Gloriavale members in Christchurch, during one of the many court hearings involving the exclusive religious community. Photo / George Heard
Gloriavale members in Christchurch, during one of the many court hearings involving the exclusive religious community. Photo / George Heard
Gloriavale has taken a knock in its battle to maintain access to banking services.
The Court of Appeal has allowed BNZ to challenge an interim injunction that requires the bank to keep Gloriavale’s accounts open until a trial determines whether BNZ can terminate its relationship with the exclusivereligious community.
If BNZ wins the challenge, the injunction will be discharged, and it will be able to close the accounts.
If BNZ loses, the injunction will stay, and the accounts will remain open until the issue is resolved at trial.
The outcome of the case could set a legal precedent that clarifies the extent to which banks can choose who they do business with.
It has bank accounts for its various businesses, farming operations, and educational and health services it provides its community, and could not find another bank to service it in 2022 when BNZ wanted out.
Background
BNZ’s decision to try to ditch Gloriavale followed a landmark Employment Court ruling that found three former Gloriavale members were employees, not volunteers.
The court broadly accepted the former members, who had worked since the age of 6, were subject to physical and psychological punishment, and rigorous, and sometimes violent, supervision.
BNZ in July 2022 gave Gloriavale three months’ notice to find another bank.
It told Gloriavale that providing it with banking services was inconsistent with the bank’s human rights policy, which says it “must not tolerate, or be complicit in, any activities that contribute to adverse human rights impacts”.
Gloriavale community members at the Employment Court in Christchurch in 2022. Photo / George Heard
BNZ agreed to extend the notice period it gave Gloriavale once, but not twice.
Gloriavale then got the High Court to issue an interim injunction, preventing BNZ from closing its accounts until the issue was dealt with at trial.
BNZ asked the High Court if it could appeal this decision. The High Court said no but was subsequently overruled by the Court of Appeal.
Court of Appeal judges Justice Jillian Mallon and Justice Rebecca Ellis said BNZ had to meet a high threshold to get the go-ahead to challenge the injunction.
The judges said if BNZ won the appeal “it may be effectively dispositive of the substantive proceeding and have important precedential value, including for future injunctive relief applications in the banking context”.
Chapman Tripp senior associate Emma Peart welcomed the Court of Appeal’s decision to consider BNZ’s challenge.
She said its judgment would provide clarity on the test for when a bank can temporarily be prevented from terminating a relationship with a customer.
Peart said the High Court’s decision to block BNZ’s appeal of the interim injunction created uncertainty, as it challenged the classic position that unless there are specific contractual or statutory restrictions, a bank can terminate its relationship with a customer on reasonable notice.
Jenée Tibshraeny is the Herald’s Wellington business editor, based in the Parliamentary press gallery. She specialises in Government and Reserve Bank policymaking, economics and banking.
