New Zealand Pork Industry Board v Director-General of the Ministry of Agriculture and Forestry HC Wellington CIV-2011-485-719
[2011] NZHC 522
•25 May 2011
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2011-485-719
IN THE MATTER OF an Application for Judicial Review under the Judicature Amendment Act 1972 and Part 30 of the High Court Rules
BETWEEN THE NEW ZEALAND PORK INDUSTRY BOARD
Applicant
ANDTHE DIRECTOR-GENERAL OF THE MINISTRY OF AGRICULTURE AND FORESTRY
First Respondent
ANDTHE CHIEF TECHNICAL OFFICER AND BIOSECURITY NEW ZEALAND Second Respondent
Hearing: 24 May 2011
Counsel: F M R Cooke QC with J Kaye for Applicant
C R Gwyn with K M Muller and A Beck for Respondents
Judgment: 25 May 2011
INTERIM JUDGMENT OF THE HON JUSTICE KÓS
[1] The Ministry of Agriculture and Forestry has introduced new import health standards. These permit the importation (in certain circumstances) of raw pork. The New Zealand Pork Industry Board says this will likely result in the introduction of a serious contagious disease to New Zealand pig herds. The Board says the process by which the standard was introduced is flawed and unlawful. It applies for interim orders to prevent the implementation of the new standards, until full trial has taken
place.
THE NEW ZEALAND PORK INDUSTRY BOARD v THE DIRECTOR-GENERAL OF THE MINISTRY OF AGRICULTURE AND FORESTRY HC WN CIV-2011-485-719 25 May 2011
[2] The Crown, on the other hand, says the case against it is weak. It says there has been an exhaustive process leading up to the promulgation of the new standards. It says that the analysis (in particular a report prepared by Drs Zagmutt and Groenendaal in December 2010) shows that the prospect of introduction of the disease, if the new standards are given effect to, is 1 in 1,227 years. The Crown is also concerned that the relief sought would be inconsistent with New Zealand’s international obligations under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures.
[3] When the matter was first called before me on 16 May, I was concerned with the lack of scientific evidence from the Board on the probability of the disease being introduced under the new standards, and as to the nature and reversibility of harm if it was. I gave leave to the Board to file such evidence.
[4] In the meantime I made temporary orders restraining the Crown from granting biosecurity clearances under ss26 to 28 of the Biosecurity Act 1993 for any pork product qualifying under the new (but not the former) standards.
[5] I have also directed a two day fixture of the substantive judicial review application, to commence on 24 August 2011.
PRRS
[6] The disease at the forefront of this case is Porcine Reproductive and Respiratory Syndrome (PRRS). The evidence is that it is now to be found around the world, with the exceptions of New Zealand, Australia, Switzerland and some (but not all) Scandinavian countries.
[7] Dr David Lawton, an experienced pig veterinarian and President of the Pig Veterinarian Special Interest Branch of the New Zealand Veterinary Association gave an affidavit for the Board. He says:
PRRS is the most devastating and important pig disease globally. When it first enters a herd the effects of the virus are most dramatic and it may literally decimate a herd. A severe strain may cause up to 90% of sows to
lose their pregnancies and mortality rates amongst young pigs can be as high as 80 per cent.
[8] Affidavit evidence was also given for the Board by Professor Roger Morris, one of New Zealand’s most eminent animal epidemiologists. Professor Morris says that PRRS causes severe damage to individual affected herds, and has forced the industry in several countries to make major changes to management practices and biosecurity measures. He says that PRRS has led to introduction of more complex and expensive management systems. He says that:
One of the major affects of the disease is to make pigs more susceptible to other endemic infections in the herd so that these increase in severity and complicate the disease process.
[9] Dr Lawton says:
It is a horrible disease that causes much animal suffering, it has enormous and economic impact on individual farms and to entire industries and it is difficult to manage and control. No country where the disease has become endemic has been able to get rid of it.
[10] The Crown’s scientific witnesses are less alarmist. Their analysis is, however, directly based upon the analysis of Drs Zagmutt and Groenendaal, as to which more later. Crown counsel, Ms Cheryl Gwyn accepted in argument that PRRS is “a serious disease”.
[11] It is common ground that the new import standards will result in PRRS infected pig meat being introduced into New Zealand. It is also common ground that there is no direct human health consequence from that.
[12] The principal dispute, at a scientific level, is over the probability of PRRS being transmitted to New Zealand pig herds, and the nature of the harm and the reversibility thereof in the event that it occurs. There are also arguments as to the economic impact of such transmission.
[13] It appears that PRRS was first recognised as a distinct disease in 1987. The cause of the virus was identified in 1991. From that point it was guarded against in this country by controlling the entry of live pigs and pig semen. In 2000 a study was published (commissioned by the Australian government) which suggested that the
disease could be transmitted from meat off-cuts fed to pigs. As a result, stricter standards were introduced into New Zealand in 2001. The 2001 import health standards required that imported pig meat either be cooked or subjected to certain ph levels (by curing) before being given a biosecurity clearance. The new 2011 standards would relax that by also permitting raw pig meat to be imported, provided it is cut in certain ways and that each cut does not exceed 3 kg.
[14] The position taken by Australia is also worth noting at this point. Australia is another country that is PRRS-free. Its import rules for pork products are more restrictive than even the previous 2001 New Zealand standards. I was advised by Ms Gwyn that only cooked pork from certain parts of the pig are permitted to be imported into Australia.
Issues
[15] Two issues arise at this preliminary hearing:[1]
[1] In accordance with Carlton & United Breweries Ltd v Minister of Customs [1986] 1 NZLR 429 (CA).
(a) Has the Board shown it has a good arguable case?
(b)Are interim orders reasonably necessary to preserve the position of the Board pending trial?
Good arguable case?
[16] Section 22 of the Biosecurity Act 1983 (Act) provides so far as relevant:
(1) The Director-General may, following the recommendation of a chief technical officer, issue an import health standard specifying the requirements to be met for the effective management of risks associated with the importation of risk goods before those goods may be imported, moved from a biosecurity control area or a transitional facility, or given a biosecurity clearance; and may, in a like manner, amend or revoke any import health standard so issued.
...
(5) When making a recommendation to the Director-General in accordance with this section, the chief technical officer must have regard to the following matters:
(a) The likelihood that goods of the kind or description to be specified in the import health standard may bring organisms into New Zealand:
(b) The nature and possible effect on people, the New Zealand environment, and the New Zealand economy of any organisms that goods of the kind or description specified in the import health standard may bring into New Zealand:
(c) New Zealand's international obligations:
(d) Such other matters as the chief technical officer considers relevant to the purpose of this Part.
(6) Before making a recommendation to the Director-General on the issue or amendment of an import health standard, the chief technical officer
must, unless the standard needs to be issued or amended urgently, or
unless the chief technical officer considers that the amendment is minor, consult with those persons considered by the chief technical officer to be representative of the classes of persons having an interest in the standard.
(7) The consultation may be on the import health standard or on a document that analyses or assesses the risks associated with the goods or class of goods to which the goods belong.
...
[17] The statute then provides a process for resolution of a dispute where a person consulted under s 22(6) has raised a “significant concern” about whether the draft standard has had sufficient regard to the scientific evidence. Section 22A (which was inserted in April 2008) relevantly provides:
(1) The Director-General must, by notice in the Gazette, set out the process by which an independent review panel is to be established to review whether, in developing an import health standard, there has been sufficient regard to the scientific evidence about which a person consulted under section 22(6) has raised a significant concern.
...
(3) The Director-General must receive any report from an independent review panel and, as soon as is reasonably practicable, determine the issue in dispute after taking into account the findings and recommendations of the independent review panel, giving reasons for that determination.
[18] The relevant process in this case was as follows:[2]
[2] I am grateful to Crown Counsel for the preparation of this chronology
April 2009 Release of provisional IHSs.
28 May 2009 NZPork requests establishment of independent review panel.
August-October 2009 Request accepted and consultation on terms of reference and appointments. Panel appointed and terms of reference issued.
31 March 2010 Panel issues report with 29 recommendations.
April-August 2010 MAF consults with stakeholders and prepared recommendations for action on panel report.
30August 2010 MAF Director-General Murray Sherwin agrees to recommendation for further action in response to panel report.
August-November
2010Further work in response to panel report, including establishment of expert working group, review of
quantitative risk analysis modelling, and preparation
of EpiX-Analytics report. Four nominees of domestic stakeholders and five nominees of international stakeholders included in expert working group, together with three MAF participants and two experts from EpiX-Analytics participating at MAF’s invitation.
November 2009- Stakeholder updates from MAF. February 2011
20 November 2010 Wayne McNee replaces Murray Sherwin as MAF Director-General.
14 December 2010 Final report from EpiX-Analytics. December 2010 Briefing of new MAF Director-General.
4 February 2011 Meeting between Mr McNee and MAF officials.
14 March 2011 Paper by MAF officials for the Director-General’s decision under s 22A determining the matters in dispute. Recommendation by the CTO under s 22 on proposed IHSs.
10 April 2011 Director-General makes (i) determination under s
22A; and (ii) decision under s 22 to issue IHSs.
[19] Despite the arguments advanced on the Crown’s behalf, I accept that the
Board has demonstrated a good arguable case on three contentions.
[20] First, the Board says that the then Director-General failed to make a determination:
(a) “as soon as is reasonably practicable”;
(b) of “the issue in dispute”.
For the purposes of s 22A(3). The Board says that the process that took place between 31 March 2010 and 10 April 2011 – i.e. just over 12 months – meant that the determination was not made “as soon as is reasonably practicable”. The Board also says that the “issue in dispute” is simply the matter provided in s 22A(1) – i.e. whether “there has been sufficient regard to the scientific evidence”. In this respect the Board points to page 42 of the Panel report which says:
The previous sections of the report are devoted to the specific issues raised for consideration. In these the Panel has drawn attention to aspects for which the scientific evidence was not considered to have been given due regard.
[21] The Board says this is a clear finding for the purposes of s 22A(1); that the Director-General (subject to weighting and potentially a limited discretion to reject aspects of the Panel report) was bound then to accept that finding, and that that was the determination required by s 22A(3). Having done so, it was for the Director- General to recommence the s 22(1) process – at which point conceivably (if the Ministry did not then have due regard to the scientific evidence that the Panel identified needed to be considered) a further dispute might arise under s 22A. Instead, the Director-General postponed the determination, and established a working group process to consider and respond to the Panel. A reasonably strong point is advanced by the Board that the April 2011 decision was therefore not based, as it should have been, on the Panel report, but on an amalgam of the Panel, the subsequent work and a Chief Technical Officer’s advice on how the Director-General should respond to the Panel report. I mean no disrespect to the careful arguments of Ms Gwyn in not setting out her full response here. She is certainly right to say, for instance, that it is not the Panel that is to determine the issue in dispute, but the Director-General. I am however unattracted to the Crown’s argument that s 22A(3) contemplates the determination of the “issue in dispute” by obtaining the additional
information the Director-General sees fit in response to concerns identified by the Panel. In my view the Board’s contention that the Director-General acted neither timeously nor in accordance with his statutory mandate is plainly arguable.
[22] Secondly, the Board says the Director-General should not have received recommendations from the Chief Technical Officer who had contributed to the draft import health standard judged wanting in terms of its scientific robustness by the Panel in then making his decision under s 22A(3). In this case the Chief Technical Officer who advised the Director-General on the Panel’s report was not the official who drafted the import health standard. However, it is clear from the evidence that he had consulted with the drafting officials and had contributed to the standard’s preparation. I consider an arguable case exists that, assuming the Director-General is entitled to take advice on the Panel Report before making his decision under s
22A(3), he should not have taken it from those officials who had directly contributed to the original standard judged scientifically deficient (albeit in limited respects) by the Panel. I do not consider this ground as strong as the previous ground, but it is arguable.
[23] Thirdly, Mr Francis Cooke QC for the Board foreshadowed an amendment to its pleadings to advance a legitimate expectation argument based on the expert working group process. As the chronology in paragraph [18] shows, the expert working group (which involves scientific and industry experts nominated by the Board, along with others) worked with Ministry officials between August and November 2010. There were significant divergences in views, but a “final report” including a number of sub-reports, was issued by the Ministry in November 2010. One of the sub-reports is from Professor John Wilesmith of the United Kingdom. He had been a member of the s 22A Panel. He was nominated to the expert working group not by the Board, but by Federated Farmers. He expressed a number of concerns about the ensuing process, including in particular what he saw as “undue effort” by the risk analysts (Drs Zagmutt and Groenendaal of EpiX-Analytics) to show that an original model prepared by Dr Neumann and his colleagues was flawed. Drs Zagmutt and Groenendaal had been appointed by the Ministry to act as members of the working group to provide independent risk analysis input.
[24] Following the “final report” of the expert working group, Drs Zagmutt and Groenendaal prepared a further report. It is dated 14 December 2010 and is known as the “EpiX-Analytics Report”. It is this report that concludes there is a 1 in 1,227 year probability of transmission of PRRS from meat permitted under the new standards to New Zealand pig herds. For reasons not apparent on the evidence, the Ministry did not show this further report to stakeholders. A summary was circulated at the end of February 2011. The Board made an Official Information Act request for the report. The decision to issue the new standard was made by the Director- General on Sunday, 10 April 2011. The EpiX-Analytics Report was then released to the Board under the Official Information Act on Wednesday, 13 April 2011. Again, despite the Crown’s arguments to the contrary, I think it is reasonably arguable that the consultation process that preceded the preparation of that report gave rise to a legitimate expectation (reinforced by the terms of s 22(6) of the Act) that the Board be given the opportunity to comment on it before it was relied upon by the Director- General to make the decision he made under s 22A(3), assuming that the Board fails in its primary and secondary arguments. The significance of the EpiX-Analytics Report to the Director-General’s decision is apparent on its face.
[25] I find the Board has presented, at this stage of the proceeding, a sufficiently arguable case to justify interim orders. I now turn to the question of whether such orders are necessary to preserve the Board’s position pending trial.
Reasonably necessary to preserve applicant’s position in trial?
[26] There is a fundamental disagreement on the scientific evidence as to the risk of harm. If the EpiX-Analytics Report, which the Ministry relies, is taken at face value, the risk of transmission (1 in 1,227 years) is too low to justify the granting of interim orders. However, I do not think I should take that report at face value, for two reasons:
(a) there is a real question now raised in the proceeding as to the circumstances in which that report was prepared, and the lack of consultation thereon by the Ministry; and
(b) there is evidence directly refuting that risk assessment, filed by the
Board from Professor Morris and Drs Lawton and Newman.
[27] Dr Lawton says:
My estimate, based on actual knowledge of pig farming and keeping in New Zealand differs greatly from the estimate MAF were able to get the model to produce (one incursion every 1,227 years). I believe PRRS virus will infect live pigs in New Zealand within the next year or two after significant quantities of imported pork are released into the market as consumer-ready cuts without further treatment.
Dr Neumann (who had prepared the original model, and consults to the Board) says:
Unless there is unequivocal evidence that novel dissection techniques (such as “consumer-ready cuts” as proposed in the Import Health Standards) are effective, created the extending “carcass dissection” as a mitigation strategy for PRRS virus is unacceptably risky.
Professor Morris is strongly critical of the EpiX-Analytics Report. He concludes:
In the interim, my scientific assessment is that the risk of introduction of PRRS under the new import health standards is sufficiently high that no imports should be permitted until the validity of the actions taken by MAF have been resolved.
Professor Morris contrasts the Australian approach[3] with that now proposed for New
Zealand. The views of these scientists cannot be dismissed out of hand.
[3] See [14].
[28] Having regard to the extent of the controversy over both the probability of transmission, the extent of harm and the economic impact of the virus entering New Zealand pig herds[4] and the fact that a trial date has been allocated in just under three month’s time, I conclude that interim orders are reasonably necessary to preserve the
Board’s position pending trial.
Discretion
[4] Although I note that the proposed new standards recognise that the economic consequences of outbreak of PRRS in New Zealand would be “in the low tens of millions of dollars (NPV) for a nationwide epidemic, unless for smaller outbreaks. The cost of controlling an outbreak has been estimated in the order of $9-16 million”.
[29] I do not overlook that interim remedies may raise questions about compliance with international obligations. However I am satisfied that the additional time required for the due disposition of the judicial review proceeding does not take New Zealand outside the terms of Art 5(7) of the Agreement on the Application of Sanitary and Phytosanitary Measures, which allows a reasonable period of time for objective assessment of risk. I note here also the position of Australia. Finally these orders may delay the importation of cheaper pork to the New Zealand market for three months. That in my view should not be a determinative consideration so long as the new standards remain legitimately contestable as a matter of law.
Disposition
[30] The following order is made:
(a) The Ministry of Agriculture and Forestry, and any inspector acting on its behalf, is restrained from granting biosecurity clearances under ss
26-28 of the Biosecurity Act 1993 for any pork product that may now be imported as a result of the Director-General’s decision to issue the following new import health standards:
Import Health Standard for Pig Meat and Pig Meat Products for Human Consumption from the European Union, MEAPORIC.EU dated 18 March 2011 (with the exception of products from Sweden and Finland).
Import Health Standard for Pig Meat and Pig Meat Products for Human Consumption from the Sonora State of Mexico, MEAPORIC.MEX dated 18 March 2011
Import Health Standard for Pig Meat and Pig Meat Products for Human Consumption from Canada and/or the United States of America, MEAPORIC.NAM dated 18 March 2011
Import Health Standard for Pig By-Products from Canada and/or the United States of America, MEBYPORIC.NAM dated 18 March 2011.
[31] For the avoidance of doubt, that does not of course preclude imports that qualified for clearance under the previous 2001 standards.
[32] Trial directions are now made as follows:
(a) Fixture: Wednesday 24 August (2 days allocated).
(b)Amended statement of claim and any interlocutory applications by other parties to be filed: Tuesday 7 June.
(c) Further mention: Monday 13 June.
(d) Applicant’s affidavits: Monday 27 June.
(e) Respondents’ affidavits: Monday 11 July.
(f) Reply affidavits (strictly in reply): Monday 25 July. (g) Applicant’s submissions: Monday 8 August.
(h) Respondents’ submissions: Monday 15 August.
[33] I thank counsel for their helpful submissions. I conclude by reinforcing that the fixture on 24 August will not (and cannot) be about the resolution of scientific controversy. That is irresolvable in a judicial forum, and in particular one without the benefit of cross-examination. The focus of the hearing on 24 August will be on the legal and public process arguments, in particular those identified in paragraphs
[20] to [24] above.
Solicitors:
Jonathan Kaye Law, Wellington for Applicant
Crown Law, Wellington for Respondents
Stephen Kós J
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