Max Pakinga-Barber

Summary

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.  

Background

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.  

The case

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.

Result

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

Summary

A climate change advocacy group was unsuccessful in judicial review proceedings challenging the grant of two petroleum exploration permits.

Background

The Crown Minerals Act 1991 (“CMA”) creates a legal regime whereby permits are granted for the exploration, prospecting, and extraction of Crown owned minerals.  The purpose of the CMA at the relevant time was to promote exploitation of Crown owned minerals for the benefit of New Zealand.

The Minister of Energy and Resources has the power to grant mineral permits under the CMA. The CMA lists various matters which the Minister must be satisfied of when granting permits, but these considerations are not stated as exhaustive. Additionally, there is a general requirement for all decision-makers under the CMA to consider the principles of the Treaty of Waitangi.

The Climate Change Response Act 2002 (“CCRA”) is the primary legislation governing carbon emissions in New Zealand. Amendments in 2019 introduced a statutory ‘net zero’ target and requirements for the government to set emissions budgets and emissions reduction plans. Section 5ZN allows any public decision-maker to have regard to these matters as they think fit.  

In 2021, the Minister proposed to grant permits under the CMA to two firms allowing them to explore for petroleum in specified areas of Taranaki.

Students For Climate Solutions Incorporated(“SCSI”), an incorporated society established to enable students to address climate change concerns, challenged the permit decision in judicial review proceedings.

The High Court dismissed the challenge on all grounds. SCSI appealed to the Court of Appeal.

The case

SCSI argued that the Minister’s decision was unlawful due to failure to consider the climate change implications of the decision, as well as the principles of the Treaty of Waitangi.

Both parties accepted that mandatory considerations were those matters that the governing statute expressly or impliedly required the decision-maker to take into account. It was not open for a court to impose its own view on decision-makers as to what was sensible to consider.

There was also no dispute between the parties that combustion of petroleum was a leading cause of climate change.

Failure to consider climate change implications

The parties agreed there was no express requirement in the CMA to consider climate change.

However, SCSI argued  that a requirement to consider climate change was implied by the reference to ‘for the benefit of New Zealand’ in the CMA’s purpose section. They argued that the ‘for the benefit of New Zealand’ wording meant that exploitation of Crown minerals should only occur if it was determined that the exploitation was in New Zealand’s benefit. Assessment of public benefit in this case required the Minister to consider climate change impacts, and this interpretation was supported by the scale of the climate emergency as well as the intent behind s 5ZN of the CCRA.

The court unanimously rejected SCSI’s interpretation of the purpose of the CMA. ‘For the benefit of New Zealand’ did not qualify the CMA’s purpose of promoting mineral exploitation. Rather, it was clear that Parliament regarded promotion of this objective and benefit to New Zealand as one and the same.

This was supported by Parliamentary materials that showed that when the purpose clause was added to the CMA, the main concern was economic development. Environmental concerns were intended to be dealt with in other legislative regimes. Subsequent case law in the High Court had confirmed this interpretation in other contexts.

Accordingly, the proper interpretation of the CMA was that Parliament had not intended a requirement for climate change to be considered.

Failure to consider Treaty of Waitangi principles

SCSI argued that failure to consider climate change implications in this case amounted to a failure to consider Treaty principles, as Maori stood to be disproportionately affected by climate change.

The court unanimously rejected this argument. Proper consideration of the Treaty principles in this context required consulting iwi and hapū around the permit area and assessing impacts of the permit on them. The Minister had considered this. A broad policy assessment weighing economic benefits with climate change impacts was not required as it would be inconsistent with the scheme and purpose of the CMA.

Were climate change implications a permissible consideration?

The High Court had held that not only was climate change not a mandatory consideration under the CMA, it was not a permissible consideration either. The court held that the CMA, as the more specific legislation, overrode the more general permission under s 5ZN of the CCRA for decision-makers to consider climate change matters. The effect of this decision was that any Minister under the CMA who considered these matters substantively would act unlawfully.  

The majority of the Court of Appeal declined to reach a concluded view on this issue, holding that it unnecessary to decide the case.

However, in a separate judgment, Mallon J came to the opposite conclusion to the High Court. Climate change matters were a permissible consideration under the CMA – there was no limitation under that Act on what matters a Minister could consider, and there was clear intent that s 5ZN applied generally to all public decision-makers. Additionally, there would be occasions where it would be perverse for a Minister not to consider climate change when granting mineral permits, such as where New Zealand was on track to significantly exceed an emissions budget.

Result

The appeal was dismissed on all grounds.

Amendments to the CMA following the permit decision mean that this decision is of lesser relevance to the interpretation of the CMA specifically.

The broader relevance of the decision relates to its treatment of s 5ZN of the CCRA. Unfortunately, the law is left in an unsatisfactory state. Cooke J’s decision in the High Court is directly in conflict with Mallon J’s comment in the Court of Appeal. Neither decision is binding precedent on future judicial reviews in the High Court. The legal uncertainty leaves room for future litigation about the extent to which public decision-makers can factor climate change concerns into their decision-making.

For more information on this case or related issues please contact Director Brigitte Morten

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