High Court judgment - 'expenses incurred' by Vote Leave Ltd

The Electoral Commission designated Vote Leave Ltd as a lead campaigner for the 2016 referendum on UK membership of the EU.  This gave Vote Leave Ltd certain advantages:

The law
governing the conduct of the 2016 referendum was contained in the Political Parties, Elections and Referendums Act 2000 ("PPERA") as modified by the European Union Referendum Act 2015 ("EURA"). That legislation imposed restrictions on the level of expenses which any individual or body campaigning for either outcome of the referendum was permitted to incur.
 
In July, the Electoral Commission found that Vote Leave had broken the law - see the Electoral Commission report.  Evidence showed that Vote Leave exceeded its legal spending limit of £7 million by almost £500,000.  Vote Leave also returned an incomplete and inaccurate spending report. Vote Leave was fined a total of £61,000.

In March 2018, the High Court considered an application for judicial review brought by the Good Law Project which claimed that the Electoral Commission had not properly discharged its responsibility to oversee spending of Vote Leave Limited and certain other campaigners in the period leading up to the referendum held in June 2016.  The court - Leggatt LJ and Holgate J - gave permission at an oral hearing to proceed with part of the claim - [2018] EWHC 602 (Admin)

On 14 September, the High Court handed down judgment - [2018] EWHC 2414 (Admin) - Leggatt LJ and Green J.  The Court concluded that the Electoral Commission had misinterpreted the definition of "referendum expenses" in section 111(2) of the Political Parties, Elections and Referendums Act 2000.

Good Law Project contended that payments made to a Canadian company - AggregateIQ Data Services Limited ("AIQ") - were "expenses incurred" within the meaning of section 111(2).  Payments had been made - at the request of Mr Darren Grimes - directly to AIQ on 14, 17 and 21 June 2016.  The three payments were reported to the Electoral Commission in the return made by Mr Grimes both as donations received by him and as payments made in respect of referendum expenses incurred by him or on his behalf. The AIQ Payments were not included in the return made by Vote Leave in respect of its referendum expenses.

Vote Leave made each of the AIQ Payments (totalling £620,000) at the request of Mr Grimes for the agreed purpose of paying for advertising which Mr Grimes ordered from AIQ.

The court saw no reason to doubt that the payments were donations made by Vote Leave to Mr Grimes to meet referendum expenses which he incurred by purchasing advertising services from AIQ.   However, the court found that, on the proper interpretation of the statutory provisions, Vote Leave "incurred expenses" by making the payments.  Those expenses were incurred "in respect of" advertising - (see Part I of Schedule 13 of PPERA) - and that the expenses were incurred "for referendum purposes" within the meaning of section 111(3) of PPERA.  They were therefore "referendum expenses" as defined in section 111(2) of PPERA.

Throughout the case, the court was at pains to point out that it was concerned only with the point of law regarding what are "incurred expenses."  Consequently, there is no comment as to whether Vote Leave's overspend had any actual impact on voting in the referendum campaign and there is no comment on whether the overspend had any impact on the legality of the referendum outcome. However, the court did note - para 10 - that spending limits are imposed "to discourage excessive spending by political parties and others and to ensure that individual organisations do not obtain disproportionate attention for their views because of the wealth behind them."

Leave.EU and the Electoral Commission:

Another organisation, somewhat confusingly called Leave.EU, was fined by the Electoral Commission and its Chief Executive Officer referred to the Metropolitan Police.  See the Electoral Commission statement (11 May) and report.  Leave.EU was not designated as a lead campaigner and so its spending limit during the controlled period - 15th April 2016 until the day of the vote on 23rd June - period was £700,000.

Venice Commission:

According to ‘The Code of Good Practice on Referendums’ issued by the Venice Commission, if the cap on spending is exceeded in a referendum by a significant amount, “the vote must be annulled.”

The Code, which is a non-binding guideline, was adopted by the Council of Europe’s Venice Commission in 2006/2007.

The Venice Commission is an advisory body of the Council of Europe, composed of independent experts in the field of constitutional law. It was created in 1990 after the fall of the Berlin Wall, at a time of urgent need for constitutional assistance in Central and Eastern Europe.

The UK is a member of the Council of Europe and has signed up to the Venice Commission.

Impact on the referendum?

The breach of spending limits - even when it happens under a "misinterpretation" of the relevant law - is a serious matter and it is unsurprising that there have been calls for the referendum to be annulled. 

High Court -

A legal challenge to the referendum result has been commenced by UKinEUChallenge - HERE.  The challenge is based on the overspends by Vote Leave and Leave.EU.  It is argued that breaches of the spending limits "flouted the core principles of UK democratic process."

Parliament -

Parliament could take note of the Electoral Commission findings and also the High Court's decision in the Good Law Project case and take whatever action, including annulment, it deemed appropriate but there is little to no sign that the referendum will be annulled as a result of the overspending. 

As Jolyon Maugham QC - Good Law Project's Director - stated in July 2018:

The loser in all of this is likely to be public trust in the integrity of politics and politicians. It remains to be seen whether the Electoral Commission will seek to appeal the High Court ruling.  I think it unlikely but you never know !

Previous post 17 July 2018

Further material:

European Union Referendum (Conduct) Regulations 2016 - SI 2016/219

The Guardian 14 September 2018 - Now the judges agree - the vote for Brexit was clearly tainted

openDemocracyUK 12 June 2018 - Arron Banks and the missing £11 million for Brexit

Information Commissioner -

Statement 2 May 2018 Investigation into data analytics for political purposes

Investigation in to data analytics for political purposes - Investigation Update 11 July 2018

House of Commons - Digital, Media, Culture and Sport Committee and its Fake News Interim Report where the committee comments that it heard evidence of  "Russian state-sponsored attempts to influence elections in the US and the UK through social media, of the efforts of private companies to do the same, and of law-breaking by certain Leave campaign groups in the UK’s EU Referendum in their use of social media."