06 Aug 2010

Illogical and irrational decisions - confirmed as a ground of judicial review for decision-makers

by Michael Palfrey, Nicholas Swan

An administrative decision can now be reviewed on the basis that no rational or logical decision-maker could arrive at the decision on the same evidence.

The High Court has recently confirmed the availability of aground of judicial review that focuses on illogical and irrational reasoning processes (Minister for Immigration and Citizenship v SZMDS [2010] HCA 16).

This means that it is clear that an administrative decision can now be reviewed on the basis that no rational or logical decision-maker could arrive at the decision on the same evidence.

Is illogical and irrational reasoning a ground of review?

The possibility of reviewing administrative decisions on the basis of illogical and irrational reasoning had been flagged by the High Court in Applicant S20/2002 (2003) 77 ALJR 1165 and SGLB (2004) 78 ALJR 992.

Following these decisions, uncertainty had arisen in the Federal Court over whether illogicality or irrationality was a free-standing ground of review. SZMDS dispels that uncertainty in the High Court's most thorough examination of the scope of this ground of review.

While SZMDS does confirm the availability of illogicality and irrationality as a ground of review, the judgments of Acting Chief Justice Gummow and Justice Kiefel, and Justices Crennan and Bell do not present a uniform approach to the meaning and scope of illogicality and irrationality. We have limited our consideration of those concepts to the judgment of Justices Crennan and Bell, as that judgment provides a more detailed discussion than that of Acting Chief Justice Gummow and Justice Kiefel.

Describing a decision as illogical or irrational is often merely a way of expressing disagreement with it, in the sense that another person, having reviewed all relevant materials, would have reached a different conclusion.

For a decision to be invalidated, more than mere disagreement with the outcome must be shown. As Justices Crennan and Bell noted, "not every lapse in logic will give rise to jurisdictional error". To invalidate a decision, the court must ask whether it was open to the decision-maker to engage in the process of reasoning it did. Illogically or irrationality therefore will only be made out in exceptional circumstances.

For Justices Crennan and Bell, a decision will be invalid where it "is one at which no rational or logical decision-maker could arrive on the same evidence". That may occur where, for example:

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

On the other hand, a decision is not illogical or irrational "if there is room for a logical or rational person to reach the same decision on the material before the decision-maker".

Making that assessment is not without difficulty. In many, if not most, circumstances there will not be a bright line that demarcates logical and illogical reasoning; a reasoning process one person considers as irrational may fairly be considered by another as rational.

This problem is well illustrated by SZMDS itself. In the High Court, Acting Chief Justice Gummow and Justice Kiefel held the Tribunal had made "a critical finding by inference not supported on logical grounds". Justices Heydon, Crennan and Bell considered, by contrast, that the reasoning process adopted by the Tribunal was open to it and was not irrational.

As we have noted, the judgments of Acting Chief Justice Gummow and Justice Kiefel and Justices Crennan and Bell do not present a uniform approach to the meaning of illogicality and irrationality. The finer points of what must be shown in order to establish illogical or irrational reasoning will consequently need to be fleshed out by further Federal Court and High Court cases.

The new ground applies only to findings of jurisdictional facts

The High Court did limit the applicability of the ground of review to "jurisdictional facts". Where a finding does not constitute a jurisdictional fact, the ground of review will not apply to it.

A jurisdictional fact is an essential pre-condition to the exercise of a statutory power; that is, a criterion or condition that must be found to exist before a decision-making power becomes enlivened.

Traditionally, this has been limited to purely factual issues (such as whether a person is of a certain age). However, a statutory requirement for a decision-maker be "satisfied" about a matter before the decision-making power arises may also constitute a jurisdictional fact.

The decision-making power under review in SZMDS was an example of this. The Minister's power to grant a protection visa only arose if the Minister was first "satisfied" that the visa applicant met specific criteria required for a protection visa.

What is the distinction between irrationality and unreasonableness?

Justices Crennan's and Bell's conception of an illogical and irrational decision as "one at which no rational or logical decision maker could arrive", appears closely related to the Wednesbury unreasonableness ground of review, which asks whether a decision is "so unreasonable that no reasonable [person] could ever have come to it".

SZMDS emphasises that despite the seeming similarity between these grounds of review, they apply to different stages of the decision-making process. As we have seen, the irrationality ground will only apply to the review of jurisdictional facts.

By contrast, Wednesbury unreasonableness will apply only when a court is reviewing the validity of the exercise of a discretionary power. Decision-makers and agencies should be wary of this distinction when assessing the cogency of their decisions and any statement of reasons that they produce.

The obligation to provide a statement of reasons

While some legislation provides a statutory right to obtain reasons for an administrative decision, there is still no right to reasons arising at common law.

Comments by Acting Chief Justice Gummow and Justice Kiefel suggest a willingness of at least some members of the current High Court to reconsider the extent to which a common law obligation to provide reasons should operate (if at all). This would appear consistent with the High Court's recent focus, seen in cases such as Kirk v Industrial Relations Commission [2010] HCA 1, on ensuring the accountability of executive decision-making and ensuring that excesses of executive power do not go unchecked.

Key lessons

Agency decision-makers need to ensure:

  • the basis upon which they have reached a level of "satisfaction" or a subjective opinion is well founded;
  • a statement of reasons that clearly articulates the factual findings and the reasoning process of their decision is provided to the affected party;
  • decisions are based on proper factual findings and are supported by cogent reasons;
  • they understand that the difference between the irrationality ground (which applies only to the review of jurisdictional facts) and Wednesbury unreasonableness (which applies only when a court is reviewing the validity of the exercise of a discretionary power) when assessing their own reasoning.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.