Re Day [No 2] [2017] HCA 14 | Case summary

HIGH COURT OF AUSTRALIA

KIEFEL CJ,

BELL, GAGELER, KEANE, NETTLE, GORDON AND EDELMAN JJ

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

Re Day [No 2]

[2017] HCA 14

5 April 2017

C14/2016

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.

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)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Re Day [No 2]

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".

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.

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

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."

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

The salient features of the facts which give rise to the questions referred may be stated shortly.
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.
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.
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.
One of the benefits provided to members of Parliament¹ 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.
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.
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.

The issue

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 recipient of the rental monies.
It is quite difficult to comprehend that this does not amount to an interest in the lease agreement of a monetary kind. It is not difficult to infer from other facts² that Mr Day brought the nomination about and that it was his purpose to apply the monies to the loan facility with respect to the Fullarton Road property. These matters may be put to one side. It is sufficient for the resolution of the questions referred to the Court to focus upon the fact that he was to receive the rental monies payable under the lease.
The question whether Mr Day had an interest of the kind referred to in s 44(v) requires that provision to be construed in the context of the Constitution as a whole. In In re Webster³, the only decision of this Court concerning s 44(v), Barwick CJ approached the construction of s 44(v) by reference to its perceived purpose. Its object or purpose was taken to be the same as that of a provision of the House of Commons (Disqualification) Act 1782 (UK)⁴ ("the 1782 Act") which, his Honour said⁵, was the "precise progenitor" of s 44(v). The purpose of the 1782 Act was well accepted. It was to secure the freedom and independence of Parliament from the Crown.
It is submitted for Mr Day that the decision in Webster should be followed. The consequence of that would be that there could be no disqualification, for there is no reason to consider that the Commonwealth could exert any influence on Mr Day's parliamentary affairs by anything it could do in relation to the lease.
The Attorney-General of the Commonwealth and Ms McEwen, who the Court ordered could be heard on the reference, argue that the purpose of s 44(v) differs from that of the 1782 Act. It is to prevent persons in the position of a member of Parliament from taking advantage of his or her position in order to obtain a financial advantage and to prevent a conflict between that person's duty as a member and his or her own interests arising. The Commonwealth submits that the reasoning in Webster is wrong and should not be followed.

The 1782 Act and the colonial Constitutions

Section 1 of the 1782 Act provided that:

"any person who shall, directly or indirectly, himself, or by any person whatsoever in trust for him, or for his use or benefit, or on his account, undertake, execute, hold, or enjoy, in the whole or in part, any contract, agreement, or commission, made or entered into with ... [the Crown] ... for or on account of the publick service ... shall be incapable of being elected, or of sitting or voting as a member of the house of commons, during the time that he shall execute, hold, or enjoy, any such contract, agreement, or commission, or any part or share thereof, or any benefit or emolument arising from the same."

The purpose of the provision reflected the times, when Parliament sought to be free of the influence of the Crown. The preamble to the Act stated its purpose to be "[f]or further securing the freedom and independence of parliament".
The 1782 Act remained in force until 1957. Its purpose has never been in doubt. In In re Samuel⁶ it was said that the mischief it guarded against was the sapping of the freedom and independence of Parliament. In Thompson v Pearce⁷, the question arising from the 1782 Act was identified as being "[w]hat influence then does this contract give the government over him in the House of Commons?" Likewise, in Royse v Birley⁸, it was held that the 1782 Act was intended to prevent the exercise of control over a man who has a contract under which he is to derive some future benefit from dealing with the government.
The Constitutions of the colonies of New South Wales, Victoria and Queensland⁹ contained provisions to similar effect to that of the 1782 Act. The decision of the Privy Council in Miles v McIlwraith¹⁰ was concerned with s 6 of the Constitution Act 1867 (Q)¹¹. Mr McIlwraith was a member of the Legislative Assembly and the owner of a ship. An agent for the ship concluded a charter party for the use of the ship by the government, contrary to Mr McIlwraith's instructions. It was held¹² that Mr McIlwraith was not disqualified, since the government could not have held him bound to the agreement. Inferentially, no control could have been exercised over him.

Standing Rules and Orders

Because the purpose of the 1782 Act was to secure the freedom and independence of members of Parliament from the Crown, it was not read as directed to the possibility that a member of Parliament could take advantage of his or her position or that a conflict between that person's duty as a member and that person's personal financial interests might arise.
This is not to say that the possibility of a conflict between a parliamentarian's private interests and his or her public duty was not foreseen. An unwritten rule of the House of Commons, which is said to have predated the 1782 Act by at least 170 years, was¹³ to the effect that:

"no Member who has a direct pecuniary interest in a question shall be allowed to vote on it".

The possibility of such a conflict was a concern to some colonial Parliaments. This is evidenced by certain Standing Rules and Orders which were adopted before Federation¹⁴. The disqualification of a member of Parliament from voting was expressed in the same terms as the unwritten rule in the House of Commons. A member was not entitled to vote in a division upon a question in which "he has a direct pecuniary interest".
In his commentary on the Webster case J D Hammond observed¹⁵ that the unwritten rule was the progenitor of such Standing Orders and continued:

"[i]t is most unlikely that the Order was brought in to protect the Parliament from the Crown. Clearly it had another purpose, and this purpose was extensively discussed in the 'UK Report of the Select Committee on Members of Parliament (Personal Interest) 1896'."

Similar provision was made following Federation. In 1901 the House of Representatives temporarily adopted "Standing Orders relative to Public Business"¹⁶. One such Standing Order contained a disentitlement in similar terms, save that the "direct pecuniary interest" there referred to was expressed to be one "not held in common with the rest of the subjects of the Crown"¹⁷. A further exception was that the Standing Order did not apply to motions or bills involving questions of public policy¹⁸.

Local government statutes

Prior to Federation the colonies enacted legislation which prohibited councillors of local authorities or municipal corporations from voting on, or participating in discussions of, a matter in which the councillor had, directly or indirectly, any "pecuniary interest"¹⁹. These words appeared in the final draft of the clause that became s 44(v).
In Ford v Andrews²⁰, Isaacs J observed that legislation of this kind had been common in England. The object of such legislation had been identified by the English Court of Appeal in Nutton v Wilson²¹ as being to prevent members of local authorities from being exposed to temptation and to prevent a conflict between their interests and duties arising. The purpose of the legislation in the Australian colonies was understood in this way²².

The Convention Debates

It would not seem an unwarranted assumption that provisions of the kind mentioned above, directed to a potential conflict of interest of parliamentarians and councillors, were known to participants in the Convention Debates on the clause that became s 44(v), particularly lawyers such as Mr Isaacs and Mr Barton. The clause was debated in Adelaide²³ and Sydney²⁴ in April and September 1897, respectively. It was passed in Melbourne in March 1898²⁵.
It is correct to observe, as Barwick CJ did²⁶ in Webster, that the progenitor of s 44(v) is the 1782 Act, but it is not correct, with respect, to say that it is the "precise progenitor" of s 44(v). The first draft of the clause which became s 44(v) was clearly drawn from the 1782 Act, which, it will be recalled, had been adopted by the Constitution Acts of the colonies, but by the time s 44(v) was passed it had undergone a substantial change in its terminology, as will be evident from a comparison of the two. In fact, little of the clause from the 1782 Act remained.
The most obvious change from the 1782 Act, it may be observed, is the introduction of the notion of a "pecuniary interest" in an agreement, which may be an "indirect" pecuniary interest. The focus of s 44(v) is on the personal interest of the member of Parliament. The 1782 Act was more concerned with the fact of the agreement with the Crown, rather than the interest that the member had in it. It referred to the member "holding" or "enjoying" a contract or agreement.
Consistently with this observation, no mention is made in the 1782 Act of the position of a member as a shareholder in a company. Section 44(v), however, created an exception to disqualification where the member's interest is a shareholding in a company which has more than 25 members, thereby implying that a shareholding in a smaller company will be an interest which has the consequence of disqualification.
These changes reflect discussions in the Convention Debates in Adelaide and Sydney. The discussions were not just about the influence which the Crown, or the Executive Government, could exert over contractors who were members of Parliament. On the topic of whether the disqualification should extend to professional men, including barristers, as well as contractors, there was certainly discussion about the possibility of corruption by the Executive Government giving contracts or briefs to such persons²⁷. But, in the course of the debate, reference was made more generally to the need to separate the personal interests of a parliamentarian from the exercise of his public duties. The freedom spoken of was not just from the executive, but from a person's own business interests, so that that person could more effectively represent others.

Webster

Senator Webster was a shareholder in a company in which there were eight other shareholders. He was managing director, secretary and manager of the company and received a salary in the latter capacity. The company supplied timber under agreements with two Commonwealth departments. There was no question that the agreements were with the Public Service of the Commonwealth.
Barwick CJ, sitting alone as the Court of Disputed Returns, held³² that the senator was not disqualified from sitting by reason of s 44(v). His Honour considered³³ that it was difficult to see that a shareholder could be said to have a pecuniary interest in the agreements for supply. An agreement for the sale of goods merely on request from time to time was not an "agreement" within s 44(v).
We do not think that we are overstating his Honour's approach to the construction of s 44(v) in saying that the purpose he identified for the provision dominated the construction which he gave to it and significantly limited its operation. He identified³⁴ the purpose as being the same as that of the 1782 Act. His Honour did not compare the terms of the two provisions.
When regard is had to the terms of s 44(v), it is obvious that it is also concerned with the interest that a parliamentarian might have in agreements with the Commonwealth. A conclusion that s 44(v) has some purpose wider than the protection of the freedom and independence of parliamentarians from the influence of the Crown is inescapable. That wider purpose can only be the prevention of financial gain which may give rise to a conflict of duty and interest. The Convention Debates identify that as the subject to which the clause which became s 44(v) was addressed. This is a proper use of those records³⁵.
At the time Webster was decided, the use to which the Convention Debates could be put was limited by decisions of this Court³⁶ which preceded Cole v Whitfield³⁷. Barwick CJ nevertheless referred to them, or at least to that part of the debates which took place in Adelaide concerning the possibility of fraud being exercised by the use, by parliamentarians, of a private company. His Honour did refer to the exception created in s 44(v), but did not draw the inference that shareholders of companies where there were fewer than 25 shareholders could be said to have an indirect pecuniary interest in agreements between the company and the Commonwealth. His Honour appears to have approached the position of shareholders from the perspective of the common law, which is to say that they could not be said to have any legal or equitable interest in the assets of the company.

Should Webster be followed?

Barwick CJ sat in Webster as the Court of Disputed Returns. His Honour was not sitting in a separate court of that name, but as the High Court exercising the additional jurisdiction given to it by the Commonwealth Electoral Act 1918‑1973 (Cth)⁴¹. That jurisdiction could be exercised by a single Justice⁴², whose decision was not subject to appeal⁴³.
It is a feature of the proceedings in Webster that no Justice of the Court other than Barwick CJ sat to hear the matter. Whilst some matters in the Court of Disputed Returns are from time to time heard by a single Justice, they usually do not involve important questions relating to provisions of the Constitution. Nevertheless it is submitted for Mr Day that the fact that the decision in Webster was made by a single Justice is irrelevant to the principles to be applied as to whether it should not be followed.
Accepting, for present purposes, that the usual principles governing when this Court should depart from its previous decisions⁴⁴ do apply, there is none which stands in the way of a reconsideration of what was decided in Webster. True it is that the decision has stood for some time, but it is not to be inferred that it has been acted upon in such a way as to prevent reconsideration. The narrow operation given to s 44(v) in Webster no doubt explains why no proceedings have been brought with respect to potential disqualifying interests since the decision in that case. There is the consideration that persons may have ordered their affairs on the basis of that decision, and may have to act promptly to regularise them. In any event the decision is of a special kind, involving as it does constitutional provisions respecting Parliament and its members. If the construction adopted in Webster is affected by error, it should not be allowed to stand.
It is not obvious to us why the fact that the decision was a judgment of only one member of the Court is not relevant to the question of whether it should be reviewed. It is accepted that a difference in the reasons of the majority in an earlier decision is a factor relevant to whether a decision should be reviewed⁴⁵. That principle implies that less force is to be attributed to a decision where no single line of reasoning commands the assent of a sufficient number of the Justices of the Court. It would not seem unreasonable then to take account of the fact that in Webster there may well have been differing opinions held, had the Court been constituted by more than one Justice.

Section 44(v), its construction and width of application

The Attorney-General of the Commonwealth submits that s 44(v) should apply when "objectively, there is a real risk that a person could be influenced, or be perceived to be influenced, in relation to parliamentary affairs by a direct or indirect financial interest". Mr Day submits that the Commonwealth overextends the application of s 44(v) by a test based upon perceptions. Even if the mischief to which it is directed is the avoidance of actual or perceived conflicts of interest, it is submitted, this does not justify reading words into the provision. That submission should be accepted. Section 44(v) applies according to its terms.
It is submitted for Mr Day that the word "interest" represents something concrete, something more than a mere expectancy. It is not disputed that a "pecuniary interest" is an interest "sounding in money or money's worth"⁵³. This concession detracts from the suggestion, implicit in the submission, that the interest referred to in s 44(v) is a legal interest. Clearly it is not. An indirect pecuniary interest looks to the "practical effect"⁵⁴ of the agreement in question on a person's pecuniary interests.
Mr Day's other argument with respect to the terms of s 44(v) focuses upon the words "in any agreement". It is put that these words narrow what is encompassed by the pecuniary interest referred to in the provision. He submits that there cannot be a pecuniary interest in an agreement just because a person stands to gain from it or may obtain a benefit out of it. The Constitution, by s 44(v), does not refer to an expectation of money gained or lost. It refers to a person who has an interest in an agreement, not a person being "interested in an agreement".
Mr Day relies on two cases in support of this argument – Norton v Taylor⁵⁵ and Ford v Andrews⁵⁶ – despite the fact that the legislation with which they were concerned referred to a councillor being "interested in any agreement". They are nevertheless said to be instructive, presumably of what is not caught by s 44(v).
Norton v Taylor concerned s 24 of the Sydney Corporation Act 1902 (NSW), which rendered a person holding a civic office liable to a penalty where that person becomes "knowingly engaged or interested in any contract, agreement, or employment" with the local authority. Ford v Andrews concerned s 70 of the Local Government Act 1906 (NSW), which disqualified an alderman if he is "interested ... in any contract, agreement, or employment" with the local authority. Both provisions excepted a person's interest as a shareholder from their operation.

How the vacancy should be filled

In In re Wood⁶⁹, it was held that the provisions of s 273(27) of the Commonwealth Electoral Act 1918 (Cth) ("the Electoral Act") may be applied by analogy in circumstances such as this in order to ascertain the true intention of the voters, consistently with the Constitution and the Electoral Act. That is to say, the vacancy resulting from a person being disqualified may be dealt with in the same way as applies where a deceased candidate's name appears on the ballot paper in a Senate election. Section 273(27) provides that a vote indicated on the ballot paper opposite the name of a deceased candidate shall be counted to the candidate next in the order of the voter's preference and the numbers indicating subsequent preferences shall be taken to be altered accordingly.
Ms McEwen was listed fourth of the candidates in the Australian Labor Party group on the ballot paper. The three listed above her were elected. At the last count she was the only other candidate, apart from Mr Day, who had not been excluded from the count. However, this does not mean that Ms McEwen's submission should be accepted to the effect that the other candidate for Family First would obtain an unfair advantage, and voter intentions would be distorted, if Family First above the line votes were counted for that other candidate. Contrary to that submission, a special count which deprived the above the line Family First voters of their vote would distort voter intentions.
The Family First group on the ballot paper consisted of Mr Day and one other candidate. It is argued for Ms McEwen that because Mr Day could not be chosen as a senator, there was no valid group of Family First candidates. Section 168(1) of the Electoral Act requires a group to comprise two or more members. The votes cast above the line for Family First must therefore be disregarded.
A similar argument was put in Wood and rejected⁷⁰. The result of such an argument would be that no effect would be given to the votes given to the other candidate. However, as was pointed out⁷¹ in Wood, a vote is valid "except to the extent that the want of qualification makes the particular indication of preference a nullity". The true intention of voters should be given effect so long as it is consistent with the Constitution and the Electoral Act⁷². Here there is no impediment to giving effect to those intentions.

Costs

The Attorney-General agreed to an order that the Commonwealth pay Mr Day's costs, but opposed an order in favour of Ms McEwen.
Ms McEwen was deemed to be a party to these proceedings and was the moving party on an application heard by Gordon J at which evidence of facts relating to Mr Day's dealings, in addition to those which had been agreed between the parties, was considered. The findings made⁷³ by her Honour were referred to by the parties in their submissions. Ms McEwen made submissions to Questions (a) and (c) which were not in all respects identical with those of the Commonwealth. She was the only contradictor with respect to Question (b). In these circumstances the Commonwealth should also pay her costs of the proceedings.

Answers to the questions referred

The questions referred by the Senate to this Court should be answered as follows:

(a) 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.

(b) 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.

(c) 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.

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

(e) 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.

GAGELER J. The High Court expressed the opinion in Brown v West⁷⁴ that "[t]here is much to be said for the view that the Parliament alone may make provision for benefits having a pecuniary value which accrue to its members in virtue of their office and which are not mere facilities for the functioning of the Parliament". The Court then set out s 48 of the Constitution, which states that "[u]ntil the Parliament otherwise provides" each senator and each member of the House of Representatives shall receive an "allowance" of a specified annual monetary amount, and continued⁷⁵:

"The effect of this section ... depends on the meaning attributed to 'allowance' and the width of the power conferred on the Parliament alone 'otherwise' to provide. ... Apart from the possible operation of s 48, it may be that our Constitution provides such a separation of powers as would preclude any exercise of the executive power which takes the form of the discretionary conferring of benefits having a pecuniary value on individual members of the Parliament, not being mere facilities for the functioning of Parliament."

Soon after Brown v West, the Parliament – in the exercise of its power under s 51(xxxvi) of the Constitution (to make laws with respect to a matter within the scope of s 48) or in the exercise of its power under s 51(xxxix) of the Constitution (to make laws with respect to a matter incidental to the power vested by the Constitution in the Parliament), it now matters not which – enacted the Parliamentary Entitlements Act 1990 (Cth). Under the Parliamentary Entitlements Act, senators and members of the House of Representatives are "entitled to" specified "benefits"⁷⁶, the costs of which are to be paid out of the Consolidated Revenue Fund⁷⁷. One of those benefits is "[o]ffice accommodation in the electorate, together with equipment and facilities necessary to operate the office, as approved by the Minister"⁷⁸.
During his term as an elected senator for South Australia, Mr Day accordingly had a statutory entitlement to be provided at public expense with office accommodation in South Australia, together with equipment and facilities necessary to operate that office, as approved by the Minister for Finance as the Minister administering the Parliamentary Entitlements Act. Procuring office premises to provide him with that statutory entitlement was the reason why the Commonwealth of Australia (represented by the Ministerial and Parliamentary Services Division, Corporate and Parliamentary Services Group of the Department of Finance), in the exercise of non-statutory executive capacity, entered into the lease from Fullarton Investments of the Fullarton Road property for a term of five years for a permitted use identified in the lease as "Office Accommodation and Communication Facility". The lease obliged the Commonwealth to pay rent in monthly instalments into such account as was from time to time to be notified to it by Fullarton Investments.
On the facts sufficiently recounted in the reasons for judgment of other members of the Court, at the time of the Commonwealth entering into the lease with Fullarton Investments, Mr Day stood to gain financially from the Commonwealth performing its obligation to pay rent under the lease. He stood to gain in one or more of three distinct ways, none of which was apparent on the face of the lease and none of which was known to the Minister for Finance or officers within the Department of Finance.
First, Mr Day was in truth the holder of the bank account labelled "Fullarton Nominees", which Fullarton Investments had already notified the Commonwealth was the account into which the Commonwealth was to pay the rent under the lease. The rent to be paid by the Commonwealth was in that way to go directly to Mr Day.

"Such an overriding disqualification provision should, in my view, be construed as depriving a citizen of the democratic right to seek to participate directly in the deliberations and decisions of the national Parliament only to the extent that its words clearly and unambiguously require."

I agree with that view, which I do not think to be contradicted by the holding of the majority in Sykes v Cleary.

Its blunt and limiting effect on democratic participation tells in favour of an interpretation which gives the disqualification set out in s 44(v) the greatest certainty of operation that is consistent with its language and purpose. Senators and members of the House of Representatives should know where they stand. They, and their electors, are entitled to expect tolerably clear and workable standards by which to gauge the constitutional propriety of their affairs.
The interpretation of s 44(v) adopted in In re Webster⁸², confining its operation to an agreement "for a substantial period of time ... under which the Crown could conceivably influence the contractor in relation to parliamentary affairs by the very existence of the agreement, or by something done or refrained from being done in relation to the contract or to its subject matter", is unsatisfactory. That is not only because the Webster interpretation is founded on too narrow a view of the purpose of the disqualification, as to which I agree with and have nothing to add to the various expositions by other members of the Court. The Webster interpretation is also unsatisfactory because the interpretation adopts a criterion for the operation of the disqualification that is vague and unduly evaluative and that involves a gloss on the constitutional language.
The interpretation now advanced by the Attorney-General of the Commonwealth is that s 44(v) "is engaged at least when: objectively, there is a real risk that a person could be influenced, or be perceived to be influenced, in relation to parliamentary affairs by a direct or indirect financial interest, in the sense of an expectation of a monetary gain or loss, arising from the existence, performance, or breach of an agreement with the executive government of the Commonwealth". That interpretation has the virtue of attempting to align the disqualification to the wider constitutional purpose of removing the possibility of conflict or the appearance of conflict between advancement of a person's interests and that person's duty as a senator or member of the House of Representatives.
But the Attorney-General's interpretation has its own shortcomings. Even more than the Webster interpretation, it adopts a criterion for the operation of the disqualification that is vague and evaluative. And not unlike the Webster interpretation, it involves a significant gloss on the constitutional language. The extent of the disqualification and the purpose of the disqualification are run too much together. The latter properly informs the former, but should not take its place.
Much of the anxiety that has attended attempted exposition of s 44(v) in the past has stemmed from reading its reference to "any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth" as equivalent to "any direct or indirect pecuniary interest in any agreement with the Executive Government of the Commonwealth". The interpretation advanced by the Attorney-General of the Commonwealth is not unique in implicitly adopting that reading. The concern has been to achieve an interpretation that excludes from the disqualifying effect of s 44(v) a pecuniary interest that a senator or member might reasonably be expected to be able to have in routine or otherwise patently benign agreements with the Executive Government of the Commonwealth. Those agreements might include a postal note issued by the Postmaster-General's Department under the Post and Telegraph Act 1901 (Cth), a bond issued by the Treasury under the Commonwealth Inscribed Stock Act 1911 (Cth), or an agreement as to the amount of compensation constituting just terms following the compulsory acquisition of land under the Lands Acquisition Act 1989 (Cth).

"A man is directly interested in a contract if he is a party to it, he is indirectly interested if he has the expectation of a benefit dependent on the performance of the contract; but in either case the interest must be in the contract, that is to say, the relation between the interest and the contract must be immediate and not merely connected by a mediate chain of possibilities."

The notion of an indirect interest in a contract being an expectation of a benefit dependent on performance of the contract is consistent with the view of s 44(v) implicit in advice given by Robert Garran as Secretary of the Attorney-General's Department to the Secretary of the Postmaster-General's Department in 1902⁸⁶. To the question "whether members of the Commonwealth Parliament are legally qualified to act as sureties for mail contractors", Garran had answered:

"The position of surety for the performance of a Government contract probably would involve at least an indirect pecuniary interest in the contract within the meaning of the section – seeing that the surety may in certain events be required either to take over the contract or pay the damages."

In my opinion, the formulation by Gavan Duffy J in Ford v Andrews captures the essence of s 44(v)'s reference to "any direct or indirect pecuniary interest" in an agreement with the Public Service of the Commonwealth. I would not presume to improve on it. I do no more than add two observations concerning its application to s 44(v).
The first observation is that for a benefit dependent on the performance of the agreement to amount to a pecuniary interest the benefit must, by definition, be pecuniary: it must be, or be capable of sounding in, money or money's worth. And it must obviously be more than trivial. The expectation that a senator or member of the House of Representatives has of receiving such a benefit dependent on the performance of an agreement with the Public Service of the Commonwealth might be an expectation of making a monetary gain as a result of the performance or non-performance of the agreement. Alternatively, it might be an expectation of avoiding a monetary loss as a result of the performance or non-performance of the agreement.
The express exception in s 44(v) for a pecuniary interest which a person has "as a member and in common with the other members of an incorporated company consisting of more than twenty-five persons" indicates that there is no reason why a pecuniary interest within the scope of the provision might not be constituted by an expectation of an increase or decrease in the value of an asset (such as a shareholding) or by an expectation of receipt or non-receipt of a payment the making of which depends on the exercise of an independent discretion (such as a dividend). The exception cannot simply be explained away as reflecting a failure to assimilate the holding in Salomon v Salomon & Co⁸⁷ that an incorporated company is distinct from its members. The statement in Webster that "a person who is no more than a shareholder in a company does not, by reason of that circumstance alone, have a pecuniary interest in any agreement the company may have"⁸⁸ is correct insofar as it refers to a direct pecuniary interest. The statement would be incorrect were it taken to exclude the possibility of a person who is no more than a shareholder in a company having an indirect pecuniary interest in an agreement into which the company has entered resulting either from the effect of the agreement on the value of the person's shareholding or from its effect on the person's expectation of the receipt of dividends. In that respect, I do not think it possible to draw any meaningful distinction between an expected receipt of dividends by a shareholder of an incorporated company and an expected receipt of a distribution by the beneficiary of a trust. The Convention Debates make quite clear that an indirect pecuniary interest was specifically contemplated to include a beneficial interest.

"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".

By letter dated 8 November 2016 to the Chief Executive and Principal Registrar of the High Court of Australia, the President of the Senate informed this Court of a resolution of the Senate referring to the Court, sitting as the Court of Disputed Returns⁹³, the following questions:

"(a) whether, by reason of s 44(v) of the Constitution, or for any other reason[⁹⁴], 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;

(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."

Questions (a) and (c) are concerned, in particular, with whether Mr Day was incapable of being chosen, or of sitting, as a Senator by reason of his having a direct or indirect pecuniary interest in a lease of part of 77 Fullarton Road, Kent Town, in South Australia ("77 Fullarton Road") to the Commonwealth. The Attorney‑General of the Commonwealth contended that Mr Day was incapable of being chosen or sitting as a Senator from no later than 1 December 2015, by which time he had an indirect pecuniary interest in the lease of part of 77 Fullarton Road, contrary to s 44(v) of the Constitution.
Upon the referral of the questions to this Court, French CJ directed that each of Mr Day, Ms Anne McEwen and the Attorney‑General of the Commonwealth be heard on the hearing of the reference, and be deemed to be a party to the reference pursuant to s 378 of the Commonwealth Electoral Act 1918 (Cth) ("the Electoral Act"). Ms McEwen was an unsuccessful candidate at the 2016 federal election for the Australian Labor Party. Ms McEwen was defeated by Mr Day in the counting of votes for the 12th Senate seat to be filled for South Australia at that election.
Consideration of the questions posed for determination must begin with an account of the facts which bear upon that determination.

Mr Day and the 44th and 45th Parliaments

At the 2013 federal election, Mr Day was elected to serve in the Senate of the 44th Parliament of the Commonwealth representing the State of South Australia. Mr Day's term as a Senator began on 1 July 2014.
On 9 May 2016, the 44th Parliament was dissolved by a simultaneous dissolution of both the Senate and the House of Representatives. On 16 May 2016, the Governor of South Australia issued writs for the election of 12 Senators for the State of South Australia at the double dissolution general election to be held on 2 July 2016.
On 2 June 2016, Mr Day, in his capacity as the registered officer of the Family First party, submitted to the Australian Electoral Commission ("the AEC") a nomination for Senators in the form of Form CC in Sched 1 to the Electoral Act. By the form submitted by Mr Day: Mr Day was nominated as a candidate for the Senate in South Australia; Ms Lucy Gichuhi was nominated as a candidate for the Senate in South Australia; Mr Day and Ms Gichuhi jointly requested that their names be grouped together on the ballot paper, with Mr Day's name appearing above Ms Gichuhi's; Mr Day, in his capacity as registered officer of Family First, endorsed Mr Day and Ms Gichuhi and requested that Family First's registered name appear next to their names on the ballot and next to their group square above the line.
The nominations of Mr Day and Ms Gichuhi, their joint request to be grouped on the ballot, and Family First's request that its name be printed next to their names and group, were accepted by the AEC. The AEC printed a square for the Family First group above the line on the ballot paper for the election.
On 4 August 2016, following the election held on 2 July, the Acting Australian Electoral Officer for the State of South Australia certified and returned Mr Day as elected, in the 12th place, to the Senate of the 45th Parliament.
The 45th Parliament opened on 30 August 2016.
Mr Day resigned as Senator by letter to the President of the Senate, pursuant to s 19 of the Constitution, on 1 November 2016.

77 Fullarton Road

The primary facts relating to Mr Day's association with the lease of a portion of 77 Fullarton Road to the Commonwealth were established by the materials accompanying the reference to this Court; by agreement between the parties; and by further findings made by Gordon J after a hearing for that purpose conducted in January 2017⁹⁵. These primary facts are not in dispute. At issue is whether, in light of these facts, Mr Day had from 1 December 2015, as the Attorney‑General contended, an indirect pecuniary interest in the lease of a portion of 77 Fullarton Road to the Commonwealth.
B & B Day Pty Ltd ("B & B Day") was the registered proprietor of 77 Fullarton Road from September 2011 until 11 November 2014. B & B Day held 77 Fullarton Road as trustee of the Day Family Trust, a discretionary trust. B & B Day was, and remains, the trustee of the Day Family Trust. Until 30 June 2014, Mr Day was the sole director and shareholder of B & B Day; after 30 June 2014, Mr Day's wife, Bronwyn Esther Day, was the sole appointed director and shareholder. Mr and Mrs Day, and members of their family, were, and remain, beneficiaries of the Day Family Trust. Mr Day was, and remains, the appointor of the Day Family Trust.
On 2 January 2014, the National Australia Bank ("NAB") approved a loan facility in favour of B & B Day to a limit of $1.6 million, with interest, for a term of five years. The security for the loan included a registered mortgage by B & B Day in favour of NAB over 77 Fullarton Road. In addition, Mr and Mrs Day gave a guarantee and indemnity for $2 million for the performance by B & B Day of its obligations under the facility.
Upon Mr Day's election to the Senate in 2013, he was entitled under the Parliamentary Entitlements Act 1990 (Cth)⁹⁶ to be provided by the Commonwealth with an electorate office. Generally speaking, an incoming Senator is expected to occupy the premises vacated by his or her predecessor in the Senate. Mr Day made representations to the Department of Finance to the effect that he did not wish to occupy the electorate office of his predecessor, Senator Donald Farrell, at 19 Gilles Street in the Adelaide CBD, and asked whether the Commonwealth would take a lease of a portion of 77 Fullarton Road for use by Mr Day as his electorate office.
From late 2013, Mr Day believed that the Commonwealth would be unwilling to take a lease of part of 77 Fullarton Road while he, or an entity he owned, was the owner of the freehold. Mr Day arranged for the incorporation of Fullarton Investments Pty Ltd ("Fullarton Investments") upon advice from his accountant, Mr Vic Rasera, for the purpose of acquiring 77 Fullarton Road from B & B Day. From no later than 16 December 2013, there was an arrangement between B & B Day, as trustee of the Day Family Trust, and Fullarton Investments, as trustee of the Fullarton Road Trust, that Fullarton Investments would collect rent paid by the Commonwealth and pass it back to the Day Family Trust.

The scope of s 44(v)

The parties' contentions

Mr Day argued that because s 44(v) disqualifies the affected person from serving in Parliament and exposes him or her to a financial "penalty" for sitting when disqualified⁹⁷, it should be given a narrow construction⁹⁸.
Mr Day argued that the mischief at which s 44(v) is directed is the making of contracts that place a person "under the influence of the Crown in relation to Parliamentary activities" or that enable the Crown to "'sap' the freedom and independence of Parliament"⁹⁹. In adopting that approach, Mr Day relied on the purpose of s 44(v) identified by Barwick CJ in In re Webster, namely the "protection of the independence of the parliament"¹⁰⁰.
In reliance on Webster, Mr Day argued that s 44(v) is engaged only where there is an agreement under which a legislator "could conceivably be influenced by the Crown in relation to Parliamentary affairs"¹⁰¹. Mr Day essayed the argument that, because the officers of the executive government with whom he dealt were unaware of his connection with the Lease, there was no possibility that the executive government might seek to use it to influence his decisions as a Senator.
Finally, Mr Day argued that an interpretation of s 44(v) unconfined by the purpose identified by Barwick CJ in Webster would catch transactions by parliamentarians that the framers of the Constitution could not possibly have contemplated, such as a Senator taking a loan from the Commonwealth Bank.
Mr Day contended that the decision in Webster was determinative of Questions (a) and (c) in his favour. It was submitted that the decision of Barwick CJ has the same authority as a decision of the full court of this Court given that Barwick CJ was sitting as the Court of Disputed Returns. It was said that this Court should be slow to accept an invitation to depart from the approach adopted by Barwick CJ except "with great caution and for strong reasons"¹⁰².
The Attorney‑General acknowledged that this Court should not depart lightly from Webster, but submitted that the decision to depart from that authority requires an "evaluation of factors which may weigh for and against overruling". In this regard, it was said to be relevant that Webster is a decision of a single judge; does not rest on a principle carefully worked out in a significant succession of cases; and rests on a narrow construction that does not cohere with the purpose or history of s 44(v).

Webster

In Webster¹⁰⁸, Senator James Webster was a shareholder in J J Webster Pty Ltd ("the Webster Company"), a company founded by his grandfather which carried on business in Victoria as a timber, hardware and plumbing merchant. From time to time, the Webster Company tendered, sometimes successfully, for the supply of material for the use of the Postmaster‑General's Department and the Department of Housing and Construction. Senator Webster was the Webster Company's managing director, secretary and manager. The Webster Company had nine shareholders.
The Senate referred to this Court, sitting as the Court of Disputed Returns, questions as to whether Senator Webster was or had become incapable of being chosen, or of sitting, as a Senator. Notwithstanding that the case raised questions as to the operation of a provision of the Constitution on which no previous decision of the Court shed any light, Barwick CJ decided to hear the case alone. His Honour answered the questions posed for determination favourably to Senator Webster.
Barwick CJ took a narrow view of the scope of s 44(v), interpreting it as applying only to an agreement:

"under which the Crown could conceivably influence the contractor in relation to parliamentary affairs by the very existence of the agreement, or by something done or refrained from being done in relation to the contract or to its subject matter"¹⁰⁹.

In my respectful opinion, this central element of the reasoning in Webster, upon which Mr Day relied, cannot be supported. It reflects a view of the scope of the disqualification which is narrower than the text conveys as a matter of its ordinary meaning, and is based on an understanding of the purpose of the provision which is narrower than that indicated by an examination of the Debates of the Australasian Federal Convention of 1897‑1898 ("the Convention Debates")¹¹⁰.
Barwick CJ proceeded upon the view that s 44(v) served the same purpose as the House of Commons (Disqualification) Act 1782 (UK) ("the 1782 Act"), which disqualified from Parliament any person who:

"shall, directly or indirectly … for his use or benefit … undertake, execute, hold, or enjoy … any contract, agreement, or commission, made or entered into with [the Crown] … for or on account of the publick service … during the time that he shall execute, hold, or enjoy, any such contract, agreement, or commission".

There is something to be said for the view that the purpose of the 1782 Act was not limited exclusively to "[t]he protection of the independence of the parliament"¹¹¹. In this regard, it should be noted that, during the debate on the Bill for the 1782 Act, Edmund Burke observed that "individuals ... had an option either to retain their political rights, and sit in parliament; or their professional and commercial rights by pursuing their trade, and supplying government as usual", adding that it "was strict justice to the public, for parliament to separate two sorts of rights, when they were found to be incompatible: ... a good member of parliament could not be a contractor"¹¹². Burke's observations support the notion that a parliamentarian should be beyond the reach of considerations of financial self‑interest in the exercise of his or her office.
In addition, the distinction which Barwick CJ perceived between the protection of the independence of parliamentarians from the influence of the executive government, and the prevention of conflict between the interests and duties of parliamentarians, is hardly a bright line. So much was acknowledged by Barwick CJ in Webster¹¹³ itself. A parliamentarian who is induced to yield to the influence of the executive by an expectation of pecuniary gain held out by the executive affords but one example, albeit an important example, of the preference for personal financial interest over parliamentary duty.
But even if it be accepted that the 1782 Act was directed exclusively at the mischief identified by Barwick CJ, the language in which s 44(v) is cast is sufficiently different from the 1782 Act as to suggest that it was not addressing only that mischief, but a broader concern as to the conflict between interest and duty, of which the possibility of yielding to blandishments provided by the executive government (for example, to support it on a motion of no confidence) is but one manifestation.

Textual considerations

Barwick CJ identified s 1 of the 1782 Act as the "precise progenitor" of s 44(v)¹¹⁴; but the 1782 Act disqualified only those persons who "undertake, execute, hold, or enjoy" an agreement with the Crown. Section 44(v) expressly extends the disqualification to those with a "pecuniary" interest, "direct or indirect", in an "agreement" with the Public Service of the Commonwealth.
The express extension of s 44(v) to pecuniary interests indirectly held in an agreement necessarily means that a disqualifying agreement need not be one to which a parliamentarian is a party. In such a case, the executive government may be entirely unaware, as was the case here, of the possibility of exercising influence over the parliamentarian. This would suggest that the purpose of the disqualification is not limited to preventing executive influence upon a parliamentarian, but extends to preventing the influence of a member's private financial interests upon the discharge of his or her parliamentary functions.
The reference to having a pecuniary interest in an agreement appeared for the first time at the 1898 Melbourne Convention in the fourth and final draft of the provision. In Webster¹¹⁵, Barwick CJ held that the purpose served by s 44(v) "has no real analogy in the purpose sought to be achieved by disqualification provisions under local government and comparable legislation … [which is] to prevent a possible conflict of interest and duty". But disqualification from elective office because of a "pecuniary interest in any agreement" with local government had long been used in local government legislation to remove "[t]he manifest possibility of a conflict between duty and interest"¹¹⁶.
The language in the final draft of what became s 44(v) departed from the language of the 1782 Act in several other respects¹¹⁷. The disqualification of a person who holds "any agreement for or on account of the public service of the Commonwealth"¹¹⁸ was altered to become a disqualification which depended upon the agreement being made, not for the public service of the Commonwealth – as an abstract purpose – but "with the Public Service of the Commonwealth", that is, with officers of the administrative organ of the government.
The contrast with s 44(iv) of the Constitution is instructive. Section 44(iv) disqualifies from Parliament the holder of "any office of profit under the Crown, or any pension payable during the pleasure of the Crown out of any of the revenues of the Commonwealth". Significantly, s 44(v) is focused upon agreements "with the Public Service of the Commonwealth", that is, with officers of the administration who might or might not be within the scope of "the Crown". Insofar as s 44(v) is apt to be engaged by an agreement with an officer of the administration other than a Minister of the Crown, it might be thought that the concern animating s 44(v) is not that the Crown might exert influence on the parliamentarian, but rather that the parliamentarian might seek to exert a corrupting influence on officers of the administration with whom he or she comes into contact. A provision such as s 44(v) might be thought to be especially necessary in a constitutional structure in which the executive government is, unlike the executive government under the Constitution of the United States of America, dependent for its survival upon the support of the legislature.

The Convention Debates

Barwick CJ adopted his narrow view of the scope of s 44(v) with only limited recourse to the Convention Debates¹²¹. More comprehensive reference to the Convention Debates than was undertaken by his Honour suggests that s 44(v) was directed at an apprehended conflict between the disinterested performance of a parliamentarian's public duty and the possibility of enhancement of his or her financial interests by arrangements with officers of the executive government. Some of the leading lights among the framers made this concern clear during the course of the Convention Debates.
In Adelaide in April 1897, Mr Isaac Isaacs said¹²²:

"We should be careful to do all that is possible to separate the personal interests of a public man from the exercise of his public duty … The public are interested in seeing and ensuring, so far as it is possible to ensure it, that no member of Parliament shall for his own personal profit allow his judgment to be warped in the slightest when he is called upon to decide on questions of public moment."

This concern was echoed by Mr George Reid, who said¹²³:

"[A]s a matter of principle, the more free a man who represents the people is from transactions with the Government the better it is for himself and for his public usefulness."

Mr Edmund Barton considered the mischief at which the measure that became s 44(v) was directed to be the possibility of "carrying out a fraud upon the public"¹²⁴.
In Sydney in September 1897, Sir John Downer said¹²⁵:

"I think it inexpedient to allow members of parliament to have any contractual relations which might suggest to any one that their position might be impure."

On this occasion, Mr Isaacs was even more explicit: "The object of the clause is to prevent individuals making a personal profit out of their public positions"¹²⁶.
Subsequently, in The King v Boston¹²⁷, Isaacs J (as Mr Isaacs had become) joined with Rich J in the following statement, echoing the views of Edmund Burke cited earlier:

"The fundamental obligation of a member in relation to the Parliament of which he is a constituent unit still subsists as essentially as at any period of our history. That fundamental obligation … is the duty to serve and, in serving, to act with fidelity and with a single‑mindedness for the welfare of the community." (emphasis in original)

A strict construction

In Webster, Barwick CJ described s 44(v) as a "vestigial" part of the Constitution which should receive a strict construction¹²⁸.
The concern that parliamentary office should not be, or be seen to be, a source of personal gain for members of Parliament was familiar to the framers of our Constitution from the great public debate that preceded the adoption of the Constitution of the United States. At that time, there was strong opposition to the proposal, ultimately adopted, that members of Congress should receive a salary. The opposition to salaries for congressmen reflected the view that public service as a member of the federal legislature should be entirely disinterested. The view which ultimately prevailed balanced that purist view against the egalitarian consideration that if Congress were not to be the exclusive preserve of the wealthy, it would be necessary for those serving in the legislature to receive remuneration for that service¹²⁹.
Our Constitution, by s 48, makes express provision for the payment of a salary to members of Parliament. That salary may be altered by the Parliament. In this way, s 48 acknowledges that, in order to achieve a broad representation of all sections of the people, including those whose only means of support is their own personal exertion, the strict standards of personal disinterest championed by Edmund Burke and Isaac Isaacs might legitimately be compromised to the extent that a member has an interest in his or her parliamentary salary. But there are limits to the compromise.
In this regard, s 44(v) affords an irreducible minimum of protection against the possibility that the personal pecuniary interests of parliamentarians might be allowed to compete with the interests of the people they represent, and so "cynically turn public debate into a cloak for bartering away the public interest"¹³⁰. Section 44(v) serves to ensure that the conscientious discharge of a parliamentarian's duties is not affected by considerations of pecuniary benefit which might be made available to members of the legislative branch of government by reason of their position by officers of the executive government. In this regard, in Brown v West¹³¹, Mason CJ, Brennan, Deane, Dawson and Toohey JJ observed:

"There is much to be said for the view that the Parliament alone may make provision for benefits having a pecuniary value which accrue to its members in virtue of their office and which are not mere facilities for the functioning of the Parliament."

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.

A "direct or indirect pecuniary interest in any agreement"

The parties' contentions

Mr Day accepted that the Lease, being an executory contract, was an "agreement" for the purposes of s 44(v). Mr Day did not dispute that the Lease was with the Public Service of the Commonwealth.
Mr Day submitted that he did not have a direct or indirect pecuniary interest in the Lease. He argued that only a legally enforceable interest is within the contemplation of s 44(v). Mr Day also argued that, consistently with the purpose of s 44(v) for which he contended, an interest will not be a "pecuniary interest" in an agreement unless "through the possibility of financial gain by the existence or the performance of the agreement, [the] person could conceivably be influenced by the Crown in relation to Parliamentary affairs"¹³².
Mr Day argued that, even if he were a party to the Lease, or a shareholder of a party to the Lease, his interest could not be understood as apt to compromise his independence vis-à-vis the executive government because there is no suggestion that, at any material time, any officer of the executive government knew that Mr Day had any direct or indirect interest in the Lease. It may be said immediately that, by this argument, Mr Day seeks to make a virtue of necessity. Mr Day knew the executive government wished him to use premises that had been used as an electorate office by Senator Farrell and, more importantly, he understood that it would not be willing to provide financial support for his use of the premises at 77 Fullarton Road while he held an interest in them. If the officers of the executive government with whom Mr Day dealt had known of his expectation of the receipt of rent from the Lease, then his discussions with those officers could have appeared as a case of a cross‑bench Senator seeking private accommodation from an executive government which was in need of cross‑bench support for its legislative program. That would have appeared as a glaring example of the kind of dealing between a parliamentarian and an officer of the executive government that s 44(v) was designed to prevent. Mr Day's case that he had no pecuniary interest is not made more attractive because his self‑interested dealing was masked by the trust structure he caused to be set up.
Mr Day also argued that the interest must be "in the agreement"; and that having such an interest is narrower than having a pecuniary interest "as a result of an agreement", or "flowing from an agreement", or "arising out of" an agreement. Mr Day argued that the mere possibility that Fullarton Investments might receive moneys under the Lease and then exercise its discretion as trustee to pay amounts to B & B Day, which might, in turn, exercise its discretion as trustee to pay amounts to Mr Day, could not establish that Mr Day had even an indirect interest in the Lease.
Ms McEwen argued that a pecuniary interest, in a context like s 44(v), is one that "sound[s] in money or money's worth". It was submitted on her behalf that, in this context, the meaning of "pecuniary interest" is the same as "financial interest". In Amadio Pty Ltd v Henderson, the Full Court of the Federal Court of Australia held that a "financial interest" is such "that it can give rise to an expectation, which is not too remote, of a 'gain or loss of money'". Ms McEwen also argued that, while the beneficiaries of a discretionary trust are generally dependent on the exercise of the power given to the trustee to distribute income or capital to the beneficiaries, a beneficiary of a discretionary family trust has, at least, an indirect pecuniary interest in a contract over the trust assets.

Mr Day's pecuniary interest

Mr Day's submission that only a legally enforceable interest is contemplated by s 44(v) must be rejected. Section 44(v) is concerned with "pecuniary interests", not with rights enforceable in the courts. In this regard, it is inconceivable that s 44(v) would not be engaged by an agreement by an officer of the executive government to provide payments to a parliamentarian, in return for support in the Parliament, simply because both parties to the agreement were content that their arrangement should not be a contract enforceable in the courts. Such an agreement would be a most serious (and obvious) example of what is targeted by s 44(v).
Accordingly, it is not necessary in this case to resolve any question as to whether the corporate and trust structures established by Mr Day were apt to avoid the disqualifying effect of s 44(v). An expectation of a gain or loss of money generated by a promise may exist without a legally enforceable entitlement to payment of money. Given the constitutional context, it is enough that the person's pockets were or might be affected¹³⁷.
The term "indirect" indicates that, here, regard may be had "to practical as well as legal effect"¹³⁸, so that a person has at least an "indirect" interest of a pecuniary nature in an agreement if the agreement is such that it can give rise to an expectation of a monetary gain or loss if it is performed. A person who has an expectation of a benefit dependent on the performance of an agreement is naturally said to be indirectly interested in the agreement¹³⁹. As was said in Ford v Andrews¹⁴⁰, such a person is "'interested' if he [or she] is not 'disinterested' in a pecuniary or proprietary sense".
In Ford v Andrews, this Court was concerned with s 70(j) of the Local Government Act 1906 (NSW), which relevantly provided that a person is disqualified from the office of alderman if:

"he is directly or indirectly … engaged or interested (other than as a shareholder in an incorporated company … consisting of more than twenty members) in any contract, agreement, or employment with, by, or on behalf of the council".

Gavan Duffy J said¹⁴¹:

"A man is directly interested in a contract if he is a party to it, he is indirectly interested if he has the expectation of a benefit dependent on the performance of the contract".

Mr Day had a pecuniary interest in the Lease from no later than 26 February 2016. It is unnecessary to determine whether Mr Day's position as a beneficiary of the Day Family Trust, either on its own or in combination with his position as guarantor of B & B Day's financial obligations, was a sufficient indirect interest for the purposes of s 44(v). That Mr Day hoped for a pecuniary benefit from the Lease is undeniable, given the directions that the rent be paid into the bank account of Fullarton Nominees, which was owned by him. The direction of 26 February 2016 meant that the Lease would, in fact, put money into Mr Day's pocket. From that date he had an expectation of a benefit dependent on the performance of the Lease by the Commonwealth.
That was so even though the discretions available to Fullarton Investments and B & B Day might not have been exercised to bring these receipts to account as distributions to Mr Day. Mr Day's control over the rental payments when received would mean that he could use them, as was intended, to repay the loan to NAB. It is not to the point that Mr Day's legal entitlement might not have been established by resolutions of the trustees. Mr Day, as a practical matter, had the spending of the rental money, and so he had a pecuniary interest in the Lease. And that would be so as a matter of fact whether or not the records of the trusts acknowledged that practical reality.
At this point, one may return to note that Mr Day put forward a number of examples of cases that would be caught by what was said to be the "overly expansive reading of s 44(v)" urged by Ms McEwen and the Attorney‑General of the Commonwealth. Mr Day offered as examples the case of a parliamentarian or potential parliamentarian:

(i) who subscribes for a government bond;

(ii) who is a creditor of a person who is owed money under an agreement with the Commonwealth, or otherwise has an agreement with the Commonwealth; and

(iii) whose spouse is a senior public servant who is remunerated pursuant to a contract with the Commonwealth in circumstances where the spouse's income benefits the parliamentarian, eg, through the reduction of a mortgage for which both are jointly and severally liable.

Mr Day mustered other examples, but it is sufficient to say that in each case the example depended upon the provision of a benefit by the Commonwealth which might enure to the benefit of the parliamentarian. The first point to be made here is that the possibility that there may be difficulty in discerning the outer limits of the operation of the constitutional disqualification is not a reason to decline to apply it to a case which is plainly within its scope; and this is such a case. Secondly, Mr Day's examples invite the response that s 44(v) is not concerned with the myriad of benefits generally provided by the Commonwealth to its citizens. Mr Day's examples exaggerate the reach of s 44(v) because they fail to pay due attention to the limitations inherent in its text.
The examples offered by Mr Day all assume that an agreement under which the Commonwealth is the source of an expected benefit is sufficient to engage the disqualifying effect of s 44(v). But, in the context in which s 44(v) appears, the circumstance that the Commonwealth is the source of the benefit is not sufficient to engage the incapacitating effect of s 44(v). That effect will be engaged only if the agreement is made with "the Public Service of the Commonwealth". An agreement with the Commonwealth (for the creation of which the Constitution provides) or with the Crown in right of the Commonwealth (to which s 44(iv) expressly refers) made under a law of the Commonwealth of general application is not within the letter of s 44(v).
The disqualifying interest contemplated by s 44(v) is a pecuniary interest generated by an agreement made with the Public Service of the Commonwealth. Of course, while the Commonwealth will inevitably be the ultimate source of the benefit under such an agreement, it is the circumstance that the source of the benefit is in an agreement made with the Public Service of the Commonwealth which engages the disqualifying effect of the provision. It is only a pecuniary interest in such an agreement that is within the purview of s 44(v). Pecuniary benefits available generally to members of the Australian community are not within the mischief at which s 44(v) is directed merely because the Commonwealth is the ultimate source of the benefit. Given the purpose that informs s 44(v), there is no reason to expand its disqualifying effect to any person who might obtain a pecuniary benefit conferred by the Commonwealth which is available generally to the community. Such a benefit does not fall within the spirit of s 44(v)¹⁴².
Acceptance of this limitation might be thought to obviate the concern as to an unduly expansive operation of s 44(v), but it is not possible to come to a concluded view on this point. The Attorney‑General of the Commonwealth was not disposed to support such an approach, and so it was not the subject of argument by the parties. In any event, as noted already, it is unnecessary to reach a concluded view upon the outer limits of the disqualifying operation of s 44(v) because in the present case Mr Day's interest falls squarely within its scope.

Question (b) – filling the vacancy

The parties' contentions

Mr Day submitted that if he were not capable of being chosen for the Senate, a special count would be the appropriate manner in which to fill the vacancy, with votes above the line in favour of Family First, and those below the line in favour of Mr Day, being allocated to Ms Gichuhi. The Attorney‑General agreed with Mr Day's proposal, submitting that a special count of this kind would not result in a distortion of the voters' real intentions, and so should be preferred to a fresh election, which would occasion significant cost and inconvenience.
Ms McEwen submitted that if Mr Day were found to have been incapable of being chosen as a Senator, the vacancy should be filled by a special count of the ballots cast at the election, disregarding the votes cast above the line for the Family First group and those below the line in favour of Mr Day. Ms McEwen argued that the presence of Mr Day on the ballot paper as the first of two candidates for the Family First group distorted the vote for that party and those votes cannot be reasonably attributed to the second candidate.
Ms McEwen argued that, as there were only two candidates in Mr Day's group (the minimum number under s 168 of the Electoral Act), in the event he were found to be incapable of being chosen, there was no valid group entitled to be placed above the line on the ballot paper. In addition, Ms McEwen argued that it could not be said that it is "highly probable, if not virtually certain"¹⁴³ that, had Mr Day not been on the ballot, Family First or Ms Gichuhi would have received the same number of votes.
The Attorney‑General argued in response that there is no sufficient factual foundation to support the submission that Mr Day's presence on the ballot "distorted" the vote; and that no sufficient reason is shown by Ms McEwen for disregarding the preferences of a significant number of voters¹⁴⁴.

A special count

The Court has the power to "declare any candidate duly elected who was not returned as elected" pursuant to s 360(1)(vi) of the Electoral Act. That power carries with it an incidental power to order a special count¹⁴⁵.
In accordance with the principles stated in In re Wood¹⁴⁶ and followed in Sue v Hill¹⁴⁷, a special count may be ordered to fill a vacancy occasioned by the return of a candidate who was subject to disqualification under s 44, to be filled by giving effect to "the true result of the polling – that is to say, the true legal intent of the voters so far as it is consistent with the Constitution and the [Electoral] Act"¹⁴⁸.
There is, of course, no suggestion here that the presence of Mr Day's name on the ballot paper falsified the declared choice of the people of South Australia for any of the other 11 candidates who were declared to be elected. The circumstance that Mr Day was not eligible to be chosen as a Senator means that a vote for him was without effect¹⁴⁹. That having been said, the circumstance that Mr Day was not eligible to be chosen as a Senator did not invalidate the ballot in which his name appeared. As was said by this Court in Wood¹⁵⁰, "an election is not avoided if an unqualified candidate stands" because "[i]f it were otherwise, the nomination of unqualified candidates would play havoc with the electoral process".
It is true that s 168(1) of the Electoral Act requires that there be two or more eligible members of a group to allow a request to be made to the Electoral Officer to print the group's square above the line on the ballot papers; but the circumstance that one member is not eligible to be chosen does not have the invalidating effect for which Ms McEwen contends. Nothing in s 168 or the associated provisions of the Electoral Act purports to suggest that the presence on the ballot of a candidate, later found to be disqualified, as part of a multi‑person group invalidates the ballot¹⁵¹. Indeed, by virtue of s 272(2) of the Electoral Act, votes above the line are expressly deemed to have been marked below the line.

Costs

On behalf of the Attorney‑General, the Court was informed that the Commonwealth agreed to submit to an order that it pay Mr Day's costs of these proceedings. It was submitted that no other order for costs should be made.
On behalf of Ms McEwen, it was argued that an order for costs should be made in her favour. In this regard, Ms McEwen invoked the power conferred on the Court of Disputed Returns by s 360(4) of the Electoral Act "to order costs to be paid by the Commonwealth where the Court considers it appropriate to do so".
In Nile v Wood¹⁵³, Deane and Toohey JJ explained that the power conferred by s 360(4):

"is not constricted by reference to the principles controlling the making of an order for costs inter partes … [but] should be exercised when considerations of what is fair and just support, on balance, an order indemnifying a party against costs".

In the present case, there can be no suggestion that Ms McEwen's participation in these proceedings was unreasonable: Ms McEwen had a real interest in the outcome of the proceedings, as was recognised by the order deeming her to be a party. Ms McEwen's participation in the hearing in this Court was of real assistance to the Court in its consideration of the relatively novel question of the construction of s 44(v) of the Constitution. In addition, Ms McEwen's participation provided a contradictor in relation to Question (b). Finally, it could not be said that her participation in the hearing before this Court prolonged the hearing in any substantial way.
In these circumstances, it is appropriate that an order be made that, subject to any other order made by a judge of this Court, the Commonwealth pay Ms McEwen's costs of the proceedings.

Orders

The questions referred to this Court should be answered 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;

Answer: Yes.

(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 a special count of the ballot papers. Any directions necessary to give effect to the conduct of the special count should be made by a single Justice.

(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;

Answer: Yes. Mr Day was incapable of sitting as a Senator from 26 February 2016.

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

Answer: Unnecessary to answer.

(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 any costs excluded by an order of a Justice of the Court.

NETTLE AND GORDON JJ. Mr Robert John Day AO commenced his term as a senator for the State of South Australia on 1 July 2014 in the 44th Parliament of the Commonwealth.
On 9 May 2016, the 44th Parliament was dissolved by a simultaneous dissolution of both the Senate and the House of Representatives. After the ensuing general election, Mr Day was declared on 4 August 2016 as elected to the Senate as a senator for South Australia. He resigned as a senator for South Australia on 1 November 2016.
Section 44 of the Constitution, headed "Disqualification" and found in Pt IV of Ch I of the Constitution, includes s 44(v), which relevantly provides that any person who:

shall be incapable of being chosen or of sitting as a senator …" (emphasis added)

On 7 November 2016, the Senate resolved that certain questions about 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 Court") pursuant to s 376 of the Commonwealth Electoral Act 1918 (Cth) ("the Electoral Act").
Substantial materials were attached to the letter ("the Reference") referring the following questions to the Court:

"(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 [Mr 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, … 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 [the Reference]; and

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

Questions (a) and (c) concern an allegation that Mr Day had, at least, an indirect pecuniary interest in a lease agreement between Fullarton Investments Pty Ltd ("Fullarton Investments"), the owner of his electorate office premises at 77 Fullarton Road, Kent Town, South Australia ("the Fullarton Road Property"), as lessor, and the Commonwealth, represented by a Division within the Department of Finance, as lessee, and that that interest was of a kind prohibited by s 44(v) of the Constitution. If the answer to Question (a) is that there is a vacancy, then two further questions arise. Question (c) asks whether Mr Day became incapable of sitting as a senator prior to the dissolution of the 44th Parliament and, if so, on what date. Question (b) asks "by what means and in what manner that vacancy should be filled".
Those questions should be answered as follows:

(a) 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 Mr Day was returned.

(b) The vacancy should be filled by a special count of the ballot papers. Any directions necessary to give effect to the conduct of the special count should be made by a single Justice.

(c) By reason of s 44(v) of the Constitution, Mr Day was incapable of sitting as a senator on and after 1 December 2015, being a date prior to the dissolution of the 44th Parliament.

After identifying the parties and summarising the relevant facts, these reasons address the proper construction of s 44(v) of the Constitution and its application to Mr Day, before turning to the manner in which the vacancy is to be filled. Questions (d) (other orders) and (e) (costs) are then addressed.

Parties

Each of Mr Day and the Attorney-General of the Commonwealth sought to be heard on the hearing of the Reference and was deemed to be a party to the Reference pursuant to s 378 of the Electoral Act. Each was represented at the hearing of the Reference.
Ms Anne McEwen also sought to be heard on the hearing of the Reference and was deemed to be a party to the Reference. She asserted that she had "a real and distinct interest in whether or not Mr Day was validly elected to the Senate and, if he was not, what method should be adopted to identify the person elected to the twelfth spot for South Australia".
The foundation for Ms McEwen's assertion was that she was the fourth of six listed candidates in the Australian Labor Party group on the ballot paper for the election of senators for South Australia. The three Australian Labor Party candidates listed above Ms McEwen were elected. On the 457th count for the representation of South Australia in the Senate, being the final count, Mr Day was the 12th and final candidate elected. At that last count, Ms McEwen was the only candidate, other than Mr Day, who had not been excluded from the count.

Facts

There were three sources of facts: the materials contained in the Reference, additional facts and documents the parties agreed should be evidence on the hearing of the Reference and additional factual findings made after a two day trial¹⁵⁴. The following summary of the facts relevant to the determination of the Reference is drawn from those sources.
The Fullarton Road Property was owned by B & B Day Pty Ltd ("B & B Day"). B & B Day is the trustee of the Day Family Trust, a discretionary trust. Mr Day and his wife, Mrs Bronwyn Day, are among the beneficiaries of the Day Family Trust. Mr Day was the sole director and sole shareholder of B & B Day until 30 June 2014, when he was replaced by Mrs Day. Mr Day was and remained the appointor of the Day Family Trust.
Fullarton Investments was incorporated on 16 December 2013 for the express purpose of purchasing the Fullarton Road Property from B & B Day. Fullarton Investments is the trustee of the Fullarton Road Trust, a discretionary trust established by deed on the same day that Fullarton Investments was incorporated. The Day Family Trust is a beneficiary of the Fullarton Road Trust.
On 24 April 2014, Fullarton Investments purchased the Fullarton Road Property from B & B Day, for a recorded purchase price of $2.1 million. A memorandum of transfer of the Fullarton Road Property was executed on 4 September 2014 by Mr Day, purportedly as sole director and sole secretary of B & B Day, and a Mrs Debra Smith, as sole director and sole secretary of Fullarton Investments. When Mr Day executed the memorandum of transfer, he was neither a director nor a secretary of B & B Day. Mrs Smith was the wife of Mr John Smith, a friend and a business partner of Mr Day until at least late 2013.
The memorandum of transfer of the Fullarton Road Property from B & B Day to Fullarton Investments was registered on 11 November 2014. The cash consideration of $2.1 million was not then and has not since been paid by Fullarton Investments to B & B Day. B & B Day or Mr Day paid the stamp duty on the transfer of the Fullarton Road Property from B & B Day to Fullarton Investments (in the amount of $109,330), the fee on the registration of the transfer (in the amount of $15,319.50) and the conveyancers' professional fees, for a total of $125,549.19. Fullarton Investments was and remains indebted to B & B Day for the purchase price. Fullarton Investments holds the Fullarton Road Property as trustee of the Fullarton Road Trust.
From April 2015, Mr Day used portions of the Fullarton Road Property as his electorate office. The Commonwealth, represented by the Ministerial and Parliamentary Services Division, Corporate and Parliamentary Services Group of the Department of Finance, entered into a lease with Fullarton Investments for the purpose of Mr Day using those parts of the Fullarton Road Property as his electorate office. The lease was executed on 1 December 2015, with a commencement date of 1 July 2015. Mr Day approved the terms of the lease.

"[Mr Day] has sought advice on establishing an entity in which the Senate Office on Fullarton Road can be housed so as to be able to avail himself of the rental allowance provided by the government. I propose incorporating a new company with [Mrs Smith] as sole director and shareholder, to act as trustee for a discretionary trust. This removes the property from Day family members and any entity in which [Mr Day] has an interest, and by having [Mrs Smith] as sole director, puts further distance between the Trust and [Mr Day's] business interests and [business] partner of nearly 40 years.

The trust will simply hold the [Fullarton Road Property] and collect rent on a regular basis. That rent will then pass back to the Day Family Trust so there will be no profit nor loss in the new trust."

However, as the Factual Judgment records¹⁵⁸, although the steps in fact taken and transactions in fact entered into were directed at those two related purposes, many of the steps taken in connection with carrying those purposes into effect were not consistent with detailed planning or careful implementation. The documents were not always consistent one with the other.
Moreover, Mr Day made a statement to the Department of Finance in which he said, in effect, that he had sold the property to Fullarton Investments and that he had retained the funding to secure the purchase of the Fullarton Road Property. Mr Day's statement of what he had done was legally inaccurate. Of course, he would not be the first person who held an inaccurate belief of that kind. But that inaccurate belief caused further inconsistencies in the documentation. For example, the original idea described by the advisor was for the rent from the Commonwealth to "pass back" to the Day Family Trust. How that was to occur was not specified. In the end, as has been seen, Fullarton Investments requested that the rent be paid directly into a bank account owned by Mr Day and not to B & B Day or the Day Family Trust.
The questions in the Reference must be answered having regard to the steps that were taken and the transactions that were made.

Section 44(v)

Section 44(v) of the Constitution is set out above. It relevantly provides that a person will be incapable of being chosen or of sitting as a senator if: (1) there is an agreement with the Public Service of the Commonwealth; and (2) the person has a direct or indirect pecuniary interest in that agreement that arises otherwise than as a member and in common with the other members of an incorporated company consisting of more than 25 persons.
Section 44(v) must be interpreted not only according to the ordinary meaning of its text but also in light of its place in the structure of the Constitution and its history¹⁵⁹, recognising that the Constitution is "intended to apply to the varying conditions which the development of our community must involve"¹⁶⁰.
It is necessary to look at each element of s 44(v).

Agreement with the Public Service of the Commonwealth

The common position of all the parties is that the lease between Fullarton Investments and the Commonwealth¹⁶¹ was an "agreement" with the Public Service of the Commonwealth for the purposes of s 44(v).
The parties, however, adopted different approaches as to what constitutes an "agreement" within the meaning of s 44(v) generally. As will become evident, it is unnecessary to resolve that issue in this Reference.

Direct or indirect pecuniary interest

The text of s 44(v) refers to, and requires, a direct or indirect pecuniary interest. Although the concept of an "interest" can be vague and uncertain¹⁶², it will take its meaning from its context.
A "pecuniary interest" within the meaning of s 44(v) should be understood as an "interest sounding in money or money's worth"¹⁶³. The direct or indirect interest must be pecuniary in the sense that, through the possibility of a not insubstantial¹⁶⁴ financial gain or loss by the existence, performance or breach of the agreement with the Public Service of the Commonwealth, 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; because the person could conceivably be influenced by the potential conduct of the executive in performing or not performing the agreement or because that person could conceivably prefer their private interests over their public duty.
A "financial gain or loss" is not to be equated with the receipt of money. It is sufficient if the person's "pockets … might be affected"¹⁶⁵. As the Attorney‑General submitted, it is sufficient if the interest affects what the person has to pay out, or if it affects the financial reward that the person is likely to receive, whether in the form of money, other consideration, or relief from making a financial outlay. Nor is there any requirement that the interest be legal or equitable or legally enforceable.
The requirement that the direct or indirect pecuniary interest be in the agreement is an important and necessary check on s 44(v). For the purposes of s 44(v), the person need not be a party to the relevant agreement, but the direct or indirect interest must be a pecuniary interest in the agreement. And "the disqualifying interest [in the agreement] must be one in existence at the critical time, and not merely a possibility of acquiring an interest"¹⁶⁶. As Gavan Duffy J said in Ford v Andrews¹⁶⁷:

Adopting and adapting the words of Gavan Duffy J, whether a person has a pecuniary interest (direct or indirect) "in [an] agreement" may be answered by asking: does the person's identified right or benefit (which does not have to be legal or equitable or legally enforceable) make that person necessarily interested in the agreement within the meaning of s 44(v)? Put another way, is the relation between the pecuniary interest (direct or indirect) and the agreement immediate or merely connected by a chain of possibilities?
An example is illustrative of the point. The partner of a parliamentarian is engaged as an employee of the Commonwealth¹⁶⁸. The benefit that the parliamentarian obtains as a result of the partner's income might be thought to give rise to an indirect pecuniary interest in the partner's contract. Does that indirect interest make the parliamentarian necessarily interested in the partner's contract within the meaning of s 44(v)? The answer is "no". The relation between the indirect interest and the contract is not immediate but connected by "a mediate chain of possibilities".
By contrast, consider the case of a parliamentarian who enters into a non-binding consultancy arrangement with an information technology company whereby, in return for the parliamentarian advising the company on its dealings with government, the company will pay the parliamentarian an amount equal to five per cent of the profits it derives from each information technology contract with the public service into which it enters over the next three years. Plainly, the benefit in the form of the profit share that the parliamentarian derives from each such contract would be an indirect pecuniary interest and it would be an immediate pecuniary interest in each such contract, despite not being legally enforceable.
The nature and extent of the indirect pecuniary interest to which s 44(v) attaches, as well as the fact that the person's identified right or benefit does not have to be legal or equitable or legally enforceable, are reinforced by the proviso in s 44(v). That proviso expressly excludes from the reach of s 44(v) the interest of a shareholder in a company with more than 25¹⁶⁹ shareholders where that person's interest is in common with the other shareholders. The proviso reinforces that the interest of a shareholder in a corporation that enters into an agreement with the Public Service of the Commonwealth may, at least potentially, constitute an "indirect pecuniary interest" in that agreement. But, as has been seen, that is not the question for the purposes of s 44(v). The question 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.

Construction consistent with constitutional structure and history

The construction of s 44(v) adopted in these reasons is consistent with the place of s 44(v) in the structure of the Constitution and with its history¹⁷⁷.
Section 44(v) is located in Ch I of the Constitution, which provides for a system of representative government¹⁷⁸: a system that vests the legislative power of the Commonwealth in a Parliament¹⁷⁹ and gives the people of the Commonwealth control over the composition of the Parliament¹⁸⁰. In that system of representative government, the elected representatives exercise sovereign power on behalf of the Australian people¹⁸¹. Parliamentarians "are not only chosen by the people but exercise their legislative and executive powers as representatives of the people"¹⁸². The fundamental obligation of a member of Parliament is "the duty to serve and, in serving, to act with fidelity and with a single-mindedness for the welfare of the community"¹⁸³ (emphasis in original). And, in the exercise of their powers, parliamentarians are necessarily accountable to the people for what they do¹⁸⁴. Moreover, the construction adopted is consistent with s 45(iii) of the Constitution, which operates to vacate the place in Parliament of a senator or member of the House of Representatives who "directly or indirectly takes or agrees to take any fee or honorarium for services rendered to the Commonwealth, or for services rendered in the Parliament to any person or State".
What would become s 44(v) was the subject of debate in the sessions of the Constitutional Conventions. At the Adelaide session of the Constitutional Convention in 1897, in the course of a debate about cl 46, which would later form the basis of s 44(v), Isaac Isaacs said that "[w]e should be careful to do all that is possible to separate the personal interests of a public man from the exercise of his public duty"¹⁸⁵, and that the "public are interested in seeing and ensuring, so far as it is possible to ensure it, that no member of Parliament shall for his own personal profit allow his judgment to be warped in the slightest when he is called upon to decide on questions of public moment". The drafters of the Constitution thus recognised that s 44(v) was directed at ensuring the separation of the personal interests of a parliamentarian from the performance of their public duties.

Webster

Barwick CJ considered the scope and meaning of s 44(v) in Webster¹⁸⁸. Some aspects of the decision should be noted.
First, in construing s 44(v), Barwick CJ identified the "precise progenitor"¹⁸⁹ of s 44(v) as s 1 of the House of Commons (Disqualification) Act 1782 (UK)¹⁹⁰. That is not accurate. Barwick CJ observed that the 1782 Act was a result of times when Parliament was establishing its independence of the Crown and it was thought that there was a real likelihood of a person with whom the government had a contract being influenced by the Crown¹⁹¹. Quoting English authorities, Barwick CJ noted that the 1782 Act was an Act that guarded against the mischief of "sapping [Parliament's] freedom and independence by members being admitted to profitable contracts"¹⁹², and that it "refers to the case of a man having a contract under which he is to derive some future benefit from dealing with the government, in respect of which they might control him; as, for instance, by directing their officers not to look too closely to the sort of goods he sent in, or the like"¹⁹³. Although Barwick CJ correctly analysed the 1782 Act, it was not the "precise progenitor" of s 44(v). The wording of the 1782 Act was initially adopted by the drafters. But the provision underwent a series of changes as a result of the Constitutional Conventions¹⁹⁴. A comparison of s 44(v) with s 1 of the 1782 Act shows that the most obvious difference is the inclusion of the words "pecuniary interest", which had previously been used in Australia in local government or related legislation¹⁹⁵.
In the context of local government legislation, as early as 1873, it was said that the existence of a "manifest possibility of a conflict between duty and interest" was enough to give rise to a direct or indirect pecuniary interest¹⁹⁶. A distinction between the existence of a disqualifying interest and the possibility of a conflict existed and remains. The disqualifying interest must be one in existence at the critical time, and not merely a possibility of acquiring an interest.

Questions (a) and (c) – Mr Day's indirect pecuniary interest in the lease

Mr Day had an indirect pecuniary interest in the lease between Fullarton Investments and the Commonwealth, which disqualified him from being chosen or from sitting as a senator, and which arose no later than 1 December 2015, when the lease was executed.
By the existence, performance or breach of the lease, Mr Day was exposed to the possibility of a not insubstantial financial gain or loss. That possibility arose in a number of ways.
First, pursuant to the terms of the lease, which Mr Day approved, the bank account into which the rent was to be paid by the Commonwealth was a bank account owned by Mr Day in the name of "Fullarton Nominees". He was to directly receive the rent from the Commonwealth.
Second, as Mr Day admitted, the Fullarton Road Property was used as security for loan facilities provided by NAB to companies associated with Mr Day. Mr Day had provided a guarantee and indemnity in relation to those facilities²⁰⁵. In the event that the Commonwealth did not pay rent under the lease, Fullarton Investments had no other substantial source of revenue from which to pay the purchase price of the Fullarton Road Property to B & B Day or to make payments to NAB. Funds would have had to come from other sources, including, if need be, from Mr Day as guarantor.
Mr Day's identified right in or benefit from the lease (the rent) made him necessarily interested in the lease within the meaning of s 44(v). The relation between the interest (the rent) and the lease was immediate; they were not merely connected by a chain of possibilities. As a result of that identified right or benefit, Mr Day could conceivably have been influenced in the exercise of his functions, powers and privileges, or in the performance of his duties, as a member of Parliament; because he could conceivably have been influenced by the potential conduct of the executive in performing or not performing the lease or because he could conceivably have preferred his private interests over his public duty.
As seen earlier, s 44(v) is concerned with more than one species of influence – influence by the executive over the parliamentarian and, independently of the executive, the parliamentarian preferring their own private interests over their public duty. Here, the "provision" of the lease, and the possibility of Mr Day being exposed to a not insubstantial financial gain or loss arising from its existence, performance or breach, could conceivably have influenced him in the exercise of his functions, powers and privileges, or in the performance of his duties, as a member of Parliament. In politics, those species of influence have been and remain relevant for all members of Parliament, whether they are independent, sitting on the cross-bench or a member of any political party (regardless of size), where on occasion each and every vote may be necessary for legislation to be enacted.

(1) Fullarton Investments was established (with Mrs Smith as sole director and shareholder) to act as trustee of a discretionary trust and to "house" the Fullarton Road Property so that Mr Day was "able to avail himself of the rental allowance provided by the government";

(2) by reason of "housing" the Fullarton Road Property in Fullarton Investments, the Fullarton Road Property was removed from Day family members and any entity in which Mr Day had a direct interest, and further distance was put "between the [Fullarton Road Trust] and [Mr Day's] business interests and [business] partner of nearly 40 years"; and

(3) the Fullarton Road Trust would simply hold the Fullarton Road Property, collect rent on a regular basis and then "pass back" the rent to the Day Family Trust so that there would be no profit or loss in the Fullarton Road Trust.

If, consistent with that arrangement, and contrary to the steps in fact taken and transactions in fact entered into, the rent was "passed back" to the Day Family Trust rather than directly to Mr Day, Mr Day would have had a disqualifying indirect pecuniary interest in the lease for the purposes of s 44(v). There was and remained the possibility of a not insubstantial financial gain or loss for Mr Day by the existence, performance or breach of the lease with the Commonwealth. That not insubstantial financial gain or loss, giving rise to the indirect pecuniary interest, would have arisen because, as Mr Day admitted, the Fullarton Road Property was used as security for facilities provided by NAB to companies associated with him. Mr Day had provided a guarantee and indemnity in relation to those facilities²¹⁰. In the event that the Commonwealth did not pay rent to Fullarton Investments, it had no other substantial source of revenue from which to pay the purchase price of the Fullarton Road Property to B & B Day or to make payments to NAB. The funds would have had to come from other sources, including, if need be, from Mr Day as guarantor.
That possibility of a not insubstantial financial gain or loss for Mr Day arising from the existence, performance or breach of the lease with the Public Service of the Commonwealth would have made him necessarily interested in the lease within the meaning of s 44(v). The relation between the indirect pecuniary interest (the rent) and the lease was immediate. They were not merely connected by a chain of possibilities. On the facts in this matter, that the rent (if it were paid by the Commonwealth) would not have been paid directly to Mr Day does not mean that Mr Day's interest would not have been a disqualifying interest for the purposes of s 44(v). Why? Because of the possibility of Mr Day's not insubstantial financial gain or loss arising from the existence, performance or breach of the lease, Mr Day could conceivably have been influenced in the exercise of his functions, powers and privileges, or in the performance of his duties, as a member of Parliament; because he could conceivably have been influenced by the potential conduct of the executive in performing or not performing the lease or because he could have preferred his private interests over his public duty.

Answers to Questions (a) and (c)

The answer to Question (a) is that, 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 Mr Day was returned.
The answer to Question (c) is that, by reason of s 44(v) of the Constitution, Mr Day was incapable of sitting as a senator on and after 1 December 2015, being a date prior to the dissolution of the 44th Parliament.

Question (b) – How the vacancy should be filled

The conclusion that Mr Day was incapable of sitting as a senator from at least 1 December 2015, and was therefore incapable of being chosen as a senator at the 2016 election, raises the question as to the order that should be made to fill the resulting vacancy in the Senate for South Australia.
Section 360(1)(vi) of the Electoral Act authorises the Court to declare any candidate duly elected who was not returned as elected²¹¹. Incidental to that power is the power to order a special count²¹².
The principles applicable to deciding by what means a vacancy is to be filled were established in In re Wood²¹³. There it was said that a want of qualification makes the particular indication of preference for the unqualified candidate a nullity; the unqualified candidate is to be treated as though they were deceased²¹⁴. The provision to be applied by analogy in those circumstances is s 273(27) of the Electoral Act, being the provision that applies when a deceased candidate's name is on the ballot paper in a Senate election²¹⁵.
Section 273(27) relevantly provides that a vote indicated on a ballot paper opposite the name of a deceased candidate shall be counted to the candidate next in the order of the voter's preference, and the numbers indicating subsequent preferences shall be deemed to be altered accordingly.
There is no dispute that this approach is appropriate for any votes cast for Mr Day below the line. However, Ms McEwen submitted that the votes cast above the line for the group of candidates (including Mr Day) endorsed by the Family First party should be disregarded on the basis that there is no "valid group".
Section 168(1) of the Electoral Act relevantly provides that "[t]wo or more candidates for election to the Senate may make a joint request" for their names to be grouped in the ballot papers. Such a request must be in writing, signed by the candidates and given to the Electoral Officer with the nomination or nominations of the candidates²¹⁶. Where such a request has been made, the names of the candidates "shall be printed in groups on the ballot papers in accordance with the requests" and a square must be printed above the dividing line and above the squares printed opposite the names of the candidates in the group.

"An unqualified candidate who has been duly nominated, that is, one whose nomination complies with the formal requirements of [the Electoral Act], is a candidate whose name is properly included on the ballot paper."

Ms McEwen, in effect, challenged that conclusion, seeking to rely on s 172 of the Electoral Act (concerning the powers of the Electoral Officer to refuse a nomination in the case of non‑compliance with certain provisions of the Electoral Act). But that provision existed at the time of Wood and has not since been relevantly amended. Moreover, Ms McEwen's submissions are contrary to the conclusion in Wood that the Electoral Officer has no general power to refuse a nomination in due form²²⁵. No reason was given for why that aspect of Wood should not be followed.

The ballot paper was not informal²²⁶. Votes are valid except to the extent that the want of qualification makes the particular indication of preference a nullity²²⁷. There is no reason for disregarding the other indications of the voter's preference²²⁸. There is no suggestion that the presence of Mr Day's name on the ballot paper has "falsified the declared choice of the people" of the State of South Australia for any of the other 11 candidates who were declared to be elected²²⁹.
Third, in relation to Wood, Ms McEwen contended that the Court's approach to determining the means by and manner in which the vacancy should be filled has evolved since Wood. She pointed to Sykes v Cleary²³⁰ and Free v Kelly²³¹. Those cases do not assist. They concerned the materially different form of elections for the House of Representatives. The Attorney-General nevertheless accepted that a special count would not be ordered if the special count would "result in a distortion of the voters' real intentions".
In this Reference, the votes cast in favour of Family First, of which Mr Day was an endorsed candidate, should be counted in favour of the next candidate in the group, in accordance with s 272(2) and the procedure described in s 273(27) of the Electoral Act. There is nothing to suggest that the votes cast above the line in favour of Family First were not intended to flow to the next individual nominee of that party in the event that Mr Day was not capable of being elected. 81.87 per cent of the first preference votes received by Mr Day were votes cast above the line for Family First.
Once the operation of s 272(2) is taken into account, as was the position in Re Culleton (No 2), "[t]here is no reason to suppose that a special count would 'result in a distortion of the voters' real intentions', rather than a reflection of 'the true legal intent of the voters so far as it is consistent with the Constitution and [the Electoral Act]'"²³².

Question (d) – Other orders and directions to dispose of the Reference

Question (d) should be referred to a single Justice to answer.

Question (e) – Costs

Section 360(1)(ix) of the Electoral Act gives the Court power to award costs, which includes the power to order costs to be paid by the Commonwealth where the Court considers it appropriate to do so²³³.
The Attorney-General agreed to submit to an order that the Commonwealth pay Mr Day's costs of the Reference on a party‑party basis. But the Attorney-General submitted that Ms McEwen should bear her own costs of the trial conducted on 23 and 24 January 2017 and of the hearing of the Reference before the Full Court. The Attorney‑General accepted that additional facts emerged as a result of Ms McEwen's presence at the trial of facts but contended that she mounted a wide factual case that largely failed. There is some force in that contention. However, Ms McEwen was a party to the proceedings and her participation at the trial of facts did result in some additional factual findings being made. At the hearing of the Reference before the Full Court, some of those additional factual findings were relied upon by all the parties. Moreover, before the Full Court, Ms McEwen was the only contradictor in relation to Question (b).
Accordingly, in this case, it is appropriate that Mr Day and Ms McEwen's costs of the proceedings be paid by the Commonwealth, save for costs excluded from this order by an order of a Justice.

Footnotes

Parliamentary Entitlements Act 1990 (Cth), s 4(1), Sched 1 Pt 1 item 7. ↩
Re Day (2017) 91 ALJR 262 at 287-288 [124]; [2017] HCA 2. ↩
(1975) 132 CLR 270; [1975] HCA 22. ↩
22 Geo III c 45. ↩
In re Webster (1975) 132 CLR 270 at 278. ↩
[1913] AC 514 at 524. ↩
(1819) 1 Brod & B 25 at 35 [129 ER 632 at 636]. ↩
(1869) LR 4 CP 296 at 311-312. ↩
Constitution Act 1855 (NSW), s 28; Constitution Act 1855 (Vic), s 25; Constitution Act 1867 (Q), s 6; see also Contractors in Parliament Act 1869-70 (SA) (33 Vict No 19), s 1. ↩
(1883) 8 App Cas 120. ↩
31 Vict No 38. ↩
Miles v McIlwraith (1883) 8 App Cas 120 at 134. ↩
Hammond, "Pecuniary Interest of Parliamentarians: A Comment on the Webster Case", (1976) 3 Monash University Law Review 91 at 98. ↩

Re Day [No 2] [2017] HCA 14 (5 April 2017)

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