The Commercial Division of the High Court has finally resolved an 18-year legal dispute between Kampala Capital City Authority (KCCA) and Twed Property Development.
In its ruling, court directed KCCA to offset more than Shs108m spent by Twed Property on the construction of a public road in Nakasero.
In an electronically delivered September 23 judgment, Justice Patience T. E. Rubagumya directed KCCA to deduct the amount from Twed’s property rate obligations, effectively reducing the city authority’s original claim from Shs151m to Shs43m. ‘The applicant (KCCA) is hereby directed to offset against the liability of the respondent (Twed Property) the sum of over Shs108m,’ the ruling reads in part.
However, court granted KCCA the right to recover Shs43m in property rates due from Twed for its commercial property located on Lumumba Avenue, Nakasero, Kampala Central.
Background
The case stems from road construction works carried out by Twed Property in 2007 along Nakasero Lane, adjacent to Twed Plaza, at more than Shs108m.
The project, approved by the then Kampala City Council, was completed under the supervision of the City Engineering Department, which issued a Certificate of Completion verifying its quality and scope.
Under the Local Governments (Rating) Act, developers who legally undertake approved public infrastructure works are entitled to offset the costs against their property rate liabilities, provided the works are certified.
Twed argued that it was entitled to deduct the cost of the road works from its property rates. But for nearly two decades, KCCA resisted recognizing the offset.
Court findings
In February 2024, KCCA acknowledged Twed’s claim but attempted to apply the offset only to arrears listed in a 2009 supplementary valuation list.
Twed challenged this, arguing that the list had expired and was never gazetted, making the arrears legally unenforceable.
Twed, represented by Mr David Kato of Kato and Co. Advocates, maintained that the company had complied with all legal requirements, and KCCA’s attempt to limit the offset was contrary to the law.
‘The company acted in full compliance with statutory requirements. KCCA’s insistence on applying the offset to expired arrears is inconsistent with the law.’ Mr Kato argued in documents filed before court.
Justice Rubagumya agreed, ruling that the 2009 valuation list had no legal effect because it was not gazetted as required under the Local Governments (Rating) Act.
‘Property rate arrears must be recovered within six years of becoming due. Claims beyond this period are barred by law and cannot be enforced,’ she held.
‘Local authorities cannot ignore statutory provisions, and any attempt to bypass lawful offsets undermines fairness and legal compliance.’
KCCA, represented by Ms Florence Nakabugo and Mr Joseph Lumu of K and K Advocates, had maintained that the waiver for public works applied only to the 2009 list.
‘KCCA’s position is that the waiver for public works applied only to rates arising from the 2009 supplementary valuation,’ said Mr Lumu.
‘We do not dispute that the works were carried out, but the offset cannot extend to current rate obligations without a proper statutory basis.’
Thus, the ruling reduces KCCA’s recoverable claim to Shs43m, which KCCA may now collect through a summary warrant.
Ms Nakabugo noted that the ruling underscores the need for the timely gazettal of valuation lists to ensure transparency and protect city revenues.
Meanwhile, Mr Dan Twebaze, Twed Property managing director, said the ruling confirms that once public works are undertaken legally to improve public infrastructure, their cost must be offset against property rates in accordance with the law.’
He noted that the decision also reaffirms the six-year limitation period for recovering rates, ‘protecting property owners from being pursued for expired liabilities.’
On costs, Justice Rubagumya invoked the Civil Procedure Act, observing that since both parties had partially succeeded, each would bear its own legal costs.