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Equity displaced first-in-time priority for occupancy costs.
Appeal concerning priority between prior perfected PPSA security interests and a later court-ordered charge granted to a mortgagee in possession for occupancy costs incurred while warehousing the bankrupts' personal property.
The court held that the priority issue was not governed by either the Bankruptcy and Insolvency Act or the Personal Property Security Act, and instead had to be resolved under common law and equitable principles.
The majority concluded that, although the appellants' security interests were first in time, their continuing and concerted misconduct in delaying payment of occupancy costs justified postponing their priority in favour of the mortgagee's charge.
The appeals were dismissed and the mortgagee's priority was upheld.
