Public Law Essentials 06: Statements of Reasons

A statement of reasons is a statement which sets out the reasons why a decision-maker made a certain decision and the materials and issues that were considered as part of the decision-making process. A statement of reasons usually plays a critical role in judicial review challenges to decisions.

This Public Law Essentials:

• discusses when a statement of reasons must and should be prepared,
• examines the legal implications of providing inadequate statements of reasons (and provides some tips for preparing statements of reasons which meet the courts’ expectations), and
• provides practical guidance as to what to include in a statement of reasons.

When to provide a statement of reasons

There is no general common law obligation to give reasons for administrative decisions, but one is often imposed, whether as an aspect of a general review procedure, or by the legislation under which the decision is made.

For example, statements of reasons are required where there is a right of merits review by the Administrative Appeals Tribunal (AAT), a right of judicial review by the Federal Court of Australia, or where the legislation under which the decision was made requires them when notifying the person of the decision. Examples of where a statutory obligation to provide a statement of reasons arises are:

1. Administrative Appeals Tribunal Act (AAT Act)

Section 28 of the AAT Act sets out the obligation to provide a statement of reasons if:

• there is a decision reviewable by the AAT; and
• reasons are requested in writing by a person whose interests are adversely affected by a decision (for example, the Applicant).

If a request is made, the decision-maker must provide a statement of reasons within 28 days after receiving it.

2. Administrative Decisions (Judicial Review) Act 1977 (ADJR Act)

Under section 13 of the ADJR Act, a statement of reasons must be provided if:

• a person is entitled to make an application to the Federal Court, or the Federal Circuit and Family Court of Australia; and
• that person requests that the person who made the decision to provide a statement of reasons setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision.

3. Other statute

Legislation also regularly provides statutory rights for persons affected by government decisions to request or be given statements of reasons. For example:

• under the Freedom of Information Act 1982 (Cth), if access to a document is refused, the Applicant must be given a statement of reasons to accompany the refusal;
• the Environment Protection and Biodiversity Conservation Act 1999 (Cth) requires the Minister to give reasons for the decision made in relation to a proposed action; and
• section 430 of Migration Act 1958 (Cth) requires that a written statement of the Tribunal's decision on a review be provided at the time of decision or notification of decision. 

When can a decision-maker refuse to provide a statement of reasons?

Sometimes a decision-maker can refuse to provide a statement of reasons, such as where:

• the person requesting reasons is not entitled to them because they are not affected (or "aggrieved") by the decision;
• an adequate statement of reasons has already been provided;
• the request was not made in writing, if that is a requirement of the operative legislation;
• the request was made outside time limits as specified in legislation (although it is considered good administrative practice not to refuse reasons on the ground that the request was out of time, particularly if the delay is minor); or
• the disclosure of information would be against public interest (so as to enliven a claim for public interest immunity).

When should a statement of reasons be provided?

If there is no legislative requirement to provide a statement of reasons, there are still good reasons for decision-makers to choose to prepare and provide a statement of reasons to the parties affected by their decisions, as aptly summarised by Justice McHugh in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme (2003) 216 CLR 212:

“Rationale for reasons: The rationale of the obligation to provide reasons for administrative decisions is that they amount to a "salutary discipline for those who have to decide anything that adversely affects others". They encourage "a careful examination of the relevant issues, the elimination of extraneous considerations, and consistency in decision-making". They provide guidance for future like decisions. In many cases they promote the acceptance of decisions once made They facilitate the work of the courts in performing their supervisory functions where they have jurisdiction to do so. They encourage good administration generally by ensuring that a decision is properly considered by the repository of the power. They promote real consideration of the issues and discourage the decision-maker from merely going through the motions. Where the decision effects the redefinition of the status of a person by the agencies of the State, they guard against the arbitrariness that would be involved in such a redefinition without proper reasons. By giving reasons, the repository of public power increases ‘public confidence in, and the legitimacy of, the administrative process’." [footnotes omitted]

If the decision does become subject to a review, a statement of reasons will help record the decision-maker’s views and the legal principles relevant to the decision, which in turn may:

• assist with the efficient preparation for reviews (including merits review) and the quick and early identification of relevant issues (for example, if there are obvious errors on the face of the decision) and the materials relied upon;
• provide insights into any deficiencies in the evidence that may need to be addressed on review (for merits review);
• create an opportunity to assess the decision’s veracity and lawfulness at an early stage (as is relevant to the type of proceedings) and possibly an efficient resolution of a review if errors can be identified early, or confine the issues on review; and
• providing evidence of the reasons for the decision which may ultimately be relevant to the decision on judicial review. This in turn may ultimately protect the decision, as it may (if drafted appropriately) demonstrate how and why the decision was rational, logical and otherwise made according to law.

Practical guidance for preparing a statement of reasons

What to include in a statement of reasons is principally guided by:

• the legislation which requires a statement of reasons, for example section 28 of the AAT Act and section 13 of the ADJR Act; and
• protecting against legal risk (ie. defending the decision from adverse findings on judicial review).

With this in mind, a statement of reasons should contain:

• a description of the decision: this must be set out in the statement of reasons in a clear and logical manner, so it is obvious what decision has been made.
• relevant legislation and section(s) under which the decision was made: it is best practice to directly quote the legislation, rather than summarise or paraphrase.
• identification of the decision-maker, and the source of that person's authority to make the decision (most likely a delegation);
• an outline of the procedure that was followed in making the decision (for example, any inquiries made, or consultations undertaken): this may include a chronology of the decision making process, a summary of requests for information and responses to those requests, the material that was before the decision-maker when the decision was made and submissions or evidence provided to the decision-maker. It is important to note that if a statement of reasons refers to other documents as part of the evidence or other material considered, those documents should be made available in full to a person who has requested a statement of reasons, as outlined in The Wilderness Society (Tasmania) Inc v Minister for Environment (2019) 275 FCR 287.
• the reasons for the decision, including:
• the material facts and findings that support each of the statutory requirements for the decision. Findings should be expressed in appropriate language (eg., "I find / accept / am satisfied / am not satisfied”);
• the conclusions reached and an explanation as to why a finding or conclusion was reached (including on any disputed fact) with reference to the evidence or material on which those findings were based; and
• if any aspect of the decision was discretionary, the opinion that was taken and why,

(further guidance on material facts and adequacy of reasons is set out below).

A failure to include these matters (and in sufficient and accurate detail) in a statement of reasons may establish an error. For example, where a statement of reasons is part of a statutory requirement for the lawful exercise of a decision-making power, a substantial failure by a decision-maker to state the reasons for its decision may constitute an error of law which vitiates the decision.

Material fact

A material fact is one which was considered and formed the basis of the decision-making – facts which the decision-maker regarded subjectively as being material to the decision. A fact could also be considered material if it is required by legislation.

According to the High Court, “it is not right to read ‘material’ as providing an objective or external standard of materiality. A requirement to set out findings and reasons focuses upon the subjective thought processes of the decision-maker” (Minister for Immigration and Multicultural Affairs v Yusuf (2001) 180 ALR 1). A material fact is therefore what is considered to be material in the decision-making process, rather than including all facts which have been provided and considered.

If a statement of reasons does not set out findings of fact on a matter, a court may draw the conclusion that factual issues were not considered to be material, which could expose the decision to a finding of error on judicial review.

Ensuring the adequacy of the reasons for the decision

A statement of reasons enables the decision-maker’s thinking process and logic to be clearly explained.

While a statement of reasons can protect a decision-maker during judicial review, it may also demonstrate the decision-maker erred in law, and become evidence of that error if that decision is ultimately subject to judicial review.

An obvious example is where the statement of reasons may, on its face, establish errors in the decision-making, such as applying the relevant legislation incorrectly, or having regard to irrelevant facts and evidence.

The Courts have also been willing to identify errors where the statement of reasons does not sufficiently demonstrate that the decision-maker undertook a coherent reasoning process or exercised their function to the standard required of a decision-maker: for example, the High Court determined that:

“The statement of reasons must explain that actual path of reasoning in sufficient detail to enable a court to see whether the opinion does or does not involve any error of law…If a statement of reason fails to meet that standard, that failure is itself an error of law on the face of the record of the opinion.” (Wingfoot Australia Partners Pty Ltd v Kocak [2013] HCA 43)

With this in mind, some key considerations for decision-makers when crafting their reasons include:

• ensure that the statement explains the reasoning process in sufficient detail and demonstrates a clear path of reasoning linking the facts and conclusions to be drawn from those facts: “the statement of bare conclusions without the statement of reasons will always expose the tribunal to the suggestion that it has not given the matter close enough attention or that it has allowed extraneous matters to cloud its consideration.” (Commonwealth v Pharmacy Guild of Australia (1989) 91 ALR 65)
• ensure that the detail of the reasons goes beyond merely listing the decision-maker’s conclusions or applying checklists: decision-makers must show an “active intellectual engagement” with the relevant considerations (Lafu v Minister for Immigration and Citizenship [2009] FCAFC 140). To avoid a finding of error on this basis, the statement of reasons should set out how the relevant considerations were assessed and the reasoning process for each relevant consideration.
• be wary of templates: agencies’ templates may be appropriate in a statement of reasons, as they may lead to more consistent decision-making and guide decision-makers. However, like checklists, templates expose decision-makers to the risk that they will be found not to have undertaken an “active intellectual engagement” with the relevant considerations. The Full Federal Court noted in one case that a degree of "cutting and pasting earlier decisions to produce" reasons was apparent, finding: "There are, of course, risks with adopting such a practice as the facts of this case bear out. Chief amongst these is that the risk of overlooking the actual submissions made is increased. Allied with that risk, or perhaps overlapping it, is the potential to fail to consider each case on its own merits". (SZRBA v Minister for Immigration and Border Protection [2014] FCAFC 81)
  • The caution that should be applied to using templates of formulas for decision-making was also noted by the High Court:
  • “A statement of reasons for a decision reviewable under the AD(JR) Act is not invalid merely because it employs a verbal formula that is routinely used by persons making similar decisions…On the other hand, if the decision-maker uses the formula to cloak the decision with the appearance of conformity with the law when the decision is infected by one of the grounds of invalidity prescribed by the Act, the incarnation of the formula will not save the decision from invalidity.” (Wu Shan Liang v Minister for Immigration and Ethnic Affairs (1996) 185 CLR 259)
• ensure that all relevant matters are referenced in the statement of reasons. For example: if policy statements or guidelines were used in the reasoning process, they should be included in the statement of reasons. Other documents which may be considered when providing reasons (and therefore included in the statement of reasons) may include legislation, case law, or other agency practices that were taken into account. The importance of referring to all relevant matters in the statement of reasons was noted by the Full Federal Court: a “failure to include reference to a matter in a statement of reasons may justify the inference that, as a matter of fact, the matter was not taken into account". (Bat Advocacy NSW Inc v Minister for Environment Protection, Heritage and the Arts [2011] FCAFC 59)
• ensure that the statement demonstrates a weighing of factors for and against a particular decision: in one case, the Full Federal Court was critical of the decision-maker’s reference to post-hearing submissions as having been considered by the Tribunal, because "Nothing in the Tribunal's reasons suggest any re-evaluation by the Tribunal of what it put to the visa applicant at the hearing on this point, in the light of the post-hearing submissions and additional country information. Rather, the reasons suggest no consciousness of the contents of these post-hearing materials… We are not suggesting the Tribunal was bound to accept the effect of that material, we are emphasizing the absence of any consideration of it." (Minister for Immigration and Border Protection v MZYTS [2013] FCAFC 114)
• ensure that the language used when formulating a statement of reasons is clearly expressed and easily understood by a person impacted by the decision. The length will vary based on the decision, and the complexity regarding the decision and material considered in reaching this decision.

Should confidential information be included?

Information provided to a decision-maker may be confidential or private in some manner.

Under section 13A(b) of the AD(JR) Act, a decision-maker need not disclose information in a statement of reasons if:

• it was supplied in confidence; or
• its publication would reveal a trade secret or;
• it was furnished in compliance with a statutory obligation; or
• to furnish it would contravene a statutory duty.
  
  

Importantly, the decision-maker does not have to provide the statement under 13A(2)(b) if it would be false or misleading without the confidential information. The AAT Act does not have an equivalent provision, but it is worth noting that the AAT must ensure that private documents are not disclosed to any other person other than a member of the Tribunal as constituted for the purposes of the proceeding. section (39B(3)).

Legal advice and statements of reasons

Legal professional privilege (LPP), also known as client legal privilege, may attach to legal advice and other communications with the Department’s Legal Section or an external legal provider, including requests for legal advice. LPP protects the confidentiality of communications between a lawyer and their client. There are good reasons for maintaining LPP over legal advice in the decision-making context, such as encouraging decision-makers to seek legal advice rather than remaining ignorant of a proposed action’s legal implications.

If the party claiming privilege (the client) has acted inconsistently with maintaining confidentiality, a court may determine that LPP has been waived and order the disclosure of the relevant legal advice – for example, the client may expressly or impliedly waive LPP by exposing the content and the existence of the legal advice.

Sometimes decision-makers will seek legal advice to assist with their decision-making (for example, on the legal principles applicable to the decision or on administrative matters such as the timeframe to make a decision). Should the legal advice be included in Statements of Reasons, and what are the implications of doing so – including whether it may constitute a waiver of LPP?

Generally, a reference in a statement of reasons to legal advice on an administrative issue (such as the timing of a decision or the interpretation of a provision in particular legislation) will not waive privilege. If, however, the decision-maker has relied on the legal advice in making the decision and the statement of reasons reveals the substance of the legal advice, either expressly or by implication, then privilege may have been waived.

As a general proposition, privilege is not waived simply by reason of mere reference to legal advice – more is required. Difficult questions may arise (for example) where the text of the legal advice is not disclosed but where it is said that the substance of the advice has been so disclosed that privilege can no longer be maintained.

The following principles may assist decision-makers (and their legal advisers) on whether to include legal advice in Statements of Reasons:

• must the legal advice be included? Some statutes may require the legal advice to be disclosed. For example, section 37(3) of the AAT Act provides that the obligation to provide documents has effect “notwithstanding any rule of law relating to privilege or the public interest in relation to production of documents”;
• is disclosing the legal advice necessary to explain the decision’s reasons and the conclusions reached? If it is possible to fully explain the decision without reference to the legal advice, it may be appropriate to cite the relevant legal principles (as set out in the legal advice) without directly relying on the legal advice as a basis for the decision. This may also protect the decision from inferences that the decision-maker was acting under dictation or not arriving at the decision independently;
• will disclose result in a waiver of LPP? As above, certain references to legal advice may not result in waiver.
• A statement of reasons may be viewed as a risk management tool for a decision-maker and may protect their decisions if reviewed or challenged.
• Legal risks to the decision may arise on the face of the statement of reasons (on review) if the reasons for the decision are not sufficiently explained, or it otherwise demonstrates (for example):
  • a failure to have regard to relevant facts and evidence (considerations), or having regard to irrelevant considerations;
  • a misapplication of the relevant legal principles; or
  • the decision was irrational, illogical or unreasonable in its conclusions.