Re Reference to Court of Disputed Returns; Re Webster [1975] HCA 22

Re Reference to Court of Disputed Returns; Re Webster [1975] HCA 22 - HCA 1975 case summary — Zoe

[15]

It is fundamental to the decision of the questions posed by the Senate to bear in mind the purposes which s. 44 (v.) of theConstitution is designed to achieve. The paragraph derives ultimately from the provisions of the statute 7 & 8 Wm. III c.25 passed in the year 1696 to secure the freedom and independence of the Parliament from the Crown and its influence. The precise progenitor of s. 44 (v.) is s. 1. of 22 Geo. III c.45 passed in the year 1782. The substance of those provisions, repeated in 41 Geo. III c.52 passed in the year 1801, persisted until 1957 when they finally disappeared from British Parliamentary life. During times when Parliament was establishing its independence of the Crown it was thought that there was a real likelihood of a government contractor, that is to say, one who had a binding term contract with the Crown to supply government stores, and from whom the Crown was bound to take its requirements, being influenced by the Crown in matters not limited to the subject matter of the contract. Lord Haldane when Lord Chancellor said in In re Sir Stuart Samuel [1] with respect to the statute 22 Geo. III c.45, "This Act of Parliament itself declares that it was made to preserve the freedom and independence of Parliament; and the mischief guarded against is the sapping of that freedom and independence by members being admitted to profitable contracts", Willes J. in Royse v. Birley [2] , speaking of the same statute, said: "I think the enactment 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." That was said in 1869, but it might be remarked in passing that even as of that time, Montague Smith J. in that case said [3] : "I cannot help thinking that it would be very desirable that this Act should be revised, because it certainly appears to me to be totally inapplicable to the present state of commerce, and that it really provides a pit-fall into which men who wish to walk uprightly and according to law may unwittingly tumble."

[17]

However, the provision is part of the Constitution and, however vestigial, must be enforced. But in its construction and application, the purpose it seeks to attain must always be kept in mind. That purpose has no real analogy in the purpose sought to be achieved by disqualification provisions under local government and comparable legislation. In the case of mayors, councillors and aldermen and persons holding statutory offices, the object of the disqualification is to prevent a possible conflict of interest and duty and the possible misapplication of shire, municipal or statutory funds for the personal gain of the mayor, councillors, aldermen or officers to "preserve purity in local government administration" (seeEx parte Elliot; re Mowle [4] ). The protection of the independence of the parliament is a completely different purpose which is not directly concerned with possible conflicts of interest and duty, though of course, to yield for personal gain to the pressure of the Crown in the performance of the parliamentary function could be said to indicate a preference of interest over duty. But the obligations of a member of parliament cannot be compared to the duties of local government or statutory officials. The member is in a significantly different situation. It might also be mentioned that the parliamentary disqualification provision was neither initially devised nor inserted in the Constitution in order to protect the public against fraudulent conduct of members of the House, carried out perhaps behind the shield of a corporation of small membership. In this connexion, I may remark, however, that in the Convention debates, some of its members were seemingly concerned, when speaking on the insertion in the provision which became s. 44 (v.) of a minimum number of shareholders, with the possibility of members of the parliament defrauding the community under the cloak of what we have come to call a "private" company. (See "National Australasian Convention Debates", Adelaide, 1897, pp. 736-738, "Australasian Federal Convention Debate", Sydney, 1897, pp. 1022-1028.)

[58]

Here it should be reiterated that the Senator's interest in the agreement between the company and the Department must be pecuniary: and it must be a pecuniary interest in the particular agreement. As I see the position, it must be a pecuniary interest in the specific agreement resulting from an order placed with the company for delivery of specified timber or some specified item. I think it must be accepted that for the purposes of s. 44 (v.) a shareholder may have a pecuniary interest in some agreements made by and with the company of which he is a member. Shareholders have been so treated in relation to disqualification provisions. However, under the general law it is well established that a shareholder does not have any legal or equitable interest in the assets, including agreements, of the company. Even where a shareholder owned almost all the shares of a company, he had no legal or equitable right or interest in the company's assets: see Macaura v. Northern Assurance Co. Ltd., per Lord Buckmaster L.C. [13] ; per Lord Sumner [14] . But of course, it may be that due to particular circumstances the shareholder may have such an interest. But in that case that pecuniary interest will arise out of those circumstances. The purpose of the exception clause in s. 44 (v.) is, in my opinion, on the one hand, to ensure that shareholders in "public" companies, who are Senators or members, are not within the disqualification provision: and, on the other, to ensure that shareholders in a company of small membership are not included in the exception. The terms of the paragraph do not amend the general law: and the presence of the exception does not mean that even for the purposes of the paragraph shareholders in public companies would otherwise have a pecuniary interest in the agreements made by those companies. If the Senator or member be a shareholder in a "private" company such as is described, which has a relevant agreement with the Government, there is a real question in my mind whether that fact of itself brings him within the disqualification. Consequently, it may be said 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 with the Public Service.

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