BNZ has agreed to provide banking services to Gloriavale for three months after successfully appealing an interim injuction preventing the bank from shutting the accounts. Photo: RNZ / Nate McKinnon
The Court of Appeal has cleared the way for BNZ to close Gloriavale's bank accounts after successfully appealing an injunction preventing the closures.
BNZ wants to terminate its 40-year banking relationship with the reclusive Christian sect, arguing the community breached the bank's human rights policy after an Employment Court ruling in 2022 that the sect used child labour.
The Employment Court ruled that three former Gloriavale men worked long hours as employees from the age of six.
It said ready access to child labour constituted a significant factor in the success of Gloriavale's business model.
The High Court granted Gloriavale an interim injunction preventing BNZ from shutting the community's commercial accounts pending trial, which was appealed.
In a judgement released on Monday, the Court of Appeal ruled in BNZ's favour and set aside the injunction.
"We do not consider that it would be in the overall interests of justice to grant an injunction requiring BNZ to continue to provide services to the Gloriavale entities for a further period (likely to be in excess of a year) until the claims could be tried. BNZ's appeal must therefore be allowed," the judgement said.
"Setting aside the injunction and allowing BNZ's decision to take effect would not of itself prevent the Gloriavale entities from obtaining banking services - it would simply remove one provider as an option, in a market where there are multiple providers of banking services. The Gloriavale entities would remain free to seek to open accounts with other banks."
The Court of Appeal said BNZ agreed that it would continue to provide banking services to Gloriavale for a period of three months from the date of the Court's decision.
At a High Court hearing in 2023, 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."
Gloriavale's lawyer Richard Raymond KC said 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.
Raymond said 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.
The Court of Appeal said the Gloriavale entities previously made attempts to establish alternative banking arrangements, but were unsuccessful.
"[The Gloriavale entities] say that without bank accounts, they will not be able to continue to operate. The Gloriavale entities carry on 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," the Court of Appeal judgement said.
These proceedings concerned 16 Gloriavale entities which between them had a total of 83 accounts with BNZ, the judgement said. BNZ would continue to bank with some individuals in the community.