At the end of the six-week hearings Dame Shirley will seek judicial review of yesterday's decision.
The District Auditor, John Magill, a partner in the accountants Touche Ross, issued provisional findings in January after a four-year investigation into the Conservative-led council's housing policy, saying that Dame Shirley and nine other councillors and officers had been guilty of gerrymandering. They all deny any wrongdoing.
His provisional report said that after the 1986 local elections, when the Tories came within four seats of losing power, Dame Shirley allegedly identified six marginal wards as 'battle zones'. A policy was formed to identify council homes in the key wards that could be designated for sale, on the assumption that owner-occupiers were likely to vote Conservative.
Dame Shirley has argued that the auditor was wrong to announce his provisional findings ahead of public hearings, and he could not be seen as unbiased.
After hearing submissions from Anthony Scrivener QC, and taking legal advice, Mr Magill decided he had acted correctly.