Questions Referred to the Court of Disputed Returns Pursuant to Section 376 of the Commonwealth Electoral Act 1918 (CTH) Concerning Mr Robert John Day AO

• Jurisdiction: Australia Federal only
• Court: High Court
• Judge: Kiefel CJ,Bell,Edelman JJ,Gageler J.,Keane J.,Nettle,Gordon JJ.
• Judgment Date: 05 April 2017
• Neutral Citation: [2017] HCA 14
• Docket Number: C14/2016
• Date: 05 April 2017

[2017] HCA 14

HIGH COURT OF AUSTRALIA

Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ

C14/2016

In the Matter of Questions Referred to the Court of Disputed Returns Pursuant to Section 376 of the Commonwealth Electoral Act 1918 (CTH) Concerning Mr Robert John Day AO

Representation

A S Bell SC with D P Hume appearing on behalf of Mr Robert Day AO (instructed by Griffins Lawyers)

S P Donaghue QC, Solicitor-General of the Commonwealth and N J Williams SC with C L Lenehan and B K Lim appearing on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor)

J K Kirk SC with S Gory appearing on behalf of Ms Anne McEwen (instructed by SBA Law)

Constitution, s 44(v).

Commonwealth Electoral Act 1918 (Cth), ss 168(1), 272(2), 273(27), 360, 376.

Parliamentary Entitlements Act 1990 (Cth), s 4(1), Item 7 of Pt 1 of Sched 1.

Constitutional law — Parliamentary elections (Cth) — Senate — Reference to Court of Disputed Returns — Where person elected and re-elected as senator — Where person stood to gain financially from Commonwealth paying rent under lease of person's electorate office — Where person's bank account nominated by lessor as bank account for payment of rent by Commonwealth — Where payment of rent reduced person's contingent liability as guarantor under loan facilities — Where person had prospect of receiving distribution of rent proceeds as beneficiary of discretionary trust — Whether person had indirect pecuniary interest in lease agreement with Commonwealth — Whether person incapable of being chosen or of sitting as senator under s 44(v) of Constitution — Whether vacancy should be filled by special count of ballot papers — Whether special count would distort voters' real intentions.

Words and phrases — ‘distortion of the voters' real intentions’, ‘expectation of pecuniary benefit’, ‘incapable of being chosen’, ‘indirect pecuniary interest’, ‘special count’, ‘true legal intent of the voters’.

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.

1 Kiefel CJ, Bell and Edelman JJ. On 9 May 2016, the 44th Parliament was dissolved. A federal election was held, and Mr Robert John Day AO was declared elected on 4 August 2016 as a senator for South Australia. On 8 November 2016, the President of the Senate wrote to the Principal Registrar of this Court advising that the Senate had resolved that certain questions respecting a vacancy in the representation of South Australia in the Senate for the place for which Mr Day was returned should be referred to the Court of Disputed Returns. The questions are as follows:

• ‘(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.’

Section 44(v) of the Constitution

2 The Constitution, by s 44(v), provides that any person who:

‘(v) has any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth otherwise than as a member and in common with the other members of an incorporated company consisting of more than twenty-five persons;

shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives.’

3 Section 46 provides for the payment of a penalty by a person declared to be incapable of sitting as a senator or as a member of the House of Representatives for every day on which he so sits.

Background to the questions referred

4 The salient features of the facts which give rise to the questions referred may be stated shortly.

5 The events in question concern a lease entered into between Fullarton Investments Pty Ltd (‘Fullarton Investments’), the registered proprietor of premises at 77 Fullarton Road, Kent Town in South Australia (‘the Fullarton Road property’), and the Commonwealth. Part of those premises was used by Mr Day as his electorate office after he was elected to the Senate for the first time, following the 2013 federal election. His term as a senator for South Australia commenced on 1 July 2014. He occupied an office in those premises from April 2015.

6 At the time Mr Day was first elected, the Fullarton Road property was owned by B & B Day Pty Ltd (‘B & B Day’) as trustee of the Day Family Trust. Certain members of the Day family, including Mr Day and his wife, were beneficiaries of that trust. Until the day before commencing his term as a senator, Mr Day was the sole director and shareholder of B & B Day. At all relevant times there was a loan facility provided by a bank to B & B Day to a limit of $1,600,000, which was secured by a mortgage over the Fullarton Road property and by a guarantee and indemnity given by Mr Day and his wife with respect to the performance by B & B Day of its obligations under the loan facility.

7 On 24 April 2014, Fullarton Investments purchased the Fullarton Road property for $2,100,000 from B & B Day. B & B Day was said to have provided vendor finance to Fullarton Investments, although no consideration appears to have passed between those parties. The sole director of Fullarton Investments at this time was Mrs Debra Smith, the wife of Mr Day's business associate. Fullarton Investments was the trustee of the Fullarton Road Trust, of which the Day Family Trust was a beneficiary.

8 One of the benefits provided to members of Parliament 1 is office accommodation in the electorate, together with necessary equipment and facilities. A lease of the Fullarton Road office was entered into between Fullarton Investments, as lessor, and the Commonwealth, represented by the Ministerial and Parliamentary Services Division, Corporate and Parliamentary Services Group of the Department of Finance, as lessee. The lease was entered into on 1 December 2015; it had a commencement date of 1 July 2015, was for a

term of five years and contained an option to renew. The rent payable was $66,540 per annum, together with GST.

9 Fullarton Investments was entitled, pursuant to the lease, to direct the Commonwealth to pay rent to any person. On 26 February 2016, it nominated ‘Fullarton Nominees’ and directed payment to a bank account. Fullarton Nominees was a business name owned by Mr Day and the bank account was his.

10 In fact, the Commonwealth did not pay the monies under the lease. Mr Day's executive assistant sent two tax invoices on behalf of Fullarton Investments on 22 March 2016 claiming rent. The bank account to which those arrears were to be paid was once again nominated as that of Fullarton Nominees.

11 Mr Day's nomination for the 2016 federal election was declared on 10 June 2016 and on 4 August 2016 he was declared elected to the Senate. Parliament was opened on 30 August 2016. On 13 October 2016, the Commonwealth gave notice of rescission of the lease. This followed earlier correspondence from the Department of Finance in which concerns were expressed that Mr Day continued to have a financial interest in the property. Mr Day resigned from the Senate on 1 November 2016.

The issue

12 In order to answer the questions referred, it is necessary to resolve the issue which arises by reason of s 44(v), that is, whether Mr Day at any relevant time had a ‘direct or indirect pecuniary interest’ in an agreement, namely, the lease. There is no dispute that the lease was an agreement with the Public Service of the Commonwealth. Mr Day was not a party to the lease and therefore did not have a direct interest in it as such, but he was the owner of the bank account nominated as the...