Neutral Citation Number: [2007] EWCA Civ 148
Case No: A3/2006/0634 AND 0634(Y)
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEENS BENCH DIVISION
Commercial Court
Mr Justice Langley
2004 FOLIO 65
Royal Courts of Justice
Strand, London, WC2A 2LL

27 February 2007

Before :

LORD JUSTICE WALLER
Vice-President of the Court of Appeal, Civil Division

LORD JUSTICE RIX
and
LORD JUSTICE HOOPER
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Between :

	Barbados Trust Company Ltd (formerly known as CI Trustees (Asia Pacific) Ltd)	Appellant	
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	Bank of Zambia and Anr	Respondents	
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(Transcript of the Handed Down Judgment of
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Stanley Brodie QC and Yash Kulkarni  (instructed by Hamilton Downing Quinn, Solicitors) for the Appellant
Richard Handyside (instructed by Lovells, Solicitors for the First Respondent
Benjamin Pilling (instructed by Linklaters, Solicitors) for the Second Respondent
Hearing dates : 6th and 7th December 2006
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Judgment
Lord Justice Waller : 
1.	This is an appeal from the judgment of Langley J handed down on 22nd February 2006. The appeal is concerned with an admitted debt due from Bank of Zambia [BoZ] under a Facility entered into on 19th July 1985 which has been traded on the distressed debt market. The Facility contained a clause allowing for the lending banks to assign “all or any part of [their] rights and benefits …to any one or more banks or other financial institutions …provided that any such assignment may only be effected if …the prior written consent of [BoZ] shall have been obtained (such consent thereto….to be deemed to have been given if no reply is received within 15 days..).” The debt had been assigned ultimately to the Bank of America [BoA] who declared a trust in respect of the same in favour of the appellants [BT]. BoZ defended the claim on the following bases:-
(1)	That the assignment to BoA was invalid – this  on the basis that, although BoZ must accept that deemed consent had been given, they not having responded to BoA’s request, since the fifteenth day was after the effective date of the assignment, prior consent had not been given; and/or 

(2)	Even if BoA might have sued (which is not necessarily admitted as we shall see), BT was not entitled to sue as beneficiary under the declaration of trust naming BoA as defendant (i.e. to use the route normally available to a beneficiary where a trustee will not bring a claim in its own name) – this all on the basis that an assignment in their favour could not have been valid (they not being a bank or other financial institution and/or they not having obtained prior written consent).The submission before us ultimately was that this followed from the fact  that either (i) the non-assignment clause prevented it or (ii) the terms of the declaration of trust would preclude it or (iii) equity would not allow BT to sue as beneficiary when to allow it to do so would be to side step the effect of the non-assignability clause. 
2.	The judge decided issue (1) the prior written consent point in favour of BT, but issue (2) the declaration of trust point in favour of BoZ.  BT appeal issue (2), and BoZ have put in a respondents’ notice appealing issue (1). Both appeals raise difficult and important questions; issue (2) the declaration of trust point raises issues which are far reaching and of considerable difficulty.
The background and relevant facts
3.	BT has brought the action claiming from BoZ the first defendant two principal sums totalling US$ 809,387.02. BT has done so as a beneficiary under a declaration of trust created in its favour by the BoA on 30 January 2004 the day the claim was issued. It has joined BoA as second defendant relying on the procedure which has been recognised in many cases of suing in their own name naming the trustee as a defendant where the trustee refuses to sue in his own name. [see Vandepitte v Preferred Accident Insurance Corp. of New York [1933] AC 70 at page 79] 
4.	The sums have been an admitted debt as far as BoZ is concerned for many years. The debts arose under an Oil Import facility dated 19 July 1985 (the Facility). By that Facility various banks and financial institutions agreed to make available to BoZ a facility for the issue of letters of credit in the maximum principal amount of $100 million. Bank of America International Limited (“BAIL”) was the agent and manager under the facility. The relevant advances, the basis of the acknowledged debt, were made on 16th January 1986 with maturity dates in June and July of that year. The debts have been reasonably recently acknowledged so as to preclude any limitation problems by an acknowledgement dated 6 February 1998.
5.	The debts have been sold in the distressed debt market, assignors and assignees  seeking the consent to assignment from BoZ pursuant to Article 12 of the Facility which is in the following terms:-
“12.01 (A)  Each Bank may at any time and from time to time assign all or any part of its rights and benefits in respect of the Facility to any one or more banks or other financial institutions (an “Assignee”), provided that any such assignment may only be effected if (save in the case where the assignee is a member of the same group as the assignor, no such consent then being required) the prior written consent thereto of the Borrower shall have been obtained (such consent not to be unreasonably withheld and to be deemed to have been given if no reply is received from the Borrower within fifteen days after the giving of a request for consent by a Bank) . . .
(B) If any Bank assigns any part of its rights and benefits in respect of the Facility in consideration of the agreement of the Assignee with such Bank to perform that percentage of such Bank’s obligations in respect of the Facility as corresponds with that percentage of its rights and benefits so assigned to the Assignee, then all references in this Agreement to such Bank shall thereafter be construed as references to such Bank and its Assignee to the extent of their respective participations.  The Borrower shall thereafter be entitled to look only to the Assignee (to the exclusion of the assignor) in respect of those proportions of the assignor’s obligations in respect of the Facility as correspond to the Assignee’s participation (and accordingly the assignor’s Commitment shall be proportionately reduced and the Assignee shall proportionately assume a Commitment equivalent to such reduction), provided that the Borrower shall not by reason of any such assignment be obliged to make any payment otherwise than to the Agent.
(C) Unless and until an Assignee has agreed with the Agent that it shall be under the same obligations to the Agent, the Manager, the Issuer and the Banks as it would have been under if it had been a party to this Agreement, the Agent, the Manager, the Issuer and the Banks shall be entitled to continue to look to the assignor for the performance of all its obligations in respect of the Facility as if no assignment had taken place and the Agent shall not be obliged to make payment of any sum to which that Assignee may become entitled in respect of the Facility other than to the relevant assignor.”
6.	The judge said this of Article 12:- 
“10. The commercial purpose of these provisions has been the subject of some debate. But I do not think it is hard to fathom. Any covenant against or restrictive of assignment is intended to ensure that the original parties to the contract are not brought into direct contractual relations with third parties save to any extent expressly permitted by the covenant. Any borrower, but particularly a central bank, may be concerned to ensure that its affairs and obligations are known and owed to and only enforceable by established and authorised institutions. Mr Antonio Bueno, QC, for the Claimant, referred the Court to the judgments of David Steel J and Aikens J in The Argo Fund v Essar Steel Limited [2004] EWHC 128 (Comm) and [2005] EWHC 600 (Comm) at paragraphs 19 (Steel J) and 28 and 29 (Aikens J). No doubt, prior to drawdown, a commercial purpose of Article 12.01 was also to ensure that any assignee was able both to provide its share of the funds and to act in co-operation with the other syndicate banks. Article 12.01(A), however, applies both before and after drawdown; is restricted, even in the case of a “Bank”, where consent to an assignment could reasonably be refused, and plainly encompasses and so regulates assignments when all that may remain to be performed is payment by Bank of Zambia. I reject Mr Bueno’s submission that the Article was not intended to protect Bank of Zambia “from being pursued for what it owes under the Facility” at least in the sense relevant to the issues, namely that any third party could claim payment of the debt directly from Bank of Zambia.”
7.	It is not suggested there was not evidence to support the finding as to the purpose of Article 12, but raised before us though not at the forefront of any submissions was a public policy issue relating to the approach of the law to an attempt to place fetters on the unencumbered property of an individual. It was not I hasten to make clear sought to suggest that Article 12 was in any way invalid or unenforceable but the extent to which Article 12 might or might not be construed as including a fetter on declaring a trust relating to an acknowledged debt might be affected by such a public policy point.
Issue (1)
8.	It is convenient to deal with this issue the subject of the respondents’ notice first, as did the judge. It is unnecessary to go into every detail of how the relevant assignment came to be made all of which is clearly set out in the judge’s judgment from paras 12-28. All that is important is to be clear about the dates when as between the assignor Masstock (International) Ltd (Masstock) (accepted as the titleholder as at the material time), and BoA any assignment was completed, and dates of the steps taken to obtain BoZ consent.
9.	The Assignment to BoA from Masstock was the subject of a “form of confirmation” dated 22 November 1999 sent by BoA. The consideration was 5% of the principal amount of the debt. The assignment was subject to and incorporated the “Standard Terms of Assignment of Loan Assets ….of the Emerging Markets Traders Association” (the “EMTA Terms”).
10.	By fax transmission sent on 2 December 1999, Masstock sent a “Request for Consent” form to BoZ with copies to BAIL “As agent” and to BoA. It notified BoZ that Masstock proposed to assign their rights and obligations to BoA and continued:-
“.  . . we request your consent to the foregoing assignment and note that Section 12.01 of the [Facility] states that your consent shall not be unreasonably withheld”.
11.	The judge held that the request was received and that BoZ did not respond for reasons which matter not. It follows that deemed consent would take place after 15 days i.e. 17th December 1999. In the meanwhile on 10th December BoA prepared a “closing certificate” for the Masstock transaction. It was also said to be subject to EMTA terms, and the Settlement dates and the Effective Dates were both stated to be 10 December 1999. The description of Asset in “Exhibit A-1” referred to the principal amounts and added in typescript “Consent: The prior written consent of BoZ is required to transfer the Assigned Credits.” On return of the certificate Masstock added in manuscript “As per Article 12.01(A). Such consent shall be deemed to have been given if no reply is received from BoZ …after the giving of the request for consent.”
12.	Notice of assignment signed by Masstock and BoA although dated 10th December was sent on about 14th December to BoZ giving notice of the assignment and stating that as between “the undersigned, the assignment is effective from December 10 1999….”
13.	The EMTA terms I can explain in the words of the judge:-
“29. The (applicable) EMTA Terms assist in explaining the paperwork employed for the trade. They provided that “Seller and Buyer shall be considered to have entered into a binding oral agreement regarding an Assignment on the Trade Date”. As between Bank of America N.A. and Masstock the Trade Date was 3 November 1999.
30. The EMTA Terms required a Written Confirmation to be sent and returned by the recipient. If the recipient does not agree the terms shown he must notify the sender in writing “in which case the parties shall determine the correct terms and the party sending the Confirmation will send the recipient a corrected Confirmation”. That was done by the “Form of Confirmation” sent by Bank of America N.A. to Masstock dated 22 November (paragraph 13). It appears, however, that it was not returned by Masstock.
31. The EMTA Terms provided that:
“When executed and returned by the recipient (or if not objected to by the recipient within two Business days after receipt) a written Confirmation will constitute a binding Agreement between Buyer and Seller.”
32. Section 1(c) provided:
“Closing Certificates. On or before the Settlement Date, Buyer and Seller will each execute and deliver a Closing Certificate for such Assignment. A Closing Certificate, when executed by both Buyer and Seller, shall, together with these Standard Terms … constitute a final and binding agreement between Buyer and Seller and shall supersede all prior oral or written agreements or statements by the parties with respect to the related Assignment.”
33. Section 1(d)(C) provided that the Seller would send a Request for Consent to the Obligor as soon as practicable “after Buyer notifies Seller of Buyer’s agreement to the draft Closing Certificate (but in any event no later than the Effective Date) ….”
34. Section 2 provided, in effect, for completion of the sale between Buyer and Seller on the Effective Date or the Settlement Date, as the case might be. Both dates were, in this case, 10 December, 1999.
35. Section 3 addressed “Consents; Substitute Assignments; Unwinds”. So far as material, it provided:
“(a) It is not a condition precedent to performance by the parties of their obligations in respect of any Assignment that all Consents be obtained on or before the Effective Date.
(b) Seller and Buyer shall use all reasonable efforts to obtain any Consent required for each Assignment as soon as possible after the Effective Date.
(c) If any such Consent is denied, any party with notice of such denial shall promptly give notice thereof to the other, and Seller and Buyer shall use all reasonable efforts to remedy the cause of such denial within 30 days after each has received notice of such denial (such 30th day being the “Unwind Date”)….”
36. In the event consent was denied, the parties could agree on a substitute asset or substitute seller or buyer and if that was not possible they were to agree either that the Buyer was to have a 100% beneficial interest with the Asset “automatically deemed reassigned” subject to that interest to the Seller as of the Effective Date or that the Buyer would pay the Seller the “Unwind Market Price” upon which the Asset “shall be automatically deemed reassigned by Buyer to Seller”.
37. Section 5(b)(C) provided (with my emphasis) that the Seller “represents and warrants as of the Trade Date and the Effective Date that” 
“on the Effective Date, (i) Buyer will receive marketable title to such Asset free and clear of all Liens and other claims; (ii) Buyer will be the beneficial owner of the Asset; (iii) subject to any consent or eligibility requirement contained in any Debt Agreement, (1) Buyer will be entitled to be the record owner of the Asset ….”
14.	BoZ’s argument is simply that by Article 12 BoZ were entitled to have 15 days to consider whether to give consent, and that consent cannot be deemed to have been received until 15 days after the request i.e. until 17th December. Thus the argument is prior written consent was not received and the assignment is invalid as between BoZ and BoA.
15.	The judge rejected this submission. He did so, on the basis that the EMTA terms contemplated the continuing need for consent despite the binding nature of the agreement as between BoA and Masstock. So he held, undoubtedly rightly, that as between Masstock and BoA it would be impossible to contemplate either being able to say that the assignment was invalid. Thus the judge emphasised it was not open to either to use the unwinding procedure. He then said at paragraph 51 and 52 as follows:-
“51. The issue is whether or not, granted that when the original Closing Certificate was completed no consent had been obtained and the Notice of Assignment purported to give notice of an assignment effective on December 10 and so also before any consent had been obtained, nonetheless when consent would have been deemed to have been given on 17 December it was effective to complete the acquisition of the Asset by Bank of America N.A. There is an artificiality in treating such a deemed consent as a “prior” consent; but there is, to my mind, a greater artificiality in ignoring the deemed consent when the Assignment plainly addressed the need for it and can, and I think should, be read commercially as providing for it to be effective when given or deemed to be given.
52. In my judgment, the proper construction of the Assignment is that it took effect to complete the transfer of the Asset to Bank of America N.A. upon receipt of actual or deemed consent such that the consent can properly be treated as given “prior” to the assignment.”
16.	Mr Handyside for BoZ before us suggested that the judge had not properly faced up to the fact that an assignment may be valid as between the parties to the assignment but not be valid as against the debtor. On the language of Article 12 he submitted that Masstock and BoA simply had not got consent prior to 17th December and thus had “jumped the gun” by concluding an effective assignment as between themselves as at 10th December.
17.	Mr Brodie QC for BT sought to uphold the judge’s decision for the reasons he gave, i.e. that the assignment, which itself recognised the need for “prior consent”, should be read as only being effective once consent had been given or deemed to be given, and on the alternative ground that the deeming provision would deem consent to have been given on the date of the request for consent.  In my view the judge’s conclusion on the proper construction of the assignment is right, and although I would not agree quite with the submission as to how the deeming provision was intended to work, that provision, too, provides the answer.
18.	On construction of the assignment, I agree with the judge that a recognition, expressly in the terms that prior written consent or deemed consent was required meant that, until it was obtained or deemed to be obtained, the assignment was not effective.
19.	As regards the deeming provision I would put the matter this way.   The deeming provision undoubtedly deems consent to have been given in writing when it has not been.  Where, as a matter of context, it is well known that deals may be done for which consent will be sought after their effective date, I can see no reason why that consent should not also be deemed to be prior. I accept the word in parenthesis to which the word deemed applies is simply “consent” and Mr Handyside submitted that the use of the word was deliberate and thus did not refer to prior written consent. I disagree. In its context it is the required “prior written consent” to which it is referring: it is prior written consent which is deemed to have been given if BoZ choose not to reply.  That, in my view, makes good commercial sense, since if BoZ chose to reply and refuse consent, the unwinding procedure under EMTA terms would be available, or, if it took the point within fifteen days that “prior” consent had not been obtained, the parties to the assignment could put that right or unwind.  It makes no commercial sense in the context of the EMTA terms that, years after the event, and despite BoZ appreciating that their consent should have been “deemed” to have been given, BoZ should be entitled to answer the assignee’s claim by reference to the date when negotiations, subject to the obtaining of consent, had been completed.
20.	I would accordingly dismiss the respondents’ appeal in relation to issue (1). 

Issue (2) the Declaration of Trust
21.	The Declaration of Trust recited as follows:
“(1)The Trustee was one of a number of banks participating in an Oil Import Facility dated 19th July 1985 (“the Facility”) pursuant to which credit was extended to Bank of Zambia by the authorising of the issue of a letter of credit identified in the Schedule (“Letter of Credit”).  By means of an Assignor Notice of Assignment and Assignee Agreement to be Bound dated 10 December 1999, The Trustee received an assignment of the rights, title, interest and benefits in respect of Bank of Zambia’s obligations under the Facility in respect of the Letter of Credit from Masstock (International) Limited in consequence of which Bank of Zambia became indebted to the Trustee.”
(2) By means of an Assignor Notice of Assignment and Assignee Agreement to be Bound dated 10 December 1999 the Trust intended to assign its rights, title, interest and benefits in respect of Bank of Zambia’s obligations to it under the Facility in respect of the Letter of Credit to GMO Emerging Country Debt LP.  By means of an Assignor Notice of Assignment and Assignee Agreement to be Bound dated 18 October 2003, GMO Emerging Country Debt LP intended to assign such rights, title, interest and benefits to FH International Financial Services Inc.
(3) The Beneficiary is the latest intended assignee of such rights, title, interest and benefits pursuant to an Assignment Agreement dated 26th December 2003 made between FH International Financial Services Inc, as intended assignor, and the Beneficiary as intended.
(4) The validity of the chain of assignments from the Trustee to the Beneficiary has been challenged and the Trustee and the Beneficiary have agreed that for the avoidance of doubt the Trustee shall execute this Declaration of Trust declaring itself the trustee of all such rights, title, interest and benefits.
22.	The Declaration was then in the following terms:-
“(1) The Trustee hereby irrevocably declares that as from the date of this Declaration of Trust it will hold all of its rights, title, interest and benefits (if any) as it may have in respect of Bank of Zambia’s obligations to it under the Facility in respect of the Letter of Credit on trust for the Beneficiary absolutely.”
(2) The Trustee acknowledges that the Beneficiary shall have the right to take all such lawful steps in its own name as it may consider necessary in any jurisdiction (whether by legal action or otherwise) against Bank of Zambia (or an assignee or successor in title) to recover the outstanding principal amounts (US$405,290.35 and US$404,096.67) due under the Letter of Credit, together with all interest, costs or other expenses payable thereunder in connection with such liabilities.
(3) The Trustee shall forthwith execute all such further documents and do all such other things as the Beneficiary may reasonably required to enable the Beneficiary to secure payment by Bank of Zambia of the aforesaid sums due under the Letter of Credit.
23.	Before the judge, this aspect was argued on the basis that it was accepted that Article 12 applied to an assignment of a debt and that because BT was not a bank or a financial institution and had not sought or obtained consent, any assignment would have been ineffective.  The argument was on the basis that Article 12 did not however cover a Declaration of Trust, and thus that BT were entitled to succeed.  This led the judge to start his consideration of this aspect with these words:-
“54. The Claimant was (and is) not a bank or a “financial institution”. It was therefore expressly excluded from taking a valid assignment of the Asset and acquiring a right to claim to recover it from Bank of Zambia by Article 12.01(A) of the Facility. As I have said (paragraph 10) this provision restricted the type of institution which would be entitled to enforce the obligations of Bank of Zambia. If it were the case that such a provision could be circumvented by the use of a Declaration of Trust it would be a matter of some concern. If the Claimant is right, the express restriction in Article 12.01(A) would achieve very little. Any Bank could declare itself to be a trustee of the Asset for any third party which could then claim the Asset in, in substance, the same way as if it were an assignee. Contracts outlawing or limiting assignment would have to be drafted so as also to outlaw declarations of trust or at least such declarations giving a direct right of action against the obligor.”
24.	Ultimately after reviewing the relevant authorities the judge concluded in the following way:-
“73. As the submissions developed, I think (unsurprisingly) they demonstrated a measure of agreement that the real key to this claim was the construction and effect of Article 12.01(A). I agree. I have stated what I think to be the commercial rationale of that Article (paragraph 10). By its terms, and whatever the status of the Facility, it decrees that, at least absent express consent, a claimant such as the present Claimant shall not be entitled to claim payment from Bank of Zambia as an assignee of the Asset. To permit such a claim to be made as the beneficiary of a declaration of trust of the Asset would in my judgment be to permit the use of the decision in Vandepitte in a commercial context in which it has no place because it would achieve a result which would be inconsistent with the terms of the Facility.”
25.	Mr Brodie QC initially ran the argument differently in the Court of Appeal from the way it had been run in the court below. He argued that Article 12 had no application to an acknowledged debt. Article 12 he submitted was concerned to provide “for the accession to the syndicate of banks of a new bank or financial institution . . . in place of an existing member”. It was designed to protect BoZ from having foisted on them as a lender any party other than a bank or financial institution and even then only a bank or financial institution to which they could not reasonably object.  He drew a distinction between “the right to repayment under the facility and the right to sue for a debt which has arisen from a breach of that right”.  Thus, he submitted, Article 12.01(a) did not relate to the assignment of an acknowledged debt arising from the subsequent default, or a debt arising from a failure of the borrower to repay the monies advanced, or to pay interest.  This involved submitting that all parties who had up until then sought consent pursuant to Article 12, and those who in the court below had accepted that consent to an assignment was necessary had simply misunderstood Article 12. 
26.	That was a bold submission, and as we indicated ultimately during the hearing one we simply could not accept on the construction of Article 12. A very similar argument was run in Linden Gardens Trust [1994] 1 A.C. 85 on a clause in the contract in that case but was roundly dismissed by the House of Lords: see in particular the speech of Lord Browne-Wilkinson at page 105 and following. But what lay behind Mr Brodie’s submission i.e. what he described as the complete lack of interest that BoZ was entitled to have in an acknowledged debt which was simply a piece of property with which an owner should on the whole be able to deal as he liked, had some relevance to the points considered hereafter.  
27.	It is right to say that our rejection of Mr Brodie’s primary argument placed Mr Handyside in a position of rearguing the case as it had been argued before Langley J.  That was an argument which understandably his written skeleton before us did not address in any detail.  However, Mr Handyside, with commendable skill and patience addressed the points and arguments, which were pursued in large measure by the court with him.  Indeed, overnight he marshalled his arguments in compelling form.
28.	The issue that arises in this case can be put in these terms.  (1) If BoA had attempted to assign the debt to BT by a legal assignment and BT had sued, BoZ would have been entitled to have refused to pay BT, since it was not a bank or financial institution and since consent had not been obtained.  [A somewhat half-hearted attempt was made by Mr Brodie to argue that BT was a bank or financial institution, but since the whole case in the court below had been conducted on the basis that they were not, I take the view it was not open to Mr Brodie to argue that point in this court.]  (2) If BoA were to declare a trust of the proceeds when received and then sue for the debt in its own name, since BoZ could have no interest in the proceeds once in BoA’s hands, BoZ would have no answer to BoA’s claim and BoA would have to answer to BT’s claim once it had received the proceeds.  (3) If, however, BoA declares a trust in the right to the debt in favour of BT, and if BoA does not sue, will the court hold, by virtue of the fact that BT sues in its own name, joining BoA as a defendant, that the Declaration of Trust is simply an assignment in another name, enabling BoZ to refuse to pay, or will the court hold that, since BT’s only remedy in order to enforce the trust between it and BoA is to sue in its own name joining BoA, the effect is to put BoZ in the same position as if BoA itself had sued?
29.	It is important to bear in mind when considering the above questions that what has for shorthand been referred to as the Vandepitte short cut is a matter of procedure to enable a beneficiary under a trust to obtain what he is beneficially entitled to in a situation in which the trustee will not sue – will not sue for what the trustee is legally entitled to but which if he succeeds he must hold for the beneficiary.  It would be understandable if the court would not allow the procedure to be misused to obtain rights that the beneficiary is not otherwise entitled to, but otherwise if the beneficiary has an unanswerable right under a trust and the trustee has an unanswerable claim, why should the court’s procedure not be available to enable the rights to be established or brought to fruition?  The focus ultimately has to be on which contract governs the entitlement of the beneficiary and the true construction of that contract.
30.	As my Lord, Rix LJ, pointed out during the argument it is necessary to take matters in stages. To spell out the stages consideration has to be given to the following questions. First what is the proper construction of Article 12? Does it seek to prohibit a declaration of trust by the legal owner of a debt, BoA, in favour of BT without the consent of BoZ? Does Article 12 seek to prohibit BoA suing BoZ on the debt once the declaration of trust in favour of BT has been entered into i.e. would BoZ have any answer to a claim by BoA once the declaration of Trust has been entered into? If BoZ would have no answer to a claim by BoA, does Article 12 seek to prohibit BT using the Vandepitte procedure if BoA refuses to sue? If the declaration of Trust is valid as between BoA and BT is it a term of that declaration of Trust that BoA will not sue in its own name and if so what difference would that make?  On the assumption that so far the answers are in favour of BT being able to sue with BoA joined as a defendant, are the circumstances such that the court will hold that the use of the Vandepitte procedure should not be available in this case?  
31.	The judge set out relevant citations from various cases. The most helpful seem to me to be  Lightman J in Don King [2000] Ch 291 at  321  
“Mr Sumption further submitted that, where a contract contains a provision prohibiting assignment, a party cannot by a declaration of trust or otherwise make himself the trustee of the benefit of that contract because this would defeat the whole purpose of the non-assignment obligation which is to ensure that the other contracting party alone, and no one else, can enforce the obligations contained in the contract against him; and that if a trust is created and if the trust refuses to enforce an obligation, the beneficiary may sue for enforcement, joining the trustee as a defendant : see Vandepitte v Preferred Accident Insurance Corporation of New York [1933] AC 70, 79.
This contention likewise fails for (amongst others) the following reasons.  (1) If one party wishes to protect himself against the other party declaring himself a trustee, and not merely against an assignment, he should expressly so provide.  That has not been done in this case.  (2) The applicable principles of trust law in this situation are the basic principles and those (and only those) whose rationale have application in this commercial context:  see Target Holdings Ltd v Redferns [1996] AC 421, 436.  The courts will accordingly be astute to disallow use of the procedural short-cut sanctioned in the Vandepitte case [1933] AC 70 in a commercial context where it has no proper place.  A beneficiary cannot be allowed to abrogate the fullest protection that the parties to the contract have secured for themselves under the terms of the contact from intrusion into their contractual relations by third parties.  (3) A declaration of trust cannot prejudice the rights of the obligor.  If the contract requires any judgment to be exercised whether by the obligor or the obligee an assignment cannot alter who is to exercise it or how that judgment is to be exercised or vest the right to make that judgment in the court. (4) The rule in Saunders v Vautier (1841) Cr. & Ph 240 (which enables the sole beneficiary or beneficiaries to give directions to the trustee) only applies if the beneficiary is entitled to wind up the trust and require the trustee to assign to him the subject matter of the trust.  If the trust cannot be determined because the trustee has under the contract held as a trust asset outstanding obligations and has no power to transfer the trust asset to the beneficiary or his order, the rule does not apply: see In re Brockbank [1948] Ch 206.  Accordingly in a case where the subject matter of the trust is a non-assignable contract and there are outstanding obligations to be performed by the trustee, the beneficiary under the trust cannot interfere.
Accordingly in principle I can see no objection to a party to contracts involving skill and confidence or containing non-assignment provisions from becoming trustee of the benefit of being the contracting party as well as the benefit of the rights conferred.  I can see no reason why the law should limit the parties’ freedom of contract to creating trusts of the fruits of such contracts received by the assignor or to creating an accounting relationship between the parties in respect of the fruits.  The broader approach which I favour appears to be in accord with the authorities, so far as they go.”
32.	In the Court of Appeal in the same case Morritt LJ at page 335 of the same report said:-
“25. I reject the second submission for similar reasons.  The question whether, in the terms of s.20 Partnership Act 1890 an asset is “brought into the partnership stock or acquired....on account of the firm...or for the purposes and in the course of the partnership business..” does not depend on whether it is assignable at law.   In both Ambler v Bolton (1872) 14 Eq. 427 and Pathirana v Pathirana [1967] AC 233 the asset was inalienable.  In both cases the inalienable asset had been acquired by the individual partner in his own name during the subsistence of the partnership but was still treated as acquired on account of the firm.  In my view it would make no difference if the asset had been acquired before the commencement of the partnership but the partner in question was required by the terms of the partnership to bring it into the common stock.  The reason is quite simply that partnership property within s.20 Partnership Act 1890 includes that to which a partner is entitled and which all the partners expressly or by implication agree should, as between themselves, be treated as partnership property.   It is immaterial, as between the partners, whether it can be assigned by the partner in whose name it stands to the partners jointly.

26. Of course, if one partner seeks to avoid the agreement he has made with his partners then questions may arise as to how the interests of the other partners are to be protected.  But there are many ways in which that may be done without the need to interfere in the performance of the contract.  I agree with the judge that Re Turcan (1888) 40 Ch.D.5 at p. 10 shows clearly that the court will protect the interests of those contractually entitled to have the benefit of an inalienable asset before the fruits of the asset have been realised.  In that case, as the House of Lords considered in Linden Gardens Ltd v Lenesta Ltd [1994] 1 AC 85, 106,  the court gave effect to the intention of the parties by means of a declaration of trust.   But, it is objected, the existence of such a trust would enable one partner to interfere in the management of the personal contract made by a third party with the other partner.   I do not agree.   The other partner cannot insist on rendering vicarious performance of the personal obligations arising under the contract.   Rules and procedures designed to enable a beneficiary to sue in respect of a contract held in trust for him would not be applied so as to jeopardise the trust property.   As Lord Browne-Wilkinson observed in Target Holdings Ltd v Redferns [1996] 1 AC 421 at p.435
“In my judgment it is in any event wrong to lift wholesale the detailed rules developed in the context of traditional trusts and then seek to apply them to trusts of  quite a different kind.  In the modern world the trust has become a valuable device in commercial and financial dealings.  The fundamental principles of equity apply as much to such trusts as they do to the traditional trusts in relation to which those principles were originally formulated.  But in my judgment it is important, if the trust is not to be rendered commercially useless, to distinguish between the  basic principles of trust law and those specialist rules developed in relation to traditional trusts which are applicable only to such trusts and rationale of which  has no application to trusts of quite a different kind.”
33.	I also found helpful the speech of Lord Browne-Wilkinson in Linden Gardens   and what my Lord Rix LJ said in Explora Group Plc v Hesco Bastion [2005] EWCA Civ 646 from paragraph 104 and onwards.
34.	Mr Handyside also referred us to Regina v Chester and North Wales Legal Aid Area Office (no 12), ex parte Floods of Queensferry Ltd [1998] 1 WLR 1496. In that case a company had assigned its cause of action against the defendants to a director contrary to a prohibition against assignment. The company had brought the proceedings and the court held that the company was not suing as a “fiduciary” for the individual director so as to entitle it to legal aid.  Millett LJ at 1501F to H said this:- 
“It was submitted before us that the assignment was effective in equity to transfer the beneficial interest in the company’s cause of action, so that it was effective as an equitable but not a legal assignment.  I do not accept this.  The subcontract expressly prohibits any assignment of the claim, not merely any legal assignment, and in my opinion an equitable assignment is as much within the prohibition as a legal assignment.  It is not necessary to consider whether the company could have declared itself a trustee of its claim, for it has not done so.  But it could not have assigned the beneficial interest to Mr Flood by contracting to do so, since equity will not enforce the performance of an obligation which constitutes a breach of a prior contract with a third party.”
35.	Mr Handyside ultimately argued the matter in this way.  
1)	First he submitted that Article 12 prevented assignment both before and after default.  He submitted that Don King was authority for the proposition that equity would not allow the Vandepitte procedure to be used to enable a beneficiary to gain a benefit which he could not have as an assignee.  On that basis alone he submitted the appeal should be dismissed.
2)	Second he submitted that, on the true construction of the Declaration of Trust, BT was not entitled to force BoA to sue, and thus on that basis the Vandepitte procedure was not available.
3)	Third he submitted that Article 12, on its proper construction, prohibited Declarations of Trust, save possibly of the proceeds once received.
4)	Fourth he submitted a Declaration of Trust was, in effect, an equitable assignment, and thus was prohibited by the express language of Article 12.
5)	Fifth he submitted that ex parte Floods was authority for the proposition that the court would not construe a contract effective as between assignor and assignee but ineffective as a legal assignment, as an equitable assignment, so as to enable the assignee to force the assignor to sue.  Thus, he submitted, the court should equally not allow the use of the Vandepitte procedure so as to enable a beneficiary of a Declaration of Trust to sue BoZ, even though the trust may be valid as between the trustee (BoA) and the beneficiary (BT).
36.	Mr Handyside also referred us to certain articles.  First he referred us to the article of Professor Goode in the Modern Law Review, quoted by Lord Browne-Wilkinson in Linden at page 104.  The importance of that article is that it emphasises the fact that even in cases of assignment the court must focus on which contract it is dealing with.  The contract under which A assigns a debt of C to B may well be enforceable as between A and B, even if, when A seeks to sue C he may fail.
37.	Second he referred us to two articles by Professor Tettenborn.  The first article is in Lloyds Maritime and Commercial Law Quarterly 1998 at page 498 and is critical of the reasoning of Lightman J in Don King.  The other is in the 1999 edition of the same publication at page 353 and is critical of the reasoning in the Court of Appeal in the same case.  The author suggests that there should be no distinction between an equitable assignment and “other equitable interests”.  He suggests there is a distinction between a trust of the benefit of a promise and a trust of the fruits of the promise.  In the latter the interests of third parties are not involved, but in the first he suggests they are because the promise is still to be enforced.
38.	Since the hearing before us, when seeking to gain some assistance in this area from Chitty on Contracts (29th Edition) I noticed that the third cumulative supplement contained a comment on Langley J’s decision in this case.  At paragraph 19-045 it set out the reasoning of Langley J to the effect that:-
“To permit such a claim to be made as the beneficiary of a declaration of trust of the asset would, in my judgment, be to permit the use of [the law on such a trust] in a commercial context in which it has no place, because it would achieve a result which would be inconsistent with the terms of the facility.”
39.	It continued:-
“Langley J reasoned that Re Turcan (1888) 40 Ch D 5 and Don King did not dictate a contrary result.  He also reasoned – but with respect that seems incorrect – that, in any event, the claimant, even though a beneficiary under the trust, could not itself enforce contractual rights despite the fact that it had joined the trustee as defendant”
40.	The above comment was counterbalanced by a note, which draws attention to an article criticising the decision in Don King entitled “Charges of Unassignable Rights”, written by Professor Turner in 20 JCL 97 in 2004.  The article covers many pages and would be difficult to summarise but in relation to Don King says this:-
“The decision has been well received, particularly by leading academics  . . . Others have been neutral or unenthusiastic.”
41.	The article undoubtedly in its reasoning thereafter would provide support for Mr Handyside’s argument.  Putting the argument in very simple terms, it would suggest (1) that rights which are personal for the purpose of assignment should also be considered personal for the purpose of a declaration of trust, and as such be “inalienable”; and (2) that a contractual provision against assignability should identify those rights which the parties have agreed as personal.  Thus the article would support the view that BoZ and BoA had identified those rights which were personal and inalienable and would support the argument that such rights could no more be the subject of a declaration of trust than they could be the subject of an assignment without the consent of BoZ.
42.	All the above articles are helpful in seeking to answer the questions that have to be considered in this case, but at the end of the day each case must be considered by reference to its own context and by reference to the terms of the agreements or contracts, the subject of the case.
43.	The most important and thus the first question to consider is the true construction of Article 12. It seems to me that if an embargo was to be placed on a participating bank declaring a trust in relation to sums due or creating a charge over sums due, words could have been used so as to make that clear, (see the first point made by Lightman J above). As regards Mr Handyside’s submission that a declaration of trust was in effect an “equitable assignment”, I would for my part accept that if it was it would be caught by the prohibition – the word assignment includes assignments both legal and equitable. But a declaration of trust is not an equitable assignment. An equitable assignment if in writing can be converted into a legal assignment under Section 136 of the Law of Property Act and that is simply not true of a declaration of trust. The language of Article 12 does not in terms include within the prohibition a declaration of trust, and it seems to me that since one is concerned with the question whether a restriction should be placed on the transfer of a piece of property, an acknowledged debt, the court should be slow to contemplate that the parties ever intended such to be within the prohibition.
44.	If, however, that were wrong, I am not sure it is a complete answer in this case because I cannot see how BoZ would by reference to Article 12 have any answer to a claim by BoA simply because they had declared a trust of the right to a debt or the proceeds of the debt in favour of a third party, about the existence of whom BoZ was unaware and to whom thus BoZ had not consented.  It would thus still leave open two questions, first whether, despite having no answer to a claim by BoA, Article 12 prevents the use of the Vandepitte  procedure by BT, or, if not, the second question, whether the court should allow use of the Vandepitte procedure so as to enable BT to enforce its rights against BoA. 
45.	It is said that BoZ has, by Article 12, a right to decree by whom it should be sued and that to allow the bringing of an action using the Vandepitte procedure on an acknowledged debt would be to allow interference in BoZ’s contract with its lenders under the facility. This argument seems to me to be a false one. The procedure is “procedure” and it simply provides a short cut to prevent litigation under which BoA could be forced to sue followed by an action under which BoA sues. In other words albeit BT is the claimant, it is as if BoA were claimant seeking to recover that which is due in law which they will then hold for BT. There is thus no interference by BT. In any event to construe suing on an acknowledged debt as interfering in BoZ’s contract with its lenders seems to me far fetched.  Thus Article 12, on its true construction, does not, in my view, prevent the use of the Vandepitte procedure.
46.	What then should be the attitude of the court?  In that regard one should first consider the terms of the Declaration of Trust.  The Declaration of Trust certainly does not provide in terms for BoA not being prepared to sue in its own name, nor is any assistance to be gained from the letters which preceded the declaration in that regard.  The Declaration recognises that BT will sue, but it also seems to recognise that there does exist the very situation in which the Vandepitte procedure should be available in normal circumstances.
47.	That brings me to the final question, which is whether, if as I am now assuming, Article 12 contains some prohibition on alienability, what attitude should the court take to the use of the Vandepitte procedure?  In my view procedure is then to enable BT to enforce its rights against BoA. It is not a measure of substantive law which might affect the asset, the subject of the declaration of trust. There is no reason why the court should hold that BoZ should be entitled to a defence which it would not have had if some longer and more tortuous form of procedure, compelling BoA to sue, were used.  The court has to recognise that it is concerned in this instance both with the enforcement of the trust declared as between BoA and BT as well as with the contract as between BoA and BoZ.  I see no reason for the court not to assist BT or any reason why it should provide BoZ with a defence which BoZ does not have against BoA.
48.	I would thus allow the appeal.
Lord Justice Rix : 
49.	I am very grateful to the Vice-President Lord Justice Waller, for setting out the facts, submissions and relevant citations in this appeal. As a result I can turn directly to the issues, which it seems to me may be stated as follows:
(1)	Does BoA have good title to the debt (the respondent’s notice)?
(2)	Does article 12 prohibit an assignment of the fruits of the Facility?
(3)	Does article 12 prohibit a declaration of trust in respect of the fruits of the Facility?
(4)	Does BoA’s declaration of trust entail that BoA is not a claimant?
(5)	Does use of the Vandepitte procedure mean that BoA is not to be regarded as a claimant, or is it otherwise ineffective or illegitimate to use that procedure to reduce the debt into possession?

(1)  Does BoA have good title to the debt (the respondent’s notice)?
50.	This issue covers Mr Handyside’s submission that Masstock’s purported assignment to BoA failed because it was effected prior to the time when written consent was deemed to have been given; and Mr Brodie’s responses (a) that the judge was right to have held that the assignment was not effected until the requisite consent was deemed to have been given, and in the alternative (b) that the requisite consent was deemed to have been given “prior” to the assignment, alternatively on the day it was first requested.
51.	The essential timetable of dates is as follows: (i) on 3 November 1999 (the trade date) the assignment by Masstock to BoA was first made by an oral trade on EMTA terms; (ii) on 22 November 1999 (the confirmation date), that oral trade  was confirmed in writing by a Form of Confirmation, again subject to EMTA terms; (iii) on 2 December 1999 (the request date) Masstock notified BoZ that it “proposed to assign” its rights and obligations to BoA and requested BoZ’s consent under article 12.01(A); (iv) on 10 December 1999 (the settlement and effective date), at a time when BoZ had not replied to that request, Masstock and BoA superseded their oral trade and written confirmation of it by a new agreement contained in a Closing Certificate for the transaction, again subject to EMTA terms, under which Settlement and Effective Dates were both given as 10 December 1999; (v) on 17 December 1999 (the fifteenth day), the requisite consent was deemed under article 12.01(A) to have been given because no reply had been received from BoZ to the request for consent.
52.	The EMTA terms are set out in the judge’s judgment and by Waller LJ. It will be recalled that section 1(d)(C) provided that the obligor’s consent would be requested after agreement of the Closing Certificate and before the effective date; that section 3(b) again stated that any consent (still) required would be obtained as soon as possible after the effective date; that section 3(a) nevertheless emphasised that it was “not” (the underlining is in the contract) a condition precedent that all consents be obtained by the effective date; that section 3(c) speaks of contractual consequences (eg unwinding) “If any such Consent is denied”; and section 5(b)(C) contains a warranty that the buyer receives “marketable title” to the asset assigned as of the effective date.
53.	The judge recorded his understanding of the effect of the documentation and those provisions in para 38 of his judgment, as follows:
“i) The originals of the Closing Certificate constitute the final agreement between Masstock and Bank of America NA. The Certificate provided expressly that the prior written consent of Bank of Zambia was required to assign the Asset.
ii) The requirement of the consent of Bank of Zambia to the Assignment was not a condition precedent to the agreement between Masstock and Bank of America NA which was effective according to its terms on 10 December 1999.
iii) The 15 day period for a deemed consent from Bank of Zambia to the Masstock trade would have expired on 17 December and therefore had not expired on either the Settlement Date or the Effective Date (both 10 December), when the agreement became effective between Masstock and Bank of America NA.
iv) Neither the EMTA Terms nor the Assignment made any express provision for a “deemed” consent but it is not open to any party to contend that consent was “denied” within Section 3 of the EMTA Terms.
v) The EMTA Terms expressly contemplate the conclusion of the trade in advance of obtaining the consent of the debtor/obligor whilst also recognising the need to obtain consent to make an assignment effective between assignee and obligor. They do not, at least with clarity, address an Asset which can only be assigned with prior written consent nor deemed consents. But the EMTA Terms do, in Sections 1(d)(C), 3 and 5(b) (C) plainly contemplate and provide both for the consent to be obtained after completion of the trade and for the consequences if it is refused…” 

54.	The judge returned to these matters in para 50 of his judgment, as follows:
“50…The Assignment was binding in accordance with its terms on the Trade Date and thereafter in accordance with the Written Confirmation and the Closing Certificate. That was expressly provided for by the EMTA Terms and I see nothing inconsistent with them in the documents themselves. Had the consent of Bank of Zambia been “denied”, the “Substitute” and “Unwind” provisions would have been binding and operable. But the EMTA Terms, and the documents, do expressly contemplate the continuing need for consent despite the binding nature of the agreement and, I think, provide that, or at least predicate that, if consent is obtained the Assignment is then to come fully into effect. In particular I think that can be derived from sections 1(d)(C), 3 and 5(b)(C) of the EMTA Terms and the reference to the need for the “prior written consent of Bank of Zambia” in the Closing Certificate. It would be remarkable if, after 17 December, it was open to either Masstock or Bank of America NA to contend that there had not been a valid and fully effective assignment between them.”
55.	The judge’s final conclusions on this issue are contained in paras 51/52 of his judgment, cited by Waller LJ above (at para 15). Waller LJ, in agreement with Mr Brodie’s submission and the judge’s para 52, himself concludes that (a) the assignment only became fully effective after consent had been obtained so that such consent, whether expressed in writing or deemed from 15 days’ silence, is always obtained prior to the assignment; and, in a passage going beyond the judge’s reasoning and reflecting Mr Brodie’s submission, that (b) a deemed consent under article 12.01(A)’s own terms is in any event always deemed to be prior consent.
56.	These are undoubtedly powerful arguments: and they have the added advantage, expressed by Waller LJ at his para 19, that they avoid what may properly be described as the commercially unattractive misfortune of a latter-day defence by the debtor on the basis that his deemed consent had come too late to be an effective consent. Nevertheless, I regret to differ from the judge and Waller LJ for the following reasons.
57.	First, the EMTA terms make it clear that the required consents are not a condition precedent to the trade contained in the documentation. That trade is therefore binding on its parties according to its terms even if, as a result of the absence of consent by the effective date, the transaction cannot proceed as the parties contemplated that it would. Even though in the absence of consent the transaction must therefore be unwound, what is unwound is an existing contract for the assignment of the asset concerned, in accordance with the terms of that contract. There is no simple falling away of the contract as a whole. It is true that the EMTA terms contemplate that, if the required consents are lacking, then the ineffectiveness of the parties’ transaction to pass the legal title to the buyer will be recognised (see eg section 5(b)(C)) and that, where consent is denied, the transaction will be unwound (with the buyer either retaining beneficial ownership or paying the seller an “Unwind Market Price”) whereupon the asset “shall be automatically deemed reassigned”. But such provisions merely to my mind emphasise that the transaction was fully effected, so far as it could be, by at latest the effective date.
58.	Secondly, I do not read article 12.01(A) as providing that its terms are prospectively fulfilled whenever its actual or deemed consent occurs. On that basis, every assignment which is consented to by either written or deemed consent will be valid, even if the purported assignment precedes such consent. What is required, however, is “prior” consent, and it is “such [prior written] consent” that is deemed to be given if no reply is received within 15 days. The matter can be tested by an express written consent requested and therefore received after an assignment has been made. Ex hypothesi such express written consent has not been “prior” – save in the sense that no assignment binding on the debtor can be made without the necessary consent. That, however, was not Mr Brodie’s submission (nor did the judge proceed on that basis, but on the basis that the assignment was conditional or not fully effective, on its own terms, until consent). Mr Brodie did not submit that the only meaning to be attached to “prior” was in order to emphasise that an assignment already (purportedly) made without consent only takes effect from the date of consent or deemed consent. His only submission alternative to the judge’s construction of the effect of the EMTA terms was that the deemed consent took effect from day one of the request and not day fifteen. In my judgment, if it had been intended to say that an assignment, whenever effected, would only take effect from the date of written consent or deemed consent, then it would have said so: the article would have stated – “provided that any such assignment will only be effective once…the written consent thereto of the Borrower shall have been obtained…” etc.
59.	Thus, where an assignment precedes written consent, then, subject to waiver in circumstances where the debtor knows that the assignment has jumped the gun, it will always be open to the debtor to argue that the assignment is ineffective. That is a potential trap for the future, and parallels the misfortune hypothesised by Waller LJ at the end of para 19 above: however, on the wording of article 12.01(A) it seems to me to be inescapable. Moreover, despite such possible unfortunate consequences, there is a commercially sound reason for the requirement of “prior” consent: it polices the process. If the debtor has to consent in advance, or is to be given a 15 day opportunity to consider his position, then the bank that wishes to assign has to give notice before it effects an assignment. And where a bank wishes to assign, there is no insuperable difficulty if its proposed assignment is made conditional upon prior consent being obtained or being deemed to have been obtained: generally speaking, the consent will be there by the end of 15 days.
60.	I say “generally speaking”, because there are in any event problems of construction which may arise where the debtor answers the request within fifteen days, but either without a positive written consent or with an express but unreasonable refusal. In such circumstances, when is the article 12.01(A) proviso fulfilled? That question has not really been debated before us, but it can be seen that the contractual language presents a problem if there is an unreasonable refusal of consent within the fifteen day period. In such a case there is no actual consent, nor is there apparently that “no reply” for 15 days which is the stated condition for deemed consent. A similar problem arises where the debtor replies within the fifteen days, but without either giving or withholding consent. I would hazard the thought that both these problems could be solved if “no reply” were stretched to encompass “no positive reply”. On that basis, the unreasonable refusal (which after all is ineffective) and the merely holding reply (which after all is the equivalent of no reply in circumstances where the debtor is expected to reply within 15 days or risk being deemed to have given his consent) could both be viewed as “no reply”. The fifteenth day would therefore become in all such cases the day by which there has either been actual consent, or deemed consent.
61.	In this connection I agree with Waller LJ that deemed consent is deemed “prior written” consent (“such consent”); but I respectively differ from him in his conclusion that the deemed consent which comes from a 15 day failure to deal properly with a request for consent is therefore a sufficient consent within the proviso whenever it occurs. In my judgment, it is for just this reason that one has to ask when such deemed prior consent occurs. The obvious answer is at the end of the fifteenth day, which in the present case is taken to be 17 December 1999. That is what the judge said (at para 19: “Therefore under Article 12.01(A) Bank of Zambia would have been deemed to have consented to this Assignment on 17 December 1999”). I reject Mr Brodie’s alternative submission that consent is deemed to have been given on the day of its request rather than at the end of the 15 day period: that is simply not justified by anything within article 12.01(A).
62.	The question then arises whether the assignment in issue, which for present purposes is taken to have been “effected” on the “Effective Date” of 10 December, is a valid assignment within the proviso with the benefit of “prior” consent. If, however, prior consent has only been deemed to have been given on 17 December, it is plainly not that deemed consent which is contemplated by the clause. After all, ex hypothesi, the request which triggers the 15 day period must have been made prior to the effecting of the assignment, for where there is actual prior written consent that is what will have happened. If therefore actual written consent must have been requested and made prior to the effecting of the assignment, then a fortiori a deemed consent must have been. Otherwise a request could be made at any time, and after a 15 day period without any reply, there would be deemed “prior” written consent. If that were right, then it ought to follow that actual consent could have been requested at any time, even years later. In one sense of course it could: if the parties agree to give retrospective effect to an ineffective assignment, they can, I suppose, do so: and there will in any event be a waiver of the requirement of “prior” consent where such consent is retrospectively obtained with knowledge of the dates in question. However, such after-acquired actual consent is plainly not “prior” consent, unless the assignment is re-effected afterwards, as it might be.
63.	It must be accepted that there is no merit in BoZ’s point raised by its respondent’s notice. Thus Masstock’s debt was acknowledged, BoA is a bank or other financial institution, and it has not been suggested that consent for Masstock’s assignment to it could have been reasonably withheld. However, prior written consent was neither obtained nor deemed to have been obtained.
64.	For these reasons, I respectively differ from the judge and Waller LJ on this first issue arising from BoZ’s respondent’s notice. It follows that, unless legal title could pass to BoA despite the absence of actual or deemed prior written consent (see issue (2) below), and whatever otherwise would be the answers to the remaining three issues, I would dismiss this appeal.
65.	It has not been argued, I would assume correctly, that no consent was needed because assignment to BoA could not reasonably have been withheld. On the contrary, it has been accepted that consent was needed and was established by the provision for deemed consent.

(2) Does article 12 prohibit an assignment of the fruits of the Facility?
66.	I put this issue in these terms because it seems to me that it properly reflects, in a manner sanctioned by Linden Gardens Trust Ltd v. Lenesta Sludge Disposals Ltd [1994] 1 AC 85, the effect of Mr Brodie’s submission that, upon a true construction of article 12, the prohibition on assignment is only intended to operate as long as there is performance required of the lenders under the Facility, but is not intended to apply to an established debt. For these purposes Mr Brodie also emphasised that the debt was admitted and acknowledged in the books of BoZ, at any rate so far as Masstock was concerned, and was in default. As the judge stated:
“12. Between February 1992 and December 1999 (and indeed thereafter) a company called Masstock…was acknowledged by both Bank of Zambia and BAIL to be the creditor of record in respect of the Asset. Although it seems that Masstock was not a bank or financial institution within the meaning of Article 12.01(A) it is accepted by Bank of Zambia that Masstock had a valid legal title to the Asset in November and December 1999.”

67.	Mr Brodie further emphasised that such a debt was a species of property, even if it required litigation to “reduce it into possession” (see Ellis v. Torrington [1920] 1 KB 399 at 411, per Scrutton LJ, cited by Hobhouse LJ in Camdex International Ltd v. Bank of Zambia [1998] QB 22 at 32G/H).
68.	So far as the Facility itself was concerned, Mr Brodie emphasised the way in which article 12 provided for not only the assignment of rights but also a process of novation by which a bank or other financial institution could become a new party in partial or complete succession to an original member of the lending syndicate. These and other provisions in the Facility, Mr Brodie submitted, showed that what the prohibition on assignment was concerned with and limited to was active performance of the lending transaction, but not the residual debts which might remain after that period of active performance was at an end. In this connection Mr Brodie focused on the words in article 12.01(A) “rights and benefits in respect of the Facility” as the subject matter of the prohibition of assignment, and submitted that such rights and benefits did not include established and/or defaulted debt. It was understandable that BoZ might have an interest in who their lenders might be, but not in who their mere creditors were, especially in circumstances where the commercial reality was that there was an active secondary market in trading debt: see Argo Fund Ltd v. Essar Steel Ltd [2006] EWCA Civ 241, [2006] 2 Lloyd’s Rep 134. 
69.	There is no doubt of course that debt can be assigned (Camdex) and that it is traded (Argo Fund, although that case speaks to a somewhat later period). It is also well established that, even in the case of personal contracts rights to the performance of which cannot be assigned even in the absence of an express prohibition on assignment, a distinction has to be drawn between performance and the fruits of performance, eg accrued rights of action or debts (Linden Gardens at 104H/105A). Thus in Linden Gardens (at 105B) Lord Browne-Wilkinson picked up Professor Sir Roy Goode’s example of a contract to write a book:
“…although an author who has contracted to write a book for a fee cannot perform the contract by supplying a book written by a third party, if he writes the book himself he can assign the right to the fee – the fruits of performance. He expressly mentions that such right to assign the fruits of performance can be prohibited by the express terms of the contract.”
70.	In Linden Gardens there was an express prohibition on assignment contained in a building contract (“The employer shall not without written consent of the contractor assign this contract”), and one of the questions which arose was whether it made sense to construe that prohibition as confined to rights of future performance and thus as permitting assignment of the fruits of performance. The House of Lords held that that it did not make sense: it would, said Lord Browne-Wilkinson, have been “a perverse intention” which was not to be attributed to the parties, although it could have been achieved “by careful and intricate drafting” (at 106B/C). His reasons included the following (at 105D/G):
“The reason for including the contractual prohibition viewed from the contractor’s point of view must be that the contractor wishes to ensure that he deals, and deals only, with the particular employer with whom he has chosen to enter into a contract. Building contracts are pregnant with disputes: some employers are much more reasonable than others in dealing with such disputes. The disputes frequently arise in the context of the contractor suing for the price and being met by a claim for the abatement of the price…”

71.	It may be admitted that much of the particular reasoning relating to building contracts does not apply to established debts under a facility. Moreover, unlike the contract in Linden Gardens, article 12.01(A) does not contain a blanket prohibition, but expressly permitted assignments to banks or other financial institutions, and even, in certain circumstances discussed under issue (1) above, without the actual consent of the debtor. (Thus the word “prohibit” has been used here and below as a form of shorthand to mean “prohibit save under the specified terms”.) In this connection the position under article 12.01(A) concerning assignments by “Each Bank” may be contrasted with the position under article 12.02 concerning assignment by BoZ (the “Borrower”). Article 12.02 provided as follows:
“12.02 Assignment by the Borrower
The rights of the Borrower under this Agreement are personal to the Borrower and accordingly the Borrower shall not assign the benefit of this Agreement in whole or in part.”   
Nevertheless, as the judge pointed out (at para 10):
“Any borrower, but particularly a central bank, may be concerned to ensure that its affairs and obligations are known and owed to and only enforceable by established and authorised institutions.”
It is plain that the parties to the chain of assignments of which there has been evidence before the court have all considered that article 12.01(A) applied to established debts.
72.	Against such a background, it is ultimately a question of construction whether the limited prohibition contained in article 12.01(A) applies both during and after the active period of the (six-month) facility and in particular to established debts. In this connection, I agree that it does. “Facility” is defined (in article 1) broadly as “the facility the terms and conditions of which are set out in this Agreement”. Article 12.01(A) is quite general and does not itself depend on novation, which is dealt with separately in article 12.01(B) and (C) and requires not only an assignment of rights and benefits but also an agreement by the assignee to perform the assignor bank’s obligations vis à vis the relevant percentage of the rights and benefits assigned. Therefore assignment is not embedded in a context where the active lending under the Facility is going on, nor does it depend on the requirement of an assignee to become a lender. Moreover, important provisions of the Facility, such as those relating to interest (article 2.05, including default interest, article 10.03), BOZ’s waiver of immunity (article 13.09), and jurisdiction (article 13.10), apply to and are among the rights and benefits of creditor banks or other financial institutions irrespective of whether or not they were original lenders. The judge, briefly, expressed the same view (at the end of para 64: “Article 12.01(A)…cannot in my judgment be construed as permitting an assignment of the “fruits” of the Facility”).  It is not clear, however, whether this argument was as fully addressed below as it has been by Mr Brodie.  Mr Handyside says it is a new point and should therefore not be heard.  Whatever the position, it seems to me to be a pure point of law open to BT on appeal.
73.	Therefore this issue (2) must be answered, Yes, article 12.01(A) does prohibit the assignment of established debt save within the restricted limits there allowed. It follows from that and my answer to issue (1) that BoA lacks legal title to the debt in question.  In my judgment, therefore, this appeal should be dismissed.  I turn, however, to the remaining issues which were argued or revealed in the course of the appeal.

Issue (3): does article 12 prohibit a Declaration of Trust in respect of the fruits of the Facility? 
74.	The terms of the declaration of trust made by BoA in favour of BT have been recited by Waller LJ at para 22 above. The declaration contemplates that BT may sue in its own name, but does not expressly require it to do so. One issue that arises is whether the effect of the declaration of trust, or of the correspondence which immediately proceeded it, is either an agreement, or at least a recognition of the fact, that BoA declined to sue in its own name or to exercise its own rights in respect of the debt. I shall deal with that question under issue (4) below. A still further issue is whether, even if article 12 does not prohibit a declaration of trust, use by the beneficiary (here, BT) of the procedure discussed in Vandepitte v. Preferred Accident Insurance Corp of New York [1933] AC 70 (PC) (for convenience, the “Vandepitte procedure”) whereby the beneficiary makes the trustee (here BoA) a second defendant to its own suit against the obligor (here BoZ), will be enforced as though the trustee is itself the claimant. I shall deal with that question under issue (5) below. Under the current issue (3) I confine myself to the question whether the prohibition on assignment embraces a prohibition on a declaration of trust.
75.	That is a question of construction, and one on which the judge ultimately came to rule in favour of BoZ. Thus at para 54 of his judgment he expressed the functional and practical view that, if article 12.01(A) did not prohibit a declaration of trust, then its prohibition on assignment “would achieve very little. Any Bank could declare itself to be a trustee of the Asset for any third party which could then claim the Asset in, in substance, the same way as if it were an assignee”, (ie by making use of the Vandepitte procedure). And at para 73 he concluded, after a review of the authorities, that article 12.01(A) as a matter of construction (“the real key to this claim was the construction and effect of Article 12.01(A)”) did prohibit declarations of trust as well as assignments. His reasoning at this point is succinct, but his ground, as I understand it, is that as the practical effect of the former was the same as the latter, ie to permit third parties, through the Vandepitte procedure, to come into direct relations with the obligor under a contract to which the third parties were strangers, therefore the original parties to the Facility must have intended, by their reference to assignment, to prohibit declarations of trust as well.
76.	In my judgment, however, the question of construction must ultimately be kept separate from the different question of what effect will be given to the contractual term which prohibits an assignment and/or declaration of trust as the case may be. I accept that the practical effects which may (or may not) be achievable through the route of the Vandepitte procedure may enter as a background factor into the question of construction, i.e. the objectively understood intentions of the parties, but the questions are nevertheless distinct.
77.	On the question of construction, then, there is in my judgment good authority for the proposition that a failed assignment may take effect as a declaration of trust between its immediate parties. This is certainly true so far as a declaration of trust which is limited to the proceeds of a claim (or the fruits of a contract) when received. The leading authority for this is In re Turcan (1888) 40 Ch D 5, as approved in Linden Gardens itself, where Lord Browne-Wilkinson said this (at 106F):
“As to the authorities, in In re Turcan, 40 Ch.D. 5, a man effected an insurance policy which contained a term that it should not be assignable in any case whatever. He had previously covenanted with trustees to settle after-acquired property. The Court of Appeal held that although he could not assign the benefit of the policy so as to give the trustees the power to recover the money from the insurance company, he could validly make a declaration of trust of the proceeds, which required him to hand over such proceeds to the trustees.”
78.	That reflects Lord Browne-Wilkinson’s acceptance of the second of Professor Goode’s four possible interpretations of a prohibition of assignment, discussed as a “question of the construction of the contract” at 104E/F, thus –
“(2) that the term precludes or invalidates any assignment by A to C (so as to entitle B to pay the debt to A) but not so as to preclude A from agreeing, as between himself and C, that he will account to C for what A receives from B: In re Turcan…”
79.	Similarly, but perhaps more broadly, Lord Browne-Wilkinson said (at 108D):
“a prohibition on assignment normally only invalidates the assignment as against the other party to the contract so as to prevent a transfer of the chose in action: in the absence of the clearest words it cannot operate to invalidate the contract as between the assignor and the assignee and even then it may be ineffective on the grounds of public policy.”
Lord Browne-Wilkinson there appears to be contemplating a declaration of trust relating to a chose of action, and not merely proceeds when received.
80.	That last observation was cited by Lightman J in Don King Productions Inc v. Warren [2000] Ch 291 at 320B in support of the following observations (at 319H/320A):
“(7) A declaration of trust in favour of a third party of the benefit of obligations or the profits obtained from a contract is different in character from an assignment of the benefit of the contract to that third party: see the Devefi case [1993] R.P.C. 493, 505. Whether the contract contains a provision prohibiting such a declaration of trust must be determined as a matter of construction of the contract. Such a limitation upon the freedom of the party is not lightly to be inferred and a clause prohibiting assignments of the benefit of the obligation does not extend to declarations of trust of the benefit: consider Pincott v. Moorstons Ltd. [1937] 1 All E.R. 513, 516.”
81.	Accordingly, Lightman J went on to recognise that Lord Browne-Wilkinson’s approach to In re Turcan, albeit that case was dealing with the proceeds of an insurance claim after they had already been paid, applied more broadly (at 321G/H):
“Accordingly in principle I can see no objection to a party to contracts involving skill and confidence or containing non-assignment provisions from becoming the trustee of the benefit of being the contracting party as well as the benefit of the rights conferred. I can see no reason why the law should limit the parties’ freedom of contract to creating trusts of the fruits of such contracts received by the assignor or to creating an accounting relationship between the parties in respect of the fruits. The broader approach which I favour appears to be in accord with the authorities, so far as they go. The leading authority is In re Turcan…”
82.	On appeal in Don King Morritt LJ (with whom Aldous and Hutchison LJJ agreed) approved Lightman J’s approach in this connection, when he said (at 335G):
“I agree with the judge that In re Turcan, 40 Ch.D. 5, 10 shows clearly that the court will protect the interests of those contractually entitled to have the benefit of an inalienable asset before the fruits of the asset have been realised.”
83.	The reference there by Morritt LJ to In re Turcan at 10 is to the following passage in the judgment of Cotton LJ (with whom Lindley and Bowen LJJ agreed):
“Would a Court of Equity in the lifetime of the covenantor have enforced the covenant to settle this policy notwithstanding the condition against assignment? I think it would. Before the Act of 1867 (30 & 31 Vict. C. 144) a policy could not be assigned at law, but now it can: and I think the condition was inserted in order to prevent the insured from availing himself of the power to assign the policy and to give the assignee a right to receive the money from the office. But though he could not assign the policy, I think it would be a sufficient compliance with the covenant if he had executed a declaration of trust for the trustees of the settlement, just as he might have done before the passing of the Act of 1867. Then he could not have assigned the policy or given the trustees the power to receive the money, but he might have given them all the benefit of the money when it was received. And I think he could have given them the same benefit in the present case by executing a declaration of trust.”
84.	In my judgment, Cotton LJ is there saying that the prohibition on assignment prevented the covenant (“to settle this policy”) taking effect as either a legal assignment (after the Act of 1867) or an equitable assignment (prior to that Act), but it did not prevent it taking effect as a declaration of trust, even in the lifetime of the covenantor (the insured), i.e. before the proceeds had been received. Thus, although on the facts of the case the proceeds of the policy had already been paid to the insured’s  executor following his death, Cotton LJ was saying that the trustees of the settlement (the beneficiaries of the covenant) could have enforced the covenant to settle against the covenantor, despite the prohibition on assignment, during his lifetime.
85.	This court has also held that a prohibited assignment could take effect as a declaration of trust in Explora Group plc v. Hesco Bastion Ltd [2005] EWCA Civ 646 (20 July 2005, unreported) at para 104.
86.	Leading text-books and commentators have accepted this broader reading of In re Turcan, Linden Gardens and Don King: see the citations at paras 60/61 in the judge’s judgment, to which may be added Chitty on Contracts, 29th ed, 2004, Vol I, at para 19-045.
87.	In these circumstances, my conclusions under this issue are as follows. The fact that a prohibition on assignment between A and B cannot allow a third party, C, as A’s purported assignee, to bring a direct contractual claim against B is not in dispute. It was held in Linden Gardens to be the consequence of the contractual prohibition. As Lord Browne-Wilkinson said (at 108F):
“Therefore the existing authorities establish that an attempted assignment of contractual rights in breach of a contractual prohibition is ineffective to transfer such contractual rights. I regard the law as being satisfactorily settled in that sense. If the law were otherwise, it would defeat the legitimate commercial reason for inserting the contractual prohibition, viz, to ensure that the original parties to the contract are not brought into direct contractual relations with third parties.”
88.	The ineffectiveness of the assignment in breach of a prohibition on assignment is understandable. It is not merely a matter of contract but of property. Although the would-be assignor has legal title to property in the form of a chose in action, he lacks the power, because of the terms on which the property is held, to transfer that property so as to entitle the transferee to exercise those contractual rights himself against the other party to the contract. However, he does not lack the power to render himself a trustee in equity of the property concerned. He would only do that if the prohibition on assignment extended as far as prohibiting a declaration of trust.
89.	There is, however, nothing in article 12.01(A) to suggest that the limitations on assignment go as far as preventing the contract between would-be assignor and assignee taking effect as between those two as a  declaration of trust, and a fortiori nothing to prevent a personal contract between them.
90.	The remaining questions relate to the consequences of that situation.
Issue (4): Does BoA’s declaration of trust entail that BoA cannot be a claimant?
91.	Under this issue I intend to raise the question whether there is anything in the declaration of trust, either on its own terms, or in its circumstances, which would prevent BoA from making claim in respect of its legal title to the debt if, contrary to my decision on issue (1), it had such title.
92.	The judge said:
“3. No relief is claimed against Bank of America NA. It was joined as a Defendant because it declined to act as a claimant and to ensure that it was bound by the outcome of the proceedings.
56…It is a feature of the present proceedings that whilst assisting the Claimant, both by agreeing to the Declaration of Trust and in the provision of evidence, Bank of America NA itself has not been willing to bring the claim to the Asset and has recognised that it could not validly assign it to the Claimant.”
93.	Waller LJ has set out the terms of the declaration of trust above. It records that BoA is the owner of the debt under the assignment from Masstock, and that it has entered into the declaration for the avoidance of doubt because of BoZ’s challenge to the chain of assignments from BoA to BT. It declares that it holds all of its rights, title, interest and benefits (if any) on trust for BT; acknowledges that BT has the right to take all such lawful steps in its own name as it may consider necessary; and agrees to execute all such further documents and do all such other things as BT may reasonably require to enable BT to secure payment by BoZ.     
94.	In the immediate run-up to the making of that declaration of trust there was correspondence between BT’s solicitors and BoA concerning how best to deal with an impending time bar on 31 January 2004. It was suggested that BoA should either issue a protective writ, and that this “would not be unduly sensitive to Bank of America if they were able to explain to Bank of Zambia that they were merely doing this to protect members of the syndicate from the limitation period”; or make a declaration of trust which would enable the beneficiaries to issue proceedings in their own name, joining BoA “as a trustee defendant merely for the sake of protecting the trustees’ position”. BoA opted for the latter alternative.
95.	In my judgment, these exchanges and the declaration of trust itself do not exclude the possibility of BoA being a claimant. BoA may not have been willing to take the initiative in pursuing BoZ, for reasons that we do not I think know about, which might be commercial or possibly connected with issues about sovereign debt. However, it recognised the potential existence of its title to the debt and was willing to help its assignees in chain to reduce it to possession, indeed it pledged itself to help.
96.	In theory, although this might not be consistent with its obligations to its assignee, BoA might have abandoned any assertion to title to the debt, or refused to enter into the declaration of trust, or been prepared to enter into a declaration of trust which was limited to the proceeds of the claim only if and when received by it while stipulating that it was unwilling for such a claim to be made by reference to its title. It did none of those things, and the correspondence itself demonstrates that it entered into the declaration of trust in the contemplation of proceedings to which it would itself be a party, albeit as defendant.
97.	In my judgment, there is nothing special about the declaration of trust or the immediate circumstances in which it was made which would have prevented BoA from claiming the debt itself or would have entitled it to say that BT was acting, so far as BoA itself as title holder of the debt was concerned, in an illegitimate way.
Issue (5): Does use of the Vandepitte procedure mean that BoA is not to be regarded as a claimant, or is it otherwise ineffective or illegitimate to use that procedure to reduce the debt into possession?
98.	The Vandepitte procedure is described by Lord Wright in Vandepitte in these terms (at 79):
“…a party to a contract can constitute himself a trustee for a third party of a right under the contract and thus confer such rights enforceable in equity on the third party. The trustee then can take steps to enforce performance to the beneficiary by the other contracting party as in the case of other equitable rights. The action should be in the name of the trustee; if, however, he refuses to sue, the beneficiary can sue, joining the trustee as a defendant.”

99.	This procedure is familiar to a variety of situations where legal and equitable rights become separated. It can operate where a contract is from the very beginning entered into by a contracting party as a trustee for a third party, as in the familiar case of a charterer under a charterparty taking the shipowner’s promise to pay commission to the ship broker: Les Affréteurs Réunis Anonyme v. Leopold Walford (London) Ltd [1919] AC 801. In such a case it operated as an exception to the rule of privity of contracts. The procedure also applies to equitable assignments, and to declarations of trusts.
100.	What is the basis of this procedure? It is clear that one at least of its purposes is to protect the obligor from the possibility of any further claim from or through the legal owner (the trustee or equitable assignor). This is discussed in Performing Right Society Limited v. London Theatre of Varieties Limited [1924] AC 1, at 14, 19, 31. That was in a case where the parties (claimant equitable assignee of performing rights and the infringing defendant) joined specific issue on the absence of the legal owner of the rights. His absence was critical. Viscount Finlay said (at 19):
“Except under very special circumstances the ordinary rule should be observed, that the legal owner should be a party to the proceedings…But whatever may be the balance of convenience, the established rules of practice should be adhered to, even in cases, of which I think the present is one, when their observance in all probability will serve no useful purpose. The parties have joined battle on the applicability to the present case of this particular rule of practice, and we must decide according to law, however much we may regret that success in the action should depend on mere technicality which has no relation to the merits of the case.”

101.	That was a case where protection to the obligor was naturally stressed, in order to give flavour to the defendant’s right to stand on the rule of practice. The rule was obviously considered to be a matter of great importance, for all that it was a rule of practice. In my judgment, it follows both from the nature of the rule and from its explanation in Performing Right Society that the procedure is necessary to get the legal claim before the court, through the party who owned it. If such a party was not a claimant, then he must perforce be made a defendant. In either event, the legal claim was brought before the court, and, having been adjudicated on, was dealt with. Or to put the matter another way, if the trustee does not come to court himself as claimant to protect the equitable rights of the beneficiary, he can be compelled to do so by means of the practice, rightly described by Lightman J in Don King (at 321D) as a “procedural short-cut”, of making him a second defendant.
102.	I would therefore consider that the effect of the Vandepitte procedure is that, although the trustee is nominally a defendant, his real role as a party is to ensure that, through his presence, his legal right can be properly before the court for adjudication, just as though he was, as he should be if he is indeed a trustee for the claimant, a claimant himself. There is support for that in Harmer v. Armstrong [1934] Ch 65 (CA) at 88 where Lawrence LJ said –
“The right of a beneficiary in such a case as the present, however, is to enforce the agreement according to its tenor, that is to say in favour of the defendant Armstrong, and not in favour of the plaintiff beneficiaries.”
103.	In these circumstances, the ultimate question is whether, in circumstances where there has been a prohibition on assignment, and the legal owner declines himself to claim, the law will permit the beneficiary of a trust to make use of the Vandepitte procedure in order to reduce a debt into possession. This it seems to me is not itself a question of construction, but of legal principle.
104.	In Don King, which was admittedly a case between trustee and beneficiary and not between the original parties to the contracts containing prohibitions on assignment, Lightman J and this court considered that the mere possibility that a declaration of trust might bring in its train the use or attempted use of the Vandepitte procedure against other parties in whose favour those prohibitions had been agreed did not prevent the arrangements between the litigants themselves from having effect. On the other hand the law would not permit the Vandepitte procedure to be used to curtail the protection for which the parties to a contract had stipulated by means of a prohibition of assignment.
105.	Lightman J said (at 321C/D):
“(1) If one party wishes to protect himself against the other party declaring himself a trustee, and not merely against an assignment, he should expressly so provide. That has not been done in this case. (2) The applicable principles of trust law in this situation are the basic principles and those (and only those) whose rationale have application in this commercial context: see Target Holdings Ltd. v. Redferns [1996] A.C. 421, 436. The courts will accordingly be astute to disallow use of the procedural short-cut sanctioned in the Vandepitte case [1933] A.C. 70 in a commercial context where it has no proper place. A beneficiary cannot be allowed to abrogate the fullest protection that the parties to the contract have secured for themselves under the terms of the contract from intrusion into their contractual relations by third parties.”
106.	In this court Morritt LJ said (at 335H/336C, para 26):
“In that case [In re Turcan], as the House of Lords considered in Linden Gardens Trust Ltd. v. Lenesta Sludge Disposals Ltd. [1994] 1 A.C. 85, 106, the court gave effect to the intention of the parties by means of a declaration of trust. But, it is objected, the existence of such a trust would enable one partner to interfere in the management of the personal contract made by a third party with the other partner. I do not agree. The other partner cannot insist on rendering vicarious performance of the personal obligations arising under the contract. Rules and procedures designed to enable a beneficiary to sue in respect of a contract held in trust for him would not be applied so as to jeopardise the trust property. As Lord Browne-Wilkinson observed in Target Holdings Ltd. v. Redferns [1996] A.C. 421, 435:
“in my judgment it is in any event wrong to lift wholesale the detailed rules developed in the context of traditional trusts and then seek to apply them to trusts of quite a different kind. In the modern world the trust has become a valuable device in commercial and financial dealings. The fundamental principles of equity apply as much to such trusts as they do to the traditional trusts in relation to which those principles were originally formulated. But in my judgment it is important, if the trust is not to be rendered commercially useless, to distinguish between the basic principles of trust law and those specialist rules developed in relation to traditional trusts which are applicable only to such trusts and the rationale of which has no application to trusts of quite a different kind.””
107.	It is possible to read these passages as saying that the Vandepitte procedure has no place in the commercial sphere. That, however, would not accord with my understanding of what Lightman J and Morritt LJ were saying. It would also be inconsistent with established lines of cases in the commercial field, such as the trust found in a charterparty in favour of the shipbroker. I understand these passages as saying that the law would not permit rules and procedures, such as the Vandepitte procedure, to be misused in the commercial context where inappropriate. Lightman J appears to have particularly in mind contractual stipulations against intrusion into the business affairs of the original contractual parties, whereas Morritt LJ seems to be focusing on personal obligations. The contracts in Don King were of both kinds: many had prohibition of assignment clauses, but all of them were contracts of a personal kind, for they concerned the management of boxers.
108.	An example of the courts being cautious in certain circumstances about the use of the Vandepitte procedure may be found in Harmer v. Armstrong [1934] Ch 65 at 88/89.
109.	These observations in Don King have led to controversy. Waller LJ has mentioned the critical articles of Professor Andrew Tettenborn in LMCLQ [1998] 498 and [1999] 353, and of P G Turner in (2004) 20 JCL 97.
110.	Is the Vandepitte procedure inappropriate here? On the one hand, there is a limited prohibition of assignment under a commercial facility which has resulted in an acknowledged debt. It may also be observed that both BoA and BT knew of that limited prohibition at all times and in particular at the time of the declaration of trust. On the other hand, save for that limited prohibition, there is nothing about the underlying contract of a personal nature. The limited prohibition can be contrasted with article 12.02, which prohibits all assignment by the borrower and emphasises that the contract is personal to it. Thus, save for the express and more or less technical terms of that limited prohibition of assignment, recovery of the debt owed to BoA would not constitute intrusion into the personal mutual dealings of contractual parties under an ongoing relationship. Moreover, debt is regularly traded in a secondary market of banks and other financial institutions, as article 12.01(A) effectively recognises. There is in the technical language of article 12.01(A) plentiful scope for error, as the circumstances of this case itself illustrate. Thus BoZ was prepared to recognise Masstock as its creditor by way of assignment, even though it seems that it was neither a bank nor financial institution itself, as the judge observed at his para 12. The definition of “other financial institution” had not been adjudicated upon until the Argo Fund case. That had been decided at first instance at the time of trial in these proceedings, in the light of which BT did not seek to argue that it was a financial institution, and accepted that it was not. However, on appeal in the Argo Fund case, the term “other financial institution” received a broader definition. That appeal decision was published in between trial and this appeal in these proceedings. It tempted BT to seek to argue that it was itself an “other financial institution”, but for that purpose its concession at first instance and the lack of any relevant evidence made such an attempt both impossible and impermissible.
111.	There is no prohibition of a declaration of trust, which there might have been. I recognise however that a declaration of trust (not only of the fruits of a contract) when received but also of rights of suit under a contract is akin to an equitable assignment of those rights; and I bear in mind what Millett LJ said in Regina v. Chester and North Wales Legal Aid Area Office (no 12), ex parte Floods of Queensferry Ltd [1998] 1 WLR 1496 at 1501, cited by Waller LJ above.
112.	What is a court to do in such circumstances? It seems to me that there is a tension between (a) the interests of those whose contracts, either because they are of an inherently personal nature or because of agreed restrictions on alienability, should not readily be intruded upon by strangers to them, (b) the interests of those who seek to arrange their affairs on the basis of holding property in trust for others, and (c) the public interest, which is concerned to see that contracts are performed, that the beneficiaries of trusts are protected, and that financial assets are not too readily made inalienable especially where markets regularly provide liquidity for the trading of them. If a prohibition on assignment carried all before it, destroying all alienability whatever the circumstances, even to the extent of making it impossible for beneficial interests to be protected in any circumstances in the absence of the legal owner as a formal claimant, it seems to me that the public interest in freedom of contract and the freedom of markets could be severely prejudiced.
113.	Some illustrations can be given. In Linden Gardens at 107/108 the case of Tom Shaw and Co v. Moss Empires Ltd (1908) 25 TLR 190 was considered. Lord Browne-Wilkinson said:
“In the Tom Shaw case an actor, B., was engaged by Moss Empires under a contract which prohibited the assignment of his salary. B. assigned 10 per cent of his salary to his agent, Tom Shaw. Tom Shaw sued Moss Empires for 10 per cent of the salary joining B. as second defendant. Moss Empires agreed to pay the 10 per cent of the salary to Tom Shaw or B. as the court might decide i.e. in effect it interpleaded. Darling J. held, at p. 191, that the prohibition on assignment was ineffective: it could “no more operate to invalidate the assignment than it could interfere with the laws of gravitation.” He gave judgment for the plaintiffs against both B. and Moss Empires, ordering B. to pay the costs but making no order for costs against Moss Empires.
The case is inadequately reported and it is hard to discover exactly what it decides. Given that both B. and Moss Empires were parties and Moss Empires was in effect interpleading, it may be that the words I have quoted merely indicate that as between the assignor, B., and the assignee Tom Shaw, the prohibition contained in the contract between B. and Moss Empires could not invalidate B.’s liability to account to Tom Shaw for the moneys when received and that, since B. was a party, payment direct to Tom Shaw was ordered. This view is supported by the fact that no order for costs was made against Moss Empires. If this is the right view of the case, it is unexceptionable: a prohibition on assignment normally only invalidates the assignment as against the other party to the contract so as to prevent a transfer of the chose in action: in the absence of the clearest words it cannot operate to invalidate the contract as between the assignor and the assignee and even then it may be ineffective on the ground of public policy. If on the other hand Darling J. purported to hold that the contractual prohibition was ineffective to prevent B.’s contractual rights against Moss Empires being transferred to Tom Shaw, it is inconsistent with authority and was wrongly decided.”
I have already cited most of the penultimate sentence of that passage out of its context (at para 31 above).
114.	What is going on here? The contract concerned was certainly a personal one, akin to a contract for the writing of a book, but the salary, like the fee for the book, was something separate, the fruits of the contract. However, there was an express prohibition on assignment of those fruits. There was nevertheless a purported assignment, which took effect only as a declaration of trust to account for the moneys when received. Only the would-be assignee, the beneficiary of that trust, sued, but he adopted the Vandepitte procedure and joined the would-be assignor, the actor, as second defendant. Moss Empires did not mind whom it paid, and in effect interpleaded. It had no defence in substance, other than the prohibition on assignment. That point was taken by the actor, who presumably wished to receive the assigned salary himself. The case therefore illustrates the operation of the Vandepitte procedure, despite a failed assignment, on the basis of a declaration of trust and suit by the beneficiary. Would it have made any difference if Moss Empires had not effectively interpleaded? That is possible, on the ground that Moss Empires thereby waived the prohibition in its favour. However, another way of looking at the matter is that in any event the actor, although defendant, was treated as a claimant. It would be very unattractive (in the absence of a prohibition on a declaration of trust) if a party who owed his agent a percentage of his earnings, and made a declaration of trust in his favour as security, could prevent his agent recovering simply by declining to claim.
115.	Another example is illustrated by the two cases considered by the House of Lords under the report in Linden Gardens. Both concerned construction contracts containing prohibitions on assignment. In the first case, Linden Gardens itself, the would-be assignor was not joined as a defendant, and the assignee claimant therefore lost (at 109C). In the second case, St Martins Property Corporation Ltd v. Sir Robert McAlpine Ltd, both the assignor and the assignee claimed, being sister companies within the same group. There was therefore no problem about the title to sue, which remained in the assignor company (at 109F). The main issue there, however, was whether that company had suffered any more than nominal damages, since the loss had been suffered by the assignee company which, because of the prohibition on assignment, lacked its own cause of action. However, the House of Lords was unwilling for the claim to disappear in this way into a black hole, and found an analysis, based on the concept that the assignor company entered into the contract for the benefit of future third parties to whom the property development had been sold and who might thus suffer from defective performance of the contract, which enabled the assignor to recover substantial damages for the assignee. Justice was done, but, if the case was looked at in an overall way, it could be said that the law permitted the problems of a stranger assignee to intrude into the contractual relationship despite the prohibition of assignment. If therefore a purely functional approach had been adopted, on the basis that the assignor could only recover for its own loss, the claim would have failed despite the presence of the assignor as claimant. In such circumstances, would it have mattered if the assignor and assignee companies had not been in the same group, but in different enterprises, so that in practical terms the assignee would have been the sole claimant and the assignor would have been joined under the Vandepitte procedure as a second defendant? I think not. 
116.	A third example is an agency contract under which the agent earns commission. Such a contract is both a personal contract and one in which a non-assignment clause is often found, for good commercial reasons. While the contract is on foot it would be entirely understandable that no stranger to that contract should, through assignment, be permitted to intrude upon it. However, suppose the agent becomes insolvent and as a result the contract is brought to an end. The relationship is over, as is any ongoing performance of the contract. However, there is outstanding commission due to the agent. The liquidator has no interest in pursuing a claim he does not understand. He sells the claim to the former managers of the insolvent agent, who have formed a new company. The assignee brings a claim against the debtor principal, joining the liquidator as defendant. Can the debtor say that he is to answer only if the liquidator is a claimant rather than a defendant? That is most unattractive. See Explora Group v. Hesco Bastion.
117.	A fourth example of a somewhat different nature is that of the subrogated insurer who sues in his insured’s name. If he sues under a contract containing a non-assignment clause, he will not be affected by it. The claim is that of the insured, and there has been no assignment. However, functionally the insured has been paid and has no interest in the claim, and the litigation is conducted entirely by the underwriter for his own benefit, who thus intrudes on his insured’s contract with the defendant. No one would suggest, however, that the non-assignment clause should be given effect because the law of subrogation functionally achieves a result whereby a stranger to the contract can intrude on it.
118.	A closely related example is that of factored invoices. A non-assignment clause will create difficulties for the factoring company. However, it would be highly undesirable if customers could totally prevent their suppliers from factoring their book debts by the device of a non-assignment clause. If the supplier has no interest in suing and has to be joined as a defendant, is that case crucially different from the case where the supplier is prevailed upon to sue together with the factoring company?
119.	For these reasons, if I had decided issue (1) in favour of finding that BoA had a good legal title to the debt, I would, on balance, have been in favour of saying that, on the facts of this case as far as they appear and on the submissions we have heard, the Vandepitte procedure could be used to recover into BoA’s possession, for the benefit of BT, a debt which on that hypothesis would have been an acknowledged debt owned by BoA. As it is, I do not have to make a final decision on this ultimate issue. That is perhaps just as well, as the argument on appeal has both far outstripped the evidence with which the parties had come to court in the first place and at the same time failed to focus on the particular facts before the court. Thus we know little about the real considerations which have affected the relationships in this case.  Moreover, there was no immediate relationship between BoA and BT to support the declaration of trust, which does not arise out of a failed assignment directly between BoA and BT.  It might therefore have been said that that declaration was merely a device to bring before the court, at the instance of BT, a claim which BoA would otherwise have allowed to become time-barred.  On that hypothesis, I would be doubtful that equity would enforce the trust.
Lord Justice Hooper : 
120.	The judgments of Waller and Rix LJJ contain a full account of the facts and arguments, for which I am grateful and which I do not propose to repeat.
121.	On the first issue which Langley J resolved in favour of BT they disagree. Waller LJ holds that Masstock’s 10 December 1999 assignment was effective to give BoA (in exchange for some $40,000) the right to claim the principal amount of $809,387.02 and contractual interest of some $3 million under the 1985 Oil Import Facility. He agrees with the reasoning of Langley J and adds a further reason, namely that prior written consent was deemed to have been given on 10 December when BoZ did not respond to the request for consent by 17 December. Rix LJ disagrees with the judge and therefore with Waller LJ’s adoption of the reasoning of Langley J.  He agrees that “deemed consent” is “deemed prior written consent” but disagrees with Waller LJ as to when that prior written consent is deemed to have occurred. He says that it occurred on 17 December and therefore too late.
122.	I agree in large measure with Rix LJ.  However, I do not agree with him and Waller LJ that “deemed consent” is “deemed prior written consent”.   
123.	By taking an assignment of what I shall call the Facility, Masstock agreed with BoZ, by virtue of Article 12.01(A), not to assign the Facility without the prior written consent of BoZ.   Masstock tells BoZ on 14 December 1999 that “the assignment is effective from December 10 1999”.  That mirrored the terms of the agreement between Masstock and BoA.  At that time, it is agreed, BoZ had not consented.  Article 12.01(A) provides that any “assignment may only be effected if ... the prior written consent” of the BoZ has been obtained. It had not. That to my mind is sufficient to resolve the issue, subject to the “deemed” argument, to which I turn in the next paragraph. For the reasons given by Rix LJ, I take the view that other terms of the Masstock/BoA agreement do not assist on this issue.  They may assist in defining the rights and liabilities of Masstock and BoA but not the liability of BoZ. If BoA received nothing for its $40,000 so be it. If that be a “commercially unattractive misfortune” so be it. 
124.	Article 12.01(A) provides that an assignment to a bank or other financial institution “may only be effected if the prior written consent of the Borrower shall have been obtained (such consent not to be unreasonably withheld and deemed to have been given if no reply is received from the Borrower within 15 days after the giving of a request for consent by a Bank) ...”.   Waller LJ and Rix LJ interpret “such consent” to mean “prior written consent”. I cannot agree.  What must not be unreasonably withheld?  The answer to that is in my view: “consent”.  “Such consent” means “the consent of the Borrower”.  An oral consent would not be sufficient. If only an oral consent was given then, after 15 days from the request, the Borrower’s consent will be deemed to have been given. It is not the Borrower’s “written” consent which is deemed to be given.  And, in my view, it is certainly not the Borrower’s “prior” consent which is deemed to have been given. Why, I ask rhetorically, would the drafter be deeming that a “prior” consent had been given?  Prior to what?  It does not seem likely to me that those responsible for the drafting had in mind that an assignment which was ineffective because of lack of prior written consent becomes effective because of the deeming provision from the date of the assignment (Waller LJ) or from the 15th day after the request for consent (Rix LJ).  
125.	I do not need to deal with the issue of an unreasonable refusal of consent within the 15 day period and the consequences.  Whatever may be the effect of such a refusal (as to which see the judgment of Rix LJ at paragraph [61]), I do not see how the resolution of that issue helps in the resolution of the first issue decided by Langley J. 
126.	For these brief reasons I would allow the appeal on the first issue resolved in favour of BT by Langley J.
127.	 Given that Rix LJ and I agree that the decision of Langley J should be reversed on the first issue, it is not strictly necessary for me to resolve the second issue, which Langley J resolved in favour of BoZ.  I shall say only a few words. 
128.	I agree with Waller LJ’s rejection of the argument of Mr Brodie that Article 12 had no application to an acknowledged debt, an argument which had not been made to Langley J. I say no more about that. 
129.	I start with an example.  D enters into a contract with A, giving A certain benefits.  D agrees with A that A can assign the benefits to anyone other than C.  He distrusts C and wants to have nothing to do with him.  Notwithstanding this, A assigns the benefits to C. A declines to sue D.  C then invokes the Vandepitte procedure and brings an action against A and D.  Thus D is facing C across the court - something which D had insisted should not happen. I would find it surprising if English law permits this to happen.  I would find it  surprising if the only way that D could have prevented this happening was by including a further term in his contract with A. I accept that it might gladden the heart of lawyers if the law is that D could have prevented this happening by the inclusion (on legal advice) of a further term in his contract with A. 
130.	This example is not this case, but it has similarities. As Langley J said, it is not hard to fathom the commercial realities of a restricted assignment clause such as that found in Article 12. In paragraph 10, he wrote:
“Any covenant against or restrictive of assignment is intended to ensure that the original parties to the contract are not brought into direct contractual relations with third parties save to any extent expressly permitted by the covenant. Any borrower, but particularly a central bank, may be concerned to ensure that its affairs and obligations are known and owed to and only enforceable by established and authorised institutions.”
131.	When asked during the course of the appeal why BoA was not prepared to sue BoZ we received no clear answer. When I suggested that BoA would not wish to be seen to be suing a “third world government bank” given the huge public pressure (expressed by Government, the Churches and, for example, by Bob Geldof) to renegotiate third world debt, counsel for BoA did not dissent. Instead BoA sells (for what appears to be a paltry sum) to GMO Emerging Country Debt LP (an institution which may be immune to such pressure) the right to claim for the principal and interest. When the validity of the assignment is questioned BoA executes a declaration of trust in favour of an indirect assignee of GMO, the claimant in this case. The correspondence referred to by Rix LJ in paragraph [95] appears to show the sensitivity felt by BoA and the suggested way of overcoming the problem - tell BoZ that the suggested protective writ was being issued for the benefit of the syndicate members!  
132.	The market in which debts of this kind are traded is known as “the distressed debt market” (see paragraph 1 of the judgment of Waller LJ).  The corporate buyers of distressed third world government debts have been given the title “Vulture Funds”.  
133.	Langley J put the issue very clearly:
“54. The Claimant was (and is) not a bank or a "financial institution". It was therefore expressly excluded from taking a valid assignment of the Asset and acquiring a right to claim to recover it from Bank of Zambia by Article 12.01(A) of the Facility. As I have said (paragraph 10) this provision restricted the type of institution which would be entitled to enforce the obligations of Bank of Zambia. If it were the case that such a provision could be circumvented by the use of a Declaration of Trust it would be a matter of some concern. If the Claimant is right, the express restriction in Article 12.01(A) would achieve very little. Any Bank could declare itself to be a trustee of the Asset for any third party which could then claim the Asset in, in substance, the same way as if it were an assignee. Contracts outlawing or limiting assignment would have to be drafted so as also to outlaw declarations of trust or at least such declarations giving a direct right of action against the obligor.”
134.	Langley J examined the authorities, which have been analysed by Waller and Rix LJJ, and concluded that there is a “distinction between a third party [such as BT] being entitled to enforce the contract (not permissible) and [his] entitlement to the benefits of the contract (properly the subject of a trust) ...”   (see paragraph 73).
135.	He continued:
“73. As the submissions developed, I think (unsurprisingly) they demonstrated a measure of agreement that the real key to this claim was the construction and effect of Article 12.01(A). I agree. I have stated what I think to be the commercial rationale of that Article (paragraph 10). By its terms, and whatever the status of the Facility, it decrees that, at least absent express consent, a claimant such as the present Claimant shall not be entitled to claim payment from Bank of Zambia as an assignee of the Asset. To permit such a claim to be made as the beneficiary of a declaration of trust of the Asset would in my judgment be to permit the use of the decision in Vandepitte in a commercial context in which it has no place because it would achieve a result which would be inconsistent with the terms of the Facility.
CONCLUSION
74. I have concluded that:
...
ii) It was not open to Bank of America N.A. and the Claimant for the former to declare itself trustee for the latter such as to entitle the Claimant to make the claim it does in these proceedings. 
iii) The claim therefore fails and must be dismissed.” (Emphasis added)
136.	In my view the conclusions of Langley J are impeccable. 
137.	Langley J had this to say about Linden Gardens and its impact on this case:
“64. In Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd the House of Lords considered the effect of a standard clause in a construction contract which provided that "the employer shall not without written consent of the contractor assign this contract". The House decided that the clause prohibited both the assignment of rights to the future performance of the contract and assignment of the "fruits" of the contract, that is the right to receive payment under it or to enforce accrued rights of action. The consequence was that the claim by the assignee failed. Lord Browne-Wilkinson, at pages 103 to 105, accepted that it was "at least hypothetically possible" that a clause might prohibit one but not the other. Again, I think this authority assists Bank of Zambia rather than the Claimant. Article 12.01(A) is unqualified in its prohibition and cannot in my judgment be construed as permitting an assignment of the "fruits" of the Facility.”
138.	I agree. In a passage already quoted by Rix LJ (paragraph [71]) Lord Browne-Wilkinson gave the reason for including the contractual prohibition - building contracts are pregnant with disputes and some employers are much more reasonable than others in dealing with such disputes.
139.	Whilst I agree with Rix LJ (paragraph [90]) that the article 12.01(A) limitations on assignment do not prevent BoA from creating a declaration of trust in favour of BT (as it purported to do by the documents set out by Waller LJ at paragraphs 22 and following), I disagree with the proposition which finds favour with Waller LJ (and with Rix LJ “on balance”), that the terms of Article 12.01(A) permit BT to bring the claim against BoZ. The clause prevents an assignment to a body such as BT and must therefore be construed so as to prevent BT from enforcing the debt directly against BoZ.  The clause cannot be circumvented by the device of a declaration of trust and the use of the Vandepitte procedure.   To require those who draft contracts of this kind to take steps to avoid the device used by BoA and BT to get round the non-assignment clause would be unduly onerous and, as I have said, would only benefit lawyers.  
140.	During the course of argument we canvassed what would happen if BT had sought an order/declaration the effect of which was that BoA would have to sue BoZ.  That has not happened. As Langley J said:
“3. No relief is claimed against Bank of America N.A. It was joined as a Defendant because it declined to act as a claimant and to ensure that it was bound by the outcome of the proceedings.”
141.	Langley J did not decide and was not asked to decide (as I understand it) whether BT could have obtained such an order pursuant to the terms of the declaration of trust. Nor do we know whether there is some other obstacle to BT taking this course.  Waller LJ assumes (I believe) that if “some longer and more tortuous procedure, compelling BA to sue” had been used, then that would have succeeded and therefore the Vandepitte procedure may be used to avoid that. I am not convinced.
142.	I note that Rix LJ says in his concluding paragraph that he is “doubtful that equity would enforce the trust” given that there was no immediate relationship between BoA and BT, given that the declaration for trust did not arise out a failed assignment between BoA and BT and given that “it might therefore have said that the declaration was merely a device to bring before the court, at the instance of BT, a claim which BoA would otherwise have allowed to become time-barred”. 
143.	It is sufficient for my purposes to say that whether or not BT could obtain an order/declaration the effect of which was that BoA would have to sue BoZ, my answer remains the same.  What BT have sought to do in bringing the instant claim is forbidden by the terms of Article 12.01(A).