There is, as the High Court said in Li, a presumption of law that Parliament intends an exercise of power to be reasonable. There is an analogy with the implication that Parliament intends an exercise of power to be conditioned by an obligation to afford procedural fairness. Subject to any impinging Constitutional consideration, the presence of a clear statutory qualification or contrary intention may be capable of modifying or excluding either implication. 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. However, legal unreasonableness can also be outcome focused, without necessarily identifying another underlying jurisdictional error. The latter occurs in what French CJ (in Li) 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 ... 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". Gageler J also uses language suggestive of review for legal unreasonableness being concerned with an examination by the supervising court of the outcome of the exercise of power...
In circumstances where no reasons for the exercise of power, or for a decision, are produced, all a supervising court can do is focus on the outcome of the exercise of power in the factual context presented, and assess, for itself, its justification or intelligibility bearing in mind that it is for the repository of the power, and not for the court, to exercise the power but to do so according to law... Where there are reasons, and especially where a discretion is being reviewed, the court is able to follow the reasoning process of the decision-maker through and identify the divergence, or the factors, in the reasons said to make the decision legally unreasonable.
There is then the question whether in assessing a contention of legal reasonableness, the court on review is confined to the reasons given by the decision-maker, where there are reasons... This question highlights the distinctions made between reasonableness review which concentrates on the outcome of the exercise of power, and reasonableness review which concentrates on an examination of the reasoning process by which the decision-maker arrived at the exercise of power. Although it is not necessary for the purposes of this appeal to resolve the question whether those should be seen as two different kinds of review and what might flow from that, we are inclined to the opinion that, where there are reasons for the exercise of a power, it is those reasons to which a supervising court should look in order to understand why the power was exercised as it was. The "intelligible justification" must lie within the reasons the decision-maker gave for the exercise of the power - at least, when a discretionary power is involved. That is because it is the decision-maker in whom Parliament has reposed the choice, and it is the explanation given by the decision-maker for why the choice was made as it was which should inform review by a supervising court. It is not, as in House v The King on an appeal from an exercise of a judicial discretion, for the court to re-exercise the discretion. If a supervising court goes outside the reasons given by a decision-maker for another justification for the exercise of power, that court might then be seen to be placing itself in the position of the repository of the power and therefore acting impermissibly. Where there are reasons, either the reasons given by the decision-maker demonstrate a justification or they do not. It would, we think, be a rare case where the reasons demonstrate a justification but the ultimate exercise of the power would be seen to be legally unreasonable.
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The standard of legal reasonableness will apply across a range of statutory powers, but the indicia of legal unreasonableness will need to be found in the scope, subject and purpose of the particular statutory provisions in issue in any given case. As we have said, unlike some other grounds for review of the exercise of power, the reasoning process in review for legal unreasonableness will inevitably be fact dependent. That is not to diminish the importance of the supervising court maintaining an approach which does not involve the substitution of its own judgment for that of the decision-maker. Rather, it is to recognise that any analysis which involves concepts such as "intelligible justification" must involve scrutiny of the factual circumstances in which the power comes to be exercised.
In the case of discretionary powers vested in either the Refugee Review Tribunal or the Migration Review Tribunal under the Act, the location of those powers in the statutory scheme as aids to the performance of a review function is important. As French CJ observed in Li, in these tribunals there is no contradictor, the review is not adversarial and therefore a balancing exercise by the tribunal in terms of prejudice to other parties is unlikely to be necessary. As the plurality observed in Li, the position of the tribunal cannot be equated with that of a party to litigation who may be prejudiced by the delay of another. It might be said there is a different kind of balancing required as between the statute's exhortation to the tribunals to discharge their functions in ways which are "fair, just, economical, informal and quick", and "according to substantial justice and the merits of the case", and the interests of individual applicants. However, the entire function of a review under Pt 5 or Pt 7 of the Act (and, indeed, any similar statutory administrative merits review process) is to make the correct or preferable decision in respect of an individual applicant or application.
A further control on the manner in which these tribunals may exercise discretions reposed in them is the interaction between their obligations of procedural fairness in the conduct of a review, and the standard of legal reasonableness. In some circumstances, an exercise of power which is said to be legally unreasonable may overlap with an alleged denial of procedural fairness because the result of the exercise of power may affect the fairness of the decision-making process. That will commonly be the case where the exercise of an adjournment power is under review, because refusing an adjournment may deny a person an opportunity to present her or his case.