England and Wales High Court (Administrative Court) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Neutral Citation Number: [2005] EWHC 902 (Admin)

		Royal Courts of Justice Strand London, WC2A 2LL
		22 April 2005

1. LORD JUSTICE BROOKE: This is an appeal by Dr Dev Sharma by way of case stated from his conviction on 30 June 2004 at the Thames Magistrates' Court for knowingly making a false declaration as to his election expenses incurred in connection with a bye-election in the Newbury Ward of the London Borough of Redbridge on 11 July 2002.
2. Dr Sharma was retired as a successful Labour candidate. He was convicted of an illegal practice pursuant to the combined effect of sections 82(6) and 170 of the Representation of the People Act 1983 ("the 1983 Act"). He was given an absolute discharge and ordered to pay £1,000 towards the costs of the prosecution. The precise nature of the charge he faced was that he knowingly made a false declaration as to elections expenses incurred

"... in that you declared among other things that you had examined the return of election expenses delivered by Mr Andrew LESTER, your election agent, and that to the best of your knowledge and belief it was a complete and correct return as required by law when in fact you did not examine the return and were unable to comment on the expenses breakdown and the return was not complete and correct as specified in Schedule 3 to the Act."

Mr Lester was also convicted of a similar offence. He had declared on the agent's election return that there were no unpaid claims, whereas in fact the principal bill for £600 was not paid until November 2002.

3. The relevant statutory requirements are set out in Part 2 of the 1983 Act. After provisions concerned with the election agent and with donations to candidates, section 73 addresses the issue of election expenses. Section 73 prescribes, with certain identified exceptions, that payments made by a candidate at an election or by any other person on the candidate's behalf must be made by or through the candidate's election agent. Section 81(1) provides that within a prescribed period each election agent must deliver to the appropriate officer a true return containing as respects that candidate -

"(a) a statement of all election expenses incurred by or on behalf of the candidate; and

(b) a statement of all payments made by the election agent together with all bills or receipts relating to the payments."

The remainder of section 81 contains further provision as to the contents of the delivery of the return. Section 82 provides, so far as is material:

"(1) The return [delivered] under section 81(1) above shall be accompanied by a declaration made by the election agent in [the appropriate form].

(2) At the same time that the election agent [delivers] that return, or within seven days afterwards, the candidate shall [deliver] to the appropriate officer a declaration made by him in [the appropriate form]

...

(6) If a candidate or election agent knowingly makes a declaration required by this section falsely, he shall be guilty of a corrupt practice."

Part 2 of the Act also contains three further offences of corrupt practices: bribery - section 113; cheating - section 114; and undue influence - section 115. Section 168 to 169 are concerned with prosecutions for corrupt practices and illegal practices. Section 170 provides that:

"A person charged with a corrupt practice may, if the circumstances warrant such finding, be found guilty of an illegal practice ..."

4. What happened in the present case is that Mr Sharma's election agent completed and signed a return in the form contained in Schedule 3 to the Act. Dr Sharma signed the declaration required of him by section 82(2) in the form set out in Schedule 3. The relevant part of this declaration read:

"I ...

DO SOLEMNLY AND SINCERELY DECLARE as follows:-

1. I am the person named above as a candidate at this election.

2. I have examined the return of election expenses [about to be] delivered by [my election agent] to the Returning Officer, of which a copy is now shown to me and marked 'copy', and to the best of my knowledge and belief it is a complete and correct return as required by law.

3. To the best of my knowledge and belief, all expenses shown in the return as paid were paid by [my election agent], except as otherwise stated."

5. The return to which Dr Sharma referred consisted of six pages with a copy invoice attached to it. In section one "Summary of Payments", only the first line "Payments made by the election agent" was completed, and the sum of £630 was written on to the form. The lines which envisaged the possibility of other payments or expenses having been incurred or other forms of declarations about expenses or the value of items being made all contained a nil return, so that the total of expenses was recorded in the summary as £630. Beneath that total are two lines which read:

"Disputed claims of which the agent is aware - nil.

Unpaid claims of which the agent is aware - nil."

Section 2 on the second page of the form is headed "Details of payments by election agent." It contains one item:

"Supply of an election service including room hire, literature production and telephone costs: the Redbridge Labour Party, Coventry House, 3 Coventry Road, Ilford IG1 4QR: £630."

6. The invoice was said to have been received on 15 July 2002, and paid on 16 July 2002. A copy of the invoice, dated 15 July 2002, was annexed to the return. The sum of £630 was being charged "for the provision of a bye-election service including printing materials, voter contact, use of telephones and committee room hire." The next two pages of the return were headed "Section Three: Payments Made Otherwise Than By The Election Agent"; and "Section Four: Declarations of Value". They all contain nil returns, as reflected by the nil returns in the summary on page 1. Similarly Section Five "Unpaid and Disputed Claims" contained a nil return as would be expected. The final page entitled "Section Six: Donations and Candidate's Contribution", contain details of a donation of £230 received from the local Labour Party's Local Government Committee.
7. The return of £630 represented expenditure within the permissible limits for this bye-election. What was wrong with the return was that the bill for £630 had not been paid at the time the return was completed and the two declarations signed and filed. It appears that although the total was correct, a printer's bill of £600 was submitted and paid four months later. As a consequence, the items "payments made by the election agent" should have been not more than £30, and there should have been an entry against the item for "unpaid claims in which the agent is aware". Electoral law is particularly strict about the duty to pay electoral expenses promptly: see section 78(1) and (2) and the provisions enabling leave to be sought from the High Court or the county court to pay a claim late. Dr Sharma's agent seems to have had an imperfect understanding of his obligations under electoral law. We were told that he, too, was convicted of an illegal practice and ordered to pay £1,000 towards costs of the prosecution. In his case the sentence was a conditional discharge.
8. The case stated contains a lengthy statement of relevant evidence, and then a very short list of findings. The district judge said, at paragraphs 5 and 6 of the case stated:

"On the 25th April 2003 the Appellant was interviewed. He said that he completely trusted his agent and knew nothing about the details of expenses. He had no idea, in respect of particular items, how much was spent. As to the agents' election expenses, he just flicked through them. He had no idea of the breakdown and this is the procedure he always followed because he trusted his agent. He had not carried out a full examination of the expenses. He had trusted him on earlier occasions and trusted him then. He remembered the figures 6 and 30 and nothing else. He signed it in absolute good faith because the agent was the only one who had the required information. He remembered joking with the agent that he was the only one who knew and there was no way of checking how much was spent on each item.

6. I heard evidence from the Appellant. He was happy with his agent and had no concerns about him. He recalls the agent's election return and looked at it and recalled the figure of £630. He was only concerned with the overall spending on the election because he understood this to be his responsibility as candidate. He compared the figure of £630 with the spending limit of about £700. He saw some sort of detail but did not check. He looked at two of six pages. He had a vague recollection of certain details on the first page but could not be sure if [he] looked at it. He had a vague recollection of seeing items on the second page but did not recollect checking the details. He thought that he went through the list. He read his declaration before he signed it and had signed such declarations in the past. As to 'I have examined the return of election expenses -' before signing the document he checked the figure of £630 and genuinely believed that his duty as candidate was to see that the overall amount was within the permitted limit. He depended upon his agent to provide a complete and accurate return. He had been advised to rely upon his agent. He did not regard it as his duty to ensure that expenses had been paid but depended upon his agent. He enquired of the agent whether everything had been paid and had he done everything right. He looked at his interview. By 'I just flicked through them' he meant that as candidate he had no details regarding the expenses. Only the agent knew. If he had asked for details the most he would have been able to do was arithmetic on the invoices to see if they added up to the figure of £630. He would still not know if all the expenses been paid and accounted for. He would have to rely on his agent and his trust in him. He was not concerned about when payments were made or due. When he signed the declaration he truly and sincerely believed that he had examined his document as much as he should. He believed it to be complete and accurate."

The district judge's findings of fact were in these terms:

"a) The evidence of the Appellant was credible throughout. He had not changed his account of what happened since he was first questioned by the police.

b) His examination of his agent's election return was just to check that there had been no overspending. Having satisfied himself as to that he looked no further. That was insufficient to find out whether his agent was dishonest or dishonest.

c) He did not check the figure of £600 [sic]. He did not ask for a breakdown.

d) The obligation put upon him by the Act required him to check what his agent had done to see if it was all correct and above board. It was part of his accountability to the electorate.

e) He had relied completely on his agent as to the accuracy of the return, which he had glanced at fleetingly, noticing that the figure of £630 was within the spending limit, and signed. This was not an examination, or a sufficient examination, within the meaning of the Act."

The case stated and ends in these terms:

"11. I was troubled by the finding I was compelled to make in respect of Dr Sharma. I had a good deal of sympathy for the candidate who was clearly a man of honesty and integrity who relied, as he felt entitled to, upon his election agent.

12. For that reason and in accordance with section 170 of the 1983 Act I found the Appellant guilty, not of a corrupt practice as charged, but of an illegal practice. I discharged the Appellant absolutely and ordered him to pay £1000 towards the costs of the prosecution.

The Question for the opinion of the High Court is: Whether on the authorities to which I was referred and on the evidence before me I was right in finding the Appellant had knowingly made a false declaration as alleged."

9. It will be recalled that the charge against Dr Sharma was to the effect that the declaration he had signed was false to his knowledge because in fact he did not examine the return. From the description of the return I have given there was very little to examine, simply the reference to the invoice of £630 which was exhibited and which was said to have been paid, and a lot of nil returns apart from the entry relating to the donation.
10. Because the district judge found Dr Sharma's evidence to be credible throughout, we may infer that she accepted the truth of what he successively told the police and said in evidence in court about his involvement in the matter. From the case stated, it is therefore possible to draw the following material findings:

1. That Dr Sharma was a man of honesty and integrity whose evidence was to be believed.

2. That Dr Sharma completely trusted his agent. He was happy with him and had no concerns about him and he had trusted him on earlier occasions.

3. That Dr Sharma knew nothing about the details of his election expenses. He had been advised to rely on his agent and he depended on his agent to provide a complete and accurate return. The agent was the only person who had or required information about the expenses.

4. That Dr Sharma knew that he had to confine his expenses to a figure of £700 and he had seen the figure of £630 and was satisfied that this sum was within his permitted limit.

5. That even if Dr Sharma had asked for details, the most he could have done was to carry out arithmetic on the invoices to see if the total was correct. He would still not know if all the expenses had been paid and accounted for.

6. That he just flicked through the return and he looked in particular at two of the six pages. He did not recollect checking the details of the item on the second page, which amount was of course brought forward to the summary on the first page.

7. When he signed the declaration he truly and sincerely believed that he had examined the document as much as he should.

11. The district judge did not find that Dr Sharma had not examined the return at all. The critical finding was that he did not examine it sufficiently. It is clear that she understood it to be the duty of a candidate to carry out an examination sufficient to find out whether his agent was honest or dishonest, and that part of his accountability to the electorate was to be found in his statutory obligation to check what his agent had done to see if it was all correct and above board.
12. The issue at the centre of this appeal is whether the district judge was correct in her understanding as to the candidate's obligations under the law. She had accepted that Dr Sharma was a completely honest man who had completely trusted his agent and depended on his agent to complete correctly the return of his expenses. Is he also required to carry out an audit role, apparently not to check whether the detail were completely accurate but to satisfy himself whether his agent was honest and producing a return which was "all correct and above board" or whether he was dishonest? It must be recalled that we are concerned only with the question whether Dr Sharma committed the criminal offence of knowingly making a false declaration: we are not concerned with issues relating to the possible nullification of an election result because a successful candidate has spent more than the permitted maximum.
13. This corner of our election law is still couched in antique, old-fashioned language. We are not concerned with a modern statutory offence which, for instance, creates absolute liability for inaccuracies, subject to a defence if the person charged exercised the diligence reasonably to be expected of him. We are concerned not with an offence of negligence, but with an offence of dishonesty. Parliament has decided that the best way of averting electoral malpractice is to identify one person, the election agent, as the person responsible for a candidate's election expenditure, subject to the minor exceptions, none of which are relevant in the present case, which are reflected by the entries on the first page of the form. The reason why the candidate as well as his agent is required to make a declaration was given by Gibson J in the Irish case concerned with the Eastern Division of the County of Cork [1911] 6 O'M & H 318 when interpreting the similar language of section 33 of the Corrupt and Illegal Practices Act 1883 at pages 346 to 348:

"I now take up the statute of 1883, and its fundamental ss 28 and 33, so much discussed at the Bar. The Act was designed to put a stop to certain common election abuses, and to carry out its object it put the candidate in a strait waistcoat as regards the maximum amount of expenses and the mode of expenditure. The pivot on which these statutory safeguards work is found in ss 27, 28, 29, and 33. The election agent is made the sole legitimate paymaster. No payments before, during or after an election can be made in respect of any expenses incurred on account of or in respect of the conduct or management of an election, save by him or his sub-agents, who must procure written receipts for such payments. As Mr Justice Field observed in the Barrow-in-Furness Case (1886) 4 O'M & H at 82:

it is the duty of the election agent to make all election contracts, he is to be the responsible man, and everything is to be done in 'the light of day'. ... Under s 33, sub-s 6, a failure to comply with the requirements of the 33rd section on the part of a candidate or an election agent is an illegal practice, while if a candidate or his election agent knowingly makes the prescribed declaration falsely, he is guilty of an offence punishable like perjury, and one to be deemed a corrupt practice under s 33, sub-s 7. I defer these two sub-sections for the present, remarking only that the position of the election agent is quite distinct from that of the candidate, the liability of each depending upon his special statutory duty, and his own personal knowledge and intent. The duty of the agent cannot be imposed upon the candidate, and the knowledge of the one cannot be imputed to the other. Each under s 33 is separate and distinct. If they combine to frustrate and violate the statute they might be guilty of an indictable misdemeanour; but the illegal practices and corrupt practices respectively created by s 33 are personal to the offender. In civil cases, the fraud and misconduct of the agent may affect the principal, but under s 33 there is no such constructive liability."

Although the detail of the modern Act as amended differs in some respects from the language of the 1883 Act, the main thrust of the provisions with which we are concerned is the same.

14. The fact that we are concerned with a crime of dishonesty was brought out very clearly by Lord Bingham CJ giving the judgment of the Criminal Division of the Court of Appeal in Jones v Whicher [1999] 2 Crim App R 253. The two items of expenditure at the heart of that case, the rental of rooms before an election was declared and the cost of using and creating a database for election purposes over the year before the election, fell into a grey area of election law. Lord Bingham said at page 258D to F:

"Before any defendant may be convicted of an offence under section 82(6) of the Act, the tribunal of fact must be satisfied:

(1) that the defendant made a declaration as to election expenses as required by the section;

(2) that such declaration was false, in that expenses which should have been included were omitted or expenses which were included were understated, or both;

(3) that the defendant knew such declaration to be false, either because the defendant knew that expenses which should have been included were omitted or because the defendant knew that expenses which were included were understated, or both."

In relation to the third of these items, Lord Bingham said at p 359B to D:

"The third requirement is crucial, because it defines the dishonest knowledge which constitutes the mens rea of the statutory crime which must be established before a defendant is convicted. It is not a crime to declare an honest belief in a declaration of election expenses in which some expenses which should have been included have been omitted or some expenses have been understated by showing an expense smaller than should have been shown, unless the person making the declaration knows that it is false in one or other respect or both. Honest belief in the truth of the declaration, and thus in the completeness and accuracy of the figures disclosed, is a complete defence. But it is, of course, for the prosecution to prove lack of honest belief and not for the defendant to prove his honesty. The nub of the offence is the declaration of an honest belief in the accuracy of a disclosure which is known to be incomplete or inaccurate."

15. I do not accept the submission of Mr Blach, who appeared for Dr Sharma, to the effect that Lord Bingham's summary of the effect of the law must be taken to be all embracing. If a candidate does not examine the return at all, for instance if it could be shown that he signed his declaration one day and the agent's return was compiled later and was then stapled to his declaration, then his declaration to the effect that he had examined the return would have been false to his knowledge and he would be guilty of an offence contrary to section 82(6). But so long as he has examined it and can honestly say that to the best of his knowledge and belief it is a complete and accurate return as required by law, and so long as all expenses shown in the return as paid were paid by his election agent to the best of his knowledge and belief, he will not have committed an offence.
16. The case stated contained a critical finding that Dr Sharma was clearly a man of honesty and integrity who completely trusted his agent as he had trusted him on previous occasions, apparently with justification. The issues at the centre of the case fell peculiarly within the election agent's own knowledge. They related only to expenses which he had incurred and which he represented to Dr Sharma he had paid. He told Dr Sharma by the way he completed the return that there were no unpaid bills and that he had paid the invoice, a copy of which was attached to the return. This is not a case in which a candidate was content to shut his eyes. Dr Sharma is an honest man who trusted his agent to do his job honestly and he was let down by him.
17. If Parliament believes it necessary for a candidate to perform the role of an auditor, as was implicit in the prosecution's submissions in this case, and to be on the look-out to see if his agent is not only deceiving the returning officer, but also deceiving him, the candidate, it may of course pass legislation to that effect. But as the law now stands, in my judgment Dr Sharma did examine his agent's return and did honestly believe that it was correct. In those circumstances he should not have been convicted of an offence. Nothing in this judgment should be taken in any way to excuse a candidate who rides roughshod over his obligations in relation to his expenses. It is noteworthy that the district judge was troubled by the conclusion to which she had arrived, and it is also noteworthy that she never made any finding that he had been dishonest in relation to anything which he did.
18. For these reasons I would allow this appeal.
19. MR JUSTICE DAVID STEEL: I wholeheartedly agree and there is nothing I can usefully add.
20. MR BLACH: My Lord, the issue of costs does arise. I believe I am duty-bound to make an application for costs on behalf of the Legal Aid Board, who are financing this appeal. My Lord, I believe your powers are under section 28(a) of the Supreme Court Act 1981.
21. LORD JUSTICE BROOKE: Where are we going to find that?
22. MR BLACH: I have Archbold.
23. LORD JUSTICE BROOKE: This is a criminal matter, is it?
24. MR BLACH: My Lord yes.
25. LORD JUSTICE BROOKE: So that you asking for a defence costs order?
26. MR BLACH: My Lord, I believe it is inter partes in relation to a case stated. I can only rely on Archbold in relation to its statement that it is inter partes. Page 885, my Lord.
27. LORD JUSTICE BROOKE: (After a pause) The associate advises us that the ordinary course is to make an order for costs out of central funds to the successful appellant in a criminal case.
28. MR BLACH: So be it. That is the application I make.
29. LORD JUSTICE BROOKE: Any observations to make, Ms Whitehouse?
30. MS WHITEHOUSE: My Lord, if costs are coming from central funds I make no observations.
31. MR BLACH: I ask for those costs to be taxed, of course.
32. LORD JUSTICE BROOKE: I do not think anything is taxed these days, but you can have an assessment. So the answer to the question posed in the case is no.