The High Court just gave the Government (in the form of officials in the Ministry of Health) a complete shellacking over the way it decided to remove funding from the Problem Gambling Foundation. It's worth going into the memory hole to recall what was said about that decision at the time it was made.

Judicial review of government decisions can sometimes be a bit nit-picky. It's a pretty complicated area of law. The rules around what processes officials and ministers have to follow in order to make "good" or "proper" decisions - in the eyes of the court, at least - are sometimes pretty technical .

Or, in the immortal words of Darryl Kerrigan:

Well OK ... ah ... the law is supposed to be about justice, no fairness and I know sometimes what is right and fair is not clear cut. It’s a bit iffy.

And so you can get cases like that of the Phillipstown School one, where a judge decides that the Government failed to do quite everything he or she thinks it ought to before making a decision. Enough of a mistake to make the decision unlawful, sure ... but also a pretty technical failure to quite dot all the i's and cross all the t's. So with a little bit more care, the Government can remedy its error, go back and make the same decision over again. Everyone screws up a bit sometimes, so it's no biggie.

Then you get cases like the just-released judgment in Problem Gambling Foundation of New Zealand v Attorney General, which is pretty much as comprehensive a demolition of the process leading to the Government's decision as it is possible to get. I'll come to what Woodhouse J said in his judgment in a moment, but before doing so let's go back and remember the context of the case.

In 2014, the Government (in the form of the Ministry of Health) decided it was going to take most of the money that it provided for combatting problem gambling away from the Problem Gambling Foundation (PGF), and instead give it to the Salvation Army. The decision was taken on the advice of a panel of public servants and outside experts, who evaluated funding proposals from those interested in doing the work and rated them on how effective they thought the proposals would be in fixing (or, at least, mitigating) the problem.

Of course, some folks were pretty suspicious of this decision when it was made, given that it came shortly after the PGF had been very vocal in opposition to the Sky City "pokies-for-Convention-Center" deal with the National Government. And as Issac Davison noted in the Herald:

It is understood that the gambling industry has made a number of complaints about the Problem Gambling Foundation's advocacy work.

So was this a case of a critic of government policy being shut down through having its funding withdrawn?

Not so, said others on the right-of-centre side of the debate. The Taxpayer's Union took a break from campaigning for taxpayer money to be spent on subsidising individuals' passports and issued a press release celebrating the fact that "the Salvation Army is more likely to use the money for service delivery rather than the pet political causes the Problem Gambling Foundation is associated with."

In a remarkable piece of coincidental timing, David Farrar also took up cudgels over the issue on Kiwiblog. Here he is saying that:

The Problem Gambling Foundation thought its role was more to lobby for policy it likes, than to provide support services for problem gamblers. Hence it is little surprise that another support group make a stronger case to the Ministry of Health that it would provide better services to problem gamblers than the Problem Gambling Foundation.

And when Labour sought to make an issue out of the decision, alleging it was politically driven, he hit back hard:

Labour seem to be upset because the PGF was a great source of taxpayer funding for their activists and candidates. Likewise the Greens haven’t mentioned that the former CEO is an active member of the Green Party and partner of a Green MP.

Nothing really to see at all, then. The Government (in the form of officials in the Ministry of Health) simply ran a ruler over what the PGF did, decided that it wasn't doing it as well as others could, and so decided to give the money to those others instead. Anyone who had a problem with that decision was then obviously a political hack driven by partisan considerations. As Peter Dunne, the then Associate Health Minister, said in response to claims that the PGF had been punished for its vocal opposition to the gambling industry:

There's just not one shred of truth in this allegation. It's shameful, it reflects on the integrity of the people making these allegations and it detracts from a process which has been robust, independent, it's been peer reviewed and it's probably one of the better processes that has been undertaken in this area for a very long time.

Except ... even at the time the decision looked a little bit strange. For one thing, the Government's preferred replacement provider - the Salvation Army - hadn't asked to take over the national contract in the PGF's place. They got told they had won it without knowing exactly what they had won and without seeking to win it. Making one wonder how exactly the decision process could have decided that they were a better option for providing a nationwide response to problem gambling.

So the PGF went off to court to find out - an action that caused David Farrar to positively explode with indignation:

So because the Salvation Army was judged better able to provide support for gambling addicts, the PGF may use some of its money (90% taxpayer funded) on court action rather than actually helping gambling addicts. Shows their sense of priority.

What on earth is this organisation doing, he wondered, suing the Government to "keep its nose in the trough" when "an independent panel of public servants and experts" have judged that the Salvation Army can do a better job than it can? 

The PGF must have had a pretty hopeless case, then. After all, if it is true that the PGF is not providing on-the-ground help for problem gambling and is instead spending most of the money given to it on advocacy work in pursuit of it's lefty-green agenda, then the decision of the independent public servants and experts will speak for itself. No chance of a court thinking anything different.

Except, not.

Because in a decision running to some 343 paragraphs (plus appendice) and 133 pages, Justice Woodhouse pretty much demolished the Government's decision on every basis put before him. I'm not going to recount it in detail - 343 paragraphs! 133 pages!! - so here's the nuts-and-bolts summary.

First of all, his honour found that the Government had failed to meet the PGF's "legitimate expectation" that the process the PGF was told would be used to decide who got the contracts would actually be used for that purpose. The Government failed to do so because it changed its assessment criteria part-way through its decision-making process - after the PGF had put in its application - by inserting an entirely new procedure into it. 

If you want a rugby analogy - because who doesn't want a rugby analogy?! - the Government told PGF that winners would be decided based on who scored the most points ... only to then actually decide the winners based on a mix of points scored and the referee's opinion of which team had played the game in the best spirit (or something similar).

Second, his honour reviewed the way in which the assessment exercise was carried out and found that, with the help of expert opinion from a statistician, the process followed simply did not support the conclusions reached. In other words, the "scores" provided by each of the members of the assesment panel were incorrectly tabulated, meaning that the apparent result of those scores may not have accurately reflected the judgments of the panel members. 

Or, to carry on with the analogy, it's like the scorer sometimes awarded 4 points for a try, sometimes 5 and sometimes 6 ... then announcing that the final score was 26-24. Can you confidently say who "really" won the game in such a situation?

Finally, his honour looked at the identity of the six people who made up the panel that assessed each organisation's application. And it turned out that some of these individuals, while not having "any suggestion of features analogous to fraud, corruption or bad faith", did have connections to those who were bidding for contracts that could lead a reasonable observer to think they were biased in their favour. Meaning that instead of being a panel of nuetral, impartial experts whose decision no-one could think reflected anything other than their best judgment of the proposals, there was a real risk that the outcome would be seen as (either consciously or unconsciously) tilted in some applicant's favour.

So it's like learning that the referee in the Rugby World Cup final was given a gold watch by the boss of the winning side's national association ... actually, no it's not. It's more like learning that the ref does some occasional building work with the captain of the winning team. Or something. I think this analogy is well and truly done.

So, to summarise, the High Court has just told us that the PGF lost its government contract after being very vocally critical of government policy through a process that;
  1. Changed the ground-rules as to how the contracts would be awarded after organisations had bid for them;
  2. So wrongly assessed the PGF's application that the apparent result couldn't be trusted; and
  3. Used people to assess who should get the contract who were at least apparently biased in favour of some applicants over others.

This is, remember, the process that Peter Dunne defended as "robust, independent, it's been peer reviewed and it's probably one of the better processes that has been undertaken in this area for a very long time." 

Kind of a different story to that some members of the commetariat were telling at the time, isn't it?

PS: Congratulations to Mai Chen on winning this! That's some damn fine lawyering right there.

PPS: To whomever is running the DoS attack on Kiwiblog. Stop it. Just stop it. Thank you.

Comments (5)

by BeShakey on July 24, 2015
BeShakey

Can you explain the implications? Presumably the process (and subsequent contract) are invalidated and they have to start again? Does the PGF get any compensation (or costs)? Does the Salvation Army contract continue until the new process is complete? What are the chances they do it all over and come up with the same result?

by Ian MacKay on July 24, 2015
Ian MacKay

BeShakey good questions.

Extraordinary! Wonder if "they" assumed that nobody would or could challenge the Health Department decision. A special form of arrogance? Wonder if the Health Department (read S Joyce) will be a repeat of the Phillpstown decision and just re-run with the same outcome. Or will the Health Department Appeal the ruling?

Comment from Mr Dunne?

by Andrew Geddis on July 24, 2015
Andrew Geddis

BeShakey,

Implications are that PGF retains its original contracts through to 2016 and at that point the Government has to do the process over properly! So a complete win for it.

by Dean Knight on August 05, 2015
Dean Knight

Hmmm. Initial reaction was the High Court miscalibrated its depth of review... I'll rant more later after I've finished teaching the case in a week or two...

by Jude on December 21, 2016
Jude

Never got round to hearing that rant, Dean, but did you have something like this in mind?

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