Green v Racing Integrity Unit Limited
[2013] NZHC 1137
•15 May 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2012-404-6446 [2013] NZHC 1137
BETWEEN JOHN PATRICK GREEN AND BRIAN HUGHES
First Applicants
ANDBARRY RATTRAY AS TRUSTEE OF THE RATTRAY FAMILY TRUST, WAYNE MCLAUGHLIN AND ESTATE OF MRS W MCLAUGHLIN
Second Applicants
ANDRACING INTEGRITY UNIT LIMITED First Respondent
ANDHARNESS RACING NEW ZEALAND INC
Second Respondent
ANDJUDICIAL CONTROL AUTHORITY FOR RACING
Third Respondent
Hearing: 18-19 March 2013
Counsel: M Fisher and L Hui for Applicants
C A McVeigh QC and B Hawes for Respondents
Judgment: 15 May 2013
JUDGMENT OF SIMON FRANCE J
GREEN AND HUGHES V RACING INTEGRITY UNIT LIMITED HC AK CIV 2012-404-6446 [15 May 2013]
Table of Contents
Paragraph No.
Introduction [1] Grounds of review [6]
The statutory scheme [12] Issue one – the legality of Rule 1104(3)(c) of the
Harness Racing Rules [16]
(a) The establishment of the Racing Integrity Unit [22]
(b) The applicants’ case addressed [29]
Issue two – does the fact that there is no other laboratory which can test the reserve sample mean a charge should
not have been brought? [42]
(a) A new laboratory is approved [43]
(b) Is there a right to have a reserve sample tested? [52]
Issue three – did industry participants have a legitimate expectation to be consulted before new testing procedures
were used? [64]
(a) What is required to establish a legitimate
expectation? [66]
(b) The liaison committee [68]
(c) Did industry participants have a legitimate
expectation? [82] Issue four – an invalid decision to prosecute? [102] Conclusion [109]
Introduction
[1] Rule 1004(1) of the Harness Racing Rules of New Zealand provides:
A horse shall be presented for a race free of prohibited substances.
[2] On 2 June 2012, a pacing filly called Delightful Christian won a prestigious and valuable harness horse race. In accordance with standard practice, a urine sample was taken after the race and sent for testing. That testing revealed the presence of arsenic in the horse’s system. A charge has been laid under the Harness Racing Rules alleging that the horse raced with a prohibited substance in its system. If proven, disqualification of the horse is mandatory. If that happens the horse will lose the race, and the connections will lose the prize money. A further consequence is that the boost to the breeding value of the horse which usually accompanies such a win will not occur.
[3] There seems little doubt that the source of the arsenic detected in Delightful Christian’s urine was a commonly used therapeutic compound called Caco Iron Copper. It contains arsenic. On the present occasion, Caco Iron Copper was administered to Delightful Christian a day prior to the race by an experienced equine veterinarian. The veterinarian has deposed that it is a treatment he has used in a similar way for 30 years. The product used in this way has never previously led to a positive test result.
[4] It seems the reason a positive result was returned on this occasion, and inferentially not detected on earlier occasions, is that the sample was sent to an overseas laboratory that had been recently approved by Harness Racing New Zealand as a laboratory that is permitted to test New Zealand racehorse samples. The New Zealand laboratory that tests the bulk of samples does not have the capacity to test for all prohibited substances, and in particular cannot test for the presence of arsenic in horse urine. Plainly, given the result, the overseas laboratory can.
[5] These proceedings have been brought by the owners and trainers of Delightful Christian (the applicants). They ask the Court to set aside the decision to lay a charge alleging a breach of r 1004(1), either because of what are alleged to be procedural irregularities in the process leading up to the charge, or because it is said that in the circumstances of the case it is sufficiently unreasonable to have decided to lay a charge that the Court should intervene.
Grounds of review
[6] The first challenge is a claim that the Rule under which the charge was laid is invalid. The Rule was amended in 2011, and the applicants say that the change that was made to the Rule is inconsistent with the Racing Act 2003, which is the statute that authorises the making of the Rule.
[7] The second challenge is to the decision of Harness Racing New Zealand (HRNZ) to approve the overseas laboratory as a laboratory authorised to test New Zealand samples. The laboratory in question is that run by the Hong Kong Jockey Club. More narrowly, the challenge could be described as a claim that HRNZ should not have accepted, or acted on, a positive test result from this laboratory in relation to arsenic. This is because it is seemingly the only laboratory in the world accredited to undertake such a test, and there are therefore issues with having the reserve sample tested.
[8] The third challenge involves a claim that HRNZ had made a commitment not to use new testing procedures and techniques without first discussing this with equine veterinarians, and then allowing the vets time to review their practices to ensure they were safe in terms of the prohibited substances rules. It is said this commitment created a legitimate expectation in industry participants that the procedure would be followed, it was not followed here, and accordingly any test result cannot be used.
[9] The fourth challenge focuses on the actual decision to charge. In situations such as these, the law requires a decision maker, when making his or her decision, to take into account all the relevant factors, and not to have regard to irrelevant matters.
The applicants submit that the decision makers did not turn their mind to an important matter, namely the fact that the effect of arsenic is to hinder a horse’s performance. Therefore, the existence of that substance in Delightful Christian’s system cannot have helped it to win the race. That being so, no charge should have been laid and any decision to do so is unreasonable.
[10] By way of background, it is to be noted that the applicants indicated at the hearing that they intend to dispute that arsenic is a substance that comes within the prohibited substances rules. However, that is a matter to be raised before the panel which will hear the charge. It is certainly at least arguable that arsenic is prohibited. Therefore, these judicial review proceedings, which are brought in advance of the charge being heard, must proceed on the assumption that arsenic is a prohibited substance.
[11] It is also relevant to the following discussion to note that if it is a prohibited substance, it has been so for a considerable period of time. This is not a case of a change in thinking about arsenic and its effects, or a change in the prohibited substances rules. The positive test is a positive test for a substance that has been prohibited for many years.1
The statutory scheme
[12] Racing in New Zealand occurs in three formats, each of which is called a “Code” – thoroughbred horses (the gallops), harness horses (the trots) and greyhounds (the dogs). The industry is governed by the Racing Act 2003 (the Act).
[13] The Act recognises the separate governing body of each Code and requires each organisation to make its own rules for the conduct of its version of the sport. The Act identifies various topics the Rules might cover, but these are not exclusive. The listed topics are described in the Act as not limiting the general power to make
rules, and conclude with the power to provide for:2
1 Subject, of course, to the applicants’ contrary argument before the racing panel.
2 Racing Act 2003, s 29(2).
any other matters relating to the conduct of races and racing that the racing code thinks fit.
[14] Sitting above the three Codes is the New Zealand Racing Board. Its task is to promote racing and maximise profits for the long term benefit of New Zealand racing. The income garnered from betting on any of the Codes goes to the Racing Board, which has the task of distributing that money to the Codes in a way that it considers will promote the racing industry.
[15] The Board has general oversight of the Codes. As well as determining the financial payment to each Code, the Board must approve the rules each Code organisation is obliged to have under the Incorporated Societies Act 1908. Further, each year the Code must submit a business plan to the Board. The business plan must outline the activities the Code intends to undertake, how it intends to spend the funds it receives from the Board, and its performance targets for the year. The Board may reject a business plan if it is inconsistent with the Board’s own objectives.
Issue one – the legality of Rule 1104(3)(c) of the Harness Racing Rules
[16] It is necessary to begin with an explanation of how charges are laid. The harness racing rules provide for the appointment of officials known as Stipendiary Stewards and Racecourse Inspectors. These are the people who are responsible for monitoring compliance with the Rules, and for taking action in relation to breaches. They are the police officers of the sport.
[17] If these officials decide to lay a charge, the matter is placed before racing’s judicial body, the Judicial Complaints Authority (JCA). The JCA is established under the Act, and is responsible for the efficient judicial control of racing in New Zealand.
[18] The Rules require all proceedings for a breach of the Rules to be commenced by the laying of an information. A process distinction is then drawn between a race day information and one laid outside a race day. Race day informations typically deal with observable offences occurring in races such as careless driving, or one horse hindering the chances of another horse. These charges may be laid by a
Stipendiary Steward or Racecourse Inspector, or indeed by connections of other affected horses. These charges do not require anyone’s approval. They are heard on race day by a JCA panel appointed in advance to be present on course for this purpose.
[19] Informations laid other than on a race day are filed with the JCA itself, which will then convene a panel to hear the charge. Unlike race day charges, only a Steward or Inspector may lay such a charge. The connections of other horses cannot.
[20] It is these non-race day charges that are subject to an approval process. Rule 1103(4)(c), the challenged rule, provides:
Otherwise than during a race meeting, an information may be filed only by a Stipendiary Steward or Racecourse Inspector and then only [after] permission to do so has been obtained from the Operations Manager or the Chairman of the Racing Integrity Unit Ltd, or in the Chairman’s absence, his nominee.3
[21] It can be seen that the task of approving a non-race day charge rests with the Operations Manager of the Racing Integrity Unit Ltd. The applicants submit that it is unlawful for the Rule to place this function on that person. They submit the previous system which required an office holder of HRNZ to give approval is the only permissible model under the Act. In order to assess this, it is necessary to describe the establishment of the Racing Integrity Unit Ltd (the RIU). It was the creation of this new regulatory body that was the genesis for switching the charge approval function from the Chief Executive of HRNZ to the RIU.
(a) The establishment of the Racing Integrity Unit
[22] It has previously been noted that each Code has its own governing body, and makes its own Rules. An historical illustration of a way in which Codes operated independently of each other is in the area of appointment and supervision of Stipendiary Stewards and Racecourse Inspectors. Until 2011, each Code appointed
its own officials who operated only within the Code that appointed them. This
3 The word [after] appears to be an omission from the text of the Rules.
changed, however, when the three Codes, in conjunction with the Racing Board, adopted a new unified enforcement model by establishing the RIU.
[23] The RIU is a limited liability company. It has four shareholders, being the three Codes, and the Racing Board. It commenced operation in February 2011. The following extracts from the RIU’s constitution identify its objects and functions.
[24] The constitution of the RIU provides a useful summary of its role, and the motivation behind the establishment of the RIU. The objectives are described this way:
2.1Strategic objectives: The strategic objectives of the Company are to:
(a) improve the integrity of New Zealand racing to a level regarded as the best in the world; and
(b) serve New Zealand racing in a professional, consistent, independent, uninhibited, proactive, efficient and transparent manner.
2.2Operational objectives: Without limiting clause 3 in any way, the operational objective of the Company is to provide to New Zealand racing a centralised integrity function that is:
(a) professional and effective, by providing consistency in the laying of charges and the undertaking of prosecutions throughout New Zealand and across the Racing Codes, with a high level of competency and prosecutorial skills based on
‘best practice’ procedures;
(b) credible, by having independence and transparency of actions and processes;
(c) an excellent employer that provides training and career pathways for staff; and
(d) an efficient organisation in the direction and use of its staff and resources.
[25] There are then listed 19 functions, the first four of which are:
(a) exercise and perform through its staff the functions, powers and duties of stipendiary stewards, racecourse inspectors and investigators under the Rules of Racing;
(b) provide integrity functions and services pursuant to the Services
Agreements;
(c) initiate, develop and undertake (where applicable) measures that the Company considers will improve the integrity of New Zealand racing in accordance with the Rules of Racing;
(d) maintain the real and perceived independence of the Company’s
structure and operations.
[26] The RIU has entered into service agreements with each Code. Under those agreements the RIU commits to supplying services that are in accordance with the Rules of Racing. It provides a monthly report to each Code on its performance and activities.
[27] The Harness Rules of Racing still require HRNZ itself to appoint the Stewards and Inspectors. However, once appointed, it is the RIU who employs them, and it is the head of the RIU to whom they are responsible.
[28] It was consequent on these charges that HRNZ amended r 1104(3)(c) to provide that the Operations Manager of the RIU should approve charges rather than the Chief Executive of HRNZ.
(b) The applicants’ case addressed
[29] It has previously been noted that the Racing Board is required to approve the annual business plan submitted by a Code. Further, the Board may reject the plan because it is inconsistent with the Board’s own objectives. Mr Fisher contends that this need for consistency means that the statutory objectives and functions of the Racing Board thereby also become the Code’s objectives. This in turn means the Code, in actions it takes or decisions it makes, must always act consistently with and in furtherance of the policies of the Racing Board.
[30] In terms of why this analysis might be relevant to the present case, there are said to be at least two relevant consequences that flow from it. The first relates to what factors the Code must take into account when carrying out its day-to-day functions. The Racing Act allocates various functions to the Board, the first of which is:
to develop policies that are conducive to the overall economic development of the racing industry, and the economic well-being of people who, and organisations which, derive their livelihoods from racing.
[31] Mr Fisher submits that the present decision to lay a charge is inconsistent with that consideration. It is inconsistent because it cannot be conducive to the overall economic well-being of the industry to lay a charge in the unfair circumstances that are said to exist here. It undermines the confidence of the industry participants and consequently affects the industry’s overall economic well-being.
[32] The second alleged consequence of the coming together of the Board’s and Code’s objectives is that the Code must keep hold of functions such as supervising Stewards and approving charges so as to ensure decisions are taken consistently with the Board’s objectives. Delegation to a body such as the RIU, which is not governed by the same objectives, is an example of what is not permitted.
[33] In support of the submission it is noted that at the time the Racing Act came into force, the individual Codes held these supervisory functions. It is submitted there is nothing in the Act to suggest devolution to a body not recognised by, or bound by, the Act was contemplated.
[34] I do not consider the Act is to be interpreted in this way. First, the scheme of the Act is to place the governance of each Code in the hands of the individual governing authority. Those authorities are specifically recognised by the Act, which directs each of them to make their own rules controlling the racing within their own area. The restrictions on that rule making function that can be found in the Act are that the Rules cannot conflict with the Act or the general law of New Zealand, and they are subject to approval by the Board. There is nothing otherwise in the Act that purports to tell the Codes what the content of those Rules should be, or how they should go about controlling their sport.
[35] I consider the applicants’ submission reads too much into the Board’s function of approving a Code’s business plan. The ability to require a plan to be consistent with the Board’s objectives does not make the Board’s objectives also the Code’s objectives. The bodies have different functions, and although each is pulling
towards the same goal, their specific roles are different. The objectives cannot conflict but they are not intermingled.
[36] Next, in passing a Rule that transferred this approval function from the Chief Executive to the RIU, HRNZ was not delegating anything. There is no provision in the Act that places this approval task on HRNZ in the first place. The Act makes it plain that it is HRNZ’s choice as to how it will run its sport. Previously HRNZ enacted rules that gave the Chief Executive some role in integrity matters. But then it, along with the other Codes and the Board, all agreed that a different model with a more independent decision-maker would be better. What then happened was a reassignment of the Chief Executive’s role to this new body, and this was done not by delegation but by a Rule change. As Mr McVeigh QC submitted, invalid delegation would only occur if either: (i) the statute nominated some person other than the one named in the Rules to make the decision (which it does not); or (ii) the person named in the Rules improperly transferred the task to someone else. Again, because the Rules were changed, that concern has not materialised.
[37] Further, I consider the applicants’ submission understates the extent to which the RIU is influenced by the Act’s purposes. The service agreements entered into by the Codes with the RIU require the RIU to supply services that are in accordance with the Rules of Racing. Those Rules are made under the Act, and are approved by the Racing Board, which is also a shareholder of the RIU. The vision for the RIU is an integrity and rule compliance model that will be internationally recognised for its quality, something which must advance the viability of racing in New Zealand. This latter concept is a core objective of the Racing Board.
[38] Finally, even if the applicants’ interpretation was to some extent correct, it could not go so far as to require the approval giver, whoever it is, to have to consider the overall economic well-being of the industry and its participants when taking an individual integrity decision such as this. The broader considerations and objectives can have no relevance to an individual decision on whether to charge in relation to a positive test result. Indeed, it is to ensure the independence of decision makers from such considerations that the RIU was established.
[39] Intuitively it would be very surprising if the applicants’ argument was correct. It is well known that racing, in whatever form, depends for its existence on bettor perception that it is run fairly and that the sport is clean. It would be an unexpected conclusion that the Racing Act 2003 prevented the Codes from adopting an integrity model that ensured greater independence, and the appearance of independence, over decision-making by a person who is, by position, a key industry player.
[40] In conclusion, I do not consider there is anything in the Act that requires an official of HRNZ to himself or herself be involved in individual decision-making on integrity issues. There is no suggestion this Rule was incorrectly made, and the policy choice it reflects is certainly one which the Act allows. A purpose of the Act is to promote the long-term viability of New Zealand racing and no doubt most involved in the industry would see a credible independent integrity system as a key component of that viability.
[41] Relevant to a later ground of review, I also reject the proposition that the decision maker had to have regard to the Board’s statutory objectives when deciding whether to give approval to a charge.
Issue two – does the fact that there is no other laboratory which can test the reserve sample mean a charge should not have been brought?
[42] It is convenient to begin this discussion by describing in more detail the process that occurred in relation to the sending of samples to the Hong Kong Jockey Club laboratory, and the way in which the matter was handled by the officials once notification was received that Delightful Christian’s sample had returned a positive to arsenic.
(a) A new laboratory is approved
[43] In April 2012, the then Chief Steward, Mr Cameron George, sought approval for extra funding to enable samples to be sent to the Hong Kong laboratory which is a recognised world leader in its field. Mr George’s paper at the time indicated that discussions with the Chief Analyst of the local laboratory which the racing Codes
used had made Mr George aware that the laboratory could not test for drugs which racing hearsay said were currently being used. He identified the particular drugs he had in mind. The proposal was not that the Hong Kong laboratory would become the main tester, but that samples would occasionally be sent there rather than to the New Zealand laboratory. Mr George also considered that, in addition to the increased testing capacity offered by the Hong Kong Jockey Club laboratory, it would also be beneficial in the battle to prevent drug abuse if industry participants became aware that the RIU was exploring all avenues. Employing the services of the Hong Kong laboratory would be one way of showing this.
[44] Approval was forthcoming. It was then necessary for each Code to formally approve the Hong Kong laboratory under its Rules. Mr Edward Rennell, the Chief Executive of HRNZ, advises that he received the request from Mr George on or before 1 May 2012. Within HRNZ, such matters are handled by a sub-Committee, and Mr George’s request was forwarded to that sub-Committee, which approved the request. Mr Rennell says he would not at the time have supplied any further information to the sub-Committee beyond the bare request because the Hong Kong laboratory was “widely recognised as one of the leading racing laboratories in the world”. The Committee advised Mr George of its approval on 1 May.
[45] Mr George says he did not consult with anyone in the racing industry prior to seeking approval to use the Hong Kong lab. He did, however, give an interview with a newspaper which, on 6 May 2012, published an article indicating overseas laboratories were to be used.4 Arsenic was discussed in that article because a New Zealand trainer recently had been found to have presented a horse to race in Sydney with arsenic in its system. The case had attracted considerable publicity. That Australian sample had also been sent to the Hong Kong laboratory.
[46] Subsequent to the Hong Kong laboratory being added as an approved facility,
18 samples taken on 2 June 2012 from the race day on which Delightful Christian was successful were sent to it. It appears these were the second group of samples to
be sent.
4 “New tactics on drugs aimed at beating cheat” Sunday Star Times (New Zealand, 6 May 2012).
[47] Following receipt of the positive arsenic result, a Stipendiary Steward, Mr Barry Kitto, was tasked with progressing the matter. As part of that process, he asked connections about testing the ‘B’ sample, referred to in the Rules as the reserve sample. The connections of Delightful Christian advised they wished the New Zealand laboratory to do the testing. Mr Kitto advised it was their choice but that the New Zealand laboratory was not capable of testing for arsenic in horse urine. He advised that only Hong Kong or an approved Perth laboratory were able to do this. In relation to the capacity of the Perth laboratory to do this testing, it was formally accredited only to test for arsenic in human urine. However, Mr Kitto’s advice from HRNZ’s veterinary adviser was that, at the levels involved, the Perth laboratory outcomes would be acceptable in relation to horse urine. Mr Kitto accordingly advised connections that the Perth laboratory was acceptable and had been the laboratory that had tested the ‘B’ samples in the Sydney arsenic cases.
[48] The connections of Delightful Christian adhered to their request that the testing be done at the New Zealand lab. This appears to have led to an impasse of sorts, and to date the reserve sample has not been analysed.
[49] Having completed his investigation, Mr Kitto decided to lay a charge. In doing so, he deposes that he took into account:
(a) whether it could be considered that arsenic was a prohibited substance;
(b)the situation as regards the reserve sample. In his view the Perth laboratory was an available option, and the connections could anyway challenge the admissibility of the Hong Kong sample if they wished;
(c) the fact that Caco Iron Cooper was the obvious source and had been administered by an approved vet; and
(d)fairness to the connections of the other horses in the race, since they were not permitted by the Rules to lay a charge if he decided not to.
[50] Having decided to charge in accordance with r 1104(3)(c), he sought approval from the Operations Manager of the RIU, Mr Mike Godber. Mr Godber says the request was made orally, and at the same time as two like cases. Present at the telephone meeting were Mr Kitto, HRNZ’s legal adviser, and the Chief Stipendiary Steward, now a Mr Ross Neal. Mr Godbar says that in approving the charges, he had regard to:
(a) the sufficiency of the evidence;
(b) the fact that no other avenues of inquiry needed to be pursued; and
(c) consistency with other decisions.
[51] Subsequent to the laying of the charge, the connections of Delightful Christian brought these proceedings. The prosecution is on hold pending this ruling.5
(b) Is there a right to have a reserve sample tested?
[52] HRNZ has approved a Swabbing Instructions Protocol that governs the taking of samples. The protocol envisages there will normally be available a reserve sample, but also contemplates there may not be. In relation to urine, for example, the standard procedure is for two bottles to be filled. However, one cannot always guarantee the horse will co-operate so the rules provide for what to do when only smaller amounts are obtained. Essentially, 50 mls goes into one bottle, and the rest into the second. If less than 50 mls is obtained, then it all goes into one, and there will be no reserve sample.
[53] The Protocol gives the connections of a horse that has returned a positive test three days “to request the reserve sample (if one is available) to be analysed at a laboratory approved by HRNZ” (emphasis added). The Protocol further states that it is not a defence to a charge that there is no reserve sample, or that the reserve sample
was lost or damaged prior to analysis.
5 I am advised the other two cases are also on hold pending resolution of this Court challenge.
[54] As noted, in the present case the connections asked for the sample to be tested in the New Zealand laboratory. They were advised the laboratory could not do this particular test, but that the Perth laboratory was able to, and that HRNZ considered its test would be reliable. The connections seemingly did not wish to use this laboratory.
[55] Evidence has been filed on the applicants’ behalf from an American expert, Dr Thomas Tobin. Dr Tobin’s evidence draws on the rules and procedures contained in the International Agreement on Breeding, Racing and Wagering. This Agreement comes from an organisation called the International Federation of Horse Racing Authorities. HRNZ is not a member of this organisation, although Thoroughbred Racing New Zealand is.
[56] The International Agreement has a section devoted to prohibited substances. I am not sure of the drafting history of HRNZ’s Prohibited Substance Regulation, but the parallels to the International Agreement are obvious. Indeed the New Zealand Regulation appears to be almost identical in structure and content to the first part of the International Agreement.
[57] However, a second part of this International Agreement, which addresses certification of laboratories to do this testing, is not replicated in the New Zealand Regulation. Concerning certification of laboratories, the International Agreement provides:
18. The aim of signatory countries is that their laboratories should:
be accredited according to ISO/IEC 17025, General requirements for the competence of testing and calibration laboratories, and to the supplementary document ILAC-G7, Accreditation requirements and operating criteria for horseracing laboratories
conform with the Guide for establishing the presence of prohibited substances (Part B of ILAC-G7)
meet the Performance specification of the International
Federation of Horseracing Authorities
take part in interlaboratory comparisons (clause 5.9(b) of
ISO/IEC 17025:2005)
control the detection of legitimate therapeutic substances through the application of internationally harmonised screening limits which have been recommended by the IFHA’s Advisory Council on Prohibited Substances and Practices and selectively adopted by the relevant signatory countries.
[58] With reference particularly to the highlighted fourth bullet point, Dr Tobin gives his opinion that the Hong Kong laboratory should not have been certified to test for arsenic in equine urine, because it is unable to test its procedures in interlaboratory comparisons. He also states that he does not consider the Perth laboratory, which is certified only in relation to human urine, is an acceptable option. Finally, it is his opinion that the inability to properly test the positive result reported by Hong Kong by way of obtaining an independent assessment of the reserve sample means that the original sample should not be regarded as scientifically reliable.
[59] The applicants use this evidence to submit either that it was not valid to approve the Hong Kong laboratory, or that any test results in relation to arsenic in urine should not be relied upon.
[60] Concerning the first proposition, which is one properly to be dealt with by this Court on the judicial review proceedings, I do not consider a dispute about the validity of a positive test in relation to one substance can undermine a prior decision generally to approve the Hong Kong laboratory under the New Zealand Rules. No one queries the standing of the laboratory, nor is any issue raised concerning the process followed by HRNZ. That being so, there is no basis on which to challenge the approval. If there is one aspect of its work product in relation to a specific substance that is open to challenge that does not mean the approval generally is invalid.
[61] Mr McVeigh QC goes further and submits the decision to approve a laboratory is not a decision that is subject to review at all. It is a low level decision not affecting rights and interests, and should be left to the organisation. I do not need to resolve this since I consider the present challenge lacks merit. I accept that generally what Mr McVeigh submits is correct, but I doubt there could be an absolute statement rendering this decision making function immune to challenge. One can hypothesise, for example, an ad hoc laboratory approval occurring for
improper motives. In such circumstances a Court may well consider the matter reviewable.
[62] The second basis for the challenge is the issue concerning the ability to test the reserve sample. I do not consider this is properly a matter for this Court to rule on prior to the hearing of the charges by the JCA. The JCA can hear and test the evidence about whether the lack of a peer review affects the worth of the positive test, and about whether the Perth laboratory offers a viable alternative, and whether that is relevant. What is clear is that the Rules do not require a reserve sample to be available for testing, and there is no challenge made here to the legality of those Rules. Hence it is an admissibility and weight issue for the JCA.
[63] I, therefore, reject the challenge to the approval of the Hong Kong laboratory.
Issue three – did industry participants have a legitimate expectation to be consulted before new testing procedures were used?
[64] The applicants rely on what is said to be an established practice (and commitment by HRNZ to maintain this practice) that has emerged from meetings of a liaison committee involving veterinarians. The membership of the committee consists of representatives of HRNZ, Thoroughbred Racing New Zealand and an organisation called NZEVA – the New Zealand Equine Veterinarian Association. As the name suggests this latter group draws its membership from vets who do substantial amounts of work with horses, and particularly in the racing industry.
[65] It is convenient first to set out the relevant law that the applicants seek to come within, and then to traverse the history of the liaison committee.
(a) What is required to establish a legitimate expectation?
[66] A legitimate expectation arises where a group has an entitlement, based on past practice or clear commitment, to a particular process being followed. Here the applicants, as participants in the harness racing industry, say there was a settled practice that notice would be given before new testing equipment or techniques were
used on samples. If the applicants can successfully establish that such an expectation existed within the industry, it can be argued that HRNZ breached that expectation when it laid a charge for arsenic that has been detected by an unannounced new testing technique (being whatever method the Hong Kong laboratory uses).
[67] The following suffices for present purposes as a description of the law on legitimate expectation, and what is required in order for the industry participants to establish they had such an expectation. The Court of Appeal in Comptroller of Customs v Terminals (NZ) Limited set out a three stage test for considering claims of
legitimate expectation:6
The first is to establish the nature of the commitment made by the public authority whether by a promise or settled practice or policy. This is a question of fact to be determined by reference to all the surrounding circumstances. A promise or practice that is ambiguous in nature is unlikely to be treated as giving rise to a legitimate expectation in administrative law terms.
The second is to determine whether the plaintiff’s reliance on the promise or practice in question is legitimate. This involves an inquiry as to whether any such reliance was reasonable in the context in which it was given.
The third, and often most difficult part of the inquiry, is to decide what remedy, if any, should be provided if a legitimate expectation is established.
(b) The liaison committee
[68] It will be recalled that the liaison committee is a joint committee of representatives of the harness and racing Codes, and the special interest group of veterinarians who work regularly within the racing industry. The evidence about these meetings comes both from participants, and from the minutes of the meetings. It seems in general they were held once or twice a year. Based on the minutes, those usually attending would appear to be the heads of harness racing and thoroughbred racing, some Stewards and Inspectors from each of the racing and harness Codes, and representatives from NZEVA. Also in attendance would be the Codes’ own
veterinary adviser.
6 Comptroller of Customs v Terminals (NZ) Ltd [2012] NZCA 598 at [125]–[127].
[69] For the applicants, evidence has been filed from two veterinarians who are each past presidents of NZEVA, and who have attended many meetings – Mr Ivan Bridge and Mr Murray Brightwell. Mr Bridge says the liaison meetings have been occurring since 1994. Both veterinarians depose to a practice emerging from these meetings whereby there would be consultation as to:
(a) any changes of opinion about the effect of a therapeutic drug;
(b)technological advancements that may increase forensic capability and require changes to withholding times.
[70] It is further said that there is a practice of having an agreed lead-in period which would precede any change in the prohibited substance rules, or precede the introduction of a change in testing or methods so as to give veterinarians reasonable time to modify their methods.
[71] Mr Green, one of the applicants and an experienced trainer, deposes that his understanding as a trainer of how things worked was as set out by Mr Bridge. This position is supported by a series of affidavits or affirmations from other trainers.
[72] Finally, for the applicants, there is an affidavit from Mr John McKenzie, the Chief Racecourse Inspector for many years, who attended many liaison meetings. Mr McKenzie deposes in broadly similar terms to the other deponents for the applicants. It would be his expectation that the head of the New Zealand laboratory would disclose the acquisition of new equipment or technologies, either by discussion at a liaison meeting or by providing the information to NZEVA and the Codes outside those meetings. In particular, Mr McKenzie says:
In my opinion, based on my experience and involvement over the years in the liaison committee process, if NZLRS had have acquired the capability of analysing arsenic in equine urine, this was something which would have been disclosed to NZEVA as part of the consultative process and NZEVA would have been given a lead in time before any regulatory action were taken under the Rules. I hold this opinion because if there had been an endeavour to control the presence of arsenic through analysis NZEVA’s list would have needed to be updated to incorporate a withholding time for substances containing arsenic.
[73] Before turning to the respondents’ evidence, I observe that if the applicants’ evidence is taken at its highest, then to outside eyes and in this modern day approach to drug detection, the harness authorities appear to have placed themselves in quite an unexpected situation. It is counter-intuitive to hear that industry participants have an expectation of being told before authorities use better drug detection equipment, or start testing for a drug that is already prohibited. Perhaps not surprisingly therefore, the respondents’ understanding of the position is somewhat different.
[74] Mr Rennell, the Chief Executive, indicates that HRNZ considers the control of the use of prohibited substances is integral to the integrity of the sport. It is essential to maintain bettor confidence. He deposes that HRNZ has never advised industry participants what the New Zealand laboratory can test for, for the obvious reason that it is undesirable to disclose what is not tested for. Nor does it disclose when a new test becomes available. He cites an example of a test being developed, discreetly, for a substance called blue magic. This subsequently led to a high profile trainer being charged. There was no prior disclosure.
[75] It is also noted that samples are now routinely held for six months to enable retrospective testing, a situation where advance notice is not possible. Mr Rennell states that whilst use of the Hong Kong laboratory is new, samples have previously been sent to Australia without notice being given to anyone.
[76] The head of the New Zealand laboratory, Mr Beresford, who is also the Code’s veterinary adviser, says he (not HRNZ) would update NZEVA if new testing equipment or technologies would impact on withholding times. However, this to date has not occurred. Generally, however, confidentiality applies and so he does not
disclose.7 Mr Beresford confirms his advice that the Perth laboratory would produce
a reliable assessment.
[77] Finally, Mr Kitto and Mr Godbar, both of the RIU, depose that they are not aware of a practice by HRNZ or the RIU of disclosing where tests are to be sent, or
the availability of new testing procedures. Mr Kitto makes the point that this is
7 I accept the criticism of the applicants’ deponents that these two statements, on their face, appear
contradictory.
inconsistent with retaining samples for six months for that purpose – to see if new techniques might emerge.
[78] Before leaving this overview of the evidence it is necessary to touch on a dispute that emerged concerning the status of a document that sets out recommended “withholding times”. A withholding time is the period of time before which a drug or product should be administered in order to be satisfied that any prohibited substance that enters the horse as a result of the treatment will have cleared its system by race day. This list is drawn up by NZEVA to assist its members to avoid administering treatments that could lead to positive race day tests.
[79] The dispute is as to whether HRNZ or the RIU endorse the list. I do not consider the debate to be of any assistance to this case, since Caco Iron Copper was not amongst the products covered in the list. However, given the degree of focus on it in the evidence, I briefly comment. It appeared to me to be a question of semantics. HRNZ is aware of it, and supports its existence. It is a topic discussed at the liaison meetings. Everyone would wish the list to be conservative and successful. It seems, according to Mr Bridge, to have been totally so until this case.
[80] However, Mr McKenzie makes the point that compliance with the recommended withholding time is not a defence to presenting a horse with a prohibited substance. To this extent HRNZ, and now RIU, do not and cannot “endorse” it. Indeed, Mr Brightwell, one of the applicant’s deponents, appends to his evidence a letter he wrote on the topic when President of NZEVA:
To all veterinarians,
The period of detection list is available to all veterinarians through the portal of the NZVA website.
Attached to this list is an important disclaimer which you are advised to make yourself familiar with.
Veterinarians are reminded that the recommendations are a guideline only and based on very small numbers in many cases and hence a conservative approach in their interpretation would be prudent.
The advised detection time is also dose dependent and all practitioners are well advised to be mindful of this when administering prerace medications.
This advice is particularly relevant given the recent concerns regarding alleged prerace administration of DMSO (dimethylsulfoxide) at dose rates allegedly in excess of the guidelines circularised by the NZEVA.
M.K. Brightwell. B.V.Sc
President NZEVA
28th August, 2008
[81] That seems to me consistent with the conclusions I have drawn on this. Its existence is recognised. It is a guideline only, albeit a valuable one. Should a positive test nevertheless eventuate, compliance with the time set out in the list is not a defence. It is also to be noted that Mr Bridge appears to err when he describes the present instance as the first example of compliance with the guidelines leading to a positive test. Although there might have been a recognised approach to the administration of Caco Iron Copper, it is not, as noted, a product covered in the withholding times document.
(c) Did industry participants have a legitimate expectation?
[82] The pleaded expectation is an expectation of consultation or liaison with NZEVA, the harness racing drivers association and industry participants about any proposal or decision to cause urine samples taken from racehorses to be subjected to a testing regime in relation to arsenic that had not previously been undertaken or employed. In written submissions this had evolved to a claim of a commitment to consult where NZEVA’s list of withholding times might be affected by any changes in opinion as to the effect of a therapeutic drug and/or any changes in equipment, testing or methods affecting withholding times for legitimate therapeutic substances.
[83] The affidavits filed on behalf of the deponents support those claims, although there are some variations in the manner in which the expectation is described. It must of course be accepted without question that that is what the deponents believe, but the issue is whether the evidence taken as a whole supports the correctness of that belief. In this regard it is to be noted that the deponents for HRNZ, the other party to the alleged agreement or protocol, deny its existence. In such circumstances regard must be had to the contemporaneous documents, to any examples of the protocol in action and to whether current practice is consistent with the existence of such a protocol.
[84] I have reviewed the minutes of the Liaison Committee meetings. Bearing in mind, of course, that they are minutes and not some verbatim record, they do not in my view support the claimed commitment. There is no doubt that drugs, prohibited substances, changes in perceptions or opinions on such substances, and withholding times have all been discussed. But that is not what must be established. There must be a settled practice of, or expressed unambiguous commitment by the relevant authority to, not acting in a certain way without first having followed the practice. The minutes do not support the existence of either.
[85] Correspondence and a statement emanating in recent times from NZEVA expresses the organisation’s unhappiness that the administration of a therapeutic treatment used for 30 years has led to a positive result because of unannounced new testing. In these statements, the organisation refers specifically a meeting of the liaison committee in August 2008 as the time when the commitment was fixed. This particular meeting is not so firmly identified in the affidavits or submissions but since this material was filed in support of the application I have looked to the minutes of that meeting.
[86] However, the minutes on their face do not disclose any agreement about such a practice. Under the relevant item, they record that discussions took place “on the following prohibited substances, developments and testing for”. There is then a list of the substances discussed. But that is it. There is no suggestion of a watershed moment or the settling of a practice for the future. Consistent with this, the Agenda for the next year’s meeting lists the topic for discussion in unchanged terms:
Prohibited Substances Discussion. Refer to previous Minutes. General discussion on prohibited substances, testing, and developments.
[87] Also of some interest are the minutes of the meeting for the preceding year,
2007, where it is recorded:
6. NOTIFICATION OF CODE RULE CHANGES
Concerns were expressed by the NZEVA representatives of poor communication from the codes of rule changes, particularly those relating to
prohibited substances. This was acknowledged by the codes with Edward
Rennell giving an undertaking that there needed to be improved communication from the codes in this process. He advised that HRNZ
would look to include the NZEVA in future rules consultation processes in a
manner similar to what it does currently with the NZRB and JCA. Fin
Powrie advised that NZTR would adopt a similar approach.
[88] This again shows that there was uncertainty at that time about the process to be followed for notifying Rule changes. It is a far cry from having a settled practice as regards methods of enforcing compliance with the Rules.
[89] Overall the documentation does not on its face support the existence of the protocol for which the applicants contend. However, the applicants submit the documents should be read in light of two concrete examples of this procedure or protocol having been followed.
[90] The first of these events occurred in relation to the substance Heptaminol. It seems that for a time there was a divergence in opinion between the racing and harness codes over whether the effects of this substance brought the substance within the definition of a Prohibited Substance. Thoroughbred Racing New Zealand took the position that it did, but HRNZ, acting on the advice of its then veterinary adviser, took a different view. Eventually, however, it was HRNZ that shifted its stance. The industry was notified of this change in view and it appears a lead-in period was allowed.
[91] The second example related to a product called Levamisole, a commonly used drench. Its use was permitted in that it came within an exemption in the prohibited substances rules which allowed the use of antiparasitics. However, expert opinion developed that Levamisole metabolised into aminorex, which is an amphetamine and therefore a prohibited substance. As a consequence, the antiparasitics exemption was removed from the regulations. NZEVA added aminorex as a prohibited substance in its list that is issued to vets, and a notice was published in the relevant industry document.
[92] The notice is of some interest. It is headed by reference to Aminorex. It explains Aminorex is a prohibited substance, and that it is a metabolite of Levamisole. The notice concludes by stating:
This is to advise trainers that race day samples will be immediately subjected to analysis for Aminorex.
The evidence does not explain what the lead-in period was on this occasion. I infer that it must have been the short period between: (i) discussion at the meeting and advice to vets; and (ii) the notice. Presumably this was enough time for industry participants to adjust and avoid innocent applications of Levamisole resulting in a positive test to Aminorex.
[93] I do not consider either example assists in relation to the proposition that a protocol existed in relation to the use of new testing capacity. Both involved the proscribing of something previously permitted, which is a wholly different situation. Here arsenic, if it is prohibited, has long been so. The situations are different.
[94] The conclusion that the documentary evidence discloses no established practice concerning new testing, nor any commitment by HRNZ in that regard, is reinforced by the current practice of keeping samples for six months for retesting. That practice is the antithesis of the applicants’ claim since its very rationale is to preserve the ability to apply new information and techniques. If the expectation contended for by the applicants existed, the keeping of samples would not be worthwhile. Accordingly, neither the contemporary documentation, nor current drug sample practices, are consistent with the existence of the type of protocol contended for.
[95] An alternative analysis raised in the submissions is that the current situation is the equivalent of proscribing a new substance, and for that reason warning should have been given. I suspect it is this analysis that underlies NZEVA’s concerns. The analysis is that Caco Iron Copper, which contains arsenic, has been used for 30 years and there has never been a reported issue with the prohibited substance rules. As it turns out this is because HRNZ did not require it to be tested for. This decision not to equip the New Zealand laboratory to test for arsenic engendered misplaced confidence that the current practices in relation to Caco Iron Copper were safe. The situation should be assessed as if arsenic was being treated as no longer prohibited. Then by using the Hong Kong laboratory which does test for arsenic, there has effectively been a decision to put the substance back on the list. Some support for this analysis can be found in the evidence of Professor Tobin’s that, although most
jurisdictions have the same Regulations which also appear to prohibit arsenic, only
Hong Kong actually tests for it.
[96] I do not accept the equivalence argument. It ignores the reality that there has been no change in relation to arsenic. HRNZ never said anything to suggest arsenic was not prohibited. No-one in the industry knew arsenic was not being tested for so they could have no expectation that it was not prohibited. A decision to start testing for an already prohibited drug cannot be likened to changing the classification of a substance from permitted to prohibited.
[97] This conclusion means that the applicants fail at the first of the three steps that apply to claims of a legitimate expectation. For completeness, however, I will briefly address the other two.
[98] The second step to be established is that it was legitimate for the applicants to rely on the expectation. Here the analysis advanced by the applicants is presumably that the trainers were entitled to rely on the veterinarian and it was reasonable for the veterinarian to rely on notice being given before a sample taken on race day would be tested for arsenic that may have come from a recognised therapeutic treatment. Had I been required to decide this step, I would not have accepted the reasonableness of the reliance in this present case.
[99] First, the veterinarian who administered the treatment deposed he was not sure that he was aware at the time of treating the horse that Caco Iron Copper had arsenic in it, although he assumes he probably did because it is noted on the label. What the veterinarian was relying on, therefore, was not the correctness of a withholding time as regards the administration of a substance containing arsenic, but an assumption as to the safety of using Caco Iron Copper in this way. That is not reliance on the pleaded protocol. Caco Iron Copper is not on the NZEVA withholding list. Second, it was not clear why notice that HRNZ would now test for
arsenic8 would have changed anything. Presumably no-one was presently following
a practice that was believed to be likely to lead to breaches of the Prohibited
8 It is misleading to speak of a decision to test for arsenic. It was a decision to use the Hong Kong laboratory on an occasional basis. As it happens arsenic is one of the substances where there is a difference between the capacities of the New Zealand laboratory and the Hong Kong laboratory.
Substance Rule. The evidence never made clear to me why an announcement that Hong Kong would now test for arsenic would lead to a change in how Caco Iron Copper was administered. Nor was there evidence that how Caco Iron Copper was administered on this occasion fell within the manufacturer’s guidelines. I do not know the answer to that and it is a fundamental step in establishing reasonableness in this case.
[100] Finally, on the topic of whether it was reasonable to rely on the expectation, if such an expectation did exist, it belonged to an arrangement between HRNZ and industry participants. There was nothing to suggest that the new enforcement body, the RIU, had made such a commitment. The most that was pointed to was that some of the Stewards, including Mr George, were aware of the old arrangement through their attendance at liaison meetings. But that would not make HRNZ’s commitment, the RIU’s, especially when regard is had to the rationale for creating the RIU.
[101] The final of the three steps is to consider what relief would have been given. It is always difficult to do this in a vacuum, given my earlier conclusion that the expectation did not exist. However, I doubt that for all the reasons that have been discussed, the relief would have involved a declaration that a charge should not be laid as regards the horse winning the race. I would have seen a better argument for relief, and I put it no higher than that, if the applicants had also been charged in relation to a positive test obtained in breach of the expectation. There is more difficulty with the proposition that a court should give relief that would require that the horse be allowed to keep the race even though it won with a prohibited substance in it. This observation leads into the fourth issue, which is the legitimacy of laying such a charge.
Issue four – an invalid decision to prosecute?
[102] Mr Fisher identified various factors that he submitted should have been considered, and were not. Some were sourced in the proposition I rejected at the outset, namely that the decision makers had to consider whether their decision was consistent with the Racing Board’s statutory objectives. I do not repeat that.
[103] The main submission the applicants make is based on the proposition that arsenic, if it is prohibited, is unlawful only because it can hinder the performance of a horse. Since Delightful Christian was a winner, the presence of arsenic was irrelevant to the outcome of the race. Therefore, it is submitted, Messrs Kitto and Godber had to take this into account before they decided to charge.
[104] I do not agree and see no reason to be concerned about the decision making process. It is not disputed that there is sufficient evidence to support the charge. It is accepted that those involved were properly interviewed, and were given an opportunity to comment. Further, the people identified by the Rules as being the decision makers are the people who have taken the decision. Combining the factors taken into account by the two decision makers, Messrs Kitto and Godber, the
following list emerges:9
(a) the sufficiency of evidence; (b) the adequacy of inquiries;
(c) the apparent reason for a positive test having occurred, and the prevalent use of Caco Iron Copper;
(d) the issue of whether the B sample could be adequately tested; (e) fairness to connections of other horses; and
(f) consistency with other decisions.
[105] I do not accept that whether the prohibited substance helped the horse to win is something that must be added to this list. Requiring the decision maker to have
regard to that would be inconsistent with the scheme of the Rules which are clear:
9 There was a dispute as to whether Mr Godber’s affidavit evidence should be accepted. I do not
need to detail the dispute but indicate I consider it should be accepted.
(a) a horse must be presented in a prohibited substance free condition; (b) if it is not, it must be disqualified;
(c) those responsible for the care of the horse at the time also commit an offence regardless of how the substance came to be in the horse.
[106] The officials are entitled to accept and work within what is an unchallenged regulatory scheme. Faced with a positive result, they are not obligated to consider whether disqualification would be a fair outcome in the particular case. The fact that the JCA itself has no discretion if the charge is proved is not to be avoided by instead loading the prosecution discretion with such considerations. The applicants’ real complaint is with mandatory disqualification, but that rule was not challenged.
[107] These Rules reflect a policy choice that an absolute regime is the best disincentive, and the best way to instil public confidence. The applicants do not directly challenge the legitimacy of this mandatory disqualification rule, but seek instead to undermine it by transferring the policy considerations to the prosecutor. I do not consider that is legitimate and so reject this aspect of the case.
[108] The final submission was that a decision to charge was unreasonable, in the sense that it is not a decision any reasonable decision maker could reach. Given my conclusion that it is a decision contemplated by the scheme of the Rules, this submission cannot succeed. When the Stewards are provided by an approved laboratory with evidence to put before the JCA of a horse winning a race with a prohibited substance in it, it is difficult to see how a decision to charge would ever be classified as legally unreasonable, absent some extreme situation.
Conclusion
[109] The Rules lawfully provide for the head of the RIU to be the person who approves a Steward’s decision to charge. In the present case, given that a positive result was received from a properly appointed overseas laboratory, it was reasonable for authorities to decide to lay a charge. In so doing the authorities had regard only to relevant matters, and did not omit to consider anything they should have.
[110] As regards the proposition that there was an understanding between industry participants and HRNZ about a process for advertising new techniques and tests, I do not consider the evidence showed there to be such a practice, or indeed that it had ever happened. Further, such a practice would be unexpected in a drug testing environment, and is inconsistent with, for example, the current practice of freezing samples for later testing as new capability emerges.
[111] Finally, it can be observed that it is the inevitability of the disqualification that has driven these proceedings. But no challenge was made to the mandatory disqualification rule itself, either as regards its lawfulness or its reasonableness. That being so, a challenge to the decision of the authorities to lay such a charge was always going to be difficult. In my view, for the reasons given, it must fail.
[112] The respondents are entitled to costs. Memoranda may be filed if agreement cannot be reached.
Simon France J
Solicitors:
M Fisher, Erskine Chambers, Auckland, email: [email protected]
C A McVeigh QC, Christchurch, email: [email protected]
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