The High Court of Australia, in an 80 page-decision entailing four separate judgments of nine Justices, has declared that Bob Day AO was incapable of sitting as a Senator from 26 February 2016 due to payments he received for rent of his Fullarton Road electorate office.
Bob Day ineligible as Senator due to lease payments
Subject to a limited number of exemptions, the Constitution prohibits Parliamentarians from having “any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth”. The argument in this case related to whether an elaborate structure (involving a company, a family trust, a bank account, a loan, a mortgage, a guarantee and indemnity), which ultimately had the effect
that money paid by the Commonwealth for rent of Mr Day’s electorate office ended up with Mr Day himself, thereby constituted an indirect interest.
The Court unanimously determined that this was the case. In doing so, the Court overruled a 1975 High Court case which favoured a narrow construction.
The long history of direct and indirect pecuniary interests in local government legislation
Significantly, the High Court determined that that the older case “wrongly rejected any analogy with the disqualification provisions under local government legislation”. An historical analysis undertaken by the High Court demonstrated that local government legislation influenced the drafting of the
Thus, the discussion of what constituted an ‘indirect pecuniary interest’ in Mr Day’s case is relevant in interpreting equivalent provisions in the Local Government Act 1999
The Court emphasised the importance of determining the actual, practical flow of pecuniary interests. Mr Day’s intricate accounting structures did not assist him. Rather, the Court suggested that “devices such as the interposition of a company or other entity between a person who is a parliamentarian who stands to gain, or lose” are precisely the types of things the “indirect” qualification is intended to capture.
An important difference between the Constitution and the LG Act
An important difference between the Constitutional provision and the LG Act is that the Constitution requires the pecuniary interest to attach to some “agreement”. On the
other hand, the LG Act requires the interest to attach to “the outcome of consideration of [a] matter at [a] meeting” in the case of a council member or, in relation to an employee, to whether “the employee acted in a particular manner in relation to [a] matter”. These are substantially more broad bases than the existence of some identifiable agreement.
Norman Waterhouse Lawyers has extensive experience advising local government authorities upon conflict of interest queries, and governance matters more generally. We are committed to regularly publishing updates of important legal developments affecting council members and officers in South Australia.