Legal advice says there is ‘some risk’ high court may find conflict due to ‘substantial size of the payments’

This article is more than 2 years old

This article is more than 2 years old

Peter Dutton is “not incapable” of sitting as a member of parliament, according legal advice from the solicitor general, but there is still “some risk” the high court might find he has a conflict of interest.

The advice was released on Friday morning ahead of an expected noon party room meeting to decide the leadership, potentially easing Dutton’s run but leaving sufficient doubt about his childcare business interests for his opponents to call for a referral to the high court.

Stephen Donaghue’s advice concluded there is “some risk” that the high court might find Dutton has a conflict of interest, in part due to the “substantial size of the payments”, referring to the subsidies earned by the childcare centres. He said it “is impossible to state the position with certainty” that Dutton is eligible.

Donaghue warned that application of section 44(v) of the constitution – which disqualifies parliamentarians with a “direct or indirect interest in an agreement” with the commonwealth – is “highly fact dependent”.

“However, for a variety of reasons, I have been briefed with very little factual information.”

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On Monday Ten News first reported that Dutton is a beneficiary of a trust that operates childcare centres that receive federal subsidies. Constitutional law experts Anne Twomey and George Williams have said those facts create an “arguable case” he is ineligible.

Donaghue said Dutton’s case was impossible to predict because the facts are “unlike those that have previously been assessed” by the high court and there is “significant division” on the court about section 44(v).

Donaghue’s advice assumed that subsidies were “entirely consumed” by provision of childcare services to children, concluding that Dutton would be eligible on that basis.

But the solicitor general also noted the need for further evidence about whether federal subsidies were large enough to generate a surplus for Dutton’s family trust that could be distributed to him as a beneficiary.

“The court might consider those payments to have created the expectation of benefit to Mr Dutton, on the basis that they would contribute to the amount of surplus income available to be distributed to beneficiaries of the RHT Family Trust, and that Mr Dutton had an indirect pecuniary interest on that basis.”

But Donaghue concluded there was no agreement with the commonwealth in Dutton’s case because subsidies are paid under a statutory scheme that compels the department to pay them in certain circumstances, not an agreement.

If the court found there were an agreement, though, Donaghue concluded “it would be likely to find that Mr Dutton had an indirect pecuniary interest in that agreement”.

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Donaghue questioned whether the agreement is “with the commonwealth”, noting judges had split on that aspect of the test in Bob Day’s case.

“On the facts set out below, in my opinion the better view is that Mr Dutton is not incapable of sitting as a member of the House of Representatives by reasons of s44(v) of the constitution,” he concluded.

The advice leaves Dutton’s eligibility unclear. With four sets of advice now circulating, Labor’s advice from Brett Walker SC is the only one concluding the better view is that he is disqualified for a pecuniary interest in an agreement with the commonwealth.

A Fairfax Media report based on education department figures produced under freedom of information revealed the two childcare centres have received a total of $5.6m since 2010.

On Thursday Turnbull elevated the issue of Dutton’s eligibility, labelling it a “very significant point” in the Liberal leadership stoush.

“I cannot underline too much how important it is that anyone who seeks to be prime minister of Australia is eligible to be a member of parliament,” he told reporters in Canberra.

Dutton supporters have brushed off the relevance of the advice to the leadership issue, with the finance minister, Mathias Cormann, suggesting it is a red herring and there is no issue with his eligibility.

One Dutton supporter characterised Turnbull’s move to seek advice and involve the solicitor general as “desperation, totally inaccurate and not a good reflection on the prime minister”.

On Wednesday – even before Turnbull elevated the issue – Tony Abbott suggested the issue was an attempt by a “despairing incumbent” to fend off his challenger.

On Thursday the House of Representatives voted 69 votes to 68 not to refer Dutton to the high court, and no further attempt at a referral could occur before 10 September when parliament resumes.

Turnbull has suggested Dutton would “have to establish that he is eligible to sit in the parliament” before the governor general appointed him prime minister.