Pars Ram Brothers v ANZ Bank: Commingled Goods, Security Interests & Trust Receipts
In Pars Ram Brothers (Pte) Ltd (in creditors’ voluntary liquidation) v Australian & New Zealand Banking Group Ltd and others, the High Court of Singapore addressed an application by the liquidators of Pars Ram Brothers (Pte) Ltd to determine whether the proceeds from the sale of pepper stock should be held for the general creditors or paid to defendant lenders asserting a security interest. The court, presided over by Justice Steven Chong, ruled on 2 March 2017, that lenders with valid trust receipts maintained their security interests despite the commingling of the stock, and were entitled to claim the proceeds in proportion to their contributions, except for specific quantities designated for the general creditors.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Declaration granted that the gross sale proceeds of the 12 Disputed Categories of pepper stock should be paid to those defendants who can assert a security interest in the underlying stock which they financed, save for specific quantities.
1.3 Case Type
Insolvency
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Liquidators sought court determination on distribution of sale proceeds from commingled pepper stock. The court held lenders with security interests could claim proceeds.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| RHB Bank Berhad | Defendant | Corporation | Entitled to claim proceeds | Won | |
| DBS Bank Ltd | Defendant | Corporation | Entitled to claim proceeds | Won | |
| Oversea-Chinese Banking Corporation Limited | Defendant | Corporation | Entitled to claim proceeds | Won | |
| Standard Chartered Bank (Singapore) Limited | Defendant | Corporation | Entitled to claim proceeds | Won | |
| Indian Overseas Bank | Defendant | Corporation | Entitled to claim proceeds | Won | |
| CIMB Bank Berhad | Defendant | Corporation | Entitled to claim proceeds | Won | |
| Indian Bank | Defendant | Corporation | Entitled to claim proceeds | Won | |
| Malayan Banking Berhad | Defendant | Corporation | Entitled to claim proceeds | Won | |
| Pars Ram Brothers (Pte) Ltd (in creditors’ voluntary liquidation) | Plaintiff | Corporation | Application for determination of distribution of sale proceeds | Neutral | |
| Australian & New Zealand Banking Group Limited | Defendant | Corporation | Entitled to claim proceeds | Won | |
| Bank of Baroda | Defendant | Corporation | Entitled to claim proceeds | Won | |
| Bank of India | Defendant | Corporation | Entitled to claim proceeds | Won | |
| The Bank of East Asia, Limited | Defendant | Corporation | Entitled to claim proceeds | Won | |
| Habib Bank Ltd | Defendant | Corporation | Entitled to claim proceeds | Won | |
| UCO Bank | Defendant | Corporation | Entitled to claim proceeds | Won | |
| CMA CGM & ANL (Singapore) Pte Ltd | Defendant | Corporation | Bear own costs | Neutral | |
| East West Commodities Pte Ltd | Defendant | Corporation | Bear own costs | Neutral | |
| Sin Thye Pin Trading Pte Ltd | Defendant | Corporation | Bear own costs | Neutral |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Steven Chong | Judge | Yes |
4. Counsels
4. Facts
- Pars Ram Brothers (Pte) Ltd was engaged in the spice business.
- The company financed its import of pepper stock through trade financing facilities from various banks.
- The banks disbursed funds directly to the supplier upon proof of purchase.
- The company furnished shipping documents to the bank under a pledge as security for the loan.
- Banks released shipping documents to the company to enable the company to sell the stock.
- The company executed trust receipts, holding the financed stock or its proceeds on trust for the bank.
- Incoming bags were stacked together with existing goods of the same description without segregation.
5. Formal Citations
- Pars Ram Brothers (Pte) Ltd (in creditors’ voluntary liquidation) v Australian & New Zealand Banking Group Ltd and others, , [2017] SGHC 38
6. Timeline
| Date | Event |
|---|---|
| Originating Summons No 1232 of 2016 filed | |
| Hearing date | |
| Judgment reserved |
7. Legal Issues
- Security Interests in Commingled Goods
- Outcome: The court held that each Lender’s security interest remains intact notwithstanding the mixture with goods in which other Lenders might have security interests.
- Category: Substantive
- Sub-Issues:
- Effect of commingling on security interests
- Priority of security interests in mixed goods
- Related Cases:
- [1987] 3 All ER 393
- [1913] AC 680
- [2007] NSWCA 295
- [2001] 1 Lloyd’s Rep 284
- [2011] NZCCLR 29
- Distribution of Proceeds from Sale of Commingled Goods
- Outcome: The court determined that the mixed stock should be divisible among the contributing Lenders rateably in proportion to the value of their respective contributions.
- Category: Substantive
- Sub-Issues:
- Rateable distribution among secured creditors
- Priority of claims
- Related Cases:
- [1948] 1 Ch 465
- Liquidator's Application under Section 310 of the Companies Act
- Outcome: The court awarded costs to the 2nd and 12th defendants, to be paid out of the liquidation estate.
- Category: Procedural
- Sub-Issues:
- Costs order for liquidator's application
- Related Cases:
- [2016] 4 SLR 1248
8. Remedies Sought
- Determination of rights to sale proceeds
- Direction on distribution of assets
9. Cause of Actions
- Breach of contract (failure to segregate stock)
- Determination of security interests
10. Practice Areas
- Liquidation
- Banking
- Finance
- Pledges
- Trust Receipts
11. Industries
- Commodities Trading
- Banking
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| In re David Allester, Limited | English court | Yes | [1922] 2 Ch 211 | England and Wales | Cited to explain that a trust receipt is a means of securing the continuance of the pledge rather than an independent security device. |
| Indian Oil Corporation Ltd v Greenstone Shipping SA (The “Ypatianna”) | Unknown | Yes | [1987] 3 All ER 393 | England and Wales | Cited for the principle that commingling of stocks does not extinguish proprietary interests of the contributors, and the equitable solution is for contributors to hold the mixed bulk as co-owners in proportion to their contributions. |
| Sandeman & Sons v Tyzack & Branfoot Steamship Co Ltd | Unknown | Yes | [1913] AC 680 | England and Wales | Cited for the principle that when a mixture occurs without fault of either party, both parties become owners in common of the mixed property. |
| Hill & Anor v Reglon Pty Limited | New South Wales Court of Appeal | Yes | [2007] NSWCA 295 | Australia | Cited for applying the principle in Sandeman to cases where goods become inextricably mixed. |
| Glencore International AG and others v Metro Trading International Inc (No 2) | Unknown | Yes | [2001] 1 Lloyd’s Rep 284 | England and Wales | Cited for the proposition that as long as owners can identify their oil as a constituent of the mixed bulk, the bulk is co-owned in proportion to the quantity and value of the oil contributed. |
| Gibson and Stiassny v StockCo Limited and ors | New Zealand High Court | No | [2011] NZCCLR 29 | New Zealand | Cited in relation to security interest in mixed herd of livestock, but court clarifies that the case was about competing ownership claims. |
| Lupton v White and others | Unknown | Yes | [1803–13] All ER Rep 356 | England and Wales | Cited for the principle that if a party's breach causes difficulty in recovering entitlement, the difficulty is resolved in favor of the other party. |
| In re Diplock, Diplock v Wintle (and associated actions) | Unknown | Yes | [1948] 1 Ch 465 | England and Wales | Cited for the principle that where claimants to a mixed fund are each innocent contributors, they share pari passu. |
| Vintage Bullion DMCC (in its own capacity and as representative of the customers of MF Global Singapore Pte Ltd (in creditors’ voluntary liquidation)) v Chay Fook Yuen (in his capacity as joint and several liquidator of MF Global Singapore Pte Ltd (in creditors’ voluntary liquidation)) and others and other appeals | Court of Appeal | Yes | [2016] 4 SLR 1248 | Singapore | Cited regarding costs order for a liquidator’s application under s 310 of the Companies Act. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Commingled goods
- Security interest
- Trust receipt
- Pledge
- Liquidator
- Trade financing
- Pepper stock
- Shipping documents
- Rateable distribution
- General creditors
15.2 Keywords
- commingled goods
- security interests
- trust receipts
- liquidation
- pepper stock
- Singapore
- insolvency
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Credit and Security | 80 |
| Liquidation | 75 |
| Trust Receipts | 70 |
| Pledges and Pawns | 65 |
| Company Law | 65 |
| Banking and Finance | 60 |
| Trust Law | 50 |
| Bankruptcy | 40 |
16. Subjects
- Insolvency
- Banking
- Finance
- Commercial Law
- Trusts