Source:

Botswana Law Reports (1964 to 2019(4))/CHRONOLOGICAL LISTING OF CASES 2020 Volume 1/1993/Cases Reported/DRAMBORE LTD v. CYRIL HURVITZ EXPORT
CO (BP) and Another 1993 BLR 245 (CA)

URL:
http://jutastat.juta.co.za/nxt/gateway.dll/frbo/2/5338/5343/5383?f=templates$fn=default.htm

DRAMBORE LTD v. CYRIL HURVITZ EXPORT CO (BP) and Another 1993 BLR 245 (CA)

Citation 1993 BLR 245 (CA)

Court Court of Appeal, Lobatse

Judge Amissah JP, Aguda JA, Bizos JA

Judgment July 14, 1993

Counsel W.H. Klevansky S.C. for the appellant.

B. Spilg for the first respondent.
G.I. Hoffman S.C. for the second respondent.

Annotations None

Flynote
Contract ­ Cession ­ Pactum de non cedendo ­ Prohibition clause not having to serve useful purpose in pursuance of public policy that rights should
be freely transferable in interest of fostering commercial activity to be effective ­ Issue of whether prohibition is judged to be valid or not is at time
the agreement concluded and not after. C
Headnote
The first respondent and the second respondent had entered into an agreement which contained a term which provided that the first
respondent would "not assign the contract or any part thereof, or any benefit or interest therein or thereunder", except in a particular instance,
without the prior written consent of the second D respondent. The first respondent had purported to cede its rights to payment in terms of the
agreement to the appellant. The second respondent did not recognise the validity of the cession agreement. The appellant contended that the
pactum de non cedendo was invalid as it served no useful purpose at the time the cessions were executed. The appellant further contended
that the cession was not affected by the clause prohibiting an assignment. E
Held: (1) that the argument that for a prohibition clause to be effective against a cessionary it had to serve a useful purpose in pursuance of
public policy that rights should be freely transferable in the interest of fostering commercial activity did not take into account the principle that
public policy required that the terms of agreements seriously entered into should be given effect.
(2) In any event the restriction did serve a useful purpose. For a number of reasons the identity of one's creditor F was not unimportant to a
debtor. It must have been useful to the second respondent to confine its contractual privity to a local company with which it had entered into
the contract rather than unknown persons or companies over whom the courts of Botswana may not have had jurisdiction for any counter­
performance in its have which may have arisen. G
(3) The issue of whether the prohibition is judged to be valid or not was at the time the agreement was concluded, and not after, with the
benefit of hindsight.
(4) It was clear that the contract, by prohibiting the transfer of any benefit or interest therein and thereunder, clearly prohibited a cession and
in the context the word "assign" encompassed both cession and delegation.
(5) The effect of the pactum de non cedendo was that a cession contrary to the restraint was of no force and H effect.
Case Information
Decision of Nganunu J. reported in [1992] B.L.R. 217 affirmed.
Cases referred to:
(1) Paiges v. Van Ryn Gold Mines Estates Ltd. 1920 A.D. 600.
(2) Book v. Davidson 1989 (1) S.A. 638 (ZSC).

1993 BLR p246

AMISSAH JP
(3) Magna Alloys and Research (S.A.) (Pty.) Ltd. v. Ellis 1984 (4) S.A. 874 (A). A

(4) National Chemsearch (S.A.) (Pty.) Ltd. v. Borrowman 1979 (3) S.A. 1092 (T).
(5) Densam (Pty.) Ltd v. Cywilnat (Pty.) Ltd. 1991 (1) S.A. 100 (A).
(6) Sasfin (Pty.) Ltd. v. Beukes 1989 (1) S.A. 626 (A).
(7) Botha and Another v. Carapax Shadeports (Pty.) Ltd. 1992 (1) S.A. 202 (A). B

(8) Trust Bank of Africa Ltd. v. Standard Bank of S.A. Ltd. 1968 (3) S.A. 166 (A).
(9) Drambore v. Cyril Hurvitz Export Co. (BP) [1992] B.L.R. 217.
(10) Vawda v. Vawda and Another 1980 (2) SA 341 (T). C

Appeal against the appellant's claim based on cessions in conflict with a pactum de non cedendo. The facts are fully set out in the judgment of
BizosJ.A.
W.H. Klevansky S.C. for the appellant.
B. Spilg for the first respondent. D

G.I. Hoffman S.C. for the second respondent.

Judgment
Amissah J.P.
I agree with the judgment about to be read by my Brother Bizos. There is one more word that I would like to add in support. The rule that he
enunciates with regard to non­cession or assignment of rights or obligations under a E contract to a third person without the consent of the
other party is not only a rule of Roman Dutch law, it is generally accepted where the one party has an interest in the performance of the
contract
© 2018 by Company
Juta and the contract partner he has chosen. It is, for example used quite
(Pty) Ltd. widely in :international
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Sat Oct 14 2023 for works,(South
21:48:49 GMT+0200 supplies orStandard
Africa services.
Time)
Thus we find that cl. 3.1 of the Conditions of Contract for Works of Civil Engineering Construction F developed by Federation Internationale des
 (2) Book v. Davidson 1989 (1) S.A. 638 (ZSC).

1993 BLR p246

AMISSAH JP
(3) Magna Alloys and Research (S.A.) (Pty.) Ltd. v. Ellis 1984 (4) S.A. 874 (A). A

(4) National Chemsearch (S.A.) (Pty.) Ltd. v. Borrowman 1979 (3) S.A. 1092 (T).
(5) Densam (Pty.) Ltd v. Cywilnat (Pty.) Ltd. 1991 (1) S.A. 100 (A).
(6) Sasfin (Pty.) Ltd. v. Beukes 1989 (1) S.A. 626 (A).
(7) Botha and Another v. Carapax Shadeports (Pty.) Ltd. 1992 (1) S.A. 202 (A). B

(8) Trust Bank of Africa Ltd. v. Standard Bank of S.A. Ltd. 1968 (3) S.A. 166 (A).
(9) Drambore v. Cyril Hurvitz Export Co. (BP) [1992] B.L.R. 217.
(10) Vawda v. Vawda and Another 1980 (2) SA 341 (T). C

Appeal against the appellant's claim based on cessions in conflict with a pactum de non cedendo. The facts are fully set out in the judgment of
BizosJ.A.
W.H. Klevansky S.C. for the appellant.
B. Spilg for the first respondent. D

G.I. Hoffman S.C. for the second respondent.

Judgment
Amissah J.P.
I agree with the judgment about to be read by my Brother Bizos. There is one more word that I would like to add in support. The rule that he
enunciates with regard to non­cession or assignment of rights or obligations under a E contract to a third person without the consent of the
other party is not only a rule of Roman Dutch law, it is generally accepted where the one party has an interest in the performance of the
contract by the contract partner he has chosen. It is, for example used quite widely in international contracts for works, supplies or services.
Thus we find that cl. 3.1 of the Conditions of Contract for Works of Civil Engineering Construction F developed by Federation Internationale des
Ingenieurs­Conseils (FIDIC) which form the basis of most international construction contracts contains the following provision:
"The contractor shall not, without the prior consent of the employer (which consent, notwithstanding the provisions of subcl. 1.5, shall be at the sole discretion
of the employer), assign the contract or any part thereof, or any benefit or G interest therein or thereunder, otherwise than by:
(a) a charge in favour of the contractor's bankers of any monies due or to become due under the contract, or
(b) assignment to the contractor's insurers (in cases where the insurers have discharged the contractor's loss or liability) of the contractor's rights to obtain relief
against any other party liable." H

Similar provisions can be found in general conditions of contracts developed by other organisations to regulate contracts between parties
operating under their umbrella. Such for example are the General Conditions for Works, Supply and Service Contracts developed to govern

1993 BLR p247

AMISSAH JP
contracts agreed under the European Community and African, Carribean and Pacific (ACP) Group of States A under the Lome Convention. The
FIDIC contract condition quoted above may be more detailed than the term of the contract between the first and second respondents in this
case which prohibited assignments or cessions without consent. But the purport or effect is not dissimilar.
Wherever the award of a contract implies confidence by one contracting partner in the other, it would obviously B not be envisaged that the
partner selected would assign the contract to a third party. The exception in favour of bankers, and in the case of the FIDIC condition, of the
insurer who had discharged the loss or liability of the contracting partner, merely anticipates and gives prior permission for those specific
assignments in order to allow the chosen partner to finance, or as the case may be, to properly insure, the contractual interests. Where C the
parties to the contract, thereto, decide beforehand that there should be no cession or delegation or assignment without consent, this is a term
of the contract which the party giving the undertaking should not be allowed to breach.
It is no use arguing in a particular case that the contract has practically been performed and therefore such assignment or cession of a right or
obligation still existing under the contract and made without permission D should be declared valid despite the contractual provision forbidding
the assignment or cession. No such limitation is placed by the contract on the prohibition. Further claims and liabilities arising out of the
contract may long outlast the supposed performance which is claimed by a contract partner who assigns any part of rights or obligations under
the contract in contravention of the express term in the contract. E
I also think that the appeal should be dismissed.
Bizos J.A.
This is an appeal from the judgment of Nganunu J. dismissing with costs an application claiming the following relief from the two respondents: F
"1.1 Declaring that the two written deeds of cession concluded by the first respondent in favour of Triassic International Ltd. by Triassic International Ltd. in
favour of the applicant are valid and of full force and effect as against the second respondent.
1.2 Order the second respondent to pay to the applicant: G
1.2.1 P108,682;
1.2.2 Interest on the said sum at the rate of two per cent p.a. over the prevailing minimum commercial bank rates for H overdrafts in Botswana, as
provided for in cl. 60(3) of the agreements, alternatively at the rate of 10 per cent p.a. a tempore morae;
1.2.3 Declaring that the applicant is entitled to institute arbitration proceedings against the second respondent in its own name and on the terms of
arbitration which were argued upon by the parties on 10 August 1987.
2. Alternatively to para. 1 above:
2.1 Ordering the first respondent to pay to the applicant: P108,682.
2.2 Interest on the aforesaid sums at the rate of two per cent p.a. over

1993 BLR p248

AMISSAH JP
the prevailing minimum commercial bank rate for overdrafts in Botswana, as provided for in cl. 60(3) of the A agreements, alternatively at the rate of
10 per cent p.a. a tempore morae;
3. Ordering the first and second respondents to pay the cost of this application, alternatively ordering the first respondent to pay the costs of this application."

On 5 March 1982 Cyril Hurvitz Export Co., then operating as Ranch International Pipelines, a Botswana B corporation, the first respondent, and
the Botswana Power Corporation "BPC", second respondent, entered into two contracts whereby first respondent was to perform services and
supply materials to second respondent also referred to as the employer. First respondent satisfactorily performed all its obligations by September
1984 and on 17 March 1987 second respondent submitted a final certificate for payment, acknowledging an C indebtedness of P108,682. There
are no counterclaims or set­offs claimed by second respondent against the appellant. There is a dispute between the first respondent in relation
to a claim of P833,636.80 against the second respondent which first respondent and second respondent agree is subject to arbitration. D
In June 1985, first respondent was placed in provisional winding­up and Mr. Hurvitz, director and a shareholder of first respondent, was placed
under provisional sequestration. While under provisional winding­up first respondent entered into a cession agreement with Triassic International
Ltd. ("Triassic"), a London based company. The parties concluded the cession agreement on 31 July 1985, to be effective as of 31 March 1985.
On the fact of it the cession agreement ceded all claims to moneys owed to first respondent by second E respondent, specifically including all
such claims as may have to be submitted to arbitration.
© 2018 Juta and Company (Pty) Ltd. Downloaded : Sat Oct 14 2023 21:48:49 GMT+0200 (South Africa Standard Time)
On 10 July 1986, Triassic ceded its claims under the first cession agreement to Drambore Ltd., the appellant. The agreement was deemed to
 operating under their umbrella. Such for example are the General Conditions for Works, Supply and Service Contracts developed to govern

1993 BLR p247

AMISSAH JP
contracts agreed under the European Community and African, Carribean and Pacific (ACP) Group of States A under the Lome Convention. The
FIDIC contract condition quoted above may be more detailed than the term of the contract between the first and second respondents in this
case which prohibited assignments or cessions without consent. But the purport or effect is not dissimilar.
Wherever the award of a contract implies confidence by one contracting partner in the other, it would obviously B not be envisaged that the
partner selected would assign the contract to a third party. The exception in favour of bankers, and in the case of the FIDIC condition, of the
insurer who had discharged the loss or liability of the contracting partner, merely anticipates and gives prior permission for those specific
assignments in order to allow the chosen partner to finance, or as the case may be, to properly insure, the contractual interests. Where C the
parties to the contract, thereto, decide beforehand that there should be no cession or delegation or assignment without consent, this is a term
of the contract which the party giving the undertaking should not be allowed to breach.
It is no use arguing in a particular case that the contract has practically been performed and therefore such assignment or cession of a right or
obligation still existing under the contract and made without permission D should be declared valid despite the contractual provision forbidding
the assignment or cession. No such limitation is placed by the contract on the prohibition. Further claims and liabilities arising out of the
contract may long outlast the supposed performance which is claimed by a contract partner who assigns any part of rights or obligations under
the contract in contravention of the express term in the contract. E
I also think that the appeal should be dismissed.
Bizos J.A.
This is an appeal from the judgment of Nganunu J. dismissing with costs an application claiming the following relief from the two respondents: F
"1.1 Declaring that the two written deeds of cession concluded by the first respondent in favour of Triassic International Ltd. by Triassic International Ltd. in
favour of the applicant are valid and of full force and effect as against the second respondent.
1.2 Order the second respondent to pay to the applicant: G
1.2.1 P108,682;
1.2.2 Interest on the said sum at the rate of two per cent p.a. over the prevailing minimum commercial bank rates for H overdrafts in Botswana, as
provided for in cl. 60(3) of the agreements, alternatively at the rate of 10 per cent p.a. a tempore morae;
1.2.3 Declaring that the applicant is entitled to institute arbitration proceedings against the second respondent in its own name and on the terms of
arbitration which were argued upon by the parties on 10 August 1987.
2. Alternatively to para. 1 above:
2.1 Ordering the first respondent to pay to the applicant: P108,682.
2.2 Interest on the aforesaid sums at the rate of two per cent p.a. over

1993 BLR p248

AMISSAH JP
the prevailing minimum commercial bank rate for overdrafts in Botswana, as provided for in cl. 60(3) of the A agreements, alternatively at the rate of
10 per cent p.a. a tempore morae;
3. Ordering the first and second respondents to pay the cost of this application, alternatively ordering the first respondent to pay the costs of this application."

On 5 March 1982 Cyril Hurvitz Export Co., then operating as Ranch International Pipelines, a Botswana B corporation, the first respondent, and
the Botswana Power Corporation "BPC", second respondent, entered into two contracts whereby first respondent was to perform services and
supply materials to second respondent also referred to as the employer. First respondent satisfactorily performed all its obligations by September
1984 and on 17 March 1987 second respondent submitted a final certificate for payment, acknowledging an C indebtedness of P108,682. There
are no counterclaims or set­offs claimed by second respondent against the appellant. There is a dispute between the first respondent in relation
to a claim of P833,636.80 against the second respondent which first respondent and second respondent agree is subject to arbitration. D
In June 1985, first respondent was placed in provisional winding­up and Mr. Hurvitz, director and a shareholder of first respondent, was placed
under provisional sequestration. While under provisional winding­up first respondent entered into a cession agreement with Triassic International
Ltd. ("Triassic"), a London based company. The parties concluded the cession agreement on 31 July 1985, to be effective as of 31 March 1985.
On the fact of it the cession agreement ceded all claims to moneys owed to first respondent by second E respondent, specifically including all
such claims as may have to be submitted to arbitration.
On 10 July 1986, Triassic ceded its claims under the first cession agreement to Drambore Ltd., the appellant. The agreement was deemed to
have become effective retrospectively to 31 March 1985. As on a number of other facts and circumstances no apparent reason can be
discerned from the affidavits what the reason for the F retrospectivity was.
Second respondent received notification of the cession agreements on 31 March 1987 and on 7 May 1987 appellant demanded payment from
second respondent in terms of the final certificate. Second respondent did not reply to this specific demand but informed appellant on several
occasions that it did not recognise the validity of the cession agreement, as in terms of cl. 3 of the contract: G
"The contractor shall not assign the contract or any part thereof, or any benefit or interest therein or thereunder, otherwise than by a charge in favour of the
contractor's bankers of any monies due or to become due under this contract, without the prior written consent of the employer." H

During the course of 1987 and 1988 appellant attempted to enforce the cession agreements against second respondent and attempted to enlist
the aid of first respondent to this end. Second respondent refused to make any payments to a party other than first respondent or its
authorised agent and first respondent refused to demand payment in its own name, or in any

1993 BLR p249

AMISSAH JP
other way assist appellant in enforcing the cession agreements. This led to this litigation. A

The main thrust of the argument of Mr. Spilg on behalf of the appellant was that the cessions were valid as the prohibition against assignment
or the pactum non cedendo in cl. 3 of the agreement is invalid as it served no useful purpose at the time the cessions were executed. The
appellant relied on:
Paiges v. Van Ryn Gold Mines Estates Ltd. 1920 A.D. 600 at pp. 614­615; Christie, The Law of Contract in B South Africa (2nd ed.) pp. 553­4;
Book v. Davidson 1989 (1) S.A. 638 (ZSC) at pp. 642H­643A; Magna Alloys and Research (S.A.) (Pty.) Ltd. v. Ellis 1984 (4) S.A. 874 (A) at p.
894F; National Chemsearch (S.A.) (Pty.) Ltd. v. Borrowman 1979 (3) S.A. 1092 (T) at pp. 1106­8; Densam (Pty.) Ltd. v. Cywilnat (Pty.) Ltd.
1991 (1) S.A. 100 (A) at p. 112A­H; Sasfin (Pty.) Ltd. v. Beukes 1989 (1) S.A. 626 (A) at pp. 31I­32A; Botha and Another v. C Carapax
Shadeports (Pty.) Ltd. 1992 (1) S.A. 202 (A) at pp. 215I­216B.
On behalf of the second respondent Mr. Hoffman submitted that a distinction is to be drawn between an agreement in relation to a right which
already exists and a right which is created for the first time. In support of his contention he quotes Scott, The Law of Cession at p. 2: D
"To my mind the position in South African Law at the moment in regard to pacta de non cedendo is as follows: an agreement restricting the cedability of
existing rights is invalid unless the restriction is in the interest of the person in whose favour it has been made. If the restricting agreement is part and parcel of
the agreement creating the right, such an E agreement is also valid, even if the cedent has no interest in the restraint. In both cases "

And Christie, The Law of Contract in South Africa (2nd ed.) says at p. 354: F

"So strongly does the law favour cession that no effect will be given to a pactum de non cedendo that purports to restrict the power to cede an already existing
right unless the other party to the agreement has an interest in imposing the restriction on the owner of the right. But it is otherwise if the restriction is
incorporated in the contract that creates the right, the freedom to create a right with a restriction against alienation being unfettered." G

The views of the two writers find support in: Paiges v. Van Rhyn Gold Mines Estates 1920 A.D. 600 at pp. 615 and 617 and Trust Bank of Africa
© 2018
Ltd.Juta and Company
v. Standard Bank(Pty) Ltd. Ltd. 1968 (3) S.A. 166 (A) at p. 189D­G whereDownloaded
of S.A. the learned: judge
Sat Octof14appeal
2023 21:48:49
says: HGMT+0200 (South Africa Standard Time)
"The rule of our law is that all rights in personam, subject to certain exceptions based principally upon the personal nature of the rights, not here relevant, can
 2.2 Interest on the aforesaid sums at the rate of two per cent p.a. over

1993 BLR p248

AMISSAH JP
the prevailing minimum commercial bank rate for overdrafts in Botswana, as provided for in cl. 60(3) of the A agreements, alternatively at the rate of
10 per cent p.a. a tempore morae;
3. Ordering the first and second respondents to pay the cost of this application, alternatively ordering the first respondent to pay the costs of this application."

On 5 March 1982 Cyril Hurvitz Export Co., then operating as Ranch International Pipelines, a Botswana B corporation, the first respondent, and
the Botswana Power Corporation "BPC", second respondent, entered into two contracts whereby first respondent was to perform services and
supply materials to second respondent also referred to as the employer. First respondent satisfactorily performed all its obligations by September
1984 and on 17 March 1987 second respondent submitted a final certificate for payment, acknowledging an C indebtedness of P108,682. There
are no counterclaims or set­offs claimed by second respondent against the appellant. There is a dispute between the first respondent in relation
to a claim of P833,636.80 against the second respondent which first respondent and second respondent agree is subject to arbitration. D
In June 1985, first respondent was placed in provisional winding­up and Mr. Hurvitz, director and a shareholder of first respondent, was placed
under provisional sequestration. While under provisional winding­up first respondent entered into a cession agreement with Triassic International
Ltd. ("Triassic"), a London based company. The parties concluded the cession agreement on 31 July 1985, to be effective as of 31 March 1985.
On the fact of it the cession agreement ceded all claims to moneys owed to first respondent by second E respondent, specifically including all
such claims as may have to be submitted to arbitration.
On 10 July 1986, Triassic ceded its claims under the first cession agreement to Drambore Ltd., the appellant. The agreement was deemed to
have become effective retrospectively to 31 March 1985. As on a number of other facts and circumstances no apparent reason can be
discerned from the affidavits what the reason for the F retrospectivity was.
Second respondent received notification of the cession agreements on 31 March 1987 and on 7 May 1987 appellant demanded payment from
second respondent in terms of the final certificate. Second respondent did not reply to this specific demand but informed appellant on several
occasions that it did not recognise the validity of the cession agreement, as in terms of cl. 3 of the contract: G
"The contractor shall not assign the contract or any part thereof, or any benefit or interest therein or thereunder, otherwise than by a charge in favour of the
contractor's bankers of any monies due or to become due under this contract, without the prior written consent of the employer." H

During the course of 1987 and 1988 appellant attempted to enforce the cession agreements against second respondent and attempted to enlist
the aid of first respondent to this end. Second respondent refused to make any payments to a party other than first respondent or its
authorised agent and first respondent refused to demand payment in its own name, or in any

1993 BLR p249

AMISSAH JP
other way assist appellant in enforcing the cession agreements. This led to this litigation. A

The main thrust of the argument of Mr. Spilg on behalf of the appellant was that the cessions were valid as the prohibition against assignment
or the pactum non cedendo in cl. 3 of the agreement is invalid as it served no useful purpose at the time the cessions were executed. The
appellant relied on:
Paiges v. Van Ryn Gold Mines Estates Ltd. 1920 A.D. 600 at pp. 614­615; Christie, The Law of Contract in B South Africa (2nd ed.) pp. 553­4;
Book v. Davidson 1989 (1) S.A. 638 (ZSC) at pp. 642H­643A; Magna Alloys and Research (S.A.) (Pty.) Ltd. v. Ellis 1984 (4) S.A. 874 (A) at p.
894F; National Chemsearch (S.A.) (Pty.) Ltd. v. Borrowman 1979 (3) S.A. 1092 (T) at pp. 1106­8; Densam (Pty.) Ltd. v. Cywilnat (Pty.) Ltd.
1991 (1) S.A. 100 (A) at p. 112A­H; Sasfin (Pty.) Ltd. v. Beukes 1989 (1) S.A. 626 (A) at pp. 31I­32A; Botha and Another v. C Carapax
Shadeports (Pty.) Ltd. 1992 (1) S.A. 202 (A) at pp. 215I­216B.
On behalf of the second respondent Mr. Hoffman submitted that a distinction is to be drawn between an agreement in relation to a right which
already exists and a right which is created for the first time. In support of his contention he quotes Scott, The Law of Cession at p. 2: D
"To my mind the position in South African Law at the moment in regard to pacta de non cedendo is as follows: an agreement restricting the cedability of
existing rights is invalid unless the restriction is in the interest of the person in whose favour it has been made. If the restricting agreement is part and parcel of
the agreement creating the right, such an E agreement is also valid, even if the cedent has no interest in the restraint. In both cases "

And Christie, The Law of Contract in South Africa (2nd ed.) says at p. 354: F

"So strongly does the law favour cession that no effect will be given to a pactum de non cedendo that purports to restrict the power to cede an already existing
right unless the other party to the agreement has an interest in imposing the restriction on the owner of the right. But it is otherwise if the restriction is
incorporated in the contract that creates the right, the freedom to create a right with a restriction against alienation being unfettered." G

The views of the two writers find support in: Paiges v. Van Rhyn Gold Mines Estates 1920 A.D. 600 at pp. 615 and 617 and Trust Bank of Africa
Ltd. v. Standard Bank of S.A. Ltd. 1968 (3) S.A. 166 (A) at p. 189D­G where the learned judge of appeal says: H
"The rule of our law is that all rights in personam, subject to certain exceptions based principally upon the personal nature of the rights, not here relevant, can
be freely ceded, but an owner's rights of free disposal of his property may be restricted by a pactum de non cedendo. The effect of such a pactum depends upon
the circumstances. Voet, 2.14.20 and Sande,

1993 BLR p250

AMISSAH JP
Restraints, 4.1.1, and 4.2.1, point out that an agreement whereby an owner deprives himself of the free right to deal with A his own property, is without effect
unless the other contracting party has an interest in the restriction, and Windscheid, Pandektenrechts, 8th ed, p. 358, note 5, refers to the fact relied upon by
Seuffert that also in the case of corporeals a contractual prohibition against alienation does not render the alienation void. These principles do not, however,
apply where the right is created with a restriction against alienation, and the restriction is contained in the very agreement recording the B right, for in such a
case the right itself is limited by the stipulation against alienation and can be relied upon by the debtor for whose benefit the stipulation was made. (Paiges v. Van
Rhyn Gold Mines Estates Ltd. 1920 A.D. 600 at 615 and 617 and see Windscheid, op. cit., para. (C) and note 5, and Dernburg, Pandekten, 7th ed., vol. II, p.
141)." C

The learned judge a quo held against the appellant on this issue. He was in my view correct in his conclusion.
The argument advanced on behalf of the appellant that for validity of the prohibition clause to be effective against a cessionary it must serve a
useful purpose in pursuance of public policy that rights should be freely transferable in the interest of fostering commercial activity is not well
founded. It does not take into account the important D distinction made in the authorities referred to above nor does it take into account the
principle that public policy requires that the terms of agreements seriously entered into should be given effect.
If it is necessary to enquire into whether or not there was a useful purpose for the restriction I would hold that there was. The identity of one's
creditor is not unimportant to a debtor. Generally, there may be a counterclaim E which may be rendered nugatory if the party to whom the
debt has been ceded is not financially sound, the debtor may not want to litigate against a commercial opponent nor submit to arbitration
against a commercial opponent nor submit to arbitration in relation to disputes that may arise. The second respondent specifically limited the
creditor's right to payment to be assigned in favour of its banker no doubt to allow the contractor to F finance the performance in terms of the
contract. It must have been "useful" to the second respondent to confine its contractual privity to the local company with which it had entered
into the contract rather than unknown persons or companies over whom the courts of Botswana may not have had jurisdiction for any counter­
performance in its favour that may have arisen. Finally, I respectfully agree with the compelling reasons G mentioned by the learned judge a quo
as to the relevant time when the issue should be exchanged, see Drambore v. Cyril Hurvitz Export Co. (BP) [1992] B.L.R. 217 at p. 223H:
"It would not be reasonable to expect that the employer must accept any and every cessionary to when the first respondent may make over its rights of claim.
In my view the issue of whether the prohibition is judged to be valid or not is H as at the time the agreement is concluded, and not after, with the benefit of
hindsight."

I am not persuaded by the argument to the contrary advanced on behalf of the appellant.

1993 BLR p251

AMISSAH JP
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It was further argued on behalf of the appellant that cl. 3 should be interpreted on the basis of the Roman­Dutch A Law principles which
 authorised agent and first respondent refused to demand payment in its own name, or in any

1993 BLR p249

AMISSAH JP
other way assist appellant in enforcing the cession agreements. This led to this litigation. A

The main thrust of the argument of Mr. Spilg on behalf of the appellant was that the cessions were valid as the prohibition against assignment
or the pactum non cedendo in cl. 3 of the agreement is invalid as it served no useful purpose at the time the cessions were executed. The
appellant relied on:
Paiges v. Van Ryn Gold Mines Estates Ltd. 1920 A.D. 600 at pp. 614­615; Christie, The Law of Contract in B South Africa (2nd ed.) pp. 553­4;
Book v. Davidson 1989 (1) S.A. 638 (ZSC) at pp. 642H­643A; Magna Alloys and Research (S.A.) (Pty.) Ltd. v. Ellis 1984 (4) S.A. 874 (A) at p.
894F; National Chemsearch (S.A.) (Pty.) Ltd. v. Borrowman 1979 (3) S.A. 1092 (T) at pp. 1106­8; Densam (Pty.) Ltd. v. Cywilnat (Pty.) Ltd.
1991 (1) S.A. 100 (A) at p. 112A­H; Sasfin (Pty.) Ltd. v. Beukes 1989 (1) S.A. 626 (A) at pp. 31I­32A; Botha and Another v. C Carapax
Shadeports (Pty.) Ltd. 1992 (1) S.A. 202 (A) at pp. 215I­216B.
On behalf of the second respondent Mr. Hoffman submitted that a distinction is to be drawn between an agreement in relation to a right which
already exists and a right which is created for the first time. In support of his contention he quotes Scott, The Law of Cession at p. 2: D
"To my mind the position in South African Law at the moment in regard to pacta de non cedendo is as follows: an agreement restricting the cedability of
existing rights is invalid unless the restriction is in the interest of the person in whose favour it has been made. If the restricting agreement is part and parcel of
the agreement creating the right, such an E agreement is also valid, even if the cedent has no interest in the restraint. In both cases "

And Christie, The Law of Contract in South Africa (2nd ed.) says at p. 354: F

"So strongly does the law favour cession that no effect will be given to a pactum de non cedendo that purports to restrict the power to cede an already existing
right unless the other party to the agreement has an interest in imposing the restriction on the owner of the right. But it is otherwise if the restriction is
incorporated in the contract that creates the right, the freedom to create a right with a restriction against alienation being unfettered." G

The views of the two writers find support in: Paiges v. Van Rhyn Gold Mines Estates 1920 A.D. 600 at pp. 615 and 617 and Trust Bank of Africa
Ltd. v. Standard Bank of S.A. Ltd. 1968 (3) S.A. 166 (A) at p. 189D­G where the learned judge of appeal says: H
"The rule of our law is that all rights in personam, subject to certain exceptions based principally upon the personal nature of the rights, not here relevant, can
be freely ceded, but an owner's rights of free disposal of his property may be restricted by a pactum de non cedendo. The effect of such a pactum depends upon
the circumstances. Voet, 2.14.20 and Sande,

1993 BLR p250

AMISSAH JP
Restraints, 4.1.1, and 4.2.1, point out that an agreement whereby an owner deprives himself of the free right to deal with A his own property, is without effect
unless the other contracting party has an interest in the restriction, and Windscheid, Pandektenrechts, 8th ed, p. 358, note 5, refers to the fact relied upon by
Seuffert that also in the case of corporeals a contractual prohibition against alienation does not render the alienation void. These principles do not, however,
apply where the right is created with a restriction against alienation, and the restriction is contained in the very agreement recording the B right, for in such a
case the right itself is limited by the stipulation against alienation and can be relied upon by the debtor for whose benefit the stipulation was made. (Paiges v. Van
Rhyn Gold Mines Estates Ltd. 1920 A.D. 600 at 615 and 617 and see Windscheid, op. cit., para. (C) and note 5, and Dernburg, Pandekten, 7th ed., vol. II, p.
141)." C

The learned judge a quo held against the appellant on this issue. He was in my view correct in his conclusion.
The argument advanced on behalf of the appellant that for validity of the prohibition clause to be effective against a cessionary it must serve a
useful purpose in pursuance of public policy that rights should be freely transferable in the interest of fostering commercial activity is not well
founded. It does not take into account the important D distinction made in the authorities referred to above nor does it take into account the
principle that public policy requires that the terms of agreements seriously entered into should be given effect.
If it is necessary to enquire into whether or not there was a useful purpose for the restriction I would hold that there was. The identity of one's
creditor is not unimportant to a debtor. Generally, there may be a counterclaim E which may be rendered nugatory if the party to whom the
debt has been ceded is not financially sound, the debtor may not want to litigate against a commercial opponent nor submit to arbitration
against a commercial opponent nor submit to arbitration in relation to disputes that may arise. The second respondent specifically limited the
creditor's right to payment to be assigned in favour of its banker no doubt to allow the contractor to F finance the performance in terms of the
contract. It must have been "useful" to the second respondent to confine its contractual privity to the local company with which it had entered
into the contract rather than unknown persons or companies over whom the courts of Botswana may not have had jurisdiction for any counter­
performance in its favour that may have arisen. Finally, I respectfully agree with the compelling reasons G mentioned by the learned judge a quo
as to the relevant time when the issue should be exchanged, see Drambore v. Cyril Hurvitz Export Co. (BP) [1992] B.L.R. 217 at p. 223H:
"It would not be reasonable to expect that the employer must accept any and every cessionary to when the first respondent may make over its rights of claim.
In my view the issue of whether the prohibition is judged to be valid or not is H as at the time the agreement is concluded, and not after, with the benefit of
hindsight."

I am not persuaded by the argument to the contrary advanced on behalf of the appellant.

1993 BLR p251

AMISSAH JP
It was further argued on behalf of the appellant that cl. 3 should be interpreted on the basis of the Roman­Dutch A Law principles which
recognise the right of action which a creditor has against his debtor to a third person. This, so the argument went, is a cession which is
transferable without the consent of the debtor which is to be distinguished from a delegation of obligations to which consent is required. It was
further argued that assignment is an English import which, according to the argument, "includes a transfer of a contract itself as well as B
obligations under the contract".
It was submitted that the prohibition against assignment was to be restricted to the making over the contract itself and not the cause of action
arising out of the performance or the fruits of the performance.
In my view it is not necessary to dwell on this argument as the clear wording of cl. 3 of the contract, by C prohibiting the transfer of "any
benefit or interest therein or thereunder " (my emphasis), clearly prohibits a cession and in the context the word "assign" encompasses both
cession and delegation.
It was also argued that public policy should lead us to adopt a pragmatic approach and grant the relief claimed against the respondents. D

The effect of the pactum de non cedendo is that a cession contrary to the restraint is of no force and effect and does not result in a claim for
damages for breach of contract: Vawda v. Vawda and Another 1980 (2) S.A. 341 (T) at p. 346 in fine­347A. See also: Scott op cit at p. 213
and Wille's Principles of South African Law (8th ed.) at p. 450. On this issue I can do no better than refer to the judgment of the court a quo at
p. 225: E
" I am of the view that the purported agreements of cession, being in breach of the restraint to cede in clause 3 of the Agreements, were invalid, i.e. cannot be
relied upon to create legal obligations between those that signed them and their successors. Such agreements therefore cannot give rise to any legal obligations
and the first respondent was not bound to assist. Reference was made in the Paiges v. Van Rhyn Gold Mines Estate (supra) to the fact that where there is a valid
F pactum de non cedendo restricting the rights created successors of the creditor cannot get any better rights than the creditor had. If therefore the cession is
invalid as between the employer and the cessionary, mentioned above, they are therefore also invalid as between the cedent and as far as the cessionary are
concerned and the cessionary cannot sue on them." G

I cannot see what policy or pragmatism should lead us to disagree with the learned judge a quo and grant any relief to the appellant against
one or other of the respondents.
I would dismiss the appeal with costs.
Aguda J.A. I agree H

Amissah J.P. The appeal is dismissed with costs.

Appeal
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and Company (Pty) Ltd. Downloaded : Sat Oct 14 2023 21:48:49 GMT+0200 (South Africa Standard Time)
1993 BLR p252
 the circumstances. Voet, 2.14.20 and Sande,

1993 BLR p250

AMISSAH JP
Restraints, 4.1.1, and 4.2.1, point out that an agreement whereby an owner deprives himself of the free right to deal with A his own property, is without effect
unless the other contracting party has an interest in the restriction, and Windscheid, Pandektenrechts, 8th ed, p. 358, note 5, refers to the fact relied upon by
Seuffert that also in the case of corporeals a contractual prohibition against alienation does not render the alienation void. These principles do not, however,
apply where the right is created with a restriction against alienation, and the restriction is contained in the very agreement recording the B right, for in such a
case the right itself is limited by the stipulation against alienation and can be relied upon by the debtor for whose benefit the stipulation was made. (Paiges v. Van
Rhyn Gold Mines Estates Ltd. 1920 A.D. 600 at 615 and 617 and see Windscheid, op. cit., para. (C) and note 5, and Dernburg, Pandekten, 7th ed., vol. II, p.
141)." C

The learned judge a quo held against the appellant on this issue. He was in my view correct in his conclusion.
The argument advanced on behalf of the appellant that for validity of the prohibition clause to be effective against a cessionary it must serve a
useful purpose in pursuance of public policy that rights should be freely transferable in the interest of fostering commercial activity is not well
founded. It does not take into account the important D distinction made in the authorities referred to above nor does it take into account the
principle that public policy requires that the terms of agreements seriously entered into should be given effect.
If it is necessary to enquire into whether or not there was a useful purpose for the restriction I would hold that there was. The identity of one's
creditor is not unimportant to a debtor. Generally, there may be a counterclaim E which may be rendered nugatory if the party to whom the
debt has been ceded is not financially sound, the debtor may not want to litigate against a commercial opponent nor submit to arbitration
against a commercial opponent nor submit to arbitration in relation to disputes that may arise. The second respondent specifically limited the
creditor's right to payment to be assigned in favour of its banker no doubt to allow the contractor to F finance the performance in terms of the
contract. It must have been "useful" to the second respondent to confine its contractual privity to the local company with which it had entered
into the contract rather than unknown persons or companies over whom the courts of Botswana may not have had jurisdiction for any counter­
performance in its favour that may have arisen. Finally, I respectfully agree with the compelling reasons G mentioned by the learned judge a quo
as to the relevant time when the issue should be exchanged, see Drambore v. Cyril Hurvitz Export Co. (BP) [1992] B.L.R. 217 at p. 223H:
"It would not be reasonable to expect that the employer must accept any and every cessionary to when the first respondent may make over its rights of claim.
In my view the issue of whether the prohibition is judged to be valid or not is H as at the time the agreement is concluded, and not after, with the benefit of
hindsight."

I am not persuaded by the argument to the contrary advanced on behalf of the appellant.

1993 BLR p251

AMISSAH JP
It was further argued on behalf of the appellant that cl. 3 should be interpreted on the basis of the Roman­Dutch A Law principles which
recognise the right of action which a creditor has against his debtor to a third person. This, so the argument went, is a cession which is
transferable without the consent of the debtor which is to be distinguished from a delegation of obligations to which consent is required. It was
further argued that assignment is an English import which, according to the argument, "includes a transfer of a contract itself as well as B
obligations under the contract".
It was submitted that the prohibition against assignment was to be restricted to the making over the contract itself and not the cause of action
arising out of the performance or the fruits of the performance.
In my view it is not necessary to dwell on this argument as the clear wording of cl. 3 of the contract, by C prohibiting the transfer of "any
benefit or interest therein or thereunder " (my emphasis), clearly prohibits a cession and in the context the word "assign" encompasses both
cession and delegation.
It was also argued that public policy should lead us to adopt a pragmatic approach and grant the relief claimed against the respondents. D

The effect of the pactum de non cedendo is that a cession contrary to the restraint is of no force and effect and does not result in a claim for
damages for breach of contract: Vawda v. Vawda and Another 1980 (2) S.A. 341 (T) at p. 346 in fine­347A. See also: Scott op cit at p. 213
and Wille's Principles of South African Law (8th ed.) at p. 450. On this issue I can do no better than refer to the judgment of the court a quo at
p. 225: E
" I am of the view that the purported agreements of cession, being in breach of the restraint to cede in clause 3 of the Agreements, were invalid, i.e. cannot be
relied upon to create legal obligations between those that signed them and their successors. Such agreements therefore cannot give rise to any legal obligations
and the first respondent was not bound to assist. Reference was made in the Paiges v. Van Rhyn Gold Mines Estate (supra) to the fact that where there is a valid
F pactum de non cedendo restricting the rights created successors of the creditor cannot get any better rights than the creditor had. If therefore the cession is
invalid as between the employer and the cessionary, mentioned above, they are therefore also invalid as between the cedent and as far as the cessionary are
concerned and the cessionary cannot sue on them." G

I cannot see what policy or pragmatism should lead us to disagree with the learned judge a quo and grant any relief to the appellant against
one or other of the respondents.
I would dismiss the appeal with costs.
Aguda J.A. I agree H

Amissah J.P. The appeal is dismissed with costs.

Appeal dismissed.

1993 BLR p252

A

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 I am not persuaded by the argument to the contrary advanced on behalf of the appellant.

1993 BLR p251

AMISSAH JP
It was further argued on behalf of the appellant that cl. 3 should be interpreted on the basis of the Roman­Dutch A Law principles which
recognise the right of action which a creditor has against his debtor to a third person. This, so the argument went, is a cession which is
transferable without the consent of the debtor which is to be distinguished from a delegation of obligations to which consent is required. It was
further argued that assignment is an English import which, according to the argument, "includes a transfer of a contract itself as well as B
obligations under the contract".
It was submitted that the prohibition against assignment was to be restricted to the making over the contract itself and not the cause of action
arising out of the performance or the fruits of the performance.
In my view it is not necessary to dwell on this argument as the clear wording of cl. 3 of the contract, by C prohibiting the transfer of "any
benefit or interest therein or thereunder " (my emphasis), clearly prohibits a cession and in the context the word "assign" encompasses both
cession and delegation.
It was also argued that public policy should lead us to adopt a pragmatic approach and grant the relief claimed against the respondents. D

The effect of the pactum de non cedendo is that a cession contrary to the restraint is of no force and effect and does not result in a claim for
damages for breach of contract: Vawda v. Vawda and Another 1980 (2) S.A. 341 (T) at p. 346 in fine­347A. See also: Scott op cit at p. 213
and Wille's Principles of South African Law (8th ed.) at p. 450. On this issue I can do no better than refer to the judgment of the court a quo at
p. 225: E
" I am of the view that the purported agreements of cession, being in breach of the restraint to cede in clause 3 of the Agreements, were invalid, i.e. cannot be
relied upon to create legal obligations between those that signed them and their successors. Such agreements therefore cannot give rise to any legal obligations
and the first respondent was not bound to assist. Reference was made in the Paiges v. Van Rhyn Gold Mines Estate (supra) to the fact that where there is a valid
F pactum de non cedendo restricting the rights created successors of the creditor cannot get any better rights than the creditor had. If therefore the cession is
invalid as between the employer and the cessionary, mentioned above, they are therefore also invalid as between the cedent and as far as the cessionary are
concerned and the cessionary cannot sue on them." G

I cannot see what policy or pragmatism should lead us to disagree with the learned judge a quo and grant any relief to the appellant against
one or other of the respondents.
I would dismiss the appeal with costs.
Aguda J.A. I agree H

Amissah J.P. The appeal is dismissed with costs.

Appeal dismissed.

1993 BLR p252

A

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 Appeal dismissed.

1993 BLR p252

A

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