New Zealand Independent Community Pharmacy Group v Te Whatu Ora Health New Zealand (formerly Hutt Valley District Health Board)
[2023] NZHC 1929
•21 July 2023
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2022-485-11
[2023] NZHC 1929
UNDER the Judicial Review Procedure Act 2016, the Declaratory Judgments Act 1908 and Parts 18 and 30 of the High Court Rules 2016 IN THE MATTER OF
an application for judicial review and an application for declaratory relief under the Declaratory Judgments Act 1908
BETWEEN
NEW ZEALAND INDEPENDENT COMMUNITY PHARMACY GROUP
Applicant
AND
TE WHATU ORA – HEALTH NEW
ZEALAND (formerly HUTT VALLEY DISTRICT HEALTH BOARD)
First Respondent
Continued…
On the Papers Counsel:
R Kirkness, N Coates, M Harris and H Yang for the Applicant D La Hood, S McCusker for Te Whatu Ora – Health
New Zealand (formerly Hutt Valley District Health Board) S Bisley, J Maltby for Te Whatu Ora – Health New Zealand (formerly Tauora Tairāwhiti)
R Schmidt-McCleave, Ms Kerr for Ministry of Health M Crotty, L Mau for RX No. 8 Limited
S McKechnie, B Clifford for Pharmacy Guild of New Zealand
Judgment:
21 July 2023
JUDGMENT OF GWYN J
(Stay of execution of judgment pending appeal)
NEW ZEALAND INDEPENDENT COMMUNITY PHARMACY GROUP v TE WHATU ORA [2023] NZHC 1929 [21 July 2023]
… Continued
HAUORA TAIRĀWHITI
Second Respondent
THE MINISTRY OF HEALTH
Third respondent
COUNTDOWN PHARMACY (GDL RX NO8 LTD)
Fourth respondent
THE PHARMACY GUILD OF NEW ZEALAND
Intervener
[1] On 15 June 2023 I issued a judgment (Judgment) in this proceeding which found that the licences granted by the Ministry of Health (Ministry) to GDL Rx No 8 Ltd (RX8) to operate the Countdown Pharmacies were unlawful and invalid and an order should be made to set aside those licences.1
[2] I directed that the Ministry and RX8 confer and file further submissions as to when the quashing order in relation to the RX8 licences should take effect, within four weeks of the judgment (that is, by 13 July 2023).
[3]RX8 filed a notice of appeal of the Judgment on 13 July 2023.
[4] In this Court RX8 filed a notice of interlocutory application for stay of execution of the Judgment pending resolution of the appeal, dated 13 July 2023. The application for stay is supported by an affidavit of Jeremy Armes, dated 11 July 2023. RX8 requests that the Court allow RX8 and the Ministry until the appeal has been resolved, to confer and file submissions (if required) as to when the quashing order in relation to RX8’s licences should take effect.
[5] When the application for stay came before me on 13 July 2023, the other parties had not had an opportunity to respond to the application. In those circumstances I granted a temporary stay of the judgment and directed that if any party wished to be heard on the stay application they should file memoranda by 5.00 pm on Thursday 20 July 2023.
[6] An interim stay of the judgment until further order was granted on 13 July 2023.2
Grounds for stay application
[7]RX8 notes the following grounds for its application.
1 New Zealand Independent Community Pharmacy Group v Te Whatu Ora [2023] NZHC 1486.
2 New Zealand Independent Community Pharmacy Group v Te Whatu Ora HC Wellington CIV- 2022-485-11, 13 July 2023 (Minute of Gwyn J).
[8] RX8 currently holds licences to operate Countdown Pharmacy Wainuiomata and Countdown Pharmacy Grey Lynn.
If no stay of execution of the judgment is granted, RX8 will (at some point):
(a)lose its licences to operate Countdown Pharmacy Wainuiomata and Countdown Pharmacy Grey Lynn in the meantime, which could:
(i)have material implications for the pharmacist shareholders in RX8 and the viability of their continued joint venture with General Distributors Ltd (GDL);
cause significant disruption to employees of the Pharmacies;
(iii)affect the care and wellbeing of patients in the relevant regions; and/or
(iv)incur significant costs in the inconvenience of having to restructure the company in order to satisfy the “effective control” test with reference to the findings in the Judgment to apply for a new licence. That cost and inconvenience may have been wholly unnecessary if RX8 is successful in its appeal.
(b)If no stay is granted and the licences are set aside this will render RX8’s right of appeal nugatory.
(c)The applicant would not be materially injuriously affected by the stay.
(d)The interpretation of “effective control” is a novel and important question which affects the whole pharmacy industry, including operators who are not before the High Court.
(e)There is public interest in the interpretation of “effective control” and ensuring that there is continuity in receiving pharmacy services from the various pharmacies that might be affected by the Court’s
interpretation of “effective control”, given the Ministry has been applying a negative control test since approximately 2008.
(f)The overall balance of convenience and justice favours the granting of a stay.
[10] Mr Armes’ affidavit in support of the application refers to steps already taken by RX8 in response to the Judgment investigating options to restructure the company to ensure it meets the “effective control” test as articulated in the Judgment and to apply for new licences for the Ministry. These steps are necessary to ensure RX8 can continue to operate the pharmacies and ensure continuity of services. Mr Armes’ evidence is that the proposed restructure will be time-consuming and expensive.
Submissions from other parties
[11] Counsel for the applicant have indicated to the Court that the applicant does not oppose the application for stay.
[12] The application is supported by the third respondent, the Ministry of Health. Counsel for the Ministry filed a memorandum, and supporting affidavit of Christopher James, on 13 July 2023. Unfortunately those were not available to me at the time I issued my minute of 13 July 2023.
[13] The Ministry notes that holding a licence under s 55D of the Medicines Act 1981 is a critical requirement for a pharmacy to operate. In the Ministry’s view, the Judgment will affect not only RX8 but also directly affect a large number of other licence holders — 240 entities, operating a total of 308 pharmacies, including RX8, which have been previously assessed by the Ministry as having “negative control” ownership structures.
[14] As the Ministry notes it will need to undertake a process of review in relation to each affected licence holder, in addition to a further significant number of potentially affected licence holders, if execution of the Judgment is not stayed. Mr James for the Ministry estimates that work will take approximately 12 months and
require a substantial investment of resource from the Ministry and the affected licence holders.
[15] The first and second respondents (Te Whatu Ora) support the application for a stay of execution of the orders made in the Judgment.
[16] While the orders relate to the sixth ground of review and are made against the Ministry and RX8, Te Whatu Ora notes it has an interest in the orders, which could significantly impact on the effective ongoing delivery of health services in several locations around the country. Te Whatu Ora reinforces the possible consequences, as outlined by RX8 and the Ministry, if a stay were not to be granted. Te Whatu Ora notes that premature closure of the Countdown Pharmacies, pending resolution of the appeal, may provide a barrier to patients accessing pharmacy services and medicines and place additional strain on existing community pharmacies.
[17] Counsel also note that the closure of pharmacies would place a resourcing burden on Te Whatu Ora in dealing with the effect on any related Integrated Community Pharmacy Services Agreements (ICPSA), including oversight of redistribution of patients (particularly those receiving controlled medicines), impact on the sector in each district and administration of ICPSAs, including notices of termination or suspension.
Principles applicable to a stay
[18] The principles relevant to an application for stay of proceedings are set out in the commentary to r 12.3 of the Court of Appeal (Civil) Rules 2005.3
[19] As I indicated in my minute granting an interim stay, I am readily satisfied that the relevant conditions are met in this case.
[20] In particular, it is clear that the question of interpretation of “effective control” is a novel and important question. It has the potential to affect the whole pharmacy
3 Jessica Gorman and others McGechan on Procedure (looseleaf ed, Thomson Reuters) at [CR12].
industry, including, as counsel for RX8 and the Ministry note, operators who are not before the High Court.
[21] I also accept that there is a public interest in the interpretation of “effective control” and ensuring continuity of pharmacy services in the meantime, given that the Ministry of Health has been applying a negative control test since approximately 2008. As each of Te Whatu Ora, the Ministry and RX8 submit, the potential impact of the order is significant and widespread.
[22] I also accept that if no stay is granted and the licences are set aside this will render RX8’s right of appeal nugatory, given for the reasons set out in the affidavits of Mr Armes and Mr James.
Result
[23] I therefore grant a stay of execution of the Judgment pending the outcome of RX8’s appeal to the Court of Appeal.
Gwyn J
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