Alt New Zealand Limited v Attorney-General
[2025] NZCA 344
•22 July 2025 at 2.30 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA30/2024 |
| BETWEEN | ALT NEW ZEALAND LIMITED |
| AND | VEC LIMITED |
| AND | MYRIAD PHARMACEUTICALS LIMITED |
| AND | ATTORNEY-GENERAL |
| Hearing: | 26 November 2024 |
Court: | Cooke, Palmer and Hinton JJ |
Counsel: | D A Laurenson KC and L I van Dam for Appellants |
Judgment: | 22 July 2025 at 2.30 pm |
JUDGMENT OF THE COURT
AThe application to adduce further evidence is declined.
BThe appeals are dismissed.
CThe appellants must pay the respondent costs on a band A basis, together with usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Hinton J)
Table of Contents
Para no
Introduction
ALT’s original and amended judicial review proceedings
Nicotine levels
Background legislation
The issue with nicotine levels under the 2021 Regulations
Procedural history
The affidavit of the Minister of Health
The interim and costs judgments of Ellis J
The substantive judgment of Churchman J
Breach of natural justice by failing to undertake a lawful consultation process
Breach of legitimate expectations
Failure to take into account relevant considerations
Unreasonableness and outside scope
Application to adduce further evidence
The agreed issues on appeal
Issue 1: Consultation
Was there a common law duty on the Minister to consult?
Given the Ministry decided to consult, was there a duty to consult to a certain standard?
If there was a duty to consult, was the consultation carried out to the required standard?
Issue 2: Air Nelson
Did the Ministry fail to provide advice on matters Cabinet was required to address?
Issue 3: Unreasonableness
Issue 4: Costs appeal
Result
Introduction
This is a case about regulation of the nicotine levels in vaping devices. It involves a challenge to the process by which regulations made in 2021 (the 2021 Regulations) under the Smokefree Environments and Regulated Products Act 1990 (the Act) were amended in 2023 to reduce the permitted level of nicotine (the 2023 Regulations).
The appellants are three related companies, all established by Mr Benjamin Pryor, involved in the research and development, manufacture, importation, and sale of vaping devices (together, ALT). Mr Pryor describes the appellants as the “primary players” in New Zealand’s vaping industry.
The respondent represents the Governor-General in Council, the Minister of Health (the Minister) and the Ministry of Health (the Ministry).
ALT’s original and amended judicial review proceedings
ALT obtained consent orders in an original judicial review proceeding over the interpretation of the 2021 Regulations and were entitled to costs.[1] Costs were ordered in their favour by Ellis J, but ALT appeals a refusal to award indemnity costs.[2]
[1]ALT New Zealand Ltd v Director-General of Health HC Wellington CIV-2023-485-146, 15 August 2023 (Minute of Ellis J) [consent orders].
[2]ALT New Zealand Ltd v Attorney-General [2024] NZHC 140 [costs award].
Following obtaining the consent orders, with leave of the Court, ALT filed an amended judicial review proceeding contesting the lawfulness of the amendment process leading to the 2023 Regulations. The key issues were whether the Minister had a duty to consult and had breached that duty, and whether the Minister had a duty to provide adequate advice to Cabinet and had failed to do so.
ALT’s amended proceeding was dismissed by Churchman J in the High Court.[3] ALT appeals that decision and the appeal was heard together with the costs appeal.
Nicotine levels
[3]ALT New Zealand Ltd v Attorney-General [2023] NZHC 3855 [judgment under appeal].
As background to this case, it is helpful first to say something about nicotine. Nicotine is a naturally occurring stimulant which, when consumed, triggers a dopamine response in the brain. Dopamine is the hormone which plays a role in how we feel pleasure and rewards. It is this dopamine response which makes nicotine addictive.
Smoking cigarettes delivers nicotine through the combustion of dried tobacco contained in the cigarette. While nicotine itself has physical impacts, and addiction is inherently harmful, it is the consumption of carcinogens (particularly carbon monoxide and tar) caused by tobacco combustion which makes smoking cigarettes particularly dangerous. The consequences of smoking have been well-documented. It is commonly accepted, as Professor Christopher Bullen (an expert witness for ALT in this case) gave evidence, that there is a causal link between smoking and various forms of cancer, cardiovascular disease, and respiratory diseases, and that regular smokers are also more vulnerable to infectious diseases.
Unlike smoking tobacco, vaping or the use of e-cigarettes is a relatively modern way to deliver nicotine.[4] A vaping device uses a battery to heat a liquid contained in the vape cartridge or “pod”. That liquid contains nicotine, flavourings and other chemicals which, when heated, creates an aerosol or vapour which is then inhaled by the user. These vaping devices can be reuseable (with replaceable pods) or single-use.[5]
[4]We used the term “vaping” throughout this judgment for consistency.
[5]We note that from 17 June 2025, single-use vaping devices were unable to be sold in New Zealand. However, they were on the market at the time ALT brought judicial review proceedings and the expert evidence was given on that basis.
The nicotine in most vaping devices is contained in the form of a nicotine salt compound. Nicotine salt compounds are formed from freebase nicotine and an acid. Depending on the acid in question, nicotine salt compounds are composed of various ratios of nicotine to the acid substance. The transition from freebase nicotine (such as that contained in a cigarette) to nicotine salt compounds was explained by Professor Bullen:
36.… The first vaping products used “freebase nicotine”, which is pure nicotine. The high alkalinity of pure nicotine means that, even at low levels, it produces a burning or irritating sensation in the throat. At higher levels, more comparable to smoking a cigarette, freebase nicotine is simply not palatable.
37.As a result, the industry developed an alternative way to deliver nicotine in vaping liquids: through nicotine salts. Nicotine salts are a compound formed using pure nicotine and a suitable acid, typically benzoic acid. Nicotine salts can deliver higher levels of nicotine in a way that is palatable to the user and that is able to be absorbed quickly into the bloodstream. The effect is to emulate more closely the physiological effect of smoking a cigarette. Replicating the “nicotine hit”, without the carcinogens from smoke, is critical to supporting smokers to quit.
It is accepted in the expert evidence filed by both parties that vaping is less harmful than smoking and that it has use as a smoking cessation tool. As quoted above, Professor Bullen and others say that in order for vaping to be an effective smoking cessation tool there must be vaping devices available that have comparable levels of the addictive stimulant (the nicotine) to the amount contained in a cigarette. Other experts take a different view as to the level of nicotine that is more effective in alternative smoking cessation tools.
This raises a public health problem. On the one hand, vaping can be a valuable tool to reduce smoking, because smokers can turn to vaping while still getting a “hit” of nicotine. Vaping has possible health risks, but less so than smoking. On the other hand, people who never smoked at all, especially young people, may start vaping and become addicted to nicotine.
As a result, the government has had to balance these public health costs and benefits. Essentially, this case is about the government changing that balance, and how they went about doing so in the case of vaping devices.
Background legislation
The Act governs the manufacture, sale, and consumption of both cigarettes and vaping devices in New Zealand.
The Act was formerly called the Smoke-free Environments Act but was amended in November 2020 to include governance over vaping devices. Correspondingly, regulations relating to vaping devices were first promulgated in 2021.
The purposes of the Act are set out in s 3A and relevantly include:
3A Purposes of this Act
The purposes of this Act are, in general, as follows:
(a)to reduce the exposure of people who do not themselves smoke to any detrimental effect on their health caused by smoking by others; and
(b)to prevent the normalisation of vaping; and
…
(d)to minimise harm from regulated products, in particular to children and young people; and
…
(f)to support smokers to switch to regulated products that are significantly less harmful than smoking; and
(g) to regulate the safety of regulated products; …
…
Also relevant to the appeal is s 84 of the Act. That section authorises the making of regulations relating to vaping devices:
84 Regulations relating to notifiable products
(1) The Governor-General may, by Order in Council, make regulations—
(a)prescribing safety requirements for regulated products that are notifiable products:
…
Vaping devices are “notifiable products” and vaping manufacturers and importers are “notifiers” under the Act.[6]
[6]Smokefree Environments and Regulated Products Act 1990, s 2.
Non-compliance with any regulations made under the Act is an offence:[7]
60 Notifier must not sell product unless it has been notified
(1)A notifier of a notifiable product must not sell the product in New Zealand unless it—
(a) has been notified in accordance with this Part; and
(b) complies with product safety requirements.
(2)A notifier must not sell a notifiable product in New Zealand whose notification has expired.
(3)A person who, without reasonable excuse, contravenes subsection (1) or (2) commits an offence and is liable to a fine not exceeding $400,000.
The issue with nicotine levels under the 2021 Regulations
[7]This is the section as it read at the time of ALT’s judicial review proceedings in the High Court. On 18 December 2024, subs (1) was amended to also require a notifier to “compl[y] with any applicable requirements in this Act or regulations”.
On 9 August 2021, the Governor-General made the Smokefree Environments and Regulated Products Regulations 2021. The 2021 Regulations prescribe, among other things, product safety requirements for vaping devices in New Zealand.
The 2021 Regulations were made following recommendations from a technical expert advisory group (TEAG) commissioned by the Ministry and chaired by Dr Hayden McRobbie. That report suggested that a maximum nicotine strength of 60 mg/mL be adopted in vaping devices using a nicotine salt compound. This was assessed as the best figure to replicate the nicotine hit from smoking a cigarette.
Most relevant to this case is sch 5 to the 2021 Regulations, which controlled the maximum nicotine strength of vaping devices:
14The strength of free-base nicotine in a vaping substance must not exceed 20 mg/mL.
15The strength of nicotine salt in a vaping substance must not exceed 50 mg/mL.
There was confusion over the meaning of cl 15, with two markedly different interpretations being advocated:
(a)The lower strength interpretation: the “strength of nicotine salt” referred to the total quantity of the nicotine salt compound, ie that there could not be more than 50 mg/mL of nicotine salt compound present. This meant there would only be about 28.5 mg/mL of freebase nicotine if the nicotine salt compound was made with benzoic acid, the most common option.[8]
(b)The higher strength interpretation: the “strength of nicotine salt” referred to the amount of freebase nicotine present, excluding the additional substance involved in making the nicotine salt compound. This interpretation would allow up to 50 mg/mL of freebase nicotine, nearly double the amount of the lower strength interpretation.
[8]The exact percentage of the freebase nicotine would depend on the formula used for the nicotine salt compound in any given product.
On 21 September 2023, cls 14 and 15 were amended in the 2023 Regulations to read as follows:
14For a vaping substance that contains nicotine only in salt form and is intended for use in a reusable vaping device, the concentration of nicotine must not exceed 28.5 mg/mL.
15For all other vaping substances, the concentration of nicotine must not exceed 20 mg/mL.
This case challenges the process by which the 2023 Regulations were made.
Procedural history
After the 2021 Regulations were promulgated, a significant number of vaping devices were “notified” and sold with freebase nicotine strengths of up to 50 mg/mL but concentrations of nicotine salt compound above 50 mg/mL. That is, the industry and, albeit perhaps inadvertently, the Ministry, was operating on the higher strength interpretation. This was more closely aligned with the TEAG recommendations.
After an inquiry by TVNZ’s Fair Go, in late 2022 the Ministry advised a journalist from Fair Go that the 50 mg/mL limit applied not to the quantity of freebase nicotine, but to the total nicotine salt compound, that is that the lower strength interpretation was correct. This meant the permissible nicotine content would be close to half that on which the industry had been operating.
In October 2022, the Vaping Regulatory Authority (the unit within the Ministry responsible for regulating vaping devices) informed ALT that there were a number of non-compliant vaping devices on the market because the 50mg/mL limit applied not to the strength of the freebase nicotine, but to the total nicotine salt compound (the lower strength interpretation).
The Ministry advised it would cancel the notifications (the first step in enforcing s 60 of the Act) for vaping devices that contained more than 50 mg/mL of nicotine salt compound. The effect of that would be to prohibit such products from being sold on the market.
In April 2023, ALT filed its judicial review proceedings. ALT agreed to not proceed with its interim orders application on the basis that the respondent would not take any enforcement actions under the Act until the challenge was determined. A substantive hearing of the proceeding was set down for 16 August 2023.
On 17 May 2023, the Minister recommended to the Cabinet Social Wellbeing Committee (the SWC) that vaping regulations be tightened, the expressed concern being over a 21.7 per cent increase in youth vaping in 2022. On 22 May, the SWC agreed to the drafting of further vaping regulations for single-use vaping devices.[9]
[9]The changes included reducing the maximum strength of the nicotine salt compound in single-use vaping devices to 35 mg/mL (a freebase nicotine strength of 20 mg/mL), as well as amendments to permissible flavour descriptions and vape retailer approval requirements.
On 26 May 2023, the Ministry sent a briefing note to the Minister as to the disagreement on the meaning of cl 15 and ALT’s judicial review proceedings. The note recommended that cl 15 also be amended as part of the above process. The Minister agreed the 2021 Regulations should be amended to refer to the maximum strength of freebase nicotine, rather than nicotine salt compound, in reusable vaping devices.
Also on 26 May 2023, the Ministry advised the Minister of its intention to concede the interpretation issue that was the subject of ALT’s judicial review proceeding. The Crown did not at that point inform ALT or the Court of the intended concession.[10]
[10]As noted by Ellis J in costs award, above n 2, at [2] and [6].
The Ministry obtained the Minister’s consent to consult with the vaping industry, relevant non-governmental organisations and clinical or professional groups over the proposed amendment. On 12 June 2023, the Ministry provided consultation documents to 194 targeted stakeholders, including ALT. The recorded proposal was to “clarify” a maximum freebase nicotine strength of 28.5 mg/mL for reusable vaping devices that use nicotine salt compounds. The aim was described as being to “better balance[e] … preventing the uptake of vaping among young people and supporting people who smoke to switch to a less harmful product”.
The two-week “targeted consultation” was short because the amendment was to clarify a single clause, the Minister wanted to make recommendations to Cabinet promptly because of the rapid rise in youth vaping, and there were a limited number of Cabinet meetings left before Parliament would adjourn around the beginning of September 2023. There had been a more comprehensive 10‑week consultation between January and March 2023, which included the proposal noted above at [31] to reduce the strength of freebase nicotine in single-use vaping devices down to approximately 20 mg/mL.
On 23 June 2023, counsel for the Ministry filed in the High Court a memorandum seeking an adjournment of the 16 August fixture because the Ministry was proposing to amend the 2021 Regulations to “clarify” the meaning of cl 15 and was consulting on that proposal.
Consultation closed on 26 June 2023, two weeks after it began. Approximately 4,700 submissions had been received.[11] The vast majority of individual submitters (87.29 per cent) opposed the proposal. This included organisations, such as ALT, who submitted that the proposed level was insufficient to support people who smoke to transition to vaping products, and that a higher strength is required to get a “nicotine hit” more comparable to smoking a cigarette. The large numbers of opposing submissions likely flowed from a vaping manufacturer, Vuse, having emailed the link to the survey to its customer database and offering them a free vape if they made a submission.
[11]Proposal to Clarify How Nicotine Levels for Vaping Products Are Expressed in the Smokefree Environments and Regulated Products Regulations 2021: Analysis of consultation submissions (Manatū Hauora | Ministry of Health, July 2023) at 3.
The Ministry explained the differing views to the Minister. The Minister was most interested in the views of the health professionals. A 30 June 2023 draft of a Cabinet paper, provided by the Ministry to the Minister, noted:
Another consideration is the upcoming denicotinisation of tobacco products that is likely to increase the need for people with nicotine addiction to be able to source alternatives at a similar dose to that available in cigarettes.
Following the Ministry’s memorandum of 23 June 2023 to the High Court, seeking an adjournment, the Court inquired whether the Ministry now agreed that ALT’s grounds of review were made out, and that a declaration could be made to that effect. The Ministry advised in response that it did not agree to a declaration being made “at this time”.[12] The adjournment application was then declined.[13]
[12]Costs award, above n 2, at [4].
[13]ALT New Zealand Ltd v Director-General of Health HC Wellington CIV-2023-485-146, 10 July 2023 (Minute of Ellis J).
On 17 July 2023, the Minister recommended to Cabinet that cl 15 of the 2021 Regulations be amended so the maximum strength of freebase nicotine allowed in reusable vaping products made with nicotine salt compounds be set at 28.5 mg/mL. The Cabinet paper explained that dispute over the interpretation of cl 15:
… makes a material difference to the overall amount of nicotine permitted in a vaping product, resulting in some more highly addictive products currently available for sale.
That same day Cabinet relevantly resolved, as the Minister recommended:
4agreed that setting the maximum allowable nicotine concentration at 28.5mg/mL for reusable vaping products that contain nicotine salts will support the continued use of vaping products as a smoking cessation tool to reduce smoking related harm, while reducing the risk of addiction and subsequent potential harm associated with the use of vaping products to young people;
5agreed to amend clause 15 of the Regulations to state that for reusable vaping products that contain nicotine salts, the maximum allowable nicotine concentration is set at 28.5 mg/mL;
6noted that the amended clause 15 is expected to be submitted to Cabinet on 31 July 2023 as part of the suite of new smoked tobacco and vaping regulations (the proposed Smokefree Environments and Regulated Products Regulations 2023).
On 19 July 2023, ALT advised that they were contemplating (further) judicial review proceedings, challenging the proposed amended regulations. They sought interim orders to prevent the promulgation and/or enforcement of the amended regulations.
On 25 July 2023, three weeks before the High Court substantive hearing scheduled for 16 August, the respondents conceded that ALT’s position was correct: that cl 15 in its unamended form in the 2021 Regulations meant that the strength of freebase nicotine in a vaping device manufactured using a nicotine salt compound must not exceed 50 mg/mL.
Before final Cabinet approval of the amendments, the Public Health Agency (a directorate within the Ministry) (the PHA) provided advice on the proposed reduction to the Minister on 9 August 2023.
On 10 August 2023, the Minister submitted a Cabinet paper to the Legislation Committee with two appendices, being the PHA advice as Appendix A and a summary of the submissions that had been received during the consultation period as Appendix B. The Minister said the Cabinet paper confirmed the proposed amendments set out above at [41] should proceed.
In a minute dated 15 August 2023, in the High Court, Ellis J made a declaration by consent that:[14]
The words “the strength of nicotine salt in a vaping substance must not exceed 50 mg/mL” in clause 15 of Schedule 5 to the Smokefree Environments and Regulated Products Regulations 2021 means that “the nicotine strength in a nicotine salt vaping substance must not exceed 50 mg/mL”.
[14]Consent orders, above n 1, at [2].
Her declaration meant that ALT had effectively succeeded in their claim and were entitled to costs.[15] She later ordered costs in a judgment which we address below.[16] Recognising that the regulatory amendment was imminent, Ellis J granted leave in the minute for ALT to amend their original proceeding to challenge those regulations (in place of the previous challenge to the cancellation of notifications).[17] ALT subsequently filed an amended statement of claim.
[15]At [3].
[16]Costs award, above n 2.
[17]Consent orders, above n 1, at [4], [6] and [8].
Cabinet approved the regulatory amendment on 21 August 2023, noting its previous decisions and the further public health advice from the PHA to proceed as previously agreed, and authorised submission of the regulations to the Executive Council. The Minister referred the regulations to the Executive Council and a month later, on 21 September, the amended cls 14 and 15 came into force as set out above at [24]. The 2023 Regulations resolved the identified ambiguity.
From 21 March 2024, vaping products which do not meet the requirements in cls 14 and 15 of the 2023 Regulations have not been able to be sold in New Zealand.
The affidavit of the Minister of Health
In the High Court proceedings, the Minister provided an affidavit dated 7 September 2023 in which she explained her reasoning and the process behind the amendment.[18]
[18]It is convenient to observe that, in the High Court, the admissibility of parts of this evidence was successfully challenged on the basis that it was expert opinion evidence that the Minister was not qualified to give in accordance with r 9.43 of the High Court Rules 2016: see judgment under appeal, above n 3, at [25]–[34]. We do not interpret her affidavit as purporting to be expert evidence. Instead, we interpret it as the decision-maker setting out her reasoning—as she puts it, the basis for her advice to Cabinet. She makes various statements about the literature, but we do not consider these to be advanced for the truth of their contents—rather as a representation of her reasoning. The point has not been taken on appeal, but we note for future reference that it is now standard practice to admit such evidence as being generally helpful to the Court in proceedings of this nature.
The Minister set out her qualifications. She explained in some detail her assessment of the role of vaping in smoking cessation, and also her concerns about the deleterious health effects of vaping. She also set out the consultation process, and, in some detail, explained the advice she received from the Ministry. She explained the reasons why the consultation process was only two weeks long, and that because it was a public health decision based on the interpretation of public health evidence, in her view the views of interested parties were only of limited relevance. She explained the advice she received on the submissions, including that most industry stakeholders did not support the proposal. She made it clear that she understood the change to be an adjustment to the level of nicotine permissible in vaping devices.
She also explained why she asked the PHA to provide further advice on 9 August 2023, and the conclusions she drew from this advice, which reinforced her earlier assessment that the nicotine level ought to be lowered.
The Minister indicated in that affidavit that she was aware of the objections and was adequately briefed by the Ministry. She explained that she considered the revised figure of 28.5 mg/mL was an appropriate level, balancing the competing public health interests at play—smoking cessation, which might militate for a higher level, and reducing youth vaping uptake, which might militate for a lower level.
The interim and costs judgments of Ellis J
The hearing of ALT’s application for interim orders preventing the promulgation and/or enforcement of the proposed amended regulations took place before Ellis J on 16 August 2023, prior to the 2023 Regulations being approved by Cabinet on 21 August 2023. The Judge’s decision was issued on 23 August 2023, just after the Cabinet decision had been made.[19] As a result, Ellis J held that ALT no longer had a position to preserve,[20] the situation was not urgent,[21] and therefore the basis for interim orders had not been established.[22]
[19]ALT New Zealand Ltd v Attorney-General [2023] NZHC 2300 [interim orders judgment] at [4].
[20]At [79].
[21]At [81].
[22]At [82].
On 9 February 2024, the Judge ordered costs, as foreshadowed above, on the basis that ALT had effectively succeeded in their original claim with respect to the interpretation of cl 15 of the 2021 Regulations.[23]
[23]Costs award, above n 2, at [7].
Costs were awarded on a 2B basis (totalling $34,894) together with an uplift of $20,000 and disbursements of $2,020.[24] The Judge declined ALT’s application for costs on an indemnity basis ($149,387),[25] because the Ministry’s initial defence of its interpretation of the original clauses could not be described as “hopeless” nor could any inference of an ulterior motive be drawn.[26] The Judge said an offer by the Ministry to pay $20,000 was an appropriate recognition of the wasted costs caused by the delay between the Ministry forming the intention to concede and actually conceding. In addition she said the level of waste was unclear given the proceedings were continuing over the same subject matter, albeit in a different form.[27]
The substantive judgment of Churchman J
[24]At [22].
[25]At [8].
[26]At [19], referring to the test in Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400.
[27]Costs award, above n 2, at [21].
On 21 December 2023, Churchman J dismissed the amended judicial review application on “all causes of action”.[28] He summarised the factual background and noted that much of the substantial quantity of evidence was of peripheral relevance in judicial review proceedings where the focus is on the lawfulness of the process, not the relative harm of smoking as compared to vaping.[29]
Breach of natural justice by failing to undertake a lawful consultation process[30]
[28]Judgment under appeal, above n 3, at [128].
[29]At [24].
[30]We adopt the headings used in the judgment.
Relying on the observation in CREEDNZ Inc v Governor-General that it would be “very unusual” for Parliament to impose on the Executive Council a duty to consult,[31] and on the fact that the Act specifically imposed duties to consult in certain circumstances,[32] the Judge concluded there was no duty to consult in respect of subordinate legislation (either express or at common law).[33] This was sufficient to dismiss the consultation ground of review.[34]
[31]At [70], citing CREEDNZ Inc v Governor-General [1981] 1 NZLR 172 (CA) at 177–178 per Cooke J; at 188 per Richardson J; and at 206 per McMullin J.
[32]Judgment under appeal, above n 3, at [71].
[33]At [74].
[34]At [81].
The Judge did not address in any detail ALT’s argument that even if there was no duty to consult, where the Minister nonetheless carried out consultation, they had a duty to carry out the consultation properly. He observed that consultation where there was no actual duty to consult was part of “healthy practice” and the consultation process was adequate.[35] He said it was not established that stakeholders were misled as to the nature or significance of the consultation because it was clear what was being proposed was a reduction in nicotine levels.[36]
[35]At [81].
[36]At [82].
ALT argued that the time period for consultation was too brief and therefore flawed. The Judge considered that had to be viewed in the context of ongoing consultation about vaping regulations and the issue being an urgent one of public safety.[37] There was a limited number of Cabinet meetings before Parliament adjourned and the other stakeholders in the targeted consultation were involved in tobacco or vaping fields.[38] They could be expected, of their own accord, to have sufficient information to make an informed submission.[39]
[37]At [83].
[38]At [83]–[84].
[39]At [84].
Addressing an argument that Māori and Pacific communities were not consulted, the Judge found that Māori stakeholders were consulted on the immediate issue—and both Māori and Pacific peoples had been consulted in a preceding consultation process. Any failure in this respect would not make out the failure to consult ground of judicial review because the Minister had a discretion as to how to conduct the consultation.[40]
[40]At [85].
Likewise, he held that the Minister was entitled to focus the consultation on notifiers under the Act, and it was not irrational not to consult other “undefined smoking cessation providers” during a targeted consultation.[41] The necessary Crown entities were consulted, albeit separately from the broader consultation process.[42] The Judge noted that the submission provided by Dr McRobbie (who had been chair of the TEAG in 2018) for Te Whata Ora | Health New Zealand said:[43]
… that a reduction of the nicotine level to the proposed 28.5 mg/mL was arguably “justifiable as the landscape has changed” since the recommendation of the Technical Working Group in 2018, and that the position of Te Aka Whai Ora was that they “strongly support[ed] the recommendations towards making [vaping products] less addictive for youth” by reducing nicotine levels.
[41]At [88].
[42]At [86].
[43]At [86]. Alterations in original.
The Judge observed it was also not improper for the Minister to have a preference in respect of the new nicotine level. Further, where there is no enforceable duty to consult, some deficiency in consultation did not result in invalidity.[44]
Breach of legitimate expectations
[44]At [87].
Turning to consider whether there was a legitimate expectation, and corresponding duty, for certain people to be consulted when making and/or amending the 2021 Regulations, the Judge noted that cl 15 was a general regulation which applied to the public and was aimed at improving the health of the New Zealand population. It did not reach the threshold of being a regulation which affects certain parties in a way that is different from the interests of the general public, thus requiring consultation with those parties.[45]
[45]At [89]–[91]. This is the test in Fowler & Roderique v Attorney-General [1987] 2 NZLR 56 (CA).
The Judge also considered that if there were a legitimate expectation of consultation, those who had a commercial interest in the 2021 Regulations were consulted and that consultation was adequate.[46] The Minister had sufficient information before her to make the referral to Cabinet. The information had been checked through the consultation process and followed an earlier consultation regarding single-use (as opposed to reusable) vaping devices.[47]
[46]Judgment under appeal, above n 3, at [92].
[47]At [95].
The Judge rejected the claim that there was a legitimate expectation that each time a regulation concerning maximum nicotine strength was amended, independent experts would be consulted. He said such an expectation must be reasonable and usually based on a representation made about consultation which was clear, unambiguous and unqualified.[48] If the commitment is implied based on past practice, it must be unambiguous, regular, well-established and clear as to the future commitment.[49] Such a legitimate expectation did not arise in this case. The fact the Ministry had used the TEAG in developing the 2021 Regulations did not mean there was a representation that the Ministry would engage with the TEAG (or a similar body) in future amendments, nor was there evidence that this was a regular, established practice which ALT could reasonably expect would occur in this case.[50]
Failure to take into account relevant considerations
[48]At [101].
[49]At [101]–[102], citing Green v Racing Integrity Unit Ltd [2014] NZCA 133, [2014] NZAR 623.
[50]Judgment under appeal, above n 3, at [103].
The Judge dealt briefly with ALT’s argument that the decision to amend the regulations was based on inadequate and misleading material, and as a consequence had failed to take into account relevant considerations.[51]
[51]The Judge incorrectly said at [105] that the “proposition” was based on the views of Professor Bullen and Benjamin Youdan, two experts called by ALT, “that vaping is harmless and more nicotine in vape products does not make them more addictive”. This was not the evidence of the two experts, but also the argument was based on Air Nelson Ltd v Minister of Transport [2008] NZCA 26, [2008] NZAR 139, to which the Judge did not refer.
The Judge accepted the respondent’s argument that it was unnecessary to put competing views before the Executive Council, as being “at the apex of the governmental structure” they could necessarily only deal with major issues in a broad way.[52] He was satisfied that the Minister’s attaching to her recommendation to Parliament the appendices referred to above at [45], with the results of the consultation process, was sufficient to demonstrate the recommendation to amend the 2021 Regulations was based on adequate information and followed an adequate process.[53]
Unreasonableness and outside scope
[52]Judgment under appeal, above n 3, at [107], citing CREEDNZ Inc v Governor-General, above n 31, at 177–178 per Cooke J; at 188 per Richardson J; and at 206 per McMullin J.
[53]Judgment under appeal, above n 3, at [107].
ALT had pleaded that the amendment was arbitrary and/or unreasonable, did not address a safety issue, and was therefore outside the scope of the Act.[54]
[54]At [108].
This ground of review was abandoned prior to the High Court hearing and the Judge was advised accordingly. He nonetheless proceeded to address the issue and found that the 2023 Regulations were within the scope of the empowering provision and were not unreasonable or ultra vires.[55]
Application to adduce further evidence
[55]At [127]. The fact the Judge addressed a ground that had been abandoned is the subject of one of the agreed issues on appeal. In oral submissions, Mr Laurenson KC for the respondent said he had nothing further to add to the written submissions filed. We refer to this point briefly when discussing the issues on appeal.
On 8 November 2024, ALT applied to adduce new evidence in support of the appeal. The evidence is in the form of a further affidavit of Mr Pryor, annexing a letter from the Ministry that says it did not possess documents to support its assertion that “higher levels of nicotine mean an increase in the risk of addiction”. ALT say that letter is relevant to this Court’s assessment of whether the consultation was flawed.
The respondent opposes the application on the basis the alleged issue is irrelevant to any sustainable ground of judicial review. In its notice of opposition, the respondent also says ALT appear to be proceeding on the basis that the letter is inconsistent with an affidavit of Dr Andrew Old filed by the Ministry in the substantive proceeding. The respondent says it is not inconsistent and the notice of opposition addresses discrepancies in the two pieces of evidence.
In order to adduce further evidence on appeal, this Court must be satisfied the evidence is fresh, credible and cogent.[56] It will not be regarded as fresh if it could, with reasonable diligence, have been produced at first instance.[57] There is no doubt the evidence is fresh and credible as it was created by the Ministry’s Chief Legal Advisor in response to an Official Information Act 1982 request after the High Court proceeding had concluded.
[56]Court of Appeal (Civil) Rules 2005, r 45. See also Erceg v Balenia Ltd [2008] NZCA 535 at [15], citing Paper Reclaim Ltd v Aotearoa International Ltd (Further Evidence) (No 1) [2006] NZSC 59, [2007] 2 NZLR 1.
[57]Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA) at 192.
However, we are not satisfied it is cogent, and therefore that it should be admitted. Such material has only peripheral relevance to the issues in the case. We therefore decline the application to adduce further evidence.
The agreed issues on appeal
The issues on appeal, helpfully agreed as of 19 November 2024, are set out below. We adopt the same headings and structure:
(a)Consultation:
1.Was there a common law duty on the Ministry to consult on the halving of the maximum nicotine strength in vaping products?
2.If there was no common law duty to consult, given that the Ministry decided to embark on a consultation, was there a duty to consult to a certain standard and what is that standard?
3.If there was a duty to consult, was the consultation in the circumstances of this case carried out to the required standard?
(b) Air Nelson:
1.Did the Ministry provide fair, accurate and adequate advice to Cabinet in the July 2023 Cabinet paper and its attachments, and/or the August 2023 Cabinet paper and its attachments, including the PHA advice?
2.If there was a failure to provide fair, accurate and adequate advice to Cabinet in the July 2023 Cabinet paper and its attachments, and/or the August 2023 Cabinet paper and its attachments, including the PHA advice, is there a reviewable error?
(c)Unreasonableness:
6.Did [Churchman J] err in making findings on a ground of review that was not advanced by the appellants?
7.Is this ground a reviewable error?
(d)Costs appeal:
8.Did [Ellis J] in [the costs award] err in declining to order indemnity costs against the respondent?
ALT’s arguments on appeal were more focused than before the High Court. Of the issues noted above, ALT’s two key arguments are that the Minister had a duty to (1) properly consult and (2) provide adequate advice to Cabinet (the second is referred to as the “Air Nelson ground of review”) and failed in both respects.
The primary relief sought by ALT is an order quashing the 2023 Regulations and reinstating the maximum freebase nicotine strength of 50 mg/mL.
Issue 1: Consultation
ALT acknowledge there was no statutory duty to consult, but submit there was a common law duty to consult in the making of the 2023 Regulations. Observing that there is no comprehensive procedural code on consultation in the Act, ALT suggest, relying on Minotaur Custodians Ltd v Wellington City Council, that a general common law duty to consult may exist.[58] ALT further submit that the Ministry had a common law duty here because of the significant public health and commercial impacts of halving the nicotine strength.
[58]Referring to Minotaur Custodians Ltd v Wellington City Council [2016] NZHC 238, [2016] 3 NZLR 92 at [48].
Alternatively, ALT argue that where a Minister who is not required to consult, chooses to consult, they are under a duty to carry out that consultation properly.
ALT contend that the consultation carried out in this case was flawed, and thus ran afoul of either the common law duty to consult, or the duty to carry out a voluntary consultation properly. ALT’s submissions focus heavily on the claimed flaws in the consultation process. These are similar to those advanced in the High Court. We set them out below:
(a)The consultation documents were not clear and as a result the consulted parties did not understand that the proposed change was a drastic reduction from the previously permitted nicotine levels. ALT argue that the consultation documents presented the proposed change as a mere “clarification” of the original regulation, when in fact it was a substantive policy shift. They say the amendment reversed the previously accepted interpretation that the 50 mg/mL limit applied to freebase nicotine, and instead imposed the limit on the total nicotine salt compound—thereby halving permissible freebase nicotine levels. This shift carried significant regulatory and commercial consequences, but the consultation materials did not transparently disclose those effects. ALT argue this framing misled consultees about the nature and impact of the proposal.
(b)The consultation documents unreasonably asserted that the reduction in maximum freebase nicotine strength would reduce the likelihood of youth addiction instead of opening that matter for submissions.
(c)The consultation did not include smoking cessation providers, which was irrational and meant that the consultation process lacked their insights.
(d)The consultation was too brief, lasting only two weeks, which is why many groups invited to submit did not do so.
Was there a common law duty on the Minister to consult?
We do not agree with ALT’s submissions that there was a common law duty to consult.
There is no duty to consult under the statutory scheme.
The purpose of the Act, as provided in s 3A, includes to provide for regulation of vaping devices in a way that seeks to minimise harm, especially harm to young people and children. Under s 84(1) of the Act the Governor-General makes the regulations by Order in Council.
As this Court said in CREEDNZ Inc it would be “very unusual” for Parliament to impose on the Executive Council a duty to consider the views of all property owners affected by a proposal who happened to want to make representations in respect of subordinate legislation.[59] Cooke J quoted from a decision of the Supreme Court of Canada that there was “no need for the Governor in Council to give reasons for his decision, to hold any kind of a hearing, or even to acknowledge the receipt of a petition”.[60] That decision, as Cooke J said, “illustrates how slow the Courts are to treat the Executive Council or Cabinet as under any duty to follow a procedure at all analogous to judicial procedure”.[61] In addition, the express provision for consultation there also told against the existence of an implied wider provision, the Act contained a careful pattern of procedural rights, and the decision affected the whole of New Zealand rather than the personal circumstances of an individual.[62]
[59]CREEDNZ Inc v Governor-General, above n 31, at 177–178 per Cooke J. See also at 188 per Richardson J, and at 206 per McMullin J.
[60]At 178 per Cooke J, quoting Attorney General of Canada v Inuit Tapirisat of Canada [1980] 2 SCR 735 at 757.
[61]CREEDNZ Inc v Governor-General, above n 31, at 178 per Cooke J.
[62]At 178.
We do not accept ALT’s proposition that the absence of a comprehensive code of consultation in the Act suggests a common law duty to consult should exist. To the contrary, as in CREEDNZ Inc, we consider a telling factor against such a duty is that the Act specifically defines when there is a duty to consult. In particular s 3AB, as it stood at the time, required the Director-General, when approving applications for tobacco retailers, to consult with various Māori interests, but when preparing regulations for tobacco products it only required the Minister to consider the risks and benefits to Māori. It did not impose, either in that context or elsewhere, a duty to consult before preparing regulations.
There were other provisions in the Act which also expressly provided when a person should be consulted; for example:
(a)suspending or cancelling the approval of a smoked tobacco retailer;[63]
(b)determining an application process for the approval of smoked tobacco retailers or the maximum number of approved smoked tobacco retail premises;[64]
(c)before suspending or cancelling an approval or temporary approval of a smoked tobacco product for sale, manufacture, import or supply in New Zealand;[65] and
(d)when cancelling or suspending notification of a notifiable product.[66]
[63]Smokefree Environments and Regulated Products Act, ss 20J–20K.
[64]Sections 20L–20N.
[65]Sections 57D–57E.
[66]Sections 74–75.
We consider that the number of express provisions for a duty to consult strongly suggests that if Parliament had intended to require a general duty of consultation, it would have expressly done so.
For the above reasons we conclude that the Minister had neither a statutory nor common law duty to consult when promulgating regulations under the Act.
Given the Ministry decided to consult, was there a duty to consult to a certain standard?
The relevant question is repeated as follows:
If there was no common law duty to consult, given the Ministry decided to embark on a consultation, was there a duty to consult to a certain standard and what is that standard?
ALT relies primarily on Mallon J’s statement in Minotaur, where she wrote:[67]
[61] I consider that, having decided to carry out consultation and to consult specifically with those likely to be directly affected, it was irrational not to consult with landlords who were directly affected. Put another way, if residents in the area were considered to have an interest sufficient to warrant consultation with them, landlords were entitled to expect that consultation would also be carried out with them. Through its process the Council succeeded in obtaining a range of community views. Those views may have included the views of some landlords. But, because landlords were not identified as being directly affected, this was haphazard. Minotaur was directly affected but it was unaware of the proposed changes. It therefore did not have the opportunity to be heard on the changes that affected it before the decision was made.
[67]Minotaur Custodians Ltd v Wellington City Council, above n 58.
On appeal this Court said, however, that it would be “difficult” to establish a concurrent common law duty to consult except in “truly exceptional cases”.[68]
[68]Wellington City Council v Minotaur Custodians Ltd [2017] NZCA 302, [2017] 3 NZLR 464 at [48].
Further, the application of common law rules around consultation has to be considered in the statutory context. In Minotaur, that was the Local Government Act 2002. There was an obligation in pt 6 of that Act to consider the views of interested and affected parties. The landlords were directly affected and the Council could put forward “no logical rationale” as to why they were not consulted.[69] As this Court recently stated, the form consultation should take “will vary materially depending on the circumstances of the case”.[70]
[69]Minotaur Custodians Ltd v Wellington City Council, above n 58, at [60].
[70]Woodgate Ltd v Palmerston North City Council [2024] NZCA 465, (2024) 26 ELRNZ 236 at [20], citing CTS Investments LLC v Palmerston North City Council [2023] NZHC 1742, (2023) 24 ELRNZ 919 at [39].
This is a completely different context from Minotaur. This case involves delegated legislation of a general public health nature. As Churchman J noted, consultation in that context is a “healthy practice”, but that does not lead to the imposition of an enforceable duty, unless created by statute.[71]
[71]Judgment under appeal, above n 3, at [81].
ALT’s position appears to be that the standard required after voluntarily embarking on a consultation would be the same as where a decision-maker is under a legal requirement to consult—that is to consult properly. ALT relied in this regard, both for the existence of a duty and standard of consultation, on decisions from the United Kingdom.[72] However, as we have said, the nature of consultation required in an area governed by statute in New Zealand depends on the statutory context and the circumstances of the case.
[72]R (on the application of MP) v Secretary of State for Health and Social Care [2020] EWCA Civ 1634, [2021] 4 All ER 326 at [29], citing Regina v North and East Devon Health Authority, Ex parte Coughlan [2001] QB 213 (CA) at [108]; and Regina (Moseley) v Haringey London Borough Council [2014] UKSC 56, [2014] 1 WLR 3947 at [25]–[28].
Consultation may or may not be obligatory in different cases, but there is no doubt that it is often good governance practice. It would be perverse for the courts to incentivise less consultation rather than more by holding public bodies to more stringent standards if they voluntarily decide to do so. That is especially relevant here, where, as above, our view is that the Ministry was under no obligation to consult and could in theory have made the 2023 Regulations without doing so. As this Court observed when dismissing a similar challenge in Lab Tests Auckland Ltd v Auckland District Health Board, there is a difference between consultation undertaken as a matter of good practice and consultation undertaken in accordance with an obligation to undertake it, enforceable through judicial review.[73]
[73]Lab Tests Auckland Ltd v Auckland District Health Board [2008] NZCA 385, [2009] 1 NZLR 776 at [314].
We conclude that in the circumstances of this case where the Minister had no duty to consult but nonetheless has consulted widely, that does not create a duty to do so. Any duty to consult, and its extent, is not free-standing but derives from the statutory and factual context.[74] Neither suggests there was such a duty here.
If there was a duty to consult, was the consultation carried out to the required standard?
[74]Bank Mellat v Her Majesty’s Treasury (No 2) [2013] UKSC 39, [2014] AC 700 at [146] per Hope LJ (dissenting). See also at [31] per Sumption LJ.
The above finding disposes of this ground of review. We observe only, in agreement with the respondent’s submission, that in any event the consultation that did take place was sufficient. We touch briefly on the flaws submitted by ALT.
ALT’s first point appears to be more one of inadequate advice, than failure to consult. We agree with ALT that the original consultation documents were in part framed as correcting a misconception about the 2021 Regulations. This was corrected by the later PHA advice. In any event we do not consider the point material. There was no risk of misapprehension as to the fundamental issue being addressed. As the respondent points out, and the Judge found, the consultation process targeted organisations that could be assumed to have had significant contextual knowledge.[75] While some may not have been aware the proposed regulations involved a change, it is clear those involved were aware that the end result of the proposal would be a maximum freebase nicotine strength of 28.5 mg/mL in vaping devices. Whether that was a “change” or a “clarification” was not significant. It was the ultimate proposed level of nicotine that was significant. The submissions that were received engage with that point, including very differing submissions from experts and health officials.
[75]Judgment under appeal, above n 3, at [88].
In similar vein, the consultation documents contained a number of assertions as ALT submits, including that the reduction in maximum freebase nicotine strength would reduce the likelihood of youth addiction. But this was not inappropriate when this was the opinion that had been formed by the responsible Minister and officials, and the primary targets of the consultation were expert organisations. Those who disagreed were free to say so. This is not a case where stakeholders were misinformed by the consultation documents. They were all, including ALT and other industry participants in particular, alive to the significance of the consultation and well-versed in the subject matter.
Likewise, as noted above, we do not consider the Ministry was required to consult smoking cessation providers (or any specific group) or that failure to do so would have amounted to a breach of duty. The Ministry was entitled to target those organisations it thought would have the most subject matter expertise or otherwise be the most useful. In this case, the Ministry was entitled to choose to consult more extensively with agencies directly involved in regulatory enforcement, public health policy, and tobacco control strategy. The mere fact that some potentially interested parties—such as providers of smoking cessation services—were not formally consulted does not render the process improper or inadequate.
We note further that it was open to the Ministry to conclude that consultation with cessation providers, while possibly desirable, was not indispensable. The record indicates that the Ministry had access to a substantial evidentiary base concerning cessation services and their role in tobacco control, including previous engagement with cessation providers in other fora. Not specifically consulting in this particular instance does not mean the Ministry acted in ignorance or disregard of their views. Consultation in this context would not require that every potentially affected party be directly engaged in every stage of policy formation. It would be sufficient that the Minister had regard to relevant considerations and the different views provided. Her evidence is that she did so and there is nothing to indicate otherwise.
As to the consultation being allegedly too brief, the Minister has explained the length of consultation in her affidavit. This particular consultation had to be viewed in the context of the earlier consultation over reducing the freebase nicotine strength of single-use vaping devices and as the Minister explained, there were only a limited number of remaining Cabinet meetings. And again, this was a technical area where the stakeholders would already know or have available the information on which to make a submission. The law does not mandate a maximalist approach to consultation, and the Court should be slow to second-guess the timeframe appropriate to a particular case, absent some clear failure of rationality or fairness.[76]
[76]See Minotaur Custodians Ltd v Wellington City Council, above n 58, at [55] for a discussion on rationality; and Regina (Moseley) v Haringey London Borough Council, above n 72, at [25]–[28] for a discussion on fairness.
We conclude this discussion by observing that none of the groups whom ALT complain were not consulted, or with whom consultation was allegedly defective, have now provided evidence of what they would have said or done.
On balance, therefore, if there was a duty to consult, ALT would not have persuaded us that more was required.
Issue 2: Air Nelson
ALT submit, relying on this Court’s decision in Air Nelson Ltd v Minister of Transport, that the Ministry was under a duty to provide fair, accurate and adequate advice to Cabinet and failed to do so.[77] There was a lack of balance in the advice provided such that only one rational decision was left available to Cabinet.
[77]Air Nelson Ltd v Minister of Transport, above n 51.
ALT focus again on an argument that the July Cabinet paper (see above at [40]) and, to a lesser extent, the August Cabinet paper (see above at [45]) both failed to alert Cabinet to the significance of what was proposed, and to the fact that the amendment amounted to a major reduction in permitted freebase nicotine strength in vaping devices.
Issue is taken over many of the statements made, particularly in the July Cabinet paper: ALT say the advice is incorrect, insufficiently fulsome, and omits relevant information. These include by way of example:
(a)The Cabinet paper asserted that the proposal would improve equity for Māori and Pacific peoples, when this was contrary to the advice that the Ministry had received from one group.
(b)The Cabinet paper asserted that there would be no deleterious effect on smoking cessation, without referring to expert evidence to the contrary.
(c)The Cabinet paper advised that a majority of submissions from clinical professional bodies, non-governmental organisations, and health professionals supported the proposal, without referring to contrary evidence, and without observing that a majority of those submitters had not appreciated that the proposed change was a reduction in the maximum freebase nicotine strength.
(d)The Cabinet paper suggested that the proposal would impact only 5 per cent of the vaping products on the market, when the Ministry knew that the correct figure was around 80 per cent.
(e)The follow-up PHA advice dated 9 August 2023 appended to the August Cabinet paper was materially inaccurate in a number of ways, mostly in terms of the likely impact of the reduction on smoking cessation rates and youth use of high-strength vaping products.
Did the Ministry fail to provide advice on matters Cabinet was required to address?
We have restated the question because we consider that ALT’s argument mischaracterises this Court’s decision in Air Nelson. In Air Nelson the Court explained that the ground of judicial review that it was upholding was a failure to take into account relevant considerations of the kind this Court had recognised in CREEDNZ Inc.[78] As Cooke J said in CREEDNZ Inc:[79]
What has to be emphasised is that it is only when the statute expressly or impliedly identifies considerations required to be taken into account by the authority as a matter of legal obligation that the Court holds a decision invalid on the ground now invoked. It is not enough that a consideration is one that may properly be taken into account, nor even that it is one which many people, including the Court itself, would have taken into account if they had to make the decision. And when the tests are whether a work is likely to be in the national interest and is essential for one or more of the purposes specified in s 3(3), it is not easy to assert of a particular consideration that the Ministers were legally bound to have regard to it.
… there will be some matters so obviously material to a decision on a particular project that anything short of direct consideration of them by the Ministers collectively would not be in accordance with the intention of the Act.
[78]Air Nelson Ltd v Minister of Transport, above n 51, at [55].
[79]CREEDNZ Inc v Governor-General, above n 31, at 183 per Cooke J.
CREEDNZ Inc remains the leading authority on mandatory and permissive considerations.[80] Air Nelson involves an application of these principles in a particular context.
[80]It is also applied in the United Kingdom, see R (on the application of Friends of the Earth Ltd) v Secretary of State for Transport (Heathrow Airport Ltd, interested party) [2020] UKSC 52, [2021] 2 All ER 967 at [117].
We agree with the respondent that ALT’s reliance on Air Nelson is misguided. Air Nelson concerned the successive Ministers’ use of their power to increase landing charges at the Hawke’s Bay Airport.[81] Air Nelson was the major customer of that airport and opposed the increases. The Minister in that case, relevantly, was not adequately informed of the reasons for Air Nelson’s opposition to the proposed charge increases. In particular, he was not told of several specific facts on which Air Nelson’s opposition was based.[82] As a result, he had not taken into account—through no fault of his own—considerations that were mandatory when making his decision.[83] This Court held that the Minister had to have been personally equipped with a “fair, accurate and adequate report” upon which the decision could be made.[84] This is a vastly different scenario to the making of general regulations focused on significant public health issues.
[81]Air Nelson Ltd v Minister of Transport, above n 51, at [2].
[82]At [40].
[83]At [55].
[84]At [53].
We do not consider Air Nelson is authority for the proposition that the conflicting views of a number of parties should be put before Cabinet when making public health regulations or for the proposition that the Ministry’s advice should be subject to scrutiny of the nature detailed at [107].
Unlike decisions where the Minister is expected to balance the private or quasi‑private interests of a small number of discrete parties, the present Cabinet decision was a high-level policy decision made by a large apex‑level body of time‑scarce but democratically accountable politicians. In that context, the degree to which individuals have a legally enforceable right to be heard or to have their particular view put forward is far diminished. If dissatisfied, the primary mechanism for individual concerns to be heard is the democratic process.
We refer again to this Court’s observation in CREEDNZ Inc that the Executive Council is at the apex of the Government structure and necessarily only deals with major issues in a “broad way”.[85] It is not the courts’ role to supervise political assessments of the merits of complex policy alternatives on which experts differ.
[85]CREEDNZ Inc v Governor-General, above n 31, at 177.
In any event the information provided to Cabinet, taken together, was sufficiently balanced, including the PHA advice and the summary of submissions, being the two appendices provided to Cabinet in August.
The PHA advice set out the two competing public health interests at play, explained the TEAG’s advice in 2018, and explained the dispute and the vaping industry’s position. It explained that the Ministry and industry had different views as to the interpretation of cl 15 in the 2021 Regulations, and explained that the Ministry had conceded the point in ongoing judicial review proceedings, with the effect that products with freebase nicotine strengths of up to 50 mg/mL were being sold at that time.
More particularly, the PHA advice specifically included the following advice, a summary of which we adopt from the respondent’s submissions:[86]
52.1 Vaping is a smoking cessation tool. This is extensively covered, including supporting research. This includes that vaping is more effective than nicotine replacement therapies. The [TEAG] in 2018 had advised on 60 mg/mL so that smokers would receive an equivalent “hit” of nicotine as to that of smoking a cigarette. Higher levels of nicotine may better support smoking cessation and that some vaping industry representatives contend that concentrations of 35–50 mg/mL are required to assist people quit.
52.2 There is evidence indicating that with lower levels of nicotine strength, experienced vapers may engage in compensatory puffing, increasing overall consumption.
52.3 Having an effective alternative to cigarettes will be particularly important as the smoked tobacco regulatory regime takes over.
52.4There are health risks with vaping and the long-term effects are not fully understood.
[86]Footnotes omitted.
The numerous criticisms advanced by ALT of specific statements made by the Ministry regarding improving equity, specific reports not being cited, alleged misstatements about the effect on products being marketed, and so on, are all matters for debate that do not amount to a failure to take into account mandatory considerations in the way described in CREEDNZ Inc and applied in Air Nelson. Further, some of these would appear to fall more under the heading of irrationality or mistake, neither of which is argued.
We conclude that the Ministry’s advice to the Minister and the Minister’s advice to Cabinet did not fail to address considerations that the Ministers were required to address as a matter of statutory interpretation. We do not consider that the Ministry was obliged to advise of the industry’s arguments, or of any particular parties’ arguments, in a case such as this. The counterarguments were provided to Cabinet at a macro level. The Ministry was entitled to make its own assessment of the merits of the regulations and to report in a relatively brief, rather than fulsome, manner to Cabinet. Unlike in Air Nelson, the Minister and Cabinet were sufficiently informed of the opposing view in lowering the nicotine level.
Given our conclusions above, it follows there is no reviewable error on this ground.
Issue 3: Unreasonableness
In written submissions ALT contend that the Judge “overrode” their litigation decision to abandon these grounds of review. As a “related point”, ALT “maintain their argument” that an affidavit of Professor Peter Edwards to which they objected in the High Court had been wrongly admitted.
This ground was not further advanced in oral submissions. It was unnecessary for the Judge to address the withdrawn grounds of review, but this must have been through inadvertence and could not be characterised as overriding ALT’s litigation decision. Clearly this cannot amount to an error that changes the outcome or impugns the judgment. It makes no difference. While it is surprising that the Judge addressed a pleading that had been withdrawn, taking the point on appeal is even more so.
The same applies to the “related” argument about Professor Edwards’ affidavit. The affidavit was not referred to by the High Court Judge, nor do we refer to it. There is no need to consider it further.
Issue 4: Costs appeal
ALT say that Ellis J’s refusal to order indemnity costs was in error.[87] Indemnity costs should have been awarded because the Ministry’s case was “hopeless” and/or there was deliberate delay in conceding defeat.
[87]Costs award, above n 2.
Rule 14.6(4) of the High Court Rules 2016 (the Rules) provides that a court may order that the costs payable to a party are the “actual costs, disbursements, and witness expenses reasonably incurred by a party” (indemnity costs) if:
(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
(b)the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or
(c)costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or
(d)the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or
(e)the party claiming costs is entitled to indemnity costs under a contract or deed; or
(f)some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
In Bradbury v Westpac Banking Corporation, this Court explained that indemnity costs may be ordered where a party has “behaved either badly or very unreasonably”.[88] To justify an order for indemnity costs the misconduct must be “flagrant”,[89] and the Court in Bradbury gave the following non-exhaustive categories of such conduct:[90]
(a)the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;
(b)particular misconduct that causes loss of time to the court and to other parties;
(c) commencing or continuing proceedings for some ulterior motive;
(d)doing so in wilful disregard of known facts or clearly established law; or
(e)making allegations which ought never to have been made or unduly prolonging a case by groundless contentions, summarised in French J’s “hopeless case” test.
[88]Bradbury v Westpac Banking Corporation, above n 26, at [27(c)].
[89]At [28].
[90]At [29].
The “hopeless case” test at (e) above refers to an observation made by the later Chief Justice of Australia that indemnity costs may be awarded where a “party persists in what should on proper consideration be seen to be a hopeless case”.[91] This is because “if the case is truly hopeless the action must be presumed to have been commenced for some ulterior motive”.[92]
[91]J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No 2) [1993] FCA 70, (1993) 46 IR 301 at 303; affirmed in Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZCA 348, (2014) 22 PRNZ 322 at [17].
[92]Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue, above n 91, at [27], citing Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 (FCA).
ALT submit that Ministry officials knew, or ought to have known, had they undertaken basic due diligence (conducting internal discussions, and reviewing the TEAG minutes, email exchanges, draft consultation material and product safety standards), that they had drafted cl 15 to regulate the freebase nicotine strength of vaping devices, not the strength of the nicotine salt compound. Further, they say that other indicators—including the Ministry’s internal communications, public consultation document, the actual operation of the Ministry’s register, and the purpose of the empowering Act and broader regulatory scheme—also militated in favour of ALT’s preferred interpretation of cl 15 of the 2021 Regulations.
We do not consider the Ministry’s case was hopeless or that there was any good basis to believe that the Ministry acted from ulterior motives. In fact, the Judge said in her costs decision that an inference of ulterior motive was not suggested.[93] The same applied before this Court. Such an inference could not properly be drawn.
[93]Costs award, above n 2, at [19].
We agree with the Judge that the Ministry’s case as to interpretation of cl 15 was arguable. Again, as she said:[94]
[20] Rather, cl 15 provided that “[t]he strength of nicotine salt in a vaping substance must not exceed 50 mg/mL”. A relatively straightforward reading of those words suggests that (as the Ministry said) it was the nicotine salt content sought to be regulated. While I accept that there was factual evidence about the TEAG’s recommendations that pointed the other way, it would be unusual for evidence about regulatory purpose or intent to prevail over what were relatively clear statutory words. And because the point was ultimately conceded and agreed, the correct interpretation is not something on which this Court has ever had to grapple; my own view is that it was a matter on which opinions could have (and did) legitimately differ.
[94]Alteration in original.
While there was evidence in favour of ALT’s interpretation having been intended, the actual language in the 2021 Regulations went the other way. As the Judge said, the relatively clear language of the regulation would normally prevail.[95] ALT’s argument was not so decisive as to lead to a conclusion that the Ministry’s case fell under the “hopeless” category in Bradbury. As the respondent asserts, it was advantageous to ALT that the Ministry did take the practical step to concede when they did.
[95]At [20].
The fact that the Ministry was drawing up a new “clarifying” clause was only common sense in the context of the dispute and does not demonstrate a hopeless case.
As to deliberate or unacceptable delay, ALT were formally advised of the Ministry’s intention to concede by letter of 25 July 2023, three weeks before the scheduled hearing. The Ministry had advised the Minister of its intention to concede the proceeding on 26 May, two months earlier, and, shortly after 3 July had declined to allow a declaration to be made by consent on similar terms to the declaration the Judge eventually made.[96]
[96]At [4].
While the delay was undesirable, it was a significant decision for the Ministry to take the step that it did. The decision would have involved the Minister and potentially other agencies such as Te Tari Ture o te Karauna | Crown Law. As can be seen from the procedural background to this case there were a number of moving parts. We do not consider in these circumstances any delay was at a level that justified indemnity costs.
We also agree with the Judge’s observation that because ALT were allowed to amend the judicial review proceeding, and the amended proceeding had the same substratum as the original, it is unlikely that all the work done in that period of delay was wasted. This was clearly not a case where the proceedings ended at the point of concession. In all the circumstances, the uplift the Judge allowed of $20,000 on top of 2B costs was an appropriate response.[97]
Result
[97]At [21]–[22].
The application to adduce further evidence is declined.
The appeals are dismissed.
The appellants must pay the respondent costs on a band A basis, together with usual disbursements.
Solicitors:
Powle & Hodson Lawyers, Auckland for Appellants
Te Tari Ture o te Karauna | Crown Law Office, Wellington for Respondent
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