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Boutique Shazim Limited v Bhatia & Another (Civil Appeal 4 of 2020)

Supreme Court · [2021] UGSC 9 · 2021 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second civil appeal from the Court of Appeal, which had reversed a High Court grant of specific performance
Decision
Appeal dismissed; the Court of Appeal's judgment, including the award of mesne profits of US$327,356 to the respondents, upheld

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Holding

The Supreme Court dismissed a second appeal, upholding the Court of Appeal. It held that time was of the essence under the sale agreement, which expressly provided that failure to pay the US$67,300 balance within 75 days would cause the agreement to lapse and the property to revert to the vendors. The appellant paid late, breaching the contract, which therefore lapsed and could not be revived by specific performance — an equitable remedy unavailable to a party in breach. Section 91 of the Evidence Act barred oral evidence varying the written terms, and no separate oral agreement on payment had been pleaded under section 92. The appellant became a trespasser liable for mesne profits of US$327,356.

Facts

On 1 July 1995 the appellant agreed to buy the respondents' property at Plot 12 Buganda Road for US$117,300. It paid US$50,000 on execution (by postdated cheques a few days later). The balance of US$67,300 was to be paid within 75 days; clause 2(b) provided that failure to pay within that time would cause the agreement to lapse and the property to revert to the vendors, subject to refund of the US$50,000. The appellant attempted payment nine days after the deadline; the respondents rejected it and offered to refund the deposit, which the appellant declined. After protracted litigation, the High Court granted the appellant specific performance, finding time was not of the essence and faulting the respondents for not supplying payment modalities. The Court of Appeal reversed, holding that time was of the essence, that the appellant breached, that the agreement lapsed, and that the appellant was a trespasser liable for mesne profits of US$327,356 (US$3,000 per month for January 1998 to October 2010).

Issues

  1. Whether time was of the essence in the contract for the sale of the suit land.
  2. Whether the question of time being of the essence could be determined where it was not pleaded but was argued at the submission stage.
  3. Whether the exceptions in section 92 of the Evidence Act permitted oral evidence of a separate agreement on the place and mode of payment where no such agreement was pleaded.
  4. Whether the appellant breached the contract by failing to pay the balance within the stipulated 75 days.
  5. Whether the appellant, being in breach, was entitled to specific performance of the sale agreement.
  6. Whether the appellant became a trespasser liable for mesne profits, and whether the mesne profits award was properly granted.

Orders

  • Appeal dismissed.
  • Judgment and orders of the Court of Appeal upheld.
  • The appellant to pay the respondents' costs in this Court and in the courts below.

Key headnotes

Contract Law — Sale of Land — Time of the Essence
Where a contract for the sale of land fixes a period for payment of the balance and expressly provides that the agreement lapses and the property reverts to the vendor on failure to pay within that period, time is of the essence of the contract.
Contract Law — Specific Performance — Party in Breach
Specific performance, being an equitable remedy, will not be granted in favour of a party that is itself in breach of the contract; a lapsed contract cannot be resurrected to enforce performance for the defaulting party.
Evidence — Parol Evidence Rule — Evidence Act ss.91 and 92
Where the terms of a contract have been reduced to a document, oral evidence varying those terms is inadmissible under section 91 of the Evidence Act, and a party relying on a separate oral agreement under the section 92 exceptions must plead it before it can be proved.
Civil Procedure — Pleadings — Issues Raised at Submission Stage
Parties are bound by their pleadings, and an issue not raised in the pleadings cannot properly be introduced for the first time at the submission stage so as to allow a party to succeed on a case it did not set up.
Land & Property — Passing of Property — Registered Land
Property in registered land passes only upon registration of a transfer instrument under the Registration of Titles Act; the equitable interest a purchaser acquires under a sale agreement does not override the vendor's legal rights where the agreement has lapsed for non-payment.
Land & Property — Trespass — Mesne Profits
A purchaser whose sale agreement has lapsed for failure to pay the balance loses its interest in the property and, by remaining in occupation, becomes a trespasser liable to pay mesne profits for the use and occupation of the property.
Civil Procedure — Second Appeal — Function of the Supreme Court
On a second appeal the Supreme Court does not re-evaluate the evidence afresh as a first appellate court would, but determines whether the first appellate court properly applied the relevant principles in approaching its task.

Legislation cited (13)

  • Evidence Act s.91
  • Evidence Act s.92(b)
  • Evidence Act s.92(c)
  • Evidence Act s.92(d)
  • Evidence Act s.79
  • Registration of Titles Act s.2
  • Registration of Titles Act s.91(2)
  • Judicature Act s.14(2)
  • Contracts Act s.47
  • Contracts Act s.64(1)
  • Contracts Act s.64(2)
  • Civil Procedure Rules Order 6 rule 15
  • Limitation Act

Cases cited (12)

  • Sharif Osman v Haji Haruna Mulangwa (Civil Appeal No. 38 of 1995)
  • Molly Turinawe and Others v Ephraim Turinawe and Another (Civil Appeal No. 10 of 2018)
  • Manzoor Vs Baram (2003) 2 EA 580
  • Interfreight Forwarders Ltd v East African Development Bank (Civil Appeal No. 33 of 1992)
  • Fang Min v Belex Tours and Travel Ltd (Civil Appeal No. 6 of 2013)
  • Hardwoods Pty Ltd vs Commissioner for Railways [1961] 1 ALLER 742
  • Steedman v Drinklle & Anor, [1914-15] ALLER 298
  • Katarikawe vs Katwiremu and Another, (1977) HCB 187
  • Osukuru Rubongi Land Development Advocacy Organization Ltd v Uganda Hui Neng Mining Ltd and Another (HCCS No. 332 of 2014)
  • Milly Masembe v Sugar Corporation (U) Ltd and Another (Civil Appeal No. 1 of 2000)
  • Francis Sembatya v Alport Services Ltd (Civil Appeal No. 6 of 1999)
  • Banco Arabe Espanol v Bank of Uganda (Civil Appeal No. 8 of 1998)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.