Judicial review for irrationality or illogicality: Full Federal Court clarifies the law

Since at least the early 2000s, decisions of administrative decision-makers have been susceptible to being set aside for jurisdictional error if those decisions are "illogical, irrational, or not based on findings or inferences of fact supported by logical grounds". So much was confirmed by the High Court in 2010, in the landmark decision of Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 61 (SZMDS).

Since SZMDS, there has lurked unresolved questions as to the limits of the circumstances in which a Court may consider a decision "illogical" and thereby affected by jurisdictional error. In the recent decision of Masi-Haini v Minister for Home Affairs [2023] FCAFC 126, the Full Federal Court expressed significant views about the proper scope of judicial review for illogicality which are likely to be of interest, and of some comfort, to government decision-makers.

An illogical decision or an illogical process

Early decisions concerned with illogicality stated that the "critical question is whether the determination was irrational, illogical and not based on findings or inferences of fact supported by logical grounds".

However, some differences in approach were evidenced in the three different judgments which comprised the High Court's decision in SZMDS. Taking each judgment in turn:

Clearly, there is a subtle, but significant, difference between the second and third approaches set out in the table above.

For the former approach, that of Justices Crennan and Bell, the inquiry as to "logicality" or "rationality" is largely "outcome-focused", asking whether the decision ultimately reached by the decision-maker can be supported by a hypothetical decision-maker undertaking lawful and logical analysis on the evidence available. If the answer to that question is "yes", then the decision will not be affected by jurisdictional error, even if the decision-maker's actual reasons expressed some illogicality or irrationality.

For Gummow ACJ and Kiefel J, if the decision-maker's reasoning expresses a want of logicality or rationality in a manner that is "critical" to the ultimate decision, the decision will be affected by jurisdictional error. In that sense, the inquiry is "process-focused", focused on the way in which the decision-maker reasoned to their conclusion.

Although the Full Court of the Federal Court held in SZOOR v Minister for Immigration and Citizenship (2012) 202 FCR 1 that the reasons of Crennan and Bell JJ represent the leading judgment in SZMDS, uncertainty has marked the evolution of the logicality and rationality grounds of judicial review, with both the "outcome focused" and "critical step" tests being applied by the Court. However, since SZMDS, courts have largely found illogicality and irrationality in two classes of case:

• Cases involving purported "unexpressed and unwarranted assumptions not based in any evidence", such as DAO16 v Minister for Immigration and Border Protection (2018) 258 FCR 175; and
• Cases where a decision-maker's illogicality may be said to have "infected the ultimate conclusion".

In each of these cases, jurisdictional error will readily be made out. Thus, the Courts have largely sidestepped the apparent difference in approach emerging from the High Court's decision in SZMDS. Until recently!

Enter: Masi-Haini

In Masi-Haini, the Full Court of the Federal Court were confronted with an appeal, challenging a decision of Minister for Home Affairs not to set aside the cancellation of the applicant's visa. One of the Applicant's grounds of challenge to the Minister's decision was a suggested "irrationality" or "illogicality" affecting the Minister's finding that the applicant – who had been affiliated with an outlaw motorcycle gang – knew of the gang's “outlaw status and criminal activity when he joined” that group.

Importantly, the Court found that there was no illogicality or irrationality in the Minister's decision and dismissed the applicant's appeal. However, and relevant for present purposes, the Court also outlined how it would have reasoned, if it was persuaded of the existence of illogicality in the Minister's reasons.

While explaining that it did not need to resolve the apparent "controversy" emerging from SZMDS, the Court made two comments of significance for the development of the rationality and logicality grounds of review.

First, the Court observed that in Djokovic v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2022) 289 FCR 21, a different Full Federal Court stated the ultimate question confronting a Court as:

"whether the satisfaction of the relevant state of affairs or matter was irrational, illogical or not based on findings or inferences supported by logical grounds, such that it cannot be said to be possible for the conclusion to be made or the satisfaction reached logically or rationally on the available material. It will then satisfy the characterisation of unjust, arbitrary or capricious." [emphasis added]

Significantly, the Court observed that the emphasised portions of this expression of the applicable test appeared consistent with the earlier decisions regarding irrationality, and with Crennan and Bell JJ's "outcome focused" formulation in SZMDS.

Secondly, the Court made clear that questions of "materiality" (in the sense described in MZAPC v Minister for Immigration and Border Protection (2021) 273 CLR 506) do not apply to irrationality and illogicality grounds. As the Court stated:

"[i]f a decision or state of satisfaction is not infected by illogicality or irrationality in the sense discussed in Djokovic (so as to be, as the Court put it, “unjust, arbitrary or capricious”), no relevant error is made out and questions of materiality, in the MZAPC sense, do not arise. On the other hand, if the decision or state of satisfaction is found to be so infected, a conclusion of materiality is implicit in that conclusion and no further threshold needs to be met. The MZAPC line of authority is thus irrelevant."

Thinking about irrationality or illogicality in practical administrative decision-making

Although some might argue that Masi-Haini represents little more than a waypoint of academic interest on the road to resolution of the apparent controversy arising from SZMDS, as the Court's comments on the test were technically obiter, the apparent ramifications of the decision appear much greater than that.

This is because the test for illogicality or irrationality propounded by Justices Crennan and Bell in SZMDS, sets a very high threshold to be satisfied before an administrative decision may be considered infected by jurisdictional error. In essence, a challenge based on rationality or logicality will only succeed where:

"only one conclusion is open on the evidence, and the decision maker does not come to that conclusion, or if the decision to which the decision maker came was simply not open on the evidence or if there is no logical connection between the evidence and the inferences or conclusions drawn."

By repositioning the Full Court's decision in Djokovic as endorsing the approach of Justices Crennan and Bell, Masi-Haini appears to throw significant persuasive weight behind this approach. There is much to be said for this more restrained approach: it would appear to be more consistent with the stringent test applied to determining legal unreasonableness (a ground of review closely related to illogicality and irrationality) and would also align with the test applied in the context of the Administrative Decisions (Judicial Review) Act 1977 (Cth). As a result, the decision goes some way to reducing the risk of successful judicial challenge to administrative decision-making on the grounds of illogicality or irrationality.

Administrative decision-makers ought, therefore, to welcome the decision of Masi-Haini as a welcome clarification of the law. Contrary approaches would appear to require the implication, by way of a general rule of statutory interpretation, that all decision-makers reasons be faultlessly logical and/or rational. With respect to proponents of such an approach, it is difficult to conceptualise a principled basis for such an implication, and such an implication would risk a slide into constitutionally impermissible merits review.

In that sense, government decision-makers should monitor the application of Masi-Haini with keenness. Whilst the decision is unlikely to affect the question of how administrative decisions are made, the case does impact how they are to be reviewed by Courts. This is because Masi-Haini casts significant doubt over the correctness and continued relevance of a line of decisions, including but not limited to those which have preferred the alternative "critical step" approach espoused by Gummow ACJ and Kiefel J in SZMDS. At the time of writing, one subsequent decision of the Full Court of the Federal Court has applied Masi-Haini in support of such a conclusion: MQGT v Minister for Immigration, Citizenship and Multicultural Affairs [2023] FCAFC 141.

In this regard, notable decisions whose continued applicability has now been called into question by the Full Court's decision include the decisions of Wigney J in Minister for Immigration and Border Protection v SZUXN [2016] FCA 516, and in SZWCO v Minister for Immigration and Border Protection [2016] FCA 51, where his Honour purported to apply aspects of Robertson J's reasoning in Minister for Immigration and Citizenship v SZRKT (2013) 212 FCR 99. Gordon J, sitting alone in the High Court in Plaintiff S183/2021 v Minister for Home Affairs [2022] HCA 15 has also expressed conclusions contrary to those espoused by the Full Court in Masi-Haini.

Masi-Haini also rejects the continued correctness of those decisions which, following the MZAPC line of authority, have applied a "materiality" test to irrationality or illogicality grounds of review (see, for example, AWU16 v Minister for Immigration and Border Protection [2020] FCA 513).