Commonwealth Numbered Acts

COMPANIES ACT 1981 No. 89 of 1981 - SCHEDULE 5

SCHEDULE 5
Section 204
ORDER OF PRIORITY OF REGISTRABLE CHARGES

1. (1) A registered charge on property of a company has priority over-

   (a)  a subsequent registered charge on the property, unless the subsequent
        registered charge was created before the creation of the prior
        registered charge and the chargee in relation to the subsequent
        registered charge proves that the chargee in relation to the prior
        registered charge had notice of the subsequent registered charge at
        the time when the prior registered charge was created;

   (b)  an unregistered charge on the property created before the creation of
        the registered charge, unless the chargee in relation to the
        unregistered charge proves that the chargee in relation to the
        registered charge had notice of the unregistered charge at the time
        when the registered charge was created; and

   (c)  an unregistered charge on the property created after the creation of
        the registered charge.

(2) A registered charge on property of a company is postponed to-

   (a)  a subsequent registered charge on the property, where the subsequent
        registered charge was created before the creation of the prior
        registered charge and the chargee in relation to the subsequent
        registered charge proves that the chargee in relation to the prior
        registered charge had notice of the subsequent registered charge at
        the time when the prior registered charge was created; and

   (b)  an unregistered charge on the property created before the creation of
        the registered charge, where the chargee in relation to the
        unregistered charge proves that the chargee in relation to the
        registered charge had notice of the unregistered charge at the time
        when the registered charge was created.

2. An unregistered charge on the property of a company has priority over-

   (a)  a registered charge on the property that was created after the
        creation of the unregistered charge and does not have priority over
        the unregistered charge under clause 1; and

   (b)  another unregistered charge on the property created after the
        first-mentioned unregistered charge.

3. (1) Except as provided by the succeeding sub-clauses of this clause, any
priority accorded by this Schedule to a charge over another charge does not
extend to any liability that, at the priority time in relation to the
first-mentioned charge, is not a present liability.

(2) Where a registered charge on property of a company secures-

   (a)  a present liability and a prospective liability of an unspecified
        amount; or

   (b)  a prospective liability of an unspecified amount,

any priority accorded by this Schedule to the charge over another charge of
which the chargee in relation to the first-mentioned charge does not have
actual knowledge extends to the prospective liability, whether the prospective
liability became a present liability before or after the registration of the
first-mentioned charge.

(3) Where a registered charge on property of a company secures-

   (a)  a present liability and a prospective liability up to a specified
        maximum amount; or

   (b)  a prospective liability up to a specified maximum amount,

and the notice lodged with the Commission under section 201 or 202 in relation
to the charge sets out the nature of the prospective liability and the amount
so specified, then any priority accorded by this Schedule to the charge over
another charge extends to any prospective liability secured by the
first-mentioned charge to the extent of the maximum amount so specified,
whether the prospective liability became a present liability before or after
the registration of the first-mentioned charge and notwithstanding that the
chargee in relation to the first-mentioned charge had actual knowledge of the
other charge at the time when the prospective liability became a present
liability.

(4) Where-

   (a)  a registered charge on property of a company secures-

        (i)    a present liability and a prospective liability up to a
               specified maximum amount; or

        (ii)   a prospective liability up to a specified maximum amount,

but the notice lodged with the Commission under section 201 or 202 in relation
to the charge does not set out the nature of the prospective liability or the
maximum amount so specified; or

   (b)  a registered charge on property of a company secures a prospective
        liability of an unspecified amount,

the following provisions of this sub-clause have effect:

   (c)  any priority accorded by this Schedule to the charge over another
        charge of which the chargee in relation to the first-mentioned charge
        has actual knowledge extends to any prospective liability secured by
        the first-mentioned charge that had become a present liability at the
        time when the chargee in relation to the first-mentioned charge first
        obtained actual knowledge of the other charge; and

   (d)  any priority accorded by this Schedule to the charge over another
        charge of which the chargee in relation to the first-mentioned charge
        has actual knowledge extends to any prospective liability secured by
        the first-mentioned charge that became a present liability, as the
        result of the making of an advance, after the time when the chargee in
        relation to the first-mentioned charge first obtained actual knowledge
        of the other charge if, at that time, the terms of the first-mentioned
        charge required the chargee in relation to that charge to make the
        advance after that time, and so extends to that prospective liability
        whether the advance was made before or after the registration of the
        first-mentioned charge and notwithstanding that the chargee in
        relation to the first-mentioned charge had actual knowledge of the
        other charge at the time when the advance was made.

4. A reference in this Schedule to a person having notice of a charge includes
a reference to the person having constructive notice of the charge.

5. In this Schedule-

   (a)  a reference to a prior registered charge in relation to another
        registered charge is a reference to a charge the priority time of
        which is earlier than the priority time of the other charge; and

   (b)  a reference to a subsequent registered charge in relation to another
        registered charge is a reference to a charge the priority time of
        which is later than the priority time of the other registered charge.

6. In this Schedule-

''priority time'', in relation to a registered charge, means-

   (a)  except as provided by paragraph (b) or (c)-the time and date appearing
        in the Register in relation to the charge, being a time and date
        entered in the Register pursuant to section 203;

   (b)  where a notice has been lodged under section 202 in relation to a
        charge on property, being a charge that, at the time when the notice
        was lodged, was already registered under Division 9 of Part IV-the
        earlier or earliest time and date appearing in the Register in
        relation to the charge, being a time and date entered in the Register
        pursuant to section 203; and

   (c)  to the extent that the charge has effect as varied by a variation
        notice of which was required to be lodged with the Commission under
        sub-section 206 (2)-the time and date entered in the Register in
        relation to the charge pursuant to sub-section 203 (14);

''registered charge'', means a charge that is registered under Division 9 of
Part IV;

''unregistered charge'', means a charge that is not registered under Division
9 of Part IV but does not include a charge that is not registrable.

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