ALT NZ LTD & ORS v ATTORNEY-GENERAL [2023] NZHC 2300

ALT NZ LTD & ORS v ATTORNEY-GENERAL [2023] NZHC 2300 [23 August 2023]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2023-485-146[2023] NZHC 2300UNDER the Judicial Review Procedure Act 2016 andunder the Declaratory Judgments Act 1908IN THE MATTER of an application for judicial review, and fordeclarations under the DeclaratoryJudgments Act 1908, in respect of clause 15of Schedule 5 to the SmokefreeEnvironments and Regulated ProductsRegulations 2021BETWEEN ALT NEW ZEALAND LTDFirst ApplicantAND VEC LTDSecond ApplicantAND MYRIAD PHARMACEUTICALS LTDThird ApplicantAND ATTORNEY-GENERALRespondentHearing: 16 August 2023Counsel: D A Laurenson KC and L van Dam for ApplicantsV Howell and J Gorman for RespondentJudgment: 23 August 2023JUDGMENT OF ELLIS J[1] The applicants have sought interim orders preventing the promulgation and/orenforcement of regulations reducing the maximum nicotine strength of reusablenicotine salt vaping products from 50 mg/mL to 28.5 mg/mL, pending thedetermination of their substantive application for judicial review. They say suchregulations will have an immediate and chilling effect on their businesses andimmediate public health consequences for tobacco smokers who are using, or whomight use, high nicotine vaping products to help with smoking cessation. In theirsubstantive claim, they say the decision to amend current regulations to achieve thisreduction in allowable nicotine strength has been tainted by a flawed and unnecessarilyrushed consultation process and is not supported by the scientific research. They saythe regulations will be ultra vires because they would be contrary to, or would notmeet, the purposes of the empowering legislation, the Smokefree Environments andRegulated Products Act 1990 (the Act).Preliminary comment[2] It is necessary to note at the outset that the relevant decision-making landscapehas, in the six days between the hearing of the application and the delivery of thisjudgment, changed in what I consider to be a material way. Put simply, at the time ofthe hearing (Thursday 16 August) it was understood that the proposed amendment ofthe Smokefree Environments and Regulated Products Regulations 2021(the Regulations) had not yet been considered or approved by Cabinet. While thethrust of the proposed amendment could reasonably be inferred from the materialbefore the Court, some of the detail was not known.[3] And although it was understood that the matter would very likely go to Cabineton Monday 21 August, it was realistically accepted by the applicants that, even if theCourt could properly make interim orders aimed at preventing that from happening(which in my view is far from clear) it was unlikely that this decision could, in fact,be delivered before then. Accordingly, the principal focus at the hearing was on ordersaimed at steps consequential to the anticipated Cabinet decision.[4] The Cabinet decision has now been made. In general terms, it is as anticipatedby the applicants. The relevant Order in Council was signed by the Governor-Generalvery shortly thereafter.[5] As a result of the Cabinet decision, however, further information—thesubmission to the Cabinet Legislation Committee by the Minister of Health (theMinister), the Cabinet minute recording the decision and two supporting documents—have now been released to the applicants and the Court.[6] It is not only likely that those documents will result in amendments to thesubstantive claim but (as I explain later) they also have an impact on the applicationfor interim orders, as I discussed with counsel at a telephone conference yesterday.[7] The other consequence of the altered landscape is that this judgment takes anunusual form. The first (and greatest) part of it proceeds on the basis of the positionas it was six days ago, and as the application was argued before me. But it is alsonecessary to consider the very recent Cabinet decision and its impact, which I do atthe end.The applicants[8] All three of the applicant companies (VEC Ltd, ALT NZ Ltd and MyriadPharmaceuticals Ltd) are companies founded and incorporated by Mr Benjamin Pryorbetween 2015 and 2018. More specifically:(a) VEC Ltd manufactures and imports vaping products, and is also aretailer trading under the names 'Vapo' and 'Value Vaper';(b) ALT Ltd manufactures a single product, the "alt" device, which usesreplaceable pods. The alt device is distributed through over 4,500 retailstores and petrol stations; and(c) Myriad Pharmaceuticals Ltd provides research, development, andquality control services to VEC and ALT, and also manufacturese-liquids for VEC and flavours for the alt product line, employing itsown scientists and pharmacologists for this task.[9] Between them, the applicants own 30 retail stores, a factory, a laboratory, awarehouse, a head office, and a large distribution centre. They employ 259 staff inroles ranging from manufacture, assembly and design, to engineering, pharmacy,finance, human resources, retail, technology, sales and marketing.[10] Notably, the applicants' position in these proceedings also has support fromAction on Smoking and Health New Zealand (ASH), and other experts in the field ofsmoking cessation who have provided evidence in support of the claim.The regulation of nicotine strength in vaping products[11] The use, marketing and sale of vaping products are regulated by the Act. Thepurposes of the Act are set out in s 3A and focus principally on the regulation ofsmoked tobacco products and, more particularly, reducing the availability, use andharmful effects of these. But, since 2020, a further purpose has been to "provide forthe regulation of notifiable products in a way that seeks to minimise harm, especiallyharm to young people and children".1 Vaping products are included in the Act'sdefinition of "notifiable products".2[12] Section 84 of the Act authorises the promulgation of regulations relating tonotifiable products, including regulations "prescribing safety requirements forregulated products that are notifiable products".31 The Act was amended to encompass vaping by the Smokefree Environments and RegulatedProducts (Vaping) Amendment Act 2020.2 Smokefree Environments and Regulated Products Act 1990, s 2 definition of "notifiable product";Under pt 4 of the Act notified products must not be sold in New Zealand unless it has been notifiedby a New Zealand resident or a company registered in New Zealand in accordance with that partand complies with safety requirements.3 Smokefree Environments and Regulated Products Act, s 84(a).[13] The Regulations were promulgated pursuant to s 84. Amongst other things,the Regulations prescribe the maximum nicotine level in vaping substances.4[14] It is necessary to interpolate at this point that vaping liquids can delivernicotine in one of two ways. As explained by Professor Christopher Bullen (an expertwitness for the applicants in this case):The first vaping products used 'freebase nicotine', which is pure nicotine. Thehigh alkalinity of pure nicotine means that, even at low levels, it produces aburning or irritating sensation in the throat. At higher levels, more comparableto smoking a cigarette, freebase nicotine is simply not palatable.As a result, the industry developed an alternative way to deliver nicotine invaping liquids: through nicotine salts. Nicotine salts are a compound formedusing pure nicotine and a suitable acid, typically benzoic acid. Nicotine saltscan deliver higher levels of nicotine in a way that is palatable to the user andthat is able to be absorbed quickly into the bloodstream. The effect is toemulate more closely the physiological effect of smoking a cigarette.Replicating the 'nicotine hit', without the carcinogens from smoke, is criticalto supporting smokers to quit.[15] Professor Bullen's view is that a nicotine strength of around 60mg/mL issimilar to the nicotine hit many highly dependent people get from smoking a cigarette.He and others with expertise in this area have therefore expressed the view that, inorder for vaping to be a useful smoking cessation tool, vapes with that nicotine strengthneed to be available.5 It is now accepted by the Ministry of Health (the Ministry) thatinformation to similar effect was obtained in advance of promulgating the Regulationsin 2021 and informed the current maximum nicotine strength presently prescribed inthe Regulations.[16] Although the Ministry's initial proposal in 2021 was to set the maximumstrength at 60 mg/mL it seems this was the subject of a late, unexplained, Ministerialchange. The maximum nicotine salt strength presently prescribed in cl 15 of Sch 5 ofthe Regulations is expressed as follows: "the strength of nicotine salt in a vapingsubstance must not exceed 50 mg/mL".4 "Vaping substance" is defined in s 2 of the Act as "a substance or mixture of substances that isintended to be vaporised or aerosolised with a vaping device" but does not include productscontaining medicinal cannabis or tobacco.5 This includes both ASH and the Technical Expert Advisory Group on Electronic Cigarette ProductSafety (TEAG), which provided expert advice to the Ministry of Health at the time the originalnicotine level was set.[17] Despite what is now accepted to be the relatively clear regulatory intent in2021, there proved to be some subsequent confusion over the interpretation of thisclause. Following an inquiry from a Fair Go reporter, the Vaping Regulatory Authority(VRA) formed the view that the 50mg/mL limit applied to the concentration of thenicotine salt itself rather than to the strength of the nicotine in the nicotine salt.6 TheMinistry calculated that a nicotine salt vaping substance with 50mg/mL of nicotinebenzoate contains 28.5mg/mL of nicotine.7[18] The VRA then communicated the view that the Regulations prescribed amaximum nicotine strength of only 28.5 mg/mL to the applicants and others involvedin the industry and threatened to cancel the notification of products with more than50 mg/mL of nicotine salt; the sale of vaping products with a higher nicotine strength(and vaping products which were labelled in a way that indicated nicotine strength andnot the concentration of the nicotine salt) would be illegal.[19] The position taken by the VRA caused the applicants to create, order andpackage an entirely new product with 50 mg/mL of nicotine salt at a cost of$1.65 million. Even though the Ministry now agrees that cl 15 in its current formregulates nicotine strength and not nicotine salt strength, the applicants cannotlawfully sell this stock. This is because the labelling records the strength of thenicotine salt and not the nicotine. Only 10 per cent of these units have since been sold.[20] ALT also had to buy additional units of their 20mg/mL 'alt' vape pods (as theonly other 'alt' pod was a 40 mg/mL nicotine option). They have been unable to shiftthis stock and the margins made on these products is 10-15% what they otherwisewould have made.6 The Vaping Regulatory Authority is part of the Ministry of Health. It does not appear to have astatutory basis.7 Although Professor Bullen says it is difficult to measure precisely, the applicants say that a50mg/mL limit on the concentration of the nicotine salt would equate to a freebase nicotinestrength of less than 25 mg/mL, depending on the acid that is used to create the nicotine salt.[21] The VRA's position also prompted the applicants to issue these judicial reviewproceedings, challenging the Ministry's interpretation of cl 15. But, shortly before thereview application was to be heard, the Director-General of Health confirmed sheaccepted the applicants' position is correct: that cl 15 in its present form means thatthe strength of free-base nicotine in a vaping substance manufactured using a nicotinesalt must not exceed 50 mg/mL. I made a declaration to that effect by consent.8[22] Although in making this concession the Director-General did not accept thatthe Ministry had intended that the 50 mg/mL be interpreted in this way, the evidenceprovided by the applicants strongly suggests that this was well understood at the timethe limit was set.Proposed amendment of cl 15[23] After these judicial review proceedings were commenced, the Ministryproposed to amend cl 15 to accord with the Ministry's (earlier) interpretation. A briefperiod of consultation ensued.[24] On 12 June 2023 (before the Ministry conceded the now accepted meaning ofthe current cl 15) the Ministry sent an email to the applicants and other stakeholdersadvising that:(a) it was "seeking feedback on amended regulations that would clarify themaximum allowable nicotine concentration" in vaping products;(b) the "amended regulation would set the maximum allowable freebasenicotine concentration at 28.5mg/mL in reusable vaping products thatuse nicotine salts";8 ALT New Zealand Ltd v Director-General of Health HC Wellington CIV-2023-485-146,15 August 2023 (Minute of Ellis J) at [2]. As a result, the hearing of the substantive applicationfor review scheduled for 9 August 2023 was vacated and it was agreed the respondent should paythe applicants' costs. But the applicants were also given leave to amend their claim to encompassmore recent developments and (as discussed later) the application for interim orders was then filedand accorded an urgent hearing.(c) a maximum nicotine concentration of 28.5mg/mL was "in line with theexisting regulations' intent and would bring greater clarity forindustry";(d) "[h]igher levels of nicotine mean an increase in the risk of addiction";and(e) the targeted consultation would begin immediately and conclude on26 June 2023.[25] The email provided a link to a Ministry webpage. There was a document onthat webpage headed:ConsultationA proposal to clarify how nicotine levels for vaping products areexpressed in the Smokefree Environments and Regulated ProductsRegulations 2021[26] Th purpose of the document was then described as follows:9Manatū Hauora is seeking feedback on the way that the nicotine strength forreusable vaping products containing nicotine salts is expressed in theRegulations. This proposal only applies to reusable vaping products. Levelsof nicotine in disposable vaping products have already been agreed.[27] The document referred to the Ministry's awareness of the existence of "someconfusion" about the interpretation of cl 15 and said:We propose to amend the wording of the regulations to always refer to themaximum nicotine concentration of a vaping product, rather than themaximum permitted nicotine salt concentration.For reusable vaping products that contain nicotine salts, we propose settingthe maximum allowable nicotine concentration at 28.5mg/mL.[28] Under the heading "Rationale" the paper said:10This approach is aligned with the purposes of the Act, to provide for theregulation of notifiable products in a way that seeks to minimise harm,especially harm to young people and children by making sure that products9 Emphasis added.10 Emphasis added.don't have excessive levels of nicotine, which is the addictive substance invaping products.If we do not make this change, and leave the regulations as they currently are,it is likely that the confusion regarding the interpretation of clause 15 ofSchedule 5 will continue. This would mean that many vaping products withsignificantly higher levels of nicotine would continue to be sold in NewZealand, increasing the risk of nicotine addiction. For example, for productsusing nicotine benzoate, the most commonly used salt, this would result in amaximum freebase nicotine concentration of 50mg/mL, rather than the28.5mg/mL that was intended.While vapes can only be legally sold to people aged 18 years and older, thelast few years have seen a rapid increase in under 18 year-olds using vapes.The estimated percentage of 14-15 year-olds, for example, who are vapingdaily is currently 10.1%. Daily vaping is more likely to indicate possibleaddiction to nicotine.Vaping rates are highest for Māori 14-15 year-olds, and Māori girls inparticular (25.2% daily vaping in 2022). While the trend for youth is currentlytoward using disposable vapes, at least half still used reusable vapes of somekind (tank or cartridge) in 2022. This proposed change will extend protectionto all youth from the highest levels of nicotine, which will reduce the likelihoodof them becoming addicted.[29] The paper then posed three questions:1. Do you agree with our proposal to set the maximum allowablenicotine concentration at 28.5mg/mL for reusable vaping productsthat contain nicotine salts?2. Please explain your reasoning.3. Is there anything else you would like to tell us at this time?[30] The June 2023 consultation process was conducted exclusively online, whichthe applicants say risks failing to engage Māori, Pacific peoples and those living inNew Zealand's most deprived areas—those who are likely to be disproportionatelyaffected by the proposed amendment.11[31] On 13 June, the applicants' solicitor wrote to the Ministry raising concernsabout this process and the messages being conveyed. In particular, concern wasexpressed about:11 There was evidence before the Court that, in the context of the consultation process around thevaping reforms to the Act in 2020, the Ministry was aware of the risk of "digital exclusion" ofthese groups and took specific steps to address it careful to address it through a number ofmechanisms.(a) the Ministry's assertion that it had always been intended to impose amaximum nicotine strength of 28.5 mg/mL when that was at odds withthe evidence obtained by the applicants;(b) the short timeframe for consultation (two weeks) and the fact that it wasonline only; and(c) the absence of any scientific studies or data supporting the change.[32] On 22 June 2023 (four days before the end of the consultation period and after3800 submissions had already been received) the Ministry published anotherdocument on its consultation page which was headed:Response to consultation queriesProposal to clarify how nicotine levels for vaping products are expressedin the Smokefree Environments and Regulated Products Regulations2021[33] Under the heading "Reasons for proposing 28.5mg/mL concentration ofnicotine in products containing nicotine salts" the document explained:122.1 As part of the amendment to regulation 15 above, the Ministryproposes to set the concentration of nicotine in products containingnicotine salt at 28.5mg/mL. The Ministry is of the view that28.5mg/mL provides a balance for smokers who wish to use vapingas a smoking cessation tool and the need to minimise harm to youngpeople. Other considerations are discussed below.2.2 The Ministry is aware of competing considerations around theappropriate concentration of nicotine. Those competingconsiderations include enabling products with a sufficiently highconcentration of nicotine to be purchased as a smoking cessation toolas well as limiting the availability of products with a highconcentration of nicotine given their potential to increase addictionin people who have not previously smoked.2.3 The public health considerations for setting maximum levels ofnicotine concentration go beyond providing a current smoker withwhat would be an equivalent hit of nicotine. They must also takeaccount of the risk to young people that comes with making very highlevels of nicotine concentration available. International precedents oflower limits are also a consideration (the UK, EU and Canada have12 Footnote added, emphasis added.set the nicotine concentration for all products at 20mg/mL).13 TheMinistry proposes setting a concentration of nicotine level that isslightly higher than the 20mg/mL set in those other countries as thismay be more effective for people wishing to vape to quit smoking.The proposed nicotine concentration level of 28.5mg/mL is intendedto give a nicotine hit that is closer to a cigarette, rather than equivalent.2.4 The Ministry is of the view that this proposal aligns with the purposesof the Smokefree Act, to provide for the regulation of notifiableproducts in a way that seeks to minimise harm, especially harm toyoung people and children by making sure that products do not haveexcessive levels of nicotine, which is the addictive substance invaping products.The applicants' requests for information[34] On 13 June 2023, the applicants had made a request under the OfficialInformation Act 1982 for all information held by the Ministry relating to the keyassertion that "higher levels of nicotine mean an increase in the risk of addiction".14This request was refused on 11 July 2023 on the grounds that the Ministry intendedproactively to release some key documents relating to amendments to the Regulationsby the end of August.[35] The applicants replied, disputing that the proposed proactive release wouldconstitute a response to their request.[36] On 13 July, the Ministry emailed the applicants a summary of what theMinistry described as a "substantial body of scientific evidence indicating that higherlevels of nicotine increase the risk of addiction" under four headings: "neurochemicaleffects", "tolerance and dependence", "clinical studies", and "epidemiological data".[37] The applicants then asked for confirmation that the response was a summaryof the information held by the Ministry falling within the request and asking for copiesof the relevant supporting documents.[38] The applicants now say that, based on their own investigation, the documentprovided by the Ministry purporting to summarise a "substantial body of scientificevidence" was generated by artificial intelligence (AI).13 The applicants' expert take issue with the aptness of this comparison.14 As indicated by the italicized passages in the two consultation documents set out above.[39] On 28 July, the Ministry's lawyers responded to the applicants' letter recordingthe Ministry's instructions that the 13 July summary document:(a) was not generated, in whole or in part, by an artificial intelligence tool;and(b) was based on information contained in:(i) previous responses to media queries;(ii) the Regulatory Impact Statement: Smokefree Aotearoa ActionPlan;15(iii) the National Library of Medicine article: "Electronic Cigarettes:what are they and what do they do?";16(iv) the Health Promotion Agency Report: "Smoking and VapingBehaviours among 14 and 15 year olds";17(v) the Ministry's Vaping Facts website;18 and(vi) the Protect Your Breath website.19[40] The applicants maintain that the information contained in these documents andon these websites does not address all the propositions in the Ministry's 13 Julysummary and does not support the Ministry's assertion that, in the context of vapingproducts, "higher levels of nicotine mean an increase in the risk of addiction".15 Ministry of Health Regulatory Impact Statement: Smokefree Aotearoa Action Plan (November2021).16 Alison Breland and others "Electronic cigarettes: what are they and what do they do?" (2017) 1Ann N Y Acad Sci 5.17 Natalie Lucas, Nivedith Gurram and Wa Anwar Smoking and Vaping Behaviours among 14 and15-year-olds: Results from the 2018 Youth Insights Survey (Te Hiringa Hauora/The HealthPromotion Agency, June 2020).18 Ministry of Health and Te Whatu Ora "Vaping Facts" <www.vapingfacts.health.nz>.19 Te Aka Whai Ora and Te Whatu Ora "Protect Your Beath" <www.protectyourbreath.co.nz>.Results of consultation[41] In broad terms the outcome of the consultation has been summarised byMr Andrew Old, the Deputy Director-General of the Ministry's Public Health Agency.A total of 4731 submissions were received. Mr Old deposed (amongst other things)thatThe majority of submissions were made by individuals, followed by smallretailers and vaping or smokeless tobacco product retailers, distributors ormanufacturers. Submissions were also made by community or advocacyorganisations, health care providers, and organisations that identifiedthemselves as having hapū or iwi affiliations, or identified themselves as aMāori or Pacific organisation.[42] Mr Old annexed to his affidavit a table showing the results for the differentgroups of submitters, which relevantly shows:(a) 25 submissions were received from community or advocacyorganisations, 22 of which (88 per cent) were opposed to the change;(b) 24 submissions were received from healthcare providers, 19 of which(79 per cent) were opposed to the change;(c) 17 submissions were received form "iwi/hapū affiliated and/or Māoriorganisation", 14 of which (82 per cent) were opposed to the change;(d) eight submissions were received from "Pacific community ororganisation", seven of which (87.5 per cent) were opposed to thechange;(e) seven submissions were received from "Government organisation[s]"five (71 per cent) of which were opposed to the change; and(f) six submissions were received from "Research or academicorganisation[s]" four of which (67 per cent) were opposed to thechange.[43] Of the 3360 submissions from individuals received 2933 or 87 per cent wereopposed to the change. Opposition from those in industry groups was, unsurprisingly,uniformly at above 90 per cent.[44] Although Mr Old said that some submitters who opposed the proposedamendment did so on the basis that the maximum strength should be lower than28.5 mg/mL, he gives no detail about the relative numbers falling within this category.Amending the regulations[45] A decision was made to pursue the proposed amendment to reduce themaximum nicotine strength to 28.5 mg/mL, although the timing and detail of thatdecision was not known at the time of the hearing.20 On 25 July 2023, the Ministry'slawyers advised the applicants that "vaping substances that do not meet the newrequirements for nicotine concentration levels will not be able to be sold at wholesale3 months after the regulations come into force, and at retail 6 months after theregulations come into force".[46] At the time of the hearing before me, the Ministry could neither confirm nordeny the contents of the proposed amendment to the regulations.21 Crown counsel hassince advised, however, that Cabinet made the decision amending cl 15, in the termsforeshadowed, yesterday (Monday 21 August). The Executive Council confirmed theproposed regulation should be made by Order in Council, and the regulations weresigned by the Governor-General the same day.[47] Before the amendment comes into force, however, it must be notified in theGazette and the Crown's advice was that this would not occur before Thursday24 August.22 Moreover, the default position set out in the Cabinet Manual is that theamendment regulations would not come into force until at least 28 days after theirnotification in the Gazette.23 Absent the invocation of any of the exceptions to that20 A point I return to later.21 Paragraph 5.23 of the Cabinet Office's Cabinet Manual 2023 prohibits the disclosure of proposalslikely to be considered at forthcoming Cabinet and Cabinet committee meetings, outsideCabinet-approved consultation procedures.22 Notification in the Gazette is a statutory publication requirement placed on the ParliamentaryCounsel Office by s 69(2) of the Legislation Act 2019.23 Cabinet Manual 2023, above n 21, at [1.50]–[1.52].rule, it was thought that any amendment in this case would not come into effect before21 September 2023.The applicants' substantive challenge to the anticipated regulations[48] As noted earlier, their substantive challenge to the amendment has a numberof planks.[49] First, the applicants say the maximum nicotine strength proposed of28.5mg/mL serves no public health purpose, because:(a) the limit is arbitrary and was arrived at by way of a random calculationthat has no clinical significance;(b) there is no evidence that higher nicotine strength in vaping products isa proxy for addiction, and no correlation between nicotine strength andaddiction in vaping products;(c) the (as yet) uncontested expert evidence is that a reduced nicotinestrength will not reduce youth vaping;(d) there is a real risk that those who rely on higher strength nicotineproducts will relapse to smoking or engage in compensatory behaviourto get the amount of nicotine they need; and(e) these harms will disproportionately prejudice vulnerable populations.[50] Secondly, the applicants say the Ministry's consultation process was flawedbecause:(a) for 12 out of the 14-day consultation period, it proceeded on amisleading and false premise that it had always been intended that thecl 15 nicotine level would be set at 28.5 mg/mL and that the proposedamendment was simply to "clarify" this;(b) failed to provide sufficient time to allow proper engagement;(c) it was online only and failed to engage appropriately with Māori andPasifika communities;(d) the stated reason for the proposal that the cl 15 nicotine level would beset at 28.5 mg/mL to reduce addiction to vaping products had noscientific justification because there is no evidence that reducingnicotine levels does reduce addiction; and(e) similarly, failed to provide information supporting the proposition thathigher nicotine strength is proxy for addiction which would allowstakeholders to respond in an informed way.[51] Thirdly, they say there has been a breach of their legitimate expectation thatany such amendment would follow, and be based on, expert advice. Not only (theysay) has there been no such advice, but the anticipated amendment is contrary to theviews of experts.[52] Fourthly, the applicants say the anticipated amendment would be ultra vires theAct because it:(a) is arbitrary in that it is not backed by any relevant study or empiricaldata;(b) does not address or prescribe 'safety requirements' as required by theempowering provision (s 84(1)(a) of the Act); and(c) does not advance the purpose of the Act which is to minimise harm.The evidence[53] The applicants have filed expert evidence in support of their case. As well asthe evidence of Professor Bullen, affidavits have been provided by Mr BenjaminYoudan, who is the Director of ASH. Mr Youdan's expertise in the area of smokingcessation cannot be doubted. He, together with Professor Robert Beaglehole (thefounder of ASH and a cardiac epidemiologist), made a submission opposing theproposed amendment in which they advised:The proposed regulations limit the strength of nicotine allowed in vapingsubstances to 20mg/ml for free based nicotine and 50mg/mL for nicotine salt.There is no clear scientific basis for these limits We believe that this levelis set too low ...Limiting strength will make it harder for many smokers to get through the firststages of switching from smoking as products will not be as satisfying as acigarette. It may also contribute to dual use as the alternate is not adequate,and leave products too weak to be helpful for the most dependent smokers ...A Cancer Research UK funded study of London based e-cigarette users foundthat 'use of a lower nicotine concentration e-liquid may be associated withcompensatory behaviour and increases in negative effect, urge to vape andformaldehyde exposure' The ability of vaping products to support nicotine dependent smokers to quitrelies on them being able to adequately compete with cigarettes to satiatewithdrawal. A low cap on nicotine adversely impacts on this ability. Studiesof high nicotine content (59mg/mL) Juul e-cigarettes have consistently foundthat they compare to cigarettes in terms of delivering nicotine and reducingthe urge to smoke.[54] Mr Youdan also:(a) explains why it is not apt to compare maximum nicotine levels invaping products in New Zealand with maximum levels in countriessuch as those in the United Kingdom;(b) expresses the view that the amendment would have a serious equityimpact on vulnerable populations;(c) says that nicotine by and of itself is not a major health issue, and thatthere is a widespread misunderstanding that it is the nicotine incigarettes that causes harm;(d) says he is aware of no evidence that indicates that high level of nicotineresults in young people becoming addicted to nicotine; and(e) notes there is very little data about the nicotine levels young people use,and how it affects vaping uptake.[55] Mr Youdan's view is that, from a public health perspective, the harm that willbe done by reducing nicotine levels in vaping products is greater than any healthbenefit likely to be achieved by the same.[56] ASH made a submission in similar terms opposing the proposed amendmentto the Ministry during the consultation process.The application for interim orders[57] In light of the events set out above, the applicants sought interim orderspursuant to s 15(3)(b)(i) of the Judicial Review Procedure Act 2016 (the JRPA). Morespecifically, they seek: an order declaring that the respondents ought not to take any further action:(a) to make regulations under s 84(1)(a) of the Smokefree Environmentsand Regulated Products Act 1990 (Act) to reduce the maximumnicotine strength of reusable nicotine salt vaping products from50mg/mL, as currently prescribed in clause 15 of Schedule 5 to theSmokefree Environments and Regulated Products Regulations 2021;and/or(b) to bring into force regulations made under s 84(1)(a) of the SmokefreeEnvironments and Regulated Products Act 1990 (Act) to reduce themaximum nicotine strength of reusable nicotine salt vaping productsfrom 50mg/mL; and/or(c) to notify in the New Zealand Gazette regulations made unders 84(1)(a) of the Smokefree Environments and Regulated ProductsAct 1990 (Act) to reduce the maximum nicotine strength of reusablenicotine salt vaping products from 50mg/mL;until the Court has determined the application for judicial review.[58] As noted earlier, however, stopping the Cabinet process was not the focus ofthe hearing before me and, as also noted, Cabinet has now made the relevant decision.Rather, the focus was (in order of preference) on stopping the Order in Councilprocess, the Gazetting process or the enforcement of the new regulations. And becausethe Order in Council was made immediately following Cabinet's decision, it is nowonly the latter two steps that remain "live".[59] For that reason, one of the main planks of the Crown's opposition to theapplication—that any interim orders would be premature, because no decision had yetbeen made—has now fallen away.[60] The guiding principles governing the determination of applications for interimorders are well known and I do not intend to set them out in any detail here. In short,the applicants must show:(a) the orders are necessary to preserve their position; and(b) the balance of convenience favours making the orders.The Cabinet decision[61] It is at this point that it becomes necessary briefly to refer to the Cabinetdecision and the material said to support it. In my view these things affect both of thematters referred to in the previous paragraph.[62] In general terms, the Cabinet decision is as anticipated. The decision is,however, not limited to the amendment to cl 15 and includes other amendments to theRegulations as well.24[63] The relevant paragraphs from the Cabinet minute record:On 21 August 2023, following reference from the Cabinet LegislationCommittee, Cabinet:1 noted that in May 2023, the Cabinet Social Wellbeing Committee(SWC) agreed to the drafting of the Smokefree Regulations toestablish the regulatory regime for smoked tobacco, and to tightenvaping restrictions [SWC-23-MIN-0051];2 noted that in May 2023, SWC agreed to reduce the maximumallowable nicotine salt concentration in single-use vaping products to35mg/mL [SWC-23-MIN-0051], and that this is expressed in theSmokefree Regulations as a maximum allowable concentration ofnicotine of 20mg/mL;24 For example, amendments relating to the labelling of vaping products. This would make itdifficult to craft interim orders aimed at slowing the Gazetting process that did not also affect theseother, unchallenged, aspects of the amendments.3 noted that in July 2023, Cabinet agreed to amend clause 15 of theSmokefree Regulations to state that for reusable vaping products thatcontain nicotine salts, the maximum allowable nicotine concentrationis set at 28.5mg/mL [CAB-23-MIN-0305];[64] The next passage is redacted on privilege grounds. The minute then continues:5. [redacted] the Minister of Health took further public health advicefrom Te Pou Hauora Tūmatanui (the Public Health Agency), ManatūHauora in relation to the nicotine concentration level for vapingproducts and regarding the safety requirement for removable batteriesfor all vaping products (attached at Appendix A to the submissionunder LEG-23-SUB-0148);6 noted the further public health advice from Te Pou Hauora Tūmatanui(the Public Health Agency), Manatū Hauora confirms that theSmokefree Regulations should proceed as previously agreed perCabinet's policy decisions in May and July 2023 [SWC-23-MIN-0051and CAB-23-MIN-0305];8 noted that the Smokefree Environments and Regulated ProductsAmendment Regulations 2023 give effect to these decisions referredto in paragraphs 1, 2, 3 and 7;12 authorised the submission to the Executive Council of the SmokefreeEnvironments and Regulated Products Regulations 2023 [PCO25668/19.0].[65] The minute also records Cabinet's agreement to transitional timeframesincluding (relevantly) that all reusable vaping products that do not meet the newrequirements cannot be sold from six months after the regulations come into force.[66] In her submission to the Cabinet Legislation Committee, the Minister hadsought a waiver of the 28-day rule (which would have meant that the new Regulationscame into effect on 25 August 2023) because:The Smokefree Regulations are required to operationalise the smoked tobaccoregulatory regime and to regulate notifiable products, including vapingproducts, in a way that seeks to minimise harm.[67] As I understand it, however, the Cabinet Legislation Committee did not agreeto that request and so the 28-day rule will apply. The effect of this is that, assumingthat Gazetting occurs this Thursday (24 August) all reusable vaping products that donot meet the new requirements will be unable to be sold after 21 March 2024 (28 daysafter Gazettal plus six months transitional).[68] It may be observed that the minute records that Cabinet first agreed to theamendment in July 2023.25 Papers relating to that decision have not been madeavailable. It can reasonably be assumed, however, that the ancillary decision to referthe matter to the Public Health Agency for further advice was made in response to thematters raised by the applicants in this litigation.[69] The other documents provided to the Court and the applicants today are:(a) the Public Health Agency's advice, which supports the amendment; and(b) a summary of the results of the consultation process.[70] From a necessarily hurried reading of the former document, it appears (at para24) to argue that the proposed new 28.5 mg/mL limit for reusable vaping devices usingnicotine salts is close to what is regarded as a "high dose" (36 mg/mL of nicotine),whereas the preceding paragraphs make it clear that 36 mg/mL is only regarded as a"high dose" when speaking of freebase nicotine.[71] And a similarly hasty read of the latter document gives rise to the followingpreliminary observations:(a) the document it is entitled "Analysis of consultation submissions on theproposal to clarify how nicotine levels for vaping products areexpressed in the Smokefree Environments and Regulated ProductsRegulations 2021";26(b) it refers to a considerable number of submitters who supported theproposed amendment as doing so because they supported"clarification" of the law;25 The Minister's paper to the Cabinet Legislation Committee says this decision was taken on17 July.26 Emphasis added.(c) as with the material before the Court (noted at [44] above) it does notprovide any breakdown in terms of the proportion of those whoopposed the proposed amendment because they supported the existingnicotine limit and those who opposed because they thought the limitshould be lower;(d) but it indicates that the seven out of eight submissions received fromPasifika communities or organisations opposing the amendment allopposed the reduction of the nicotine limit; and(e) although it refers to the submissions from the Royal New ZealandCollege of General Practitioners and the ASPIRE Aotearoa group (whoboth supported the proposal) no reference is made to the submissionfrom ASH.27[72] I turn now to consider the questions of whether the applicants have a positionto preserve and where the balance of convenience lies. As I have said, the very recent(Cabinet) material received by the Court is very material to that analysis.Position to preserve?[73] In order to have a "position to preserve" the applicants needed to show thatthey are likely to suffer prejudice or loss if interim orders stopping or slowing theprocess of promulgating the regulations (or declaring that it should stop or slow) arenot made, and their substantive claim for judicial review ultimately succeeds. At thetime of the hearing, they said they had such a position for the following reasons:(a) the reduction in the maximum nicotine strength would affect 85.3% ofthe applicants' combined consumable e-liquid revenue where theirbestselling products are those with a nicotine strength over 28.5mg/mL; and27 Like ASH, ASPIRE Aotearoa is said to be a group of leading smokefree researchers and healthproviders whose aim is to provide research to help the government achieve the goals of aSmokefree Aotearoa.(b) if interim orders are not made, they would need to implement atwo-pronged 'contingency plan', involving:(i) the creation, ordering and packaging of a new range of productswith a maximum nicotine strength of 28.5 mg/mL (in case thesubstantive application for review is not successful); and(ii) continuing to stock products with a maximum nicotine strengthhigher than 28.5 mg/mL (in case the substantive application forreview is successful).[74] They said this contingency plan will inevitably leave the applicants with stockthey cannot sell, regardless of the outcome because:(a) if they lost the substantive case, they would be unable to sell productsabove 28.5 mg/mL; and(b) if they won the substantive case, it is likely they would be unable to sellthe stock with the lower nicotine level because people will not buy it(as already noted, over 85.3% of the applicants' revenue comes fromthe sale of e-liquids with a nicotine strength of over 28.5 mg/mL).[75] The applicants also said none of this was speculative or premature becauseALT has already suffered a similar contingency loss as a result of the advice receivedfrom the VRA earlier this year. I have referred to that earlier.28[76] The applicants said that if the regulations were Gazetted on Thursday25 August, and based on the advice they had received at that point, they would haveonly four months at most to create, order and receive a new range of products with amaximum nicotine strength of 28.5 mg/mL. Their evidence was that this processwould have to be started immediately in order to have the requisite product at the endof the four-month time frame and would cost about $3.7 million.28 See [19]–[20] above.[77] I have no reason to doubt any of this. But what has changed is that—as a resultof the transitional arrangements agreed by Cabinet—there is now a seven-monthwindow, not a four month one. As advised to counsel yesterday, the Court canaccommodate an urgent substantive hearing within that time, and in time to give theapplicants the window they need. A date of 4 September 2023 has been offered.Although I accept that may be a little too soon, given that it seems likely that furtheramendment and further evidence may be required, and the Crown will need anopportunity to respond. But an acceptable timeframe still seems tenable.[78] Although Mr Laurenson submitted that the real damage would be done—interms of a chilling effecton retailers—before the amendments come into force,29 thereality is that any such effect is likely as soon as retailers hear about the decision. Andit has been publicly announced today. That horse has bolted.[79] So in light of the transitional provisions and the 28-day rule, and provided thesubstantive application for review can be brought on for hearing quickly, I considerthe applicants no longer have a position to preserve—or at least one that cannot bepreserved by allocating an early substantive hearing date.Balance of convenience[80] In light of my conclusion on position to preserve it is not strictly necessary toconsider the balance of convenience. So, I merely record my preliminary view thatthe applicants have an arguable case on at least some of their causes of action in thesubstantive proceedings. The difficulty may, however, be that the alleged errors ofprocess could not—even if made out—lead to the quashing of the regulations. Iexpress no firm view on that issue here. And I also accept that a successful claim thatthe Regulations are ultra vires the Act would most likely lead to such a result.[81] As well, I record that, based on the material before the Court, there wasnothing to suggest that the proposed amendment was urgent, despite the alacrity withwhich the consultation and subsequent decision-making proceeded. Despite what I29 By which was meant an effect on retailers' willingness to continue to sell products that are bannedby the amendment, despite the transitional period, particularly in light of what may be the negativepublic perception of retailers that continue to do so.accept are real and present concerns around the exponential increase in vaping byyoung people, there are countervailing—and equally serious—health concerns and itremains (on the present state of the evidence) unclear the extent to which they haveproperly been taken into account. Determining the balance to be struck between thesetwo very important health concerns is not a matter that should be rushed.Result[82] The application for interim orders is dismissed for the reasons—and on theexpress basis that—I have given. In the circumstances, however, I am not inclined toaward costs against the applicants. But if there is disagreement about that, memorandamay be filed.[83] Counsel should confer with each other and with the Registry with a view toobtaining an urgent (but do-able) substantive fixture. Leave is reserved to seek atelephone conference with me if further assistance is required._______________________________Rebecca Ellis JSolicitors:Powle & Hodson, Auckland for ApplicantsCrown Law, Wellington for Respondent