When Can Sponsor's Anxiety Support Schedule 3 Waiver?

Can the anxiety that may be suffered by the sponsor of an applicant for a partner visa be a “compelling reason” to waive Schedule 3 criteria so that an application made onshore in Australia can be granted?
This is a question that commonly arises in partner visa cases, and it was the subject of a recent decision by Judge Emmett of the Federal Circuit Court, Elhendy v Minister for Immigration & Anor (2018) FCCA 1140 (22 May 2018).
The circumstances of the case were that the applicant is a citizen of Egypt. He originally entered Australia on a short-stay business visa (subclass 456). When that visa ceased, he remained in Australia for a period of time as an unlawful non-citizen, until he applied for a Protection visa.
...