Paramount lien over shares under bank articles prevailed against a competing claim for the remaining debt heads.

Articles of association can create a first charge and paramount lien over a member's shares for debts and liabilities owed to the bank, and that lien remains legally effective even if the shares are sold in the open market, fully paid up, or not held in the bank's custody. Priority is determined against persons claiming through the shareholder after notice; on the facts, the bank did not press priority for the overdraft component because it arose after notice. For the remaining two heads of claim, the bank was entitled to enforce its contractual lien under the articles and that lien prevailed over the third defendant's competing claim to that extent.

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Issues: Whether the bank had a first and paramount lien over the shares, and whether that lien had priority over the third defendant's claim in respect of the items of debt pursued in appeal.

Analysis: The articles of association created a first charge and paramount lien upon all shares registered in the member's name for debts and liabilities owing to the bank. Such a lien was held to be legally effective and not defeated merely because the shares were sold in the open market, fully paid up, or not taken into the bank's custody. The real controversy was priority against a person claiming under the shareholder after notice, but the claim for overdraft amounts was not pressed for priority because it arose after notice. As to the remaining two heads of claim, the bank was entitled to rely on its contractual lien under the articles.

Conclusion: The bank's paramount lien was upheld in priority to the third defendant for the two heads of claim pressed in appeal, and the appellant succeeded to that extent.

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