Brian Rudman: Rebels dragging out house battle

COMMENT

Nearly a decade after disgruntled right-wing Onehunga Labour Party members "privatised" the electorate organisation's main asset, a rental bungalow, Justice Tony Randerson has ordered it to be returned to Onehunga Labour Party members.

A simple enough instruction, you might have thought. The only complication is that the Onehunga electorate no longer exists and chief rebel, Chris Diack, plans to drag out the battle for all it's worth.

The judge, in a reserved decision, has called on both parties in the case - the Labour Party and Mr Diack's Hugh Watt Society - to report back to him with ways of satisfying his ruling.

Mr Diack says he will propose that as the electorate officially ceased to exist on or about October 12, 1996, so too did the Onehunga Labour Party.

Therefore, he will propose that each member of the Labour Party in Onehunga as of that date be contacted and asked whether they want their share of the loot in the hand - not surprisingly, his recommended course of action - or agree to the assets being passed over to some new Labour Party entity.

However Labour Party president Mike Williams dismisses this course of action, saying the party will propose that a new trust to administer the property be set up representing the Labour Party members living within the old electorate boundaries.

He also added he was "delighted to be given the opportunity to restore the property to its rightful ownership".

Who's reading the judgment right? Well my bets are on the Labour Party. While Justice Randerson insists his final determination will be made "in the light of submissions" made, he does seem to give a pretty clear nudge and wink as to what Labour should do to get his attention.

"The parties should bear in mind that the court has power under section 64 of the Trustee Act 1956 to authorise variations of trust where it is inexpedient, difficult, or impracticable to do so without the court's assistance.

"Bearing in mind the clear intention that the property would be held for the benefit of the Labour Party members in the Onehunga electorate from time to time, it might be decided that some other form of disposition might now be appropriate."

The saga began back in December 1992 when Mr Diack, the local Labour organisation's favourite for selection as their candidate in the 1993 general election, missed out to the head office favourite, centre-left Richard Northey.

Mr Diack and his supporters kicked all the toys out of the sandpit, draining the electorate cash accounts by paying more than $6000 in outstanding debts to party headquarters, leaving just $7 in the fighting fund for Mr Northey's campaign.

Retaining control of the local organisation, they also systematically seized control of the rental property that had been the electorate organisation's little piggy bank.

It was a bitter battle, including efforts to have Mr Diack expelled from the party that lapsed when he resigned in 1994.

In 1973 the organisation had acquired what later became known as Hugh Watt Hall. In 1985, it was transferred to a newly formed incorporated society known as the Onehunga Labour Society.

The transfer of ownership to a society was done after rumours that Labour Party head office might seize the property and sell it off to pay election debts.

In 1988, the hall was sold and a residential unit bought instead.

The officers of the Hugh Watt Society and the local Labour Party were initially interchangeable. But from 1992, the Diack rebels, still in control of the society, progressively changed the rules, eventually eliminating any reference to the Labour Party.

By June 1995, the existing society members, with Mr Diack as secretary, had changed the rules sufficiently to make themselves a self-perpetuating identity.

Justice Randerson found that at the time of the transfer in 1985, the transaction was completed with the clear understanding and expectation that the membership of the society would remain composed of the Labour Party in the Onehunga electorate through the ruling electorate committee, and that in the event of a winding-up, any surplus assets would revert to the New Zealand Labour Party.

Justice Randerson said Mr Diack's society held the property in trust and "the society has been unjustly enriched at the expense of those who raised the original funds for the purchase of the hall."

Mr Diack and his society and the Labour Party have six weeks to make their submissions.