HEALTHCARE OF NEW ZEALAND LIMITED V CAPITAL AND COAST DISTRICT HEALTH BOARD HC WN CIV-2011-485-1998

HEALTHCARE OF NEW ZEALAND LIMITED V CAPITAL AND COAST DISTRICT HEALTH BOARD HC WN CIV-2011-485-1998 26 October 2011IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2011-485-1998IN THE MATTER OF Judicature Amendment Act 1972AND IN THE MATTER OF New Zealand Public Health andDisability Act 2000BETWEEN HEALTHCARE OF NEW ZEALANDLIMITEDPlaintiffAND CAPITAL AND COAST DISTRICTHEALTH BOARDDefendantHearing: 14 October 2011Counsel: A S Butler and P D Hume for PlaintiffC P Browne and K J Webster for DefendantJudgment: 26 October 2011 at 12:30 PMI direct the Registrar to endorse this judgment with a delivery time of 12.30pm on the 26th day of October 2011.RESERVED JUDGMENT OF MACKENZIE J[1] The plaintiff (Healthcare) is currently a provider of restorative home and community and support services to the defendant (CCDHB). It is one of three service providers contracted to CCDHB to provide such services. CCDHB proposes to restructure its arrangements for the provision of those services. In June 2011, it issued a request for proposals (RFP) to potential suppliers, seeking proposals for the supply of such services, under arrangements which differ significantly from the previous arrangements. Healthcare submitted a tender in July 2011. That followed exchanges between Healthcare and CCDHB in which Healthcare identified issues of concern to it about the design of the RFP, and CCDHB responded to those concerns.[2] Healthcare's existing contract for the provision of services, which has been inforce for some years, was to expire, unless renewed, on 31 October 2011. By letter dated 21 July 2011, CCDHB gave formal notice that the contract would cease on 31 October 2011.[3] Healthcare's tender pursuant to the RFP was not accepted by the CCDHB. Contracts with two new providers were concluded by CCDHB on or about 23 September 2011. On 3 October 2011 Healthcare filed this proceeding seeking judicial review of the decision made by CCDHB on or before 24 June 2011, to release the RFP and the decision made on or about 16 September 2011 to take noaction in respect of Healthcare's concerns as to the RFP and to award contracts under the RFP to other providers.[4] Healthcare seeks interim orders to preserve its position pending the hearing of its application for judicial review. It seeks orders:(a) That CCDHB be prohibited from taking further steps in reliance on the RFP; and(b) That CCDHB be prohibited from taking further steps in reliance on any contract it has executed in relation to the RFP.[5] The jurisdiction to make interim orders arises from s 8 of the Judicature Amendment Act 1972. Subsection (1) provides:Interim orders(1) Subject to subsection (2) of this section, at any time before the final determination of an application for review, and on the application of any party, the Court may, if in its opinion it is necessary to do so for the purpose of preserving the position of the applicant, make an interim order for all or any of the following purposes:(a) Prohibiting any respondent to the application for review from taking any further action that is or would be consequential on the exercise of the statutory power:(b) Prohibiting or staying any proceedings, civil or criminal, in connection with any matter to which the application for review relates:(c) Declaring any licence that has been revoked or suspended in the exercise of the statutory power, or that will expire by effluxion of time before the final determination of the application for review, to continue and, where necessary, to be deemed to have continued in force.[6] The test to be applied on an application for an order under s 8 is well established. It was expressed by Cooke J in Carlton and United Breweries Ltd v Minister of Customs as follows:1Section 8 of the Judicature Amendment Act 1972 gives a valuable power to make interim orders, a power which should not, it seems to me, be restricted by any such formulation as is to be found in the well-known English case about interim injunctions, American Cyanamid Co v Ethicon Ltd [1975] AC 396. It is not in dispute in this case that there are serious questions to be tried. But, in considering whether a bond from an exporter for dumping duty should be permitted under s 8, I think that the court should require the exporter applying for interim relief to show prospects of ultimate success in the review proceedings better than might be merely consistent with saying that there is a serious question to be tried. In the special class of case concerning dumping duties a serious question test would be too light, bearing in mind the scheme of Part VA. At least a prima facie case should be shown. In my opinion such a case is shown here; which is not to say that it will not eventually be fully answered.Of course I am not suggesting that there should be any general rule that a prima facie case is necessary before interim relief can be granted under s 8. In general the Court must be satisfied that the order sought is necessary to preserve the position of the applicant for interim relief — which must mean reasonably necessary. If that condition is satisfied, as the chief Justice was entitled to find that it was here, the court has a wide discretion to consider all the circumstances of the case, including the apparent strength or weakness of the claim of the applicant for review, and all the repercussions, public orprivate, of granting interim relief. [7] The starting point must be to consider what is the position of the applicant, and what is reasonably necessary to preserve that position.[8] Healthcare's position is that it is a provider of services to CCDHB under acontract which is to terminate on 31 October 2011. The provisions of the contract to which I was taken are open to some ambiguity as to whether the contract would have continued beyond 31 October if notice had not been given cancelling the contract. I need not address that issue, because it is clear that not less than three months notice1 Carlton and United Breweries Ltd v Minister of Customs [1986] 1 NZLR 423 (CA) at 430.that the contract would not continue beyond that date was given by CCDHB. That notice was given in a letter from CCDHB to Healthcare dated 21 July 2011.[9] The decision not to renew Healthcare's existing contract beyond 31 October is not itself challenged in the application for judicial review. That is appropriate, because I do not consider that any challenge by way of judicial review to that decision would be feasible. While the notice of non-renewal was given in the context of the changes which CCDHB proposed to implement through the RFP, it is separate action by CCDHB. A right to challenge, by way of judicial review, the decisions involved in the issue of the RFP and the acceptance of tenders submitted under it (assuming for present purposes that such a right exists) does not carry with it a right to judicially review the non-renewal of the previous contracts. The contracts with Healthcare and the other two service providers were entered into by CCDHB in the performance of its statutory function, but that is not in itself sufficient to make the decision not to renew those contracts judicially reviewable. Decisions in relation to contracts entered into pursuant to statutory powers are potentially subject to judicial review, but, as the decision of the Privy Council in Pratt Contractors Ltd v Transit New Zealand demonstrates,2 the standard of judicial review applicable to a public body acting in a commercial context is not the same as that which applies to administrative decision makers.[10] The ultimate objective of Healthcare in seeking interim relief is that it should be reinstated as a service provider, from 1 November 2011, until the outcome of its judicial review challenge to the RFP process. Healthcare does not frame its application for interim relief so as to seek an order which would directly achieve that outcome. It seeks to achieve that outcome indirectly. The orders which it seeks would prohibit the CCDHB from taking further steps in reliance on any contract it has executed in relation to the RFP.[11] An order to that effect would require CCDHB to breach the terms of contracts that it has entered into. There would need to be very compelling reasons before the Court should make an order which would have that effect, particularly in a proceeding to which the other contracting parties are not party.2 Pratt Contractors Ltd v Transit New Zealand [2005] 2 NZLR 433 (PC).[12] I need not consider in detail the question whether the Court could properly intervene in the performance of those contracts, because it is clear that an order prohibiting CCDHB from performing those contracts in the interim would not lead to a continuation of Healthcare's existing contract beyond 31 October. The contracts with the three existing providers (including Healthcare) are to end on 31 October. The new contracts entered into with the two new providers pursuant to the RFP do not come into operation until 5 December 2011. There is accordingly a potential gap in service, between the ending of the existing contracts on 31 October and the coming into operation of the new contracts entered into pursuant to the RFP on 5 December. CCDHB has taken steps to address that potential gap in service. It initially sought to agree with the three existing service providers that service would be continued, from 1 November to 5 December, on the same terms and conditions as applied under the contracts terminated with effect from 31 October. Negotiations with Healthcare were not successful, and acceptable terms for a continuation on an interim basis could not be agreed. Interim arrangements have been made with the other two providers, for those two providers to carry out, in that interim period, the services hitherto provided by all three providers.[13] The position then is that, from 31 October 2011, services will be provided pursuant to the interim arrangements entered into with the other two previous service providers. For these reasons, I do not consider that Healthcare has a position to protect, in the administrative law sense, beyond 31 October 2011 in the provision of services to CCDHB.[14] But, if I am wrong in that conclusion and Healthcare does have a position to be preserved, after 31 October, then the relief sought would not preserve that position. If the Court were to effect any change in the position which will apply after 31 October, it would not be feasible to do so without some mandatory order, directing CCDHB to vary its interim arrangements, to reinstate Healthcare as one of the providers in that interim period. I do not consider that any such relief would be justified, even if it were feasible. The parties have been unable to reach acceptable terms for just such an interim arrangement. It would not be appropriate for the Court to force such a contract on the parties.[15] Interim orders which may be made under paragraphs (a) or (b) of s 8(1) of the Judicature Amendment Act are confined to prohibitory orders. The relief sought recognises that, in that Healthcare seeks orders prohibiting CCDHB from taking further steps in reliance on the RFP or in reliance on any contract it has executed in relation to the RFP. For the reasons I have given, prohibitory relief of this naturewould not secure Healthcare's position as a provider of services beyond 31 October,even if such relief could be regarded as necessary to preserve Healthcare's position.[16] Under s 8(1)(c), the Court has power to order the continuance in force of any licence that has been revoked or suspended in the exercise of a statutory power, or that will expire by effluxion of time before the final determination of the application for review. That power is not available here. The contract between CCDHB and Healthcare is not a licence as that term is defined in s 3. The difficulties to which I have referred in requiring the parties to enter into an interim contractual arrangement demonstrate that the boundaries of the power in s 8(1) (c) need to be observed.[17] For these reasons, I am satisfied that the application for interim relief cannotsucceed, because the relief sought is not necessary to preserve Healthcare's position,and would not, if granted, preserve its position.[18] That conclusion makes it unnecessary for me to consider the other issuesargued before me, as to whether, in the exercise of the Court's discretion, a grant ofrelief would be appropriate. An important consideration in the exercise of the discretion under s 8 is the strength of the applicant's case in the substantiveapplication for judicial review. The merits of the case will be for determination on the substantive application. As it is unnecessary for me to address this aspect, it is better that I do not express any view.[19] For the reasons I have given, the application for interim relief is dismissed.[20] CCDHB is entitled to costs on this application, which I fix on a 2B basis."A D MacKenzie J"Solicitors: Russell McVeagh, Wellington, for PlaintiffWilson Harle, Auckalnd, for Defendant