Bob Day was ineligible to be a senator because he had an “indirect pecuniary interest” in an agreement with the commonwealth, the high court unanimously ruled on Wednesday.
The ruling means that Day’s vacancy, created when he resigned in November over the liquidation of his building companies, will be filled by a recount of last election’s votes.
The process will likely return the second Family First candidate, Lucy Gichuhi, as the new senator for South Australia although Labor’s Anne McEwen and others are an outside chance to take it.
Day’s eligibility was referred to the high court on 8 November to determine if he had an indirect interest in the lease of his Adelaide electorate office by the commonwealth, in breach of section 44 of the constitution.
The court found that Day created an entity, Fullarton Investments, that bought the 77 Fullarton Road property from the Day family trust on a vendor finance basis. Fullarton Investments was to receive rent from the commonwealth and use it to pay back the Day family trust, although no rent was ever paid by the commonwealth.
A majority of the court found that Day was ineligible from 26 February 2016, the date on which Fullarton Investments directed the commonwealth to pay rent to a bank account owned by Day.
Justices Geoffrey Nettle, Michelle Gordon, and Stephen Gageler suggested the date of ineligibility should be 1 December 2015, the date the lease was executed.
In submissions to the court at the 7 February hearing the solicitor general, Stephen Donaghue, quoted a letter from Day’s accountant, Vic Rasera, on 2 December 2013 that Day had sought advice about creating Fullarton Investments “so as to be able to avail himself of the rental allowance provided by the government”.
In late December 2015 Day asked the then special minister of state, Mathias Cormann, for almost $60,000 in back payments from 1 July that year because the commonwealth had failed to find a new tenant for his predecessor’s office, which triggered the obligation to pay rent.
Cormann asked for evidence that Day had paid rent for his office, which led Day to reveal the arrangement to pay back the Day family trust to the finance department on 25 January 2016. “No rent, no vendor finance repayments,” he wrote.
Donaghue said this amounted to Day “directly equating” the rental allowance with repayments to be made to the Day family trust. That evidenced an indirect interest in the lease, “a reasonable expectation of monies arising out of the lease”, the commonwealth submitted.
The justices unanimously held that Day stood to obtain a financial benefit from the commonwealth because the rent was to be paid directly into a bank account he owned, and that constituted an indirect pecuniary interest.
The majority of the court held there was no need for a pecuniary interest to be legally enforceable.
The conduct of the special count will be governed by orders from a single justice of the court. The court ordered the commonwealth to pay Day and McEwen’s costs, although one portion of the costs were excluded by an earlier order.
The ruling means that Day’s vacancy, created when he resigned in November over the liquidation of his building companies, will be filled by a recount of last election’s votes.
The process will likely return the second Family First candidate, Lucy Gichuhi, as the new senator for South Australia although Labor’s Anne McEwen and others are an outside chance to take it.
Day’s eligibility was referred to the high court on 8 November to determine if he had an indirect interest in the lease of his Adelaide electorate office by the commonwealth, in breach of section 44 of the constitution.
The court found that Day created an entity, Fullarton Investments, that bought the 77 Fullarton Road property from the Day family trust on a vendor finance basis. Fullarton Investments was to receive rent from the commonwealth and use it to pay back the Day family trust, although no rent was ever paid by the commonwealth.
A majority of the court found that Day was ineligible from 26 February 2016, the date on which Fullarton Investments directed the commonwealth to pay rent to a bank account owned by Day.
Justices Geoffrey Nettle, Michelle Gordon, and Stephen Gageler suggested the date of ineligibility should be 1 December 2015, the date the lease was executed.
In submissions to the court at the 7 February hearing the solicitor general, Stephen Donaghue, quoted a letter from Day’s accountant, Vic Rasera, on 2 December 2013 that Day had sought advice about creating Fullarton Investments “so as to be able to avail himself of the rental allowance provided by the government”.
In late December 2015 Day asked the then special minister of state, Mathias Cormann, for almost $60,000 in back payments from 1 July that year because the commonwealth had failed to find a new tenant for his predecessor’s office, which triggered the obligation to pay rent.
Cormann asked for evidence that Day had paid rent for his office, which led Day to reveal the arrangement to pay back the Day family trust to the finance department on 25 January 2016. “No rent, no vendor finance repayments,” he wrote.
Donaghue said this amounted to Day “directly equating” the rental allowance with repayments to be made to the Day family trust. That evidenced an indirect interest in the lease, “a reasonable expectation of monies arising out of the lease”, the commonwealth submitted.
The justices unanimously held that Day stood to obtain a financial benefit from the commonwealth because the rent was to be paid directly into a bank account he owned, and that constituted an indirect pecuniary interest.
The majority of the court held there was no need for a pecuniary interest to be legally enforceable.
The conduct of the special count will be governed by orders from a single justice of the court. The court ordered the commonwealth to pay Day and McEwen’s costs, although one portion of the costs were excluded by an earlier order.
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