The Christian Church Community Trust and associated entities (commonly known as Gloriavale) has received a great deal of media attention.
In particular, various allegations have been made that its leaders:
- Breached a number of employment obligations, including using forced labour and child labour
- Physically and sexually abused members of the community, including children, and
- Ignored their legal obligations towards the people in its community, including ensuring their safety.
For many years, Gloriavale has banked with the Bank of New Zealand (BNZ). In July 2022, BNZ notified Gloriavale that it intended to end its contractual relationship and stop providing banking services.
What happened next?
BNZ originally gave Gloriavale three months to make new banking arrangements. This was extended by agreement, but BNZ did not agree to an extension beyond 30 November 2022.
Gloriavale tried, but was unable, to make alternative banking arrangements within that timeframe. Gloriavale then sued BNZ[1]; it said that BNZ had an obligation to provide it with continued banking services, particularly where there are no other options available. However, as litigation can take many years, this did not solve the problem that BNZ intended to terminate the banking relationship immediately.
Gloriavale therefore made a separate legal application for an injunction. The injunction case was brought alongside the main legal case. The main case argued that BNZ had to provide Gloriavale with continued banking services; this may take years to determine.
The injunction case argued that BNZ had to provide banking services until the main legal case had been determined. The High Court agreed with Gloriavale in the injunction case, but the Court of Appeal overturned that decision in December 2024. The result is that Gloriavale must find a new bank to use while the main legal case against BNZ goes through the court system. This is very significant in light of the evidence that Gloriavale has not been able to find another bank.
The arguments
An injunction will only be granted where there is a serious question in the main court case. In this case, the question was whether Gloriavale could seriously argue that BNZ was not entitled to end the banking relationship.
BNZ argued that its terms and conditions allowed it to terminate a banking relationship whenever it wishes. Just as a customer can fire a bank at any time, a bank can fire a customer. The bank’s terms and conditions allowed it to decline to provide any product or service without needing to give a reason. It simply no longer wanted to work with Gloriavale.
Gloriavale argued that BNZ had to act reasonably and, that if it was concerned about recent allegations, it should have asked Gloriavale for more information rather than giving notice of termination with no warning. BNZ might have been wrong, and it would be unfair for the bank to cancel if they did not at least take steps to find out if they were right.
Court of Appeal decision
The Court of Appeal found that the main court case was weak. The banking contract did not require BNZ to undergo any kind of consultation process, to act reasonably or to verify any concerns it might have before terminating the banking relationship. BNZ did not act in bad faith; it had concerns that the Gloriavale community acted inconsistently with a variety of basic human rights and it no longer wanted Gloriavale as a customer. This was actually quite reasonable, as it transpired that other banks also did not want to work with Gloriavale.
Other arguments made on behalf of Gloriavale were similarly not persuasive.
While the Court of Appeal was only considering the issues on an interim basis, and the main court case would still continue to a full court hearing, the court did not find that Gloriavale had strong enough arguments to justify forcing BNZ to provide banking services in the meantime. It therefore overturned the High Court’s decision to issue an injunction.
What next?
Gloriavale is a complicated commercial enterprise and it will need to find alternative banking arrangements. It will be interesting to see which trading bank will offer those services, when it seems that a number of banks have already declined.
It will also be interesting to see what happens in the underlying court case. Gloriavale is still arguing that the BNZ could not terminate the banking relationship. While the Court of Appeal doesn’t think the arguments were strong, it is possible that a later judge will disagree after hearing the full argument. Gloriavale could still be successful and, if so, could pursue BNZ for any losses suffered due to the termination.
Banks are in a position of power in their customer relationships. Their terms and conditions usually let them terminate a relationship with a customer at any time. This is highly relevant for people or organisations that do not have many options.
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[1] Bank of New Zealand v The Christian Church Community Trust & Ors [2024] NZCA 645.