Non Raceday Inquiry RIU v G Brick, S Ramsay & J Ritchie, R Manning – Decision as to Costs dated 26 September 2019 – Chair, Prof G Hall

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decisiondate: 01/10/2019

hearing_title: Non Raceday Inquiry RIU v G Brick, S Ramsay & J Ritchie, R Manning - Decision as to Costs dated 26 September 2019 - Chair, Prof G Hall

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appealdecision: NO LINKED APPEAL DECISION

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Decision:

BEFORE A JUDICIAL COMMITTEE OF

THE JUDICIAL CONTROL AUTHORITY

UNDER THE RACING ACT 2003

AND IN THE MATTER of the New Zealand Thoroughbred Racing Rules of Racing

BETWEEN-RACING INTEGRITY UNIT (RIU)

Informant

AND--GLYNN BRICK, STEVEN RAMSAY & JULIA RITCHIE, RALPH MANNING

Licensed Trainers

Interested Parties

INFORMATION NOS.-A8701, A8702 & A8703

COMMITTEE:-Prof G Hall (Chairman)

Mrs N Moffatt (Member)

APPEARING:-On the papers

DECISION OF JUDICIAL COMMITTEE AS TO COSTS

[1]-The Informant, the Racing Integrity Unit (RIU), has successfully sought a ruling under r 804(1) of the New Zealand Thoroughbred Racing Rules of Racing disqualifying three horses from the Taranaki Racing Inc meeting at New Plymouth on 24 November 2017.

[2]-In our minute of 12 July last we required the parties to make written submissions as to costs. Mr Singh, counsel for New Zealand Racing Laboratory Services (NZRLS), was also granted leave to provide submissions re costs on the application for third party disclosure.

[3]-The Informant has filed submissions seeking costs from the Interested Parties (referred to therein as Respondents), as has NZRLS. Mr Morgan QC has filed a response on behalf of the Interested Parties. The information refers to the named trainers as Respondents, although as it is a request for ruling, we accept that the named trainers can be viewed as interested parties. We will use this description in this decision.

[4]-Mr Lange and Mr Singh filed further submissions in reply and Mr Lange later clarified the B sample costs figure at the request of the Committee.

[5]-Rule 920(3) of the Rules of Thoroughbred Racing provides:

The Judicial Committee may order that all or any of the costs and expenses of:

(a) any party to the hearing;

(b) any other person granted permission to be heard at the hearing by direction of the Judicial Committee;

(c) NZTR and/or any employee or officer thereof;

(d) the Judicial Control Authority and the Judicial Committee;

be paid by such person or body as it thinks fit.…

[6]-The discretion to award costs under this rule is wide. In this regard we refer to the decision of the Appeals Tribunal in Butcher v RIU 21 December 2011, which cited Walker v Law Society [2007] EWCA Civ 233, [2008] 1 WLR 426. It is accepted practice that any award must be just and reasonable.

[7]-The Tribunal in Butcher observed that the JCA are funded by allocations from the New Zealand Racing Board (NZRB), and partly from fees and levies. These funds are utilised to meet expenses incurred whenever it becomes necessary to take proceedings against those who are bound by the Rules and who breach them. Unless adequate and effective steps are taken to recover these expenses, the utilisation of funds for disciplinary purposes is inevitably at the expense of the JCA’s and the code’s other activities in relation to racing. This reasoning may be seen to apply equally to costs incurred by the RIU.

[8]-The Interested Parties made application on 15 March 2019 for third party disclosure. The application for non-party disclosure sought that the two named racing laboratories disclose their standard operating procedures (hereinafter referred to as SOPs) and in support relied on an affidavit filed by Dr Ardrey, an English expert the Interested Parties had engaged. An amended notice of application was filed on 27 March 2019 to include a third laboratory.

[9]-The background to the application for third party disclosure is traversed in the Informant’s submission.

[10]-At a teleconference held on 18 December 2018 an invitation was made for Dr Ardrey to discuss matters with NZRLS. On 15 January 2019 the RIU were informed on behalf of the Interested Parties: “Dr Ardrey simply providing a list of questions is not satisfactory and nor does he consider it appropriate to approach the scientists at the laboratories involved on an informal basis.”

[11]-On 18 January 2019 the RIU responded:

Thank you for your letter of 15 January 2019. NZRLS remains open to discussions with Dr Ardrey on a formal or informal basis. NZRLS is not a party to proceedings before racing judicial bodies. Those who give evidence on behalf of NZRLS are witnesses. As previously advised in the past dialogue between expert witnesses have been constructive and avoided the need for third party disclosure applications.

NZRLS have informed me they remain open to communication with Dr Ardrey however are not permitted to disclose the SOPs due to confidentiality requirements. It is further understood the material provided is sufficient to review the conclusion that methamphetamine was detected in the relevant samples. Whilst it is noted Dr Ardrey does not consider it appropriate to approach [a] scientist [on] an informal basis it is open for him to do so on a formal basis. The RIU would invite Dr Ardrey to reconsider the stance that is being adopted and at least initially engage with NZRLS to ascertain whether the matters identified by him can be satisfied by constructive dialogue.

In the event Dr Ardrey is not prepared to reconsider the stance then the RIU invites your clients to make application for non-party disclosure.

[12]-On 15 March 2019 the Interested Parties filed an application for non-party disclosure. The application was supported by an affidavit of Dr Ardrey in which he referred to there being “other substances which provide very similar analytical data [to methamphetamine], and thus are capable of generating false positives”. Dr Ardrey also deposed he did not consider it appropriate to approach the laboratories on an informal or a formal basis.

[13]-As a result of the non-party disclosure hearing, affidavits were filed by the laboratories and an affidavit in reply by Dr Ardrey. Dr Ardrey was not available to appear on the date of the scheduled hearing.

[14]-After exchanges between the Interested Parties and NZRLS, the Interested Parties withdrew the non-party application in a memorandum on 26 June 2019 and conceded the ruling requesting that the horses be disqualified should be made.

RIU costs submission

[15]-The RIU submitted that they were required under the Rules to seek disqualification of the horses. The identification of methamphetamine by NZRLS was independently confirmed by the Australian laboratories.

[16]-The RIU accepted that it was open to a respondent to challenge the finding of the laboratories, but submitted that this should not be at the expense of the racing industry where the laboratories were prepared to engage in communication with the Interested Parties (respondents) and their advisors but there was a refusal to do so.

[17]-In the circumstances of the present proceedings the application for non-party disclosure was withdrawn after information was exchanged that could have been exchanged through professional discussions. The racing industry should not bear the costs incurred as a result of the Interested Parties’ expert refusing to engage with the witnesses to be called by the RIU.

[18]-The Informant acknowledged that had the request for a ruling not been opposed costs would not have been sought. As a result of the approach adopted by the Interested Parties, legal costs were incurred in the sum of $16,100.

[19]-The RIU had also incurred costs from the NZRLS of $6,210 and $4,414.78 for the analysis of the B samples.

[20]-The total RIU costs amounted to $26,724.78.

NZRLS costs submission

[21]-NZRLS seeks costs against the “Applicants and Respondents” (referred to in this decision as the Interested Parties) following the discontinuation of the application for non-party disclosure of NZRLS’ SOPs MM-26, MM-38 and MM-61.

[22]-NZRLS submitted that the application should not have been brought. Any specific concerns held by the Interested Parties’ expert, Dr Ardrey, as to the confirmatory analyses undertaken ought to have been raised directly with NZRLS in the first instance, as opposed to a blanket request for highly confidential SOPs, which did not contain details of the confirmatory analyses undertaken in this instance.

[23]-Mr Singh emphasised in his submission that an expert is not an advocate. Dr Ardrey's theory of four allegedly similar isomers that could have led to a false positive, identified in his report of 28 September 2018, were not disclosed in his affidavit in support of the application for non-party disclosure dated 21 February 2019, nor in his affidavit in reply dated 29 April 2019. These were only disclosed after repeated requests on 11 May 2019.

[24]-NZRLS submitted Dr Ardrey's theory could have been communicated to NZRLS without the need for the application. Even after voluntary disclosure of further information by NZRLS (despite this not being material), the application was maintained as a means of having NZRLS answer two questions relating to Dr Ardrey’s theory. The theory had no bearing on the SOPs, and it was, in any event, disproved. The application was discontinued shortly thereafter. Mr Singh submitted costs should now follow the event.

[25]-Mr Singh referred to s 4 of the Criminal Disclosure Act 2008 and High Court Rule 15.6(4)(d) and 15.23. He also submitted that in FM Custodians v Pati [2012] NZHC 1902 at [11] the High Court held:

(a) “The Court will consider the reasonableness of the stance of both parties in the proceeding (whether it was reasonable for the plaintiff to bring and continue the proceeding, and for the defendant to oppose and continue to oppose it, up to the point of discontinuance)"; and that (b) "Conduct prior to the commencement of the proceeding may be relevant (for example, if any conduct by a defendant has precipitated the litigation), as may be the reason for discontinuing (for example, where a change in circumstances has made the proceedings unnecessary).

[26]-Applying this reasoning to the facts of this case, Mr Singh submitted the application could have been avoided had Dr Ardrey first relayed his concerns to NZRLS and made reasonable efforts to obtain the information considered necessary, as opposed to a blanket request for NZRLS’ SOPs. He said this is the expectation in s 24 of the Criminal Disclosure Act 2008 and it is common for experts to confer in ordinary proceedings. Dr Ardrey maintained a theory that NZRLS had failed to consider four other structures that he had identified, without putting this to NZRLS at the outset. The RIU had invited Dr Ardrey to reconsider his stance and at least initially to engage with NZRLS to ascertain whether the matters identified by him could be satisfied by constructive dialogue.

[27]-Mr Singh stated that had Dr Ardrey done so, he would have been told that the highly confidential SOPs did not contain the information he sought. NZRLS could nonetheless have provided him with the additional information that it did provide on 30 April 2019 and would have agreed to carry out the further testing that it did in fact do on 21 June 2019, without incurring costs in defending the application. At the very latest, the application ought to have been discontinued following receipt of Mr Howitt’s affidavit of 18 April 2019, where he said: “NZRLS does not hold an SOP that specifically details the procedure used for the confirmatory analyses undertaken on samples 129071, 129072 and 129073 for the presence of methamphetamine”.

[28]-Mr Singh said that throughout the application NZRLS had maintained that requests unrelated to the SOPs, for example, relating to Dr Ardrey's theory, were matters for the substantive hearing. The answers Dr Ardrey was seeking were not contained in the documents that were the subject of the application. Nonetheless, in an effort to progress matters, NZRLS complied and agreed to undertake the additional testing. This provision of further information was not to be taken as a concession by NZRLS that the application was justified.

[29]-Mr Singh emphasised NZRLS had at all times acted reasonably and responsibly. It had a duty to protect the confidentiality of its SOPs in the interests of the integrity of racing, yet, it offered to provide additional information where possible.

[30]-Mr Howitt deposed that NZRLS had never disclosed its SOPs. To do so would jeopardise the integrity of racing as the information contained therein could be used to evade the detection of a prohibited substance violation. Confidentiality undertakings, which he understood to be unenforceable, could not overcome these concerns. In addition, NZRLS had already provided the defence with the analytical data from the confirmatory analyses conducted on samples 129071, 129072 and 129073 by way of a Confirmation Report. This information, together with certificates of analysis, met the internationally accepted guidelines for the provision of a Laboratory Documentation Package and demonstrated full compliance with the international standards for the identification of prohibited substances in samples taken for doping control purposes on behalf of horseracing authorities.

[31]-Mr Howitt also deposed that the IFHA “Guidelines on Laboratory Documentation Package” also states that the Laboratory Documentation Package “shall be the only information that the laboratory is required to provide. Therefore, the laboratory is not compelled to provide any additional documentation, such as SOPs, general quality management documents (eg those related to compliance with accreditation requirements), validation data, proficiency testing data, or any other data or documents, in hardcopy or electronic format, not specifically required by this Guideline.”

[32]-Mr Singh also submitted, as did Mr Lange, that Dr Ardrey misunderstood the relevant criteria involved in the wider proceedings in two ways: first, that the presence of methamphetamine in the metabolism of the horse had to be established to an “unequivocal” standard / beyond reasonable doubt; and secondly, that whatever the substance present is, it is in quantities that, although being measurable from an analytical standpoint, are so small that their possible effect on a horse may be questionable, whereas as counsel for the RIU made clear in his submissions, the relevant rule is breached where a prohibited substance is present and does not require proof of the presence of the drug in a performance affecting quantity, nor does it require proof of knowledge against the person in charge of the animal.

[33]-Additionally, NZRLS had incurred legal costs in preparing for the 3 May 2019 hearing that did not ultimately proceed due to Dr Ardrey’s unavailability.

[34]-Mr Singh described NZRLS as a private company that provided services to the NZRB pursuant to a Contract for Services. As an independent third party, it had incurred legal costs as a result of an application that could have been avoided and that (as recognised by the discontinuance) would not have succeeded. High Court Rules 15.6(4)(d) and 15.23 are specifically aimed at the position that NZRLS now found itself in. NZRLS was entitled to an indemnity in these circumstances.

[35]-NZRLS sought an order for costs in favour of NZRLS in the sum of $14,845 ($10,945 + $3,900, excluding GST) against the Interested Parties on a joint and severally liable basis.

Interested Parties’ cost submission

[36]-Mr Morgan QC submitted on behalf of the Interested Parties that it was unprincipled that the RIU and the NZRLS should seek costs.

[37]-Mr Morgan emphasised that the proceeding was a Request for a Ruling. It was not a case where the Interested Parties were a party to the hearing and, contrary to the submission of counsel for the RIU, nor was this a case where allocations from the NZRB were funds that were used to meet expenses incurred whenever it becomes necessary to take proceedings against those bound by the Rules who breach them. The Interested Parties’ conduct did not breach the rules and there was nothing they could have done to have prevented what had occurred.

[38]-The summary of evidence concluded that the evidence suggests that the three trainers involved were not liable and should not be held liable for the methamphetamine being in their respective horses. The evidence indicated that the horses had come into contact with methamphetamine via unknown ingestion, inhalation or contamination in or around the yards of Pukekura Park Raceway between 1:30 pm and 5:30 pm on 24 November 2017.

[39]-The Interested Parties in what Mr Morgan described as “the extraordinary circumstances of this case”, had undertaken their own investigations as best they could to identify how it could have been that the three horses were found to have methamphetamine in their metabolism.

[40]-Mr Morgan submitted NZTR is responsible for the conduct of Thoroughbred Racing in New Zealand and, in this case, the positive tests arose on account of the horses in question being present at Pukekura Raceway, where the Taranaki Racing Club Inc, an NZTR member and licensed racing club, conducts its race meetings.

[41]-We were referred to rr 601-604 of the Rules of Racing. It is the Stipendiary Stewards that have the control of the race meeting and they are charged with the duty of ensuring that the provisions of the Rules are applied and enforced in respect of a race meeting. The club must follow directives, policies, guidelines or practices of NZTR necessary for the administration and control of a race meeting. As a consequence, the Interested Parties submitted it was the obligation of NZTR to provide secure and drug free stabling for visiting horses.

[42]-Significantly, Mr Morgan submitted: “It is entirely contrary to any principled application of the Rules for the RIU to seek costs against innocent trainers when those facilities have not been provided and the horses contaminated as a result. That principle is acknowledged by counsel for the RIU, at [18] of the submissions of 2 August, where it is said: “It is acknowledged that had the Request for a Ruling not been opposed, costs would not have been sought.”

[43]-Mr Morgan observed that the thrust of counsel for the RIU’s submissions focused on Dr Ardrey and the application brought for non-party discovery. It seemed to be the basis for the RIU application for costs that the Interested Parties should have simply accepted what they were told, namely that their horses had tested positive for methamphetamine and they should not have attempted any sort of critical review.

[44]-We were advised that the Interested Parties’ investigation was not limited to Dr Ardrey’s review. The Interested Parties engaged Forensic and Industrial Science Ltd (Dr Nicholas Powell) to investigate the occurrence of methamphetamine in the samples taken from the horses and his report advised that the existing toxicological results should be reviewed.

[45]-Dr Ardrey was engaged and, on 4 December 2018, counsel for the RIU was provided with Dr Ardrey’s conclusions. Counsel for the RIU, having been provided with those conclusions, was asked: “For him [Dr Ardrey] to sensibly complete his work he needs copies of the SOPs employed by each of the laboratories. This is obviously material. Will you intercede and do what you can to require the laboratories to make those available to him? This is not an uncommon issue. It arises in the blood alcohol legislation area where the scientists, by means of confidentiality provisions, do get access to operating procedures to satisfy themselves one way or the other of the efficacy of the investigations.”

[46]-The response of the NZRLS was to refuse, hence Mr Morgan said, the application for non-party discovery. The RIU and the NZRLS opposed on the grounds of commercial sensitivity. As a consequence, Dr Ardrey’s entire report was disclosed, which identified four of the structural isomers of methamphetamine, which would be expected to give very similar analytical data to methamphetamine which, on the basis of the analytical data disclosed, had not been unequivocally excluded as the substance detected in the equine urine. NZRLS subsequently purchased three of the four isomers identified and ran them through their liquid chromatography and mass spectrometry testing regimes to see if they did generate distinguishable results. They did, and Dr Ardrey’s advice was that, having seen those results, the four isomers to which he referred had now been excluded. One of them by a different method but all four were excluded by one method or another, such that the application for non-party discovery did not need to be pursued.

[47]-Mr Morgan stated that the submissions of counsel for RIU suggested that this all could have been discussed by the scientists over the telephone and need not have required an application for third party disclosure at all. The simple answer, he believed, was that these issues were extremely important to the Interested Parties. If the scientist concerned did not consider issues like these could be determined informally, it was “not for the Interested Parties to second guess their expert advisors.” After the further testing carried out by NZRLS and Dr Ardrey’s advice that in view of that testing the application for non-party discovery did not need to be pursued, the Interested Parties did not oppose the Request for a Ruling.

[48]-This was a case, Mr Morgan submitted, where the Interested Parties had merely exercised the opportunity available to them to have a second opinion on the test results obtained, together with a thorough review of the circumstances in which the horses were found to be contaminated. The independent testing referred to by the Australian laboratories was of a different nature. It was only confirmatory and was designed to exclude gross error.

[49]-Ultimately, the position reached was that the Interested Parties had “accepted advice of experts engaged by them that, however extraordinary and indeed unbelievable the results were in this case, they should not oppose the Request for a Ruling.” Mr Morgan submitted that “what that has uncovered, is that the NZRLS tests, in the opinion of Dr Ardrey, were not fit for purpose. Retesting has established that the structural isomers he refers to in his report could be excluded but that was at a cost to the Interested Parties in the professional fees they have incurred from Dr Nicholas Powell of Forensic and Industrial Science Ltd and Dr Ardrey.”

[50]-With respect to costs to the RIU, the Interested Parties’ submission concluded: “Recognising they had not committed an offence themselves and that there was nothing that they could have done to prevent this, further recognising that fault falls squarely on the organiser of the race meeting failing to provide drug free stabling for visiting horses, it is submitted that the Interested Parties should not be penalised by an award of costs.”

[51]-With respect to the NZRLS submission, Mr Morgan stated there was never a “blanket request” for highly confidential SOPs. It was always the case that Dr Ardrey was willing to give confidentiality undertakings. The claim that these SOPs were so highly confidential had to be queried when they are so generic that they did not contain details of the confirmatory analysis undertaken in this instance.

[52]-The chronology of events annexed to counsel for NZRLS’ submissions was alleged to be misleading. Dr Ardrey’s conclusions were provided to counsel for the RIU, being the body that was intending to adduce the evidence of the test results on 4 December 2018 with the request for copies of the SOPs employed by each of the laboratories. Whether the issues Dr Ardrey wished to explore could be dealt with informally was dealt with by an exchange of correspondence between counsel, and Dr Ardrey was specifically asked what his issues were and whether it could be done informally. Dr Ardrey’s response was in his affidavits filed for the non-party discovery application.

[53]-Mr Morgan alleged: “Regrettably, it appears that the submissions of counsel of NZRLS in support of its application for costs reveal that there appears to be some contest between the scientists, Dr Ardrey on the one hand and Mr Howitt on the other, over the efficacy of the results and how any queries about them should be resolved. Such contest was irrelevant. The real issue was should the Interested Parties need to pay costs at all, recognising they were without fault and had the misfortune of having their horses race at a contaminated facility. Then, whether they should need to meet the costs of counsel instructed for NZRLS, where the expert advice they had received was that the testing conducted by the NZRLS was not fit for purpose.

[54]-Mr Morgan submitted that the total costs claimed by RIU and NZRLS were such that these two organisations were seeking to punish the Interested Parties for having the temerity to question the results. This, in a case where the advice counsel had been given by the RIU on 24 August 2018 was that there had been a total of seven methamphetamine positives nationally in the last three years, with four having come from meetings held by Taranaki Racing Inc at New Plymouth, including the three that were the subject of this matter. Subsequently, an area was isolated.

[55]-Mr Morgan observed that the interested parties had had their own costs to bear in the form of counsel’s costs, costs of Dr Nicholas Powell and the costs of Dr Ardrey, which had revealed an unsatisfactory state of affairs: a racing club where horses can be inadvertently contaminated with methamphetamine; and a testing regime undertaken by NZRLS, which is not fit for purpose in the opinion of Dr Ardrey.

[56]-If costs were to be awarded, Mr Morgan submitted they should be nominal, recognising the costs the Interested Parties had already borne and the total absence of fault on their part and that no hearing was ultimately required.

[57]-Mr Morgan concluded his submission by stating the Interested Parties were without fault in this case. The application for non-party disclosure need not have been brought had NZRLS not taken an unduly precious attitude towards its SOPs and instead adopted what Dr Ardrey described in his affidavit as a routine process with other organisations, such as ESR, providing this sort of material with confidentiality undertakings. Further, the Interested Parties, having sought expert advice, received advice that the analytical results did not unequivocally establish methamphetamine and required further testing. Once that testing had occurred it was no longer necessary to continue the application for non-party discovery and the Request for a Ruling was not opposed. This history did not demonstrate a case for costs.

Reply

[58]-In reply, Mr Lange disputed the fact that it was the obligation of NZTR to provide secure and drug free stabling for visiting horses, citing the Appeals Tribunal decision in Justice v RIU 14 March 2012 where it was said that it is not the responsibility for the racing code, the club, or the RIU to ensure a horse races free of a prohibited substance. He said that in the context of the present proceedings the RIU concluded that none of the trainers involved should be liable for the positive swabs and the RIU believed that they could not have done anything to prevent the positive swabs from occurring. In these circumstances, the RIU appropriately had sought only disqualification of the horses, which was mandatory under the Rules.

[59]-Mr Lange noted that the Rules provide a discretion to award costs. Where a respondent admitted a breach, or opposed a request for a ruling, the usual course was not to seek costs, however where a breach is denied or request for a ruling is opposed, the usual course was to seek costs. The Interested Parties exercised their right to oppose the Request for a Ruling and to challenge the results of analysis. As a result, not insignificant costs were incurred by the RIU (and NZRLS).

[60]-Mr Singh in his reply stated that the Interested Parties sought NZRLS’ SOPs based on advice from their chosen expert. When told of their confidential nature, Dr Ardrey refused to engage with NZRLS to have specific concerns addressed, despite such an invitation in December 2018. Although Dr Ardrey’s theory as to the four allegedly similar isomers was formulated in September 2018, his conclusions, received on 4 December 2018, did not identify what these were. Neither did the application for non-party disclosure, nor Dr Ardrey’s two affidavits filed in support.

Decision

[61]-This matter has a lengthy history. The races in question were held on 24 November 2017. Notification that the A samples were positive was on 28 December 2017 and the B samples notifications were 23 and 31 January 2018, respectively. Authorisation to lodge an information requesting a ruling for each horse to be disqualified from the race without the trainers being charged was given by Mr Mike Godber, General Manager of the RIU, on 22 March 2018.

[62]-The request for a ruling with respect to the three horses

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