Clearly articulated arguments, established facts, and constructive failure to exercise jurisdiction: Day v SAS Trustee Corporation

If someone were to ask me to nominate the most frequently abused statement of principle in Australian legal history, I would refer them to paragraphs 24 and 25 of the judgment of Gummow and Callinan JJ in Dranichnikov v Minister for Immigration and Multicultural Affairs. In those paragraphs, their Honours stated that:

To fail to respond to a substantial, clearly articulated argument relying upon established facts was at least to fail to accord Mr Dranichnikov natural justice … The question remains however whether what occurred, either characterised as a failure to accord natural justice or as that, and more, which we consider it to be, including a constructive failure to exercise jurisdiction, entitles Mr Dranichnikov to relief under s 75(v) of the Constitution.

There is nothing wrong with what Gummow and Callinan JJ said in Dranichnikov. Clearly, if a decision maker is obliged to afford a person an opportunity to be heard before it makes a decision, it will fail to comply with that obligation if it ignores what the person says about why particular facts are relevant to whether the decision should or should not be made. More fundamentally, it seems obvious that a decision maker cannot properly exercise jurisdiction without considering what a person whose interests are liable to be affected by its decision says about the significance of any factual conclusions the decision maker has reached.

However, in the 18 years since Dranichnikov was decided, the obvious proposition that a decision maker will constructively fail to exercise jurisdiction if it fails to engage with ‘a substantial, clearly articulated argument relying upon established facts’ has (at least in the minds of a succession of federal Ministers and their legal representatives) somehow been transformed into the wholly erroneous proposition that this is the only way in which a decision maker can constructively fail to exercise jurisdiction. While this mistaken proposition has occasionally been corrected by the Federal Court, it nevertheless continues to shamble through federal judicial review proceedings like a jurisprudential zombie. But in recent years, State appellate courts have explained the true nature of jurisdictional error in the form of constructive failure to exercise jurisdiction, including why that form of error is not limited to cases in which a decision maker ignores ‘established facts’. The recent judgment of the New South Wales Court of Appeal in Day v SAS Trustee Corporation, handed down on 28 April 2021, is a useful addition to this body of State administrative law jurisprudence. But before turning to the judgment in Day, it is useful to consider what Gummow and Callinan JJ actually said (and did not say) in Drachnikov itself and to look at the Victorian Court of Appeal’s comprehensive explanation in Chang v Neill of the principles underlying judicial review for constructive failure to exercise jurisdiction.

The reasoning of Gummow and Callinan JJ in Dranichnikov

In revisiting Dranichnikov, it is important to recall what the case was actually about. In 1997, the applicant, his wife and their daughter departed Vladivostok, Russia, where the applicant had operated a small business. The applicant claimed that from about 1993, a culture of lawlessness and corruption had taken hold in Vladivostok. He claimed that he had made public efforts to raise this issue with the local authorities, and that this had resulted in his being stabbed and severely injured. The applicant stated that he had been pressured by police not to take any further action in respect of this assault, to the point where he had signed a letter requesting that police discontinue any investigation into the circumstances of the assault. Based on these matters, the applicant submitted that he was entitled to a protection visa on the grounds that if he was required to return to Russia, there was a real chance that he would persecuted because of his membership of a particular social group.

The Tribunal accepted all of the primary allegations of fact made by the applicant. However, it refused to grant the applicant a protection visa on the grounds that it did not accept that there was evidence before it of ‘general persecution of businessmen in Russia’. The problem with the Tribunal’s line of reasoning was that this finding did not address the case that was actually put to it by the applicant. That case was not that ‘businessmen in Russia’ were at risk of persecution. It was that a particular group of businessmen – being those businessmen who had publicly criticised Russia’s law enforcement apparatus – were at risk of persecution. Thus Gummow and Callinan JJ stated that:

The Tribunal … decided another question, whether Mr Dranichnikov’s membership of a social group, namely, of “businessmen in Russia” was a reason for his persecution and relevantly nothing more. The Tribunal should have decided the matter which was put to it, whether Mr Dranichnikov was a member of a social group consisting of entrepreneurs and businessmen who publicly criticised law enforcement authorities for failing to take action against crime or criminals.

It is in this context that their Honours’ reference to ‘established facts’ has to be understood. What Gummow and Callinan JJ said in their judgment is that where a decision maker accepts the factual allegations made by a person, but misapprehends why the person says those facts should result in the making of a particular decision, it will constructively fail to exercise its jurisdiction (and fail to comply with the hearing rule). Their Honours emphatically did not say that a decision maker will only constructively fail to exercise jurisdiction if it fails to respond to ‘established facts’. Such a principle would be absurd. In this regard, the role of an administrative decision maker will generally require it to make findings on factual allegations put to it. It is only once those findings have been made that any facts (other than truly obvious facts – such as that Vladivostok is in Russia, or that Russia was once part of the Union of Soviet Socialist Republics) can be said to have been ‘established’. To say that a decision maker is only required to respond to a claim based on ‘established facts’ is to put the cart before the horse – it is to say that a decision maker’s obligation to consider the case before it somehow arises after it has made findings of fact, notwithstanding that making those findings is a key step in discharging its jurisdictional obligation to consider the case. Plainly that cannot be correct. The judgment of Gummow and Callinan JJ in Dranichnikov thus merely describes one type of situation in which a decision maker may fall into jurisdictional error – it does not purport to delimit the circumstances in which a decision maker may constructively fail to exercise jurisdiction.

And yet, in federal judicial review proceedings, Dranichnikov is almost inevitably cited by the Minister administering the Migration Act 1958 (Cth) in support of the manifestly wrong proposition that a decision maker can only constructively fail to exercise jurisdiction by failing to respond to a claim based on established facts. At least in my view, this misunderstanding is less a good faith disagreement about the meaning of Gummow and Callinan JJ’s judgment than it is an unfortunate example of Upton Sinclair’s dictum that ‘it is difficult to get a man to understand something, when his salary depends upon his not understanding it.’

The judgment in Chang v Neill

In Chang v Neill, the Victorian Court of Appeal reviewed a substantial number of Federal Court authorities addressing the question when an administrative decision maker will fall into jurisdictional error by misapprehending or failing to consider some aspect of a case put to it a by a person whose interests are liable to be affected by a decision (including the seminal judgments in Minister for Immigration and Citizenship v SZRKT and Minister for Immigration and Border Protection v MZYTS). Based on this review of the authorities, the Court stated that:

[A] factual error may constitute jurisdictional error if it amounts to a constructive failure to perform the statutory function conferred on the decision-maker … Factual errors that may constitute jurisdictional error include a failure by the decision-maker to have regard to relevant factual material and the taking into account of such material in a manner that misconstrues its nature or effect (the latter may be described as a constructive failure to have regard to the material). Whether such a factual error amounts to a constructive failure to perform the statutory function conferred on the decision-maker will depend on the importance of the material to the exercise of the function and the seriousness of the error. 

As the Court emphasised, failing to address or properly understand some aspect of the factual substratum of a case – whether that aspect of the case is characterised as a ‘claim’, a ‘submission’, or a matter of ‘evidence’ – will give rise to jurisdictional error if it indicates that the decision maker has not truly engaged with the case in a meaningful way. This is a qualitative failure that can arise in a range of different circumstances. The failure need not relate to any ‘established facts’ – it can just as easily involve overlooking evidentiary material that is important to the resolution of a controversial question of fact, or failing to grapple with and reach conclusions on a factual issue that must be determined in order to provide a proper factual foundation for the decision.

The judgment in Day v SAS Trustee Corporation

In Day, the appellant appealed on a question of law from a judgment of the District Court holding that he was not entitled to a superannuation allowance under the Police Regulation (Superannuation) Act 1906 (NSW). In this regard, the District Court held that while the appellant had sustained some form of psychiatric injury during the course of his work as a police prosecutor in or about August of 1998, and that he had left the police force because of this condition, that injury had ceased to cause the appellant any infirmity after a short period. One of the appellant’s grounds of appeal was that in making this finding, the District Court had fallen into jurisdictional error by failing to consider three ‘key issues’, being: (1) the appellant’s submission that he had continued working throughout the duration of his psychiatric illness because of his ‘stoicism’; (2) the appellant’s claim that while his psychiatric illness did not prevent him from working, it prevented him from working around police officers; and (3) the appellant’s submission that while his condition had not prevented him from becoming a lawyer and working in private practice after he left the police force, it had left him unable to do the work of a police prosecutor.

In addressing this aspect of the appellant’s appeal, Meagher JA (with whom Payne and White JJA agreed) stated the relevant principles as follows:

[A] constructive failure to exercise jurisdiction (or a purported exercise, in the sense that there is an appearance of an exercise of jurisdiction) as alleged by the appellant is not a mere failure to consider evidence or to address an argument or submission, which may be contingent or otherwise insignificant, but a failure to understand and determine a case or claim. The ultimate question is whether a failure to consider and address certain issues or arguments involved a failure to address central or critical elements of the case or claim.

Like the judgment of the Court of Appeal in Chang, this formulation of the relevant principles emphasises that whether there has been a constructive failure to exercise jurisdiction depends on a qualitative characterisation of the material that is alleged to have been overlooked or misapprehended, and upon an assessment of whether that material was of such significance that the decision maker could not fully engage with the case put before it without considering and properly understanding it.

Having set out the relevant principles in such a clear and concise manner, Meagher JA proceeded to say in relation to the first key issue identified by the appellant that ‘[a] fundamental difficulty for the appellant in relation to this issue is that its factual basis, that the appellant was a “stoic”, is not established: cf Dranichnikov at [24].’ One might conclude from this that Meagher JA, having rightly acknowledged that constructive failure to exercise jurisdiction can arise in a range of different ways, went on to assess the appellant’s case on the basis that he could only succeed on this issue by establishing that the District Court had failed to respond to ‘established facts’. However, this remark has to be read in light of the fact that the appellant expressly invoked the ‘established facts’ aspect of Gummow and Callinan JJ’s judgment in Dranichnikov. As such, it should be read as reflective of the submissions that were made by the appellant, rather than as of a misapprehension on the part of the Court of Appeal that Dranichnikov limits the circumstances in a which a constructive failure to exercise jurisdiction may arise. In this regard, Meagher JA noted that the District Court had in fact given extensive consideration to the evidence concerning the appellant’s psychiatric history and had concluded from this history that the appellant had not suffered any real infirmity after about November of 1998. In these circumstances, his Honour considered that the appellant’s claimed stoicism ‘never arose for separate determination’ – it was simply a part of the fundamental factual question raised by the appellant’s case, which was whether he had suffered any significant psychiatric infirmity. The District Court had engaged extensively with the evidence on that issue and thus had not constructively failed to exercise jurisdiction.

Similarly, Meagher JA considered that the District Court had engaged with each of the the second and third key issues raised by the appellant, in that it had considered and rejected the appellant’s evidence that after he left the police force, he had developed a phobia of police that would have rendered him unable to work as a police prosecutor. In this regard, the District Court found that the appellant had worked as a defence lawyer for four years after leaving the police force, had been appointed as a magistrate, and had returned to private practice in 2003 – during the entirety of this period, the appellant had engaged with police officers with no apparent sign of psychiatric illness. In light of these findings, it could not be said that the District Court had not engaged with the second and third key issues.

Like Chang, Day is a useful distillation by a State appellate court of a potentially confusing group of authorities on constructive failure to exercise jurisdiction. It emphasises that evaluating a claim of constructive failure to exercise jurisdiction requires a court engaged in judicial review (or hearing an appeal on a question of law) to consider the significance of any material – whether that material is characterised as a claim, a submission or an item of evidence – that is alleged to have been overlooked or mischaracterised by the decision maker. This in turn requires the court to make both a factual judgment as to whether the material was overlooked or mischaracterised and an evaluative judgment as to whether the decision maker could genuinely engage with the case without properly understanding the material. The judgment is a qualitative one that depends on the significance of the material in the context of the issues arising before the decision maker – it cannot be made by reference to fixed classes of case, and the scope of judicial review for constructive failure to exercise jurisdiction is not limited to cases in which the decision maker has failed to respond to ‘established facts’.

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