Commonwealth Consolidated Acts Commonwealth Consolidated ActsNon - purchase money security interest in account as original collateral has priority over purchase money security interest in account as proceeds of inventory
(1) Despite subsection 62(2), a non - purchase money security interest (the priority interest ) granted for new value in an account as original collateral and perfected by registration has priority over a perfected purchase money security interest that is granted by the same grantor in the account as proceeds of inventory, if:
(a) the registration time in respect of the priority interest occurs before the earlier of the following times:
(i) the time at which the purchase money security interest is perfected;
(ii) the registration time in respect of the purchase money security interest; or
(b) both of the following conditions are met:
(i) the secured party holding the priority interest gives a notice in accordance with subsection (2) to the secured party holding the purchase money security interest;
(ii) the notice is given at least 15 business days before the earlier of the day on which the registration time for the account occurs and the day the priority interest attaches to the account.
Note 1: This section is subject to sections 57 (perfection by control) and 71 (chattel paper).
Note 2: The period mentioned in paragraph (b) may be extended by a court under section 293.
(2) A notice is given in accordance with this subsection if:
(a) the notice is in the approved form; or
(b) the notice:
(i) contains a description of the inventory to which the notice relates; and
(ii) sets out the effect of subsection (1).
Perfected purchase money security interest in both proceeds and new value
(3) If a person has a purchase money security interest in an account as proceeds of inventory that is subordinate to a non - purchase money security interest under subsection (1):
(a) the person is taken to have a purchase money security interest in both the proceeds of the inventory and in the new value mentioned in subsection (1); and
(b) the purchase money security interest in the new value is taken to be perfected by the registration that perfected the purchase money security interest in the proceeds; and
(c) the new value is taken to be an account for the purposes of this Act (except for the purposes of this section or paragraph 12(3)(a) (account transferee's interest taken to be security interest)).
(4) However, if the new value mentioned in paragraph (3)(c) would be an account for the purposes of this Act in the absence of that paragraph, the paragraph does not prevent the new value from being an account for the purposes of this section or paragraph 12(3)(a).