Thursday, 13th April 2017

The High Court last week decided that former Family First Senator Bob Day had been ineligible of sitting in the Senate since at least February 2016. He has been disqualified under section 44v of the Constitution:

Section 44 Any person who:

(v) 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 persons;

shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives.

There will be a special recount of the votes from the 2016 election conducted by the Australian Electoral Commission (AEC) today. Bob Day will likely be replaced by Lucy Gichuhi, the number two on the Family First ticket at the last election (Antony Green’s called it).

After the recount, the AEC will notify the High Court of the outcome for its consideration. The AEC will not be making the results of the special recount public today.

How is the Constitution interpreted?

Here at CEFA we’ve been widely reading and researching lately. We discovered an article by former High Court Justice Michael Kirby. He discusses the ‘originalist’ theory of the Constitution, whereby the meaning of the words people who wrote the Constitution are used to interpret the Constitution. He also describes the ‘qualified originalist’, where it is understood that the meaning of words change over time, but that the origin of the words should be the starting point when interpreting the Constitution (this is probably how we often describe the Constitution for you in the CCF).

Michael Kirby then quotes the words of Andrew Inglis Clark which are found in his 1901 book Studies in Australian Constitutional Law:

This method of interpreting a written constitution cannot be properly said to be characteristic of either a liberal or a strict construction of the instrument. The basis of it is the recognition of the fact that the Constitution was not made to serve a temporary and restricted purpose, but was framed and adopted as a permanent and comprehensive code of law, by which the exercise of the governmental powers conferred by it should be regulated as long as the institutions which it created to exercise the powers should exist. But the social conditions and the political exigencies of the succeeding generations of every civilized and progressive community will inevitably produce new governmental problems to which the language of the Constitution must be applied, and hence it must be read and construed, not as containing a declaration of the will and intentions of men long since dead, and who cannot have anticipated the problems that would arise for solution by future generations, but as declaring the will and intentions of the present inheritors and possessors of sovereign power, who maintain the Constitution and have the power to alter it, and who are in the immediate presence of the problems to be solved. It is they who enforce the provisions of the Constitution and make a living force of that which would otherwise be a silent and lifeless document.

Andrew Inglis Clark was one of the major contributors to the Constitution, and as such his book, written immediately after the Constitution came into being, is an important record. Clark saw the Constitution as a ‘living force’. He saw it not as something that can be contained by the meaning of words in 1901. 99 years later former Chief Justice Murray Gleeson stated something similar on ABC radio:

The founders were sophisticated people, experienced in public affairs. They knew that the ship they were launching would have to sail in waters uncharted by, and unknown to, them. It was obvious that the instrument of government which they worked to devise, and upon which, after many compromises, they reached agreement, would operate in conditions they could not foresee. They built in a mechanism for altering the Constitution, but they knew that the political society whose shape they were defining would have to accommodate itself to extensive and unpredictable change. The courage of most people would fail before such a task. They took it on, and, on balance, were remarkably successful.

The Bob Day situation

The Bob Day situation was very tricky. Day had devised a complex loan and business arrangement that would have directed Commonwealth Public Service funds straight to his own bank account.

When he was elected in 2013 Bob Day owned the building that all the fuss is about. He wanted to use the building as his electorate office, however he was informed that the Government could not pay rent to a sitting Senator. Professor of Law, Tony Blackshield explains what happened next:

Accordingly, the building was sold to a newly-formed company, Fullarton Investments Pty Ltd. But under a “vendor finance arrangement”, no money was actually paid. Instead the amount of the purchase price was (notionally) loaned by the vendor (B&B Day) to the purchaser….the end result was that the Commonwealth would lease office space from Fullarton Investments, which would use the money received as rent to pay progressive instalments of the purchase price to B&B Day, which would use the money to make loan repayments to the National Australia Bank.

The lease was signed on 1 December 2015 and backdated to 1 July that year. But according to reports, the problems weren’t picked up until the department was seeking to make the first payment in February 2016. The public servant who was tasked with paying the rent noticed that the business name and bank account belonged to Bob Day. The payment was stopped and an investigation commenced.

The people who wrote our Constitution could not have known that business arrangements like this were going to be possible. There were simply no words to describe this situation in 1901 (it’s hard to describe it now).

Previous decisions

Past cases decided in the Court are taken into account when the High Court makes a decision. There had been one previous decision on this section of the Constitution, In re Webster in 1975. Only one Justice sat on the case and Garfield Barwick gave section 44v a very narrow definition using what could be deemed an originalist view of this section in the Constitution. He approached the construction of section 44v on a 1782 Act of the UK Parliament and stated it was the ‘precise progenitor’ of this section. The purpose of the 1782 Act was to secure freedom and independence of the Parliament from the Crown. All seven current Justices agreed that this previous decision must be overruled. A paragraph from Kiefel CJ, Bell J and Edelman J explain:

The Attorney-General of the Commonwealth and Ms McEwen, who the Court ordered could be heard on the reference, argue that the purpose of s 44(v) differs from that of the 1782 Act. It is to prevent persons in the position of a member of Parliament from taking advantage of his or her position in order to obtain a financial advantage and to prevent a conflict between that person's duty as a member and his or her own interests arising. The Commonwealth submits that the reasoning in Webster is wrong and should not be followed.

When Court decisions are overruled like this, and new meanings are formed for sections of the Constitution, there can be a period of uncertainty. For instance, National MP David Gillespie owns a shopping centre that has an Australia Post outlet within it. Do the Commonwealth payments to this business cause an indirect pecuniary interest for the MP? Or is he a little bit too far removed. Professor Tony Blackshield goes a bit further:

The concern of all four judgments in Re Day with “the possibility of a conflict between a parliamentarian’s private interests and his or her public duty” (as the leading judgment put it at [23]) echoes a recurring theme in other recent judgments, as well as in our increasing popular cynicism towards politicians. But however widely the expanded reach of s 44(v) may now extend, it can only meet part of the problem. When members and Ministers are asked to review the systems of negative gearing and capital gains tax on which their own property portfolios depend, we need more than s 44(v).

This is an interesting point. The leading judgement in the Day case states this:

An unwritten rule of the House of Commons, which is said to have predated the 1782 Act by at least 170 years, was to the effect that:

"no Member who has a direct pecuniary interest in a question shall be allowed to vote on it".

In 1811 this standing order in the UK Parliament was described by the speaker of the House of Commons as an ancient practice established 200 years before. Should MP’s and Senators sit out of votes in Parliament if there is a potential personal benefit for them from the legislation?

MP’s represent us in Parliament. If an MP were to sit out a vote because they had a personal interest in the outcome, then the people of their electorate would not be represented on that issue.

This is certainly a complex topic. Has the High Court opened a can of worms?