It's now official. Priority between competing security
interests under the Personal Property Securities Act
(PPSA) is assessed at the time those interests come into
conflict. This will usually, but not always, be when receivers are
appointed.
The PPSA is silent on the issue but the general view, now
confirmed by the High Court, has been that the rule established in
the Canadian Sperry1 case is the correct
approach.
The point at which the conflict arises will be a question of
fact in each case, with the central focus being on the security
agreement between creditor and debtor.
High Court confirms Sperry
The Canadian Sperry case concerned a contest between
two unperfected security interests whose registrations had both
expired. The main issue in the case arose when one creditor sought
to register its interest after receivers had been appointed over
the debtor.
