Sun Capital Investments Pty Ltd & Anor v Westpac [2026] VSC 216

1. By summons dated 24 March 2026, Sun Capital Investments Pty Ltd and Australian Gold Capital Pty Ltd (formerly known as Gold Dealers Pty Ltd), the plaintiffs in this proceeding, seek an interlocutory injunction until the determination of the trial of the proceeding restraining Westpac Banking Corporation, 'from closing, or limiting online banking services' to two accounts held in the name of Sun Capital (Sun Capital Accounts).
2. This proceeding was commenced by writ and statement of claim on 20 February 2026. On that day, as duty judge, I heard an application by the plaintiffs for an urgent interlocutory injunction requiring Westpac to release a restraint it had placed on the Sun Capital Accounts. Westpac did not oppose that application. I made orders on 20 February 2026 requiring Westpac to release its freeze or restraint over the Sun Capital Accounts and restraining Westpac from implementing a wholesale freeze or restraint over the Sun Capital Accounts.
3. On 19 February 2026, Westpac gave written notification to Sun Capital of its intention to close the Sun Capital Accounts (Close Account Decision). On 23 February 2026, Westpac notified Sun Capital that it would cease providing Sun Capital with banking and financial services from then, with the accounts to be closed on 3 March 2026 (Cease Services Decision).
4. Pending determination of the summons, Westpac has not implemented the Close Account Decision and the Cease Services Decision (together, the Decisions).
5. In support of their summons, the plaintiffs rely on:

(a) the affidavits of Edward Menegol sworn 20 February 2026 and 24 March 2026 (respectively, the First Menegol Affidavit and the Second Menegol Affidavit). Mr Menegol is the sole director and shareholder of Sun Capital;

(b) an affidavit of Michael Kukulka sworn on 24 March 2026 (Kukulka Affidavit). Mr Kukulka is the uncle of Mr Menegol and he is the chief executive officer of the plaintiffs;

(c) an affidavit of Adrian Follacchio affirmed 31 March 2026 (Follacchio Affidavit). Mr Follacchio is a solicitor employed by DSA Law, solicitors for the plaintiffs; and

(d) their written submissions filed 24 March 2026.

1. In opposition to the summons, Westpac relies on:

(a) an affidavit of Kartik Tadepalli affirmed on 30 March 2026 (Tadepalli Affidavit). Mr Tadepalli is the managing director of business transaction banking at Westpac;

(b) an affidavit of Christopher Kerrigan affirmed on 30 March 2026 (Kerrigan Affidavit). Mr Kerrigan is a partner of Allens, solicitors for Westpac; and

(c) its written submissions filed 30 March 2026.

1. On 1 April 2026, I heard the summons, including extensive oral submissions.
2. The nature of the application before me must be borne in mind. I am not making a final determination of the issues in this proceeding, but considering whether the plaintiffs have satisfied the relevant test for obtaining an interlocutory injunction. My reasons should be read in light of that.
3. For the reasons which follow, the summons will be dismissed.

1. The following background is taken from the affidavits relied on by the parties. It is important to note that none of this evidence has, as yet, been tested by a trial.
2. Gold Dealers was incorporated in or around 2016 and trades under the business name Melbourne Gold Company. Gold Dealers conducts a business of buying gold, other precious metals and jewellery, and providing finance.[1]
3. Sun Capital was incorporated on or around 3 September 2019 by Mr Menegol as part of a restructure of the Gold Dealers business. Its purpose, according to Mr Menegol, is to provide administrative services to Gold Dealers through, amongst other things.[2]
4. Mr Menegol deposes that the plaintiffs, along with related entities of Gold Dealers, operate a national business, with nine locations across Australia (the Business). The plaintiffs do not directly employ staff, but do so through a related entity, Kam Exports Pty Ltd, which employs approximately 19 employees. He deposes that Gold Dealers generates, and Sun Capital banks on its behalf, annual revenue in excess of $100 million, generated through sales of bullion, scrap metal and precious metal storage fees.[3] A separate entity within the Business also generates revenue by loaning money against gold and silver, which are used as security for the loans. That entity holds separate bank accounts with a different bank.[4]
5. Since 27 November 2025, Sun Capital has held two accounts with Westpac.[5]
6. On or before 29 January 2026, Westpac froze the Sun Capital Accounts without prior notice to Sun Capital.[6] Upon making enquiries of Westpac, Mr Menegol was told that this was due to Westpac having received notifications from other financial institutions of a suspicious transaction involving one individual, and of multiple suspicious transactions involving another individual, that had been deposited into one of the Sun Capital Accounts.[7] Sun Capital subsequently provided information to Westpac regarding the two individuals, who were customers of the Business, and the impugned transactions.[8]
7. Correspondence then ensued between Sun Capital and Westpac, and their respective solicitors. It is not necessary for me to describe all of this correspondence: I will describe only the correspondence which is relevant to the summons.
8. On 12 February 2026, Westpac sent a letter to DSA Law (12 February Letter) which referred to the Sun Capital Accounts having been restrained. The 12 February Letter also stated, inter alia, that Westpac was conducting a full review of the banking and financial services it provided to Sun Capital as a result of the claims that led to the restraint and the risk of potential future claims and that to assist with its review, it required further information from Sun Capital (Information Request). The information requested was:
   • details of the type and purpose of business that your clients operate, including details of the business entities that facilitate payments, on behalf of your clients and their customers, and the industries each of those businesses operate in;
   • details of who at Sun Capital are the key management personnel, the beneficial owner(s) and directors directly involved in day-to-day operations;
   • the structure of the relationship between Sun Capital and Gold Dealers Exchange Pty Ltd (Gold Dealers) (and any other clients of Sun Capital), and if formalised under a contractual arrangement, please provide a copy of the contract;
   • confirmation of any licenses and/or registrations that your clients (both Sun Capital and Gold Dealers) and their key clients are required to maintain to be able to operate their business, along with a copy of any of those licenses/registrations as held by your clients;
   • a copy of the documentation held by Sun Capital and/or Gold Dealers identifying the end customer of that business and those customers' source of funds;
   • details of whether Sun Capital has banking with other financial institutions, including where the main account/s for the purposes of paying wages, rent and other day-to-day business related expenses are maintained; and
   • a detailed explanation from Sun Capital as to why Westpac has received the claims from third parties disputing the funds deposited into the Account.
9. In the 12 February Letter, Westpac requested that the information be provided by no later than 19 February 2026, given the urgency stated by Sun Capital to resolve the restraint on its accounts.
10. DSA Law responded to Westpac by letter the following day (13 February Response). Amongst other things, the 13 February Response stated:

(a) Westpac cannot request information in order to enable it to consider whether to exercise a power it has already exercised, namely the decision to restrain the Sun Capital Accounts;

(b) in truth, Westpac was seeking information as part of its broader review of the Sun Capital-Westpac relationship;

(c) Westpac had not identified a power under its terms and conditions to terminate the Sun Capital Accounts or alternatively to seek information before it so terminates; and

(d) even if Sun Capital was minded to provide the requested information, the Information Request was expressed in terms of extraordinary breadth and vagueness such that it was impossible for Sun Capital to respond, let alone by 19 February.

1. The 13 February Response then went on to state, under the heading 'moving forward':

1. Reading [the 12 February] Letter, it is clear that Westpac is reviewing its relationship with Sun Capital. If Westpac's position is that it no longer wishes to maintain the banking relationship, our clients are prepared to bring that relationship to an orderly end. In that event, Westpac should immediately remit the balance of the Accounts (less any properly identified and legally justified hold in respect of a specific transaction) by bank cheque or electronic transfer to our clients. 2. Our clients have already identified an alternative banking provider willing to conduct their business. There is no justification for Westpac to continue to retain funds well in excess of any amount said to be under review. 3. We are therefore instructed to demand that, by no later than 5.00pm on Monday,16 February 2025, Westpac confirm whether it will:

1. Lift the wholesale freeze and restore full operation of the Accounts (subject only to any properly identified and contractually justified restriction in respect of a specific transaction); or 2. Bring the banking relationship to an end and remit the balance of the Accounts in the manner set out above.
2. The reference to alternative banking services in paragraph 7 of the 13 February Response is a reference to ANZ Bank. In the Second Menegol Affidavit, Mr Menegol deposes that on about 10 February 2026, Sun Capital opened two business accounts with ANZ, which were intended to enable it to transition part of its banking activities away from Westpac.[9] As it later turned out, on about 26 February 2026 ANZ froze those accounts without prior written notice or explanation.[10] On 24 March 2026, ANZ wrote to Sun Capital and said that it had decided to end its banking relationship with Sun Capital and close the accounts.[11]
3. On 17 February 2026, DSA Law sent an email to Allens stating that Sun Capital has alternative banking arrangements available and is prepared to transfer its business elsewhere, and repeated the two options referred to in paragraph 8 of the 13 February Response.
4. On 19 February 2026, Allens wrote to DSA Law to advise that Westpac had reviewed its banking relationship with Sun Capital and has determined that it intends to close the Sun Capital Accounts, and that Westpac would write separately to Sun Capital in relation to ceasing its provision of banking and financial services to it. That letter referred to clause 20 of the relevant terms and conditions (I will set the relevant contractual provisions out later).
5. On 23 February 2026, Westpac wrote to Sun Capital, notifying it that Westpac had decided to cease providing Sun Capital with banking and financial services from 23 February 2026 and that the Sun Capital Accounts would be closed and online banking services removed on 3 March 2026.
6. Exhibited to the Second Menegol Affidavit is a draft amended statement of claim (Draft ASOC) which, inter alia, reflects amendments to make allegations and claims regarding the Decisions.
7. Other entities and people associated with Sun Capital also hold accounts with Westpac, including (Other Westpac Customer Entities):[12]

(a) KAM Exports;

(b) Australian Gold Capital Holdings Pty Ltd;

(c) Mr Menegol; and

(d) Mrs Margaret Kukulka, Mr Menegol's sister who is also employed by Datacom Communications Pty Ltd, a related company which provides services to the plaintiffs.

1. On 27 February 2026, Westpac notified by letter Mr Menegol that it had decided to close the bank accounts held personally in his name. The letter stated that Westpac made its decision '[a]s a result of a recent review' of Westpac's 'policies, procedures and services that we provide to our customers'.[13]
2. On 6 March 2026, Westpac issued three letters which notified Mrs Kukulka, KAM Exports and Australian Gold Capital that it intended to close their bank accounts. In each of those letters, the same explanation as outlined at paragraph 27 above was given as the reason for the accou[14] closures.14
3. The summons only seeks to restrain Westpac from closing the Sun Capital Accounts until determination of the trial, although the plaintiffs have indicated that they may seek to join the Other Westpac Customer Entities as plaintiffs to this proceeding and amend their statement of claim. The Draft ASOC does not contain those anticipated amendments, and had not been filed as at the date of the hearing of the summons, given the likelihood of it being further amended to deal with the Other Westpac Customer Entities. It was common ground between the parties that for the purposes of dealing with the summons, in particular when analysing whether there was a serious question to be tried, the relevant pleading was the Draft ASOC. In summary, by the Draft ASOC, the plaintiffs seek permanent injunctions restraining Westpac's closure of the Sun Capital Accounts and damages for breach of contract. The Decisions are alleged to have been made in breach of Westpac's contract with Sun Capital.

1. The legal principles in relation to whether the Court should grant an injunction are well-known and not in dispute.
2. In Australian Broadcasting Corporation v O'Neill,[15] the High Court said that in order to grant an interlocutory injunction, the Court looks to whether the applicant for the injunction has shown a serious question to be tried as to their entitlement to relief, whether the applicant is likely to suffer an injury for which damages will not be an adequate remedy, and whether the balance of convenience favours the grant of the injunction.[16]
3. In relation to the balance of convenience, the Court of Appeal in Bradto v State of Victoria,[17] said that the Court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been wrong, in the sense of granting an injunction to a party who fails to establish his right at the trial or in failing to grant an injunction to a party who succeeds at trial.[18]
4. Both parties referred to the recent summary by Nichols J of the principles concerning the grant of interlocutory injunctions in In the matter of Cryptai Pty Ltd (No 2), as follows:[19]

(a) An applicant for an interlocutory injunction must show that there is a serious question to be tried by making out a prima facie case in the sense of demonstrating that there is a sufficient likelihood of success at trial to justify the preservation of the status quo pending the determination of the parties' rights at trial, in the circumstances. This does not mean that the applicant has to establish that it is more likely than not that it will succeed at trial. How strong the probability needs to be depends upon the nature of the rights asserted and the practical consequences likely to flow from the relief sought.

(b) The applicant must also establish that the balance of convenience favours the granting of an injunction. The Court should take whichever course appears to carry the lowest risk of injustice, should it turn out to have been wrong in the sense of granting an injunction to a party who fails to establish its right at trial or failing to grant an injunction to a party who succeeds at trial.

(c) Incorporated within the consideration of 'balance of convenience', or sometimes considered as a separate matter, is the question whether damages would be an inadequate remedy, were the injunction refused. One must also consider the adequacy of the applicant's undertaking as to damages. There is no inflexible rule that the plaintiff should be denied interlocutory relief unless it can give a meaningful undertaking, but the adequacy of the undertaking will be a relevant factor to be taken into account in weighing the balance of convenience, particularly in cases involving the protection of commercial interests.

(d) These principles are not to be applied in isolation from one another, but must be considered together. In considering where the lower risk of injustice lies, all relevant factors are to be weighed in the balance. The strength of the applicant's case and their chances of success may be a relevant matter when assessing the balance of convenience.

1. Thus two questions must be answered: is there a serious question to be tried; and does the balance of convenience favour granting the interlocutory injunction.

1. The banking relationship between Sun Capital and Westpac is governed by a contract whose terms include the document 'Deposit accounts for business customers Terms and Conditions' (Terms and Conditions). Westpac provides and has provided online banking services to Sun Capital pursuant to the Terms and Conditions and also the 'Online Banking Terms and Conditions' (Online T&Cs).
2. The clauses in the Terms and Conditions which are relevant to the summons are set out below:

20. How to close your account

...

We may also exercise our discretion to close accounts ... or refuse to accept further deposits or allow further withdrawals after giving reasonable notice to you (and, we may also notify the authorised signatory/signatories) due to unsatisfactory conduct or where your account is designed for use by our business customers and is being used for personal purposes.

In certain circumstances we may do any of the above without providing you with any prior notice. When we do so, we will act fairly and reasonably towards you. These circumstances may include:

• you do not provide us with any document or information we reasonably request from you;

• we reasonably consider it necessary to comply with our policies, Australian law or sanctions (or the law or sanctions of any other country); or

• to comply with our regulatory and compliance obligations or to manage associated risk.

...

52. Reasonableness

We will act fairly and reasonably in accordance with our legitimate business interests in exercising our rights and discretions under these terms and conditions.

1. Thus clause 20 provides for two circumstances in which Westpac can close an account by giving notice to the customer: (1) due to unsatisfactory conduct by the customer; or (2) where the account is a business account and the customer has used it for personal purposes. Neither of these circumstances are relevant in this case. Clause 20 then goes on to state three circumstances in which Westpac can close an account without giving any prior notice to the customer but if it takes that course, it will act fairly and reasonably towards the customer. Those circumstances are: (3) the customer does not provide information or documents reasonably requested by Westpac; (4) Westpac reasonably considers it necessary to comply with our policies, Australian law or sanctions (or the law or sanctions of any other country); or (5) to comply with Westpac's regulatory and compliance obligations or to manage associated risk.[20]
2. When Allens wrote to DSA Law on 19 February 2026 advising Sun Capital of the Close Accounts Decision, it referred to clause 20 of the Terms and Conditions as cited clauses 20(3), 20(4) and 20(5).

D.2 The plaintiffs' allegations in the proceeding which are relevant to the summons

1. The plaintiffs allege that by the Decisions, Westpac has breached clause 20 and clause 52 of the Terms and Conditions, and the duties of cooperation and good faith. Although it is yet to file a defence, it is apparent that Westpac disputes these allegations.
2. In particular, the plaintiffs allege that:

(a) The five circumstances described in clause 20 are the only circumstances in which Westpac could close the Sun Capital Accounts.[21] The allegation that these are the only circumstances was not the subject of argument at the hearing.

(b) It was a term of the contract that Westpac would exercise the power to close the Sun Capital Accounts in the circumstances described in clause 20 only:

(i) in good faith, via an implied term; and

(ii) acting fairly and reasonably in accordance with Westpac's legitimate business interests, via clause 52.[22]

(c) Westpac does not have any business that is 'legitimate' (for the purposes of clause 52) in restraining or closing accounts without:[23]

(i) forming an opinion on reasonable grounds that the restraint [or closure] was reasonably necessary to enable Westpac to meet its regulatory and compliance obligations or to manage associated risk; and

(ii) informing Sun Capital that it had formed any opinion (reasonable or otherwise) that the restraint [or closure] was reasonably necessary to enable Westpac to meet its regulatory and compliance obligations or to manage associated risk.

(d) At no time prior to making the Decisions did Westpac:

(i) form a reasonable opinion that the closure of the Sun Capital Account was necessary to comply with its policies, Australian law or sanctions (or the law or sanctions of any other country);[24]

(ii) inform Sun Capital that it had formed that reasonable opinion;[25]

(iii) give Sun Capital any opportunity to deal with, and respond to, any opinion that it was allegedly reasonably necessary to close the Sun Capital Accounts to comply with Westpac's policies, Australian law or sanctions (or the law or sanctions of any other country).[26]

(e) By reason of the matters in (c) and (d) above, Westpac did not act:[27]

(i) fairly and reasonably;

(ii) further or in the alternative, with its legitimate business interests;

(iii) further or in the alternative, in good faith.

(f) Westpac's making of the Decisions was a breach of the terms set out in (a) and/or (b) above.[28]

(g) If Westpac was to close the Accounts pursuant to either Decision, Sun Capital will suffer irreparable loss and damage.[29] The particulars of this allegation are that:

(i) the nature of the plaintiffs' Business is such that it is only possible for them to bank with a 'big four' bank, and none of the other 'big four' banks provides banking facilities to them; and

(ii) the Sun Capital Accounts are an integral part of the Business and are required in order to run the Business.

1. At this juncture, it should be noted that there is no suggestion that Gold Dealers has a contract with Westpac or is a customer of Westpac alongside Sun Capital in respect of the Sun Capital Accounts. How the plaintiffs put a case on behalf of Gold Dealers is somewhat opaque. When the question of Gold Dealer's standing was mentioned by Westpac at the hearing, the response was that Gold Dealers had standing due to it, Sun Capital and other entities in the group, operating the Business.

D.3 Westpac's evidence regarding the Decisions

1. The Tadepalli Affidavit contains the evidence relied upon by Westpac regarding the Decisions, including the background to them and Westpac's reasons for reaching the Decisions.
2. I summarise that evidence below.
3. The business and transaction banking team at Westpac sits within the Business and Wealth Division, which also has a financial crime unit (BW Financial Crime team) that monitors financial crime issues and incidents and high risk areas for the Business and Wealth Division.[30]
4. Mr Tadepalli deposes that Westpac operates in a highly regulated environment and that as a reporting entity that provides designated services under the Anti-Money Laundering and Counter-Terrorism Funding Act 2006 (Cth) (AML/CTF Act) and Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No 1) (AML/CTF Rules), Westpac must have policies and procedures to identify, mitigate, and manage money laundering and terrorism financing (ML/TF) risks that it may reasonably face, using a risk-based approach.[31]
5. Mr Tadepalli deposes that Westpac must also have a and comply with Part A and Part B of its AML/CTF program. The AML/CTF Act requires that:

(a) the primary purpose of a Part A program is to identify, mitigate and manage the risk Westpac may reasonably face that is provision of designated services might (even inadvertently) involve or facilitate ML/TF; and

(b) the sole or primary purpose of a Part B program is to set out Westpac's applicable customer identification procedures.[32]

1. As part of its assessment of the ML/TF risk involved in its provision of designated services, Westpac considers, among other things, the risks associated with its customer base, including factors such as percentage of high risk rated customers and jurisdictions.[33] Westpac considers that gold bullion dealers present higher ML/TF risks (and is therefore considered to be in a higher risk industry) because:

(a) the gold bullion market is cash intensive;

(b) there is a high degree of anonymity in gold bullion trading;

(c) gold is attractive to criminals due to its high value compared to its relative size, weight and ease of transport;

(d) gold can be used as a form of currency globally and function as a medium of exchange in most areas of the world; and

(e) there is a lack of visibility of a gold bullion dealer's underlying customers' identities and transactions. [34]

1. For customers that Westpac assesses to be in a higher risk industry, it:

(a) conducts additional due diligence;

(b) collects and assesses additional information about the customer;

(c) assesses the risks of the products and services the customer holds;

(d) considers, where applicable, whether any special considerations (e.g. additional controls) are required; and

(e) obtains approval from senior management or their delegate in the division that owns the customer relationship to onboard and/or retain the customer. [35]

1. Under the AML/CTF Rules, Westpac is required to apply enhanced customer due diligence when it determines under its risk-based systems and controls that the ML/TF risk is high. This is also reflected in Westpac's approach to identifying, mitigating and managing ML/TF risks.[36] The purpose of conducting this enhanced customer due diligence is to determine whether to retain the customer, or retain the customer with additional controls, or exit the customer when Westpac understands the ML/TF risks cannot be sufficiently mitigated.[37]
2. Decisions whether to cease the banking relationship with a customer are informed by Westpac's ability to manage the ML/TF risks posed by certain customers based on Westpac's risk assessment, existing procedures and controls, access to relevant information, and whether the customer's activities fall outside the level of risk Westpac is able to accept.[38]
3. Where Westpac cannot complete enhanced customer due diligence due to a lack of information, it cannot implement additional controls to manage a customer with a high ML/TF risk, as it is unable to understand the customer's business and whether the customer's current controls are sufficiently tailored to risks in that business and operating effectively.[39]
4. The BW Financial Crime team reviews and makes decisions to retain or cease a banking relationship with a customer for the Business and Wealth division based on their ML/TF Risk.[40]
5. Mr Tadepalli deposes that he was kept updated by the Head of the BW Financial Crime team as to the reviews and decisions involving Sun Capital, including through written and verbal updates.[41]
6. Mr Tadepalli deposes that the restraint on the Sun Capital Accounts was imposed due to transactions which had been identified as potential scam funds.[42] These are the transactions referred to in paragraph 15 above. In response to this, Westpac took the following steps:

(a) the Major Investigations (MI) team within the Financial Crime Surveillance and Risk division commenced a customer risk assessment on Sun Capital (MI Case Review), which is an assessment of the financial crime risk posed to Westpac by a customer and is an input into the Head of the BW Financial Crime's decision whether to retain or terminate a customer relationship;[43]

(b) to perform this customer risk assessment, the MI team conducts enhanced customer due diligence and prepares a case review of the customer based on information relating to it, including transactional history, internal searches, open source media, and other reporting. The MI team provides the information so that a decision can be made about whether Westpac should retain the customer.[44]

1. In parallel to these steps, the Head of the BW Financial Crime team commenced a review of Sun Capital and made the Information Request in the 12 February Letter, so that, depending on the customer's responses, Westpac could determine if there were other requirements under Westpac's policies (such as whether Sun Capital was operating within a higher risk industry) that would require Westpac to undertake further steps. Sun Capital refused to provide a response to the Information Request, and also told Westpac that it was prepared to bring the banking relationship to an orderly end.[45]
2. On 16 February 2026, the Head of the BW Financial Crime team told Mr Tadepalli that after making their own preliminary inquiries and subject to the outcome of the MI Case Review, the team was minded to decide to cease the banking relationship with Sun Capital. Mr Tadepalli deposes that the Head of the BW Financial Crime team told him that the team had formed the view that Sun Capital fell outside of Westpac's risk appetite and that Westpac was unable to comply with its regulatory and compliance obligations or manage associated risk with Sun Capital for the following reasons:[46]

(a) The transaction review performed by the MI team indicated that Sun Capital was not just providing administrative services, but they were conducting transactions on the Accounts in connection with the buying and selling of gold bullion. ... This caused Head of the BW Financial Crime team concern in circumstances where Westpac was aware of third party claims in close proximity to the Accounts first becoming active in November 2025. The Head of the BW Financial Crime team formed the view that because Sun Capital was involved in some way in the buying and selling of gold bullion, Sun Capital should maintain a AML/CTF Program, which should set out the controls that Sun Capital implements to identify, mitigate and manage ML/TF risks, including those that were the subject of third party claims. The Head of the BW Financial Crime team was concerned that Sun Capital had refused to provide Westpac with a copy of its AML/CTF Program, together with any details about its licences and registrations.

(b) The Head of the BW Financial Crime team formed the view that Sun Capital was, in fact, being operated by Michael Kukulka, meaning that the relationship between Sun Capital and Gold Dealers Exchange was not an arms' length commercial relationship. In particular, Tanya Kukulka (who shares the same residential address as Michael Kukulka) was conducting regular outbound transactions on the Sun Capital account. In addition, the beneficial owner and signatory of the Accounts, Edward Menegol, had the characteristics of a 'straw director'. A 'straw director' is a reference to director of a board who acts as a figurehead, obscuring the true operators or controllers of the business. The Head of the BW Financial Crime team formed the view that Edward Menegol was a 'straw director' because:

(i) an open source media article from 2024 quoted Michael Kukulka as referring to Sun Capital as 'his business'. ...; and

(ii) the transactions on the account were being predominantly made by Tanya Kukulka, and not Mr Menegol. ...

(c) That the Accounts had a close connection to Michael Kukulka was concerning because Michael Kukulka was a previous Westpac customer whose banking relationship with Westpac was ceased in 2013, and again in 2016. Mr Kukulka was also the subject of adverse media reports in 2020 in the Age and the Sydney Morning Herald (SMH). The articles related to concerns held by Victoria Police on Michael Kukulka's dealings in the gold bullion industry, in which Victoria Police identified more than $6 million in irregular transactions in a bank account linked to his business, although no charges were laid. It was also alleged in the media reporting that, over police objections, Mr Kukulka's application to reopen a strip club was approved by the Victorian Commission for Gambling and Liquor Regulation. ...

(d) There were third party claims in relation to one of Sun Capital's accounts, which Westpac received shortly after the account became active. Third party claims expose Westpac to heightened risks due to litigation risk and also under the incoming Scams Prevention Framework ..., which, among other things, will introduce obligations on banks and participants in certain other sectors to take reasonable steps to prevent, detect, disrupt, report and respond to scam activity, with associated liability where they fail to do so. These new obligations are expected to come into effect on 1 July 2026.

1. On 18 February 2026, the MI team informed the BW Financial Crime team of the findings of the MI Case Review.[47] The findings from the review was that given the totality of evidence identified by the MI team, it recommended that Sun Capital be exited as a customer in circumstances where Westpac's relationship with Sun Capital posed an unacceptable ML/TF and reputational risk to Westpac.[48]
2. Following the receipt of the MI Case Review, on 18 February 2026, the Head of the BW Financial Crime team responded to the MI team and confirmed the decision to cease the banking relationship with Sun Capital and associated entities.[49] In her email (18 February Email), the Head of the BW Financial Crime team stated the rationale for the decision as follows:
   • the relationship between Sun Capital and Gold Dealers Exchange is not an arm's length commercial relationship and is related to previously exited party Michael Kukulka and his gold bullion's business where we had AML concerns.
   • Michael Kukulka (previously exited) is not a party to the Sun Capital account however we reasonably believe him to be involved in the business as the Tanya Kukulka (likely wife) with active 3rd Party access has the same last name and resides at the same address.
   • BO/Director of Gold Bullion Exchange also has same last name and same address.
   • In the AFR report regarding litigation against NAB, it is reported that Sun Capital is Michael Kakulka's company. ...
   • The BO and director of Sun Capital EDWARD JOSEPH MENEGOL has characteristics of a straw director.
   • we can reasonably deduce from the litigation against NAB that there was high risk conduct and likely reporting to AUSTRAC.
   • Kukulka has been was subject to adverse media by The AGE and SMH in 2020 regarding Vic Police's concerns on his dealings in gold bullion which were made public when in 2020 the Licensing Inspector opposed an application by Mr Kukulka to reopen strip club Showgirls Bar - he obtained the licence and no charges were laid. ...
   • Notwithstanding the family's long history in the gold bullion industry, it is high risk for AML/CTF and a platform for scammers which exposes Westpac to heightened risk including under the upcoming SPF and we have already seen 3rd party claims in the two months since the account became active. The veracity of one claim is established and the timing of the second in relation to acc restrictions is being tested.
   • the customer falls into the High-Risk Industry framework. They have refused to answer our questions about their business model and licences. We would expect them to be a reporting entity to AUSTRAC given Sun Capital is receiving and making payments for the purchase of gold bullion from their account.
3. Embedded links to copies of the media articles referred to above were included in the email, and copies were exhibited to the Tadepalli Affidavit.
4. Mr Tadepalli deposes that he supported the decision made by the Head of the BW Financial Crime team.[50]
5. He also deposes that following the decision, he was informed by the Head of the BW Financial Crime team that they became aware of the circumstances in which Mr Kukulka had previously been exited as a customer in 2013, which were that there had been multiple instances of aggressive behaviour in Westpac branches, requiring police involvement on at least one occasion. The banking relationship was again ceased in 2016 following a review which identified that his profile had not been closed correctly.
6. Mr Tadepalli deposes that the timing of ceasing the banking relationship was due to Westpac's concern that the ongoing use of the Sun Capital Accounts as a result of the interim orders may expose it to risks, including the risks of further third party claims and the association with Mr Kukulka.[51]
7. Mr Tadepalli deposes that he believes that:

(a) continuing to provide banking services to Sun Capital, due to Sun Capital operating in the gold bullion sector which Westpac has assessed as high risk, involves significant operational risks and costs for Westpac which are associated with having to apply increased monitoring over customers with high ML/TF risk ratings and implementing additional controls above Westpac's existing controls framework;[52]

(b) the level of risk posed by Sun Capital is outside of Westpac's risk appetite;[53]

(c) maintaining Sun Capital as a customer presents a level of risk that Westpac cannot sufficiently mitigate and manage based on its existing systems and controls, placing Westpac at risk of non-compliance with the AML/CTF Act and Rules and regulatory enforcement action including the imposition of penalties;[54] and

(d) ceasing the banking relationship with Sun Capital is necessary in order for Westpac to comply with its regulatory and compliance obligations and to sufficiently mitigate and manage the ML/TF risks and other associated risk.[55]

1. The plaintiffs must show that there is a serious question to be tried that in making and seeking to act on the Close Account Decision, Westpac has breached its contract with Sun Capital. The plaintiffs contend that given the form of the interlocutory injunction sought, being to injunct Westpac from closing the Sun Capital Accounts, they need to establish a serious question to be tried on the Close Account Decision.
2. Before turning to the parties' submissions, there is one other aspect I want to explain.
3. At the time that the plaintiffs filed their affidavits (except the Follacchio Affidavit) and written submissions, they did not have Westpac's submissions and affidavits or a detailed explanation as to Westpac's reasons for the Close Account Decision.
4. The plaintiffs' written submission was directed towards the circumstance in clause 20(4). They submit that Westpac must form a reasonable opinion that it is necessary to close the Sun Capital Accounts, which they define as a Reasonable Opinion of Necessity, to comply with its policies, Australian law or sanctions (i.e. clause 20(4) before taking a decision to close the Accounts, and that to do otherwise would be a breach. The plaintiffs' written submission then builds on that Reasonable Opinion of Necessity in a number of ways.
5. However, it is apparent from Westpac's affidavits and written submission that it relies on the circumstances in clause 20(5), not the circumstance in clause 20(4). Thus the plaintiffs' oral submission at the hearing were directed towards clause 20(5). During the hearing, I asked the plaintiffs' counsel whether it still relied upon its written submission, particularly in respect of the Reasonable Opinion of Necessity, in light of Westpac's submission, counsel said yes they did.

D.5.1 The plaintiffs' submissions regarding the terms of the contract

1. The plaintiffs submit that there are three reasons why Westpac is required to have formed a Reasonable Opinion of Necessity before it can close the Sun Capital Accounts pursuant to clause 20(5). These are:

(a) First, on a proper construction of clause 20(5), formation of a Reasonable Opinion of Necessity is required. Proof is required that Westpac in fact acted 'to comply with our regulatory and compliance obligations', that is, Westpac must show that the reasons it closed the Sun Capital Accounts were 'to comply with' its regulatory and compliance obligations. When read with clause 20(4), clause 20(5) points to the necessity for the reasons for closure to have some correlation with or to be motivated by regulatory and compliance obligations.

(b) Second, clause 52 requires Westpac to have acted fairly and reasonably. When clause 20(5) is read with clause 52, Westpac must form a Reasonable Opinion of Necessity before closing the Sun Capital Accounts. It also requires Westpac to have had a reasonable opinion so that it had legitimate business interests in closing the accounts for those reasons.

(c) Third, a Reasonable Opinion of Necessity is required in order for Westpac to comply with its duty to act in good faith. That duty requires Westpac to have had a reasonable opinion and not an unreasonable opinion that it was necessary to close the Sun Capital Accounts to comply with its regulatory and compliance obligations. The plaintiffs submit that there is an implied duty to exercise contractual powers in good faith,[56] and that this duty was breached in this case. In particular, the plaintiffs rely on the statement by Parker J in Human Appeal International that:

The existence of an obligation to exercise contractual powers in good faith (and, it is sometimes added, reasonably) is well recognised. In the leading authorities in this State, it is seen as deriving from an implication to that effect as a term of the contract. This, of course, would mean that the implication could be excluded by an express term to the contrary.[57]

1. In relation to (c) above, the plaintiffs submit that even if, contrary to their submissions, a Reasonable Opinion of Necessity is not required for clause 20(5) and even if Westpac does not have to prove that the reasons it actually relied upon were reasons of ensuring that Westpac complied with its regulatory obligations, then Westpac would still have to show that whatever reasons it did have to close the Sun Capital Accounts are reasons that it can act upon in having a legitimate business interest. In this regard, the Tadepalli Affidavit refers to Westpac's concern about its reputational risk, which the plaintiffs submit that Westpac does not have a legitimate business interest in closing the accounts for reasons as generalised as protecting its reputational risk. The plaintiffs also submit that it would be a breach of clause 20 for Westpac to close the Sun Capital Accounts because it was practical, cost-effective or efficient for it to do so to avoid it having to carry out assessment procedures.
2. The plaintiffs submit that it would be a breach of Westpac's obligation in clause 52 of the Terms and Conditions not to exercise its rights under clause 20 to close the Sun Capital Accounts without first having:

(a) formed a Reasonable Opinion of Necessity;

(b) informed Sun Capital of that Reasonable Opinion of Necessity (or, at least, to attempt to inform Sun Capital of as much of that reason as the law permits);

(c) given Sun Capital an opportunity to respond to that information; and thereby

(d) acted fairly and reasonably in accordance with Westpac's legitimate business interests in so doing.

1. The plaintiffs submit that there is a serious question to be tried in respect of all of the matters of contractual construction raised above.
2. The plaintiffs also submit that to provide banking services fairly and reasonably, Westpac must carry out those systems of customer-specific risk assessment management that the law requires Westpac to carry out. In particular, the provision of banking services fairly and reasonably requires Westpac to perform AUSTRAC's clear, and publicly-stated, expectation of assessing and understanding any risks in respect of each customer, and only closing customer accounts by reason of any ML/TF risk in the event that Westpac has an objectively reasonable opinion that those customer-specific risks have been substantiated.

D.5.2 The plaintiffs' submissions regarding breach of the terms of the contract

1. The plaintiffs submit that there is a serious question to be tried that, were Westpac not to be enjoined from doing so, it intends to cancel the Sun Capital Accounts for reasons other than to comply with its regulatory and compliance obligations or to manage associated risk and without having formed a Reasonable Opinion of Necessity. Therefore there is a serious question to be tried that the intended closure of the Sun Capital Accounts will constitute breaches by Westpac of its contract with Sun Capital.
2. Apart from construction issues, much of the plaintiffs' written submission regarding breach of the contract is based on arguments about what they assumed Westpac's reasons for the Close Account Decision were, which were drawn from the limited reasons given in correspondence prior to the provision of Westpac's affidavits and written submission. The correspondence from Westpac and/or Allens on the reasons did not contain much more than a recitation of the relevant clauses from the Terms and Conditions. The plaintiffs submit that the evidence supports an inference that Westpac sought to close the Sun Capital Accounts by reason of Westpac's policy decision not to bank with particular, but unspecified and undisclosed, customer categories. Referring to the evidence that Westpac has written to other individuals or entities in the group that it intends to close their account,[58] the plaintiffs submit that Westpac made the Close Account Decision not on the basis of some individualised, particularised and thus rational concern but because of a policy preference to no longer do business with Sun Capital and those associated with it. Thus the plaintiffs' written submission contended that there is a serious question to be tried that Westpac's apparent decision not to carry out the specific risk management measures required by the AML/CTF Act and AUSTRAC's guidance, but to instead minimise risk-management costs by debanking customers for largely unspecified, vague and highly generalised reasons, is a breach of the duty of good faith and the requirement in clauses 20 and 52 to act fairly and reasonably and the requirement in clause 52 to exercise contractual rights only for legitimate business reasons.
3. The plaintiffs did not resile from this position in their oral submission. However, they made a number of submissions about the adequacy (or otherwise) of Westpac's material and position in respect of its reasons for the Close Account Decision, which I will summarise now.
4. The plaintiffs submit that there is a serious question to be tried that Westpac's reasons for making the Close Account Decision, as set out in the Tadepalli Affidavit, are reasons for closing the Sun Capital Accounts that Westpac is entitled to act upon.
5. They also submit that there is a serious question to be tried regarding the evidence Westpac has adduced to establish the reasons it decided to close the Sun Capital Accounts. In particular, the plaintiffs hone in on the evidence given at paragraph 37 of the Tadepalli Affidavit where he deposes:

The MI Case Review concluded that, given the totality of information identified by MI, MI recommended that Sun Capital be exited as a customer in circumstances where Westpac's relationship with Sun Capital posed an unacceptable ML/TF and reputational risk to Westpac.

1. The plaintiffs submit that this evidence is so vague that the Court cannot be satisfied that Westpac's relationship with the plaintiffs posed an unacceptable ML/TF risk and reputational risk to Westpac. The plaintiffs submit there are three reasons why that is the case:

(a) There is a serious question to be tried whether that paragraph is an accurate summary of the document, MI Case Review, referred to there. Westpac has not produced this document. The plaintiffs submit that it was incumbent on Westpac to produce the MI Case Review document as Mr Tadepalli's evidence does not show that he read that document.

(b) The evidence given at paragraph 37 raises more questions than it answers, such as, what kinds of 'reputational risks' is Mr Tadepalli referring to? Is he referring to the reputational risk of Westpac being found not to have sufficiently robust mismanagement systems in place so that it could in fact run Part A of its AML/CTF program? Or is he referring to the reputational risk of having its systems being shown not to be capable of ensuring that Westpac is compliant with its regulatory obligations? The plaintiff also submits that the vagueness of paragraph 37 is not cured by the production of the MI Case Review document.

(c) Mr Tadepalli's evidence does not expressly state whether it is Sun Capital or Gold Dealers that gives rise to the ML/TF risks. The plaintiffs submit that it is Westpac's relationship with Sun Capital that posed the unacceptable ML/TF and reputational risk to Westpac and that this allegation is a serious one. Consistently with Briginshaw,[59] Westpac needed to provide particulars and not merely allude to an unacceptable ML/TF risk or some reputational risk. Instead, in the absence of particulars, the plaintiffs contend that the evidence is so vague that this Court cannot safely put weight upon it.

1. Similarly, the plaintiffs submit that the evidence at paragraph 39 of the Tadepalli Affidavit (set out at paragraph 56 above) requires a descent into the actual details of the evidence at trial. The plaintiffs refute each of the matters identified in that paragraph, submitting that:

(a) The reason in sub-paragraph (a) is not enough to satisfy clause 20(5) when read with clause 52 and the good faith obligations. This is because:

(i) there is no evidence that an ML/TF risk arises just because a company is buying and selling gold bullion; and

(ii) the content of that sub-paragraph, like the other sub-paragraphs, is similar to the content of the 18 February Email, and there is no evidence that the transaction review performed by the MI team indicated that Sun Capital was not just providing administrative services, but were conducting transactions on the accounts.

(b) The reason in sub-paragraph (b) is also insufficient. There is no evidence from Mr Tadepalli that an ML/TF risk arises whenever a relationship between a customer (Sun Capital) and another entity (Mr Kukulka, or Gold Dealers) is found not to be at arm's length or a commercial relationship.

(c) The reason in sub-paragraph (c) is insufficient as there is no evidence that Westpac's banking relationship with Mr Kukulka ceased by reason of an ML/TF risk and further, no evidence that it ceased because that ML/TF risk was capable of infecting his related entities 10 years later. Mr Tadepalli refers to and relies upon media articles regarding Mr Kukulka, but those media articles are an insufficient basis for the Close Account Decision and, indeed, do not support Westpac's contentions. Further, the material in the Tadepalli Affidavit referred to at paragraph 61 above is hearsay and given without identifying the source of it, so should be given limited weight, and it is indicative of the ways in which Westpac has identified ML/TF risks without the kind of rigor that it should have applied, and the contents of that paragraph infect sub-paragraph (c).

(d) The third party claims referred to in sub-paragraph (d) do not provide a sufficient reason to close the Sun Capital Accounts. There is extensive evidence about those transactions in the First Menegol Affidavit. Westpac needed to grapple with what it was about those third party claims and Sun Capital's responses regarding them that means there is in fact an ML/TF risk arising from those claims. It did not.

1. By that submission, the plaintiffs also dealt with what they say are the inadequacies of the 18 February Email as reasons for the Close Account Decision. In addition, they refer to the final dot point (see paragraph 58 above) about Sun Capital refusing to answer Westpac's questions. They acknowledge that it is correct that the plaintiffs were provided with the Information Request and that they refused to respond to it, but say that this dot point is not a fair or accurate statement of how the plaintiffs engaged with Westpac, and that Westpac would have known that. Senior Counsel for the plaintiffs submitted that Westpac knew that the reasons why Sun Capital had not responded were because it considered there to be defects in the Information Request. When I put to Ms O'Gorman SC that I did not consider that to be a fair characterisation of the 13 February Response, the position stated was that in its full context, that refusal cannot give rise to a specific ML/TF risk.
2. The plaintiffs contend that there are no details of Westpac conducting a customer transaction profile review as a result of enhanced customer due diligence or the results of such reviews or due diligence. Specifically, there are no details of particular transactions (apart from the two which led to the initial restraint on the Sun Capital Accounts in late January 2026). The plaintiffs contrast this with the type of particulars given of the ML/TF concerns in Merciful Group Incorporated v Norfina Limited (t/as Suncorp Bank).[60]
3. The plaintiffs submit that because Westpac did not identify the actual specifics of its reasons, it has not been able to prove that there is no serious question to be tried that it closed the Sun Capital Accounts to comply with its regulatory and compliance obligations. Westpac needs to prove that there is not a forensic argument for trial, including by cross-examination of the decision-maker or review of the MI Case Review report which has not been produced. The evidence in the Tadepalli Affidavit is not enough for Westpac to prove that there is no serious question to be tried.
4. Further, the plaintiffs contend that by Westpac adducing evidence only of this vague kind, it has sought to make itself immune from an injunction because it can simply adduce evidence of the vague kind which is not examinable by the plaintiffs on an injunction and then contend that there's no serious question to be tried as to whether those reasons were in fact the reasons Westpac had for closing the Sun Capital Accounts.
5. The plaintiffs submit that they have established that there are serious questions to be tried, being:

(a) whether the evidence actually supports the contentions in the 18 February Email and at paragraphs 37 to 39 of the Tadepalli Affidavit;

(b) whether, even if the Court accepts that evidence at trial, that evidence is capable of giving rise to and falling within the bounds of clause 20(5);

(c) whether, even if the plaintiffs fail on (a) and (b) above, those matters constitute a breach of clause 20(5) when it is read with clause 52, or a breach of clause 52 as a standalone obligation, or a breach of the implied duty of good faith.

1. The plaintiffs contend that these issues are only capable of being determined after a full trial.

1. Westpac submits that there is no serious question to be tried.
2. Westpac submits that its power to close accounts under clause 20(5) is enlivened where Westpac is managing risk associated with its regulatory and compliance obligations. That is the management of the risk associated with Westpac complying with those obligations. Westpac submits that the evidence shows that it made the decision to close the Sun Capital Accounts to manage risk associated with its regulatory and compliance obligations.
3. To establish a serious question to be tried, the plaintiffs would need to establish a sufficient likelihood of proving that Westpac acted unfairly and unreasonably towards them in connection with that decision. In terms of construing that proviso, the fact that accounts can be closed in the circumstances set out in clauses 20(3), (4) and (5) without notice to the customer is relevant to construing what fair and reasonable means. Being required to act fairly and reasonably 'towards you' (i.e. the customer) is important language as it qualifies what acting fairly and reasonably means. Read fairly in context, it is plainly speaking about the bank not being unfair or unreasonable in how it goes about the account closure, that is, the process of closing the account. It does not admit of a construction that the decision or the reasons for the decision must be objectively fair or reasonable.
4. Westpac submits that when the Reasonable Opinion of Necessity gloss is put to one side, the plaintiffs have not pointed to any unfairness or unreasonableness in the processes followed by Westpac in exercising its discretion to close the Sun Capital Accounts. Westpac promptly notified Sun Capital of its decision to close the accounts and acted reasonably in releasing the funds from the accounts. Further, when clause 20 is read in light of clause 52 of the Terms and Conditions, it is plain that the requirement to act fairly and reasonably does not require Westpac to disregard or subjugate its legitimate business interests (which must include Westpac taking steps to manage risk associated with its regulatory and compliance obligations).
5. Westpac rejects the plaintiffs' submission that it would be in breach of clause 20 if it closed the Sun Capital Accounts because it was 'practical, cost-effective or efficient' for Westpac to close those accounts to avoid it having to carry out assessment procedures. Westpac submits that the proviso that Westpac act fairly and reasonably towards Sun Capital cannot extend to requiring Westpac to continue offering banking services to a customer it has assessed as being outside of its ML/TF risk appetite and imposing an increased risk management and compliance burden on the bank. The plaintiffs overlook the express power under clause 20 for Westpac to close a bank account to 'manage... risk'. Westpac also submits that there is no evidence to support the inference that the decision to close the Sun Capital Accounts has been taken for the sake of commercial practicality.
6. Westpac submits that the plaintiffs' submission that a precondition to the lawful exercise of the discretion under clause 20 of the Terms and Conditions to close accounts is the formation of a Reasonable Opinion of Necessity is incorrect.
7. Westpac submits that the plaintiffs' contention assumes that the only category of circumstance in connection with which the discretion under clause 20 could be exercised is clause 20(4). However, the circumstance relied on by Westpac is that in clause 20(5). The circumstance in clause 20(5) is not conditioned by any concept of reasonable necessity. The only proviso to closing an account in that circumstance is the promise that '[Westpac] will act fairly and reasonably towards you'. The plaintiffs' written submissions do not address the 'manage associated risk' circumstance, beyond asserting that it is not capable of having any application in this case, which Westpac does not accept. In oral submissions, the plaintiffs focused on 'to comply with our regulatory obligations' in clause 20(5) and not on 'or to manage associated risk'. Here, Westpac relies on the latter, such that it relies on the management of risk associated with regulatory and compliance obligations as the reason for the Close Account Decision.
8. Westpac submits that there is no reasonable construction of clause 20(5) which says that the Reasonable Opinion of Necessity applies either expressly or impliedly to an account closure decision taken to manage risk associated with the bank's compliance obligations.
9. In terms of an express obligation, Westpac says that there is nothing in clause 20(5) to support the plaintiffs' position. The concept of reasonably necessary is expressly included in clause 20(4) but not in clause 20(5), which tells against an express obligation.
10. Westpac rejects that there is an implied term of having to form a Reasonable Opinion of Necessity. It accepts the proviso in clause 20 that it act fairly and reasonably towards Sun Capital, and the obligation in clause 52. It says that this means the only condition for acting under clause 20(5) are those two matters, although it accepts that it would have to establish that the circumstance in clause 20(5) was engaged factually.
11. Westpac submits that the proposition that it cannot terminate under clause 20(5) unless it has first formed a Reasonable Opinion of Necessity, or an objectively reasonable opinion, that customer-specific ML/TF risk had been substantiated should be rejected. There is no justification, textual or contextual, for reading into the 'fairly and reasonably towards you' proviso a requirement that Westpac form a reasonable opinion that a customer-specific ML/TF was substantiated. There are at least two problems with the plaintiffs' proposition:

(a) Clause 20(5) is enlivened where Westpac is managing risk associated with its regulatory and compliance obligations. That is management of the risk associated with Westpac's obligation to comply. It could not tenably be said that Westpac must wait until it forms a reasonable opinion that the compliance risk has been substantiated - for example, where Westpac forms a reasonable opinion that it is in breach because it concludes (reasonably) that the facilitation of money laundering has in fact taken place - before it can close an account under clause 20(5).

(b) That is a fortiori when regard is had to the ML/TF regulatory and compliance obligations contained in the AML/CTF Act. That regime is a risk-based framework which requires reporting entities such as Westpac to identify, mitigate and manage money laundering and terrorism financing risks the bank may reasonably face that its provision of designated services might (even inadvertently) involve or facilitate ML/TF.[61]

(c) If Westpac fails to comply with its AML/CTF Act obligations, it exposes itself to the risk of the imposition of civil penalties and regulatory action including AUSTRAC enforcement.

1. Westpac relies on the Tadepalli Affidavit and the documents exhibited thereto to establish that as a factual matter, its reason for the Close Account Decision was to manage risk associated with complying with its regulatory and compliance obligations. In particular, Westpac submits that:

(a) notwithstanding the plaintiffs' criticisms, paragraphs 37 to 42 of the Tadepalli Affidavit establish, beyond any doubt, that the reason for the Close Account Decision was to manage those risks;

(b) the same can be said of the contemporaneous document recording the reason for the Close Account Decision, which was the 18 February Email. In particular, that email establishes that:

(i) the context for the decision was that the MI team identified Sun Capital, as part of its customer risk assessment, as presenting a higher ML risk and reputational risk;

(ii) the email itself sets out the reasons;

(iii) there is no basis for the plaintiffs' suggestion that Westpac had some reason other than those set out in the email, and there is no real reason to doubt, as the plaintiffs hinted, that these were the reasons;

(iv) there is no relevant inconsistency between what is set out in the email and what is set out in paragraphs 37 to 42 of the Tadepalli Affidavit; and

(v) the plaintiffs' submission that there was nothing in the email about why Mr Kukulka had previously been exited as a customer is incorrect: the first dot point in the email refers to him and his gold bullions where we had AML concerns.

1. Westpac says that the plaintiffs' submission that there is a serious question to be tried because there needs to be a trial at which they can contest whether or not this contemporaneous document in fact records the reasons Westpac had for the Close Account Decision is incorrect. There needs to be a basis to doubt that these were the reasons, and nothing is proffered. The plaintiffs go no further than a complaint that some underlying report was not produced that might contain a smoking gun as to there being another reason, and that proposition simply cannot be right. It is speculative in the extreme.
2. Westpac submits that in light of all this evidence, the plaintiffs have not established a sufficient likelihood of Westpac not having acted fairly and reasonably towards Sun Capital. In this regard, they also point to the following matters:

(a) the transactional concerns that led to the restraint on the Sun Capital Accounts in late January provoked Westpac into conducting a broad review of the relationship;

(b) as part of that review, Westpac made the Information Request. The content of that request were reasonable requests for a bank to make in order to obtain information so as to properly assess its risk in continuing to bank Sun Capital;

(c) by the 13 February Response, there was a blanket refusal to provide the information;

(d) the Close Account Decision was made at a point in time when this was Sun Capital's position on the Information Request;

(e) by the 13 February Response, Sun Capital accepted bringing the banking relationship to an end provided that the funds then frozen in the accounts were released, which they were by reason of the orders made on 20 February 2026 which Westpac did not oppose;

(f) prior to the hearing on 20 February, Sun Capital had been notified of the Close Account Decision; and

(g) once Sun Capital had that release of funds and the restraint on the accounts lifted, it changed its position and decided that the orderly closure of the accounts no longer suited it.

1. Westpac submits that Sun Capital cannot have it both ways. It cannot, on 13 February, expressly acknowledge Westpac's right to bring the relationship to an end in the event that funds are released and then, once the funds are released, resile from that part of the proposal which no longer suits it and contend that Westpac has no lawful right to end the relationship. Sun Capital's position is said to be even less tenable when regard is had to what was said by junior counsel for Sun Capital on its behalf at the hearing on 20 February, at a time when it had already been informed of the Close Account Decision. There, it was submitted that one of the things Sun Capital had been asking for in correspondence with Westpac was:

Just lift the restraint, wholesale, terminate us as a client and give us our money back because we'll take our money to someone else. Or if you are seriously concerned about these transactions, let us have all the money save for the transactions you identify as being ones which require further investigation ... and stop freezing the rest of it.[62]

1. Then on 23 February 2026, the next working day after the hearing, Westpac informed Sun Capital that the accounts would be closed and online banking access removed on 3 March. By its letter of that date, Westpac was doing precisely what Sun Capital had asked it to do at the hearing.
2. Westpac also submits that it is inherently unlikely that the Court would, at trial, permanently enjoin it from terminating the relationship with a customer that it has determined to be outside of its risk appetite. It is well-established that the 'strength of the probability' that the plaintiffs must demonstrate at the serious question stage depends upon the nature of the rights asserted and the practical consequences likely to flow from the relief sought.[63] Here, in order to obtain an interim injunction in the terms sought, it is necessary for the plaintiffs to demonstrate a sufficient likelihood that they will succeed at trial in establishing an entitlement to a permanent injunction. A sufficient likelihood of the plaintiffs establishing an entitlement to damages is not sufficient to justify the preservation of the status quo. The fact that the Court is extremely unlikely to permanently enjoin Westpac from terminating (for reasons developed when considering the balance of convenience) only compounds the foregoing reasons why the plaintiffs have failed to establish that there is a serious question to be tried. Westpac submits that this is an example of where the two steps in the interim injunction test are interrelated and that it is a reason why establishing a serious question to be tried on breach is not enough to get Sun Capital home in respect of a serious question to be tried. The plaintiffs must establish a sufficient likelihood of obtaining relief which justifies preservation of the status quo.

1. The plaintiffs submit that the interpretation given to 'associated risk' by Westpac in submissions about clause 20(5), that it was associated risk to Westpac, is one interpretation but there may be others. Another construction that is just as open is that associated risk means, the risk that needs to be mitigated by Westpac in order for Westpac to comply with its regulatory and compliance obligations. That risk has not been identified and Westpac has made no attempt to identify any actual ML/TF risk that had been identified by Westpac on the actual material. Which construction issue is correct is a matter for trial.
2. The plaintiffs stated, in reply, that they did not submit that there is reason to doubt that the reasons set out in the 18 February Email were the reasons for the Close Account Decision. Rather, they say that their submission is that there is reason to doubt that those reasons in the email actually constitute reasons of requiring to comply with regulatory and compliance obligations and to manage associated risks. It is that issue which gives rise to the serious question to be tried.
3. The plaintiffs submit that the evidence does not show that Westpac made the Close Account Decision by reason of information it collected or obtained as to any articulated ML/TF risk. They say that identifying Sun Capital as being involved in gold bullion dealing, which Westpac identifies as a high risk industry, is not enough. They say that once it identifies a high risk customer, Westpac has to do enhanced customer due diligence, through which it will obtain results about specific transactions or patterns of behaviour in those accounts that constitute the ML/TF risk. The mere fact that a customer is high risk is an entirely prior issue. It is the issue that then imposes on Westpac the obligation to do the hard work required by the AML/CTF Act. If Westpac intended to prove at this hearing that there was a ML/TF risk, it needed to identify the problematic transactions and the features of the Sun Capital Accounts which give Westpac a reason to conclude that there is an actual ML/TF risk on behalf of either of the plaintiffs. It is not enough, under Sun Capital's contract with Westpac, for Westpac to say that Sun Capital belongs to a high risk category so we are not attempting to apply our systems of risk management and risk mitigation. Westpac cannot debank a high risk customer because as a bank, it has to do the hard work of carrying out its risk management processes that a Part A program under the AML/CTF Act requires it to carry out.

D.8 Consideration - have the plaintiffs established a serious question to be tried?

1. I am not satisfied that the plaintiffs have established that there is a serious question to be tried.
2. The plaintiffs bear the onus of establishing a serious question to be tried. It is trite to say this, but I consider it necessary to begin there for this reason. Despite acknowledging at the outset that the plaintiffs bear the onus, the oral submissions by senior counsel for the plaintiffs were often couched in terms that Westpac has not proven, or has not established, that there is no serious question to be tried. The onus is not reversed just because a defendant challenges the plaintiff's position.
3. I will first consider contractual construction issues. I will then turn to Westpac's reasons for and conduct in closing the Sun Capital Accounts so as to consider whether there is a serious question to be tried that Westpac breached its contract with Sun Capital.

D.8.1 Construction of the contract between Sun Capital and Westpac

1. I do not accept the plaintiffs' position that Westpac cannot exercise a right to close a customer's account pursuant to clause 20(5) without first forming a Reasonable Opinion of Necessity, for a number of reasons, some of which are interrelated:

(a) First, the plaintiffs define and develop the concept of a Reasonable Opinion of Necessity (see paragraph 67 above) in the context of clause 20(4) but expressly apply it more broadly. This is apparent from the Draft ASOC (see the summary at paragraph 40(c) above) and from the submissions summarised at paragraph 69 above. However, their concept of what Reasonable Opinion of Necessity means (and it is just that, a concept) is clearly predicated on the wording in clause 20(4).

(b) Second, it forms no part of the express terms of clause 20(5). That clause 20(4) involves Westpac reasonably considering closure to be necessary does not mean that the same is required for clause 20(5). To the contrary: if it was intended to apply to clause 20(5), it would have said so, just as it did in clause 20(4).

(c) Third, at paragraph 69(a) above, the plaintiffs submit that Westpac must prove that it in fact acted to comply with its regulatory and compliance obligations. On their submission, this requires Westpac to have formed a Reasonable Opinion of Necessity. However, the plaintiffs do not grapple with or explain how that is so. Why is forming a Reasonable Opinion of Necessity a requirement in proving that Westpac acted so as to comply with its regulatory and compliance obligations?

(d) Fourth, there is no reason why, as the plaintiffs contend, that clause 20(5) must be read with clause 20(4) and that therefore the concept of necessity is involved.

(e) Fifth, the promise in clause 20 that Westpac will act fairly and reasonably towards the customer is made in the express context of where it closes the accounts without providing the customer with any prior notice. To contend that where Westpac is entitled to close an account without giving prior notice but must first form a Reasonable Opinion of Necessity is not supported by the terms of the contract. I agree with Westpac's submission that in this context, it requires the bank not to act unfairly or unreasonably in how it goes about the account closure.

(f) Sixth, I accept the plaintiffs' submission that clause 20 must be read with clause 52, and that clause 52 informs how the rights in clause 20 can be exercised. However I do not accept that clause 52 is to be interpreted as requiring Westpac to first form a Reasonable Opinion of Necessity before it may close an account. There is nothing in the text of or context for clause 52 which requires such a step. I do not accept that Westpac cannot have a legitimate business interest without forming a Reasonable Opinion of Necessity.

(g) Seventh, if there is an implied term of good faith such that Westpac can only exercise its rights in good faith, then I do not accept that such a duty carries with it an obligation to form a Reasonable Opinion of Necessity. Many of the plaintiffs' submissions in this regard, and on their characterisation of a Reasonable Opinion of Necessity, were akin to public law notions of reasonableness for which there is no doctrinal basis for importing them into contractual dealings. Since I do not accept that such an implied term carries with it the obligation to form a Reasonable Opinion of Necessity, it is unnecessary for me to determine whether there is an implied term of good faith here.

(h) Eighth and relatedly to the sixth and seventh reasons, I do not accept the submission set out in paragraph 71 above. In circumstances where Westpac can close an account without giving prior notice to the customer, there is no basis for interpreting clause 52 as requiring notice of the formation of a Reasonable Opinion of Necessity to be given to the customer and then requiring Westpac to give the customer an opportunity to respond to that information.

(i) Ninth, I do not accept that forming a Reasonable Opinion of Necessity is a necessary component of the reason for closure being 'to comply with regulatory or compliance obligations'. That puts far too narrow an interpretation on clause 20(5) and ignores the rest of clause 20(5), being 'or to manage associated risk'.

1. In my view, therefore, Westpac's description of the plaintiffs' submission regarding the requirement of forming a Reasonable Opinion of Necessity as a gloss on the Terms and Conditions is apt. Not only is it a gloss, it is not one that is found in the express or implied terms of the contract between Sun Capital and Westpac.
2. The plaintiffs' submissions focus heavily on the 'to comply with our regulatory and compliance obligations' aspect of clause 20(5) and often ignore or downplay the remainder of the clause, which is 'or to manage associated risk'. Such a focus is likely to be the source of a submission such as the one set out at paragraph 73 above. That focus ignores the fact that there is nothing in the AML/CTF Act or the AML/CTF Rules which mandates the risk threshold or degree of suspicion or concern which a bank must hold before it exits a customer. It is up to the bank to determine its own risk threshold.
3. In any event, I reject the submission set out at paragraph 73 above. That submission conflates what a bank must do in order to comply with the AML/CTF Act with what a bank must do before it can exit a customer pursuant to the relevant contract with the customer. The level of conflation of the two involved in the plaintiffs' submission is starkly illustrated by their submission at paragraph 106 above. Those are the steps and the types of evidence which Westpac would likely need to adduce if it were defending its banking practices in an action taken against it by a regulator. These are not the steps or evidence required for Westpac to determine that a customer is outside its risk appetite and that, in managing risks associated with complying with its regulatory or compliance obligations, it has decided to close a customer account. I agree with Westpac's submission in this regard, as set out at paragraphs 88 and 97 above. I do not agree with the plaintiffs' reply to this issue, as set out at paragraph 104 above: in my view, the alternative interpretation posited there is not open and so the construction issue does not present a serious question to be tried.
4. For all of these reasons, I do not accept that there is a serious question to be tried as to whether the contract between Sun Capital and Westpac must be interpreted in the manner contended for by the plaintiffs.

D.8.2 Whether there is a serious question to be tried that Westpac breached its contract with Sun Capital

1. Addressing this issue requires consideration of Westpac's reasons for and conduct in closing the Sun Capital Accounts. Westpac has identified that it relied on clause 20(5) of the Terms and Conditions when making the Close Account Decision, hence that is the focus of the analysis.
2. Accordingly, to establish that there is a serious question to be tried that Westpac breached its contract with Sun Capital, the plaintiffs need to establish that there is a serious question to be tried that:

(a) Westpac did not make the Close Account Decision so as to manage risk associated with its regulatory and compliance obligations; or

(b) Westpac did not act fairly and reasonably in accordance with its legitimate business interests in making that decision.

1. The first of these propositions derives from clause 20(5) and the construction of it set out in section D.8.1 above. The second proposition derives both from the chapeau to clause 20(5) and clause 52.

D.8.2.1 Is there a serious question to be tried that Westpac did not make the Close Account Decision so as to manage risk associated with its regulatory and compliance obligations?

1. I do not accept the plaintiffs' submission that there is a serious question to be tried that if not enjoined from doing so, Westpac intends to close the Sun Capital Accounts without having formed a Reasonable Opinion of Necessity and thereby breaching the contract. There is no obligation on Westpac to have formed a Reasonable Opinion of Necessity and there is therefore no serious question to be tried that not forming one and closing the accounts anyway is a breach of contract.
2. I do not accept the plaintiffs' submission that there is a serious question to be tried that if not enjoined from doing so, Westpac intends to close the Sun Capital Accounts for a reason other than to manage risks associated with complying with its regulatory and compliance obligations and thereby breaching the contract.
3. In my view, not only have the plaintiffs not established that there is a serious question to be tried that Westpac did not make the Close Account Decision so as to manage the risk associated with complying with its regulatory and compliance obligations, the evidence establishes that Westpac in fact relied on clause 20(5) when it made the Close Account Decision, and it does so to a level where it cannot be said that there is a serious question to be tried to the contrary.
4. Nor do I accept the submission that there is a serious question to be tried that Westpac's reasons for making the Close Account Decision, as set out in the Tadepalli Affidavit, are reasons for closing the accounts that Westpac is entitled to act upon.
5. Much criticism was levelled by the plaintiffs at the Tadepalli Affidavit, as set out at paragraphs 79 to 81 above. I do not accept those criticisms.
6. In my view, the evidence in the Tadepalli Affidavit and the exhibits thereto, particularly the 18 February Email, sufficiently explain Westpac's reason for its decision. That evidence is not vague or insufficient to establish that its reason for the decision was to manage risk associated with complying with its regulatory and compliance obligations. My reasons for coming to this view are:

(a) First, the plaintiffs' criticism of paragraph 37 of the Tadepalli Affidavit (see paragraphs 57 and 78 above for what paragraph 37 stated) is not justified, as:

(i) speculative and unsubstantiated submissions about whether that paragraph accurately summarises the MI Case Review because the MI Case Review has not been produced is not a proper basis for contending that there is a serious question to be tried. Indeed, there was no evidence about whether such a document existed - that seems to have been an assumption made by the plaintiffs;

(ii) the plaintiffs fail to take into account the rest of the Tadepalli Affidavit, framing their criticism of paragraph 37 as if it is the only statement of Westpac's reason for closing the accounts;

(iii) speculation about what is meant by 'reputational risks' does not give rise to a serious question to be tried; and

(iv) the submission at paragraph 79(c) above is expressly rejected. It is clear that Westpac viewed the Sun Capital Accounts as posing a ML/TF risk that was unacceptable to it because those accounts were being used by Gold Dealers to conduct transactions in the gold bullion industry. The notion that Briginshaw has some work to do here is incorrect and in any event ignores the content of the rest of the Tadepalli Affidavit, particularly Mr Tadepalli's explanation of how Westpac goes about dealing with ML/TF issues and the detailed reasons given in paragraph 39 of the affidavit.

(b) Second, paragraph 39 of the Tadepalli Affidavit (set out at paragraph 56 above) clearly demonstrates that the Close Account Decision was made for the reason of managing risk associated with Westpac's regulatory and compliance obligations. Addressing the plaintiffs' submissions in paragraph 80 above:

(i) in respect of (a), there is no basis for doubting that Westpac views gold bullion dealing as a high risk industry or that it was not legitimate for it to come to that view. Earlier sections in the Tadepalli Affidavit set this out in some detail (see paragraph 47 above);

(ii) also in respect of (a), the submission that there is no evidence that the MI team's transaction review identified Sun Capital was conducting transactions on the accounts and not just providing administrative services cannot be sustained. Transactions being conducted on the Sun Capital Accounts was what prompted the MI Case Review in the first place. Further, the plaintiffs' submission is disingenuous when it is directly contradicted by their own evidence: Mr Menegol and Mr Kukulka both give extensive evidence about the Sun Capital Accounts being used to process transactions for the buying and selling of gold bullion;

(iii) in respect of (b), there is no need for evidence of the type mentioned by the plaintiffs. The fact is that Sun Capital, Mr Kukulka and Gold Dealers are not at arm's length, and the possibility that this may heighten any ML/TF risk is obvious;

(iv) in respect of (c), the proposition that there is no evidence that Mr Kukulka was debanked by Westpac due to an ML/TF risk is directly contradicted by the first dot point in the 18 February Email. There is therefore no substance to that criticism. It is clear that the other matters referred to in that sub-paragraph were not the sole basis for the reason for the Close Account Decision, but were pieces of information that fed into the decision-making process; and

(v) in respect of (d), those third party claims do not have to provide a sufficient reason in and of themselves for the Close Account Decision in order for Westpac to rely on clause 20(5). Again, they were part of the factual matrix.

(c) Third, the plaintiffs' criticisms of paragraph 39 of the Tadepalli Affidavit are based on taking each sub-paragraph and treating them as separate bases for the Close Account Decision such that each one must provide a sufficient basis, whereas it is clear that it is the whole of those matters which were relied upon.

(d) Fourth, the plaintiffs' attempts to portray the content of the 18 February Email as insufficient to establish that Westpac made the Close Account Decision for a reason other than to manage risks associated with complying with its regulatory and compliance obligations do not establish a serious question to be tried.

(e) Fifth, the plaintiffs' contention that there are no details of Westpac conducting a customer transaction profile review or enhanced customer due diligence (see paragraph 82 above is not correct. Mr Tadepalli sets out, in general terms, Westpac's procedures and then explains what it did in this instance. Having assessed that a customer is in a higher risk industry, Westpac takes the steps set out in paragraph 48 above. Westpac's MI team carried out the customer risk assessment in respect of Sun Capital (see paragraph 54 above) and the Head of the BW Financial Crime team also conducted a review (see paragraph 55 above). It is of no moment that particular transaction reports are not detailed, for example. Further, it is clear from the contents of paragraph 39 of the Tadepalli Affidavit and the 18 February Email that the results of what the transaction profile review and enhanced customer due diligence were summarised. For example, there are references to Tanya Kukulka conducting regular outbound transactions on the Sun Capital Accounts.

(f) Sixth, I do not accept that detail of the type and to the level set out in Merciful Group is required before it could be said that there is no serious question to be tried. Whether there is a serious question to be tried is to be assessed on the basis of the evidence that is adduced; it is not to be assessed by comparison with that set out in another case. That the evidence in Merciful Group was sufficient to persuade the Court that there had not been a breach of contract in that case does not mean that if the same type of evidence is not adduced here then there must be a serious question to be tried. The question for me is whether the evidence in this case establishes a serious question to be tried as to breach. I do not consider that it does.

(g) Seventh, the premise for the plaintiffs' submission in paragraph 83 is a mistaken one. Westpac does not have to prove anything here: it is up to the plaintiffs to prove a serious question to be tried; not for Westpac to prove that there is not one. In any event, I do not accept that there is any serious question to be tried that Westpac did not close the Sun Capital Accounts to manage risk associated with its regulatory and compliance obligations.

1. Further, I do not accept that considering matters of practicality, cost-effectiveness or efficiency are not ones which are relevant to the question of managing risk. In that regard, I accept Westpac's submission at paragraph 91 above. In any event, it is mere speculation that Westpac's decision was made due to such matters.
2. Much was made by the plaintiffs of Mr Tadepalli's reference to reputational risk in paragraph 37 of his affidavit. It is clear even from paragraph 37 itself that this was one aspect, but so too was the ML/TF risk which was regarded as unacceptable. This is even more apparent from the contents of paragraph 39 of the Tadepalli Affidavit and the 18 February Email. At most, paragraph 37 suggests that there may have been more than one reason, being the ML/TF risk, for making the Close Account Decision. No cogent argument was made before me, however, as to how the presence of an additional reason such as reputational risk would mean that Westpac was not able to legitimately rely on clause 20(5) to close the accounts. I do not think that this raises a serious question to be tried.
3. The plaintiffs and the other entities in the group have structured their Business and operations, including the use of bank accounts, in a manner which they have found to be convenient and which to date has worked for them. However, it is telling, in my view, that the purpose of Sun Capital's incorporation was to create a separate entity through which transactions for gold bullion dealing could be processed since that had been at least one of the reasons why Gold Dealers and other group entities had had accounts closed by banks in the past.[64] Having been created in an attempt to bypass banks regarding gold bullion dealing as presenting an unacceptable ML/TF risk, it is somewhat ironic that Sun Capital now advances the argument that its association with Gold Dealers and gold bullion dealing is an insufficient basis for Westpac to close the Sun Capital Accounts.

D.8.2.2 Is there a serious question to be tried that Westpac did not act fairly and reasonably in accordance with its legitimate business interests in making the Close Account Decision?

1. I do not accept Westpac's submission set out in paragraph 89 above that the proviso in clause 20 and the obligation in clause 52 only requires procedural fairness and reasonableness In particular, I do not consider that to be a construction of clause 52 that is open. I consider that an element of objectivity and reasonableness in a substantive sense is also required.
2. In Merciful Group, the applicable contractual provision (clause 15.2) relevantly provided that:[65]

We can close your Account immediately if:

...

(c) to protect our Legitimate Interests;

(d) we need to by law or to meet our prudential requirements;

...

However, unless there are exceptional circumstances (e.g. fraud or criminal activity), we will give you at least 14 days advance notice before we close your Account.

1. 'Legitimate Interests' was relevantly defined as:[66]

"Legitimate Interests" means [the Bank's] legitimate business needs, prudential requirements and/or security requirements (including any reasonable response to material changes to [the Bank's] business or systems) and any requirements that are reasonably necessary to protect [the Bank] against a material risk of:

(a) a monetary default by [a customer] under a Credit Contract;

(b) [the Bank's] ability to enforce [its] rights against a Security;

(c) the value of a Security being materially compromised; or

(d) [the Bank's] financial detriment.

...

We may exercise our rights, powers and discretions in any manner that protects our Legitimate Interests but unless specifically stated we will not be under an obligation to take any action.

1. While clause 15.2 in Suncorp's terms and conditions in Merciful Group, and the use of the defined term 'Legitimate Interests' are clearly different to the ones under consideration here, there are aspects of that case which are instructive. In that case, Hammerschlag CJ in Equity:

(a) rejected the contention that on the operation of clause 15.2 Suncorp needed to have a necessity to terminate - 'reasonably necessary' appears in the definition of 'Legitimate Interests' but not in that part of the definition that incorporates Suncorp's legitimate business needs and prudential requirements;[67]

(b) rejected the proposition that there must be 'a "standard of reasonable compulsion" (whatever that may mean)' for Suncorp to exercise its right to close the account to protect its Legitimate Interests, being its legitimate business needs, its prudential requirements, or any requirements that are reasonably necessary to protect it against a material risk of financial detriment to it;[68]

(c) went on to say:

As to the business needs relied upon, they are required to be legitimate. This, I think, imports an element of objective assessment. In the context of the Bank's business they must be factors to which rational regard may be had as requiring protection. Prudential requirements likewise import such an element of objectivity. As to material risk of financial detriment, there must be an identified financial risk of substance and the Bank's steps must be reasonably necessary to protect against that risk.[69]

(d) stated that clause 15.2 'requires no more than that the Bank exercise a rational or bona fide judgment or reach a rational honest opinion or belief that that step should be taken';[70]

(e) rejected the proposition that Suncorp's lack of risk appetite for doing business with Merciful or Suncorp's reputation are not legitimate business interests or prudential requirements.[71] This is particularly so given the legislative requirement on a bank to deal with ML/TF through a risk-based framework; and

(f) concluded that Suncorp had established that it acted rationally, honestly and in good faith, that its response was reasonable and for a prudential purpose,[72] and that in deciding to close the account due to an unacceptable ML/TF risk, Suncorp was not required to make any finding that ML/TF had actually occurred.[73]

1. The use of phrases such as acting 'fairly and reasonably', and 'legitimate business interests' on ordinary contractual construction principles and in light of judicial consideration of similar phrases in Merciful Group do involve an element of objective assessment, and that Westpac reaches a rational honest belief.
2. In my view, the evidence here establishes, to a degree that there is no serious question to be tried as to the contrary, that Westpac did conduct an objective assessment and reached a rational honest belief that the appropriate course was to close the Sun Capital Accounts. My reasons for coming to that conclusion are set out in detail in paragraphs 123 to 125 above.
3. Thus there is no serious question to be tried that Westpac did not act fairly and reasonably, in a substantive sense in terms of its reasons, in making the Close Account Decision.
4. In addition, there is no basis at all for contending that there is a serious question to be tried that Westpac did not act fairly and reasonably in so doing, from a procedural perspective.
5. I have already found that there is no contractual requirement here for Westpac to inform Sun Capital that it has formed a Reasonable Opinion of Necessity or give Sun Capital an opportunity to respond.
6. Here, Westpac made the Close Account Decision, notified Sun Capital of it promptly, and then gave later notice on 23 February 2026 that the actual closure would occur on 3 March 2026. This may seem like a short period of time, but where Westpac has a contractual right to close the Sun Capital Accounts without notice to Sun Capital, any notice at all is an improvement on that position. It cannot be the case that the general obligation in clause 52, or the proviso to clause 20, have the effect of narrowing the operation of clause 20(5) to require notice to be given.
7. Regard must also be had to the circumstances pertaining at the time Westpac notified Sun Capital of the Close Account Decision and then the notice on 23 February as to the timing of the closure. Sun Capital had effectively invited Westpac to terminate the banking relationship so long as the funds in its accounts were released to it, and had stated in writing and in open court that it was going to take its banking elsewhere. Westpac's submissions in this regard, as set out in paragraphs 101 and 102 above have much force.
8. I note that after making the submission cited in paragraph 101 above, Mr McAveney went on to refer to having received Allens' 19 February letter notifying Sun Capital of the Close Account Decision, and goes on to say that this letter sets out the po[74]tion that:74

we want to terminate you as a customer, but we have to keep all of the funds restrained whilst we determine what to do with your exit, presumably because of these internal requirements. So as I said it seems an order of the court would overcome all of those concerns. And subject to what my learned friend seems to say, it seems the easiest and certainly most convenient way forward.

Thus the position set out in the 13 February Response, that Sun Capital accepted the termination of the banking relationship provided its funds were released, remained its position at the 20 February hearing, in the full knowledge that Westpac had made the Close Account Decision.

Now the plaintiffs submit, in response to Westpac's submission on this, that they can have it both ways. I disagree. They cannot have their cake and eat it too. Sun Capital is now seeking to injunct Westpac from doing the very thing it invited it to do: release the funds and then terminate the banking relationship. It suited Sun Capital at that time to focus on the release of the funds, and having obtained that from the Court, it has resiled from its position.

1. True it is, as the plaintiffs respond, that Westpac makes no allegation of waiver or the like. However, this does provide part of the context for Westpac making the Close Account Decision, and it should not merely be ignored, as it does go to the question of procedural fairness.
2. Apart from the proposition that Westpac was obliged to inform Sun Capital of having formed a Reasonable Opinion of Necessity and give it an opportunity to respond (which I have already rejected), no submissions were made as to what else procedural fairness when making the Close Account Decision might require.
3. In my view, the fact that Westpac sought customer-specific and detailed information from Sun Capital when conducting the MI Case Review, in the form of the Information Request, goes towards showing that Westpac's conduct was procedurally fair and reasonable. It did not get the information it requested due to Sun Capital's refusal to provide it. In those circumstances, it is hardly procedurally unfair or unreasonable for Westpac to act without having that information. That the 13 February Response was a refusal to provide the requested information and not merely a reluctance to do so due to some asserted defects in the Information Request is clear on the face of the 13 February Response. I reject the position taken by the plaintiffs as set out in paragraph 81 above. Sun Capital flat out refused to give the information and one of its reasons was the alleged defects in the request. However, the issue goes much further than that: it is not that the refusal gives rise to a specific ML/TF risk, but that Westpac was engaged in the very exercise the plaintiffs allege they should have engaged in, being enhanced customer due diligence, for which it needed customer-specific information and which it asked for. When the customer refused to provide that, Westpac could not assume that the customer had any measures in place dealing with ML/TF risk. Having sought and not been given the information, I do not see how it can be suggested that Westpac's procedure was inadequate or that the effect of Sun Capital's refusal to provide information cannot be taken into account.
4. Noting what I have said above in respect of clause 52 and what I have said in paragraph 110(g) about an implied term requiring good faith, I would also add here that I am satisfied that the plaintiffs have not established a serious question to be tried that Westpac breached such a duty. The same factors as those considered in this section also inform this question, and provide the basis for that conclusion.

D.8.3 Conclusion regarding serious question to be tried

1. For all of the reasons set out above, the plaintiffs have not established that there is a serious question to be tried that Westpac breached its contract with Sun Capital in making the Close Account Decision.
2. If, contrary to that view, there is a serious question to be tried, then I consider that the plaintiffs case is weak, for the same reasons.
3. I refer to Westpac's submission set out in paragraph 103 above. I agree that this issue straddles both aspects of considering an interlocutory injunction, being serious question to be tried and balance of convenience. I will deal with it as part of considering the balance of convenience and so do not express a view about that submission at this point.

E Does the balance of convenience favour granting the injunction?

1. The plaintiffs submit that the balance of convenience favours the granting of the injunction. They contend that there is no evidence of any risk of injustice to Westpac if the injunction is granted, whereas there is risk of injustice to the plaintiffs if it is not.

E.1.1 There is no risk of injustice to Westpac if the injunction is granted

1. The plaintiffs submit that there is no evidence before the Court as to any prejudice which Westpac will suffer if the Sun Capital Accounts remain open. They contend that risk of injustice could only have been shown by Westpac pointing to an actual way in which it would not be in compliance with its regulatory obligations if compelled by the Court to keep the Sun Capital Accounts open. As Westpac has stopped short of identifying any specific aspect of non-compliance, there is no injustice that could possibly flow from granting the injunction.
2. The plaintiffs say that instead, Westpac relies on legal submissions to attempt to create a presumption that the balance of convenience does not favour the grant of an injunction in the specific case of a bank providing transactional accounts to a customer. In this regard the plaintiffs submit that:

(a) Westpac points out that the banker-customer relationship is a contractual one. So much may be accepted, but that does not explain why there is anything special about that contract to make it immune from injunctive relief to prevent a breach of contract;

(b) Westpac's submission in that respect does not capture other elements of the banker-customer relationship, including obligations owed under s 912A(1)(a) of the Corporations Act 2001 (Cth) where a financial licensee (such as a bank) is required to do all things necessary to ensure that the financial services are provided efficiently, honestly and fairly;

(c) Westpac says that an injunction requiring a bank to continue to bank a customer is not available or is an extraordinary remedy or a court should exercise caution before making such an injunction, relying on seven cases, only one of which is an Australian case. [75] The foreign cases can be disregarded as they do not engage with the precise regulatory context or the balance of convenience authorities with which this court is concerned. Insofar as the Australian case is concerned, Impact Traders Pty Ltd v Australia and New Zealand Banking Group Limited,[76] the paragraphs relied on by Westpac do not support the contention it advances. Further, the account in question was not a transactional account but one obliging the bank to make loans to the plaintiff as and when an internet transaction is processed, which is quite a different situation. The same cases are referred to in Merciful Group, but his Honour also says that the descriptor 'extraordinary remedy' is of little assistance and that whether an injunction should be granted depends on all the circumstances.[77]

E.1.2 There is a risk of injustice to the plaintiffs if the injunction is not granted

1. The plaintiffs submit that there is evidence of injustice to the plaintiffs if the injunction is refused, as the closure of the Sun Capital Accounts would mean that the Business has no practical means by which to continue its ordinary trading operations.
2. The plaintiffs submit that Sun Capital's director, Mr Menegol, has deposed to the hardship the previous restraint had placed on Sun Capital. Those hardships being:[78]

(a) An inability to make payments to suppliers and related companies within the business, which are responsible for ongoing operational expenses like rent and wages. There is a loss of opportunity component, as the plaintiffs are unable to secure trades for gold and precious metals at favourable market spot prices.

(b) An inability to receive payments.

(c) Significant reputational damage due to the fact that defaults on suppliers and customer trades have undermined confidence in the industry.

(d) Diversion of resources from profit generating activities of the business to managing fracturing supplier and customer relationships.

1. The plaintiffs submit that the above risks are more acute in the context of Westpac's proposed closure of the Sun Capital Accounts. This is because the proposed closure needs to be considered in light of the plaintiffs' inability to obtain alternative banking facilities. The plaintiffs submit that the evidence shows that:

(a) The business is a closely-held, family run business operated by members of the Mr Menegol's and Mr Kukulka's family.[79] As the business grew,[80] it found itself in a situation where different entities within the business held bank accounts, all of which were used to process payments connected with the sale and purpose of gold bullion. Banks have historically been sensitive to such transactions. The result was that various entities and individuals associated with the group had accounts frozen or closed.[81]

(b) Mr Kukulka formed the view that only the 'big four' banks were suitable for the business' trading needs.[82] Those banks could facilitate prompt or instantaneous payments,[83] had higher daily transaction limits[84] and better payment support infrastructure.[85]

(c) In 2019, Mr Menegol incorporated Sun Capital. The purpose was to create a clean or fresh entity to hold bank accounts through which payments connected with the sale and purchase of gold bullion could be processed. This enabled the Business to consolidate all such payments into one entity and through one account, and avoid the risk that trading activities to which banks were more sensitive occurred across multiple different entities, thus tainting other aspects of the group. This meant that other entities, (e.g., those which pay rent and wages or which lend money) do not have their accounts arbitrarily frozen or closed.[86]

(d) The strategy deployed has been effective, to the point where the Business has been able to operate for more than six years with this structure. But since 2019, Sun Capital has been debanked by the 'big four' major Australian banks.[87] Westpac is the last of those banks with an account open with Sun Capital.[88]

(e) Since Westpac indicated that it intended to close the Sun Capital Accounts, Sun Capital has attempted to open bank accounts with other banks and second tier deposit-taking institutions.[89] Sun Capital decided not to apply to certain other banks and second-tier deposit-taking institutions as those entities' terms were such that they could not viably service Sun Capital's banking needs.[90] ANZ had initially stated that it would open accounts for Sun Capital but it promptly froze those accounts and stated that it intended to close those accounts. ANZ's terms and conditions are more favourable to ANZ than Westpac's, in effect permitting ANZ to close a customer's account without first telling the customer if they believed it to be in their legitimate business interests.

(f) If the injunction is not granted, Sun Capital will not merely be inconvenienced but will be left without any presently available major banking facilities through which it can receive customer payments, make payments to customers, or make prompt settlements to wholesale suppliers.[91]

(g) Using bank accounts held in the name of different entities within the Business is not a viable solution, for fear that the use of those entities to process gold bullion transactions would taint those accounts. However, Westpac appears to be now debanking those entities as well.

1. The plaintiffs submit that no bank is willing to permit the plaintiffs' gold trading activities.[92] If the plaintiffs are unable to bank, the Business cannot function and earn revenue. Without revenue to remit to other entities within the group, the Business will not be able to pay rent, tax and its employees. The Business will likely collapse or at a minimum significantly scale back its operations, such that a business model in operation since 2009 will be reduced to nothing.[93] In addition to the loss of revenue and trading opportunities, closure of the accounts would jeopardise relationships with customers and suppliers built up over time, undermine confidence in the Business, and place at risk the continued employment of staff.[94]
2. Insofar as Westpac's criticisms of the plaintiffs' evidence on balance of convenience are concerned, the plaintiffs submit that:

(a) to the extent Westpac was relying on Sun Capital having an account with ANZ for the proposition that Sun Capital had not established it had no other accounts it could use, that has now been dispelled through the Follacchio Affidavit, which confirmed that ANZ had notified Sun Capital it was closing that account;

(b) Westpac's submission that the hardship of Gold Dealers is aggregated to Sun Capital where it should be the hardship to the bank's customer that is the issue should be rejected, given that the Business is operated through a quasi-partnership. Further, if the Sun Capital Accounts are closed, Sun Capital would be done an injustice because it would not be able to carry out the purpose for which it was incorporated - providing administrative services to Gold Dealers;

(c) Westpac's submission that there is no evidence that Gold Dealers could not obtain banking services elsewhere should be rejected. The plaintiffs submit that the Tadepalli Affidavit suggests that Westpac's concern about Gold Dealers and Mr Kukulka is the primary source of any nascent ML/TF risk insofar as Sun Capital is concerned, such that there are real reasons to doubt that Gold Dealers could obtain banking services elsewhere. Further, Westpac has since acted consistently with that suspicion by acting to close down accounts of persons associated with Gold Dealers, being the Other Westpac Customer Entities. Sun Capital has made inquiries of other financial institutions but has experienced difficulties in securing alternative banking facilities.[95] It has also conducted Google searches of other institutions but did not apply to those due to the terms and conditions being unsuitable.[96] It should be inferred that Gold Dealers would have the same problems. In any event, despite Westpac's contentions, Sun Capital does not need to establish that there is no other entity in the group that can obtain banking services. Rather, it is enough for Sun Capital to show it will suffer enough injustice so as to outweigh any injustice to Westpac.

E.1.3 Responding to Westpac's argument that the balance of convenience is against an interlocutory injunction because the plaintiffs are unlikely to gain a permanent injunction at trial

1. The plaintiffs make a number of submissions about Westpac's argument set out at paragraph 103 above. I set the plaintiffs' submissions out here, as well as the plaintiffs' response to Westpac's development of the argument as referred to in Section E.2.2 below.
2. The plaintiffs say that Westpac's submission does not sufficiently take into account the form of the permanent injunction they will seek at trial. Relevantly, paragraph D of the prayer for relief in the Draft ASOC seeks 'a permanent injunction restraining Westpac from closing the Accounts pursuant to the Close Account Decision or the Cease Services Decision'. The plaintiffs submit that they do not seek a permanent injunction restraining Westpac from closing the Sun Capital Accounts at all, as what is sought is much more limited than that, which is preventing Westpac from closing the accounts pursuant to the Decisions it has already made. Hence the plaintiffs do not need to establish some remarkably high probability that they will succeed at trial in order to have a serious question to be tried to justify the permanent relief that is sought.
3. During the course of argument, I raised with senior counsel for the plaintiffs the fact that the form of relief sought in the summons for the interlocutory injunction was wider than that sought by way of permanent injunction, including that it was not limited to Westpac closing the Sun Capital Accounts pursuant to the Decisions. Ms O'Gorman SC responded that the plaintiffs press for the form of relief as contained in the summons, since it is an interlocutory injunction and is also framed as being subject to further order of the Court. Hence if Westpac had a reason to close the accounts separate from the Close Account Decision, then it would be able to come to the Court to indicate that an alternative order needs to be made. The plaintiffs should be protected, on an interim basis, from Westpac making the same decision with the same degree of absence of underlying evidence to support it. Alternatively, if the Court was concerned about the disconnect between the two forms of injunction, then the plaintiffs would seek an interlocutory injunction that mirrors the permanent injunction sought.

1. The plaintiffs submit that damages would not be an adequate remedy in this case, if the injunction is refused and at trial they are successful. In this regard, the plaintiffs submit that:

(a) damages will not be enough to restore the reputational damage which is being inflicted on the Business through the earlier restraint on transactions and which will be inflicted if the Sun Capital Accounts are closed; and

(b) the plaintiffs claim damages for pecuniary loss brought about by the loss of reputation and the loss of opportunity to conduct the Business caused by the breach of contract. However, the plaintiffs will face evidentiary difficulties in proving up the kind of loss that will follow. There will be difficulties in establishing causation between the closure of the Sun Capital Accounts and the loss of the Business and practical issues of proof in calculating the quantum of that damage. It is also inherently difficult to quantify damages for loss of reputation, and even if damages are awarded, there remains a residual damage that is not capable of being compensated.

1. The plaintiffs rely on Walker v ANZ (No 2)[97] to support their submission that evidentiary difficulties in proving the quantum of loss arising out of not being able to process transactions through the bank account is an instance of damages not being an adequate remedy.[98] They say that it is the delta between the injustice which stands to be suffered and that which the Court thinks it is likely to be able to grant by way of damages that tips the balance of convenience. If the practical difficulties of proof give rise to any likelihood that the plaintiffs will not actually be able to recover all of the damages they stand to suffer, then that tips the balance of convenience in favour of granting the injunction.

1. Westpac submits that the balance of convenience does not favour an injunction being granted for the following reasons:

(a) the plaintiffs' case to be tried is weak;

(b) consistent with the authorities, the Court should exercise caution before ordering injunctive relief that would compel Westpac to continue providing banking services to Sun Capital against its will;

(c) damages are an adequate remedy; and

(d) refusing to grant the injunction carries the lower risk of injustice.

E.2.1 Refusing to grant the injunction carries the lower risk of injustice

1. Westpac submits that the plaintiffs' evidence does not establish that the Sun Capital Accounts are the only bank accounts available to the business capable of providing the administrative services to the Business in general and Gold Dealers in particular that Sun Capital provides. The evidence does not establish that Sun Capital has no other bank accounts in the event that the Sun Capital Accounts are closed.
2. Westpac also submits that the plaintiffs' evidence of hardship by the closure of the Sun Capital Accounts aggregates hardship to Gold Dealers. The analysis of hardship must be viewed in light of what Sun Capital does and the asserted prejudice to it if the Sun Capital Accounts are closed. Mr Menegol's evidence is that Sun Capital's purpose is to 'provide administrative services to Gold Dealers through, amongst other things, the processing of payments'.[99] Sun Capital does not employ any staff.[100] There is no contractual relationship in place between Sun Capital and Gold Dealers.[101] There is no evidence of any administrative services being provided other than Sun Capital being a vehicle with bank accounts in its name which are used to process payments on behalf of Gold Dealers. Mr Menegol's evidence is that Sun Capital was established because Gold Dealers had been debanked by many banks it held accounts with.[102] Westpac submits that it appears then that a special purpose vehicle, Sun Capital, was established to overcome historical problems that Gold Dealers was confronted with in having bank accounts in its own name. Westpac also submits that there is no evidence of any renewed application by Gold Dealers to take out an account in its own name or that it would be unable to do so. Nor is there any evidence that following a rebrand of Gold Dealers through a change of name to Australian Gold Capital Pty Ltd it has been unable to obtain a bank account in its name.
3. Westpac also submits that there is no evidence that it is essential to the Business that Gold Dealers be able to transact through the Sun Capital Accounts. The evidence seems to suggest a commercial preference to transact through the Sun Capital Accounts. For example, Mr Menegol deposes that there are a number of entities associated with himself, Nigel Kukulka and Mr Kukulka, some or all of which hold bank accounts, but those entities 'have different functions and it is not reasonably practicable to use bank accounts in the names of those entities to purchase and sell gold bullion and other precious metals.'[103] The Business wishes to have its customers transact through the Sun Capital Accounts. Westpac submits that losing a commercial preference is not prejudice sufficient to weigh the balance of convenience in the plaintiffs' favour.
4. Westpac submits that there is also no evidence that Sun Capital provides any specialised service to Gold Dealers that could not be replicated by customer funds flowing through a different bank account. The evidence only goes so far as to establish an assertion that the Business requires consolidation of all transactions concerning the sale and purchase of gold into bank accounts held in the name of one entity because, if mixed with the accounts of other entities as described in the previous paragraph, 'it leaves those other accounts susceptible to a risk of a bank closing the accounts. Such a closure would be highly prejudicial to the Business' non-gold trading operations'.[104] Westpac submits that what the Court is really being asked by the plaintiffs to do, on the balance of convenience, is compel Westpac to provide services to a customer it considers to present too high a risk to it from an AML/CTF compliance perspective so as to avoid the asserted (but not properly founded) risk to these non-gold trading entities of possibly losing their bank accounts.
5. Westpac submits that the evidence of inquiries of other financial institutions and of Google searches, relied on by the plaintiffs to establish hardship if the injunction is not granted, are hardly an exhaustive attempt to find alternative banking arrangements for Sun Capital. That evidence is insufficient to establish an inability to access alternative banking services.
6. Westpac also submits that its own evidence demonstrates that it cannot provide several of the 'essential requirements' Mr Kukulka contends Sun Capital requires from a 'big four' bank to facilitate the commercial choices of the Business. In particular and relying on the Tadepalli Affidavit, Westpac submits that:

(a) It has continuing obligations to monitor, identify and manage risks created by providing Sun Capital with banking services. These obligations may lead to slower processing or delaying of incoming payments as Westpac takes actions to manage risk (as unfettered use of bank accounts would present an unacceptable ML/TF risk).[105] Westpac cannot guarantee immediate payment proceeding capabilities in relation to the Sun Capital Accounts.

(b) Sun Capital is not a relationship managed customer with Westpac. It does not have direct access to a relationship manager at Westpac through which to urgently escalate issues.[106]

(c) Westpac's business banking support call centre does not operate on weekends or public holidays. It is only available 8am-8pm on weekdays.[107]

(d) There are various non 'big four' financial institutions that offer the services and requirements sought by Mr Kukulka,[108] including because a wide range of such institutions are able to provide high-volume and real-time transaction proceeding via the New Payments Platform.

1. Westpac relies on the submissions in the next section of this ruling, Section E.2.2, to contend that there is a risk of injustice if the injunction is granted. The same factors telling against granting a permanent injunction tell against an interlocutory one.

E.2.2 The balance of convenience is against an interlocutory injunction because the plaintiffs are unlikely to gain a permanent injunction at trial

1. Westpac submits that the balance of convenience does not favour granting an interlocutory injunction because it is unlikely that a permanent injunction would be made at trial (see paragraph 103 above). In effect, Westpac submits that the plaintiffs are unlikely to obtain a permanent injunction at trial and that therefore an interim injunction preserving the status quo is not justified. Westpac develops this further, as follows.
2. The relationship between a bank and its customer is contractual.[109]
3. There is a body of authority that an injunction requiring a bank to continue to provide services to a customer is not available or is at least an extraordinary remedy and, in any event, the Court should exercise caution before requiring a bank to continue a business relationship with a customer against its will.[110]
4. Westpac relies on Merciful Group, where Hammerschlag CJ in Equity approached the question of whether an injunction should be granted in the context of a bank and customer relationship as one that depends on all the circumstances.[111] Relevantly, his Honour found that even if Merciful had established a breach of contract, he would not have granted the injunction sought by the customer because of one or more or all of the following:[112]

(1) the context in which this relationship has broken down involves the Bank having made a judgment that there is external risk to it in continuing the relationship and the Bank does not have the appetite for taking that risk. I consider that it would be inappropriate to force the Bank to take that perceived risk in the highly regulated environment in which it operates with regard to its AML/CTF obligations;

(2) the banker customer relationship is based on contract but is founded on trust and good faith in a commercial sense and the Bank plainly does not trust the customer;

(3) if their relationship were to continue, I regard it as almost inevitable that issues of the kind which have been the subject of this dispute will arise again and will continue to arise so that an injunction is inutile;

(4) Merciful has found another bank willing to do business with it, so that a significant element of the harm Merciful says it will suffer by not having a bank has been assuaged.

1. Westpac submits that the first three of these factors are all present in this case.
2. In light of those observations, Westpac submits the following considerations point strongly against a grant of an interlocutory injunction:

(a) Following an investigation, Westpac has made a decision that having Sun Capital as a customer is beyond its risk appetite. It is inappropriate to force Westpac to take on that perceived risk in the highly regulated environment within which it operates.

(b) The reasons why Westpac made the decision to close the Sun Capital Accounts makes it highly likely that Westpac, in continuing to monitor and manage its regulatory and compliance risks, may again form the view that having Sun Capital is beyond its risk appetite.[113] Forcing Westpac to retain Sun Capital as a customer - temporarily or permanently - is inutile.

(c) Imposing a restraint on Westpac closing the Sun Capital Accounts pending the final hearing and determining of this proceeding will require Westpac to continue to provide banking services to a customer it has already decided is outside its risk appetite. Westpac will be required to maintain continuous oversight of the Sun Capital Accounts, which necessitates significant senior leadership involvement and results in Westpac carrying the ongoing risks associated with retaining the customer relationship.[114] A failure to comply with Westpac's regulatory obligations exposes the bank to the risk of regulatory action and substantial financial detriments.[115] These considerations cause inconvenience and prejudice to Westpac.

1. Westpac submits that the plaintiffs' proposition that the permanent injunction that is sought is somehow attenuated because it is relevantly limited to the Close Account Decision and the Cease Services Decision, such that it is not a barrier to an interlocutory injunction being granted, should be rejected. Westpac says that the problem with that submission is that the plaintiffs would contend that Westpac cannot have regard to any of the circumstances in forming those Decisions if making a new decision to close the Sun Capital Accounts. If they were successful in establishing a breach that entitled them to a permanent injunction, the burden of the plaintiffs' submission would be all that underpinned that decision is out of bounds and Westpac cannot have regard to it in making a fresh decision. That would mean that where Westpac has identified an established relationship between Sun Capital and Mr Kukulka who has previously been identified as a money laundering risk that Westpac has identified through publicly available information that supports that view, it would be compelled to continue providing services to an entity it has formed the view is outside of its ML/TF risk appetite.

1. Westpac submits that damages would be an adequate remedy such that an interlocutory injunction not required. Westpac submits that if it is determined at trial that Westpac has breached its contractual obligations with the plaintiffs in closing the Sun Capital Accounts, any loss suffered by the plaintiffs can be assessed by evidence, quantified and compensated by damages.
2. Westpac submits that it is difficult to see what loss Sun Capital would suffer if unable to offer Gold Dealers a bank account through which to transact. However, to the extent that it does suffer harm, it is not apparent why that could not be compensated or remedied by an award of damages. Damages for reputational harm and loss of commercial opportunity are harms which are compensated for in monetary terms by courts all the time.
3. Further, Westpac says that the plaintiffs' submissions about the so-called practical issues of proof do not establish that damages in this case would be an adequate remedy. That argument is completely circular and goes nowhere, as illustrated by Walker v ANZ. One of the difficulties regarding quantification of damages identified in that case involved assessing the recovery of a myriad of small debts. The banking facility used by One.Tel involved a large-scale telephone business of approximately 720,000 active customers with outstanding debts of about $190 million, where the bank account was used by customers to pay their telephone accounts. The evidence was that if the facility was not available for the collection of customer debts, voluntary compliance by customers would dramatically fall away and the debt recovery process would be substantially impaired. The difficulty in that case was the one which the administrators of One.Tel would have in proving the recovery of debts which would have been achieved but for the closure of the facility. Westpac submits that the practical proof of loss of the kind confronted in Walker v ANZ is not the practical problems which may exist here. That the plaintiffs perceive a challenge in proving causally connected loss confronts every plaintiff, and if that argument was a reason why you could obtain an interlocutory injunction, then every case would result in one being granted.

E.3 Consideration - where does the balance of convenience lie?

E.3.1 Assessing and balancing the competing risks of injustice

1. The plaintiffs effectively submit that the balance of convenience weighs fully in their favour. I do not accept this.
2. The proposition that Westpac could only establish a risk of injustice to it by pointing to an actual way in which an injunction to keep the Sun Capital Accounts open would result in Westpac not being in compliance with its regulatory obligations must be rejected. As with the plaintiffs' development of the concept of Reasonable Opinion of Necessity, stating the test for balance of convenience in those terms creates, without reference to any authority, far too high a threshold. If Westpac does not have to have an actual instance of a ML/TF violation in order to decide to close the accounts to manage the risk associated with complying with its regulatory obligations,[116] then it could hardly be the case that it would have to have such an instance in order for there to be a risk of injustice to it if the injunction is granted. In other words, the actual ML/TF risk does not have to have materialised in order for injustice to arise through granting an interlocutory injunction preventing Westpac from closing the Sun Capital Accounts.
3. The plaintiffs' focus has been on preventing Westpac from closing the Sun Capital Accounts, but the flip side of this must be borne in mind. Granting the injunction would not just keep the accounts open: it would require Westpac to continue to bank Sun Capital, including processing the various transactions through the accounts. Having identified that Sun Capital is high risk insofar as ML/TF is concerned, Westpac must take the additional measures required by the AML/CTF Act and the AML/CTF Rules and its own policies, as described in the Tadepalli Affidavit.
4. I do not accept the plaintiffs' submission that there is no evidence before the Court as to any prejudice Westpac will suffer if forced to keep the Sun Capital Accounts open. In my view, the matters identified by Mr Tadepalli as set out at paragraph 63 above more than amply establish that there is real prejudice to Westpac if the injunction is granted. The matters set out there are not merely theoretical. Clearly the steps Mr Tadepalli outlines must be taken, including for the reasons I have set out at paragraph 179 above. Those concerns arise, irrespective of whether there are transactions on the Sun Capital Accounts which are established to be for ML/TF purposes.
5. Accordingly, I am satisfied that there is a risk of injustice to Westpac if the injunction is granted.
6. That said, I am also satisfied that there is a risk of injustice to the plaintiffs if the injunction is not granted. In this regard:

(a) I accept that the evidence establishes that Sun Capital may find it difficult to obtain other banking facilities and that other entities in the group may experience difficulties doing so as well. The fact that Sun Capital itself has been debanked by ANZ (twice, now), Commonwealth Bank of Australia, and National Australia Bank,[117] and has had applications to open accounts with other financial institutions rejected (including in the last two to three months),[118] is sufficient to establish that it may be difficult.

(b) I also accept the evidence that other entities in the group may experience problems with their existing accounts if they start processing transactions for gold bullion dealings through those accounts. Mr Menegol's evidence is that such difficulties have occurred in the past when those accounts have been used.

1. However, I do not accept that the prejudice to the plaintiffs is as great or as dire as they submit, but I do accept that they are likely to be prejudiced if the injunction is not granted. In my view, the plaintiffs' position as set out in paragraph 152 above is significantly overstated. The evidence does not go so far as to show that no bank is willing to permit the plaintiffs' gold trading activities: rather, it demonstrates that finding another bank may be difficult.
2. Rather than causing the collapse of the Business, as the plaintiffs contend, in my view the evidence establishes that the plaintiffs will likely be inconvenienced in operating the Business in the short term while they organise new facilities or seek to use existing ones in the group. This is likely to cause some loss to the plaintiffs, as the Business may suffer in that period.
3. I agree with Westpac's submission that the plaintiffs' commercial reasons and preferences for having accounts with a 'big four' bank is not sufficient to establish prejudice if the injunction is not granted. I accept Mr Tadepelli's evidence that some of the features Mr Kukulka describes of banking with a 'big four' bank are not all features which Westpac provides, and that there are other banks which can and do provide services with those features.[119]
4. For the purposes of considering this application, I accept that the descriptor 'extraordinary remedy' for an injunction requiring a bank to keep banking a customer is of little assistance and that whether an injunction should be granted depends on all the circumstances.[120]
5. In all the circumstances of this case and applying the test set out in Bradto, I am satisfied that the lower risk of injustice should I turn out to be wrong is to refuse the interlocutory injunction. This is because:

(a) as noted by Nichols J in Cryptai, the strength of the plaintiffs' case and their chances of success may be relevant to assessing the balance of convenience.[121] Since I have not found that there is a serious question to be tried, and have stated if that turns out not to be the case then I consider the plaintiffs' case to be weak, that tells against the balance of convenience favouring the plaintiffs. There being no serious question to be tried, or at the least only a weak case, the risk of injustice is greater if the interlocutory injunction is granted and the plaintiffs fail at trial;

(b) for the reasons identified by Hammerschlag CJ in Equity in Merciful Group,[122] I accept Westpac's submission that a permanent injunction is unlikely to be granted at trial. The first three of the factors identified by his Honour are present in this case - so much is apparent from my findings in respect of serious question to be tried - and I do not regard it as fatal to this argument that the fourth factor is not present. That the fourth factor is not present is something I have addressed in paragraphs 182 to 184 above. I agree with Westpac's submission at paragraph 172 above, for the reasons articulated by Westpac. In summary, it is unlikely that the Court will require Westpac to continue to bank Sun Capital in circumstances where, after an investigation, it has made a decision to close the accounts of a customer who it has determined is beyond its risk appetite and on the basis of managing risk associated with complying with its regulatory and compliance obligations; and

(c) the matter discussed in sub-paragraph (b) above is a factor in determining the balance of convenience, but I do not regard it as determinative. Nonetheless, it means that irrespective of whether there is a serious question to be tried, an interlocutory injunction to preserve the status quo when a permanent injunction reflecting that status quo is unlikely is a factor strongly telling against the balance of convenience in granting the interlocutory injunction; and

(d) further, in circumstances where I have found there is no serious question to be tried (or at the least, a weak case), granting an interlocutory injunction to preserve the status quo when a permanent injunction reflecting that status quo is unlikely also tells against the balance of convenience. I do not accept the plaintiffs' submission at paragraph 155 above that the form of the permanent injunction somehow attenuates the granting of the interlocutory injunction such that the matters identified in Merciful Group carry less force. Further, the argument made in favour of the broader interlocutory injunction, set out at paragraph 156 above, exposes the fallacy of the plaintiffs' submission that there is no prejudice to Westpac caused by granting the injunction. Clearly, the plaintiffs take the view that if the broader interlocutory injunction is granted, no matter what transactions occur in the Sun Capital Accounts, Westpac would not be able to close them without seeking an order from the Court. Nor do I accept that framing the interlocutory injunction in the same terms as the permanent injunction tips the balance of convenience back in favour of the plaintiffs, for all of the reasons already stated.

1. I am not satisfied that the plaintiffs have established that damages are not an adequate remedy, for the following reasons:

(a) I am not at all persuaded by the submission (see paragraph 157(b) above) that establishing a causal link between the closure of the Sun Capital Accounts and the loss of the Business is a reasonable basis for finding that damages are not an adequate remedy. Indeed, I find this a rather extraordinary submission, given that establishing causation between breach and loss is an essential element of any breach of contract claim;

(b) there may well be difficulties in quantifying damages for loss of reputation, but again, that is hardly a strong basis for granting an interlocutory injunction, when courts undertake such exercises on a daily basis, particularly for example in the context of defamation claims;

(c) despite the plaintiffs' submissions to the contrary, there is a circular or somewhat inconsistent argument between seeking damages for pecuniary loss brought about by the loss of reputation and the loss of opportunity to conduct the Business on the one hand, and then contending that because there are difficulties with proving the quantum of that loss damages are an inadequate remedy; and

(d) courts can, and do, assess damages in many difficult circumstances and there is nothing about this case to suggest that if the plaintiffs succeed at trial but do not obtain a permanent injunction, then the Court will not be able to award damages which adequately compensate them.

1. The situation in Walker v ANZ, the case relied on by the plaintiffs regarding the adequacy of damages as a remedy, was very different to the one which pertains here. In that case, ANZ provided an electronic payment facility to One.Tel Limited and later to its administrators, which ANZ purported to terminate pursuant to its contract. One.Tel and its administrators then commenced proceedings alleging that the purported termination was a breach of contract and the then Trade Practices Act 1974 (Cth). They sought in interlocutory injunction restraining ANZ from giving effect to the notice by which it purported to terminate the service.
2. As the plaintiffs submitted, in Walker v ANZ, Austin J accepted One.Tel's and the administrators' submissions that damages were not an adequate remedy due to the practical difficulties in that case of proving the quantum of their loss. However, what the plaintiffs did not go on to say was that this was not enough for Austin J to grant the interlocutory injunction, as his Honour was not satisfied because it could not be said that the relief sought would not cause prejudice or hardship to the customers of One.Tel or to the defendant bank.[123]
3. Accordingly, the adequacy of damages is a factor to take into account when considering the balance of convenience, but it can by no means be seen as determinative.
4. In any event, even if the plaintiffs had persuaded me that damages were an adequate remedy, the balance of convenience still favours not granting the injunction. The matters I have identified in section E.3.1 above outweigh damages being an inadequate remedy.

E.3.3 Conclusion regarding the balance of convenience

1. Both Westpac and the plaintiffs are prejudiced by granting/not granting the injunction, such that there truly is a balancing which is required. However, it is not competing prejudices which must be weighed, but competing injustices. The identified risk of injustice to the plaintiffs is, in truth, the identification of prejudice or hardship. Since the plaintiffs have not established a serious question to be tried, it is not the case that risk of prejudice/hardship equates to risk of injustice. However, for the reasons I set out in Sections E.3.1 and E.3.2 above, even had I found that there was a serious question to be tried, I would still have found that the balance of convenience was served by refusing the interlocutory injunction.
2. In all the circumstances of this case, the appropriate balance is achieved by not granting the injunction. That is where the lesser risk of injustice lies.

1. For the above reasons, the plaintiffs' application for an interlocutory injunction is refused and the summons will be dismissed.
2. I will hear from the parties on the form of orders to be made and on the question of costs.

[2] First Menegol Affidavit, [4]-[5].

[7] First Menegol Affidavit, [16], [22], [23].

[8] First Menegol Affidavit, [18], [19], [24].

[11] Follacchio Affidavit, [9]-[10].

[13] Second Menegol Affidavit, [70]-[71].

[14] Second Menegol Affidavit, [73]-[74].

[15] [2006] HCA 46; (2006) 227 CLR 57.

[16] O'Neill, 68 [19] (Gleeson CJ and Crennan J).

[17] [2006] VSCA 89; (2006) 15 VR 65.

[18] Ibid 73 [35] (Maxwell P and Charles JA).

[19] [2025] VSC 217, [14] (citations omitted).

[20] For convenience, I will refer to each of these circumstances as clause 20(1), clause 20(2), clause 20(3), clause 20(4) and clause 20(5).

[31] Tadepalli Affidavit, [12], [13].

[45] Tadepalli Affidavit, [33]-[35].

[56] Relying on Human Appeal International Australia v Beyond Bank Australia Ltd (No 2) [2023] NSWSC 1161 (Parker J), [111]-[113].

[57] Human Appeal International, [113].

[58] See paragraphs 28 and 28 above.

[59] Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336.

[60] [2025] NSWSC 841 (Hammerschlag CJ in Eq), [30]-[44].

[61] The language of 'might' is taken directly from the terms of s 85 of the AML/CTF Act.

[62] Kerrigan Affidavit, exhibit CJK-1 at pp.25-26.

[64] See sub-paragraphs 151(a), (c), (f) and (g) below where the evidence to this effect is described.

[74] Kerrigan Affidavit, exhibit CJK-1 at p.26.

[75] See paragraph 169 below for Westpac's submission in this regard, and footnote 110 for the cases referred to therein.

[76] [2003] NSWSC 964.

[78] First Menegol Affidavit, [40]-[41].

[81] Second Menegol Affidavit, [10]-[11].

[82] Kukulka Affidavit, [13], [14].

[87] Second Menegol Affidavit, [15]-[29].

[92] Second Menegol Affidavit, [15]-[29].

[93] Second Menegol Affidavit, [91]-[95].

[97] [2001] NSWSC 806.

[98] Walker v ANZ, [104]-[105] (Austin J).

[101] Second Menegol Affidavit, [14].

[102] Second Menegol Affidavit, [11].

[103] Second Menegol Affidavit, [85].

[104] Second Menegol Affidavit, [85].

[108] Tadepalli Affidavit, [51]-[54].

[109] Paciocco v Australia and New Zealand Banking Group Ltd (2014) 309 ALR 249, [93].

[110] Prosperity Ltd v Lloyds Bank Ltd (1923) 39 TLR 372, 374-5; B-Filer Inc v Bank of Nova Scotia 2005 ABQB 704, [43]; B-Filer Inc v TD Canada Trust 2008 ABQB 749, [53]; RCG Forex Service Corp v HSBC Bank Canada 2011 BCSC 315, [59]-[60]; Impact Traders Pty Ltd v Australian and New Zealand Banking Group Limited [2003] NSWSC 964, [32], [36]; National Commercial Bank Jamaica v Olint Corporation [2009] 1 WLR 1405, [1]; Bank of New Zealand v Christian Church Community Trust [2024] NZCA 645; [2024] 3 NZLR 856, [186]-[187]; [2024] NZCA 645.

[112] Merciful Group, [99] (citations omitted).

[113] Tadepalli Affidavit, [39], [41], [45].

[116] Noting that in Merciful Group, it was found that Suncorp was not required to make any finding that ML/TF had actually occurred before closing the account due to an unacceptable ML/TF risk: Merciful Group, [89].

[117] Second Menegol Affidavit, [15]-[29].

[118] Second Menegol Affidavit, [28], [38].

[119] See paragraph 165 above.

[120] Merciful Group, [96], [98].

[122] Merciful Group, [99]; see paragraph 170 above.