Gloriavale’s existence at risk if bank accounts close, court told
BNZ is allowed to use its human rights policy to stop providing banking for Gloriavale – a move the isolated settlement’s leaders say will put their community’s existence at risk.
The bank’s decision to close Gloriavale’s accounts followed an Employment Court ruling in May 2022 that found three former members – who began working at the community from age 6 – were employees rather than volunteers.
Gloriavale entities, including two trusts and 13 companies, took the bank to the High Court and got an interim injunction ordering BNZ to keep its accounts open. The injunction continued until a substantive hearing could be held to determine whether BNZ acted in breach of its contract.
BNZ appealed to the Court of Appeal and in a decision released on Monday, the court ruled it could terminate the bank accounts in line with its internal human rights policy.
However, BNZ assured the court it would continue to provide banking services to the Gloriavale entities for three months.
In the Court of Appeal decision, justices David Goddard, Sarah Katz and Jillian Mallon said the Gloriavale entities tried to establish alternative banking arrangements, but were unsuccessful.
The Gloriavale entities claimed BNZ required a reason to close their accounts, but the judges said BNZ’s standard terms clearly stated accounts can be closed for “any reason”.
They told the court the entities carry out 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,” they argued.
The judges said there was no need for a substantive hearing.
“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.”
They said there was no proper basis for requiring BNZ to continue to provide the services.
“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.”
The injunction would remove only one provider from a market of multiple providers and moving banking services would not lead to Gloriavale suffering serious or irremediable prejudice of any kind, the judges said.
“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.”
The decision says there was no evidence before the court that Gloriavale had tried to find alternative banking in more than a year.
The judges acknowledged there was a very substantial risk that the Gloriavale entities would not be able to open bank accounts with other New Zealand retail banks.
Gloriavale told the court all of its entities and individuals had been banking with BNZ for 40 years, but had never received any interest on investments because of their Christian beliefs, which gave BNZ a significant financial benefit.
The trust’s 16 entities had 83 accounts with BNZ.
Gloriavale leavers have been asked for comment.
The group’s lawyer, Brian Henry, said residents still living in the community needed protecting from its leaders, who will “never change”, and that if Gloriavale is not able to have bank accounts, “the community can’t continue”.
Henry said he found it difficult to understand how the community was still allowed to operate.
“Anywhere else in the world this place would have been gone long before now,” he said.
“I can’t understand why our Government allows it to remain. I’m calling for them to act now and close Gloriavale down.”
According to the latest financial report filed with Charities Services, the community’s Christian Church Community Trust, which is a registered charity, had total cash of $5.9 million and assets of $46.9m.