OPS SCREENING & CRUSHING EQUIPMENT PTY LTD v GOLD VALLEY IRON PTY LTD

1. The appellants counterclaimed, amongst other things, a declaration that the respondent's security interest in each item of the mining equipment was not perfected, within s 21 of the PPSA, as at 17 February 2020; a declaration that the respondent's security interests vested in the first appellant, pursuant to s 267 of the PPSA, on 17 February 2020; and an order that the respondent deliver up the items of mining equipment which the respondent collected on 22 March 2020, alternatively, that the respondent pay to the second and third appellants for the account of the first appellant the value of those items of equipment.
2. The preliminary issue formulated by the parties and determined by the primary judge was this: did each hire agreement create a security interest in the mining equipment the subject of the agreement pursuant to s 12(1) of the PPSA, alternatively pursuant to s 12(3) of the PPSA, which the respondent was required to perfect by registration pursuant to s 21 of the PPSA?
3. His Honour concluded that none of the hire agreements created a security interest in the mining equipment the subject of the agreements which the respondent was required to perfect by registration pursuant to s 21 of the PPSA. It followed, in his Honour's view, that s 267 of the PPSA had no application in the circumstances of the case and the respondent's alleged security interests in the equipment did not vest in the first appellant pursuant to that provision.
4. On 25 November 2020, the primary judge made declaratory orders to that effect.
5. On 10 December 2020, his Honour ordered that the appellants' counterclaim be dismissed.
6. We note that the preliminary issue formulated by the parties was confined to whether the hire agreements created security interests in the mining equipment pursuant to s 12(1), alternatively s 12(3), of the PPSA, which the respondent was required to perfect by registration pursuant to s 21 of the PPSA.
7. The preliminary issue did not include whether, if the hire agreements did create security interests which the respondent was required to perfect by registration, the respondent had validly and effectively perfected its security interests.
8. The appellants pleaded in their defence that:

(a) on 20 December 2019, the respondent registered security interests in respect of the mining equipment on the Personal Property Securities Register (par 6);

(b) however, the security interests were not registered as required by sch 1, cl 2 of the Personal Property Securities Regulations 2010 (Cth) (par 7);

(c) in the premises, the security interests were defective registrations pursuant to s 164(1)(b) and s 165 of the PPSA, alternatively were seriously misleading within s 164(1)(a) of the PPSA (par 8); and

(d) the security interests were therefore not valid registrations capable of being enforced by or relied upon by the respondent (par 9).

1. The appellants repeated those pleas in their counterclaim.
2. The respondent, in its reply and defence to counterclaim, joined issue with the appellants in relation to whether the respondent was required and had failed to perfect its alleged security interests in the mining equipment. The respondent pleaded that the hire agreements did not create any security interest, within s 12 of the PPSA, in the equipment and, accordingly, no such security interest was capable of vesting in the first appellant pursuant to s 267 of the PPSA.
3. The primary judge did not deal in his reasons with the question whether any purported registration by the respondent was valid and effective. It was unnecessary for his Honour to deal with that question because, as we have mentioned, it was not included in the preliminary issue formulated by the parties.
4. The appellants rely upon three grounds of appeal. After the court heard and reserved judgment in the appeal, the appellants filed an application in the appeal on 27 July 2022 for leave to amend ground 1. The essence of the appellants' complaints in their grounds of appeal is that his Honour erred in finding that each hire agreement did not constitute, in substance, a security interest within s 12(1) of the PPSA which the respondent was required to perfect by registration pursuant to s 21 of the PPSA, and his Honour also erred in finding that the PPSA had no application in the circumstances of the case and the respondent's alleged security interests in the equipment did not vest in the first appellant pursuant to that provision.
5. We would allow the appeal. In our opinion, each of the hire agreements constituted a hire purchase transaction that provided for an interest in personal property (namely, the mining equipment) that, in substance, secured payment or performance of an obligation by the first appellant to the respondent (without regard to the form of the transaction or the identity of the respondent as the person who had title to the equipment). The interest in personal property was the respondent's rights in the mining equipment as the hiree of the equipment and the holder of the reversion.

1. The relevant facts, as found by the primary judge, are not in dispute.
2. The following recitation of those facts is taken from his Honour's reasons.
3. There were five written agreements between the parties under which the first appellant agreed to hire from the respondent specified items of equipment. The material terms of the agreements were identical.
4. Each agreement was entitled 'Monthly Plant and Equipment Dry Hire Agreement' and comprised a front page on which basic information was recorded in tabular form, a second page containing 'Hire Particulars', a third page recording 'Additional Hire Charges', two pages of 'Terms and Conditions of Hire' and finally two pages of 'Special Terms & Conditions of Hire'.
5. The front page of each agreement contained five tables of information. One contained details of the quote provided by the respondent, one contained the 'Hirer Details' in which various details of the first appellant were set out. Another table contained 'Equipment Details' recording details of the equipment the subject of the agreement and the 'Plant Insurance Value'. Another table specified the 'Hire Rate'. Using the agreement in respect of a C-1540S Cone Crusher as an example, the form of the table relating to the hire rate was as follows:[1]

Monthly hire rate based on a maximum 200 SMU hours per month. Hours in excess of 250 SMU hours per month will be charged at the below pro rata hourly hire rate.

1. The final table on the first page of the agreement was as follows:

1. In each agreement the price specified in the 'Outright Purchase Price Option' table was the same as the figure specified as the 'Plant Insurance Value'.
2. The 'Hire Particulars' included provisions referred to as 'Special Terms', 'Hire Period', 'Delivery Date', 'Commencement Date' and 'Anticipated Completion Date' all set out in tabular form along with other details that are not presently relevant. The relevant provisions are reproduced below.

1. Machine rental is subject to received and completed Hire Agreement, [the respondent's] Trading Terms Agreement; Special Terms & Conditions of Hire Agreement, as well as Customer purchase order and insurance CoC from a reputable insurer.

1. Hirer is granted to option to purchase the equipment, subject to receipt of an executed Special Terms & Conditions of Hire Agreement.

1. Two months base rental to be paid in advance, in order to secure units and commence dispatch preparations. Two months in advance to be maintained at all times during the hire. Hire invoices will be sent out minimum five business days prior to end of month for the base monthly hire rate. These invoices must be received in [the respondent's] nominated bank account prior to COB AWST on the last business day of the calendar month.

Should funds not be received by this time, the equipment will be immediately disabled and demobilisation arrangements made.

[The respondent] will retain the two months in advance as a security deposit up until the point of off hire, return of the equipment and completion of post hire repair estimation. The advance payment will be applied to the post hire repair invoice, with any difference being returned to the customer or to be paid by the customer within two business days of invoice issue.

Should the customer purchase the units at any stage during the hire, the advance payment will be applied as a deposit against the purchase buy out amount.

Minimum ten (10) continuous months hire period with option to purchase at anytime. Should the hire fall short of ten (10) continuous months for any reason other than buyout of equipment, [the respondent] will be entitled to charge the difference between the ten (10) months hire rates and its standard monthly contract hire rates.

Anticipated 20/12/2019 - To be confirmed by [the respondent]

To be confirmed by customer - minimum period applies, as above

1. Nothing turns on the provisions included under the heading 'Additional Hire Charges'.
2. The 'Terms & Conditions of Hire' dealt with matters such as the payment of hire charges, the obligation on the Hirer to keep the equipment safe, the obligation on the Hirer to insure, the Hirer's responsibility for damage, the Hirer's responsibility for maintenance, and the Hirer's responsibility for the maintenance of service records and other practical matters relating to the hire of mining equipment. The terms included a term to the effect that the owner had the right to terminate the hire and recover the hired plant at any time 'in the event of non-payment of monies owing or plant misuse/abuse'. Further, there was a term to the effect that if the 'fixed hire period [was] concluded early, hire charges remain payable until agreed final hire date or until plant is rehired by the owner' but there was no other provision that dealt expressly with termination of the agreement.
3. Clause 7 of the 'Terms & Conditions of Hire' provided:
   1. The owner has the right to terminate the hire and recover the hired plant at any time, in the event of non‑payment of monies owing or plant misuse/abuse.
4. Clause 12 and cl 13 of the 'Terms & Conditions of Hire' dealt with adjustments to the hire charges that may be made in favour of the Hirer in respect of 'stand down time'. The clauses provided as follows:
   1. Stand down time will only be granted by the owner, upon written or oral request by the Hirer, prior to the commencement of the proposed stand down period. Adjustment for hire charges will be considered on the merit of the request and will be at the owner's discretion. Stand down rates, if granted, will be charged at 50% of the current standard hire rate.
   2. No hire charge shall be applied to the Hirer's account in instances of inclement weather or major machine maintenance/repairs. For hire charges to be wavered, the Hirer must notify the Owner on each and every day the machine is to be stood down in these instances.
5. In the 'Special Terms & Conditions of Hire' the respondent was designated 'the Owner' and the first appellant 'the Client'. The Special Conditions were preceded by a preamble that read as follows:

This document is in place to act as a binding agreement between the Owner and the Client, detailing the special conditions associated to Monthly Plant and Equipment Hire Agreement Number CENT0413A‑2, as agreed.

1. The Special Terms & Conditions of Hire were as follows:

1. The Client will commence the hire of a 2019 Terex Finlay C‑1540S Cone Crusher, with details confirmed as per Monthly Plant & Equipment Hire Agreement Number CENT0413A-2, at the agreed rates listed within the Hire Agreement. Any additional costs and charges associated with this hire will be as per the binding Monthly Plant & Equipment Hire Agreement and [the respondent's] Terms and Conditions of Hire Agreement.
2. The hire of this machine by the Client will be governed by the binding Monthly Plant & Equipment Hire Agreement and [the respondent's] Terms and Conditions of Hire Agreement, except where these Special Conditions of Hire are applied and take precedent.
3. The Client is agreed to have first right of refusal to purchase the 2019 Terex Finlay C‑1540S Cone Crusher, machine serial number TRX1540SHOMK50180, for the purchase price of AU$693,500.00 + GST (base unit pricing, exclusive of any required modifications, mobilisation, commissioning etc). Any resultant sale enactment will be governed as per [the respondent's] standard Terms & Conditions of Sale;
   • If the Client enacts the Sales Agreement by settling machine purchase funds within 30 days from commencement of hire, [the respondent] agree[s] to apply a rebate of 100% of the monthly hire rate for each month of hire which has been fully paid to and received by [the respondent], as a deposit against the final settlement amount for the machine purchase. No GST amount can be refunded or applied as a deposit.
   • If the Client enacts the Sales Agreement by settling machine purchase funds within 31-60 days from commencement of hire, [the respondent] agree[s] to apply a rebate of 85% of the monthly hire rate for each month of hire which has been fully paid to and received by [the respondent] as a deposit against the final settlement amount for the machine purchase. No GST amount can be refunded or applied as a deposit.
   • If the Client enacts the Sales Agreement by settling machine purchase funds within 61-90 days from commencement of hire, [the respondent] agree[s] to apply a rebate of 70% of the monthly hire rate for each month of hire which has been fully paid to and received by [the respondent] as a deposit against the final settlement amount for the machine purchase. No GST amount can be refunded or applied as a deposit.
   • If the Client enacts the Sales Agreement by settling machine purchase funds within 91-120 days from commencement of hire, [the respondent] agree[s] to apply a rebate of 65% of the monthly hire rate for each month of hire which has been fully paid to and received by [the respondent] as a deposit against the final settlement amount for the machine purchase. No GST amount can be refunded or applied as a deposit.
   • If the Client enacts the Sales Agreement by settling machine purchase funds within 121-300 days from commencement of hire, [the respondent] agree[s] to apply a rebate of 50% of the monthly hire rate for each month of hire which has been fully paid to and received by [the respondent] as a deposit against the final settlement amount for the machine purchase. No GST amount can be refunded or applied as a deposit.
4. No transfer in ownership or title of the machine will take place until full settlement of machine purchase funds has been received (and confirmed as received) by [the respondent] in our nominated bank account. As such, all usage of the unit up until this point will be subject to [the respondent's] Terms & Conditions of Hire and any alterations/modifications to the machine must be requested in writing to the Owner and subsequently approved in writing.
5. Rebate amounts are based on the base hire rate only, and exclude the amortised modifications. For clarity, this is the post three months hire rate.
6. Clause 3 of the Special Terms & Conditions of Hire refer to '[the respondent's] standard Terms & Conditions of Sale', but there was no evidence that any such terms existed or, if they existed, what they were.

1. Section 3 of the PPSA includes an overview of the PPSA as follows:

This Act is a law about security interests in personal property.

A security interest is an interest in personal property provided for by a transaction that secures payment or the performance of an obligation. The form of the transaction and the identity of the person who has title to the property do not affect whether an interest is a security interest.

Personal property includes many different kinds of tangible and intangible property, other than real property. Examples include motor vehicles, household goods, business inventory, intellectual property and company shares. Personal property is known as collateral if it is (or is anticipated to be) the subject of a security interest.

A security interest is enforceable against a grantor when it attaches to collateral. A security interest attaches to collateral when a person gives value for acquiring the security interest (or does something else to acquire it), and in return, the person gains rights in the collateral.

A security interest is enforceable against third parties when it has attached to the collateral and either the secured party has possession or control of the collateral, or a security agreement covers the collateral.

If a security interest in collateral is perfected, it takes priority over another security interest that is unperfected when the security interest comes to be enforced. A security interest is perfected if:

(a) it has attached to collateral; and

(b) it is enforceable against third parties; and

(c) certain extra steps (possession or control of the collateral, or registration on the Register of Personal Property Securities) have been taken to protect the interest.

Certain security interests are also declared to be temporarily perfected, or perfected, under this Act.

The secured party whose security interest has the highest priority is entitled to enforce that interest ahead of secured parties with security interests that have a lower priority.

Between perfected security interests, perfection by control has a higher priority than other forms of perfection. The next level of priority is given (subject to certain rules) to perfected purchase money security interests. If no other way of working out priority between perfected interests is provided, the highest priority is given to the security interest that has been continuously perfected for the longest period.

The Register of Personal Property Securities enables secured parties to give notice of actual or prospective security interests. Notice is given by the recording of data about secured parties, grantors and collateral. The register may be kept electronically, for example in a form that is interactive and accessible over the internet.

1. Section 8(1) states that the PPSA does not apply to any of the interests specified in that provision, except as provided by s 8(2) or s 8(3). Section 8 has no application in the present case.
2. Section 10 contains numerous definitions. It provides, relevantly, that in the PPSA:

general law means the principles and rules of the common law and equity.

goods means personal property that is tangible property, including the following:

(a) crops;

(b) livestock;

(c) wool;

(d) minerals that have been extracted (including hydrocarbons) in any form, whether solid, liquid or gaseous and whether organic or inorganic;

(e) satellites and other space objects;

but does not include financial property or an intermediated security.

grantor means:

(a) a person who has the interest in the personal property to which a security interest is attached (whether or not the person owes payment or performance of an obligation secured by the security interest); or

(b) a person who receives goods under a commercial consignment; or

(c) a lessee under a PPS lease; or

(d) a transferor of an account or chattel paper; or

(e) a transferee of, or successor to, the interest of a person mentioned in paragraphs (a) to (d); or

(f) in relation to a registration with respect to a security interest:

(i) a person registered in the registration as a grantor; or

(ii) a person mentioned in paragraphs (a) to (e).

insolvency has the same meaning as in paragraph 51(xvii) of the Constitution.

Note: Other parts of speech and grammatical forms of "insolvency" (for example, "insolvent") have a corresponding meaning (see section 18A of the Acts Interpretation Act 1901.

...

interest, in personal property, includes a right in the personal property.

...

law of the Commonwealth, a State or a Territory means:

(a) an Act of the Commonwealth, the State or the Territory; or

(b) an instrument made under such an Act.

...

located, in relation to personal property, or a person, has the meaning given by section 235.

...

matter includes act, omission, body, person and thing.

...

perfected has the meaning given by section 21.

personal property means property (including a licence) other than:

(a) land; or

(b) a right, entitlement or authority that is:

(i) granted by or under a law of the Commonwealth, a State or a Territory; and

(ii) declared by that law not to be personal property for the purposes of this Act.

Note: This Act does not apply to certain interests even if they are interests in personal property (see section 8).

possession has a meaning affected by section 24.

PPS lease (short for Personal Property Securities lease) has the meaning given by section 13.

PPS matter (short for Personal Property Securities matter) has the meaning given by section 206.

...

provides: a security agreement provides for a security interest if the interest arises under the agreement.

...

secured party:

(a) means a person who holds a security interest for the person's own benefit or for the benefit of another person (or both); and

(b) if the holders of the obligations issued, guaranteed or provided for under a security agreement are represented by a trustee as the holder of the security interest - includes the trustee; and

(c) in relation to a registration with respect to a security interest ‑ includes a person registered as a secured party in the registration.

(a) an agreement or act by which a security interest is created, arises or is provided for; or

(b) writing evidencing such an agreement or act.

security interest has the meaning given by section 12.

...

this Act includes the regulations.

time of execution has the meaning given by section 74.

...

value:

(a) means consideration that is sufficient to support a contract; and

(b) includes an antecedent debt or liability; and

(c) in relation to the definition of purchase money security interest ‑ has a meaning affected by section 14.

(a) the recording of words or data in any way (including electronically), if, at the time the recording was made, it was reasonable to expect that the words or data would be readily accessible so as to be useable for subsequent reference; and

(b) the display, or other representation, of words or data by any form of communication (including electronic), if:

(i) the display or representation is recorded in any way (including electronically); and

(ii) at the time the recording was made, it was reasonable to expect that the words or data would be readily accessible so as to be useable for subsequent reference.

1. Section 12 is concerned with the meaning of 'security interest'. It provides, relevantly:

(1) A security interest means an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property).

Note: For the application of this Act to interests, see section 8.

(2) For example, a security interest includes an interest in personal property provided by any of the following transactions, if the transaction, in substance, secures payment or performance of an obligation:

(a) a fixed charge;

(b) a floating charge;

(c) a chattel mortgage;

(d) a conditional sale agreement (including an agreement to sell subject to retention of title);

(e) a hire purchase agreement;

(f) a pledge;

(g) a trust receipt;

(h) a consignment (whether or not a commercial consignment);

(i) a lease of goods (whether or not a PPS lease);

(j) an assignment;

(k) a transfer of title;

(l) a flawed asset arrangement.

(3) A security interest also includes the following interests, whether or not the transaction concerned, in substance, secures payment or performance of an obligation:

(a) the interest of a transferee under a transfer of an account or chattel paper;

(b) the interest of a consignor who delivers goods to a consignee under a commercial consignment;

(c) the interest of a lessor or bailor of goods under a PPS lease.

1. Section 13 is concerned with the meaning of 'PPS lease'. It provides:

(1) A PPS lease means a lease or bailment of goods:

(a) for a term of more than 2 years; or

(c) for a term of up to 2 years that is automatically renewable, or that is renewable at the option of one of the parties, for one or more terms if the total of all the terms might exceed 2 years; or

(d) for a term of up to 2 years, or a lease for an indefinite term, in a case in which the lessee or bailee, with the consent of the lessor or bailor, retains uninterrupted (or substantially uninterrupted) possession of the leased or bailed property for a period of more than 2 years after the day the lessee or bailee first acquired possession of the property (but not until the lessee's or bailee's possession extends for more than 2 years).

(2) However, a PPS lease does not include:

(a) a lease by a lessor who is not regularly engaged in the business of leasing goods; or

(b) a bailment by a bailor who is not regularly engaged in the business of bailing goods; or

(c) a lease of consumer property as part of a lease of land where the use of the property is incidental to the use and enjoyment of the land; or

(d) a lease or bailment of personal property prescribed by the regulations for the purposes of this definition, regardless of the length of the term of the lease or bailment.

Bailments for value only

(3) This section only applies to a bailment for which the bailee provides value.

1. Section 18 specifies general rules about security agreements and security interests. By s 18(1):

A security agreement is effective according to its terms.

1. Section 19 relates to the enforceability of security interests against grantors and the concept of attachment. Section 19 provides:

Attachment required for enforceability

(1) A security interest is enforceable against a grantor in respect of particular collateral only if the security interest has attached to the collateral.

Attachment rule

(2) A security interest attaches to collateral when:

(a) the grantor has rights in the collateral, or the power to transfer rights in the collateral to the secured party; and

(b) either:

(ii) the grantor does an act by which the security interest arises.

Time of attachment

(3) Subsection (2) does not apply if the parties to a security agreement have agreed that a security interest attaches at a later time, in which case the security interest attaches at the time specified in the agreement.

(4) To avoid doubt, a reference in a security agreement to a floating charge is not a reference to an agreement that the security interest created by the floating charge attaches at a time later than provided under subsection (2).

Goods leased, bailed, consigned or sold under a conditional sale agreement.

(5) For the purposes of paragraph (2)(a), a grantor has rights in goods that are leased or bailed to the grantor under a PPS lease, consigned to the grantor, or sold to the grantor under a conditional sale agreement (including an agreement to sell subject to retention of title) when the grantor obtains possession of the goods.

(6) Subsection (5) does not limit any other rights the grantor may have in the goods.

Note: A security interest may attach to crops while they are growing, and to the products of livestock, before they become proceeds of the crops or livestock (for example, wool before it is shorn). See subsections 31(4) and (5) (meaning of proceeds) and section 84A (security interests in crops and livestock).

1. Section 20 is concerned with the enforceability of security interests against third parties. Section 20 provides, relevantly:

General rule

(1) A security interest is enforceable against a third party in respect of particular collateral only if:

(a) the security interest is attached to the collateral; and

(b) one of the following applies:

(i) the secured party possesses the collateral;

(ii) the secured party has perfected the security interest by control;

(iii) a security agreement that provides for the security interest covers the collateral in accordance with subsection (2).

Note: For possession and control of collateral, see Part 2.3.

Written security agreements

(2) A security agreement covers collateral in accordance with this subsection if:

(a) the security agreement is evidenced by writing that is:

(i) signed by the grantor (see subsection (3)); or

(ii) adopted or accepted by the grantor by an act, or omission, that reasonably appears to be done with the intention of adopting or accepting the writing; and

(b) the writing evidencing the agreement contains:

(i) a description of the particular collateral, subject to subsections (4) and (5); or

(ii) a statement that a security interest is taken in all of the grantor's present and after‑acquired property; or

(iii) a statement that a security interest is taken in all of the grantor's present and after‑acquired property except specified items or classes of personal property.

48 Section 21 specifies the main rule in relation to the perfection of a security interest in particular collateral. Section 21 provides:

(1) A security interest in particular collateral is perfected if:

(a) the security interest is temporarily perfected, or otherwise perfected, by force of this Act; or

(b) all of the following apply:

(i) the security interest is attached to the collateral;

(ii) the security interest is enforceable against a third party;

(iii) subsection (2) applies.

(a) for any collateral, a registration is effective with respect to the collateral; or

(b) for any collateral, the secured party has possession of the collateral (other than possession as a result of seizure or repossession); or

(c) for the following kinds of collateral, the secured party has control of the collateral:

(i) an ADI account;

(ii) an intermediated security;

(iii) an investment instrument;

(iv) a negotiable instrument that is not evidenced by a certificate;

(v) a right evidenced by a letter of credit that states that the letter of credit must be presented on claiming payment or requiring the performance of an obligation;

(vi) satellites and other space objects.

Note: For what constitutes possession and control of collateral, see Part 2.3.

(3) A security interest may be perfected regardless of the order in which attachment and any step mentioned in subsection (2) occur.

(4) A single registration may perfect one or more security interests.

1. Section 267 is concerned with the vesting of unperfected security interests in the grantor upon the grantor's winding up or bankruptcy etc. It provides:

Scope

(1) This section applies if:

(a) any of the following events occurs:

(i) an order is made, or a resolution is passed, for the winding up of a company or a body corporate;

(ii) an administrator of a company or a body corporate is appointed (whether under section 436A, 436B or 436C of the Corporations Act 2001, under that section as it is applied by force of a law of a State or Territory, or otherwise);

(iii) a company or a body corporate executes a deed of company arrangement (whether under Division 10 of Part 5.3A of the Corporations Act 2001, under that Division as it is applied by force of a law of a State or Territory, or otherwise);

(iiia) a restructuring practitioner for a company or a body corporate is appointed (whether under section 453B of the Corporations Act 2001, under that section as it is applied by force of a law of a State or Territory, or otherwise);

(iiib) a company or a body corporate makes a restructuring plan (whether under Division 3 of Part 5.3B of the Corporations Act 2001, under that Division as it is applied by force of a law of a State or Territory, or otherwise);

(iv) a sequestration order is made against a person (the bankrupt) under the Bankruptcy Act 1966;

(v) a person (the bankrupt) becomes a bankrupt by force of section 55, 56E or 57 of the Bankruptcy Act 1966; and

(b) a security interest granted by the body corporate, company or bankrupt is unperfected at whichever of the following times applies:

(i) in the case of a company or body corporate that is being wound up - when, on a day, the event occurs by virtue of which the winding up is taken to have begun or commenced on that day (whether under section 513A or 513B of the Corporations Act 2001, under either section as applied by force of a law of a State or Territory, or otherwise);

(ii) in the case of a company or a body corporate to which subparagraph (a)(ii) or (iii) applies - when, on a day, the event occurs by virtue of which the day is the section 513C day for the company or body, within the meaning of the Corporations Act 2001 (including that Act as it is applied by force of a law of a State or Territory, or otherwise);

(iia) in the case of a company or a body corporate to which subparagraph (a)(iiia) or (iiib) applies - when, on a day, the event occurs by virtue of which the day is the section 513CA day for the company or body, within the meaning of the Corporations Act 2001 (including that Act as it is applied by force of a law of a State or Territory, or otherwise);

(iii) in the case of a bankrupt - when a sequestration order is made against the bankrupt under the Bankruptcy Act 1966, or when he or she becomes a bankrupt by force of section 55, 56E or 57 of that Act.

Note 1: For the meaning of company, see section 10.

Note 2: See also Division 2A of Part 5.7B of the Corporations Act 2001.

Security interest vested in grantor

(2) The security interest held by the secured party vests in the grantor immediately before the event mentioned in paragraph (1)(a) occurs.

Note: This subsection does not apply to certain security interests (see section 268).

Title of person acquired for new value without knowledge

(3) Subsection (2) does not affect the title of a person to personal property if:

(a) the person acquires the personal property for new value from a secured party, from a person on behalf of a secured party, or from a receiver in the exercise of powers:

(i) conferred by the security agreement that provides for the security interest; or

(ii) implied by the general law; and

(b) at the time the person acquires the property, the person has no actual or constructive knowledge of the following (as the case requires):

(i) the filing of an application for an order to wind up the company;

(ii) the passing of a resolution to wind up the company;

(iii) the appointment of an administrator of the company under section 436A, 436B or 436C of the Corporations Act 2001;

(iv) the execution of a deed of company arrangement by the company;

(v) the appointment of a restructuring practitioner for the company under section 453B of the Corporations Act 2001;

(vi) the making of a restructuring plan by the company.

Note: Section 296 deals with the onus of proving matters under this subsection.

The primary judge's identification of the issues to be determined

1. The primary judge stated that whether the respondent had a security interest in each item of the mining equipment involved two subsidiary questions:

(a) Did each hire agreement involve the first appellant granting to the respondent a security interest within s 12(1) of the PPSA (an 'in substance security interest')?

(b) Did each hire agreement constitute a PPS lease? If so, the respondent's interest in each item of the mining equipment in its capacity as lessor was deemed by s 12(3) of the PPSA to be a security interest [22].

The primary judge's reasons in relation to whether under each hire agreement the first appellant granted to the respondent a security interest within s 12(1) of the PPSA

1. The primary judge stated that the essential question was whether each hire agreement provided for 'the grant by [the first appellant] to [the respondent] of an interest in the equipment to which it related that in substance secured payment or performance [of] an obligation by [the first appellant]?' [37].
2. His Honour said that the drafting of the hire agreements lacked precision and clarity. It was therefore difficult to discern the intention of the parties. His Honour noted, in particular, the following [40]:

(a) Special Term 2 of the Hire Particulars records the grant of the option to purchase the equipment. The option was expressed to be 'subject to receipt of an executed Special Terms & Conditions of the Hire Agreement' which would suggest that the Special Terms & Conditions were of some relevance to the option to purchase. The Special Terms did not refer, however, to the option and the relevance of those terms to an option to purchase is not apparent. In oral submissions the first defendant's counsel noted that the option was expressed to be subject to 'receipt' of an executed copy of the Special Terms & Conditions rather than being subject to the terms themselves. In the context of hire agreements, notable for the imprecision with which their terms have been expressed, I am not persuaded that this distinction is to be accorded any significance.

(b) The hire agreements were silent as to the price to be paid in the event that the option were to be exercised though it may be inferred that the price was that specified in the 'Outright Purchase Price Option' table. The only reference to an allowance against the option price for hire charges paid is the reference in the final paragraph of Special Term 2 of the Hire Particulars to the effect that the two months hire charges paid in advance were to 'be applied as a deposit against the purchase buy out amount'.

(c) There is no textual foundation for construing the provision relating to the rebate of hire charges applicable on a sale following the exercise of the first right of refusal as being applicable also if the option to purchase was exercised. That said, assessed objectively, it would seem unlikely that the parties would have contemplated that the approach to rebating hire charges against the purchase price would differ markedly between a purchase pursuant to the exercise of an option and a purchase pursuant to the exercise of the first right of refusal.

(d) Assuming for the purposes of discussion that the hire agreements are to be construed as conferring on the [first appellant] an option to purchase the equipment and that the purchase price was to be reduced by the rebate of hire charges in the amounts specified in cl 3 of the Special Terms & Conditions of Hire, the percentages of the hire charges rebated are not consistent with a transaction which in substance involves the payment of the capital cost of equipment by instalments in the form of hire charges. I return to this issue later in this section of the reasons but the short point is that because the percentage of the rebated hire charges reduced over time so did the financial incentive to buy the equipment.

1. The primary judge observed that the difficulty in discerning the intention of the parties from the text of the hire agreements was compounded because 'subject always to the terms of the bargain, from a commercial perspective, a first right of refusal and an option to purchase reflect conflicting commercial objectives on the part of an owner of property on the one hand and a potential purchaser of the property on the other' [41].
2. His Honour said that it may be possible 'technically' to construe the hire agreements as providing for both a right of first refusal and an option to purchase 'on the basis that it would have been open to [the first appellant] to exercise the option until [the respondent] gave notice of an intention to sell the equipment thereby enlivening the first right of refusal'. However, his Honour concluded that this would be 'a strained construction' of the hire agreements [43]. His Honour added [43]:

And, given the conflicting commercial objectives to which I have referred, it is not a construction that makes commercial sense on any view of the price to be paid on the exercise of the option. That is, whether the price is 'Outright Purchase Price Option' figure less the two months hire charges paid in advance or the Outright Purchase Price Option less the rebate of hire charges as set out in cl 3 of the Special Terms & Conditions of Hire.

1. The primary judge said that, in his view, the references in the hire agreements to the option to purchase should be construed as references to the right of first refusal in cl 3 of the Special Terms & Conditions of Hire, with the result that the first appellant's only right to acquire the mining equipment arose by exercising the right of first refusal [44]. His Honour explained that this construction of the hire agreements [44]:

(a) reflects the parties' intention (as recorded in cl 2 of the Special Terms & Conditions of Hire) that the Special Conditions are to be accorded precedence over the other provisions of the hire agreements;

(b) acknowledges the connection between the grant of the 'option' and the Special Conditions evidenced by the words 'subject to receipt of an executed Special Terms & Conditions of the Hire Agreement' in special term 2 of the Hire Particulars;

(c) can be reconciled with the use of the term 'option to purchase' by reading it down as meaning an option exercisable if the owner decided to sell; and

(d) avoids the commercially improbable result of the inclusion in the hire agreements of a first right of refusal and option to purchase at any time being provisions calculated to achieve conflicting commercial objectives.

1. His Honour then said that there were two further features of the hire agreements which, in his view, provided support for the conclusion that they were not agreements for the sale and purchase of the mining equipment. Those features were as follows [46]:

(a) Clauses 12 and 13 of the Terms & Conditions of Hire provided for adjustment of the hire charges for 'stand down time'. While it must be acknowledged that whether any adjustment would be made lay in the discretion of [the respondent], the inclusion of a provision that recognised the possibility of an adjustment for stand down time tends to suggest that the payment of the hire charges did not amount, in substance, to payment of the purchase price of the equipment.

(b) The percentage of the hire charges paid over the hire period, which was to be rebated in the event of a purchase of the equipment, reduced over the hire period. For example, if the equipment was purchased in the first month of the hire period, 100% of the hire charges paid to that date would be rebated against the purchase price whereas if the equipment was purchased between four and 10 months (121 ‑ 300 days) into the hire period the rebate would be 50% of the hire charges paid. If the hire agreements were in substance agreements for the purchase of the equipment, with the monthly hire charges effectively representing payment of the purchase price by instalments, one would expect the proportion of the hire charges rebated against the purchase price would increase rather than decrease over time to provide an incentive to the lessee to acquire the equipment. Further, the fact that percentage rebated in the event of a purchase between four and 10 months remained at 50% and did not vary depending on when in that period of six months the purchase was effected is not consistent with the hire agreements being agreements which financed the purchase of the equipment. If the agreements were finance agreements one would expect the percentage of the hire charges rebated against the purchase price to vary depending on the transaction date to reflect the time cost of money.

1. The primary judge said that, having concluded that the hire agreements were not, in substance, agreements for the purchase of the mining equipment, 'it [was] impossible to identify any basis upon which it could be said that the agreements provided for the grant of security interests by [the first appellant] to [the respondent]' [47]. His Honour said that the hire agreements 'did not confer a proprietary interest on [the first appellant] as hirer from which it could grant a security interest in favour of [the respondent] as security for payment or performance of an obligation' [47].
2. His Honour concluded his consideration of this issue by making these comments:

(a) Special Term 2 of the Hire Particulars, which provided for the payment of two months hire charges in advance as a security deposit, might have created a security interest in the hire charges paid in advance, but it did not create a security interest in the equipment [48].

(b) The respondent's right under the hire agreements to terminate the hire and recover the mining equipment at any time 'in the event of non‑payment of monies owing or plant misuse/abuse' should be characterised as 'a limitation on [the first appellant's] contractual right to possession and use of the equipment rather than the grant of a security interest' [49]. The respondent's right to repossess, in the event of non-payment of the hire charges, was 'an incident of ownership of the equipment and not a right "provided for" by the hire agreement[s]' [49].

The primary judge's reasons in relation to whether each hire agreement constituted a PPS lease

1. The primary judge noted that the hire period specified in the hire agreements was 'a minimum 10 months continuous hire'. His Honour said that the hire period as specified did not equate to a term of '10 months' or to 10 terms of one month. His Honour concluded that the hire agreements did not specify a term. Also, the hire agreements did not include a provision conferring on the first appellant a right to renewal of any term. His Honour was therefore of the view that the hire agreements did not constitute PPS leases within s 13(1)(c) of the PPSA [58].
2. His Honour considered that the hire agreements were leases for an indefinite period. By s 13(1)(d) of the PPSA, for a lease or bailment for an indefinite term to constitute a PPS lease, the lessee or bailee must retain uninterrupted or substantially uninterrupted possession of the leased or bailed property for more than 2 years. His Honour said that it was not sufficient that the lease or the bailment may extend for more than 2 years. It must actually do so [59].
3. It followed, in his Honour's view, that the hire agreements did not constitute PPS leases.

1. The primary judge concluded that s 267 of the PPSA had no application in the circumstances of the case.

1. As we have mentioned, the appellants rely upon three grounds of appeal.
2. Ground 1 (in its form at and before the hearing of the appeal) alleges, in essence, that the primary judge erred in finding that each hire agreement did not constitute, in substance, a security interest within s 12(1) of the PPSA. In particular, the appellants complain that, in construing the hire agreements:

(a) his Honour failed to have regard to whether the hire agreements 'in substance' secured payment or performance of an obligation, independently of the existence of any option to purchase or first right of refusal with respect to the equipment;

(b) his Honour failed to have regard to the actual text of the hire agreements including Special Terms 1, 2 and 3 of the Hire Particulars; the order of application of the terms and conditions; and the entry into the Special Terms & Conditions of Hire Agreement; and

(c) his Honour erred in finding that the hire agreements provided only for a first right of refusal, alternatively did not provide for an option to purchase, the equipment.

1. Ground 2 alleges, in essence, that his Honour erred in determining the intention of the parties with respect to the hire agreements without regard to extrinsic evidence including the registrations (being an objective fact which did not merge upon the parties' entry into the hire agreements).
2. Ground 3 alleges that the primary judge erred in construing the commercial intention of the parties to the hire agreements in a manner which relied upon the rebate of hire charges and the market value of the equipment (when there was no expert or other evidence in relation to those matters) and did not provide for the possibility that the parties' respective commercial interests were complementary rather than mutually exclusive.
3. We note that the appellants' grounds of appeal relate to his Honour's rejection of the appellants' contention that the hire agreements provided for a hire purchase transaction that created security interests in the mining equipment. The appellants have not challenged his Honour's finding that the hire agreements were not PPS leases within s 13 of the PPSA.

1. The respondent relied upon a notice of contention.
2. The notice asserts:

In addition to the matters referenced by the primary judge [at [46(b)] of his reasons] in support of the construction of the Hire Agreements are Schedules which were attached to the respondent's submissions at first instance (those schedules were admitted at first instance without objection from the appellant) which established that on a mathematical calculation of the hire charges the cost of purchasing the Equipment would become more expensive the longer the term of the Hire Agreements. That is, the antithesis of an agreement creating a security interest in the nature of a hire purchase or a finance lease where it would be expected the cost of purchase would decrease over the term of the hire period.

1. Counsel for the appellants submitted, in essence, that:

(a) Each hire agreement involved a 'transaction' and 'personal property'.

(b) Each hire agreement involved the grant of a security interest by the first appellant to the respondent because each agreement was, in substance, an agreement for the sale of the equipment.

(c) Clauses 2 and 3 of the Special Terms in the Hire Particulars refer to the first appellant having an option to purchase the equipment which is exercisable at any time.

(d) Clause 3 of the Special Terms & Conditions of Hire refers to the first appellant having a first right of refusal to purchase the equipment.

(e) The first appellant's option to purchase the equipment was in addition to and separate from the first appellant's first right of refusal.

(f) Although the option to purchase and the first right of refusal were separate rights, the rebate of hire charges provided for in cl 3 of the Special Terms & Conditions of Hire applied in the event that the option to purchase was exercised.

(g) The provisions of each hire agreement for the payment of two months base rental in advance, the payment of monthly hire charges and the respondent's right to disable and demobilise the equipment if payments were not made on time were provisions which secured the first appellant's use of the equipment during the hire period. When those provisions are considered in conjunction with the option to purchase it is apparent that, in substance, each hire agreement was an agreement for the sale of the equipment to which it related.

1. Counsel argued that the primary judge's erroneous finding that each hire agreement did not constitute, in substance, a security interest within s 12(1) of the PPSA arose from a number of other errors in his Honour's approach to the resolution of the preliminary issue, namely:

(a) His Honour analysed the hire agreements on the basis that operating leases, on the one hand, and financing leases, on the other, were mutually exclusive concepts.

(b) His Honour failed to have regard to whether the hire agreements 'in substance' secured payment or performance of an obligation independently of any option to purchase or first right of refusal conferred on the first appellant.

(c) His Honour failed to have regard to the actual text of the hire agreements.

(d) His Honour misconstrued the hire agreements in finding that the hire agreements provided only for a right of first refusal and did not provide for an option to purchase the equipment.

(e) His Honour determined the intention of the parties with respect to the hire agreements without regard to extrinsic evidence.

(f) His Honour relied upon the rebate of hire charges and the market value of the equipment in construing the commercial intention of the parties.

(g) His Honour should have considered that the parties' respective commercial interests were complementary, rather than mutually exclusive, in construing the commercial intention of the parties.

1. Counsel for the respondent submitted, in essence, that:

(a) Each hire agreement created a 'true lease'; that is, an operating lease. The hire agreements were not disguised sales or financing arrangements under which the first appellant acquired title to the equipment by the payment of hire charges. The Terms & Conditions of Hire reflected the terms of an operating lease. There were no terms which supported construing the hire agreements as agreements for the sale of the equipment.

(b) The references to Outright Purchase Price Option, the option to purchase the equipment, 'the purchase buy out amount' and 'buy out of equipment' in the hire agreements involve the use of imprecise language. Those references should be read as subject to the Special Terms & Conditions of Hire which, properly construed, limit the first appellant's rights to a right of first refusal to purchase the equipment for a specified price (which is the same amount as the Outright Purchase Price) less a rebate of the hire charges which have been paid.

(c) The specific terms which confer the right of first refusal take precedence over the general references to the option to purchase.

(d) A right of first refusal is not capable of constituting a security interest.

(e) A number of factors demonstrate that the hire agreements were not agreements for the sale and purchase of the equipment. In particular:

(i) The minimum hire period was only 10 months while the useful economic life of the equipment was significantly greater than 10 months.

(ii) The total hire charges for the equipment over the minimum hire period of 10 months did not equate to the market value of the equipment (taking the right of first refusal purchase price as its market value). The total hire charges over 10 months would equate to between 66% and 76% of the relevant first right of refusal purchase price for the e quipment.

(iii) The first appellant was not obliged to purchase the equipment.

(iv) In the event the first right of refusal was exercised, the purchase price would be calculated in such a way that it could not be described as a 'bargain price'.

(v) In the event the first right of refusal was exercised at the end of the minimum hire period of 10 months, the total which the first appellant would have been required to pay for the hire and purchase of the equipment would equate to more than 130% of the market value of the equipment.

(vi) In the event the first right of refusal was exercised after 12 months of hire, the total amount the first appellant would have been required to pay for the hire and purchase of the equipment would equate to more than 180% of the market value of the equipment.

(vii) There was no automatic right for the first appellant to obtain title to the equipment at the end of the term of the hire agreement.

1. Counsel argued that the primary judge did not make the errors alleged by the appellant in his Honour's approach to the resolution of the preliminary issue.

1. The fundamental issues were obscured rather than illuminated by the appellant's grounds of appeal.
2. The fundamental issues are as follows.
3. First, was each hire agreement a 'hire purchase agreement', within s 12(2)(e) of the PPSA, in respect of the mining equipment the subject of the hire agreement?
4. Secondly, if each hire agreement was a 'hire purchase agreement', within s 12(2)(e), in respect of the mining equipment the subject of the hire agreement, did the hire purchase transaction provide for the respondent (as the 'secured party' as defined in par (a) of the definition in s 10 of the PPSA) to have a 'security interest' in the mining equipment, within s 12(1) of the PPSA, and, if so:

(a) what was the nature and extent of the 'interest' (as defined in s 10 of the PPSA) in the mining equipment of the first appellant (as the 'grantor') to which the security interest of the respondent (as the secured party) was attached (see par (a) of the definition of 'grantor' in s 10 of the PPSA); and

(b) what was the nature and extent of the respondent's 'interest' (as defined in s 10 of the PPSA) in the mining equipment?

(a) if each hire agreement was a 'hire purchase agreement', within s 12(2)(e), in respect of the mining equipment the subject of the hire agreement; and

(b) if the hire purchase transaction provided for the respondent (as the secured party) to have a 'security interest' in the mining equipment, within s 12(1),

did the security interest, in substance, secure payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who had title to the mining equipment) and, if so, what was the nature and extent of the obligation?

(a) if each hire agreement was a 'hire purchase agreement', within s 12(2)(e), in respect of the mining equipment the subject of the hire agreement; and

(b) if the hire purchase transaction provided for the respondent to have a 'security interest' in the mining equipment, within s 12(1); and

(c) if the respondent's security interest in the mining equipment, in substance, secured payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who had title to the mining equipment),

did the security interest held by the respondent (as the secured party) vest in the first appellant (as the grantor), pursuant to s 267(2) of the PPSA, immediately before the administrators of the first appellant were appointed?

The appellants' application for leave to amend ground 1

1. After the court heard and reserved judgment in the appeal, the Court of Appeal Registrar sent a letter dated 21 July 2022 to the parties. The letter stated:

I have been instructed by the coram that heard the appeal to inform the parties that the court wishes to receive further submissions on whether, properly analysed:

(1) Each hire agreement constituted a hire purchase transaction.

(2) The transaction embodied in each hire agreement provided for an 'interest' (as defined in s 10 of the Personal Property Securities Act 2009 (Cth) (the PPSA)) in the mining equipment (without regard to the form of the transaction or the identity of the respondent as the person who had title to the equipment), within s 12(1) of the PPSA.

(3) The 'interest' (as defined in s 10) in 'personal property' (as defined in s 10) was the respondent's rights in the mining equipment as the hiree of the equipment and the holder of the reversion.

(4) The hire purchase transaction provided for that interest by creating the hiree/hiror relationship including the reversion in respect of the equipment.

(5) The respondent's rights in the mining equipment as the hiree and the holder of the reversion under each hire purchase transaction, in substance, secured 'payment or performance of an obligation' by the first appellant, within s 12(1) and s 12(2) of the PPSA. The obligation comprised the first appellant's promises to the respondent in each hire agreement to make payments and to perform obligations as stipulated in the hire agreement.

Such analysis would appear to be materially different from the position contended for by counsel for the appellants at the hearing of the appeal.

The court requires supplementary written submissions from the parties as follows:

(a) By 4.00 pm on 27 July 2022, the appellants must file and serve written submissions stating whether the appellants wish to adopt as part of their case the propositions set out at [1] to [5] above; and, if so, by the same time the appellants must file and serve an application to amend ground 1 of the grounds of appeal to incorporate a further particular advancing those propositions.

(b) If the appellants wish to adopt as part of their case the propositions set out at [1] to [5] above then, by 4.00 pm on 10 August 2022, the respondent must file and serve written submissions in response to the propositions set out at [1] to [5] above and the application to amend ground 1 of the grounds of appeal.

(c) By 4.00 pm on 15 August 2022, the appellants may file and serve written submissions in reply to the respondent's written submissions.

1. On 27 July 2022, the appellants filed and served written submissions stating that the appellants wished to adopt as part of their case the propositions set out at [1] to [5] of the Court of Appeal Registrar's letter dated 21 July 2022. On 27 July 2022, the appellants also filed and served an application in the appeal for leave to amend ground 1 by incorporating and advancing those propositions.
2. On 10 August 2022, the respondent filed and served written submissions.
3. The respondent opposed a grant of leave to amend for these reasons:

(a) apart from proposition (1), each of the propositions concerned a matter that was not advanced by the appellants at trial or at the hearing of the appeal;

(b) the appellants had identified no special or exceptional circumstances that would justify leave being granted; and

(c) although the respondent could not point to any particular evidence that it would have led had the propositions been raised at trial, the appellants ought to be bound by their conduct of the case at trial: a grant of leave would be inimical to the due administration of justice and the expedient determination of the dispute.

1. An appellant is bound by the conduct of his or her case at trial. In University of Wollongong v Metwally [No 2],[2] Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ said:

It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had [an] opportunity to do so (483). (emphasis added)

1. The substance of that statement was reiterated in Coulton v Holcombe[3] by Gibbs CJ, Wilson, Brennan and Dawson JJ:

To say that an appeal is by way of rehearing does not mean that the issues and the evidence to be considered are at large. It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. The powers of an appellate court with respect to amendment are ordinarily to be exercised within the general framework of the issues so determined and not otherwise. In a case where, had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding, this Court has firmly maintained the principle that the point cannot be taken afterwards: see Suttor v Gundowda Pty Ltd ((1950) [1950] HCA 35; 81 CLR 418, at 438); Bloemen v The Commonwealth ((1975) 49 ALJR 219) (7 ‑ 8). (emphasis added)

1. The High Court returned to this issue in Water Board v Moustakas.[4] Mason CJ, Wilson, Brennan and Dawson JJ emphasised that a point cannot be raised for the first time on appeal 'when it could possibly have been met' by calling evidence at the trial (497) (emphasis added). Their Honours allowed only these limited exceptions:

Where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied (see Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950), 81 CLR 418, at p 438; University of Wollongong v Metwally [No 2] (1985), 59 ALJR 481, at p 483; 60 ALR 68, at p 71; Coulton v Holcombe [1986] HCA 33; (1986), 162 CLR 1, at pp 7 ‑ 8; O'Brien v Komesaroff [1982] HCA 33; (1982), 150 CLR 310, at p 319)) (497).

1. In Whisprun Pty Ltd v Dixon,[5] Gleeson CJ, McHugh and Gummow JJ restated the applicable principles and elaborated upon their rationale:

It would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial (University of Wollongong v Metwally [No 2] (1985) 59 ALJR 481 at 483; Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 8 - 9; Liftronic Pty Ltd v Unver (2001) 75 ALJR 867 at 875 [44]; Water Board v Moustakas (1988) 180 CLR 491 at 496 - 497; cf R v Birks (1990) 19 NSWLR 677 at 683-685). Nothing is more likely to give rise to a sense of injustice in a litigant than to have a verdict taken away on a point that was not taken at the trial and could or might possibly have been met by rebutting evidence or cross-examination. Even when no question of further evidence is admissible, it may not be in the interests of justice to allow a new point to be raised on appeal, particularly if it will require a further trial of the action (Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 645 - 646). Not only is the successful party put to expense that may not be recoverable on a party and party taxation but a new trial inevitably inflicts on the parties worry, inconvenience and an interference with their personal and business affairs.

As Water Board v Moustakas ((1988) 180 CLR 491 at 498) makes clear, a point may be a new point even though it is within the pleadings or particulars. The pleadings and particulars are frequently decisive in determining whether a party is seeking to raise a new point on appeal. But they are not conclusive. To determine whether a party is raising a new point on appeal, it is 'necessary to look to the actual conduct of the proceedings' (Water Board v Moustakas (1988) 180 CLR 491 at 497) [51] ‑ [52]. (emphasis added)

1. The juridical basis of the principles we have been discussing appears to derive, in part, from public policy considerations directed to ensuring finality in litigation and, in part, from the doctrine of estoppel by election in the conduct of litigation. However, to the extent that some aspects have their origin in estoppel by election, the relevant consideration is not that the other party is put in a worse position, but that he or she may have been put in a worse position. See Banque Commerciale SA, en liquidation v Akhil Holdings Ltd;[6] McLennan v McCallum;[7] Zerjavic v Chevron Australia Pty Ltd.[8]
2. If an appellate court is satisfied that the appellant is seeking to advance a new case on appeal, there is no residual discretion under which the court may permit the new case to be run 'in the interests of justice'. The interests of justice are embodied within the principles formulated in the High Court authorities we have discussed. See McLennan [88]; Zerjavic [66].
3. In the present case, we would grant the appellants' application for leave to amend ground 1 for the following reasons. First, ground 1, as originally formulated, raised questions as to the proper construction of the hire agreements, the proper construction of relevant provisions of the PPSA and the proper application of the relevant provisions of the PPSA to the hire agreements. The proposed amendment also raises questions as to the proper construction of the hire agreements, the proper construction of relevant provisions of the PPSA and the proper application for the relevant provisions of the PPSA to the hire agreements. Secondly, although the issues arising from the proposed amendment were not raised by the appellants at the trial of the preliminary issue, there is no possibility that those issues could have been met and determined in favour of the respondent by the respondent calling other evidence at the trial of the preliminary issue. Thirdly, this court may resolve the issues arising from the proposed amendment having regard to submissions by the parties on the appeal and without remitting the matter to the primary judge. Fourthly, the issues arising from the proposed amendment concern, to a significant extent, the proper construction of relevant provisions of the PPSA which have received only limited consideration by intermediate courts of appeal and scant attention from the High Court. Those issues involve questions of general public importance on significant national legislation. Fifthly, the issues arising from the amendment concern questions of law. Sixthly, this court may resolve the issues arising from the proposed amendment without relevant prejudice to the respondent. Seventhly, in the circumstances we have mentioned, it is in the interests of justice to allow the issues raised by the proposed amendment to be ventilated and dealt with on appeal.
4. The respondent said that if the court granted the appellants leave to amend, then the respondent made submissions in answer to the propositions incorporated in and advanced by ground 1, relevantly, to the following effect:
5. As to proposition (1):

(a) Each hire agreement is a contract for the hire of goods coupled with an option to purchase the goods. However, the exercise of the option under each agreement was conditional upon the respondent first having determined to sell the goods. The option being outside the exclusive control of the first appellant (and the decision to purchase therefore not being that of the first appellant alone) each agreement cannot truly be characterised as a hire purchase agreement.

(b) Further, viewed objectively, each hire agreement provided no economic incentive for the first appellant to make all the lease payments and exercise an option to purchase the hire equipment and cannot be viewed on any basis as a disguised form of finance lease.

(c) Even if the primary judge erred in deciding that the 'option' could only be exercised as part of the first right of refusal, that would not be determinative of the questions on appeal; whether the hire agreements are leases or hire purchase agreements, the remaining criteria in s 12 of the PPSA would have to be satisfied before they could give rise to security interests under the PPSA. Accordingly, the relevant question is whether or not each hire agreement creates an interest that, in substance, secures the payment or performance of an obligation.

(d) Each of the hire agreements is properly construed as a 'true lease' of the equipment in question. Under the hire agreements, a purchase would only arise if the respondent first elected to sell the goods (activating the first right of refusal) and the first appellant then agreed to buy them (exercising the first right of refusal). Alternatively, if (contrary to the primary judge's conclusion) the option and the first right of refusal were separate and co‑existent obligations, or the option applied alone and there was no first right of refusal, then the purchase would only arise if the first appellant exercised its option and the parties then entered a sale. Neither the first right of refusal nor the option was ever activated.

(e) The hire agreements demonstrate an absence of the usual indicia which would be expected in a finance lease, such as the following:

(i) the term of hire representing the useful life of the equipment;

(ii) an obligation on the hirer to pay the equivalent of the capital cost of the equipment plus the costs of money invested in it by the hiror by way of an interest payment;

(iii) the hirer bearing the loss of depreciation or the gain of appreciation in the hire equipment; and

(iv) the acquisition of an interest in the hire equipment by way of an option to purchase for an amount that is less than the fair market value (the exercise of that option being a fait accompli, because the transaction is structured to ensure that its exercise is inevitable once the hirer makes all the scheduled lease payments).

(f) In the present case, if the first right of refusal was activated, the first appellant would have had to pay, as a minimum, about the same amount again as it had already paid the respondent in hire charges to exercise the first right of refusal and purchase the equipment (and, as a maximum, 14 times as much). It follows that the primary judge was correct to find that, even if the hire agreements included an option to purchase, there was no evidentiary foundation for concluding that the option would have been exercisable at a 'bargain' price [40(d)], [45(b)]. Thus, it is clear that quite unlike a hire purchase agreement or a finance lease, where a sale is always intended, a sale in this instance was an unlikely possibility. When the hire agreements were entered, there was no obligation, nor even a reasonable expectation, that there would be a sale of the equipment to the first appellant.

(a) Section 10 of the PPSA defines an 'interest' in personal property as including 'a right' in personal property. Section 10 defines 'provides' by stating 'a security agreement provides for a security interest if the interest arises under the agreement'.

(b) Each hire agreement created a reversionary interest in the respondent and a right of possession in the first appellant.

(a) The respondent's 'interest' created by each hire agreement was the right of reversion. The enforcement of the respondent's rights upon default under the hire agreements did not involve any recourse to that right of reversion. Rather, it involved the surrender or termination of the first appellant's leasehold interest. The hire agreements did not give the respondent any 'interest' in those leaseholds capable of being used as security for the first appellant's obligations.

(b) By contrast, a finance lease creates an 'in substance security' because the relevant 'interest' in the equipment is the 'hirer's' right to purchase the equipment through the making of periodic rental payments. Under such a transaction, the hirer has an immediate 'interest' in the equipment which, in substance, can be used to secure the payment or performance of the hirer's obligations (for example, the obligation to make rental payments).

(c) The lessee's payment and performance obligations under a true operating lease are properly viewed as the consideration exchanged for the lessee's use and right of exclusive possession to the hire equipment. Those contractual obligations are not 'interests' capable of being pledged as security. For that reason, under a true operating lease it is common for a lessor to take separate security or credit support, in the form of a security deposit or a bank guarantee, from the lessee in respect of the lessee's payment and performance obligations in respect of paying rent and making good. That occurred, in the present case, under the hire agreements, in that the first appellant paid a security deposit to the respondent.

(d) The fact that a lessor's rights under a lease do not of themselves create a security interest is recognised by the PPSA. Section 12(2)(i) states, by way of example, that a security interest includes an interest in personal property provided by a lease of goods 'if the transaction, in substance, secures payment or performance of an obligation', whereas s 12(3) provides that the interest of a lessor or bailor of goods under a PPS lease is a security interest, whether or not the transaction secures payment or performance of an obligation. Section 13 prescribes what constitutes a PPS lease. All of those provisions would be redundant if the lessor's rights under a lease always constituted a security interest under s 12(1).

(e) The clear distinction between 'in substance' security interests (arising under s 12(1) and s 12(2) of the PPSA) and 'deemed' PPS lease security interests (arising under s 12(3) of the PPSA) is critical when construing the hire agreements in the present case because the enforcement provisions in ch 4 of the PPSA operate differently where the security interest is a PPS lease. See, in particular, s 109(1)(c).

(f) In the present case, the reversionary interests created by the hire agreements did not secure the payment of any obligation, and those interests were not 'security interests' under s 12 of the PPSA.

1. On 15 August 2022, the appellants filed and served written submissions in reply to the respondent's written submissions. It is unnecessary to refer to the appellants' written submissions in reply.

A brief overview of the nature and purpose of the PPSA

1. The PPSA established a national law in respect of security interests in personal property. The purpose of enacting the PPSA was to create an efficient personal property securities regulatory system. The PPSA was modelled on New Zealand, Canadian and United States legislation; in particular, the Personal Property Securities Act 1999 (NZ), the Saskatchewan Personal Property Security Act 1993 and Article 9 of the United States Uniform Commercial Code.
2. In Bank of Montreal v Innovation Credit Union,[9] Charron J, delivering the judgment of the Supreme Court of Canada, made these observations about the Saskatchewan Personal Property Security Act:

The Saskatchewan PPSA ... has ... essentially [rendered] irrelevant the distinctions between the wide variety of instruments which existed at common law and in equity for taking security interests in another person's personal property. It does so by employing a functional approach to determining what security interests are covered by its provisions [18].

See, also i Trade Finance Inc v Bank of Montreal.[10]

1. Charron J noted at [19] that the conceptual framework of the Saskatchewan Personal Property Security Act was radically different from common law principles of secured lending. The Saskatchewan statute followed 'a priority-based approach'. The statute did not rely upon the common law concept of title or the equitable concepts of beneficial interest or equity of redemption to resolve priority issues. Instead, the statute established a set of rules for resolving priority disputes as between different security interests and as between security interests and other interests in the collateral, without regard to who actually has title to the collateral.
2. It is apparent from the text of the PPSA that the notions of security agreement, security interest, attachment and perfection are of central importance in the statutory scheme.
3. A security interest is an interest in personal property provided by a transaction that secures payment or performance of an obligation. The form of the transaction and the identity of the person who has title to the personal property do not affect whether an interest is a security interest. Some transactions that do not secure payment or performance of an obligation may also give rise to a security interest. See, in particular, s 12(3) of the PPSA.
4. A security interest is only effective if it has attached to the collateral. A security interest attaches to the collateral when the grantor (that is, relevantly, the person who has the interest in the personal property to which the security interest is attached) has rights in the collateral, or can transfer it to the secured party (that is, relevantly, the person who holds the security interest), and value is given, or the security interest otherwise arises. See, in particular, s 19 of the PPSA.
5. A security interest is only enforceable against a third party if it has attached to the collateral and the secured party possesses the collateral, has perfected the security interest by controlling the collateral or has entered into a written security agreement that describes the collateral. See, in particular, s 20 of the PPSA.
6. A perfected security interest has priority over an unperfected security interest. Perfection occurs, relevantly, when the security interest has attached to collateral and any further steps needed to make the security interest effective against third parties have been taken. Those steps involve registration on the Personal Property Securities Register or the secured party taking possession or control of the collateral. In some circumstances, the PPSA provides for perfection by operation of the statute itself. See, in particular, s 21 of the PPSA.
7. In the event of the bankruptcy of a natural person grantor or the winding up or the entry into administration of a body corporate grantor, a secured party's unperfected security interest vests in the grantor. This general rule is, however, subject to exceptions. Some secured parties are entitled to damages or compensation in relation to the vesting of unperfected interests. See, in particular, s 267, s 267A, s 268 and s 269 of the PPSA.

1. Section 12(1) states that a 'security interest' is 'an interest in personal property' (which expression is defined in s 10 to include 'a right in the personal property') that is 'provided by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property)'.
2. The term 'transaction' in s 12 is not defined in the PPSA. The ordinary and natural meaning of 'transaction', in the context of property, is comprehensive and includes any dealings in property. See Barron (Inspector of Taxes) v Littman.[11] Although the term 'transaction' is ordinarily used to describe some bilateral activity, it can also be used to denote an activity in which only a single person is engaged. See Greenberg v Inland Revenue Commissioners.[12]
3. Section 12(2) gives colour to the notion of a 'transaction' within s 12(1) by specifying examples of relevant transactions. Section 12(2) states, by way of example, that a security interest includes 'an interest in personal property' that is 'provided by any of the following transactions, if the transaction, in substance, secures payment or performance of an obligation'. The specified transactions include 'a hire purchase agreement' (s 12(2)(e)).
4. Section 12(3) states that a security interest includes a number of specified 'interests', whether or not the transaction concerned, in substance, secures payment or performance of an obligation.
5. The term 'hire purchase agreement' in s 12(2)(e) is not defined in the PPSA.
6. A hire purchase agreement is a well‑known commercial transaction. It is a contract for the hire of goods between the owner of the goods (usually a financier) and a hirer of the goods. The owner gives possession, use and other rights in respect of the goods to the hirer for a period in consideration of the hirer agreeing to make periodic payments to the owner and to observe or perform other obligations in relation to the goods. The contract confers on the hirer an option to purchase the goods from the owner. Hire purchase transactions originated in the 19th century. They have been regulated by legislation and construed in many cases. See, generally, McEntire v Crossley Bros Ltd;[13] Helby v Matthews;[14] Kay's Leasing Corporation Pty Ltd v Fletcher.[15]
7. A hire purchase agreement creates a bailment of the hired goods until the option to purchase is exercised. See Karflex Ltd v Poole;[16] Australian Guarantee Corporation Ltd v Ross;[17] Palmer on Bailment (3rd ed, 2009) [1‑004]. However, as Young CJ observed in Ross (323), the hirer is a special kind of bailee in that, ordinarily, part of every payment which the hirer makes is an instalment of the purchase price (in the event that the right of purchase is exercised).
8. Under a hire purchase agreement, the vendor (and not the hirer) is the owner of the hired goods. The hirer is entitled to possession and use of the goods. If the making of the periodical payments entitles the hirer to purchase the goods, the hirer acquires an 'equity' in the goods of a proprietary character. Although the hirer does not have title to the goods until the hirer has fulfilled the conditions specified by the hire purchase agreement, the hirer's right to acquire the title by fulfilling those conditions may be protected by the court in exercise of its equitable jurisdiction. See AL Hamblin Equipment Pty Ltd v Commissioner of Taxation (Cth);[18] Forestry Commission of New South Wales v Stefanetto;[19] Esanda Finance Corporation Ltd v Plessnig;[20] RHG Mortgage Securities v BNY Trust Company;[21] Westpac Banking Corporation v Souter.[22]
9. The history of hire purchase transactions and the absence of a definition of the term 'hire purchase agreement' in the PPSA indicate that the term 'hire purchase agreement' in s 12(2)(e) bears its ordinary and natural meaning.
10. Although the focus in s 12 is on the 'transaction' rather than any written or oral agreement (see National Australia Bank Ltd v Garrett),[23] where the relevant transaction is created by or arises under a written agreement it is essential to construe the agreement for the purpose and in the course of ascertaining the substance of the transaction.
11. It is therefore necessary, in the present case, to consider whether each hire agreement was a hire purchase agreement which constituted a transaction that provided for an interest in personal property and, if so, whether the transaction, in substance, secured payment or performance of an obligation, within s 12(1) and s 12(2)(e).
12. The proper construction of a commercial contract is to be determined objectively having regard to its text, context and purpose or objects. The provisions of the contract are to be understood objectively by reference to what a reasonable businessperson would have understood them to mean. The hypothetical reasonable businessperson must be placed in the position of the parties. The court considers from that perspective the circumstances surrounding the contract and the commercial purpose or objects sought to be achieved by it. See Electricity Generation Corporation v Woodside Energy Ltd;[24] Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd.[25]
13. In Electricity Generation Corporation [35], French CJ, Hayne, Crennan and Kiefel JJ made these observations in relation to ascertaining what the hypothetical reasonable businessperson would have understood by the terms of a commercial contract:

[I]t will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd [[2009] EWCA Civ 636 at [28]], unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties ... intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'. (footnotes omitted)

See also Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd;[26] Simic v New South Wales Land and Housing Corp.[27]

1. A commercial contract must be construed as a whole. The words of a clause in the contract are to be given the most appropriate meaning which they can legitimately bear. A court must have regard to all of the provisions of the contract with a view to achieving harmony among them. If more than one construction of a clause is open having regard to the text, context and purpose or objects of the contract as a whole, the court will prefer a construction that will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust. See Australian Broadcasting Commission v Australasian Performing Right Association Ltd;[28] Zhu v Treasurer of the State of New South Wales;[29] Electricity Generation Corporation [35].
2. In Fitzgerald v Masters,[30] Dixon CJ and Fullagar J said, '[w]ords may generally be supplied, omitted or corrected, in an instrument, where it is clearly necessary in order to avoid absurdity or inconsistency'. See also Adams v Lambert;[31] Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq).[32]
3. An issue that arises in the present case, in construing each hire agreement, is whether the transaction constituted by the agreement included an option for the first appellant to purchase the mining equipment or conferred on the first appellant a first right of refusal in respect of the equipment or both.
4. The nature of a first right of refusal was explained by Street J in Mackay v Wilson:[33]

[A]n agreement to give 'the first refusal' or 'a right of pre-emption' confers no immediate right upon the prospective purchaser. It imposes a negative obligation on the possible vendor requiring him to refrain from selling the land to any other person without giving to the holder of the right of first refusal the opportunity of purchasing in preference to any other buyer. It is not an offer and in itself it imposes no obligation on the owner of the land to sell the same. He may do so or not as he wishes. But if he does decide to sell, then the holder of the right of first refusal has the right to receive the first offer, which he also may accept or not as he wishes. The right is merely contractual and no equitable interest in the land is created by the agreement.

1. In Woodroffe v Box,[34] Fullagar and Kitto JJ analysed the character of a first right of refusal as follows:

The term 'first refusal' is not a technical term. It is a colloquial term, and indeed a somewhat inept term, because what the potential offeree wants is an opportunity of accepting an offer rather than an opportunity of refusing an offer ... It seems clear that a mere promise to give the first refusal should be taken prima facie as conferring no more than a pre-emptive right. If I promise to give you the first refusal of my property, I am making prima facie only a negative promise: I am saying: 'I will not sell my property unless and until I have offered it to you and you have refused it.' ...

The truth is, indeed, that, in dealing with such a loose and colloquial expression, it may often be a mistake to cling strongly to a preconceived meaning. The safer and sounder course is to regard it as an expression of fairly flexible import, to look at the whole of what the parties to an instrument have said, and in the light of that whole to determine whether they have or have not conveyed an intention that an immediate offer is being made or is to be made (257 ‑ 258).

1. So, ordinarily and subject to the terms of the agreement which confers it, a first right of refusal in respect of property is a right to purchase the property before the owner sells the property to a third party, if the owner decides to sell it.
2. By contrast, an option to purchase in respect of property is a right to purchase the property from the owner, if the holder of the option decides to exercise the option.
3. The nature of an option to purchase has for a considerable time been controversial. The controversy is whether an option constitutes a conditional contract or an irrevocable offer. On one view, an option to purchase that is exercisable by the giving of notice and the payment of a deposit is a conditional contract which gives the holder of the option the right, if those conditions are performed, to become the purchaser. On the other view, an option to purchase is a continuing offer (the offer being supported by consideration so that it is irrevocable) which the holder may, during the period and upon the conditions specified in the offer, accept and thereby convert the offer into a contract. See, generally, Goldsbrough, Mort & Co Ltd v Quinn;[35] Carter v Hyde;[36] Laybutt v Amoco Australia Pty Ltd;[37] Quadling v Robinson.[38] The form and substance of the agreement evidencing the option may be decisive as to whether the option constitutes a conditional contract or an irrevocable offer. See Carter (123); Ballas v Theophilos;[39] O'Halloran Enterprises Pty Ltd v Williamson.[40]
4. In the present case, if each hire agreement, properly construed, included an option for the first appellant to purchase the mining equipment, it is unnecessary to decide whether the option should be characterised as a conditional contract or an irrevocable offer. There are no differences between the provisions of each agreement that are material for the purposes of this appeal. Some of the details in each agreement are different but, for the purposes of this appeal, those differences are of no significance. It is convenient, in construing the hire agreements, to refer at [127] ‑ [128], [130], [132] ‑ [134] and [140] below to one of the agreements (the subject hire agreement) including its details.
5. The front page of the subject hire agreement provides, relevantly:

(a) The date of the agreement is 13 December 2019.

(b) The Agreement Number is CENT0413A-2.

(c) The mining equipment the subject of the agreement is described.

(d) The 'Plant Insurance Value' is $693,500 plus goods and services tax (GST).

(e) The period of the hire is 'Minimum Ten Continuous Months'.

(f) The monthly hire rate is $46,000 plus GST, based on a maximum of 200 hours of use per month. An additional amount of $230 per hour plus GST is payable for each hour of use in excess of 250 hours per month.

(g) The 'Outright Purchase Price Option' is $693,500 plus GST.

1. The provisions on the front page of the subject hire agreement indicate that the first appellant, as hirer, was to have an option to purchase the mining equipment during the period of the hire for $693,500 plus GST (which corresponded with the specified Plant Insurance Value).
2. The 'Hire Particulars' on the second page of each hire agreement provide, relevantly:

(a) The first appellant, as the hirer, is 'granted ... option to purchase the equipment, subject to receipt of an executed ''Special Terms & Conditions of Hire Agreement''' (cl 2).

(b) The first appellant, as hirer, is obliged to pay two months base rental in advance. The respondent was entitled to retain the two months base rental in advance 'as a security deposit up until the point of off hire' (cl 3).

(c) It is specified that '[s]hould the customer [that is, the first appellant as hirer] purchase the units at any stage during the hire, the advance payment will be applied as a deposit against the purchase buy out amount' (cl 3).

(d) It is specified that the 'Hire Period' is 'Minimum ten (10) continuous months hire period with option to purchase at anytime'.

(e) It is specified that '[s]hould the hire fall short of ten (10) continuous months for any reason other than buyout of equipment', the respondent would be entitled to charge the difference between the 10 month hire rates, on the one hand, and its standard monthly contract hire rates, on the other.

1. The provisions of the 'Hire Particulars' on the second page of the subject hire agreement indicate that, subject to receipt by the respondent of an executed 'Special Terms & Conditions of Hire Agreement', the first appellant, as hirer, was to have an option to purchase the mining equipment at any time during the hire period. The 'Hire Particulars' made provision to the effect that if the first appellant exercised the option to purchase then the advance payment of two months of base rental made by the first appellant to the respondent would be applied as a deposit against the purchase price of $693,500 plus GST.
2. The 'Special Terms & Conditions of Hire Agreement' referred to in the 'Hire Particulars' was the document forming part of each hire agreement that was headed 'Special Terms & Conditions of Hire'. That document was executed for and on behalf of the first appellant (and, also, for and on behalf of the respondent). The condition in the 'Hire Particulars' with respect to the receipt by the respondent of an executed 'Special Terms & Conditions of Hire Agreement' was therefore satisfied.
3. The 'Special Terms & Conditions of Hire' forming part of the subject hire agreement provide, relevantly:

(a) There is a reference to the date of the agreement, namely 13 December 2019.

(b) There is a reference to the Agreement Number, namely CENT0413A-2.

(c) The mining equipment the subject of the agreement is described.

(d) Special condition 2 states, in effect, that the hire of the mining equipment will be governed by the other terms and conditions of the agreement, 'except where these Special Conditions of Hire are applied and take precedent [sic]'.

(e) Special condition 3 states, in effect, that the first appellant will have 'first right of refusal to purchase' the mining equipment for the price of $693,500 plus GST.

(f) Special condition 3 also states that '[a]ny resultant sale enactment' will be governed by the respondent's standard terms and conditions of sale and, further, that:

(i) if the first appellant 'enacts the Sales Agreement by settling machine purchase funds within 30 days from commencement of hire' then the respondent will apply 'a rebate of 100% of the monthly hire rate for each month of hire which has been fully paid to and received by [the respondent], as a deposit against the final settlement amount for the machine purchase';

(ii) if the first appellant 'enacts the Sales Agreement by settling machine purchase funds within 31 ‑ 60 days from commencement of hire' then the respondent will apply 'a rebate of 85% of the monthly hire rate for each month of hire which has been fully paid to and received by [the respondent] as a deposit against the final settlement amount for the machine purchase';

(iii) if the first appellant 'enacts the Sales Agreement by settling machine purchase funds within 61 ‑ 90 days from commencement of hire' then the respondent will apply 'a rebate of 70% of the monthly hire rate for each month of hire which has been fully paid to and received by [the respondent] as a deposit against the final settlement amount for the machine purchase';

(iv) if the first appellant 'enacts the Sales Agreement by settling machine purchase funds within 91 ‑ 120 days from commencement of hire' then the respondent will apply 'a rebate of 65% of the monthly hire rate for each month of hire which has been fully paid to and received by [the respondent] as a deposit against the final settlement amount for the machine purchase';

(v) if the first appellant 'enacts the Sales Agreement by settling machine purchase funds within 121 ‑ 300 days from commencement of hire' then the respondent will apply 'a rebate of 50% of the monthly hire rate for each month of hire which has been fully paid to and received by [the respondent] as a deposit against the final settlement amount for the machine purchase';

(g) Special condition 4 states that no transfer in ownership or title of the equipment will take place until 'full settlement of machine purchase funds has been received (and confirmed as received) by [the respondent] in [its] nominated bank account'.

1. The provisions of 'Special Terms & Conditions of Hire' forming part of the subject hire agreement indicate that the first appellant, as hirer, was to have a 'first right of refusal to purchase' the mining equipment for $693,500 plus GST, subject to an adjustment of that purchase price in accordance with special condition 3.
2. In our opinion, the purchase price of the mining equipment if the first appellant exercised the option to purchase was the amount specified on the front page of the subject hire agreement as the 'Outright Purchase Price Option'; that is, $693,500 plus GST. None of the provisions of the agreement states that if the first appellant exercises the option to purchase then the purchase price is to be adjusted in accordance with special condition 3 of the 'Special Terms & Conditions of Hire'. Special condition 3 refers to the adjustment of the purchase price in the context of the first appellant having 'enact[ed] the Sales Agreement' pursuant to the first right of refusal. However, cl 2 of the 'Hire Particulars' on the second page of the subject hire agreement expressly states that the first appellant, as the hirer, is 'granted ... option to purchase the equipment, subject to receipt of an executed "Special Terms & Conditions of Hire Agreement"'. Clause 2 reveals a connection between the granting of the option to purchase, on the one hand, and the provisions of the 'Special Terms & Conditions of Hire', on the other. We consider that, on a proper construction of the provisions of the subject hire agreement as a whole, the parties intended that if the first appellant exercised the option to purchase then the purchase price would be adjusted in accordance with special condition 3 of the 'Special Terms & Conditions of Hire'. The alternative construction, namely that if the first appellant exercised the option to purchase then there would be no adjustment of the purchase price, produces a result that is commercial nonsense and at odds with the well established nature and operation of a hire purchase transaction.
3. It is apparent that the essential terms of the 'option to purchase' the mining equipment, which is referred to in some parts of each hire agreement, and the 'first right of refusal to purchase' the equipment, which is referred to in other parts of each hire agreement, were expressly stated in the agreement. The essential terms were, relevantly, those which identified the respondent as the vendor; the first appellant as the purchaser; the equipment the subject of the right of purchase or refusal; the purchase price; and the period during which the right of purchase or refusal subsisted. There were a number of non‑essential terms for which no express provision was made; for example, the notice which the respondent must give to the first appellant to engage the first right of refusal; how the first appellant may exercise the right of purchase or refusal; the time within which the right of refusal, if engaged, is exercisable by the first appellant; and the time at which settlement of any sale of the equipment must occur. No doubt, terms may be implied (for example, by reference to the standard of reasonableness) to fill gaps in relation to non‑essential matters that were omitted or left incomplete by the parties. It is unnecessary to pursue that point having regard to the issues which arise for decision in the appeal.
4. However, there is an apparent disconformity between the references in the front page of each hire agreement and in the 'Hire Particulars' on the second page of each agreement to the first appellant having an 'option to purchase' the mining equipment, on the one hand, and the references in the 'Special Terms & Conditions of Hire' to the first appellant having a 'first right of refusal to purchase' the equipment, on the other.
5. As we have mentioned:

(a) ordinarily and subject to the terms of the agreement which confers it, a first right of refusal in respect of property is a right to purchase the property before the owner sells the property to a third party, if the owner decides to sell it; and

(b) by contrast, an option to purchase in respect of property is a right to purchase the property from the owner, if the holder of the option decides to exercise the option.

1. The apparent disconformity arises from the material difference between the essential character of an option to purchase and the essential character of a first right of refusal. Ordinarily, the holder of an option to purchase has a right (but not an obligation) to exercise the option and purchase the property at any time during the agreed period. Further, ordinarily, the owner of the property has no right to require the holder of the option to decide during the agreed period whether to exercise the option or not on the basis that if the holder does not decide to exercise the option then the owner may sell the property to a third party during the agreed period. By contrast, the holder of a first right of refusal does not have a right to require the owner to decide, within a specified period or at all, whether to sell the property.
2. It is plain from the text of each hire agreement that the parties intended that during the hire period the first appellant should have a right, at least in some circumstances, to purchase the mining equipment. However, the nature of the right and the particular circumstances in which the right would be exercisable depend upon the resolution of the apparent disconformity to which we have referred.
3. In our opinion, on a proper construction of the subject hire agreement:

(a) Subject to [140(b)] below, the first appellant had an option to purchase the mining equipment during the hire period of at least 10 months. The purchase price was $693,500 plus GST, subject to an adjustment of that purchase price in accordance with special condition 3 of the 'Special Terms & Conditions of Hire'.

(b) However, notwithstanding the first appellant's option to purchase, the respondent had a right to sell the mining equipment during the hire period of at least 10 months, provided that the respondent first offered to sell the equipment to the first appellant. The sale price was $693,500 plus GST, subject to an adjustment of that sale price in accordance with special condition 3 of the 'Special Terms & Conditions of Hire'.

1. The effect of this construction is that the first appellant had an option to purchase the mining equipment during the hire period of at least 10 months, but that option was liable to defeasance if the respondent decided to sell the equipment during the hire period and offered to sell the equipment to the first appellant as required by the first right of refusal.
2. Our construction of each hire agreement gives effect to special condition 2 of the 'Special Terms & Conditions of Hire', which stipulates, in essence, that the hire of the mining equipment will be governed by the other terms of conditions of the agreement, 'except where the Special Conditions of Hire are applied and take precedent [sic]'. That provision indicates that the 'Special Terms & Conditions of Hire', which incorporate the first right of refusal, are to take precedence over the other terms and conditions of the agreement, which incorporate the option to purchase. Consequently, as we have explained, the option to purchase was liable to defeasance.
3. Also, our construction of each hire agreement resolves the apparent disconformity between the references in the front page of each hire agreement and in the 'Hire Particulars' on the second page of each agreement to the first appellant having an 'option to purchase' the mining equipment, on the one hand, and the references in the 'Special Terms & Conditions of Hire' to the first appellant having a 'first right of refusal to purchase' the equipment, on the other. The resolution gives a practical operation both to the option to purchase and to the first right of refusal.
4. Further, our construction of each hire agreement gives the words of each clause in the agreement the most appropriate meaning which they can legitimately bear and achieves harmony among all of the provisions of the agreement. It is not a strained construction of the agreements. The construction avoids the substitution of the term 'first right of refusal' for the term 'option to purchase' where the term 'option to purchase' appears (as it does on numerous occasions) in the agreement. In our opinion, the substitution of 'first right of refusal' for 'option to purchase' is not necessary for the purpose of giving each hire agreement a businesslike interpretation or circumventing commercial nonsense or inconvenience.
5. It is true, as the primary judge pointed out at [40(d)] and [46(b)] of his reasons, that the financial incentive for the first appellant to purchase the mining equipment reduced over the hire period because the percentage of the rebated hire charges reduced over time.
6. His Honour said that if the hire agreements were, in substance, 'agreements for the purchase of the equipment, with the monthly hire charges effectively representing payment of the purchase price by instalments, one would expect the proportion of the hire charges rebated against the purchase price would increase rather than decrease over time to provide an incentive to [the hirer] to acquire the equipment' [46(b)].
7. It is also true, as the primary judge pointed out at [46(a)] of his reasons, that cl 12 and cl 13 of the 'Terms & Conditions of Hire' dealt with adjustments to the hire charges to be made in favour of the hirer for 'stand down time'. By cl 12, stand down time would only occur if requested by the first appellant (as the hirer) and granted by the respondent (as the owner). The respondent had a discretion to adjust the hire charges in respect of any stand down time it granted. The stand down rates, if granted, were to be charged at 50% of the current standard hire charge. By cl 13, no hire charge was payable by the first appellant 'in instances of inclement weather or major machine maintenance/repairs'. The hire agreements did not provide for any hire charges paid by the first appellant during any stand down times to be taken into account as instalments of the purchase price if the first appellant exercised the option to purchase.
8. His Honour said that 'the inclusion of a provision that recognised the possibility of an adjustment for stand down time tends to suggest that the payment of the hire charges did not amount, in substance, to payment of the purchase price of the equipment' [46(a)].
9. However, in our opinion, the features to which we have referred at [145] and [147] above do not, either alone or in combination with any other features, support a construction of each hire agreement as a whole which, in effect, disregards the repeated references in the agreement to the first appellant having an option to purchase the equipment.
10. We consider that any diminution over time in the financial incentive for the first appellant to purchase the equipment reflects the relative strength or weakness of the bargain made by each party. The diminution over time in the financial incentive for the first appellant must be evaluated in the context that each hire agreement provided for the first appellant to have the possession and use of the equipment during the agreed period as well as a right, at least in some circumstances, to purchase the equipment. Further, the diminution over time in the financial incentive for the first appellant applies both to the option to purchase and the first right of refusal.
11. We consider that the provisions with respect to stand down time reflect the relative strength or weakness of the bargain made by each party. The provisions with respect to stand down time must be evaluated in the context that each hire agreement provided for the first appellant to have the possession and use of the equipment during the agreed period as well as a right, at least in some circumstances, to purchase the equipment. The hire charges are in part on account of the bailment of the equipment and in part an instalment of the purchase price (in the event that the right of purchase is exercised). Further, the provisions with respect to stand down time apply both to the option to purchase and the first right of refusal.
12. The features to which we have referred at [145] and [147] above do not, either alone or in combination with any other features, warrant a conclusion that, as a matter of construction, each agreement did not confer an option to purchase but merely a first right of refusal.
13. We consider that the meaning which we have attributed to the provisions of each hire agreement is consistent with the manner in which those provisions would have been understood objectively by the hypothetical reasonable businessperson placed in the position of the parties.
14. We are therefore of the opinion that each hire agreement included an option for the first appellant to purchase the mining equipment the subject of the hire agreement.
15. The option to purchase conferred by each hire agreement was not defeated before the first appellant was placed into liquidation because the respondent did not decide to sell the mining equipment during the hire period and did not offer to sell the equipment to the first appellant as required by the first right of refusal.

The second, third and fourth fundamental issues

1. As we have mentioned, the PPSA was modelled on New Zealand, Canadian and United States legislation; in particular, the Personal Property Securities Act 1999 (NZ), the Saskatchewan Personal Property Security Act 1993 and Article 9 of the United States Uniform Commercial Code.
2. Although there are some material differences between the PPSA, on the one hand, and the New Zealand and Canadian statutes, on the other, it is useful to examine the approach of the New Zealand and Canadian courts in relation to analogous provisions.
3. In Re International Harvester Credit Corp of Canada Ltd and Touche Ross Ltd,[41] Bell's Dairy Limited went bankrupt. It had in its possession five vehicles on lease from International Harvester Credit Corp of Canada Ltd (International Harvester). The trustee in bankruptcy, Touche Ross Ltd, took possession of the vehicles. International Harvester's security interest in one of the vehicles was not perfected by registration under the Saskatchewan Personal Property Security Act 1979. The trustee in bankruptcy claimed title to the vehicle in respect of which International Harvester had an unperfected security interest. However, the primary judge held that the trustee in bankruptcy had no higher interest than that of the bankrupt company; that is, a right to possession for the term of the lease on payment of rent. The Saskatchewan Court of Appeal allowed an appeal by the trustee in bankruptcy from the primary judge's decision. The Court of Appeal held that the scheme of the Personal Property Security Act permitted the trustee in bankruptcy to take a higher interest than the bankrupt company. The trustee in bankruptcy had the right to sell the vehicle for the benefit of the bankrupt company's creditors.
4. Cameron JA delivered the judgment of the Court of Appeal. His Honour noted that the object of the Saskatchewan statute was to modernise and consolidate the law of personal property as security for debts. His Honour then elaborated (393):

The scope of the statute includes all transactions, regardless of their form and irrespective of the intention of the parties, that either create or are deemed to create a security interest in personal property and fixtures. For the first time both consignments of goods and true leases of goods are treated by the law as though the parties had intended the property to serve as security for the amounts owing by the consignee or lessee as the case may be. This is a singularly important departure from the law as it existed before this Act came into being.

1. Cameron JA referred to the definition of 'security interest' in s 2 of the Saskatchewan statute and observed (396):

A 'security interest', which is defined, as we have seen, to include 'an interest in goods . . . that secures payment or performance of an obligation', embraces the interest of a lender on the security of goods, a seller of goods on time - the traditional forms of security transaction - a consignor and, in the case of a commercial lease exceeding a year in duration, a lessor. These persons share one thing in common under the statute. Each has an interest, rooted in title, to some particular goods in another's possession.

1. Cameron JA failed to see any legitimate basis for confining a trustee in bankruptcy, who takes over leased goods in the possession of a bankrupt lessee, to no greater claim upon the goods than that which the bankrupt had (397). His Honour explained (397):

That would require resort to traditional common law concepts, to form over substance, to a technical construction of the term 'interest', and to the defeat of the policy choice made by the Legislature in choosing, as it did, to include within the scope of the Act a true lease of goods. It would render the section largely if not wholly ineffective in this instance - as it might very well do in others as well.

1. Cameron JA noted that under s 20(1)(d) of the Saskatchewan statute an unperfected security interest is subordinate to the interest of a trustee in bankruptcy. His Honour explained the manner in which the scheme of the statute permitted a trustee in bankruptcy to take a higher interest than the bankrupt and also explained the residual rights against the bankrupt's estate of a lessor whose security interest is unperfected (398 ‑ 399):

In the first place, then, a trustee in bankruptcy, upon whom there devolves a chattel in the possession of the bankrupt under a commercial lease for a term exceeding a year, succeeds to the contractual or 'possessory' interest of the bankrupt in that chattel, as well as to the bankrupt's statutory or 'proprietory' interest therein as conferred upon the debtor by s 12 of the Act. That section provides that the debtor, including a lessee, 'has rights ... in goods leased to him ... when he obtains possession of them pursuant to the lease'. These are the rights of which Professor Cuming said (in his article, 'The Modernization of Canadian Personal Property Security Law', 31 U. of T. L.J. 247 (1981), at p. 262):

Since a lessee does not have a proprietary interest in goods leased to him, the drafters of the Saskatchewan Act decided ex abundanti cautela that it was necessary to deem him to have such an interest in order to eliminate any confusion with respect to the application of the concepts of attachment and perfection.

In the second place - and this is a critical point - a trustee in bankruptcy, may, as a representative of the creditors of the bankrupt, assert the interests of those creditors in the goods of the bankrupt, including goods in the possession of the bankrupt pursuant to a commercial lease for a term exceeding a year.

It is to these 'interests' of the trustee - enjoyed not only by the bankrupt, but held as well by his creditors - to which an unperfected security interest is, by virtue of s 20(1)(d), rendered subordinate. That gives the trustee in bankruptcy the right (subject to limitations which are of no concern here) to sell a chattel in the possession of the bankrupt pursuant to a commercial lease whose term exceeds a year, and to use the proceeds of sale to satisfy the claims of the creditors - including incidentally the claim of the unperfected security interest holder, since, as between the lessor and the lessee the financial obligation secured by the lease remains payable.

1. In Re Giffen,[42] the respondent lessor leased a car to a company which in turn leased it to Ms Giffen. The lease between the company and Ms Giffen was for more than one year and conferred on Ms Giffen the option of purchasing the vehicle from the respondent lessor. Although the respondent lessor was not a party to the lease agreement, it had a significant role in the arrangement. Ms Giffen made an assignment in bankruptcy. Neither the respondent lessor nor the company had registered financing statements under the British Columbia Personal Property Security Act 1989 in respect of their leases. Consequently, the respondent lessor's security interest in the car was not perfected. The respondent lessor seized the car and sold it. Subsequently, Ms Giffen's trustee in bankruptcy applied for an order that it was entitled to the proceeds of sale. The respondent lessor opposed the trustee's application on the grounds that Ms Giffen never owned the car and that the trustee could not have a better claim to the car than Ms Giffen had. The Supreme Court of Canada held that the respondent lessor's unperfected security interest was of no effect as against the trustee.
2. Iacobucci J, who delivered the judgment of the Supreme Court, said that the British Columbia legislature, in enacting the Personal Property Security Act, had set aside, to a certain extent, the traditional concepts of title and ownership [26]. His Lordship referred with approval at [26] to this extract from the article of T.M. Buckwold and R C C Cuming, 'The Personal Property Security Act and the Bankruptcy and Insolvency Act: Two Solitudes or Complementary Systems?' (1997) 12 Banking & Finance L. Rev. 467, 469 ‑ 470, where the authors expressed the view that the personal property security regimes of Canadian provincial legislatures had redefined traditional concepts of rights in property:

Simply put, the property rights of persons subject to provincial legislation are what the legislature determines them to be. While a statutory definition of rights may incorporate common law concepts in whole or in part, it is open to the legislature to redefine or revise those concepts as may be required to meet the objectives of its legislation. This was done in the provincial PPSAs, which implement a new conceptual approach to the definition and assertion of rights in and to personal property falling within their scope. The priority and realization provisions of the Acts revolve around the central statutory concept of 'security interest'. The rights of parties to a transaction that creates a security interest are explicitly not dependent upon either the form of the transaction or upon traditional questions of title. Rather, they are defined by the Act itself. (emphasis added)

1. Iacobucci J emphasised that it was necessary, in construing and applying the Personal Property Security Act, to look past the traditional concepts of title and ownership. The dispute between the respondent lessor and the trustee in bankruptcy could not be resolved by determining who had title to the car because the dispute concerned priority to the car and not ownership of it [28].
2. Iacobucci J noted that s 12(2) of the British Columbia Personal Property Security Act stated that 'a debtor has rights in goods leased to the debtor ... when he obtains possession of them in accordance with the lease' (emphasis added) [36]. Section 12(2) is analogous to s 19(5) of the Australian PPSA. His Lordship said that the words 'rights in goods' in s 12(2) indicated that a lessee obtains a proprietary interest in leased goods. In other words, s 12(2) of the British Columbia statute operated to deem or recognise that a lessee has a proprietary interest [36].
3. Iacobucci J referred with approval at [36] to the observations of the Court of Appeal of Saskatchewan (with respect to a provision similar to s 12 of the British Columbia statute) in Re International Harvester (398) to the effect that a trustee in bankruptcy, upon whom there devolves a chattel in the bankrupt's possession under a commercial lease for a term exceeding one year, succeeds both to the contractual or 'possessory' interest of the bankrupt in the chattel and, also, to the bankrupt's statutory or 'proprietary' interest in the chattel that is conferred upon the debtor by s 12. We have set out those observations of the Court of Appeal at [162] above.
4. Iacobucci J then said that, from the perspective of the British Columbia Personal Property Security Act, Ms Giffen, as lessee, could be described as having a proprietary interest in the car [37].
5. In Graham v Portacom New Zealand Ltd,[43] the defendant (Portacom) leased five portable buildings to the second plaintiff (NDG). The third plaintiff (HSBC), who held a debenture over NDG's assets, appointed the first plaintiffs as receivers and managers of NDG's assets. The receivers claimed to have the right to sell the buildings. Portacom disputed the receivers' claim. The receivers therefore sought judicial directions as to whether they or Portacom had priority to the buildings and whether the receivers had the power to sell them. The five buildings had been leased by Portacom to NDG for a term of more than one year. Pursuant to the lease, Portacom delivered the buildings to NDG. The lease was for an indefinite term for the purposes of s 16(b)(i) of the Personal Property Securities Act 1999 (NZ). In any event, the buildings were in the uninterrupted possession of NDG for more than one year within s 16(b)(iii) of the New Zealand statute. Portacom therefore had a 'security interest' in the buildings for the purposes of the New Zealand statute. Portacom's security interest in the buildings was not perfected by registration when the receivers and managers of NDG's assets were appointed. Two issues arose in the proceedings before Rodney Hansen J. First, whether HSBC's debenture created a 'security interest' in the buildings. Secondly, whether any such security interest attached to the buildings.
6. Section 40 of the New Zealand statute is analogous to s 19 of the Australian PPSA. In particular, s 40(3) provided that, for the purposes of s 40(1)(b), 'a debtor has rights in goods that are leased to the debtor, consigned to the debtor, or sold to the debtor under a conditional sale agreement (including an agreement to sell subject to retention of title) no later than when the debtor obtains possession of the goods'.
7. Rodney Hansen J reviewed the decisions in Re Giffen and Re International Harvester. His Honour then held [28]:

The rights of a lessee in leased goods referred to in s 40(3) of the Act are not ... confined to the lessee's possessory rights. As against the lessee's secured creditors, the lessee has rights of ownership in the goods sufficient to permit a secured creditor to acquire rights in priority to those of the lessor.

1. In Waller v New Zealand Bloodstock Ltd,[44] S H Lock (New Zealand) Ltd (Lock) held a registered debenture over the present and future assets of Glenmorgan Farm Ltd (Glenmorgan). The debenture was granted and registered in 1999. Later, in 2001, Glenmorgan entered a lease to purchase arrangement with New Zealand Bloodstock Ltd in respect of a horse. Title to the horse remained with New Zealand Bloodstock. New Zealand Bloodstock did not comply with the requirements of the New Zealand Personal Property Securities Act. In 2004, New Zealand Bloodstock terminated the agreement with Glenmorgan and took possession of the horse. Shortly after, Lock appointed receivers and managers of Glenmorgan pursuant to the debenture. The receivers and managers claimed that Lock was entitled to priority under the New Zealand Personal Property Securities Act in respect of the horse. A majority of the Court of Appeal of New Zealand (Robertson and Baragwanath JJ) held that Lock's security interest had been perfected by registration under the New Zealand Personal Property Securities Act and therefore took priority over the interests of New Zealand Bloodstock. The New Zealand statute had ousted the principle nemo dat quod non habet with respect to priority of competing security interests.
2. Robertson and Baragwanath JJ said that the consequence of the statutory ouster of the nemo dat principle was 'to empower Glenmorgan to add to the security passing to Lock under Lock's debenture a proprietary interest in [the horse], even though the agreement between New Zealand Bloodstock and Glenmorgan had provided to the contrary' [74]. Their Honours added [75]:

The result follows Parliament's decision that the kind of leasehold interest retained by New Zealand Bloodstock should, as a matter of policy, be treated as a mere security interest which requires registration to be perfected. Since that did not occur, Lock's competing security interest which was duly registered and so perfected took priority. The major lessons of the case are twofold: the statutory altering of the proprietary rights of a lessor; and the crucial importance of registration. These are policy choices which have been made and significantly alter what would otherwise have been the position.

1. In Albarran v Queensland Excavation Services Pty Ltd,[45] the salient facts were these. In 2010 one of the defendants (QES) leased vehicles to Maiden Civil (P&E) Pty Ltd (Maiden) pursuant to unwritten agreements. Maiden took possession of the vehicles. In 2012, Fast Financial Solutions Pty Ltd (Fast) lent money to Maiden and Maiden executed a general security deed which granted Fast security over its present and future assets and undertaking, including a security interest in the vehicles within s 12 of the PPSA. Pursuant to the deed, Fast had power to enforce its security by seizing and taking possession of the vehicles. In July 2012, Fast appointed receivers and managers of Maiden's assets, including the vehicles, in exercise of powers conferred on Fast under the deed. The receivers and managers claimed possession of the vehicles. In August 2012, Maiden went into liquidation.
2. Brereton J noted that, although the litigation had to be resolved according to the system of priorities established by the PPSA, the notion of title or 'true ownership' was not irrelevant [11]. QES's claim depended, in part, on the assertion that it had title to the vehicles. QES claimed to be the true owner of the vehicles. The receivers and managers asserted that Maiden was the 'true owner'. His Honour concluded that Maiden was the 'true owner' of one of the vehicles, but QES was the 'true owner' of the others [19].
3. His Honour held that, pursuant to s 19(5) of the PPSA, Maiden, as a PPS lessee in possession of the vehicles, had rights in the vehicles to which a security interest could attach. These rights were not limited to possessory rights, but included proprietary rights [26].
4. In the general security deed, Fast was defined as the 'Secured Party' and Maiden was defined as the 'Grantor'. Pursuant to the deed, Maiden granted to Fast a 'security interest' in its present and future assets and undertaking, including the vehicles, to secure the due payment of the 'Secured Moneys'. The term 'Secured Moneys' was defined to mean, relevantly, all of Maiden's indebtedness to Fast [33].
5. Brereton J held [34]:

Accordingly, the General Security Deed was [an] agreement by which an interest in personal property that secures payment or performance of an obligation was created; it was a 'security agreement', and the interest it created in favour of Fast was a 'security interest', within the meaning of PPSA. Pursuant to s 19(2), Fast's security interest attached to [the vehicles] when it gave value for its security interest by advancing the funds referred to in the Loan Agreement and General Security Deed. Once Fast's security interest had attached to [the vehicles], it was enforceable against Maiden pursuant to s 19(1).

1. His Honour then reiterated that the competing security interests of QES and Fast must be resolved in accordance with the system of priorities established by the PPSA. His Honour referred to Re Giffen and Re International Harvester and said that the dispute between QES and Fast 'cannot be resolved through the determination of who has title to the collateral, because the dispute is one of priority, not ownership' [35].
2. Next, Brereton J referred to s 55 of the PPSA, which governs priorities between competing interests. His Honour said that Fast's security interest had attached to the vehicles in accordance with s 20(1)(a); the general security deed was a security agreement evidenced by writing signed by Maiden as grantor within s 20(2)(a)(i); the deed contained a description of the particular collateral within s 20(2)(b)(i) and a statement that a security interest was taken in all of the grantor's present and after‑acquired property within s 20(2)(b)(ii) [39]. His Honour therefore concluded that the security agreement 'covers the collateral' for the purposes of s 20(1)(b), and that Fast's security interest in the vehicles was therefore enforceable against a third party (which, in relation to the general security deed, included QES) [39]. His Honour said that s 21 of the PPSA had been satisfied in relation to Fast's security interest in the vehicles; in particular, Fast's security interest had been registered. It followed that Fast's security interest in the vehicles had been perfected within s 21(1) of the PPSA [40]. By contrast, QES had not registered its security interest in respect of any of the vehicles and, consequently, its security interest had not been perfected [41]. In the circumstances, s 55(3) applied. Accordingly, Fast's perfected security interest in the vehicles had priority over QES's unperfected security interest in them [41].
3. His Honour rejected QES's contention that the receivers and managers had no enforceable right to possession of the vehicles because Maiden no longer had a right to possession of the vehicles in that QES had terminated the leases. His Honour rejected QES's contention for two reasons.
4. First, by s 267(2) of the PPSA, any security interest granted by a corporation that is unperfected at the commencement of its administration or winding up vests in the corporation [70]. Section 267 differs from s 20(b)(i) of the British Columbia statute (which was considered by the Supreme Court of Canada in Re Giffen) in that s 267 vests the unperfected security interest in the grantor and does not merely render the unperfected security interest ineffective against the grantor's trustee in bankruptcy or liquidator [71]. The effect of s 267, in the context of the dispute between the plaintiffs and QES, was as follows [72]:

The consequence, in the present case, is that upon the commencement of the administration and/or winding up of Maiden, QES's unperfected security interests in [the vehicles] vested in Maiden. The exception provided for by s 268(1)(ii) in respect of PPS leases of serial numbered goods does not apply, because one or more of s 13(1)(a) to (d) apply, as Maiden as lessee retained possession of [the vehicles] under the lease for more than a year. The practical effect is that QES's security interest is extinguished; QES has no further interest in [the vehicles]; and Maiden holds them subject only to the perfected security interest of Fast.

1. Secondly, Maiden did not have merely a right to possession under the leases. A PPS lessee, on taking possession of the collateral, acquires proprietary interests in addition to a possessory right 'to the extent that it can grant security interests to third parties, so that the lessor's interest if unregistered is vulnerable to being defeated by security interests so granted to such third parties' [73]. Further [73] ‑ [74]:

The PPSA treats the lessee under a PPS lease as the grantor of a security interest with rights in the collateral, and the lessor as a secured party, because it sees the transaction as, in substance, a security transaction, though in form it is a lease. As the cases mentioned show, it recognises that the lessee may validly and effectively grant security interests in the collateral to third parties, that can take priority [over] the lessor's unperfected interest, because the lessee is regarded for that purpose as having rights in the collateral. Maiden acquired possessory and proprietary rights in [the vehicles] upon taking possession of them, and granted a security interest in them to Fast under the General Security Deed.

Under clauses 11.3(b) and 12.2 of the General Security Deed, following an event of default, Fast and receivers appointed by it respectively have the power to enforce the security interest by 'entering into, seizing, taking possession of, managing or using the Secured Property'. This confers on the plaintiffs a right to possession of [the vehicles].

1. Brereton J rejected QES's contention (QES purportedly relying upon s 112 of the PPSA) that because Maiden was merely a lessee under a lease that had been terminated and because Maiden did not have title to the vehicles, Fast could not deal with the vehicles. That is, QES argued that, despite Fast having a perfected security interest in the vehicles which had priority over QES's unperfected security interest, Fast was in no better a position than Maiden in the context of enforcement action; in other words, nemo dat quod non habet [76]. His Honour held that s 112 should be construed and applied consistently with the scheme of the PPSA with respect to title and priorities [77]. His Honour explained [78]:

Accordingly, the purpose of s 112 is to confirm that limitations and restrictions imposed by law on a grantor's ability to deal with collateral apply also to the secured party in enforcement action under Ch 4. But it does not detract from the effect of PPSA in treating ostensible ownership, through possession, as a sufficient right in collateral for a PPS lessee to deal with it, to the extent of creating in a third party a valid security interest which, on perfection, prevails over the lessor's unperfected interest. This construction is fortified by the circumstance that s 112 is expressed to apply only to enforcement under Ch 4, and not otherwise, indicating that it is no more than a restriction on the remedies given by Ch 4, rather than a general limitation on the rights of a party holding a perfected security interest.

1. His Honour said that s 112 of the PPSA, properly construed, does not detract from the result that Fast's priority over QES entitled it to possession of the vehicles, either under the general security deed or pursuant to ch 4 of the PPSA [79].
2. In summary, Brereton J concluded, relevantly:

(a) Maiden was the 'true owner' of one of the vehicles and QES was the 'true owner' of the others [86].

(b) Fast had a security interest in all of the vehicles pursuant to the general security deed. That interest attached to the vehicles and was enforceable against third parties and perfected by registration [87].

(c) QES had a security interest in two of the vehicles under a PPS lease. However, QES had not registered its security interest. Accordingly, QES's security interest was unperfected [89] ‑ [90].

(d) In the circumstances, s 55(3) of the PPSA applied. Fast's perfected security interest in the vehicles had priority over QES's unperfected security interest in them [90].

(e) Upon Maiden going into administration and/or liquidation, Maiden became entitled to the vehicles, subject to Fast's perfected security interests, because QES's unperfected security interest thereupon vested in Maiden [91].

1. We turn to deal specifically with the second, third and fourth fundamental issues.
2. Section 12(1) of the PPSA states that a security interest means 'an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property)'.
3. Section 12(1) requires attention to two aspects. First, does a transaction provide for 'an interest in personal property ... (without regard to the form of the transaction or the identity of the person who has title to the property)'? Secondly, if so, does the transaction which provides for the interest in personal property 'in substance, secure payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property)'?
4. In s 10 of the PPSA the term 'security agreement' is defined to mean:

(a) 'an agreement or act by which a security interest is created, arises or is provided for'; or

(b) 'writing evidencing such an agreement or act'.

1. Also, in s 10 it is stated, in defining the term 'provides', that a security agreement 'provides' for a security interest 'if the interest arises under the agreement'.
2. Section 12(2) states, in essence, that a 'security interest', within s 12(1), 'includes an interest in personal property provided by any of the following transactions' (being the transactions enumerated in s 12(2)(a) to (l)), 'if the transaction, in substance, secures payment or performance of an obligation'.
3. The transactions enumerated in s 12(2)(a) to (l) include 'a hire purchase agreement' (s 12(2)(e)).
4. In our opinion, s 12(2) specifies particular transactions that ordinarily provide for an interest in personal property. If, in a particular case, a transaction of the kind enumerated in s 12(2)(a) to (l) provides for an interest in personal property and if the transaction, in substance, secures payment or performance of an obligation, then the transaction will have created a 'security interest', within s 12(1). See, generally, Replacement Explanatory Memorandum, Personal Property Securities Bill 2009 (Cth) [2.5]. See also, generally, the discussion by B Whittaker, Review of the Personal Property Securities Act 2009, Final Report (27 February 2015) [4.2.3].
5. A 'security interest' for the purposes of the PPSA must arise from a transaction that is consensual. An interest that arises by operation of law or from the granting of equitable relief is not a 'security interest' within the PPSA. The transaction in question must itself give rise to the 'security interest'. See i Trade Finance [30] - [32]; Sandhurst Golf Estates Pty Ltd v Coppersmith Pty Ltd;[46] Garrett [32]; Hughes v Pluton Resources Ltd.[47]
6. The PPSA adopts a functional approach and focuses on the substance of the transaction in determining whether an interest is a 'security interest'. See, generally, Replacement Explanatory Memorandum, Personal Property Securities Bill 2009 (Cth) [2.4].
7. The statutory direction in s 12(1) that regard must be had to what the transaction does 'in substance', and 'without regard to the form of the transaction or the identity of the person who has title to the property', indicates that close attention must be given to what the transaction purports to do.[48] The relevant substance of the transaction is its business or economic substance.
8. Whether a transaction that provides for an interest in personal property, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property) is a question of characterisation of the transaction to which the parties have agreed. It is not merely a question of the intention of the parties and it is not merely a question of interpretation. See, generally, English Law Commission, Consultative Report No 176, 'Company Security Interests' (2004) [3.32]; Agnew v Commissioner of Inland Revenue;[49] Waller [72] ‑ [73].
9. In the present case, as we have mentioned, each hire agreement was a hire purchase agreement. Each hire agreement provided for a 'transaction', within s 12(1), in that s 12(2)(e) in effect deems a 'hire purchase agreement' to be a transaction. Also, each hire agreement provided for a 'transaction', within the ordinary and natural meaning of that term, in that the agreement provided for a dealing with respect to the mining equipment.
10. The term 'personal property' is defined in s 10 of the PPSA to mean 'property' apart from specified exceptions. The exceptions are not relevant in the present case. The mining equipment the subject of each hire agreement was 'personal property' within the definition in s 10.
11. The term 'interest', in personal property, is defined in s 10 of the PPSA to include 'a right in the personal property'. It is unnecessary, in the present case, to decide whether the reference to 'a right in personal property' in the definition extends to a mere contractual right. See, generally, the discussion by Whittaker [4.2.2].
12. It is unnecessary to decide that point because, as we will explain, in the present case each of the first appellant and the respondent had a right in the mining equipment the subject of each hire agreement that was not merely a contractual right.
13. In Yanner v Eaton,[50] Gleeson CJ, Gaudron, Kirby and Hayne JJ explained that property 'does not refer to a thing; it is a description of a legal relationship with a thing. It refers to a degree of power that is recognised in law as power permissibly exercised over the thing' (footnotes omitted). Their Honours added that the term 'property' can be and is applied 'to many different kinds of relationship with a subject matter' [19]. Gummow J said in Yanner that '[d]istinct corporeal and incorporeal property rights in relation to the one object may exist concurrently and be held by different parties' [85] (footnote omitted).
14. In Hocking v Director‑General of the National Archives of Australia,[51] Kiefel CJ, Bell, Gageler and Keane JJ made these observations in relation to the common law doctrine of possessory title arising from the actual physical custody of a tangible or corporeal thing:

The doctrine of the common law has been explained in terms that physical possession of a tangible or 'corporeal' thing, in the sense of actual physical custody of the thing, 'is not merely evidence of absolute title: it confers a title of its own, which is sometimes called a "possessory title"'. The possessory title that derives from lawful physical possession 'is as good as the absolute title as against, it is usually said, every person except the absolute owner' (Russell v Wilson [1923] HCA 60; (1923) 33 CLR 538 at 546). Though the doctrine has been so much encrusted with technicalities that any exposition of it must be hedged with qualifications (eg, Moors v Burke [1919] HCA 32; (1919) 26 CLR 265 at 268-269; Willey v Synan [1937] HCA 85; (1937) 57 CLR 200 at 217-219), a slightly more complete statement of it might be that lawful physical possession is as good as absolute title against every person except someone 'who can show a better right to possession' (Holdsworth, A History of English Law (1925), vol 7, p 449. See The Winkfield [1901] UKLawRpPro 52; [1902] P 42 at 55-56; Gatward v Alley [1940] NSWStRp 12; (1940) 40 SR (NSW) 174 at 180; Gollan v Nugent [1988] HCA 59; (1988) 166 CLR 18 at 30-33, 48-49).

1. In Hocking, Edelman J said that 'when the concept of property is used in law in the context of a tangible thing it describes the legal relationship between a person and a thing rather than the thing itself. The focus is therefore upon the nature of the legal relationship between a person and a thing' [202]. His Honour made these comments about the character of a property right to, or 'property' in, a chattel [206]:

The essence of a property right to, or 'property' in, a chattel as the right to exclude others also flows from the requirements for a property right in the chattel, namely that a person have (i) a sufficient degree of physical control (sometimes described as 'factual possession' (JA Pye (Oxford) Ltd v Graham [2002] UKHL 30; [2003] 1 AC 419 at 435-436 [40]) to the exclusion of others and (ii) a manifested intention to exercise that control personally (ie not on behalf of another) in a manner that 'exclude[s] unauthorized interference' (Pollock and Wright, An Essay on Possession in the Common Law (1888), p 41).

1. The meaning of the phrase 'a right in the personal property' in the definition of 'interest', in personal property, in s 10 of the PPSA is to be ascertained from the text, context and purpose of the phrase in the PPSA as a whole.
2. It is significant, in our opinion, that the phrase refers to 'a right in' the personal property as distinct from 'an interest in' the personal property. This indicates that the term 'interest', in personal property, as defined in s 10, was intended to have a broad meaning. The attribution of a broad meaning reflects the relevant context and purpose, namely the functional approach of the PPSA and its focus upon the substance of transactions.
3. In our opinion, the phrase 'a right in the personal property' in the definition of 'interest', in personal property, in s 10 includes rights in chattels that would be recognised at common law as rights of a proprietary kind. Those rights include a legal right held by a person in their own right to the physical control, possession and use of the chattel combined with a legal right held by the person in their own right to exclude others from physically controlling, possessing or using the chattel.
4. In the present case, apart from the operation of the PPSA, the respondent was the hiree of the mining equipment and had title to the equipment. During the hire period, the respondent, as the hiree, held the reversion in respect of the equipment under the hire agreements unless and until the first appellant exercised its right of purchase (pursuant to the option to purchase or the first right of refusal, if engaged) and completed the purchase. The respondent did not merely have a contractual right in relation to the equipment.
5. Also, in the present case, apart from the operation of the PPSA, the first appellant was the hirer of the mining equipment. During the hire period, the first appellant, as the hirer and in its own right, had a legal right under the hire agreements to the physical control, possession and use of the equipment and a legal right (by virtue of its rights under the hire agreements) to exclude others from physically controlling, possessing or using the equipment. During that period the first appellant, as the holder of an option to purchase the equipment, also had an 'equity' in the equipment of a proprietary character. See [110] ‑ [112] above. The first appellant did not merely have a contractual right in relation to the equipment.
6. However, the critical question, in the present case, is whether the transaction embodied in each hire agreement 'provided for' 'an interest in personal property' (without regard to the form of the transaction or the identity of the respondent as the person who had title to the equipment), within s 12(1) of the PPSA, and, if so, whether the transaction, in substance, secured payment or performance of an obligation (without regard to the form of the transaction or the identity of the respondent as the person who had title to the equipment). If those conditions were satisfied then each hire transaction created or provided for a 'security interest', within the meaning of s 12(1), for the purposes of the PPSA.
7. In our opinion, the hire purchase transaction created by each hire agreement 'provided for' 'an interest in personal property' (without regard to the form of the transaction or the identity of the respondent as the person who had title to the equipment), within s 12(1) of the PPSA. The 'interest' (as defined in s 10) in 'personal property' (as defined in s 10) was the respondent's rights in the mining equipment as the hiree of the equipment and the holder of the reversion. The hire purchase transaction 'provided for' those rights by creating the hiree/hiror relationship including the reversion in respect of the equipment. That was a relevant part of the business or economic substance of the hire purchase transaction.
8. The respondent's rights in the mining equipment as the hiree and the holder of the reversion under each hire purchase transaction, in substance, secured 'payment or performance of an obligation' by the first appellant, within s 12(1) and s 12(2) of the PPSA. The obligation comprised the first appellant's promises to the respondent in each hire agreement to make payments and to perform obligations as stipulated in the hire agreement. That was a relevant part of the business or economic substance of the hire purchase transaction.
9. The first appellant's rights in the mining equipment comprised the first appellant's legal right under the hire agreements to the physical control, possession and use of the equipment combined with its legal right (by virtue of its rights under the hire agreements) to exclude others from physically controlling, possessing or using the equipment, and the first appellant's 'equity' in the equipment of a proprietary character as the holder of the option to purchase. Section 19(5) of the PPSA (which provides that, for the purposes of s 19(2)(a), a grantor has rights in goods that are leased or bailed to the grantor under a PPS lease, consigned to the grantor, or sold to the grantor under a conditional sale agreement (including an agreement to sell subject to retention of title) when the grantor obtains possession of the goods) does not apply to a hirer under a hire purchase agreement. However, in the present case, the first appellant's rights in the mining equipment were created, arose or provided by the hire agreements. That was a relevant part of the business or economic substance of the hire purchase transaction.
10. The respondent's rights and the first appellant's rights in the mining equipment arose from a consensual transaction between them. The transaction itself gave rise to those rights.
11. So, each hire agreement was a 'security agreement' as defined in par (a) of the definition of that term in s 10, in that a 'security interest', within the meaning of s 12(1), was provided for by the hire agreement.
12. The respondent was the 'secured party', within par (a) of the definition of that term in s 10, in that the respondent held a security interest in the mining equipment for the respondent's own benefit. The first appellant was the 'grantor', within par (a) of the definition of that term in s 10, in that the first appellant had an interest in the mining equipment, the equipment being the personal property to which the respondent's security interest was attached.
13. The mining equipment was the 'collateral', within the definition of that term in s 10, being the personal property to which the respondent's security interest was attached.
14. In our opinion, in the present case, the hire purchase transaction which we have described was the relevant business or economic transaction that was created or arose under each hire agreement. That characterisation is not abrogated by the features of the hire agreements to which the primary judge referred at [40(d)], [46(a)] and [46(b)] of his reasons or by the feature of the hire agreements alleged by the respondent in its notice of contention (see [69] above). See our analysis at [145] ‑ [152] above. Each of those features, individually and collectively, impact on the commercial value of the option to purchase conferred on the first appellant by each hire agreement. However, they do not, in our opinion, materially alter the nature of the rights and obligations created by or arising under each hire purchase transaction so as to preclude the conclusion that, as a matter of substance and without regard to the form of the transaction or the identity of the respondent as the person who had title to the equipment, each transaction operated and took effect as both a hiring transaction and an option to purchase transaction.
15. By s 18(1), the security agreement between the respondent and the first appellant was effective according to its terms.
16. By s 19(1), the respondent's security interest was enforceable against the first appellant as grantor in respect of the particular collateral only if the respondent's security interest had attached to the collateral.
17. Pursuant to s 19(2), the respondent's security interest attached to the collateral on the date of execution of each hire agreement in that:

(a) upon execution, the first appellant as grantor had rights in the collateral (being the first appellant's rights in the collateral which we have described at [214] above); and

(b) upon execution, 'value' (as defined in s 10) was given by the respondent for the respondent's security interest (being the respondent's promises to the first appellant under each hire agreement) and, further, the first appellant did an act by which the respondent's security interest arose (namely, the first appellant executed each hire agreement).

1. It was necessary for the respondent's security interest in the collateral to be perfected. See s 21 of the PPSA. However, as we have mentioned, the preliminary issue formulated by the parties was confined to whether the hire agreements created security interests in the mining equipment which the respondent was required to perfect by registration. The preliminary issue did not include whether, if the hire agreements did create security interests which the respondent was required to perfect by registration, the respondent had validly and effectively perfected its security interests. As we have mentioned, the parties have joined issue in their pleadings on that point. It will be necessary for the point to be resolved by a judge in the pending proceedings in the General Division.
2. We will, however, make some observations about s 267 of the PPSA.
3. Section 267(1)(a) of the PPSA provides that s 267 applies if, relevantly, an order is made (or a resolution is passed) for the winding up of a company or a body corporate or if an administrator of a company or a body corporate is appointed.
4. As we have mentioned, on 17 February 2020 the first appellant was placed into voluntary administration. Also, as we have mentioned, on 19 March 2020 the first appellant was placed into liquidation and the second and third appellants were appointed its joint and several liquidators.
5. By s 267(1)(b), relevantly, a security interest granted by the company or the body corporate is unperfected at whichever of the times specified in s 267(1)(b) applies.
6. In the present case, as we have mentioned, there is an outstanding and unresolved issue as to whether the respondent's security interest was perfected or not at the applicable time specified in s 267(1)(b).
7. Section 267(2) provides that '[t]he security interest held by the secured party vests in the grantor immediately before the event mentioned in [s 267(1)(a)] occurs'.
8. Section 267 is materially different from the Canadian statutes and the New Zealand statute. By s 267, in essence, an unperfected security interest vests in the grantor upon the occurrence of an insolvency event in relation to the grantor. The unperfected security interest is not merely void or ineffective as against, for example, a liquidator or an administrator.
9. It is an incident of a hire purchase transaction, to which s 12(1) and s 12(2) apply, that the secured party's security interest is liable to vest in the grantor, if certain events occur, unless the secured party has perfected the security interest. If the secured party fails to perfect its security interest then, if s 267 applies, the secured party ceases to have a security interest in the personal property which comprised the collateral for the security interest. The secured party is consigned to the status of an unsecured creditor in the grantor's insolvency or bankruptcy. See Albarran [70] ‑ [74]; Re OneSteel Manufacturing Pty Ltd (Administrators Appointed);[52] Rohrt, Rose Guerin and Partners Pty Ltd (in liq) v Princes Square W24NY Pty Ltd.[53]

1. We would allow the appeal. Each of the hire agreements constituted a hire purchase transaction that provided for an interest in the mining equipment that, in substance, secured payment or performance of an obligation by the first appellant to the respondent. The interest in the mining equipment was the respondent's rights in the mining equipment as the hiree of the equipment and the holder of the reversion.
2. The parties should be heard as to the precise form of the orders, including as to costs.

1. I have the considerable advantage of having read the joint reasons of Buss P & Murphy JA. I wish to express in my own words my reasons for also concluding that each of the hire agreements provide

for a security interest within the meaning of s 12(2)(e) (and s 12(1)) of the Personal Property Securities Act 2009 (Cth). However, in doing so I adopt, without repetition, their Honours' description of the factual background, the procedural history of the litigation and the primary judge's reasons for decision. I also adopt the comprehensive recitation of the parties' respective contentions on appeal as recounted in the joint reasons.

1. The appellants raise numerous grounds which, in effect, challenge much of the primary judge's methodology in arriving at his Honour's final determination. There is, however, really just one question on which the appeal turns: did the primary judge err in law in holding that the hire agreements, properly construed, did not provide for a security interest within the meaning of s 12 of the PPSA? Subject to one matter, discussed at [240] - [243] below, the primary judge correctly identified the critical question to be whether the respondent h[54]d a security interest.54 His Honour resolved that question favourably to the respondent and adversely to the appellants.
2. While the ultimate question on appeal may be expressed simply, there is an anterior issue as to whether the appellants should have leave to amend their grounds of appeal. The appellants seek leave to advance a series of propositions which squarely raise whether the hire agreements ought to be characterised as hire purchase agreements within s 12(2)(e) of the PPSA and, if so, whether the agreements provided for a security interest. The application for leave to amend was made well after the conclusion of the appeal hearing in response to the court raising with the parties the analysis implicit in the additional propositions by which the appellants seek leave to amplify their ground 1 (see [80] - [83] above).
3. In opposing leave to amend the respondent invokes the principles that apply to advancing a new point on appeal. Those principles are well established.[55] In this instance, generally for the reasons given by Buss P & Murphy JA (see [90] above), I am satisfied that it is expedient and in the interests of justice to allow the appellants to rely on the additional propositions as part of ground 1.
4. The issues that arise from the proposed amendment involve questions of law where the relevant facts are established. Indeed the relevant facts were never in dispute. The respondent accepts that there is no additional evidence it would have led had the additional propositions been raised at trial.[56] Moreover, while the appellants never articulated their case with the precision now found in the additional propositions, counsel for the appellants did submit at the appeal hearing that the relevant transaction was a hire purchase agreement.[57] In articulating various alternative alleged relevant 'interests' that were said to be present the appellants' counsel also identified the relevant interest in personal property as being the rights under the hire agreements and the return of the mining equipment[58] - thereby, in effect, identifying the relevant interest in personal property in terms of the respondent's rights in the equipment as owner and the holder of the reversion. And it was always the appellants' contention that the transactions, in substance, secured payment and performance of obligations under the agreements.[59] So, although the appellants did not formally advance the additional propositions in the form of a ground of appeal, the appellants' case on appeal was - at least in part - broadly consistent with the proposed amendment.
5. In the circumstances I would allow the appellants' application to amend ground 1. It then becomes convenient to examine the merits of the appeal by reference to the framework found in the additional propositions relied on to sustain ground 1.

The preliminary issue in the primary proceedings

1. There is one minor respect in which the primary proceedings proceeded on a false footing.
2. The preliminary issue as formulated by the parties asked whether each hire agreement 'created' a security interest in the mining equipment.[60] Thus, throughout the primary reasons, his Honour spoke in terms of whether there was a 'grant' of a security interest.[61] The primary judge concluded that the hire agreements did not 'create' security interests in the equipment[62] and ultimately made a declaration to that effect.[63]
3. The relevant statutory language is not whether a transaction 'created' a security interest in personal property.[64] Rather, it is whether an interest in personal property was 'provided for' by a transaction that, in substance, secured payment or performance of an obligation. A security agreement 'provides' for a security interest if the interest arises under the agreement.[65]
4. I would, accordingly, understand the preliminary issue to have raised for determination whether each hire agreement 'provided for' a security interest in the mining equipment the subject of the agreement - a question that requires consideration of whether the relevant interest arose under the agreement. The appeal should be understood as raising the same issue.

The initial question of contractual construction

1. Two steps must be taken to resolve the issue of whether the hire agreements, properly construed, provided for a security interest within the meaning of s 12 of the PPSA. The first step is to determine the parties' respective rights and interests under the hire agreements properly construed. The second step is to determine whether the rights and interests of the respondent amount to a security interest within the PPSA.
2. There is, in the first respect, a key point of difference between the appellants and the respondent. The respondent contends, and the primary judge found, that the hire agreements merely provided for a right of first refusal. The appellants contend that there is both an option to purchase and a right of first refusal. In the alternative the appellants contend that there is an option to purchase rather than a right of first refusal.
3. The contention that, properly construed, the hire agreements provided the first appellant with an option to purchase the mining equipment the subject of the agreements was a fundamental feature of the appellants' argument that the hire agreements provided for a security interest within the meaning of s 12 of the PPSA. While, by sub-ground 1(a), the appellants assert that the hire agreements provided for a security interest independently of the existence of any option to purchase, in oral submissions counsel for the appellants submitted that the relevant interest in personal property contended for 'lies in' the alleged option to purchase.[66] The suggestion that there is a security interest if the transaction was no more than a pure hire was only faintly pressed and is without obvious merit.
4. I agree with Buss P & Murphy JA, for the reasons that their Honours give, that properly construed the hire agreements provided the first appellant with an option to purchase the relevant mining equipment during the hire period. However, that option was defeasible provided that the respondent offered to sell the equipment to the first appellant as required by the right of first refusal (see [140] - [141] above). It follows that each hire agreement included an option whereby, during the hire period, the first appellant as hirer was able to purchase the mining equipment the subject of the agreement. The purchase price was the amount specified in the particular headed 'Outright Purchase Price Option' but applying the rebate allowed in cl 3 of the Special Terms & Conditions of Hire.
5. The option to purchase is not the only relevant feature of the hire agreements. However, the other material rights and interests can be addressed when undertaking the second step as outlined in [244] above. Before turning to that second step it is necessary to say something about the nature of a security interest pursuant to s 12 of the PPSA.

The nature of a 'security interest' pursuant to s 12 of the PPSA

1. The joint reasons summarise the structure and material provisions of the PPSA (see [40] - [49], [96], [99] - [104] above). I adopt that overview.[67] It is not necessary, in these reasons, that I again state the many defined terms and concepts that are found in the PPSA. Instead I intend to focus on the s 12 meaning of 'security interest'. It will, however, be understood that the meaning of 'security interest' is informed by the wider context of the PPSA's statutory provisions - these importing matters such as attachment (s 19), perfection (see esp. s 21) and the s 10 definitions of 'collateral', 'grantor', 'interest', 'personal property', 'provides', 'secured party' and 'security agreement'. Also important is s 8(1)'s list of interests to which the PPSA does not apply.
2. The material parts of s 12 of the PPSA, providing for the meaning of 'security interest', have been reproduced at [43] above.
3. The concept of a 'security interest' under the PPSA is more than a mere grouping of a range of relationships arising under the general law. The effect of the legislation is to create a distinct statutory interest - one that is not dependent on the form of the transaction or the identity of the person who has title to the personal property. The independent existence of the statutory interest arises from the provisions of the PPSA. There is a 'security agreement' where a security interest (as defined in s 12) is created, arises or is provided for by an agreement or act (s 10). By s 18(1) of the PPSA a security agreement is effective according to its terms. Accordingly, s 18(1) gives statutory force to the existence of the security interest.
4. For the purpose of this appeal, it is not necessary to consider whether that statutory interest is or is analogous to a proprietary right.[68] Nor, so far as nothing in the PPSA abolishes the traditional general law forms of security interest, is it necessary to consider how the statutory interest interacts with a traditional general law security interest. It is enough to observe that so far as there are security interests regulated by the PPSA the parties' respective rights and obligations in respect of those security interests will be governed by the PPSA.
5. The definition of 'security interest' is fundamental to the PPSA. The PPSA is self-described as a 'law about security interests in personal property'.[69] It provides for the creation and registration of security interests in personal property as well as priority between security interests and the enforcement of security interests. Accordingly, the definition of the term 'security interest' is integral to the scope and operation of the PPSA. In this respect the legislature has adopted what is said to be a 'functional definition'.[70]
6. The approach is explained in the following terms in the outline to the Replacement Explanatory Memorandum to the Personal Property Securities Bill 2009 (Cth):

A security interest in personal property arises from a transaction that in substance secures the payment or performance of an obligation. The interest in the personal property, taken as security for a loan or other obligation, is a security interest. The Bill would apply to transactions which have the effect of securing a payment or other obligation, regardless of the form of the transaction, the nature of the debtor or the jurisdiction in which the personal property or parties are located (subject to specified exceptions). This is known as a functional approach.[71] (original emphasis)

1. In employing a functional approach to determining the security interests covered by the PPSA the legislation essentially renders irrelevant the distinctions which exist in the general law as to the taking of security interests in personal property.
2. The PPSA extends its operation to almost anything that serves the function of a security interest insofar as the concept applies to an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation. Some of the authorities consider whether a transaction has the effect, in substance, of securing the payment or performance of an obligation as a matter of commercial or economic substance.[72] The statutory imperative is to consider whether the relevant transaction, in substance, secures payment or performance of an obligation - doing so without regard to the form of the transaction or the identity of the person who has title to the relevant personal property. Accordingly, the focus is on what the transaction seeks to accomplish rather than its legal form.
3. The requirement to disregard form naturally invites consideration of the commercial or economic substance of a transaction. However, this should not be taken too far. It is more faithful to the statutory language to examine the essence of the transaction and ask whether, in reality, the transaction assures or supports the payment or performance of an obligation. The inquiry is directed to the way in which the transaction works or operates - does it serve the function of securing payment or performance of an obligation?
4. By its definition of 'security interest' the PPSA regulates all transactions which provide for an interest in personal property and, in substance, secure payment or performance of an obligation. The PPSA does so regardless of form or who has title to the property. Traditional concepts of ownership and title are put aside in favour of the PPSA's functional approach. In this way the PPSA treats alike all interests in personal property provided for by a transaction which, from a functional perspective, secure payment or performance of an obligation.
5. Ordinarily, but not exclusively, the concept of a security interest under the PPSA covers the situation where one person (the secured party) has an interest in some personal property in another's possession to assure or support the payment or performance of an obligation.
6. The initial three sub-sections dealing with the concept of a 'security interest' in s 12 of the PPSA have distinct areas of operation. An initial demarcation can be seen between the 'in substance' security interests provided for in s 12(1) and s 12(2) and the 'deemed' security interests provided for in s 12(3). Within the 'in substance' security interests there are arrangements that fall within the general definition of 'security interest' in s 12(1). There are also specified transactions of the kind listed in s 12(2). Some of the specified transactions in s 12(2) fit within traditional forms of a security interest (eg a fixed or floating charge and a chattel mortgage). Others do not (eg an agreement to sell subject to retention of title or a lease of goods). In the case of all 'in substance' security interests the transaction must, in substance, secure payment or performance of an obligation - it is not enough that the arrangement simply qualifies as one of the transactions specified in s 12(2).
7. The general definition of 'security interest' in s 12(1) provides:

A security interest means an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property).

1. A security interest is only enforceable against a grantor in respect of collateral if the security interest has 'attached' to the collateral (PPSA s 19(1)).
2. There are four elements to the general definition of 'security interest' in s 12(1):[73]
   1. There must be an outstanding obligation - the obligation may be monetary (note the reference to 'payment') or non-monetary (note the reference to 'performance').
   2. There must be an in substance security - something that assures or supports the payment or performance of an obligation by furnishing the secured party with a right, power or remedy to be enforced or exercised in the event of non-payment or non-performance of the obligation. It follows from the next element that the right, power or remedy must be enforceable or exercisable against some personal property.
   3. The security must amount to an interest in personal property (the term 'interest' including a 'right' in the personal property given the s 10 inclusive definition of the term 'interest').
   4. The interest must be provided for by (ie arise under) a transaction.
3. There is no definition of the term 'transaction' in the PPSA. The term bears its ordinary meaning,[74] ie an act or dealing which produces legal consequences. It is established that a transaction for the purpose of s 12(1) of the PPSA must be consensual between the parties to it.[75] What is included within the concept of a transaction is illustrated by the list of transactions in s 12(2) of the PPSA. Reading s 12(2) with s 12(1) also clarifies that it is the transaction (as opposed to the interest in personal property) that is to, in substance, secure payment or performance of the obligation.
4. Section 12(2) of the PPSA must be read with s 12(1). Section 12(2) specifies various examples of an interest in personal property provided by certain transactions which are included in the concept of a security interest (as long as the transaction, in substance, secures payment or performance of an obligation). It has been suggested that the better view is that the list of transactions in s 12(2) does not expand the meaning of the term 'security interest', ie the list of transactions in s 12(2) merely provides examples of transactions that can be security interests if they fall within the primary definition of the term in s 12(1).[76] It is, however, well understood that a statutory definition which uses the language of 'means' (see s 12(1)) and 'includes' (see s 12(2)) indicates an exhaustive explanation providing both for exclusion and enlargement - the latter making plain that otherwise doubtful cases fall within the scope of the definition.[77] In s 12 of the PPSA the position is potentially more nuanced insofar as s 12(2) uses the words '[f]or example' - thereby perhaps connoting that the specified examples fit within the general definition.[78]
5. It is not necessary to resolve this issue in the present appeal. Plainly a 'hire purchase agreement' is a transaction. Accordingly, if the hire agreements are properly characterised as hire purchase agreements, both s 12(1) and s 12(2) may arise for consideration. But in each case it is not sufficient to conclude that there is a hire purchase agreement. To establish that there is a security interest it remains necessary: (1) to identify the 'interest in personal property' provided for by the transaction (ie the hire purchase agreement); and (2) to show that the transaction, in substance, secures payment or performance of an obligation.
6. As I have mentioned, some of the transactions listed in s 12(2) involve dealings that fit within the traditional conception of a security interest under the general law (ie where an interest in property is created by grant by a debtor). For example:
   1. A fixed charge (s 12(2)(a)).
   2. A floating charge (s 12(2)(b)).
   3. A chattel mortgage (s 12(2)(c)).
   4. A pledge (s 12(2)(f)).
7. These four nominated transactions within the list in s 12(2) demonstrate the breadth of the statutory concept of a security interest and the irrelevance of form and title to the statutory concept. Each of these forms of security may apply to goods (ie personal property that is tangible property). With a fixed charge and a floating charge the grantor (ie the chargor) has possession of and legal title to the goods. With a chattel mortgage the grantor retains possession of the goods but (in the case of a legal mortgage) transfers legal title. With a pledge the grantor transfers possession of the goods but retains legal title.
8. The general immateriality of title to the operation of the PPSA is apparent from more than just the definition of security interest. Priority disputes between competing security interests in collateral do not rely on a property-based regime. Instead pt 2.6 of the PPSA provides a rules-based priority ranking approach that covers security interests coming within the scope of the PPSA. The default priority rules provide for priority to be determined in a way that has no regard to legal title (see PPSA s 55).
9. Other transactions listed in s 12(2) might be considered to be non-traditional security interests in as much as interests that operate to reserve a creditor's original ownership in goods are not traditionally treated as security in the strict legal sense. This is so despite it being widely appreciated that title-retention devices such as conditional sales, hire purchase agreements and finance leases commonly have a security purpose. Transactions of this kind in s 12(2) include:

1, A conditional sale agreement (including an agreement to sell subject to retention of title) (s 12(2)(d)).

1. A hire purchase agreement (s 12(2)(e)).
2. A consignment (s 12(2)(h)).
3. A lease of goods (s 12(2)(i)).
4. With each of these examples there is no immediate passing of legal title (albeit that, with some of these transactions, an eventual passing of legal title is anticipated or at least possible). However, in each case there is a transfer of possession. As between conditional seller/purchaser, owner/hirer, consignor/consignee and lessor/lessee the latter takes possession of the goods. So these are transactions where one party (the creditor/seller) retains legal title but another party (the debtor) has possession and apparent ownership.
5. The operation of the PPSA in relation to such transactions is awkward and, to some extent, counter intuitive. It might be thought anomalous that the party in possession through a transaction by way of conditional sale, hire purchase, consignment or lease may provide for a security interest in the relevant goods in favour of the legal title holder. A non-owner debtor is providing for an interest in personal property in favour of the owner. So too it may seem anomalous to say that the secured party's interest in the goods (the secured party being the creditor/seller) is provided for by the transaction where the secured party owned the goods before the transaction and continues to hold legal title after the transaction.
6. One must, however, put aside preconceived notions based on the operation of the general law and instead apply oneself to the text and structure of the PPSA.
7. Overseas jurisdictions adopting personal property securities legislation like the PPSA have explained that the legislation requires a different approach from traditional ideas of property ownership. In Re Giffen the Supreme Court of Canada said that, in enacting the Personal Property Security Act 1989 (BC), the legislature of British Columbia had set aside the traditional concepts of title and ownership to a certain extent, redefining traditional concepts of rights in property.[79] The court approved commentary which stated that the personal property securities legislation implemented a 'new conceptual approach to the definition and assertion of rights in and to personal property' falling within the scope of the legislation.[80]
8. This, in my view, is seen most obviously with the non-traditional security interests where legal title to goods rests with one person while another enjoys possession and use of the goods. In providing for such a new statutory interest by way of a 'security interest' the PPSA potentially effects the general law rights and interests of the parties. There is, potentially, a statutory alteration in the rights and interests of the conditional seller, owner, consignor or lessor (either absolutely, in a situation where s 267 applies, or relatively, where there is a priority dispute with a competing security interest). In particular, the legal title holder's interest in the relevant goods is subject to the operation of the PPSA - a circumstance which potentially has correlative effects for the rights and interests of the debtor party in the goods.
9. Similar issues have been the subject of academic commentary in overseas jurisdictions adopting personal property securities legislation. An article by M Bridge, R McDonald, R Simmonds & C Walsh examines, among other things, the problems encountered in attempting to apply a purely functional security analysis to title-based transactions.[81] The authors refer to the circumstance that in certain transactions title functions as security.[82] In the context of the many forms of transaction involving an unpaid seller's reservation of title the authors observe that the drafters of the United States of America's Uniform Commercial Code (UCC) did not believe that conditional sales necessarily fell within their functionalist definition of 'security'. So the UCC formally reconceptualised the conditional sale as a security agreement in the conventional sense. By art 1 of the UCC any retention or reservation of ownership by a seller is limited in its substantive effect to the reservation of a security interest. General property in the goods passes to the buyer.[83]
10. The authors go on to state:

The Canadian PPSA provisions do not effect an equivalent express conversion. Nonetheless, PPSA analysts are of the unanimous opinion that it is necessary to reconceptualize the arrangement so as to involve an executed sale to the buyer followed by the grant back of a security interest to the seller in order to rationalize the application of the legislation to conditional sales and analogous title reservation security transactions. Pursuant to this approach, the seller is a 'secured creditor and not an owner of the collateral; the owner of the collateral is the buyer', and it is to the debtor's undivided ownership interest that the security interest attaches.[84] (citations omitted)

1. In short, the seller's property interest in the goods is reduced from ownership to security.[85] And, correlatively, the debtor/purchaser is treated as the owner.
2. This has been picked up in some of the overseas jurisprudence.[86] So, for example, in the context of a lease of goods it has been said that the lessee (ie the person in possession) is treated by the relevant personal property securities legislation as the owner of the goods for registration and priority purposes.[87] Like analysis has even been adopted in at least one Australian PPSA commentary. In Personal Property Securities in Australia,[88] the authors address the definition of 'grantor' in s 10. It will be recalled that this provides in par (a) that a 'grantor' is:

a person who has the interest in the personal property to which a security interest is attached (whether or not the person owes payment or performance of an obligation secured by the security interest).

The first element of this definition [ie par (a)] is intended to apply to 'in substance' security interests. It will include, for example, the mortgagor, chargor or pledgor under a pre-PPSA security interest, as they would clearly have the interest in the personal property to which the security interest is attached. The language does not work as well, however, in relation to non-traditional security interests such as hire-purchase agreements, leases or sales on retention of title terms. In these cases, a traditional legal analysis would say that the hirer, lessee or purchaser has 'an interest' in the personal property (the right of possession), but not 'the interest' in the personal property to which the security interest is to attach, as the scheme of the PPSA contemplates that the security interest will attach to the whole asset, not just the grantor's possessory interest in it. The internal logic of the PPSA overcomes this difficulty, however, by treating the grantor as if it were the owner of the collateral, whether or not it is the owner of collateral in the eyes of the general law.[89] (emphasis added)

1. There is a degree of irony in legislation which was expressly intended to take a functional approach to the identification of security interests (one without regard to the form of the transaction or the identity of the person who has title to the property) being reconceptualised to accord with a traditional property-based analysis. The suggestion that it is necessary or appropriate to do so is perhaps emblematic of the challenges faced in putting aside accepted general law principles from a pre-PPSA environment and adapting to the new paradigm as constituted by the PPSA - one in which the PPSA equates true (ie general law) security interests and in substance security interests. Those challenges are exacerbated by the PPSA's approach of generally (although not exclusively) providing for like treatment of all security interests despite the different legal characteristics of the numerous different types of transaction which may provide for a security interest.
2. I have developed the nature of a security interest pursuant to s 12 of the PPSA as part of the backdrop to the proper disposition of the appeal. It is, however, not necessary to come to a final view on whether, in applying the PPSA, it is necessary to reconceptualise reservation of title security interests conformably with overseas analysis of the type referred to at [276] - [279] above. The present appeal concerns a limited question directed to whether the hire agreements, properly construed, provided for a security interest. The essential contest is between the first appellant and the respondent as alleged grantor and alleged secured party. Whether in relation to a reservation of title security interest a debtor/purchaser is to be treated under the PPSA as if it were the owner of the goods is, I expect, something that will be of greater significance in a dispute between the creditor/seller and another putative secured party who seeks to claim through the debtor/purchaser.
3. It is, however, appropriate to make some limited provisional observations on whether the PPSA implicitly treats a grantor as if it was the owner of the relevant goods irrespective of the position under the general law.
4. In relation to transactions involving an unpaid seller's reservation of title, the PPSA, like the Canadian personal property securities statutes, does not expressly provide for the debtor in possession to obtain a deemed ownership interest in the relevant goods. There are, however, some instances in which s 19(5) of the PPSA expressly recognises that a grantor obtains rights in goods (for the purpose of the attachment rule) when it obtains possession of the relevant goods. That is the case for goods that are leased or bailed under a PPS lease, goods that are consigned and goods that are sold under a conditional sale agreement. For such transactions there is, prima facie, no need to reconceptualise in the manner suggested by the overseas analysis. The PPSA expressly provides for the debtor in possession to hold the necessary rights in the goods for the purpose of the attachment rule. The debtor is deemed to hold the necessary property interest on obtaining possession of the goods.
5. Section 19(5) does not apply to a hire purchase agreement. Nor does it apply to a lease of goods not being a PPS lease. Presumably that is because in these situations it was thought that the debtor in possession holds a relevant right or interest in the goods by reason of the operation of the general law.[90] If that is right, prima facie, there is again no need to reconceptualise either kind of transaction in the manner suggested by the overseas analysis.
6. I will touch briefly on two different matters before moving away from the concept of a security interest.
7. First, it has been suggested that the examples set out in s 12(2) will usually satisfy the requirement that there be a transaction that, in substance, secures payment or performance of an obligation.[91] This, in my view, reflects no more than what is observable as a matter of experience; it is not a statement of legal principle. It is plain from s 12(2) that the 'in substance' security requirement is additional to the requirement that an interest in personal property be provided for by a transaction. And, while some of the examples may commonly amount to an in substance security, that is not always the case. For example, whether in a particular case a lease of goods is an in substance security will be fact sensitive.
8. Finally, it is not necessary, for the purpose of this appeal, to address the concept of deemed security interests under s 12(3) of the PPSA. It is enough to observe that the PPSA stipulates certain interests to be security interests irrespective of whether they, in substance, secure the payment or performance of an obligation. This, in my view, accentuates that the concept of a security interest is a distinct statutory interest arising under the provisions of the PPSA.

Disposition: did the hire agreements each provide for a 'security interest' within s 12 of the PPSA? Are the hire agreements 'hire purchase agreements' within s 12(2)(e)?

1. The first sub-issue raised by the additional propositions is whether each hire agreement is a hire purchase agreement within s 12(2)(e) of the PPSA.
2. The joint reasons discuss the nature of a hire purchase agreement under the general law (see [110] - [112] above). As is explained in the joint reasons, the words 'hire purchase agreement' have acquired a specific legal meaning. There is no definition of the term 'hire purchase agreement' in the PPSA. In the absence of any definition, and no contrary intention appearing from the relevant context, the term 'hire purchase agreement' should be given the meaning it has acquired under the general law.[92]
3. A hire purchase agreement is an agreement for the acquisition of goods where the owner hires the goods to another person (the hirer) who, as well as receiving possession of the goods, is given an option or obligation to purchase the goods at a future time.[93]
4. Under a hire purchase agreement it is the owner who is the legal title holder of the goods. However, the hirer has an 'equity' in the goods which may amount to a proprietary interest for certain purposes.[94] The hirer has no legal title to the goods until fulfillment of the conditions prescribed by the agreement. Instead, under the general law, the hirer is entitled to continued possession of the goods. And, so far as instalment payments entitle the hirer to purchase the goods, the hirer acquires a proprietary interest in the goods which is susceptible to protection in equity.[95]
5. The respondent acknowledges that, on its face, each hire agreement was a contract for the hire of goods coupled with an option to purchase. But, on the respondent's construction, the exercise of the option was conditional on the respondent having determined to sell the goods - in other words the option was conditional on the right of first refusal. The respondent submits that as the option was outside the exclusive control of the first appellant the agreements cannot be characterised as hire purchase agreements.[96]
6. That submission fails given the proper construction of the hire agreements as summarised at [247] above. The hire agreements provided the first appellant with an option to purchase the relevant mining equipment during the hire period. The option to purchase remained in force as at the appointment of the voluntary administrators to the first appellant.
7. Separately, in seeking to answer whether each hire agreement constituted a hire purchase agreement, the respondent submits that the agreements could not be viewed as being a disguised form of finance lease.[97] The respondent submits:
   1. The hire agreements provided no economic incentive for the first appellant to make all the hire charge payments and exercise an option to purchase the mining equipment.[98]
   2. In leasing and bailment cases, the Canadian,[99] New Zealand and first instance Western Australian authorities[100] have drawn a distinction between 'finance' leases (which give rise to a security interest) and 'operating' or 'true' leases (which do not) - the respondent contends that each of the hire agreements is properly construed as an operating or true lease as there is an absence of the usual indicia that would be expected in a finance lease.[101]
8. These submissions are misdirected. First, the relevant sub-issue concerns whether the hire agreements are properly construed as hire purchase agreements, not whether they are 'finance' leases or 'operating/true' leases. This is not to say that the indicia which inform whether a lease is a finance lease as opposed to an operating/true lease are irrelevant to the ultimate question before the court. Those considerations arise when examining the question whether the relevant transaction in substance secures payment or performance of an obligation. I have dealt with the respondent's arguments on this point when addressing that question (see [310] - [364] below).
9. Second, I do not accept that the hire agreements provided no economic incentive for the first appellant to make hire charge payments and exercise the option to purchase the mining equipment. There was an incentive in the form of the rebate allowed against the purchase price pursuant to cl 3 of the Special Terms & Conditions of Hire. The rebate provided for an allowance of 50% to 100% of the monthly hire charges as paid by the first appellant to the respondent depending on the time at which the first appellant completed the purchase by making final payment on account of the purchase price. The rebate provided an economic incentive to exercise the option and complete the purchase of the mining equipment whenever the market value of the equipment exceeded the amount required to complete the purchase after adjusting for the application of the rebate.
10. The economic incentive is emphasised by the circumstance that the rebate has a limited availability. It expired if the purchase was not completed within 300 days after commencement of the hire. Accordingly, there was an economic incentive to exercise the option and complete the purchase of the mining equipment within 300 days after commencement of the hire.
11. While raising these matters, the respondent seemingly conceded that if there was an option to purchase the mining equipment independent of the right of first refusal, the form of the hire agreements would bring them within the general law conception of a hire purchase agreement.[102] That concession should be accepted. The hire of the mining equipment under each hire agreement is self-evident. The first appellant had possession and use of the mining equipment. Properly construed the effect of the hire agreements was also that, during the hire period, the first appellant was granted an option to purchase the mining equipment the subject of the hire agreements. This suffices, in my opinion, to meet the general law understanding of the term 'hire purchase agreement'. Each hire agreement was a hire purchase agreement within the meaning of s 12(2)(e) of the PPSA.
12. Insofar as the hire agreements each constituted a 'hire purchase agreement' there was also a 'transaction' for the purpose of s 12(1) of the PPSA.
13. The respondent nevertheless submitted that whether the hire agreements met the general law conception of a hire purchase agreement was not determinative of the question on appeal.[103]
14. That must be accepted. The question whether there is an 'in substance' security is not answered simply by asking whether there is a transaction fitting within the list of transactions in s 12(2) of the PPSA. Nor, if considered within the rubric of s 12(1), is it sufficient that there is a transaction. It remains necessary to consider two further sub-issues. First, does the transaction (ie the hire purchase agreement) relevantly provide for an interest in personal property? Second, does the transaction (ie the hire purchase agreement) in substance secure payment or performance of an obligation?

Did the respondent have an 'interest in personal property' provided for by the hire agreements?

1. A transaction will only give rise to a security interest if the person who would be a 'secured party' (here the respondent) holds an 'interest in personal property' provided for by the transaction.
2. All parties accepted that the mining equipment the subject of the hire agreements constituted personal property within the meaning of that term in s 10 of the PPSA.
3. Counsel for the appellants eschewed the suggestion that the relevant 'interest in' the mining equipment for the purpose of the alleged security interest was the respondent's legal title to the mining equipment.[104] Counsel was correct to take this position. The respondent's legal title to the mining equipment was not provided for by the hire agreements. The legal title did not arise under the hire agreements insofar as the respondent held legal title to the mining equipment before entry into the agreements. The appellants instead pointed to there being an interest in the mining equipment in the form of the respondent's rights in the mining equipment as the owner of the equipment and the holder of the reversion.[105]
4. The identification of an interest in the mining equipment in these terms proved uncontroversial - the respondent accepted that each hire agreement created a 'reversionary interest' in the respondent and a 'right of possession' in the first appellant.[106]
5. I agree with the parties that the respondent held an interest in the mining equipment provided for by the hire agreements. The term 'interest', in respect of personal property, includes a right in the personal property (PPSA s 10). In terms of relevant rights and interests in the mining equipment the effect of the hire agreements was threefold: (1) the first appellant became entitled to the possession and use of the equipment to the exclusion of any other person (including the respondent); (2) the first appellant, under the option to purchase, acquired an interest in the equipment of a proprietary character so far as the first appellant's interest in the equipment under the option was susceptible to protection in equity (see [292] above); and (3) the respondent became entitled to a reversion in the equipment expectant on the termination or expiry of the hire (which reversionary interest in the equipment might be extinguished if the first appellant exercised the option to purchase or right of first refusal and thereafter completed the purchase of the equipment).
6. The term 'interest in' personal property is broad so far as it includes a right in the personal property. The term is at least wide enough to include an interest that constitutes a proprietary right in personal property. The reversionary interest held by the respondent in the mining equipment is of this character. Separately, there is no doubt that the reversionary interest was provided for by the hire agreements. The hire agreements conferred an express right to recover the mining equipment in the event of default (Terms & Conditions of Hire cl 7). And, reading the hire agreements as a whole, it is plain that at the end of the hire period the equipment was to be returned to the respondent unless it was purchased by the first appellant pursuant to the option to purchase.
7. Accordingly, the respondent held an 'interest in personal property' provided for by the hire agreements - that interest was the respondent's rights in the mining equipment as the owner of the equipment and the holder of the reversion.

Did the hire agreements, in substance, secure payment or performance of an obligation?

1. The PPSA gives limited guidance on the task that arises in determining whether a transaction, in substance, secures payment or performance of an obligation. The question is considered without regard to the form of the transaction. So too the consideration occurs without regard to the identity of the person who has title to the personal property. Otherwise the only guidance is that the question requires the adoption of a functional approach - does the transaction serve the function of securing payment or performance of an obligation?
2. I have already referred to what is included within the term 'secures' (see [263.2] above).

1. The appellants contend that the respondent's rights in the mining equipment as the owner of the equipment and the holder of the reversion under each hire agreement, in substance, secured payment or performance of an obligation by the first appellant. The alleged obligation was the first appellant's promises to make payments and to perform obligations as stipulated in the hire agreements.[107]
2. This contention is expressed at a level of generality which means that it is little more than an asserted conclusion.
3. Self-evidently the first appellant had monetary and non-monetary covenants under the hire agreements. Logically, if there is a 'security interest' for the purpose of the PPSA, those covenants comprise the relevant 'obligation' for the purpose of s 12(1) or s 12(2)(e). But I do not accept that the right to recover the mining equipment in the event of default (or otherwise on the termination or expiry of the hire) alone means that the hire agreements, in substance, secure the payment or performance of those obligations. Otherwise it could be argued that any conditional sale agreement, hire purchase agreement, consignment or lease secures payment or performance of an obligation to the extent that the conditional seller, owner, consignor or lessor will usually have the right to retake possession of the relevant goods when the conditional purchaser, hirer, consignee or lessee fails to pay instalments, hire charges or rent or otherwise fails to perform an obligation. Indeed, such a right will often be a legal incident of the transaction. The circumstance that there is an additional requirement to demonstrate an in substance security means that it cannot be enough that in the case of a conditional sale, hire purchase agreement, consignment or lease of goods there is a right to retake possession on default.
4. In this respect it is not enough that terms are intended to make (or even have the practical effect of making) it more likely that an obligation will be paid or performed. A transaction does not relevantly secure payment or performance of an obligation simply because the contractual consequences of non-payment or non-performance are such as to compel compliance. Again, something more is required.
5. The respondent submits that the relevant interest provided by the hire agreement was the right of reversion. It is said that the enforcement of the respondent's rights on default under the hire agreements did not involve any recourse to that reversion - it simply involved the surrender or termination of the first appellant's rights under the hire agreements. Thus, according to the respondent, the hire agreements gave the respondent no 'interest' capable of being used as security for the first appellant's obligations.[108]
6. In support of that submission, the respondent relies on the following passage from an article by Professor Cuming (a Canadian scholar widely published in the area of personal property securities legislation):

Under a true lease, the lessor surrenders his possessory right in chattels to the lessee in return for an undertaking by the lessee to perform certain acts which usually involve the payment of money to the lessor. The lessee has obligations, but the transaction cannot be characterised as a security agreement because the interest of the lessor is not related to those obligations. In other words the lessor does not remain owner merely to ensure or to induce performance of the lessee's obligations. He remains owner because a bailment contract does not involve the transfer of ownership to the bailee.[109]

1. The respondent's primary submission is misdirected. The question is not whether the respondent's interest arising under the hire agreement secures payment or performance of an obligation. It is whether the transaction (which provides for such an interest) secures payment or performance of an obligation.
2. The quotation from Professor Cuming's article recognises the distinction. However, it goes on to explain why, with a true lease, the transaction cannot be characterised as securing the payment or performance of an obligation. Lest there be any doubt on this score it is useful to have regard to the introduction to Professor Cuming's article. There the author observes that the personal property securities legislation precludes the use of a simplistic and rigid formula as a method of determining the scope of the legislation. Instead the required approach 'involves an examination of all aspects of the transaction', focussing less on the detailed terms of the agreement and more on its effect.[110]

The factors relevant to the characterisation task

1. The question is one of characterisation. The Canadian jurisprudence on its various personal property securities statutes has accepted that the process of characterisation is guided by numerous factors. Those factors were helpfully synthesised by Kirkpatrick JA, delivering judgment for the Court of Appeal for British Columbia, in DaimlerChrysler Services Canada Inc v Cameron.
2. DaimlerChrysler Services Canada Inc v Cameron concerned the lease of a Dodge Ram pickup truck for a term of 4 years. The lease required a Mr Cameron to pay a monthly amount and an extra $0.12 per kilometre if the truck was driven over 2,000 kilometres monthly. Mr Cameron had an option to purchase the truck at the expiration of the lease term. The option purchase price was based on a forecast of the truck's value at the end of the lease term. Mr Cameron failed to make payments due under the lease. Daimler repossessed the truck and sold it. The court was called on to determine whether the lease was a 'true' lease (one not regulated by the applicable personal property securities statute) or a 'security' lease (which was so regulated). The court held that the lease was a true lease, ie it was not the British Columbia equivalent of a PPSA in substance security.
3. Kirkpatrick JA stated that the court must scrutinise the relationship between the lessor and the lessee to ascertain whether, in that relationship, the indicia of a security agreement were evident.[111] Her Honour went on to state:

The factors that support a finding that the lease is a security lease include:

1. whether there was an option to purchase for a nominal sum;
2. whether there was a provision in the lease granting the lessee an equity or property interest in the equipment;
3. whether the nature of the lessor's business was to act as a financing agency;
4. whether the lessee paid a sales tax incident to acquisition of the equipment;
5. whether the lessee paid all other taxes incident to ownership of the equipment;
6. whether the lessee was responsible for comprehensive insurance on the equipment;
7. whether the lessee was required to pay any and all licence fees for operation of the equipment and to maintain the equipment at his expense;
8. whether the agreement placed the entire risk of loss upon the lessee;
9. whether the agreement included a clause permitting the lessor to accelerate the payment of rent upon default of the lessee and granted remedies similar to those of a mortgagee;
10. whether the equipment subject to the agreement was selected by the lessee and purchased by the lessor for this specific lease;
11. whether the lessee was required to pay a substantial security deposit in order to obtain the equipment;
12. whether there was a default provision in the lease inordinately favourable to the lessor;
13. whether there was a provision in the lease for liquidated damages;
14. whether there was a provision disclaiming warranties of fitness and/or merchantability on the part of the lessor; and
15. whether the aggregate rentals approximate the value or purchase price of the equipment.

...

Another relevant factor is the term of the lease. A lease for a short period generally indicates a true lease, since the leased property will have a significant residual useful life upon expiration of the lease and can be leased again or sold by the lessor.[112]

1. While, given the factual context of DaimlerChrysler Services Canada Inc v Cameron, this lengthy quotation is concerned with 'true' and 'security' leases (as well as parties who are lessors and lessees), I consider these factors to be equally applicable in distinguishing between a hire purchase agreement that constitutes an in substance security pursuant to the PPSA and a hire purchase agreement that does not. After all, as s 12(1) of the PPSA makes clear, the form of the transaction is to be disregarded. In adopting the functional approach mandated by s 12(1) and s 12(2) of the PPSA it is appropriate to consider these factors - interchanging terminology appropriate for a hire purchase agreement (ie 'owner/hirer' for 'lessor/lessee' and 'hired' for 'leased') - in evaluating whether the hire agreements constitute an in substance security. For 'security' or 'true' lease I would substitute a hire purchase agreement that constitutes an in substance security pursuant to the PPSA and a hire purchase agreement that does not - the latter being a 'pure hire'.
2. Another useful list of relevant factors is found in the Western Australian bailment case of Re Arcabi Pty Ltd (in liq); Ex parte Theobold:

There are several factors accepted by overseas courts as indicia of when bailment arrangements secure payment or performance of an obligation. These include:

(a) the bailment provides that the ownership of the goods will vest in the bailee on expiry of the bailment agreement;

(b) the bailee has an obligation to purchase the goods or an option to purchase the goods or extend the term of the arrangement at a 'bargain' price such that it would be reasonable to expect the bailee to exercise the option;

(c) the term of the arrangement is for a major part of the economic life of the goods; and

(d) the minimum payments under the bailment amount to substantially all the capital cost of the goods.[113]

1. As can be seen, some of these factors overlap with the factors mentioned in DaimlerChrysler Services Canada Inc v Cameron.
2. Both DaimlerChrysler Services Canada Inc v Cameron and Re Arcabi Pty Ltd (in liq); Ex parte Theobold identify that a provision for change of ownership, and the terms on which the change of ownership will occur, are relevant factors. It is not difficult to understand why this is the case. Whatever the legal form of a transaction, it is likely to be characterised as an in substance security for the purpose of the PPSA where in substance it is a secured sales transaction. That is all the more so where all or most of the incidents of ownership accrue to the party in possession of the goods. In such cases it is readily appreciated that, although a transaction takes the legal form of a conditional sale, a hire purchase agreement or a lease with an option to purchase, the chosen legal form is, in reality, a title-retention device for security purposes. The realities of the relationship between the parties demonstrate that the transaction operates functionally to secure the payment of a purchase price.
3. In DaimlerChrysler Services Canada Inc v Cameron Kirkpatrick JA referred to authority which described the essence of a lease intended as security as being whether the leased property was ultimately to pass to the lessee who was obliged to pay the lessor what might reasonably be regarded as the purchase price with interest and carrying charges over the life of the lease.[114] Her Honour also endorsed the following explanation of the distinction between a true lease and a lease by way of security:

The test in determining whether an agreement is a true lease or a conditional sale is whether the option to purchase at the end of the lease term is for a substantial sum or a nominal amount ... If the purchase price bears a resemblance to the fair market price of the property, then the rental payments were in fact designated to be in compensation for the use of the property and the option is recognized as a real one. On the other hand, where the price of the option to purchase is substantially less than the fair market value of the leased equipment, the lease will be construed as a mere cover for an agreement of conditional sale.[115]

1. Adapting that passage to the current factual context, a clause in a hire purchase agreement giving the hirer an option to purchase goods at less than market value indicates that the hirer has acquired or will acquire 'equity' in the goods (in the commercial or economic sense of that term - something I will refer to as 'commercial equity' - rather than the legal sense). The transaction is more likely to be characterised as an in substance security. The reality of the transaction is that the hirer's right or interest in the goods is available to secure the payment or performance of the hirer's obligations under the transaction. The position is otherwise when there is a pure hire. The hirer's payment and performance obligations are properly viewed as no more than the consideration exchanged for the possession and use of the goods. As Professor Cuming puts it, the owner's interest is not related to the hirer's obligations. The owner does not remain holder of the legal title to ensure or to induce performance of the hirer's obligations.
2. I now turn to consider the relevant factors as they apply to the hire agreements between the respondent and the first appellant.

1. At the outset it should be observed that there are significant gaps in the evidence. The absence of direct evidence regarding three matters is marked.
2. First, there is no direct evidence as to the market value of the mining equipment the subject of the hire agreements - either as at the date of commencement of the hire or pending the duration of the hire period. The most that can be said is that the parties agreed that the appropriate insurance value was the same amount as the price stipulated by the 'outright purchase price option'. In this regard I infer from the agreed insurance value that the market value of the mining equipment at the commencement of the hire was in the order of the price stipulated as to the outright purchase price option. That inference is more safely drawn when it is recalled that during the first 30 days of hire the first appellant could have exercised the option to purchase and purchased the mining equipment for the price stipulated in the outright purchase price option. Also, the hire agreements expressly contemplated that the mining equipment would be insured for its market value (Additional Hire Charges cl 4).
3. Second, there is no evidence of the market monthly hire charge for a pure hire of mining equipment of the kind the subject of the hire agreements. As will be seen, all other relevant matters being equal (ie comparing the hire or lease of similar or identical goods in the same market), where a transaction includes an option to purchase, a requirement to pay a hire charge in excess of what is being paid under a pure hire or operating lease provides some indication that there is an in substance security.
4. There is, however, available evidence in the hire agreements which supports the conclusion that the monthly hire charges under the agreements were greater than the respondent's standard monthly contract hire rates for the relevant equipment. In the particulars of the hire period provided for under the Hire Agreement it is stated:

Should the hire fall short of ten (10) continuous months for any reason other than buyout of equipment, [the respondent] will be entitled to charge the difference between the ten (10) month hire rates and it's [sic] standard monthly contract hire rates.

1. Accordingly, I would infer that the hire agreements required the first appellant to pay monthly hire charges in excess of the respondent's standard monthly contract hire rates for mining equipment of the kind the subject of the agreements.
2. Finally, there is no direct evidence as to the useful economic life of the mining equipment. The respondent submits that it is obvious from the nature of the equipment that it would be capable of use beyond the minimum 10 month hire period.[116] I accept that an inference should be drawn that the useful economic life of the mining equipment was more than the minimum hire period. That follows from the nature of the equipment - most of it being substantial mining machinery (the equipment included a cone crusher, a jaw crusher and a horizontal screener as well as two stockpilers). Each hire agreement describes the mining equipment the subject of the equipment as being new. And, also supporting the inference, the hire agreements contemplated that the hire might continue beyond the 10 months - or, alternatively, that if it did not, there would be post-hire cleaning, servicing, repairs and maintenance so that the mining equipment was made suitable for re-hire on return. Indeed, by cl 2 of the Terms & Conditions of Hire, hire charges remained payable if the equipment was unsuitable for rehire on return (pending repairs being carried out).
3. There are other potentially relevant matters on which there was no evidence. The parties did not address the nature of the respondent's business. Nor was there any explanation of how the mining equipment was selected or whether it was purchased by the respondent so as to meet the requirements of the hire agreements. These matters are, however, less significant than the three evidentiary matters referred to at [330] - [335] above.

The factors which support characterisation of the hire agreements as in substance securities

1. There are a number of factors which support the appellants' contention that each hire agreement constituted an in substance security. Chief among these factors is the option to purchase that was granted by the respondent in favour of the first appellant.
2. The respondent argues that if, contrary to its preferred construction, there is an option to purchase, there is nevertheless no in substance security. First, as has been seen, the respondent says that there is no economic incentive to make the payments under the hire agreements and exercise the option to purchase.[117] I have rejected that submission (see [297] above). There was an incentive so far as the rebate reduced the price payable on exercise of the option to purchase. It cannot be said that, after applying the applicable rebate, the purchase price under the option to purchase was reflective of the then market value of the mining equipment. Second, the respondent says that the term of hire does not represent the whole of the useful life of the minin[118]quipment.118 Third, the respondent says that the first appellant's obligation is not to pay the equivalent of the capital cost of the mining equipment plus carrying costs by way of an inter[119] payment.119 Fourth, the respondent says that the exercise of the option to purchase is not a fait accompli, the transaction not being structured to ensure that its exercise is inevitable once the hirer makes all schedul[120]payments.120
3. I accept that there was, on the face of each hire agreement, no mandatory sale. But that is the case whenever there is an option to purchase. It does not mean that there is no de facto secured purchase transaction. Nor, viewing the transaction as a whole, is it determinative that the hire is for less than the useful life of the mining equipment. Professor Cuming's article contains an instructive passage that considers a like situation in the leasing context:

Many leases provide instalment payments for a period of time which is less than the useful life of the property and, in addition, include a purchase option involving the payment of a sum which is not nominal and which is payable before the lessee has made payments substantially equivalent to the value of the goods. If the amount payable under the option is significantly less than the market value which, at the date the lease was entered into, the parties could expect the goods to have at the date when the option is exercised, there is persuasive evidence that the lessee had an equity in the goods prior to exercise of the option. Usually, this type of transaction will require the lessee to make lease payments in excess of what other lessees are paying to lease similar or identical goods in the same market. What the parties have created is a transaction under which the lessee acquires an increased equity in the chattels with each lease payment. While the final payment is labelled 'optional' in the contract, from a commercial point of view it is obligatory because it makes no economic sense to refrain from exercising the option. Viewed in this light, the option is merely the final in a series of payments toward the purchase price of the chattels.[121] (emphasis added)

1. Professor Cuming observes that American courts have shown little reluctance in finding that this type of transaction is a security agreement.[122] Professor Cuming also refers to a variant of this arrangement where rental payments, or a portion thereof, may be credited toward the amount payable on exercise of a payment option. If the option price approximates the market value of the goods the circumstance that the lessee (ie the hirer) can treat all or a large portion of the lease payments (ie the hire charges) as credit toward the purchase price is an indication of a secured sale transaction.[123] This variant succinctly describes the essence of the arrangement effected by the hire agreements. The reality of the rebate allowed under the option to purchase is that during the 300 days post-commencement of hire the first appellant was building up its 'commercial equity' in relation to the mining equipment by making the monthly hire charges payable under the hire agreements. This, in my view, strongly supports the conclusion that each hire agreement was a hire purchase agreement that constituted an in substance security pursuant to the PPSA.
2. This analysis is supported by the circumstance that, as mentioned, it should be inferred that the monthly hire rates under the hire agreements were in excess of the respondent's standard monthly contract rates for like mining equipment.
3. Finally, in seeking to counter the implications of the option to purchase, the respondent relied on schedules it prepared. I have reproduced the schedule for the first hire agreement as an annexure to these reasons. While there are minor monthly differences this schedule is representative of the other schedules. The schedules show that, on a monthly basis, there was an increase in the total amount payable by way of hire charges and purchase price (less allowable rebate) to purchase the mining equipment under the option to purchase. Viewed as a percentage of the amount stipulated in the outright purchase price option, the amounts were 100% (month 1), 102% (month 2), 106% (month 3), 109% (month 4), 117% (month 5) 120% (month 6), 123% (month 7) 127% (month 8), 130% (month 9) and 133% (month 10). (I have not included month 11 or month 12 as the rebate is no longer available at this point.)
4. The respondent relied on the schedules in support of its notice of contention (see [69] above). The respondent also submitted that:

The respondent has provided schedules of the comparison between the hire charges and the purchase price, and the total amounts payable under the hire agreements. In summary, if the first right of refusal was activated, the first appellant would have had to pay, as a minimum, roughly the same amount again as it had already paid the respondent in hire charges to exercise the first right of refusal and purchase the equipment (and, as a maximum, 14 times as much). It follows that the trial judge was correct to find that even if the hire agreements included an option to purchase, there was no evidentiary foundation for concluding that the option would have been exercisable at a 'bargain' price. Thus, it is clear that quite unlike a hire purchase agreement or finance lease where a sale is always intended, a sale in this instance was an unlikely possibility. At the time the hire agreements were entered, there was no obligation, nor even a reasonable expectation that there would be a sale of the equipment to the first appellant.[124] (citations omitted)

1. It is unsurprising that the overall cost of purchasing the mining equipment would increase over time. That is to be expected where the overall cost comprises a capital component and a carrying charge equivalent to an interest payment. That, in substance, is what is shown by the schedules. While the increase is not uniform, month-by-month, the disparity on a monthly basis is not so great as to avoid the conclusion that, in substance, what was effected was an arrangement whereby the first appellant was able (and, given its economic incentive, likely) to purchase the mining equipment for its market value plus a carrying charge in the nature of an interest component. In that respect it does not matter that the option to purchase was not exercisable at a bargain price.
2. The notice of contention is without merit and should be dismissed.
3. Second, as to the additional factors in support of the characterisation that the hire agreements were in substance securities, the first appellant was obliged to insure the mining equipment for its full market value (Additional Hire Charges cl 4; Terms & Conditions of Hire cl 2). Generally speaking, it is for the owner of goods to purchase insurance against loss or damage to the goods. Accordingly, the circumstance that the obligation to insure is transferred to a hirer is an indicator of a de facto secured purchase transaction. Standing alone it is not strong evidence. But it is corroborative of what appears from the option to purchase.[125]
4. Third, the first appellant assumed responsibility for repairs and maintenance as well as servicing costs. In particular, the first appellant accepted responsibility for all servicing, maintenance and damage (Terms & Conditions of Hire cl 5, cl 19). Damage caused by 'undue wear and tear' was to be repaired at the first appellant's expense (Terms & Conditions of Hire cl 4) as was any expense associated with the wear of various specific parts (Terms & Conditions of Hire cl 20). And, as has been mentioned, if the equipment was unsuitable for rehire on return, hire charges remained payable until repairs were carried out (Terms & Conditions of Hire cl 2). Ordinarily such costs are an incident of ownership.[126]
5. Finally in terms of those factors which support the hire agreements being characterised as in substance securities, there is a disclaimer of any warranty or condition as to suitability or fitness for purpose (Terms & Conditions of Hire cl 8). Such a term is to be expected in a de facto secured purchase. However, it is also not uncommon in a pure hire. As such, standing alone, this factor is of little persuasive value.[127] In the present case it has relevance as a corroborative factor.

1. The default provisions in the hire agreements are essentially neutral to the characterisation question. Failure to make a monthly hire charge payment was to result in the mining equipment being immediately disabled and demobilisation arrangements made (Hire Agreement special terms cl 3). The respondent had the right to terminate the hire and recover the mining equipment at any time in the event of non-payment of any amount due or 'plant misuse/abuse' (Terms & Conditions of Hire cl 7). Hire charges remained payable for the minimum hire period if the hire period was concluded early (Terms & Conditions of Hire cl 11).
2. Recovery of the mining equipment on default is consistent with both a hire purchase agreement that constitutes an in substance security and a pure hire. Beyond that the default clause does no more than reinforce the basis for the calculation of contractual damages. It cannot reasonably be said that the default clause secures the payment of the hire charges and the purchase price under the option to purchase. There is no acceleration provision. Nor is the respondent granted remedies similar to those of a mortgagee.

The factors which support characterisation of the hire agreements as a pure hire

1. There are, however, a number of features of the hire agreements which are consistent with the agreements involving a pure hire rather than an in substance security arrangement. In some cases this is because the relevant matter is inconsistent with the usual incidents of ownership accruing to the first appellant as the person in possession of the mining equipment and having an option to purchase the equipment.[128]
2. First, the minimum hire period of 10 continuous months was less than the useful economic life of the mining equipment, meaning that the mining equipment might be rehired on return to the respondent after the expiry or termination of the hire period. Moreover, the 10 months is a relatively short minimum hire period. The short length of the term is consistent with a pure hire rather than an in substance secured purchase contract. However, as has been seen, neither of these matters is determinative. To the contrary, the option to purchase coupled with the economic incentive provided by the rebate is consistent with a de facto secured sales transaction where the purchase was to be completed within 300 days after commencement.
3. Second, there was no rebate against the purchase price under the option to purchase if the first appellant exercised the option to purchase more than 300 days after the commencement of the hire. Again, however, this presupposes that the hire continued past the 300 days. There was an economic incentive to exercise the option to purchase and complete the purchase within 300 days after commencement of hire.
4. Third, the first appellant was obliged to operate the mining equipment within its specifications and in accordance with the respondent's instructions (Terms & Conditions of Hire cl 3).
5. Fourth, any alterations or modifications to the mining equipment had to be approved in writing by the respondent (Special Terms & Conditions of Hire cl 4).
6. Fifth, the hire agreements provided for an excess hourly rate when the mining equipment was used for more than 250 hours per month. A pro rata hourly rate was payable in addition to the monthly hire rate (Hire Agreement particulars of hire rate). Logically this excess rate compensated for extra wear and tear which would presumably reduce market value at the end of the hire period. Such a term is, in my view, consistent with a pure hire. In a de facto secured purchase transaction it would not be expected that additional compensation would be payable to the respondent for usage of the mining equipment on an excess hours basis.
7. Sixth, the hire agreements provided for potential reductions in the monthly hire charge in the event of 'stand down time', 'inclement weather' and 'major machine maintenance/repairs' (Terms & Conditions of Hire cl 12, cl 13). Such allowances are the other side of the coin to the additional hire charge for excess monthly usage. It is consistent with the hire agreements being a pure hire.
8. Seventh, the respondent accepted responsibility for and the costs of mechanical repairs necessary due to faulty manufacture (Terms & Conditions of Hire cl 5). Doing so is consistent with a pure hire. That said, standing alone this is of limited significance. Such an allocation of responsibility is not necessarily inconsistent with the hire agreements being characterised as a title-retention device for security purposes. It is also normal for a seller of equipment to be responsible for mechanical repairs required as a result of faulty manufacture.
9. Eighth, the first appellant was to maintain a two month hire charge amount as a security deposit.
10. I accept that, as the respondent submits,[129] this is often consistent with an operating lease rather than a security lease. However, I view this factor as having little weight in the present case. There is good reason why a person in the position of the respondent might wish to obtain an advance payment as and by way of additional security. That is particularly the case at the commencement of the hire period when the hirer is yet to build up a substantial 'commercial equity' in the goods.
11. Moreover, as Professor Cuming observes, it is difficult to see how the presence or absence of a security deposit does more than confirm a conclusion based primarily on other more persuasive factors.[130]

Conclusion: the hire agreements, in substance, secured payment or performance of an obligation

1. I am satisfied that, when the various features of the hire agreements are considered and weighed, each agreement should be characterised as an in substance security for the purpose of the PPSA rather than a pure hire.
2. The single most important feature is the option to purchase. When the nature and structure of the option to purchase is understood it becomes apparent that in substance the hire agreements are a secured sales transaction. The transaction takes its legal form as a title-retention device for security purposes. The implications of the option to purchase are supported by a number of other features of the hire agreement. The contrary factors are peripheral indicia which do not detract from the conclusion that the transaction serves the function of securing the payment or the performance of an obligation as inheres from the option to purchase in the circumstances of the hire agreements.
3. It follows, in my opinion, that each hire agreement provided for a 'security interest' within the meaning of s 12(2)(e) (and s 12(1)) of the PPSA. Ground 1 of the appeal should be upheld.

1. Question 1 of the preliminary issues before the primary judge was in the following terms:

Did each of the hire agreements create a security interest in the equipment the subject of the relevant hire agreement pursuant to: (i) section 12(1); (ii) alternatively section 12(3), of the PPSA which the [respondent] was required to perfect by registration pursuant to section 20(1) of the PPSA?

1. In this court, argument was confined to whether each hire agreement provided for a security interest in the equipment pursuant to s 12(1) of the PPSA (and, implicitly, s 12(2)(e) of the PPSA). No argument was presented to the effect that there was a security interest which the respondent was 'required' to perfect pursuant to s 20(1) of the PPSA. Nor, properly understood, does s 20(1) require perfection - it simply provides for certain consequences that might arise in the absence of perfection. That aspect of the question raised by way of preliminary issue should be disregarded.
2. I would answer question 1 of the preliminary issues as follows:

Each of the hire agreements provided for a 'security interest' in the equipment the subject of the relevant agreement pursuant to s 12(2)(e) (and s 12(1)) of the Personal Property Securities Act 2009 (Cth).

1. In concluding to the contrary, the primary judge was, in my respectful opinion, in error. Accordingly, the appeal should be allowed. Orders should be made providing for an answer to question 1 of the preliminary issues to the effect of that specified in [367] above. The proceedings should otherwise be remitted to the General Division of the court for the determination of the remaining issues in the proceedings. I see no reason why the remittal ought not be to the primary judge.
2. I would make orders to the following effect (allowing the parties to be heard on the precise terms of the orders):
   1. The appeal is allowed.
   2. The orders of the court made 25 November 2020 and 10 December 2020 in action CIV/1495/2020 are set aside. In substitution thereof it is ordered that:

Question 1 of the preliminary issues ordered to be tried by order of the court is answered as follows:

Question: Did each of the hire agreements create a security interest in the equipment the subject of the relevant hire agreement pursuant to: (i) section 12(1); (ii) alternatively section 12(3), of the Personal Property Securities Act 2009 (Cth) which the plaintiff was required to perfect by registration pursuant to section 20(1) of the Act?

Answer: Each of the hire agreements provided for a 'security interest' in the equipment the subject of the relevant agreement pursuant to s 12(2)(e) (and s 12(1)) of the Personal Property Securities Act 2009 (Cth).

1. Action CIV/1495/2020 is otherwise remitted to the General Division for determination of the remaining issues in the proceedings.
2. The parties should be heard on the costs of the appeal and the trial of the preliminary issues.

Annexure Respondent's Schedule for Hire Agreement GENT0413A-2

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] The extracts from the agreement are reproduced with the spelling and grammatical errors contained in the agreement.

[2] University of Wollongong v Metwally [No 2] [1985] HCA 28; (1985) 59 ALJR 481.

[3] Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1.

[4] Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491.

[5] Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598.

[6] Banque Commerciale SA, en liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 284.

[7] McLennan v McCallum [2010] WASCA 45 [87] (Buss JA; McLure P & Newnes JA agreeing).

[8] Zerjavic v Chevron Australia Pty Ltd [2020] WASCA 40 [67] (Buss P, Murphy & Vaughan JJA).

[9] Bank of Montreal v Innovation Credit Union [2010] 3 SCR 3.

[10] i Trade Finance Inc v Bank of Montreal [2011] 2 SCR 360 [27] (Deschamps J delivering the judgment of the Supreme Court of Canada).

[11] Barron (Inspector of Taxes) v Littman [1953] AC 96, 113.

[12] Greenberg v Inland Revenue Commissioners [1972] AC 109, 136 ‑ 137.

[13] McEntire v Crossley Bros Ltd [1895] UKLawRpAC 25; [1895] AC 457.

[14] Helby v Matthews [1895] UKLawRpAC 30; [1895] AC 471.

[15] Kay's Leasing Corporation Pty Ltd v Fletcher [1964] HCA 79; (1964) 116 CLR 124.

[16] Karflex Ltd v Poole [1933] 2 KB 251, 263 ‑ 264 (Goddard J).

[17] Australian Guarantee Corporation Ltd v Ross [1983] VicRp 92; [1983] 2 VR 319, 323 (Young CJ), 325 (Murray J), 329 (Marks J).

[18] AL Hamblin Equipment Pty Ltd v Commissioner of Taxation (Cth) [1974] HCA 44; (1974) 131 CLR 570, 581 ‑ 582 (Mason J).

[19] Forestry Commission of New South Wales v Stefanetto [1976] HCA 3; (1976) 133 CLR 507, 518 (Mason J).

[20] Esanda Finance Corporation Ltd v Plessnig [1989] HCA 7; (1989) 166 CLR 131, 151 ‑ 152 (Brennan J).

[21] RHG Mortgage Securities v BNY Trust Company [2009] NSWSC 1432 [144] (McDougall J).

[22] Westpac Banking Corporation v Souter [2013] VSC 649 [42] (Ginnane J).

[23] National Australia Bank Ltd v Garrett [2016] FCA 714; (2016) 340 ALR 532 [28] (Beach J).

[24] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35].

[25] Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544 [16].

[26] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [46] ‑ [47].

[27] Simic v New South Wales Land and Housing Corp [2016] HCA 47; (2016) 260 CLR 85 [78].

[28] Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109.

[29] Zhu v Treasurer of the State of New South Wales [2004] HCA 56; (2004) 218 CLR 530 [82].

[30] Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420, 426 ‑ 427.

[31] Adams v Lambert [2006] HCA 10; (2006) 228 CLR 409 [21].

[32] Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) [2019] NSWCA 11; (2019) 99 NSWLR 317 [6] ‑ [10].

[33] Mackay v Wilson [1947] NSWStRp 7; (1947) 47 SR (NSW) 315, 325.

[34] Woodroffe v Box [1954] HCA 22; (1954) 92 CLR 245, 257 ‑ 258.

[35] Goldsbrough, Mort & Co Ltd v Quinn [1910] HCA 20; (1910) 10 CLR 674, 678, 691.

[36] Carter v Hyde [1923] HCA 36; (1923) 33 CLR 115, 120, 123, 128.

[37] Laybutt v Amoco Australia Pty Ltd [1974] HCA 49; (1974) 132 CLR 57, 71 ‑ 76.

[38] Quadling v Robinson [1976] HCA 31; (1976) 137 CLR 192, 200 ‑ 201.

[39] Ballas v Theophilos [1958] VicRp 91; [1958] VR 576, 579.

[40] O'Halloran Enterprises Pty Ltd v Williamson [1979] VicRp 5; [1979] VR 33, 40.

[41] Re International Harvester Credit Corp of Canada Ltd and Touche Ross Ltd (1986) 30 DLR (4th) 387.

[42] Re Giffen [1998] 1 SCR 91.

[43] Graham v Portacom New Zealand Ltd [2004] 2 NZLR 528.

[44] Waller v New Zealand Bloodstock Ltd [2005] NZCA 254; [2006] 3 NZLR 629.

[45] Albarran v Queensland Excavation Services Pty Ltd [2013] NSWSC 852; (2013) 277 FLR 337.

[46] Sandhurst Golf Estates Pty Ltd v Coppersmith Pty Ltd [2014] VSC 217; (2014) 285 FLR 267 [98] ‑ [99] (Robson J).

[47] Hughes v Pluton Resources Ltd [2017] WASCA 213; (2017) 52 WAR 456 [90] (Buss P, Murphy & Beech JJA).

[48] Widdup & Mayne Personal Property Securities Act: A Conceptual Approach (2002) [2.9]; JS Brooksbank & Company (Australasia) Limited v EXFTX Limited (in receivership and liquidation) formerly known as Feltex Carpets Ltd [2009] NZCA 122 [51] (Arnold J delivering the judgment of the Court of Appeal of New Zealand).

[49] Agnew v Commissioner of Inland Revenue [2001] UKPC 28; [2001] 2 AC 710 [32] (Lord Millett delivering the advice of the Privy Council).

[50] Yanner v Eaton [1999] HCA 53; (1999) 201 CLR 351 [17].

[51] Hocking v Director‑General of the National Archives of Australia [2020] HCA 19; (2020) 271 CLR 1 [91].

[52] Re OneSteel Manufacturing Pty Ltd (Administrators Appointed) [2017] NSWSC 21; (2017) 93 NSWLR 611 [45] ‑ [46], [81] (Brereton J).

[53] Rohrt, Rose Guerin and Partners Pty Ltd (in liq) v Princes Square W24NY Pty Ltd [2021] FCA 483 [94] ‑ [99] (Anderson J).

[54] OPS Screening & Crushing Equipment Pty Ltd v Gold Valley Iron Pty Ltd (in liq) [2020] WASC 412 (primary reasons) [9]. See also [4], [22(a)], [37].

[55] See eg Zerjavic v Chevron Australia Pty Ltd [2020] WASCA 40 [65] - [67].

[56] Respondent's supplementary submissions dated 10 August 2022 par 3.

[58] Appeal ts 4 - 5. See also Appeal ts 22 - 23, 28 - 29, 32.

[59] Appeal ts 7 - 8, 32 - 33. See also Appellants' defence and counterclaim dated 24 July 2020 pars 5.9.1, 26 BAB 60, 67 - 68.

[61] Primary reasons [2], [22(a)], [37], [47], [49]. See also [3], [4], 6].

[63] Order of the court made 25 November 2020 par 1 BAB 2.

[64] Although compare PPSA s 8(1), s 10 (definition of 'security agreement'), s 12(6). Other jurisdictions that have adopted equivalent legislation to the PPSA have used the statutory language of 'created'. For example: Personal Property Security Act 1993 (SS) s 3(1)(a) (the Act applies to 'every transaction that in substance creates a security interest'); Personal Property Securities Act 1999 (NZ) s 17 ('interest in personal property created or provided for by a transaction').

[65] PPSA s 10 (definition of 'provides').

[67] See also Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [2014] VSCA 326; (2014) 49 VR 86 [17], [97] - [106].

[68] Although, in characterising a PPSA security interest under the Saskatchewan Personal Property Security Act 1993 (SS) as a matter of property law, the Supreme Court of Canada has concluded that the statutory interest is analogous to a proprietary right: Bank of Montreal v Innovation Credit Union [2010] 3 SCR 3 [48].

[70] Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [17].

[71] Replacement Explanatory Memorandum to the Personal Property Securities Bill 2009 (Cth) page 11. See also pars 2.4 ('[i]n determining whether or not an interest is a security interest, the Bill takes a functional approach and focuses on the substance of the transaction') and 9.56.

[72] See eg White v Spiers Earthworks Pty Ltd [2014] WASC 139; (2014) 99 ACSR 214 [19]; Re Bowery Bar Pty Ltd [2021] NSWSC 697 [27].

[73] Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [107].

[74] Hughes v Pluton Resources Ltd [2017] WASCA 213; (2017) 52 WAR 456 [76].

[75] Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [126].

[76] B Whittaker Review of the Personal Property Securities Act 2009 - Final Report (2015) pars 4.2.1, 4.2.3.1.

[77] BHP Billiton Iron Ore Pty Ltd v National Competition Council [2008] HCA 45; (2008) 236 CLR 145 [32]; International Litigation Partners Pte Ltd v Chameleon Mining NL [2112] HCA 45; [2012] HCA 45; (2012) 246 CLR 455 [26].

[78] All the more so given that the relevant version of the Acts Interpretation Act 1901 (Cth) (see PPSA s 11) provides that where there is inconsistency between a provision and an example the provision prevails: s 15AD.

[79] Re Giffen [1998] 1 SCR 91 [26].

[81] M Bridge et al, 'Formalism, Functionalism, and Understanding the Law of Secured Transactions' (1999) 44 McGill Law Journal 567.

[82] M Bridge et al, 'Formalism, Functionalism, and Understanding the Law of Secured Transactions' 589.

[83] M Bridge et al, 'Formalism, Functionalism, and Understanding the Law of Secured Transactions' 588.

[84] M Bridge et al, 'Formalism, Functionalism, and Understanding the Law of Secured Transactions' 588.

[85] M Bridge et al, 'Formalism, Functionalism, and Understanding the Law of Secured Transactions' 593.

[86] See eg M Bridge et al, 'Formalism, Functionalism, and Understanding the Law of Secured Transactions' 593 fn 87.

[87] Graham v Portacom New Zealand Ltd [2004] 2 NZLR 528 [19]. See also [28].

[88] C Wappett, B Whittaker & S Edwards, Personal Property Securities in Australia (LexisNexis: Online).

[89] C Wappett, B Whittaker & S Edwards, Personal Property Securities in Australia [2.2500].

[90] See, in relation to a hire purchase agreement, [292] below.

[91] National Australia Bank Ltd v Garrett [2016] FCA 714; (2016) 340 ALR 532 [29].

[92] Attorney-General for New South Wales v Brewery Employees Union of New South Wales [1908] HCA 94 (1908) 6 CLR 469, 531.

[93] See LexisNexis, Australian Legal Dictionary (2nd ed, 2016) 723 (definitions of 'hire purchase' and 'hire purchase agreement').

[94] Forestry Commission of New South Wales v Stefanetto [1976] HCA 3; (1976) 133 CLR 507, 518.

[95] Esanda Finance Corporation Ltd v Plessnig [1989] HCA 7; (1989) 166 CLR 131, 151.

[96] Respondent's supplementary submissions dated 10 August 2022 par 8. See also par 18.

[97] Respondent's supplementary submissions dated 10 August 2022 par 9.

[98] Respondent's supplementary submissions dated 10 August 2022 pars 9, 20.

[99] The respondent refers to Daimler Chrysler Services Canada Inc v Cameron [2007] BCCA 133 [21] - [24], [31].

[100] The respondent refers to White v Spiers Earthworks Pty Ltd [19], [20] - [22] and Re Arcabi Pty Ltd (in liq); Ex parte Theobold [2014] WASC 310; (2014) 288 FLR 236 [20].

[101] Respondent's supplementary submissions dated 10 August 2022 pars 11 - 20.

[102] Respondent's supplementary submissions dated 10 August 2022 par 10.

[103] Respondent's supplementary submissions dated 10 August 2022 par 10. See also pars 31 - 34.

[106] Respondent's supplementary submissions dated 10 August 2022 par 23.

[108] Respondent's supplementary submissions dated 10 August 2022 par 26.

[109] R Cuming, 'True Leases and Security Leases under Canadian Personal Property Security Acts' (1983) 7 Canadian Business Law Journal 251, 263.

[110] R Cuming, 'True Leases and Security Leases under Canadian Personal Property Security Acts' 252 - 253.

[111] DaimlerChrysler Services Canada Inc v Cameron [21].

[112] DaimlerChrysler Services Canada Inc v Cameron [22], [24]. Kirkpatrick JA acknowledged that the list was derived from a list of factors mentioned by Professor Cuming in the article referred to at fn 109 above. See R Cuming, 'True Leases and Security Leases under Canadian Personal Property Security Acts' 285 fn 103. As well as referring to the source of the list Professor Cuming's article provides insightful explication of the significance of each of the enumerated factors.

[113] Re Arcabi Pty Ltd (in liq); Ex parte Theobold [20].

[114] DaimlerChrysler Services Canada Inc v Cameron [31].

[115] DaimlerChrysler Services Canada Inc v Cameron [31].

[116] Respondent's supplementary submissions dated 10 August 2022 par 19.1.

[117] Respondent's supplementary submissions dated 10 August 2022 par 9.

[118] Respondent's supplementary submissions dated 10 August 2022 par 19.1.

[119] Respondent's supplementary submissions dated 10 August 2022 par 19.2.

[120] Respondent's supplementary submissions dated 10 August 2022 par 19.4.

[121] R Cuming, 'True Leases and Security Leases under Canadian Personal Property Security Acts' 273.

[122] R Cuming, 'True Leases and Security Leases under Canadian Personal Property Security Acts' 273.

[123] R Cuming, 'True Leases and Security Leases under Canadian Personal Property Security Acts' 274 - 275.

[124] Respondent's supplementary submissions dated 10 August 2022 par 20.

[125] See R Cuming, 'True Leases and Security Leases under Canadian Personal Property Security Acts' 283 - 284.

[126] R Cuming, 'True Leases and Security Leases under Canadian Personal Property Security Acts' 283 - 284.

[127] R Cuming, 'True Leases and Security Leases under Canadian Personal Property Security Acts' 285.

[128] See in particular [120] - [123].

[129] Respondent's supplementary submissions dated 10 August 2022 par 29.

[130] R Cuming, 'True Leases and Security Leases under Canadian Personal Property Security Acts' 284.