IN THE MATTER OF THE ELIGIBILITY OF MR CREWTHER PURSUANT TO

SECTION 44(V) OF THE CONSTITUTION

OPINION
 2

Introduction

1. We are asked for advice about whether Mr Chris Crewther is incapable of sitting as a
member of the House of Representatives by reason of s 44(v) of the Constitution, with the
consequence that his seat has become vacant by reason of s 45(i) of the Constitution.

2. The specific question we have been asked is:

Does Mr Crewther 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 twenty-five persons, such that he is incapable of sitting as a member of the
House of Representatives by reason of s 44(v) of the Constitution and with the
consequence that his seat has become vacant by reason of s 45(i) of the
Constitution?

Executive Summary

3. On our instructions, Mr Crewther holds shares in Gretals Australia Pty Ltd (Gretals). Gretals
is a Partner Organisation to the University of Melbourne in a project (Project) that receives
Linkage Program Funding from the Commonwealth, via the Australian Research Council
(ARC).

4. If the Linkage Program Funding is regulated in the ordinary way:

(a) the Project will be subject to a standard form funding agreement entered into
between the Commonwealth (as represented by and acting through the ARC) and
the University of Melbourne (ARC Funding Agreement);

(b) Gretals will be obliged to contribute funding or equivalent in-kind support to the
Project; and

(c) Gretals and the University of Melbourne will have entered into a Partner
Organisation Agreement that specifies the benefits that Gretals expects to receive
from the Project.

5. If an ARC Funding Agreement has been entered into between the Commonwealth
(represented by and acting through the ARC) and the University of Melbourne, it is, in our
view, an ‘agreement with the Public Service’ within the meaning of s 44(v) of the
Constitution.

6. Whether Mr Crewther has an interest in any such ARC Funding Agreement within the
meaning of s 44(v) of the Constitution cannot be known until the terms of the relevant
Partner Organisation Agreement, if any, are identified.
 3

7. However, if (as would be expected) the terms of the relevant Partner Organisation
Agreement reveal that Gretals stands to receive a benefit, such as the right to commercial
exploitation of the intellectual property (IP) that results from the Project research, then we
are of the opinion that Mr Crewther is likely to have an ‘interest in an agreement with the
Public Service of the Commonwealth’ within the meaning of s 45(v) of the Constitution, with
the effect that:

(a) he is incapable of sitting in the House of Representatives; and

(b) his seat is thereby vacated.

Instructions

8. We are instructed as follows:

(a) Mr Crewther was declared elected to the House of Representatives of the 45th
Parliament as the member for Dunkley on 29 July 2016;1

(b) on 24 February 2017, the ARC announced that, as part of round 1 of the Linkage
Program 2016 funding, $421,854.00 of funding (the ARC Funding) had been allocated
to the Project (project ID LP160101307), with the administering organisation recorded
as the University of Melbourne and the Partner Organisations recorded as Gretals
and Felton Grimwade & Bosisto’s Pty Ltd;

(c) the ARC Funding is for the period 2017–2019;

(d) on 23 October 2017, Mr Crewther made a statement in the House of Representatives

in which, among other things, he said:

We're very lucky in Dunkley to have a number of brilliant

innovators, and with each one that I visit I am more and more
impressed with our local talent, skill and ability to innovate.
Recently I met with Gretals Australia, another fantastically
innovative company based in Mornington. Gretals specialise in
developing highly innovative pharmaceuticals and new
technologies in collaboration with their partners across Australia
and around the globe; for example, they developed glucosamine,
which has had amazing results in Australia and across the world. I
met with the CEO of Gretals, Alistair Cumming, to discuss how
they will benefit from the $50,000 grant they recently received
under the government's Global Connections Fund, part of the
National Innovation and Science Agenda, as well as other federal
funding they've recently received.

1 https://www.aph.gov.au/Senators_and_Members/Parliamentarian?MPID=248969.
 4

(e) on 10 July 2018, Crewther Do Pty Ltd (ACN 627 422 075) was registered with the
Australian Securities and Investments Commission (ASIC);

(f) Crewther Do Pty Ltd has two issued shares, with a total paid valued of $2, held by:

(i) Christopher John Crewther; and

(ii) Grace Ha Lam Do;

(g) on 6 September 2018, Mr Crewther executed a Register of Members’ Interests

Notification of Alteration of Interests (the Notification); 2

(h) in the Notification, Mr Crewther declared ‘Investment – Gretals Australia PL’;

(i) on 31 October 2018, Gretals lodged a Form 484 (Change of Company Details) with
ASIC;

(j) the Form 484 states that, on 22 October 2018, a company bearing the name
‘Christopher John Crewther Grace Ha Lam Do’ purchased 50,000 shares in Gretals
for a total consideration of $25,000;

(k) a current and historical ASIC search obtained on 31 October 2018 identifies that, at
that date, Gretals had:

(i) 18 members; and

(ii) 18,450,000 issued shares, at an amount paid of $3,870,000; and

(l) Gretals is in receipt of a Global Connections Fund Grant.

9. We are instructed to make the following assumptions:

(a) the Commonwealth of Australia, as represented by and acting through the ARC, has
entered into an ARC Funding Agreement with the University of Melbourne in
relation to the Project on the terms set out in the standard form funding agreement
annexed to this advice;

(b) the University of Melbourne has entered into a Partner Agreement with Gretals as
required by, and in the terms prescribed by, clause 10 of the ARC Funding
Agreement; and

2 House of Representatives, Register of Members’ Interests – Notification of Alteration(s) of Interests,

Christopher John Crewther, 6 September 2018.
 5

(c) Mr Crewther holds shares in Gretals through Crewther Do Pty Ltd (and not a
company in the name of Christopher John Crewther Grace Ha Lam Do).

Section 44(v) of the Constitution

10. Section 44 of the Constitution is headed ‘disqualification’. Section 44(v) provides:

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.

11. Section 44(v) renders a person incapable of being chosen, or of sitting, as a member of
Parliament if each of the following elements is satisfied:

(a) there is an ‘agreement’;

(b) ‘with the Public Service of the Commonwealth’; and

(c) in which a person has ‘direct or indirect pecuniary interest’.

12. The leading authority on s 44(v) of the Constitution is Re Day (No 2).3 The High Court in Re
Day (No 2) was constituted by seven justices. Four separate judgments were delivered. While
the High Court unanimously held that Mr Day was incapable of sitting as a senator, the
divergence of reasoning between the judgments means that some uncertainty remains about
the operation of s 44(v).

Agreement

13. There is limited authority on the meaning of the word ‘agreement’ in s44(v). However, it is
tolerably clear that an agreement need not be in the form of a contract (and does not ‘turn
on technical concepts of the law of contract’);4 and need not be legally enforceable.5

14. In the present case, there are two potential ‘agreements’ to be considered, namely:

3 (2017) 91 ALJR 518.

4 Re Webster (1975) 132 CLR 270 at 277 (Barwick CJ); Re Day (No 2) (2017) 91 ALJR 518 at [190] (Keane J).
5 Re Day (No 2) (2017) 91 ALJR 518 at [190] (Keane J), [253], [258] (Nettle and Gordon JJ).
 6

(a) any agreement underlying the Global Connections Fund Grant referred to in [8(l)]
above; and

(b) the ARC Funding Agreement.

The Global Connections Fund Grant

15. The Global Connections Fund forms part of the Global Innovation Strategy under the
Australian Government’s National Innovation and Science Agenda. The Fund aims to
provide initial funding support to promote collaboration between Australian researchers
and small to medium enterprises (SMEs). The Fund makes two types of grants:

(a) ‘Priming Grants’ are small grants of $7,000, to enable Australian SMEs and
researchers to physically meet with their international partners and develop their
collaborative ideas; and

(b) ‘Bridging Grants’ are larger grants (up to $50,000) designed as seed funding capital
to enable viable projects to grow in scope and scale, to test commercialisation and
proof-of-concept activities.

16. Global Connections Fund grants are administered by the Australian Academy of
Technology and Engineering (AATE) on behalf of the Australian Government. AATE is an
independent, non-government organisation. We are not instructed with any form of
agreement that gives effect to these funding arrangements.

17. Absent further instructions, we have not considered this potential agreement any further.

ARC Funding Agreement

18. There is no reason to doubt that the ARC Funding Agreement is an ‘agreement’ within the
meaning of s 44(v) of the Constitution.

Agreement ‘with the Public Service of the Commonwealth’

Applicable Principles

19. The next question is whether the ARC Funding Agreement is an agreement ‘with the Public
Service of the Commonwealth’.

20. The Court in Re Day (No 2) was divided on the meaning of that phrase. Its proper
construction is therefore attended with some uncertainty.
 7

21. In Re Day (No 2) there was no dispute that the lease in which Mr Day had an interest (in
which the lessee was the Commonwealth, represented by the Ministerial and Parliamentary
Services Division, Corporate and Parliamentary Services Group of the Department of
Finance) was ‘an agreement with the Public Service of the Commonwealth’.6 Accordingly,
the plurality (Kiefel CJ, Bell and Edelman JJ) did not address, in terms, the meaning of that
phrase.

22. The balance of the Court gave some consideration to the meaning of the phrase. As it was
not necessary to determine its meaning for the purpose of disposing of the proceeding,
however, the reasoning is properly understood as constituting obiter dicta, of persuasive
value only for the purpose of subsequent cases.

23. Keane J described a relevant agreement as being one ‘with officers of the administrative
organ of the government’.7 In reaching that conclusion, Keane J distinguished between an
‘agreement with the public service’ and an ‘agreement with the Crown’. His Honour said that
it is not sufficient to engage s 44(v) that the Commonwealth is the ‘source of an expected
benefit’. Rather, his Honour said that what is required is that the agreement is made with the
‘public service’ of the Commonwealth. His Honour held that ‘an agreement made under a
law of the Commonwealth of general application is not within the letter of s 44(v)’.8 Keane J
concluded that while the Commonwealth will inevitably be the ultimate source of the
benefit under an agreement with the public service of the Commonwealth, it is the
circumstance that the source of the benefit is in an agreement made with the public service
of the Commonwealth which engages the disqualifying effect of the provision.9

24. Gageler J, agreeing with Keane J on this point, also distinguished between the ‘Public Service
of the Commonwealth’ and ‘the Crown’, holding that the former phrase is ‘most naturally
read as referring to those whom s 67 of the Constitution describes as ‘other officers of the
Executive Government of the Commonwealth’ within what s 64 of the Constitution
describes as ‘such departments of State of the Commonwealth as the Governor-General in
Council may establish’.10 Gageler J concluded that ‘an agreement with the Public Service of
the Commonwealth can only be an agreement to which the relevant party is the
Commonwealth’, but ‘not every agreement with the Commonwealth can properly be
characterised as an agreement with the Public Service of the Commonwealth’.11

6 Re Day (No 2) (2017) 91 ALJR 518 at [12] (Kiefel CJ, Bell and Edelman JJ).
7 Re Day (No 2) (2017) 91 ALJR 518 at [169].
8 Re Day (No 2) (2017) 91 ALJR 518 at [199].
9 Re Day (No 2) (2017) 91 ALJR 518 at [200].
10 Re Day (No 2) (2017) 91 ALJR 518 at [103].
11 Re Day (No 2) (2017) 91 ALJR 518 at [105].
 8

25. Nettle and Gordon JJ, while concluding that it was not necessary to determine the question,
noted that the disqualifying effect of s 44(v) is confined by its purposes, and that such
confinement does not depend on giving some narrow or limited operation to the notion of
‘the Public Service of the Commonwealth’ that would exclude agreements specifically
authorised by statute.12 Further, their Honours were of the opinion that ‘no useful distinction
can now be drawn between agreements made with ‘the Public Service of the
Commonwealth’ and agreements made with either the Commonwealth or the Crown in
right of the Commonwealth.13 They concluded:14

Any agreement, arrangement or understanding made in the course of

Commonwealth government business will ordinarily be negotiated by one or
more members of the Public Service of the Commonwealth. In that sense, the
agreement will be made with the Public Service of the Commonwealth. It is in
these circumstances now not possible to treat the phrase ‘any agreement with the
Public Service of the Commonwealth’ as limited in operation by seeking to draw
the distinction earlier mentioned – between an agreement made with the Public
Service on the one hand and an agreement made with the Commonwealth or the
Crown in right of the Commonwealth on the other. The supposed distinction is
without practical or legal content.

26. The conclusions favoured by Keane and Gageler JJ on the one hand, and Nettle and
Gordon JJ on the other, appear irreconcilable. The differences in view would potentially be
material in a case where the Commonwealth was a contracting party, but the agreement
could not be characterised as one with the public service of the Commonwealth. However,
for the reasons developed below, the divide in the Court does not materially affect our
opinion in the present case, because the Commonwealth, represented by and acting through
the ARC, is a party to the ARC Funding Agreement, and the agreement is, in our view,
properly characterised as an agreement with the ‘Public Service of the Commonwealth’.

ARC Funding Proposals

27. Determining whether the ARC Funding Agreement is an agreement with the public service
of the Commonwealth within the meaning of s 44(v) requires an understanding of the
statutory scheme establishing and regulating the ARC, and the source and nature of the
funding.

28. The ARC is established by s 5 of the Australian Research Council Act 2001 (Cth) (the ARC Act).
By s 5(2), the ARC consists of:

(a) the CEO:

12 Re Day (No 2) (2017) 91 ALJR 518 at [256].

13 Re Day (No 2) (2017) 91 ALJR 518 at [226].
14 Re Day (No 2) (2017) 91 ALJR 518 at [267].
 9

(b) the designated committees; and

(c) the staff of the ARC.

29. By s 5(3), for the purposes of the finance law (within the meaning of the Public Governance,
Performance and Accountability Act 2013):

(a) the ARC is a listed entity; and

(b) the CEO is the accountable authority of the ARC; and

(c) the following persons are officials of the ARC:

(i) the CEO;

(ii) the members of the designated committees;

(iii) the staff of the ARC; and

(d) the purposes of the ARC include:

(i) the function of the ARC referred to in section 6; and

(ii) the functions of the designated committees referred to in section 31; and

(iii) the functions of the CEO referred to in section 33B.

30. By s 41, the staff of the ARC are to be persons engaged under the Public Service Act 1999 (Cth).
For the purposes of the PSA, the CEO and employees of the ARC together constitute a
Statutory Agency of which the CEO is the head.15

31. The functions of the ARC are given effect through a series of statutory rules made by the
Minister under the ARC Act. Relevant for present purposes are the Funding Rules for Schemes
under the Linkage Program (2016 edition) (the Funding Rules). The Funding Rules are a
legislative instrument that was approved under s 60 of the ARC Act by Simon Birmingham
as Minister for Education and Training.

32. The Funding Rules provide that the Linkage Program supports the growth of research
partnerships between university-based researchers and researchers in other sectors in
Australia and overseas that generate new knowledge, technologies and innovations.16 A

15 Australian Research Council Act 2001 (Cth), s 41.

16 Funding Rules for Schemes under the Linkage Program (2016 edition), A4.1.2.
 10

funding proposal (Proposal) may only be submitted through the research office of an
‘Eligible Organisation’ (all of which are higher education institutions).17 The submitting
Eligible Organisation is the ‘Administering Organisation’ for the Proposal.18 Proposals
seeking Linkage Program funding must include at least one Partner Organisation.19

33. The Funding Rules prescribe the eligibility requirements for each Partner Organisation.20
The conditions that must be met for each Partner Organisation include evidence of new or
on-going collaboration between the Partner Organisation either directly with the
Administering Organisation, and/or with another Eligible Organisation on the Proposal.
Each Proposal should include details of the collaborative arrangements proposed, including
how each Partner Organisation is involved in the Project and should also detail how the
Project fits into each Partner Organisation’s overall strategic plan and how the Project is of
value to each of the Partner Organisations involved.21 Each Partner Organisation must
submit a letter of support containing prescribed matters, including its expectations about
industry outcomes/products and market value.

34. The Funding Rules prescribe the process for submitting a Proposal. Assessment of Proposals
is undertaken by the ARC, which has the right to make recommendations for funding to the
Minister, based on any number of assessments or solely on the basis of its expertise.22 All
Proposals are to be considered against the eligibility criteria for the relevant scheme and
compliance with the Funding Rules.23

35. In accordance with the ARC Act, the ARC CEO submits funding recommendations to the
Minister for consideration. The Minister determines which Proposals will be approved and
the amount and timing of funding to be paid to Administering Organisations for approved
Proposals.24 The Minister must not approve for funding any Proposal that fails to meet the
eligibility criteria set out in the Funding Rules.25 An appeal against a funding decision can be
brought only against ‘administrative process issues’ and not against the assessment
outcome.26

17 Funding Rules for Schemes under the Linkage Program (2016 edition), A6.1.1.
18 Funding Rules for Schemes under the Linkage Program (2016 edition), A6.1.2.
19 Funding Rules for Schemes under the Linkage Program (2016 edition), D81.
20 Funding Rules for Schemes under the Linkage Program (2016 edition), A6.1.
21 Funding Rules for Schemes under the Linkage Program (2016 edition), A6.2.3.
22 Funding Rules for Schemes under the Linkage Program (2016 edition), A9.1.1.
23 Funding Rules for Schemes under the Linkage Program (2016 edition), A9.1.2.
24 Funding Rules for Schemes under the Linkage Program (2016 edition), A9.4.1.
25 Funding Rules for Schemes under the Linkage Program (2016 edition), A9.4.2.
26 Funding Rules for Schemes under the Linkage Program (2016 edition), A10.2.
 11

36. Administering Organisations whose Proposals are approved are notified in a letter of offer
and are required to enter into an ARC Funding Agreement.27

The Standard Form ARC Funding Agreement

37. The standard form ARC Funding Agreement provides that the agreement is made between
‘the Commonwealth of Australia as represented by and acting through the Australian
Research Council’ and the administering organisation. Put another way, the
Commonwealth is a contracting party to all ARC Funding Agreements, not as the Crown in
right of the Commonwealth, but as the ultimate principal of the ARC.

38. The recitals to the ARC Funding Agreement are in the following terms:

A. The Commonwealth through the ARC operates the Linkage Program

(‘the Scheme’);

B. The Commonwealth accepts that the Administering Organisation is an

eligible body for the purposes of the Scheme, and the Commonwealth
may provide financial assistance to support the Administering
Organisation to conduct the Projects, including the approved Funding
elements, being those described in the Funding Offer;

C. The Commonwealth is required by law to ensure the accountability of

Funding and, accordingly, the Administering Organisation is required
to be accountable for all Commonwealth Funding it receives under this
Agreement; and

D. The Commonwealth wishes to provide Funding under the Scheme to

the Administering Organisation for the purposes, and subject to the
terms and conditions, set out in this Agreement.

39. The ARC Funding Agreement is expressed to be an entire agreement, subject to a power
reserved to the Minister to impose ‘at any time’ other requirements or conditions in
connection with any funding covered by the agreement as provided for under the ARC Act.
Funding under an ARC Funding Agreement is paid by the Commonwealth to the
Administering Organisation in progressive monthly instalments.28

40. Payment of funding under the ARC Funding Agreement is subject to extensive conditions.
If the Administering Organisation does not meet any one or more of those conditions the
Commonwealth may do any or all of the following:

(a) not pay the Administering Organisation any further Funds for the Project;

27 Funding Rules for Schemes under the Linkage Program (2016 edition), A9.4.4.
28 Funding Agreement, cl 4.1.
 12

(b) recover all or some of the Funds paid under the Agreement for the Project, including
all unspent Funds and any Funds not spent in accordance with the Agreement;
and/or

(c) vary the amount of Funding approved for the Project.

41. The ARC Funding Agreement states that the Commonwealth will pay to the Administering
Organisation, by way of financial assistance in accordance with the ARC Act, the approved
amounts set out in the Funding Offer, exclusive of GST.29 The Commonwealth has the right
to vary, unilaterally, the amounts of Funding for any or all Projects.30

42. The ARC Funding Agreement states that the Administering Organisation must not allow a
Project to commence, nor Funding to be expended, until it has entered into an agreement
with each other Participating Organisation in accordance with clause 10.31 A written
agreement must be entered into with each Participating Organisation in the terms
prescribed by clause 10.2. Those terms are prescriptive.

43. In addition, clause 10.3 provides that the written agreement under clause 10.2 should also
consider including provisions that:

(a) provide an assurance from the Participating Organisation for the continued
operation of the Project unhindered by ownership of IP;

(b) provide an assurance that, following the transfer of any IP by the Administering
Organisation to the Participating Organisation, the Administering Organisation may
continue to teach and research in any and all areas protected by the IP;

(c) provide an assurance that where the ownership of any IP is transferred to a

Participating Organisation as a result of the collaboration for which funding is
provided, upon the closing down, dissolution and/or liquidation of the Participating
Organisation, during the term of the Agreement, the ownership of the IP shall be
renegotiated with the Administering Organisation; and

(d) provide an assurance that upon any sale of the Participating Organisation in part or
in full, the Administering Organisation has a reasonable opportunity to retain the
proposed benefits to Australia on which the funding was awarded.

29 Funding Agreement, cl 4.5.

30 Funding Agreement, cl 4.7.
31 Funding Agreement, cl 10.1.
 13

44. The ARC Funding Agreement allows the ARC to immediately terminate funding in a range
of circumstances, including where there has been a breach of the ARC Funding Agreement.32
The ARC Funding Agreement also permits the termination of the agreement in prescribed
circumstances, including where there is fraud or misleading or deceptive conduct on the part
of the Administering Organisation, any Personnel or any Participating Organisation in
connection with any or all Projects.33

Consideration

Agreement with the ‘public service’?

45. The first question that must be determined is whether the ARC is the ‘public service’ within
the meaning of s 45(v) of the Constitution.

46. The phrase ‘public service’ appears in five places in the Constitution. The first is s 44(v). It
next appears in s 52, which is concerned with the exclusive powers of Parliament. By s 52(ii),
the Parliament shall, subject to the Constitution, have exclusive power to make laws for the
peace, order, and good government of the Commonwealth with respect to matters relating
to any department of the public service the control of which is by the Constitution
transferred to the Executive Government of the Commonwealth.34 Those departments are
then identified in s 69, which effected the transfer of specified ‘departments of the public
service in each State’ to the Commonwealth. Section 69 is supported by s 84, which effected
the transfer of officers of those departments to the control of the Executive Government of
the Commonwealth; and s 85, which effected the transfer of the property of those
departments to the Commonwealth.

47. Those provisions sit alongside ss 64 and 67 of the Constitution. Section 64 provides for the
establishment of ‘departments of State of the Commonwealth’, while section 67 vests power
to appoint civil servants in the Governor-General until such time as the Parliament
otherwise provides. Since 1906, the departments referred to in s 64 of the Constitution have
been established by administrative arrangements orders (AAOs) issued by the Governor
General. The power in s 67 has, since 1902, been regulated by statute, initially by the
Commonwealth Public Service Act 1902 (Cth), later through the Commonwealth Public Service Act
1922 (Cth) and more recently through the Public Service Act 1999 (Cth) (the PS Act).

48. Quite separately from the departments referred to in s 64 of the Constitution, statutory
bodies and agencies can also be created by legislation. Such bodies and agencies are not

32 Funding Agreement, cl 38.

33 Funding Agreement, cl 39.1(e).
34 Constitution of Australia Act, s 52.
 14

‘departments’ of the kind established by AAOs, but statutory creations regulated by their
enabling statutes and staffed by persons engaged under the PS Act.

49. In the present case, while it is clear that the ARC is a statutory authority and not a
‘department’ of the Commonwealth (insofar as ‘departments’ are created by AAOs), it is
nonetheless a body which is staffed by employees appointed under the PS Act and charged
with carrying out public functions.

50. Whether the term ‘public service’ should be limited to ‘departments’ created by AAOs
should not, in our view, by answered by an unduly narrow reading of the term ‘public
service’ in s 44(v), or by reference solely to s 64 and 67, but by reference to the purpose of s
44(v).

51. The plurality in Re Day (No 2) held that s 44(v) has a purpose ‘wider than the protection of
the freedom and independence of parliamentarians from the influence of the Crown’,35 that
purpose being ‘the prevention of financial gain which may give rise to a conflict of duty and
interest’. In so holding, they expressly disapproved of the approach taken by Barwick CJ,
sitting alone as the Court of Disputed Returns, in Re Webster.36

52. Re Webster concerned Senator Webster, who was a shareholder in a company in which there
were eight other shareholders. He was managing director, secretary and manager of the
company and received a salary in the latter capacity. The company supplied timber under
agreements with two Commonwealth departments.

53. In construing s 44(v), Barwick CJ identified its purpose as being the ‘protection of the
independence of Parliament’.37 In holding that Senator Webster was not incapable of sitting
by operation of s 44(v), Barwick CJ said that, bearing this purpose in mind, for an agreement
to fall within the scope of s 44(v), it ‘must have a currency for a substantial period of time,
and must be one under which the Crown could conceivably influence the contractor in
relation to parliamentary affairs by the very existence of the agreement, or by something
done or refrained from being done in relation to the contract or to its subject matter, whether
or not that act or omission is within the terms of the contract’.38

35 Re Day (No 2) (2017) 91 ALJR 518 at [39].

36 Re Webster [1975] HCA 22; (1975) 132 CLR 270.
37 Re Webster [1975] HCA 22; (1975) 132 CLR 270 at [13].
38 Re Webster [1975] HCA 22; (1975) 132 CLR 270 at [16].
 15

54. In Re Day (No 2) the plurality (Keane39 and Gageler40 JJ agreeing on this point), expressly
rejected the limited purpose articulated by Barwick CJ.41 The plurality held that the object of
s 44(v) ‘is to ensure not only that the Public Service of the Commonwealth is not in a position
to exercise undue influence over members of Parliament through the medium
of agreements; but also that members of Parliament will not seek to benefit by
such agreements or to put themselves in a position where their duty to the people they
represent and their own personal interests may conflict’.42

55. Keane J considered that ‘the purpose of the disqualification is not limited to preventing
executive influence upon a parliamentarian, but extends to preventing the influence of a
member's private financial interests upon the discharge of his or her parliamentary
functions’.43 Drawing a distinction between the language in s 44(iv) and that in s 44(v), his
Honour said that ‘it might be thought that the concern animating s 44(v) is not that the
Crown might exert influence on the parliamentarian, but rather that the parliamentarian
might seek to exert a corrupting influence on officers of the administration with whom he or
she comes into contact’.44

56. Nettle and Gordon JJ said that the relevant question is whether, because of a direct or
indirect pecuniary interest in a relevant agreement, a person could conceivably be
influenced in the exercise of their functions, powers and privileges, or in the performance of
their duties, as a member of Parliament.45

57. Consistent with that purpose, in our opinion, the ‘public service’, for the purposes of s 44(v)of
the Constitution, is not limited to the departments established by AAOs, but includes any
entity that is staffed by persons employed under the PS Act, and which carries out functions
or duties that might be capable of influencing a member of parliament in the exercise of their
duties. A narrow reading that limited the phrase ‘public service’ to departments established
under AAOs would be inconsistent with the protective purpose of the section.

58. We note that, while it is possible to read Gageler J’s reasons reproduced above at [24] as
suggesting a narrow view of the words ‘public service’, such that they are limited to
departments established under s 64, we do not think that his Honour’s reasons bear such a
meaning. In circumstances where the point did not ultimately arise in the case, we

39 Re Day (No 2) (2017) 91 ALJR 518 at [161].

40 Re Day (No 2) (2017) 91 ALJR 518 at [98] (Gageler J).
41 Re Day (No 2) (2017) 91 ALJR 518 at [48].
42 Re Day (No 2) (2017) 91 ALJR 518 at [48].
43 Re Day (No 2) (2017) 91 ALJR 518 at [167].
44 Re Day (No 2) (2017) 91 ALJR 518 at [170].
45 Re Day (No 2) (2017) 91 ALJR 518 at [258].
 16

understand his Honour to be distinguishing between the civil service in broad terms and the
Crown in right of the Commonwealth.

59. We also observe that ss 52(ii) and 69 of the Constitution distinguish between ‘departments’
and the ‘public service’, which is indicative of the terms having different intended meanings,
and of ‘departments’ being only a subset of the ‘public service’.

60. The ARC is a statutory agency, charged with carrying out a public function and staffed by
employees appointed under the PS Act. It is readily conceivable that, in relation to an ARC
Funding Agreement in which a member of Parliament’s own direct or indirect interests are
concerned, the member could be influenced in the exercise of his or functions, powers and
privileges, for example by seeking to exert a corrupting influence on officers of the
administration with whom he or she comes into contact. For these reasons, we favour the
view that the ARC is part of the ‘public service’ within the meaning of s 44(v) of the
Constitution and that, consequently, the ARC Funding Agreement is an agreement with the
‘Public Service of the Commonwealth’ for the purposes of that section.

An agreement of the relevant kind

61. The next question is whether the ARC Funding Agreement is of a kind that falls outside the
scope of s 44(v).

62. In Re Day (No 2) Keane J said that pecuniary benefits available generally to members of the
Australian community are not within the mischief to which s 44(v) is directed merely
because the Commonwealth is the ultimate source of the benefit, and that the ‘disqualifying
effect of s 44(v)’ should not be expanded to ‘any person who might obtain a pecuniary benefit
conferred by the Commonwealth which is available generally to the community’.46 To
similar effect, the plurality observed that there ‘can be no relevant interest if the agreement
in question is one ordinarily made between government and a citizen’, reasoning that ‘[w]ere
this otherwise, every day-to-day dealing which a citizen has with government could result in
the disqualification of a citizen who happens to be a parliamentarian’.47

63. Keane J, with whom Gageler J agreed on this point,48 said that the phrase is to be read ‘as
having no application to an agreement entered into by the Executive Government of the
Commonwealth in the execution of a law of general application enacted by the Parliament’.49

46 Re Day (No 2) (2017) 91 ALJR 518 at [200] (Keane J).

47 Re Day (No 2) (2017) 91 ALJR 518 at [69] (Nettle and Gordon JJ).
48 Re Day (No 2) (2017) 91 ALJR 518 at [102].
49 Re Day (No 2) (2017) 91 ALJR 518 at [102].
 17

64. While these comments were made in a different context, they indicate that not all
agreements fall within the ambit of s 44(v) and that, in particular, agreements that are made
‘in the execution of a law of general application’ or are ‘ordinarily made between
government and a citizen’ are not captured.

65. The ARC Funding Agreement is a standard form agreement. Successful funding applicants
are required to enter into it. There is limited scope to negotiate or vary its terms. It gives effect
to a statutory power and function prescribed by the ARC Act. An ARC Funding Agreement
is one that is available to all organisations that meet the prescribed criteria, subject to
approval.

66. However, an ARC Funding Agreement is not one that is ‘ordinarily made between
government and a citizen’. It is an agreement that can only be made with an ‘Eligible
Organisation’ as prescribed in the Funding Rules. ‘Eligible Organisations’ are certain higher
education institutions. The funding benefit provided is not one that can be obtained by any
member of the community on application or by the meeting of prescribed criteria. While the
criteria for the grant of funds is heavily regulated and subject to assessment, determination
of which Proposals will be funded is in the absolute discretion of the Minister. No appeal lies
against that decision, save on administrative grounds.

67. Further, the funds that are provided under ARC Funding Agreements are advanced on
terms, and continued payment of funds is contingent on continued compliance by the
Administering Organisation and its Partner Organisations with the obligations imposed by
the ARC Funding Agreement. That continued compliance is monitored and enforced by
employees of the ARC – that is, by members of the public service. In certain circumstances
prescribed by in the ARC Funding Agreement, payment of funding can be terminated or
suspended. The power to terminate or suspend is a discretion conferred on the ARC and,
therefore, one that is capable of being influenced.

68. In short, in our view, ARC Funding Agreements are agreements with the public service of
the Commonwealth in which the continued receipt of benefits is subject to various
compliance conditions, the monitoring and enforcement of which is vested in members of
the public service. The consequence of non-compliance, including decisions as to the
suspension and termination of funding under ARC Funding Agreements, is subject to a
discretion exercised by employees of the ARC. In those circumstances, we consider ARC
Funding Agreements to be of a kind captured by s 44(v): that is, they are agreements which
might put a member of Parliament holding a direct or indirect interest in them ‘in a position
where their duty to the people they represent, and their own personal interests, may
conflict’. There is, in the exercise of ongoing powers of monitoring and compliance, and in
 18

the exercise of discretions conferred by the ARC Funding Agreement, the capacity for a
member of Parliament to use his or her position to seek to influence or impair the exercise
of those powers and discretions.

Pecuniary Interest

69. A ‘pecuniary interest’ is an interest ‘sounding in money or money's worth’.50 It is not a legal
interest.51 An indirect pecuniary interest in an agreement looks to the ‘practical effect’ of
the agreement in question on a person's pecuniary interests.52 The intention of the member
or senator is relevant but not determinative.53

70. A person does not need to be party to an agreement to have an interest in it.54 The plurality
in Re Day (No 2) said that the requirement that the interest be ‘in’ an agreement implies some
personal connection to it, albeit indirect.55 The mischief to which the provision is addressed
looks to the personal financial circumstances of a parliamentarian and the possibility of a
conflict of duty and interest.56 The plurality in Re Day (No 2) said ‘there can be no relevant
interest if the agreement in question is one ordinarily made between government and a
citizen’, reasoning that, were this otherwise, every day-to-day dealing which a citizen has
with government could result in the disqualification of a citizen who happens to be a
parliamentarian.57

71. In Re Day (No 2) Keane J said that it was not necessary in that case to inquire as to whether
the corporate and trust structures established by Mr Day were apt to avoid the disqualifying
effect of s 44(v), because ‘an expectation of a gain or loss of money generated by a promise
may exist without a legally enforceable entitlement to payment of money’ and ‘it is enough
that the person's pockets were or might be affected’.58 His Honour said also that ‘the term
‘indirect’ indicates that regard may be had ‘to practical as well as legal effect’, so that a person
has at least an ‘indirect’ interest of a pecuniary nature in an agreement if the agreement is
such that it can give rise to an expectation of a monetary gain or loss if it is performed.59

50 Webb v The Queen [1994] HCA 30; (1994) 181 CLR 41 at 75; cited with approval in Re Day (No 2) (2017) 91
ALJR 518 at [54] (Kiefel CJ, Bell and Edelman JJ), at [252] (Nettle and Gordon JJ).
51 Webb v The Queen [1994] HCA 30; (1994) 181 CLR 41 at 75; see also Re Day (No 2) (2017) 91 ALJR 518 at
[190] (Keane J), at [253] (Nettle and Gordon JJ).
52 Crump v New South Wales [2012] HCA 20; (2012) 247 CLR 1 at 26 [60]; cited with approval in Re Day (No
2) (2017) 91 ALJR 518 [54] ([insert] JJ).
53 Re Day (No 2) (2017) 91 ALJR 518 at [113].
54 Re Day (No 2) (2017) 91 ALJR 518 at [66].
55 Re Day (No 2) (2017) 91 ALJR 518 at [66].
56 Re Day (No 2) (2017) 91 ALJR 518 at [66].
57 Re Day (No 2) (2017) 91 ALJR 518 at [69].
58 Re Day (No 2) (2017) 91 ALJR 518 at [191], see also [253] (Nettle and Gordon JJ).
59 Re Day (No 2) (2017) 91 ALJR 518 at [192].
 19

72. Nettle and Gordon JJ said that the person’s direct or indirect interest must be pecuniary ‘in
the sense that, through the possibility of a not insubstantial financial gain or loss by the
existence, performance or breach of the agreement with the Public Service of the
Commonwealth, that person could conceivably be influenced in the exercise of their
functions, powers and privileges, or in the performance of their duties, as a member of
Parliament; because the person could conceivably be influenced by the potential conduct of
the executive in performing or not performing the agreement or because that person could
conceivably prefer their private interests over their public duty’.60

73. In Re Webster, Barwick CJ said that, bearing in mind the purpose of the section, it was ‘more
than difficult to conclude that the shareholder does have a pecuniary interest in each and
every of the day to day transactions of the company, whether they be strictly ‘over the
counter’ transactions or arise out of orders given for the immediate supply of goods pursuant
to a standing offer of supply’.61 That conclusion must now be doubted in light of the rejection,
in Re Day (No 2), of the narrow purpose of s 44(v) adopted by Barwick CJ in that case.

74. Moreover, in Re Day (No 2), the plurality observed that the exception to disqualification
where the member's interest is a shareholding in a company which has more than 25
members, implies that a shareholding in a smaller company will be an interest which has
the consequence of disqualification.62 They noted also that, in the course of the Convention
debates, the freedom spoken of was freedom ‘from a person’s own business interests, so that
that person could more effectively represent others’.63 The plurality went on to observe that
a beneficiary of a discretionary trust may have an ‘indirect pecuniary interest’ in an
agreement, holding that this is ‘consistent with the inference that is to be drawn from the
exception to s 44(v) that shareholders in a company may be regarded as having a pecuniary
interest in its contracts’.64

75. On this question, Gageler J observed that ‘the express exception in s 44(v) for a pecuniary
interest which a person has "as a member and in common with the other members of an
incorporated company consisting of more than twenty-five persons" indicates that there is
no reason why a pecuniary interest within the scope of the provision might not be
constituted by an expectation of an increase or decrease in the value of an asset (such as a
shareholding) or by an expectation of receipt or non-receipt of a payment the making of
which depends on the exercise of an independent discretion (such as a dividend)’.65 His

60 Re Day (No 2) (2017) 91 ALJR 518 at [252].

61 Re Webster [1975] HCA 22; (1975) 132 CLR 270 at [44].
62 Re Day (No 2) (2017) 91 ALJR 518 at [32].
63 Re Day (No 2) (2017) 91 ALJR 518 at [32].
64 Re Day (No 2) (2017) 91 ALJR 518 at [62].
65 Re Day (No 2) (2017) 91 ALJR 518 at [112].
 20

Honour went on to say that whether a senator or member of the House of Representatives
has an expectation of such a benefit that is ‘immediate or real as distinct from mediate or
remote must be determined objectively by reference to the practical consequences of
performance or non-performance of the agreement’.66

76. In the present case, in our view, on the assumptions we have been instructed to make, Mr
Crewther has an ‘interest’ in the ARC Funding Agreement constituted by an expectation of
an increase in the value of an asset – being his indirect interest in Gretals, via his direct
shareholding in Crewther Do Pty Ltd – and the potential for an (increased) dividend if the
ARC Funding Agreement is performed by the ARC. Whether that is a relevant ‘interest’
turns on the nature of the expected benefit.

77. Neither Mr Crewther, nor Gretals, are a party to the ARC Funding Agreement. It appears
that Gretals does not receive any of the funding provided for under the ARC Funding
Agreement. If (as we are instructed to assume) Gretals has entered into a Partner Agreement
with the University of Melbourne, Gretals is required to make a financial contribution to the
Project. That financial contribution, which must satisfy the requirements set out in the ARC
Funding Agreement,67 is a funding condition for the Project.68

78. It can be inferred that each Partner Organisation must have been collaborating prior to the
grant of funding and must expect to derive a benefit from the Project. That is because, as set
out above, each Proposal must include details of the collaborative arrangements proposed,
including how each Partner Organisation is involved in the Project, how the Project fits into
each Partner Organisation’s overall strategic plan, and how the Project is of value to each of
the Partner Organisations. When read with the purpose of the Linkage Program, it is clear
that funding is directed at research that is capable of commercial exploitation.

79. Further, as noted earlier, Administering Organisations and Partner Organisations are
required, when entering into Partner Agreements, to determine the basis upon which IP
developed in the course of the Project will be allocated at the conclusion of the Project. The
ARC Funding Agreement suggests that ordinarily the Administering Organisation will
retain research and teaching rights, while the Partner Organisation will retain the right to
commercially exploit the results of the research.

66 Re Day (No 2) (2017) 91 ALJR 518 at [112].

67 Funding Agreement cl 4.2(i).
68 Funding Agreement, cl 4.2.
 21

80. The precise nature of the benefit that Gretals expects to receive from the Project cannot be
known without access to the Partner Agreement entered into between it and the University
of Melbourne. It is that document that would reveal the nature of the expected benefit.

81. If the Partner Agreement identifies that Gretals stands or expects to make a benefit from the
ARC Funding Agreement, including by, for example:

(a) a right to the IP resulting from the Project; or

(b) a right to commercially exploit the results of the research,

then, in our view, the benefit that Gretals (and consequently, indirectly, Mr Crewther) stands
to make from the ARC Funding Agreement is likely to be ‘immediate or real as distinct from
mediate or remote’. That benefit is the development, using public funds, of IP capable of
commercial exploitation, with the attendant prospect of an increase in share value or
declared dividends. In circumstances where eligibility for funding is based, in part, of the
likelihood of commercial exploitation of the research, we consider the benefit is likely to be
‘immediate and real’ and not ‘mediate or remote’.

82. That the ultimate effect of the ARC Funding Agreement, if it is fully performed, on the value
of the shareholding or dividends is unknown is, in our view, irrelevant. The question is not
whether Mr Crewther will in fact receive the benefit of an increase in the value of his
shareholding or increased dividends, but whether he could conceivably be influenced or
could conceivably prefer his private interests over his public duty.

83. It is also not to the point that Mr Crewther obtained the interest in Gretals after the ARC
Funding Agreement was entered into. As the Funding Rules make clear, funding is generally
paid in progressive monthly payments. Mr Crewther therefore potentially stands to benefit
from the continued performance by the Commonwealth, represented by and acting through
the ARC, of its payment obligations under the ARC Funding Agreement. Second, the ARC
Funding Agreement and the Funding Rules impose a significant ongoing regulatory and
compliance burden on the relevant Administering Organisation (in this case, the University
of Melbourne). As such, the anticipated benefit is subject to the Administering Organisation,
and Gretals, complying with their respective obligations. While that situation persists, the
potential for conflict remains.

84. We cannot reach a concluded view until the terms of the Partner Agreement are known. If,
however, the Partner Agreement provides for benefits of the kind described above then, in
our opinion, it is probable that the High Court would conclude that Mr Crewther’s interest
was an indirect pecuniary interest in the ARC Funding Agreement.
 22

Consequences of Mr Crewther holding an indirect pecuniary interest in the ARC Funding

Agreement

85. In Alley v Gillespie,69 the majority (comprising Kiefel CJ, Bell, Keane and Edelman JJ)70 held
that, contrary to a contention advanced by the plaintiff in that case, s 44 ‘does not contain a
singular’ and that the words ‘incapable of being chosen or of sitting’ are ‘clearly disjunctive’.71
The majority confirmed earlier authority that s 44 operates such that if a person seeking to
be chosen suffers from one of the disabilities there stated, he or she is ‘incapable of being
chosen’, while if a person subsequently comes under a disability, he or she is ‘incapable of
sitting’.72 In the latter case, s 45 operates to vacate his or her seat.73

86. It follows, in our view, that if Mr Crewther holds an indirect pecuniary interest in the ARC
Funding Agreement, then he is incapable of sitting as a member in the House of
Representatives, and his seat is thereby vacated.

Dated: 11 November 2018

MATTHEW COLLINS*

SIOBHAN KELLY*

* Liability limited by a scheme approved under Professional Standards Legislation.

69 (2018) 92 ALJR 373.

70 The remaining members of the Court did not consider this question.
71 (2018) 92 ALJR 373 at [65].
72 (2018) 92 ALJR 373 at [65].
73 (2018) 92 ALJR 373 at [65]; see also Re Nash (2017) 91 CLJR 23 at [33] (Kiefel CJ, Bell, Gageler, Keane and
Edelman JJ) and Re Day (No 2) (2017) 91 ALJR 518 at [95] (Gageler J).