In this episode, Litigation Partner, Richard Gordon talks to Senior Associate, Alex Church, about the outcome of a recent Court of Appeal case, Bank of New Zealand v The Christian Church Community Trust and others, commonly known as the Gloriavale case. Together they discuss the implications of the case for banking rights and the exercise of contractual powers, and compare it with a similar case, Targa Capital Ltd v Westpac New Zealand Ltd.
[00:30] Richard provides a brief overview of the Gloriavale case, explaining the bank's decision to "de-bank" various Gloriavale entities and the ensuing legal battle. Alex provides a detailed explanation of the Gloriavale case, including the factual background and the legal issues at stake.
[03:17] Alex shares insights from a similar case, Targa Capital v Westpac Bank, where Alex successfully defended Westpac. Alex discusses the differences and similarities between the two cases.
[04:42] Richard brings up the topic of "de-banking" in other jurisdictions, such as the UK, citing the high-profile case involving Nigel Farage.
[06:10] Richard and Alex then discuss the traditional rule that a bank-customer relationship is terminable on reasonable notice, contrasting it with the modern context where banking services are essential for business operations.
[09:37] Richard and Alex explain the concept of interlocutory injunctions and their role in the Gloriavale case. They discuss the Court of Appeal's decision to rule in BNZ's favour and lift the High Court's injunction.
[11:26] Alex provides an in-depth analysis of Gloriavale's breach of contract claim and the Court of Appeal's reasoning for dismissing it.
[12:25] Richard and Alex explore the concepts of the default rule and the expanded default rule, discussing their relevance to the case and the Court of Appeal's stance on these legal doctrines.
[13:51] Richard shares his experience with the proper purpose doctrine in other cases, and Alex explains its application in the Gloriavale case.
[14:19] Next Richard and Alex debate the broader issue of access to banking services and the implications of a bank's right to terminate services, especially in cases where no other bank is willing to provide services.
[16:16] Alex offers practical guidance for banks on how to future-proof their decision-making processes and ensure compliance with internal policies and procedures.
[19:06] Richard and Alex discuss the tension between banks' business interests and risk mitigation, including litigation risk and public scrutiny.
[20:29] Richard and Alex consider the wider implications of the Court of Appeal's decision for other contracting parties and the importance of contractual certainty.
[22:25] Richard plays devil's advocate, questioning the potential societal impact of banks' decisions to terminate services based on customer assessments.
[24:50] Richard summarizes the discussion, emphasizing the reluctance of courts to interfere with clear contractual rights and the importance of proper purpose in exercising contractual powers.
[25:18] Richard and Alex reflect on the Court of Appeal's decision and its implications for future banking law cases. They emphasise the importance of clear contractual terms and proper decision making processes for banks.
Information in this episode is accurate as at the date of recording Wednesday, 29 January 2025.
Please contact Richard Gordon or Alex Church or our Litigation team if you need legal advice and guidance on any of the topics discussed in the episode.
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