Tararone Investments v DBS Bank: Scope of Charge over Fixed Deposit for Banking Facilities
In Tararone Investments Pte Ltd v DBS Bank, the Court of Appeal of Singapore, on 2001-09-04, addressed the scope of a charge over a fixed deposit account. Tararone Investments had provided a fixed deposit to DBS as security for banking facilities granted to Sogo Department Stores. When Sogo faced financial difficulties, DBS terminated the overdraft facility but continued to honor certain cheques. The court considered whether the charge secured only the initial overdraft or all monies owed by Sogo to DBS. The Court of Appeal allowed the appeal, declaring that the charge secured all facilities extended by DBS to Sogo, not just the initial overdraft.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal allowed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The Court of Appeal determined the scope of a charge over a fixed deposit account securing banking facilities, ruling it covered all monies owed, not just the initial overdraft.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Tararone Investments Pte Ltd | Respondent | Corporation | Appeal Lost | Lost | |
| DBS | Appellant | Corporation | Appeal Allowed | Won | Leslie Chew, Chan Kia Pheng |
| Sogo Department Stores (S) Pte Ltd | Other | Corporation |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chao Hick Tin | Justice of Appeal | No |
| L P Thean | Justice of Appeal | No |
| Yong Pung How | Chief Justice | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Leslie Chew | Khattar Wong & Partners |
| Chan Kia Pheng | Khattar Wong & Partners |
| Ronald Choo | Rajah & Tann |
| Chio Yuen-Lyn | Rajah & Tann |
4. Facts
- Sogo was indebted to DBS for $18m in an overdraft account.
- DBS agreed to continue the overdraft facility subject to a repayment schedule and security.
- Tararone executed a charge over a $18m fixed deposit to secure Sogo's facilities.
- DBS terminated the overdraft facility due to Sogo's financial difficulties.
- DBS continued to honor certain cheques drawn by Sogo after termination.
- Sogo and Tararone were placed under interim judicial management.
- DBS sought to enforce the charge on the fixed deposit to satisfy Sogo's debt.
5. Formal Citations
- Tararone Investments Pte Ltd, CA 600022/2001, [2001] SGCA 57
6. Timeline
| Date | Event |
|---|---|
| DBS informed Sogo of overdraft facility terms. | |
| Tararone executed charge in respect of fixed deposit. | |
| DBS notified Sogo of overdraft facility termination. | |
| DBS notified Tararone of overdraft facility termination. | |
| Sogo protested DBS's decision to terminate overdraft facility. | |
| DBS stated they would honor specific cheques on a without prejudice basis. | |
| Sogo and Tararone placed under interim judicial management. | |
| Interim judicial managers instructed DBS to close Sogo's accounts. | |
| Sum deducted from overdraft facility for payment on letter of guarantee. | |
| Judicial management order made against Tararone. | |
| Sum owing by Sogo in overdraft account was $2,878,586.28. | |
| DBS sought consent to enforce charge on fixed deposit. | |
| Interim judicial managers explained they had to consider questions before replying. | |
| Originating summons filed. | |
| Decision Date |
7. Legal Issues
- Scope of Charge
- Outcome: The court held that the charge was an 'all money' charge, securing all facilities extended by DBS to Sogo, not just the initial overdraft.
- Category: Substantive
- Sub-Issues:
- Interpretation of 'all monies' clause
- Effect of termination of overdraft facility on charge
- Related Cases:
- [1983] 2 Lloyd`s Rep 298
- [1986] 2 BCC 98
- Estoppel
- Outcome: The court held that the elements of estoppel were not satisfied, as there was no clear and unambiguous representation, no reliance, and no detriment suffered.
- Category: Substantive
- Sub-Issues:
- Representation by conduct
- Reliance on representation
- Detriment suffered
- Duty to Disclose
- Outcome: The court held that there was no duty to disclose the revival of the overdraft account, as it was not an unusual feature.
- Category: Substantive
- Sub-Issues:
- Unusual features of transaction
- Disclosure to surety
- Related Cases:
- [1999] 3 SLR 650
8. Remedies Sought
- Declaration
- Recovery of Debt
9. Cause of Actions
- Enforcement of Charge
- Breach of Contract (Overdraft Facility)
10. Practice Areas
- Commercial Litigation
- Banking Litigation
11. Industries
- Banking
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Bank of India v Trans Continental Commodity Merchants | English Court of Appeal | Yes | [1983] 2 Lloyd`s Rep 298 | England | Cited for the purposive and practical approach taken by the court in relation to a wide `all money` clause in a guarantee given to a bank. |
| Re Rudd & Son | English Court of Appeal | Yes | [1986] 2 BCC 98 | England | Cited to gauge judicial attitudes in relation to such `all money` clauses and to interpret such clauses in accordance with its commercial sense, in order to give effect to the parties` intention. |
| Estoril Investments v Westpac Banking Corp | N/A | Yes | [1993] 6 BPR 13 | Australia | Cited by counsel for Tararone to contend that the present charge should sensibly be read down to circumscribe its application, but the court disagreed. |
| Habibullah Mohamed Yousuff v Indian Bank | Court of Appeal | Yes | [1999] 3 SLR 650 | Singapore | Cited by Tararone on the basis that a bank must disclose to a surety `unusual features` relating to a transaction, but the court distinguished it. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 1994 Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Charge
- Fixed Deposit
- Overdraft Facility
- Banking Facilities
- All Money Charge
- Continuing Security
- Termination
- Estoppel
- Judicial Management
15.2 Keywords
- charge
- fixed deposit
- overdraft
- banking facilities
- security
- DBS
- Tararone
- Sogo
- Singapore
- contract law
- banking law
16. Subjects
- Banking
- Finance
- Security
- Contract Law
17. Areas of Law
- Banking Law
- Contract Law
- Lending and Security
- Construction Law