The debtor executed a General Security Agreement with the respondent credit union covering present and after-acquired property, but the credit union did not immediately register its interest under the Personal Property Security Act (PPSA).
The debtor subsequently granted a Bank Act security interest to the appellant bank, which was registered.
The debtor later acquired additional property, to which both security interests attached simultaneously.
When the debtor defaulted, the bank seized and sold the after-acquired property.
The Supreme Court of Canada held that the bank's security interest was subject to the credit union's prior unregistered PPSA interest.
Under the Bank Act, the bank could acquire no greater interest than the debtor held at the time the security was given.
Because the credit union had already acquired an inchoate proprietary interest in the after-acquired property upon execution of its security agreement, the debtor's title was already encumbered when the bank took its security.
