OUTER HOUSE, COURT OF SESSION
 CSOH 84
OPINION OF LORD MALCOLM
in the cause
SAMUEL ANDREW AITKEN
Pursuers: J. Wolffe QC; Pinsent Masons
Defenders: P. O'Brien, advocate; Maclay Murray & Spens
18 May 2012
 This action concerns the interpretation and application of a loan agreement between Anglo Irish Bank Corporation plc (the bank) and the defenders. (The bank has assigned its rights under the agreement to the pursuers.) The defenders are the 158 members of the 2004/2005 Eurocentral Hotel Syndicate. The agreement relates to a term loan facility of г13, 500,000 in respect of the purchase of property at Eurocentral. In terms of the agreement "syndicate" means the borrowers together acting pursuant to the trust deed in relation to the project. "The project" means the acquisition of the property and its development and letting. "The property" means the subjects known as site 20, McNeil Drive, Eurocentral, Holytown, Motherwell. The information memorandum described a proposal to purchase "a high quality pre-let hotel and serviced office building. The total purchase price was г23,275,000, with an initial gross rent of г1,184,000 per annum. The minimum participant investment was г200,000. The syndicate mechanism allowed the members "to participate directly in the UK Enterprise Zone property market in order to obtain 100% tax relief on qualifying expenditure". A non-recourse loan facility of г13.5m had been negotiated to be secured against a charge on the properties and the income therefrom, the bank having no recourse against any members personally.
 Subsequently the tenants of the office premises were placed in administration. This had the potential to put the syndicate in default in respect of repayment of the loan, and created a risk that losses would be incurred by the members. In October 2008 a cash call request was made of the members by the syndicate's trustees. This was to allow the servicing of the loan and the fulfilment of certain other requirements of the syndicate. Some of the members responded to this call, some did not. By October 2009 г1.134m had been received. In the defences it is explained that the syndicate trustees and the bank were in discussions with a view to renegotiating the terms of the agreement. The bank had indicated that, as part of any such agreement, it would require a payment in excess of г1m. The purpose of the cash call was to obtain funds so that the trustees would be in a position to implement such an agreement if ultimately it was finalised and approved by the members of the syndicate.
 The negotiations had not been concluded when the bank assigned its rights under the agreement to the present pursuers. The pursuers served a written demand dated 23 August 2011 upon the syndicate in respect of sums payable under the agreement. No sums have been paid in response to that demand. Accordingly an event of default has occurred in terms of clause 10 of the agreement. The pursuers now seek payment of г1,031,765.91 from the members of the syndicate, failing which for payment of the same into the rental account as defined in the agreement, or, alternatively, for an order requiring security to be provided to the pursuer in respect of the sums received following the cash call.
 The pursuers aver that the sums received in respect of the cash call relate to the property, all in terms of clause 14.2 of the agreement. As a result they should be forwarded to the rental account, over which the pursuers hold security documentation. The defenders respond to the effect that the rental account is concerned only with sums received from third parties. At a debate, Mr Wolffe QC, counsel for the pursuers, did not press this point. Instead the focus was on the following two questions:
1. Are the funds "an asset of the syndicate"? The defenders' position is that the funds are not part of the assets of the syndicate, having been ingathered for a purpose which has failed, and, in any event, being insufficiently connected to the project. The pursuers submit that the definition of "assets of the syndicate" is very wide and that the funds fall within its scope.
2. The second question is: if the funds are assets of the syndicate, are the pursuers entitled to demand a security over them in respect of the borrowers' liabilities under the loan agreement? Clause 8.2(f) provides that until the discharge date (ie when the bank is repaid in full) the defenders shall "on demand and at their cost grant such further security interests in respect of assets of the syndicate in favour of the bank in security of the borrowers obligations hereunder as the bank may specify". By formal letter of 20 December 2011 the pursuers demanded the execution of security documentation in respect of the funds. On behalf of the defenders it is averred that, in the event that the funds are assets of the syndicate, nonetheless clause 19.6 of the agreement provides that the pursuers "shall only have recourse to the extent of any assets of the syndicate which are expressed to be secured by any of the financing documents." The funds are not so secured. Accordingly it is submitted that the pursuers are not entitled to recourse to the funds.
 I consider that some further procedure will be required before I am able to express a definitive view on whether the funds are or are not part of the assets of the syndicate. I will therefore concentrate on the issue of the proper approach to clauses 8.2(f) and 19.6. For this purpose I will proceed on the hypothesis that the funds are part of the assets of the syndicate. For the pursuers Mr Wolffe emphasised that the commercial purpose of, amongst other things, the definition of "assets of the syndicate" and clause 19.6 is to draw a distinction between, on the one hand, the personal assets of members of the syndicate which have nothing to do with the project and, on the other hand, the assets belonging to the syndicate as whole. The syndicate has no separate legal personality, no other business interests, and is governed by a deed of trust which defines the scope of the syndicate's interests. The overall intention was that the personal assets of individual borrowers would not be at risk in the event of there being a shortfall between the syndicate's assets and the borrowers' liabilities to the bank. According to Mr Wolffe it would be "neither commercially sensible nor consistent with business common sense" that the answer to the question "what are the assets of the syndicate?" should depend on the claimed subjective intent or purposes of the syndicate for particular assets at any given time. Clause 19.6 allows recourse to any assets of the syndicate which are subject to a further security granted pursuant to clause 8.2(f). Counsel referred to certain recent decisions in support of his submission in favour of what he described as a commercially sensible approach to contractual interpretation, including Rainy Sky SA v Kookmin Bank  1 WLR 2900 and Multi-Link Leisure Developments Ltd v North Lanarkshire Council 2011 SC (UKSC) 53.
 For the defenders Mr O'Brien described the limited recourse provided for in clause 19.6 as a cardinal feature of the agreement. There had been an event of default, so the clause applied. It is implicit that there can be assets of the syndicate to which the bank has no recourse. However, on the pursuers' approach the bank can recover all and any of the assets of the syndicate at any time. The proper analysis is that, after a default, clause 19.6 takes precedence. Furthermore, the security documents contemplated by the agreement all relate to the development and the letting of the hotel and offices. Reference was made to paragraph 16 of the conditions precedent set out in schedule 2 of the agreement. It was envisaged that the syndicate's solicitors could hold substantial funds in their client account.
 Mr O'Brien suggested that there is a "tension" between the two clauses. They "pull in opposite directions." He asked, what is the point of the specific provisions as to security documents if all the assets of the syndicate can be obtained using powers under clause 8.2(f)? One clause has to govern the other. Mr O'Brien submitted that it should be clause 19.6. In these circumstances content could be given to clause 8.2(f). It might cover the curing of a defect or invalidity in an existing security, or extend to the obtaining of a different type of security over an already secured asset. Counsel submitted that it would be absurd if clause 8.2(f) could be used to circumvent the clear purpose of clause 19.6.
decision on the interplay between clauses 8.2(f) and 19.6.
 The borrowers are the individual members of the syndicate. The syndicate has no separate legal personality. In the absence of any agreement to the contrary, the personal assets of the borrowers would be available to the bank in satisfaction of any outstanding liabilities, at least to the extent of an individual borrower's personal responsibility on a proportionate basis. However it is clear that the bank and the syndicate members agreed that, whatever else, the bank's recourse would not extend to assets of individual members which had not been committed to the project. In clause 1.2 the term "assets of the syndicate" is defined as meaning "the whole rights, title and interest (present and future) of the borrowers in and to the project, the property, the project documents and all other assets and rights of whatever nature relating to or deriving from the project." "The project" is defined as "the acquisition of the property and the development and letting of the property as contemplated by the information memorandum." Given the size of the loan and the overall context of the loan facility, it would make sense if the bank could obtain a security over all and any of the assets of the syndicate, including assets accruing after the date of the initial loan. In this regard clause 8.2(f) provides that, until all borrowings have been repaid (the "discharge date"), the borrowers shall, on demand, grant such further security interests in respects of assets of the syndicate "in favour of the bank in security of the business obligations hereunder as the bank may specify." The loan has not been repaid, therefore, on the face of it, this clause applies. On the hypothesis that the funds are properly regarded as assets of the syndicate, the defence is predicated on the proposition that, in the event of a default, the bank's powers under clause 8.2(f) are superseded or overruled by the terms of clause 19.6.
 It can be noted that the prohibition on unilateral disposal of the assets of the syndicate provided for in clauses 8.3(a) and (b) likewise persists until the discharge date. It might be thought that the agreement reveals an intention to preserve the right of the bank to attach all or any of the assets of the syndicate in security of borrowings. So the question comes to be, does clause 19.6 limit the bank's apparently unqualified rights under clause 8.2(f)? In passing it can be noted that clause 19.5 provides for the obligations of the borrowers to be several and apportioned according to their respective proportions of the overall investment. Each borrower is personally liable for his or her share of the debt, and, barring any contrary provision in the loan agreement, each borrower's personal property could be liable to attachment in satisfaction of that share. However, whatever else, clause 19.6 makes it clear that the intention was that only the "assets of the syndicate" would be subject to any legitimate demands from the bank. Thus, in the event that the assets of the syndicate are insufficient to meet the syndicate's liabilities to the bank, the individual borrower's personal assets remain out of the reach of the bank.
 It is helpful at this stage to remember the exact terms of clause 19.6. Under the heading "Limited Recourse" it provides:
"Notwithstanding the occurrence of any event of default, the bank shall only have recourse to the extent of any assets of the syndicate which are expressed to be secured by any of the financing documents."
For myself, I do not identify any necessary conflict or inconsistency between that provision and clause 8.2(f). One provides that the bank can only proceed against assets of the syndicate which are secured by a financing document (which includes a security document as defined in the agreement); the other allows the bank to obtain such a security at any time before the discharge date, ie the date when the loan is fully repaid. The discharge date has not yet arrived. In my opinion, the bank can insist on security now in respect of all or any of the unsecured assets of the syndicate. Once that security is obtained, clause 19.6 is no bar to the bank's recourse to the funds. The definitions of both financing and security documents are sufficiently wide to cover such documents as are required by the bank "from time to time."
 This analysis respects the desire to protect the purely personal assets of the borrowers, and limits the bank's rights to those assets which a borrower has given over to the syndicate. It also gives content to clause 19.6 in the sense that, unless and until an asset of the syndicate is included in a security document, the bank cannot demand that it be used in repayment of any outstanding liabilities under the loan agreement. This might seem to involve an unnecessary prolixity of procedure, but the alternative is to insist that the clauses are in direct conflict with one another, and thereby force a decision as to which is to prevail.
 It is well established that if a contract, when read as a whole, can be construed in a manner which avoids internal conflict or inconsistency, other things being equal, that construction will be preferred. In The North Eastern Railway Company v Lord Hastings  AC 260, Lord Davey quoted the words of Lord Watson in an unreported case:
"...the deed must be read as a whole in order to ascertain the true meaning of its several clauses, and ... the words of each clause should be so interpreted as to bring them into harmony with the other provisions of the deed if that interpretation does no violence to the meaning of which they are naturally susceptible..."
There would be a direct conflict if clause 19.6 was understood as providing that the relevant financing documents are fixed and immutable as at the date of the default, and that there can then be no recourse against any assets which were unsecured at that date. Such an interpretation would require the phrase "which are expressed to be secured by any of the financing documents" to be treated as a reference to those financing documents in existence at the time of the default and exclusive of any documents created at a later date. While that may be a possible interpretation, as already mentioned, it would set up a direct clash with the terms of clause 8.2(f), which, when read in the context of the preamble to clause 8.2, clearly envisage further security being provided for the borrowing at any time prior to the discharge date. In my opinion clause 19.6 can equally be interpreted as limiting recourse to such assets as are, at any time before the discharge date, secured by a financing document. This would be in accordance with business common sense, in that all free assets of the syndicate would be available to the bank in respect of outstanding liabilities. This is all the more so given that the agreement prevents the syndicate from disposing of unsecured assets until the liabilities are met. It would also be consistent with the intention to separate the remaining personal assets of the borrowers from those committed to the project, with only the latter being available to the bank.
 If one concentrates only on the terms of clause 19.6, it might appear that there are assets of the syndicate which are out of the bank's reach, namely, those which are unsecured as at the date of the default. However, if the focus is widened to include the other provisions in the agreement, and notably clause 8.2(f), it becomes apparent that there is a mechanism whereby the bank can, by exercising the powers under that clause, attach such assets of the syndicate. As assignees of the bank, the pursuers are entitled to the benefit of those powers.
Are the funds
"assets of the syndicate"?
 I now turn to the other issue, namely, whether the funds are part of the "assets of the syndicate" in terms of the agreement. If they are not assets of the syndicate, the bank has no call upon them. Clause 1.2 provides that the term "assets of the syndicate" means "the whole rights, title and interest (present and future) of the borrowers in and to the project, the property, the project documents and all other assets and rights of whatever nature relating to or deriving from the project." That is a broad and expansive definition, apt to cover anything which the individual members have committed to the trustees for the purposes of the project. For the defenders Mr O'Brien referred to the background to the cash call which generated the funds presently held in the trustees' solicitors client account. He explained that the funds were obtained to provide monies to facilitate an accommodation with the bank in order to stave off a default and foreclosure following upon the loss of rental income from the office development. The particular concern was that if the property was sold prior to 5 April 2012, being the seventh anniversary of the syndicate, this would have serious tax and financial consequences for the borrowers.
 In the result no such accommodation was reached, and the bank assigned its rights to the present pursuers. According to Mr O'Brien, that purpose having failed, the funds should not be regarded as assets of the syndicate. Any connection with the project is too tenuous to justify a contrary approach. Properly understood the assets of the syndicate are those assets which have a more direct relationship with the development. Paragraph 16 of the conditions precedent, set out at page 56 of the agreement, demonstrates that it was envisaged that funds could be held in the solicitors' client account. It was not the intention that such funds could be the subject of any security in favour of the bank. Were it otherwise the bank would have the power to tie down all the funds available to the syndicate, including those needed to defend the current action. If clause 8.2(f) has the effect contended for by the pursuers, "assets of the syndicate" should receive a restricted meaning. Furthermore it would be wrong if the money, having been raised to facilitate a deal with the bank, could nonetheless be obtained by the bank or its successors notwithstanding the failure of those negotiations. If the funds were initially assets of the syndicate, then they ceased to be such on the failure of the purpose for which the monies had been ingathered. It would have been different if the funds were obtained for general trust purposes, but, in the whole circumstances, the funds have no real connection with the project.
 For the pursuers Mr Wolffe submitted that the cash call generated funds were raised for the purpose of the project, hence they fall within the broad definition of "assets of the syndicate" in clause 1.2. The trustees could have concluded a deal with the bank then ingathered the funds, however they chose to take the risk that the funds would be obtained prior to the collapse of the negotiations with the bank. In the meantime some of the monies have been used for general purposes of the syndicate, with just over г1 million now remaining in the account. The funds are available for attachment under clause 8.2(f). That is simply a consequence of the agreement.
 Mr Wolffe drew attention to the definition of "syndicate", namely the borrowers together acting pursuant to the trust deed in relation to the project. Once again he stressed that there is a distinction between the borrowers' purely personal assets (which are beyond the reach of the bank) and those committed by the borrowers to the syndicate trustees for the purpose of the project (which can be secured in favour of the bank). The cash call funds fall into the latter category. They are available for the trustees to use for the purposes of the project. The monies sent in response to the cash call are no longer purely personal assets of the individual borrowers. Instead they have been committed to the syndicate. The fact that the funds are held collectively in the solicitors' client account does not alter their status. A ballot was held and the decision was taken that the funds should be provided to the trustees. In terms of the deed of trust the ballot created a legal obligation upon each borrower to pay his or her share. This was done to further the requirements of the syndicate in respect of the project, namely to prevent a default and foreclosure by the bank, all with the view to avoiding potentially serious tax and financial consequences for the individual members.
 Mr Wolffe recognised that if his submission that the funds have been committed to the trustees for the syndicate's purposes is in dispute, and the defenders' contention is that the funds are simply being held on a temporary basis pending return to the individual borrowers, then there may require to be further procedure to resolve the factual position. However, on the face of the documents presented so far, the funds appear to have been dedicated to the syndicate and removed from the personal estate of the members.
 After the conclusion of the debate the court's attention was drawn to the syndicate's accounts for the year ending 5 April 2011. The accounts are framed on the basis that cash in the amount of г1, 002,854 held by the solicitors (described as funds from an earlier cash call) is included in the syndicate's balance sheet. The notes to the accounts disclose that the entry in the balance sheet in respect of debtors includes debts of г185,639 due from syndicate members in respect of outstanding cash calls. The г1,002,854 is the fund at issue in the present proceedings. According to counsel for the pursuers, the accounts demonstrate that these monies are part of the assets of the syndicate and cannot be withdrawn by the members on demand. For the defenders, Mr O'Brien observed that the accounts were drafted long after the agreement. They do not impinge upon his submissions as to the correct interpretation of the agreement, nor to the need for a more direct connection between the funds and the hotel and office development.
 As the discussion on this point progressed, it became apparent that the resolution of this issue concerns - not so much the proper interpretation of the agreement - but the determination of the facts of the matter. In particular, have the funds been committed to the project? Alternatively, were they sent to the trustees for a specific purpose, and that purpose having failed they are not available to the trustees for use in connection with other requirements of the trust and the project? In other words, are the borrowers entitled to demand the return of the monies raised in response to the cash call? If so, it seems odd that the funds have been retained by the trustees. Likewise the provision in the accounts that the members who have not responded to the cash call are debtors of the syndicate is difficult to reconcile with such a proposition. If the funds are in the current set of accounts because they are available to the trustees to use for any alternative purpose relating to the project, then, given the very broad definition of "assets of the syndicate", it may be difficult for the defenders to resist the application of clause 8.2(f) to the funds. However I note that at paragraph 2.3 of their note of argument the defenders say:
"...it is plain that the funds are no longer being held with a view to being used in connection with the project. They are simply general funds held by the trustees, and for which the trustees will require to account to the individual syndicate members."
 I have considered whether the pleadings, the documents and the submissions allow me to make a sufficient determination of the relevant facts as would allow a resolution of the matter. I have serious reservations about that, and have concluded that the better course is to put the case out by order so that parties can address the court on any appropriate further procedure which might assist in this regard. It may be that the above comments are sufficient to focus matters to the extent that there is no need for a proof with oral evidence. Indeed there may be enough common ground between the parties to allow the matter to be resolved after discussion at that hearing.