On 24 December 2019, the Full Federal Court found that the Section 501 character test did not apply to applications for protection visas under s 36 of the Migration Act 1958: BAL19 v Minister of Home Affairs  FCA 2189.
In this case, the Minister accepted that the applicant had fought for the LTTE since he was sixteen years of age for a period of ten years. The Minister also accepted that Australia owed the applicant in this case non-refoulement obligations.
The Minister further noted that the applicant had significant physical and mental health conditions, including that he was legally blind. The Minister also accepted that the applicant’s behaviour had improved in recent times and if released from detention, the applicant had potential to be rehabilitated. Nevertheless, the Minister expressed concerns about the risk of the applicant engaging in harmful behaviour in the community.
The Minister concluded that there was still a risk that the applicant would represent a danger to the Australian community and personally refused his visa on character grounds under s 501(1).
The applicant was thus liable to be removed from Australia, however, as the applicant has a well-founded fear of persecution, as accepted by the Minister, he cannot be returned to his home country. This would subject the applicant to indefinite detention as he has no rights to enter any other country.
In his decision, Rares J describes the Minister’s reasoning as to granting the applicant another visa to avoid a breach of Australia’s non-refoulement obligations as akin to a “catch-22” as the Minister is unable to grant the applicant another visa due to s195A because the applicant had failed to meet the character test under s501 but is also unwilling to exercise his non-compellable power under s 48B.
At  –  Rares J further states:
It follows that the Minister’s reasons at -, dealing with the possibility of the future grant of other visas, amounted to him taking into account an irrelevant consideration or constructively failing to exercise his power on a correct understanding of the law. The Minister had, but failed, to address squarely in his reasons that the inevitable consequence of his assessment of risk, if he were to refuse to grant the visa under s 501(1), was that the applicant would have to be refouled as soon as reasonably practicable in accordance with ss 197C and 198 because there was no reasonable basis on which the grant of any other visa could occur having regard to that assessment of risk.
Refoulement of the applicant to Sri Lanka as soon as reasonably practicable, even though Australia owed him protection obligations, would be the, or a reasonable, legal and the immediate practical, consequence of a decision to refuse the visa. Contrary to what he said in  and , were he to have refused the visa, the Minister had no reasonable, available alternative to refoulement as soon as reasonably practicable, but to act in accordance with the requirements of ss 197C and 198. The Minister’s reasons at - were perfunctory and cursory. They did not amount to an active intellectual process that engaged at all with, let alone with the legal or practical consequence of, what his assessment of risk necessarily would entail, if he refused the visa, namely that he would have to refoule the applicant in breach of this country’s international obligations as reflected in s 36(1C).
That is, the Minister had not addressed the correct issue, being the legal or practical consequence of not granting the applicant a visa.
Rares J further noted that s 36(1C) applies to protection visa and that it is not a discretionary power. Under section 36(1C) a person is eligible to be granted a protection visa if he or she is not a person whom the Minister considers, upon objectively reasonable grounds, to be a danger to the Australian community on the basis that they have been convicted of a particularly serious crime. This is consistent with Art 33(2) of the Refugee Convention which prohibits refoulement unless a refugee is regarded a danger to the security of the country on reasonable grounds or has been convicted of a particularly serious crime and therefore constitutes a danger to the community of that country. Contrastingly s 501(6)(d)(v) provides that a person did not pass the s 501 character test if there is a risk that he or she would represent a danger to the, or a segment of the, Australian community. The character test under s 36(1C) is thus far more stringent than s 501.
A "particularly serious crime" is defined as one that:
involves violence against a person; or
is a serious drug offence; or
involves serious damage to property; or
is an offence relating to immigration detention
and is punishable by imprisonment for life, or a fixed term of not less than 3 years, or a maximum term of not less than 3 years. It does not matter whether the person was actually sentenced to 3 years, or to any term of imprisonment.
In analysing the Parliament’s intention when drafting s 36, Rares J observes that s 36 does not provide that an applicant for a protection visa who satisfies the criteria in s 36(1B), (1C) and (2) may be refused the visa under s 501(1). Rares J concludes that if s 36(1B) and (1C) could be overridden by the use of the general power in s 501(1), there would be no useful function for s 36 (1B) and (1C) which give statutory effect to Australia’s non-refoulement obligations under the Refugee convention. It is thus implied that the Minister can only act under s 36(1C) to assess if the applicant is a danger to the Australian community. The refusal of the applicant’s protection visa under s 501 by the Minister was thus found to be not in accordance with the law and was quashed. The Federal Court also ordered the Minister to make a decision on the application for a visa according to law.
It is important to note that this case relates to a decision to refuse a protection visa only. Whether or not s 501 can be used to cancel a protection visa that has already been granted is not clear at this time.