Explainer: is a High Court challenge about to bring down the Turnbull government?

Labor is set to launch a High Court challenge over the eligibility of Assistant Health Minister David Gillespie to sit in federal parliament. The case has been brought by Peter Alley, the ALP candidate who ran against Gillespie in Lyne at the 2016 federal election.

The action is based on Gillespie, a Nationals MP, owning a small shopping centre in Port Macquarie that contains an Australian Post outlet. As Australia Post is a government-owned corporation, Labor claims this results in Gillespie having an indirect pecuniary interest contrary to Section 44(v) of the Constitution.

If the High Court agrees, Gillespie would be ineligible to sit as an MP.

What does the Constitution say?

Section 44 of the Constitution sets out several grounds of disqualification from holding parliamentary office.

Under Section 44(v), someone “shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives” if they have:

… 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 25 persons.

Before this year, the High Court had only considered this section on one occasion, in 1975.

In that case, Chief Justice Garfield Barwick took an extremely narrow interpretation of the provision, based on a finding that its historic purpose was to protect parliament’s freedom and independence from the influence of the Crown.

An “indirect pecuniary influence” would only be disqualifying where it involved a legal or equitable interest in a contract with ongoing obligations, and where the possibility of financial gain by the agreement’s existence or performance could conceivably allow the Crown to influence an MP in relation to parliamentary affairs.

Under this narrow interpretation – which had been subject to considerable criticism – Gillespie would not be considered ineligible based on his interest in the shopping centre.

The Bob Day case

The High Court revisited the meaning of “indirect pecuniary interest” in April this year. It unanimously held that former Family First Senator Bob Day had an “indirect pecuniary interest” at the time of the 2016 federal election, and was therefore ineligible to be a senator.

Day had already resigned from the Senate before this ruling. But the High Court’s decision was significant for two key reasons.

• The first was its immediate importance in deciding how a replacement senator was to be selected.

• The second, which will now be critical when considering Gillespie’s future, was its reconsideration of what constitutes an “indirect pecuniary interest” under Section 44(v).

The Day case concerned a lease agreement between the Commonwealth and Fullarton Investments Pty Ltd for premises Day used as his electorate office. There were a variety of ways in which Day was connected to both the company and property. However, a fact the court found to be particularly significant was that in February 2016, Fullarton Investments directed that rental payments be made into a Day-owned bank account.

The High Court declined to follow the 1975 precedent and adopted a broader interpretation of Section 44(v). Importantly, it found the section had a wider purpose than solely protecting parliament’s independence from executive influence. It was also intended as an anti-corruption provision, designed to protect against potential conflicts of interest by ensuring the public duties of MPs are kept separate from their personal interests.

Under this broader view, an individual would be disqualified where there was an expectation of financial gain if the agreement in question was performed. The court would look at the agreement’s practical effect when making this assessment.

High Court justice Patrick Keane observed:

It is enough that the person’s pockets were or might be affected.

However, it was noted there will be no relevant interest:

… if the agreement in question is one ordinarily made between government and a citizen.

The case against Gillespie

So, is Gillespie ineligible based upon this new, broader interpretation of Section 44(v)?

There is no question of a direct financial interest in this case. Rather, the information currently available suggest that a company owned by Gillespie and his wife leases space in a shopping centre it owns to an Australia Post licensee.

The possible financial interest in this case certainly seems to be more remote than in Day’s case. However, there is still sufficient uncertainty surrounding the outer limits of section 44(v) for this case to be of real concern to the Turnbull government.

What happens now?

If the High Court finds Gillespie is incapable of sitting as an MP under Section 44(v) there would necessarily be a by-election in Lyne.

Given the Turnbull government only has a one-seat majority, the immediate stakes are as high as they could possibly be.

There is also a broader issue worth considering. Gillespie is the third member of the 45th parliament – after Day and Rod Culleton – to have their constitutional eligibility challenged before the courts. In Day’s case, High Court Justice Stephen Gageler emphasised the importance of certainty in this area, so candidates and MPs know where they stand.

Given recent controversies, it would seem an opportune time to review Section 44 to make sure the disqualification provisions in our Constitution are clear, fair, and reflect voters’ real concerns.