Rudman's city: Fed-up Labour acts to put its house in order

Eight years ago disgruntled right-wing Onehunga Labour Party members "privatised" the electorate organisation's main asset, a rental bungalow.

Now party chiefs are finally demanding it back.

In a stern letter to the former party members controlling the house, the party's lawyer, Greg Presland, says that to many in the party, their action amounted to theft.

"The assets represent the cumulative efforts of scores of Labour Party members over many decades."

An unrepentant recipient of the letter, would-be Labour candidate turned Act activist and Auckland Now secretary Chris Diack, says it's just a case of the Labour Party running short of money and hunting around "to see where they can get it from."

That's not the way party president Mike Williams and Paul Tolich, the party councillor deputed to repossess the house, see it.

"We want to rightfully gain control of party property and we're prepared to follow through as long as it takes," says Mr Tolich.

Mr Presland's letter, addressed jointly to Mr Diack and Margaret Burke - ex-Labour vice-chairwoman in Onehunga and now electorate agent for Epsom-based Act MP Rodney Hide - doesn't beat about the bush.

"It appears that you have both been involved in the systematic alteration of the rules of the Onehunga Labour Society so that the party's assets have been placed outside of its control ...

"To add further insult to injury, the assets appear now to be used to support the Act party and Auckland Now, two institutions whose principles are far from the guiding principles of the Labour Party and the beliefs of its members."

He demands they transfer the funds, assets and books of the Hugh Watt Society (formerly known as the Onehunga Labour Society), which administers the property, and also refund any payments made by the society - in particular, the $2000-a-year honorarium paid to the society secretary.

Amid all the blood-letting and back-stabbing between the left and right factions that tore the Labour Party apart in the decade after its 1984 election victory, the Onehunga house ranks as one of the more inventive diversions.

In December 1992, Mr Diack, the local organisation favourite, missed out on nomination as 1993 general election candidate.

Selected instead was centre-left Richard Northey, the favourite of the head office selectors.

Mr Diack and his supporters spat the dummy.

First, they drained the electorate cash accounts, paying more than $6000 in outstanding debts to party headquarters, leaving only $7 in the kitty for Mr Northey.

They also turned their eyes on the Mt Smart Rd investment property. This was the legacy of years of fundraising by party members in the era of the late Hugh Watt, Onehunga MP for 22 years.

The local party had bought Hugh Watt Hall in Grey St as a headquarters and source of income.

It was initially run by a trust, but this was replaced in 1985, apparently for taxation reasons, by an incorporated society, the Onehunga Labour Society Inc.

By 1988, the hall was costing more to run than it earned, so it was sold and an income-earning rental house bought.

The 1985 rules of the society restricted membership to current members of the Onehunga Labour Party electorate committee. Meetings were supposed to coincide with meetings of that committee.

Finally, the rules said: "On the winding up of the society, all surplus assets after the payment of costs, debts and liabilities shall vest in the name of the NZ Labour Party at Wellington."

Immediately after Mr Northey's selection, Mr Diack, Ms Burke and their supporters undertook a wholesale revision of the society's constitution. They said at the time that it was to prevent head office plans to sell the property and transfer the assets to party headquarters. Party bosses denied any such plot.

By June 1995, the existing society members, with Mr Diack as secretary, had used a series of rule changes to make themselves a self-perpetuating entity.

Any reference to the Labour Party had been expunged. At winding-up, any assets were to go to registered charities active in Onehunga.

Party officials decided the least damaging tactic, politically, was to let the rebels have their fun, blowing off a bit of steam. They hoped that then they would come to their senses. No such luck.

Now the party has declared playtime over. Its legal advice is that the society held the assets in trust for the party.

Under clause 214 of the party's constitution, party assets cannot be sold without approval of the party's New Zealand Council. This was not obtained.

Further, legal advice is that money raised for the party's purposes belongs to the party, not to the society, and cannot be transferred to another party or organisation.

The May 3 letter gave the society seven days to "confirm you will cooperate" otherwise legal action would begin.

Society members have not yet met, but have told party officials they will.

If Mr Diack is to be believed, the fight has just begun.