Section 18.1(4) of the Federal Court Act, RSC 1985, c F-7, states that the grounds for judicial review are:
The Federal Court may grant relief under subsection (3) if it is satisfied that the federal board, commission or other tribunal
(a) acted without jurisdiction, acted beyond its jurisdiction or refused to exercise its jurisdiction;
(b) failed to observe a principle of natural justice, procedural fairness or other procedure that it was required by law to observe;
(c) erred in law in making a decision or an order, whether or not the error appears on the face of the record;
(d) based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it;
(e) acted, or failed to act, by reason of fraud or perjured evidence; or
(f) acted in any other way that was contrary to law.
Based its Decision or Order on an Erroneous Finding of Fact in a Perverse or Capricious Manner
In Rahal v Canada (Minister of Citizenship and Immigration), 2012 FC 319, Justice Gleason provided the following guidance on interpreting s. 18.1(4):
In the seminal case interpreting section 18(1)(d) of the FCA, Rohm & Haas, Chief Justice Jacket defined “perversity” as “willfully going contrary to the evidence” (at para 6). Thus defined, there will be relatively few decisions that may be characterized as perverse.
The notion of “capriciousness” is somewhat less exacting. In Khakh v Canada (Minister of Citizenship and Immigration), (1996), 116 FTR 310,  FCJ No 980 at para 6, Justice Campbell defined capricious, with reference to a dictionary definition, as meaning “marked or guided by caprice; given to changes of interest or attitude according to whim or fancies; not guided by steady judgment, intent or purpose”. To somewhat similar effect, Justice Harrington in Matondo v Canada (Minister of Citizenship and Immigration), 2005 FC 416 at para 1,  FCJ No 509, defined “capricious” as being “so irregular as to appear to be ungoverned by law”. Many decisions hold that inferences based on conjecture are capricious. In Canada (Minister of Employment and Immigration) v Satiacum (1989), 99 NR 171,  FCJ No 505 (FCA) at para 33, Justice MacGuigan, writing for the Court, stated as follows regarding conjecture:
The common law has long recognized the difference between reasonable inference and pure conjecture. Lord Macmillan put the distinction this way in Jones v. Great Western Railway Co. [citation omitted]:
The dividing line between conjecture and inference is often a very difficult one to draw. A conjecture may be plausible but it is of no legal value, for its essence is that it is a mere guess. An inference in the legal sense, on the other hand, is a deduction from the evidence, and if it is a reasonable deduction it may have the validity of legal proof. …
Turning, finally, to the third aspect of section 18.1(4)(d), the case law recognizes that a finding for which there is no evidence before the tribunal will be set aside on review because such a finding is made without regard to the material before the tribunal (see e.g. Canadian Union of Postal Workers v Healy, 2003 FCA 380 at para 25,  FCJ No 1517). Beyond that, it is difficult to discern a bright-line. The oft-cited Cepeda-Gutierrez v Canada (Minister of Citizenship and Immigration) (1998), 157 FTR 35,  FCJ No 1425) [Cepeda-Gutierez] provides a useful review of the sorts of errors that might meet the standard of a decision made “without regard to the material” before the tribunal which fall short of findings for which there is no evidence. There, Justice Evans (as he then was) wrote at paragraphs 14 – 17:
… in order to attract judicial intervention under section 18.1(4)(d), the applicant must satisfy the Court, not only that the Board made a palpably erroneous finding of material fact, but also that the finding was made “without regard to the evidence” …
The Court may infer that the administrative agency under review made the erroneous finding of fact “without regard to the evidence” from the agency’s failure to mention in its reasons some evidence before it that was relevant to the finding, and pointed to a different conclusion from that reached by the agency. Just as a court will only defer to an agency’s interpretation of its constituent statute if it provides reasons for its conclusion, so a court will be reluctant to defer to an agency’s factual determinations in the absence of express findings, and an analysis of the evidence that shows how the agency reached its result.
On the other hand, the reasons given by administrative agencies are not to be read hypercritically by a court [citations omitted]… nor are agencies required to refer to every piece of evidence that they received that is contrary to their finding, and to explain how they dealt with it … That would be far too onerous a burden to impose upon administrative decision-makers who may be struggling with a heavy case-load and inadequate resources. A statement by the agency in its reasons for decision that, in making its findings, it considered all the evidence before it, will often suffice to assure the parties, and a reviewing court, that the agency directed itself to the totality of the evidence when making its findings of fact.
However, the more important the evidence that is not mentioned specifically and analyzed in the agency’s reasons, the more willing a court may be to infer from the silence that the agency made an erroneous finding of fact “without regard to the evidence”: … In other words, the agency’s burden of explanation increases with the relevance of the evidence in question to the disputed facts. Thus, a blanket statement that the agency has considered all the evidence will not suffice when the evidence omitted from any discussion in the reasons appears squarely to contradict the agency’s finding of fact. Moreover, when the agency refers in some detail to evidence supporting its finding, but is silent on evidence pointing to the opposite conclusion, it may be easier to infer that the agency overlooked the contradictory evidence when making its finding of fact.