THE High Court of Australia has ruled that former Family First senator Bob Day breached the constitution and was therefore incapable of sitting as a senator.
The court ordered that a special recount of ballot papers be used to choose Mr Day's replacement as a senator for South Australia.
Family First number two candidate, lawyer Lucy Gichuhi, is the favourite to win the recount.
Ms Gichuhi ran second on the Family First ticket.
The court ruled that Mr Day's links to the company which owned his Senate electorate office breached conflict of interest provisions under the constitution.
It is still possible Family First will lose the seat because the full bench of the High Court did not rule on how the recount should be conducted.
A single justice of the court will rule on this at a later time.
Former Labor senator Anne McEwen, One Nation's Steve Burgess or former Liberal senator Sean Edwards could all theoretically be elected by a recount.
Senator McEwen's counsel had argued that "above the line" votes for Family First should be excluded from the count but the full bench was sceptical about this proposal.
"…a special count which deprived the above the line Family First voters of their vote would distort voter intentions,'' Chief Justice Susan Kiefel, and justices Virginia Bell and James Edeleman said in a majority opinion.
While the way in which Mr Day's replacement will be selected is a complicated quagmire, Ms Gichuhi stands a good chance. But she says she wasn't expecting it.
"You just go about your own life," she said.
"In fact, I was just driving to work when this message came through."
Ms Gichuhi, who is Kenyan-born but has renounced her Kenyan citizenship, is a volunteer at Women's Legal Services. She says top of her agenda, if she does become an SA Senator, will be working with migrant communities - and she says in her experience Prime Minister Malcolm Turnbull is correct when he says Australia is the world's most successful multicultural society.
"Australia is a very welcoming country," she said.
""For me (the priority) is just to motivate and integrate migrant communities so they become totally Australian. "That's my dream."
Mr Day's seat has been vacant since he quit the Senate in November after his building empire collapsed.
The court was asked to rule on whether Mr Day's links to the company which owned his taxpayer-funded electorate office in Kent Town breached the Constitution.
The office had been held by B & B Day Pty Ltd, for the Day Family Trust.
B & B Day sold the property to Fullarton Investments Pty Ltd, with B & B Day lending the $2.1 million purchase price to the new owner.
Fullarton Investments was to have used rental payments from the Government to repay B & B Day, although no rent was actually ever paid.
The court heard Mr Day expected B & B Day to use the rent to service a National Australia Bank loan facility.
Section 44(v) of the Constitution prohibits candidates for Parliament from having "any direct or pecuniary interest in any agreement with the Public Service of the Commonwealth", unless they are members of an incorporated company with more than 25 members.
Mr Day's Home Australia group of building companies went into liquidation last year with an estimated $37.8 million worth of debts.
The court ruled that the Federal Government should pay the legal costs incurred by Mr Day and Ms Mcwen.
TIMELINE: POLITICAL LIFE OF BOB DAY
2006 - South Australian housing developer Bob Day endorsed by federal Liberals to run in seat of Makin, with strong support from John Howard.
2007 - Labor wins Makin and Kevin Rudd takes government.
2008 - Day unsuccessfully contests Liberal preselection in Mayo, then quits to run as a Family First candidate. Fails to win seat.
2010 - Day runs as Family First senate candidate in SA, but fails to win seat.
2013 - Day wins SA senate seat for Family First.
2014 - Day tells Finance Department officials he doesn't want to use former senator Don Farrell's Adelaide CBD office. Instead he wants to use a Kent Town building. Finance officials tell then-Special Minister of State Michael Ronaldson that Day owns the building and intends to sell it on condition the office is leased to the commonwealth. After lengthy negotiation Day agrees to terms for lease.
2015 - Lease signed between building's new owners and commonwealth. No rent paid.
August 2016 - Day approaches new Special Minister of State Scott Ryan about rent on the office. Ryan seeks further information on the background of the lease and discovers there may be a constitutional breach.
October 2016 - Ryan terminates lease and seeks independent legal advice from constitutional law expert David Jackson. Day announces he will resign as his Home Australia Group of companies goes into liquidation. Ryan receives legal advice regarding the possible invalid election of Day, with concerns over indirect pecuniary interest because building owner owes Day money. November 2016 - Day tenders his resignation to the Senate President. Senate refers the lease matter and Day's possible invalid run for parliament to the High Court.
April 5, 2017 - High Court finds Day was ineligible to run under section 44 of the constitution, which states a member or senator can be disqualified where there is "any direct or indirect pecuniary interest in any agreement with the public service of the commonwealth".
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