NZ First wants to charge straying MPs $300,000. I say they can't do it. Winston says I'm wrong. Where does the truth lie?
There's a well known saying around Wellington that you haven't really made it until you've been rubbished by Winston Peters on the radio. What, you haven't heard this saying? Well, you have now ... so it's on its way to becoming well known.
I had my taste of Winston's irritated dismissal on this morning's Morning Report, in relation to this story:
The party is changing its constitution to stop its MPs staying on in Parliament after they have resigned or are expelled from caucus.
The new constitution states that any new member who agrees to become a New Zealand First candidate will have to sign what's intended to be a legally enforceable contract.
That stipulates that if they resign from, or are expelled from, the New Zealand First parliamentary caucus, they must quit their seat in Parliament within three days. If that contract is broken, the new rules say the member would be liable for $300,000 in damages.
I get the idea behind this change. Since the demise of the "waka hopping law" back in 2005 - an issue I've posted on here - there is no statutory requirement for an MP who leaves his or her party (whether voluntarily or by expulsion) to resign from Parliament. And previous attempts by parties to use their own internal rules to force MPs to quit Parliament once they leave the party have proved unsuccessful - think back to the Alliance Party's failed attempt to oust Alamein Kopu back in 1997. So this is a novel attempt to resolve what is (for some parties) and ongoing source of extreme annoyance.
However, therein lies the problem. The $300,000 figure here clearly is designed to present an MP who leaves NZ First with Hobson's choice. Either quit as an MP, or face ruinous financial consequences. And because the rule has this effect - it is designed to force an MP from Parliament - I don't think it will be enforceable in court. And a rule of this nature only has teeth if there is a court that is prepared to, as a matter of law, make someone actually pay up the penalty figure.
So that's what I explained to Radio NZ's reporter, and what she said on Morning Report. Apparently, however, Winston Peters didn't like hearing it, because in an interview broadcast after the report was aired he accused me of not just being wrong, but fundamentally misunderstanding the case on which I based my analysis. A case, ironically, that involved him.
Now, I have been known to be wrong on the odd occasion. No mortal is perfect. But I don't think that this is one of those times. So let's go back in history and see. In the late 80s/early 90s, Winston Peters was a young(er) tyro angling to become the leader of the National Party. This horrified the National Party heirarchy, who responded by (ironically, again) changing the party constitution to include some new rules, including:
(1) A rule that let the National Party's governing board veto the nomination of any person as a candidate in any electorate;
(2) A pledge that had to be signed by all people who sought to become candidates for National, promising not to stand against National if they were unsuccessful in being selected.
Now, Winston Peters is not silly, so he could see what was coming. To be eligible to be selected as a candidate for National in his Tauranga stronghold, he'd have to sign this pledge. But once he did so, the National Party's board would veto his nomination. And then it would try to enforce his pledge against him, in order to stop him running against it.
So off went Winston Peters to the High Court to seek a declaration that the National Party's new rules couldn't be used in this way. As it turned out, he lost on the first point. But it's the second point that really is of interest here, because in relation to it he won his argument. Here's what the court said (sorry it's so lengthy, but as I'm being accused of not getting the case right, I thought I'd let you decide for yourself):
In appropriate cases the Courts will decline to enforce contractual provisions upon the ground that to do so would be contrary to public policy, that is to say injurious to society. Counsel were not aware of any precedents involving the right to stand for Parliament. However, public policy can be developed to embrace fresh situations (Maxim Nordenfelt Guns and Ammunition Company v Nordenfelt  1 Ch 630, 666) and there are already helpful analogies. Some are to be found in the line of cases concerned with corruption in public affairs; Amalgamated Society of Railway Servants v Osborne  AC 87 is particularly helpful. It involved an unsuccessful attempt to require trade union members to contribute funds which would be used to secure representation in Parliament and upon terms which would require the resultant Members of Parliament to vote in accordance with Labour Party dictates. Trade union rules to that effect were held to be ultra vires and illegal. The decision appears to have rested at least in part upon public policy, Lord Shaw of Dunfermline stating at pp 114 and 115:
"In brief, my opinion accordingly is: The proposed additional rule of the society that 'all candidates shall sign and respect the conditions of the Labour party, and be subject to their "whip,"' the rule that candidates are to be 'responsible to and paid by the society,' and, in particular, the provision in the constitution of the Labour party that 'candidates and members must accept this constitution, and agree to abide by the decision of the parliamentary party in carrying out the aims of this constitution,' are all fundamentally illegal, because they are in violation of that sound public policy which is essential to the working of representative government.
"Parliament is summoned by the Sovereign to advise His Majesty freely. By the nature of the case it is implied that coercion, constraint, or a money payment, which is the price of voting at the bidding of others, destroys or imperils that function of freedom of advice which is fundamental in the very constitution of Parliament. Inter alia, the Labour party pledge is such a price, with its accompaniments of unconstitutional and illegal constraint or temptation.
"Further, the pledge is an unconstitutional and unwarrantable interference with the rights of the constituencies of the United Kingdom. The Corrupt Practices Act, and the proceedings of Parliament before such Acts were passed, were but machinery to make effective the fundamental rule that the electors, in the exercise of their franchise, are to be free from coercion, constraint, or corrupt influence; and it is they, acting through their majority, and not any outside body having money power, that are charged with the election of a representative, and with the judgment on the question of his continuance as such.
"Still further, in regard to the member of Parliament himself, he too is to be free; he is not to be the paid mandatory of any man, or organization of men, nor is he entitled to bind himself to subordinate his opinions on public questions to others, for wages, or at the peril of pecuniary loss; and any contract of this character would not be recognized by a Court of law, either for its enforcement or in respect of its breach. Accordingly, as it is put in the words of Fletcher Moulton LJ, 'Any other view of the fundamental principles of our law in this respect would, to my mind, leave it open to any body of men of sufficient wealth or influence to acquire contractually the powerto exercise that authority to govern the nation which the law compels individuals to surrender only to representatives, that is, to men who accept the obligations and the responsibility of the trust towards the public implied by that position.'"
There is precedent, then, for the view that a contract which purports to interfere with the exercise of fundamental constitutional rights associated with election to, and representation in, Parliament may be struck down as contrary to public policy.
The Court then went on to declare that the specific rule that National had adopted - you must sign a pledge not to compete against us if not selected by us - to be an "illegal contract" on these sorts of public policy grounds, meaning that it could not be enforced by a court against Mr Peters (or any other prospective candidate). Meaning that there was nothing to stop Mr Peters running in Tauranga first as an independent, and then as the leader of NZ First, when he subsequently resigned from National.
My claim is then that the courts would view the "resign from Parliament or pay $300,000" rule in the NZ First contract in exactly the same way. A private agreement (a form of contract) between the MP and the Party will not, on public policy grounds, be enforceable where it has the effect of determining membership of the House of Representatives. In point of fact, I'd suggest that any attempt to even try and enforce this rule would be a contempt of the House, insofar as it is seeking to punish an MP for continuing to sit as a member.
There's then a couple of other points to note. First, if an MP has been kicked out as a member of NZ First, is he or she even bound by the "resign in 3 days or pay a $300,000" rule? Because that rule is a matter of vluntary contract only - and if the MP isn't a member of NZ First, does that "contract" between the MP and the party still apply? Second, the $300,000 figure seems to be one that has been plucked out of thin air to operate as a penalty provision. And, in contract law, penalty provisions are not enforceable.
So I feel pretty comfortable with my position on this isue. NZ First has tried something new. I don't think it will work. And I think the law - particularly the case that Winston Peters himself was a part of - backs me up.
Update: And if you want to hear more of me talking about this sort of thing, you can do so over on Radio NZ's Morning Report.