Glasgow sheriff orders Brexit Party to pay £22k in unpaid invoices to advertising firm

VMS Enterprises Ltd, a supplier of mobile advertising services in the form of mobile billboards and electronic boards, was contracted by the then-Brexit Party Ltd in 2019 to assist it in campaigning for the 2019 UK General Election. The defender refused to make payment, claiming that the invoices claimed for had not been authorised internally.

The case was heard by Sheriff Stuart Reid in Glasgow Sheriff Court. The pursuer was represented by Ms S Cargill, and the defender by Mr R Watson.

Candidate budgets

During the course of the pursuer’s interactions with the defender, they principally dealt with a Mr Howard Jones, a volunteer district manager for the party in 12, later 18, districts of central London. His responsibilities included the incurring of campaign expenditure on behalf of the candidates in the constituencies he managed, including the supply of the pursuer’s services. The defender’s candidates, or Mr Jones acting on their behalf, placed 28 orders for advertising services with the pursuer between 25 November 2019 and 12 December 2019.

At a meeting for candidates of the defender in September 2019, it advised candidates that it would meet all of their campaign expenditure as allowed by the Electoral Commission. The following month, it altered its position and instead advised it would only allocate each candidate a budget of £5,000. The pursuer was unaware of this policy until after the date of the election.

Between 25 November and 5 December, the pursuer issued 10 initial invoices amounting to just over £22,000 to the defender, around £15,000 of which were paid by the defender. On 5 December 2019, the pursuer emailed the defender to advise that several invoices were still outstanding, receiving no reply.

A further 18 invoices were issued between 6 and 12 December totalling £18,870 following further requests from Mr Jones and Brexit Party candidates. The pursuer carried out the requested services in the belief that these requests had been authorised. Following three further payments, nineteen outstanding invoices totalling £23,160 remained.

By email dated 17 January 2020, the pursuer was formally advised by the defender’s national campaign director that the unpaid invoices would not be paid as Mr Jones and the candidates had not followed the campaign expenditure instructions, and they had no knowledge that the pursuer’s services had been instructed for those services.

The pursuer’s position was that it was an implied term of the contracts that the sums due were payable at their principal place of business in Glasgow, thus making the action a matter for the Scottish courts. It was submitted that the defender’s conduct in making the initial payments constituted a representation that Mr Jones and the candidates were authorised to contract with them, with the defenders having taken no steps to make the pursuer aware of any limitation on this authority.

It was submitted in response for the defender, which also challenged the jurisdiction of the sheriff court, that the candidates’ contracts with the pursuer were void or unenforceable due to constraints placed on political parties by sections 76 and 77 of the Political Parties, Elections & Referendums Act 2000 preventing it from making unauthorised payments of any campaign expenditure.

Reasonable inference

In his decision, Sheriff Reid noted that the case raised issues concerning the law of agency, of which he said: “In law there appears to be no true relationship of agency between a political party (as principal) and its fielded candidate (as agent) arising merely by virtue of the nomination of latter by the former. A key element of agency, in the legal sense, is missing, namely the grant of some sort of authority by the political party to the candidate to act on behalf of the party (as principal) to create or affect legal relationships between the principal and third parties.”

However, he went on to say: “If I am correct in my interpretation of the [campaign expenditure] Instructions, in my judgment the fundamental consequence is that an agency relationship is thereby created between the candidate (as agent) and the defender (as principal). The agency relationship arises once a candidate’s request for approval of a purchase is approved by [the defender]. At that point, the defender thereby confers upon the candidate an express authority to purchase the sanctioned item or service and, critically, to do so on behalf of the defender as principal.”

On whether the pursuer was justified in believing that the later invoices would be paid, he said: “Viewed objectively, from the perspective of the third party, the candidates (direct or through Mr Jones as campaign manager) were concluding contracts on behalf of the Party and instructing the issuing of invoices to the Party, all without any disclosed or evident constraint on their authority, and the defender was duly honouring those contracts by promptly settling the invoices.”

He continued: “The reasonable, objective inference to be drawn by the pursuer from this course of conduct, comprising the seven Initial Payments, is that the candidates (directly or through their campaign manager) did indeed have authority to bind the defender to contracts of this nature with the pursuer.”

Addressing the effect of the 2000 Act, Sheriff Reid explained: “Notwithstanding the illegality of incurring and paying campaign expenditure in circumstances falling foul of sections 75 & 77, section 114 of the 2000 Act expressly provides that the rights of third-party creditors are unaffected. Section 114 was not referred to in averment or submission, but it would seem to be an absolute answer to the defender’s primary argument in this respect. The pursuer, as a third-party creditor, is entitled to enforce the contracts.”

He concluded: “The purpose of sections 75 & 77 of the 2000 Act is merely to criminalise the stated conduct and perhaps to trigger additional potential consequences under electoral law, all with a view to ensuring a fair election. Its purpose is not to interfere with or regulate private civil rights or obligations arising between contracting parties (specifically with bona fide third-party creditors), or to divest legal persons of contractual capacity.”

For these reasons, Sheriff Reid ordered the defender to make payment to the pursuer of the sum of £22,020 with interest from 26 February 2020.