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Gloriavale wins fight to keep its bank accounts – for now

22 Sep 2023

| Author: Fiona Wu

Interlocutory application for interim injunction – High Court Rules 2016 – serious question to be tried – breach of contract – default rule – exercise of discretionary power – balance of convenience – interests of justice

Christian Church Community Trust v Bank of New Zealand [2023] NZHC 2523 per Cull J.


In July 2022, the Bank of New Zealand (BNZ) gave notice of its intention to terminate its banking relationship with various companies and entities associated with the Christian Church Community Trust, more commonly known as the Gloriavale Christian Community.

Gloriavale has almost exclusively used BNZ as its bank of choice for the past 40 years. BNZ’s relationship with Gloriavale is governed by BNZ’s standard terms and conditions, clause 8.2 of which states:

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…

On 6 July 2022, BNZ terminated its relationship with Gloriavale, citing human rights breaches. BNZ relied on an earlier finding of the Employment Court that three members of the Gloriavale community were employees from the age of six. BNZ gave Gloriavale three months to find alternative banking services; it failed to do so, having been turned down by other banks it approached.

Gloriavale challenges BNZ’s decision to terminate the relationship and the matter will go to trial. Gloriavale applied, without notice, in November 2022 for an interim injunction (which was granted) preventing BNZ from terminating the banking relationship. The matter was set down for this hearing to determine whether the interim injunction order should continue, pending resolution of claims at trial.


Interim injunction

Interim injunctions are protective orders that preserve the status quo. There are three questions the court must consider when deciding whether to grant an interim injunction:

  • Whether there is a serious question to be tried;
  • where the balance of conveniences lies; and
  • the overall interest of justice.

At this stage, the court need not determine the merits of the parties’ case (beyond answering the three questions) nor resolve any evidential conflicts.

Gloriavale pleaded three causes of action in its statement of claim: breach of contract, breach of fiduciary duty and estoppel by convention.

The judgment largely turned on whether there was a serious question to be tried on the first cause of action, which the court found there was. In so finding, the court notes that while BNZ’s power to close accounts appears unfettered, the common law has developed a default rule controlling the exercise of unilateral contractual powers: a party, on whom a contract confers a discretionary power, must not exercise the discretion arbitrarily, capriciously or in bad faith, or unreasonably in the sense that no reasonable contracting party could have so acted.

While there is ambiguity about whether (and to what extent) the default rule applies in New Zealand, the court decided its application was arguable, particularly in light of the recent Court of Appeal decision Woolley v Fonterra Co-operative Group Ltd [2023] NZCA 266.

The question remains as to whether it is seriously arguable that BNZ exercised its discretion unreasonably. In considering this question, the court considered the procedural fairness (or lack thereof) of BNZ’s process as well as the substantive reasonableness of its decision.

On both counts, Cull J accepted there was a reasonable question to be tried: procedurally, BNZ did not engage with Gloriavale before reaching its decision, did not fully disclose its policies and did not consider the length of the relationship in exercising its discretion to termination. Substantively, there are weighty issues involving the reasonableness of unilateral termination in these circumstances, and whether banking is an essential service (and therefore imports public interest obligations on BNZ).

Having found there was a serious question to be tried on the first cause of action, Cull J did not address the arguments relating to the other causes of action and moved to consider the other threshold questions.

In finding the balance of convenience and overall interests of justice lay in continuing the interim injunction, the court noted that damages are unlikely to be an adequate remedy for Gloriavale. Losing the provision of a banking service in New Zealand, vital to its day-to-day operations, will cause irrecoverable detriment to Gloriavale.


Applicable principles: whether serious question to be tried – whether default rule relating to contractual powers applies in New Zealand – where balance of convenience lies – whether mandatory or prohibitory injunction – whether damages would be adequate remedy.


Held: Order granted, continuing the interim injunction to prevent BNZ from terminating Gloriavale’s accounts.

The Christian Church Community Trust v Bank of New Zealand [2023] NZHC 2523

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