Scorched earth litigation
The right’s implausible and not so implausible legal threats have a purpose, writes Mike Macnair
As soon as one worthless legal argument is knocked on the head, another pops up. Last Thursday Mr Justice Foskett dismissed - emphatically - Michael Foster’s lawsuit claiming that Labour Party rules required Jeremy Corbyn to obtain nominations from MPs and MEPs to be on the ballot. Foster said he would not appeal. But within two days, “leading moderates” had told The Daily Telegraph of “plans for the parliamentary party to defy the result of the ballot, and: “They are considering going through the courts to get the right to use Labour’s name and assets, including property owned by the party across the country”.1
This ‘whack-a-mole’ character of the Labour rightwingers’ legal threats is more interesting than at first sight appears. It tells us something about the present Labour right (as opposed to the ‘old right’ from before Blairism). And beyond that it tells us something about the plutocratic character of the ‘rule of law’ and ‘liberal constitutionalism’.
In my previous article on Labour’s national executive committee decision and the role of legal advice given to it, before Foster’s claim was actually brought, I commented that “the drafting is, in my opinion, perfectly clear and unambiguous”. Foskett J made the same point (at para 50): “I have to say that a fair reading of clause II.B.2 (i) and (ii) reveals a natural and ordinary meaning that seems to me to be entirely clear.”2
Of course, he could not begin or end there without making the claim appear to be so wholly unfounded as to be vexatious. Paras 1-36 set out the background and the facts, mentioning the conflicting legal advice given to the NEC (but not telling us much about the grounds offered in that advice: that would violate ‘legal professional privilege’3).
Paras 37-49 set out the arguments offered in court by both sides. Foster’s counsel argued that the provision in clause II.B.2 (ii) requiring nominations only for the challenger was merely a threshold to trigger a context; if the leader was to get on the ballot automatically, they argued, this was so important that it could only be the case if it was expressly provided (paras 43-44). This had been in the advice offered to the NEC by James Goudie QC (para 44). Counsel for the party and for Jeremy Corbyn merely countered these arguments.
This takes us to para 50, quoted above. The judge elaborated on the point in paras 51-54, concluding that other issues which had been argued did not strictly arise. But he proceeded to deal with them “in case they are considered by the parties to be of relevance”. One of them is important.
Clause 1.X.5 says that the NEC’s interpretation of the rules is ‘final’. Counsel for the Labour Party and for Corbyn argued that this meant the judge should only overrule the NEC if its interpretation was unreasonable. Counsel for Foster, on the other hand, argued that the clause attempted to “oust the jurisdiction of the court” and was, as such, void, relying on the judgment of Denning LJ (later Lord Denning MR) in the 1952 case of Lee v Showmen’s Guild of Great Britain4 (and numerous following decisions). The judge said (para 58):
I find it difficult to understand how a court could conclude that an erroneous interpretation of the rules was reasonable: a conclusion of law is either right or wrong and a member of an unincorporated association has the right to ask the court for its decision.
This is a constitutional claim: that the court has the right to control the internal affairs of voluntary associations. The judge qualified this claim only slightly by admitting (para 59) that, if the rule was found to be ambiguous, and hence
requires consideration of background material beyond the precise words used in the rule that has significant political connotations, the NEC may well be better placed than the court to consider these implications and decide accordingly ... I highlight the issue because it brings clearly and vividly into focus the importance of recognising the vital dividing line between the world of politics and the world of the law.
These two passages are a clear example of doublethink. But the doublethink is endemic in the legal issue. The ‘rule of law’ concept, if carried into rigorous effect, is inconsistent with political democracy. So, all the more, the rule against ‘ouster clauses’ - that is, the claim that the courts always have to have the last word on the interpretation of the rules of voluntary associations - is inconsistent with freedom of political association (and hence also with political democracy). Through these claims, the judiciary in fact claims unlimited and unaccountable political power: sovereignty.
But as a matter of political legitimacy, these claims cannot be admitted to be unlimited. An open judicial claim to political sovereignty would make nonsense of the routines of elections, and so on. It is far from clear that a direct judicial conflict with a parliamentary majority on the termsof an open judicial claim to sovereignty would end with the police, army, etc obeying the judges. Hence Foskett J’s offer of ‘deference’ to the NEC - under circumstances which might but do not in the actual dispute arise.
The other two points are much less important. Paras 60-68 of the judgment dealt with the claim made by counsel for Foster that Tony Benn’s 1988 challenge to Neil Kinnock was a precedent, showing that the leader had to obtain nominations. Since 1988 the formulations in the rules had changed more than once, and more fundamentally a single instance could hardly amount to “an established basis for interpreting the rule” (para 68). Paras 68-70 report that Labour general secretary Iain McNicol in an affidavit indicated that the current practice was that, in the absence of a challenge, the leader and deputy leader of the party were elected unopposed. The judge indicated that this current practice could not affect the interpretation of clause II.B.2 (ii).
Law and politics
I made the point in my previous article that, though the interpretation of the rules which I put forward there looked obvious - and it now turns out also to be obvious according to Foskett J - courts are quite capable of deciding cases in ways which involve deeply tortured interpretations of rules. Such issues are never ‘purely legal’, contrary to Foskett J’s claims that this is such an issue (at paras 10, 59 and 72), unless either no political issues are at stake in the outcome or the politics makes it advantageous to those in dispute to fence off the issue.
An example of the first sort is that in ordinary accident cases no political issue is at stake; but this is not true in accident cases implicating the current moral panic among lawyers about ‘compensation culture’, which is political.5
An example of the second is - this case. To get to the point, we need to think about what would have happened if Michael Foster’s claim had succeeded. It is quite clear that this would not have been the end of the story. The Labour leadership election would have had to be suspended or restarted. Suspended, in practice, because there would inevitably have been an appeal - at least to the court of appeal, and probably all the way to the supreme court of the UK - dragging on, perhaps, for a year or more. While the appeal was pending, the leadership of the Labour Party would remain in suspense. It would be practically politically impossible for Theresa May to call a snap general election while the leadership of the Labour Party was sub judice. Moreover, the longer the process dragged on, the worse would get the political position of the Labour right, skewered to the wall as obvious advocates of a gerrymander against the majority of their own party’s membership.
This political judgment is reflected in the decisions of both the media and the Labour right, surrounding the litigation. Down to the NEC meeting, a great deal of noise was being made about the claim that Jeremy Corbyn needed to get the nominations from MPs and MEPs, both in open arguments and in anonymous briefings. Once the NEC decided that Corbyn did not need the nominations, the right - and the media - shut up almost completely about the issue. The reality was that any decision other than the one which has actually been reached by Foskett J would be against the interests not just of Jeremy Corbyn, but also of the Labour right - and of the Conservative Party.
Hence Owen Smith’s statement when the decision was handed down, that the court had “done the right thing”, and that “This now puts to bed any questions about the process, so we can get on with discussing the issues that really matter.”6 Hey, Mr Smith - if you really think that the litigation was unjustified, how come you did not criticise the 14 NEC members who voted to interpret the rules to exclude Corbyn?
The reality was that Michael Foster’s taking the case to court was a result of his failing to understand the right’s actual strategy. This, it seems from its conduct, was to use unfounded legal threats to put pressure on Corbyn and the left and keep them on the defensive, but not to have its claims actually tested in court, which could only lead to embarrassment (but for the fact that the media minimises such embarrassment by minimising the ‘news value’ of the decision).
The claim that a Parliamentary Labour Party breakaway could acquire through the courts the right to the party’s assets is not quite as implausible as the claim that Corbyn had to get MP and MEP nominations under the rules. But the way in which it could be made plausible is weird and would even more unambiguously lack political legitimacy.
Under the rules, the Labour Party’s assets are vested in one of two companies, either in Labour Party Properties Ltd or in Labour Party Nominees Ltd, either absolutely or upon trusts (the terms of these trusts are not readily visible). This is not just the assets of the central party, but also the assets of local constituency parties (which until the 1980s and maybe later were locally owned). Here we are told that the constituency “shall procure” that all assets are transferred to Labour Party Nominees Ltd “to be held by it as trustee for the relevant Constituency Labour Party upon the standard terms of trust from time to time approved by the NEC”.
Similar rules apply mutatis mutandis to Young Labour, etc. As I already said, trying to find the terms of trust online does not bring them up.
The two companies, as appears from the Companies House website, are both “limited by guarantee”: ie. though they have members, they do not have shareholders. They each have five, identical, officers. Simon Mills, Labour Party deputy treasurer, is the company secretary of both. There are four directors, again of both: Iain McNicol, the party general secretary; Greg Cook, characterised in 2015 as “the party’s in-house pollster” (and in 2002 self-identified as a “party hack and proud to be so”, who had worked for the party since 1988);7 Michael Creighton, party regional director for the Southern Region; and Thomas Sharpe, a solicitor (whose name is fairly common and shared with a famous author, which effectively precludes finding information about him online).
If the companies were limited by shares, the issue would arise as to whether the shareholders had the beneficial interest in their shares or were trustees for the party; and they would most likely be considered to be trustees for the party. Because the companies are limited by guarantee, rather than by shares, it is possible that an operation could be conducted along the lines of the Morning Star split from the old ‘official’ Communist Party of Great Britain - where the members of the People’s Press Printing Society decided to go their own way in violation of the discipline of the party. We do not know who the members of the companies are, and it is possible that the right wing has a majority among them.
Possible, but seriously problematic. After all, the PPPS was in theory a ‘broad front’ organisation linking the Communist Party to allies in the trade unions and Labour left. That character gave it, probably unintentionally, a degree of legal autonomy.
But, by comparison, the officers of the two Labour property companies are predominantly paid employees - plus a solicitor, who is most unlikely to be entitled to any beneficial claim on the assets. The assets came from the Labour Party, not from the guarantor-members of the company or anyone else, being the result of a reorganisation of the party’s property-holding arrangements, through powers explicitly granted to the NEC under sub-clause 1.VIII.3.L (Rules, p6); and the assets of the constituencies are explicitly said under the rules quoted above to be held by Labour Party nominees on trust for the CLP. In other words, unlike the PPPS, the Labour property companies are very much most likely to be held, in the event of litigation, to be trustee companies holding their assets in trust for the Labour Party.8 Fine detail information not publicly available may call this conclusion into question, but it does not look likely.
Having said that, however, litigation about the Labour Party’s assets would open a can of worms, and it might be that the rightwingers who flew this kite past the Telegraph are relying on this possibility.
The basis of the can of worms is the 1979 decision of Vinelott J in Re Grant’s Will Trusts,9 the effect of which is that, if the ownership of Labour Party property came to court, it might well be decided that the whole lot belongs to the government legal department, bona vacantia (ownerless property) division, under a ‘royal prerogative’ rule, which gives ownerless property to the crown (ie, the monarchy considered as the state).10
The rule underlying Re Grant’s Will Trusts is that the law does not permit the creation of perpetual trusts, or trusts for purposes, except for those publicly favoured trusts called ‘charities’.11 The rule is of some antiquity and had a purpose which is not in itself senseless, being to prevent the tendency which would otherwise exist for a large proportion of the land in the country to wind up owned by old, and frequently obsolete, institutions.12 Corporations do not count because under the Companies Acts the members can wind them up.
In the ordinary case of unincorporated societies (like political parties, clubs and societies), the courts construe the assets as being held by or for the members for their own benefit, but subject to their contractual rights under the society’s constitution or rules. The courts have, however, said that this interpretation fails, should the rules of the society prevent its being wound up: a conclusion reached in Carne v Long (1860), where the rules prohibited the winding up of Penzance library as long as there were still 10 members.13
In re Grant’s WT, Wilson Grant, who died in 1975, left his property
for the benefit of the Chertsey headquarters of the Chertsey and Walton Constituency Labour Party, provided that such headquarters remain in what was the Chertsey Urban District Council area (1972). If not, I declare that the foregoing provision shall not take effect and in lieu thereof I give all my said estate to the national Labour Party absolutely.
The judge, after analysing the rules of the Constituency Labour Party and of the national Labour party, came to the conclusion that both local and national party, like the library in Carne v Long, lacked provision for the winding up and distribution of assets. Hence the trusts of Grant’s will were void, and his estate fell to be distributed as if he had left no will (probably to relatives).
Vinelott J was pressed with a statement made by Brightman J in the earlier case of re Recher’s Will Trusts that “It would astonish a layman to be told there was a difficulty in his giving a legacy to an unincorporated, non-charitable society, which he had, or could have, supported without trouble during his lifetime.”14
His answer to this point was not very persuasive. What it comes down to, however, is that support “during his lifetime” is “without trouble” because the destination of funds paid during lifetime to unincorporated societies is not usually litigated. As soon as it does come to be litigated, the problem that void trusts were involved would surface.
The void trusts then imply that funds which have been given by identifiable donors for specific purposes will be held on “resulting trust”: that is, go back to the donors. Where the donors are unidentifiable, or the income arose from subscriptions, the assets will become bona vacantia. This was decided in another slightly earlier case: the 1969 decision in Re West Sussex Constabulary’s Widows, Children and Benevolent (1930) Fund Trusts. There, a police benevolent fund with narrowly defined purposes had lost its objects due to police reorganisation destroying the force whose widows, etc, were to be supported. Those among the funds which could not be restored to identifiable donors were held to be bona vacantia.15 The rather unattractive result here has been avoided in various ways, but they amount in essence to cases where the unincorporated society has rules governing its winding up; these rules then take effect.
Where property turns out in litigation to fall to be analysed as bona vacantia, the judge is under a duty ex officio (under his official duties) to find the crown title irrespective of whether any of the parties argues for the crown title (another aspect of the ‘royal prerogative’ character of the rules).
I have read all the way through the Labour Party 2016 rulebook for the sake of this article and, though I may be missing something, I cannot see any provision for the winding up of the party and distribution of its assets. In fact, the centralisation of party property in the two companies under the current rules seem to me to make Vinelott J’s analysis in Re Grant’s Will Trusts, and in consequence the bona vacantia analysis under Re West Sussex ... Benevolent Fund, if anything more legally persuasive than it was in 1979.
This is a point which is worth a short digression, as being a matter of the politics of party rules. The rule against perpetual trusts is a branch of the rule against mortmain. This rule is one which in principle communists should support. I merely note that “the return to the nation of the goods said to be mortmain, moveable and immoveable” is in the 1880 Programme of the Parti Ouvrier;16 Marx, Guesde, Engels and Lafargue might have been wrong on this one. But the underlying principle of the rule - that at the end of the day the living and not the dead should control the allocation of resources - seems to me to be as fundamental to communism as it is to liberalism.
Given, then, that we should not oppose the rule against perpetual trusts, that has implications for the rules of working class political parties and other institutions. We should not be endeavouring to immunise the party or its property against wrong decisions by the members. There should be a power to wind up and dispose of the assets. We can condemn the decision to exercise such a power as political liquidationism, and refuse to recognise it politically,as our comrades did in relation to the winding up of the old ‘official’ communisty party. However, trying to stop it by legal rules or setting up ‘constitutional’ protections has the effect of rendering the party’s (or other organisation’s) property more vulnerable to legal attack.
This is, of course, a branch of the fake legalism which affects the left more generally and usually produces caricatures of legal reasoning. We have made the point more extensively in past articles about Left Unity, its Heath Robinson constitution and its bureaucratic ‘safe spaces’ proposals and disputes procedures. But, of course, Left Unity merely copied these organisational principles from the arcane bureaucratic management of the Labour Party ...
The ‘stretch’, then - and I have to say that it would be a considerable stretch - would be for the right wing to put the party property into litigation; for the judge then to find that the bulk of the property, not being capable of ‘resulting trust’ analysis, was bona vacantia; and for the ‘Parliamentary Labour Party’ then to get the government legal department in its discretion (which it certainly has in relation to the disposal of bona vacantia)17to set up a scheme for the use of the ‘unowned’ assets, which would give control to the ‘Parliamentary Labour Party’, as opposed to the current Labour Party.
It is, as I say, a stretch. It depends on the government legal department exercising discretion in favour of the splitters. And it would be even more obviously politically illegitimate than the idea of gerrymandering the leadership ballot through litigation. So it is pretty unlikely, though not completely out of the question.
The question which this perhaps over-elaborate analysis poses is, as I said at the outset: why does the Labour right wing keep using the mass media to make a series of seriously implausible legal threats?
The answer is, it seems to me, that the behaviour is a political version of what is called in North America ‘scorched earth litigation tactics’,18 under which the party to a lawsuit who has more financial resources engages in more or less unjustified legal claims in order to cause the other side to run out of money, or to distract their lawyers (who are assumed to have fewer resources) from preparing arguments on seriously contestable issues; or merely to cause the party to abandon hope, as they are drawn into the labyrinth of side-issues. Such tactics are recognised in the UK to be a form of abuse of process,19 but there is a delicate line involved, since the regulatory bodies are not prepared to say that the exploitation of superior resources to force the adverse party to give up or settle on unjust terms is in itself unacceptable - this is too much a normal feature of the legal system.20
The Labour Party right’s legal threats are, of course, not directly ‘scorched earth litigation tactics’: it is not engaged in litigation as such. But the right seems to have a very similar tactical purpose: to distract Corbyn and his co-thinkers’ attention (successfully, for example, in relation to the decisions of the July 12 NEC on issues beyond whether Corbyn should or should not be on the ballot); and, in addition, to provide yet more opportunities for the right wing to provide anonymous briefings to the media and to convey the impression that Labour is disastrously split and the fault is all Jeremy Corbyn’s. The purpose is like ‘scorched earth litigation tactics’, because it is, by making unfounded claims, to destabilise and demoralise the other side.
It has to be said that this is a different tactic to those of the old Labour right in fights against the left before the time of Blairism. The old right certainly used bureaucratic manoeuvres of one sort or another. But its leaders also combined these tactics with actually going out and endeavouring to persuade people on the ground of the truth of their (Atlanticist, mixed-economy, constitutional-loyalist) political ideas.
The current right seems to be desperately short of ideas. We can call as witness Angela Eagle’s inability to explain her policy differences with Corbyn, or Owen Smith’s rather desperate-seeming attempts to sell himself as a leftwinger.
But more fundamentally we can look at the first years of the Blair government. While Gordon Brown tinkered with small-scale redistribution, the government’s legislation showed an unusual degree of Law Commission-sponsored reforms going through; plus, some constitutional changes then fashionable with the bar (human rights, devolution, freedom of information ...), some of which Blair himself subsequently regretted. The early Blair government let through the projects of the ‘great and the good’ because it did not have its own ideas, and had committed itself to not reversing what the Tories had done. In short, it is not just the post-Blair right which is short of ideas. Blairism itself was a project about how to get into office, not at all about what to do with it.
The result of the Blairite project and 20 years’ control of the parliamentary selections is the character of the PLP and the Labour Party in general. On the one hand, there is an elderly ‘remnant left’ hanging on (Corbyn and his immediate allies), and a new and totally inexperienced layer of young activists brought in by the ‘Corbyn surge’ last year and this. On the other, the right is mainly non-ideological in character. These people are political technicians, often with degrees in ‘PPE’ (politics, philosophy and economics), often with careers in lobbying (Owen Smith is an example), or as MPs’ assistants, or at best in the party apparatus before their selections as MPs.21
It is this background which leads them to think that the way to conduct the political battle in the Labour Party is as lobbyists and PR men, using their privileged access to the media and legal threats in the way a Robert Maxwell figure would use them: politics as ‘scorched earth litigation tactics’.
This is, of course, how the commercial lobbyists routinely work: the combination of legal threats, plus never going away, keeping constant pressure on, deploying the resources of their clients to overpower any attempt to change the law in ways adverse to their interests.
The rightwing MPs have an extraordinary sense of ‘entitlement’ (a problem rather general among today’s elites). This can’t be happening to them: as they might say to a police officer who stopped them on a traffic matter, ‘Don’t you know who I am?’ They would, fairly clearly, rather see the Labour Party altogether destroyed than lose control of it.
Here, too, there is an underlying constitutional claim. In the large bulk of the 20th century, the Russian Revolution and the resulting geopolitics required compromises with the interests of the working class as a class. A major result was universal suffrage - not accepted in the UK until after 1917. In the post-1948 period, these compromises meant the acceptance of the existence of large mass workers’ parties, trade unions, etc - as long as their leaders were prepared to commit to the constitutional order.
When the Soviet Union fell, the sense of the need to make such compromises disappeared. Serious efforts have not been made to get rid of universal suffrage; but the legal system and the nexus of the lobbyists and the advertising-funded käufliche Presse (‘bought media’) have been used more and more to deny the legitimacy of working class independent organisation and political representation; to insist that the workers must be represented by one of another group of lobbyists and political technicians, who are actually open to hire by this or that capitalist group.
There is an interlock here between the dominance of paid agents in the press - paid agents in the form of lobbyists, the ‘revolving door’ between government and lobbying, lawyers as ‘mouthpieces’ and lobbyists and as technicians of ‘scorched earth’ - and the idea that only those lobbyists/lawyers approved by the advertising-funded media are acceptable leaders of political parties. What is at issue is neutralising universal suffrage, ensuring that it serves only as an instrument of deception (to quote, again, the Programme of the Parti Ouvrier).
We can begin to counter these mechanisms. But to do so we have to recognise that they are constitutional mechanisms of a plutocratic-oligarchic political order; and not kid ourselves that better technique in handling the media, or ingenious tactics in relation to the Labour right wing, can overcome them.
1. The DailyTelegraph July 30 2016.
3. See my ‘Secrets and lies’ Weekly Worker May 4 2005. Also ‘Equitable protection of legal professional privilege: a commentary’ in PG Turner (ed) Equity and administration Cambridge 2016, pp498-99.
4. 1952, 2 QB 329.
5. See, for example, TUC/APIL The compensation myth (2014): www.apil.org.uk/files/campaigns/the-compensation-myth-2014.pdf.
7. The Guardian April 10 2015; J Bartle, R Mortimore, E Atkinson (eds) Political communications: the general election of 2001 London 2002, p87.
8. The party’s advice on legacies to the party (www.labour.org.uk/pages/making-a-will-useful-information) also suggests this analysis.
9. 1980, 1 WLR 360.
11. Charities Act 2011, sections 2-6.
12. Pre-colonial sharia law, which did not have this ‘mortmain’ rule, had the result that the sultan or secular government had periodically to seize large amounts of land extra-legally to get it back from the awqaf (charitable or family trusts), which were strangling the tax base.
13. 2 De G, F & J 75, 45 ER 550.
14. 1972, ch 526, 536.
15. 1971, ch 1.
17. Compare www.gov.uk/guidance/apply-for-a-discretionary-grant-where-the-dissolved-company-cannot-be-restored-cb3 for the discretion in the context of companies struck off the register where there are still assets.
18, See Quora: www.quora.com/What-are-some-delay-tactics-used-by-litigation-lawyers-to-drag-out-a-lawsuit; or www.lawyerquality.com/article_behaving_badly. More generally, about 29,500 hits on Google.
20. See, for example, H Genn Hard bargaining Oxford 1987.
21. ‘At best’ because the party apparatus is in a sense closer to real-life politics than these other activities.