Bank of New Zealand v The Christian Church Community Trust
[2024] NZCA 645
•9 December 2024 at 3.00 pm
IN THE COURT OF APPEAL OF NEW ZEALAND
I TE KŌTI PĪRA O AOTEAROA
CA32/2024
[2024] NZCA 645
BETWEEN BANK OF NEW ZEALAND Appellant AND THE CHRISTIAN CHURCH COMMUNITY TRUST AND OTHERS Respondents (See Schedule A for complete list of Respondents)
| Hearing: | 31 October 2024 |
| Court: | Goddard, Katz and Mallon JJ |
| Counsel: | S M Hunter KC, W M Irving and E B Boyle for Appellant R W Raymond KC, AV Foote and B I G Cummings for |
| Respondents |
REASONS OF THE COURT
(Given by Goddard J)
Table of contents
Para no
| Introduction | [1] |
The issue: should BNZ be required to continue to provide banking
| services to the Gloriavale entities pending trial? | [1] |
| The Gloriavale entities’ claims | [5] |
| Summary | [10] |
| Background | [19] |
| BNZ’s longstanding banking relation with Gloriavale | [19] |
| The terms of the banking relationship | [22] |
| BNZ gives notice terminating the relationship | [36] |
| Attempts by the Gloriavale entities to open accounts with other banks | [47] |
| First injunction decision | [49] |
| Second injunction decision | [51] |
| Leave to appeal | [53] |
| Principles governing interim relief | [56] |
| Limits on BNZ’s ability to terminate the contractual banking relationship | [65] |
| Second injunction decision | [65] |
| Submissions for the Gloriavale entities | [71] |
| Submissions for BNZ | [84] |
| Interpretation of cl 8.2 | [90] |
| Implied term restricting the exercise of the cl 8.2 power? | [113] |
| An implied term requiring powers to be exercised for a proper purpose? | [123] |
| An implied term in law based on the “default rule” or Braganza? | [135] |
| Implied term in fact? | [144] |
| Summary — no arguable case for an implied term | [146] |
| Serious question to be tried in relation to BNZ breach? | [147] |
| Submissions for Gloriavale entities | [151] |
| Submissions for BNZ | [154] |
| Discussion | [160] |
| Serious question to be tried in relation to breach of fiduciary duty? | [165] |
| The claim for breach of fiduciary duty | [165] |
| Discussion | [168] |
| Serious question to be tried in relation to estoppel? | [173] |
| The estoppel claim | [173] |
| Discussion | [175] |
| Overall assessment | [182] |
| Result | [190] |
| Introduction |
The issue: should BNZ be required to continue to provide banking services to the
Gloriavale entities pending trial?
The Bank of New Zealand (BNZ) has for many years provided banking
services to various trusts, partnerships and companies associated with the Gloriavale
Christian Community (Gloriavale entities). In July 2022 BNZ gave notice to the
Gloriavale entities of its intention to terminate the provision of banking services.
BNZ considered that this decision was appropriate in light of its (internal) human
rights policy. BNZ initially gave the Gloriavale entities three months’ notice that it
would cease providing banking services. That deadline was extended to 30 November
2022 at the request of the Gloriavale entities. BNZ declined to provide any further
extension.
The Gloriavale entities made attempts to establish alternative banking
arrangements, but were unsuccessful. They say that without bank accounts, they will
not be able to continue to operate. The Gloriavale entities carry on a range of
commercial activities, and meet the basic needs of the Gloriavale community
including medical care, education of children in the community, and provision of food
and clothing. If the Gloriavale entities do not have bank accounts, all of these activities
will be at risk, as will the continued existence of the community.
The Gloriavale entities sought an interim injunction requiring BNZ to continue
to provide services to them. The application was initially made without notice.[1]
[1] BNZ participated on a “Pickwick” basis: see Pickwick International Inc (GB) Ltd v Multiple Sound
An injunction was granted by Dunningham J on 7 December 2022.[2] The application
[2] Christian Church Community Trust v Bank of New Zealand [2022] NZHC 3271 [First injunction
then came before Cull J on notice on 30 May 2023. On 8 September 2023, Cull J
granted an interim injunction preventing BNZ from terminating the Gloriavale
entities’ accounts pending trial.[3]
[3] Christian Church Community Trust v Bank of New Zealand [2023] NZHC 2523, [2023] 3 NZLR
BNZ appeals from the second injunction decision. BNZ seeks to have the
injunction set aside, so it is able to close the Gloriavale entities’ accounts.
The Gloriavale entities’ claims
It was common ground before us that as a matter of common law a contract by
a bank to provide banking services to a customer is terminable upon reasonable notice
in the absence of express contrary agreement or statutory impediment.[4]
[4] National Commercial Bank Jamaica Ltd v Olint Corpn Ltd [2009] UKPC 16, [2009] 1 WLR 1405
The Gloriavale entities do not contend that any legislation restricts the ability
of BNZ to terminate the provision of banking services to them.[5]
[5] It would be unlawful for a bank to refuse to provide banking services, or to terminate banking
But the Gloriavale entities claim that the ability of BNZ to close their accounts
and terminate their relationship is limited by the express terms of the contract between
BNZ and the Gloriavale entities, properly interpreted. They also claim that BNZ owes
them a fiduciary duty that would be breached by closing their accounts, and that BNZ
is estopped from closing their accounts.
The contractual relationship between the Gloriavale entities and BNZ is
governed by BNZ’s standard terms and conditions (BNZ standard terms). That
contract expressly confers on each of the customer and BNZ the ability to terminate
the banking relationship. As discussed in more detail below, cl 8.2 of the BNZ
standard terms provides that BNZ can close a customer’s account or end any other
product or service “for any reason”. Some examples are given of circumstances in
which an account may be closed or suspended, but the contract expressly states that
those examples do not limit the reasons why BNZ might close or suspend an account.
The Gloriavale entitles say that cl 8.2, properly interpreted:
(a) requires BNZ to have a “reason” to close their accounts; and (b) requires that the reason cannot be founded on a mistake of fact, unreasonable, capricious, arbitrary, or require customers to meet
standards of unpublished and unnotified policies of which they were
not aware.
The Gloriavale entities say that the High Court was right to grant an injunction,
| because: | ||
|
close their accounts breached cl 8.2. They say it is seriously arguable
that BNZ’s decision was made on the basis of unreliable and incorrect
information; they were not provided with the BNZ human rights policy
by reference to which the relationship was terminated; no attempt was
made to engage with them to ascertain the correct position and whether
the concerns identified were well founded or had since been addressed;
and there was no discussion with them about what steps could be taken
to enable the banking relationship to continue.
(b) The balance of convenience strongly favours continued provision of banking services until their claims have been determined. If the
accounts continue, there is no material prejudice to BNZ. If the
accounts are closed, the Gloriavale entities will suffer irreversible
prejudice.
Summary
It is not seriously arguable that cl 8.2, properly interpreted, limits the reasons
for which BNZ may terminate the banking relationship. Rather, under cl 8.2 BNZ
may terminate “for any reason”, unqualified by the list of examples set out in that
clause or by any requirement that the reason be of a particular kind.
There is a substantial body of overseas authority to the effect that a
discretionary contractual power conferred on one party may be subject to implied
limits broadly analogous to the limits that apply to the exercise of public powers.
These authorities do not speak with one voice: the law is developing, and remains unsettled. This Court has not to date had to determine which (if any) of these lines of
authority should be followed in New Zealand. On the approach which we consider
most promising, it is strongly arguable that BNZ’s power to terminate the agreements
must be exercised for the purpose for which that power was conferred under the
contract. But that purpose is to enable BNZ to bring the relationship to an end if BNZ
wishes to do so “for any reason”. On this approach, cl 8.2 preserves, rather than limits,
BNZ’s freedom at common law to terminate the relationship unilaterally in its own
interests.
Some overseas authorities suggest that a term should be implied into every
contract that confers a discretionary power on one party to the effect that the power
must not be exercised dishonestly, in bad faith, or capriciously or arbitrarily. But the
Gloriavale entities do not contend that BNZ’s decision was made dishonestly or in bad
faith (in the sense that BNZ was seeking to cause them harm). It is not seriously
arguable that BNZ’s decision was made capriciously or arbitrarily: BNZ made a
considered decision at a senior level that termination was appropriate, in light of its
internal policies. The decision was not made on a whim, or for reasons unconnected
with BNZ’s legitimate interests. For the purpose of this interlocutory appeal we are
content to proceed on the basis that the termination provision in the BNZ standard
terms is arguably subject to an implied limit along these lines. But it is not seriously
arguable that BNZ breached any such implied term.
It is not in our view seriously arguable as a matter of law that a term should be
implied into this contract that would require BNZ to act reasonably in making a
termination decision, or that would impose process obligations before BNZ makes a
decision to terminate a customer’s account under cl 8.2. Such a term would be
inconsistent with the express terms of the contract, in particular cl 8.2, and with the
general scheme of the contract.
Still less is it seriously arguable that BNZ has a fiduciary duty that would be
breached if BNZ ceases to provide banking services to the Gloriavale entities, or that
BNZ is (indefinitely) estopped from terminating the provision of those services.
We are thus firmly of the view that there is no serious question to be tried in
relation to the Gloriavale entities’ claims against BNZ. In those circumstances an
interim injunction should not be granted.
If we had considered that it is arguable that cl 8.2 or an implied term of the
contract imposed process obligations on BNZ that required it to make decisions about
termination taking into account relevant matters and disregarding irrelevant matters,
we would have assessed the Gloriavale entities’ claims as arguable on the facts, but
weak. We would nonetheless have declined to continue the injunction, as that would
compel BNZ to provide services to the Gloriavale entities for an extended period
against BNZ’s will in circumstances where:
(a) BNZ believes in good faith that continuing to provide those services is inconsistent with its internal policies.
(b) BNZ’s decision does not prevent the Gloriavale entities from obtaining banking services — it simply removes one provider as an option, in a
market where there are many providers of banking services.
(c) The Gloriavale entities can seek to open accounts with other banks. If another bank is willing to provide banking services to a Gloriavale
entity, that entity will suffer some inconvenience as it moves its
accounts, but will not suffer serious or irremediable prejudice of the
kind that would justify granting an injunction. If no other bank is
willing to accept the Gloriavale entities as customers, that reluctance
cannot be laid at the door of BNZ. The prejudice to the Gloriavale
entities would result from the characteristics of those entities that are
perceived by other bankers as relevant to the costs and risks of dealing
with them. And it would be in precisely those circumstances that the
prejudice to BNZ of being required to provide services to customers
with whom no other bank wishes to deal would be most apparent, and
would weigh most strongly against granting an injunction.
Thus even if we are wrong about the existence of an arguable question to be
tried, we do not consider that it would be in the overall interests of justice to grant an
injunction requiring BNZ to continue to provide services to the Gloriavale entities for
a further period (likely to be in excess of a year) until the claims could be tried.
BNZ’s appeal must therefore be allowed. BNZ has provided an assurance to
the Court that if its appeal succeeds, it will continue to provide banking services to the
Gloriavale entities for a period of three months from the date of this Court’s decision.
In reliance on that assurance, we set aside the injunction with immediate effect.
Background
BNZ’s longstanding banking relation with Gloriavale
Gloriavale is a Christian community based in an isolated location on the
West Coast of the South Island. The nearest town is Greymouth. The Christian
Church Community Trust (the Trust), which is responsible for the day-to-day
functioning of the community, first opened a bank account with BNZ in March 1999.
Various accounts were opened by Gloriavale entities from 1999 through to 2020.
These proceedings concern 16 Gloriavale entities which between them have a
total of 83 accounts with BNZ. BNZ is the only bank used by the Trust and the other
Gloriavale entities. It is also the bank used by most individual members of the
Gloriavale community.[6] It was common ground before us that many of the Gloriavale
[6] BNZ has terminated its banking relationship with certain individual members of the Gloriavale
entities have a longstanding customer relationship with BNZ, and that the relationship
has been a good one. The Gloriavale entities all operate their accounts in credit.
However at their request they are not paid interest on their (substantial) credit
balances, as that would be inconsistent with their religious beliefs. There is no suggestion that any of the Gloriavale entities has ever breached any obligations owed
by it to BNZ.
The Gloriavale entities have access to BNZ’s “Internet Banking for Business”
platform, and most transactions are carried out online using that platform. Other
services that cannot be provided through that platform are provided by BNZ’s
Greymouth branch, which has regular dealings with members of the Gloriavale
community involved in the management of the Gloriavale entities. BNZ also provides
a relationship manager for the Gloriavale entities, who is based in Christchurch.
The relationship manager and their team are responsible for a small number of issues
that cannot be dealt with at branch level, and are escalated to them — for example,
establishing new accounts for existing entities or for new entities.
The terms of the banking relationship
The relationship between banker and customer is contractual.[7] It is common
[7] John Odgers and Ian Wilson Paget’s Law of Banking (16th ed, LexisNexis, London, 2023) at [4.1].
ground that the terms of the relevant contract for each of the Gloriavale entities are the
BNZ standard terms that apply to all BNZ transaction and savings accounts, and to
account-related products and services.
The BNZ standard terms provide that BNZ can change those terms at any time,
generally with at least 14 days’ notice. The Gloriavale entities did not suggest that
earlier versions of the terms were more favourable to them, or that they had been
prejudiced by any unilateral changes to the terms by BNZ. Rather, they rely on the
current version of the BNZ standard terms.
Clause 1.6 provides that BNZ will provide its services with reasonable care
and skill. It is not suggested that BNZ has breached this obligation.
Clause 2.1 of the BNZ standard terms is concerned with opening an account.
It provides:
2.1 Opening an account … [BNZ has] sole discretion as to whether or not we will open an account or provide any product or service to you. We can decline your application for an account … and we do not need to give you a reason for doing so.
Clause 2.11 provides that BNZ can decline to act on instructions “where we
consider that we have a good reason to do so”.[8]
[8] Emphasis added.
Clause 4.4 provides that BNZ can change its interest rates at any time without
| notice.[9] | |
| [28] | Clause 4.6 provides that BNZ may impose fees and charges for products and |
[9] Subject to the terms of any specific product or service, such as a term loan or term deposit. As one
services, and may change those fees and charges at any time. Clause 4.8 provides that
if a customer is not happy with a change to fees and charges, they can close their
accounts and end any other products or services in accordance with s 8 and any
relevant specific terms. (The same applies where a customer is not happy with a
change to interest rates, though there is no specific term to that effect.)
Section 7 of the BNZ standard terms is concerned with overdrafts. If a
customer seeks to make a payment out of an account with insufficient funds, cl 3.4
provides that BNZ “can, at our discretion, choose whether or not to make a payment
… or dishonour a payment”. Clause 7.3 provides that this will be treated as a request
for an unarranged overdraft, and cl 7.4 provides that BNZ will consider whether it
agrees to the request and “can approve or decline the request”.
Section 8 of the BNZ standard terms sets out the circumstances in which the
contract may be terminated by either party.
Clause 8.1 provides that a customer may close their account or end any other
product or service at any time. Outstanding obligations to the bank must still be met;
in particular, any debts owed on any account must be repaid.
BNZ’s right to terminate the provision of services is governed by cl 8.2, which
we set out in full as it is central to this appeal:
8.2 When we can close or suspend your account or end or suspend any other product or service: We can close your account or end any other product or service, or immediately suspend or restrict the operation of your account or the provision of any other product or service, for any reason. For example (but without limiting the reasons why we might close or suspend your account), we may close or suspend your account where:
(a) we learn of your, or your guarantor’s, death or any other lack of legal capacity;
(b) we learn that you, or your guarantor, have suffered a Bankruptcy Event or an Insolvency Event;
(c) there are insufficient available funds (including funds available under any overdraft, or other loan facility on that
account) to meet payment instructions or other obligations
from that account (including obligations that might arise later
and our fees and charges);
(d) we learn of a dispute over the ownership of funds or the operation of your account;
(e) we learn that a party has reasonably claimed an interest in your account;
(f) we reasonably believe that you or someone else has used or is using your account or has (or has attempted to use your
account), illegally or fraudulently, or behaving improperly
(for example, in a threatening or aggressive manner to our
staff);
(g) for organisation accounts (including those of trusts, companies, incorporated societies and other businesses),
while the authority of the person representing the organisation
is unclear;
(h) we reasonably believe that there is a legal requirement to do so, including to comply with Sanctions, or as required by a
Court or other authority;
(i) you have breached these Terms or any relevant Product
Terms;
(j) we reasonably believe that you, or payments in or out of your account, are subject to Sanctions;
(k) your account has never been used, or has not been used for an extended period; or
(l) you refuse to provide information that we ask for or we learn that information we have been provided in relation to you or
in relation to the operation of your account, is incorrect or
misleading or incomplete.
Clause 8.3 provides that BNZ “will not usually close your account … unless
we have told you that we are going to do so at least 14 days in advance”.
Clause 8.5 excludes liability for suspending or closing an account:
8.5 Liability if we suspend or close your account or end or suspend a product or service: If we suspend, restrict or close your account or
end or suspend a product or service in accordance with clauses 8.2,
20.10 or 21.10:
(a) where there is more than one account holder (for example, for joint or partnership accounts), each joint account holder
existing at the time of the suspension or closure of the account
will continue to be jointly and individually liable for any
outstanding debt; and
(b) we will not be liable to you for any consequences (including any Loss) arising out of the suspension, restriction or closure
of that account.
Clause 8.10 provides that if BNZ is asked to move a customer’s account to
another bank, BNZ will co-operate in a timely manner (subject to any legal
constraints).
BNZ gives notice terminating the relationship
[36] In May 2022 the Employment Court delivered judgment in
Courage v Attorney-General.[10] The Court found that three members of the Gloriavale
[10] Courage v Attorney-General [2022] NZEmpC 77, (2022) 18 NZELR 746.
community were employees from the age of six until they left.[11] The decision included
[11] At [9], [40], [55], [56], [165] and [203].
a number of adverse findings about the circumstances in which those three members
had worked at Gloriavale. The Court found that children aged six to 14 were coerced, including through violence and denial of food, to perform laborious and often
dangerous physical work for the commercial benefit of the Gloriavale community.
The defendants in the Courage proceeding included senior members of the
Gloriavale community (some of whom are or were trustees of the Trust), and one of
the Gloriavale entities (Forest Gold Honey Ltd).
There was no appeal from the Courage judgment. Leaders of the Gloriavale
community issued a public apology for failing to prevent, and protect victims from,
labour exploitation and sexual abuse.
The Courage decision and the subsequent apology came to the attention of
BNZ. BNZ is part of the National Australia Bank Ltd group of companies. It is subject
to that group’s human rights policy. BNZ says it considered the Courage judgment in
light of the group human rights policy, and decided to terminate the provision of
banking services to the Gloriavale entities based on the findings in the Courage
judgment.
In making that decision BNZ did not seek any input from the Gloriavale
entities. BNZ does not suggest that it took into account the interests of those entities.
Rather, BNZ says it made a decision internally, at a senior level, which it saw as
appropriate in light of its human rights policy.
The first that the Gloriavale entities knew about BNZ’s consideration of
whether BNZ would continue to provide banking services to them was when they were
told, at an online meeting on 6 July 2022, that BNZ had made the decision to cease to
do so. A letter formally recording the decision was sent by BNZ to the Gloriavale
entities on 8 July 2022, attaching the list of all accounts to be closed. That list included
accounts for the charitable trust that meets the needs of members of the community,
the school, the pre-school, all businesses, the midwifery service, and accounts used
for medical and laundry costs.
The letter explained the decision to close the accounts as follows:
3. As we explained on the call, BNZ is aware of the recent Employment Court decision dated 10 May 2022, relating to a claim by three former
members of the Gloriavale community. BNZ has serious concerns
about the labour practices that have been described in that decision.
4. Based on what BNZ has learned about the labour practices followed
at Gloriavale, and taking into account the public apology issued by
Gloriavale, BNZ has formed the view that the labour practices amount
to, or are likely to amount to, human rights abuses. BNZ understands
that these human rights abuses are occurring (or have occurred) under
the senior leadership of the Servants and Shepherds (as described in
the Employment Court decision).
5. BNZ follows a strong human rights policy. Under this policy, BNZ
must not tolerate, or be complicit in, any activities that contribute to
adverse human rights impacts. We believe that continuing to provide
banking services to you would be inconsistent with our human rights
policy.
6. Therefore BNZ has reached a decision to terminate our banking
relationships with you. …
BNZ says the three month notice period it provided was intended to allow the
Gloriavale entities to approach other banking providers, complete on-boarding with
an alternative banking provider, or make alternative arrangements if it was
unsuccessful in securing a different banking provider during this period. The BNZ
letter offered to assist the Gloriavale entities to transition to another banking provider,
and identified the relevant BNZ contact person to assist in making the necessary
arrangements.
The Gloriavale entities say that they attempted to engage with BNZ to provide
information and correct inaccurate assumptions made by BNZ, to give assurances that
steps were being taken within the Gloriavale community to remedy the practices of
concern to BNZ, and to find a resolution that would enable the banking relationship
to continue. They say that the Employment Court findings do not apply to most of the
Gloriavale entities, contrary to the assumption that BNZ appears to have made, and
that significant measures have been put in place to ensure that the concerns identified
by that Court and by other agencies are effectively addressed including appointment
of independent external trustees of the Trust, and employment of a new chief executive officer of the Trust who is not a member of the community. But BNZ has not been
willing to engage, or to revisit its decision.
The Gloriavale entities asked for a copy of the human rights policy at the
meeting on 6 July 2022, but were told that it was an internal policy. They were not
given a copy. They saw the policy only when it was exhibited to an affidavit of a BNZ
executive in these proceedings.
As already mentioned, the Gloriavale entities sought an extension of the notice
period. On 7 October 2022 BNZ agreed to extend the date by which the accounts
would be closed from 14 October 2022 to 30 November 2022.
Attempts by the Gloriavale entities to open accounts with other banks
Members of the Gloriavale community swore affidavits for the purpose of the
May 2023 High Court hearing setting out the attempts they had made to put in place
alternative banking arrangements. All of those attempts were unsuccessful.
There is no updating evidence before this Court about whether any further
efforts have been made by the Gloriavale entities to establish alternative banking
arrangements since the hearing in the High Court, more than a year ago. We were
advised from the bar that attempts to find an alternative banking service provider have
continued, and have been unsuccessful. For present purposes we will proceed on the
basis that there is a very substantial risk that the Gloriavale entities will not be able to
open bank accounts with other New Zealand retail banks.
First injunction decision
On 29 November 2022 the Gloriavale entities sought interim relief on a without
notice basis. BNZ was advised of the application, and participated on a limited basis.[12]
[12] Pickwick International Inc (GB) Ltd v Multiple Sound Distributers Ltd, above n 1; and Jessica
The Gloriavale entities had not prepared pleadings at that time, but made their application on the basis that termination would be a breach of contract or a breach of
fiduciary duty.[13]
[13] First injunction decision, above n 2, at [28].
Dunningham J accepted that it was theoretically arguable that there are
constraints on the exercise of power to terminate a contract, particularly given the
importance of banking facilities in today’s society.[14] The Judge considered it was
[14] At [28].
unclear from the Employment Court decision whether the concerns identified applied
to all the relevant Gloriavale entities.[15] She was satisfied that the balance of
[15] At [28].
convenience lay with the Gloriavale entities, as the closure of their bank accounts
meant that the community could not make alternative arrangements.[16] The Judge
[16] At [29].
concluded that it was appropriate for the bank accounts to be sustained while the
Gloriavale entities’ claim is determined, and granted an “interim interim” injunction.[17]
[17] At [33].
Second injunction decision
The Gloriavale entities then filed proceedings and applied on notice for interim
relief pending trial. They plead three causes of action: breach of contract, breach of
fiduciary duty, and estoppel by convention. The claims are described in more detail
below.
The Gloriavale entities’ application for an interim injunction was, as already
mentioned, heard by Cull J on 30 May 2023. The Judge concluded that there was a
serious question to be tried on at least the breach of contract cause of action.[18]
[18] Second injunction decision, above n 3, at [84]–[85].
She considered that the balance of convenience and overall justice favoured allowing
an interim injunction to continue until determination of the substantive claims.[19]
[19] At [89]–[91] and [93].
The Judge’s reasoning is set out in more detail below. Having found that the threshold
was met, and there was a serious question to be tried on the first cause of action, the
Judge did not need to address the arguments relating to the other causes of action.[20]
Leave to appeal
[20] At [85].
BNZ sought and was granted special leave to appeal to this Court from the
second interim injunction decision.[21]
[21] Bank of New Zealand v Christian Church Community Trust [2024] NZCA 246.
The main thrust of BNZ’s appeal is its argument that there is no serious
question to be tried. BNZ says it is clear as a matter of common law, and interpretation
of the BNZ standard terms, that it had an express unilateral right to terminate the
provision of banking services to the Gloriavale entities.
For their part, the Gloriavale entities say that the High Court Judge was right
to find that there is a serious question to be tried on their breach of contract cause of
action. They say there are also serious questions to be tried on their breach of fiduciary
duty and estoppel causes of action. They add that if there is a serious question to be
tried, the balance of convenience overwhelmingly favours requiring BNZ to continue
to provide banking services until those questions can be determined at trial. If BNZ
withdraws banking services, and the Gloriavale entities are unable to find alternative
banking facilities, they will not be able to continue to operate. A determination at trial
that BNZ was not entitled to close their accounts will come much too late: they will
suffer irreversible prejudice if they are deprived of banking facilities, which are
essential for the operation of businesses and charitable trusts in the modern world.
Principles governing interim relief
As Cull J said, the circumstances in which an interim injunction will be granted
pending trial are well established in New Zealand.[22] The ultimate question is whether
[22] Second injunction decision, above n 3, at [16], citing Klissers Farmhouse Bakeries Ltd v Harvest
the overall interests of justice require that an injunction be granted.[23] In order to
[23] Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd, above n 22, at 142.
determine that question, the court will first consider whether there is a serious question
to be tried. If that threshold is satisfied, the court then goes on to consider where the
balance of convenience lies, and the overall interests of justice.[24]
[24] Intellihub Ltd v Genesis Energy Ltd, above n 22, at [23], citing Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd, above n 22, at 142.
Before the High Court, BNZ argued that the Gloriavale entities were seeking a
mandatory injunction that would compel BNZ to continue to provide services to the
Gloriavale entities. BNZ argued that mandatory injunctions are granted rarely, and
the applicant is required to establish a “powerfully arguable or strong case to sustain
a mandatory injunction”.[25]
[25] Second injunction decision, above n 3, at [19], relying on Croser v Focus Genetics Ltd Partnership
The Judge did not accept BNZ’s submission. She considered that attempting
to classify injunctions as either mandatory or prohibitory can be a barren exercise.[26]
[26] Second injunction decision, above n 3, at [20], citing National Commercial Bank Jamaica
What ultimately matters is the practical implications of ordering the injunction
sought.[27] The court should take whichever course seems likely to cause the least
[27] Commerce Commission v Viagogo AG, above n 26, at [90], citing National Commercial Bank
irremediable prejudice to one party or the other.[28]
[28] National Commercial Bank Jamaica Ltd v Olint Corpn Ltd, above n 4, at [17]; and Croser v Focus
The second reason that the Judge did not accept BNZ’s submission was that
the interim injunction prevented BNZ terminating the Gloriavale accounts. The Judge
considered that because the injunction prohibited termination of the accounts, it was a
prohibitory injunction.[29]
[29] Second injunction decision, above n 3, at [21].
The Judge proceeded to apply the orthodox test for an interim injunction to the
facts of the case.[30]
[30] At [22].
There was no real dispute before us about the principles governing the grant of
interim injunctions pending trial. BNZ reiterated its submission that a customer of a
bank seeking to prevent the bank from closing its accounts is seeking a mandatory
injunction, requiring the bank to continue to do business with the customer against the
bank’s will. BNZ submits that mandatory injunctions are granted rarely, and there is
authority to the effect that the applicant is required to establish a powerfully arguable or strong case to sustain a mandatory injunction.[31] Whether or not a higher standard
[31] See Croser v Focus Genetics Ltd Partnership, above n 25, at [78]; and Acernus Aero Ltd v Vincent
formally applies to a mandatory injunction, BNZ submits that this Court should be
mindful that, properly construed, the injunction compels BNZ to continue to provide
services to the respondents on an ongoing basis.
For their part, the Gloriavale entities support the approach of the High Court
Judge. They say the High Court was correct to proceed on the basis that the relief
sought is not a mandatory injunction. But in any event, classification is not the issue
— rather, what ultimately matters is the practical implications of ordering an
injunction.
We proceed on the basis of the orthodox approach to interim injunctive relief
before the New Zealand courts set out at [56] above. An essential prerequisite for the
grant of an interim injunction is that there must be a serious question to be tried. That
question is the main focus of our analysis on appeal. If there is no serious question to
be tried on the claims advanced, it would be inappropriate to grant an injunction
pending trial. If there is a serious question to be tried, it is then necessary to consider
the practical consequences of granting or refusing an injunction for the parties, and for
the ability of the courts to do practical justice at trial.
As this Court has previously observed, arguments about whether injunctions
are classified as mandatory or prohibitory are “barren … [w]hat matters is what the
practical consequences of the actual injunction are likely to be”.[32] But we accept
[32] Commerce Commission v Viagogo AG, above n 26, at [90], citing National Commercial Bank
BNZ’s submission that the effect of granting an injunction in this case is to compel
BNZ to continue to provide services to the Gloriavale entities, and deal with those
entities, in circumstances where BNZ does not wish to do so. That is a relevant factor,
among others, if there is a serious question for trial with the result that the balancing
stage of the analysis is reached.
Limits on BNZ’s ability to terminate the contractual banking relationship
Second injunction decision
Before the High Court, the Gloriavale entities accepted that in the absence of
an express contrary agreement a bank may terminate a relationship with a customer
on reasonable notice. However the Gloriavale entities submitted that:
(a) Clause 8.2 of the BNZ standard terms provides an express, contractual requirement that BNZ must have a qualifying reason for closing the
affected accounts.
(b) BNZ’s exercise of power under cl 8.2 is an exercise of contractual discretion, and contractual discretions cannot be exercised in a manner
that is arbitrary, capricious or unreasonable, having regard to the
provisions of the contract.
The Judge considered that cl 8.2 of the BNZ standard terms, by giving
examples of reasons for BNZ to terminate a customer’s account, appeared to imply
either that there would need to be a valid reason for termination, or that BNZ would
act reasonably.[33]
[33] Second injunction decision, above n 3, at [50].
The Judge also considered that it was reasonably arguable that the common
law “default rule” controlling the exercise of unilateral contractual powers or
discretions applies in this case.[34] The Judge referred to the manner in which this rule
[34] At [52].
was articulated by Leggatt LJ in Abu Dhabi National Tanker Co v Product Star
Shipping Co Ltd (No 2):[35]
[35] At [39], citing Abu Dhabi National Tanker Co v Product Star Shipping Co Ltd (No 2) [1993] 1
For purposes of judicial review the Court is concerned to judge whether a
decision-making body has exceeded its powers, and in this context whether a
particular decision is so perverse that no reasonable body, properly directing
itself to the applicable law, could have reached such a decision. But the
exercise of judicial control of administrative action is an analogy which must
be applied with caution to the assessment of whether a contractual discretion
has been properly exercised. The essential question always is whether the relevant power has been abused. Where A and B contract with one another to
confer a discretion on A, that does not render B subject to A’s uninhibited
whim. In my judgment, the authorities show that not only must the discretion
be exercised honestly and in good faith, but, having regard to the provisions
of the contract by which it is conferred, it must not be exercised arbitrarily,
capriciously or unreasonably. That entails a proper consideration of the matter
after making any necessary inquiries. To these principles, little is added by
the concept of fairness: it does no more than describe the result achieved by
their application.
The Judge also referred to what has been described as the “expanded default
rule” drawn from the decision of the United Kingdom Supreme Court in
Braganza v BP Shipping Ltd.[36] That case is sometimes cited as authority for the
[36] Second injunction decision, above n 3, at [41], citing Braganza v BP Shipping Ltd [2015] UKSC
proposition that where a contract assigns a decision-making function to one of the
parties, the same constraints apply as in the public law context where a statute assigns
a decision-making function to a public authority. In particular, the decision-maker
must take into account relevant matters, and must not take into account irrelevant
matters.
As the Judge noted, in Woolley v Fonterra Co-operative Group Ltd this Court
proceeded on the assumption that the default rule applies in New Zealand, without
expressly deciding the point.[37] This Court did not consider that Woolley was an
[37] Second injunction decision, above n 3, at [42], citing Woolley v Fonterra Co-Operative Group Ltd
appropriate vehicle for deciding whether to adopt the Braganza approach in
New Zealand.[38]
[38] Woolley v Fonterra Co-Operative Group Ltd, above n 37, at [103] and [112]–[115].
The Judge considered that it is reasonably arguable that the default rule or the
Braganza approach may be applicable to the banking relationship, and to the exercise
of BNZ’s discretion to terminate under cl 8.2. She did not accept BNZ’s submission
that BNZ had an absolute termination right.[39]
[39] Second injunction decision, above n 3, at [51]–[52].
Submissions for the Gloriavale entities
The Gloriavale entities support the finding of the High Court that it is seriously
arguable that there are restrictions on the ability of BNZ to close their accounts.
They plead that, correctly construed, the BNZ standard terms:
(a) require there to be a “reason” to suspend or close an account; and (b) require that the reason “cannot be founded on a mistake of fact, unreasonable, capricious, arbitrary, or require customers to meet
standards of unpublished and unnotified ‘policies’ of which they were
not aware”.
The Gloriavale entities say that BNZ cannot suspend or close their accounts as
there is no qualifying “reason” to do so.
The Gloriavale entities submit that contractual interpretation is objective, the
aim being to ascertain what the words would convey to a reasonable person. They say
that a reasonable person would not expect that BNZ could terminate an account for a
reason that is invalid, unreasonable, or factually incorrect, or a matter that is wholly
outside the banking relationship.
The Gloriavale entities say that cl 8.2 must be interpreted in light of the wider
context of the contract. They emphasise that the banking relationship stretches back
some 40 years. They note that cl 8.2 is not a negotiated outcome arrived at by legally
advised parties. Rather, it is a clause unilaterally imposed by BNZ.
Mr Raymond KC, who appeared for the Gloriavale entities, put particular
emphasis on the limbs of cl 8.2 that contemplate BNZ acting reasonably. For example,
para (h) refers to BNZ closing or suspending an account where “we reasonably believe
that there is a legal requirement to do so, including to comply with Sanctions, or as
required by a Court or other authority”. Mr Raymond said that it would make no
commercial sense for BNZ to be free to close an account in reliance on the general
language in cl 8.2 by reference to a belief that it was legally obliged to do so, if that
belief was not reasonable. A customer would not expect that BNZ was free to take
steps to close or suspend an account under cl 8.2 on the basis of unreasonable beliefs.
Mr Raymond added that BNZ’s argument that it can close the account for any
reason, even an irrational or capricious reason, is irreconcilable with:
(a) BNZ’s obligations under s 7 of the Fair Trading Act 1986, which prohibits unconscionable conduct;
(b) the Code of Banking Practice, which states that participating banks (including BNZ) will act “fairly, reasonably, and in good faith”;
(c) additional information on BNZ’s website, including a commitment from BNZ that “[w]e agree to: treat you fairly and reasonably”;
(d) the wider regulatory context, including the purpose of the Deposit Takers Act 2023 to “promote the prosperity and well-being of
New Zealanders and contribute to a sustainable and productive
economy by protecting and promoting the stability of the financial
system”;[40] and
[40] Deposit Takers Act 2023, s 3(1).
(e) the Fair Conduct Principles that will apply to BNZ under the Financial Markets (Conduct of Institutions) Amendment Act 2022, with effect
from 31 March 2025.
The Gloriavale entities say that it is seriously arguable that the common law
“default rule” in relation to the exercise of unilateral contractual powers or discretions
applies, with the result that BNZ must exercise its power of termination honestly and
in good faith, and must not exercise the power arbitrarily, capriciously or
unreasonably. They say that it is also arguable that the Braganza approach applies in
this context, with the result that BNZ is required to consider all relevant matters before
exercising the termination power, and must not consider irrelevant matters.
The Gloriavale entities do not plead any implied term to this effect: their pleading is
focused on the interpretation of BNZ’s standard terms, and in particular cl 8.2.
But these issues were canvassed in the High Court and in submissions before this Court. We accept Mr Raymond’s submission that these arguments are squarely on the
table for the purposes of this appeal.
Mr Raymond identified a number of concerns in relation to the sources on
which BNZ relied in making its decision, including Wikipedia and media stories;
inaccurate and outdated information; and a failure to engage. In response to questions
from the bench he accepted that at the time it made its decision, BNZ did not know
that other banks would decline to provide banking services. But he said that BNZ
made an erroneous factual assumption about the availability of alternative services,
and was not willing to revisit its decision in light of the information subsequently
provided about this (and other matters).
Mr Raymond accepted, in response to questions from the bench, that BNZ is
free to terminate in its own interests under cl 8.2. But he submitted that before doing
so BNZ is required (by cl 8.2, and any relevant implied term) to treat the customer
fairly, including consulting the customer about the time frame for any proposed
withdrawal of services. He referred to evidence that BNZ’s website informs customers
they will be treated fairly and reasonably, and submitted that this was implicit in cl 8.2.
Mr Raymond added that if BNZ really is free to terminate for any reason,
however arbitrary or capricious or unfounded, then that would be an unusual and
surprising power that would need to be clearly highlighted in the contract. Clause 8.2
does not give such a surprising power the prominence that would be required in order
for it to be effective.
Mr Raymond confirmed that the Gloriavale entities are not arguing that BNZ
acted in bad faith in the sense that it set out to harm the Gloriavale entities. But, he
said, BNZ has not acted in good faith as it has made a significant decision affecting
the Gloriavale entities and members of the Gloriavale community without following
a fair process: there was no warning, no provision of the policy against which the
conduct of the Gloriavale entities was being assessed,[41] no opportunity to correct
[41] We were advised from the bar that the group human rights policy can be accessed through the
errors in the information that BNZ was relying on, no opportunity to provide reassurance about future conduct, and no reassessment of the decision in light of
information subsequently obtained, in particular the inability to find any alternative
banking provider.
Mr Raymond was especially critical of BNZ seeking to terminate the
relationship for what he described as reasons outside the four corners of the banking
relationship, without any prior notice that it would seek to do so. The examples given
in cl 8.2 are, he said, all matters that concern the banking relationship. The issues
raised by BNZ in respect of its human rights policy are not. Before terminating for
these “non-banking reasons”, a proper process needed to be followed.
Submissions for BNZ
BNZ submits that cl 8.2 expressly provides that BNZ can close an account “for
any reason”, and it is not seriously arguable that this provision gives rise to anything
other than an express unilateral power of termination. BNZ says that this approach is
consistent with the contract more broadly:
(a) Customers also have unilateral termination rights. It could not be seriously argued that a customer’s unilateral termination right is in
some way constrained, and that a customer would not be entitled to
close their bank account merely because they felt like it.
(b) This approach gives cl 8.2 a meaning that is consistent with BNZ’s rights under cl 2.1 to decline an application to open an account or to
decline to provide any product or service without needing to give a
reason.
BNZ submits that the Judge’s reasoning that the inclusion of example reasons
in cl 8.2 may imply either that there would need to be a valid reason for termination,
or that BNZ would act reasonably, is not seriously arguable. The BNZ standard terms
expressly provide that those examples are included “without limiting” the reasons for
which BNZ can terminate.
BNZ also submits that it is not seriously arguable that there is any implied limit
on the exercise of BNZ’s termination power based on the “default rule” or the
Braganza approach. Neither applies to the exercise of a right of termination that is
conferred on a party for the sole benefit of that party.
In oral submissions that expanded on this point, Mr Hunter KC, who appeared
for BNZ, accepted that a contractual power — including a termination power — must
be exercised only for the purpose for which it is conferred.[42] So, for example, a
[42] Mr Hunter adopted the approach to constraints on contractual powers outlined in Paul S Davies
termination power cannot be used for an ulterior motive to defeat other provisions of
the contract while keeping the parties’ relationship on foot, as the UK Supreme Court
recently held in Tesco Stores Ltd v Union of Shop, Distributive and Allied Workers.[43]
[43] Tesco Stores Ltd v Union of Shop, Distributive and Allied Workers [2024] UKSC 28, [2024] IRLR
But the purpose of cl 8.2 is to permit BNZ to terminate “for any reason”, in its own
interests, and without having to enter into a debate about the validity of its reasons for
doing so. In the present case, Mr Hunter said, there is no suggestion of an ulterior
motive: BNZ’s genuine purpose is to bring the relationship to an end.
Mr Hunter did not accept the characterisation of BNZ’s decision as unrelated
to the banking relationship. BNZ’s concerns related to money flowing through BNZ
accounts that was the product of the practices described in the Courage decision. BNZ
was entitled to decide to act on those concerns without undertaking its own
investigation, or setting up monitoring systems to ensure such conduct was no longer
continuing.
Mr Hunter submitted that if BNZ were required to consider whether a customer
would be able to make alternative banking arrangements before giving a notice under
cl 8.2, it would in all cases have to give some sort of preliminary notice and seek
information from the customer: it could not simply give a termination notice, as cls
8.2 and 8.3 contemplate. The more commercially unattractive the customer, the less
likely it would be that they could make alternative banking arrangements — and, on the approach contended for by the Gloriavale entities, the more likely it would be that
BNZ would be required to continue to provide services to that customer.
Interpretation of cl 8.2
[90] In National Commercial Bank Jamaica Ltd v Olint Corpn Ltd the
Privy Council set aside an injunction restraining a bank from closing a customer’s
account.[44] Lord Hoffmann, delivering the advice of the Board, said:
[44] National Commercial Bank Jamaica Ltd v Olint Corpn Ltd, above n 4.
[1] The chief issue in this appeal … is whether a bank, “by merely giving
reasonable notice”, can lawfully close an account that is not in debit, where
there is no evidence of that account being operated unlawfully. Their
Lordships have no doubt that in the absence of express contrary agreement or
statutory impediment, a contract by a bank to provide banking services to a
customer is terminable upon reasonable notice: Paget’s Law of Banking, 13th
ed (2007), p 153.
The correctness of this statement of the common law position was not
challenged before us. The Gloriavale entities do not contend that there was any
statutory impediment to BNZ closing their accounts, though as explained below they
say that certain statutory regimes are relevant to the interpretation of the BNZ standard
terms. But the Gloriavale entities say that there is an express contrary agreement that
limits the common law freedom of BNZ to terminate their accounts on reasonable
notice. They also argue that there is an implied term limiting BNZ’s freedom to do so.
The Gloriavale entities locate the express contrary agreement on which they
rely in cl 8.2 of the BNZ standard terms, the introductory words of which we set out
again for ease of reference:[45]
[45] Emphasis added.
8.2 When we can close or suspend your account or end or suspend any other product or service: We can close your account or end any other product or service, or immediately suspend or restrict the operation of your account or the provision of any other product or service, for any reason. For example (but without limiting the reasons why we might close or suspend your account), we may close or suspend your account where …
[93] It is difficult to read this clause as imposing any limit on BNZ’s common law freedom to close a customer’s account. BNZ has reserved to itself the ability to close an account “for any reason”. Examples of reasons are given, but the contract expressly
provides that these examples do not limit the reasons why BNZ might close an
account.
The language used in cl 8.2 can be contrasted with the requirement in cl 2.11
that before declining to act on an instruction, BNZ must consider that it has a good
reason to do so. Clause 8.2 expressly provides that “any reason” will suffice.
Contract interpretation has been the subject of a number of decisions of the
Supreme Court in recent years. It is well established that the proper approach is an
objective one, the aim being to ascertain “the meaning which the document would
convey to a reasonable person having all the background knowledge which would
reasonably have been available to the parties in the situation in which they were at the
time of the contract”.[46] In the present case it is not suggested that the relevant context
[46] Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60]
includes any pre-contractual negotiations between the parties. The BNZ standard
terms are unilaterally determined by BNZ, without negotiation. One relevant
contextual feature is that BNZ, its customers, and the hypothetical reasonable observer
would all understand that these are standard terms that apply to all BNZ’s customers:
it could not sensibly be argued that these terms should be interpreted in light of
circumstances peculiar to a particular customer. Customer-specific circumstances
might conceivably give rise to a collateral contract or an estoppel, but could not bear
on the interpretation of the BNZ standard terms as between BNZ and each of its many
thousands of customers.
The contract set out in the BNZ standard terms is a commercial contract,
though it is not the product of a negotiation. It applies to the banking services provided
by BNZ to many commercial entities, including a number of the Gloriavale entities.
One of its important purposes is to create certainty for the parties.
We make two preliminary points. First, the time for determining the meaning
of cl 8.2 is when the contract was first entered into (or when that term was first
introduced into the contract, if that occurred at a later stage), not the time when BNZ
made its decision to close the Gloriavale entities’ accounts. The arguments advanced
by the Gloriavale entities in relation to the interpretation of cl 8.2 leant heavily on the
serious consequences for them of closure of their accounts as matters have transpired.
But at the time the accounts were opened, neither the parties nor the reasonable
observer could know the details of these subsequent events. That evidence is not
relevant to the interpretation of cl 8.2.
Second, at the time each account was opened an important contextual feature
was that BNZ was just one of a number of banks providing current accounts and other
banking services to the public in New Zealand. A reasonable person would understand
that the BNZ standard terms confer many unilateral powers on BNZ — including the
power to change the terms themselves. The primary constraint on how BNZ exercises
those unilateral powers is the constraint provided by its competitors in the banking
market, not any constraint provided for in the contract itself. So for example a
reasonable person reading the BNZ standard terms would understand that BNZ is free
to set whatever interest rates it thinks fit for current accounts, in its own commercial
interests, without consulting with its customers and without considering their
interests.[47] Similarly, BNZ can increase fees or introduce new fees for current
[47] BNZ’s ability to set interest rates may be constrained by express terms in other contexts, for
accounts without consulting its customers and without considering their interests. The
protection for customers is not found in the contract — rather, it lies in their ability,
expressly recognised in cl 8.1, to move their funds (or overdraft) to another bank if
better terms are on offer elsewhere, and close their account with BNZ.
Similarly, a reasonable person would understand that the discretion provided
for in cl 7.4 in relation to unarranged overdrafts is a discretion exercisable by BNZ
without reference to the customer, and without considering the interests of the
customer. BNZ is free to decide whether to honour a payment out of an account with
insufficient funds based solely on BNZ’s own interests, without any prior reference to
the customer.
[100] These provisions reflect the arms-length nature of the banker-customer
relationship, and the many respects in which the parties have preserved, rather than
limited, their unilateral freedom of action.
When interpreting cl 8.2 the reasonable observer would thus need to consider
whether the provision incorporates substantive or procedural limits on BNZ’s
decision-making, or is another example of a unilateral power that BNZ can exercise
in its own interests and without prior reference to the customer. The reasonable
observer would recognise the risk of BNZ deciding to close the customer’s accounts
at some time in the future for a reason that the customer would not consider reasonable
or well-founded. But that observer would also be conscious that a customer whose
accounts were closed in circumstances where a reasonable bank would not do so would
expect to be able to open an account with another bank (there being, by hypothesis, no
good reason to decline to bank that customer). Thus the practical consequence of an
arbitrary or capricious or unreasonable closure of an account would be likely to be
limited to the inconvenience of moving those accounts to another bank.
The reasonable observer would also be conscious of the customer’s unfettered
freedom under cl 8.1 to decide to move some or all of their business to another bank,
and to close their account at any time.
Against this backdrop, we consider that the meaning of cl 8.2 is clear. It is not
an “express contrary agreement” of the kind referred to by the Privy Council in
National Commercial Bank Jamaica Ltd.[48] Rather, it expressly provides that BNZ can
[48] National Commercial Bank Jamaica Ltd v Olint Corpn Ltd, above n 4, at [1] per Lord Hoffman.
terminate for any reason, and it expressly provides that the examples given do not limit
the reasons why BNZ can close an account. It is not implicit in the requirement that
BNZ have “any reason” for closing an account that the reason must be a good reason,
or a valid or well-founded reason, or a reason relating to the operation of the
customer’s account. “Any reason” means what it says, as the language in a
commercial contract usually will. The clear scheme of the contract, consistent with
the common law default position, is that the relationship subsists for so long as both
parties wish it to do so, but either is free to bring it to an end at any time for any reason. Neither has any liability to the other if it chooses to do so (as cl 8.5 expressly confirms
in the case of BNZ).
[104] Nor is there anything in the text of cl 8.2 to suggest that BNZ has process
obligations that require it to test information or engage with a customer before
exercising the power to close an account. Courts cannot invent obligations of this kind
under the guise of interpretation if the parties have not agreed to assume them.
The high point of Mr Raymond’s interpretation argument is that a reasonable
observer might pause to wonder whether, in circumstances where some of the
examples given in the cl 8.2 paragraphs contemplate a reasonable belief on the part of
BNZ about certain matters, BNZ could rely on the general language of the clause to
close or suspend an account on the basis of an unreasonable belief about those same
matters. But the language providing that the examples in cl 8.2 do not limit BNZ’s
freedom to act for any reason could not be clearer, and that language cannot simply be
disregarded. It is not easy to see how a drafter could have spelled out more clearly
that the examples provided do not limit the introductory words of cl 8.2. Clear drafting
of this kind would not be disregarded by a reasonable observer, and should be given
effect by the courts.
In Targa Capital Ltd v Westpac New Zealand Ltd Campbell J declined to grant
an interim injunction restraining Westpac from closing Targa’s accounts.[49] The
[49] Targa Capital Ltd v Westpac New Zealand Ltd [2023] NZHC 230, [2023] NZCCLR 21.
relevant contract provided that Westpac could close a customer’s account “if Westpac
believes it has reasonable grounds for doing so”.[50] The Judge did not consider that it
[50] At [22].
was arguable that this clause required Westpac to have a reasonable belief that it had
reasonable grounds to close the account.[51] The plain language of the termination
[51] At [35]–[43].
provision required an inquiry into Westpac’s subjective belief as to whether it has
reasonable grounds to terminate. “Targa’s interpretation would flip a subjective
inquiry to an objective inquiry. It would introduce an objective qualifier to Westpac’s
belief that the contract did not include.”[52] Other provisions included an objective
[52] At [38].
qualifier, but the termination provision did not. The Judge considered that Targa’s interpretation was not tenable, as it would involve an illegitimate rewriting of the
termination provision.[53]
[53] At [39] and [43].
Similarly, in the present case, the interpretations of cl 8.2 contended for by the
Gloriavale entities are untenable as they would involve an illegitimate rewriting of
cl 8.2. They run directly counter to the express provision in the contract that BNZ can
close an account “for any reason”, and to the express provision that the examples
provided do not limit the reasons for which BNZ can take this step.
[108] Mr Raymond’s interpretation arguments based on the regulatory framework
face a number of insuperable difficulties. The first, and most obvious, difficulty is that
most of the matters relied on postdate the opening of the relevant accounts. (It was
not argued before us that some later date when cl 8.2 was introduced into the BNZ
standard terms was the relevant date for this purpose.) As already noted, the relevant
accounts were opened — and the relevant contracts came into existence — between
1999 and 2020. At the risk of stating the obvious, a reasonable person seeking to
ascertain what the parties had agreed at some time leading up to 2020 would not have
been aware of, or taken into account, the unconscionable conduct provisions inserted
in the Fair Trading Act with effect from 16 August 2022 by the Fair Trading
Amendment Act 2021, the purpose of the Deposit Takers Act, or the fair conduct
principles provided for in the Financial Markets (Conduct of Institutions) Amendment
Act, which will have effect from 31 March 2025.
Nor, quite apart from timing, is there any reason to read cl 8.2 differently in
light of these regulatory initiatives. Mr Raymond suggested in oral argument that a
reasonable observer would expect BNZ to comply with the law. We agree. But we
cannot see how it could reasonably be argued that this expectation would inform the
interpretation of cl 8.2. The “reasonable observer” test in the context of contract
interpretation is concerned with how the reasonable observer would understand the
language (and conduct) of the parties as at the time of contracting.[54] It does not involve
a broader inquiry into what the reasonable observer might have expected the parties to
contemplate or agree: that goes well beyond the legitimate scope of the interpretation exercise. Nor for that matter can an expectation that the parties to a contract will
comply with the law be translated into a contractual commitment to do so: these are
very different propositions.
[54] Firm PI 1 Ltd v Zurich Australian Insurance Ltd, above n 46, at [60] per Arnold J.
[110] Mr Raymond referred to the Code of Banking Practice, which states that
participating banks (including BNZ) will act “fairly, reasonably, and in good faith”.
The Code expressly provides that it does not form part of the terms and conditions of
the relationship between bank and customer, or override or replace those terms and
conditions. Nor can we see how it could be relevant to the interpretation of those
terms and conditions. Rather, it sits alongside those terms and conditions, and is
enforced through complaints to participating banks and to the Banking Ombudsman.
Mr Raymond also referred to the statement on BNZ’s website that “we agree
to treat you fairly and reasonably”. There is no evidence before this Court about when
that statement first appeared on BNZ’s website, so we do not know whether that
occurred before or after the dates on which the relevant accounts were opened, and the
relevant terms fall to be interpreted. But even assuming this statement appeared on
BNZ’s website before some or all of the relevant accounts were opened, we cannot see
how it can assist in the interpretation of cl 8.2. We return below to the question of
whether a generally applicable term to this effect can be implied into the contract.
We add that we do not accept the submission that cl 8.2, interpreted in this
manner, is such an unusual and surprising term to find in the BNZ standard terms that
it required greater prominence before it could be treated as binding on a customer.
Far from being unusual or surprising, cl 8.2 read in this manner is consistent with the
common law position in the absence of any express provision to different effect. It is
just one of a number of provisions enabling BNZ to act in its own commercial
interests, in a manner that is consistent with the broader scheme of the contract. Nor
is there a lack of balance in the contract, read in this way: the customer also has an
unfettered ability to terminate at any time, in their own interests — and in their case,
without prior notice.
Implied term restricting the exercise of the cl 8.2 power?
The Gloriavale entities’ interpretation arguments shaded into their arguments
that cl 8.2 was subject to an implied term limiting the exercise of the power to close
an account. That is unsurprising — the process of identifying additional terms that are
implicit in the parties’ express agreement is closely akin to, and on one view forms
part of, the process of interpreting the express terms of that agreement.[55]
[55] Bathurst Resources Ltd v L&M Coal Holdings Ltd, above n 46, at [93]–[102] and [106] per
There are two principal categories of implied term:[56]
[56] At [92] per Winkelmann CJ and Ellen France J. There is a third, less common, category of implied
(a) Terms implied “in law” — that is, default terms brought into operation not on the basis of any intention of the parties, but rather by operation
of law.
(b) Terms implied “in fact” to give a contract business efficacy — this form of implication is based on an intention imputed to the parties by the
courts in the particular circumstances, often referred to as presumed
intention.
[115] The law in relation to implied terms that limit the exercise of contractual
powers and discretions is at present unsettled. There are a number of ways in which
the issue can be framed, and a number of approaches have been proposed.[57]
[57] For a helpful overview of the different approaches that have been proposed, and their conceptual
Cull J referred to the statement of the “default rule” in Abu Dhabi National
Tanker Co v Product Star Shipping Co Ltd (No 2), where Leggatt LJ said that in his
judgment:[58]
… the authorities show that not only must the discretion be exercised honestly
and in good faith, but, having regard to the provisions of the contract by which
it is conferred, it must not be exercised arbitrarily, capriciously or unreasonably. That entails a proper consideration of the matter after making
any necessary inquiries.
[58] Second injunction decision, above n 3, at [39], citing Abu Dhabi National Tanker Co v Product
This “default rule” is usually characterised as a (default) term implied by law
in all contracts. As a default term it may of course be displaced by inconsistent express
terms.
In Equitable Life Assurance Society v Hyman Lord Steyn concluded that a term
should be implied into retirement policies entered into by a life assurance society to
the effect that the discretion of the directors of the society relating to bonuses could
not be exercised in conflict with, and so as to override, other contractual rights of
policyholders.[59] Lord Steyn emphasised that this was an individualised term imputed
to the parties from their actual circumstances, not a term implied in law. Lord Cooke
agreed with that way of viewing the case, but observed that the same conclusion could
be reached by starting from “the principle that no legal discretion, however widely
worded … can be exercised for purposes contrary to those of the instrument by which
it is conferred”.[60]
[59] Equitable Life Assurance Society v Hyman [2002] 1 AC 408 (HL) at 459–460 per Lord Steyn.
[60] At 460 per Lord Cooke.
In Braganza the UK Supreme Court held that where a contract conferred on a
party — in that case, an employer — a discretion to make a decision that would affect
the rights and obligations of both parties, a term should be implied to the effect that
the power should be exercised not only in good faith but also without being arbitrary,
capricious or irrational in the sense in which that term was used when reviewing the
decisions of public authorities. Lady Hale observed that “[t]here are signs … that the
contractual implied term is drawing closer and closer to the principles applicable in
judicial review”.[61]
[61] Braganza v BP Shipping Ltd, above n 36, at [28] per Lady Hale.
A central issue in that appeal was whether both limbs of the Wednesbury test
applied to the decision of the employer.[62] The employer argued that its decision could
be impugned only if it was a decision that no reasonable employer could have reached
(the second limb of the Wednesbury principle). For the claimant[63] it was argued that the first limb also applied, and that the employer’s decision was not valid if the
employer had taken into account matters which they ought not to have taken into
account, or, conversely, had failed to take into account matters which they ought to
have taken into account.
[62] Associated Provincial Picture Houses Ltd v Wednesbury Corp [1948] 1 KB 223 (CA) at 233–234.
[63] The employee’s widow and executrix.
[121] In the passage that is most frequently cited as a statement of the Braganza
approach, Lady Hale said:
[29] If it is part of a rational decision-making process to exclude
extraneous considerations, it is in my view also part of a rational decision-
making process to take into account those considerations which are obviously
relevant to the decision in question. It is of the essence of “Wednesbury
reasonableness” (or “GCHQ rationality”) review to consider the rationality of
the decision-making process rather than to concentrate on the outcome.
Concentrating on the outcome runs the risk that the court will substitute its
own decision for that of the primary decision-maker.
[30] It is clear, however, that unless the court can imply a term that the
outcome be objectively reasonable — for example, a reasonable price or a
reasonable term — the court will only imply a term that the decision-making
process be lawful and rational in the public law sense, that the decision is made
rationally (as well as in good faith) and consistently with its contractual
purpose. For my part, I would include both limbs of the Wednesbury
formulation in the rationality test. …
[31] But whatever term may be implied will depend on the terms and the
context of the particular contract involved. …
In Woolley this Court proceeded on the basis accepted by both parties that the
“default rule” applies in New Zealand, and expressly refrained from deciding whether
the Braganza approach should be endorsed or rejected.[64]
An implied term requiring powers to be exercised for a proper purpose?
[64] Woolley v Fonterra Co-operative Group Ltd, above n 37, at [103] and [112]–[115].
[123] We consider that the most promising approach to ascertaining the (implied)
limits of a contractual power or discretion is along the lines suggested by Professor
Paul Davies and Lord Sales in their recent article on this topic, in which they suggest
that:[65]
[A]ny restrictions need to be found through the normal techniques of
interpretation and implication, and that these usually have the effect that
contractual powers must be exercised for a proper purpose. The application of these techniques will sometimes indicate that the parties intended that a
discretion should be unlimited or that extensive restrictions should apply.
[65] Davies and Sales, above n 42, at 106.
As the authors explain, although the analogy between contractual discretions
and discretions in public law conferred by statute has a superficial attraction, there is
a fundamental difference of context between contractual discretionary powers and
public law discretionary powers.[66] The most fundamental difference is that public
[66] At 109.
powers are conferred for the public good, and a public authority may not pursue its
own self-interest when exercising discretion. However:[67]
… that outward-directed orientation is missing in the context of most
contractual relationships, where it is implicit that the power-holder may have
regard to its self-interest. The core difficulty in articulating rules to constrain
the exercise of a contractual discretion is that typically the party exercising
that discretion is entitled to have regard to its own self-interest, often in the
context of a zero-sum situation vis-à-vis the other party. In such
circumstances, it cannot be said that the party exercising the discretion acts
irrationally when it decides to act for self-interested reasons.
[67] At 109 (footnote omitted, emphasis in original).
As the authors go on to explain, the contractual context lacks the longstanding
constitutional principles and values against which the rationality of an exercise of a
public power can be assessed:[68]
[68] At 109–110 (footnotes omitted).
By contrast, given the fundamental importance of freedom of contract, there
are few significant external background values to structure the context in
which assessment of the lawfulness of the exercise of a contractual discretion
takes place. Business common-sense plays only a limited role. Unlike in the
public law context, the parties themselves generate the values which are to
apply, as something inherent in the contract they have made. The
constitutional basis for intervention in the public law context, which helps to
ensure the proper ongoing administration of the relevant public power, does
not apply in the private law context. Moreover, whilst public decision-makers
are not, in the absence of malice, liable for losses caused by their decisions,
the same is not true for private parties who wrongly exercise a discretion in
breach of an obligation.
Accordingly, they suggest, a simple rationality test along public law lines is
inapposite.[69] To apply such a test would generate confusion and uncertainty about
what it means.[70] A more relevant analogy can be drawn with Padfield v Ministry of
Agriculture, Fisheries and Food, which holds that statutory powers must be used for
proper purposes.[71]
[69] At 110.
[70] At 110.
[71] At 110, citing Padfield v Ministry of Agriculture, Fisheries and Food [1968] AC 997 (HL). In the
In the contractual context, in many cases the parties cannot have intended that
the power-holder should be entitled to exercise a contractual discretion exclusively in
their own self-interest. “That will appear because the discretion has plainly been
conferred for use for particular purposes within a scope capable of being derived
objectively from the context and terms of the contract itself.”[72]
[72] Davies and Sales, above n 42, at 115.
plan, or that it was realistic for BNZ to take on the role of externally monitoring
compliance with a transition plan of some kind.
Discussion
As already mentioned, we do not consider that it is seriously arguable that BNZ
acted dishonestly, in bad faith, capriciously, or arbitrarily in deciding to close the
accounts.
We explained above why we consider that a term could not be implied into this
particular contract in relation to the reasonableness of BNZ’s decision, or in relation
to the process to be followed by BNZ before it makes such a decision. But we are
conscious that there is authority to support a different view, and that because this is an
interlocutory appeal we have not had the benefit of full argument. If we are wrong
about this, would there be a serious issue for trial?
[162] We do not consider that it is seriously arguable that BNZ’s decision was
irrational, in the sense that no reasonable bank could have acted in this way. The
criticisms of the decision made by the Gloriavale entities fall far short of this threshold.
And there is considerable force in BNZ’s submission that the Gloriavale entities’ own
evidence about the reluctance of other banks to provide services to them confirms that
this was not an irrational decision that no reasonable bank could make.
However BNZ did not engage with the Gloriavale entities in any way before it
made its decision. If BNZ was required to follow a process designed to ensure it was
acting on the basis of accurate information, or was fully informed about the steps being
taken by the Gloriavale community to address the concerns identified in Courage, then
it is well arguable that BNZ failed to do so. Such a requirement might be founded on
the default rule, if a decision made without following such a process could be
described as unreasonable or irrational for the purpose of that rule.[86] It would perhaps
more naturally be founded on the Braganza approach, which emphasises the public
law requirement that a decision-maker take relevant matters into account and disregard
irrelevant matters, and applies that requirement by analogy to (some) contractual
decisions.
[86] In Abu Dhabi National Tanker Co v Product Star Shipping Co Ltd (No 2), above n 35, at 404
It follows that if we had reached a different view on whether an implied term
imposing process obligations was tenable in this context, we would have accepted that
there was a serious question to be tried. However we would still have seen the
Gloriavale entities’ case as weak, as it would require a trial court to accept that BNZ
had process obligations in connection with cl 8.2 that are not easy to reconcile with
the express terms and underlying scheme of the contract.
Serious question to be tried in relation to breach of fiduciary duty?
The claim for breach of fiduciary duty
The Gloriavale entities plead that there is a fiduciary relationship between them
and the BNZ because:
(a) The Gloriavale entities, and the Gloriavale community generally, had placed trust and confidence in BNZ to not act contrary to their interests.
(b) The Gloriavale entities reasonably believed that they had a secure relationship with BNZ, based on the history of that relationship.
(c) The Gloriavale entities are vulnerable to BNZ, because no other banking services are available to them and banking is an essential
service for them.
(d) They are based in a remote location over an hour from the nearest town, and are dependent on their own resources to meet the needs of the
Gloriavale community.
(e) The investigations, media attention, social media harassment and ridicule faced by the members of the Gloriavale Community make them
especially susceptible to detriment.
(f) The volume of accounts operated by the Gloriavale entities and associated entities means that transfer of accounts in the event of
suspension or termination would be difficult, time consuming and
unlikely to be achievable at the local branch level.
The Gloriavale entities go on to plead that BNZ owed them fiduciary duties not
to act unfairly, arbitrarily, capriciously, and without reference to their freedom of
association and without giving them the opportunity to remedy any perceived wrong,
and provide assurances to BNZ about the correct factual position.
In the course of oral argument, Ms Foote (who argued this aspect of the appeal
for the Gloriavale entities) accepted that the core banker-customer relationship is not
fiduciary in nature. Rather, it is an arms-length contractual relationship.
She submitted that the relationship between BNZ and the Gloriavale entities became
a fiduciary relationship when BNZ decided it would look beyond the financial matters
that it is normal for a bank to consider. When BNZ stepped outside the four corners of the debtor-creditor relationship by considering matters that are not directly relevant
to that relationship, she said, it became subject to fiduciary obligations to the
Gloriavale entities.
Discussion
It has long been accepted that the essential relationship between a bank and its
customer is contractual, and that it is not a fiduciary relationship.[87] The Gloriavale
entities did not identify any authority to support the proposition that the relationship
between banker and customer is fiduciary in nature, or gives rise to fiduciary
obligations. The relationship between banker and customer is not one of the
recognised categories of relationships which are inherently fiduciary.[88] (Fiduciary
duties may of course arise in connection with particular services provided by a bank
— for example, the provision of financial advice.)
[87] Paget’s Law of Banking, above n 7, at [4.1].
[88] See Chirnside v Fay [2006] NZSC 68, [2007] 1 NZLR 433 at [72]–[74] per Blanchard and
Nor is there any authority to support the proposition that a bank is in a fiduciary
position vis-à-vis its customer when deciding whether to close or suspend an account.
To say this is a fiduciary obligation would be to say that the bank owes a duty of loyalty
to its customer in this context, which would preclude the bank from utilising their
position in a manner which is adverse to the interests of the principal.
The argument advanced for the Gloriavale entities — that BNZ owed fiduciary
obligations because of the nature of the factors it was considering — finds no support
in the authorities. Nor does it make any sense as a matter of principle: the Gloriavale
entities needed to point to some aspect of their relationship with BNZ that precluded
BNZ from making termination decisions in BNZ’s own interests, and that limited the
matters that BNZ could properly take into account when making that decision. They
have not identified, in their pleadings or in their argument before us, any arguable
basis on which BNZ could be required to subordinate its interests to the interests of
the Gloriavale entities.
To the contrary, Ms Foote accepted — as she had to — that in making a
termination decision, BNZ is free to act in its own interests. It is obvious from the
example reasons provided in cl 8.2 that the decision to close or suspend an account is
one that BNZ is entitled to make to protect its own interests. It is also clear that the
decision may be made even though it is adverse to the interests of the customer: indeed
that will generally be the case.
The argument that BNZ owes fiduciary duties to the Gloriavale entities in this
context is misconceived. It does not give rise to a serious question to be tried.
Serious question to be tried in relation to estoppel?
The estoppel claim
The Gloriavale entities plead that BNZ has by its conduct over many years of
the banking relationship represented to them that, absent a material breach of the BNZ
standard terms, BNZ would continue to provide banking services to them. They say
they have relied on that representation and reasonably assumed their relationship with
BNZ would continue subject to their compliance with its terms and conditions. Thus,
they say, it would in all the circumstances be unconscionable for BNZ to depart from
the assumption that the parties’ relationship will continue subject to the Gloriavale
entities breaching the BNZ standard terms.
BNZ sought further and better particulars of the allegation that it had made
representations to the Gloriavale entities that it would continue to provide banking
services to them. The Gloriavale entities’ response did not identify any specific
representations made. Rather, they refer to BNZ’s election to continue to provide
banking services to them, and to accept some of the recently established entities as
new customers. They also refer to “positive and successful” interactions, including
meetings and correspondence, over an extended period, and to the “unilateral
imposition” of BNZ’s standard terms on them, “creating the expectation that the
parties’ relationship would continue provided the [Gloriavale entities] complied with
those Terms”. Reference was also made in argument to the many years during which
BNZ had benefited from the Gloriavale entities’ substantial credit balances without
paying any interest on those balances.
Discussion
This issue can be dealt with very briefly. The estoppel cause of action adds
nothing to the cause of action founded on breach of contract. If BNZ’s standard terms
impose limits on the circumstances in which BNZ can close or suspend an account,
then BNZ must comply with those contractually binding limits. If there are no such
limits, then the Gloriavale entities have not identified in their pleadings or in their
evidence anything that could found an estoppel that would prevent BNZ from
exercising its contractual right to close an account in its own interests.
In particular, the Gloriavale entities do not identify any commitment by BNZ
to provide banking services indefinitely, or for a particular period. Nor do they
identify any indication by BNZ that it would refrain from exercising any contractual
right it had to close or suspend accounts.
The Gloriavale entities say that they changed their position by not establishing
a banking relationship with any other bank in reliance on the assumption they were
encouraged to make that BNZ would continue to provide services to them. There are
three main difficulties with this argument.
The first is that as already mentioned, the Gloriavale entities have not identified
any statements or conduct on the part of BNZ, apart from the continuing provision of
services, that could provide a foundation for such an assumption. But there is no
inconsistency between the ongoing provision of services, and a good relationship, on
the one hand and a right to terminate the provision of those services on the other hand.
The Gloriavale entities may have assumed a continuing banking relationship, but they
cannot point to anything BNZ said or did to encourage them to believe that BNZ would
not exercise its cl 8.2 rights.
The second difficulty is that the Gloriavale entities do not suggest that they
consciously turned their attention to, and relied on, an expectation of continuing
banking services. Nothing that was pleaded or argued goes beyond refraining from
taking any steps to establish a new banking relationship because they were happy with
the existing one. That is likely to be true of many customers of any bank, and cannot
without more limit the ability of the bank to terminate the relationship on reasonable notice, any more than it limits the freedom of the customer to cease to deal with the
bank.
The third difficulty is that in those circumstances it is not seriously arguable
that BNZ would be acting unconscionably in exercising the termination rights
provided for in the BNZ standard terms.
On the material before us, there is no serious question to be tried in relation to
estoppel.
Overall assessment
We have concluded that there is no serious question to be tried in relation to
any of the three causes of action pleaded by the Gloriavale entities. That threshold is
not a high one — but it must not be disregarded. Here, it is not met. It follows that
there is no proper basis for requiring BNZ to continue to provide services to the
Gloriavale entities.
If we had considered that there was a serious question to be tried in relation to
the contractual cause of action, we would nonetheless have declined to grant an interim
injunction.[89]
[89] As the Privy Council would have done in National Commercial Bank Jamaica Ltd v Olint Corpn Ltd, above n 4, at [21] per Lord Hoffman.
We would have reached that conclusion only if we considered that it is arguable
that the default rule or the Braganza approach applied in this context, and imposed
process obligations on BNZ requiring it to take into account relevant matters and
disregard irrelevant matters. On that approach it would be arguable that BNZ had
breached an implied term because of the process it followed, and in particular because
it failed to provide the Gloriavale entities with an opportunity to correct any errors in
the information BNZ was relying on, and to provide further relevant information. If
we had been persuaded that there was a serious question to be tried along those lines,
we would nonetheless have seen the argument as very weak having regard to the
language of cl 8.2 and the nature of the contract.
In those circumstances it would have been necessary to consider the practical
consequences of continuing, or setting aside, the injunction pending trial.
[186] Continuing the injunction would compel BNZ to provide services to the
Gloriavale entities for an extended period against BNZ’s will, in circumstances where
BNZ believes in good faith that doing so is inconsistent with its internal policies.
Setting aside the injunction and allowing BNZ’s decision to take effect would
not of itself prevent the Gloriavale entities from obtaining banking services — it would
simply remove one provider as an option, in a market where there are multiple
providers of banking services. The Gloriavale entities would remain free to seek to
open accounts with other banks. If any other bank is willing to provide banking
services to a Gloriavale entity, that entity will suffer some inconvenience as it moves
its accounts, but will not suffer serious or irremediable prejudice of the kind that would
justify granting an injunction. If no other bank is willing to accept the Gloriavale
entities as customers, that reluctance cannot be laid at the door of BNZ. The prejudice
to the Gloriavale entities would result from the characteristics of those entities that are
perceived by other bankers as relevant to the costs and risks of dealing with them —
matters that are within those entities’ control. And it would be in precisely those
circumstances that the prejudice to BNZ of being required to provide services to
customers that no other bank wishes to deal with would be most apparent, and would
weigh most strongly against granting an injunction.
Thus even if we are wrong about the existence of an arguable question to be
tried, we do not consider that it would be in the overall interests of justice to grant an
injunction requiring BNZ to continue to deal with, and provide services to, the
Gloriavale entities for a further extended period until the claims could be tried.
[189] BNZ’s appeal must therefore be allowed. But it would be unreasonable to
expect the Gloriavale entities to make alternative arrangements immediately following
the delivery of this judgment. BNZ has provided an assurance to the Court that if its
appeal succeeds, it will continue to provide banking services to the Gloriavale entities
for a period of three months from the date of this Court’s decision. In reliance on that
assurance, we will set aside the injunction with immediate effect.
Result
The appeal is allowed.
The injunction granted in the High Court is set aside.
Costs should follow the event in the ordinary way. The Gloriavale entities must
pay costs to BNZ for a standard appeal on a band A basis, with usual disbursements.
We certify for second counsel.
The costs order made in the High Court is set aside. Costs in the High Court
should be determined by that Court in light of this judgment.
Solicitors:
Russell McVeagh, Auckland for Appellant
Duncan Cotterill, Christchurch for Respondents
SCHEDULE A – complete list of Respondents
BRUNNER STATION LIMITED
CANAAN FARMING ENGINEERING LIMITED
CANAAN FARMING DEER LIMITED
CANAAN FARMING DAIRY LIMITED
HAUPIRI NET LIMITED
VALUE PROTEINS LIMITED
CHRISTIAN PARTNERS
CARING MIDWIVES LIMITED
FOREST GOLD HONEY LIMITED
PURE VITALITY LIMITED
ALPINE HEALTH MANUFACTURING NEW ZEALAND LIMITED
VALUE ENERGY LIMITED
CHRISTIAN PARTNERS ASSETS LIMITED
CHRISTIAN PARTNERS HOLDINGS LIMITED
THE CHRISTIAN CHURCH COMMUNITY TRUST
BRUNNER CHRISTIAN RESIDENTIAL TRUST
| Judgment: | 9 December 2024 at 3.00 pm |
JUDGMENT OF THE COURT
| A | The appeal is allowed. |
| B | The injunction granted in the High Court is set aside. |
| C | The Gloriavale entities must pay costs to BNZ for a standard appeal on a |
| band A basis, with usual disbursements. We certify for second counsel. | |
| D | The costs order made in the High Court is set aside. Costs in the |
| High Court are to be determined by that Court in light of this judgment. |
____________________________________________________________________
BANK OF NEW ZEALAND v THE CHRISTIAN CHURCH COMMUNITY TRUST & ORS [2024] NZCA 645
[9 December 2024]
Distributers Ltd [1972] 1 WLR 1213 (Ch).
decision].
190 [Second injunction decision].
at [1] per Lord Hoffman.
services, on the basis of any of the prohibited grounds of discrimination set out in the
Human Rights Act 1993 — see s 44. But the Gloriavale entities do not plead that BNZ is acting
in breach of the Human Rights Act, or any other legislation.
community who are leaders of that community. That termination is not challenged. It appears
those individuals have been able to make alternative banking arrangements. BNZ continues to
provide banking services to other individual members of the Gloriavale community.
would expect, specific terms in relation to particular products and services prevail over the general
terms in the BNZ standard terms.
Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR7.46.05] and
[HR7.53.12].
Bakeries Ltd [1985] 2 NZLR 129 (HC) at 133; Klissers Farmhouse Bakeries Ltd v Harvest
Bakeries Ltd [1985] 2 NZLR 129 (CA) at 142; and Intellihub Ltd v Genesis Energy Ltd [2020]
NZCA 344, [2020] NZCCLR 29 at [22]–[24].
[2019] NZHC 627; and Acernus Aero Ltd v Vincent Aviation Ltd [2012] NZHC 295.
Ltd v Olint Corpn Ltd, above n 4; and Commerce Commission v Viagogo AG [2019] NZCA 472,
[2019] 3 NZLR 559 at [90].
Jamaica Ltd v Olint Corpn Ltd, above n 4.
Genetics Ltd Partnership, above n 25, at [78].
Aviation Ltd, above n 25, at [9].
Jamaica Ltd v Olint Corpn Ltd, above n 4, at [20] per Lord Hoffman.
Lloyd's Rep 397 (CA) at 404.
17, [2015] 1 WLR 1661 at [19] per Lady Hale.
[2023] NZCA 266, [2023] 3 NZLR 405 at [103] and [112]–[115].
National Australia Bank website, but not through the BNZ website.
and Philip Sales “Controlling contract discretions: Wednesbury reasonableness, good faith and
proper purposes” (2024) 140 LQR 106.
per Arnold J, quoting Investors Compensation Scheme Ltd v West Bromwich Building Society
[1998] 1 WLR 896 (HL) at 912 per Lord Hoffmann. See also Bathurst Resources Ltd v L&M Coal
Holdings Ltd [2021] NZSC 85, [2021] 1 NZLR 696 at [41] per Winkelmann CJ and Ellen France
J.
example term loans and term deposits.
Winkelmann CJ and Ellen France J.
term — terms implied by custom in a particular trade or area of business.
underpinnings, see Jason N E Varuhas “Three Issues in the Law of Contractual Discretion” (2022)
42 OJLS 787.
Star Shipping Co Ltd (No 2), above n 35, at 404.
public law context the New Zealand Supreme Court restated this requirement in Unison Networks
Ltd v Commerce Commission [2007] NZSC 74, [2008] 1 NZLR 42 at [53]–[55] per McGrath J.
Rixson Inc [2012] EWCA Civ 419, [2012] 2 All ER (Comm) 1076; Shurbanova v Forex Capital
Markets Ltd [2017] EWHC 2133 (QB); Monk v Largo Foods Ltd [2016] EWHC 1837 (Comm);
Hamsard 3147 Ltd v Boots UK Ltd [2013] EWHC 3251 (Pat) at [88]; TSG Building Services
Plc v South Anglia Housing Ltd [2013] EWHC 1151 (TCC) at [51]; Sucden Financial Ltd v Fluxo-
Cane Overseas Ltd [2010] EWHC 2133 (Comm); Monde Petroleum SA v WesternZagros Ltd
[2016] EWHC 1472 (Comm), [2017] 1 All ER (Comm) 1009; and Lombard North Central Plc v
European Skyjets Ltd (in liq) [2022] EWHC 728 (QB).
SCC 7, [2021] 1 SCR 32 at [133] per Brown and Rowe JJ (emphasis in original).
Lord Burrows and Lady Simler, and [129]–[136] per Lord Leggatt.
Ellen France J.
regs 22–26.
credit balances in their accounts.
Leggatt LJ suggested that the implied term required “a proper consideration of the matter after
making any necessary inquiries”.
Tipping JJ.
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