Priority of Security Interests

Lizzie has a horse farm where she raises thoroughbred horses to race. Lizzie negotiated a loan in the amount of $300,000 from Canada Trust for the purpose of buying horses and equipment. Canada Trust took a security interest in all of Lizzie's present and future assets under a general security agreement. Canada Trust registered its security interest by filing a financing statement on July 15, 2015 under the Personal Property Security Act.

A year later, Lizzie needed a new pickup truck for her business. She negotiated a loan of $25,000 from Commerce Bank to buy a new truck. The bank took a chattel mortgage on the truck to secure the loan. Lizzie took delivery of the truck on August 1, 2016.The bank registered its security interest in August 30, 2016.

A few months later, Lizzie defaults on her obligations to Canada Trust and Commerce Bank. Both Commerce Bank and Canada Trust claim that its security interest has first priority to the pickup truck. Who is entitled to seize the pickup truck?

Required

1. What is the relevant legal issues (Under Canadian Law)?

Read and understand the facts to determine the legal questions that need to be answered.

2. Identify and discuss the applicable law relevant to the issue.

Cite the applicable law for piercing the corporate veil.

3. Apply the law to the facts and come to a conclusion or opinion.

Do not apply only common sense. Apply the law!