Alt New Zealand Ltd v Attorney-General
[2023] NZHC 2300
•23 August 2023
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-146
[2023] NZHC 2300
UNDER the Judicial Review Procedure Act 2016 and under the Declaratory Judgments Act 1908 IN THE MATTER
of an application for judicial review, and for declarations under the Declaratory Judgments Act 1908, in respect of clause 15 of Schedule 5 to the Smokefree
Environments and Regulated Products Regulations 2021
BETWEEN
ALT NEW ZEALAND LTD
First Applicant
AND
VEC LTD
Second Applicant
AND
MYRIAD PHARMACEUTICALS LTD
Third Applicant
AND
ATTORNEY-GENERAL
Respondent
Hearing: 16 August 2023 Counsel:
D A Laurenson KC and L van Dam for Applicants V Howell and J Gorman for Respondent
Judgment:
23 August 2023
JUDGMENT OF ELLIS J
ALT NZ LTD & ORS v ATTORNEY-GENERAL [2023] NZHC 2300 [23 August 2023]
[1] The applicants have sought interim orders preventing the promulgation and/or enforcement of regulations reducing the maximum nicotine strength of reusable nicotine salt vaping products from 50 mg/mL to 28.5 mg/mL, pending the determination of their substantive application for judicial review. They say such regulations will have an immediate and chilling effect on their businesses and immediate public health consequences for tobacco smokers who are using, or who might use, high nicotine vaping products to help with smoking cessation. In their substantive claim, they say the decision to amend current regulations to achieve this reduction in allowable nicotine strength has been tainted by a flawed and unnecessarily rushed consultation process and is not supported by the scientific research. They say the regulations will be ultra vires because they would be contrary to, or would not meet, the purposes of the empowering legislation, the Smokefree Environments and Regulated Products Act 1990 (the Act).
Preliminary comment
[2] It is necessary to note at the outset that the relevant decision-making landscape has, in the six days between the hearing of the application and the delivery of this judgment, changed in what I consider to be a material way. Put simply, at the time of the hearing (Thursday 16 August) it was understood that the proposed amendment of the Smokefree Environments and Regulated Products Regulations 2021 (the Regulations) had not yet been considered or approved by Cabinet. While the thrust of the proposed amendment could reasonably be inferred from the material before the Court, some of the detail was not known.
[3] And although it was understood that the matter would very likely go to Cabinet on Monday 21 August, it was realistically accepted by the applicants that, even if the Court could properly make interim orders aimed at preventing that from happening (which in my view is far from clear) it was unlikely that this decision could, in fact, be delivered before then. Accordingly, the principal focus at the hearing was on orders aimed at steps consequential to the anticipated Cabinet decision.
[4] The Cabinet decision has now been made. In general terms, it is as anticipated by the applicants. The relevant Order in Council was signed by the Governor-General very shortly thereafter.
[5] As a result of the Cabinet decision, however, further information—the submission to the Cabinet Legislation Committee by the Minister of Health (the Minister), the Cabinet minute recording the decision and two supporting documents— have now been released to the applicants and the Court.
[6] It is not only likely that those documents will result in amendments to the substantive claim but (as I explain later) they also have an impact on the application for interim orders, as I discussed with counsel at a telephone conference yesterday.
[7] The other consequence of the altered landscape is that this judgment takes an unusual form. The first (and greatest) part of it proceeds on the basis of the position as it was six days ago, and as the application was argued before me. But it is also necessary to consider the very recent Cabinet decision and its impact, which I do at the end.
The applicants
[8] All three of the applicant companies (VEC Ltd, ALT NZ Ltd and Myriad Pharmaceuticals Ltd) are companies founded and incorporated by Mr Benjamin Pryor between 2015 and 2018. More specifically:
(a)VEC Ltd manufactures and imports vaping products, and is also a retailer trading under the names ‘Vapo’ and ‘Value Vaper’;
(b)ALT Ltd manufactures a single product, the “alt” device, which uses replaceable pods. The alt device is distributed through over 4,500 retail stores and petrol stations; and
(c)Myriad Pharmaceuticals Ltd provides research, development, and quality control services to VEC and ALT, and also manufactures e-liquids for VEC and flavours for the alt product line, employing its own scientists and pharmacologists for this task.
[9] Between them, the applicants own 30 retail stores, a factory, a laboratory, a warehouse, a head office, and a large distribution centre. They employ 259 staff in roles ranging from manufacture, assembly and design, to engineering, pharmacy, finance, human resources, retail, technology, sales and marketing.
[10] Notably, the applicants’ position in these proceedings also has support from Action on Smoking and Health New Zealand (ASH), and other experts in the field of smoking cessation who have provided evidence in support of the claim.
The regulation of nicotine strength in vaping products
[11] The use, marketing and sale of vaping products are regulated by the Act. The purposes of the Act are set out in s 3A and focus principally on the regulation of smoked tobacco products and, more particularly, reducing the availability, use and harmful effects of these. But, since 2020, a further purpose has been to “provide for the regulation of notifiable products in a way that seeks to minimise harm, especially harm to young people and children”.1 Vaping products are included in the Act’s definition of “notifiable products”.2
[12] Section 84 of the Act authorises the promulgation of regulations relating to notifiable products, including regulations “prescribing safety requirements for regulated products that are notifiable products”.3
1 The Act was amended to encompass vaping by the Smokefree Environments and Regulated Products (Vaping) Amendment Act 2020.
2 Smokefree Environments and Regulated Products Act 1990, s 2 definition of “notifiable product”; Under pt 4 of the Act notified products must not be sold in New Zealand unless it has been notified by a New Zealand resident or a company registered in New Zealand in accordance with that part and complies with safety requirements.
3 Smokefree Environments and Regulated Products Act, s 84(a).
[13] The Regulations were promulgated pursuant to s 84. Amongst other things, the Regulations prescribe the maximum nicotine level in vaping substances.4
[14] It is necessary to interpolate at this point that vaping liquids can deliver nicotine in one of two ways. As explained by Professor Christopher Bullen (an expert witness for the applicants in this case):
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.
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.
[15] Professor Bullen’s view is that a nicotine strength of around 60mg/mL is similar to the nicotine hit many highly dependent people get from smoking a cigarette. He and others with expertise in this area have therefore expressed the view that, in order for vaping to be a useful smoking cessation tool, vapes with that nicotine strength need to be available.5 It is now accepted by the Ministry of Health (the Ministry) that information to similar effect was obtained in advance of promulgating the Regulations in 2021 and informed the current maximum nicotine strength presently prescribed in the Regulations.
[16] Although the Ministry’s initial proposal in 2021 was to set the maximum strength at 60 mg/mL it seems this was the subject of a late, unexplained, Ministerial change. The maximum nicotine salt strength presently prescribed in cl 15 of Sch 5 of the Regulations is expressed as follows: “the strength of nicotine salt in a vaping substance must not exceed 50 mg/mL”.
4 “Vaping substance” is defined in s 2 of the Act as “a substance or mixture of substances that is intended to be vaporised or aerosolised with a vaping device” but does not include products containing medicinal cannabis or tobacco.
5 This includes both ASH and the Technical Expert Advisory Group on Electronic Cigarette Product Safety (TEAG), which provided expert advice to the Ministry of Health at the time the original nicotine level was set.
[17] Despite what is now accepted to be the relatively clear regulatory intent in 2021, there proved to be some subsequent confusion over the interpretation of this clause. Following an inquiry from a Fair Go reporter, the Vaping Regulatory Authority (VRA) formed the view that the 50mg/mL limit applied to the concentration of the nicotine salt itself rather than to the strength of the nicotine in the nicotine salt.6 The Ministry calculated that a nicotine salt vaping substance with 50mg/mL of nicotine benzoate contains 28.5mg/mL of nicotine.7
[18] The VRA then communicated the view that the Regulations prescribed a maximum nicotine strength of only 28.5 mg/mL to the applicants and others involved in the industry and threatened to cancel the notification of products with more than 50 mg/mL of nicotine salt; the sale of vaping products with a higher nicotine strength (and vaping products which were labelled in a way that indicated nicotine strength and not the concentration of the nicotine salt) would be illegal.
[19] The position taken by the VRA caused the applicants to create, order and package an entirely new product with 50 mg/mL of nicotine salt at a cost of
$1.65 million. Even though the Ministry now agrees that cl 15 in its current form regulates nicotine strength and not nicotine salt strength, the applicants cannot lawfully sell this stock. This is because the labelling records the strength of the nicotine salt and not the nicotine. Only 10 per cent of these units have since been sold.
[20] ALT also had to buy additional units of their 20mg/mL ‘alt’ vape pods (as the only other ‘alt’ pod was a 40 mg/mL nicotine option). They have been unable to shift this stock and the margins made on these products is 10-15% what they otherwise would have made.
6 The Vaping Regulatory Authority is part of the Ministry of Health. It does not appear to have a statutory basis.
7 Although Professor Bullen says it is difficult to measure precisely, the applicants say that a 50mg/mL limit on the concentration of the nicotine salt would equate to a freebase nicotine strength of less than 25 mg/mL, depending on the acid that is used to create the nicotine salt.
[21] The VRA’s position also prompted the applicants to issue these judicial review proceedings, challenging the Ministry’s interpretation of cl 15. But, shortly before the review application was to be heard, the Director-General of Health confirmed she accepted the applicants’ position is correct: that cl 15 in its present form means that the strength of free-base nicotine in a vaping substance manufactured using a nicotine salt must not exceed 50 mg/mL. I made a declaration to that effect by consent.8
[22] Although in making this concession the Director-General did not accept that the Ministry had intended that the 50 mg/mL be interpreted in this way, the evidence provided by the applicants strongly suggests that this was well understood at the time the limit was set.
Proposed amendment of cl 15
[23] After these judicial review proceedings were commenced, the Ministry proposed to amend cl 15 to accord with the Ministry’s (earlier) interpretation. A brief period of consultation ensued.
[24] On 12 June 2023 (before the Ministry conceded the now accepted meaning of the current cl 15) the Ministry sent an email to the applicants and other stakeholders advising that:
(a)it was “seeking feedback on amended regulations that would clarify the maximum allowable nicotine concentration” in vaping products;
(b)the “amended regulation would set the maximum allowable freebase nicotine concentration at 28.5mg/mL in reusable vaping products that use nicotine salts”;
8 ALT New Zealand Ltd v Director-General of Health HC Wellington CIV-2023-485-146, 15 August 2023 (Minute of Ellis J) at [2]. As a result, the hearing of the substantive application for review scheduled for 9 August 2023 was vacated and it was agreed the respondent should pay the applicants’ costs. But the applicants were also given leave to amend their claim to encompass more recent developments and (as discussed later) the application for interim orders was then filed and accorded an urgent hearing.
(c)a maximum nicotine concentration of 28.5mg/mL was “in line with the existing regulations’ intent and would bring greater clarity for industry”;
(d)“[h]igher levels of nicotine mean an increase in the risk of addiction”; and
(e)the targeted consultation would begin immediately and conclude on 26 June 2023.
[25] The email provided a link to a Ministry webpage. There was a document on that webpage headed:
Consultation
A proposal to clarify how nicotine levels for vaping products are expressed in the Smokefree Environments and Regulated Products Regulations 2021
[26]Th purpose of the document was then described as follows:9
Manatū Hauora is seeking feedback on the way that the nicotine strength for reusable vaping products containing nicotine salts is expressed in the Regulations. This proposal only applies to reusable vaping products. Levels of nicotine in disposable vaping products have already been agreed.
[27] The document referred to the Ministry’s awareness of the existence of “some confusion” about the interpretation of cl 15 and said:
We propose to amend the wording of the regulations to always refer to the maximum nicotine concentration of a vaping product, rather than the
maximum permitted nicotine salt concentration.
For reusable vaping products that contain nicotine salts, we propose setting the maximum allowable nicotine concentration at 28.5mg/mL.
[28]Under the heading “Rationale” the paper said:10
This approach is aligned with the purposes of the Act, to provide for the regulation of notifiable products in a way that seeks to minimise harm, especially harm to young people and children by making sure that products
9 Emphasis added.
10 Emphasis added.
don't have excessive levels of nicotine, which is the addictive substance in vaping products.
If we do not make this change, and leave the regulations as they currently are, it is likely that the confusion regarding the interpretation of clause 15 of Schedule 5 will continue. This would mean that many vaping products with significantly higher levels of nicotine would continue to be sold in New Zealand, increasing the risk of nicotine addiction. For example, for products using nicotine benzoate, the most commonly used salt, this would result in a maximum freebase nicotine concentration of 50mg/mL, rather than the 28.5mg/mL that was intended.
While vapes can only be legally sold to people aged 18 years and older, the last few years have seen a rapid increase in under 18 year-olds using vapes. The estimated percentage of 14-15 year-olds, for example, who are vaping daily is currently 10.1%. Daily vaping is more likely to indicate possible addiction to nicotine.
Vaping rates are highest for Māori 14-15 year-olds, and Māori girls in particular (25.2% daily vaping in 2022). While the trend for youth is currently toward using disposable vapes, at least half still used reusable vapes of some kind (tank or cartridge) in 2022. This proposed change will extend protection to all youth from the highest levels of nicotine, which will reduce the likelihood of them becoming addicted.
[29]The paper then posed three questions:
1.Do you agree with our proposal to set the maximum allowable nicotine concentration at 28.5mg/mL for reusable vaping products that contain nicotine salts?
2.Please explain your reasoning.
3.Is there anything else you would like to tell us at this time?
[30] The June 2023 consultation process was conducted exclusively online, which the applicants say risks failing to engage Māori, Pacific peoples and those living in New Zealand’s most deprived areas—those who are likely to be disproportionately affected by the proposed amendment.11
[31] On 13 June, the applicants’ solicitor wrote to the Ministry raising concerns about this process and the messages being conveyed. In particular, concern was expressed about:
11 There was evidence before the Court that, in the context of the consultation process around the vaping reforms to the Act in 2020, the Ministry was aware of the risk of “digital exclusion” of these groups and took specific steps to address it careful to address it through a number of mechanisms.
(a)the Ministry’s assertion that it had always been intended to impose a maximum nicotine strength of 28.5 mg/mL when that was at odds with the evidence obtained by the applicants;
(b)the short timeframe for consultation (two weeks) and the fact that it was online only; and
(c)the absence of any scientific studies or data supporting the change.
[32] On 22 June 2023 (four days before the end of the consultation period and after 3800 submissions had already been received) the Ministry published another document on its consultation page which was headed:
Response to consultation queries
Proposal to clarify how nicotine levels for vaping products are expressed in the Smokefree Environments and Regulated Products Regulations 2021
[33] Under the heading “Reasons for proposing 28.5mg/mL concentration of nicotine in products containing nicotine salts” the document explained:12
2.1As part of the amendment to regulation 15 above, the Ministry proposes to set the concentration of nicotine in products containing nicotine salt at 28.5mg/mL. The Ministry is of the view that 28.5mg/mL provides a balance for smokers who wish to use vaping as a smoking cessation tool and the need to minimise harm to young people. Other considerations are discussed below.
2.2The Ministry is aware of competing considerations around the appropriate concentration of nicotine. Those competing considerations include enabling products with a sufficiently high concentration of nicotine to be purchased as a smoking cessation tool as well as limiting the availability of products with a high concentration of nicotine given their potential to increase addiction in people who have not previously smoked.
2.3The public health considerations for setting maximum levels of nicotine concentration go beyond providing a current smoker with what would be an equivalent hit of nicotine. They must also take account of the risk to young people that comes with making very high levels of nicotine concentration available. International precedents of lower limits are also a consideration (the UK, EU and Canada have
12 Footnote added, emphasis added.
set the nicotine concentration for all products at 20mg/mL).13 The Ministry proposes setting a concentration of nicotine level that is slightly higher than the 20mg/mL set in those other countries as this may be more effective for people wishing to vape to quit smoking. The proposed nicotine concentration level of 28.5mg/mL is intended to give a nicotine hit that is closer to a cigarette, rather than equivalent.
2.4The Ministry is of the view that this proposal aligns with the purposes of the Smokefree Act, to provide for the regulation of notifiable products in a way that seeks to minimise harm, especially harm to young people and children by making sure that products do not have excessive levels of nicotine, which is the addictive substance in vaping products.
The applicants’ requests for information
[34] On 13 June 2023, the applicants had made a request under the Official Information Act 1982 for all information held by the Ministry relating to the key assertion that “higher levels of nicotine mean an increase in the risk of addiction”.14 This request was refused on 11 July 2023 on the grounds that the Ministry intended proactively to release some key documents relating to amendments to the Regulations by the end of August.
[35] The applicants replied, disputing that the proposed proactive release would constitute a response to their request.
[36] On 13 July, the Ministry emailed the applicants a summary of what the Ministry described as a “substantial body of scientific evidence indicating that higher levels of nicotine increase the risk of addiction” under four headings: “neurochemical effects”, “tolerance and dependence”, “clinical studies”, and “epidemiological data”.
[37] The applicants then asked for confirmation that the response was a summary of the information held by the Ministry falling within the request and asking for copies of the relevant supporting documents.
[38] The applicants now say that, based on their own investigation, the document provided by the Ministry purporting to summarise a “substantial body of scientific evidence” was generated by artificial intelligence (AI).
13 The applicants’ expert take issue with the aptness of this comparison.
14 As indicated by the italicized passages in the two consultation documents set out above.
[39] On 28 July, the Ministry’s lawyers responded to the applicants’ letter recording the Ministry’s instructions that the 13 July summary document:
(a)was not generated, in whole or in part, by an artificial intelligence tool; and
(b)was based on information contained in:
(i)previous responses to media queries;
(ii)the Regulatory Impact Statement: Smokefree Aotearoa Action Plan;15
(iii)the National Library of Medicine article: “Electronic Cigarettes: what are they and what do they do?”;16
(iv)the Health Promotion Agency Report: “Smoking and Vaping Behaviours among 14 and 15 year olds”;17
(v)the Ministry’s Vaping Facts website;18 and
(vi)the Protect Your Breath website.19
[40] The applicants maintain that the information contained in these documents and on these websites does not address all the propositions in the Ministry’s 13 July summary and does not support the Ministry’s assertion that, in the context of vaping products, “higher levels of nicotine mean an increase in the risk of addiction”.
15 Ministry of Health Regulatory Impact Statement: Smokefree Aotearoa Action Plan (November 2021).
16 Alison Breland and others “Electronic cigarettes: what are they and what do they do?” (2017) 1 Ann N Y Acad Sci 5.
17 Natalie Lucas, Nivedith Gurram and Wa Anwar Smoking and Vaping Behaviours among 14 and 15-year-olds: Results from the 2018 Youth Insights Survey (Te Hiringa Hauora/The Health Promotion Agency, June 2020).
18 Ministry of Health and Te Whatu Ora “Vaping Facts” < Te Aka Whai Ora and Te Whatu Ora “Protect Your Beath” < of consultation
[41] In broad terms the outcome of the consultation has been summarised by Mr Andrew Old, the Deputy Director-General of the Ministry’s Public Health Agency. A total of 4731 submissions were received. Mr Old deposed (amongst other things) that
The majority of submissions were made by individuals, followed by small retailers and vaping or smokeless tobacco product retailers, distributors or manufacturers. Submissions were also made by community or advocacy organisations, health care providers, and organisations that identified themselves as having hapū or iwi affiliations, or identified themselves as a Māori or Pacific organisation.
[42] Mr Old annexed to his affidavit a table showing the results for the different groups of submitters, which relevantly shows:
(a)25 submissions were received from community or advocacy organisations, 22 of which (88 per cent) were opposed to the change;
(b)24 submissions were received from healthcare providers, 19 of which (79 per cent) were opposed to the change;
(c)17 submissions were received form “iwi/hapū affiliated and/or Māori organisation”, 14 of which (82 per cent) were opposed to the change;
(d)eight submissions were received from “Pacific community or organisation”, seven of which (87.5 per cent) were opposed to the change;
(e)seven submissions were received from “Government organisation[s]” five (71 per cent) of which were opposed to the change; and
(f)six submissions were received from “Research or academic organisation[s]” four of which (67 per cent) were opposed to the change.
[43] Of the 3360 submissions from individuals received 2933 or 87 per cent were opposed to the change. Opposition from those in industry groups was, unsurprisingly, uniformly at above 90 per cent.
[44] Although Mr Old said that some submitters who opposed the proposed amendment did so on the basis that the maximum strength should be lower than
28.5 mg/mL, he gives no detail about the relative numbers falling within this category.
Amending the regulations
[45] A decision was made to pursue the proposed amendment to reduce the maximum nicotine strength to 28.5 mg/mL, although the timing and detail of that decision was not known at the time of the hearing.20 On 25 July 2023, the Ministry’s lawyers advised the applicants that “vaping substances that do not meet the new requirements for nicotine concentration levels will not be able to be sold at wholesale 3 months after the regulations come into force, and at retail 6 months after the regulations come into force”.
[46] At the time of the hearing before me, the Ministry could neither confirm nor deny the contents of the proposed amendment to the regulations.21 Crown counsel has since advised, however, that Cabinet made the decision amending cl 15, in the terms foreshadowed, yesterday (Monday 21 August). The Executive Council confirmed the proposed regulation should be made by Order in Council, and the regulations were signed by the Governor-General the same day.
[47] Before the amendment comes into force, however, it must be notified in the Gazette and the Crown’s advice was that this would not occur before Thursday 24 August.22 Moreover, the default position set out in the Cabinet Manual is that the amendment regulations would not come into force until at least 28 days after their notification in the Gazette.23 Absent the invocation of any of the exceptions to that
20 A point I return to later.
21 Paragraph 5.23 of the Cabinet Office’s Cabinet Manual 2023 prohibits the disclosure of proposals likely to be considered at forthcoming Cabinet and Cabinet committee meetings, outside Cabinet-approved consultation procedures.
22 Notification in the Gazette is a statutory publication requirement placed on the Parliamentary Counsel Office by s 69(2) of the Legislation Act 2019.
23 Cabinet Manual 2023, above n 21, at [1.50]–[1.52].
rule, it was thought that any amendment in this case would not come into effect before 21 September 2023.
The applicants’ substantive challenge to the anticipated regulations
[48] As noted earlier, their substantive challenge to the amendment has a number of planks.
[49] First, the applicants say the maximum nicotine strength proposed of 28.5mg/mL serves no public health purpose, because:
(a)the limit is arbitrary and was arrived at by way of a random calculation that has no clinical significance;
(b)there is no evidence that higher nicotine strength in vaping products is a proxy for addiction, and no correlation between nicotine strength and addiction in vaping products;
(c)the (as yet) uncontested expert evidence is that a reduced nicotine strength will not reduce youth vaping;
(d)there is a real risk that those who rely on higher strength nicotine products will relapse to smoking or engage in compensatory behaviour to get the amount of nicotine they need; and
(e)these harms will disproportionately prejudice vulnerable populations.
[50] Secondly, the applicants say the Ministry’s consultation process was flawed because:
(a)for 12 out of the 14-day consultation period, it proceeded on a misleading and false premise that it had always been intended that the cl 15 nicotine level would be set at 28.5 mg/mL and that the proposed amendment was simply to “clarify” this;
(b)failed to provide sufficient time to allow proper engagement;
(c)it was online only and failed to engage appropriately with Māori and Pasifika communities;
(d)the stated reason for the proposal that the cl 15 nicotine level would be set at 28.5 mg/mL to reduce addiction to vaping products had no scientific justification because there is no evidence that reducing nicotine levels does reduce addiction; and
(e)similarly, failed to provide information supporting the proposition that higher nicotine strength is proxy for addiction which would allow stakeholders to respond in an informed way.
[51] Thirdly, they say there has been a breach of their legitimate expectation that any such amendment would follow, and be based on, expert advice. Not only (they say) has there been no such advice, but the anticipated amendment is contrary to the views of experts.
[52] Fourthly, the applicants say the anticipated amendment would be ultra vires the Act because it:
(a)is arbitrary in that it is not backed by any relevant study or empirical data;
(b)does not address or prescribe ‘safety requirements’ as required by the empowering provision (s 84(1)(a) of the Act); and
(c)does not advance the purpose of the Act which is to minimise harm.
The evidence
[53] The applicants have filed expert evidence in support of their case. As well as the evidence of Professor Bullen, affidavits have been provided by Mr Benjamin Youdan, who is the Director of ASH. Mr Youdan’s expertise in the area of smoking
cessation cannot be doubted. He, together with Professor Robert Beaglehole (the founder of ASH and a cardiac epidemiologist), made a submission opposing the proposed amendment in which they advised:
The proposed regulations limit the strength of nicotine allowed in vaping substances to 20mg/ml for free based nicotine and 50mg/mL for nicotine salt. There is no clear scientific basis for these limits … We believe that this level is set too low ...
Limiting strength will make it harder for many smokers to get through the first stages of switching from smoking as products will not be as satisfying as a cigarette. It may also contribute to dual use as the alternate is not adequate, and leave products too weak to be helpful for the most dependent smokers ...
A Cancer Research UK funded study of London based e-cigarette users found that ‘use of a lower nicotine concentration e-liquid may be associated with compensatory behaviour and increases in negative effect, urge to vape and formaldehyde exposure’ …
The ability of vaping products to support nicotine dependent smokers to quit relies on them being able to adequately compete with cigarettes to satiate withdrawal. A low cap on nicotine adversely impacts on this ability. Studies of high nicotine content (59mg/mL) Juul e-cigarettes have consistently found that they compare to cigarettes in terms of delivering nicotine and reducing the urge to smoke.
[54]Mr Youdan also:
(a)explains why it is not apt to compare maximum nicotine levels in vaping products in New Zealand with maximum levels in countries such as those in the United Kingdom;
(b)expresses the view that the amendment would have a serious equity impact on vulnerable populations;
(c)says that nicotine by and of itself is not a major health issue, and that there is a widespread misunderstanding that it is the nicotine in cigarettes that causes harm;
(d)says he is aware of no evidence that indicates that high level of nicotine results in young people becoming addicted to nicotine; and
(e)notes there is very little data about the nicotine levels young people use, and how it affects vaping uptake.
[55] Mr Youdan’s view is that, from a public health perspective, the harm that will be done by reducing nicotine levels in vaping products is greater than any health benefit likely to be achieved by the same.
[56] ASH made a submission in similar terms opposing the proposed amendment to the Ministry during the consultation process.
The application for interim orders
[57] In light of the events set out above, the applicants sought interim orders pursuant to s 15(3)(b)(i) of the Judicial Review Procedure Act 2016 (the JRPA). More specifically, they seek:
… an order declaring that the respondents ought not to take any further action:
(a)to make regulations under s 84(1)(a) of the Smokefree Environments and Regulated Products Act 1990 (Act) to reduce the maximum nicotine strength of reusable nicotine salt vaping products from 50mg/mL, as currently prescribed in clause 15 of Schedule 5 to the Smokefree Environments and Regulated Products Regulations 2021; and/or
(b)to bring into force regulations made under s 84(1)(a) of the Smokefree Environments and Regulated Products Act 1990 (Act) to reduce the maximum nicotine strength of reusable nicotine salt vaping products from 50mg/mL; and/or
(c)to notify in the New Zealand Gazette regulations made under s 84(1)(a) of the Smokefree Environments and Regulated Products Act 1990 (Act) to reduce the maximum nicotine strength of reusable nicotine salt vaping products from 50mg/mL;
until the Court has determined the application for judicial review.
[58] As noted earlier, however, stopping the Cabinet process was not the focus of the hearing before me and, as also noted, Cabinet has now made the relevant decision. Rather, the focus was (in order of preference) on stopping the Order in Council process, the Gazetting process or the enforcement of the new regulations. And because the Order in Council was made immediately following Cabinet’s decision, it is now only the latter two steps that remain “live”.
[59] For that reason, one of the main planks of the Crown’s opposition to the application—that any interim orders would be premature, because no decision had yet been made—has now fallen away.
[60] The guiding principles governing the determination of applications for interim orders are well known and I do not intend to set them out in any detail here. In short, the applicants must show:
(a)the orders are necessary to preserve their position; and
(b)the balance of convenience favours making the orders.
The Cabinet decision
[61] It is at this point that it becomes necessary briefly to refer to the Cabinet decision and the material said to support it. In my view these things affect both of the matters referred to in the previous paragraph.
[62] In general terms, the Cabinet decision is as anticipated. The decision is, however, not limited to the amendment to cl 15 and includes other amendments to the Regulations as well.24
[63]The relevant paragraphs from the Cabinet minute record:
On 21 August 2023, following reference from the Cabinet Legislation Committee, Cabinet:
1noted that in May 2023, the Cabinet Social Wellbeing Committee (SWC) agreed to the drafting of the Smokefree Regulations to establish the regulatory regime for smoked tobacco, and to tighten vaping restrictions [SWC-23-MIN-0051];
2noted that in May 2023, SWC agreed to reduce the maximum allowable nicotine salt concentration in single-use vaping products to 35mg/mL [SWC-23-MIN-0051], and that this is expressed in the Smokefree Regulations as a maximum allowable concentration of nicotine of 20mg/mL;
24 For example, amendments relating to the labelling of vaping products. This would make it difficult to craft interim orders aimed at slowing the Gazetting process that did not also affect these other, unchallenged, aspects of the amendments.
3noted that in July 2023, Cabinet agreed to amend clause 15 of the Smokefree Regulations to state that for reusable vaping products that contain nicotine salts, the maximum allowable nicotine concentration is set at 28.5mg/mL [CAB-23-MIN-0305];
[64]The next passage is redacted on privilege grounds. The minute then continues:
5.[redacted] … the Minister of Health took further public health advice from Te Pou Hauora Tūmatanui (the Public Health Agency), Manatū Hauora in relation to the nicotine concentration level for vaping products and regarding the safety requirement for removable batteries for all vaping products (attached at Appendix A to the submission under LEG-23-SUB-0148);
6noted the further public health advice from Te Pou Hauora Tūmatanui (the Public Health Agency), Manatū Hauora confirms that the Smokefree Regulations should proceed as previously agreed per Cabinet’s policy decisions in May and July 2023 [SWC-23-MIN-0051 and CAB-23-MIN-0305];
…
8noted that the Smokefree Environments and Regulated Products Amendment Regulations 2023 give effect to these decisions referred to in paragraphs 1, 2, 3 and 7;
…
12authorised the submission to the Executive Council of the Smokefree Environments and Regulated Products Regulations 2023 [PCO 25668/19.0].
[65] The minute also records Cabinet’s agreement to transitional timeframes including (relevantly) that all reusable vaping products that do not meet the new requirements cannot be sold from six months after the regulations come into force.
[66] In her submission to the Cabinet Legislation Committee, the Minister had sought a waiver of the 28-day rule (which would have meant that the new Regulations came into effect on 25 August 2023) because:
The Smokefree Regulations are required to operationalise the smoked tobacco regulatory regime and to regulate notifiable products, including vaping products, in a way that seeks to minimise harm.
[67] As I understand it, however, the Cabinet Legislation Committee did not agree to that request and so the 28-day rule will apply. The effect of this is that, assuming that Gazetting occurs this Thursday (24 August) all reusable vaping products that do
not meet the new requirements will be unable to be sold after 21 March 2024 (28 days after Gazettal plus six months transitional).
[68] It may be observed that the minute records that Cabinet first agreed to the amendment in July 2023.25 Papers relating to that decision have not been made available. It can reasonably be assumed, however, that the ancillary decision to refer the matter to the Public Health Agency for further advice was made in response to the matters raised by the applicants in this litigation.
[69]The other documents provided to the Court and the applicants today are:
(a)the Public Health Agency’s advice, which supports the amendment; and
(b)a summary of the results of the consultation process.
[70]From a necessarily hurried reading of the former document, it appears (at para
24) to argue that the proposed new 28.5 mg/mL limit for reusable vaping devices using nicotine salts is close to what is regarded as a “high dose” (36 mg/mL of nicotine), whereas the preceding paragraphs make it clear that 36 mg/mL is only regarded as a “high dose” when speaking of freebase nicotine.
[71] And a similarly hasty read of the latter document gives rise to the following preliminary observations:
(a)the document it is entitled “Analysis of consultation submissions on the proposal to clarify how nicotine levels for vaping products are expressed in the Smokefree Environments and Regulated Products Regulations 2021”;26
(b)it refers to a considerable number of submitters who supported the proposed amendment as doing so because they supported “clarification” of the law;
25 The Minister’s paper to the Cabinet Legislation Committee says this decision was taken on 17 July.
26 Emphasis added.
(c)as with the material before the Court (noted at [44] above) it does not provide any breakdown in terms of the proportion of those who opposed the proposed amendment because they supported the existing nicotine limit and those who opposed because they thought the limit should be lower;
(d)but it indicates that the seven out of eight submissions received from Pasifika communities or organisations opposing the amendment all opposed the reduction of the nicotine limit; and
(e)although it refers to the submissions from the Royal New Zealand College of General Practitioners and the ASPIRE Aotearoa group (who both supported the proposal) no reference is made to the submission from ASH.27
[72] I turn now to consider the questions of whether the applicants have a position to preserve and where the balance of convenience lies. As I have said, the very recent (Cabinet) material received by the Court is very material to that analysis.
Position to preserve?
[73] In order to have a “position to preserve” the applicants needed to show that they are likely to suffer prejudice or loss if interim orders stopping or slowing the process of promulgating the regulations (or declaring that it should stop or slow) are not made, and their substantive claim for judicial review ultimately succeeds. At the time of the hearing, they said they had such a position for the following reasons:
(a)the reduction in the maximum nicotine strength would affect 85.3% of the applicants’ combined consumable e-liquid revenue where their bestselling products are those with a nicotine strength over 28.5 mg/mL; and
27 Like ASH, ASPIRE Aotearoa is said to be a group of leading smokefree researchers and health providers whose aim is to provide research to help the government achieve the goals of a Smokefree Aotearoa.
(b)if interim orders are not made, they would need to implement a two-pronged ‘contingency plan’, involving:
(i)the creation, ordering and packaging of a new range of products with a maximum nicotine strength of 28.5 mg/mL (in case the substantive application for review is not successful); and
(ii)continuing to stock products with a maximum nicotine strength higher than 28.5 mg/mL (in case the substantive application for review is successful).
[74] They said this contingency plan will inevitably leave the applicants with stock they cannot sell, regardless of the outcome because:
(a)if they lost the substantive case, they would be unable to sell products above 28.5 mg/mL; and
(b)if they won the substantive case, it is likely they would be unable to sell the stock with the lower nicotine level because people will not buy it (as already noted, over 85.3% of the applicants’ revenue comes from the sale of e-liquids with a nicotine strength of over 28.5 mg/mL).
[75] The applicants also said none of this was speculative or premature because ALT has already suffered a similar contingency loss as a result of the advice received from the VRA earlier this year. I have referred to that earlier.28
[76] The applicants said that if the regulations were Gazetted on Thursday 25 August, and based on the advice they had received at that point, they would have only four months at most to create, order and receive a new range of products with a maximum nicotine strength of 28.5 mg/mL. Their evidence was that this process would have to be started immediately in order to have the requisite product at the end of the four-month time frame and would cost about $3.7 million.
28 See [19]–[20] above.
[77] I have no reason to doubt any of this. But what has changed is that—as a result of the transitional arrangements agreed by Cabinet—there is now a seven-month window, not a four month one. As advised to counsel yesterday, the Court can accommodate an urgent substantive hearing within that time, and in time to give the applicants the window they need. A date of 4 September 2023 has been offered. Although I accept that may be a little too soon, given that it seems likely that further amendment and further evidence may be required, and the Crown will need an opportunity to respond. But an acceptable timeframe still seems tenable.
[78] Although Mr Laurenson submitted that the real damage would be done—in terms of a chilling effecton retailers—before the amendments come into force,29 the reality is that any such effect is likely as soon as retailers hear about the decision. And it has been publicly announced today. That horse has bolted.
[79] So in light of the transitional provisions and the 28-day rule, and provided the substantive application for review can be brought on for hearing quickly, I consider the applicants no longer have a position to preserve—or at least one that cannot be preserved by allocating an early substantive hearing date.
Balance of convenience
[80] In light of my conclusion on position to preserve it is not strictly necessary to consider the balance of convenience. So, I merely record my preliminary view that the applicants have an arguable case on at least some of their causes of action in the substantive proceedings. The difficulty may, however, be that the alleged errors of process could not—even if made out—lead to the quashing of the regulations. I express no firm view on that issue here. And I also accept that a successful claim that the Regulations are ultra vires the Act would most likely lead to such a result.
[81] As well, I record that, based on the material before the Court, there was nothing to suggest that the proposed amendment was urgent, despite the alacrity with which the consultation and subsequent decision-making proceeded. Despite what I
29 By which was meant an effect on retailers’ willingness to continue to sell products that are banned by the amendment, despite the transitional period, particularly in light of what may be the negative public perception of retailers that continue to do so.
accept are real and present concerns around the exponential increase in vaping by young people, there are countervailing—and equally serious—health concerns and it remains (on the present state of the evidence) unclear the extent to which they have properly been taken into account. Determining the balance to be struck between these two very important health concerns is not a matter that should be rushed.
Result
[82] The application for interim orders is dismissed for the reasons—and on the express basis that—I have given. In the circumstances, however, I am not inclined to award costs against the applicants. But if there is disagreement about that, memoranda may be filed.
[83] Counsel should confer with each other and with the Registry with a view to obtaining an urgent (but do-able) substantive fixture. Leave is reserved to seek a telephone conference with me if further assistance is required.
Rebecca Ellis J
Solicitors:
Powle & Hodson, Auckland for Applicants Crown Law, Wellington for Respondent
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