Effect of Registration on Priorities

The rules on priority between charges created by a company are basically the same as those governing legal and equitable charges generally. As between equitable charges the first in time should generally prevail, whereas the holder of a legal mortgage will rank before an earlier equitable charge where the legal interest is acquired by a bona fide purchaser for value without notice.¹

The application of the bona fide purchaser doctrine in a commercial context was considered in Gray v Smith² though the case did not concern the registration of charges. In the case it was held that a bona fide purchaser for value of a car who lacked actual or constructive notice that it had previously been bought by an agent but then sold on without the principal's knowledge took title clear of the principal's equitable interest. Cooke J applied the general principle that a bona fide purchaser for value of a legal interest took free of an earlier