New Zealand Independent Pharmacy Group v Hutt Valley District Health Board

[2022] NZHC 1512

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2022-485-11

[2022] NZHC 1512

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 PHARMACY GROUP

Applicant

AND

HUTT VALLEY DISTRICT HEALTH BOARD

First Respondent

HAUORA TAIRĀWHITI
Second Respondent

Continued…

Hearing (by VMR):

27 June 2022

Counsel:

H Yang for the Applicant

D LaHood and S McCusker for the First Respondent S Bisley and H Kelly for the Second Respondent

R Schmidt-McCleave for the Third Respondent No appearance for the Fourth Respondent

S McKechnie and M Holmes for the Applicant to Intervene

Judgment:

28 June 2022

JUDGMENT OF GWYN J

(Application for leave to intervene)

NEW ZEALAND INDEPENDENT PHARMACY GROUP v HUTT VALLEY DISTRICT HEALTH BOARD [2022] NZHC 1512 [28 June 2022]

… Continued

AND

MINISTRY OF HEALTH

Third Respondent

GDL RX NO 8 LIMITED
Fourth Respondent

AND

PHARMACY GUILD OF NEW ZEALAND

Applicant to intervene

Introduction

[1]    This substantive proceeding is an application by the New Zealand Independent Community Pharmacy Group (ICPG) for judicial review, in relation to the decision of the Hutt Valley District Health Board (HVDHB, the first respondent) to enter into an Integrated Community Pharmacy Services Agreement (ICPSA) with GDL Rx No 8 Limited (Countdown) and the decision of the second respondent, Hauora Tairāwhiti, to enter into an ICPSA with Countdown.

[2]    The Ministry of Health is the third respondent in its capacity as funder and overseer of the health and disability system. Countdown was joined as a fourth respondent.

[3]    The application before me is brought by the Pharmacy Guild of New Zealand (Guild) for leave to intervene in the proceeding. The Guild seeks leave to file written submissions and evidence and, with the leave of the trial Judge, to make oral submissions.

[4]    The Ministry of Health abides the Court’s decision on the Guild’s application, but submits that, if leave is granted, joinder for the purposes of making submissions only would be appropriate. The ICPG also abides the Court’s decision but says there would be no prejudice to the parties from the proposed intervention and disputes some aspects of the HVDHB’s characterisation of the issues in dispute, noting the broader claim encompassed in its final cause of action.1

[5]    The application is opposed by HVDHB and Hauora Tairāwhiti. HVDHB asks that, in the event the application is granted, the Guild’s intervention is limited to the filing of written submissions and Hauora Tairāwhiti supports that position. Countdown supports HVDHB’s opposition to the application but did not wish to be heard.

1 Discussed at [33] below.

Background

[6]    The primary legislation currently governing the public health and disability sector is the New Zealand Public Health and Disability Act 2000 (PHDA). Under the PHDA, District Health Boards (DHBs) are responsible for planning, funding and ensuring the delivery of health and disability services to their resident populations, including monitoring the delivery and performance of such services.

[7]    Section 25 of the PHDA provides DHBs with the power to negotiate and enter into service agreements and the obligation to monitor the performance of the other contract holders under that agreement. The ICPSA is a service agreement under s 25. The ICPSA is an evergreen contract, entered into between a DHB and a service provider for the provision of community pharmacy services. The ICPSA is negotiated at a national, collective level, between representatives of the DHBs and of community pharmacies. The current ICPSA came into effect on 1 October 2018.

[8]    Andrew Gaudin, Chief Executive of the Guild, has filed evidence in support of the application to intervene. Mr Gaudin’s evidence is that, once the ICPSA is approved by the collective Chief Executives of the DHBs, it is promulgated by each DHB to the community pharmacies in each DHB district. The contract itself is between an individual licensed pharmacy provider and the relevant DHB. A community pharmacy must hold an ICPSA in order to provide community pharmacy services and receive government funding. Mr Gaudin’s evidence is that, without an ICPSA, community pharmacy businesses are financially unsustainable.

The Pharmacy Guild of New Zealand

[9]    The Guild is the largest membership organisation in the community pharmacy sector in New Zealand. It currently represents 606 members across New Zealand, including 19 in the Hutt Valley and six in Tairāwhiti.

[10]   Mr Gaudin’s evidence is that the Guild provides a range of support and services to community pharmacy owners, including leadership and representation of its members on many issues facing the sector.

[11]    In addition to its significant role in negotiating the current ICPSA, it acts as its members’ representative in ICPSA discussions and engages with government officials and DHBs in significant public policy discussions in community pharmacy.

[12]   Mr Gaudin’s evidence also discusses the annual review process (National Annual Agreement Review or NAAR) where issues ancillary to the contract, such as recommended changes to the government’s pharmaceutical co-payment policy, are discussed. The NAAR processes have also discussed the DHBs’ use of contracting policies more generally. Mr Gaudin says that these policies – which represent a change in approach by DHBs – are being used by DHBs to determine who should be given access to an ICPSA. Mr Gaudin says that variations in the DHBs’ policies and their application is creating confusion among Guild members and impacts on their ability to sell or transfer their businesses, or to physically relocate them.

The substantive proceeding

[13]   The four grounds of review contained in ICPG’s judicial review application are that the decisions to enter into the ICPSA with Countdown, by each of HVDHB and Hauora Tairāwhiti, were decisions taken by the DHBs without:

(a)sufficient and suitable evidence;

(b)directing themselves properly in law and taking into account relevant factors;

(c)any rational connection between the decisions taken and the outcome sought (improving health outcomes of Māori); and

(d)sufficient engagement with Māori, contrary to Te Tiriti o Waitangi and its principles.

Grounds for the application

[14]   Against that background, the Guild seeks leave to intervene in the proceeding on the basis that, first, each of its 606 members, as ICPSA contract holders, will be

directly affected by the outcome of the decision in the judicial review application – in relation to the specific contracting policies of the respondent DHBs and other DHBs, and, “more generally regarding the public policy matters being discussed.”

[15]   The Guild says that it has a material interest, on behalf of its members, in public policy considerations arising from this proceeding, including but not limited to:

(a)the scope of the DHBs’ statutory obligations in contracting for community pharmacy services;

(b)the necessary evidence required from community pharmacy applicants and expected to be assessed in an application for an ICPSA;

(c)the approach expected to be taken by the DHB in its assessment and decision-making; and

(d)any consequent changes in DHB contracting policies regarding the ICPSA to be considered in an ICPSA application assessment.

[16]   The Guild says its special expertise in the area of pharmacy contracting policies and the related practices within the community pharmacy sector means it will be able to assist the Court in determining the proceeding.

Opposition by Hutt Valley District Health Board and Hauora Tairāwhiti

[17]The HVDHB opposes the Guild’s application. It says:

(a)The proceeding relates to two separate contracting decisions by the first and second respondents. It does not raise wider issues as to the role of pharmaceutical co-payment policies, the consistency of DHB contracting policies, or the negotiation history of the ICPSA.

(b)The Guild’s members will not be “directly affected” by the matters raised in the proceeding. At most, the Guild has an indirect interest. The Guild may rely on the submissions of the applicant, ICPG, to

protect its members’ rights and obligations. The Guild has not articulated any basis upon which its perspective on matters in the proceeding are said to diverge from that of the ICPG.

(c)The Guild has failed to provide any detail about the scope of any evidence it might file if leave is granted. That position will prejudice the HVDHB and have the potential effect of expanding and prolonging the proceeding.

[18]   Hauora Tairāwhiti too says that the Guild’s interests are only indirectly affected by the proceeding. Nor do its members from outside the Hutt Valley and Tairāwhiti have any direct interest in the outcome. It says the proceeding is narrowly focussed on the commercial contracting decisions of two DHBs. The contracting approaches and policies of DHBs other than HVDHB and Hauora Tairāwhiti are not in issue. Rather, the proceedings concern the evidential basis for the decisions made by the respective DHBs. They only incidentally engage issues around, for example, pharmaceutical co-payments.

[19]   HVDHB and Hauora Tairāwhiti note that the Guild’s claims around the wider significance of these proceedings appear to be predicated on the declaratory relief sought by the ICPG in its “further cause of action”.2 The statements of defence filed for both HVDHB and Hauora Tairāwhiti note that the relief sought by the ICPG is in the nature of a hypothetical advisory opinion on DHB decision-making, which both parties contend is outside the scope of the Court’s jurisdiction.

[20]   Both DHBs submit that an application for judicial review is not an appropriate vehicle for a general airing of public policy concerns or national policy matters, particularly when only two of 20 DHBs are party to the proceeding and in the context of an imminent change to the statutory framework.

[21]   The negotiation and terms of the ICPSA, in respect of which the Guild has played a role, are not in issue in this proceeding. The Court’s determination will not impact on future negotiations or annual reviews in relation to the ICPSA.

2      Statement of claim dated 22 December 2021, at [103]-[106].

[22]   Hauora Tairāwhiti says that the Guild’s interests will be appropriately represented and protected by the ICPG.

[23]   In addition, Hauora Tairāwhiti notes that the enactment of the Pae Ora (Healthy Futures) Act 2022 will have an impact on the relevance of ICPSA contracting policies and processes. The Pae Ora Act takes effect on 1 July 2022 and will:

(a)Repeal and replace the NZPHDA.

(b)Disestablish DHBs and the Health Promotion Agency.

(c)Establish a new independent statutory entity, the Māori Health Authority.

[24]   The Pae Ora Act means that DHBs will cease to exist and Health New Zealand will come into existence. There will no longer be an obligation for DHBs to give effect to the principles of Te Tiriti o Waitangi, as s 4 of the NZPHDA will be repealed. How Health New Zealand is to give effect to Treaty principles, in the context of its statutory setting, is not a matter for this proceeding. Any interest in issues related to ICPSA contracting processes and policies will be of historic relevance only. The declarations sought will be in relation to a statutory power that will be repealed at the time.

[25]   Accordingly, Hauora Tairāwhiti says that, if leave is granted the Guild should be limited to making written submissions and leave should not be granted for it to file (unspecified) evidence or to make oral submissions.

Intervention

[26]   The Guild’s application is brought under rr 7.43A(1)(d)  and  (e)  of  the  High Court Rules 2016, s 14(2)(b)(ii) of the Judicial Review Procedure Act 2016 and the Court’s inherent jurisdiction.

[27]   The principles applicable to granting leave to intervene are well established. This Court has jurisdiction under r 7.43A(1)(d) and (e) of the High Court Rules to

make orders or directions as to how a hearing is to be conducted, and it has inherent jurisdiction to grant leave to a non-party to intervene in a proceeding.3

[28]   The relevant principles to consider when granting leave to intervene were set out by the Court of Appeal in Ngāti Whātua Ōrākei Trust v Attorney-General.4 Although the Court of Appeal was considering an application under the Court of Appeal (Civil) Rules 2005, these principles are equally applicable to the High Court and similar to those articulated in previous High Court decisions.5 The principles are as follows:6

(a)The power is broad in nature but should be exercised with restraint to avoid the risk of expanding issues, elongation of hearings and increasing the costs of litigation.

(b)In cases involving issues of general and wide importance the court may grant leave when satisfied that it would be assisted by submissions from the intervener.

(c)The fact that the case raises issues of principles transcending the particular facts is not in itself sufficient to extend rights of hearing beyond the parties.

(d)The Court will take into account the relevant expertise or the unique position of an intended intervener as well as the impact of the intervention on appeal.

Assessment of the application

[29]   As the respondents note, the proceeding – with the exception of the last cause of action – is narrowly focussed on the commercial contracting decisions of the two respondent DHBs. The Guild and the ICPG are both commercial interest groups, representing the interests of community pharmacies.

[30]   The Guild says that it cannot be sure that the interests of its members will be adequately represented by the ICPG. The Guild has more than 600 members, across New Zealand. Mr Gaudin’s evidence is that it is a long-standing representative and

3      Seales v Attorney-General [2015] NZHC 828 at [41].

4      Ngāti Whātua Ōrākei Trust v Attorney-General [2017] NZCA 183 at [11].

5      Borrowdale v Director-General of Health (Applications to Intervene) [2020] NZHC 1379, [2020] 2 NZLR 927 at [20]; Seales v Attorney-General, above n 3, at [44]-[48]; and Capital and Merchant Finance Ltd (in rec and liq) v Perpetual Trust Ltd [2014] NZHC 3205, [2015] NZAR 228 at [41].

6      Borrowdale v Director-General of Health (Applications to Intervene), above n 5, at [20], applying

Ngāti Whātua Ōrākei Trust v Attorney-General, above n 4, at [11] (footnotes omitted).

professional advocacy body, that has engaged in community pharmacy issues for decades. In contrast, the ICPG has a considerably smaller membership of community pharmacy owners and was created only in 2021, to counsel’s knowledge, for the sole purpose of bringing this proceeding. It therefore lacks the knowledge and experience that the Guild can bring to the proceeding.

[31]   But it is not clear how the interests of the Guild’s members, other than those in the Hutt Valley and Tairāwhiti, will be directly affected by the proceeding. To the extent that the direct commercial interests of any of the Guild’s members such as those in the Hutt Valley and Tairāwhiti are engaged by the proceeding, it is not clear from Mr Gaudin’s evidence or the Guild’s submissions why they cannot rely on the ICPG to protect their rights and interests. It appears that the Guild has not, to date, conferred with the ICPG as to the approach the ICPG will take in its evidence and submissions and the extent to which it might be necessary for the Guild to supplement that evidence and submissions.

[32]   As counsel for HVDHB points out, the onus is on the Guild to demonstrate to the Court that it does have a perspective different to that of the parties on the matters in issue and can improve the quality of the information before the Court. In the absence of any indication from the Guild in that respect, I must assume that the perspective advanced by the Guild will be similar or identical to that offered by the ICPG.

[33]   The Guild’s submissions as to broader policy interests largely hinge on the alternative cause of action in ICPG’s statement of claim, where the ICPG seeks declarations in the following terms:

(a)a declaration that DHBs must make decisions based on sufficient and suitable evidence when negotiating and entering into service agreements in the pharmacy sector and when seeking the optimum arrangement for the most effective and efficient delivery of health services in order to meet local, regional, and national needs, including evidence as to:

(i)the impact of the grant of an additional ICPSA on the pharmacy services provided to the DHB’s local resident population; and

(ii)the need for additional pharmacy services amongst the local resident population, including the resident Māori population;

(b)a declaration that DHBs, when negotiating and entering into service agreements in the pharmacy sector, must establish processes that give effect to Te Tiriti o Waitangi / the Treaty of Waitangi when seeking the optimum arrangement for the most effective and efficient delivery of health services in order to meet local, regional, and national needs;

…

[34]   I do not prejudge the outcome of the substantive hearing, but I do signal that the Court will be reluctant to give declarations of such a broad, advisory nature (even if it could do so within the parameters of the Declaratory Judgments Act), particularly given the imminent change to the statutory framework and the fact that only two of the 20 DHBs are party to the proceeding (while DHBs will cease to exist, there will continue to be factors at play in the contracting process that are specific to “regions”).

[35]   The parties have agreed in principle (and without prejudice to the outcome of this application), on a timetable which would allow for the filing of evidence by the Guild and for evidence in reply to be filed by the respondents. However, I accept the respondents’ submission that without the Guild being able to provide any specificity as to the nature of its proposed evidence, there is potential for expansion of the issues, which may lead to challenges to the relevance and admissibility of the Guild’s evidence, thus complicating the timetable and endangering the fixture.

[36]   The High Court observed in Wilson v Attorney-General, that in the judicial review context joinder is appropriate where the party’s interests “are, or may be, directly or indirectly affected by the judicial review application”.7 While, as I have indicated above, it is not clear that the Guild’s members’ interests are affected (or, to the extent they are, why they cannot be adequately represented by the ICPG), I have concluded that any residual concerns about expansion of the issues can be managed by the terms on which intervention is granted.8

[37]   I accept that the Guild may be able to provide written submissions in relation to the issues in dispute that will assist the Court. Granting it leave to do so does not

7      Wilson v Attorney-General (Judicial Conduct) (No 2) [2010] NZAR 507 (HC) at [20].

8      McClintock v Attorney-General [2015] NZHC 1280, at [44(g)].

risk unnecessarily expanding the issues before the Court. However, for the reasons set out above, I conclude that it is not appropriate to grant leave for the Guild to file evidence (at least at this stage and on the basis of the information currently before the Court).

Result

[38]The Guild is granted leave to intervene on the following conditions:9

(a)The Guild is to file and serve its written submissions on or before

14 November 2022.

(b)The Guild may be represented by counsel at the substantive hearing. It will be for the trial Judge to decide whether oral submissions will be allowed.

(c)The Guild may renew its application for leave to file evidence, following receipt of the applicant’s evidence on 11 July 2022. Any such application should be made promptly and should clearly articulate the specific areas where the Guild wishes to file evidence and how that evidence will be likely to assist the Court. If such application is made, the Court will consider it on the papers.

(d)If leave is granted to the Guild to file evidence, such evidence is to be filed by 12 September 2022 and the respondents will have a right of reply, by 3 October 2022.

(e)The Guild shall have no claim to costs.

Gwyn J

99     The timetable dates were agreed by the parties in their memorandum of 13 June 2022 (filed without prejudice to the Court’s determination of this application for leave to intervene).

Solicitors:

Tripe Matthews Feist, Wellington

Luke Cunningham Clere, Wellington Buddle Findlay, Wellington

Crown Law, Wellington

Russell McVeagh, Auckland Simpson Grierson, Wellington