Priority - Definition - Law Dictionary Home Dictionary Definition priority

Definition :

Priority, an antiquity of tenure in comparison with another less ancient; also that which is before another in order of time.

As to priority among creditors, see (English) Admin-istration of Estates Act, 1869, reproduced by ss. 32 to 34, (English) Administration of Estates Act, 1925, and the First Sch., which provides that in the administration of the estate of any person who shall die on or after 1st January, 1870, no debt or liability of such person shall be entitled to any priority or preference by reason merely that the same is secured by or arises under a bond, deed, or other instrument under seal, or is otherwise made or constituted a specialty debt.

The priority in legal and equitable assignments of equitable choses in action are determined accord-ing to the date of receipt of notice by the persons who are for the time being owners of the legal interest in the property assigned. Before 1926 the notice might be verbal; after 1926 it must, for the purposes of establishing priority among competing claims, be in writing, Law of Property Act, 1925, s. 137; and see Dearle v. Hall.

Subject to the (English) Land Charges Act, 1925, the assignee of an equitable interest inland having notice will himself be bound to give effect to prior equitable claims of which he has notice, whether verbal or written, or actual or constructive, Torkington v. Magee, (1902) 2 KB 427. The notice does not, under the rule in Dearle v. Hall, affect the validity of the assignment, Ward v. Duncombe, 1893 AC 369; it merely establishes priority. Under the (English) Law of Property Act, 1925, s. 137, important classes of property were swept into this rule, viz., all equitable interests inland (i.e., all estates for less than a fee simple absolute in possession or a term of years absolute and corresponding incorporeal hereditaments (see s. 1 of the Act)), as well as all equitable interests in capital money, and securities representing capital money. Before 1926 the priorities in regard to these were determined by the date and time of creation of the equitable interest and subject to the formalities required for the transfer. Special rules as to the persons, if any, to whom notice must be given and, in their absence, for the indorsement of a memorandum on the trust instrument are provided by the section, see Dearle v. Hall.

In regard to mortgages: before 1926, puisne mort-gagees to whom the equity of redemption was conveyed in succession obtained priority by the order in date of their mortgages, subject to the application of the doctrine of tacking or to equitable reasons (if any) for the postponement of their mortgages:-

After 1926 subsisting and future mortgages of the equity of redemption of a legal estate in its new and statutory meaning, i.e., a fee simple or a term of years absolute, but not mortgages of life interests or of an undivided share or of an estate in remainder or reversion were transformed into legal mortgages. Consequently the former rules of equity, based on the rule of equity 'qui prior in tempore potior est in jure' ceased to apply. Priority among all mortgages, both legal and equitable, of a legal estate is now ascertained, if the mortgages were crated or transferred after 1925:-

(a) By possession of the documents of title subject, presumably, to notice, actual or constructive, of equities affecting the security.

(b) By date of registration at the Red Lion Square office under the (English) Land Charges Act, 1925, s. 10 (1), Class C., irrespectively of notice, except absence of documents of title [(English) Law of Property Act, 1925, s. 97]. If the mortgage is by trustees for sale, or a tenant for life as estate owner, or personal representatives or other persons referred to in the (English) Law of Property Act, 1925, s. 2, and is made in accordance with the statutory requirements, the mortgagees as purchasers, whether registered or not, will not be affected by equities which can be overreached under that section, or otherwise under the legislation of 1925.

(c) Registered land, according to date of registration [(English) Land Registration Act, 1925, s. 29], and see REGISTRATION OF TITLE.

The priorities (b) and (c), above mentioned, are subject to the provisions of the (English) Law of Property Amendment Act, 1926, s. 4, and the Land Registration Act, 1925, s. 144, respectively, relating to PRIORITY NOTICES.

In regard to property locally situate in Middlesex and Yorkshire, before 1926 priorities in Yorkshire were effected by registration; after 1884, in the Yorkshire Registries but not in Middlesex, under the Middlesex Registry Act, 1708 (q.v.), and it does not seem clear that the law has been altered by s. 97 of the (English) Law of Property Act, 1925, in regard to memorials registered in the Middlesex Registry until 1936.

Priorities in respect of equitable charges by a tenant for life or statutory owner for death duties and other estate liabilities discharged by him, and subject to these equitable charges which are not protected by possession of the documents of title or which do not affect interests under a trust for sale or settlement, are, if created or conveyed after 1925, determined by date of their registration under Class C., (English) Land Charges Act, 1925, s. 10.

In regard to equitable mortgages and other charges upon land, or any interest therein created before 1926, which have not been transferred or conveyed after 1925, the rule qui prior est tempore potior in jure prevails if equities are equal, and a purchaser is still affected with notice of these and cannot gain priority by registration, but registration, if available (as in the case of any mortgage), amounts to notice. See also PREFERENTIAL PAYMENTS; ASSETS.