David Hencke has an article on today’s Comment is free website where he suggests that various Labour lawyers are trying to have the loans to the Labour party declared ultra vires the party. If ultra vires the party – the argument runs – the loans would be unenforceable. This means – according to the lawyers – that with one bound the Labour party is free. Its crippling multi-million pound debt is wiped clean because the lender’s cannot enforce the loans. And – it is suggested – Tony Blair and Lord Levy would become personally liable the Union bosses and such like, unhappy with the influence of private investors exerting influence over the party (as opposed to the Unions) would be happy.
This suggestion has the benefit of novelty, but sadly for the Labour party would legally not lead to the result they claim. The legal flaw is a whopping big one. The law of unjustified enrichment (or restitution) provides that where a party is unjustifiably enriched at the expense of another the party enriched comes under an obligation to pay it back. The party enirched here is not Lord Levy in a personal capacity, nor is it Mr Blair. The party enriched is the Labour party. It is the Labour party that received the millions of pounds and being enriched the Labour party that would have to repay it. If the loans were declared to be ultra vires and consequently the transactions were unenforceable the parties that have given the money would then become creditors – not in contract law (as lenders), but as creditors in restitution. This has the added disadvantage for the Labour party that the money would be due on demand, rather than with time to pay (as most loan agreements would be structured). Innovative, but likely to be rejected unless personal liability can be pinned to Levy and Blair – which is itself unlikely when the money was – it appears – spent by the Labour party. Consequence, Labour party is in poorer financial position than it was before, plus Yates of the Yard sniffs around PM and others. I can’t see Prudence the Presbyterian being happy with that.