In its recent decision in Pars Ram Brothers (Pte) Ltd (in creditors’ voluntary liquidation) v Australian & New Zealand Banking Group Ltd and others [2017] SGHC 38, the Singapore High Court held that the security interests of lenders survived the commingling of assets, and that the assets should be divided among the secured lenders in proportion to their respective contributions.


The Plaintiff was a company that carried out trade in spices and was undergoing a creditors’ voluntary liquidation. The Defendants were banks that had granted trade financing facilities to the Plaintiff.

Under the financing arrangements, the Defendants would disburse funds for stock purchased by the Plaintiff. As security for the loan, the Plaintiff would furnish the shipping documents to the Defendants under a pledge. To allow the Plaintiff to sell the stock, the Defendants would release the shipping documents to the Plaintiff in consideration for a trust receipt on terms that the Plaintiff held the financed stock or its proceeds of sale on trust for the relevant Defendant.

The trust receipts typically identified the financed stock with reference to their bill of lading number and/or a description of the goods. Some of the trust receipts also had an express term that the Plaintiff should hold or store the goods in a manner to allow separate identification. Where such an express term was absent, there was at least an obligation to hold and store goods in the Defendant’s name or to pay the proceeds of sale of the underlying goods into a designated account.

Unfortunately for the Defendants, the Plaintiff did not store the stocks in accordance with the requirements under the trust receipts. Incoming bags were stacked together with existing goods of the same description without segregation, and it was impossible to identify the stock financed by each lender because it had been commingled in mixed bulks with stocks financed by other lenders.

The liquidators were able to identify the lenders asserting interests in various categories of goods, but the amount of goods in each of the categories was insufficient to meet each of the lenders’ claims in full, as bags had been removed from delivery randomly from the stacks of goods to fulfill outgoing shipments.

The liquidators initiated the proceedings as the Defendants could not agree on how the sales proceeds should be distributed.


The judge found that the trust receipts merely made clear that the pledged property was regarded as security and not the absolute property of the Defendants. The interest that the Defendants asserted was a legal possessory security interest.

The judge extended the principle that owners of commingled stock would hold the mixed bulk as co-owners in proportion to their respective proportions to security interests, and held that the Defendants’ security interests survived the commingling.

Critically, the judge found that the Defendants’ security interests had already been perfected prior to the commingling by virtue of the underlying pledge. The ascertainment of part of the bulk was not necessary to create or perfect the Defendants’ security interests in the stocks financed by them, and therefore the failure to segregate the goods did not negate the existence of the Defendants’ security.

The judge held that since the mixtures came about through no fault of the Defendants, there was no reason to prefer the interests of one over the other. He therefore held that the mixed stock would be divided among the contributing Defendants rateably in proportion to the value of their respective contributions.

Points to Note

This judgment makes clear that security interests in commingled assets will be protected in the same way as ownership in commingled assets, so long as the security is perfected before the commingling.

While the court did not deal with the issue where the commingling occurred due to the fault of one of the lenders, it is likely that it will hold that similar principles to those dealing with ownership will apply. Namely, any doubts as to the amounts owed to each lender will be resolved in the favour of the innocent party.

This judgment therefore gives secured lenders assurance that even if assets pledged to them are commingled, they are still entitled to assert their security interest over a rateable portion of the commingled amount so long as the security is perfected before the assets are commingled.