NEW HEALTH NEW ZEALAND INCORPORATED v SOUTH TARANAKI DISTRICT COUNCIL [2018] NZSC 60

NEW HEALTH NEW ZEALAND INCORPORATED v SOUTH TARANAKI DISTRICT COUNCIL[2018] NZSC 60 [27 June 2018]IN THE SUPREME COURT OF NEW ZEALANDI TE KŌTI MANA NUISC 141/2016[2018] NZSC 60BETWEEN NEW HEALTH NEW ZEALANDINCORPORATEDAppellantAND SOUTH TARANAKI DISTRICT COUNCILFirst RespondentATTORNEY-GENERAL FOR AND ONBEHALF OF THE MINISTER OFHEALTHSecond RespondentHearing: 16 and 17 November 2017Court: Elias CJ, William Young, Glazebrook, O'Regan andEllen France JJCounsel: M T Scholtens QC, L M Hansen and T Mijatov for AppellantD J S Laing and H P Harwood for First RespondentA M Powell and S K Jameson for Second RespondentJudgment: 27 June 2018JUDGMENT OF THE COURTA The appeals from the decision of the Court of Appeal inrelation to CA529/2015 and CA615/2014, referred torespectively as the Regulations and Medicines Act appeals,are dismissed.B Costs are reserved. Any memoranda on costs may be filedby 31 July 2018.____________________________________________________________________REASONSElias CJ, Glazebrook, O'Regan and Ellen France JJ [1]William Young J [39]ELIAS CJ, GLAZEBROOK, O'REGAN AND ELLEN FRANCE JJ(Given by Ellen France J)Table of ContentsPara No.Introduction [1]The Regulations Appeal [3]Introduction [3]Background [6]The regulation-making power in the Medicines Act [9]The approach taken in the High Court and the Court of Appeal [12]The arguments on appeal [15]Discussion [16]Was the Court of Appeal correct to find that the Medicines Actappeal was moot? [31]The Medicines Act appeal [35]Conclusion [37]Introduction[1] This is an appeal against aspects of a decision of the Court of Appeal whichdealt with a number of issues relating to the fluoridation of water in New Zealand.1[2] The Court of Appeal decision addressed appeals by New Health New ZealandInc (New Health) against three separate High Court judgments dealing with differentquestions concerning the legality of fluoridation.2 New Health was granted leave toappeal on all aspects of the Court of Appeal's decision.3 We heard these matterstogether but this judgment deals only with the issues arising out of what are referredto as the Regulations and the Medicines Act appeals. Judgment on the third set of1 New Health New Zealand Inc v South Taranaki District Council [2016] NZCA 462,[2017] 2 NZLR 13 (Randerson, Wild and French JJ) [New Health (CA)].2 New Health New Zealand Inc v South Taranaki District Council [2014] NZHC 395,[2014] 2 NZLR 834 (Rodney Hansen J) [Council judgment]; New Health New ZealandInc v Attorney-General [2014] NZHC 2487 (Collins J) [Medicines Act judgment]; and NewHealth New Zealand Inc v Attorney-General [2015] NZHC 2138, [2015] NZAR 1513 (Kós J)[Regulations judgment].3 New Health New Zealand Inc v South Taranaki District Council [2017] NZSC 13.issues, described as the Council appeal, is being delivered at the same time as thisjudgment.4The Regulations AppealIntroduction[3] This part of the judgment concerns the validity of the Medicines AmendmentRegulations 2015 (the Regulations) which came into force from 30 January 2015. TheRegulations amended the Medicines Regulations 1984 by inserting a new reg 58B.Regulation 58B(2) provides that "[f]luoridating agents for use in fluoridating drinkingwater are not medicines" for the purposes of the Medicines Act 1981. Further,reg 58B(3) states that the addition of fluoridating agents to the drinking water supplywould not be a medicine for the purposes of the Medicines Act. "Fluoridating agents"for these purposes are defined as:5(a) hydrofluorosilicic acid [(HFA)]:(b) sodium fluoride:(c) sodium silicofluoride [(SSF)]:(d) any other substance that releases fluoride when added to water.[4] The Regulations were promulgated following the decision of Collins Jdismissing New Health's application for a declaration that HFA and SSF weremedicines as defined in the Medicines Act.6 Collins J found neither compound was amedicine but, in the course of the judgment, the Judge suggested that the Ministry ofHealth "may wish to consider recommending a Regulation that exempts HFA and SSFfrom the definition of 'medicine' when those compounds are used to fluoridatewater".7[5] After the Regulations came into force, New Health brought judicial reviewproceedings challenging their validity on a number of grounds including improper4 New Health New Zealand Inc v South Taranaki District Council [2018] NZSC 59 [Councilappeal].5 Regulation 58B(4).6 Medicines Act judgment, above n 2.7 At [51].purpose and failure to take into account relevant considerations. Kós J dismissed NewHealth's application for judicial review of the Regulations8 and New Health thenappealed unsuccessfully to the Court of Appeal. The Regulations appeal relates to theCourt of Appeal's decision to uphold the decision of Kós J.9 We address the issuesarising on this aspect of the case after first setting out the background facts, thestatutory framework and a summary of the judgments below.Background[6] The narrative of events following the delivery of the judgment of Collins J onthe Medicines Act on 9 October 2014 is set out in the decision of the Court of Appeal.10For present purposes we need only note some key matters.[7] The first point to note is that New Health filed an appeal against the judgmentof Collins J (the Medicines Act appeal) on 28 October 2014. Various proceduralapplications were made after that including an unsuccessful application byNew Health to have the Medicines Act appeal fast-tracked to the Court of Appeal.[8] Second, the hearing of the Medicines Act appeal was subsequently adjournedby the Court of Appeal pending the decision of Kós J on the validity of theRegulations. Ultimately, as we have noted, the Court of Appeal heard the three appealstogether, that is, the Council appeal (relating to the power to fluoridate), theRegulations appeal and the Medicines Act appeal. The Court decided that theMedicines Act appeal was moot.The regulation-making power in the Medicines Act[9] Section 105 of the Medicines Act provides for the Governor-General to makeregulations for any of the listed purposes after a consultation process has beenundertaken. The listed purposes include identifying the substances that are or are notmedicines. Section 105(1) relevantly states:8 Regulations judgment, above n 2.9 New Health (CA), above n 1.10 At [168]–[175].(1) The Governor-General may from time to time, by Order in Councilmade on the advice of the Minister tendered after consultation withsuch organisations or bodies as appear to the Minister to berepresentative of persons likely to be substantially affected by theregulations, make regulations for all or any of the following purposes:(i) specifying, by name or description, substances or articles, orkinds or classes of substances or articles, that are, or are not,medicines or medical devices for the purposes of this Act:[10] Where a regulation specifies that a substance is not a medicine, the effect is toremove the substance from the statutory definition of "medicine" in s 3(1).Section 3(1) provides, relevantly, that "unless the context otherwise requires"medicine means substances manufactured and sold principally for administering for atherapeutic purpose. The definition then excludes various substances including thosedeclared by regulations not to be medicines. Section 3(1)(c) states that "medicine"does not include:(i) a medical device; or(ii) any food within the meaning of section 2 of the Food Act 1981; or(iii) any radioactive material within the meaning of section 5(1) of theRadiation Safety Act 2016;[11] or(iv) any animal food in which a medicine (within the meaning ofparagraph (a) or (b)) is incorporated; or(v) any animal remedy; or(vi) any substance or article of a kind or belonging to a class that isdeclared by regulations not to be a medicine for the purposes of thisAct.[11] We add that, as the Court of Appeal noted, the process leading to thepromulgation of the Regulations began on 20 November 2014 when the Minister ofHealth received a report from officials recommending regulation.12 A consultationprocess ensued and, after the period for consultation closed on 9 January 2015, a draft11 At the time of the Medicines Act judgment this referred to s 2(1) of the Radiation Protection Act1965.12 New Health (CA), above n 1, at [170].Cabinet paper was provided to the Minister on 16 January 2015. Ultimately, an Orderin Council was made on 27 January 2015.The approach taken in the High Court and the Court of Appeal[12] Kós J rejected the claim the Regulations were made for an improper purpose.The Judge said it was open to the Executive to confirm whether or not HFA and SSFwere covered by the Medicines Act regime. Further, Kós J found that the Regulationsdid not extinguish New Health's appeal although they did impair its "practicalutility".13[13] The Judge also rejected both New Health's complaints about the consultationprocess and its claim that the decision to make the Regulations was irrational. Nor didthe Judge consider that the regulations were inconsistent with s 27(2) of theNew Zealand Bill of Rights Act 1990 (the right to apply for judicial review). Finally,Kós J dismissed an argument that the Minister had failed to take into account relevantconsiderations.[14] The Court of Appeal similarly found the Minister had not acted for an improperpurpose. The Court considered it was not improper to give "certainty to thosedistributing and using [the relevant compounds] for the purpose of water fluoridationor for the purpose of averting collateral challenges in the High Court to the judgmentof Collins J".14 The impact on New Health's rights of appeal was "a consequence ofthe legitimate exercise of the power of the Executive Council and not unlawful".15The arguments on appeal[15] The key points of the appellant's case that the Regulations are invalid can besummarised in this way. First, invalidity arises because the Regulations were madeon the basis of an error of law. Second, and associated with the first point, it iscontended that in the exercise of the regulation-making power it was necessary tosquarely confront whether the Medicines Act should apply to the various compounds.13 Regulations judgment, above n 2, at [46].14 New Health (CA), above n 1, at [195] per Randerson J.15 At [199].This required that the Minister must understand the present status of that substance.Finally, the appellant says the Regulations were made on the basis of an improperpurpose, namely, to render New Health's appeal in relation to the decision of Collins Jon the Medicines Act moot.Discussion[16] We turn first to the submission that the Regulations were made on the basis ofan error of law. The argument in this respect is that the Regulations were premised onthe High Court correctly stating the law. On this basis, the submission is that thecorrectness of the High Court decision is a condition precedent to the lawful exerciseof the regulation-making power.[17] It is not necessary in addressing this submission to traverse the principlesrelating to the approach to determining challenges to the validity of delegatedlegislation.16 The short answer to this (and the other submissions made by New Healthon this aspect of the case) is that there is no improper purpose where the effect of theRegulations is prospective. We need only address New Health's submissions briefly.[18] The first of the arguments made by New Health is based on a false premise.The evidence on the making of the Regulations makes it clear the concern was toclarify the law. Although the position taken by the Ministry of Health was that thecompounds dealt with in the Regulations were not medicines, it was considereddesirable to clarify the position. Three examples will suffice.[19] The Ministry of Health's briefing paper to the Minister, dated20 November 2014, recommended accepting advice from the Crown Law Office toprogress an amendment to the Regulations "to provide legal clarity". The consultationpaper published by the New Zealand Medicine and Medical Devices Safety Authority(Medsafe) in November 2014 explained the perceived benefits of the proposedamendment as being to "preserve the status quo and provide legal clarity about the16 For a discussion of the authorities see Philip A Joseph Constitutional and Administrative Law inNew Zealand (4th ed, Thomson Reuters, Wellington, 2014) at 1124–1125, 1127–1131 and1134–1139. See also Cropp v Judicial Committee [2008] NZSC 46, [2008] 3 NZLR 774 at [6]and [25]–[26] per Blanchard J citing Drew v Attorney-General [2002] 1 NZLR 58 (CA) at [68];and Harness Racing New Zealand v Kotzikas [2005] NZAR 268 (CA) at [56]–[62].regulatory status of the fluoride compounds". Finally, the Cabinet paper ofJanuary 2015 said the purpose of the Regulations was to "provide legal clarity".[20] Accordingly, even assuming for these purposes that an error of law of thenature contended for could lead to invalidity, there was no error of law.17 As the Courtof Appeal noted, the Regulations in this case were made for the purpose of "promotinglegal certainty".18 That was a lawful purpose.[21] The appellant also argues that the error arises because the Regulations weremade to confirm an incorrect view of the law, namely, that the compounds were notmedicines. As we have indicated, this argument fails because the Regulations areprospective. In any event, s 105 of the Medicines Act answers the point.Section 105(1)(i) expressly contemplates the making of a Regulation which clarifieswhether or not a substance is a medicine for the purposes of the Act. Ms Hansen forNew Health accepted that if there was no mistake about the status of the compounds,they could be exempted from coverage of the Act. Whether, as the Court of Appealsaid, the substance was, or was not, a medicine under the Act before the Regulationswere made is not material.19[22] The authorities relied on by New Health in this context are not on point. Thesubmission is that these cases support the view that if the Regulations were based ona decision that was subsequently determined to be unlawful, the actions taken inreliance on the Regulations are vitiated. However, the authorities relied on reflectdifferent factual circumstances and do not deal with the validity of the exercise of aregulation-making power.2017 We are not to be taken as commenting on whether or not an error of the type alleged could providea basis to invalidate regulations.18 New Health (CA), above n 1, at [199].19 At [190].20 For example, McNally v Attorney-General [2010] NZCA 571, [2011] 2 NZLR 137 concerned ajudicial review of a decision to stay a prosecution under the Fisheries Act 1996 and raisedquestions about the impact of an earlier judicial decision subsequently held to be incorrect;R v Governor of Brockhill Prison, ex parte Evans (No 2) [2001] 2 AC 19 (HL) dealt with a claimof false imprisonment arising from the calculation of a release date which was based on earlierdecisions of the Divisional Court subsequently overruled; and Kleinwort Benson Ltd v LincolnCity Council [1999] 2 AC 349 (HL) concerned the recovery of money paid on the basis of settledlaw which was subsequently changed by a judicial decision. See also Lord Woolf and othersDe Smith's Judicial Review (8th ed, Sweet & Maxwell, London, 2018) at [4-067]–[4-069].[23] Ms Hansen referred in particular to R (Shoesmith) v OFSTED.21 That casedealt with the fallout from an inquiry into child protection services provided by a localauthority. Ms Shoesmith was summarily dismissed from her position as Director ofChildren's Services by OFSTED22 (her employer) at the direction of the Secretary ofState. The direction was found to be unlawful because the Secretary of State had actedunfairly.23 By a majority, the Court of Appeal concluded the decision to dismiss wasvitiated by the finding of unlawfulness in relation to the direction.24 Thosecircumstances are distinguishable from those in the present case because theRegulations are effective and not contingent on the validity of the determination madeby Collins J. In contrast the dismissal in OFSTED was dependent on the lawfulnessof the direction.[24] We also do not see any merit in New Health's second point, that is, that thedecision-making process failed because there was no consideration of the merits of theapplication of the Medicines Act. The evidence shows that the effect of theconsultation process was to raise for consideration the concerns expressed by theappellant about the appropriateness of the application of the Medicines Act to thecompounds in issue. The consultation process also raised issues about the perceivedinadequacy of the other statutory regimes providing for the regulation of thecompounds.[25] A large number of the submissions received as part of the consultation processwere opposed to the proposed change and raised the same sorts of concerns advancedby New Health in its submission.25 The material before us indicates these concernswere considered as part of the consultation process. As Kós J put it:26 the key consideration for the Minister here was whether, if the compoundswere exempted from the Act's controls, they would nonetheless be controlledeffectively through the wider statutory framework. And the Minister wasentitled to conclude that they would.21 R (Shoesmith) v OFSTED [2011] EWCA Civ 642, [2011] LGR 649.22 Office for Standards in Education, Children's Services and Skills.23 At [67] and [75] per Kay LJ.24 At [138] per Burnton LJ and [148] per Lord Neuberger MR.25 Kós J notes 1411 submissions were received including New Health's submission and that 1339 ofthat total opposed the proposed change: Regulations judgment, above n 2, at [15].26 At [89].[26] We turn then to the final argument that the regulations were based on animproper purpose because of their effect on New Health's Medicines Act appeal. It isrelevant in this context, as we have said, that the Regulations applied prospectively,not retrospectively. The prospective nature of the Regulations distinguishes thepresent case from that of R (Reilly) v Secretary of State for Work and Pensions (No 2)which is the high point of the case for New Health on this aspect.27[27] The appellants in Reilly had succeeded in the Court of Appeal of England andWales in showing that the Jobseeker's Allowance (Employment, Skills and EnterpriseScheme) Regulations 2011 (which affected their receipt of a jobseeker's allowance)were ultra vires.28 While appeals by the Secretary of State from the decision of theCourt of Appeal were pending, legislation was introduced and enacted which validatedthe 2011 Regulations thereby depriving the appellants of the fruits of their litigation.The appellants sought judicial review on the basis the Jobseekers (Back to Work)Schemes Act 2013, by retrospectively validating the actions of the Secretary of Stateunder the Regulations, was inconsistent with art 6 the European Convention on HumanRights.29 Before the application for judicial review was considered the SupremeCourt, on the Secretary of State's appeal from the decision declaring the 2011Regulations ultra vires, concluded that the 2011 Regulations were ultra vires butallowed the appeal because the 2013 Act had come into force.30[28] Lang J concluded that the 2013 Act was inconsistent with the protection inart 6(1) of the European Convention on Human Rights of the right to a fair and publichearing by an independent and impartial tribunal. Lang J said that the power tolegislate to overrule the effect of a judgment: 31generally ought not to take the form of retrospective legislation designed tofavour the executive in ongoing litigation brought against it by one of itscitizens, unless there are compelling reasons to do so. Otherwise it is likelyto offend a citizen's sense of fair play.27 R (Reilly) v Secretary of State for Work and Pensions (No 2) [2014] EWHC 2182 (Admin), [2015]QB 573 [Reilly (HC)], upheld on appeal in R (Reilly) v Secretary of State for Work and Pensions(No 2) [2016] EWCA Civ 413, [2017] QB 657. The latter decision did not disturb the reasoningof Lang J.28 R (Reilly) v Secretary of State for Work and Pensions [2013] EWCA Civ 66, [2013] 3 All ER 67.29 Convention for the Protection of Human Rights and Fundamental Freedoms, 213 UNTS 221(opened for signature 4 November 1950, entered into force 3 September 1953).30 R (Reilly) v Secretary of State for Work and Pensions [2013] UKSC 68, [2014] AC 453.31 Reilly (HC), above n 27, at [82].[29] Here, where the purpose was to clarify the law prospectively, albeit with aconsequential effect on the utility of the appellant's appeal, the same concern does notarise. Indeed, Lang J in Reilly considered that the "usual course" would be toprospectively amend the regulations to correct the earlier error.32[30] For these reasons, we would dismiss the Regulations appeal.Was the Court of Appeal correct to find the Medicines Act appeal was moot?[31] The Court of Appeal declined to hear the Medicines Act appeal on the basis itwas moot. The Court said there was no longer a live issue as between the parties andthat the making of the Regulations settled the controversy for the future. The Courtdid not accept there was any utility in determining what the position was in the periodprior to 30 January 2015 when the Regulations came into force.33[32] New Health takes issue with this conclusion noting, first, the Regulations wereprospective. Secondly, New Health advances several bases which it is said show alive issue remains which should be decided. These grounds can be summarised asfollows:(a) the Court's determination of the issue will demonstrate whether or notthe Crown has complied with its obligations under the Medicines Act;(b) whether the Medicines Act has been properly administered is a questionof wider public significance especially where the effect of the decisionof Collins J is to create a loophole; and(c) if the Court decided HFA and SSF were medicines this would lead tothe invalidation of the Regulations.[33] We consider the Court of Appeal was right. The Court in rejectingNew Health's argument on this part of the appeal applied the applicable principles,32 At [90]. Lang J's observation was made in the context of her Honour's acceptance that the firstclaimant had given no thought to the possibility the Government would legislate retrospectivelyin this way if her claim was successful.33 New Health (CA), above n 1, at [212].those set out in R v Gordon-Smith.34 The Court in R v Gordon-Smith confirmed thejurisdiction to hear a moot appeal but noted the cautious approach adopted to hearingsuch appeals.35 Nothing raised by New Health overcomes that caution. That isbecause the point of the appeal has been overtaken by the Regulations, which havebeen validly made. The Regulations prevent the relief New Health may have obtainedon appeal if successful and that is what makes the appeal moot. In the course of oralargument Ms Hansen also suggested that there was utility in hearing the appealbecause of the implications for costs for New Health in relation to the High Court andthe Court of Appeal. This submission was not pressed and, in the present contextwhere the utility is said to stem from broader public issues which are now mootbecause of the change to the Regulations, was rightly not at the forefront of theargument.[34] For these reasons, we would uphold the decision of the Court of Appeal thatthe Medicines Act appeal is moot.The Medicines Act appeal[35] On this approach, it is not necessary to address the Medicines Act appeal andwe do not do so.[36] For completeness, we add a brief comment about the argument addressed byWilliam Young J (in the judgment on the Council appeal being delivered at the sametime) that fluoride comes within the definition of "food" in s 2 of the Food Act 1981.36If fluoride is a "food" as defined in the Food Act, that brings it within one of theexpress exclusions from the definition of "medicine" in s 3(1)(c) of the Medicines Act.We do not need to consider the correctness of that approach and we do not do so.34 R v Gordon-Smith [2008] NZSC 56, [2009] 1 NZLR 721.35 At [16]–[18] and see [24] and [29] per McGrath J.36 The Council appeal, above n 4, per William Young J at [201]. The definition in force at the timeof the Medicines Act judgment encompassed "anything used or represented for use as drinkfor human beings;" and included "anything that is or is intended to be mixed with or added to anyfood or drink;": s 2. The current definition in s 9 of the Food Act 2014 is not materially different.Conclusion[37] Accordingly, that part of the appeal relating to the Regulations appeal and asto the correctness of the Court of Appeal's decision that the Medicines Act appeal wasmoot is dismissed. The Medicines Act appeal accordingly falls away and is formallydismissed.[38] The position as to costs is unclear. Costs are accordingly reserved. Anymemoranda on costs may be filed by 31 July 2018.WILLIAM YOUNG J[39] I agree that the Regulations appeal should be dismissed for the reasons givenby Ellen France J.[40] As will be apparent from my reasons in the Council appeal, I am of the viewthat the judgment of Collins J in the Medicines Act litigation was correct, albeit fordifferent reasons. So I would have been content to dismiss the Medicines Act appealon that basis. I do, however, agree with Ellen France J that there is no practical needto decide the Medicines Act appeal and that, for this reason, it can properly be regardedas moot.Solicitors:Wynn Williams Lawyers, Christchurch for AppellantSimpson Grierson, Wellington for First RespondentCrown Law Office, Wellington for Second Respondent