Background
Merciful Group Incorporated is an Australian registered charity providing aid to conflict-affected countries, including Syria, Lebanon and Yemen. It held an account with Suncorp Bank from 2019 until 2025. Suncorp’s monitoring systems classified the account as presenting a high anti-money-laundering and counter-terrorism-financing risk after identifying matters including substantial transfers through a third-party remitter, transactions involving high-risk jurisdictions, a sharp increase in donations and uncertainty about sources of funds.
In April 2025, Suncorp notified Merciful that it would close the account under clause 15.2(c) of its standard terms. That clause stated that Suncorp could close an account immediately “if … to protect our Legitimate Interests,” an acknowledged grammatical error. The Supreme Court of New South Wales rejected Merciful’s claim that closure breached the agreement. Merciful then sought leave to appeal, arguing that the clause permitted closure only when objectively necessary and that Suncorp should first have pursued less restrictive measures or further inquiries.
The Court’s Holding
The Court of Appeal granted leave because the defective standard term raised an issue extending beyond the parties, but unanimously dismissed the appeal. Leeming JA, with Bell CJ and Stern JA agreeing, held that clause 15.2(c) should be read as if it said Suncorp could close an account immediately if “we need to protect our Legitimate Interests.” That construction corrected the grammatical defect with the least alteration to the text, made paragraph (c) operate as a condition like the other paragraphs and avoided depriving the following provision concerning prudential requirements of practical work.
The Court assumed in Merciful’s favour that Suncorp’s decision had to be reasonable as well as rational, honest and made in good faith. Even on that assumption, the challenge failed. The contract did not make closure a last resort, and more than one response to a financial-crime risk could be reasonable. Suncorp’s responsible officer had concluded that no available measure would adequately mitigate the identified risk; he had not been confronted in cross-examination with an allegation that this conclusion or the decision to close the account was unreasonable. There was therefore no basis to disturb the primary judge’s finding that Suncorp acted reasonably.
Key Takeaways
- A court may correct an obvious drafting error by adopting the construction that does the least violence to the contractual text and best fits the provision’s structure.
- Suncorp’s account-closure power applied when it needed to protect its defined Legitimate Interests; it did not require the bank to prove that every lesser measure had first been exhausted.
- A party seeking to establish that a decision-maker acted unreasonably ordinarily must put that allegation squarely to the relevant witness in cross-examination.
Why It Matters
The decision clarifies how Australian courts may construe defective standard banking terms and confirms that a contractual requirement of “need” does not necessarily make account closure available only as a last resort. Banks assessing AML/CTF exposure may reasonably choose among different risk responses, depending on their risk appetite and capacity to mitigate the risk.
The case also underscores a practical evidentiary point for challenges to de-banking decisions: allegations that a bank’s assessment was unreasonable must be tested directly with the officer responsible for that assessment. Although Merciful obtained leave and secured a narrower construction of the clause than Suncorp primarily advocated, it could not overturn the factual finding that the closure decision was reasonable.