The NSW Electoral Commission (the Electoral Commission) claims $200,000 as a debt due on the basis that the total sum, which was paid in three separate payments to an account in the name of the Liberal Party of Australia New South Wales Division (the Party), comprised unlawful political donations. In the alternative the Electoral Commission claims an amount of $76,508.07 as a debt due on the basis that the monies comprised unlawful political donations. The Electoral Commission also claims declarations about the operation and effect of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) (the Act). Unless otherwise stated all references to legislation are to the Act.
The Electoral Commission is entitled to bring proceedings under the title of the State of New South Wales: s 21A of the Parliamentary Electorates and Elections Act 1912 (NSW) and ss 3 and 4 of the Crown Proceedings Act 1988 (NSW). The first defendant, Peter Wheatley, is currently the party agent for the Party (the Party agent) and holds that office by operation of s 41(2) of the Act. The Party, which is unincorporated, is the second defendant.
The alleged debt of $200,000 which the plaintiff claims in its primary case is the total of three payments made to a bank account (referred to in more detail below as the 7155 account) in the name of the Party by two candidates, Glenn Brookes and Ronney Oueik. The alleged debt of $76,508.07 which the plaintiff claims in its alternative case is the sum of two payments of $47,559.45 and $28,948.62 which were made by Mr Ouiek and Mr Brookes respectively.
The form of the declarations sought by the plaintiff is as follows:
"4. A declaration that:
(a) payments made by a candidate to the State campaign account kept by a party pursuant to section 96 of the EFED Act [the Act] for the purposes of electoral expenditure are contributions to the party and therefore not capable of being a candidate's contribution to finance his or her own election campaign for the purposes of section 95A(4) of the EFED Act; and further
(b) expenditure of such funds for the purposes of electoral communication expenditure is subject to the cap on electoral communication expenditure in section 95F(2) of the EFED Act, including party expenditure subject to the additional cap in s. 95F(12) of the EFED Act.
5. In the alternative to prayer 4, a declaration that:
(a) s. 95A(4) of the EFED Act only applies to a candidate's contribution to finance his or her campaign, where that contribution is used for electoral communication expenditure, to the extent that the candidate's contribution is to form part of his or her personal cap on electoral communication expenditure under s. 95F(6) of the EFED Act; and further
(b) s. 95A(4) does not apply to a candidate's contribution to his or her party for the purpose of his or her party expending funds that are to form part of the party's cap on electoral communication expenditure under s. 95F(2) of the EFED Act, including party expenditure subject to the additional cap in s. 95F(12)of the EFED Act."
The plaintiff's claim turns on the interpretation of various provisions of the Act. The detail of relevant provisions will be set out below. It is sufficient to say at the outset that the plaintiff's entitlement to judgment for $200,000 depends on its establishing that the monies were unlawful political donations on the basis that the sums were paid to the Party and exceeded the cap of $5,000 on political donations to a political party. The plaintiff's alternative case rests on the premise that part of the $200,000 will be found to have been lawful, and the balance of $76,508.07 will be found to be unlawful.
In substance, the defendants' case is that the payments were not unlawful because they were not political donations at all, but rather contributions by candidates endorsed by the Party to their own campaigns and, as such, fell within the exception which permits candidates to fund their own election campaigns.
The primary facts are not in dispute, although the consequences of certain evidence are contested. I propose to address the Act, as a whole and by reference to provisions which are presently relevant, before turning to the evidence.
Unless otherwise indicated the term "party" in these reasons refers to political parties, and not to the parties to the litigation. As noted above, the second defendant will be referred to as the Party.
[3]
The legislative history, purposes of the Act and the relevant statutory provisions
[4]
The Act as passed
The Act commenced on 14 August 1981. Its original title was the Election Funding Act 1981 (NSW). It was passed to implement, with some variations, many of the recommendations of a Joint Committee, including a system whereby elections would be partly publicly funded. The Act as passed required disclosure by both parties and candidates of "political contributions" and "electoral expenditure". These disclosures were required to be publicly available. There was no upper limit on "political contributions".
[5]
The 2010 amendment to the Act
The Act was amended by the Election Funding and Disclosures Amendment Act 2010 (NSW) (the 2010 Amendment Act). The 2010 Amendment Act introduced or amended many of the provisions on which these proceedings turn. Divisions 2A and 2B of Part 6, which provide for caps on both political donations and so-called electoral communications expenditure (ECE) were inserted into the Act by the 2010 Amendment Act.
[6]
Relevant statutory provisions
It was common ground that the relevant version of the Act was the historical version for 1 December 2014 to 7 July 2015. All references to the Act in these reasons, except where stated otherwise, are to this version. I propose to address those provisions which are presently relevant.
[7]
The long title and the objects and definitions
The long title of the Act is in the following terms:
"An Act to make provision for the public funding of Parliamentary election campaigns and to require the disclosure of certain political donations and electoral expenditure for Parliamentary or local government election campaigns; and for other purposes."
The objects provision, s 4A, which was inserted into the Act on 1 December 2014 by the Election and Lobbying Legislation Amendment (Electoral Commission) Act 2014 (NSW), provides:
"4A Objects of Act
The objects of this Act are as follows:
(a) to establish a fair and transparent election funding, expenditure and disclosure scheme,
(b) to facilitate public awareness of political donations,
(c) to help prevent corruption and undue influence in the government of the State,
(d) to provide for the effective administration of public funding of elections, recognising the importance of the appropriate use of public revenue for that purpose,
(e) to promote compliance by parties, elected members, candidates, groups, agents, third-party campaigners and donors with the requirements of the election funding, expenditure and disclosure scheme."
[8]
The relevant role and functions of the Electoral Commission
Part 3 provides for the responsibilities of the Electoral Commission. In addition to the general functions conferred on it by the Act (s 22), the Electoral Commission has, under s 23(1)(c), "the responsibility of dealing with . . . disclosures of, and caps on, political donations and electoral expenditure under Part 6". Section 23(2), on which the Electoral Commission relied for its claim for declaratory relief, provides:
"For the purpose of ensuring compliance with this Act, the Electoral Commission is authorised to make an application to the Supreme Court for an injunction, declaration or other order that is within the jurisdiction of the Court."
[9]
Party agents
Section 41 obliges a party to appoint one party agent, who must be registered as such: s 40. As referred to above, the first defendant is the Party's current party agent.
A candidate or group must (unless they have an ex officio official agent) appoint an official agent, who is registered by the Electoral Commission for each general election: ss 44-46. The term "group" is, relevantly, defined by s 4(1) to mean a group of candidates for a periodic Legislative Council election. As the present proceedings concern payments made by candidates for the Legislative Assembly, the concept of "group" is not directly relevant, although the term appears in several provisions of the Act which are relevant.
[10]
Public funding of State election campaigns
As referred to above, the public funding of State election campaigns is an important feature of the Act. It was common ground that, for each vote in favour of a party in the 2015 State election, the party would receive $4 in public funding for the following election.
[11]
Political donations and electoral expenditure
Part 6 regulates the income and expenditure of parties and candidates by capping political donations (Division 2A) and ECE (Division 2B) and requiring disclosure of political donations and ECE in audited statements submitted by candidates and parties to the Electoral Commission (Division 2).
[12]
The definition of "political donation" and the applicable caps
Section 85 of the Act defines "political donation" as including a gift made to or for the benefit of a party, elected member, candidate or group of candidates. Section 84(1) defines "gift" as follows:
"gift means any disposition of property made by a person to another person, otherwise than by will, being a disposition made without consideration in money or money's worth or with inadequate consideration, and includes the provision of a service (other than volunteer labour) for no consideration or for inadequate consideration."
The term "disposition of property" is defined in s 4(1) as "any conveyance, transfer, assignment, settlement, delivery, payment or other alienation of property".
The applicable caps on political donations apply only to State elections: s 95AA. The caps are, relevantly, $5,000 for donations to a party (s 95A(1)(a)) and $2,000 for donations to a candidate (s 95A(1)(e) or elected member (s 95A(1)(c)).
Section 95A(4), which is of considerable importance in the present case, preserves a candidate's entitlement to fund his or her own election campaign in the following terms:
"(4) Non-aggregation of contributions to candidate's own campaign
For the avoidance of doubt, a candidate's contribution to finance his or her own election campaign is not a political donation and is not included in the applicable cap on political donations to the candidate."
Section 95B relevantly provides that it is unlawful for a person to accept a political donation if it exceeds the applicable cap. A breach of this provision constitutes an offence pursuant to s 96HA (referred to below), subject to proof of the requisite mental element.
[13]
The definition of ECE and the applicable caps
Both electoral expenditure and ECE are defined in s 87. ECE is a subset of electoral expenditure and is defined in s 87(2) as being electoral expenditure of specified kinds, including expenditure on advertisements in various media; the production and distribution of election material; and other associated expenses.
Section 61 provides that the same item of ECE cannot be claimed as expenditure of both a candidate and the party that endorses the candidate. If this occurs, the item of ECE is taken to be that of the party and not the candidate.
The Act contemplates, in s 84(7) (set out below), that if a party incurs electoral expenditure "for the benefit of the candidate" and invoices the candidate for that expenditure, this amount is included in the candidate's own electoral expenditure, and is therefore subject to the relevant ECE cap for the candidate.
Section 84(7) provides:
"(7) For the purposes of this Part, an amount of electoral expenditure by a candidate for election to the Assembly includes, if the candidate is the endorsed candidate of a registered party, any amount of electoral expenditure that is:
(a) incurred by that party for the benefit of the candidate or for the benefit of the candidate and other candidates endorsed by the party at the election (whether or not as an agent for the candidate), and
(b) invoiced by that party to the candidate for payment (whether or not the candidate has a legal liability to pay to the party the amount invoiced)."
[Emphasis added.]
This provision would appear to permit the party to arrange for, say, printing of how-to-vote cards, to be done for the benefit of a particular candidate, and pay the invoice for that printing, but have the expense treated as the candidate's ECE expenditure because it was incurred for the benefit of the particular candidate, who is invoiced for the amount of such expenditure. It is relevant for present purposes because it is referred to in correspondence between the Party and the Electoral Commission (set out below). Section 84(7) is also significant because it contains the words, "the benefit of the candidate". This is to be contrasted with, and distinguished from, the words, "the benefit of a party", which appear, for example, in s 85 of the Act.
I propose to address only the relevant caps, which are those that apply to candidates for the Legislative Assembly and parties that endorse candidates for the Legislative Assembly. Other caps, which are not presently relevant, apply where a party endorses candidates for the Legislative Council but not the Legislative Assembly and will not be specifically addressed.
The caps on ECE apply only to State elections: s 95E. The applicable cap for ECE by a party is $100,000 multiplied by the number of electorates in which a party's candidate is endorsed: s 95F(2) (the Overall Cap). The applicable cap for ECE for a candidate endorsed by a party is $100,000: s 95F(6). Sections 95F(12) and (13) relevantly provide for an additional cap, within the Overall Cap, in the following terms:
"(12) Additional cap for individual Assembly seats
The applicable cap for parties . . . is subject to an additional cap (within the overall applicable cap) in relation to State general elections . . . for electoral communication expenditure incurred substantially for the purposes of the election in a particular electorate, being:
(a) in the case of a party - $50,000 in respect of each such electorate,
. . .
(13) For the purposes of subsection (12), electoral communication expenditure is only incurred for the purposes of the election in a particular electorate if the expenditure is for advertising or other material that:
(a) explicitly mentions the name of a candidate in the election in that electorate or the name of the electorate, and
(b) is communicated to electors in that electorate, and
(c) is not mainly communicated to electors outside that electorate."
The effect of the cap in s 95F(12) is to prevent parties disproportionately focussing their spending on ECE in marginal electorates.
Section 95G provides for aggregation of certain ECE, including the aggregation of ECE of endorsed candidates and parties for Legislative Assembly by-elections (s 95G(5)). These sections proceed on the basis that expenditure by a party is separate from expenditure by a candidate (because otherwise they would not need to be aggregated). For example s 95G(5) provides that ECE incurred by a candidate exceeds the applicable cap if that expenditure and any other expenditure incurred by the party for the by-election exceed the applicable cap. This suggests that the words of s 95F(9), for example, (which imposes a cap on ECE by candidates for the Legislative Assembly in a by-election of $200,000) are not sufficient without more to prevent parties and candidates together spending more than the cap. Thus it would appear that ECE incurred by a party, even if it relates to a specific electorate, is not treated as ECE for an individual candidate unless one of the aggregation provisions applies.
Section 95H stipulates the capped expenditure period. For the purposes of the present proceedings, the capped expenditure period was 1 October 2014 to the end of the polling day for the State election, 28 March 2015.
Section 95I relevantly provides that it is unlawful for a party or candidate to incur ECE if it exceeds the applicable cap. If the ECE is less than the applicable cap, the balance is not transferable so as to increase the applicable cap of any other party or person. ECE is taken to be incurred when the expenditure is incurred or the goods are actually delivered: s 95J. Thus, ECE is incurred when election advertising is broadcast or published and when election material is distributed.
[14]
The obligation imposed on parties and candidates to disclose political donations and electoral expenditure
Section 88 requires disclosure of political donations and electoral expenditure by, relevantly, both parties and candidates. Under s 90 the person responsible for making the disclosure by a party is the party agent, and by a candidate, the candidate's official agent. Disclosures are to be made to the Electoral Commission: s 91. Section 92 imposes requirements for the disclosure of all political donations and the details (name, date, amount etc) which are to be disclosed. Section 93 requires disclosure of all electoral expenditure, whether or not it is incurred during the capped period (as to which see below). Section 94 provides that multiples disclosures are not required of the same item: thus, if an item has been disclosed by someone who is a candidate, it need not also be disclosed by that person when he or she becomes an elected member; and if an item has been disclosed in relation to a member of a group, it need not also be disclosed in relation to the group of which the person is a member.
Section 95 requires the Electoral Commission to make these disclosures public on its website.
[15]
Regulation of the campaign accounts of parties and candidates
Division 3 of Part 6 separately regulates the receipt of donations and payment of expenditure incurred by candidates and parties.
[16]
Regulation of party campaign accounts
Section 96(3), which is directed at parties, provides that it is unlawful for a party to make payments for electoral expenditure (which includes ECE) for a State election campaign unless the payments are made from a State campaign account kept in accordance with s 96. The State campaign account must be a separate bank account: s 96(4). Section 96(5) provides that certain monies may be paid into such an account. The permissible categories include: political donations; Part 5 payments (public funding of elections); and monies borrowed by the party: s 96(5). Section 96(6)(b) relevantly prohibits the payment into a State campaign account of "any amount of a political donation to the party that exceeds the applicable cap on political donations to the party under Division 2A".
[17]
Regulation of candidate campaign accounts
Section 96A, which is directed at candidates (and elected members and groups but not parties, which are dealt with by s 96, see above), provides that it is unlawful for political donations for a candidate to be accepted unless the person has an official agent and the donations are made to the agent. Section 96A(3) prohibits the use of political donations for a candidate's electoral expenditure unless the donations were paid by the official agent into the candidate campaign account and the electoral expenditure was made by the agent from the candidate campaign account. These provisions highlight the importance of the candidate campaign account as the account into which donations are to be paid by the official agent and from which electoral expenditure is to be paid by that agent.
Sections 96A(5A) relevantly provides for self-funding by a candidate as follows:
"(5A) It is unlawful for a candidate . . . to make payments for electoral expenditure for their own election or re-election unless the . . . candidate is registered under this Act and the payments are made from their campaign account kept in accordance with section 96B."
[Emphasis added.]
Section 95A(6) relevantly provides that it is unlawful for political donations made to a candidate to be used other than for electoral expenditure.
Section 96B relevantly provides for campaign accounts for candidates. Subject to s 96B(3) such an account is to be a separate account (s 96B(1)) which is to be operated by an official agent and not the candidate (s 96B(2)). Section 96B(3) permits an official agent to keep a single account for a number of elected members or candidates as long as the funds of, and relevant transactions regarding, each member or candidate are accounted for separately. A candidate is entitled to pay money into his or her campaign account, but when this occurs the amount paid and the terms on which the payment was made are to be disclosed in the relevant declaration: s 96B(4).
There are significant limits on the payments which may be made from the candidate campaign account. Section 96B(5) provides:
"(5) Payments out of a [candidate's] campaign account may only be made:
(a) for the purposes of electoral expenditure incurred by or on behalf of the elected member, group or candidate to whom the account belongs, or
(b) with the approval of the elected member, group or candidate to whom the account belongs, for the purposes of lawful expenditure referred to in section 96 [Requirements for parties] incurred by or on behalf of the party of which they are a member, or
(c) to reimburse the elected member, group or candidate for money paid into the account by the member, group or candidate, or
(d) for the purpose of the elected member, group or candidate to whom the account belongs to make political donations to elected members, groups or candidates who are members of the same party, or
(e) for the purposes of expenditure incurred in connection with parliamentary or council duties of the person to whom the account belongs or in connection with community activities."
[Emphasis added.]
Details of political donations must be recorded: s 96C. The donors, who must be identified, must be either individuals who are entitled to vote, or who are otherwise identified (s 96D(1)(a)); or businesses which are, in effect, associated with Australia and identified in a manner acceptable to the Electoral Commissioner (s 96D(1(b) and (2)). Section 96D was amended prior to the relevant period for present purposes to reflect the decision of the High Court in Unions NSW v State of New South Wales (2013) 252 CLR 530; [2013] HCA 58. The questions there considered and determined do not presently arise.
[18]
The consequences of breach of the Act
Division 5 of Part 6 provides for criminal and civil consequences for breaches of the Act. Offences are created for failures to disclose (s 96H) and breaching caps on, relevantly, political donations or ECE (s 96HA). Each such offence has a relevant mental element which must be proved to the criminal standard.
Section 96J, on which the plaintiff relies to recover the amount claimed, relevantly provides:
"96J Recovery of unlawful donations etc
(1) If a person accepts a political donation . . . that is unlawful because of this Part, an amount equal to the amount . . . of the donation . . . (or double that amount if the person knew it was unlawful) is payable by that person to the State and may be recovered by the Electoral Commission as a debt due to the State from:
(a) in the case of a donation . . . received by a party that is a body corporate - the party, or
(b) in the case of a donation, loan or contribution received by a party that is not a body corporate - the party agent of the party
. . ."
I note that the plaintiff claims only the amount of the donation and not double that amount. The quantum of the claim indicates that no allegation is made that the then Party agent knew that the payments were unlawful. Further, Mr Moses SC, who appeared for the defendants with Mr Duggan, noted that there was no suggestion that there was any concealment by the Party or the two candidates and, indeed, that the only reason the plaintiff became aware of the alleged illegality was because these were matters that were disclosed in terms of monies coming from these two candidates.
[19]
Other provisions of relevance
Section 4(8) of the Act (which is relied on by the plaintiff in support of the proposition that the Party is a proper defendant) provides:
"(8) For the purposes of this Act, where anything is done by, on behalf of or for the benefit of, or any property is held by, or in trust for or for the members of, a body or organisation, incorporated or unincorporated, being a body or organisation that:
(a) forms part of a party,
(b) is established by or under the constitution of a party, or
(c) has functions conferred by or under the constitution of a party,
the thing shall be deemed to be done by, on behalf of or for the benefit of that party or the property shall be deemed to be held by that party, as the case may be."
[20]
The facts
For the 2015 State General Election, Mr Oueik was nominated as the Party candidate for the electorate of Auburn. Mr Brookes was nominated as the Party candidate for the electorate of East Hills. During the period from 1 October 2014 to 28 March 2015, the Party held two accounts with Westpac Banking Corporation, one of which was the 7155 account.
It is common ground that, during the relevant period, Simon McInnes was the Party agent and also the official agent for each of Mr Oueik and Mr Brookes. He was one of the signatories for the 7155 account. Relevantly, the following payments were made into the 7155 account.
Date of deposit Name of depositor Amount of deposit
18 February 2015 Mr Oueik $120,000
4 March 2015 Mr Brookes $50,000
9 April 2015 Mr Oueik $30,000
[21]
It was common ground that the evidence established that Mr Brookes had spent $77,959.81 personally on his campaign and that this money had not been deposited into the 7155 account.
The following ECE expenditures were reported by the Party agent and official agent. All of the expenditures disclosed as having been made by the Party for Auburn and East Hills were made from the 7155 account.
Electorate ECE disclosed as being candidate's ECE disclosed by Party as substantially for electorate (all from 7155 account) Total
Auburn (Mr Oueik) $99,945.11 (from 7155 account) $47,559.45 $147,504.56
East Hills (Mr Brookes) $99,011.19 (see derivation below) $28,948.62 $127,959.81
[22]
It was common ground that the total sum of $147,504.56 in ECE for Mr Oueik was derived from Mr Oueik's two payments to the 7155 account which totalled $150,000 and that the total sum of $127,959.81 in ECE for Mr Brookes was derived from his payment of $50,000 to the 7155 account and his own payments amounting to $77,959.81. I infer that the reported ECE was designed to reflect the Party's understanding of the caps on ECE imposed by s 95F: being, the $100,000 cap on a candidate's own ECE (s 95F(6)) and the additional cap of $50,000 on a Party where ECE is substantially for the benefit of a particular electorate (s 95F(12) and (13)).
By invoices dated 28 March 2015, the Party invoiced Mr Oueik for the amount reported as Mr Oueik's ECE ($99,945.1) and Mr Brookes for an amount of $99,371.19 which comprised the amount reported as Mr Brooke's ECE ($99,011.10) and an in-kind donation. I understood these invoices to have been rendered in purported compliance with s 84(7).
[23]
The 2015 Party Disclosure
On 22 September 2015 the Electoral Commission received the audited disclosure of political donations and electoral expenditure for the year ended 30 June 2015 from the Party, which was signed by Mr McInnes as party agent (the 2015 Party Disclosure). The 2015 Party Disclosure included, in Part B, a list of "reportable donations received". Almost all amounts in Part B were less than $5,000. Part C listed funds raised from various functions or ventures. Part E listed membership totals by various types of membership. Part F contained the disclosure of items of ECE by category. Relevantly, F1 related to advertising; F2 to production and distribution; and F7 to research. The schedules in Part F listed, in respect of each item, the date expenditure was incurred; the name of the supplier; a description of the goods or services supplied; the electorate or area for which the ECE was incurred (whether state-wide or by reference to a local government area or a particular electorate); and the classification of the item as either advertising; production and distribution; or research. The tables in the 2015 Party Disclosure indicated that, for the relevant period, the Party spent in the order of $4 million on advertising (in radio, television, the internet, cinemas, newspapers, billboards, posters, brochures, how-to-vote cards and other election material) and in the order of $2.3 million on the production and distribution of election materials.
The Party also supplied to the Electoral Commission copies of the bank statements for the 7155 account from 10 February 2015 to 10 April 2015. Those statements included the deposits made by Mr Oueik and Mr Brookes which are the subject of these proceedings. The Party also supplied a spreadsheet which extracted these deposits from the "Transaction Report".
[24]
The 2015 Brookes Disclosure
On 10 November 2015 the Electoral Commission received the audited disclosures of political donations and electoral expenditure for the year ended 30 June 2015 from Mr Brookes (the 2015 Brookes Disclosure). Mr Brookes disclosed that he had spent $133,220.81 on funding his campaign and that he had not received any political donations. Of the total, $50,000 represented the cash payment to the 7155 account; the balance comprised items, each of which was described as "self-funding donation (in kind)" in the schedule attached to the 2015 Brookes Disclosure.
As referred to above, the Party invoiced Mr Brookes on 28 March 2015 for $99,371.19 which comprised the amount reported as ECE for Mr Brookes ($99,011.10) and an in-kind donation. That invoice was in the 2015 Brookes Disclosure.
[25]
The 2015 Oueik Disclosure
On 10 November 2015 the Electoral Commission received the audited disclosures of political donations and electoral expenditure for the year ended 30 June 2015 from Mr Oueik (the 2015 Oueik Disclosure). Mr Oueik disclosed that he had spent $150,000 on funding his campaign, which comprised the sum of the two the cash payments to the 7155 account.
As referred to above, the Party invoiced Mr Oueik on 28 March 2015 for $99,945.11 which comprised the amount reported as ECE for Mr Oueik.
[26]
Analysis of the expenditure within the candidates' disclosure statements
An analysis of the documents which substantiated the expenditure said to have been made by Mr Brookes and Mr Oueik revealed that several items of expenditure were not confined to their respective electorates.
For example, the attached schedule to the 2015 Brookes Disclosure revealed four line items for advertising supplied by Starcom Mediavest Group (Australia) Pty Ltd (Starcom) which totalled in the order of $4,200. Although this ECE was allocated by the Party to the electorate of East Hills, the corresponding invoices itemised advertising in media of general distribution, such as Daily Mail Australia and News Digital Media. The contents of such advertisements principally focussed on Mike Baird, the then Premier. I am satisfied that this expenditure related to advertisements which were neither disseminated exclusively, or predominantly, in East Hills nor directed to the benefit of Mr Brookes in East Hills but, rather, were intended to benefit the Party's state-wide election campaign generally. Other invoices contain charges for advertising over an area, which is larger than any one electorate and, in some cases, for the whole of New South Wales.
The attached schedule to the 2015 Oueik Disclosure revealed five line items for advertising supplied by Starcom totalling approximately $10,000 which the Party recorded as having been allocated to the electorate of Auburn, for which Mr Oueik was the candidate. Invoices in evidence indicated that Starcom arranged advertising in media of general distribution, such as Daily Mail Australia and News Digital Media.
The defendants accepted that much of the advertising material which related to constituent invoices in the 2015 Brookes and Ouiek Disclosures was directed at an area beyond the specific electorate to which it was allocated, and in some cases, at the whole of New South Wales. However, the defendants contended that such material was necessarily for the benefit of the candidate to whose account it had been allocated as, in effect, everything that benefited the Party provided a benefit of equivalent value (or at least of some value) to the candidate to whom the expenditure was allocated.
[27]
Correspondence with the Electoral Commission
Following the submission of the disclosures referred to above correspondence ensued between the Electoral Commission and the defendants and their representatives. On 21 December 2015 Bruce Walton, (who was then the Party's agent), emailed the Electoral Commission. Mr Walton said, of present relevance:
"As discussed yesterday, the candidate [Mr Oueik] placed $150,000 into the Auburn campaign Account for the State Election, as self-funding.
$99,945.11 was used on reimbursing Head office for expenses incurred on behalf of the Auburn campaign.
$47,559.45 (Spreadsheet with break-up of expenses was emailed to you yesterday) was spent on campaign expenses, authorised by the Auburn campaign.
This leaves a balance of $2,495.44."
In oral evidence, Mr Walton confirmed that the statements he had made in the email were correct.
By email in response dated 22 December 2015, the Electoral Commission set out its position as follows (which represents its primary (B. below) and alternative (A. below) arguments in these proceedings):
"Just to clarify our position, if the candidate paid and authorised these campaign expenses that are reported in the party disclosure, our position would be that either:
A. The candidate should have reported the expenditure in its disclosure declaration (there are no provision[s] similar to s 84(7) where a candidate can invoice a party whether or not there is legal liability to pay); or
B. This constitutes a donation in kind by the candidate to the Party.
We note that in this instance, both situations raise issues. Situation A would indicate a potential breach of electoral communication expenditure cap by the candidate, while situation B would result in a donation to the party over the cap."
Mr Brookes was interviewed by officers of the Electoral Commission on 24 August 2017. He explained his understanding of what he was required to do and how he was to self-fund his campaign. His understanding was that the $50,000 he deposited into the 7155 account was a donation to the Party. So much is apparent from the following passage from his recorded interview:
"Q99 In the 2015 campaign you did donate $50,000 to the Liberal Party?
A That's correct.
Q100 Can you explain to me why you donated the $50,000?
A It's told to us that as a Member of Parliament and Member of a political party that you are to fundraise for the Liberal Party and as I said, I don't fundraise at all, therefore, instead of me going out fundraising and that money go to the Liberal Party, I just give it to the Liberal Party.
Q1O1 Okay. Is there any reason why you didn't put the $82,000 [monies he spent on electoral expenditure] through to the Liberal Party and re-draw on that through the state election campaign?
A Yeah, I already gave them funds which, from what I've been told since then or seen since then, that out of that 50,000 they only spent 22,000 on me anyhow. Why would I give them my chequebook? Why would I allow them to have access to my money and it could've gone anywhere? No.
Q102 Can you tell me how you recorded the 2015 expenditure yourself?
A Same, every invoice that comes through is documented, a cheque is written, drawn upon and it's paid.
Q103 And how does that information get from your office to the Liberal Party?
A At the end of the election everything is recorded, we keep tabs on it, so we run a tally so we don't go over the capped amount, so we keep a running tally of it and at the end of the election that's when we put everything together and send it into head office or the Liberal Party."
[Emphasis added.]
[28]
The plaintiff's submissions
Mr Williams SC, who appeared with Mr Emmett on behalf of the plaintiff, submitted that the effect of the Act is that if a candidate wants to self-finance his or her own election campaign, the money has to be paid into the candidate campaign account (authorised by s 96B(1)) or s 96B(3). Mr Williams submitted that funds that were paid into a party's campaign account, whether by a candidate, elected member or other person, were necessarily to be characterised as political donations. He submitted that, as the amounts exceeded the cap, they were unlawful political donations which could be recovered as a debt due pursuant to s 96J of the Act.
The plaintiff contended that, because the 7155 account was the Party's campaign account, once the payments were made into that account, the depositor no longer had control over how the money could be spent. Accordingly, it contended that such payments ought, therefore, be regarded as a "gift" or a "disposition of property". In the alternative, the plaintiffs submitted that, even if I were not persuaded that the 7155 account were correctly to be characterised as the Party's campaign account, it was nonetheless an account which did not "belong" to the candidate and that, accordingly, the same conclusion would follow.
[29]
The defendants' submissions
The defendants submitted that the 7155 account was not the Party's campaign account. In their written submissions they accepted that it "had all the hallmarks of a candidate campaign account". In oral submissions, Mr Moses accepted that the 7155 account also had all the hallmarks of a party campaign account. Ultimately he accepted "omnibus account" as a "fair description" since the 7155 account plainly served a number of purposes, including as the repository for a number of donations up to $2,000 (which might be inferred to be for individual candidates), a number of donations up to $5,000 (which might be inferred to be for the Party) and the account from which various items of ECE in numerous electorates and throughout the State were paid.
Mr Moses contended that the real question was the character of the deposits made by Mr Brookes and Mr Oueik to the 7155 account. He said that this was not to be determined by the label applied to the account, but rather by the nature and purpose of the payments themselves.
The defendants contended that the payments were not prohibited by the cap because they were not donations. This was said to be so since they fell within the specific exclusion in s 95A(4), which provides that "a candidate's contribution to finance his or her own election campaign is not a donation and is not included in the applicable cap on political donations to the candidate" (emphasis added). They submitted that the payments were plainly made by the respective candidates for the purposes of their own campaigns and that, accordingly, the Party was bound to use the monies advanced for those purposes. They relied on the definition of "gift" in s 84(1) and submitted that the deposits into the 7155 account could not be said to have been made "for no consideration or for no adequate consideration" because the depositors obtained the benefit of the monies being spent on the election campaign. Mr Moses submitted orally that: "the monies were effectively held in the party's - if one characterises it as a party's account, in that account for the specific purpose of being applied for the benefit of the candidate."
The defendants also relied on the fact that the Party had accounted for all the funds which had been deposited in the 7155 account. They submitted that the evidence showed that the whole of the three payments which were sought to be impugned had been spent on ECE for the 2015 election, whether in the candidate's own electorates, or for the benefit of the Party, which was also, necessarily, for the benefit of each depositor as a candidate. The defendants submitted that it could not be assumed that general advertising for the Party was not for the benefit of an individual candidate since a candidate, necessarily, obtained the benefit of a favourable electoral response to the Party which endorsed him or her.
The defendants argued that, because the conduct alleged against individuals could amount to a criminal offence under Division 5 of Part 6 of the Act, the court should exercise "great caution" in interpreting the caps: Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193; [2005] HCA 58 at [45]. They also submitted that I should make findings of fact against individuals only if satisfied to the requisite standard appropriate for allegations of misconduct of a significant character or criminal conduct: Morley v Australian Securities Investment Commission [2010] NSWCA 331; 81 ACSR 285 at [741]-[747] (Spigelman CJ, Beazley and Giles JJA). They also relied on Ashby v Slipper (2014) 219 FCR 322; [2014] FCAFC 15 at [69] (Mansfield and Gilmour JJ) in support of their submission that the graver the allegation and its potential consequences, the stronger the evidence required before making a finding that the allegation has been made out. Mr Moses did not articulate what difference the imposition of the so-called Briginshaw standard (after Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34) would make in the present case.
Mr Moses also submitted that it was not appropriate for the Court to order declaratory relief in circumstances where persons who were not parties would be affected by any such declaration.
[30]
The plaintiff's submissions in reply
Mr Williams submitted that the defendants' legal analysis of the deposits and expenditure was inconsistent with the scheme of the Act, which was said to draw a "bright line distinction" between, on the one hand, a candidate's campaign expenditure (governed by ss 95A(4), 96B and 95F(6)) and a party's campaign expenditure (governed by ss 96, 95F(2) and 95F(12)).
He also submitted that the appropriate standard was the civil standard, not the modified civil standard which applies in cases where allegations of dishonourable or criminal behaviour have been made. Mr Williams confirmed that there was no allegation of dishonourable conduct on the part of any individual; rather, the claim was a claim for debt. I accept Mr Williams' submission. The findings of fact set out above are based on largely uncontroversial evidence. The character of the 7155 account and the meaning of "benefit" in this context are questions of fact and law which are not to be resolved by imposing a higher standard of proof than the balance of probabilities.
Mr Williams contended that it was plain from the wording of s 23(2) that Parliament intended the Court to have power to grant declaratory relief in a case such as the present. He submitted further that it was no impediment to the making of a declaration that others, who were not parties to the litigation, might be affected.
[31]
The effect of the statutory scheme
In order to address these arguments it is necessary to analyse the relevant provisions set out above in the context of the Act as a whole, having regard to their purposes (s 33 of the Interpretation Act 1987 (NSW)).
[32]
The relevance of potential penal consequences
Although regard may be had to the potential penal consequences of any particular interpretation (see Stevens v Kabushiki Kaisha Sony Computer Entertainment, cited above), this matter is to be regarded as a "rule of last resort": Beckwith v The Queen (1976) 135 CLR 569 at 576 (Gibbs J); [1976] HCA 55; Waugh v Kippen (1986) 160 CLR 156 at 165; [1986] HCA 12. I accept that these provisions, including ss 96H, 96HA, 96HB, 96I and 96J, give rise to potential penal and criminal consequences. In the present case it is not suggested that the requisite mental element is present, either for a criminal offence or for the doubling of the amount recoverable as an unlawful donation. Nonetheless, s 96J(1), the provision relied on by the plaintiff for its claim for judgment, involves a penalty since it requires a party agent who has accepted an unlawful political donation (and who is therefore not entitled to retain it for the benefit of the party) to disgorge it to the plaintiff.
[33]
The distinction between a candidate campaign account and a party campaign account
For the reasons that follow, I consider the scheme of the Act to make a fundamental distinction between a candidate campaign account (whether under s 96B(1) or (3)) and a party campaign account under s 96, each of which must be used for its designated purpose. Political donations (as long as they are within the cap) may be paid into either a candidate campaign account or a party campaign account through the relevant agent, who acts as gate-keeper (see, for example, ss 96A(1), 96A(2) and s 96B(2)). The distinction between the two types of accounts is manifested by the imposition of different rules for each relating to such matters as: caps on electoral expenditure; whether the terms of payment need to be disclosed in the declaration to the Electoral Commission; and whether a payment can be made from one account to another. These differences will be described and, where necessary, considered below in turn.
[34]
The difference in applicable caps on electoral expenditure
The candidate's expenditure on his or her election campaign is limited to $100,000 under s 95F(6). The applicable caps for a party are the Overall Cap (s 95F(2)); and the limitation in s 95F(12) that the party may not spend more than $50,000 directly on an electorate-specific campaign. This important distinction would be rendered nugatory if a candidate could "fund" the party to spend $50,000 on ECE in his or her electorate beyond the limit of $100,000 imposed on the candidate's own campaign expenditure and have the $50,000 excluded from characterisation as a political donation by reason of the self-funding exception in s 95A(4). Section 95I relevantly provides that it is unlawful for a party or candidate to incur ECE if it exceeds the applicable cap. Section 95I(3) relevantly provides that the applicable cap for a candidate is for ECE directed at "the election of the candidate". This subsection uses the same language as s 95F(6), in that it refers to the "applicable cap for a candidate". It also indicates that ECE directed at the election of that candidate is treated as falling within the candidate cap in s 95F(6). The aggregation provided for in s 95G(4) and (5) proceeds on the basis that expenditure by a party is separate from expenditure by a candidate (because otherwise they would not need to be aggregated). The distinction is also consistent with the public funding provisions in Part 5, and, in particular, s 61, which provides that an item of ECE cannot be claimed as expenditure of both a candidate and his or her party.
[35]
The requirement for a candidate to disclose the terms on which he or she pays money into the candidate campaign account
The candidate's entitlement to pay money into his or her candidate campaign account is subject to the requirement that the amount paid and the terms on which it was paid are disclosed in the relevant declaration: s 96B(4). There is no equivalent requirement for payments made by a candidate to the party campaign account. I regard the lack of counterpart to s 96B(4) in the context of the party's campaign account as a powerful indication that Parliament intended neither to permit, nor to authorise, a candidate to make a payment to a party's campaign account for the purpose of having that money used in the candidate's own campaign. Whereas the candidate's own campaign account "belongs" (in the wording of s 96B(2)) to the candidate (subject to the requirements that it be operated by an official agent and that payments out of the account can only be made for authorised purposes), a party campaign account does not. If the Act contemplated that a candidate could make a payment into the party campaign account for his or her own campaign and his or her own benefit, one would expect there to be a statutory requirement that the terms on which the money was paid (that it be used for the campaign of the donor candidate) be disclosed. This is particularly so, having regard to the wording of s 96B(4). The maintenance of these distinctions, too, is inconsistent with a payment by a candidate to a party's campaign account being treated as other than a political donation or a payment authorised by s 96B(5)(b) referred to below.
[36]
The bridge between a candidate campaign account and a party campaign account
The bridge between the two accounts (the party campaign account and the candidate campaign account) is specifically provided for in s 96B(5)(b), which provides that payments may be made from candidate campaign account for certain purposes, including, relevantly, with the approval of the candidate to whom the account belongs, for the purposes of lawful expenditure referred to in s 96 incurred by or on behalf of the party of which they are a member. Section 96B(5)(b) is the avenue authorised by the Act by which a candidate can pay his or her party for campaign expenses. As the expenditure in that instance is "lawful expenditure . . . incurred by or on behalf of the party of which they are a member" (and therefore not by or on behalf of the candidate), it must be treated, and disclosed, as expenditure on the party's election campaign and not on the candidate's own campaign. This provision, too, is inconsistent with the Act leaving open the possibility of a candidate's funding his or her own campaign by channelling money through an account other than the candidate campaign account. The fact that payments under s 96B(5)(b) are required to be made from the candidate campaign account to the party campaign account is another indication that the candidate's funds must be deposited into the candidate campaign account, even if they are ultimately to be transferred (through s 96B(5)(b)) to the party campaign account for expenses incurred by or on behalf of the party.
[37]
The distinction between the benefit of the candidate and the benefit of the party
There is another important, related, distinction, which is the distinction between "the benefit of the candidate" and "the benefit of the party". These terms are to be construed on the assumption that Parliament intended, by the different wording to distinguish between the two concepts. This is not to say that a candidate obtains no benefit from expenditure for the benefit of the Party. Plainly, every candidate endorsed by a party obtains some advantage from general advertising which benefits the party. However, it cannot be said that, because a payment by a candidate to his or her party, which was spent by that party on ECE, incidentally benefited the candidate who made the payment, that the payment falls within the exemption for a candidate self-funding his or her campaign in s 95A(4). Nor can it be said that the benefit constituted adequate consideration to render the payment other than a gift (addressed below).
Further, there may be a substantial difference between the benefit of any given amount of ECE to an Assembly candidate and the benefit of the same ECE to a party. ECE spent "for a candidate" is concerned solely with that candidate's election in his or her electorate. The maximum of $50,000 that the party can spend on ECE directed at a particular electorate, gives the party itself a range of benefits which include the election of the candidate (which increases the party's prospects of forming government); the promotion of the party more widely (particularly in a seat, which is regarded as a safe seat for the opposing party); increased votes (which increase the public funding for the next election); and a potential benefit in the Legislative Council. For example, Mr Oueik obtained 15,471 primary votes in Auburn although he did not win the seat. This entitles the Party to public funding of $61,884 (15,471 x $4; see above) for the State election in 2019.
[38]
Summary
The relevant effect of the analysis set out above can be reduced to the following propositions.
1. The candidate is permitted (by the exemption in s 95A(4)) to use his or her funds for electoral expenditure (including ECE) on his or her campaign if and only if:
1. the candidate's own funds are paid into the candidate campaign account; and
2. the electoral expenditure is paid out of the candidate campaign account by the official agent (s 96A(5A) and s 96A(3)(b)).
1. If the candidate pays money into a party campaign account, the monies are not covered by the exemption in s 95A(4) and constitute unlawful political donations to that party if they exceed the cap of $5,000 (s 95A(1)(a)).
[39]
The limits of the present proceedings
It is evident from a comparison between the relevant statutory provisions and the facts set out above that there were many instances where the statutory requirements were not complied with. The requirement for a candidate campaign account (whether for one candidate or more than one) to be a separate account from the party campaign account is one such example. An account can be either a candidate campaign account (under s 96B) or a party campaign account (under s 96). It cannot be both. The concept of an "omnibus" account has no place within the statutory scheme.
The 7155 account was not a candidate campaign account since the deposits included numerous donations up to $5,000 which were lawful only if they were made to the Party. Moreover, and more importantly, the Party's expenditure was made from that account. In these circumstances, I am satisfied that the 7155 account was a party campaign account within the meaning of s 96 and not a candidate campaign account under either ss 96B(1) or (3).
However, as Mr Moses emphasised in the defendants' submissions, the Court's task is not to audit the defendants' compliance with the Act but rather to determine whether the payments accepted into the 7155 account constitute a debt due to the plaintiff under s 95J(1) and, if so, whether declaratory relief ought be granted.
[40]
Whether the deposits were gifts
The specific relief claimed by the plaintiff makes it necessary to address the defendants' argument that it was immaterial that the payments were not made to the candidate campaign account because the payments were not "gifts" as they were supported by adequate consideration. This requires a consideration of the effect of the factual findings set out above on this question.
The evidence does not establish that all of the funds comprised by the deposits made by Mr Oueik and Mr Brookes were spent for the purposes of their own campaigns in their respective electorates. The evidence contained several instances of monies being spent in areas which were of benefit to the Party generally in its campaign but only incidentally to Mr Oueik and Mr Brookes. It is difficult, for example, to see how promotion of the Party in regional newspapers and on regional radio stations in areas such as Goulburn and Canberra (presumably directed at those in Queanbeyan) could be regarded as part of the consideration flowing to Mr Oueik or Mr Brookes in return for their deposits to the 7155 account. Once this is accepted it follows that the deposits constituted political donations since they were, at least to some extent, "gifts".
However, as I understood the defendants' submissions, they were to the effect that the deposits ought be regarded as impressed with an obligation imposed on the Party to use the funds for the purposes of the depositors' campaigns, since this ought be taken to have been the intention of the candidates when they made the deposits.
When someone causes money to be deposited into a bank account in the name of a political party, one can infer an intention to make a gift, unless there is an express declaration of trust. Where such a deposit is accepted by the party agent, who operates the account, the inference arises that the party is entitled to spend the money for its benefit. It may be that the depositor hopes, by that payment, to obtain something in return, whether it be favourable treatment by the party, or a favourable decision if the party is elected to Government, or that the money will be spent in a particular way. But this does not make what the party does voluntarily with the money deposited valuable consideration, or consideration at all. Even if a money sum equivalent to the deposits were wholly spent by the Party on the respective candidates, this would not amount to consideration since the Party had no obligation to do so. That the Party did not spend the monies exclusively on, or in, the electorates of the depositors is an indication that the Party did not see itself as obliged to spend the money in that way. In these circumstances, it is not appropriate to attempt to segregate the ECE which was spent in the candidate's electorate from the ECE with a broader reach.
Nor does the evidence reveal that the depositors had any such expectation. Indeed, Mr Brookes admitted in his recorded interview that his understanding was that the payment of $50,000 to the Party (into the 7155 account) was a "donation" which he "gave" to the Party. Although this admission does not bind the defendants, and was admitted into evidence on the limited basis that it was evidence of Mr Brooke's understanding, it is nonetheless significant. What distinguishes a donor from the settlor of a trust (who intends the transferee should hold and use the property for the benefit of another, including the settlor himself or herself) is the intention with which property (in this case, money) is transferred.
There is, however, a further, and more fundamental, difficulty with the defendants' submission that the deposits by Mr Oueik and Mr Brookes were not gifts. The analysis of the transactions for which the defendants contended would have the effect of leaving intact common law concepts of trusts and restitution and applying them to a statutory scheme, the purposes of which would appear to be inconsistent with the continued application of such principles. Although statutes are to be construed against the background of the general law, it is primarily a question of statutory construction whether the statute excludes the common law, either expressly or by necessary implication: see, in the context of tort law, Pyrenees Shire Council v Day (1998) 192 CLR 330 [1998] HCA 3 at [126] (Gummow J); Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1; [1999] HCA 59 at [27] (Gaudron J); Graham Barclay Oysters Pty Limited v Ryan (2002) 211 CLR 540; [2002] HCA 54 at [78]-[79] (McHugh J); and, in the context of restitution, Pavey & Matthews Pty Limited v Paul (1987) 162 CLR 221 at 228-230 (Mason and Wilson JJ); at 243-244 (Brennan J, in dissent); and 262-263 (Deane J); [1987] HCA 5.
In the present case, the defendants submitted, in substance, that the deposits made by Mr Brookes and Mr Oueik into the 7155 account were not gifts because they were entitled to have the Party spend the money for their benefit on their election campaigns. For a person who pays money into an account which is also the repository of political donations to be held to be entitled to expect something in return (that the money will be used for his or her benefit in an election campaign in his or her electorate; or that money not so used will be returned or otherwise accounted for) is, in my view, entirely antithetical to the statutory scheme. As referred to above, the fact a candidate is required to disclose the terms on which a payment is made into a candidate campaign account but not the terms on which a payment is made into a party campaign account is significant in this context. I regard the concepts of trust and restitution, which were, implicitly although not expressly, called in aid by the defendants to have been excluded by the Act by necessary implication.
It is important to bear in mind the policy reason for the cap on political donations in Division 2A of Part 6 of the Act, of which the High Court said in McCloy v State of New South Wales (2015) 257 CLR 178; [2015] HCA 34:
[33] The provisions of Div 2A are most clearly directed to the object stated in s 4A(c), the prevention of 'corruption and undue influence in the government of the State'. The capping provisions of Div 2A are intended to reduce the risk of corruption by preventing payments of large sums of money by way of political donation. It may be accepted, as the plaintiffs submit, that the EFED Act targets money which may be used for political communication, but this is not inconsistent with a purpose to prevent corruption.
[34] The provisions of Div 2A, and those of the EFED Act more generally, . . . are also directed to overcoming perceptions of corruption and undue influence, which may undermine public confidence in government and in the electoral system itself. . . .
. . .
[36] There are different kinds of corruption. . . . Another, more subtle, kind of corruption concerns 'the danger that officeholders will decide issues not on the merits or the desires of their constituencies, but according to the wishes of those who have made large financial contributions valued by the officeholder'. This kind of corruption is described as 'clientelism'. It arises from an office-holder's dependence on the financial support of a wealthy patron to a degree that is apt to compromise the expectation, fundamental to representative democracy, that public power will be exercised in the public interest. The particular concern is that reliance by political candidates on private patronage may, over time, become so necessary as to sap the vitality, as well as the integrity, of the political branches of government.
. . .
[38] Quid pro quo and clientelistic corruption threaten the quality and integrity of governmental decision-making, but the power of money may also pose a threat to the electoral process itself. This phenomenon has been referred to as 'war-chest' corruption. This form of corruption has been identified, albeit using different terminology, as a matter of concern both in Australia and in other liberal democracies of the common law tradition.
[39] In R (Animal Defenders International) v Secretary of State for Culture, Media and Sport, Lord Bingham of Cornhill said that in a democracy it is highly desirable that the playing field of public debate be so far as practicable level and that:
"This is achieved where, in public discussion, differing views are expressed, contradicted, answered and debated … It is not achieved if political parties can, in proportion to their resources, buy unlimited opportunities to advertise in the most effective media, so that elections become little more than an auction."
[Footnotes omitted.]
Were the defendants' construction to be accepted, a candidate would be exempted from the general prohibition on political donations to a party above $5,000. In that event, self-financed candidates for a major party might reasonably be regarded as having a significant advantage over independent candidates in a general election. They would be able to contribute up to $150,000 themselves ($100,000 directly and $50,000 "through" their party), and also get the benefit of their party's State-wide campaign.
The Act, when construed as a whole, and by reference to the specific provisions referred to above, is inconsistent with such a result. Furthermore, such a construction would be inimical to the purposes enunciated by the High Court in the passages set out above, particularly those relating to the prevention of "clientelistic", or "war-chest" corruption.
Although the classification of the 7155 account may not be determinative, it is, in my view, plain that the account was not an account authorised by s 96B. Once it is accepted (as I have found) that the depositor candidate had no right to control the use of the money deposited, which was determined by the Party at its discretion, the deposit became, upon payment, a gift to the Party. Had the depositor intended to retain control of the monies, he would have had to deposit it in his candidate campaign account (or a collective candidate campaign account authorised by s 96B(3)) or retain it.
[41]
Conclusion on the plaintiff's primary case
I am satisfied that the payments were "gifts" within the meaning of s 84(1); did not fall within the exclusion in s 95A(4); and were therefore political donations within the meaning of s 85(1)(a) because each was "a gift made to or for the benefit of a party". As each of the three payments was a political donation which exceeded the limit of $5,000 for political donations to a party, each was unlawful under Part 6, are recoverable by the Electoral Commission as a debt due to the State: s 96J(1). As the donation was received by the Party, the debt is recoverable from the first defendant, as the Party's agent: s 96J(1)(b). I note that s 96J provides that the whole of the unlawful political donation is unlawful, not merely the amount of the donation in excess of the statutory limit of $5,000. Accordingly the three deposits are all recoverable in full.
[42]
The Electoral Commission's alternative case
As I have found in favour of the Electoral Commission on its primary case, it is not strictly necessary to determine its alternative claim. I shall, however, address the alternative claim briefly.
The Electoral Commission contended that, on the assumptions (contrary to its primary case and to my findings and conclusions set out above) that the deposits were not political donations in whole and that the 7155 account was a joint candidate campaign account pursuant to s 96B(3), the amounts of $47,559.45 (made by Mr Oueik to the Party's ECE) and $28,948.62 (made by Mr Brookes) were unlawful political donations to the extent to which the Party reported that they were ECE for the Party.
The sources of the two payments claimed by the Party as ECE (which totalled $76,508.07) were the candidates themselves and not the Party. They therefore did not qualify as lawful ECE expenditure by the Party under s 95F(12) (because they were not made by the Party). Moreover the documents which the Party disclosed to substantiate the expenditure show expenditure which did not qualify for inclusion within the $50,000 cap because it did not meet the conditions in s 95F(13). For example, some of the advertising material, the cost of which was allocated to the Party's ECE for Auburn did not refer to Auburn or to Mr Oueik at all, but only to Mr Baird.
The monies contributed by the two candidates and subsequently attributed to Party expenses were plainly for the benefit of the Party. I infer that the payments were made to take advantage of the amount of ECE that a Party is entitled to expend in a given electorate ($50,000) in addition to the amount of ECE ($100,000) that a candidate is permitted to expend.
For the reasons given above, if a contribution is made for the purpose of a party's ECE, it cannot be characterised as a candidate's contribution to his or her own campaign. Section 95A(4) does not apply. To construe the Act as the defendants contended would be, in my view, at odds with the wording of the Act and one of its evident purposes: to limit contributions to a party to lawful political donations (that is up to $5,000). I reject the defendants' construction which would permit candidates to donate a further $50,000 for the benefit of his or her party, notwithstanding the express terms of s 95F(12) and (13) which limit a party's ECE in any given electorate.
[43]
Whether the Party is a proper defendant
Although it was not addressed in oral submissions, the plaintiff identified in its written submissions that it was a live issue whether the Party is a proper defendant. The Party is an unincorporated association and therefore not a body corporate. However, as the High Court held in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Queensland Rail (2015) 256 CLR 171; [2015] HCA 11 at [36], "the determinative consideration" is whether the party to litigation has "independent existence as a legal person, which is to say recognition as a right and duty bearing entity". I accept the plaintiff's submission that the Party does have such independent existence. Sections 4(8) and 4A(e) of the Act are premised on that basis. The party agent is agent for a party, which is therefore the principal on behalf of which the agent acts. The party agent is the natural person who is required to perform certain statutory obligations on behalf of a party, which is the relevant "right and duty bearing entity."
I am satisfied that it was necessary for both the Party and Mr Wheatley to be joined as defendants to the proceedings. The declaration sought can, if made, be made against both defendants. However the debt claimed under s 96J can only be recovered against the party agent of the Party, as the Party is unincorporated: s 96J(1)(b). It appears that the parties to the proceedings have agreed to proceed on the basis that judgment can be ordered against the Party notwithstanding that it is not a body corporate. I do not regard the Act as authorising this course. The consent of the parties to the proceedings is not sufficient to overcome the express wording of s 96J(1)(b).
[44]
Judgment
For the reasons given above, the plaintiff has established its primary case that the amount of $200,000 is a debt due to it pursuant to s 96J of the Act. I am satisfied that the plaintiff is entitled to pre-judgment interest on this sum pursuant to s 100 of the Civil Procedure Act 2005 (NSW). The plaintiff claims interest on the total sum from 28 March 2015. Although the third payment of $30,000 was not made until 9 April 2015, the first two payments were both made earlier than 28 March 2015. In these circumstances I accept the plaintiff's modified concession about the date. It is appropriate that interest be awarded from that date in order to deprive the Party of the benefit of accepting, and retaining (for the period from 28 March 2015 to the present), monies which I have found to be unlawful political donations.
[45]
Whether a declaration ought be made
I turn now to the question whether it is appropriate to make a declaration and, if so, the terms of the declaration.
The defendants submitted that it was not appropriate to make a declaration in the present case and that, in effect, the plaintiff's claim for such relief was an application for judicial advice which should not be acceded to.
I accept the force of the defendants' submissions that, if declarations were made in the terms sought by the plaintiff, their utility and appropriateness would be questionable since declarations ought be referable to the facts of the case: Bass v Permanent Trustee Company Limited (1998) 199 CLR 334; [1999] HCA 9 at [47]-[49]. However, I consider that it is appropriate for a declaration in some form to be made. The legislative intention evinced in s 23(2) of the Act is that the Court have power to make declarations on the application of the Electoral Commission. The purpose for which the Electoral Commission is to make such an application is "[f]or the purpose of ensuring compliance with [the] Act": s 23(2).
The defendants also objected to the making of declarations on the ground that a declaration would necessarily implicate persons who were not named as defendants to the proceedings and affect other persons. I note that neither Mr Oueik nor Mr Brookes was joined as a defendant. The consequence of these reasons and the judgment against the first defendant is that the three amounts paid into the 7155 account were unlawful political donations. Section 96J provides for recovery of unlawful political donations from the person who accepts the unlawful political donation. It was the Party agent who accepted the unlawful political donations into the 7155 account and the first defendant (the current Party agent) from whom the unlawful political donations can be recovered as a debt due to the plaintiff. In these circumstances, I consider it to be appropriate to word the declarations in terms of the acceptance of the monies, rather than their payment.
I am satisfied that it is appropriate to make a declaration pursuant to s 23(2), the terms of which will reflect the facts of the present case, rather than in the general terms proposed by the plaintiff.
[46]
Costs
Ordinarily the successful party ought obtain an order for costs in its favour (Uniform Civil Procedure Rules 2005 (NSW), r 42.1). However, the defendants requested that I reserve the question of costs. Accordingly, the question of costs will be reserved.
[47]
Orders
For the reasons set out above, I make the following orders:
1. Judgment for the plaintiff against the first defendant in the sum of $245,480.20, comprising $200,000 plus pre-judgment interest from 28 March 2015 to the date hereof in the sum of $45,480.20.
2. Declare that account 55-7155 held with Westpac Banking Corporation in the name of the second defendant (the 7155 account) was not a "candidate campaign account" within the meaning of s 96B(1) or (3) of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) (the Act).
3. Declare that the sum of $50,000, which the second defendant's party agent accepted into the 7155 account on 4 March 2015:
1. did not fall within the exception in s 95A(4) of the Act for a candidate's contribution to his or her campaign; and
2. was an unlawful political donation in breach of the prohibition in s 95A(1)(a) of the Act.
1. Declare that the sums of $120,000 and $30,000, which the second defendant's party agent accepted into the 7155 account on 18 February 2015 and 9 April 2015 respectively:
1. did not fall within the exception in s 95A(4) of the Act for a candidate's contribution to his or her campaign; and
2. were unlawful political donations in breach of the prohibition in s 95A(1)(a) of the Act.
1. Costs reserved.
2. Direct that if any party seeks an order for costs:
1. Any such application is be made in writing to my Associate by email, together with submissions and evidence (if any) in support within seven days;
2. The opposing party is to send to my Associate by email any submissions and evidence (if any) relied on in response within a further seven days;
3. The applicant is to reply within a further three days; and
4. The question of costs will be dealt with on the papers unless an application is made for an oral hearing.
[48]
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Decision last updated: 23 February 2018