GLYN BRETT MORSE JENKINS AND KIM ST CLAIR JENKINS V NEW ZEALAND BLOODSTOCK LEASING LIMITED AND NEW ZEALAND BLOODSTOCK FINANCE LIMITED CA CA217/2007

GLYN BRETT MORSE JENKINS AND KIM ST CLAIR JENKINS V NEW ZEALAND BLOODSTOCK LEASING LIMITED AND NEW ZEALAND BLOODSTOCK FINANCE LIMITED CA CA217/2007 10 October 2008IN THE COURT OF APPEAL OF NEW ZEALAND CA217/2007 [2008] NZCA 413BETWEEN GLYN BRETT MORSE JENKINS AND KIM ST CLAIR JENKINS Appellants AND NEW ZEALAND BLOODSTOCK LEASING LIMITED AND NEW ZEALAND BLOODSTOCK FINANCE LIMITED RespondentsCA218/2007AND BETWEEN GLYN CRAWFORD MORSE JENKINS AND KATHLEEN MOIRA JENKINS Appellants AND NEW ZEALAND BLOODSTOCK LEASING LIMITED AND NEW ZEALAND BLOODSTOCK FINANCE LIMITED Respondents Hearing: 23 and 24 September 2008 Court: Robertson, Ellen France and Baragwanath JJ Counsel: D F Dugdale and M C Black for Appellants P J Morgan QC and J G Collinge for Respondents Judgment: 10 October 2008 at 3 pmJUDGMENT OF THE COURT A The appeal is dismissed. B The appellants must pay the respondents costs for a standard appeal on a band A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Robertson J)Introduction[1] This is an appeal from a decision of Winkelmann J (CIV 2004-404-5795 HC AK 19 April 2007) about the relationship between a series of documents signed between the appellants, the Jenkins, and the respondents, New Zealand Bloodstock, relating to the purchase and lease of a stallion named "Generous". [2] A variety of issues were argued in the High Court that have not arisen for consideration before us. There was no appeal against Winkelmann J's dismissal of the appellants' counter-claim, and nor did the appellants pursue the claims they had made in the High Court with regard to the respondents' failure to register particular security interests under the Personal Property Securities Act 1999. [3] The fundamental issue on appeal is the scope and reach of a "lease to purchase" agreement entered into between the respondents and Glenmorgan Farms Ltd ("Glenmorgan"), the company for which the appellants were guarantors. The appellants contend that the lease to purchase agreement was, and remained at all material times, an operative hire purchase agreement, thereby engaging the application of the Hire Purchase Act 1971 (now repealed). The respondents claim that that agreement was extinguished and supplanted by a pair of later agreements, the "Refinancing Agreement" ("RA") and the "Contract for Current Advances" ("CCA"). [4] The significance of this disagreement arises from the appellants' contention that if, as they submit, the second of the two lease to purchase agreements ("LPA2") was a hire purchase agreement, and applicable to the dispute, then s 51 of the Hire Purchase Act prohibited any contracting out of the protection it afforded them as purchasers. Those protections included:(1) the limitation on guarantors' liability in s 36(3), which provides that such liability does not exceed that of the purchaser.(2) the implied term as to title, provided by s 11(a):that the vendor will have the right to sell the goods at the time when the property is to pass.Mr Dugdale argues that, because they did not register their security interest under the Personal Properties Securities Act 1999, the respondents were unable to comply with s 11 the term as to title. It follows, Mr Dugdale urges, that Glenmorgan is not liable to the respondents. And, since Glenmorgan is not liable to New Zealand Bloodstock Finance Limited ("NZB Finance"), neither are the appellants as guarantors. [5] The issues arising on the appeal are: (a) Was LPA2 a "hire purchase" agreement? (b) If so, did it remain operative after the parties entered into the third round of agreements – the RA and the CCA – or was it effectively extinguished? [6] If the Hire Purchase Act applies, a further series of questions must be addressed. [7] Mr Dugdale's fundamental proposition was that the LPA2 was a hire purchase agreement and that it and the two subsequent refinancing documents were so connected to LPA2 that the documents should be considered collectively to constitute a single hire purchase agreement in terms of the Hire Purchase Act. [8] The respondents' position, accepted by Winkelmann J, is that the RA and the CCA constituted a stand-alone financing arrangement which enabled the appellants to meet their obligations under LPA2, but which were not a variation of, connected to, spliced into, or otherwise part of, LPA2 itself.[9] As will appear, like Winkelmann J we do not find it necessary to determine whether LPA2 was a hire purchase agreement. [10] Nor do we consider it necessary to determine whether, if LPA2 was a hire purchase agreement, its "hire purchase" character was absorbed by the RA and the CCA during a period when they were both in effect. That is because we are satisfied that as of 28 March 2004, when money borrowed under the RA and CCA was used to pay off LPA2, all liability under LPA2 was discharged. As of that date, the character of LPA2 as a "hire purchase" agreement, if such it had been, was terminated. At that point title in Generous passed from the respondents as vendors to Glenmorgan as debtor. Thereafter the RA and CCA continued, according to their terms, as contracts of loan for which the respondents held security. The Hire Purchase Act, if it had previously applied, ceased to do so. Accordingly the basis of the appellant's argument evaporated.Background[11] The appellants were shareholders and directors of an equine bloodstock company, Glenmorgan, which acquired elite stock for breeding racehorses. The parties' relationship began when Glyn Crawford Jenkins and Kathleen Jenkins were Glenmorgan shareholders and directors. Glyn Crawford Jenkins and Kathleen Jenkins sold their shareholding to Glyn Brett Morse Jenkins and Kim St Clair Jenkins in 2002. [12] In November 1999, Glenmorgan granted a debenture to SH Lock (New Zealand) Limited ("Lock") to secure a trade facility. Among other things, the debenture gave Lock a floating charge over Glenmorgan's stock in trade, including its livestock. [13] In August 2001, Glenmorgan requested that the first respondent, New Zealand Bloodstock Leasing Limited ("NZB Leasing"), purchase Generous from Japanese interests. NZB Leasing purchases suitable equine bloodstock on behalf of breeders and then leases the animals back to the breeder who requested the purchase. Generous was one such purchase. NZB Leasing and Glenmorgan entered into aninitial lease to purchase agreement ("LPA1"). Under that agreement, Glenmorgan was to lease Generous from NZB Leasing, making periodic payments and paying a residual sum in July 2004. Only at that stage would title to Generous vest in Glenmorgan. Each of the four appellants guaranteed Glenmorgan's obligations under LPA1. [14] By 2002, Glenmorgan was seriously in arrears under LPA1 and the debt was restructured under a second agreement, LPA2. LPA2 provided for the following payment schedule: (a) 28 November 2002 - $1,372,795.78. (b) 28 March 2003 - $456,000.00. (c) 28 November 2003 - $1,372,795.78. (d) 28 March 2004 - $251,273.00. (e) 28 March 2004 - $335,869.00 (residual value). [15] Although Glyn Crawford Jenkins and Kathleen Jenkins had by then resigned as directors of Glenmorgan and sold their shareholding, all four Jenkins remained guarantors for Glenmorgan's obligations and entered into fresh deeds of guarantee. [16] LPA2 allowed for NZB Leasing's rights and obligations under the agreement to be assigned. NZB subsequently assigned its rights and obligations to receive rentals/other monies for Generous to NZB Finance and assigned its property rights in, and obligations for, Generous to New Zealand Bloodstock Progeny Limited ("NZB Progeny"). The right to the residual payment was also assigned to NZB Progeny. Both NZB Finance and NZB Progeny were wholly owned subsidiaries of NZB Leasing. [17] Glenmorgan did not meet its obligations under LPA2, making only a payment of $750,000 on 1 November 2002 and another of $420,000 on 6 November 2002.[18] In August 2003, with Glenmorgan continuing to fall behind in its payments, it entered into the RA with NZB Finance. This provided that NZB Finance would assist Glenmorgan to meet its obligations under LPA2 (which, the RA recited, remained in force) by drip-feeding funds sufficient for it to meet the repayments. The loans themselves were set out in the appended CCA. [19] The CCA provided that in exchange for the loans, NZB Finance was granted a security interest in Glenmorgan's present and future rights in its livestock (which included Generous). The four appellants guaranteed this agreement as well. [20] With the assistance of this new financing arrangement, Glenmorgan managed to meet its obligations under LPA2, and made the following payments: (a) 1 September 2003 – $658,795.76 (NZB Finance advance). (b) 1 September 2003 – ($32,220.10 (interest arrears) (NZB Finance Advance). (c) 28 November 2003 – $250,000 (Glenmorgan payment). (d) 28 November 2003 – $1,122,795.78 (NZB Finance Advance). (e) 28 March 2004 – $251,273 (NZB Finance Advance). (f) 28 March 2004 – $335,869 (residual value) (NZB Finance Advance). [21] At the same time, Glenmorgan was falling into arrears in respect of its other obligations under the RA. [22] Winkelmann J discussed the effect of the new arrangements and said:[11] Glenmorgan continued to default in making lease payments. On 22 August 2003 NZB Finance, Glenmorgan and the first to fourth defendants entered into a Refinancing Agreement. The Refinancing Agreement recited that Glenmorgan was in arrears under LPA2 and that Glenmorgan and the guarantors had indicated to NZB Finance that Glenmorgan might not be able to meet future payments in full. Glenmorgan had requested NZB Finance to assist Glenmorgan in the performance of its obligations under LPA2 andNZB Finance had agreed to. The parties confirmed LPA2 and the obligations thereunder in every respect and the first to fourth defendants confirmed that their guarantees under LPA2 remained in full force and effect. It was acknowledged that the amount owing by Glenmorgan to NZB Financing under LPA2 as at 22 August 2003 was approximately $2.6 million. NZB Financing agreed to lend funds to Glenmorgan on an on- demand basis sufficient for Glenmorgan to meet its obligations under LPA2. The loans were to be separately documented in a "Contract for Current Advances". [12] The Refinancing Agreement provided that should NZB Finance advance any money under the Contract for Current Advances, Glenmorgan would apply those advances to meet its obligations under LPA2, and authorised NZB Finance to do so on its behalf. Glenmorgan agreed to a schedule of repayments, and it was further agreed that if the scheduled repayments were made, NZB Finance could exercise any of its rights under LPA2, the Refinancing Agreement or the Contract for Current Advances. A breach of any agreement entitled NZB Finance to exercise its rights under all or any of the agreements. [13] On the same date, the guarantors and NZB Finance entered into the Contract for Current Advances. By that contract NZB Finance agreed to make advances to Glenmorgan to enable Glenmorgan to meet its obligations under LPA2, and such other advances as NZB Finance agreed to make at its sole discretion. Glenmorgan undertook that it had used or would use money advanced under the Contract to purchase the bloodstock outlined in the Schedule. Glenmorgan agreed to grant to NZB Finance a security interest in the "collateral", defined as all of Glenmorgan's present and future rights in relation to the bloodstock listed in the schedule to the agreement purchased or acquired with the assistance of the funds advanced under the contract, and the progeny of that bloodstock, and the proceeds thereof. The Schedule to the agreement listed eight horses including the stallion Generous. The horses listed in the Schedule, but excluding Generous, are referred to as the Schedule Bloodstock.[23] Despite the refinancing arrangement, Glenmorgan fell further behind in its payment obligations under the RA. In particular, Glenmorgan failed to pay $1 million, which fell due on 28 November 2003. [24] On 25 June 2004 Mr Ross Gwyn, the manager of NZB Leasing and NZB Finance, wrote to Glenmorgan in relation to outstanding monies which totalled more than $1.32 million. In his letter, he made reference to the RA, the CCA and LPA2. [25] NZB Finance's solicitors sent a follow-up letter dated 6 July 2004. Once again, the letter made reference to all three documents and raised the possibility of the repossession of Generous by NZB Finance. The letter noted that, because of Glenmorgan's defaults, all monies owing, under all three agreements, were now dueand payable. At 30 June 2004, that amounted to $2,400,251.97 exclusive of costs and expenses. [26] The respondents took possession of Generous in the United Kingdom and the stallion was transported back to New Zealand. [27] Litigation between Lock and Glenmorgan then intervened. By this stage, Glenmorgan had been placed into receivership with Messrs Waller and Agnew as receivers. [28] This Court held in Waller v New Zealand Bloodstock Limited [2006] 3 NZLR 629 that Lock's security interest in Generous had priority over that of Glenmorgan. [29] On 21 October 2004, NZB Leasing and NZB Finance issued these proceedings against the four appellants as guarantors of Glenmorgan's obligations. The statement of claim alleged Glenmorgan's default under the RA but the terms of LPA2 were also pleaded, and judgment was sought in respect of amounts owing under the LPA2, the RA and the CCA. [30] After an initial hearing in the High Court in October 2005, the respondents filed a memorandum stating that although the claim had been pleaded in the alternative on behalf of NZB Leasing and NZB Finance, only the NZB Finance claim, based on the CCA and the finance guarantees, was pursued. The Judge treated this as an abandonment of the claims by NZB Leasing. Winkelmann J held:[50] Therefore, once all moneys due under LPA2 were paid, the defendants were discharged in respect of their guarantee of Glenmorgan's payment obligations under those guarantees. Because NZB Leasing's claim against the defendants under the Leasing Guarantees was in respect of payment obligations, the performance by Glenmorgan of all payment obligations under LPA2 would have been a complete answer to NZB Leasing's claim against the defendants. As now confirmed by the plaintiffs, NZB Leasing does not pursue that claim.The appellants' case[31] Mr Dugdale for the appellants introduced his argument by saying:This is a very strange case in which when reduced to its essentials, the Respondents being the seller of the chattel ("Generous") are claiming to recover the full price although unable to provide title to the chattel in question.[32] This characterisation assumes that LPA2 is the operative agreement in this proceeding. It was under that agreement that title to Generous was vested in the respondents until payment of the residual sum. It is this contemplated title-transfer feature that gave LPA2 its ostensible hire purchase character. [33] The starting question in this appeal is therefore whether LPA2 was a "hire purchase" agreement and whether, because of its continuing life and inter- relationship with the RA and the CCA, all three documents should be considered a single hire purchase agreement subject to the requirements of the Hire Purchase Act. If so, the further question is whether LPA2 remained an operational contractual arrangement after 28 March 2004 when the final payment under LPA2 was made by Glenmorgan and accepted by NZB Finance. But if the answer to the further question is no, there is no need to answer the first. [34] The initial recitals of the RA provided:A Glenmorgan as Lessee and New Zealand Bloodstock Leasing Limited as Lessor entered into a Lease to Purchase Agreement dated 28.6.02 in respect of the horse named "Generous (IRE)" (the lease to Purchase Agreement) and the obligations of Glenmorgan under the Lease to Purchase Agreement are guaranteed by the Guarantors. New Zealand Bloodstock Leasing Limited has assigned its interest in the Lease to Purchase Agreement to NZBS. B Glenmorgan is in arrears under the Lease to Purchase Agreement and Glenmorgan and the Guarantors have indicated to NZBS that Glenmorgan may not be able to meet some of the future payments in full and have requested NZBS to assist Glenmorgan perform its obligations there under. C NZBS has agreed to assist Glenmorgan and the Guarantors on the basis set out in this Agreement and for this purpose to enter in to a Contract for Current Advances with Glenmorgan in relation thereto (the Contract for Current Advances) to the intent that NZBS will assist Glenmorgan to meet its obligations under the Lease to Purchase Agreement.[35] From August 2001 when he was acquired from the Japanese vendors, until July 2001 when he was repossessed by the respondents, Generous was in the uninterrupted possession of Glenmorgan. [36] The appellants noted that in cl 1(a) of the RA, LPA2 was expressly stated to remain in force:1 Lease to Purchase Agreement Confirmed(a) The parties confirm the Lease to Purchase Agreement in every respect and their obligations there under.[37] This was the position asserted by NZB Finance's solicitor by the letter of on 6 July 2004 and it is the position asserted in the pleadings. [38] In addition, the RA provided that the default under any one of the three agreements entitled NZB Finance to exercise powers under all or any of the three agreements. In the appellants' submission this demonstrates that the RA and CCA were not stand-alone or discrete contractual arrangements, but variations to the primary agreement, LPA2. [39] The theme is repeated elsewhere in the RA. The appellants pointed to the following clauses:3 NZBS to Advance Monies(c) Should any such sum not be paid by Glenmorgan on due date, then NZBS shall have no obligation to pay such shortfall and may exercise all or any of the rights available to it under the Lease to Purchase Agreement, the Contract for Current Advances, this Refinancing Agreement or at law and NZBS shall have no further obligations whatsoever hereunder or under the Contract for Current Advances.5 Installment Payments(b) Should any such payment not be made on due date then, without limiting any other rights of NZBS, the whole of the amount due under the Contract for Current Advances shall forthwith become due and payable and NZBS may exercise any or all of its rights at its discretion under the Lease to Purchase Agreement, the Contract for Current Advances, this Refinancing Agreement or at law forthwith.(c) Further, a breach of any of the provisions of the Lease to Purchase Agreement, the Contract for Current Advances and this Refinancing Agreement shall entitle NZBS to exercise any or all of its rights under all or any such Agreements.[40] The CCA contained provisions to like effect, particularly 12(b):The Borrower undertakes that the whole of the monies hereby advanced to it under this Facility will be used to pay arrears under or any monies which from time to time be owing by the Borrower to New Zealand Bloodstock Leasing Limited under the Lease to Purchase Agreement relating to the horse "Generous (IRE)" between New Zealand Bloodstock Leasing Limited and Glenmorgan Farm Limited dated the 28 th day of June 2002 (the benefit of which contract has been subsequently assigned by New Zealand Bloodstock Leasing Limited to New Zealand Bloodstock Finance Limited), and Glenmorgan Farm Limited dated the 28 th day of June 2002 (the benefit of which contract has been subsequently assigned by New Zealand Bloodstock Leasing Limited to New Zealand Bloodstock Finance Limited), and the Borrower hereby authorises the Creditor to apply all such monies to this purpose.[41] The cumulative effect, it was argued by Mr Dugdale, was that there was an uninterrupted – although varied – contractual arrangement between Glenmorgan (and through it, the appellants as guarantors) and the respondents, and that no single agreement can be cleaved off and examined or invoked in isolation from the trio of agreements. He submitted: (a) LPA2 is an "add-to" agreement which, by s 25(1), has the same hire purchase characteristics as LPA1; (b) The RA and the CCA were further "add-to" agreements, also subject to the Hire Purchase Act; (c) All three contractual arrangements were therefore subject to s 51, and the "hire purchase" character pervaded all three; (d) The consequences of this characterisation include those stated at [4] above.Discussion[42] We appreciate the force of Mr Dugdale's argument up until 28 March 2004. We are prepared to assume, without determining the point, that LPA 1 and LPA2 were hire purchase agreements and that during the period of co-existence between LPA2 and the RA and CCA, the policy of the Hire Purchase Act overrode the ostensible contractual effect of the RA and CCA. [43] That approach would affect the characterisation of the agreements prior to 28 March 2004. On this, Winkelmann J said:[52] These provisions relied upon by the defendants do no more than reflect the basic structure of the refinancing transaction; the LPA2 debts were not immediately extinguished, over time NZB Finance would advance the money needed by Glenmorgan to meet its obligations under LPA2, and until full repayment was made the LPA2 obligations remained. Cross default provisions may be necessary where for a period of time multiple contracts remain on foot between the parties. As Mr Gwyn confirmed, NZB Finance would not wish to remain bound to perform its obligations under one contract, if Glenmorgan was in default under another. Clause 2(a) of the Contract for Current Advances provides that the financial accommodation is made on the terms and conditions set out in that agreement and subject to the terms of the Refinancing Agreement. The provisions of LPA2 are not incorporated into the refinancing transactions. [53] The provisions relied upon by the defendants therefore do not evidence any intention on the part of the parties to merge the rights and obligations under the various agreements. I am satisfied that the refinancing took effect in accordance with the express provisions of the refinancing documentation. The Contract for Current Advances and Finance Guarantees created separate rights and obligations to those recorded in LPA2.[44] We also see the force of Mr Dugdale's criticism that, until the discharge of what we are assuming was the "hire purchase" agreement LPA2, it was the dominant transaction. It is from that point that we prefer Winkelmann J's analysis. We are also satisfied that from the time of LPA2's discharge, any hire purchase element disappeared from the remaining contractual arrangements. Thereafter the RA and the CCA operated according to their distinct tenor, as stand-alone commercial arrangements which the parties had entered into so that Glenmorgan could meet a revised timetable of financial obligations under LPA2.[45] To reiterate, Glenmorgan had failed to meet its obligations under LPA1, which had led to LPA2. Upon Glenmorgan's further defaults under LPA2 a different approach was adopted. A stand-alone financing arrangement by way of the RA and CCA was put in place. This new arrangement was to enable Glenmorgan to meet its obligations under LPA2. It was not a mere re-casting of Glenmorgan's LPA2 obligations. Those earlier obligations were at an end. [46] An alternative characterisation of Mr Dugdale's contention that the RA and CCA were extensions of, and not distinct from, LPA2, is a "restructuring" argument. On this view LPA2 remained in effect after March 2004 because the RA and CCA were merely a restructuring of the existing loan. [47] Some support for this restructuring argument is found in the Canadian case ofWerner v Royal Bank of Canada (2000) 2 PPSAC (3d) 199 (Sask QB). [48] Winkelmann J accepted that there was nothing in our statutory regime which in principle precluded application of Werner in which it was held that:A consolidated or new loan used to pay out an existing loan secured by a purchase money security interest passes the interest to the lender.[49] But, as Winkelmann J properly noted, in the present case one had to consider the overall effect of the refinancing transaction. She concluded that in the case before her:[55] What was plainly envisaged was that LPA2 would proceed through to completion, Glenmorgan would acquire title in Generous, and NZB Finance would have a security interest in Glenmorgan's rights to Generous, securing the amounts outstanding under the Contract for Current Advances. I am satisfied that this negatives any intention to retain the LPA2 security interest after payment of all amounts outstanding under it with advances under the Contract for Current Advances. The LPA2 purchase money security interest was therefore extinguished by March 2004.We agree with that assessment. [50] As to the fact that, in the correspondence between Glenmorgan and NZB Finance, there had been repeated reference to LPA2's continuation, the Judge noted:[93] There can be no doubt that there has been a significant degree of confusion on the part of legal advisors involved in the enforcement phase, both for NZB Finance and the guarantors, as to the effect of the various transactions. However, the fact that correspondence and pleadings include reference to LPA2 cannot revive that agreement. [51] The Judge expressly rejected the plausibility of an estoppel (which in any event had not been directly argued), and we respectfully adopt her apprehension of the contractual position between the parties. [52] In short, the RA and CCA constituted a discrete refinancing arrangement, entered into so that Glenmorgan could meet its obligations under the LPA2. However, once those had been met, LPA2 ceased to have effect. We reject the submission that to distinguish the RA and CCA from their progenitor agreement, LPA2, is to favour form over substance. Once LPA2 had been extinguished, the RA and CCA were not simply formally distinct from LPA2. They were substantively and functionally distinct, and intended to be so. That is not altered simply because they were entered into in order to facilitate payment of LPA2. Nor is it altered because the parties' solicitors in correspondence may have used language suggestive of an interlinking between LPA2 and the RA and CCA. Confusion or obfuscation on the part of legal advisors does not change the true nature of a contractual arrangement. [53] The waters in this case are somewhat muddied by the situation that existed in the interim period between August 2003, when the RA and CCA were signed, and 28 March 2004, when LPA2 was extinguished by Glenmorgan's final payment. We have noted that that cross-over period saw the co-existence of two apparently mutually exclusive ownership frameworks. Under LPA2, Generous was stated to be vested in the respondents until payment of the residual sum. Under the RA and CCA, Generous was stated to be the property of Glenmorgan, subject to financiers' security interests. There was therefore a "title-tension", from which it might be inferred that the two contractual arrangements were intended to be read together so as to avoid an absurd bundle of incompatible property interests. [54] However, even if between August 2003 and 28 March 2004 the character of LPA2 was that of a hire purchase agreement and that character was absorbed by theRA and CCA, we are satisfied that Winkelmann J was correct when she held that as of 28 March 2004 LPA2 was extinguished. From that date, the relatedness or otherwise of LPA2 to the RA and CCA during that interim period ceased to be relevant. From that date, the appellants' obligations to NZB Finance were governed solely by the refinancing agreements. [55] Mr Dugdale suggested that the RA and CCA were no more than means of effecting a naïve kind of "money-go-round", since in effect NZB Finance was lending money to Glenmorgan so that Glenmorgan could pay it back to NZB Finance. We do not consider that the circular nature of the lending under the RA and CCA entails the conclusion that the refinancing was simply a variation of an existing contract, nor that it was a contrivance to avoid the protections afforded to borrower consumers by the Hire Purchase Act. What arguments may be available if this had occurred in respect of a vulnerable individual acquiring some household consumer item is speculation. This was a considered legal transaction between serious commercial operators all of whom were independently advised. [56] Whatever consequences might have attached had there been a breakdown in relations between Glenmorgan and NZB Finance between August 2003 and March 2004, when both LPA2 and the refinancing agreements were in contemporaneous operation, evaporated once LPA2 was extinguished. [57] After 28 March 2004, Glenmorgan had title to Generous as a result of payment of the final installment under LPA2. [58] In the dying moments of the appeal hearing, an issue arose as to whether LPA2 was in fact totally paid out by Glenmorgan by 28 March 2004. [59] There is no dispute that the amount which was actually paid by Glenmorgan to the respondents in respect of LPA1 was $2,650,952. Clause 1(b) of the RA recited that the amount due and owing on 22 August 2003 was $2,652,545, a difference of $1,593.00. This had never been an issue at any time in the High Court, nor in the Court of Appeal until reply submissions.[60] We allowed time over a luncheon adjournment for the issue to be investigated but no explanation could be provided for the apparent, although small, discrepancy. [61] We are satisfied it is immaterial. The Schedule to the Statement of Claim asserted there was a nil balance as at 28 March 2004 in respect of LPA2. That was not placed in contention or challenged in the statement of defence. It was never a matter of controversy between the parties and we approach this appeal on the basis that all monies due and owing under LPA2 as at 28 March 2004 were paid. [62] A question also arose over continuing interest on sums outstanding on LPA2 in this seven-month period. We are satisfied that, on a true construction of the documentation, interest payment obligations from 22 August 2003 were obligations under the RA, and that capital sums only were due and payable under LPA2 from that date. [63] It follows from the foregoing discussion that whether LPA2 itself was a "hire purchase" agreement, and thereby covered by the Hire Purchase Act, need not be determined. We have proceeded in our analysis upon a beneficial interpretation of Mr Dugdale's construction of LPA2, ie that LPA2 is a "hire purchase" agreement within the meaning of the Hire Purchase Act. We accept that the Hire Purchase Act was a consumer protection statute. Its purpose was to stipulate the statutory rights of consumer parties to hire purchase agreements, and to proscribe certain actions on the part of creditors to those contracts. [64] If the Hire Purchase Act applied to LPA2 and, by virtue of a presumption in favour of that Act's application where one of the contracts was a "hire purchase" agreement, it may have applied over the period during which both LPA2 and the RA/CCA were in existence. However, once LPA2 was extinguished and only the RA and CCA were operative, there was no basis upon which to apply the policy of the Hire Purchase Act to the agreement between the parties. Both Glenmorgan, and through it the Jenkins and NZB Finance, were well-informed and autonomous commercial entities. The parties entered into the RA and CCA, as fresh agreements, from a position of full information. A small and vulnerable consumer might haveslid into a subsequent agreement such as the RA under a misapprehension that it was a mere variation of an earlier hire purchase agreement. Such misapprehension could not be ascribed in the circumstances of this case. [65] Whether LPA2 was "in retail" within the meaning of the Hire Purchase Act is the critical point upon which there was divergence between Mr Dugdale and Mr Morgan QC. Were that issue material, it would need to be considered in light of the decision of this Court in National Westminster Finance New Zealand Limited v South Pacific Rent-a-Car Limited [1985] 1 NZLR 646 (HC) in which Casey J discussed the criteria against which "in retail" is properly assessed. But, our conclusion on the essential independence of the RA/CCA from LPA2 is sufficient to dispose of the appellants' case.Result[66] Accordingly, we find that LPA2 was extinguished as of 28 March 2004. At least from that date, the RA and CCA were not contingent upon, or derived from LPA2, but were distinct agreements with their own terms. They were no longer, if they ever had been, "add-ons" to, intertwined with, or a variation of, the obligations provided for in LPA2. [67] We are satisfied that the conclusions reached by Winkelmann J are sound, and that the appeal must be dismissed. [68] The appellants are to pay the respondents' costs for a standard appeal on a band A basis and usual disbursements.Solicitors: Mahon & Sumpter, Auckland, for Appellants John Collinge, Auckland, for Respondents