Gloriavale won an interim High Court injunction last December preventing BNZ from closing the accounts pending further legal proceedings. Photo: RNZ / Jean Edwards
BNZ cannot justify terminating its 40-year banking relationship with the Gloriavale Christian community as a result of a landmark child labour ruling, the High Court has heard.
The bank wants to close the community's commercial and charitable accounts, arguing last year's Employment Court finding that three former Gloriavale men were employees from the age of six is inconsistent with its human rights policy.
Gloriavale - also known as the Christian Church Community Trust - won an interim High Court injunction last December preventing BNZ from closing the accounts pending further legal proceedings.
At a further High Court hearing on Tuesday, BNZ lawyer Will Irving said the Employment Court case brought by Hosea Courage, Daniel Pilgrim and Levi Courage warranted cutting ties with Gloriavale.
"The Courage decision, for the first time, revealed a system of forced child labour in the Gloriavale businesses and across the Gloriavale businesses," he said.
"It was inconsistent with BNZ's human rights policy for it to continue to bank entities forcing children, school-age children, to work for them."
The Employment Court found ready access to child labour constituted a significant factor in the success of Gloriavale's business model.
However Gloriavale's lawyer Richard Raymond KC told Justice Helen Cull the community had not breached BNZ's terms and conditions and the accounts' closure would be devastating for "vulnerable" people who lived at the West Coast commune.
He noted any declaration identifying the employer in the Courage case had been reserved.
"(BNZ) misconstrue, place too much reliance on or misunderstand that decision as a basis for making all of these extremely devastating decisions for the community," he said.
"There has been no finding about these applicants."
For example, there was no reference or finding against the Gloriavale company Caring Midwives, Raymond said.
"It's simply not reasonable for them to conclude that they are somehow tainted by the brush that swept over the Courage decision in relation to the enterprises at Gloriavale," he said.
The High Court heard an internal BNZ report listed up to 17 other reasons for closing the bank accounts, which include the charitable trust, all businesses and the midwifery service.
About $9 million was sitting in the accounts - money that would not be forfeited or frozen if they were to close, BNZ said.
Justice Helen Cull is hearing the case. Photo: RNZ / Michael Cropp
Bank's information incorrect - Gloriavale's lawyer
Raymond told Justice Cull that a good proportion of matters relied on by the bank appeared to have been sourced from the media or Wikipedia and were factually incorrect.
"One can tell from the way it's framed, the spelling mistakes, the commas and so on that it is taken directly from Wikipedia," he said.
"No opportunity was given by the bank to the applicants to comment on those matters or refute what was said or say what has been done to change the matters which have been historically reported on Wikipedia.
"There has been no attempt to look into these allegations, check they're accurate, ask the community about them, what steps the community has put in place to address them, and yet this is the basis of a decision to terminate a 40-year banking relationship. It's extraordinary."
Raymond said the bank's argument for cutting ties must be rational, reasonable and based on the correct facts.
"To suggest otherwise would permit the bank to terminate a relationship on the basis it doesn't like someone or terminate on the basis of a hearsay statement that it doesn't seek to verify, or because the values of a customer differ from the views of the bank," he said.
Irving told Justice Cull BNZ believed it had the contractual and legal right to close the accounts and could do so for any reason.
"The contractual relationship between the parties is governed by the terms and those permit BNZ to terminate for any reason," he said.
The judge later questioned Irving about BNZ's reliance on a 2021 human rights policy that had not been heralded to customers.
"So when are you going to tell your customers?" she asked.
"There are publicly available documents on BNZ's website, they don't include the policy in question but they do set out a great deal of information in relation to the steps that BNZ is taking, what its values are," Irving said.
He said the bank had modern slavery reporting obligations.
"If businesses force people to work for them in the manner that these businesses have, and particularly children, then they are at risk of having their accounts closed," he said.
The court heard other banks, including ASB and Kiwibank, were not prepared to open commercial accounts for Gloriavale.
Justice Cull has reserved her decision.