NEW ZEALAND GREYHOUND RACING ASSOCIATION (INCORPORATED) V THE MINISTER FOR RACING HC WN CIV 2012-485-2070

NEW ZEALAND GREYHOUND RACING ASSOCIATION (INCORPORATED) V THE MINISTER FOR RACING HC WN CIV 2012-485-2070 [19 February 2013]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV 2012-485-2070[2013] NZHC 245UNDER the Judicature Amendment Act 1972 Part 1IN THE MATTER OF the Racing Act 2003BETWEEN NEW ZEALAND GREYHOUNDRACING ASSOCIATION(INCORPORATED)PlaintiffAND THE MINISTER FOR RACINGDefendantHearing: 10 December 2012Counsel: H Cull QC and N Levy for the PlaintiffK Stephen and A Jacobs for the DefendantJudgment: 19 February 2013JUDGMENT OF MALLON JContentsIntroduction ....................................................................................................................................... [1]The Racing Act .................................................................................................................................. [3]Current legislation: the 2003 Act ................................................................................................... [3]Predecessor legislation: the Racing Act 1971 .............................................................................. [10]The facts ........................................................................................................................................... [15]Previous chairpersons .................................................................................................................. [15]Dr Jackson's earlier NZRB membership ...................................................................................... [17]Process leading to Dr Jackson's appointment as chairperson ..................................................... [19]Dr Jackson's appointment ............................................................................................................ [31]First ground of review: error of law (meaning of "independent") .............................................. [38]The competing positions ............................................................................................................... [38]The Minister's approach ............................................................................................................... [40]The words of s 11 .......................................................................................................................... [44]Other indicators in the 2003 Act .................................................................................................. [46]Legislative history ........................................................................................................................ [57]Other definitions ........................................................................................................................... [62]Conclusion on meaning of "independent chairperson" ............................................................... [67]Dr Jackson's interests and associations ....................................................................................... [69]Relevant/irrelevant considerations ................................................................................................ [73]Consultation ..................................................................................................................................... [74]Result ................................................................................................................................................ [76]Introduction[1] The plaintiff ("the Greyhound Racing Association" also referred to as the "greyhound code") challenges the decision of the Minister for Racing to appoint Dr Alan Jackson as independent chairperson of the New Zealand Racing Board ("the NZRB"). Appointments to the NZRB are made by the Minister under the Racing Act 2003. The Racing Act stipulates the composition of the governing body of theNZRB, including that there be "an independent chairperson".1 Within the racing industry there are three codes (as they are called), being New Zealand ThoroughbredRacing Incorporated ("the thoroughbred code"), Harness Racing New Zealand Incorporated ("the harness code") and the greyhound code. The greyhound codesays that Dr Jackson is not independent because he has strong and ongoing connections with thoroughbred racing.[2] The greyhound code brings its challenge to Dr Jackson's appointment by wayof judicial review. It contends that:(a) the Minister applied the wrong legal test (or, to put it another way, asked the wrong question) in deciding that Dr Jackson wasindependent because he focussed on Dr Jackson's ability to performthe role independently rather than considering whether his past and current interests meant that he was not independent;(b) the Minister failed to take into account relevant considerations because, in focussing on the wrong question, he failed to obtainadequate information about, and to take into account, Dr Jackson'sinterests and associations with the thoroughbred code;(c) the Minister failed to consult on Dr Jackson's proposed appointment as required by the Racing Act because he did not consider thegreyhound code's objection to Dr Jackson's appointment with an openmind.1 Racing Act 2003, s 11(1)(a).The Racing ActCurrent legislation: the 2003 Act[3] Dr Jackson's appointment as chairperson was made under the Racing Act 2003. The purpose of that Act is set out as follows:3 PurposeThe purpose of this Act is-(a) to provide effective governance arrangements for the racing industry; and(b) to facilitate betting on galloping, harness, and greyhound races, and other sporting events; and(c) to promote the long-term viability of New Zealand racing.[4] The Act establishes the NZRB as a body corporate with capacity to undertake business activities, or to enter into transactions (etc).2 The NZRB's objectives are topromote the racing industry, to facilitate and promote racing betting and sports betting, and to maximise its profits for the long-term benefit of New Zealand racing.3The functions of the NZRB, most relevantly for present purposes, include:4(b) to determine the racing calendar each year, and issue betting licences, under Part 5:...(d) to distribute funds obtained from betting to the racing codes in accordance with sections 16 and 17[5] All decisions of the NZRB are to be made by or under the authority of theNZRB's governing body.5 The governing body comprises three people each appointed on nomination by each of the three codes, three persons appointed on the advice of a nomination advisory panel and an independent chairperson.6 More particularly, s 11 provides as follows:2 Section 7.3 Section 8.4 Section 9.5 Section 10.6 Section 11.11 Membership of governing body(1) The governing body consists of 7 members, acceptable to the Minister, as follows:(a) an independent chairperson appointed by the Minister after consultation with the racing industry; and(b) 1 person appointed by the Minister on the nomination of New Zealand Thoroughbred Racing Incorporated; and(c) 1 person appointed by the Minister on the nomination of Harness Racing New Zealand Incorporated; and(d) 1 person appointed by the Minister on the nomination of the New Zealand Greyhound Racing Association (Incorporated); and(e) 3 persons appointed by the Minister on the advice of the nomination advisory panel referred to in section 12, and following the nomination and consultation process described in that section.(2) A person who is a chairperson of a racing code may not be appointed or hold office as a member of the governing body under subsection (1)(b) to (e) unless the person resigns from that position before taking up the appointment, but any other person (including any member of the governing body of a code) may be appointed and hold office as such.(3) An appointment under subsection (1) is for a period not exceeding 3 years, but-(a) a member continues to hold office until the member is re- appointed or the member's successor is appointed; and(b) if a vacancy occurs during the period, an appointment may be made by the Minister to fill that vacancy for the remainder of the period.(4) The Minister may appoint a person to be a member of the Board under subsection (1) only if the Minister is satisfied that the person is qualified to be a member by virtue of the person's-(a) knowledge of, or experience in, the racing industry; or(b) expertise in business, marketing, or economics.[6] The nomination advisory panel referred to in s 11(1)(e) comprises the Minister, the independent chairperson of the NZRB and the three chairpersons of the racing codes.7 The procedure, pursuant to which the nomination advisory panel is to7 Section 12(1).recommend the appointment of any person to the governing body, includes arequirement for the Minister to identify "the desired skills and qualifications" ofnominees8 and a requirement for the nomination advisory panel to meet to consider the nominations, taking into account the consultation with recognised industryorganisations and "the desired skills and qualifications of nominees".9 What is meant by that phrase for these purposes is set out as follows:10(4) For the purposes of subsection (3)(a) and (e), the desired skills and qualifications of nominees include a person's-(a) knowledge of, or experience in, the racing industry; and(b) expertise in business, marketing, or economics.[7] An issue raised in the submissions by the parties concerns the extent to which the NZRB controls the distribution of funds as between the three racing codes. The relevant provision is as follows:16 Amounts of distributions to codes(1) The Board must, as soon as practicable following the end of a racing year, determine the amount to be distributed among the racing codes for that year from any surpluses referred to in sections 53(2) and 57(2), or any other source whether capital or income.(2) Unless a majority of the racing codes otherwise agrees in writing, the amount referred to in subsection (1) must be not less than the total of the surpluses referred to in sections 53(2) and 57(2) for that racing year less the total amount credited to reserves for that year from those surpluses.(3) Unless a majority of the racing codes otherwise agrees in writing, the amount referred to in subsection (1) must be distributed among the racing codes in the same proportions that the Board considers are the proportions to which the codes contributed to the New Zealand turnover of the Board for that racing year.(4) In subsection (3), New Zealand turnover of the Board means the total gross amount received by the Board from racing betting placed in New Zealand on races run in New Zealand.[8] There is also provision for the NZRB to make part payments of the sum to be distributed to the codes and to recoup any overpayments.118 Section 12(3)(a).9 Section 12(3)(e).10 Section 12(4).11 Section 17.[9] Schedule 1 to the Act applies to the NZRB and its governing body. Amongst other things, this:(a) requires NZRB members to act in good faith and with honesty and integrity;(b) enables the Minister to appoint a NZRB member as the deputy chairperson; and(c) contains requirements for NZRB members to disclose materialfinancial or other (direct or indirect) interests in NZRB's matters orarrangements and provides that the member cannot vote or take part in any deliberations or decisions in relation to that matter.Predecessor legislation: the Racing Act 1971[10] The Racing Act 2003 replaced the Racing Act 1971. Under the 1971 Act the governing body was made up of 10 members, rather than seven under the present Act.12 As with the present Act, three of those members were appointed on thenomination of the three racing codes (then called "conferences"). The other sevenmembers were appointed on the nomination of others. One of the 10 members was appointed President and another member was appointed Vice-President.13 There was no requirement that the President (or Vice-President) be independent.[11] Specifically section 4 provided:4 Membership of Industry Board(1) The Industry Board shall consist of 10 members, who shall be appointed by the Minister, comprising –(a) One person, acceptable to the Minister, on the nomination of the Executive of the galloping conference:(b) One person, acceptable to the Minister, on the nomination of the Executive of the harness conference:12 Racing Act 1971, s 4(1).13 Section 4(3).(c) One person, acceptable to the Minister, on the nomination of the Executive of the greyhound conference:(d) Seven persons, acceptable to the Minister, each to be nominated by the Executive or Executive Committee of one or more recognised industry organisations or by any other organisation or person.(2) The Minister shall appoint a person to be a member of the Industry Board, under subsection (1) of this section, only if the Minister is satisfied that the person is qualified to be a member by virtue of theperson's –(a) Knowledge of, or experience in, the racing industry; or(b) Expertise in business, marketing, or economics.(3) The Minister shall appoint one of the members as President and another member as Vice-President.(4) Notwithstanding subsections (1) and (2) of this section, not less than 6 members of the Industry Board shall have knowledge of or expertise in the racing industry, and, in making appointments to the Industry Board, the Minister shall have regard to the various racing interests.(5) Before appointing any member pursuant to paragraph (a) or paragraph (b) or paragraph (c) of subsection (1) of this section, the Minister shall consult the President and Vice-President of the Industry Board about the proposed appointment.(6) No person who is –(a) A member of the Executive of the galloping conference; or(b) A member of the Executive of the harness conference; or(c) A member of the Executive of the greyhound conference –may be appointed as a member of the Industry Board unless he or she resigns from the Executive or Executive Committee, as the case may be, before taking up the appointment.(7) Not more than 2 members of the Industry Board may also hold office as a member of the Totalisator Agency Board.[12] Mr McArthur's evidence is that under the 1971 Act there was constant tension among the three codes, and difficulties arose in regulating and controlling the industry. He says that in about 2000, representatives of the three codes were enlisted to cooperate in formulating the content of a new Racing Bill. Mr McArthur was thegreyhound code's representative. He says that there had not been immediateacceptance by all the codes that there needed to be an independent chairperson but itwas the lynchpin in securing the agreement of the greyhound code to the industry reforms proposed.[13] The first reading of the new Racing Industry Bill (which became the 2003 Act) was on 22 June 2001. At that time, the changes from the 1971 Act to the membership of the governing body in that Bill were explained by the Minister for Racing as follows:The draft bill submitted by the Racing Industry Board proposed that thethree racing conferences would appoint the new board's seven-person governing body. However, in discussions with the wider industry, considerable opposition to that proposal was found. In recognition of these concerns, the bill provides that the governing body of the board will be appointed following a robust nomination and consultation process. Further, it is intended that the board chairperson will be independent of the three codes. Each code will be entitled to nominate one person for appointment tothe board. The chairpersons of each code, together with the board'sindependent chairperson and the responsible Minister, will form a nominations advisory panel. That panel will advise on the appointment of the three remaining positions. (emphasis added)[14] Subsequent to this, there was no particular comment about the change to an independent chairperson in the supplementary papers and discussions in the House about the Racing Bill.The factsPrevious chairpersons[15] Under the 2003 Act, the inaugural independent chairperson was Mr Warren Larsen. In a relatively informal consultation process the then Racing Minister,Damien O'Connor, advised each code that Mr Larsen was selected for the role. No objections were made or alternatives suggested and the appointment was made. The beehive.govt.nz report on the appointment on 19 June 2003 said:The Racing Act requires the chairperson to be independent of any particular racing code or sector group. Warren Larsen is an experienced company director and the former chief executive of the New Zealand Dairy Board.[16] The next independent chairperson was Michael Stiassny. As with Mr Larsen, Mr Stiassny's name was circulated and was approved when no objections weremade. The beehive.govt.nz report dated 13 December 2006 said about that appointment:Mr Peters said Mr Stiassny would take up the position on 1 January, replacing Warren Larsen, who was not reappointed after losing the support of the thoroughbred code."Given the importance of co-operation among the three codes, it is the righttime to introduce a new chairman," Mr Peters said."Mr Stiassny will bring a fresh approach to the challenges facing the industry now and in the future. He has considerable leadership experience on the boards of a number of publicly listed companies, and is currently chairman of Vector, NGC Holdings and Metro Water. He has also been a prominent member of the Auckland Racing Club since 1982."This is an important time for the racing industry. The benefits of the new tax regime are beginning to be felt, and it is vital that the Board, as the industry leader, shows the necessary leadership to unite the codes and see through initiatives that will further revitalise all forms of racing in NewZealand."Dr Jackson's earlier NZRB membership[17] From 1 August 2003 until 31 December 2006, Dr Jackson was a member of the NZRB, being one of the three persons appointed under s 11(1)(e). Although nominations for those three positions are not required, Dr Jackson was appointed following a nomination for that position which was supported by the thoroughbred industry. On his resignation from that position, the media report from the NewZealand Thoroughbred Breeders' Association Inc ("the Thoroughbred Breeders' Association") dated 23 December 2006 said:Dr Alan Jackson, the prominent thoroughbred representative on the New Zealand Racing Board (NZRB), has tendered his resignation to the Minister of Racing Winston Peters just days after the appointment of Auckland accountant and lawyer Michael Stiassny to be the new chairman of the NZRB.[18] At this time Dr Jackson had overseas interests which took him out of the country. This meant a break in his membership of the NZRB Board. After that break he was reappointed to the NZRB on the nomination of NZ Thoroughbred Racing. That nomination, on 20 October 2010, was pursuant to s 11(1)(b) of the Act. He remained in that position until he was appointed as chairperson of the NZRB with effect from 1 August 2012.Process leading to Dr Jackson's appointment as chairperson[19] The background to Dr Jackson's appointment as chairperson was that, in early 2012, he indicated to the Minister's office that he wished to be considered forthe role of chairperson of the NZRB when the role came up for renewal on 1 August 2012. He subsequently reiterated this desire to the Minister personally.[20] In March 2012 the Minister commenced an appointment process for six (out of a total of seven) positions on the NZRB including the position of independent chairperson. That process included public notices in the five major daily newspapers, and notifying government nominated agencies, the chairs of the three racing codes, 143 recognised racing organisations and a number of the Minister'sparliamentary colleagues. The process adopted for each of the roles was to call for nominations and a nomination form was provided for that purpose. Nominations closed on 20 April 2012.[21] From that process only two candidates emerged for the position of independent chairperson. Dr Jackson, who was nominated by the New ZealandThoroughbred Breeders' Association, was one of those two candidates. The otherwas Mr George Hickton, who was nominated by the greyhound code.[22] The Minister was disappointed with the small number of applications received. As a result, in mid-April 2012, the Minister asked officials to provide his office with a list of potential candidates for the chairperson position. A list was provided. The Minister reviewed that list but considered that none of the individuals on that list offered greater expertise than Dr Jackson.[23] The Minister's views on the two nominated candidates, as set out in hisaffidavit filed in this proceeding, were as follows:While Mr Hickton had senior management experience with New Zealand organisations, there was limited evidence of strategic governance of a large- scale entity.In comparison, Dr Jackson's CV and credentials were very impressive. Iwas particularly taken with his international business experience including his many years as chairman of the Boston Consulting Group Australasia. Ialso knew him to be someone who had served previous terms on the Board both as an independent and a code nominated member and, as a result, that he was very familiar with the issues confronting the racing industry and offered institutional knowledge at a time of major transition for the Board. My preliminary view was that he was someone who was ideally placed to be the Chairperson and I did not consider that his past role as a representative nominated by the New Zealand Thoroughbred Racing Incorporated meant that he would be unable to perform the independent role of Chairperson.Furthermore, Dr Jackson's CV listed significant private and public sectorgovernance roles, including a current role as Chairperson of the Housing Corporation of New Zealand and directorship with Fletcher Building Limited. Dr Jackson had also assisted New Zealand Rugby in its shift to a professional focus, which aligned well with the commercial demands of the New Zealand Racing Board. While Dr Jackson has previously served on the Board both as an independent and as a code nominated member, he has not declared any directorships or managerial roles on a racing code body that would lead me to consider him unable to act independently. (my emphasis)[24] From about early April 2012 the greyhound code knew that Dr Jackson was a potential candidate. It obtained a legal opinion on whether it would be lawful for the Minister to appoint Dr Jackson as the independent chairperson of the Board under s 11(1)(a) of the Racing Act. The opinion gave advice as to the meaning of"independent chairperson" under that section. That advice was summarised asfollows:The Act provides for the Minister to appoint an "independent" chairperson tothe Board (s11(1)(a) of the Act). A person nominated by the Thoroughbreds and appointed to the Board by the Minister as the representative of theThoroughbreds on the Board would not be "independent" as required bys11(1)(a) of the Act, and consequently could not be appointed as the independent chairperson of the Board by the Minister under s11(1)(a).The use of the term "independent" in s11(1)(a) to refer to the chairpersonmust be read in the context of the other members appointed to the Board. Ata minimum, the "independent" chairperson must be independent of the threecodes who nominate members under s11(1)(b)-(d) of the Act and independent of the recognised industry organisations who nominate members to be appointed under s11(1)(e) of the Act.The role of the independent chairperson is critical for ensuring that there is a level of fairness exercised by the Board in its decision-making in respect of the three codes. The Board is responsible for allocating funding to the three codes and it is important that there is, and is seen to be, a fair process for the allocation of funds between those three codes.The independent chairperson also has an important role on the nomination advisory panel responsible for recommending the appointment of the three nominees from the recognised industry organisations. The chairperson is one of two persons on the panel who do not have an interest in any one of the three codes or recognised industry organisations.For these reasons the chairperson must be seen to be independent of the three codes and the recognised industry organisations, and able to act impartially in respect of the allocation of funding between the three codes.While the requirement that the chairperson be independent would not preclude a person who had some past association with one or more of the codes it would clearly prevent a person who had any kind of current associations or interests with one or more of the codes from being appointed as chairperson. Such a person would not be seen to be independent of the codes and would not be seen to be able to make impartial decisions on the allocation of funding between the three codes.[25] In early May 2012 the greyhound code raised its concerns about Dr Jackson'snomination with the Minister's officials. The officials requested a copy of the greyhound code's legal advice, which the greyhound code provided. The Ministerrequested advice from the Department of Internal Affairs ("the Department") andreceived a briefing on 14 May 2012. That briefing included legal advice which was said to have been:Following the request from your office, the Department of Internal Affairs(the Department) has received legal advice that since the term "independent"is not explicitly defined in the Act, it rests with the Minister for Racing to decide what he considers acceptable as an independent Chairperson, takinginto account the commonly understood English definition of "independent".[26] The briefing went on to refer to definitions of "independent" found in othercontexts and concluded:In the definitions available, independence is framed in terms of current interests and relationships. While due regard should be given to past interests as a matter of principal, current interests and relationships (at the time of appointment) are of prime relevance when considering whether an individual can be accepted as independent.RecommendationsThe recommendations are that you:a) note that "independent" is not explicitly defined in the Racing Act2003;b) note that most wider definitions of independence refer to anindividual's current interests or relationships, and that past positions,while requiring due note, do not automatically disqualify an individual from being considered independent; andc) note that the Minister for Racing decides who is acceptable as an independent Chairperson, giving due regard to common definitions and industry consultation.[27] In his affidavit for this proceeding the Minister summarises the advice he received in the following way:It was clear to me that because one alternative of the criteria was that the appointee have knowledge of, or experience in, the racing industry, an appointee did not need to be completely disconnected from the racing industry in order to be independent. I also took heed of the advice the Department gave me that independence may be framed in terms of current interest and relationships and that while due regard should be given to past interests as a matter of principal (sic), current interests and relationships at the time of appointment were of prime relevance when considering whether an individual can be accepted as independent. I understood that in this case, the requirement for independence was a description of the role the chairperson was required to perform, rather than a complete prerequisite for appointment.[28] The Minister says that, because he preferred that there be consensus over the person appointed, he asked the Department to supply him with a further list of possible candidates for the chairperson position. He viewed this "as a final test toassess whether Dr Jackson was the best available candidate." The Departmentforwarded the Minister a list of names sourced from databases held by the Ministryof Women's Affairs and the Crown Ownership Monitoring Unit on 7 June 2012. TheMinister says that he "considered the names supplied but again came to the view thatDr Jackson remained the strongest candidate."[29] On 24 May 2012 the Minister met with the nomination advisory panel established under s 12 of the Act. The Minister chaired the panel which also comprised the then independent chairperson of the Board, Mr Stiassny, and the three chairs of the racing codes. When Mr Stiassny departed from the meeting, the Minister says that he consulted with the three chairs of the racing codes on his preliminary view that Dr Jackson should be appointed the independent chairperson. His office had been in contact with the three racing code chairs to advise them that this consultation meeting would be held following the panel meeting. The Minister says that the chairs of the thoroughbred and harness codes were strongly supportive of Dr Jackson's candidacy while the chairperson of the greyhound code was stronglyopposed.[30] The suggestion was made that Dr Jackson could meet with the greyhoundcode's board. The greyhound code rejected this because a meeting would not resolvetheir concerns about Dr Jackson's lack of independence from the thoroughbred code.After this there was further correspondence. The greyhound code again said that Dr Jackson was not independent as required by the Act because of his previous involvement with Thoroughbred Racing.Dr Jackson's appointment[31] As part of the standard Cabinet process Dr Jackson completed a disclosure form. In that form he was asked to note any actual or perceived conflicts of interest and to explain how he proposed to manage those. He noted that:(a) he was a director of "Racing Stables Owning Organisation –Broadway Trust" and that he would exclude himself from anydiscussions re the Matamata Racecourse; and(b) he was an owner/breeder in "Broadway Partnership" with his wife,owning racing and breeding interests in thoroughbreds and pacers inNew Zealand and Australia, which he described as "not significant in NZRB mandate".[32] The Minister's memorandum to the Cabinet Appointment and HonoursCommittee was signed by the Minister on 21 June 2012. In that memorandum the Minister referred to Dr Jackson's previous appointments on the NZRB governing body amongst Dr Jackson's other experience. He described Dr Jackson's strengths as being his "extensive business and governance experience, his strategic analysis expertise and familiarity with the racing industry." Under the heading "Conflicts of Interest" it said:Dr Alan Jackson has declared that he is owns (sic) racing and breeding interests in thoroughbred and pacer horses, and that he is a Director of the Broadway Trust, which owns racing stables in Matamata....The potential conflicts outlined above are considered manageable, and all appointees have agreed to abide by any decision made about the management of their interests. These will be handled in accordance withAuditor-General guidelines (Managing Conflicts of Interest: Guidance for Public Entities, 2007) and the NZRB's established protocols.The individuals have also agreed to declare to the Board all new conflicts, perceived or otherwise, that may arise during their term of appointment and to abide by decisions made by the Board, in the first instance, to manage them. Conflicts that cannot be managed by the Board will be directed to me as responsible Minister.[33] Similar comments were made in an annexure to that memorandum which the Department had prepared on the basis of Dr Jackson's disclosure form as follows:Possible conflicts ofinterestAlan Jackson has declared that he isowns (sic) racing and breeding interestsin thoroughbred and pacer horses, andthat he is a Director of the BroadwayTrust, which owns racing stables inMatamata.Proposals for conflictmanagementIn the event of any actual or potentialconflict of interest issue arising, AlanJackson agrees to promptly declare thatinterest to the Board, who will considerhow the interest can be managed. Hehas agreed to abide by any decisionsabout the management of an interest andacknowledges that in the event that aninterest cannot be managed, the Boardwill inform the Minister for Racing[34] The Minister informed the chairs of the three racing codes by telephone on 20 and 21 June 2012 of his intention to appoint Dr Jackson. There was further correspondence between the greyhound code and the Minister. The greyhound code asserted its view that Dr Jackson was not independent as required by the 2003 Act. By letter dated 29 June 2012 the Minister replied, saying that he "did not agree that Dr Jackson has strong connections to the Thoroughbred Association and is notindependent".[35] The Minister's affidavit summarises his thinking at this time as follows:Dr Jackson has a depth of senior business and governance expertise, involving major international firms, which provide the commercial and strategic background that I consider vital for the Chairperson of the New Zealand Racing Board, particularly at a time when the Board is addressingthe industry's economic performance and long-term viability, and is in transition. In addition, Dr Jackson has an understanding of the issues confronting the racing industry and offers continuity and institutionalknowledge that enables him to provide immediate and effective leadership.Dr Jackson has declared what I consider to be minor personal racing interests that are sufficiently removed that they would not influence him as Chairperson, and can be managed using established protocols. As an experienced director and chairperson I am confident Dr Jackson has a sound understanding of principals (sic) of good governance, chair independence, collective duty and the oversight of ownership interests (particularly as it applies to a Crown body) and will act independently in the role. (my emphasis)[36] Dr Jackson was duly appointed on 17 July 2012 for a term commencing on 1 August 2012. His appointment, along with four other appointments to the NZRB governing body, was referred to on the website beehive.govt.nz on 19 July 2012. That report did not refer specifically to Dr Jackson's involvement in the racing industry, but referred to the new appointments bringing "a valuable range of senior business, marketing and industry experience." His previous roles with the NZRBwere, however, mentioned in a 20 July 2012 article on his appointment on the website www.theinformant.co.nz. There it was said:He is well known in racing industry circles, having previously served as an independent member of the NZRB board as well as more recently representing thoroughbred interests on the NZRB.[37] The greyhound code requested full disclosure from the Minister of DrJackson's racing interests. The material received by the greyhound code did notinclude any additional detail to that referred to in the Cabinet memorandum, the annexure and the disclosure form set out above. These proceedings were issued on 2 October 2012.First ground of review: error of law (meaning of "independent")The competing positions[38] The first ground of review is whether the Minister misinterpreted the word"independent" in s 11(1)(a) of the 2003 Act when deciding to appoint Dr Jackson. That is, whether the Minister applied the wrong legal test or asked the wrong question. Counsel for the greyhound code submits that the question was not whether Dr Jackson would be "able to act independently" (ie. a description of how the chairperson must behave) but whether he was independent at the time of hisappointment. She submits that "independent" means independent of any of the threecodes, both at the time the appointment is made and throughout the tenure. Shesubmits that to answer this question, Dr Jackson's current and past interests must beconsidered and that, when they are, it is apparent that Dr Jackson is not independent of the thoroughbred code.[39] The position advanced by counsel for the Minister is that s 11(1)(a) is about the role of the chairperson once appointed. He submits that the chairperson must be able to perform his or her role without bias towards any racing code. He submits that this means that the chairperson cannot be an office holder in an entity in the racing industry regulated by the Act. Beyond that, a case by case consideration is required. He submits that the Minister applied the correct test in concluding that Dr Jackson was eligible for appointment.The Minister's approach[40] There are parts of the affidavit of the Minister which suggest that theMinister's focus was on whether Dr Jackson could perform the role of chairpersonindependently (that is, without his racing interests influencing him).14 Similarly inthe written submissions for the Minister it is said that "'independent' should not beinterpreted as an absolute requirement of office but rather as a requirement whenperforming the office of independent chairperson." That was also part of theMinister's legal advice at the time15 which also included that it was up to the Minister to decide what he considers acceptable as an independent chairperson.16[41] It was also part of the legal advice to the Minister that Dr Jackson's past andcurrent interests were relevant to that question.17 It is apparent that the Minister tookinto account Dr Jackson's current interests. He viewed these as "minor" andtherefore not interests which would influence him in the role of chairperson. This view was taken apparently without further enquiry on the basis of the brief description of them in the disclosure form and the Minister was aware that Dr14 Refer quotation from affidavit at [35] above.15 Refer last line in quotation from affidavit at [27] above.16 Refer quotation at [25] above.17 Refer middle sentence in quotation from affidavit at [27] above.Jackson had "previously served on the [NZRB] both as an independent and as a code nominated member" but these roles did not mean "he would be unable to perform the independent role of chairperson."18 There is no elaboration as to why this view was reached.[42] On the evidence before me, at no point did the Minister ask himself the question, before the decision was made to appoint Dr Jackson, whether Dr Jackson was too aligned with the thoroughbred code to be independent of that code. The only time this is mentioned is after his appointment when the Minister said that hedid "not agree that Dr Jackson has strong connections to the ThoroughbredAssociation."19 The question therefore is whether, in failing to ask that question in deciding to appoint Dr Jackson, the Minister was in error. That depends on whatParliament meant by the word "independent" in s 11(1)(a) of the 2003 Act in light of its purpose.[43] Insofar as the Minister's advice was that it was up to him to decide what heconsiders acceptable as an independent chairperson, that advice was in error. The question was not what the Minister considered was an acceptable level ofindependence. Rather it was what Parliament meant by the term "independent chairperson" in light of its purpose and whether Dr Jackson met that test.The words of s 11[44] Starting first with the words of s 11:(a) It is apparent that Parliament intended independence to be more than or different from a requirement to resign from office as a chairperson of one of the three codes. That is because (under s 11(2)) that is an express requirement for the other six members of the governing body, but not for the independent chairperson.18 Refer [23] above.19 Refer [34] above.(b) That requirement in respect of the other appointees suggests that Parliament was concerned to ensure that the governing body had some degree of separation from the three codes. An independent chairperson would be a further way of ensuring that separation.(c) The make-up of the governing body (one nomination from each of the codes and a further three from the nomination advisory panel, which in turn is made up of representatives from each of the three codes, the independent chairperson and the Minister) indicates an intent to have a governing body that does not favour any one of the codes over another. An independent chairperson would be a further way of ensuring an appropriate balance as between the three codes.(d) Parliament did not, however, intend that the independent chairperson need be completely removed from the racing industry. By s 11(4) an independent chairperson could qualify for appointment by virtue ofthat person's knowledge of, or experience in, the racing industry or through their expertise in business, marketing, or economics.[45] The words of s 11 therefore indicate that a person would be disqualified from appointment as an independent chairperson if they are a chairperson of one of the three codes. They also indicate that a person would not be disqualified from appointment as an independent chairperson merely because they have knowledge of, or experience in, the racing industry. More generally the content of s 11 indicates an intention that an independent chairperson be independent of each of the codes. Beyond that Parliament has not attempted to stipulate the racing interests that mightbe disqualifying, or otherwise define the meaning of "independent".Other indicators in the 2003 Act[46] There are no other strong indicators in the legislation as to what is meant by"independent chairperson". Counsel for the Minister says that the Act's purpose ofproviding effective governance for the racing industry and promoting the long-term viability of New Zealand racing means that industry experience is important. Hesubmits that, in a small country, a person with expertise in the industry is likely to have conflicts from time to time. He submits that, consistent with this, Schedule 1 provides a mechanism for dealing with conflicts of interest.[47] I accept all of that, but consider that these points do not help with what ismeant by "independent" in s 11(1)(a). It is apparent that the racing experience likely to be desirable in meeting the Act's purpose can come from other appointees on the governing body of the NZRB. The mechanism for dealing with conflicts in Schedule 1 recognises that the appointees may from time to time have conflicts. Such mechanisms are workable for occasional conflicts arising from minor involvement in the racing industry. But they are not workable where the conflict is pervasive because a chairperson is closely aligned with one of the three codes. The conflict mechanism does not override the requirement for an independent chairperson.[48] Counsel for the Minister also says that it is relevant that the power of the chairperson is limited. Decisions of the governing body are made by majority. The chairperson does not have a casting vote. Schedule 1 regulates the conduct of the NZRB and its members and includes a requirement to act in good faith and with honesty and integrity. NZRB decisions are subject to the provisions of the Act. All members of the NZRB are required to achieve the purposes of the Act. The NZRB is required to operate in a financially responsible manner. It is also required to propose a statement of intent, business plan and annual report. There is annual auditing. The NZRB is otherwise subject to public scrutiny and to the Official Information Act 1982. Importantly, s 16 of the Act stipulates how distributions are to be allocated unless the codes agree to something else. Furthermore the requirement for anindependent chairperson is "watered down" (my words) because there is no requirement for a deputy chairperson to be independent, and a deputy chairperson presides at meetings of the governing body if the chairperson is not present.[49] Counsel for the greyhound code submits that any suggestion that the NZRB does not make decisions which could favour one of the codes over another is not correct. She says that there is scope for the NZRB to favour, for example, the two horse codes when making decisions on distribution calculations, provisions forupgrades and maintenance on tracks and on days of racing. She says that these kinds of issues are very important to each of the codes and can give rise to real tensions.[50] The words of s 16 do suggest that the NZRB has a degree of discretion both as to the total amount to be distributed between the codes (s 16(2) setting a lower limit only) and the amount to be distributed to each code (s 16(3) leaving it to theNZRB's assessment of the proportions that each code has contributed to turnover).There is, therefore, scope for disagreement and for tensions to arise.[51] There is some (limited) information before me which supports this. Forexample, the NZRB's 2011 Annual Report contains the following:The NZ Racing Board sought to establish close collaborative and co- operative relationships with industry stakeholders in 2010/11.Strengthened relations built of trust and understanding have been established most notably with the three racing Codes – NZ Thoroughbred Racing, Harness Racing NZ and Greyhound Racing NZ.A programme of regular consultative meetings between key representatives from the four major racing organisations has helped establish consensus on a range of issues, from funding distribution and other financial matters to enhancing perceptions and promotion of the racing industry.This "whole industry" approach on issues of critical importance to the industry reflects the recognition, willingness and commitment of industry stakeholders to work together to ensure the New Zealand racing industry remains viable, sustainable and able to grow. (my emphasis)[52] In referring to a consensus, the implication is that there was room for disagreement. Similarly, the announcement of Mr Stiassny's appointment as independent chairperson refers to "necessary leadership to unite the codes", againindicating the potential for disagreement and tensions.[53] Another example is the 31 March 2012 Annual Financial Report of theThoroughbred Breeders' Association which contains the following comments fromthe President:The continued global instability has caused our industry its fair share of problems. That combined with a lack of confidence in our local racing scene, has seen the New Zealand thoroughbred industry go through a difficult trading year. The NZTBA recently met with the new Minister forRacing, the Hon Nathan Guy and we presented an extremely concerning list of statistics:Mares Served in 2001: 7611 compared with 6050 in 2010;Foals Born in 2004: 4600 compared with 3650 estimated for 2012Stallions advertised in the 2010 Register: 121 compared with 96 this year.Just about every indicator is tracking down. As an industry that makes a major contribution to employment, tax revenue and acquiring export dollars, we need policies and strategies to stop these downward trends. Our industry needs strong leadership at Racing Board level to drive income up and costs down to provide the ultimate return to our code, because as we all know, stake money levels are the key drivers in confidence and participation levels.(my emphasis)[54] The reference to strong leadership at Racing Board level to provide the"ultimate return" to the thoroughbred code suggests an ability for NZRB appointeesto influence matters for the benefit of a code (which may or may not be to the benefit of other codes).[55] The last example is from the thoroughbred code's 2011-12 Annual Report. The potentially conflicting interests of the three codes in relation to distributions andrace days is indicated in the Chairman's statement in that report which includes thefollowing:The first is a high degree of downside protection regarding the amount of the NZRB distribution to us, and in the (now unlikely) event that future reductions may prove necessary, far greater advance notice of such reductions than had been the case in the past. This gives us confidence that the emergency belt-tightening of January 2011 will not be repeated.The second element is that NZTR agreed to race on every Monday and on some Tuesdays from 5 March 2012. In return for this, we are paid above our domestic market share percentage as defined by Section 16 of the Racing Act. This recognises the extra costs of holding more meetings; the money HRNZ saves by holding fewer meetings with more races; and most importantly, the upside for overall wagering due to the most popular code holding more meetings across the week.[56] In any event, Parliament was obviously not content that the limits on achairperson's role or on the discretion vested with the governing body were sufficient to achieve the Act's purposes. It required, and therefore must have seen aneed for, both a balance between the codes in the make-up of the governing body and an independent chairperson.Legislative history[57] Turning to the legislative history, under the 1971 Act there were ten members on the governing body (then called the Industry Board). Seven of these members were nominated "by the Executive or Executive Committee of one or more recognised industry organisations or by any other organisation or person."20 A"recognised industry organisation" was a defined term in the Act.21 It referred to various organisations in relation to "galloping races", "harness races" and "greyhound races". In respect of each of those it included the codes (then called "conferences") as well as other organisations. In relation to galloping races, thoseother organisations included, for example, the Thoroughbred Breeders' Association.[58] The result was that potentially all of the seven appointees could be (though not necessarily had to be) aligned with one of the three codes, depending on thenominations made and the Minister's decision on those nominations. Potentially, therefore, none of the appointees needed to be from outside the racing industry. There was also potential for one of the codes to have greater representation on the 10 member body than another, if the seven appointees were mainly those with interests aligned with one of the codes over another. The 2003 Act changed this by ensuring the three codes had equal say in who would be nominated and throughcreating the new position of "independent chairperson".[59] According to Mr McArthur's evidence the introduction of the independent chairperson was important to the greyhound code (because of the tensions between the horse racing codes on the one hand, and the greyhound code on the other). Counsel for the Minister makes the point that the plaintiff's motives in relation todiscussions at the time the Act was being developed are too remote to be a useful aid to interpretation and that it is what Parliament has actually said that matters. I accept that. Mr McArthur's evidence is just an indication of the greyhound code's20 Racing Act 1971, s 4(1)(d).21 Section 2.perspective. However his evidence that there were tensions between the codes and difficulties in controlling the industry under the 1971 Act was unchallenged and thegreyhound code's perspective does fit with the make-up of the governing body as enacted, which ensured a balanced representation between the codes. If the chairperson was not independent of any of the codes that balance would be altered.[60] There was another reason for an independent chairperson. According to theMinister's speech in introducing the Bill, an independent chairperson was one of theways intended to address a wider industry concern that all of the governing body would be appointed from the three codes. I do not have any detail about why there was that wider industry concern (although I envisage that part of that concern is likely to have been about ensuring that there be appropriate measures in place in relation to the potentially harmful effects of the industry and appropriate standards for ensuring the integrity of the sport). But the existence of that concern, and the response to it by way of introducing an independent chairperson, lends support to thegreyhound code's submission that an independent chairperson was intended to be aperson who was independent of all of the codes.[61] Counsel for the greyhound code submits that the first two appointments made under the 2003 Act were consistent with the understanding that the chairperson was to be independent of the codes. She says that neither Mr Larsen nor Mr Stiassny had any more than nominal interests in any of the racing codes. She refers to the announcement made on 19 June 2003 of Mr Larsen's appointment which specificallyreferred to Mr Larsen's independence from any particular code or sector group. That was not specifically mentioned in the announcement of Mr Stiassny's appointmentbut it did refer to the importance for the three codes of uniting and cooperating to meet the challenges for the industry.Other definitions[62] Counsel for both parties refer to how "independent" is used elsewhere. Some of these were included in the Department's advice to the Minister at the time. Oneexample referred to is the Institute of Directors' description in a recent publication "The Four Pillars of Governance Best Practice", which is as follows:22An independent non-executive director plays an important role, particularly on larger boards. Independent in this context means independent of management and free from any business or other relationship or circumstance that could materially interfere with the exercise of a director'sindependent judgement. For example, a director would not be independent if they had recently been employed by the company or have a contractual relationship with the company (other than as a director) or if they are related to a major shareholder.[63] Another example referred to is the NZX Listing Rules. Under those rules an independent director is someone who is not an executive of the company and who has no disqualifying relationship. A disqualifying relationship means any direct orindirect interest that could reasonably influence, in a material way, the director'sdecisions in relation to the company. Those two examples are helpful. They indicate that the requirement for independence in the context of independent directors isabout involvement or relationships that could materially influence that director'sindependent judgement.[64] Counsel for the Minister refers to the Oxford English Dictionary (onlineedition) which defines "independent" as:Not depending upon the authority of another, not in a position of subordination or subjection; not subject to external control or rule; self governing, autonomous free.Not depending on others for the formulation of opinions or guidance of conduct; not influenced or biased by the opinions of others; thinking or acting, or disposed to think or act for oneself. (my emphasis)[65] In the context of s 11(1)(a) the most relevant part of that definition is the words in italics. Applied in the context of s 11(1)(a), an independent chairperson must not be influenced or biased by the views of one code, or thinking or acting, or disposed to think or act for the benefit of one code over another or for the benefit of a code over other industry concerns.[66] Counsel for both sides referred to references to an "independent chairperson" in other legislation and other definitions of "independent" or "acting independently"22 Institute of Directors in New Zealand Inc The Four Pillars of Governance Best Practice at 10.in cases. However, as counsel for the Minister submits, in the end these are of limited assistance because they arise in their own contexts. "Independent chairperson" in s 11(1)(a) must also be considered in its context and in light of its purpose.Conclusion on meaning of "independent chairperson"[67] I conclude that the word "independent" in s 11(1)(a) when read in light of its purpose means a person who is independent of the three codes. To be independent the person must not have past or present relationships, associations or interests with any of the three codes that would materially influence their decisions on the governing body in relation to that code. In considering whether a person would likely be materially influenced in their decisions on the governing body, the following (not necessarily exhaustive) considerations are relevant:(a) It is not simply a question of whether the person under consideration for appointment is an office holder on one of the codes. A person may be materially influenced in their decision making because of other substantial involvement in one of the codes.(b) Past positions as an office holder of a code or as a code nominated appointee on the NZRB are an indicator of an association with that code. Even a past position on the NZRB as a s 11(1)(e) appointee should be considered where that appointment indicates a strong alignment with one of the codes. Resigning from such positions does not necessarily end that association. The longer the period that the positions were held, the greater the likely degree of association with the code. The closer the time period between positions held with a code or as a code nominated appointee on the NZRB with the proposed appointment as independent chairperson of the NZRB governing body, the more likely it is that the relationships formed and the perspectives gained from that position will have an influence onthe chairperson's views on matters of concern to that code that arebefore the NZRB.(c) Other interests in the code are also relevant. A person may never have held an office position on that code, but may still have interests and relationships within the code that are likely to influence their view on matters of concern to that code that are before the NZRB. Where a person carries on a business in relation to one of the codes, that may be relevant. Substantial ownership interests in thoroughbreds, for example, are potentially relevant. The issue with any of these interests is whether they are likely to materially influence their exercise of independent judgement on decisions of the governing body on matters relating to the code to which the business relates or in which the interest is held.(d) Anything else which indicates that a person has interests, associations or relationships that materially align that person with one of the codes such as to be likely to materially interfere with that person'sindependent decision making on matters before the NZRB that relate to the code.[68] Because the Minister did not approach the question of whether Dr Jackson was independent in this way, he misinterpreted the requirement for an independent chairperson. The question then becomes whether the Minister's decision should bequashed and referred back to the Minister for reconsideration using the correct test, as the greyhound code seeks. The only reason not to order that relief would be if I were satisfied that the Minister's decision would be the same even applying thecorrect legal test. I turn to consider that question.Dr Jackson's interests and associations[69] The information about Dr Jackson's involvements in the racing industry thatis before me is as follows:(a) Dr Jackson was one of the three representatives appointed under s 11(1)(e) on the nomination of the thoroughbred industry,23 a position which he held for over three years (August 2003 to December 2006).(b) As at 23 December 2006 he was viewed by the ThoroughbredBreeders' Association as "the prominent thoroughbred representative"on the NZRB governing body.(c) After a four year break from NZRB involvement, Dr Jackson was appointed under s 11(1)(b), that is on the nomination of the thoroughbred code. He held that position in the two years immediately before his appointment as independent chairperson.(d) Dr Jackson was nominated for the position of independent chairpersonby the Thoroughbred Breeders' Association.(e) He continues to own racing and breeding interests in thoroughbred and pacer horses in New Zealand and Australia.(f) He owns racing stables in Matamata.(g) He is a member of the Thoroughbred Breeders' Association.[70] The latter membership in and of itself is not material. The 31 March 2012 Annual Financial Report for the Thoroughbred Breeders' Association shows a very long list of "annual members". Dr Jackson is not an "Honorary Life Member" nor a "Gold Badge Member". I do not have any evidence about what membership entails,but counsel for the Minister advises that a person becomes a member by simply paying the membership fee. On the face of it this membership seems to be an interest akin to, for example, Mr Stiassny's membership of the Auckland RacingClub. However Dr Jackson has further associations with the ThoroughbredBreeders' Association and the thoroughbred code, because he was nominated for appointment under s 11(1)(e) by the Thoroughbred Breeders' Association (or another23 The information I have been referred to is not clear about the organisation that made thenomination.organisation within the thoroughbred industry) and held that position for three yearsand, immediately prior to Dr Jackson's appointment as independent chairperson, he was the thoroughbred code's nominated appointment and had been in that positionfor two years.[71] I also do not have any detail about Dr Jackson's ownership interests ((e) and (f) above). Owning a horse or two would not be disqualifying. However significant ownership interests are potentially relevant. There does seem to be a prospect that Dr Jackson's ownership interests are significant. Mr McArthur refers to a news update on the website nzracing.co.nz which says:Matamata racecourse stages racing on behalf of Matamata RC and South Waikato Race Club also stages its annual meeting there in March.Comprising 157 acres, it's New Zealand's largest, and most successfultraining centre, with over 600 horses trained on the course each day by anumber of NZ's leading trainers based at the course. The training facilitiesinclude an equine pool, 10 separate training tracks including the American"All Weather Trackmaster" surface, the only one of its kind in New Zealand which is capable of accommodating up to 1000 horses per day.[72] Overall the facts as they are before me indicate that Dr Jackson has strong and ongoing connections with the thoroughbred code. On the evidence before me, itcannot be said that the Minister's decision would be the same if the correct legal testwas applied to the legislative requirement for an independent chairperson. I considerthat the Minister's decision to appoint Dr Jackson must be quashed and theappointment referred back to the Minister for further consideration in light of the test and relevant considerations set out above (at [67]).Relevant/irrelevant considerations[73] This ground of review, as counsel for the greyhound code accepts, overlaps with the first ground of review. Essentially, it alleges that because the Minister applied the wrong legal test, he failed to take into account relevant considerations in deciding whether Dr Jackson should be appointed as independent chairperson. I have dealt with the relevant considerations in my conclusion on the meaning of"independent chairperson". Nothing additional arises under this ground of review.Consultation[74] There is no dispute between the parties that the requirements for consultation in this context are those set out in Wellington International Airport Ltd v Air New Zealand.24 The greyhound code submits that the Minister failed to comply withthese requirements because he did not reconsider Dr Jackson's appointment with anopen mind in light of what the greyhound code had to say about Dr Jackson's lack ofindependence. The evidence does not support this submission. The Minister looked to find an alternative candidate when the greyhound code made its concerns known but, having done so, remained of the view that Dr Jackson was the best candidate.[75] The problem seems more to have been that the Minister had taken advice onthe meaning of "independent chairperson" and considered that Dr Jackson met thattest. It might have been appropriate for the Minister to have taken further legal advice in light of the legal advice that the greyhound code provided to theDepartment. That would have provided an additional check on the Minister'sprocess and decision. I am not sure whether he did or did not (I understood from counsel in the course of the hearing that he may have done so at some point but I was given no details of this). But even if he did not, this would not mean that he didnot have an open mind when considering the greyhound code's concerns. Again, therefore, I consider that the consultation ground of review adds nothing additional to the first ground of review.Result[76] The Minister's decision to appoint Dr Jackson is quashed. The appointmentof an independent chairperson is to be reconsidered by the Minister in light of the meaning of independent chairperson as discussed above (at [67]). If the parties are not able to agree on costs, brief memoranda (limited to three pages) may besubmitted on the items in issue within one month of today's date.Mallon J24 Wellington International Airport Ltd v Air New Zealand [1993] 1 NZLR 671 (CA) at 674-676.