The Audit Commission has told John Magill, the district auditor, that he can pursue charges of gerrymandering against the former leader of the Tory borough, The Independent has learned.
The court had cleared the Tesco heiress of "wilful misconduct" and quashed an earlier High Court ruling that she should pay pounds 27m for her alleged orchestration of the sale of council homes to potential Tory voters in marginal wards.
In a landmark decision, Lord Justice Schiemann and Lord Justice Kennedy said the "designated sales" policy was lawful, although it had Tory electoral success as a motive.
The Commission decision removes the biggest obstacle against Mr Magill, who is not expected to announce his final decision to take the case to the Lords until next month.
The move will infuriate Dame Shirley and her allies, who say prolonging the case is a waste of public money. Nearly pounds 7m has been spent on legal costs and Tory MPs have put down a swathe of parliamentary questions for answer this week on the bill for the taxpayer.
They say even the Court of Appeal judge who dissented from the ruling calculated that the alleged gerrymandering had cost Westminster pounds 7m, not pounds 26m as originally charged. But it is understood that the Audit Commission believes that will be far outweighed by surcharges if the Lords overturns the Court of Appeal ruling.
"Obviously, with a case as big as this, it is important that we have the law clarified," a Commission source said. "The broader issues of misuse of public office and surcharge need to be sorted out by the highest court in the land."
A big factor in its decision was the rare step by the Court of Appeal judges to grant Mr Magill leave to appeal to the Lords. The Commission has estimated that the extra cost of the Lords hearing will be minimal because most of the evidence has already been compiled.
Dame Shirley was accused in 1989 of using the designated sales policy to sell off flats earmarked for the homeless in a deliberate attempt to keep Westminster Conservative.
She and Mr Weeks were found guilty of wilful misconduct by Mr Magill in 1996, and a year later lost an appeal to the Divisional Court, when four other surcharged councillors and officers were cleared.
But in a ruling with profound implications for local politics, the Court of Appeal earlier this month reversed those findings. Lord Justice Kennedy and Lord Justice Schiemann said: "It is legitimate for councillors to desire that their party should win the next election."
Later, John Howell QC, counsel for Mr Magill, said the decision was a "charter for councillors to pursue improper objects".Reuse content