Case Digiest: Noormohamed Abdulla Osman & Another versus Abdul Aziz Hageb

CASE DIGEST: NOORMOHAMED ABDULLA OSMAN & ANOTHER VERSUS ABDUL AZIZ HAGEB

Case Title: Noormohamed Abdulla Osman & Another Versus Abdul Aziz Hageb
Citation: Civil Appeal No. 264 Of 2019 [2024] TZCA 766
Court: Court of Appeal at Mwanza
Date of Decision: 19th August, 2024
Judges: Mugasha, J.A., Ngwembe, J.A., Mlacha, J.A.

OVERVIEW

In this riveting legal saga, Abdul Aziz Hageb (the Respondent), sued NoorMohamed Abdullah Osman and Mohamed Said Seif, the Appellants, before the High Court of Tanzania, at Mwanza. The cause of action was premised as hereunder:

1. The legality of the 1st Appellant’s rescission of the sale agreement of a house located on Plot No. 81 Block Q, Uhuru Street in Mwanza City (the suit premises) between him and the 1st Appellant after he had paid a substantial sum to purchase the suit property
2. The legality of the consequent re-sale agreement of the suit premises between 1st Appellant to the 2nd Appellant.
   
   The reliefs sought by the Respondent included a declaration that the subsequent sale agreement between the Appellants was a nullity; permanent injunction against the Appellants from disturbing the Respondent from occupying the suit premises, general damages and costs of the suit.

FACTS

This case revolves around a dispute over the sale and rescission of a property located at Plot No. 81, Block Q, Uhuru Street in Mwanza. The respondent, Abdul Aziz Hageb, initially entered into a sale agreement with the 1st appellant, Noormohamed Abdulla Osman, to purchase the property, but the 1st appellant rescinded the agreement after alleging default on the payment schedule. The property was then resold to the 2nd appellant, Mohamed Said Seif, leading to the respondent’s legal challenge.

The Trial court decided that the rescission was unilateral and unlawful; even though the Respondent had delayed in paying the purchase price, that did not amount to a default of the same. The Appellants were restrained from disturbing the Respondent and the Respondent was ordered to finalize the remaining instalments to perfect the transfer of the property. Being aggrieved by the decision of the trial court, the Appellants brought their grievances before the Court of Appeal in the form of this Appeal.

ARGUMENTS BY THE PARTIES

• Appellant’s Arguments:
  The Appellants maintained that the rescission was justified because the Respondent had defaulted to pay the scheduled instalments on agreed dates which was contrary to Clause 3 of the sale agreement and as such, he was entitled to rescind the agreement. Their argument was premised under Section 55(1) of the Law of Contract that states:”When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.”They also argued that the nature of the subject matter of the contract or the surrounding circumstances showed that time should be considered of essence.
• Respondent’s Arguments:
  The Respondent countered by pointing to Clause 3 of the sale agreement, which clearly stated that the dates of payment were not “of the essence,” provided each instalment was made before the next one was due. He emphasized that he had made all payments on time, and thus, the rescission and subsequent resale were unlawful.

RESPONDENT’S ARGUMENTS

The Respondent countered by pointing to Clause 3 of the sale agreement, which clearly stated that the dates of payment were not “of the essence,” provided each instalment was made before the next one was due. He emphasized that he had made all payments on time, and thus, the rescission and subsequent resale were unlawful. Clause 3 of the sale agreement stated

“The dates of payment of the instalments shall not be the essence of this contract as long as the purchaser pays due instalments before the next following instalment.”

DECISION OF THE COURT

The Court of Appeal upheld the High Court’s ruling that the rescission of the sale agreement by the 1st appellant was unlawful. The Court found that the Respondent had indeed complied with the payment schedule as per the agreement, and the 1st Appellant’s claim of default was unjustified. Since the Respondent was still the rightful owner under the original sale agreement, the 1st Appellant had no legal title to pass in the subsequent sale to the 2nd Appellant, making the resale void.

LEGAL PRINCIPLES ESTABLISHED

1. Contractual Flexibility: Payment schedules in contracts must be adhered to, but if the contract allows flexibility, strict compliance with specific dates is not always required. The Court cited with approval the comment in Halsbury’s Laws of England, 5th Edition Reissue Vol. 9 (1) at page 685 where it is stated that:
   The modem law, in the case of contracts of all types, may be summarized as follows: Time will not be considered to be of essence, except in one of the following cases:
   • Where the parties expressly stipulate conditions as to time must be strictly complied with.
   • The nature of the subject matter of the contract or the surrounding circumstances show that time should be considered of essence.
   • A party who has subjected to unreasonable delay gives notice to the party in default making time of essence.” [Emphasis supplied]
2. Rescission of Sale Agreements: A seller cannot unilaterally rescind a sale agreement without just cause, especially if the buyer is compliant with the terms.
3. Nemo dat quod non habet: A seller cannot transfer what they do not legally own. Once a property is sold, the seller cannot validly resell it to another party

SIGNIFICANCE OF THE CASE

This case serves as a crucial reminder that when time is intended to be of the essence, it must be explicitly stated&not assumed, especially in high-stakes real estate transactions. For investors & property developers, it underscores the importance of meticulously following all procedures & payment terms in a timely manner to avoid costly disputes & significant financial losses.CASE DIGEST: NOORMOHAMED ABDULLA OSMAN & ANOTHER VERSUS ABDUL AZIZ HAGEB

Case Title: Noormohamed Abdulla Osman & Another Versus Abdul Aziz Hageb
Citation: Civil Appeal No. 264 Of 2019 [2024] TZCA 766
Court: Court of Appeal at Mwanza
Date of Decision: 19th August, 2024
Judges: Mugasha, J.A., Ngwembe, J.A., Mlacha, J.A.

OVERVIEW

In this riveting legal saga, Abdul Aziz Hageb (the Respondent), sued NoorMohamed Abdullah Osman and Mohamed Said Seif, the Appellants, before the High Court of Tanzania, at Mwanza. The cause of action was premised as hereunder:

1. The legality of the 1st Appellant’s rescission of the sale agreement of a house located on Plot No. 81 Block Q, Uhuru Street in Mwanza City (the suit premises) between him and the 1st Appellant after he had paid a substantial sum to purchase the suit property
2. The legality of the consequent re-sale agreement of the suit premises between 1st Appellant to the 2nd Appellant.
   
   The reliefs sought by the Respondent included a declaration that the subsequent sale agreement between the Appellants was a nullity; permanent injunction against the Appellants from disturbing the Respondent from occupying the suit premises, general damages and costs of the suit.

FACTS

This case revolves around a dispute over the sale and rescission of a property located at Plot No. 81, Block Q, Uhuru Street in Mwanza. The respondent, Abdul Aziz Hageb, initially entered into a sale agreement with the 1st appellant, Noormohamed Abdulla Osman, to purchase the property, but the 1st appellant rescinded the agreement after alleging default on the payment schedule. The property was then resold to the 2nd appellant, Mohamed Said Seif, leading to the respondent’s legal challenge.

The Trial court decided that the rescission was unilateral and unlawful; even though the Respondent had delayed in paying the purchase price, that did not amount to a default of the same. The Appellants were restrained from disturbing the Respondent and the Respondent was ordered to finalize the remaining instalments to perfect the transfer of the property. Being aggrieved by the decision of the trial court, the Appellants brought their grievances before the Court of Appeal in the form of this Appeal.

ARGUMENTS BY THE PARTIES

• Appellant’s Arguments:
  The Appellants maintained that the rescission was justified because the Respondent had defaulted to pay the scheduled instalments on agreed dates which was contrary to Clause 3 of the sale agreement and as such, he was entitled to rescind the agreement. Their argument was premised under Section 55(1) of the Law of Contract that states:”When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.”They also argued that the nature of the subject matter of the contract or the surrounding circumstances showed that time should be considered of essence.
• Respondent’s Arguments:
  The Respondent countered by pointing to Clause 3 of the sale agreement, which clearly stated that the dates of payment were not “of the essence,” provided each instalment was made before the next one was due. He emphasized that he had made all payments on time, and thus, the rescission and subsequent resale were unlawful.

RESPONDENT’S ARGUMENTS

The Respondent countered by pointing to Clause 3 of the sale agreement, which clearly stated that the dates of payment were not “of the essence,” provided each instalment was made before the next one was due. He emphasized that he had made all payments on time, and thus, the rescission and subsequent resale were unlawful. Clause 3 of the sale agreement stated

“The dates of payment of the instalments shall not be the essence of this contract as long as the purchaser pays due instalments before the next following instalment.”

DECISION OF THE COURT

The Court of Appeal upheld the High Court’s ruling that the rescission of the sale agreement by the 1st appellant was unlawful. The Court found that the Respondent had indeed complied with the payment schedule as per the agreement, and the 1st Appellant’s claim of default was unjustified. Since the Respondent was still the rightful owner under the original sale agreement, the 1st Appellant had no legal title to pass in the subsequent sale to the 2nd Appellant, making the resale void.

LEGAL PRINCIPLES ESTABLISHED

1. Contractual Flexibility: Payment schedules in contracts must be adhered to, but if the contract allows flexibility, strict compliance with specific dates is not always required. The Court cited with approval the comment in Halsbury’s Laws of England, 5th Edition Reissue Vol. 9 (1) at page 685 where it is stated that:
   The modem law, in the case of contracts of all types, may be summarized as follows: Time will not be considered to be of essence, except in one of the following cases:
   • Where the parties expressly stipulate conditions as to time must be strictly complied with.
   • The nature of the subject matter of the contract or the surrounding circumstances show that time should be considered of essence.
   • A party who has subjected to unreasonable delay gives notice to the party in default making time of essence.” [Emphasis supplied]
2. Rescission of Sale Agreements: A seller cannot unilaterally rescind a sale agreement without just cause, especially if the buyer is compliant with the terms.
3. Nemo dat quod non habet: A seller cannot transfer what they do not legally own. Once a property is sold, the seller cannot validly resell it to another party

SIGNIFICANCE OF THE CASE

This case serves as a crucial reminder that when time is intended to be of the essence, it must be explicitly stated&not assumed, especially in high-stakes real estate transactions. For investors & property developers, it underscores the importance of meticulously following all procedures & payment terms in a timely manner to avoid costly disputes & significant financial losses.