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216 MANITOBA LAW JOURNAL |VOLUME 35 NUMBER 1
the PPSA will govern, meaning that one creditor is allowed to take advantage of
the mistake of another. However, where there is more than mere knowledge of a
pre-existing security interest, and one secured creditor has been led, by the other,
“down the garden path”, through fraud or something akin to it, the statutory
priority scheme will be ignored, so as to defeat the fraudulent intent of the
misleading creditor. The more involved the misleading creditor is with the other,
in causing the other person to become a creditor, the more likely it is that the
courts will find the misleading creditor to be acting in bad faith, which will not be
allowed.