeiture.

Interpreting the power comprised in s 58, the majority found that the forfeiture power implicitly included the power to order a lesser sum. This would better comply with article 1 of the First protocol as scheduled to the Human Rights Act 1998.

Delivering dissenting judgments Lords Rodger, Brown and Walker found that the language of Parliament and the intention of the legislation were clear: political parties could not accept donations from persons not registered on an electoral role. Determining that the facts of the present case fell into this category, the courts were not in a position to second-guess Parliament and pursuance of the Act’s intention could mean no less than forfeiture of the full amount of the donation.

Disposing of the case, the majority of the court allowed the appeal and restored the order of the Senior District Judge.