A Dark Decision for Day - the High Court rules on election validity

LG Leader April 2017

On 5 April 2017 the High Court handed down its decision Re Day [No 2] [2017] HCA 14 (5 April 2017) and determined that Mr Bob Day was ineligible to sit in the Senate since at least 26 February 2016.

In doing so, the Court was asked to decide, amongst other issues, whether the leasing arrangements for Mr Day’s South Australian electorate office had breached section 44 of the Constitution. Section 44(v) of the Constitution provides that “any person who has a 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 a senator or a member of the House of Representatives.” Accordingly, it was necessary for the Court to resolve the issue which arises by reason of section 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 was no dispute that the lease was an agreement with the Public Service of the Commonwealth. However, the Commonwealth leased the office space at a building owned by Mr Day located in Kent Town and part of the premises were used to house his electorate office, following election to the Senate in 2013.  Mr Day later transferred the property to a family friend, but documents produced before the High Court showed there was an agreement that proceeds from the rent would flow to a company owned by Mr Day.

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 facts 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 Kent Town property. Nevertheless, it was 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.

Interestingly, the High Court briefly mentioned local government statutes in it’s decision. The Court stated that prior to Federation the colonies enacted legislation that 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’. These words appeared in the final draft of the clause that became section 44(v) of the Constitution. Similar words continue to exist in section 73 of the Local Government Act 1999.

To this extent, the Court’s approach in determining the difference between indirect and direct pecuniary interest was made. A direct pecuniary interest meant if Mr Day were a party to the contract, being the lease, he had a direct interest in it. The notion of being indirectly interested in a contract exists when there is an expectation of a benefit dependent upon performance of the contract. The fact that the rent had been directed to be paid into Mr Day’s bank account meant, without more, that he had an objective expectation of receiving a monetary benefit from the payment of rent. That was an indirect pecuniary interest.