Problem Gambling Foundation of New Zealand v Attorney-General

• Jurisdiction: New Zealand
• Judge: Woodhouse J
• Judgment Date: 23 July 2015
• Neutral Citation: [2015] NZHC 1701
• Docket Number: CIV-2014-404-1219
• Court: High Court
• Date: 23 July 2015

BETWEEN

Problem Gambling Foundation of New Zealand

Plaintiff

and

Attorney-General

Defendant

[2015] NZHC 1701

CIV-2014-404-1219

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

Appearances:

M Chen and A Van Houtte for Plaintiff

M Andrews and S Shaw for first defendent

JUDGMENT OF Woodhouse J

TABLE OF CONTENTS

Para No.
Introduction	[1]
Outline of the Foundation's claims and reformulation of the issues	[6]
Conclusion	[10]
Background	[11]
The current six year strategic plan and three year service plan	[13]
The Request for Proposal	[16]
Receipt of proposals	[18]
The panel process	[20]
Distribution of evaluation packs	[22]
Evaluation process: stage 1– “pre-scoring”	[27]
Compilation of individual pre-scores by Mr Levy	[29]
First panel meeting: preliminary discussion: conflicts of interest	[31]
Evaluation process: stage 2 – “consensus scoring”	[32]
Evaluation process: stage 3 – “moderation”	[37]
The outcome of the panel evaluation process	[38]
Further steps by the Ministry leading to the final decision	[39]
Evidence	[46]
Issue 1: The scope of judicial review	[54]
Lab Tests	[56]
Application of Lab Tests: the scope of review: matters of context	[65]
The statutory setting	[66]
The Mandatory Rules for Procurement by Departments	[79]
The nature of the decision	[87]
Nature of the body making the decision	[91]
Any relevant contractual provisions	[93]
Would “onerous procedural obligations” unduly fetter the power of the public body to negotiate freely?	[95]
The complexity of the subject matter	[102]

What is alleged to have gone wrong?	[106]
The availability of “non-judicial accountability mechanisms”	[108]
Conclusion as to the scope of review	[110]
Issue 2: Adherence to the RFP: the mandatory rules: legitimate expectation
Introduction	[111]
The mandatory rules	[113]
Legitimate expectation	[118]
Interpretation of the RFP	[124]
Issue 2(a): Deviation from the RFP: changes to the evaluation criteria and weightings	[128]
Appendix 1: the RFP: its most relevant provisions	[133]
Requirements: Organisational strength and stability requirements: 12.5% of total: 18% of quality	[144]
Delivery: Ability to deliver the required Services: 15% of total: 21.45% of the quality	[152]
Experience: Successful experience in delivery of similar services: 7% of total: 10% of quality	[157]
Capability: Capability of staff proposed to deliver the required Services: 15% of total: 21.45% of quality	[159]
Alignment: Alignment of Services with the health and social service sector: 10% of total: 14.3% of quality	[160]
Outputs and Outcomes: Performance and Quality measures to ensure the quality of Services: 7.5% of total: 10.73% of quality	[166]
Purchase Units: Ability to deliver all clinical and public health services required in a region: 3% of total: 4% of quality	[171]
Price: Ability to deliver a full range of required services across a region at a reasonable price per FTE: 30% of total: 100% of price	[173]
The PwC Report	[180]
Conclusion on changed sub-criteria and weightings	[185]
Issue 2(b): Deviation from the RFP: the moderation stage	[186]
Evidence on the moderation stage	[187]
Outline of submissions	[192]
Evaluation of issue 2(b): moderation	[195]
Issue 2(c): Failure by the Ministry to contact the Foundation about its lead agency proposal	[204]
Issue 2(d): other complaints of breach of a legitimate expectation	[212]
Issue 3: Mistake of fact or lack of probative evidence	[218]
Legal principles	[220]
The divergent positions of the Foundation and the Ministry as to the nature of the evaluation process	[228]
Conclusion on the nature of the evaluation process	[245]
Aspects of Mr Mullins' evidence	[253]
The process was subject to significant “noise”	[254]
Inter-rater variability: “aberrant scores”	[258]
Mr Mullins' general conclusions	[264]
Conclusion	[271]
Other complaints of the Foundation	[275]
Issue 4: Conflicts of interest or bias
Introduction and legal principles	[276]
Legal principles	[278]
Context: The rules about conflict of interest and bias in this case	[287]
Conflict declarations by panel members and management of conflicts	[292]
Other evidence	[301]
Assessment
The standard to be met by the panel	[313]
The two step preliminary analysis	[323]
Assessment as a fair-minded lay observer	[325]
Should the decision be set aside?	[339]
Result	[342]
Appendix 1
Appendix 2

Introduction

Introduction

1 The Problem Gambling Foundation of New Zealand seeks judicial review of a decision of the Ministry of Health relating to provision of services to reduce problem gambling and treat problem gamblers.

2 The Foundation is a charitable trust. It is a non-profit organisation which provides both public health and clinical problem gambling services. In broad terms, public health services are those designed to prevent or reduce the risk of problem gambling, and clinical services are those concerned with the treatment of problem gamblers. The Foundation has provided problem gambling services since 1988 and has been the largest service provider in New Zealand.

3 Since 2004 the Ministry of Health has been the Government department with responsibility under the Gambling Act 2003 (the Act) for developing, managing and implementing an “integrated problem gambling strategy”. 1

4 In July 2013 the Ministry issued a Request for Proposal (RFP). This was for provision of services in 13 regions in New Zealand, and nationally, for a 30 month period commencing on 1 January 2014 and concluding on 30 June 2016.

5 The Foundation submitted two proposals. One was to provide services, as the sole provider, in 9 of the 13 regions. The other was to provide national services in conjunction with another provider. In March 2014 the Ministry decided that no contract should be offered to the Foundation other than two small contracts for specialised Asian services in the Auckland and Canterbury/West Coast regions.

Outline of the Foundation's claims and reformulation of the issues

6 The Foundation filed an amended statement of claim shortly before the hearing commenced. Two causes of action were pleaded. The first was described as “mistake of fact/decision not supported by probative evidence”. The second was described as “breach of natural justice/procedural expectation”. The pleading of each cause of action provided detailed particulars of alleged errors in the decision making process and breaches of a legitimate procedural expectation.

7 In the course of submissions the key issues were refined by Ms Chen for the Foundation. She submitted that there were seven key issues. Mr Andrews, for the Ministry, accepted Ms Chen's summary. For reasons noted below, I consider that it is appropriate to consider the issues under four main headings, rather than seven, but because of the agreement between counsel, and to provide an indication of the way in which the case was argued, I will set out Ms Chen's summary in full. It is as follows:

1

Can this Court review the Ministry's decision on the purchase of regional / national services from specific providers, and if so, for what types of breaches? 2. Did the Ministry fail to adequately mitigate the impact of conflicts of interest of some of the panel members who participated in the Panel scoring process (which formed the basis for the Panel recommendations which are set out in the Panel recommendation memo that was largely adopted by Mr Bartling in making his decision), such that the Ministry's decision was contaminated? 3. Did the Ministry breach [the Foundation's] legitimate expectation that the Ministry would follow the RFP and not make material changes to the criteria for evaluating proposals without giving notification of the change and allowing [the Foundation] and all other providers the opportunity to modify their proposals? 4. Did the Ministry breach its voluntarily adopted Mandatory Rules of Procurement concerning conflicts and the notifying of material modifications to the scoring criteria such that it constitutes an error or law? 5. Whether the Ministry's decision was not based on evidence of some probative value that tends logically to show the existence of facts consistent with the decision? 6. Was the decision based on material mistakes of fact? 7. Did the Ministry fail to take reasonable steps to acquaint itself with the relevant information in order to make a probative decision, including on [the Foundation's] Lead Agency Proposal?

8 I restate the main issues under four headings because there is a degree of overlap between some of the issues as outlined by Ms Chen. The overlap, in large measure, is in relation to matters of fact and assessing the issues under four headings is a more convenient focus. There is also Ms Chen's fourth issue relating to the Mandatory Rules of Procurement, which I will refer to as “the mandatory rules”. The mandatory rules were binding on the Ministry in respect of the RFP and the decision making of the Ministry that followed. The two categories of rules referred to in the summary of the fourth issue, concerning conflicts of interest and modifications to the scoring criteria, are directly relevant to the...