The High Court Commercial Division has awarded more than Shs1.25 billion in damages and compensation to two traders after finding that managers of the New Park Lockup Owners Association breached a binding agreement that guaranteed pioneer members shops on the ground floor of the redeveloped New Taxi Park complex.
In his judgment, Justice Stephen Mubiru ruled in favour of Kakooza Hussein and Sarah Nabuuma Kakooza, who sued the New Park Lockup Owners Association and eight of its officials over the allocation of lockup shops following the redevelopment of the market.
The defendants are the New Park Lockup Owners Association, Mr John Fred Kiyimba, Mr John Rogers Tusingire, Ms Mada Nagadya, Mr Milton Muhwezi, Mr Wilberforce Lugayavu, Mr Ntake Lule, Mr Muhamad Semanda and Mr Sekalo Mukasa.
The dispute arose from a resolution passed by members of the association on December 11, 2010, which reserved ground-floor lockup shops measuring 10 by 10 feet for original tenants, commonly referred to as pioneer members, provided they fulfilled their financial obligations towards the redevelopment project.
The plaintiffs, Kakooza and Nabuuma, argued that although they paid the required contributions, they were denied the promised ground-floor shops while some units were instead sold to outsiders.
Justice Mubiru agreed, finding that the association and its leaders violated both contractual obligations and fiduciary duties owed to the pioneer members.
‘By continuing to receive the landlords’ contributions despite the missed deadlines, the 1st defendant implicitly indicated that time was no longer strictly of the essence,’ the judge held.
The court found that while the original arrangement required members to pay within specified timelines, the association later obtained a bank loan to finance the project and continued accepting payments from members without enforcing the earlier deadlines.
According to the judgment, this conduct amounted to a waiver of the strict payment timelines, meaning the plaintiffs retained their entitlement to the promised ground-floor shops after completing payment.
Justice Mubiru noted that the association had created a legitimate expectation among pioneer members that they would occupy the ground floor once the project was completed.
‘The directors’ decision to sell the ground-floor shops to the general public was a breach of their fiduciary duties to the plaintiffs,’ he ruled.
The judge emphasised that properly passed resolutions at members’ meetings are legally binding on a company and its directors.
‘Breaching these decisions can render the directors liable for negligence or breach of fiduciary duty,’ he stated.
Evidence before the court showed that Nabuuma completed her payments in September 2016, while Kakooza cleared his obligations in January 2017 after contributing a revised amount of Shs88.5 million each towards the project.
Although the defendants claimed that the plaintiffs had already been allocated shops, the court found no evidence that possession had ever been handed over.
‘There is therefore neither evidence to show that shop units No. 763 and No. 870 have ever been handed over to the plaintiffs, nor that the plaintiffs are in physical possession as claimed by the defendants,’ Justice Mubiru ruled.
However, the court dismissed allegations of fraud against the association and its officials, holding that the plaintiffs had failed to meet the higher standard of proof required in fraud claims.
‘The defendants never acted fraudulently and did not secretly allocate shops on the ground floor to non-pioneer members,’ the judge ruled.
In the final orders, the court directed the defendants to immediately hand over vacant possession of Shop No. 763 and its condominium title to Sarah Nabuuma Kakooza.
The court further awarded her Shs283.5 million in general damages for loss of rental income dating back to January 2017.
For Kakooza, the judge found that all ground-floor units had already been disposed of by the time he completed payment, making specific performance impossible. Instead, the court awarded him Shs957.5 million as damages in lieu of specific performance and an additional Shs15 million in general damages.
The total monetary award amounts to more than Shs1.25 billion, exclusive of interest.
Justice Mubiru also ordered that all damages attract interest at 8 percent per annum from the date of judgment until payment in full and awarded costs of the suit to the plaintiffs.