The High Court in Kampala has ordered the New Park Lockup Owners Association to pay more than Shs 1.26 billion in damages after finding that it breached members’ resolutions and fiduciary duties during the redevelopment of lock-up shops at the New Taxi Park.
Commercial Division judge Stephen Mubiru ruled that the association violated binding resolutions that guaranteed pioneer members ground-floor commercial units upon completion of the redevelopment project.
The dispute stems from a directive by Kampala Capital City Authority (KCCA) requiring traders operating around Mackay and Namirembe roads to form an association to collectively acquire and redevelop the land previously occupied by the old taxi park.
Court heard that members, including Hussein Kakooza and Sarah Nabuuma Kakooza, contributed funds towards the construction of a multi-storey commercial complex after a resolution passed on December 11, 2010, promised pioneer members ground-floor lock-up shops measuring 10 by 10 feet upon full payment of their contributions.
The applicants told court that they each paid Shs 88.5 million after the association revised members’ contributions to service a bank loan. However, they were later allocated smaller units on upper floors or excluded from the promised allocation altogether.
The association argued that allocation of units was based on a “first pay, first allocate” system and that all members enjoyed equal rights under its governing documents.
However, Justice Mubiru held that resolutions passed at properly convened general meetings are binding on both the association and its leadership.
“The properly passed resolutions at a members’ general meeting are binding on the company and are actionable,” the judge ruled.
The court found that the association repeatedly extended payment deadlines and accepted late contributions, effectively waiving strict enforcement of earlier timelines.
Mubiru further held that the association’s leaders owed fiduciary duties to pioneer members who had contributed funds in expectation of specific allocations and that those obligations could not be overridden by subsequent resolutions allowing sales to outsiders.
The judge also ruled that the property was held under a constructive trust for the benefit of qualifying members.
While allegations of fraud were dismissed for lack of sufficient evidence, the court upheld claims of breach of contract and breach of fiduciary duty.
In his final orders, Justice Mubiru directed the association to immediately hand over ground-floor Shop No. 763, together with its condominium title, to Nabuuma. He also awarded her Shs 283.5 million in damages for lost rental income.
Kakooza was awarded Shs 957.55 million in damages after the court found that specific performance was no longer possible because all ground-floor units had already been allocated. He was also awarded Shs 15 million in general damages.
The court further awarded interest at eight per cent per annum and costs of the suit to the applicants.
The case has been before court since 2017.
BY URN
