Legal reasonableness
78 Any application of a principle of legal reasonableness must conform to the guidance and instructions of the High Court in Li.
79 The judgment of the High Court in Li concerned the exercise of a procedural discretion (whether to grant an adjournment). The argument in the case was not limited to considerations of procedural fairness (see e.g. per French CJ at [22]) and the various judgments explained how a statutory obligation incorporates a legal presumption that a statutorily conferred discretionary power will be exercised reasonably (see e.g. per Hayne, Kiefel and Bell JJ at [63]). The majority judgment said (at [66]):
66 This approach does not deny that there is an area within which a decision-maker has a genuinely free discretion. That area resides within the bounds of legal reasonableness. The courts are conscious of not exceeding their supervisory role by undertaking a review of the merits of an exercise of discretionary power. Properly applied, a standard of legal reasonableness does not involve substituting a court's view as to how a discretion should be exercised for that of a decision-maker. Accepting that the standard of reasonableness is not applied in this way does not, however, explain how it is to be applied and how it is to be tested.
(Footnotes omitted.)
and (at [72]):
72 The more specific errors in decision-making, to which the courts often refer, may also be seen as encompassed by unreasonableness. This may be consistent with the observations of Lord Greene MR, that some decisions may be considered unreasonable in more than one sense and that "all these things run into one another". Further, in Minister for Aboriginal Affairs v Peko-Wallsend Ltd, Mason J considered that the preferred ground for setting aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to an irrelevant factor of no importance, is that the decision is "manifestly unreasonable". Whether a decision-maker be regarded, by reference to the scope and purpose of the statute, as having committed a particular error in reasoning, given disproportionate weight to some factor or reasoned illogically or irrationally, the final conclusion will in each case be that the decision-maker has been unreasonable in a legal sense.
(Footnotes omitted)
80 In Singh, a Full Court of this Court offered the following further analysis (at [44]):
44 In order to understand how the standard of legal unreasonableness is to be ascertained, it is important to see where the concept fits in terms of the Court's supervisory powers over executive or administrative decision-making. In Li, the judgments identify two different contexts in which the concept is employed. Legal unreasonableness can be a conclusion reached by a supervising court after the identification of an underlying jurisdictional error in the decision-making process: 297 ALR 225; [2013] HCA 18 at [27]-[28] per French CJ, at [72] per Hayne, Kiefel and Bell JJ; cf Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; [2010] HCA 16 at [39] per Gummow A-CJ and Kiefel J. However, legal unreasonableness can also be outcome focused, without necessarily identifying another underlying jurisdictional error. The latter occurs in what French CJ (in Li 297 ALR 225; [2013] HCA 18 at [28]) calls "an area of decisional freedom": it has the character of a choice that is arbitrary, capricious or without "common sense". See also the plurality at [66] referring to an area within which a decision-maker has a genuinely free discretion. The plurality in Li described this as an inference to be drawn because the court cannot identify how the decision was arrived at. In those circumstances, the exercise of power is seen by the supervising court as lacking "an evident and intelligible justification". …
81 In my view there are, with respect, difficulties in the present case in readily accommodating the challenge to the IMR decision within the particular rubric of legal reasonableness.
82 The present case is not (for example) one, like Li, where it might be said that the manner of exercise of a procedural discretion was foreign to the proper performance of a statutory task (e.g. per French CJ at [21], per Hayne, Kiefel and Bell JJ at [85], per Gageler J at [124]). No statutory function was committed to the IMR. The case is also not easily seen as one where the "the court cannot identify how the decision was arrived at", as explained in Singh. I therefore do not see the present case as falling apparently within the identified categories of legal unreasonableness except perhaps, as I shall discuss shortly, a failure of procedural fairness but, normally, an identified denial of an obligation of procedural fairness would need no further characterisation as legal unreasonableness.
83 However, it is clear from M61 that a court may examine, and declare, whether an IMR has made an error of law. In my view, it is apparent that an error of that kind was made by the IMR. That leads to the same conclusion as the ultimate conclusion of the primary judge and supports the relief granted by the FCCA.
84 The legal error consisted of disregarding the plain fact that the first respondent had, while on Christmas Island, made a direct complaint of sexual torture to the RSA assessor in support of a claim for protection by Australia. That objective circumstance could not be disregarded in the reasoning which the IMR employed to conclude that, on that issue, the first respondent had fabricated the allegation or that, more generally, his statements were unreliable. Those conclusions were important ones for the assessment of the first respondent's claims to be a refugee and to be a person in respect of whom Australia had protection obligations. The framework of the Migration Act, and the purposes to which the IMR's assessment was directed, meant that the IMR could not disregard the true position (that a complaint about sexual torture had been made on Christmas Island in support of a claim for protection) when assessing the first respondent's credibility. That matter was significant to the reasoning of the IMR. The erroneous conclusions about it were material to the rejection of the first respondent's claims for protection, based on an adverse assessment of his credibility.
85 I appreciate that the parameters of the debate were set by the grounds advanced in the FCCA and that the principal focus of the appeal has been on the reasons of the primary judge for its order. Nevertheless, the appeal is ultimately concerned with the jurisprudential foundation for the order made by the FCCA and the matters which bear on the issue of whether the IMR made an error of law were ventilated on the hearing of the appeal, without protest.
86 In that regard, the nature of the role of the IMR must be borne in mind. The IMR is an appointee of the Minister. He performs no direct statutory role but he does provide a foundation for the exercise of Ministerial discretion under the Migration Act. It is consonant with that function (and would otherwise be contrary to the purposes of the Migration Act) that neither the recommendation of the IMR, nor any subsequent decision of the Minister be based on an error of law.
87 The legal significance of the independent merits review process, as explained in M61, is that if an error of law occurs, and a declaration to that effect is made by a court in proceedings to which the Minister is a party (such as in the present case), the Minister will be bound in law not to incorporate the error in a subsequent exercise of his own discretion.
88 The central question for attention, therefore, is whether the IMR, as a person charged with a recommendation about matters central to the operation of the Migration Act and the discharge by Australia of its international obligations, made a relevant error of law in the discharge of that function.
89 If this case was about jurisdictional error (which it is not) it would be necessary to show that an error of law had been committed which affected the exercise of power (see Craig v South Australia (1995) 184 CLR 163 at 179; Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at [82]-[83]). That is because jurisdictional error is not committed by mere procedural infelicity, or even by error of law, which is not material to the exercise of power.
90 In the case of judicial review of decisions of administrative decision-makers, where jurisdictional error need not be shown (e.g. cases arising under the Administrative Decisions (Judicial Review) Act 1977 (Cth)), courts will intervene if a decision-maker disregards a matter which must be taken into account. Again, a material effect on the exercise of power must be apparent. The test was stated by Mason J in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 ("Peko-Wallsend") at 40:
(c) Not every consideration that a decision-maker is bound to take into account but fails to take into account will justify the court setting aside the impugned decision and ordering that the discretion be re-exercised according to law. A factor might be so insignificant that the failure to take it into account could not have materially affected the decision: see, e.g., the various expressions in Baldwin & Francis Ltd. v. Patents Appeal Tribunal; Hanks v. Minister of Housing and Local Government; Reg. v. Chief Registrar of Friendly Societies; Ex parte New Cross Building Society. A similar principle has been enunciated in cases where regard has been had to irrelevant considerations in the making of an administrative decision: Reg. v. Bishop of London; Reg. v. Rochdale Metropolitan Borough Council; Ex parte Cromer Ring Mill Ltd..
(Citations omitted.)
91 In my view, in the present case there was an error of law committed by the IMR when he disregarded the plain fact that the first respondent had raised claims to have been sexually assaulted during an interview which took place on Christmas Island directed specifically to assessing his claim to be a refugee. The IMR became bound to take that fact into account when it embarked on findings adverse to the credit of the first respondent, based on the false premise that he had not, as he asserted, made such a claim.
92 It cannot be said that those erroneous conclusions could not have materially affected the outcome, in view of the interconnected nature of the IMR's findings on reliability (see also FTZK v Minister for Immigration and Border Protection [2014] HCA 26 per Crennan and Bell JJ at [97]).
93 The error, therefore, had a discernible effect on the exercise of the IMR's function. In my view, that function was not carried out in accordance with the purpose to which it was directed.
94 What then, of the procedural circumstance that the analysis above departs from the reasoning of the primary judge, and that no notice of contention has been filed to support it.
95 I do not doubt that the Court has power to uphold the orders made by the FCCA, even if it does not embrace the reasons for those orders (Federal Court of Australia Act 1976 (Cth), s 28(1)(b)). A notice of contention gives clear warning that orders will be supported on other grounds, but it is a procedural step, not a fetter on the Court's power.
96 In my view, the possibility of a different approach to the significance of the error made by the IMR was sufficiently exposed during oral argument on the appeal to avoid any embarrassment which might otherwise arise. In particular, I am satisfied that it is not unfair to the appellant to conclude that the appeal should be dismissed, and the order of the FCCA be thereby confirmed, upon a ground other than a specific conclusion of legal unreasonableness.