The High Court, sitting as the Court of Disputed Returns, has answered a set of questions referred to it by the Senate regarding the qualifications of Robert John Day AO to be chosen as a senator under s 44(v) of the Constitution. The Court held that he was ineligible to be chosen, that there is a vacancy in the place for which he was returned, and that that vacancy will be filled by a special count of ballots.

Section 44(v) provides that any person who has any direct or indirect pecuniary interested in any agreement with the Commonwealth Public Service shall be incapable of being chosen or sitting as a senator.

Day was first elected to the Senate in 2013, taking office in July 2014. Following the 2016 double dissolution election, he was declared re-elected to the Senate in August 2016. In December 2015, the Commonwealth entered into a lease agreement with Fullarton Investments Pty Ltd, the registered proprietor of a property on Fullarton Rd in Kent Town, South Australia. The property had been used by Day as an office since April 2015, and the December lease was for the purposes of Day’s office accommodation (an ordinary parliamentary benefit). Through a set of transactions in 2014 (see, eg, [6]ff), the ownership of the Fullarton Rd Property passed from B & B Day Pty Ltd — controlled by Day (and later his wife) and the trustee of the Day Family Trust, a discretionary trust whose beneficiaries included Day and his wife — to Fullarton Investments, a company solely directed by the wife of a business associate of Day’s, and a trustee of the Fullarton Road Trust, of which the Day Family Trust was a beneficiary. The lease with the Commonwealth was executed on 1 December 2015. On 26 February 2016, Fullarton nominated ‘Fullarton Nominees’, a business name owned by Day, as the recipient of the rent, and directed payment to a bank account that was owned by Day. The Commonwealth did not pay the monies, despite two arrears claims. The Commonwealth rescinded the lease in October 2016 after the Department of Finance expressed concerns that Day continued to have a financial interested in Fullarton Rd. Day resigned from the Senate on 1 November 2016.

On 8 November 2016,  the President of the Senate advised the High Court that the Senate had resolved that certain questions over the Senate vacancy for which Day was returned should be referred to the Court of Disputed Returns:

(a) whether, by reason of s 44(v) of the Constitution, or for any other reason, there is a vacancy in the representation of South Australia in the Senate for the place for which Robert John Day was returned;

(b) if the answer to Question (a) is ‘yes’, by what means and in what manner that vacancy should be filled;

(c) whether, by reason of s 44(v) of the Constitution, or for any other reason, Mr Day was at any time incapable of sitting as a Senator prior to the dissolution of the 44th Parliament and, if so, on what date he became so incapable;

(d) what directions and other orders, if any, should the Court make in order to hear and finally dispose of this reference; and

(e) what, if any, orders should be made as to the costs of these proceedings.

Following a trial conducted by Gordon J dealing with several disputed facts and hearing oral evidence, the Full Court heard the appeal.

The Court unanimously held that Day’s financial benefit constituted an ‘indirect pecuniary interest’ within the meaning of s 44(v), that he was thus disqualified from being chosen or sitting as a Senator, and that the vacancy should be filled by a special count of ballot papers. Four judges (Kiefel CJ, Bell and Edelman JJ and Keane J) held that the vacancy arose on 26 February 2016, the date on which the direction of payment to Day was made. Three judges (Gageler J and Nettle and Gordon JJ) held that the vacancy arose on 1 December 2015, the date of the execution of the lease.

Kiefel CJ, Bell and Edelman JJ noted that, in dealing with the central issue of whether Day had a direct or indirect pecuniary interest arising from the lease with the Commonwealth, questions about Day’s involvement and purpose could be put to one side: it is sufficient that he was to receive rental monies payable under the lease (at [12]). After covering the historical antecedents to s 44 in the United Kingdom, the Australian colonies, and the Convention debates (see [18]–[35]), the joint judges turned to Day’s central submission: that Re Webster [1975] HCA 22, which Day argued saw Barwick CJ take a purposive approach to s 44 that emphasised the objective of independence of Parliament from the Crown, ought to be followed, with the effect that Day should not be disqualified because the lease arrangement provided no reason to conclude that the Commonwealth could exert any influence over Day’s parliamentary affairs (see [14]–[15]). The joint judges held that Webster should be reconsidered: Barwick CJ sat alone, giving the decision less force than a majority decision; it does not rest on a principle worked out in a succession of cases; and it is not likely to be seen as giving the ‘last word’ on s 44 (at [46]–[47]). The joint judges then held that it ought not to be followed: the purpose of s 44(v) is wider than Barwick CJ put it, and extended to preventing members of Parliament from benefiting from agreements with the Commonwealth or placing themselves in a situation of conflict between their duty to their constituents and their own personal interests (at [48]–[50]).

Turning to this wider purposive construction, the joint judges held that beneficiaries of a discretionary trust that benefits from an agreement to which s 44(v) refers may be considered to have an indirect pecuniary interest in the agreement (at [62]). After rejecting a number of arguments based on hypothetical scenarios (see at [65]ff), their Honours also rejected Day’s contentions that the meaning of s 44(v) ought to be narrowed due to the penal consequences in s 46 and other provisions on qualifications: there was no warrant for limiting its operation on the basis of consequences that might follow for a person disqualified, and ‘much to be said’ for the view that s 44(v) holds special status as a provision that protects the representative and responsible government principles within the Constitution (at [72]ff). Finally, the joint judges rejected the narrow suggestion that Day would need to be a party to the lease to hold an ‘interest’ in it because this reading would give no effect to the word ‘indirect’ in s 44(v): at [75]. From 26 February 2016, the day on which direction of the payment of rent to Day was made, s 44(v) operated to disqualify him: at [76].

Dealing with the question of filling the vacancy, the joint judges concluded that s 273(27), which provides that a vote for a deceased candidate shall be counted to the candidate next in the order of the voter’s preference, should be applied by analogy here: at [77]. A special count of the ballots along the lines provided in that provision, which would avoid distorting voter’s intentions either in favour of the ALP candidate, Ms McEwen, (who was the only other candidate besides Day that had not been excluded at last count) or Family First, was ordered (see at [78]ff).

Gageler J also held that Day had an indirect pecuniary interest under the lease, but held that Day’s seat became vacant when the Commonwealth entered into that agreement on 1 December 2015 (at [92]). While Gageler J agreed with the answers formulated by the plurality (save for stating the date of the vacancy as 1 December 2015) and the plurality’s reasoning on the question of filling the vacancy (at [93]), his Honour provided a different approach to s 44(v): at [94]. Gageler J emphasised that the automatic and draconian consequences of a s 44 disqualification means it ought to be given an interpretation that holds the ‘greatest certainty of operation that is consistent with its language and purpose’ (at [[97], and see at [95]). Gageler J also held that the reasoning in Webster was ‘unsatisfactory’ for taking a too narrow view of the purpose of s 44 (expressly agreeing with the reasoning of the other judges on this point), and also being vague, unduly evaluative, and glossing the language of the provision (at [98]).

After noting shortcomings with the Attorney-General’s suggested interpretation (see [99]–[100]), Gageler J stated that the ‘anxieties’ in interpreting s 44(v) often stemmed from reading ‘Public Service’ in the text as equivalent to the executive government more generally, a problem that could be alleviated by following Keane J’s suggestion in this case that s 44(v) does not extend to agreements by the Executive government that execute a law of general application enacted by the Parliament (at [101]–[102]). Instead, the Public Service ought to be read more narrowly than the general references to the ‘Crown’ elsewhere in the Constitution, and akin to the references to state public services in s 84 (see [103]ff). Gageler J then stated that while an agreement with the Public Service must involve the Commonwealth as a party to it, not every agreement with the Commonwealth can properly be characterised as one with the Public Service of the Commonwealth (at [105]), and while the outer limits may be uncertain, a lease with the Commonwealth fell squarely within the core of its meaning (at [106]).

With this reading of ‘Public Service’ in place, Gageler J stated that there was no reason why the meaning of ‘indirect pecuniary interest’ should be given a more restrictive interpretation than the general one given by Gavan Duffy J in Ford v Andrews [1916] HCA 29, namely a benefit dependent on the performance of a contract, where the interest is itself in the contract (at [108] and see comments at [109]ff). Adapting this to s 44(v), Gageler J noted the interest must be pecuniary, not trivial, and that the expectation must be real and not mediate or remote, and that must be determined objectively: thus the intentions of the senator or member ‘cannot be determinative but must be relevant’ (at [111]–[113]). Here, the rent was to be paid directly into Day’s bank account, and thus he had an objective expectation of receiving a pecuniary benefit (at [114]). Gageler J concluded by noting that the need for certainty in the operation of s 44(v) warranted observations on two further considerations, namely that Day’s intention in setting up the arrangements was highly probative of the way in which they could objectively be expected to benefit him in practice (at [116]) and that s 44(v) is not concerned with the theoretical possibility that others connected with the Day Family Trust might have also benefitted (see [117]–[118]).

Keane J agreed with answers given by the joint judges, likewise holding that Day was disqualified due to s 44(v) from 26 February 2016. Like the other judges, Keane J was critical of Barwick CJ’s reasoning in Webster. His Honour first noted that the central element of the reasoning in Webster made the scope of disqualification narrower than what is conveyed by the ordinary meaning of the text and by the Convention debates (at [161]ff), and that the broader correct concern in s 44(v) is directed to a representative’s conflict between interest and duty (at [165]).

Turning to the text of s 44(v), Keane J noted that its express extension to indirect pecuniary interests means that a parliamentarian need not be a party to a disqualifying agreement, and the executive government may be entirely unaware of the possibility of exercising influence over the parliamentarian: this suggest that the purpose extends to preventing a member’s private financial interests from influencing the member’s discharge of parliamentary functions (at [167]). Keane J then stated that this broader view could be gleaned from a more comprehensive examination of the Convention debates than that undertaken by Barwick CJ (at see at [173]ff), and concluded that Barwick CJ’s ‘strict’ construction of s 44 as a ‘vestigial’ part of the Constitution was unsupportable: ‘It is to do a disservice to the abiding importance of the constitutional balance between the constitutional values of social equality and parliamentary integrity to describe the protection afforded by s 44(v) to the latter as a “vestigial” provision to be strictly confined in its operation.’: at [184].

On the question of pecuniary interest, Keane J held that for the purposes of s 44(v), an expectation of gain generated by a promise, even absent a legally enforceable entitlement to payment of money, was sufficient for an ‘indirect’ pecuniary interest (at [191], [192]). Here, Day held such an interest due to his ownership of the bank account into which the rent would be paid, and the direction of 26 February 2016 meant that money would be paid to him (at [196]). On the issue of filling the vacancy, Keane J also held that a special count should be ordered, and rejected McEwen’s submissions that that would result in a distortion of the voters’ intentions (see at [206]ff).

Nettle and Gordon JJ also agreed with the answers given by the joint judges, holding that Day was incapable of being chosen or sitting as a senator (albeit, like Gageler J, holding that this was the case on and after 1 December 2015), and that the vacancy should be filled by a special count of ballots (at [224]). Their Honours stated that s 44(v) must be interpreted not only according to its ordinary textual meaning, but also in light of the Constitution‘s structure and history, and with the recognition that it is meant to apply to the varying conditions that the development of the community inevitably involves (at [247]).

Turning to the text of s 44(v), Nettle and Gordon JJ emphasised that the requirement of a connection between the pecuniary interest and the agreement to which s 44(v) refers is an ‘important and necessary check’ on the section (at [254], and see [251]ff), requiring an immediate (direct or indirect) relation rather than a mere connection through a chain of possibilities (at [255]). Nettle and Gordon JJ stated that the question, ultimately, is ‘whether, because of that interest in that agreement, that person could conceivably be influenced in the exercise of their functions, powers and privileges, or in the performance of their duties, as a member of Parliament.’ (at [258], and see the five notes on this test from [260]–[267]).

After noting that demonstrating that this approach was congruent with the structure and history of the Constitution (at [268]–[271]), and making several criticisms of Barwick CJ’s approach in Webster (at [272]–[276]), Nettle and Gordon JJ turned to apply their interpretation of s 44(v) to this case. Here, Day held a pecuniary interest in the lease arising when that lease was executed, because that exposed him to the possibility of a ‘not insubstantial financial gain or loss’ by directly receiving rent and by reducing his own guarantee and indemnity relating to a bank loan on the property (at [277]–[280]). The interest in the rent was immediate and not merely connected by a chain of possibilities, and as he could conceivably have been influenced in the exercise of his parliamentary powers by the executive’s conduct in performing or not performing the lease, or could have preferred this private interest over his public duty, he was disqualified under s 44(v): at [288]. Turning to the filling of the vacancy, Nettle and Gordon JJ, like the joint judges, held that s 273(27) could be followed analogously (at [293]ff), and rejected McEwen’s arguments on distinguishing or not following In Re Wood (see at [297]).

High Court Judgment	[2017] HCA 14	5 April 2017
Result	Vacancy in the Senate seat for which Day was returned; to be filled by special count
High Court Documents	Re Day
Full Court Hearing	[2017] HCATrans 15
Judgment, Gordon J	[2017] HCA 2	27 January 2017
Trial Hearings	[2017] HCATrans 6	24 January 2017
	[2017] HCATrans 5	23 January 2017
Proceedings	[2017] HCATrans 4	20 January 2017
	[2017] HCATrans 3	17 January 2017
	[2016] HCATrans 298	12 December 2016
	[2016] HCATrans 290	21 November 2016
Determination, French CJ	[2016] HCATrans 288	21 November 2016

ORDER

The questions referred to the Court of Disputed Returns by the President of the Senate in his letter dated 8 November 2016, as amended by orders made by French CJ on 21 November 2016, be answered as follows:

Question (a)

Whether, by reason of s 44(v) of the Constitution, there is a vacancy in the representation of South Australia in the Senate for the place for which Robert John Day AO was returned?

Answer

Yes, there is a vacancy in the representation of South Australia in the Senate for the place for which Robert John Day AO was returned, by reason of s 44(v) of the Constitution.

Question (b)

If the answer to Question (a) is “yes”, by what means and in what manner that vacancy should be filled?

Answer

The vacancy should be filled by applying the provisions of s 273(27) of the Commonwealth Electoral Act 1918 (Cth) by analogy by filling the vacancy by a special count of the ballot papers.

Question (c)

Whether, by reason of s 44(v) of the Constitution, Mr Day was at any time incapable of sitting as a senator prior to the dissolution of the 44th Parliament and, if so, on what date he became so incapable?

Answer

Mr Day was incapable of sitting as a senator, by reason of s 44(v) of the Constitution, on and after 26 February 2016, being a date prior to the dissolution of the 44th Parliament.

Question (d)

What directions and other orders, if any, should the Court make in order to hear and finally dispose of this reference?

Answer

A single Justice should make any further directions and orders necessary to finally dispose of this reference.

Question (e)

What, if any, orders should be made as to the costs of these proceedings?

Answer

The Commonwealth should pay Mr Day’s and Ms McEwen’s costs of the proceedings, save for costs excluded by an order of a Justice of the Court.