Re Day (No 2)

The High Court of Australia considered questions referred by the President of the Senate concerning Senator Robert John Day AO. The dispute arose from a lease agreement between Fullarton Investments Pty Ltd and the Commonwealth for Senator Day's electorate office. Senator Day had a financial interest in the premises, which were previously owned by a company of which he was a director and shareholder, and which was held in trust for beneficiaries including himself. The rent payable under the lease was directed to be paid into Senator Day's personal bank account, and he was a guarantor of a loan secured by the property.

The Court was required to determine whether Senator Day was incapable of being chosen or of sitting as a senator under section 44(v) of the Constitution due to an indirect pecuniary interest in the lease agreement with the Commonwealth. If a vacancy was found, the Court also had to decide how that vacancy should be filled, and whether Senator Day had been incapable of sitting as a senator prior to the dissolution of the 44th Parliament, and if so, from what date.

The Court reasoned that Senator Day had an indirect pecuniary interest in the lease agreement because the rent payments to his nominated bank account reduced his contingent liability as a guarantor of the loan secured by the property. Furthermore, as a beneficiary of the Day Family Trust, which was a beneficiary of the Fullarton Road Trust, he had a prospect of receiving distributions of rent proceeds. Applying the principles established in previous cases concerning section 44(v), the Court found that Senator Day was indeed incapable of being chosen or of sitting as a senator.

The Court answered the referred questions, finding that a vacancy existed in the representation of South Australia in the Senate for Senator Day's place by reason of section 44(v) of the Constitution. The vacancy was to be filled by applying section 273(2) of the Commonwealth Electoral Act 1918 (Cth) by analogy, through a special count of ballot papers. The Court also determined that Senator Day had been incapable of sitting as a senator on and after 26 February 2016. Directions were made for a single Justice to handle further proceedings, and the Commonwealth was ordered to pay Senator Day's and Ms McEwen's costs.