Former Family First senator Bob Day had an “indirect pecuniary interest” in the lease of his electoral office because his family trust sold the property so he could personally receive rent from the government, the commonwealth has submitted.
The solicitor general, Stephen Donaghue, made the submission in the high court hearing on Tuesday into Day’s eligibility to be a senator before he resigned in November.
Donaghue relied on a number of findings of fact of Justice Michelle Gordon on 27 January, including that Day knew the commonwealth was unlikely to lease the 77 Fullarton Road address for his electorate office while he or the Day family trust owned it.
Donaghue placed great reliance on a letter from Day’s accountant Vic Rasera on 2 December 2013 that Day had sought advice about creating a new entity – Fullarton Investments – “so as to be able to avail himself of the rental allowance provided by the government”.
Fullarton Investment purchased the property of the Day family trust on vendor finance, but Donaghue noted Day and his wife were still liable for a personal guarantee over the mortgage.
Gordon found there was an arrangement that Fullarton Investments would collect the rent from the government and pass it back to the Day family trust.
On 12 June 2015, Bob Day, as the contact person for Fullarton Investments, nominated a bank account of Fullarton Nominees, a business name he owned, to receive the payments direct from the commonwealth.
No rental payments were ever made. But in late December 2015 Day asked 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 moneys arising out of the lease”, the commonwealth submitted.
Donaghue said that Day asking for future rent and the back-payment amounted to a member of parliament directly negotiating for payment of a substantial sum of money, despite the fact he was not a party to the lease.
Donaghue said there was an “obvious capacity” for the commonwealth to influence Day’s financial position and that was the kind of conflict of interest the constitutional disqualification was designed to prevent.
A parliamentarian should be ineligible “where there is objectively a real risk the senator or member could be influenced or perceived to be influenced by a monetary gain or loss by performance or non performance of an agreement”, the commonwealth submitted.
Day’s counsel, Andrew Bell, noted that the Day family trust was discretionary, meaning it was not obliged to pay Bob Day the rent it received, and this degree of separation meant Day did not have an interest in an agreement with the commonwealth.
Asked about Gordon’s finding that Day had told his business partner notionally behind Fullarton Investments that he would “take care of everything”, Bell replied this conversation was “not part” of the arrangement relied on to establish the indirect interest.
Bell claimed that an “indirect interest” would have to be legally enforceable, but backtracked, then relied on a series of examples of interests he thought the constitutional disqualification should be limited to.
Bell warned against an “impossibly broad and uncertain” definition of what constituted an indirect pecuniary interest, warning it could knock out the eligibility of many senators and members.
The chief justice, Susan Kiefel, suggested that limiting the section to preventing members having an indirect interest in benefits they received because they were parliamentarians, such as their electorate office rent, would prevent such uncertainty.
The court reserved its decision. The outcome, which may take several weeks, will determine who fills Day’s vacancy in the Senate.
If Day was ineligible at the time of the July election, a recount is very likely to return the second Family First candidate, Lucy Gichuhi. If he was eligible, the party will fill the vacancy and his former chief of staff Rikki Lambert will take the seat.
Former Labor senator Anne McEwen, who lost to Day in the final count for the 12th South Australian senate seat, submitted that above the line votes for Family First should go to the second group because without Day the whole ticket was not validly registered.
Neil Williams submitted for the commonwealth that this would deprive the 24,000 voters who chose Family First of their second preference for Gichuhi.
