The bank's standard terms allowed it to close accounts at its discretion: court
The Court of Appeal has ruled in favour of the Bank of New Zealand (BNZ), overturning an injunction that required the bank to continue providing services to entities associated with the Gloriavale Christian Community.
The decision allows BNZ to terminate its banking relationship with the Gloriavale entities. The case arose after BNZ ended its long-standing relationship with Gloriavale-related trusts, partnerships, and companies in 2022, citing concerns under its internal human rights policy. This decision followed a May 2022 Employment Court judgment that revealed instances of child labour and exploitation within Gloriavale. BNZ concluded that continuing its association with the entities would breach its policies.
The Gloriavale entities sought an interim injunction to prevent the closure of their accounts, arguing that losing access to banking services would jeopardize the community’s essential operations, including education, healthcare, and food provision. The High Court granted the injunction, but BNZ appealed, asserting its right under its standard terms to terminate customer accounts “for any reason.”
The Court of Appeal found that BNZ’s standard terms allowed the bank to close accounts at its discretion, provided it gave reasonable notice. The court rejected the Gloriavale entities’ arguments that BNZ was bound by implied terms to act reasonably or consider the entities’ interests before making its decision. It emphasised that clause 8.2 of the standard terms explicitly gave BNZ the freedom to terminate for any reason, without limiting its discretion.
The court also dismissed claims that BNZ owed a fiduciary duty to the Gloriavale entities, stating that the banker-customer relationship is inherently contractual and does not impose a duty of loyalty. Similarly, it found no basis for the entities’ argument that BNZ’s long-standing relationship created an estoppel preventing the bank from ending its services.
In its ruling, the court highlighted the practical implications of forcing BNZ to maintain the accounts. It noted that if other banks were unwilling to provide services to the Gloriavale entities, that reluctance reflected broader concerns about the risks of dealing with those entities rather than any fault of BNZ. While the court acknowledged that the closure of accounts might cause inconvenience, it concluded that BNZ could not be compelled to continue providing services against its will.
BNZ has assured the court it will maintain the accounts for three months from the decision date, giving the Gloriavale entities additional time to make alternative arrangements. The judgment reinforces the principle that when clear in their terms, private contracts cannot be overridden by implied obligations or judicial intervention.