In consideration of the Mortgagee having at the request of the Mortgagor agreed to make or continuing to make available to the Mortgagor general banking facilities including but not limited to advances, revolving credit facilities, loans, guarantee facilities and term facilities whether in Singapore Dollars and/or in foreign currencies and such other general banking and credit facilities or other accommodation, up to such amount or amounts as the Mortgagee may from time to time agree by permitting the Mortgagor to overdraw on the account or accounts current or to draw down or utilise any facilities on any other account or accounts whatsoever whether current or revolving or continuing or whether in instalments or otherwise which the Mortgagor now has or may at any time hereafter have with the Mortgagee either solely or jointly or jointly with any other person or persons in partnership or otherwise (hereinafter called ‘the said Accounts’ which expression shall wherever the context admits include any one or more of the accounts hereinbefore mentioned) on such terms as may from time to time be fixed by the Mortgagee in its absolute discretion, the Mortgagor hereby covenants with the Mortgagee as follows:-

1. To pay:-

1.1 To the Mortgagee on demand made to the Mortgagor all such sums of money which are now or shall from time to time or at any time hereafter be owing or remain unpaid to the Mortgagee by the Mortgagor either as principal or as surety and either solely or jointly or jointly with any other person or persons in partnership or otherwise whether on the said Accounts or otherwise in any manner whatsoever or for all other liabilities whether certain or contingent primary or collateral including (but without prejudice to the generality of the foregoing) the balance which at the date of such demand shall be owing or remain unpaid to the Mortgagee by the Mortgagor on the said Accounts or otherwise in any manner whatsoever whether in respect of moneys advanced or paid to or for the use or accommodation of the Mortgagor either solely or jointly or jointly with any other person or persons in partnership or otherwise or in respect of cheques bills of exchange promissory notes or other negotiable instruments signed drawn accepted or indorsed by or on behalf of the Mortgagor either solely or jointly or jointly with any other person or persons in partnership or otherwise or discounted paid or held by the Mortgagee either at the request of the Mortgagor or in the course of business or otherwise or in respect of letters of credit bills notes drafts trust receipts guarantees indemnities or other documents or instruments signed by the Mortgagor either solely or jointly or jointly with any other person or persons in partnership or otherwise and held by the Mortgagee or in respect of any other banking facilities whatsoever pursuant to the terms and conditions of any offer facility or commitment letter(s) or agreement(s) in relation thereto as revised varied amended supplemented or superceded [sic] from time to time (hereinafter collectively referred to as ‘the Letter of Offer’);

1. To pay:-

…

1.3 To the Mortgagee interest on any balance owing or remaining unpaid if and when the said Accounts shall be closed or shall cease to be current at the rate or rates and in the manner aforesaid or at such other rate or rates and with such periodic rests as may from time to time be fixed by the Mortgagee from the date of such demand being made or from the date such account intended to be hereby secured shall be closed or shall cease to be current (as the case may be) whichever is the earlier until full payment is received by the Mortgagee both after as well as before judgment (if any) shall have been obtained in respect thereof.

2. That this Mortgage expressly authorises the Mortgagee to make further advances or give credit in instalments or on a current, revolving or continuing account or otherwise or any other credit or banking facilities or accommodation whatsoever from time to time to the Mortgagor either solely or jointly or jointly with any other person or persons in partnership or otherwise and all moneys and liabilities owing to the Mortgagee from time to time in connection therewith shall be secured by this Mortgage in addition to the moneys and liabilities already outstanding or incurred as at the date hereof.

In consideration of the Mortgagee having at the request of the Mortgagor agreed to make or continuing to make available to the Mortgagor general banking facilities including but not limited to … guarantee facilities … whether in Singapore Dollars and/or in foreign currencies … up to amount or amounts as the Mortgagee may from time to time agree …, the Mortgagor hereby covenants with the Mortgagee:

[emphasis added]

17 First, the reliance placed in some cases on commercial common sense and surrounding circumstances (eg in Chartbrook [2009] AC 1101, paras 16-26) should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision.

[emphasis added]

Most professionally drawn loan agreements define ‘borrowings’ in such a way as to include not only the sums currently the subject of the agreement but also future sums lent or in respect of which the borrower might become indebted to the lender or, indeed, in respect of which the lender might find itself guarantor of the borrower’s obligations. Such clauses are usually tied to some security. An example would be:

‘The mortgagor hereby charges to the Bank its undertaking (including goodwill) and all its assets whatsoever and wheresoever both present and future … with the repayment to the Bank of all moneys now or hereafter to become owing or payable to the Bank by the mortgagor in any circumstances or manner whatsoever including but without limiting the foregoing either alone or in conjunction with any person … or on any other account whatsoever including any moneys which may be due and owing by the mortgagor to the Bank under or by virtue of any instrument or guarantee executed by the mortgagor in favour of the Bank to secure repayment of any advance made by the Bank to any person ALSO any moneys which the Bank shall pay or become liable to pay for or on account of the mortgagor either by direct advances or by reason of the Bank’s entering into any guarantee for or on behalf of the mortgagor’.

12 The judge below held that the charge was only to secure the $18m overdraft debt which Sogo owed to DBS at the time the charge was created and that the phrase ‘all moneys and liabilities which may be owing to the Bank from time to time’ appearing in the facility letter related to ancillary debts such as interests and costs arising under the facility; it could not mean any money or liability outside the facility. He was of the view that while the wording of the charge seemed to be wide, the clauses therein must be read together to determine the parties’ intention. Clause 4 referred to the termination provision of the facility letter and the right of the chargor to withdraw such amount from the FD as was commensurate with the sums repaid by Sogo in accordance with the repayment schedule. Clause 6 referred to Tararone’s obligation to keep the charge as a continuing security up to $18m and the expression ‘continuing security’ ought not be given a wider meaning than was plain in the context of the facility letter and the charge. He felt that it could not have been the intention of the parties that the charge should secure any further loans made by DBS to Sogo when the overdraft facility granted under the letter of 4 March 1998 had been terminated.

15  We would observe that, if that was the intended meaning, then the word ‘thereunder’ should appropriately have appeared after the phrase ‘may be owing’. Indeed, if that was the intention, there would have been no necessity to refer to ‘all monies and liabilities which may be owing to the bank from time to time’. It would have sufficed to merely state ‘The above facility shall be secured by …’

16 We shall now turn to consider the provisions in the charge. Under cl 1, the charge was expressly stated to be in respect of ‘advances, loans credit and/or other banking facilities or accommodation’ given to Sogo, all of which facilities are collectively referred to as ‘the banking facilities’. Under that clause, Tararone covenanted to pay to DBS, on demand, all sums of money owing by Sogo in respect of those banking facilities. Clause 2 charged the FD with the repayment of all moneys owing by Sogo to DBS. Tararone further confirmed that the FD would be held by DBS as a continuing security for the due payment of all of Sogo’s liabilities owing from time to time to DBS. Clause 3 authorised DBS, without notice to Tararone, to appropriate all or any part of the FD towards payment of all of Sogo’s liabilities to DBS. Finally, cl 6 reaffirmed that notwithstanding the other provisions, the charge ‘shall be and remain a continuing security for all moneys and liabilities from time to time owing by Sogo to DBS in respect of the banking facilities’. In the light of the terms of these clauses, there cannot be any doubt that this was an ‘all money’ charge.

17 While it is true that the original reason for the creation of the charge was the $18m overdraft facility which DBS had then granted to Sogo, and which DBS were prepared to continue to extend to Sogo, the express terms of the charge clearly go beyond that. Nowhere is it stated, nor can it be implied, that the charge merely secures the payment of the overdraft facility. The court ought to give effect to what the document expressly and specifically stated.

18 In this connection reference may be made to Bank of India v Trans Continental Commodity Merchants Ltd [1983] 2 Lloyd’s Rep 298 and Re Rudd & Son Ltd [1986] 2 BCC 98, 955. Admittedly, in these two English cases, the charging provisions were not identical to that of the present case and they also specified ‘on any account whatsoever’ or ‘any other account’, which are not to be found in our instant charge. However, in our opinion, these differences notwithstanding, they do not render the charge here any less an ‘all-money’ charge. While the words ‘any other account’ do not appear in the present charge, it must be borne in mind that cl 1 refers to ‘advances, loans, credit and/or other banking facilities or accommodation’. It is a very wide clause. If the intention was merely to secure that specific overdraft account, it would have easily so stated. Furthermore, Tararone also covenanted to pay on demand ‘all sums of moneys which now or thereafter from time to time and at any time shall be owing’ in respect of the aforesaid banking facilities. This is again inconsistent with any intention to only repay the debt in the overdraft account.

19 In our judgment, the charge is truly a charge in respect of all moneys from any account which are owed by Sogo to DBS. We would reiterate that, if the overdraft account was all that the parties had in mind, they would have simply referred to that and would not have widened the clause to cover any ‘advances, loans, credit and/or other banking facilities’. Most of the clauses in the charge may well be standard provisions (as cl 4 is clearly not) but there is no canon of construction which allows the court to ignore the express words in a document, or to rewrite the terms which the parties have agreed, unless a plain construction of the words would lead to absurdity.

The Mortgagor hereby covenants with each of the Bank and the Company that it will on demand pay or discharge to the Bank and the Company:–

(1) all sums of money which have been or are now or may hereafter at any time or from time to time be advanced to the Mortgagor by the Bank or the Company (as the case may be);

(2) all other indebtedness and/or liabilities whatsoever of the Mortgagor to the Bank or the Company (as the case may be) present, future, actual and/or contingent and whether on any banking or other account or otherwise in any manner whatsoever including such indebtedness and/or liabilities due under the terms hereof (whether alone or jointly with any other person and in whatever style, name or form and whether as principal or surety);

…

Mr Martin and Mr Gold and each of them hereby jointly and severally covenant with … the bank … that they and each of them will on demand pay or discharge to the bank … all sums of money … advanced to Mr Martin and Mr Gold or either of them by the bank …

15 … A distributive construction is commonly adopted when a plural subject is followed by a plural predicate and the plurals are broken down into their component singulars. An example from everyday speech would be to say: ‘A and B took their children to school.’ Prima facie the word ‘their’ means ‘belonging to both of them’. But this is not its only possible meaning, and if A and B are not married it is obviously not its meaning. In that case the word ‘their’ means ‘of each of them’. But this means that A and B took their respective children to school, not each other’s children. The children are distributed to the relevant parent. And it goes further than that. Although the word ‘school’ is in the singular, it may conceal a plural. If necessary, the sentence means that A and B took the children to their respective schools.

16 This is a well-established principle of construction. It often, and perhaps usually, gives the words their most natural meaning. It parades under a Latin name reddendo singula singulis. This simply means that, when plurals are broken down, each singular component must be attributed to its respective singular and not to every other possible singular. It is a broad and general principle which departs from the literal and grammatical meaning and does not depend upon minutiae of language.

17 In the present case the principle would operate in two ways. It would apply the interpretation clause to clause 2(1) by attributing the obligation to repay the moneys advanced to Mr Martin and Mr Gold jointly to their joint and several covenant, thereby removing the unnecessary duplication resulting from the attribution of the same obligation to their individual covenants. This reading preserves the identity between the covenantor and the subject-matter of the covenant, and makes no difference to the effect of the joint mortgage. It is the most natural way to read the operative clause and ought not to be controversial. Mr Martin and Mr Gold thereby jointly and severally covenant to pay the joint debts and each of them separately covenants to pay the separate debts.

18 Critically, however, a distributive application of the interpretation clause would not stop there. It would also attribute the obligation to repay the separate debts of ‘the mortgagor’, not to each member of the class, but to the relevant member who owed them. This is a perfectly legitimate, and in my opinion the more natural, way to apply the interpretation clause. It treats a covenant by two or more persons (insofar as it means by each of them) to discharge their debts (in so far as it means the debts of each of them) as a covenant by each of them to discharge his own debts and not the debts of the other or others. Put shortly, it treats the obligation of two or more persons to pay their debts as an obligation to pay their respective debts.

At English law a partnership has no legal personality separate from the personalities of its individual (or corporate) members. The liabilities of the partnership are directly the liabilities of the individual partners.

… The terms of a loan transaction or a guarantee/security entered into by the partnership may provide that the partners’ obligations extend beyond the partnership debt to encompass the purely personal obligations of a partner. This was the position in AIB Group (UK) Ltd v Martin. …

30  Finally, we ought to mention that counsel for Tararone relied upon the following passage of Young J in the Australian case Estoril Investments Pty Ltd v Westpac Banking Corporation (1993) 6 BPR 13,146 to contend that, in relation to the present charge, it should sensibly be read down to circumscribe its application:

However, in my view it is valid to say in Australia that when one sees a mortgage in wide words and, as I believe is the situation in the instant case, one would get absurdities if one read the wide words literally, one should pause to see whether the parties intended when they entered into the mortgage that it should cover the circumstance which has now arisen.

31  We do not see how this passage assists Tararone when the crucial qualification in that passage is ‘one would get absurdities if one read the wide words literally’. The absurdities which counsel thought existed in the present charge was the alleged contradiction between cl 1 and cl 4. We have explained above the consistency between the two clauses. To give cl 1 of the charge its plain meaning would not lead to any absurdity. It is a common phenomenon for banks, in granting facilities, to require the execution of an ‘all money’ charge. It is also a common feature for banks to set a limit to the facilities it would accord to the borrower, which facilities would be secured by a charge.

In the United States of America, as can be seen from Nelson G and Whitman D, Real Estate Finance Law (2nd ed, 1988), pp 899-902, there have been a series of cases in which, what the Americans call ‘dragnet clauses’ have been read down by the courts. The learned authors say at p 899 that in the absence of such a method of construction, ‘A mortgagor might naively execute upon his house a mortgage containing a dragnet clause and consequently find himself locked in to that particular lender for the rest of his life.’ The learned authors then say: ‘Dragnet clauses are generally upheld, but because their apparent coverage is so broad, and because the mortgagor is often unaware of their presence or implications, the courts tend to construe them narrowly against the mortgagee.’ However, it must be emphasised that this is a question of construction. …

…

Nelson and Whitman at pp 900-2 set out nine guidelines which illustrate how courts often approach dragnet clauses provided that the language permits them to do so. These can be summarised as follows:

…

(2) Only debts of the same type or character as the original debt are secured by the mortgage.

…

… Generally it seems to me the guidelines set out in Nelson and Whitman are applicable to Australian conditions though I emphasise once more that it all depends on the construction of the individual mortgage.

[emphasis added]

… It is not to be thought that merely because the business had changed and expanded that the mortgages which were taken out to secure working capital were not to operate as such security. But Mr Einfeld QC says that the debts which are now being sought to be charged against Estoril are so far removed from what was originally contemplated that the moneys are not within the wide all moneys clause. With respect I disagree. Even though the parties may well not have contemplated at the time of entering into the mortgages that there would be a million dollars in legal costs which came about because Mr Wimborne, the principal of Estoril, became involved with a Saudi Arabian Prince, nonetheless the parties anticipated that there would be costs and expenses including legal costs which could possibly arise in connection with the banking and which might be added on to the principal sum.

Accordingly even though I am of the view that there is some such rule of construction such as Mr Einfeld QC suggests, I do not believe that it gives any comfort to Estoril in the present case. It is thus a situation where one should direct one’s mind to the particular words used to see whether this liability for costs and this liability for interest is properly able to be brought within the words which the parties have used.

26. The use of ‘all monies’ clause has become a common banking practice. The Legal Charge containing such a clause is the prevalent type of security instrument adopted by most commercial banks in all ordinary transactions. Under such a charge, a co-mortgagor is jointly and severally liable to the lender for all his indebtedness as well as that of his co-mortgagor, unless a limit has been set, whether jointly incurred or alone, and whether incurred at or after the execution of the legal charge. Whether a co-mortgagor has knowledge of the level of indebtedness of his co-mortgage before entering into the ‘all monies’ mortgage is irrelevant. Nor is his knowledge of the co-mortgagor incurring new liabilities thereafter. Such a construction has been given effect by the highest court of England. I am unable to see how the 2nd defendant can escape from such consequence by arguing that her husband’s Personal Loans and Corporate Loans were non-existent at the time of execution of the Legal Charge and were not within her contemplation. At the time she signed the Legal Charge, none of those loans were in existence, and neither were the Mortgage Loans. But on a fair reading of clause 1.01 as extended by clause 1.03, the 2nd defendant is liable for all present and future indebtedness incurred jointly by her and the 1st defendant or by either of them alone. This may not be what she subjectively intended. The court is not privy to the negotiation of the Legal Charge. It may not take into account the subjective intention of the 2nd defendant. This is the typical case where the ordinary meaning of the words makes sense in relation to the entire document and the factual background, though the consequences may appear hard for the defendants or either of them. Accordingly, the 2nd defendant is jointly liable with the 1st defendant in respect of his Personal Loans and the Corporate Loans of his companies.