Re Day

[2017] HCATrans 15

[2017] HCATrans 015

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Canberra  No C14 of 2016

B e t w e e n -

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

KIEFEL CJ
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 7 FEBRUARY 2017, AT 10.15 AM

Copyright in the High Court of Australia

MR S.P. DONAGHUE, QC, Solicitor‑General of the Commonwealth:   May it please the Court, I appear with my learned friends, MR N.J. WILLIAMS, SC, MR C.L. LENEHAN and MR B.K. LIM for the Commonwealth Attorney‑General.  (instructed by the Australian Government Solicitor)

MR J.K. KIRK, SC:   May it please the Court, I appear with my learned friend, MR S. GORY, for Ms Anne McEwen.  (instructed by SBA Law)

MR A.S. BELL, SC:   If the Court pleases, I appear with my learned friend, MR D.P. HUME, for Mr Day.  (instructed by Griffins Lawyers)

KIEFEL CJ:   Yes, Mr Solicitor.

MR DONAGHUE:   Your Honours, the Reference before the Court in substance raises three questions.  The main issue on the Reference is that it arises from questions (a) and (c), which is did Mr Day have an indirect pecuniary interest in an agreement with the Public Service of the Commonwealth at the time of the 2016 election.  The Commonwealth Attorney‑General submits that he did on the basis that from no later than 1 December 2015 Mr Day had an indirect interest in the lease that had been made between the Commonwealth and Fullarton Investments over a premises that I will refer to as 77 Fullarton Road.

Your Honours will have seen from the submissions that it is common ground between the parties that that lease is an agreement within the meaning of section 44(v) of the Constitution and that it is an agreement with the Public Service of the Commonwealth, so the issue is as to whether there was an indirect pecuniary interest of the specified kind. If there is, then it would follow that there was a vacancy in the Senate for Mr Day’s seat which occurred no later than the date of that agreement and that he was, therefore, ineligible or incapable of being chosen at the 2016 election.

If your Honours reach that conclusion, then question (b) on the Reference arises:  how should the vacancy be filled, and the Commonwealth submits consistently with settled authority that a special count is the appropriate mechanism and there is then a final question as to costs, where the Commonwealth has indicated that it will submit to an order that it pays Mr Day’s costs and that no other order as to costs should be made.

Your Honours, can I start with the facts?  There is, as your Honours will apprehend, a large amount of ground to cover so with your permission I will move fairly quickly through this.  There are four places in the material before your Honours where the relevant facts are to be found.  First, there is a document at the end of volume 1 of the court books, starting at page 426, which sets out a document that records areas of factual agreement between the parties and from 426 to the end of that volume there are set out in 92 paragraphs agreed facts. 

There are then, additionally to the agreed facts, a series of documents before the Court in the two volumes of the court book.  Some are documents that were referred specifically by the Senate in the Reference.  Others are documents that were agreed for the purpose of being placed before the Full Court pursuant to some orders made by Chief Justice French and your Honours find those documents, particularly the documents additional to those referred by the Senate, in volume 2 of the court book.

Third, there are findings of fact made by your Honour Justice Gordon in the two‑day hearing that was concerned with whether the additional facts that Ms McEwen sought to have found should be found – and I will take your Honours to some aspects of Justice Gordon’s judgment where necessary. 
Finally, your Honours should have a slim volume headed “Exhibit 1” which is some additional documents that were tendered at the trial, as I understand it, on behalf of Ms McEwen.    

So, with those four sources there I will, where I can, focus just on the agreed facts in the interests of efficiency, but there are some occasions where I will take your Honours to the primary documents.  But starting with the agreed facts on page 426, your Honours will see it is uncontroversial that Mr Day was elected to the Senate at the 7 September 2013 federal election.  His term was to begin on 1 July 2014 – that is paragraph 2 of the agreed facts.  Paragraph 3, there was a trust for the Day Family Trust, which was a discretionary trust where the beneficiaries included Mr Day, his wife, and other family members.

Prior to his election to the Senate, Mr Day had worked out of an office located at the premises at 77 Fullarton Road, which is at the heart of this case, that premises being owned by the Day Family Trust.  In the Exhibit 1 document, the slim volume, your Honours will see at page 14 of that document that there is a ministerial submission that went up to the Special Minister of State about Mr Day’s electoral office. 

It records some of the relevant factual information.  It records that the outgoing senator, Senator Farrell, had an office at 19 Gilles Street in Adelaide.  The Department of Finance’s position was that Senator Day should take over that office, but Senator Day did not wish to do so.  So your Honours will see at about point 6 the senator wrote to Finance expressing his wish to remain in his current office at 77 Fullarton Road in Kent Town.  That office, the submission records at the end of the penultimate paragraph, was less than five kilometres away from the existing office that Senator Farrell had vacated.  There are some further details over the page.

If your Honours turn over the page to AM16 you will see that in paragraphs 6 and 7 there is a reference to a document called the Senators and Members’ Entitlements handbook, which refers to the entitlement to be provided with an electoral office and it records in paragraph 7 that generally it is expected that an incoming senator or member will occupy the office vacated by his or her predecessor. So Mr Day was seeking, having been elected and seeking to stay where he was already, to change from the ordinary default position that operated with respect to incoming senators.

Going back to the agreed facts at 427 in paragraph 11, you will see it recorded that in January 2014 Mr Day made representations to the Department of Finance to the effect that he did not want to stay in Senator Farrell’s office but wanted to establish his electoral office at Fullarton Rd.  The circumstances - or the arrangements that underpinned Mr Day’s - or the steps that Mr Day took to try to facilitate him staying at that property are not the subject of agreed facts and they were the subject of some contest before Justice Gordon.

So at this point, could I ask your Honours to note here just one additional fact, to turn to her Honour Justice Gordon’s judgment. The additional fact is that in paragraph 83 on page 436 you will see that it is agreed that in late 2013 Mr Smith, who is about to feature in the evidence I am going to take your Honours to, was a friend and business partner of Mr Day. So, noting that, if your Honours could then turn to Justice Gordon’s judgment which is [2017] HCA 2.

KIEFEL CJ:   I am sorry, where are you now?

MR DONAGHUE:   Sorry, your Honour.  Justice Gordon gave that judgment on the disputed factual questions which I am hoping is before your Honours.  That is the judgment given on 27 January this year, and if your Honour has that and goes to paragraph 185, there your Honour Justice Gordon recorded that:

Mr Day agreed, and I find, that “from late 2013, Mr Day believed that the Commonwealth was likely to be unwilling to lease the Fullarton Road Property while Mr Day, or an entity he owned, owned the fee simple”.  In addition, the following facts and matters are found –

and then there are references to some communications with the Special Minister of State which I will pass over in the interests of time.  If your Honours go then back to, in the same judgment, paragraph 87, Justice Gordon heard evidence and both witnesses were cross‑examined from Mr and Mrs Smith about the facts I am about to take your Honours to, and in paragraph 87 Justice Gordon’s findings are that, notwithstanding criticisms that were made of Mr Smith’s evidence:

I find, that Mr Smith had a conversation with Mr Day in or about late 2013 . . . when Mr Day, in substance:

(1)told Mr Smith that he (Mr Day) could not retain ownership of the Fullarton Road property in his own name or anything close to his own name;

(2)told Mr Smith that he could not be paid any rent or receive any lease payments while the Fullarton Road Property was in his name or could be in any way associated with him dealing with it;

(3)asked Mr Smith if he would oppose him, or Mr Smith, asking Mr Smith’s wife to take ownership of the Fullarton Road Property “by way of shares in trust or something”;

(4)told him that the person had to be someone removed from their partnership and business, the Fullarton Road Property and Mr Day’s family.

Justice Gordon then finds in paragraph 88, Mr Smith’s response was to the effect:

“fine” so long as he (Mr Smith) did not have to do anything and there were no costs or expenses that he (Mr Smith) would have to pay . . . Mr Day responded by saying words to the effect that he would “take care of everything”.

So in December 2013, the evidence demonstrates that Mr Day understood that he could not remain where he was and receive rental payments from the Commonwealth and that he needed there to be separation between him and that property if he was to be able to receive – or if the Commonwealth was to pay for his electoral offices at 77 Fullarton Road.

Over the page, in Justice Gordon’s judgment in paragraph 92, her Honour deals with an email that your Honours will find the original of if you need it – I do not need to take your Honours to it now but at page 503, which is in volume 2 of the court book.  The email was from a man who acted as accountant to Mr Day and also the Smiths, and it stated relevantly that the accountant, Mr Rasera, stated that:

“[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 –

“himself” being Mr Day, not, relevantly, any of the trusts about which your Honours will hear:

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 . . . 

The trust will simply hold the 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.

Her Honour Justice Gordon finds in paragraph 97 that:

In light of the [above] evidence, I make the following findings –

about the nature of the arrangement that existed and the finding is:

from no later than 16 December 2013 (when Mrs Smith signed the Fullarton Road Trust Deed), there was an arrangement in the terms set out in the 2 December 2013 email –

which I just read to your Honours – that is, an arrangement that would allow Mr Day to avail himself of the rental allowance provided by the government and that the rent would pass back to the Day Family Trust.  Over the page in paragraph 97 at paragraphs (5) and (6), it is found that one of the purposes of that arrangement was that the Fullarton Road Trust, which had been created specifically to give effect to this arrangement:

would hold the Fullarton Road Property, it would collect the rental allowance provided by the government and it would then pass the rent back to the Day Family Trust;

(6)      there would be no profit or loss in the Fullarton Road Trust.

Justice Gordon finds at paragraph 103 that the arrangement, the subject of those findings in paragraph 97, was implemented and also that it “continued to subsist” after Ms Smith resigned as a director and was replaced with another friend of Mr Day’s, so the arrangement was both implemented and continued to subsist, and at 111 in the judgment is where you find the finding about the subsistence of the agreement.

Turning away for the moment from Justice Gordon’s judgment and back to the agreed facts, I said a moment ago in passing that the Fullarton Road Trust was created for the purpose of giving effect to this arrangement.  It is recorded in paragraph 6 of the agreed facts, in the last sentence, that:

On 16 December 2013 Fullarton Investments was incorporated with Debra Smith (Mrs Smith) as the sole shareholder and appointed director.

Now, your Honours can gain some insight into the reasoning that might have underlain these arrangements if your Honours look at some of the documents involved in Mr Day’s dealings with his bank which are contained in the materials, and in particular if your Honours turn to volume 2 of the court book at page 457, you will see a document described in the court book as a “Credit note submission” that was made in November 2013, so just a little bit before the December 2013 arrangement.

BELL J:   I am sorry, what page was that?

MR DONAGHUE:   I am sorry, your Honour – page 457.

BELL J:   Thank you.

MR DONAGHUE:   This is clearly an internal document generated by the bank.  If your Honours turn to page 462, there are sections of the documents dealing with matters that are not relevant to any issue before the Court now, but at 462 there is a heading, about two‑thirds of the way down the page:

3.  B&B Day Pty Ltd ATF The Day Family Trust –

and there is a reference to an existing facility for $1.5 million and a proposed facility for $1.6 million.  It said:

The current facility $1,500,000 Bill) was used to acquire the property on Fullarton Rd which is called The Bert Kelly Research Centre.

We are seeking a $100,000 increase to this facility and conversion to Business Markets Loan.  The total facility will be $1,600,000.  The increase is to cover Bob Day’s election funding.  This facility will be amortised at $10k per month as this property will be where Bob’s political office is.  Once he enters the Senate he will receive a salary and an allowance for office . . . $90,000 pa for 6 years.

On 2 January – and your Honours see this recorded back at page 8 of the agreed facts – the bank approved that loan facility for $1.6 million and you see it agreed that the security for the loan, for the 1.6 million facility, included a mortgage over the 77 Fullarton Road property.  But in addition to that mortgage – and this is also at paragraph 8 – Mr Day and his wife gave a guarantee – a personal guarantee and indemnity for $2 million for the performance by the B&B Trust of its obligations under that loan facility, that loan facility being made, as your Honours just saw, in contemplation of the office at 77 Fullarton Road becoming the political office of Senator Day and the receipt of the rental allowance.

There are then some important but uncontroversial facts that I can pass over quickly.  So there was, in order to separate Mr Day from the Fullarton Road property, that agreement was sold to a company, Fullarton Investments – this is paragraph 14 of the agreed facts.  So in April 2014, the agreement for sale was executed.  In September 2014 – this is paragraph 25 of the agreed facts – the memorandum of transfer for the property was executed.  At 29 of the agreed facts, on 11 November that memorandum of transfer was registered with the Land Titles Office.

On the same day of the registration – this is 11 November, and I am directing your Honours here to paragraph 30 of the agreed facts – the mortgage that had been given over the Fullarton Road property was discharged and the new mortgage over the property, showing Fullarton Investments as the mortgagor, was registered.

But, notwithstanding the shift in the mortgage over the property, the personal guarantee that had been given – or, sorry, the loan facility remained in the name of the trust, B&B Day, so the availability of the 1.6 million remained a liability of the trust and the personal guarantee remained unaffected by the transfer of the property. 

Now, at paragraph 34 of the agreed facts you will see that it is recorded that in September 2016, so last year, there was a document signed that acknowledged the prior provision of the vendor finance loan by B&B Day to Fullarton Investments in the sum of 2.1 million to secure the property.  So what happened was – it is certainly not disputed by the Attorney‑General – that the sale of the Fullarton Road property from the Day Trust, B&B Day, to Fullarton was financed by a vendor finance loan, not documented at the time but recorded in that document nearly two years after the event but, as a consequence of that vendor finance loan, Fullarton Investments had a liability to the B&B Day trust in the sum of $2.1 million.

Your Honours will see from the facts I will take you to shortly that the intention was that Fullarton Investments would receive income from its lease arrangements with the Commonwealth and that pursuant to the arrangement that I have already taken you to that income would then pass back to the Day Trust where it could then be used as that trust saw fit, although it appears to have intended that it – or Mr Day appears to have intended to use it to meet the payments on the loan facility.

If your Honours could now go in court book volume 2 to page 800, the relevant fact here is referred to in paragraph 37 of the agreed facts, but it is helpful to show your Honours the document.  This is a document evidently completed by Mr Day on 12 June 2015, which was used to provide vendor information to the government, DTZ handling leasing issues on behalf of the Commonwealth. 

You will see that on that form the vendor is recorded as Fullarton Investments, which it was by now the legal owner of the 77 Fullarton Road property.  The physical address to which this form relates is identified as 77 Fullarton Road.  But if your Honours go about halfway down the page you will see contact information – this is on a Fullarton Investments form – “Contact Name:  Bob Day.”  The email address is given as “bobday@77fullarton” - and banking details are provided, which refer to the account name on the last line of the bank account details box as “Fullarton Nominees”.

It was found as a fact by your Honour Justice Gordon that Fullarton Nominees is simply a business name, not a legal entity – business name owned by Mr Day ‑ and that the only available inference was therefore that that bank account there nominated was a bank account owned by Mr Day.

So that what occurred in June 2015 was that, on behalf of Fullarton, or identifying himself as the contact name for Fullarton, Mr Day fills out a form nominating his own bank account as the bank account into which payments are to be made under the lease agreement between the Commonwealth and Fullarton Investments.

I will not, in the interests of time take your Honours back to it, but Justice Gordon made findings about this at paragraph 124 of her Honour’s judgment in subparagraphs (6) and (7), and we submit that the practical effect of this, had it been given effect – and I put it in that way because in fact no rental payments were ever made by the Commonwealth under this lease – but had they been made in accordance with the nomination that your Honours are looking at on page 800, money would have flowed directly from the Commonwealth to Mr Day’s bank account without going via either of the trusts, without going via the Fullarton Investments Trust and without going via the B&B Day trust.

So it is put in some of the submissions, well, there are multiple levels of discretionary decision‑making involved in the arrangements that were in place but that, in practical terms, was not how this arrangement was going to work.  It was not necessary for anyone to decide to distribute to Mr Day, the money just went to him directly.

Now, your Honours, the lease itself, which is the agreement for the purpose of section 44(5) of the Constitution in which we say Mr Day had an interest, was signed on 1 December 2015. That is recorded in paragraph 40 of the agreed facts. I do not need to take your Honours to it but the lease commences on page 123 of volume 1 of the court book. It is a lease that was to be current until 2020, I think – yes, current until 30 June 2020 with an option to renew for a further period of six years. The one fact of particular note about the lease – and this appears – in fact, your Honours, I will take you to it; it appears at I think clause 19, your Honours, but I will just ‑ ‑ ‑

GORDON J:   Do you mean clause 9 on 142?

MR DONAGHUE:   I am talking about the rent‑free period.  Page 166 of the book - I am grateful to Mr Lim.  Yes, sorry, clause 36, your Honours, on page 166.  You will see that under the lease, signed on 1 December 2015, it was acknowledged that:

the Tenant will be entitled to a rent free period, which will expire on the earlier of:

a.        14 August 2016 –

the following August, or:

b.        where the Gilles Street lease is subleased –

Now, that is explicable when your Honours recall that there was an existing office occupied by Senator Farrell, the outgoing senator.  There was a lease in relation to that existing office, the term of which lasted until 14 August, and part of the deal when the Commonwealth agreed to allow Mr Day to remain at that office was that they would not be paying rent twice, partly for Senator Farrell’s office and partly for Mr Day’s.  So it was agreed that no payments would be made to Mr Day until the old office for the outgoing senator had been subleased.

So it was quite apparent on the face of the lease that rent was not going to be payable under it until 14 August, unless there was earlier subleasing and, your Honours, it is found by Justice Gordon in paragraph 155 of her judgment – your Honours do not need to go back to it – that Mr Day approved the terms of the lease before it was entered into between the Commonwealth and Fullarton Investments.  So there is a finding to that effect.

Notwithstanding that Mr Day had seen this lease and approved it before it was signed on 1 December he, only a matter of weeks after the lease was signed, engaged in correspondence with the then Special Minister of State, Senator Cormann, about the payment of rent under the lease.  This is a lease to which he is, as your Honours understand, not a party.

If your Honours can go to that communication, it is in court book volume 2 at page 919, a letter sent by Mr Day to the senator on 29 December, so a few weeks after the lease is signed.  You will see that in it Mr Day raises the question of - in paragraph 1 - the relocation of or his desire to locate his office in Kent Town, which is at Fullarton Road, rather than under the existing lease by Senator Farrell.  He recounts some of the history of that including in the next paragraph that the Department had sought to have him move into Senator Farrell’s office but that he did not wish to do so and in the second part of that second full paragraph:

I persevered with my request and finally got approval to move to Kent Town subject to two conditions – that I would have to pay for any renovations myself . . . and secondly that the Department would not pay any rent for Kent Town until it hade sub‑let former Senator Farrell’s old office . . . 

It is now one and half years since 1.7.14 and no tenant has been secured . . . I can only conclude that the Department is not at all interested in sub‑letting Senator Farrrell’s old office –

and he says in the last sentence of that:

I spent nearly $200,000 getting Kent Town up to standard . . . and have been paying rent out of my salary since moving into the Kent Town office early this year.

It is then, in the next paragraph down, noted:

accept that I agreed the Department would only start paying rent for Kent Town once it had sub‑let Senator Farrell’s old office, however I think it is totally unreasonable for the sub‑let not to happen at all.  At most, I expected the sub‑let to take six months, a year would be way over the top; two years is ridiculous.

I would like to request that the Department pay rent for the Kent Town office starting 1.7.15 –

So, notwithstanding that the lease is signed about three weeks earlier saying no rent until August the following year or until the sublease, Senator Day, weeks later, engages with a senior minister saying, in effect, it is outrageous that this has not happened, I want back pay on the rent to a time prior to the signing of the lease, back until July - back pay on the rent in respect of a property he does not own under a lease to which he is not a party. 

It is an agreed fact in paragraph 48 of the agreed facts that Senator Cormann responded to that letter on 7 January.  Your Honours do not have the letter but it is an agreed fact that he responded agreeing to the request to pay the rent from 1 July – subject to evidence of the rent payments by Mr Day – that is paragraph 48.

Mr Day then was asked by the Department to provide evidence, consistently with that communication, and back in court book volume 2 – sorry, your Honours, at court book 191, so I think that it is in volume 1 – yes, in court book volume 1, page 191, your Honours can see the way that Mr Day responded to that request for evidence.  This is in an email to the Department of Finance.  On page 191, he says:

I have asked the bank (NAB) to provide evidence of loan repayments –

This is in response to a request for evidence of rent.  He asked the bank to provide evidence of loan repayments:

made with respect to the Kent Town Property. 

The bank has this morning sent through the original loan contract together with monthly renewal letters . . . 

In 2014 I sold the property to Fullarton Investments Pty Ltd on a vendor finance basis.  I retained the NAB loan.

That is the loan facility for 1.6 million:

Fullarton Investments was to receive rent from the Commonwealth and then make vendor finance payments to me using those funds.  No rent, no vendor finance payments.

So, in other words, the 2.1 million loan from B&B Day to Fullarton was not to be repaid unless there was rent coming to Fullarton Investments from the Commonwealth:

I trust this is sufficient “evidence of payments since 1 July 2015”. 

So what Mr Day does there is directly equate the payment of rent on the Fullarton Road property with the payment of interest on the B&B Day trust loan to the NAB bank, originally secured by Fullarton Road, subsequently not.  But the equation is, we submit, plain on the face of the document.

What then subsequently happened – and this is agreed fact 56 – is that Ms Joy Montgomery, who was, as your Honours will see in paragraph 60, “Mr Day’s executive assistant while he was a senator” - Ms Montgomery sent rental forms to the Commonwealth directing it to pay rent under the agreement to Fullarton Nominees which, as I have already indicated, was the business name owned by Senator Day.  So his PA -senator is directing the Department to pay the rent to him and that rent that was sought, as is recorded in paragraph 59, included an invoice for the payment of rent arrears back to 1 July 2015 in the amount of $54,895.50.

So the claim was made following the negotiations with Senator Cormann for the back pay of rent.  It was said the rent had been evidenced by showing the interest payments on the loan facility and an invoice was then sent to the Department plainly, we submit, on Mr Day’s behalf, seeking back payment of rent, $54,895 and then the ongoing rental payments in the amount of a little over $6,000.

Your Honours, in our submission, what emerges from that, relevantly, is summarised in paragraph 1 of the oral outline document that we have handed up.  The facts, in our submission, show that Mr Day was keenly interested in ensuring that the Commonwealth leased the Fullarton Road property to be used as his electoral office.  It simply is not the case, on the evidence, that this was a matter of indifference to him or that it was just a matter of securing any tenant to pay market rent.  He played an active role over a long period of time in seeking to bring about the lease over the Fullarton Road ‑ ‑ ‑

KIEFEL CJ:   What do you mean to convey by “nor simply of securing market rent”?  The evidence or the agreed fact is that it was valued by an independent valuer, was it not?

MR DONAGHUE:   I do not deny the rental level but, in our submission, as we understand it, it is put against us that because it was market rent it did not really matter who the tenant was.  The same amount of money would have been flowing in with respect of this property.  

In our submission it is clear from the facts I have taken your Honours through that Mr Day was far from indifferent to the nature of the tenant who was in that property.  He wanted it to be him, he wanted the Commonwealth to be paying that money and he was relying on that money, in part, in relation to the financial arrangements that he put in place with the bank, including for the increase in the loan facility where he refers specifically to the fact that that money would be coming in for a period of six years from the Commonwealth under the lease arrangement. 

So, rather than just secure a different tenant, what Mr Day did when he realised he could not maintain a direct interest in the property is that he made an arrangement with Mrs Smith whereby a new company would be created, to be trustee for a new trust that would then hold the property transferred to it on a vendor finance basis, where payments would only be made in paying down that vendor finance loan in the event that rent was paid by the Commonwealth.  No rent, no vendor finance payments.

All of that happened in circumstances where, as your Honour Justice Gordon found, the arrangement that led to the creation of the Fullarton Road Trust was one whereby the rent payments would be “passed back” from the recipient of the rent, Fullarton Investments, passed back to the Day Family Trust ‑ or to B&B Day, sorry.

In our submission, those facts do not demonstrate a direct interest in the agreement.  We accept that Mr Day was not a party to the lease between the Commonwealth and Fullarton, but they, in our submission, make a strong case for an indirect pecuniary interest in that lease agreement and that is so even if your Honours apply the Webster test, for reasons I will come to in a moment.

So, your Honours, that is what I seek to say about the facts.  Can I ask your Honours then to turn to Webster (1975) 132 CLR 270. This case, as your Honours know, is the only authority directly concerned with the interpretation of section 44(v) of the Constitution. The facts relevantly appear on page 277. In essence, Senator Webster was a shareholder in a family company. It was a family company engaged in a timber, hardware and plumbing business and that company had agreements with the Commonwealth Public Service, which your Honours see recorded at the bottom of 276.

It was a company that the shareholding and capital structure of which is explained in the middle of page 277 but the substance of it is there were nine shareholders in total and the senator held 1,000 of the 7,000 preference shares, or 14 per cent, and a little under 8,000 of the 33,000 ordinary shares, or about 24 per cent of the ordinary shares.

In addition to being a shareholder in that company, the senator was also – as is recorded at about point 8 of the page on 277 – the “managing director, secretary and manager of the company”.  But, as is recorded about point 9 on that page, he:

was not entitled to . . . any fee, remuneration or reward as managing director or as director.  He received a fixed salary as manager of the company unrelated to the turnover or profits –

and he had a company car. The question was, on that set of facts, did Senator Webster have a pecuniary interest in contracts that his company made with the Commonwealth. Chief Justice Barwick said no. I will come to the reasoning that led his Honour to that conclusion shortly, but just to show your Honours the way that his Honour confined the reach of section 44(v) so as to reach that conclusion – and so the principle that emerges from the case you see partly on 279 of the report at about point 6 on the page, the sentence that begins “Because”:

Because of the evident purpose of the disqualification provision, it applies only to executory contracts, that is to say, to contracts under which at the relevant time something remains to be done by the contractor in performance of the contract –

So that was one of the limits that the Chief Justice ascertained.  Then over the top of the page on 280, his Honour referred to the fact that – he says in the second paragraph:

It seems to me that, upon the proper construction of the paragraph, bearing in mind the purpose –

So there is repeated emphasis by the Chief Justice on the purpose of the provision:

must have a currency for a substantial period of time, and must be one 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, whether or not that act or omission is within the terms of the contract.

So there has to be executory contract for a substantial period of time where it is conceivable that the Crown could influence the contractor.  That is, in essence, what Webster is authority for as an interpretation of section 44(v). In a moment I will develop our submissions as to why we say your Honours should not follow that approach to the construction of 44(v), but even if you did, in our submission, on the facts that I have already outlined, the conclusion should be drawn that Mr Day had an indirect pecuniary interest in the lease.

The lease was executory – clearly things remained to be done under it.  It was obviously for a substantial term, so the only question on the Webster formulation is could the Crown conceivably have influenced Mr Day in the performance of his parliamentary duties?  In our submission, that bar is met in circumstances where a member of Parliament, here a senator, is in a situation where they are directly negotiating with ministers of the Executive Government as to the payment to them of substantial sums of money, as is evident both from the back‑pay claims in the negotiations with Senator Cormann about the slightly less than $60,000 of back pay that was being sought and in relation to the payment of rent going forward. 

This was a contractual arrangement that involved negotiations with the Executive that had an obvious capacity to directly influence Mr Day’s financial position, both in terms of the money that would flow into his bank account and in relation to his capacity to finance the loan facilities that had been granted to him by the bank, in part by reference to the existence of these rental arrangements, and in circumstances of that kind we submit that – one asks well, could the Crown conceivably influence Mr Day in the performance of his duties, and interests of that kind comfortably clears the bar.

KIEFEL CJ:  On that view, though, the influence would be in the period leading up to the execution of the agreement.  The influence ceases after that time?

MR DONAGHUE:  Well, your Honour, the agreement was executed on 1 December but the negotiations about back pay were happening about a month later and in the period following then it was suggested, “Can you give us evidence of this?”  So there was toing‑and‑froing between the Executive and Mr Day after the executions were ‑ ‑ ‑

KIEFEL CJ:   But not negotiations about the lease agreement as such?  Mr Day was trying to sidestep the terms of the lease agreement by the arrears, was he not?

MR DONAGHUE:   The lease agreement in its terms purported – the evidence, I think, does not disclose why – to have commenced retrospectively back to 1 July 2015, so even though it was signed on 1 December it purported to go back in time.  So there was a connection between the back‑pay claim and the terms of the lease.

KIEFEL CJ:   In any event the point of my question is, in the case of Mr Day, the period of influence would cease at a point which is shorter than the period of the lease itself.

MR DONAGHUE:   Your Honour, there remained the need – or two things.  There remained – forgetting about back pay – an intention on Mr Day’s part, pursuant to the arrangement that had been made, that the rental payments being made to Fullarton would flow back and perhaps the best answer to your Honour’s question is that the lease in its terms contained an option for its renewal for a further period of six years.  So to the extent that - in our submission that capacity meant that there was an ongoing capacity for influence beyond the date, the original ‑ ‑ ‑

KIEFEL CJ:   That the option to renew had been set.  How does the influence arise?  It has been agreed.

MR DONAGHUE:   Well, the Commonwealth had ‑ ‑ ‑

KIEFEL CJ:   You mean whether or not it is exercised?

MR DONAGHUE:   Whether or not it is exercised – whether or not it is exercised remains to be seen and that potentially depended on the nature of relations between the then Senator, or Mr Day, and the Commonwealth at the time that that decision falls to be made.

EDELMAN J:   Do you say that influence was then exercised by Mr Day on behalf of Fullarton Investments, and if not, how is that influence relative to the agreement itself?

MR DONAGHUE:   Your Honour, in my submission, the influence in question or the capacity to influence on the Webster test is the capacity of the Executive to influence Mr Day, and we submit that the fact that Fullarton had been interposed for the express purpose of putting some distance between Mr Day and the Fullarton Road property did not have a bearing on the capacity of the Executive to influence Mr Day because the reality of the situation was that it was Mr Day who was pursuant to his arrangement with Fullarton to receive these funds and it was Mr Day who was engaging with the Executive.  It was not Fullarton.  It was Mr Day who was saying to Senator Cormann “Where’s the money” and “Can I have the back pay”, so ‑ ‑ ‑

EDELMAN J:   So, by reality of the situation, you mean irrespective of the legal rights of the trustee to negotiate, the negotiations were – and any potential influence occurred in a practical way that had no bearing on the actual legal structure.

MR DONAGHUE:   Yes.  The legal structure had a bearing on whether the interest in question was a direct or an indirect one, but it did not have a bearing on whether the – it was not sufficient to avoid an indirect interest in an agreement, which in a real or practical sense Mr Day was very interested in, that a trust had been interposed and the history of these provisions will lend some support to that which I will come to in a moment.

KIEFEL CJ:   In that respect, do you focus on the words “indirect interest” as distinct from right?

MR DONAGHUE:   I do.  An indirect pecuniary interest is, in our submission, broader than a legal right.

GAGELER J:   Can we just go back to the capacity of the Commonwealth to influence – or of the Crown to influence Mr Day?  You mentioned, I think, the option to renew which, of course, just arises from the terms of the lease.

MR DONAGHUE:   Yes.

GAGELER J:   This question of back pay, how did the negotiations to which you referred tie to any provision of the lease as it currently exists?  It seems to me to implement any agreement that would come from those negotiations would require an amendment to the lease.

MR DONAGHUE:   I accept, your Honour, that the lease in its terms did not give rise to a right for Mr Day to receive the rental payments that he was claiming, but, in my submission, reading the terms of that letter to which I have already taken your Honours, Mr Day recounts the history that led up to the lease and how the lease came to have the terms that it did and then essentially said “This is unfair, you should be making rental payments to me going back to the date of the effect of commencement of the lease”. 

So, while I accept that there was no legal right under the lease to those payments, the claim that was being made in practice was referable by Mr Day back to the same set of negotiations that were manifest in the lease, or partly manifest in the lease as executed.  In other words, your Honour, I am saying that it is possible – our submission is that Mr Day can have an interest in the lease that does not precisely coalesce with the precise legal rights to which the lease gives rise.  The constitutional provisions are more flexible than that.  Mr Day would not have been negotiating with Senator Cormann about the payment of rent – back pay or otherwise – were it not for the existence of the lease between the Commonwealth and Fullarton.

KIEFEL CJ:   Do you mean it puts him in a bargaining position?

MR DONAGHUE:   I am saying that the lease is a critical part of the factual substratum that underpinned the negotiations or the dealings that the senator was having with the Executive.  He was only having this discussion, “Can you pay me $50,000?” or nearly $60,000, because that lease was there.

GORDON J:   Is this an essential plank of your argument, though?

MR DONAGHUE:   No.

GORDON J:   Is it not the position that absent the claim for back rent, I had understood your submission was that there was an indirect interest arising from the entitlement under the lease giving rise to the payment of rent today.

MR DONAGHUE:   Yes, your Honour.

GORDON J:   So why run it?

MR DONAGHUE:   Your Honour, we have put the interest in a number of ways.  I agree that it is not an essential part of our agreement.  I was really endeavouring to deal with the questions the Court has been asking about the capacity to influence.

KIEFEL CJ:   This is on the Webster approach?

MR DONAGHUE:   This on the Webster approach.

GORDON J:    But even on the capacity to influence, is it not sufficient on your analysis for the rent going directly to Day?

MR DONAGHUE:   It is, in my submission, and I understood the Chief Justice to put to me that maybe there was a difficulty with that in relation to forward influence.  One way I answered that was by reference to back pay; another way we would answer it is to say, if Mr Day has negotiated in a particular way with the Commonwealth, that the very nature of that negotiation process that results in an agreement pursuant to which money is to flow to him is such as to create a capacity to influence, even if there does not remain anything formal under the lease that needed to be done.

I am reminded that under the rent free provision in clause 36, which I took your Honours to at 136, another thing that remained to be done is that it was the Commonwealth that had to act to sublease the Gilles Street property before a legal entitlement under the lease arose for rental payments to be made to Fullarton.  So that was another thing that the Commonwealth had to do and that created a capacity for influence between the Executive and Day.

EDELMAN J:   Do you say that if the payments had been made directly to Mr Day that would be a valid disposition?

MR DONAGHUE:   If they had been, your Honour?

EDELMAN J:   Yes.

MR DONAGHUE:   The lease contemplated that Fullarton Investments could specify where the payments were to be made.  On the face of the material it appears that the way Fullarton – the only evidence that we have is that Fullarton Investments did that in the form that Mr Day signed but I do not think, and indeed it may have been put to your Honour, that there was authority for that to be done.  I do not think we need to go so far as to say that that was without authority.

To complete my answer to Justice Edelman, I refer your Honour to page 57 of court book volume 1, which is part of the Fullarton Road trust deed.  In clause 4 in the middle of that page it is recorded that:

THE Trustee shall open and keep a banking account in the name of the Trustee at some Bank to be chosen by the Trustee into which all moneys forming part of the trust property shall be paid and no moneys shall be withdrawn from such account except by electronic transfer ‑

Now, it is difficult to reconcile a nomination on behalf of the Fullarton Road Trust that payment should be made to Mr Day’s bank account with that provision of the trustee, which, on its face requires the payments to be made to the trust’s bank account.

GAGELER J:   Look, this is a very general question but it is general concern I have.  You have taken us in some detail to quite a lot of evidence in a basically chronological order.  What is not clear to me is, as at the critical date which is the date of the election, I think, what legal relationships do you say existed or what practical arrangements existed – and I would be assisted by differentiating those – that gave rise to the interest in the lease?

MR DONAGHUE:   When your Honour says “legal arrangements”, we do not submit that there were legally enforceable arrangements ‑ but we do submit that – so, focusing first on the legal.  The lease itself is the agreement in which we say that Mr Day had an indirect interest.

GAGELER J:   Yes.

MR DONAGHUE:   He had that indirect interest substantially because of the 2 December 2013 arrangement that was made that I have taken your Honours to in the terms of Justice Gordon’s finding.

GAGELER J:   It does not matter whether or not that is legally binding?

MR DONAGHUE:   It does not matter, in our submission, whether that is legally binding.

GAGELER J:   All right.

MR DONAGHUE:   It may be that it was but it does not matter whether it was or not, in our submission.  And, pursuant to that arrangement, there was to be – Fullarton was created to be interposed to place distance between Mr Day and the property but the payment pursuant to the future lease – the lease that was anticipated – were to be passed back to Day.  That is the essence of our case.  That is sufficient, in my submission.

GAGELER J:   So, the 2 December 2013 arrangement is that which gives rise to the interest in the lease.

MR DONAGHUE:   In the lease.  At least is sufficient to give rise to the interest in the lease.

GAGELER J:   Well, do you rely on anything else?

MR DONAGHUE:   Your Honour, can I come back to you on that?

KIEFEL CJ:   But, do I take it from what you have just said in your answer, that it is your submission that the disqualification relates both to – it relates only to sitting as a senator – it is only that period?

MR DONAGHUE:   Our submission is no, your Honour.  Our submission is that because Mr Day nominated and was elected in the middle of 2016, well after the lease of December 2015, we say he was both incapable of being chosen and incapable of sitting.  So, questions (a) and (c) should get the same answer.  If we want to put it in a different way, your Honour, I will come back to it.

GAGELER J:   Thank you.

BELL J:   But, the facts specific inquiry that you submit is necessitated in every case is one here that fastens on the arrangement to pass the rent back – an arrangement which may not have been a legal arrangement but which is the fact and does not require consideration of the significance of a senator who might be a beneficiary under a discretionary trust that obtains a benefit.

MR DONAGHUE:   Yes, your Honour.  We do not need to go beyond the facts of this case, so far as to say simply because you are one of a number of possible beneficiaries of a trust – that is right.

BELL J:   That argument is not made?

MR DONAGHUE:   It is not made.  Indeed, in the final part of my submissions, we will affirmatively submit that that in and of itself would not be enough as the inquiry.  One would need to ask some additional questions, but if I can come to that.

GAGELER J:   I am sorry, but I do want to be specific about this – that is the way in which the indirect pecuniary interest arises ‑ ‑ ‑

MR DONAGHUE:   Yes.

GAGELER J:   ‑ ‑ ‑ by reason of this 2 December 2013 arrangement.  What is exactly the pecuniary interest that is indirect?

MR DONAGHUE:   Would your Honour just pardon me a minute so I get the language exactly right.  The pecuniary interest is not required, in our submission, to go to the point of a legal or equitable or proprietary interest.  It is sufficient, as we put it in our submission, that there is a reasonable expectation of moneys or money’s worth arising; that is the constitutional concept in our submission.  That is why I say it does not need to be a legally binding arrangement. 

Pursuant to the 2 December arrangement, such an expectation existed because Mr Day could have reasonably expected – whatever the strict legalities of the position – that the rental payments made by the Commonwealth pursuant to the lease would flow back – pass back to him.  I might turn up the paragraph in our submissions where we identify the test for the interest in that way by reference to some authorities, but ‑ ‑ ‑

GAGELER J:   So it is just the money in his bank account?

MR DONAGHUE:   Yes.

GAGELER J:   You do not go to the guarantee.  You do not go to the payments to the NAB.

MR DONAGHUE:   Well, your Honour, one of the reasons I paused before giving your Honour a full list is that we have put the case in a few different ways and there were pecuniary benefits flowing to Mr Day in part from his capacity to meet the – or the capacity of the B&B Day Trust to meet the loan repayments on the facility agreement and also from the fact that it was only if B&B Day Trust did meet those payments on the facility agreement that Mr Day and his wife were safe from the personal guarantees that they had granted in relation to those facilities being called upon.  So there are some other ways in our submissions that we have identified financial benefits of an indirect kind arising to Mr Day, but on my feet I did not feel I could give your Honour a comprehensive list of them.

GORDON J:   If you accept an argument that pecuniary interest is something where you have an expectation of a monetary gain or loss coming from the performance or otherwise of an agreement, so you take it in those general terms, then picking up the question from Justice Gageler does it not extend on your analysis beyond the mere payment or receipt of the rent under the direction to those additional matters?

MR DONAGHUE: Yes. If I have given the impression that I have disavowed that, I was not intending to. We say that the pass back of the rent is an obvious example of such an interest and that we do not need to go further, but I accept that we can go further to those additional matters that I was mentioning to his Honour. The paragraph of our submissions I was referring to was paragraph 54 where we identify pecuniary interest in the context of section 44(i) as one that sounds in money or money’s worth, citing Webb v The Queen and Ebner in this Court, and if I have time I will also take your Honours to a discussion in the Full Federal Court in Amadio v Henderson of that kind of concept and the type of interest that might exist.

GAGELER J:   Yes, the legal concept bothers me less than just understanding precisely how you are putting the case factually.

MR DONAGHUE:   Practically.  I understand, your Honour.  Well, I am relying on at least the arrangement of December 2013 and, if necessary, on the obligations under the loan facility and the connected issue of the personal guarantee by Mr Day and his wife in respect of the payment by the B&B Day Trust.  If I seek to add to those three things then I will do so before I sit down.

GAGELER J:   Perhaps this just displays my ignorance, but the money that went into Mr Day’s account presumably went to pay the loan to the bank, which the trustee company had.  Is that right?

MR DONAGHUE:   Your Honour, there was an issue, as I understand it, in the trial before Justice Gordon as to whether or not it was an aspect of the arrangement itself that the money would be deployed in that way.  And the evidence did not satisfy your Honour Justice Gordon, as I understand it, that that was so.  It was not found that it did not go ‑ ‑ ‑

GORDON J:   There was no money ever paid.

MR DONAGHUE:   Well, yes, or that it would have gone in that way.  There was no evidence sufficient to demonstrate that that was what would have happened if the funds had been received.  But it was plainly in Mr Day’s contemplation, from the documents I have taken your Honour to, particularly the “no vendor finance/no payments” and his complaint that he was having to pay out of his own pocket, that that was what was going to be done – that was what he was going to do with the funds had he received them.

GAGELER J:   And was that contemplation part of the arrangement you rely on or not?

MR DONAGHUE:   No.

KIEFEL CJ:   And there was no evidence, as I understand it, that the bank account which was held by Mr Day was connected with the B&B Day Trust?

MR DONAGHUE:   No.  There was evidence that it was just a business name, held by him.  Now, your Honours, it was put against us that we needed to apply for Webster to be reopened and overruled, if we wished to make a submission to that effect.  And we did in our reply indicate that we did make such an application.  We submit that, in evaluating that application, the question is not as Mr Day’s submissions indicate, whether your Honours are satisfied that Webster is manifestly wrong.  It is, instead, an evaluation of the factors that have been identified in many cases in this Court, including the regularly cited observations in John v Federal Commissioner of Taxation about whether or not it is an appropriate case for the Court to take the serious step of departing from an earlier decision of its own.

I am not, given the time, going to take your Honours through all of those factors, but we do note that the first two of them – one being the decision rests on a principle worked out in a significant succession of cases and, two, the reasons of the Justices constituting the majority – was there a difference between the reasoning of the Justices constituting the majority?  Both reflect an acknowledgment that the number of judicial minds that have been brought to bear on the resolution of a question is an important consideration in deciding whether or not that decision should be allowed to stand.  The reason we care about whether there has been a significant succession of cases or whether the Justices in the majority agree is because judicial consensus gives rise to a great degree of confidence in the correctness of the decision that has been made.

In our submission, for that reason it is very relevant that Webster was a decision of Chief Justice Barwick, sitting as a single Judge, where his Honour acknowledged in his reasons that he had not been able to locate any authority that supported his interpretation of section 44(v), although he said the authorities were not inconsistent with the narrow reading that he gave that provision.

We submit that Webster was a decision that has attracted quite some critical attention from the moment it was given and that there are three particular aspects of the reasoning in that decision that are, we submit, open to criticism such that your Honours should depart from them.  They are three points that are identified in paragraph 4 of our oral outline and if I could deal with them as expeditiously as I can.

It was plainly critical to Chief Justice Barwick’s conclusion in Webster that his view – that the purpose that he perceived section 44(v) as serving was plainly critical to the interpretation that he adopted. Indeed, the Chief Justice at the bottom of page 277 said it was:

fundamental to the decision of the questions posed by the Senate to bear in mind the purposes [of] s 44(v.) –

If your Honours have Webster there – which is, if you need it again, 132 CLR 270 – at the top of page 278, his Honour makes some observations about the origins of the provision and he says two things. He says, right at the top of the page:

The paragraph derives ultimately from . . . [a 1696 statute] to secure the freedom and independence of the Parliament –

and next that “the precise progenitor of” the section was the 1782 statute commonly referred to as the House of Commons (Disqualification) Act.  With respect to his Honour, in our submission, both of those propositions are wrong.  Now, we have provided to the Court a document that – or two additional bundles of material.  One is headed “Bundle of material of the Commonwealth Attorney‑General” and the second is headed “Further bundle of material of the Attorney‑General”. 

If you could go to the further bundle of material – I will not ask your Honours to go to it.  We have given you at page 1 through to 3 the 1696 statute and we have given it to your Honours simply for the purpose of allowing me to say it is irrelevant to the issue now before the Court, and so because it is irrelevant I do not propose to take your Honours to any part of it, but if your Honours wish to satisfy yourself in that respect.  The only clause we can see that bears at all on the topic of eligibility to run is clause 8, and that is dealing with people under the age of 21 years not being eligible to either vote or to stand for Parliament.

By contrast, the 1782 Act, the House of Commons (Disqualification) Act, which your Honours will see at page 4 and following in the supplementary bundle, is obviously not irrelevant. We accept that it is one of the historical antecedents of section 44(v) but, in our submission, it is a very substantial overstatement to describe this Act as the precise progenitor of 44(v) of the Constitution. If your Honours look at page 4 in the supplementary bundle, section 1 of the Act runs straight on from the preamble, so the preamble was:

For further securing the freedom of independence of parliament –

which is the purpose to which Chief Justice Barwick refers.  If your Honours read on three or four lines, it is said relevantly:

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, under –

and if you then skip down four lines:

any other person or persons whatsoever, for or on account of the publick service –

Now, as I will demonstrate shortly, that provision directly influenced the first draft of the clause that ultimately became clause 44(v) in the 1891 draft of the Constitution. But it is a draft that your Honours will notice does not use the words “pecuniary interests” at all; it refers instead to a person who directly or indirectly has a contract where they contract to undertake, execute, hold or enjoy a contract “for or on account of” the Public Service instead of “with” the Public Service.

So there were a number of what we will say are important textual differences.  Indeed, in our submission, as some of the cases that the Chief Justice makes clear, there was quite some authority about the meaning of the 1782 Act. 

The drafters of the Constitution departed markedly from the formulation used in the 1782 Act after debates that suggested that their concerns went beyond the concerns specifically addressed in the 1782 Act and, just as a matter of ordinary interpretation, in our submission, where a statute has a well-settled meaning, if the drafters intended to achieve and only achieve that well-settled meaning, one would have expected them to stay with the text that had achieved that settled meaning, which they manifestly did not do.

So that the cases upon which Chief Justice Barwick relies in the middle of page 278, Royse v Birley for example, is a case that is concerned with the question of whether or not a person undertakes, executes, holds or enjoys a contract for or on account of the Public Service and it reached the conclusion on that language that where everything that needed to be done under the contract had been done, except payment, the person had not been paid for their services, they no longer held, executed or enjoyed the contract.

Now, whether or not that be right on that language, in our submission, it is difficult to see that someone does not have a pecuniary interest in a contract if they have provided services under it for which they have not yet been paid.  So, in our submission, the difference in language in that example illustrates the different legal effect of 44(v). 

Similarly in the case of Hobler v Jones, which I will not take your Honours to, but Mr Day relies quite heavily on that case, he says it is on all fours with the present case.  With respect, it is not.  It does deal with leases, but the legislation in question was legislation substantially following the terms of the 1782 Act.  The point in that case turned on the words “for or on account of the Public Service”.

Our friends note that counsel who appeared in that case included future Chief Justices Gibbs and Brennan.  The submission that their Honours made in that case was because the provision says “for or on account of” not “with”, it cannot just mean with; it must mean for the benefit of the public, and that submission was accepted.  So their Honours focused on the very textual distinction that we say might support one answer in the context of the 1782 Act but does not support the same answer when one deals with 44(v).  Now, Chief Justice Barwick also denied that there was any analogy properly – this is near the bottom of 278.  His Honour said, the purpose of 44(v):

Has no real analogy in the purpose sought to be achieved by disqualification provisions under local government and comparable legislation –

which his Honour states are in a different position.  Local councils are in a different position to parliamentarians, so he denied that analogy and said at the top of 279 that:

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 –

In our submission, that proposition is difficult to sustain when one recognises not just that the debates were – that the conventions were concerned with conflict of interest situations, but also when it is appreciated that the phrase that the drafters used when they departed from the 1782 Act by referring to “direct or indirect pecuniary interests” was terminology that at the time was well established in both colonial and United Kingdom legislation as language that dealt with conflict of interest situations in the local government context.

In the supplementary bundle we have handed up, we have provided – and this is just a table that we have prepared, it does not come from anywhere more authoritative than that so I do not want to make any claims as to its status – but we have attempted to collect in a convenient way for your Honours some of the Acts in existence in the 1800s that dealt with the concept of pecuniary interests.  We submit that what happened in the drafting process – sorry, page 7 through to – well, 7 and 8 deal with local government statutes and then 9 deals with the same concept which was used in the standing orders of a number of colonial parliaments to identify situations in which members of parliament could not vote – which was also phrased in terms of pecuniary interests.

So the language that was ultimately adopted was language that was familiar at the relevant time as language that was deployed to address situations of conflict of interest, not just potential executive interests; by which I mean, in effect, abuse by parliamentarians of their position for personal gain. That was one of, in our submissions, the concerns to which the section 44, as ultimately drafted, was directed. Chief Justice Barwick said in Re Webster, a little further down on page 279, probably at about point 3 on the page:

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.

Now, having made that comment, the very next comment is, we submit, a little hard to square with it because his Honour then remarks:

That in the Convention debates, some of its members were seemingly concerned, when speaking on the insertion in the provision . . . with the possibility of members of the parliament defrauding the community under the cloak of what we have come to call a “private” company.

His Honour is quite right:  that was a significant concern that flows through the Convention Debates, the prevention of fraud of that kind, and we submit it is difficult to reconcile a recognition of that fact with the idea that the provision was not concerned with conduct by members of either House.

It is perhaps interesting to note that it is clear from that paragraph in the judgment that his Honour had looked at the Convention Debates.  At the time, of course, pre Cole v Whitefield, the established position in this Court was that reliance should not be placed on the Convention Debates in the interpretation of the Constitution. And you see we have included in the supplementary bundle a very short extract of the hearing in Webster – which your Honours will find in the supplementary bundle at page 48 – where the Chief Justice effectively makes a confession in the hearing.  He says:

One ought not to do it, but I did it; I went and looked at the original debates, and it is very amusing; they were concerned with the possibility of fraudulent contract –

masking the public in private companies, et cetera, “By a company structure”, and Mr Hughes, who was then appearing for the Commonwealth Attorney, said:

The temptation of going to debates is almost too strong to resist, really.

And the Chief Justice responded:

It is easier to resist the temptation of giving them any effect.

So, in our submission, while it is plain enough that his Honour had looked, at least briefly, at the Convention Debates, in our submission, given the legal position at the time, it is not surprising that he had not received any submissions about their significance and that a reasonably close examination of those debates demonstrates a concern going well beyond the quite narrow purpose of protecting from Executive influence that Chief Justice Barwick ascribed to these provisions.

We have given your Honours in this same bundle, this further bundle, extracts from the relevant pages of Professor Williams’ book – this is from page 15 onwards – The Australian Constitution:  A Documentary History.  Given the time, I am not going to take your Honours right through this, but on page 17 you will see the original 1891 draft and from the top of the page you see a clause that closely resembles the 1782 statute, but that includes, relevantly, at about point 3 on the page the proviso in relation to companies above a certain size; more than 20 at that stage.

The clause remains substantially in those terms through the Adelaide Convention in 1897, which you see on page 20, at that point it was clause 46, and then through to the Sydney Convention in September 1897, at which time it was clause 47, which is on page 29 of the supplementary book.  At that Convention, the proviso at the bottom of page 29, you will see it has become from 20 to 25 and that the number went up in response to a suggestion made by Isaac Isaacs at that Convention.  And then your Honours will see, if you go from 29 over to 30 ‑ ‑ ‑

KIEFEL CJ:   To?

MR DONAGHUE: ‑ ‑ ‑ to page 30, the very radical recasting that occurred between the Sydney Convention in September 1897 and at the March 1898 Convention in Melbourne where, in effect, what you have back on page 29 is a long list of disqualification provisions in quite some detail, occupying most of page 29, the old, as they then were, clauses 45, 46 and 47. Between those two conventions there was a drafting committee, comprising Mr Barton, Mr Downer and Mr O’Connor, who undertook a major redrafting process of those clauses and produced, what is in clause 45 of that draft, a provision that now very closely resembles clause 44, as ultimately adopted in the Constitution.

KIEFEL CJ:   This is where “pecuniary” first appears.

MR DONAGHUE:   That is the first time “pecuniary” appears.

KIEFEL CJ:   And there is no debate about it in Melbourne.

MR DONAGHUE:   There is no debate about it.  So “pecuniary” first appears, it becomes “with” the Public Service rather than “for or on account of” the Public Service as a result of those changes, but those changes in 1898 follow some quite detailed debates in both Adelaide and Sydney in 1897 about the former clause and those debates, in our submission, can reasonably be inferred to having formed the thinking that led to the recasting of those provisions, which were then adopted without debate. 

So had there been a radical departure in the minds of the convention, one would have expected these clauses to have attracted debate; they did not.  In particular, in both Adelaide and Sydney one finds the conflict of interest purpose quite clearly manifest.

Now, to make that good, your Honours will need to go to our first bundle of material, rather than to the further bundle.  We have given most of the debates here, unfortunately we left out the Sydney draft.  So the Sydney debates are in the further bundle but the other debates are in this one.  Could I ask your Honours to go first to page 3 of that bundle where you see multiple references to a concern with fraud, so that about halfway down the column on page 3 you will see Mr Barton referring to these provisions applying to “a different state of things” and he says at the end – he refers to people forming:

a body of seven or eight persons combining together to form a registered company, and then carrying out a fraud upon the public.

Mr Gordon, a few contributions down near the bottom of the page, says at the end of his remarks:

If we are going to prevent fraud let us make the perpetration of it as difficult as possible.

Then Mr Carruthers, in the middle of the next column, there is a sentence:

Our object is to try to correct the power of engaging in corruption by giving contracts or preferences to members.

So there are multiple references in that debate to that concern. Then on page 9, still at the April 1897 Convention but a few days later, you see Mr Isaacs – sorry, if your Honours can go to page 8, in the second column, Mr Isaacs, dealing here with the debate about the provision that ultimately became 45(iii) in the Constitution, which is about fees and honoraria, was particularly concerned about contracts with barristers who are members of Parliament. So Mr Carruthers had proposed inserting that clause. Mr Isaacs supported it saying:

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.  We should bear in mind that it is not only important to secure that so far as we can in actual fact, but, in every way possible, we should prevent any appearance of the contrary being exercised.

And his Honour, as he then became his Honour, but on the next page Mr Isaacs said in page 9, the first column halfway down:

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.

There are other contributions to like effect.  For example, Mr Fraser, at the bottom of page 11 in the second column, says:

It is only right that there should not be the semblance of wrong‑doing or suspicion of it attached to Members of Parliament, and I heartily support the amendment.

GAGELER J:   So the interesting question raised by Mr Wise about whether a barrister who is a Member of Parliament could accept a brief from the Crown is no, without ‑ ‑ ‑

MR DONAGHUE:   Is specifically no, by reason of what is now 45(iii), and there was a concern that it was discriminating unfairly against contractors in favour of what were described as “professional men” and the Convention decided that the rule that was applied to contractors should be so extended, and a particular provision was inserted to that effect.  But we submit that it is clear from a reading of the debates, particularly in April and September 1897, that the concern was not just with Executive influence.  It was also concerned with abuse of the position as a Member of Parliament and that that is the purpose that should properly inform the interpretation of 44(v), not just the narrow purpose that the Chief Justice had identified.

GAGELER J:   By focusing on the position of a barrister, at least as understood at that time, it also suggests that the agreement need not be a legally enforceable agreement.

MR DONAGHUE:   Well, indeed, and also quite probably not long term. 

GAGELER J:   Yes.

MR DONAGHUE:   Now, your Honours, I have just arrived at the end of the time that had been allocated between counsel and I probably still have about 20 minutes of submissions I would seek to make.  Is the Court prepared to shorten the hearing day?

KIEFEL CJ:   Yes, but if you could confine yourself as much as you can within that 20 minutes.

MR DONAGHUE:   Thank you.  I will be as quick as I can, your Honours.  Thank you. 

Can I give your Honours a brief reference to the Sydney Convention Debates, which is in the other volume, the supplementary volume, at page 38.  So this is the start of the Sydney session, and if your Honours turn over to page 40, you will see Isaac Isaacs again at about point 7 in the first column referring to – and he is here moving an amendment to the proviso:

The object of the clause is to prevent individuals making a personal profit out of their public positions –

So he quite clearly perceived that wider interest.  Similarly, Mr Kingston referred to – at the top of 1024, about three or four lines down:

I think we can provide against abuse of the provision which occurs every day in connection with colonial legislature.

He was particularly concerned to avoid arbitrary distinctions based on company size.  And Mr Downer at 1025, so on page 42 of the print, said:

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.

Now, it is true that Mr Downer went on to say that he thinks that the glare of publicity may well be enough to achieve that objective, but there was no suggestion that that objective was not part of the work that was being done by the clause of which they were then concerned.

The final point I would note, and I will just give your Honours a reference, is to the March 1898 debate on pages 1946 and 1947. Mr Barton expressed a concern that perhaps these disqualification provisions were loading up the Constitution with dealing with matters that Parliament could be left itself to deal with about questions of disqualification and part of Mr Day’s case is your Honours should give a narrow construction to 44(v) and leave it to Parliament to figure out what is needed by way of additional disqualifications.

Mr Barton, having expressed some concern about that topic in response to an amendment moved by Mr Reid, Mr Reid came back and said, in effect, it is critical that the Constitution, on its face, clearly states the principles to guide the proper conduct of parliamentarians and the kinds of interests that are not to be permitted and the amendment was passed. So we submit that dealing with these provisions one has to strive to give them work that accords with the purposes that they were adopted to serve and that that is not achieved by the narrowest reading available.

I will not, in the time, take you to it but we have given your Honours extracts from the final report of the Constitutional Commission in the further bundle of material which also contains some useful discussion of 44(v) and recognises the possibility that it does extend to a conflict of interest purpose in addition to dealing with executive influence.

So, for those reasons, in our submission, as a matter of history, Chief Justice Barwick was not correct in confining the provision to the narrow purpose that he identified and that that purpose then flowed through the entirety of the reasoning that his Honour then adopted.  Similarly, textually, we submit that it is important, in identifying the kinds of interests that can trigger this provision, to pay fair attention to the proviso at the end of the clause.  So 44(v) says:

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 [members].

In our submission, it is necessarily implicit in that formulation that, but for the proviso, an interest that existed by reason of being a shareholder of a company that had a contract with the public interest, would be capable of having an indirect interest in that contract.  The way that one avoids that indirect interest is if the company is big enough and the interests are in common with the other shareholders.  So that for a large company where all you have is an interest in common with other shareholders, no problem.  But, in the context of a smaller company, you can have a pecuniary interest in the contracts made by the company itself and the delegates in the Convention Debates clearly proceeded on that footing.

Chief Justice Barwick rejected that submission because he said it is well established as a matter of law that a shareholder does not have a legal interest in the contracts by the company. That may be true but it does not deal, in our submission, at all with the indirect language in section 44(v) and we submit that work needs to be given to that test.

We accept, your Honours, that there are questions of line drawing involved in the application of section 44(v) and the identification of whether or not there is an indirect pecuniary interest. Those questions of line drawing are not peculiar to this area of the law. Your Honours will recall that in Ebner v Official Trustee, which I accept was a different context and your Honours do not need to go to it, but it is 205 CLR 337, if you wish to. It was asserted that there is an automatic disqualification rule for judges if they have a pecuniary interest in any of the parties who are appearing before them, and the Court rejected the existence of that rule and said, well, you cannot draw bright lines because the concept of the pecuniary interest is itself a concept that is vague and uncertain and requires judgments to be made as to whether an interest of the relevant kind exists.

The same kind of judgments are called for in the context of section 44(i) of the Constitution, which is the foreign power type provision that was considered in Sykes v Cleary, and if your Honours look at 44(i):

acknowledgment of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or a citizen of a foreign power –

there are no words of qualification in the constitutional text, yet the Court accepted in Sykes v Cleary that in applying that provision it was relevant to ask whether a person had taken reasonable steps to divest themselves of their foreign allegiance. That was held by Chief Justice Mason and Justices Toohey and McHugh at 108, Justice Brennan at 113 and Justice Dawson at 131.

So all of their Honours accepted that an evaluative inquiry about the reasonableness of the steps that had been taken by a person was a necessary part of deciding whether a disqualification under 44(i) arose, and that was a conclusion arrived at because their Honours, applying the purpose of the provision, recognised that it could not be given full operation according to its strict and literal terms and that it needed to be read in light in a way that would achieve the purpose to be served.  That is, we submit, entirely consistent with the approach that we urge upon the Court.

Finally, in relation to Webster, Chief Justice Barwick partly explained a narrow construction of the clause by reference to his characterisation of the provision as penal.  We submit in relation to that that, first, that is a presumption of interpretation that has lost much of its force, as this Court has regularly recognised, including, for example, in Beckwith v The Queen, but, perhaps more importantly, that is an approach that preferences the interests of an individual parliamentarian over the systemic public interest that section 44 is designed to serve in protecting the integrity of the Parliament.

If it were right that section 44(v) should be interpreted as a penal provision, then the same should be true of each of the other paragraphs in section 44 of the Constitution, all of which have the same consequences where they are attracted, but one does not see in the decisions of this Court concerning those other paragraphs any reading down or narrow reading of the paragraphs in order to avoid a penal consequence. It was argued in Sykes v Cleary that section 44(i) should be read down in that way by reference to Webster, relying on Chief Justice Barwick’s observations. 

The only judge in Sykes v Cleary who accepted that argument was Justice Deane who as counsel had put the argument in Webster that the provision should be read down as a penal provision. No other member of the Court accepted that argument. Justice Deane dealt with it at 116, but the other members of the Court all interpreted section 44(i) in accordance with the wider of the two interpretations that were identified in the judgments because it was the wider of the two interpretations that better served the constitutional purpose, and Justice Deane, of course, dissented in accepting that argument in Sykes.

In conclusion, the test that we invite the Court to adopt is that a parliamentarian should be held to have a direct or indirect pecuniary interest in an agreement in circumstances where objectively there is a real risk that the parliamentarian could be influenced or perceived to be influenced in their parliamentary affairs by an expectation of monetary gain or loss arising from the existence, performance or non-performance of an agreement with the Commonwealth Executive.

Our submission is that that reading of the kind of interests that attract the operation of 44(v) is a reading that aligns the operation of the clause with purposes that its history reveals it was intended to serve and it had the practical effect of dealing with one of the objections that are sometimes made to this clause about how it operates in circumstances where a parliamentarian deals with the Public Service on terms that are exactly the same as are available to the public at large.

It is said that that could still be an agreement.  In the old days when we had the government-owned Commonwealth Bank or government insurance, it was said that, if you have a contract with the bank or with the insurance company that that could disqualify you under 44(v), even though the contract is exactly the same as a contract that could be entered into by any member of the public.

In our submission, the provision should not be interpreted as having that operation but that it would not have that operation if interpreted as we urge because in circumstances where a parliamentarian deals with the Public Service in circumstances that are available to the public at large and on the same terms, objectively one would not find a real risk that the parliamentarian would be influenced in the conduct of their affairs.

GAGELER J:   Can we just test that very briefly?  If you go to page 54 of your further bundle of material, within the final report of the Constitutional Commission there are a couple of quite interesting difficulties.  Adopting your approach, what is the position in relation to paragraph (a) and (b) at the bottom of page 54?  You see you have the position of a member of Parliament who is a pharmaceutical chemist, not a member of the public but a pharmaceutical chemist who received payments under the National Health Act, and then you have a parliamentarian receiving payments from the ABC for being interviewed.

MR DONAGHUE:   Your Honour, our test we accept will always call for an evaluative judgment based on all of the circumstances.  Having said that, in my submission paragraph (b) is, on our test, likely to be a source of difficulty because the interviewing of a parliamentarian is likely to be connected with the status of that person as a parliamentarian. 

So in the same way as we say dealing with a parliamentarian about their electoral office is, by its very nature, a kind of dealing that is not available to the public at large and does carry objectively the risk of influence, the pharmaceutical example might well be different because, if that person is receiving payments of the same kind as any chemist would receive for the conduct of a business, that would not have that risk associated with it because the interest that causes the dealing with the government is in common with the public at large. 

GORDON J:   Can we just test that?  If you look at 44(v) and look at the limitations in 44(v), they are prescribed by:

direct or indirect pecuniary interest in any agreement –

What happens if the person who is the subject of (a) is the Minister for Health?

MR DONAGHUE:   Well, that is why I introduced my answer to Justice Gageler by saying it is a fact intensive evaluative inquiry.  If the person is the Minister for Health, then ‑ ‑ ‑

GORDON J:   There is no limitation by the person within this clause.  So in effect, you must add a rider to it.

MR DONAGHUE:   Your Honour, the submission that I have just been putting is designed around or is intended to assist in identifying the kinds of indirect pecuniary interest with which the section is concerned in circumstances where to apply it to every possible indirect pecuniary interest would not align with the purpose of the clause it is intended to serve.  So it is a narrowing of the provision to align – a purpose of reading of the provision that involves a narrowing of its literal operation so as to align with its text, in the same way that the Court in Sykes v Cleary narrowed 44(i) to align with its constitutional purpose. 

In the event that the person is the Minister, then I accept what your Honour says that, on the face of the provision, is not identified as relevant but would seem, in our submission, a very relevant fact in identifying whether or not there was a conflict of interest revealed by the dealings between the parliamentarian and the Commonwealth Executive.

GORDON J:   The difficulty when you look at Ebner and the questions about judges, of course, the matter, the interest and the time is static.  One can make the assessment exactly at that point.  Here you have got something which is both anticipatory in its nature as well as involving some future discussion at well.  What is wrong with just a rule which says you cannot do it, absent this – whatever additional words you have given us?

MR DONAGHUE:   That you just cannot ‑ ‑ ‑

GORDON J:   The real risk.  I mean, for example, your pencil argument would fall way ‑ ‑ ‑

MR DONAGHUE:   Yes.

GORDON J:    ‑ ‑ ‑ because it is not an executory contract – money’s worth has been given.  So there is no pecuniary interest or direct or indirect arising from an executive contract in that sort of argument.  What is left ‑ ‑ ‑

MR DONAGHUE:   But we say, your Honour, you do not need an executory contract.

GORDON J:   No, I accept that.  But, assuming for the moment that is at least part of it, what is the risk of a rule which does not conclude those first few lines of your test?

MR DONAGHUE:   Well, your Honour, it is really a risk of a broader disqualifying operation than, in our submission, the purpose of the provision needs to turn – needs to have.  So it would have the advantage of perhaps some increased level of certainty but the disadvantage of an over‑broad automatic disqualification rule.

KEANE J:   Is there any narrowing of the scope of 44(v) that can be discerned in a comparison between 44(iv) which speaks about dealings with the Crown and 44(v) which speaks about a dealing with the Public Service of the Commonwealth, in the sense that, so far as those examples in (a) and (b) are concerned, it might be said that they represent agreements with the Crown – that is to say, with the Crown or an emanation of the Crown – that they do not have that notion of connection with the actual administration – the actual execution of the affairs of government at the level of the Public Service of the Commonwealth?

MR DONAGHUE:   Our submission, your Honour, is that the Public Service of the Commonwealth is broader – is going to be, in its operation, and that one does not ‑ ‑ ‑

KEANE J:   The Public Service of the Commonwealth is not speaking about the abstract notion of serving the Commonwealth.

MR DONAGHUE:   No.

KEANE J:   It is actually about an institution.

MR DONAGHUE:   It is.  It is – in contrast with the earlier form which was interpreted as being about serving the public interests.

KEANE J:   Quite.  So it is not about the public interest; it is actually about dealing with an institution.

MR DONAGHUE:   Yes.

KEANE J:   And it is dealing with an institution that is described differently from the Crown.

MR DONAGHUE:   I accept that that is so.

KEANE J:   So you do not see that as having a narrowing effect; you see it as having a broadening effect?

MR DONAGHUE:   Yes, we do, your Honour.  We submit that in this case one does not – there was an issue that fell away about whether or not this was a contract with the Public Service of the Commonwealth.  This was a contract with the Department of Finance on behalf of the Commonwealth.

KEANE J:   That is right; they are the same ‑ ‑ ‑

MR DONAGHUE:   So we submit it is core ‑ ‑ ‑

KEANE J:   Quite.  There is no question here:  this is a dealing with a department of government.

MR DONAGHUE:   So at the margins, when you have government business enterprises one might start to get a question:  is that the Public Service of the Commonwealth within the meaning of this provision?  And we submit that is a matter that should await another day – the full boundaries of that clause – but we have not sought to narrow the provision by reference to that.  We will give that some further thought, your Honour, over lunch.

EDELMAN J:   One of the reasons why you seek to narrow the provision by reference to risk of influence in parliamentary affairs and so on, is it because you read “in an agreement” as effectively being any pecuniary receipt that arises directly or indirectly from an agreement?

MR DONAGHUE:   Well, we do read it in that way, yes.  Your Honour, in response to your Honour Justice Gageler’s question, we would also note this section of the Constitutional Commission’s report deals not just with 44(v) but also with 45(iii) which, as I have noted, is historically tied.  Those examples would all seem to run into problems under 45(iii).

GAGELER J:   Of course, but I was interested in 44(v), yes.

MR DONAGHUE:   Yes, in 44(v), yes.  Indeed.

GAGELER J:   And while you are addressing me, there is still legislation for the purposes of section 46 of the Constitution, is there?

MR DONAGHUE: There is. I will need to turn up the name of it but there is, very dramatically reducing the severity of the consequence that section 46 contains. Your Honour, Justice Gageler, and I promised to come back to a complete answer, could I refer your Honour to paragraph 61 of our written submissions for a complete statement of the interests upon which we rely.

GAGELER J:   Thank you.

MR DONAGHUE:   Thank you, your Honours, for the extra time.  Unless there are further questions, those are my submissions.

KIEFEL CJ:   Thank you.  Yes, Mr Kirk.

MR KIRK: Your Honours should have our three‑page outline. My time is even more constrained than that of my learned friend, so I hope you will forgive me if I seek to be a bit staccato. But may I start, as indicated in the oral outline, with a few submissions about the construction of section 44(v), and can I start by going back to the text of the provision and in that way seek to develop our argument a little? Looking at the text it starts, of course, with the word “has” – present tense – not “had at the time of entry” or any other such words. It is:

has any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth –

There does not seem a lot of dispute about what “pecuniary interest” encompasses.  Chief Justice Barwick referred to the possibility of financial gain.  We would also extend that to financial loss.  I think Mr Day speaks about an interest sounding in money or money’s worth.

Obviously critical is that it is not just direct but also indirect pecuniary interest and in any agreement with the Public Service of the Commonwealth these are expansive words.  “Indirect”, as my learned friend the Solicitor-General put, means of course that the person in question need not be a party to the agreement.  That is also confirmed by the proviso, the qualification, which makes clear that you need not be a party to the agreement.

Because it is not just a matter thus of legal relations, it necessarily raises practical questions about having an indirect, but in some sense meaningful, possibility of financial gain or loss because of some agreement with the Public Service of the Commonwealth.  The proviso of the 25‑member company would also tend to indicate that the degree of the pecuniary interest or the indirect pecuniary interest need not be all that great. 

Now, I accept it is only a proviso.  If it is above that, you are safe, but the fact that they have chosen that number of 25 persons and the Convention Debates illustrate that that was the size of what we now call “proprietary companies” indicates it is quite an encompassing and fairly strict disqualification.

In relation to the purpose of the provision, we respectfully adopt what the Attorney has said as to the purpose – namely, that it is not just about influence one way, that is to say, for the Executive to influence parliamentarians as to their parliamentary affairs, but it captures influence in the other way, that is to say, the parliamentarian taking advantage of their position to obtain financial advantage.  In our written submissions we refer to the sorts of integrity concerns, which this Court recognised in a different context but a related context in McCloy v New South Wales as being legitimate parts of the system of government established by the Constitution.

The proviso makes clear, of course, that one cannot avoid the effects of the provision by the interposition of a company.  We would add or by any other mechanism including a discretionary trust.  It becomes, as I put earlier, a practical question about whether a person has a direct or indirect pecuniary interest in the agreement.

Now, one area we do differ from the Attorney – and this is related to the question your Honour Justice Gordon asked of my learned friend – is in relation to not to what the purpose of the provision is but what significance that has.  Both the Attorney and Mr Day – Mr Day reflecting what the Chief Justice did in Webster – seek to, in effect, incorporate the purpose as part of the test.  Indeed, the way the Attorney puts it – a similar point may be made about Webster, with respect, it is actually that statement of purpose which becomes the core mechanism of the test.  That is really what you are testing on that approach. 

We would respectfully submit it is a little clearer and simpler and stricter than that.  Namely, if the words are satisfied, and leaving aside de minimis interests because the law does not concern itself with trifles, leaving those aside, if the words are satisfied in light of all the practical circumstances, then the disqualification arises.  Now, my learned friend referred to Ebner.  Can I briefly take your Honours to Ebner to perhaps make the converse point to what my learned friend was putting, it is CLR 337. 

Could I take your Honours to page 356, paragraph 54, in the plurality judgment?  Without reading out the words, the point their Honours were there making was that one of the strands of the apprehended bias case law relating to judges was a suggestion, in some cases, that there was an automatic disqualification where a judge had a direct pecuniary interest – however small – in the outcome of the case over which the judge was presiding.  As they note in the last sentence of paragraph 54, some judges had suggested that was subject to a de minimis qualification.

Their Honours rejected that approach, and part of their reasoning for that is found back at paragraphs 24 to 26 on pages 348 to 349, particularly paragraph 26, where their Honours make the point that to talk about direct pecuniary interest can be too narrow and, also, it does not encompass other sorts of interests.   Of course, that led their Honours – that was part of the reasoning of their Honours to adopt or confirm the generic test, if I can put it that way.  No special categories, just a generic test.  But here we have a strict rule directed to pecuniary interests. 

So, whilst my learned friend seeks to say, well, Ebner suggests we should go to some broader test, we would say it actually illustrates the contrary position.  It rejected a strict rule because it perceived we should have a general rule encompassing a range of possibilities.  But here the framers provided a specific rule and, in our respectful submission, that confirms what we respectfully put, that the purpose should not become the test.  The text should supply the text. 

And yes, that does, we acknowledge, lead to some potentially strict results, but it would provide a relatively bright and clear line.  That is not to say that one still does not have to look at the facts because, I have said, it is always going to be a factual question for indirect interests.  But it is a brighter line, in our respectful submission, than either approach of the other two parties.

If I could then make some brief submissions about the factual issues, can I respectfully adopt what my learned friend, the Solicitor‑General, has said, and I will seek to be brief here, if your Honours will forgive me.  At the heart of the minor premise of this case, we respectfully submit, it can be put fairly simply.  As your Honour Justice Gordon found, and my learned friend referred to – and we quote this in paragraph 6 of our outline – the arrangement was that the Fullarton Road Trust would hold the property, collect the rental allowance, pass the rent back to the Day Family Trust with a result there would be no profit or loss in the Fullarton Road Trust. 

Your Honour’s finding there reflects – if I can go to page 503 of court book 2 – a critical email of 2 December 2013 from Mr Rasera to Mr and Mrs Smith, cc to Mr Day.  Mr Rasera was there providing – manifesting the advice he provided to Mr Day.  If your Honours look at about line 40, the whole context of this was that Mr Day had:

sought advice on establishing an entity in which the [property] can be housed so as to be able to avail himself of the rental allowance provided by the government.

Then the point about the pass ….. of rent is in the second‑last paragraph:

The trust will simply hold the property and collect rent . . .  That rent will then pass back to the Day Family Trust so there will be no profit nor loss in the new trust.

What happened in the implementation, albeit rent was never actually paid, was that the money was directed to be paid into Mr Day’s bank account.  The whole context, the whole purpose, the whole effect, if it had finally been implemented, was so Mr Day could obtain the rental allowance from the Commonwealth, and the final step was that the money was being paid in fact into his own bank account.

So did he have a pecuniary interest in the sense of obtaining financial gain from the lease where he was not a party?  In our respectful submission, absolutely yes, that was always the purpose, it was the effect.  It was always what was sought to be achieved.  We then do draw in as well a broader range of circumstances, and we have sought to capture some of those in paragraph 6, and my learned friend referred to others, which are consistent with that fundamental purpose and effect to show that this was an unusual arrangement.  We picked up, for example, that no deposit was payable, although the sale agreement required that payment be made on settlement.  No cash consideration has in fact been paid to date.  Costs of the transfer were paid by Day or B&B Day.  No adjustment for rates or taxes.  And also (c) about transfer fees, and I think the rest of the points were made by my learned friend.

Your Honour Justice Edelman asked a question of my learned friend towards the end about whether it is enough that the money be received.  The words of the provision do speak about an indirect or direct pecuniary interest in an agreement.  The circumstances must be such that you can characterise the interest as being in the agreement.  So one of the examples my learned friend Dr Bell gives is to say, well, what about, say, a married couple, wife is a senior public servant, husband reasonably expects that some part of the wife’s salary will pay the mortgage. 

In all the circumstances, it is most unlikely that – yes, the husband stands the benefit but is it an interest in the agreement?  Unless there were very unusual circumstances, it would not be, in our respectful submission.  The sorts of circumstances we evoke here, plus the nature of the discretionary trust, the fact that Mr Day, for example, even after he ceased being a director of B&B Day on 30 June 2014, did some things on behalf of B&B Day – and that is reflected in the finding of your Honour Justice Gordon at paragraph 65 of that judgment.

Drawing all of those circumstances together, they not only serve to confirm, in our respectful submission, that as a matter of practicality there was a pecuniary interest here, but also that it was an interest in the agreement, and I come back to where I started.  The whole purpose of this was to house the property so Mr Day could receive the rental allowance.

EDELMAN J:   It is sufficient, then, is it, to look at the purpose only from Mr Day’s perspective rather than from the perspective of both parties?

MR KIRK:   You mean both parties to the agreement, your Honour?

EDELMAN J:   Yes.

MR KIRK:   I think that must be right, in our submission, because – ultimately because of the word “indirect”.  Because you do not have to be a party, the contractor on the other side, the public service side, may not know a whole range of these elements.  Now, because our version of the test does not incorporate the purpose feature, we do not need to draw that into account, but even insofar as the purpose feature comes in, once the agreement is entered, then there is the potential for influence there, conceivably.

My learned friend referred to some aspects of Webster, and I think your Honour Justice Gageler might have asked a question about it being on foot, or perhaps actually it was your Honour the Chief Justice.  If I can go back to Webster actually at (1975) 132 CLR 271 at page 280, even there – and we like the Attorney respectfully submit it is too strict an approach, but even there his Honour spoke at about point 3 about:

could conceivably influence the contractor in relation to parliamentary affairs by the very existence of the agreement –

and then a little further down, about seven lines from the end of the paragraph –

it need not be certain, at least it must be conceivable, and in any case the possibility will arise from the continuing nature of the agreement.

So even his Honour seemed to accept that the very existence of agreement on a purposive approach of “could conceivably influence” may well be enough, but to come back to your Honour Justice Edelman’s question, no, the Commonwealth does not need to know and may not know all the circumstances relating to it.

In light of the time, that might be all I say about the facts because then I need to engage with question (b) which is of, I will be frank, obvious and significant concern to my client which is about filling the vacancy.  Can I seek to articulate what our position is in summary and then develop the argument?  As we have put on page 2 of the outline, starting at paragraph 10 – first let me summarise, if I may.  In paragraphs 11 and 12, we put two versions of the argument.  They overlap but they are two distinguishable arguments.

First, that if there is a two‑candidate group and one of those candidates is ineligible, then the group’s square, that is above the line, is not properly included on the ballot paper and a vote in that square should be treated as a nullity, or further in the alternative, at least in circumstances such as the present, to allocate votes to the second candidate would distort the voter’s real intention and that should not be done.  Let me recognise at the outset that particularly with the first argument, I need to grapple with what the Chief Justice said in Wood and seek to distinguish it as best I may and also to put it in the current context.  I recognise that is not an easy task but that is the task that we face and we seek to put to the Court.

The first point to note, in a sense, in dealing with this sort of question – question (b) – is to identify where the legal norms come from. Assuming that Mr Day – and one must assume for this question (b) that Mr Day has been found to be ineligible; the Constitution does not address what happens then. It does not address what the status of the election is, and, of course, here we are dealing with that first part, you might say, of section 44 where the person was incapable of being chosen as opposed to where the agreement is entered later whilst they are sitting as a senator.

The Constitution does not address it. It touches on it indirectly in a range of ways. For example, section 7 refers to the names of the senators chosen being certified by the State Governor to the Governor-General but it does not directly grapple with the issue. Nor has the Parliament done so. It has dealt with deceased candidates, and I will seek to come to deal with that analogy, as the Commonwealth puts it, but it does not deal with this issue.

The statutory guidance, such as it is, is to be found in section 360 of the Act.  Section 360 relevantly empowers the Court in (1), (4), (5) and (6) to make relevant declarations about whether someone returned as elected was not elected or who is not returned is elected or that the election is absolutely void.

Then subsection (2) of 360 identifies the criterion, namely “the Court in its discretion thinks just and sufficient”.  This Court, of course, in Sue v Hill indicated that that does not invoke some open-ended discretion but invokes an application of legal principle.  I will not take your Honours to it now but it is paragraphs 42 and 45 of the plurality in Sue v Hill and 149 of your Honour Justice Gordon’s judgment.

Given that there is no direct guidance from the Constitution or the Act, in the end it is for this Court to resolve how to address the issue consistent with legal principle, as I said. That then leads to how the Court addressed it in Wood.  So if I can take your Honours to Wood 167 CLR 145. Obviously, with respect, all of Wood is important.  I will just pull up a couple of important places in the text.  Page 165, in the Full Court judgment, about 11 lines from the bottom beginning:

The purpose of the poll is to choose in accordance with the Act –

their Honours say –

no effect can be given for the purpose of the poll to the placing of a figure against the name of a candidate who is not qualified to be chosen . . . is a nullity.  That is not to say that the ballot papers are informal.  An unqualified candidate who has been duly nominated, that is, one whose nomination complies with the form appeal requirements . . . is a candidate whose name is properly included on the ballot paper.  But in the scrutiny, the indications of preference . . . cannot be treated as effective by this Court once . . . the candidate has been held to be invalid.  That is no reason for disregarding the other indications of the voter’s preference as invalid.  The vote is valid except to the extent that the want of qualification makes the particular indication of preference a nullity.

Now, pausing there, we give emphasis to that sentence about “except to the extent that the want of qualification makes the indication of preference a nullity”. 

In a sense, that identifies the question and we say that is not just the marking in the square below the line against the candidate’s name, but, for reasons I will seek to develop in a two‑candidate group, also the marking in the square above the line.  Their Honours then go on to refer to the analogy of deceased candidates, and I will come back to deal with that, if I may.  Then the last sentence of that paragraph:

By construing Pt XVIII in this way, 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 Act – can be ascertained.

So that is one key statement of legal principle, the true intent of the voters consistent with the Constitution and the Act. On page 167, their Honours rejected an argument that there should be a supplementary election for all 12 persons. The 1987 election like the recent one was a double dissolution. Their Honours say, fourth line:

the validity of the election of the eleven persons duly returned as elected is not now open to challenge.

The same applies here.  Mr Day was the twelfth candidate.  No question could conceivably arise about the other 11.  They are returned and no question can be raised about the validity of their election.  Their Honours then go on to refer to a Northern Territory decision of Justice Nader in Hickey v Tuxworth where his Honour in a single member seat in the Northern Territory Assembly held the election void.  Can I take your Honours to about point 5 where their Honours say:

With respect, the conclusion in Hickey v Tuxworth cannot be accepted, at least for the purposes of the Act.  If the unqualified candidate’s nomination in that case was formally correct and his name was properly on the ballot paper, it is difficult to see how the election miscarried.

The reason I mention that is that, with respect, there is some tension between that rejection of Hickey v Tuxworth and what subsequently has occurred in this Court’s case law in Sykes v Cleary and in Free v Kelly.  Finally, if I could draw attention on this page to the last sentence of that paragraph:

In any event, in the present case, it is unreal to suggest that the presence of Senator Wood’s name on the ballot paper has falsified the declared choice of the –

other eleven.  That repeats the point I have already made.  The formal answer to the question is at page 169, the relevant question being (b):

The vacancy may be filled by the further counting or recounting of ballot papers cast –

So no need for a new general election for the 12, nor an election for the one, because that would of course change the voting system.  It is a recount.  Then an issue arose as to how that was to be done and his Honour the Chief Justice dealt with that.  If I could take your Honours to page 173, the Electoral Commissioner through the Attorney‑General proposed specific directions as to how the recount should be done and item 4 is the one relevant to my argument, namely, it was put on behalf of counsel for Mrs Nile that the box above the line for the NDP should be ignored.  The relevant part of the argument is then addressed over the page at page 174 where it is noted that:

Counsel for Mrs. Nile then submits that I should not give direction (4) because it requires that counting take place on the footing that voters could adopt the group voting ticket of the Nuclear Disarmament Party . . . The argument is that Robert Wood . . . could not join with Irina Dunn –

as a group, and the basis of that is that you cannot have a group of just two.  I should note there was a little exception to that at the time.  Your Honours may recall from the Day Case last year that an incumbent senator could have a square above the box but others could not and Mr Wood was not an incumbent.  Now, his Honour rejected the argument saying:

This submission is again at odds with the Full Court judgment, the effect of which is that, though Robert Wood was disqualified, his nomination was in order and his name was properly on the ballot‑ paper.  The Court observed –

that is from page 167 –

The problem of want of qualification arises under the Act if an unqualified candidate is elected, but an election is not avoided if an unqualified candidate stands.

His Honour goes on:

The point is that only the election of Robert Wood miscarried so that a primary or preferential vote for him must be disregarded.  But in other respects the election for the Senate was valid and in counting the votes it is necessary to have regard to the group voting ticket process as it related to the Group E candidates.

That was a central feature of the ballot paper:

As the electors were entitled to vote in accordance with a group voting ticket process, it must be taken into account.

Lying behind, in our respectful submission, some of what his Honour says there is a notion of taking practical account of the consequences of adopting one argument or another.  And, the consequence of adopting Mrs Niles’ argument would be that the entirety of the vote would be disregarded because under the system as it then applied, one only numbered “1” or “X” above the line, that was it, and then it followed the list or the direction of the group.  So to cut out votes above the line would be to entirely throw away those votes.

That of course is no longer the case because of the legislative changes last year discussed and upheld in Day’s Case last year.  I will not take your Honours to it but, pursuant to section 239(2) of the Act, your Honours will recall voters are required to mark at least six squares above the line and they may in fact mark more.  There is also, as it happens, a scrutiny provision which says if you mark less, you can still count it to the extent you count it, but you are supposed to mark at least six.

The consequence of that change is that the effect is now markedly different.  If our argument was accepted, one would not be throwing away the entirety of the vote but one would be throwing away one‑sixth of it for a standard vote, perhaps more or less in some circumstances.  Now, we accept that is only the start of an argument; it is not an argument sufficient of itself.  It is putting it in context.

Can I then seek to grapple with the issue of whether the candidate’s name and the group name was properly on the ballot paper.  There is, with respect, a little ambiguity in that phrase.  The way the Full Court addressed it in Wood seemed to be directed to whether it would lead to invalidity of the ballot paper. We do not put that for a moment. But that is different from saying it is properly on the ballot paper in the sense of it is something to which legal significance should be given in the legal context. And the legal context here of course starts with section 44(v) – 44 generally, actually – which speaks about being incapable of being chosen. That is the foundation of all this.

Now, in Sykes v Cleary, the majority – if I could take your Honours, briefly, to it, it is 176 CLR 77, at page 100. From page 99 onwards, their Honours dealt with a narrow view of “chosen” or a broader view of “chosen”. The narrow view being when the poll is declared, and that is the view Justice Deane in dissent accepted, or a broader view that it encompasses the process. As your Honours know, they went for the broader view and that is crystallised at page 100 at about point 3:

Reflection on these considerations persuades us that the words “shall be incapable of being chosen” refer to the process of being chosen, of which nomination is an essential part.

Where nomination is an essential part of the ultimately constitutional process, that is important in considering as to whether the name is properly on the ballot paper where the person is incapable of being chosen.  Then one goes to the statutory provisions relating to nomination.  If I can take your Honours to the Act starting at section 162, it is about page 197 of my printout – I am not sure if that is the same printout as your Honours.  The first provision in the relevant part of 162 says:

No person shall be capable of being elected as a Senator or a Member of the House . . . unless duly nominated.

In our respectful submission, that encompasses the context of the Constitution. It must be read in its constitutional context. Section 163 establishes qualification for nominations. It does not say “must comply with section 44”. It is establishing additional qualifications as opposed to dealing with disqualifications.

If one then goes to 166, that deals with the mode of nomination.  The relevant mode here is that in (1AAA), form CC – and that is recognised in the agreed facts ‑ sets out certain requirements.  Then in form CC, if your Honours could keep your fingers on that page but go to about page 467 in Schedule 1, your Honours will find form CC and that includes a statement about halfway down in the fourth dot point:

·I am not, by virtue of section 44 of the Constitution, incapable of being chosen …

and declares as follows:

·I am qualified under the Constitution and the laws of the Commonwealth to be elected as a Senator –

Part of the context here, too, is that this particular form is put in by the registered office of the party but it has to also be signed by the candidate, as your Honours will see over the page.  Going back to 166 – in fact then turning to section 167(1):

Nominations of candidates for election to the Senate must be made to the Australian Electoral Officer.

Section 168 is the key statutory premise for this part of my argument:

Two or more candidates for election to the Senate may make a joint request:

(a)that their names be grouped in the ballot papers; or

(b)that their names be grouped in the ballot papers in a specified order.

Normally, a party will specify the order.  So the premise is that two or more candidates may make a joint request and we say that means candidates properly nominated.  Section 169 is about notification of party endorsement.  Section 170 says:

A nomination is not valid unless, in the nomination paper, the person nominated -

makes the declaration.  That is (b), about being qualified, reflected in Form CC.  And I have to acknowledge, too, 172, limiting the ability of the Electoral Officer to reject a nomination.  I note the Full Court in Wood, at 164, did refer to, well, perhaps in a mere abuse of the right or of a nomination or an obvious unreality, perhaps the Electoral Officer can reject it.  In any event, whatever the Electoral Officer can do, we are speaking here about ultimate constitutional requirements.

BELL J:   But does this argument require departure from the analysis of the Full Court in Wood?

MR KIRK:   We submit not, your Honour.  We do recognise that the Full Court in Wood used the language of “properly on the ballot paper”.  The name is “properly on the ballot paper”, even for an ineligible candidate.  But we would respectfully seek to explain that as being directed to the argument that the ballot paper is not invalid.  It does not invalidate the ballot paper.  But that is a different point from saying it has legal significance for, relevantly, being part of the foundation of a two‑person group where the necessity is you have two people.

BELL J:   Well, the NDP was a two‑person group.

MR KIRK:   It was.  I accept that this part of my argument is directly against what the Chief Justice said, and the Chief Justice ‑ ‑ ‑

BELL J:   And the Chief Justice relied for what he said on the analysis of the majority at 165, 166 of the report.  Now, I am having some difficulty understanding how your argument is reconciled with that analysis.

MR KIRK:   Your Honour is quite in what you say, with respect.  But we seek to say his Honour the Chief Justice in effect read the Full Court, in speaking about the name properly being on the ballot paper, as meaning it has relevant legal significance.

We seek to say, no, the argument being rejected by the Full Court was about invalidity of the ballot paper, and that is a subtlety different point.  The other basis on which we seek to distinguish Sir Anthony Mason is, of course, that the consequences now are very different in the way I sought to explain of accepting the argument.

There is one other point I wanted to make in this regard.  Remembering the words in 162, “are duly nominated”, in Sykes v Cleary if I can take your Honours back to that briefly at 176 CLR at page 125 in the dissent of Justice Deane, his Honour there noted an argument of which mine is an echo, in a sense. Justice Deane, as I have indicated, rejected the argument that “chosen” means including the nomination process.

His Honour recognised, well, even on my narrow view of “chosen”, a problem could still arise with “duly nominated”, and his Honour noted that argument but did not feel the need to resolve it because his Honour recognised his argument was in dissent. We, in a sense, embrace that issue raised by Justice Deane to say “duly nominated” in 162, which then feeds through to two‑person candidate groups in 168, does mean, consistent with the Constitution, capable of being chosen.

To put this - another way if I can seek in a sense to answer your Honour Justice Bell’s question, in the Full Court in Wood they did of course emphasise that there is some nullity involved here, namely a marking against the ineligible candidate’s name is a nullity.  That is what their Honours said at about 165 point 8.  Then as I referred to earlier, at the top of 166 they then spoke about:

The vote is valid except to the extent that the want of qualification makes the particular indication of preference a nullity.

We respectfully embrace that and say there is no reason properly to limit that to the underlined box where 162 and 168 build on proper nomination, the nullity can and should in a case such as this extend to a two-candidate group for the square above the box.

We also seek to make the point that it was a contravention of the Act.  So, assuming Mr Day had a pecuniary interest, by doing what he did and filling in his form, without any hint of a suggestion of mens rea or anything like that, it was a contravention of the Act, because the Act is premised on candidates being eligible, and if they are not ultimately eligible that must be a contravention of sections 162, 170 and 172.

That links to what this Court held in Sue v Hill because in Sue v Hill this Court held, the High Court sitting as the Court of Disputed Returns, as jurisdiction to determine petitions raising constitutional ineligibility.  If I can go to Justice Gaudron’s judgment in Sue v Hill (1999) 199 CLR 462 at page 512, paragraphs 124 to 125. Her Honour referred to what an “illegal practice” means. It was defined then, as now, as a contravention, relevantly, of the Act. Her Honour says, second‑last sentence of 124:

That expression means failure to comply with a provision of the Act.  It does not mean the commission of an offence.  

Her Honour then went on to refer to then provision 339(3) of the Act which did make it an offence.  That provision is no longer in the Act.  As we refer to in our written submissions, the Commonwealth pulled things like that out of the Act just to rely on the Criminal Code.  That does not change the fact, in our respectful submission, that it was a contravention of the Act and in no part of her Honour’s analysis was to suggest that Ms Hill had mens rea, or anything like that.  On the contrary, her Honour went out of her way to say – page 506, paragraph 104, last sentence:

It does appear that Mrs Hill understood that, at all relevant times from the grant of citizenship, her sole loyalty was to Australia.

In other words, Mrs Hill acted perfectly honestly.  So, her Honour’s finding cannot depend on that.  Justice McHugh, in dissent, took a different view.  I would draw your Honours’ attention to page 544, paragraphs 216 and 217.  His Honour said, “illegal practice” cannot include lack of qualification, including lack of the constitutional eligibility. But that is wrapped up in his Honour’s dissent.  

As for the plurality, their Honours, with respect, do not grapple with this issue directly.  The clearest way it is dealt with is at page 475, paragraphs 11 and 12.  In 12 their Honours refer to the “oddity and inconvenience” which would result on the contrary view.  So where we respectfully submit here it would be an illegal practice in the sense of a contravention of the Act, the candidate is not duly nominated.  The factual premise of section 168 is that you have two candidates, we would say, properly nominated.  Here, the premise of section 168 is not fulfilled and there is no proper group and the effect of that argument is not to disenfranchise the entirety of the vote.

Now, the Attorney has indicated that the answer to all this is said to be section 272 of the Act, which is about page 315 of the printout, within the scrutiny provisions.  And your Honours may recall from the Day Case, if I can paraphrase it this way, the effect of this is that if you put a marking in the square above the line, that is a deemed vote down the column.  So if I vote 1, X party, and they have got six candidates, then one numbers 1, 2, 3, 4, 5, 6 and if I vote 2, Y party, that becomes 7, 8, 9, 10, 11, 12.  So the Commonwealth says, looking at the legal intent of the voter, picking up that phrase from the In re Wood decision, that supplies the legal intent. 

Our response is that the argument presupposes there was a valid box there and, if there was not, that is the end of the matter.  It does not reflect the true legal intent in circumstances where the constitutional and statutory scheme has not been complied with.  Thirdly, and this leads to the second part of the argument, the test is not just legal intent but also distortion of the voter’s real intentions, and I will come back to that in a minute.  Your Honour, I should be able to finish in about 10 minutes.  I note the time.  Is it all right if I keep going until 1 pm?

KIEFEL CJ:   We will sit on until 1 pm.

MR KIRK:  Thank you, your Honour.  Before I get to the second version of the argument, I said I would deal with the deceased candidate analogy, which was raised by the Full Court in Wood and relied on by the Attorney.  To put it simply, section 273(27) of the Act indicates that the Senate votes, if a candidate becomes deceased between declaration of the nominations and the election taking place, in effect you ignore the number against the candidate’s name.  That is different from the House of House of Representatives where section 180 provides that in that circumstance there needs to be a new election.

The question is whether the analogy is a good one and, in our respectful submission, it is not.  A candidate dying involves no ineligibility under the Constitution; it involves no contravention of the Act; there is no sense of a party getting advantage or anything like that.  That is a contrast here to the situation here where one of the two candidates was ineligible to be chosen, the party has the advantage of grouping which in fact it should not have obtained and that has consequences for the way voters are likely to vote.

KIEFEL CJ:   Is the effect of your argument, though, that the decision in Day last year was based upon two wrong premises?

MR KIRK:   I do not think so, your Honour, because Day of course upheld the validity of the above-the-line scheme, but it did not address the issue of what happens in a particular circumstances of ineligibility, and I do not recall it being any part of the argument to have addressed that.

KIEFEL CJ:   So it still might mean it is based on a wrong premise, from what you are saying.  It may not have been taken into account.

MR KIRK:   I do not apprehend anything ‑ ‑ ‑

KIEFEL CJ:   Its foundation was shaky, shall we say, rather being based on a wrong premise.

MR KIRK: Nothing I have put is seeking to or has the effect of, I think, undermining the validity of above-the-line voting. It is just dealing with the consequence of where you have a two-candidate group and one is ineligible, which ultimately derives from the Constitution, of course, but that does not alter the legitimacy within the system of government established and the system of elections established of voters being able to use a shorthand above-the-line voting, whether it be with a simple “1”, as used to occur, upheld by Chief Justice Gibbs in McKenzie, or “1” through “6” or more, as upheld by this Court last year in Day.

Can I move then briefly to our second overlapping but distinct version of the argument, which is a more factual one in a sense.  The case law since Wood has moved on.  If I could take your Honours back to Sykes v Cleary, 176 CLR 77, at page 101 to 102 – this is the plurality relevantly speaking for six members of the court – their Honours were grappling with the issue there of Mr Cleary, a candidate for the seat of Wills in the House of Representatives, having been held to be ineligible. If one turns to page 102, about four lines down, their Honours say:

In these circumstances, the situation in In re Wood was such as to warrant the conclusion that the special count would reflect the voters’ “true legal intent”.  Furthermore, in the light of the group system of voting which applies in Senate elections, it was highly probable, if not virtually certain, that a person who voted for Mr Wood would have voted for another member of his group, had the voter known that Mr Wood was ineligible.

Now, pausing there, that in a sense is a factual inference and not one we challenge for a moment, but it does illustrate that there are issues of fact floating around here.  Their Honours go on:

The same comment cannot be made in the present case.  Here a special count could result in a distortion of the voters’ real intentions because the voters’ preferences were expressed within the framework of a larger field of candidates presented to the voters by reason of the inclusion of the first respondent.

That is actually echoing the Northern Territory decision of Hickey, broadening it out from true legal intent to a notion of distortion of the voters’ real intention and taking account of the likely effects.  Their Honours then go on to refer to the deceased candidate analogy, and I have sought to deal with that, save that at about point 5 their Honours say:

The reasons which lie behind the drawing of that distinction –

that is to say, in the Act –

have equal application to the drawing of a like distinction between the election to the House of Representatives and to the Senate –

The reasons which lie behind it are not spelt out but no doubt they include the degree of disruption to the polity, to the Senate and the degree of inconvenience.  But given it is no part of my argument to suggest there should be a new election, those sorts of reasons do not arise here.

KIEFEL CJ:   But is one effect of your argument about the invalid nomination mean that one does not have regard to the intent of the voter?
You do not get to that point?

MR KIRK:   That is on the first argument, correct, your Honour.  This is the second argument.

KIEFEL CJ:   This is in the alternative.

MR KIRK:   Precisely so.  If I could then take your Honours to Free v Kelly (1996) 185 CLR 296, a decision of Chief Justice Brennan sitting alone, at page 303. At about point 4, if I could invite your Honours to read the paragraph beginning “The principle to be derived” through to the end of the paragraph. By way of completeness, both of the two passages I have just referred to were also referred to by four members of this Court in Culleton last week, at about paragraph 43, I think. 

So, again, it is speaking about distortion of the real intention. To be very clear we are not seeking to say that leads to invalidity. The other eleven candidates were validly elected, but it can be taken into account as to what should result, consistent with the Act and the Constitution and the intent of the voters. Then, one turns to the facts of this particular case – remembering this is my second argument which is more fact‑specific. Of course, first here the group only had two members – Mr Day and the second candidate.

Next, the ineligible candidate, Mr Day, was the first of those two candidates.  Next, he featured prominently in Family First selection campaign, without going to it, that is agreed fact 92.  Fourth, as found by your Honour Justice Gordon reflecting the agreement between the parties, the second candidate, Ms Gichuhi, did not hold political office in South Australia, had not previously stood for or held political office in South Australia, and in contrast to Mr Day, did not feature prominently in Family First’s selection campaign or in media coverage relating to Family First in South Australia.  Fifth, as also found by your Honour at paragraph 240, in a sense, with respect, obvious point:

“[p]olitical parties seek to influence voters to vote for them and their candidates by undertaking political advertising in various forms, and by communicating publicly through the media” –

In other words, parties campaign because campaigning matters.  In that context, we submit, there was inevitably a close association between the ineligible candidate and the party that is reflected in the votes received which we have captured in our primary submissions at paragraph 63 by reference to the evidence.

Briefly – that is on page 14 – Mr Day, who was elected on the 457^th count, ultimately received just over 72,000 votes.  He got about 5,500 below the line votes.  There were nearly 25,000 above the line first-preference votes and the remaining votes were second or later preferences.  The second candidate, in stark contrast to Mr Day, received 152 preferences below the line.  So there is a marked disparity between Mr Day’s vote and the second candidate’s vote.

In such circumstances, we respectfully submit, the second candidate is in effect riding on the coat tails of the candidate, the first and incumbent senator, who was incapable of being chosen.  The Attorney says in answer to this, well, that is all speculative.  We do not know what would have happened if Mr Day had not stood and the party may well have chosen another candidate and it might have been a high-profile candidate, and all of that is true.

But the fact is we do know what actually occurred – namely, an ineligible candidate, who was high profile relative to the number 2 candidate, stood and there is a reasonable basis to infer that had an impact on this election.  We can reasonably conclude that the presence of Mr Day on the ballot was causally significant as regards Family First’s vote. 

Where then should the onus of drawing the line of nullity lie where this Court must determine exactly what results from the constitutional ineligibility?  Why should the competing candidate and those who voted for her be disadvantaged on the basis that we do not know what would have happened in an alternative universe?

We hear that all is disregarded on our argument is just one of potentially six expressions of preference and where, furthermore, it was the party’s registered officer who submitted and signed form CC taking responsibility on behalf of the party for in the premise an incorrect nomination.

BELL J:   How does that submission bear on any question of distort or of voter intention?

MR KIRK:   Because the way it was put in Sykes v Cleary was could it result?  It could result in a distortion of the voter’s real intention.  Here, in the way I have sought to articulate, there is a basis to infer the presence of Mr Day was causally significant.  We do not know how much.  It is speculative, but the way we put it is why should the speculation fall against us as against the party who nominated this candidate who was ineligible?

I note the time. There is one final very brief topic, if I may, and I will take one minute – apologies for going over, your Honour.  That is the issue of costs.  We have put in our written submission it should be referred to a single justice but the Attorney submitted there should be no order as to costs in relation to Ms McEwen.

KIEFEL CJ:   Why should there be an order for costs?  Why should it be referred?

MR KIRK:   We seek costs pursuant to the special provision in section 360(4).  As we have referred in our outline to relevant cases, in Nile v Wood Justices Deane and Toohey indicated that the power in section 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 Hudson v Lee, which we refer to in our outline, her Honour Justice Gaudron adopted that view.  In Sue v Hill in the Full Court the costs of both the petitioner and Mrs Hill, who of course lost, were ordered to be paid by the Commonwealth.  To be clear, section 360(4) makes the Commonwealth liable for costs.  It is effectively a public interest provision –not the Attorney, the Commonwealth – and in Sue v Hill subsequently, your Honour Justice Gageler may recall, Chief Justice Gleeson ordered the Commonwealth to pay the costs of the petitioner for follow-up hearings about doing the recount and also the costs of other people who appeared as potentially affected persons being four other Senate candidates, one of whom was unsuccessful, and that was even though those persons did not, in the end, have to present argument.

Here the reason it is fair and reasonable that my client obtain her costs regardless of the result from the Commonwealth, she was a person potentially affected in a similar manner to the other candidates in Sue v Hill.  Whether successful or not in her answers to questions (a) or (b), she has contributed usefully to putting relevant facts before the Court. 

It is notable, with respect, how much of my learned friend the Solicitor-General’s submissions drew on the findings of your Honour Justice Gordon, which my client sought, not the Commonwealth, and on materials in court book 2 and exhibit 1, which my client gathered and put before the Court, not the Commonwealth, whether successful or not, Ms McEwen has contributed to testing the legal argument and in relation to question (b) she is the only contradictor and all these are matters of great public importance.

For those reasons, my client should have costs.  If it please the Court.

KIEFEL CJ:   The Court will now adjourn until 2 pm.

AT 1.01 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 1.59 PM:

KIEFEL CJ:   Yes, Mr Bell.

MR BELL:   Thank you, your Honour.  I think your Honours have received our three‑page outline.  I do not know whether your Honours have had a chance to glance at it already or would like ‑ ‑ ‑

KIEFEL CJ:   I am sure you can proceed and we can follow.  Thank you.

MR BELL:   Thank you, your Honour.  Now, in Mr Day’s submissions, which focus on the question of qualification or disqualification, as opposed to consequence if disqualified, on which we side with the Attorney’s submissions, there are two real questions for the Court to decide.  First, what is the meaning of the expression “indirect pecuniary interest in an agreement”, and I will be coming, obviously, with the text but emphasising the notion of “interest” which is different to “expectation”, which is at the core of the Attorney’s submission. 

I will also be emphasising the words “in an agreement”, which is different from the Attorney’s formulation, which talks about “arising out of” et cetera, and we will be grappling with the textual challenge:  how can you have an indirect interest in an agreement?  We will be suggesting answers to that question. 

The second question is, of course, did Mr Day have such an interest?  In answering the second question it is of very great importance to emphasise at the outset that the inquiry is whether Mr Day, as opposed, for example, to B&B Day Pty Ltd, the trustee of the Day Family Trust, had the indirect pecuniary interest.  It is an important distinction and it really requires some real precision of analysis and, with respect, there have been times in the written and oral submissions put against my client where that precision of analysis has been lacking or has been glossed over.

Now, in making that point, we do not accept that B&B Day had an indirect pecuniary interest in the lease, but I am making the further point that even if it did, it does not follow that Mr Day, himself, had an indirect pecuniary interest in the lease just because the trustee company of the discretionary trust had such an interest.  It is not open to either the Attorney or Ms McEwen to elide B&B Day and Mr Day by using phrases “the reality of the situation” or “as a matter of substance” or “in a practical sense”.  The reason why it is not open to either the Attorney or Ms McEwen to do that is because Ms McEwen sought a factual finding that Mr Day was the effective controller of B&B Day at all material times from 30 June 2014, which was the date he resigned as a director of that company and which was, I should have had, 17 months prior to the entry into the lease.

Her Honour Justice Gordon declined to make that finding in relation to Mr Day, and that reference is in her Honour’s judgment at paragraph 62.  And there is no evidence or contention made by either Ms McEwen or the Attorney that there was some further agreement or understanding between Mr Day and B&B Day which, after 30 June 2014, the sole director of was Mrs Day.  There is no evidence or contention that there was some agreement, arrangement or understanding between B&B Day and Mr Day as to what would happen with moneys remitted to B&B Day pursuant to the arrangement that her Honour Justice Gordon found and on which the Attorney‑General, in particular, placed particular emphasis. 

Indeed, the Solicitor-General said, and I quote, “The intention was Fullarton Investments would receive the income” – that is namely the rent – “and pursuant to the arrangement would pass that back to the Day trust to be used as the trust saw fit.”  That is the Solicitor-General’s submission to this Court and it highlights the distinction I am making from the outset between B&B Day and Mr Day. 

The arrangement upon which the Attorney has fastened derived from the email Mr Kirk took you to and which was the foundation for her Honour’s finding in paragraph 97(5) was an arrangement that Fullarton would collect the rent and it would be remitted to the Day Family Trust, that is to B&B Day, but non constat that it would flow down to Mr Day or any evidence that he had an expectation or that there was a policy that that money would flow to him.

GORDON J:   There are two things that are subject to that, though, are there not, Mr Bell?  The first is that, as I found at 32 to 35, the implementation of that arrangement was not what you would call the most refined manner and the second is you have the implementation of it, which itself may arguably itself be sufficient, and that is you have a lease, the term of the lease that permits a lessor or a landlord to nominate where the rent is to go.  On one version of the events, Mr Day himself nominated himself.  On another version of events a subsequent director of Fullarton Investments nominated Mr Day as the recipient of the rent.

MR BELL:   I am going to come to that aspect of it, your Honour, but I do so in sequence.  At the moment, I am dealing with what is at the centre of the Attorney’s argument, which is that the arrangement is at the key of the indirect pecuniary interest.

My sole opening point is the need for precise analysis and understanding that the terms of the arrangement your Honour found, upon which reliance is placed, is that the moneys be collected by Fullarton Investments and remitted to the Day Family Trust.  There is a difference, and a real difference, between the Day Family Trust – particularly in light of your Honour’s other findings about lack of effective control, et cetera – between the Day Family Trust, B&B Day and Mr Day, and that is recognised in the Attorney’s submission to this Court that the moneys received by the Day Family Trust were to be used by it as the Trust saw fit.

A trustee of a discretionary trust has that power – subject, obviously, to the objects of the trust deed and the general law, but it stops short of identifying an interest which Mr Day has unless – but the Attorney seemed to eschew this – unless the interest is put as one of a beneficiary of a discretionary trust.  But if that is the contention to be put, there is a real problem because when one goes to the Day Family Trust, there are many beneficiaries, including – and your Honours will see this in court book 1 at pages 29 and 30 – and focusing on clause 2(viii):

any charitable, educational, benevolent, sporting or religious institution person or persons –

A very, very broad range of potential beneficiaries under this discretionary trust.  So it cannot be, in our submission – and as we understood the Attorney’s submissions, they do not put that the fact that you are a discretionary beneficiary or a beneficiary of a discretionary trust gives you a pecuniary interest, even if the trustees might have such a pecuniary interest.  And, as I said, we do not accept that B&B Day had the indirect pecuniary interests, and I will develop the reasons why.  But even if it did, the next step does not and cannot follow.  And, as we understand the Attorney’s submissions, he does not so contend.

GAGELER J:   But Mr Kirk so contends.

MR BELL:   Yes, and I will be developing our response to that.  Just at the outset on the issue of nomenclature and the need for precision, the Attorney’s written submissions from time to time refer to Mr Day’s Family Trust.  Again, that is imprecise and legally incorrect.  It was not Mr Day’s Family Trust.  It was the Day Family Trust, of which there were many beneficiaries, including members of the Day family but not exclusively members of the Day family.  It included Mr Smith and what I take to be his then wife and it included in clause (viii), as we have seen, a whole range of other persons or institutions, charities, corporations and the like.  So, again, we respectfully counsel against the looseness of language and analysis when analysing the question before the Court.

We also take issue with phrases which emanated from the learned Solicitor‑General, such as “the reality of the situation” or “in a real and practical sense”.  There was no allegation made and certainly not sustained of sham.  Mr Kirk submitted in the factual hearing that the contract of sale was a purported contract.  That is the closest it came and that contention was rejected.  So this notion appealing to what is broadly asserted to be the reality of the situation again is a source where the Court should be cautious and look very carefully at a proper legal analysis of the situation.

BELL J:   For my part, I do not see either of the vices that you identify in paragraph 61 of the Attorney’s submissions in which the various factual matters said to give rise to an indirect pecuniary interest are identified.

MR BELL:   I accept that and I will come to that.  All I was responding to were phrases which appeared in oral submissions this morning about the reality of the situation, and I will come to some more details.

The final introductory point I wish to make in relation to the evidence is this.  The Solicitor‑General took the Court to – and Justice Gordon has alluded to this – a document at page 800 in court book 2, being a document dated 12 June 2015, a direction.  Your Honours will see that is dated 12 June 2015, more than six months prior to the entry into the lease.  Perhaps it is unfortunate that the Court was not taken to the document, page 924, which is a document executed after entry into the lease but before any rental was due, and signed by Mr Steinert who was by then the director of Fullarton Investments.

It is important to understand this document in the context of another of one of her Honour Justice Gordon’s findings, namely, it was contended that Mr Day controlled the affairs of Fullarton Investments.  Her Honour refused to make that finding.

KIEFEL CJ:   But the bank account remains his in this document.

MR BELL:   Yes, that is so, but your Honour, what this document is is a direction by Fullarton Investments which Mr Day – there is no finding before the Court that Mr Day controlled Fullarton Investments – it is a direction by Fullarton Investments to the Commonwealth as the lessee of Fullarton Investments’ property to remit the rental payments to a particular place; as it happens, we accept, an account Fullarton Nominees, the evidence is, owned by Mr Day.

Now, just pausing there, there was in the lease itself an express power – and I can take your Honours to that in court book 1 at page 174, clause 10, the third paragraph:

Rent and other payments due under this Lease … are to be paid … in equal monthly instalments in advance by electronic transfer … to the account nominated by the Lessor (as varied from time to time).

So there was in the lease an express contractual right of the lessor, the creditor, the party owed the rent, to direct the payment of money.  Now, that clause need not have been there in the sense that it is open to any creditor under a contract to direct that the contract debtor pay the contract debt at the direction of the creditor to a third party.

As it happens, here we have an express power to do so.  But the critical point of analysis in the question is this.  If the indirect pecuniary interest is said to arise from the fact that a creditor under the lease, the lessor under the lease directed that the money be paid to Mr Fullarton, is it really to be said, for example, that if Mr Steinert decided that he would direct that the money be paid to Ms McEwen, for example, or Mr Shorten or Mr Turnbull or Senator Bernardi, would that give those persons an indirect pecuniary interest in an agreement with the Public Service?

Now, that is what Mr Kirk’s argument, in our respectful submission, ultimately amounts to because Mr Kirk says, “No, I’ve got the fact that Mr Day or Fullarton Nominees’ bank account is getting this benefit.”  And how is it getting that benefit?  It is getting the benefit by reason of the direction of Fullarton Investments, signed by Mr Steinert, to pay the rent to that bank account.  Now, if that is how somebody can have a disqualifying indirect pecuniary interest, then that would be a quite extraordinary situation.  It would mean that anybody who was owed money under a contract with the Commonwealth could, by directing the payment to a third party, potentially disqualifying that person from standing for election.

NETTLE J:   That is a fair point, but what about the oral conversation up the front with Smith where Day said, “Just leave it all to me” and Smith said, “Well fine, as long as I don’t have to pay anything, it’s okay”?

MR BELL:   Yes.  That goes back to the arrangement Justice Gordon found.

NETTLE J:   It is not quite the same as paying the money to Cory Bernardi or Ms McEwen, is it?

MR BELL:   That “leave it all to me” – the arrangement her Honour found is in paragraph 97 of her Honour’s judgment.  It does not adopt those words.  Her Honour made a finding of the arrangement, because the email – the conversation, which I think the Solicitor referred to, preceded the email and the email set out a proposal by the accountant, Mr Rasera, and Mrs Smith accepted that by email 40 minutes after.  That conversation does not form part of the arrangement.  If one analyses it in contractual terms, and we do not because her Honour did not find it was an agreement – I will take your Honour to that – but whatever the conversation was, it was superseded by the arrangement her Honour found.

GORDON J:   Can I just take you back to this contention in relation to the lease.  There is a critical fact, is there not, you are missing and that is that Mr Day occupied these premises; he was not the tenant but they were the premises in which he operated his parliamentary offices?

MR BELL:   But he operated them pursuant to the lease which the Commonwealth had taken out.

GORDON J:   Premises with respect to which he was being paid the rent, as directed by the lease.

MR BELL:   No, your Honour, with the greatest respect, that is not accurate.  Premises with respect to which the Commonwealth had a liability to Fullarton Investments, and the fact is that Fullarton Investments, Mr Steinert, as I have shown you at the document, at 924, directed that those payments be made to the account.  Now, if that is what gives a party an indirect pecuniary interest, so be it, but part of the point I am making at the outset is that any creditor, anybody owed money under a contract with the Public Service, could equally direct that payment be made to a person.

BELL J:   I understood that Ms McEwen, in common with the Attorney, emphasised the need to look at each case in its particular facts and one is not looking at a direction to pay Ms McEwen or Senator Bernardi; one is looking at facts that include Fullarton Investments’ only source of income was the rent that it received, its arrangement with the B&B Trust and the circumstance ultimately when you track through that Senator Day had offered his personal guarantee in relation to the loan and that that might ultimately be called upon were it not for the income stream progressing in the way the ‑ ‑ ‑

MR BELL:   This is the argument that if the Commonwealth defaulted on its obligations under the lease the guarantee would be potentially engaged?

BELL J:   It is an argument that one looks to all the facts, Mr Bell.

MR BELL:   Yes, yes.

BELL J:   And to take us to the illustration of the extreme circumstance that a person simply directs payment to a member of Parliament of funds paid to them by the Commonwealth, does not seem to me to be particularly helpful.

MR BELL:   I understand what your Honour says and one does need to grapple with the facts.  But what I am trying to, with respect, do is take, first, the arrangement on which the Solicitor‑General puts squarely – I make a point that that arrangement does not give Mr Day an interest.  It might give the family trust an indirect interest but it does not give Mr Day an interest.  The direction which Mr Kirk – particularly Dr Kirk relied on – that is not part of the arrangement.  That is different to the arrangement as found by her Honour.  It is quite different because the money is not going to the Day Family Trust.  It is going to Mr Day.  And, I am saying, well, on that different fact, if that is the source of the indirect interest, then the Court has to be careful ‑ ‑ ‑

EDELMAN J:   If any parliamentarian were receiving a stream of income payments from the Commonwealth and did not disclaim them, then that may present less of a difficulty than the circumstance of a direction being given to, say, Ms McEwen without her knowledge and a receipt that is not disclaimed. 

MR BELL:   It may.  Where I want to proceed, your Honour – I want to, actually, first establish the considerations because, in a sense, what the Court first has to grapple with is the meaning of “indirect pecuniary interest in an agreement” and then ask, well, depending on the competing arguments, do the facts fit that conception.  So, what I would like to do – I will return to the facts and, in a sense, it is my fault I got into them from the outset – but what I would like to do by way of a coherent presentation is to now turn to what the contextual and textual considerations relating to the meaning of the expression and then return to the facts, if I may.

Your Honours, this phrase, “indirect pecuniary interest in an agreement” requires, in our submission, not just a consideration of the literal words of the relevant section but also considerations of context and purpose.  Context and purpose are important because all sides recognise that the expression “indirect pecuniary interest in an agreement” is capable of having a broad meaning or a narrower meaning and the issue is where is the line to be drawn.

So if my wife, for example, had a contract of employment with the Commonwealth Public Service, is it the case that I have an indirect pecuniary interest in that contract because we are jointly liable for mortgage repayments which we personally guaranteed and her receipt of a wage benefits me financially?  Or, at least, to adopt the test that the Attorney posits, I at least have an expectation that I will benefit financially from her receipt of moneys under her contract with the Public Service?  Now, if I do have such an indirect pecuniary interest on such an analysis, the result is that I cannot – I am not eligible to stand for Parliament nor is anybody else who has a partner who is a Commonwealth public servant, who has a joint liability or who has an expectation of benefiting financially from the income derived ‑ ‑ ‑

KIEFEL CJ:   Well, one point of distinction might be to distinguish a benefit from an interest.

MR BELL:   Well, I do not think ‑ ‑ ‑

KIEFEL CJ:   An interest in, as distinct from a benefit which is a consequence of something that someone else has.

MR BELL:   Well, I understand your Honour’s point.  I think the Solicitor is arguing for a broad view of what a pecuniary interest is.

KIEFEL CJ:   By reference to the expectation?

MR BELL:   Yes.  It is an expectation of the language is – an expectation of a monetary gain or loss.  Anyway, I just pose that to make this point, that of course the broader and more open ended the meaning the Court gives this potentially very broad concept “indirect pecuniary interest in an agreement” with the Public Service, the broader the disqualifying effect on citizens, the broader the impact on the choice of the polity in the sense that the larger number of people disqualified, the fewer that can stand for election and be elected, and the representative choice, the exercise of representative democracy by the people is constrained to that extent.

Now, the Attorney recognises in his written submissions the potential breadth of the notion of an indirect pecuniary interest and the need to limit it because he attempts to do so through notions of, “well, it does not catch routine contracts”, it is not defined, or “de minimis transactions”, also not defined.  Now, the section does not lend itself, or the words of the section literally do not lend themselves to those exceptions or qualifications, but the fact that the Attorney recognises their need to be some exceptions recognises that the Court is in a line‑drawing territory.  So the question is:  where is the line to be drawn? 

So looking at context and purpose is entirely orthodox, an entirely orthodox means of reasoning and in relation to context, the subject matter of the section, namely, eligibility to stand for election and to sit in the Parliament, is of course of profound democratic significance, both as to who may stand and, as in the present case, who may continue to sit if a question arises following a person’s election.  Because of course this reference came after Mr Day had been elected, after the writs had been returned, after the result of the election had been announced, so important democratic consequences.  And although he was in dissent ‑ ‑ ‑

KIEFEL CJ:   You say democratic consequences yet, in the way you have put it, it is consequences for the individual.  But what is put against you in relation to the penal aspect but which also applies here is that it is the wider perspective – the disqualification is a wider perspective than the effect of on the individual.

MR BELL:   Yes.  But far more than the effect on the individual.  The effect on the individual certainly, but the effect on the polity in terms of the number of candidates who they may choose to vote for.

KIEFEL CJ:   I see.

MR BELL:    And also the effect on the polity and the facts of this case, everyone who voted for Senator Day.  The effect is that the process and electoral certainty will, at the very least, be disrupted.  I want to develop that.  But we would embrace the sentiment of Justice Deane in Sykes v Cleary, fully accepting that he was in dissent; and this is not Justice Deane acting on the penal consequences, it is Justice Deane really opining on the consequences for representative democracy of taking a broad interpretation of disqualifying criteria. And what his Honour said was this, at 176 CLR 77 at 121, point 4, was as follows:

What s 44 does is to impose an overriding disqualification of any person who comes within its terms –

So he is talking about section 44, generally:

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.

So part of the context his Honour was drawing attention to were the ramifications not only for the individual, but, we would add, the ramifications for the polity.  So that is the first point about context, the electoral context and the broader representative democracy considerations.

For example, and without any criticism of anyone in the present case, it is now exactly three months since the Senate reference was made to the Court of Disputed Returns and slightly longer since Senator Day resigned. So this is a period where the Senate representation of South Australia and the Commonwealth Parliament will have been smaller than contemplated by the Constitution and disproportionate to the representation of other States. And, of course, important legislative activity has occurred in that time period and will no doubt continue to occur.

Part of the point I am making – and much of the time that has passed since the Reference has been bound up in fact‑finding, interlocutory processes relating to discovery and the like.  All parties, and not least the Court, have moved with huge expedition to get the case on for hearing today.  But it is because – that delay is partly because the Solicitor‑General and Ms McEwen are advocating for a very broad purpose to inform, at least, the test and a very open‑ended evaluative test.  Now, that lends itself to factual contests to what I might describe as electoral litigation and what we might say is democratic dislocation because, in a sense, the representation is up in the air until those questions are resolved.

I say that not by way of criticism but I say it to urge on the Court the desirability of adopting a narrow and certain test for this critical concept “indirect interest in an agreement” with the Public Service, something that one cannot ever fully preclude, electoral litigation, but depending on the test chosen and the criterion chosen, one will have more or less such litigation and what we would put as democratic dislocation.

KEANE J:   Do you accept that an indirect interest need not be one that is legally enforceable?

MR BELL:   No, no, your Honour. We would say the concept of interest connotes some enforceability and we say it has to be an agreement. Just to cut to the chase, your Honour, we say there are essentially five situations where there could be an indirect interest. One is suggested by the exception to section 44(v) itself; that is to say, where there is a contract with the Public Service where the party to the contract is not the individual candidate but a small proprietary company of no greater than a certain number. That is a situation where it could be said that a candidate had an indirect pecuniary interest by virtue of the fact that he or she was a shareholder in a small proprietary company which had the contract with the Public Service.

GAGELER J:   What is the pecuniary interest; the prospect of dividends or the value of the share, what is it?

MR BELL:   No, no, the pecuniary is any benefit which would flow to the company but because of the nature of the company and the small size of the company, a notion that a shareholder in that context would have an indirect pecuniary interest in moneys or benefits that the proprietary company was to receive under the contract.

NETTLE J:   In what way would that be enforceable, pursuit of the shareholder?

MR BELL:   Well, it would not be enforceable by the candidate against the Commonwealth, I accept, but the notion is that in a small – and that exception is not absolute in the sense that it is putting an outer limit but, if there were a small proprietary company, take for example, a company where the candidate had a controlling interest in that small proprietary company, even though, as a matter of company law, qua shareholder, he or she did not have an interest, because of the effective control in that small proprietary company, the interest could be enforced against the Commonwealth.

NETTLE J:   If it were a two‑man company and he had no control, then you would say he has no financial interest.

MR BELL:   One could draw the line at that stage.  The second example we would give ‑ ‑ ‑

BELL J:   Can we just stick with the first example for a moment, because I thought, up until your last answer, that you were accepting that although the shareholder does not have any legal or equitable interest in the assets of the company and no right to enforce any ‑ ‑ ‑

MR BELL:   Chose in action.

BELL J:    Indeed – against the Commonwealth, nonetheless, having regard to the terms of the proviso, I understood you to accept that a shareholder in such an entity might have an indirect pecuniary interest.

MR BELL:   And that would be, for example, where – and when one looks at the Convention Debates, the talk was all – the Convention Debates occurred within a year of Salomon v Salomon and the talk was all about one‑man companies and the example might be where there was a small proprietary company effectively controlled by the candidate.

BELL J:   But I am asking about a small company of say, 10 members and we are dealing with one who does not answer the description of being a controller.  Nonetheless, might they not, having regard to the terms of the proviso, be said to have an indirect pecuniary interest in a contract between that company and the Commonwealth?

MR BELL:   Possibly but not necessarily.

GORDON J:   Once you accept it is possible, then you have got – in answer to Justice Keane’s question – to alter your answer, do you not, and that is that you can have indirect pecuniary interest which is not legally enforceable?  It has to follow.

MR BELL:   Yes, I think that is right, but one is dealing with, in that context, a far narrower piece of electoral litigation than the kind of litigation that would flow from the test being advocated by both the Attorney and Ms McEwen.  The second ‑ ‑ ‑

GORDON J:   Is that right?  Sorry.

MR BELL:   Yes.

KEANE J:   But why?  In a case similar to this but a bit different, if the Minister responsible for the grant of the lease had said to your client, “Yes, we will backdate the rental payments and we will increase them by $10,000 a month as long as you vote for the government’s program in the Senate, and by the way we both agree that this arrangement is not legally enforceable”, that is plainly precisely the sort of agreement that 44(v) must necessarily be striking at, but it is not legally enforceable.

MR BELL:   Well, I am not sure it would not.  While your Honour says ‑ ‑ ‑

KEANE J:   Because both sides agree that it is not legally enforceable.  It is not intended to create legal relations.  Not surprisingly, no one wants it to come before a court.  But if the evidence emerges that this agreement has been made, you could not possibly suggest, could you, that the Senator who made it could continue to sit in the House?

MR BELL:   But let that be – let that be accepted.  What I am trying to focus on is how you could identify a range of narrow – on a narrow interpretation of the section you could still give it work to do.

KEANE J:   But there is no problem about the operation of the section.  The question is just difficulties of proof.  It is just about getting the evidence.

MR BELL:   There is, with respect, a problem about the operation of the section because if this Court gives it the very broad interpretation it is capable of being given, that has consequences in terms of uncertainty as to who may stand and who may continue to sit, and certainty, as Justice Nettle emphasised in the Culleton judgment last week and I think also was implicit in the plurality decision, and also as the joint judgment Sir Anthony Mason and others in Sykes v Cleary said, their Honours rejected a broad interpretation I think to section 44(i) in that case because of the particular electoral context and the need for as much certainty as possible in that context. The corollary of uncertainty is this notion of democratic dislocation which I have sought to introduce. Another example of an indirect interest ‑ ‑ ‑

GORDON J:   Before you get to the other example, can you just outline for me, on the assumption that we now accept we can have an indirect pecuniary interest which is not legally enforceable, what your test is, what you say – how you say 44(v) is to work?

MR BELL:   Yes, we ‑ ‑ ‑

GORDON J:   What is the end play?

MR BELL:   We say the Court should confine the operation of the section really to a small number of examples which meet the description of an indirect pecuniary interest.  They would include, for example, cases of fraud and sham, where, though the legal form of the agreement gave a party an indirect – gave the candidate an indirect interest, the arrangements were just a sham or a fraud, a cloak for what was really a direct agreement between the candidate and the Commonwealth.

Now, that is not this case, I hasten to add because that was not alleged and certainly was not found.  Now, one could draw the line there and one could say, by reference to the Convention Debates, well, what were they concerned about?  What they were concerned about was one-man companies then recently given the blessing of the House of Lords in Salomon v Salomon and remembering that the company Acts were only 30 or 40 years old at the time of the Federation debates, but the concern was one-man companies and this is not able to be done.

That is why you have the carved out exception for proprietary companies and it may or may not be that where you have someone who is not in control of the proprietary company, then there might not be an indirect pecuniary interest, but where there is control, such as in a one-man company, there would be an interest.

GAGELER J:   So Mr Wise had nothing to worry about accepting a brief from the Commonwealth?

MR BELL:   I am going to come to that because that part of the debates which the Solicitor took your Honour to were in relation to the amendment which became section 45(iii) not 44(v), and 45(iii) is concerned with honoraria and fees expressly directed to non-contractual situations. So you can see 44(v) as directed to agreements, interest in an agreement, and 45(iii) as directed to the non-contractual situation of a barrister. And, with respect, what the Solicitor-General did not take you to at the beginning of that section of the debates was the amendment which was an amendment to what became 45(iii), not 44(v) of the Constitution.

Another example, if one went beyond the case of fraud or sham and beyond the case of small proprietary companies where the candidate was effectively in control of that company, another example would be a trust and it is not surprising that this is how Ms McEwen sought, in her original contentions, to characterise my client’s interests in a variety of ways.

Your Honours may have picked up that there are annotations, in the submissions of Ms McEwen and the Commonwealth, where slabs of Ms McEwen’s case are properly removed because of failure to establish underlying facts which would establish a trust.  But an obvious situation where an indirect interest could be held in an agreement with the Commonwealth was where a person or a corporation had the benefit of the contract but held that benefit on trust for the candidate, and that is not this case either.

NETTLE J:   So not a discretionary trust.

MR BELL:    Not a discretionary trust.

NETTLE J:   Just a fixed trust.

MR BELL:   Just a fixed trust, and that submission which I make, your Honour, gains some force, with respect, from the language of the 1782 Act, the disqualification of a parliamentarian Act. It is just not correct to say that that Act was not the progenitor of section 44(v). The Solicitor-General demonstrated this by taking you through the texts of the Constitution in the various conventions and one had a provision plainly modelled on that Act. It was not just Sir Garfield Barwick in Webster who said that 1782 Act was the progenitor of 44(v); so did three members of this Court, including Justice Bell, in Pape’s Case.

BELL J:   As I understood the submission, it was accepted.  The point that was being made was that there was a significant departure by the time one got to the last convention following the work of the drafting committee.

MR BELL:   I do not want to quibble.  I thought my friend said it was not the progenitor.  It was ‑ ‑ ‑

BELL J:   I think that related to the earlier, the 17th century Act, there was a reference to the 1692 or what have you. 

MR BELL:   Yes, perhaps he said that.  But in essence, Justice Nettle, one sees in the language of that 1782 Act, the notion of interest being held on trust.  So that would be another example of the kind of indirect interest that Sir Edmund Barton, Sir Richard O’Connor and Sir John Downer had in mind when they changed the facsimile language of the 1782 Act into the language which became 44(v).  There was an interest in one‑man companies, there was an interest in trust arrangements and, of course, there would always be an interest in sham or fraud.

BELL J:   Just taking up the interest in sham or fraud, would one need to provide in terms of an indirect pecuniary interest in a circumstance where a member had so arranged affairs as to set up some sham arrangement to obscure the fact of the member’s direct pecuniary interest?

MR BELL:   Well, I think the argument would be more likely to be, although there is a legal arrangement which gives the appearance of an indirect interest, because the legal framework amounts to a sham, one looks through it so what appears to be an indirect interest is in truth a direct interest.

BELL J:   Direct interest.

MR BELL:   But, your Honour, may I just make it very clear that that is not the case we are meeting and it is just not a case which is open.  This case has proceeded and it calls for procedural fairness and order by the previous Chief Justice to outline facts and contentions, et cetera.

BELL J:   Mr Bell, I think that is clear.

MR BELL:   Very well, yes.

BELL J:   It is simply that in answer to the question “what is the test you proposed”, you say that this Court might answer that by identifying a series of examples and the first of those was a sham or fraudulent arrangement, and the matter I raise with you is that would not necessarily answer the inclusion of the words “indirect pecuniary interest”.

MR BELL:   Well, it would in the sense that presumably the finding of a sham would mean that ‑ ‑ ‑

GORDON J:   Exactly what it says, that is, they were never intended to have a legal effect recorded and there was another set of legal arrangements put into place with direct legal interests.

MR BELL:   Yes, well, what appeared to be indirect is revealed as direct.  A final example we give and these are ‑ ‑ ‑

GORDON J:   You said there were five, I have only got three, am I wrong?

MR BELL:   I am counting sham and fraud as separate ‑ ‑ ‑

GORDON J:   I see, thank you.

MR BELL:    ‑ ‑ ‑ accepting that I think it is probably correct to say they are not coterminous or coextensive.

NETTLE J:   Sham, fraud and trust are three, what is the fourth?

MR BELL:   Sham, fraud, trust, small proprietary controlled company, and the fourth is agency where the – agency in a context where in truth the party contracting with the Commonwealth has acted as an undisclosed agent but the principal is the candidate.

GAGELER J:   Would you add to the controlled company the controlled discretionary trust?

GORDON J:   Where it is clear the appointor has all the control.

MR BELL:   No, your Honour, for this reason.  One might control the discretionary trust but one is subject to general law obligations, trust law obligations and obligations under the Trustee Acts to act for proper purposes, et cetera, to give genuine consideration whether to make a distribution, to whom, to which of the discretionary beneficiaries to make the distribution and the like, so we would not go that far.

But, in any event, we do not accept – and there is no finding that Mr Day controlled the Day Family Trust.  And that is why I pointed out, there is no allegation or contention or finding that Mrs Day, as the sole director of B&B Day, had bound herself in any way to exercise her lawful discretion as, effectively, the controller of the Trust as a sole director of that Trust to distribute the money to Mr Day.  Your Honours ‑ ‑ ‑

KIEFEL CJ:   Are you moving on to your purpose submission under paragraph 6 of your outline?

MR BELL:   I just missed the first bit of what your Honour said.

KIEFEL CJ:   Are you moving on to the discussion of the purpose and expanding on that topic?

MR BELL:   I just want to make sure I have finished what I wanted to say about context, the points being, because of the consequences the Court should aim for a certain and predictable test, a narrower one, given the policy choice, effectively, or the textual choice the Court has, not only because a narrower choice will yield greater certainty and predictability, because it is important that people know whether they are eligible to stand or not and it is important where there are penal consequences that people know whether they are going to step into potential penal territory or not.

So, certainty and predictability, minimising democratic dislocation, maximising democratic choice in terms of the number of people elected and always this, your Honours – and this is very important before I come to purpose, this is very important indeed – always recognising this, which is the point we make in our written submissions in paragraphs 26 to 31, namely that qualifications of parliamentarians, Senators and Members of the House, are dealt with in the Constitution by, to a very large extent, leaving to the parliamentarians, the democratically elected representative, the ability to legislate on the subject of qualifications.

So, if I summarise our point this way, in four steps. Section 44(v) is susceptible to a broad and narrow interpretation is step one. Secondly, there are the powerful contextual and textual – which I will come to – considerations supporting the narrow interpretation. I will not repeat what I have said. Thirdly, if Parliament considers that the Court has interpreted the provision too narrowly, it is not only open to it but the Constitution expressly leaves open to it – in sections 16, 34 and 51(xxxvi) – the Parliament expressly leaves open – the Constitution expressly leaves open to the Parliament the ability to legislate as the qualifications of members of parliament. And, if you were to say, well, they would be self‑interested, we would retort by quoting, as we have in paragraphs 27 to 29, in particular, what Justice Gummow said in McGinty, that is how the Constitution has left it, recognising that there may be some self‑interest.

So, in other words, by virtue of those legislative powers, there is the ability if the Parliament, and not forgetting that, in a sense, the Parliament has co‑ordinate jurisdiction as a Court of Disputed Returns as well, but it has express legislative power – that Parliament can broaden it and has the ability to do so. 

KEANE J: Well, Parliament can broaden it, but the Constitution in 44(v) contains an irreducible minimum qualification.

MR BELL:   Can I answer that submission in this way, your Honour, because that is an argument which has been put in reply against it.  We would answer that in part by the way this Court approached section 92 in Cole v Whitfield and the relationship between section 92 and 51(i).  Can I explain?  The Court is familiar with the broad, imperative language of section 92.  In a sense, that is a constitutional given.  But there was section 51(i) as well which allowed the Parliament to regulate trade and commerce. 

Now, what this Court did in Cole v Whitfield was to read down section 92 to a case not of any regulation of trade or commerce but to regulation of trade or commerce of a particular kind, namely discriminatory protectionist regulation, and it did so bearing in mind the breadth of 51(i).  In other words – your Honours, can I give your Honours a reference, it was not on our list, but it has come up more in reply, Cole v Whitfield (1998) 165 CLR 360 at 398 in the second half of the page. May I just read briefly from that decision:

The consequence of reconciling the two constitutional provisions in that way –

that is the way it had been dealt with in Grannall v Marrickville Margarine –

is to treat the legislative power conferred by s 51(i) as essentially peripheral in character.  In our view, any acceptable appreciation of the interrelationship between the two sections must recognize –

and here, of course, we are dealing with the interrelationship between 44(v) on the one hand and the suite of provisions 16, 34 and 51(xxxvi) on the other hand –

In our view, any acceptable appreciation of the interrelationship between the two sections must recognize that s 51(i) is a plenary power on a topic of fundamental importance.  That being so, the express conferral of legislative power with respect to interstate trade and commerce lends some support for the view that s 92 should not be construed as precluding an exercise of legislative power which would impose any burden or restriction on interstate trade and commerce or on an essential attribute of that trade and commerce.

So the point I am making is, yes, 44(v) is there and 45 has to be interpreted, but it has to be interpreted in the context of the Constitution as a whole including those provisions in the Constitution which allow the Parliament to speak authoritatively and to legislate with regard to parliamentary qualifications. And so that is how we would answer the point your Honour made and which, with respect, I think, the Attorney has sought to make against us.

These are considerations which favour a narrow interpretation, confident in the knowledge that if the democratically elected representatives think the Court has gone too narrow, they can pass legislation and if somebody says that is self‑interested, Justice Gummow said, “The Constitution recognises that and that is just as it is.” That is in McGinty, which we have quoted in our written submissions.

KIEFEL CJ:   As Justice Keane points out, if the Parliament is exercising that power, it could only really be to confine or to make the disqualification even more profound.  It could not alter the provisions, though.

MR BELL:   Yes, you could say, to be qualified to stand for election you must not benefit financially from your partner’s contract of employment as a commissioner of ASIC or the Commissioner of Taxation or the head of the Post Office.

KIEFEL CJ: My point is it could not alter the words of section 44(v). That is the point.

MR BELL:   No.  I accept that, but the question for you of course is:  there being, it seems common ground, a spectrum – those words can be interpreted broadly or narrowly ‑ ‑ ‑

KIEFEL CJ:   Are you suggesting that Parliament passes Acts which then somehow influence the construction or give light to the construction of 44(v)?  Is that how it is going to operate?

MR BELL:   No, no, I am not suggesting that.  I am pointing out candidly that this Court has a legislative choice as to how to interpret – I mean, subject to Webster’s Case, which I will come to – but this Court has a legislative choice as to whether to give this key phrase a narrow or a broad ‑ ‑ ‑

KIEFEL CJ:   You mean a constructional choice?

MR BELL: Constructional choice. The Court will of course look at the text and will look at context and will look at purpose, and considerations, particularly of context at the moment I am addressing, favour a narrow interpretation not only because of the consequences of the broad interpretation but also by reason of the fact that this is an area where, if it is concerned about representative democracy, et cetera, which it undoubtedly is, representative democracy is also dealt with in the Constitution, the same document, by giving the Parliament the ability to legislate as to electoral qualification. So that if the Parliament makes its own legislative policy choice that this Court’s interpretation is too narrow – the Parliament, by passing legislation, does not of course amend the Constitution ‑ ‑ ‑

KIEFEL CJ:   Yes, I understand what you are saying.  You are saying that we should adopt a careful approach and allow a narrow operation to the section to allow Parliament to provide the ‑ ‑ ‑

MR BELL:   Not so much to allow Parliament to, but conscious of the fact that Parliament has the ability to broaden it in substance and effect if those democratically elected members of Parliament so choose.  So that, for example, if this Court were to adhere to Webster’s Case, say, the contract has to be of a character which compromises the independence of Senator Day, and section 44(v) is not concerned with broader conflicts of interest of the kind – the purpose sought to be identified by the Solicitor‑General, Parliament could always say, well, in light of the High Court’s interpretation, we think it is important to pass legislation which precludes candidates from having conflicts of interest and we have power to do so, sections 16, 34 and 51(xxxvi), and we do so.

GAGELER J:   I have just got one question.

MR BELL:   Yes, your Honour.

GAGELER J:   Does that power extend to sitting members?

MR BELL:   Section ‑ ‑ ‑

GAGELER J:   I do not think there is an easy answer

MR BELL: No, no, even if it did not, your Honour, given the terms et cetera, in a sense my point is good, that the Constitution makes provision for electoral adjustment by the Parliament in relation to qualifications. There are, of course, other means, as we put in our written submissions, of the Parliament punishing members for contemptuous acts, for other violations – no doubt Mr Hume – if any further occurs on your Honour’s question, I will deal with it. Now ‑ ‑ ‑

KIEFEL CJ:   I am sorry, just to clarify this because it is an important plank of your argument ‑ ‑ ‑

MR BELL:   Yes.

KIEFEL CJ:    ‑ ‑ ‑your argument must proceed on the basis that the choices between a narrow and a broad construction ‑ ‑ ‑

MR BELL:   Yes.

KIEFEL CJ:   ‑ ‑ ‑ are equal.  There is a true choice and therefore you allow the one which allows Parliament to operate.  Surely one must look first to not just the fact that there is a choice, but what most strongly identifies the reason, the rationale, for the constitutional provision to operate in a particular way because otherwise is potentially to deny it proper operation.

MR BELL: I am not suggesting, your Honour, an at‑large choice. I am say that the choice would be informed by context and that context is electoral and in the electoral context, as Justice Nettle pointed out and gave it authorities, certainty and predictability. I mean, core values in the law anyhow are of acute significance because if people stand and it turns out are ineligible, one has the democratic disruption, the dislocation. You do not have the Parliament operating as the Constitution contemplates, et cetera.

That is not an at‑large policy consideration that we pulled out of the air.  That comes from the context, the immediate context of the section.  Similarly, your Honour, the fact that there are penal consequences, as the Court said in the cases we have cited, the CFME Cases, are an important part of that context ‑ ‑ ‑

KIEFEL CJ:   I understand your argument.  Really, what I was trying to put to you ‑ I perhaps overstated it when I said it might be that your argument proceeds from the choices being equal, but in a sense you argument denies that there is really much to be seen from the history or purpose of the provision that would give it a broader construction.

MR BELL:   That would give it a broad construction, certainly.

KIEFEL CJ:   You seem to say that there is not much background really to the provision and that is the way in which you proceed.

MR BELL:   No, there is background. I am coming to it. I apologise for having been slow getting there but I am putting real emphasis on context, the things I have just mentioned, also the other legislative provisions because when construing 44(v) in the context of the operation as a whole, of the Constitution as a whole and the subject matter is also dealt with in other sections, giving the Parliament power to pass laws affecting the qualification. Then I come to purpose, your Honour.

It is common ground that Chief Justice Barwick identified the purpose in a way in which is narrower than that contended for by the Attorney-General.  We submit his Honour was correct to do so.  We submit that his Honour correctly identified the 1782 Act as the precise progenitor of 44(v) and we have given a reference also to what was said by three members of this Court in Pape to the same effect about 44(v) – that is to say, the 1782 Act was the progenitor.

Secondly, we know what the purpose of the 1782 Act was.  Why?  Because it says so in its preamble and it is preventing the Executive from corrupting the Parliament.

EDELMAN J:   Is your argument necessarily inconsistent with a broader purpose if it is read as implementing potentially that broader purpose of preventing conflict of interest in a more circumscribed way?

MR BELL:   It is not dependent on it.  You would have regard to purpose.  We say Chief Justice Barwick got the purpose right, but if we are wrong about that, it does not mean the Court should not adopt the narrow interpretation, which I am urging because for all the other reasons I am advocating.

So his Honour identified 1782 and we know from the Attorney’s submissions that it was there in the very language of all but the last draft.  Now, one can see the last draft not as radically changing the purpose expressly identified in the 1782 Act but as modernising the language.  One can see that.  Related to that, a very large part of the references to the Convention Debates that the Solicitor took you to came from – and if your Honours go to the Commonwealth’s first supplementary materials ‑ the 1897 debates.

If your Honours turn to page 5 of those materials, using the numbering down the bottom – page 1034 of the debates – you will see that the debates from which he drew most of his quotations was a debate – and you will see this at the top of the right-hand column – was a debate on what became 45(iii), the point I have made to Justice Gageler in argument.  So if one turns the page, your Honour, we are taken to Sir Joseph Abbott, Mr Carruthers, I think you were taken to Mr Isaacs at page 8 and page 9 and following.

But they were comments made in the context of a different section.  They were not debating 44(v) there.  The next point we make is that if that purpose, the purpose to prevent parliamentarians from having conflicts of interest in the discharge of their business with a purpose underpinning 44(v), why is the disqualification confined to agreements with the Public Service?  Why is not more general? 

KEANE J:   Because it is concerned with bespoke agreements, not with benefits that are obtainable from the Commonwealth under the general laws of the Commonwealth.

MR BELL:   No, no, but why is it not concerned about conflicts of interest in general whether as a result of agreements or arrangements with the Commonwealth as opposed to having interest in the subject matter, for example, owning a pharmaceutical company where the direct interest of the member who owns an entire pharmaceutical company and the Parliament is going to pass on pharmaceutical benefits?  I mean, the broader purpose our friends identify is not reflected in the language.  The language is narrower.  The language is focusing on agreements with the Public Service just as the 1782 Act was concerned with agreements with the government and the purpose of the 1782 Act was expressed tied in the preamble to the notion of corrupting the independence of the government.

Now, just on the facts here in that context, we point to the fact that in this agreement, the Commonwealth was not keen on this agreement.  The Commonwealth resisted this lease to start with, far from it being dangled in front of Mr Day’s eyes, but, secondly, the rent under the agreement was set by an independent party, and it was reviewed on a CPI basis.

KIEFEL CJ:   I do not think it has been suggested it was otherwise than at arm’s length and ‑ ‑ ‑

MR BELL:   No, but I am just making the submission that one perhaps could have a different sort of agreement where the Minister for Finance could set the rent and review the rent at his discretion, et cetera.  That would be a very different sort of agreement.  But you have got an agreement where the rent is set neutrally and it is not paid for up to two years or something like a year and a half.  The agreement in question is not of a kind or a character, just as the agreement, as Chief Justice Barwick found in Webster, was not of a character, to which the 1782 Act and by reference the section 44(v) was directed. Similarly, the decision of the Full Court of the Supreme Court of Queensland which held – dealing with leases, so where the parliamentarian had a direct lease with the Commonwealth, and that was not held to infringe the provision in the Queensland Constitution which used the language of the 1782 Act. Now, our friend put against us that ‑ ‑ ‑

KIEFEL CJ:   Is that because it was a leasehold interest of property under legislation?

MR BELL:   Well, no, no.  There was a direct lease and our friends put against us, well, the court was concerned there whether it was for or on behalf of the Crown, different language to 44(v), we accept that.  But when you look at the passage we have extracted in our submissions ‑ ‑ ‑

KIEFEL CJ:   That is Hobler v Jones [1959] Qd R 609.

MR BELL:   Sorry, your Honour, certainly.  Part of the language used in the disposition of that case – and I will just come to it ‑ ‑ ‑

KIEFEL CJ:   This turned on the notion of what was meant by Public Service, was it not, the lease was given by the Crown ‑ ‑ ‑

MR BELL:   I do not ‑ ‑ ‑

KIEFEL CJ:    ‑ ‑ ‑ “for or on account of the public service”.

MR BELL:   For or on account.  It ‑ ‑ ‑

KIEFEL CJ:   “For or on account of the public service” of Queensland.

MR BELL:   Yes, it was dealing with that phrase, we accept that.  But in the report, your Honour, at page 615, point 5, the court said:

Regard should be had to the mischief at which the Act was aimed.  It was passed to diminish the power of the Crown ‑ ‑ ‑

KIEFEL CJ:   Sorry, did you say 615, point 5?

MR BELL:   Yes, 615, point 5:

Regard should be had to the mischief at which the Act was aimed.  It was passed to diminish the power of the Crown to exert corrupt influence over Parliament.

Then at point 7.  Sorry?

GORDON J:   I do not think that can be right, Mr Bell.  We are dealing with argument on the report at those page, I think.

MR BELL:   I am sorry, your Honour.  Is it – I am so sorry, your Honour, it is my mistake, it is 620.  I am so sorry.  So, 620, point 5:

Regard should be had to the mischief at which the Act was aimed.  It was passed to diminish the power of the Crown to exert corrupt influence over Parliament.

There is a reference to Holdsworth.  Then there was a reference then to ‑ ‑ ‑

KIEFEL CJ:  

They were ordinary leases in terms of the conditions and form required by the Land Acts.  They have no special conditions. 

MR BELL:   Yes.  In a sense, that is the point ‑ ‑ ‑

KIEFEL CJ:   It is how you held land.

MR BELL:   Yes.  But, in a sense, it is the point I am making that this lease was not of a kind where the rent was set and could be controlled and manipulated by the Minister for Finance, for example, as a carrot or an inducement to voting, et cetera.  It was an ordinary lease, but, more particularly, your Honour, this case ‑ ‑ ‑

KIEFEL CJ:   It is not the kind referred to in Hobler v Jones.  

MR BELL:   Pardon, your Honour?

KIEFEL CJ:   It is not a lease of the kind referred to in Hobler v Jones.

MR BELL:   No, I accept that.  But, my point is – also at point 7 – the Court took into account, in reaching an answer to the interpretative question, the mischief of the Act. 

GORDON J:   Can I go back to that question, because you criticise the Solicitor‑General for taking us to some of the debates, but what do we do about the September 1897 debate where Isaacs says particularly “The object” – and I think he is dealing precisely with 44(v):

is to prevent individuals making a personal profit out of their public positions –

MR BELL:   We accept that he said that but he is the only member of the Convention on our reading ‑ ‑ ‑

GORDON J:   I do not know about that.  Read on, we were taken to places by Fraser and others, including Downer.  He talks about relations and the manner in which the abuse may arise.

MR BELL:   Yes.  But, your Honour, that reference, for example, to a corruption – that is consistent with the notion to free ‑ ‑ ‑

GORDON J:   I do not think it is dealing just with corruption.  It is dealing with making a profit.  It is dealing with the way in which the relationship ultimately pans out and how it is inapposite that that parliamentary officer would be in that position.

MR BELL:   Could I just inquire, your Honour?  Which debate are you ‑ ‑ ‑

GORDON J:   I was looking at the September 1897 ones, which are in the further bundle of materials, commencing at page 38, and we were taken particularly to page 1023, 1024 and 1025, which are directed at the “mischief” of the section.  So I am picking up your point about a reference to Hobler v Jones and the bit we were taken to is in the left‑hand column of 1023, “The object of the clause” dealing with what became 44(v).

MR BELL:   Yes.  That is Mr Isaacs.

GORDON J:   Yes, and then Mr Fraser at the top of page 1024.  You can read through – then it is Mr Kingston, sorry – dealing with what should and should not be done and what should be permitted in the context of “parliamentarian”.

MR BELL:   Yes.  We would respectfully see those ‑ ‑ ‑

GORDON J:   My point is they are dealing with the provisions, as I read them, that we are the subject of discussion, not another one.

MR BELL:   In our submission, your Honour, a number of those passages can be read and interpreted consistent with the original mischief of the Act.  The Court has said, and we have referred to this in our written submissions, that one should be careful about allowing the Convention Debates to drive too much of an interpretation.  What this Court has, which is more authoritative than the Convention Debates, is a decision of this Court and it is not correct to say that because it was a decision of one judge it is of any less status.  There is no Full Court ‑ ‑ ‑

KIEFEL CJ:   Why is that?

MR BELL:   There is no Full Court of the Court of Disputed Returns, your Honour, under the Commonwealth Electoral Act.  There is one Court of Disputed Returns and from its decision there is no appeal.

KIEFEL CJ:   But the opinion of six judges was not obtained.

MR BELL:   But your Honour, that would be like saying that a decision of five judges does not bind ‑ ‑ ‑

KIEFEL CJ:  All right; one more judge. It was a fairly unusual step, even historically, for a Chief Justice to sit alone on a matter involving the Constitution.

MR BELL:   Justice Hayne sat alone on the Western Australian lost Senate ballot papers.  Justice Brennan I think sat alone in Free v Kelly.  It is a simple point.  I do not want to belabour it, but technically the decision in Webster was coordinate and its status is a decision of the Court of Disputed Returns and there is no Full Court.  This Court is not sitting at a different level in the judicial hierarchy, with the greatest respect to it, than Sir Garfield Barwick was in Webster.

KIEFEL CJ:   I suppose at a more neutral level one could say that the decision in Webster was not informed by previous decisions of this Court and there was nothing really directly in point, which normally would have indicated that Court should sit with a larger number.

MR BELL:    Your Honour, it was informed by – again, I do not want to make too much of it, but it was informed by an understanding of the history, the 1782 Act, and cases which had considered that Act, and as was said by this Court in Engineers – and we have made a reference to this in our written submissions – one interprets the Constitution in light of the case law and statute law as known to the framers.

There is 19th century case law on the English Act, which I will come to shortly, for example, and there are cases in this Court which are inconsistent with the notion of expectation of the kind my friend, the Solicitor-General, urges and there are cases in the 19th century, for example, which hold that where a party had a contract with the Public Service in the UK, if to fulfil that contract that party entered into a subcontract with another party, for example, to supply widgets in order then to be supplied to the Public Service, that subcontractor did not have an indirect interest or did not have a disqualifying interest in the head contract.

There are cases of that kind which this Court has cited that I will come to in a moment.  So it was not as though, with respect, Webster was being decided in a vacuum.  Sir Garfield Barwick referred to the 1782 Act.  He referred to the express purpose for which that Act was passed.

KIEFEL CJ:   You know that I meant that section 44(v) had not been construed before and you would also understand that the other occasions on which members of this Court have sat as single members of the Court of Disputed Returns did not involve questions like this which have not been dealt with before. So, you really should not have referred to them.

MR BELL:   Well, I do not want to get into an unseemly argument but ‑ ‑ ‑

KIEFEL CJ:   No, I think you should end it there, please.

MR BELL:   Very well, your Honour.  Now, one of the 19th century cases which are part of the pre‑federation case law on this territory is Royse v Birley (1869) LR 4 CP 296 at 312 and 313 where Justice Willes said, and I will just read this on to the transcript unless the Court wishes to go to it. His Lordship said:

That would tend rather in an opposite direction to what the act intended; for, it would tend to destroy the freedom and independence of parliament –

So identifying the freedom and independence of Parliament as key, and Justice Montague‑Smith as 317 referred to producing the very consequence the Act sought to avoid, namely, “giving the government a control over a man” and referring to the mischief of the Act as government might exercise very considerable influence over the independence of the Parliament.  So, we would submit the Court should follow and apply Webster, but to pick up a point I made with Justice Edelman, it is not critical or central to our argument.

Now, can I come then to the text?  First, what the Commonwealth is urging – this is the Commonwealth’s articulation, it is in paragraphs 4 and 5 of their written submissions in‑chief and it is also in paragraph 7 of their reply submissions.  This is the test for an indirect pecuniary interest being urged – a real risk that a person could be influenced, or perceived to be influenced, in relation to parliamentary affairs by an expectation of a monetary gain or loss that was not remote or insubstantial arising out of the existence of the lease or alternatively arising out of things done or contemplated to be done in the performance of a lease. 

Now, that is a test which, in our submission, is impossibly broad and uncertain, and it is a test the satisfaction in whose elements could change from day to day – I think Justice Gordon made a point of that kind – depending on external circumstances such as the likelihood of the risk or shifting perceptions.  It is a test which has, at its heart, the notion of expectation. 

MR BELL:   In a different context, this Court has eschewed as singularly unhelpful in the public law context, the notion of a reasonable expectation or a legitimate expectation.  Can I just remind the Court of references where the Court has ‑ ‑ ‑

KIEFEL CJ:   How is that relevant in this context, Mr Bell?

MR BELL:   Because, as Justice Hayne pointed out in Lam, for example, he said, the concept of an expectation raises a series of questions:  Whose state of mind is relevant?  Is it a subjective expectation?  Is it an objective expectation?  How is it established?  The Court, your Honour, Justices Kiefel, Bell and Keane in The Minister v WZARH (2015) 256 CLR 326 at 334, paragraphs 28 and 29, described it in that public law context as unsatisfactory and confusing, quoting both Justice Hayne in Lam and also Justices Gummow, Hayne, Crennan and Bell in Plaintiff S v The Minister for Immigration 246 CLR 636 at 658, paragraph 65.

So it is just to say that the test posited has at its heart this notion of expectation which is a difficult concept to start with, but the second thing to note about the interpretation is it uses the language of “arising out of” where of course the text is to have an indirect interest in the agreement.  Now ‑ ‑ ‑

KIEFEL CJ:   Do you place much weight upon the reference to the person being the member in the sense that, although that is obvious, it is the member in the position of member who has to have the indirect interest?

MR BELL:   Yes, yes, it is the ‑ ‑ ‑

KIEFEL CJ:   It is just that it might affect some of the examples that you were giving before about benefits that flowed rather than the member having the indirect himself or herself in the position as member.

MR BELL:   Yes, it is not having the interest as a member ‑ ‑ ‑

KIEFEL CJ:   Or potentially to be a member.

MR BELL:   Well, no, it is just a candidate cannot have an interest of this kind.  It is not related to their parliamentary ‑ ‑ ‑

KIEFEL CJ:   But the possibility that they will be a member as well.

MR BELL:   Yes, yes

KIEFEL CJ:   I accept that. 

MR BELL:   It is all geared to the possibility that they would be ‑ ‑ ‑

KIEFEL CJ:   All I am really saying is that the text in that sense might narrow some of the examples of the broad reach that you say that the section otherwise construed might have.

MR BELL:   It might, and your Honour would be conscious in paragraph 35 of our written submissions we give a whole series of examples which we say could potentially be caught on a broad interpretation, but what is very interesting, with respect, is that the Commonwealth in their reply submissions do not shy away from that.  They say, yes.  They say they are all examples which, depending on the facts, could disqualify a person.  But the precise textual point I wish to make about “in the agreement” is that that was a deliberate use of words.  Can we give your Honour these references?

The drafters of the Constitution used other relational concepts elsewhere which were broader in character than the notion of “in the agreement” or “in any agreement”, for example, “arising under” one sees in 75(i), 76(i) and 76(ii); “affecting” in 75(ii), “relating to” in 76(iv) and section 101 of the Constitution concerning the interstate commission and the breadth of its jurisdiction, so “relating to”, and then “with respect to” in section 51 and section 77. Now, there is, of course, a principle of construction, perhaps most eloquently articulated by Lord Diplock in a case called Prestcold( Central) Limited v Minister of Labour [1969] 1 WLR 89 at 97 where Lord Diplock said:

The habit of a legal draftsman is to eschew synonyms.  He uses the same words throughout the document to express the same thing or concept, and consequently if he uses different words the presumption is that he means a different thing or concept.

That is what the Supreme Court of Canada recently in a case Agraria v Canada [2013] 2 SCR 559 at 597, paragraph 81, referred to as the “presumption of consistent expression”. As the Solicitor has said, this clause was drafted by Sir Edmund Barton, Sir Richard O’Connor, Sir John Downer KC, assisted by Mr Robert Garran, it was drafted by lawyers. There is precise language and the language used in 44(v) is different to and narrower than relational terms used elsewhere in the same document. That is the textual reason supporting the narrow interpretation for which we contend. The interest must be in the agreement, not arising from ‑ ‑ ‑

KIEFEL CJ:   In any agreement.

MR BELL:   In any agreement, but in this case we are dealing with the one nominated agreement and that is important, I think, because the Court is not answering the question, did Mr Day have an interest in the arrangement which Justice Gordon found in paragraph 97, that is not put.  The only case ever put against Mr Day is that he had an indirect pecuniary interest in the lease, not any other arrangement, in the lease. 

KIEFEL CJ:   I thought the Attorney was relying upon the arrangement which preceded the lease.

MR BELL:   He is, he is, but the agreement which Ms McEwen and the Attorney had nominated in which Mr Day is said to have had the indirect pecuniary interest ‑ ‑ ‑

KIEFEL CJ:   I see, you say arrangement does not come within the terms of the section.

MR BELL:   No, and that is not, in any event, an arrangement with the Public Service.  So, where is, how does Mr Day ‑ ‑ ‑

KIEFEL CJ:   Cannot your interest in any agreement be derived by a reference to an arrangement, though?  The agreement can still be between – with the Public Service of the Commonwealth but your interest is derived through other arrangement?

MR BELL:   Well, the language is – this is the point I am making about the language is in the arrangement and that is a quite deliberate narrow concept which is narrower than “arising from” or “relating to” or even “arising under” which are broader and which the draftsmen had at their disposal in 1898 when they drafted section 44(iv) and drafting it in the context of provisions where citizens would be able to tell whether they were qualified to stand or disqualified from standing for election. It was important that it be clear, that it be crisp, and that it be precise.

Now, we accept that “indirect”, the use of the word “indirect”, makes it less clear but on one view which I put forward, that could just be covering the case of a sham or a fraud or those other couple of cases, the one‑man companies which the members – if one goes into the debates, four or five of the members of the Convention expressly referred to one‑man companies and I think we have got the references now written submissions.

EDELMAN J:   There is reference in the Convention Debates in some of the ones that you took us to to the provision in colonial legislatures and including the provision in relation to the companies’ exemption in colonial legislatures.  Is that picked up in any of the material?

MR BELL:   The debate was this, your Honour, as I recall from the debates.  Different State legislatures had a different definition of a proprietary company.  Some States or colonies, of course, as they then were, nominated 20 members, others nominated 25, and 25 was changed.  There was a debate as to whether you would have a number and what the number would be.  But 25 was chosen because that would, effectively, mean all of the constituent colonies or the respective States, company legislation would be caught.  It was a fairly new – the companies legislation was relatively novel, was relatively new even in 1897.  It had arisen in the 1860s and we have the references, including some historical references, in our submissions. 

But the debate – the concern was, well, what about this new phenomenon of one‑man companies?  Surely, if somebody could incorporate a one‑man company, they could get around what the 1782 Act was intended to do.  Or the government could get around that by saying we will pay you this for your goods, but we are not going to pay it to you personally.  Incorporate a company and we will pay the money to the company.

EDELMAN J:   They are the references to acting through the medium of the company?

MR BELL:   That is right.  And so it may be that “indirect” was only intended to cover the case of a circuitous device – what might be thought to be a circuitous device or no doubt the fraud or a sham case.  And that is a meaning, using that context – gives 44(v) work to do – to be sure it gives it less work to do than our friends against us would have it.  But, as I have said, if the Parliament thinks that is inadequate, the Parliament can broaden it.

BELL J:   Why would that not have been caught by the language of the 1782 Act?

MR BELL:   A circuitous device or a ‑ ‑ ‑

BELL J:   The language would pick up: 

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 –

That would be sufficient to pick up the concern respecting the creation of the company.

MR BELL:   Yes.

BELL J:   In other words, it does not explain the choice that was made by the drafting committee and accepted at the last debate to include the expression “pecuniary interest” and add to that the concept of “an indirect pecuniary interest” which, to the lawyers who drafted it, might well have been understood to carry with it some freight.

MR BELL:   The difficulty, in a sense, in answering your Honour’s question, is that we have debate about the provision of a clause modelled on the 1782 Act at least up until a particular time.  Then prior to the last Convention there was the drafting committee, as Mr Donaghue has correctly said, which redrafted effectively in the way they did.  There is no secondary material suggesting why they did it, what they were seeking to achieve ‑ ‑ ‑

BELL J:   Which might make the history before the adoption of the text with which we are concerned of comparatively little assistance.

MR BELL:   It may do, it may do, I accept that.  Another possibility is that obviously the language of 44(v) is less antique, if I may put it that way.

BELL J:   But it is not only less antique.  Surely, if one goes to the material that the Attorney has filed, it is fair to point out that the concept of pecuniary interest was one that was used in other contexts in relation to local government and so forth.

MR BELL:   Yes.

BELL J:   If it had been the intention to retain in essence – or if the intention were directed purely to reproducing in more modern language the proscription of the 1782 Act, it is difficult to see why they might have picked up indirect pecuniary interest, is the matter I am raising.

MR BELL:   Well, with respect, not necessarily because I think the – obviously the 1782 Act was concerned with benefits being conferred on candidates and compromising their independence as parliamentarians, so one has the idea of pecuniary in those benefits, and the notions of indirect, the 1782 used the language of direct and indirect, used the language of trust, et cetera.  It may be that they are just being captured in that one phrase. 

Your Honours, there is an important judgment in this Court in Ford v Andrews (1916) 21 CLR 317 at 325, point 6. This is a local government case but dealing with disqualifying pecuniary interests, and Sir Edmund Barton at 325, point 6, your Honours, said, “In my view” ‑ ‑ ‑

GORDON J:   Sorry, where are we, Mr Bell?

MR BELL:   Page 325, point 6 of the page.

GORDON J:   Thank you.

MR BELL:   Sir Edmund Barton said:

In my view the disqualifying interest must be one in existence at the critical time, and not merely a possibility of acquiring an interest.

Then, at the end of that paragraph, towards the end he says:

Such a possibility does not in my opinion amount to an interest, especially in a case devoid of any service on his part on which the award of any such remuneration could be funded.

In the judgment of Sir Frank Gavan Duffy at 334, about point 6 of the page, says:

I do not think that the mere possibility of obtaining from the directors, of whom he was one, a gift of a share in the profits of the Enfield Brick Company under its Articles of Association . . . is such a pecuniary or proprietary interest.

That is why I say what I have said earlier about discretionary trusts.  It is a possibility that there could be a distribution to Mr Day.  There is ‑ ‑ ‑

GORDON J:   It does go on to say, to draw a distinction, though, if there was an agreement or understanding to that effect or that nature that he would get ‑ ‑ ‑

MR BELL:   There is no finding, with respect, your Honour, in this case that Mr Day had an agreement or understanding that the Day Family Trust would disburse any moneys received to him personally.  There is no such finding sought and no such finding made, and that is why I went on for probably too long in the beginning of my submissions to emphasise that point.

EDELMAN J:   Was the Livingston concept of an object of a discretionary trust having no more than an expectation one that was current in 1900?

MR BELL:   I would like to be able to give your Honour an answer to that on my feet.  I do not think I can responsibly, but we know – this is a decision relatively soon after the turn of the century.  Yes, we have in paragraph 146(d) of our written submissions given your Honour’s reference to the authorities, including one authority from the 19th century ReColeman, Henry and Strong (1888) 39 Ch D 443, a 19th century authority for the familiar proposition that beneficiaries and discretionary trusts hold no beneficial interest in the assets of the discretion trust.

That is not quite an answer to your Honour’s question but it is a 19th century authority in support of a proposition which has become trite in our law, including our revenue law in relation to discretionary trusts.

GAGELER J:   Mr Bell, page 335, the next page in Justice Sir Gavan Duffy’s judgment, what do you say about the third last sentence, the penultimate sentence of the large paragraph  that ends there:

A man is directly interested in a contract –

et cetera.

MR BELL:   Yes, well, the key point is the second half of the sentence, your Honour:

in either case the interest must be in the contract –

so a bit like in the agreement –

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.

And, of course, part of the chain in this case is the last link, as it were, in the chain – that is to say, the link between the receipt – or contemplated by the arrangement by the Day Family Trust of moneys, et cetera.  Now, your Honour, I do not have time to take you there but referred in particular, there is a case called Thompson v Pearce and there is a case called Le Feuvre v Lankester, which was cited by this Court in Norton v Taylor, (1905) 2 CLR 291. Those three cases are authority for the proposition that a subcontractor who in a sense has an economic interest in the performance of a head contract does not have a pecuniary interest in the head contract.

That is really quite a significant line of authorities because that would be caught on the Commonwealth’s test.  That would be arising from the main contract because the payment under subcontract is tied to the payment under the head contract, et cetera, the monetary benefit flows.  It is indirect, et cetera, but those cases say no, that is not an indirect interest of a disqualifying kind.

Now, I think I have just under 10 minutes of my allocated time, if I might.  Your Honours have our short outline of submissions.  Your Honours will see in paragraph 14 that we have gathered what we say are salient facts.  Now, this is important because it takes the facts we were aware of in our principal written submissions but it adds some findings including some non‑findings or some refusals to find certain facts by her Honour Justice Gordon in that judgment. 

These facts, in our respectful submission, are of great significance in terms of a precise analysis of whether an indirect pecuniary interest was held by Mr Day in the lease.  He, of course, was not a party.  There is a very important finding by her Honour Justice Gordon – or proposition, proposition (3) under paragraph 14 the Court declined to find the rent was payable by the Commonwealth under the lease – the rent that was payable by the Commonwealth under the lease was to be paid by B&B Day or to Mr Day.  That was a finding which was sought and we have given the references – that was sought and we have given the references – that was sought by Ms McEwen and her Honour did not find that.  That is a particularly important finding.

Other aspects of these findings illustrate how Ms McEwen, in particular, sought to identify an indirect interest in a trust – as a result of a trust, an express trust arrangement.  Either the property was held on trust for Mr Day or shares in Fullarton Investments, et cetera, but all of those alternate characterisations were rejected.  We have only, which was an agreed fact, that the property was held on the terms of the Fullarton Road Trust and Mr Day was not a beneficiary of that trust.  Mr Day was not a shareholder of Fullarton Investments, was not a director of Fullarton Investments.  He was not a shareholder.  After 30 June 2014 in B&B Day, he was not a director.  After 30 June 2014 in B&B Day, he was not effectively in control of B&B Day.  After 30 June 2014, her Honour declined to make that finding which was sought.  So, at the end of the day, what was he other than the holder – one of many including every religious or sporting person in the country, a potential beneficiary of this discretionary trust. 

Now, we make a submission about the arrangement found.  Can I just put two items of context around her Honour’s finding in paragraph 97(5) – maybe three items of context.  Her Honour found in 97(4) of the judgment that:

the purpose of the arrangement was to remove the Fullarton Road Property from Day family members and any entity in which Mr Day had an interest –

That was the finding of the purpose of the arrangement.  The second piece of context is to be found in paragraph 73 of her Honour’s judgment where her Honour identified the way in which she was using the word “arrangement” in the judgment.  That is:

something less than a binding contract or agreement.  It may be informal as well as unenforceable and the parties may be free to withdraw from it or to act inconsistently with it, notwithstanding their adoption of it.

That seems, with respect, to be something less – it does not seem to lend itself to the description of an interest.  It might give rise to a possibility or some expectation, but it is short of an interest, and there are those passages from Ford’s Case that I have referred to.  But even on that analysis, of course, the arrangement falls short because of the absence of the last step,  the arrangement contemplates the payment to the Trust, not to Mr Day, and that is why we make the submission in paragraph 16 that even if B&B Day had an indirect pecuniary interest, it would follow that Mr Day did.

The third bit of context is that the arrangement to make the payments to the Trust of course were in the context where Fullarton Investments owed money to B&B Day because it had not yet paid the full purchase price, and so, I think as the Solicitor‑General seemed to accept, that part of the arrangement which would see the money being collected by Fullarton Investments and then passed back to the Trust has to be seen in the context that Fullarton Investments was indebted to the Trust because it had not paid all of the purchase price, and the records of the B&B Day show that it was indebted, I think, to Fullarton Investments – the financial records of Fullarton Investments show it was indebted to the tune of something like $679,000 to B&B Day. 

That is another part of the context which, in a sense, we would submit, makes far less suspicious or apparently dubious these arrangements.  So what one is left with then is the alternate way it seems to be put, which is, well, whatever the arrangement, we know that Mr Steinert, as the director of Fullarton Investments, directed that money be paid into Mr Day’s bank account.

Well, he did.  Mr Day did not control him.  That consequence was as a result of an independent exercise of discretion by Fullarton Investments.  It had nothing to do with the lease in the sense that it was not mandated by the lease, it was not required by the lease.  Mr Steinert, who is the Director of Fullarton Investments at a time after entry into the lease, said, “You’re going to owe me rent, I want you to pay it to a person I nominate.”  Now, if that is how you get an indirect interest, then any object of a direction of a payment would have such an interest and that is not an attractive outcome.

Finally, to pick up a point Justice Bell made to me, but Mr Day was a guarantor, if the rent was to effectively discharge a debt to B&B Day and B&B Day had the finance facility, et cetera. That argument, your Honour, is based on, with respect, the most extraordinary proposition.  It is based on the proposition – and your Honours will see this expressly in the allegations, the way the Commonwealth articulated its case in its statement of facts at court book pages 289 and 290.  You will see paragraph 52, point 3 where the indirect pecuniary interest is identified and an important element – you will see at paragraph h. –

BELL J:   Which page?

MR BELL:   Pages 289 and 290, paragraph 52, point 3.  I am sorry; I am racing.  At paragraph h.:

By reason of the matters in paragraphs a to g . . . Mr Day had an interest . . . involving and expectation of some form of monetary gain –

If one goes back to e, an important plank of this is the notion, well, if the Commonwealth does not pay its contractual obligation under the lease, B&B Day will have a problem on its facility and you as guarantor will be exposed.

BELL J:   Yes.

MR BELL:   We say three things about that, your Honour.  It is a fairly breathtaking submission to be made by the Attorney-General because the interest is dependent upon the Commonwealth of Australia not honouring a contractual obligation.  Now, bearing in mind that the consequences of the finding of an interest is a citizen is disqualified from standing for election and/or that someone who has been elected no longer be continued to sit, and that would be on this analysis because the Commonwealth has not honoured and contractual obligation.  That is a breathtaking submission.

More so, your Honour, it is directly at odds with another aspect of Webster, and I take your Honours very briefly, at page 286, point 3 and point 6.  His Honour rejected a case posited which was in his description theoretical.  So about point 3 he said:

In the first case, theoretically, the Department might delay payment as a measure of influence upon or coercion of the member; and, equally theoretically, in the second case the Department might accept unacceptable goods as a means of persuasion.  But, in my operation, as of this day, neither theoretical possibility is really conceivable in relation to isolated orders –

et cetera.  Then at point 6 or point 7, his Honour said:

I cannot conceive that, in these days, the Crown could exert any influence in Parliamentary affairs by anything it could do, properly or improperly, in relation to such an agreement.  There are but bare theoretical possibilities unrelated to the practical affairs of business and departmental life, but these are not really conceivable.

It is no answer for the Commonwealth to say, but we did not pay, got you.  I mean, when this lease was entered into, the absolutely reasonable assumption would be that the Commonwealth would meet its obligations to Fullarton Investments.  The contract was executed by the Commonwealth of Australia, and if it did not meet its obligations, the Commonwealth would be liable for rental shortcomings.  You cannot, with respect, build a case of an indirect financial interest on a predicate of the Commonwealth acting in breach of contract, especially where that had the anti‑democratic and anti‑representative of government consequences of the kind.

Further, the third point about this is if the Commonwealth’s test is this real risk or perceived risk of influence because something might happen, no objective bystander – whether it be this Court or reasonable bystander – would expect the Commonwealth to default on its contractual obligations.  So, if the Commonwealth is putting this test that the expectation arises built on the possibility that the Commonwealth would

default, the Commonwealth fails on the facts, simple as that, because the perception of influence which should result in the disqualification would not be made good. 

The final point to make, I think, is that if a test is accepted which has built into it – notwithstanding what I have said about the language of expectation – some concept of expectation, there is, again, an evidentiary deficit.  The Commonwealth did not contend – other than in that paragraph I have taken you to, 52, point 3 – that Mr Day had an expectation.  The only way they put it was in 52, point 3 and, in particular, they did not ever put, or plead, or contend what your Honours will see in the Attorney’s reply submissions – and we do object to this – in paragraph 16 of the Attorney’s reply submissions, it is said:

there is ample basis to infer that Mr Day controlled the direction of rental payments under the Lease.

That is the submission the Commonwealth has made.  That was not a contention made and as paragraph 16 it is very important because it is at the core of the Commonwealth’s response on the facts, and it was not a contention sought by the Commonwealth and is not a finding made and we would submit, with respect, that it is inconsistent with other findings – in particular, the finding that Mr Day did not control Fullarton Investments.

Your Honours, as I indicated at the outset, if the Court finds contrary to my submissions that Mr Day was not qualified or was disqualified as to the consequences, we have advanced some short written submissions on consequences in paragraphs 157 and 158 of our written submissions, but we otherwise adopt both what the Attorney has put in writing and orally, I think, or what Mr Williams is about to put orally in answer to Mr Kirk’s submissions on consequences.  If it please the Court.

KIEFEL CJ:   Mr Solicitor.

MR DONAGHUE: Thank you, your Honour. Your Honours, as in other constitutional contexts, in our submission, the operation of section 44(v) depends upon matters of substance and while we, of course, agree that it is important to undertake a precise analysis, that analysis first cannot be more precise than the terms used in the Constitution permit, the term here being “interest” which is a term that is recognised in the case law of this Court as having some level of vagueness about it. But, perhaps more importantly for present purposes, a call for precision in analysis cannot be allowed to become a cover for allowing devices to be used for the circumvention of constitutional requirements or minimum standards.

In our submission, there are two points we need to make about the factual case that has been put on behalf of Mr Day.  The first requires me to take your Honours back to the 2 December email at page 503 of volume 2 of the court book because, in our submission, the submissions just put on behalf Mr Day leave out an important part of the arrangement.  Your Honours will recall that Justice Gordon found that an arrangement was made in terms of the 2 December email and at the start of the 2 December email – this is near the bottom of page 503 – you see:

Hi John and Debbie, Bob 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 –

to allow Mr Day –

of the rental allowance provided –

Now, there are then some further details about how that was to be done, the rent to be passed back to the Trust, but this was not an arrangement that was for the benefit of all of the potential beneficiaries under the Day Family Trust.  This was an arrangement, in the terms of that email and as found by her Honour, where it was contemplated as a matter of implementation that the funds would be paid to the Day Family Trust but the funds were to go to the benefit of Mr Day and our submission is that is entirely consistent with the documents of the case as found.

The other point, your Honours, in the same volume of the court book, if you could turn to page 924, Mr Bell made something of a point about the fact that this is a document signed by Mr Steinert, who at that time had become the director of Fullarton Investments, and that of course is true.  He replaced Ms Smith.  What Mr Steinert did in this document is give the same direction to the Commonwealth as had earlier been given by Mr Day himself when he nominated himself as the contact person in the equivalent document you see at court book 800.

In our submission, this document does not assist Mr Day at all because the finding of fact is that the arrangement that had been implemented between – or as to the creation of Fullarton and then the pass back of the rental payments was implemented and I think continued.  That is paragraph 11 of Justice Gordon’s judgment.  And, in our submission, what was happening here in the direction that the moneys be paid was consistent with that finding in accordance with the – well, perhaps a loose implementation, to adopt the language that Justice Gordon used earlier, because it is not precise – it is not a payment to B&B Day; it is a payment to Mr Day directly.

Now, that is not the mechanism that the arrangement contemplated, but it is entirely consistent with the opening paragraph of the arrangement to which I just took your Honours.  So when it is said, as Mr Bell said, there was an independent exercise of discretion being exercised when Fullarton pulled out that form, that rather leaves out of account the fact that there was an arrangement as to the way that that was to be done.

Second, your Honours, can I address the question of the meaning of “interest” or “pecuniary interest”.  Without going to it, in paragraph 54 of the judgment in Ebner, this Court said that the concept of interest is “vague and uncertain”. It is, however, the words the Constitution uses and so it presents a task of interpretation for the Court. It is, I think, accepted that it does not have to mean legal interest and it was ultimately conceded by Mr Day that it also does not have to be an enforceable interest.

We have attempted to identify the test that should be applied in paragraph 54 of our written submissions, and if I can ask your Honours to go briefly to them, because we have been criticised for using the word “expectation” but that is a word that has quite some foundation in the case law in this context.  In paragraph 54 we identify pecuniary interest in the context of 44(v) as one that sounds in money or money’s worth.  We give a reference to a decision of the Full Court of the Federal Court explaining that a proprietary interest is dealing with, in that context, the words “financial interest”. 

The Full Court distinguished between a proprietary interest and financial interest and said a financial interest pertains to money or money’s worth and we equate those concepts, and Amadio then, which is the Full Court case, drawing in part on a number of older authorities about the concept of pecuniary interest, identified some of the possible meanings, one being that the interest as we quoted is such that can give rise to an expectation which is not too remote of a gain for loss of money.  So that is where we ground our submission about the meaning of that concept.  When your Honour Justice Gordon asked ‑ ‑ ‑

GORDON J:   Sorry, just one moment.  Does that mean that 55 is – in 55 you go on, in effect, or as I thought, to identify it in precise terms.  Is that not the position?

MR DONAGHUE:   No, I was not intending to back away from 55, your Honour.  I was just trying to move quickly.  That is the part of our submissions where we attempt to grapple with the meaning of the words.  When your Honour Justice Gordon asked Dr Bell what his test was, he responded by not offering a test but by saying there are five categories and no underlying theme or concept was identified to unify or to draw together those five categories.  Some of them do not seem to be categories of indirect interest all, the fraud or sham, for the reasons that your Honours have already raised with him.

The question of the small proprietary company exception immediately raises the question, well, why does a shareholder in a small proprietary company have an indirect interest.  What is the theory or the rationale that says that such a person has an interest if they do not have a right to dividends and there is no necessary reason why the contract would impact upon the value of the shares that they hold?  But it seems to have been put by our friends, well, that is an interest because it necessarily follows from the proviso that that is an interest.  But if one uses that example to try to inform the meaning of the constitutional word “indirect interest”, it suggests that relevant kind of interest is potentially a quite weak one, certainly not one that would be capable of enforcement. 

The other point that we would note about that, your Honours, is that none of those five examples appear to grapple with Justice Keane’s example to our friend about the unenforceable side deal in relation to rent that might be paid under an agreement, that being an example which we accept, as your Honour put, would obviously fall within the intended ambit of 44(v) and so the indirect interest has to capture it.

As to the Convention Debates, no doubt your Honours will ultimately be looking at them for yourselves, the submission, as I understood it, that was put was that the passages that we invite the Court to rely upon are actually irrelevant because they are about a different provision.  We respectfully say that that submission cannot be maintained, and if your Honours go back to the first of the supplementary bundles at page 5, you will see – and Mr Bell passed over this page – but you will see on that page, this is in the April 1897 debate, at the bottom of the first column clause 46 which is the clause that became 44(v) set out and then at the top of the next column Mr Carruthers moved an amendment to that clause, to the clause that became 44(v), and he sought to add a provision that we accept ultimately and I put to your Honours this morning, ultimately became 45(iii).

But in the debate that follows, what you find is it being said, we need to add these words, so that the reach of what became 44(v), then 46, will not just be applied to contractors but it will be extended to a wider class of people and it necessarily follows that anything that he said about how the new paragraph was intended to work applies equally to the purpose that was to be served by the earlier words, because this was a debate about extension; it was not a debate, as I think was being put, about a quite different clause with a quite different area of concern.

The submission about 44(v) needing to be given a narrower operation to and then allowing wide work to be done by the powers given to the Parliament by sections 16 and 34 we submit runs into the objection discussed in the Convention Debates in the March 1898 passage that in theory all of this could have been left to the Parliament. There was no need at all to include section 44 at all if Parliament was to be left with the judgment as to what kinds of qualifications or what kinds of things should disqualify people from running for office.

The constitutional design did not adopt that model. It identified in paragraph 44 a number of discrete categories of case that the Constitution itself provides, disqualify, and it then empowered Parliament to add to those. We submit it is entirely to invert the proper analysis to say that because Parliament could legislate on the topic, the Constitution’s own provision on the topic is to be read down or confined in any way.

As to Dr Bell’s focus on the words “in the arrangement” in clause 44(v), we agree that those are important words and they need to be given work, but they cannot be read or divorced from the fact that the clause also refers to an indirect interest.

So the provision relevantly contemplates that it is possible to have an indirect interest in the relevant arrangement with the Public Service and it is that combination of concepts that gives rise to the interpretive difficulty and it is not answered by focusing on one part of the phrase to the exclusion of the other. 

Ford v Andrews, your Honours, is a case that was concerned with a provision, section 60 of the Local Government Act 1906 (NSW), that expressly excluded the interests of a shareholder. So in the statutory provision in context said that you could not an interest or you could not be disqualified by an interest that was held only as a shareholder. So right from the start this statutory context is quite different. The question then was, how did the councillor who was a director of the company and also a shareholder but whose interests as a shareholder was to be disregarded, how could he have a pecuniary interest in the contracts of the company.

The answer that was posited was that it was possible under the articles of that company for the directors to resolve to give one of the directors a commission on profits made on particular contracts.  So it was said you have an interest because the directors might exercise their power to give you a return out of the particular contract and this Court, not unsurprisingly, said the mere possibility that that power under the articles might be exercised in the absence of any facts that suggest that anyone was even thinking of exercising it in the context was not enough to give the director a pecuniary interest in the company.  But, in that context, as

your Honour Justice Gordon pointed out, Justice Gavan Duffy made a point of saying there was not any suggestion that there was an agreement or understanding that there would be share, we say, in marked contradistinction of the facts of this case where there was an arrangement not just that contemplated it but that it would occur.

We also note, as your Honour Justice Gageler pointed out, that there is a discussion towards the end of Justice Gavan Duffy’s judgment, again using the language of expectation that is not consistent with, even under the local government legislation, a narrow approach to those words.  Justice Edelman, I do not think we can answer your question about discretionary trusts but there is, I am told, an article that was written by Peter Hely, when he was still a law student, in 1966 in volume 5 of the Sydney Law Review, 331, tracing some of the 1890 cases on that topic.  So that may be of some assistance to your Honour.  Your Honours, will you permit Mr Williams to address very briefly in reply to Mr Kirk.

KIEFEL CJ:   Yes, Mr Williams.

MR WILLIAMS:   Your Honours, In re Wood in 167 CLR 145 settled at least two points. The first, to be found at page 174 at about point 2 of the report in the judgment of Chief Justice Mason, quoting of course the Full Court, that since section 273(27) concerning the death of a Senate candidate treats a vote for that candidate as a vote for the next preferred candidate. Then when a candidate is later found to have been disqualified, the true legal intent of the voters is to be ascertained in the same way. That is, of course, a sharp contrast to the position under section 180(2) for the House of Representatives.

Now, that first aspect of Wood has been directly applied in Sue v Hill.  The reference is Justice Gaudron in paragraph 178, the plurality adopting her Honour’s answers to the questions in paragraph 1 and in the ultimate orders made by Chief Justice Gleeson.  It has been applied of course in Re Culleton (No 2) as recently as Friday and it is being applied as I speak in that case.  The second point settled by Wood was that the presence of a later disqualified candidate or candidate later found to have been disqualified on a two‑person group ticket does not invalidate the ticket.  Now, that of course was held directly by the Full Court in Wood, applied by Chief Justice Mason, part of the ratio, no application is made to reopen.

It follows indirectly, of course, from the reasoning in Wood, in Sue v Hill and in Culleton, that the presence of a disqualified candidate on the ballot, does not prevent the ascertainment of voters’ true legal intent in the preferences that are expressed for other candidates.  The current voting system only reinforces that approach.  Section 272(2) treats a vote above the line as a vote below the line for each group candidate in order, so that the true legal intent of a vote above the line for Family First was to vote for Mr Day and then for the second ticket member, Ms Gichuhi.

Those who gave a preference below the line to Mr Day – we understand some reliance is placed on that – either did or did not give a preference to Ms Gichuhi.  A special count will ascertain whether or not they did and will ascertain the true legal intent.  So there is no distortion flowing from that.  There is, we submit, simply no basis for an assertion that the almost 24,800 voters who chose Family First above the line should have that choice entirely disregarded.

The House of Representatives cases relied on, where there are no group voting provisions and where, almost invariably, there is one candidate per party plus independents, provide no assistance whatever to Ms McEwen.  Nor does the prominent position of Mr Day and the Family First campaign material assist her.  In re Wood calls attention to the true legal intent of the voters in the election that did occur, not just some hypothetical alternative election in which Mr Day was not a candidate.  There are a myriad of possibilities as to what may have occurred, absent Mr Day as a candidate, and the exploration of those would require evidence.  But, there is, of course, no basis in the statute for so hypothetical an inquiry.  

Finally, to deal with the question of the costs of Ms McEwen, Ms McEwen mounted a wide factual case which largely failed.  The facts that did emerge from Ms McEwen’s case would, absent her as a party, likely have emerged by inference from the documents that the Commonwealth had intended to seek under a subpoena which it had drawn and which was referred to in the 12 December directions hearing before your Honour Justice Gordon.

KIEFEL CJ:   But had not the question about the costs occasioned by widening that factual inquiry been dealt with by Justice Gordon?  We are talking about the costs of this matter itself divorced from that.

MR WILLIAMS:   Yes, that is so.  There were particular orders made by Justice Gordon concerning particular aspects, but reliance is placed on the fact that additional facts did emerge from Ms McEwen’s presence.  Had she not been present, we would have served a subpoena more narrowly drawn than the ones that were ultimately served by her and the material that would have emerged from that would likely have given rise to most at least of the inferences upon which we have in addition placed reliance.

Sue v Hill does not assist Ms McEwen either.  In that case the Full Court concluded of course that the fourth, fifth and sixth elected candidates might be affected by the invalidity of the nomination of the third

elected candidate, Ms Hill, and those candidates, the fourth, fifth and sixth elected Senators, were then joined so that they could be heard as to what should follow.  Perhaps, unsurprisingly, an order was made that their costs be paid. 

That is a very long way from the present facts.  The ultimate case that Ms McEwen came into the case to run, that is that the almost 25,000 Family First votes should be entirely ignored in a recount is a case that is so remote on both a factual and a legal basis as not to merit an order for costs, in our submission.  Those are our submissions.

KIEFEL CJ:   Yes, Mr Kirk, reply in relation to Mr Bell, I think.

MR KIRK:   Yes, and also briefly, if I may, in relation to Mr Williams.  Obviously not in relation to the Solicitor‑General.

KIEFEL CJ:   Why would you have a right of reply in relation to Mr Williams?  Does he then have a right of reply in relation to you?  We have to stop this.  The Attorney puts the point forward, you counter the point, they reply to it, where is your right of reply?

MR KIRK:   It was not addressed in primary submissions orally this morning.  Mr Williams did not address the question (b) point orally.  This is my first chance to respond to that.  Nor was the costs issue addressed this morning.  So it was on that basis actually that it was agreed that I would go last in reply because that is the first time I have heard the oral submissions of the Attorney on those points.

KIEFEL CJ:   Very well.

MR KIRK:   I will seek to be very brief on both topics, though, your Honour.  In relation to Dr Bell, four brief points.  My learned friend seeks to emphasise the imposition of the B&B Day Trust.  I am not going to go back over my submissions this morning.  But my learned friend did take your Honours to the trust deed.  Can I also remind your Honours that under the trust deed, I will not take your Honours to it but at page 49 clause 18, Mr Day was the appointer of the B&B Day Trust and that has significance explained in our written reply at paragraph 16.  That is the first point.

The second point:  my learned friend Dr Bell, in effect, seeks to characterise this as just, “Well, A owes something to B, who owes something to C, so B directs A to pay it to C.”  That has no relation to the situation here.  First, one goes back to that email of 2 December 2013, which my learned friend Dr Donoghue referred to.  The purpose here was to house the property so Mr Day could avail himself of the allowance.

Secondly, this has to be seen in the context of the vendor finance agreement, to which your Honours have not been taken, but it is at page 107 of court book 1.  This, although it is dated 1 December 2014, was in fact signed on or about 21 September 2016 – see the facts judgment, paragraphs 118 to 119.  That says nothing as to repayment of interest or capital or the term or the termination or security.  It is a bare acknowledgement of a loan.  So that completely undermines, in our respectful submission, Dr Bell’s submission about C paying B, who pays A.

Thirdly, my learned friend referred to the Steinert document, signed – being the second document directing payment into Mr Day’s account.  Can I add to what the Solicitor said by referring your Honours to the factual judgment, para 110, subparagraph 9 which, in effect, treated that as part of the evidence of the implementation and subsistence of the arrangement.  In relation to Webster and the status of it, can I just give your Honours a reference.  There is no separate Court of Disputed Returns.  This Court is the High Court, sitting with additional original jurisdiction, conferred on it by the Commonwealth – see Sue v Hill, paragraph 38 of the plurality and her Honour Justice Gaudron at paragraphs 143 to 144.

In relation to what my learned friend Mr Williams said, he said we had established two points.  He referred first to the deceased candidate analogy.  The question is whether the analogy is a good one and I have already addressed that.  He referred to Sue v Hill.  This issue did not arise there, nor was it raised in Culleton, that is to say, what should happen as a consequence.

In relation to the second point my learned friend said, we furiously agree that the Full Court held that the presence of an ineligible candidate does not invalidate the ballot paper.  We agree.  The issue is the extent of the nullity though and how far it goes.  I will not repeat what I said about that this morning.  My learned friend said the present voting position reinforces the position; we say the context and the consequence is quite different.

My learned friend did not seek to reconcile Wood with the subsequent House of Representatives cases but has not disputed that the language used there of distortion of the voter’s real intention may equally apply here.  My learned friend said our argument had no basis in the statute.  The statute, as I put, does not address this issue.  It is a choice for the Court in line with legal principle.

Finally, in relation to costs, my friend said we ran a wide factual case and it is true, we sought many findings before your Honour Justice Gordon which we did not obtain.  Now…..we obtained many.  It is, with respect to the Attorney, a little unfair, having referred to a whole series of findings

made by your Honour Justice Gordon, sought by us, having referred regularly to court book 2, which were documents obtained by us, to then say we have contributed nothing to the resolution of this case.  In any event, it misses the broad purpose of section 360(4).

In Sue v Hill, not just before Chief Justice Gleeson but the Full Court gave costs to Mrs Hill reflecting the broad notion of public interest here.  Furthermore, Ms McEwen may be affected by the result and by the answer to either question (a) or question (b).  Even if we lose on question (b) but won on question (a), there will be a recount. 

My client was the one who missed out on the 457^th count.  She is the one with skin in the game, not the Attorney.  She is the one who has some real interest to play, which she has sought to put and has, with respect, usefully put, in our respectful submission, before the Court.  May it please the Court.

KIEFEL CJ:   The Court reserves its decision in this matter and will adjourn until 10.15 am tomorrow.

AT 4.30 PM THE MATTER WAS ADJOURNED