BETWEENTHE CHRISTIAN CHURCH COMMUNITY TRUST AND OTHERSApplicantsANDBANK OF NEW ZEALANDRespondent
[2023] NZHC 3465
•30 November 2023
IN THE HIGH COURT OF NEW ZEALAND GREYMOUTH REGISTRY
I TE KŌTI MATUA O AOTEAROA MĀWHERA ROHE
CIV-2022-418-16
[2023] NZHC 3465
UNDER The High Court Rules 2016 IN THE MATTER OF
An interlocutory application for interim injunction
BETWEEN
THE CHRISTIAN CHURCH COMMUNITY TRUST AND OTHERS
Applicants
AND
BANK OF NEW ZEALAND
Respondent
Hearing: 30 May 2023 Appearances:
R W Raymond KC, A V Foote and C M G Sykes for Applicants W M Irving and L M Dick for Respondent
Judgment on Leave to Appeal:
30 November 2023
JUDGMENT OF CULL J
[On leave to appeal]
Introduction
[1] By judgment dated 8 September, this Court upheld the interlocutory application by the Christian Church Community Trust (Gloriavale) for the continuation of an interim injunction preventing the respondent, the Bank of New Zealand (BNZ) from terminating the bank accounts of Gloriavale’s entities pending the final determination at a substantive hearing.1
1 Christian Church Community Trust v Bank of New Zealand [2023] NZHC 2523.
THE CHRISTIAN CHURCH COMMUNITY TRUST AND OTHERS v BANK OF NEW ZEALAND [2023] NZHC 3465 [30 November 2023]
[2]BNZ seeks leave to appeal the interlocutory decision to the Court of Appeal.
[3] Both parties have filed submissions in support of their application and in opposition respectively and invite the Court to determine leave on the papers.
Approach to Leave
[4] BNZ’s application for leave to appeal is governed by s 56(3) of the Senior Courts Act 2016, which provides:
56 Jurisdiction
(1) The Court of Appeal may hear and determine appeals—
(a) from a judgment, decree, or order of the High Court:
…
(2) Subsection (1) is subject to subsections (3) and (5) and to rules made under section 148.
(3) No appeal, except an appeal under subsection (4), lies from any order or decision of the High Court made on an interlocutory application in respect of any civil proceeding unless leave to appeal to the Court of Appeal is given by the High Court on application made within 20 working days after the date of that order or decision or within any further time that the High Court may allow.
...
(6) If leave to appeal under subsection (3) or (5) is refused in respect of an order or a decision of the High Court made on an interlocutory application, nothing in this section prevents any point raised in the application for leave to appeal from being raised in an appeal against the substantive High Court decision.
[5] The Court of Appeal recently discussed the approach to applications for leave to appeal a decision on an interlocutory application as follows:2
The principles that apply to an application seeking leave to appeal an interlocutory decision are well settled. In Finewood Upholstery Ltd v Vaughan Fitzgerald J observed that:3
[13] The requirement for leave to appeal should serve as a ‘filtering mechanism’, to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to
2 McNaughton v Miller [2022] NZCA 273 at [2]–[3].
3 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679.
either the parties or more generally, do not unnecessarily delay the proceedings in which the orders were made.
The following considerations apply:4
(a)a high threshold exists;
(b)the applicant must identify an arguable error of law or fact;
(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;
(d)the circumstances must warrant incurring further delay; and
(e)the ultimate question is whether the interests of justice are served by granting leave.
[6] This Court has also held that s 56(3) has a wider purpose to lessen tactical delays and enhance the efficiency of the administration of justice.5
The parties’ positions on leave
BNZ’s position
[7]BNZ seeks leave on the following grounds:
(a)The decision contains arguable errors or law or fact. In summary, BNZ says this Court erred in finding that it was a serious question to be tried in that:
(i)cl 8.2 of BNZ’s Standard Terms and Conditions did not confer on BNZ an express, unconstrained, unilateral termination right;
(ii)cl 8.2 of the Terms implied a contractual term or requirement that BNZ’s reason for closing a customer’s account needed to be valid or that BNZ would act reasonably;
4 Greendrake v District Court of New Zealand [2020] NZCA 122 at [6], citing Finewood Upholstery Ltd, above n 3.
5 Li v Chief Executive, Ministry of Business, Innovation and Employment [2018] NZHC 1171 at [20], citing Siemer v Heron [2011] NZSC 133, [2012] 1 NZLR 30 at [30].
(iii)if BNZ did have a contractual discretion or was otherwise required to act reasonably (which is denied), BNZ did not act reasonably in deciding to close Gloriavale’s accounts.
(b)There is significant general or precedential value in the appeal because:
(i)the decision deviates from the settled common law position that providers of banking services are entitled to terminate customer accounts on reasonable notice;6
(ii)providers of banking services need certainty as to the risks of a Court granting an interim injunction preventing them from terminating customer accounts.
(iii)the appeal raises issues around the extent of constraints on freedom of contract more generally.
(c)Delay is a neutral factor or alternatively supports the granting of leave because any delay would be minimal and the significance for both parties of the issues at stake warrants incurring any further delay.
(d)It is in the interests of justice that leave be granted because of the significance of the matter to the parties and would allow them to make submissions on the application of Woolley v Fonterra Co-operative Group Ltd7 and the relevance of the findings of the Employment Court in Pilgrim v Attorney-General, being two decisions that followed the hearing.8
Gloriavale’s position
[8] Counsel for Gloriavale oppose the application for leave on the grounds that there is no error of law or fact in the decision, and that any alleged errors of law are
6 Citing Targa Capital Limited v Westpac New Zealand Limited [2023] NZHC 230.
7 Woolley v Fonterra Co-operative Group Ltd [2023] NZCA 266.
8 Pilgrim v Attorney-General (2023) NZ EmpC 105, (2023) 19 NZELR 793.
not capable of serious bona fide argument. Gloriavale submits that each of the alleged “errors of law” raised by BNZ in its application are issues which are seriously arguable, as the Court found for the purposes of continuing the interim injunction.
[9] Further, they say, there is no matter of public or general importance to justify an appeal at this stage, as the legal questions to be tried will be addressed at the substantive stage of the proceeding. Gloriavale submits it should not be put to the unnecessary cost of defending the judgment on appeal and that the grounds of leave are not sufficiently meritorious to outweigh the cost and delay to the substantive proceeding.
Reasons for declining leave
[10] Having read the careful submissions of Counsel for both parties, I have reached the view that leave to appeal should be declined. I have reached this decision for three reasons:
(i)The high threshold for appealing an interlocutory decision is not met;
(ii)The arguable errors of law do not warrant an appeal before the substantive hearing;
(iii)It is in the interests of justice that the substantive proceeding is determined before any appeal.
[11]I deal with each of these in turn.
[12] The purpose of the high threshold for the leave to appeal interlocutory decisions is to limit the cases which may go on appeal in the interests of finality of litigation, while preserving the integrity of the law and the interests of justice.9 It is relevant therefore to set out the context of this Court’s interlocutory decision.
9 Sandle v Stewart [1982] 1 NZLR 708 (CA) at 715.
The interlocutory decision
[13] These proceedings arise out of the action taken by BNZ to terminate Gloriavale’s bank accounts. BNZ sought to terminate its relationship with Gloriavale on 16 July 2022, by proposing to close a total of 83 accounts across 16 Gloriavale entities in reliance on its termination clause 8.2 of its Standard Terms and Conditions. It provided Gloriavale with three months notice to find alternative arrangements, having decided that Gloriavale’s activities were inconsistent with its internal Group Human Rights Policy. This finding was primarily in reliance of the Employment Court’s decision in Courage v Attorney-General.10
[14] A without notice application for an interim injunction was first granted on 29 November 2022 by Dunningham J, restraining BNZ from closing the Gloriavale accounts.11 The matter was set down for a one-day hearing before me on 30 May 2023 to determine whether the interim injunction order should continue, pending resolution of the substantive claims at trial.
[15] I determined that there was a serious question to be tried on the first cause of action of breach of contract and it was appropriate that the Gloriavale accounts for all its 16 entities retain banking facilities, pending final resolution of the claim. I also held that the balance of convenience and overall justice favoured the interim injunction continuing until the determination of the substantive claims.
[16] I consider it is important to record that my decision was an interim or interlocutory decision, which decided that there was a serious question to be tried. It was not a determinative decision on either the first or the remaining causes of action, the latter of which I recorded were yet to be determined at the substantive hearing. Importantly, the interlocutory decision does not determine the first cause of action as to whether BNZ has a unilateral termination right or that BNZ was required to have “valid reason” to terminate or to act reasonably in so doing. The interlocutory decision canvasses the common law rules and principles on the bank’s contractual termination
10 Courage v Attorney-General and ors [2022] NZEmpC 77, (2022) 18 NZELR 746.
11 Christian Church Community Trust v Bank of New Zealand [2022] NZHC 3271 (Decision of Dunningham J).
power. The conclusion was that Gloriavale’s claim under its first cause of action is seriously arguable.
[17] In making that finding, there are several passages in the decision, where it is noted that there was limited evidence before the Court on a number of issues12 and that there needs to be an assessment, on all the evidence, as to whether it was reasonable for BNZ to have terminated its banking relationship with all of Gloriavale’s entities.13 Further, at [73] the decision specifically notes that any assessment by the Court of whether it was reasonable for the BNZ to apply its human rights policies will depend on a careful examination of the BNZ policy and the parent bank’s NAB policy. These matters were specifically highlighted to reinforce this Court’s position on the interlocutory hearing that a final determination could not yet be made on the first cause of action but that it was arguable.
[18] As noted above, there were two further causes of action, which were not canvassed in the interlocutory decision. Having found there was a seriously arguable case on the first cause of action, there was no need for the Court to examine or canvass the second and third causes of action at this interim stage. Those causes of action remain for the ultimate determination at the substantive hearing, on the basis of all the evidence to be adduced and full legal argument.
[19] In summary, there is no binding authority in the interlocutory decision, from which the BNZ seeks leave to appeal. The plaintiffs’ claims should be assessed at the substantive hearing, once all the relevant evidence has been adduced. I note, in this regard, that BNZ seek an opportunity to make submissions on the Court of Appeal decision in Woolley v Fonterra Co-operative Group Ltd,14 which issued after the one- day hearing and featured in my interlocutory decision. BNZ also seek to address a subsequent decision of the Employment Court in Pilgrim v Attorney-General.15
[20] I consider that it is appropriate that the parties address those cases, not on an appeal decision against a finding that the first cause of action was seriously arguable,
12 Christian Church Community Trust v Bank of New Zealand, above n 1, at [67].
13 At [71].
14 Woolley v Fonterra Co-operative Group Ltd, above n 7.
15 Pilgrim v Attorney-General, above n 8.
but rather at the substantive hearing before this Court, where all matters, factual and legal, can be appropriately addressed.
Arguable errors of law
[21] The parties take opposing views as to whether there are arguable errors of law and fact. In the interlocutory decision, I found it was seriously arguable that cl 8.2 of BNZ’s standard terms and conditions did not confer on BNZ a unilateral termination right. I also found it was seriously arguable that the termination clause implied a contractual term that BNZ was required to act reasonably in closing a customer’s account and the question of whether BNZ did act reasonably, was a matter for further consideration on all the evidence.
[22] Clause 8.2, the termination clause, provides that BNZ may close or suspend a customer’s account “for any reason” and lists potential reasons for account termination, all of which relate to events or circumstances concerning a customer’s use of account which may risk BNZ’s commercial interests or affect the relationship between BNZ and the customer. The parties disagree on the common law principles applicable to the exercise of cl 8.2. In particular:
(a)Gloriavale says cl 8.2 confers a discretionary power on BNZ to decide whether to close an account for a reason listed in the clause or some other reason. The discretion is subject to the common law constraints on the exercise of discretion, i.e., the default rule.16
(b)BNZ contends that cl 8.2 confers an express, unconstrained, absolute termination right, consistent with the common law position that a bank may terminate a customer’s account on reasonable notice in the absence of express contrary agreement or statutory impediment.17
16 Abu Dhabi National Tanker Co v Product Star Shipping Co Ltd (No.2) [1993] 1 Lloyd's Rep 397 (CA) at 404. See also C & S Kelly Properties Ltd v Earthquake Commission [2015] NZHC 1690 at [73].
17 Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd [2013] EWCA Civ 200 at [83]; National Commercial Bank Jamaica Ltd v Olint Corp Ltd [2009] UKPC 16, [2009] 1 WLR 1405; Targa Capital Ltd v Westpac New Zealand Ltd, above n 6.
[23] As noted above, I held that it is that it is seriously arguable that BNZ does not have an express unilateral power of termination, and that either the default rule,18 or the Braganza extension applies,19 potentially requiring BNZ not to exercise its contractual discretion in a way that is arbitrary, capricious, or that there is an implied term in the contract to act reasonably. However, I did not need to decide the point and nor was the Court required to. What was argued was whether there was a serious question to be tried such that the interim injunction should be continued.
[24] I further held that if BNZ was required to act reasonably, there is a serious question as to whether BNZ’s termination decision was reasonable, procedurally and/or substantively, and whether there is a public obligation on BNZ as an essential service provider to provide minimum banking services to customers without alternative options. I observed three factors in the case which may be relevant as to whether BNZ acted reasonably.20 Again, I did not need to decide whether it had. My finding was restricted to whether the matter was seriously arguable and I found that it was.
[25] I am not satisfied that any of the alleged errors are of such general or public importance to warrant determination by an appeal of the interim decision. The arguments raised in this leave application will be fully traversed, no doubt more effectively at trial, with the benefit of full argument and further evidence.21 Any appeal of the substantive decision will enable the parties to argue the outcome of the substantive decision on appeal, which I consider to be the preferable and most appropriate course.
[26] I conclude that the errors of law and fact identified by the BNZ do not warrant appeal of the interim decision before the substantive decision is determined.
18 See Canaan Farming Dairy Ltd v Westland Dairy Company Ltd [2022] NZHC 2524 at [115]—
[122] recently considered in Woolley v Fonterra Co-operative Group, above n 8.
19 Braganza v BP Shipping Ltd and another [2015] UKSC 17, [2015] 1 WLR 1661, neither expressly endorsed or rejected in Woolley v Fonterra Co-operative Group Ltd, above n 8, at [103] and [112]– [115].
20 Such as whether BNZ was managing a real or actual risk to its commercial interests when it made its decision to terminate the accounts; the relevance of Gloriavale’s inability to find alternative banking services; and whether BNZ is an essential service provider and subject to public interest obligations. See Christian Church Community Trust v Bank of New Zealand, above n 1, at [64]– [83].
21 See Li v Chief Executive, Ministry of Business, Innovation and Employment, above n 5, at [10].
Interests of justice
[27] In the interim decision, I found the balance of convenience and overall justice of the case clearly favoured Gloriavale. Gloriavale and BNZ had a 40 year banking relationship. There was no obvious detriment to BNZ continuing to provide banking services to Gloriavale pending the substantive hearing. The accounts to be closed included accounts for the charitable trust, the school, the pre-school, all businesses, the midwifery service and accounts used for medical and laundry costs. Relevantly, Gloriavale was unable to engage any other banking facility in New Zealand to maintain its livelihood and continue its business and trading activities. Had the interim injunction lapsed, Gloriavale’s accounts would be closed, detrimentally affecting Gloriavale’s position by pre-determining the substantive proceeding.
[28] BNZ submits that it is likely that a successful appeal against the interlocutory decision will be determinative and will bring the proceedings to an end, thereby strongly supporting the granting of leave. This submission is based on the BNZ proposition that if BNZ are successful on appeal, there will no longer be an interim injunction in place to prevent BNZ from closing the accounts. BNZ confirmed that it will close the accounts in that event and it considers this proceeding will then be at an end. Where an appeal is dispositive of the case in law or as a practical matter, it argues, this is a factor in favour of granting leave to appeal under s 56(3) of the Senior Courts Act 2006.
[29] I consider this submission overlooks the purpose of the interim injunction. The interim injunction was continued to ensure that the parties had an adequate opportunity to argue the substantive claims. If an injunction had not been granted, then all of Gloriavale’s 83 accounts would have been closed and on the available evidence Gloriavale could not access any other banking services meaning its current business could not continue. Such an outcome supported the balance of convenience and the overall justice of the case in favour of Gloriavale.
[30] Even if the BNZ were successful on appeal in relation to the first claim, it would not be dispositive of Gloriavale’s remaining claims. The interim injunction
protects Gloriavale in the interim before the substantive hearing but the substantive claims still require determination.
[31] I accept the BNZ’s submission that this proceeding raises issues of public interest, is important to the parties, and has precedential value on a bank’s contractual powers to terminate customers’ accounts. BNZ submits further that this interlocutory decision is inconsistent with this Court’s decision in Targa Capital Limited v Westpac New Zealand Limited, which was an interlocutory decision of this Court and was not appealed.22 I consider this reinforces the need for a substantive decision in this case, not an appeal on an interlocutory decision, to determine the legal basis upon which banks can terminate customers’ accounts.
[32] I consider that it is not in the interests of justice to grant leave to appeal the interlocutory decision and I decline leave accordingly.
Result
[33]Leave to appeal under s 56(3) of the Senior Courts Act 2016 is declined.
Cull J
Solicitors:
Duncan Cotterill, Christchurch, for Plaintiffs Russell McVeagh, Auckland, for Respondents
22 Targa Capital Ltd v Westpac New Zealand Ltd, above n 6, at [35].
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