In Air Liquide New Zealand Ltd v Supagas 2009 Ltd the High Court dismissed a strike out application advanced on the basis that the statement of claim discloses no reasonably arguable cause of action. The case involved an agreement under which Asco Gas Ltd supplied certain equipment to Supagas Holdings Ltd in exchange for a monthly rental fee. Asco did not register a financing statement under the Personal Property Securities Act 1999 in respect of the agreement.

Easy Factors International Limited, who had provided funding to Supagas, had a general security agreement with Supagas, in respect of which it had registered a financing statement under the PPSA. Following Supagas' default on its repayment obligations Easy Factors appointed receivers who subsequently entered into an agreement to sell all of Supagas' assets, including the equipment, to Supagas 2009 Ltd.

Air Liquide, who had previously acquired Asco's rights under the agreement, brought proceedings claiming (amongst other things) that the defendants had converted the equipment. Peters J dismissed the strike out application because it was not clear whether the Asco agreement constituted a security interest under the PPSA. Even though the agreement appeared to be a lease for a term of more than a year, a factual issue arose as to whether Asco was a lessor or bailor, regularly engaged in the business of leasing (or bailing) goods. If not, then the agreement would not constitute a lease for a term of more than one year, or a security interest under the PPSA. It is likely that in future proceedings the High Court will turn to the Court of Appeal's decision in Rabobank New Zealand Ltd v McAnulty [2011] 3 NZLR 192 for guidance in deciding this issue.

See Court decision here.