Max Barber is a Senior Solicitor with Franks Ogilvie. He joined the firm in early 2023 as a Law Clerk and was admitted as a barrister and solicitor in March 2023. Max joined the firm from BNZ, where he worked in client relations and personal banking while completing his Bachelor of Laws at Victoria University.
Since joining Franks Ogilvie, Max has been involved in all aspects the firm’s work, including litigation matters ranging from a Commerce Act appeal through to appearing at a coronial inquest, a major commercial negotiation in the biosecurity sector, and law reform projects relating to water infrastructure, local government, and primary sector governance.
A local authority was liable to a landowner for taking enforcement action against them under the Resource Management Act 1991 without checking their records as to whether the use of the land was consented.
Mr Daisley purchased a quarry near Whangarei in 2004 and intended to extract metal to use in his earthworks contracting business and for commercial sales. The seller of the land told Mr Daisley, correctly, that the quarry operations had not been challenged or prohibited at any time.
In November 2004, the Whangarei District Council (“Council”) advised Mr Daisley that he did not have the correct resource consent to quarry. Mr Daisley maintained that the quarrying activity was consented.
The Council commenced enforcement proceedings against Mr Daisley to stop him quarrying the land. The enforcement proceedings progressed through the courts between 2005 and 2009. Throughout this period, the Council remained steadfast in its position that no consents existed for the quarry.
In September 2009, a search of Council records revealed the quarrying activity was subject to an existing use consent. This was the first time Mr Daisley knew the consent existed. That consent was not limited by time or in the volume of removed materials.
Unfortunately, the inability to quarry the land had led Mr Daisley to financial ruin and, in December 2009, he was forced to sell the land at a fire sale price to avoid a mortgagee sale. Notwithstanding this, the Council failed to apologise to Mr Daisley for the mistake and maintained its enforcement proceedings until 2011 for apparent tactical advantage.
Mr Daisley issued proceedings for negligence against the Council in 2015 for lost earnings, the loss in value of the business operation and the land, and costs associated with defending against enforcement proceedings. He also claimed exemplary damages against the Council for the tort of misfeasance in public office.
The Council defended the claims primarily on the basis that the claims were made more than six years after the causes of action had accrued and were therefore barred by the Limitation Act 1950.
The High Court rejected the Council’s limitation defence, and found the Council liable both for negligence and misfeasance in public office. The Council was ordered to pay Mr Daisley approximately $4 million in compensatory damages, and an additional $50,000 in exemplary damages.
The Council appealed.
The Court of Appeal upheld the High Court’s decision on negligence but overturned the misfeasance finding.
Negligence
As the Council had admitted it had breached its duty of care to Mr Daisley, the primary issue on appeal was whether the claim was barred by the Limitation Act.
The High Court held that Council’s ongoing failure to search their records constituted a continuing breach of duty. This meant the negligence cause of action accrued repeatedly on a daily basis for limitation purposes.
The Court of Appeal disagreed with this reasoning. The notion of a continuing breach of duty undermined the policy of certainty and finality that underlay the Limitation Act, which contemplated that even meritorious claims were not available if too much time had elapsed.
However, the Court of Appeal went on to hold that the ‘fraudulent concealment’ exception in the Limitation Act meant the limitation period did not begin until September 2009 (when the consent was disclosed to Mr Daisley).
While the Council had not deliberately intended to deceive Mr Daisley about the consent, this was not a requirement for the exception to apply. It was enough that the Council had been reckless about the existence of the consent.
In this regard, the court noted Council officers were aware the site had been used as a quarry for a number of decades. Despite this, the officers had repeatedly insisted that Mr Daisley prove the consent existed when they could have easily verified this themselves by searching internal databases. On this basis, the court inferred that the officers had been aware that a consent could exist. They had no reasonable excuse for failing to search the Council’s records, a search which would have readily revealed the consent. This awareness and failure to act established recklessness sufficient to engage the Limitation Act’s fraudulent concealment exception.
Accordingly, the High Court’s finding of negligence was upheld, albeit on an altered basis.
Misfeasance in public office
The High Court found the Council liable for the tort of misfeasance of public office on the basis that the Council officers were reckless as to the existence of the consent, even though they had not acted in bad faith.
The Court of Appeal rejected the High Court’s finding on misfeasance. While the Council had been reckless as to the existence of the consent, it did not automatically follow that the officers involved had been reckless about whether they had legal power to bring enforcement proceedings. There was no suggestion that the officers had acted while having subjective doubts about their legal authority – they genuinely believed they were entitled to act as they had.
The Council was liable to pay Mr Daisley over $4 million in damages for lost opportunity to quarry the land, loss of property value, and the costs of dealing with the Council’s enforcement proceedings. However, because the Court of Appeal did not find the Council liable for misfeasance in public office, the High Court’s award of $50,000 in exemplary damages was reversed.
The High Court and Court of Appeal decisions both affirm the important point that in some cases, local authorities can be liable to pay damage for failure to perform record-keeping duties under s 35 of the Resource Management Act 1991.
For further information of this or similar cases, contact Director, , Brigitte Morten.
Photo by Jonny Caspari on Unsplash
The Court of Appeal upheld the High Court’s declaration that a non-statutory process that allowed pokie machine operators to relocate was unlawful under the Gambling Act 2003.
The Gambling Act 2003 (“Act”) imposes established stringent regulations on businesses offering ‘Class 4 gambling machines’ commonly known as pokies. Among other things, these business must hold both an operator licence and avenue licence.
The Act is intended to minimise gambling harm by controlling the growth of gambling. Reflecting this harm reduction imperative, venue licences limit the number of pokie machines that can operate within a venue.
However, venue licences granted before the commencement of the Act can continue on the same terms as they did prior to the Act, which in many cases allows a greater number of pokie machines to operate than the Act allows. This arrangement is known colloquially as ‘grandparenting’.
There was no provision in the Act for venue relocation at the time of enactment. The only apparent means of relocating avenue was through an application for a new venue licence. Because the venue was new, the benefits of grandparenting would inevitably be lost, thereby discouraging relocations.
The High Court decision ILT Foundation v Secretary for Internal Affairs [2013] NZHC 1330 (“Waikiwi Decision”) clarified this position. In that case, the owner sought a declaration that they could move their premises 200 metres to a neighbouring section via a change to their existing venue licence rather than a new licence application. The court granted the declaration, holding that minor relocations were not changes in “venue” under the Act and could therefore be completed without a new venue licence application. The Waikiwi Decision relied on highly technical distinctions between the definition of “venue”, “place”, and “location” within the scheme of the Act as it stood at the time.
Shortly after the Waikiwi Decision, Parliament amended the Act to provide for local authorities to have the final say over venue relocations under new venue relocation policies (“2013 Amendments”). The amendments were made in apparent ignorance of the Waikiwi Decision.
Subsequently, a number of venue relocations were approved under the criteria set out in the Waikiwi Decision (“Waikiwi Relocations”). 34 applications were made between 2013 and the date of the appeal, with 25 being approved. The average relocation distance was 138m, with one relocation to a site 600m away (on the other side of the Christchurch CBD).
Following a number of changes in approach to Waikiwi Relocations by the responsible regulator, non-profit organisation Feed Families Not Pokies Inc applied to the High Court for a declaration that the Waikiwi Decision had not survived the 2013 Amendments. The Gaming Machine Association Inc (“GMA”) opposed the application.
The High Court granted declarations sought, ruling that Waikiwi Relocations were inconsistent with the intent of the Act following its amendments, which expressly delegated relocation decisions to local authorities. The court reserved its position on how the declaration would apply to venues who had successfully obtained Waikiwi Relocations in the past.
GMA appealed the High Court’s decision to the Court of Appeal.
GMA argued that the High Court misinterpreted the Act and sought a declaration affirming the continued legality of Waikiwi Relocations after the 2013 Amendments. The Court of Appeal rejected this argument and dismissed the appeal, upholding the High Court’s declaration.
The Court clarified that the Waikiwi Decision was a narrow, case-specific exception, not a general framework for venue movement. The test proposed in that decision was too vague to govern broader applications and was never intended to serve as a relocation code.
Before 2013, distinguishing between “venue,” “place,” and “location” was legally viable. The 2013 Amendments, however, introduced a detailed relocation regime that meant this distinction was no longer tenable. In the amended legislation, Parliament intended “venue” to mean the physical place where gambling occurs, and any change in location (however minor) must now follow the statutory relocation process.
Permitting Waikiwi Relocations would undermine the 2013 Amendments’ purpose: enabling local authorities to control venue relocations, particularly to reduce gambling in high-deprivation areas. Waikiwi Relocations bypassed that oversight, relying on criteria far less rigorous than those mandated in local policies. They could allow movement within high-deprivation zones to more commercially attractive sites, contrary to legislative intent. In some cases, they could enable an increase in gaming machines, an outcome fundamentally inconsistent with the Act’s core purpose.
The Court also dismissed GMA’s argument based on the interpretive presumption that Parliament does not overturn the common law without express language to that effect. It explained that this presumption typically applies where legislation might infringe upon established common law rights. In this case, however, grandparenting benefits were rights created entirely by statute, and could be altered accordingly.
The Court dismissed GMA’s appeal, meaning the High Court’s declarations stand. This means that Waikiwi Relocations (whenever they occurred) are unlawful. While the High Court had reserved the position for venues that had Waikiwi Relocations approved prior to judgment, those venue licences are now at risk of judicial review.
As GMA has not sought leave to appeal from the Supreme Court within time, the Court of Appeal’s decision on the matter is final.
For further information on this case or similar issues, please contact Director, Brigitte Morten.
Summary
The Court of Appeal overturned an injunction, allowing a bank to close a client's account due to human rights abuse concerns, ruling there was no arguable case that the account closure breached the client’s rights.
Background
The Bank of New Zealand (“BNZ”) had a long-standing banking relationship (since 1999) with the Gloriavale Christian Community and associated entities (“Gloriavale”). BNZ provided transactional banking and relationship management services.
The relationship between Gloriavale and BNZ prior to the termination was generally positive.
On 10 May 2022, the Employment Court issued its judgment in Courage v Attorney-General. The court made adverse findings against Gloriavale regarding coercion, violence, and use of child labour. The court also noted serious concerns regarding sexual abuse within the Gloriavale community. Following the decision, Gloriavale made a public apology.
BNZ viewed these findings as establishing that Gloriavale’s conduct amounted to, or was likely to amount to, human rights abuses. They concluded that Gloriavale had breached the bank’s internal human rights policy, and that the banking relationship could not continue.
In July 2022, BNZ gave notice to terminate its banking services to the Gloriavale entities (“Termination Decision”). BNZ did not engage with Gloriavale to seek further information or assurances before making its decision, acting unilaterally based on their interpretation of the Courage decision and their own internal policies.
Following receipt of the notice, Gloriavale tried to find alternative banking arrangements but were unsuccessful. When BNZ was informed of this, they offered assistance in transiting to a new bank, but refused to alter their decision to terminate the banking relationship.
In December 2022,Gloriavale filed civil proceedings in the High Court alleging the Termination Decision was a breach of contract, breach of fiduciary duty, and estoppel by representation.
The High Court granted an interim injunction preventing BNZ from terminating the banking relationship pending trial.
BNZ appealed to the Court of Appeal.
The Case
The sole issue on appeal was whether any of Gloriavale’s causes of action were viable enough to meet the minimum standard for the court to issue an interim injunction (a ‘serious issue to be tried’).
Breach of contract
The Termination Decision relied on clause 8.2 of BNZ’s standard terms and conditions, which stated that BNZ could close a customer’s account “for any reason”. The contract listed examples of cases where accounts might be terminated but explicitly stated that the examples were not exhaustive.
The parties accepted the ‘reason’ for the Termination Decision was that BNZ had concluded Gloriavale had breached BNZ’s internal human rights policy.
Interpretation of clause 8.2
Gloriavale argued that clause 8.2 should be interpreted more broadly than its ordinary language suggested, that BNZ was required to have a reason to close their accounts, it must not be based on factual errors or be unreasonable.
The court rejected this broad interpretation.
The ordinary languageof cl 8.2 was clear – accounts could be terminated for ‘any reason’. While not determinative, the plain language gave a strong clue as to what the parties intended.
The background context supported the plain meaning. The clause reflected the default common law rule that the banking relationship was terminable on reasonable notice – had the parties intended to change this rule, clearer language would be expected. Other contextual clues were that the terms were uniformly applicable to BNZ customers (meaning a greater emphasis on certainty was expected), and that the customer was protected by being able to also terminate the banking relationship at notice and find a new bank.
In light of this, the court held that a reasonable observer would conclude that the contract meant exactly what it said. BNZ had an unqualified power to terminate the contract for ‘any reason’. Gloriavale’s interpretation would amount to rewriting the contract.
Implied term
Gloriavale made a related argument that clause 8.2 was subject to an implied term that the discretion to terminate the banking relationship must not be exercised arbitrarily, capriciously, or in bad faith. This argument was founded on a ‘default rule’, derived from UK case law that applied to all contracts unless excluded by the parties.
The court declined to rule on whether the default rule was recognised in New Zealand law, holding that this was more appropriately assessed in a full trial. They instead decided the case on a narrower implied term that had been previously recognised in NewZealand – that all contractual discretions must be exercised in good faith and for a proper purpose.
Applying the narrower ‘proper purpose’ test, the court held that Gloriavale had failed to establish an arguable case that the term had been breached. Gloriavale had not contended that the discretion had been exercised in bad faith, and it was clear that the discretion had been exercised for the purpose for which it was granted – namely to terminate the banking relationship for any reason. There was no question that BNZ had acted for a reason other than a genuine desire to terminate its relationship with Gloriavale.
Outcome
Because the court had rejected Gloriavale’s arguments on interpretation and implication of terms, there was no serious issue to be tried that BNZ had breached the contract. However, the court went on to hold that, if the default rule were adopted, Gloriavale would have had an arguable (but weak) case on whether the Termination Decision breached an implied term of the contract.
Other causes of action
The court rejected Gloriavale’s claims based on breach of fiduciary duty and estoppel. In the case of the former, legal precedent clearly established that the banker/customer relationship was not fiduciary in nature. Regarding the latter, the court found the claim to be completely unsubstantiated.
Result
The Court held that there was no serious issue to be tried on any of the causes of action pleaded by Gloriavale. Accordingly, the High Court did not have jurisdiction to grant the injunction, and the Court of Appeal quashed the orders it had made.
The legal reasoning and commercial sense of the judgment are sound. The court was correct to note that reading any protection into clause 8.2 would have amounted to a judicial rewrite of the contract.
However, the breadth of the discretion recognised by the Court of Appeal is concerning from a freedom of expression standpoint. Controversial or unpopular bank customers now face the risk of losing banking services without good reason and without the chance to be heard. As the court recognised, there is no obligation for other banks to take on clients that have been terminated by their competitors.
It remains to be seen whether Gloriavale will appeal the case to the Supreme Court or pursue the case to trial.
For more information on this case or related issues please contact Director Brigitte Morten
