Along another line of reasoning, the Bank might assert that the parties did not intend to create a PPSA security interest in Al's deposit account by virtue of the contractual set-off right.
(55) Pursuant to subsection 3(1), but subject to section 4 (a provision in which there is no mention of set-off), the PPSA applies to every transaction that in substance creates a security interest without regard to the form of the transaction or the intention of the parties.
Corresponding logic should apply in the context of deposit account set-off; namely, that the Bank does indeed acquire a PPSA security interest in Al's deposit account by virtue of its contractual set-off right against the deposit account balance.
In other words, since Al is entitled, at his discretion, to withdraw funds from the deposit account and deprive the Bank of an asset to assert set-off against, (60) no security interest has been created.
Al can deprive the Bank of its set-off remedy by drawing down the balance to nil.
Paragraph 41(2)(a), read in conjunction with subsection 65(2), can be interpreted as a codification of the bank's right of contractual set-off: an assignee (whether transferee, secured party, etc.
Embracing this purposive interpretation and the conventional view is consonant with the notion that a contractual set-off right does not extend to proceeds of the disbursed account balance.
In other words, the chief focus in ascertaining whether a security interest has been created in Al's deposit account by virtue of the Bank's right of contractual set-off, should be on the deposit account itself, not its proceeds.
Another weakness in the purposive interpretation argument is that it completely disregards the introductory words of subsection 3(1) which state that subsection 3(1) is subject only to section 4, a provision which, again, makes no reference to set-off. (70) But this weakness is arguably counteracted by a pragmatic counterpoint.
Ultimately, though the purposive interpretation argument is assailable, it provides a coherent path to the conclusion that, in Scenario B, the Bank's right of contractual set-off does not create a PPSA security interest in Al's deposit account.
In Part IV.B.2.d, a non-preservation argument was advanced in support of the conventional view that contractual set-off does not create a PPSA security interest.
(76) A triple cocktail consists of "(1) a contractual right of set-off; (2) a charge back or security interest in the account; and (3) a flawed asset arrangement." (77) We already know, from the above discussion, that the first element of a triple cocktail does not, in itself, create a security interest.