The Commercial Division of the High Court has awarded more than Sh1.25b to two pioneer members of the New Park Lock-up Owners Association after finding that they were unlawfully denied ownership of lock-up shops in the redeveloped New Taxi Park commercial complex.
Justice Stephen Mubiru ruled in favour of Hussein Kakooza and Sarah Nabuuma Kakooza, who had sued the association, its chairperson John Fred Kiyimba, and board member Charles Ssekitto.
The two traders accused the association and its officials of breaching members’ resolutions and denying them shops they had paid for during the redevelopment project.
In a judgment delivered on Tuesday, Justice Mubiru found that the association and its officials breached contractual and fiduciary duties owed to the two traders.
Dispute started with New Taxi Park redevelopment
The case arose from the redevelopment of the former New Taxi Park area into a modern commercial complex.
Court heard that traders who operated lock-up shops around the park were required to form an association. The association would then secure leasehold rights and lead the redevelopment of the property.
Members later formed the New Park Lock-up Owners Association and agreed to contribute money toward construction.
During a general meeting held on December 11, 2010, members resolved that pioneer traders, described as landlords, would retain ownership of ground-floor lock-up shops measuring 10x10ft after the project was completed.
New entrants were expected to take units on the upper floors.
Court rejects delayed payment defence
Evidence before court showed that the redevelopment project later faced financial difficulties. Construction costs increased, and members were asked to make additional payments.
The association also secured a bank loan to complete the project.
Hussein Kakooza and Sarah Nabuuma Kakooza initially delayed in clearing some contributions. However, they later paid the revised amounts demanded by the association.
They told court that despite meeting their obligations, the association abandoned the earlier arrangement. They said ground-floor units were later allocated or sold to other people under a condominium ownership scheme.
In their defence, the association and its officials said shop allocation followed a “first pay, first allocate” policy.
They argued that members who completed payments first had priority in selecting shops. They also claimed the plaintiffs lost their entitlement because they delayed payment.
The defendants further said alternative units had been allocated to the two traders, meaning they had not suffered any loss.
Justice Mubiru rejected that argument.
He noted that the association continued receiving contributions from the plaintiffs for years after the original deadlines had passed. He also found that the association never formally informed them that their rights had been extinguished.
Court orders handover of shop and damages
The court ordered the association to hand over vacant possession of Lock-Up Shop No. 763 to Sarah Nabuuma Kakooza, together with its condominium title.
Nabuuma Kakooza was also awarded Sh283.5m in general damages for loss of rental income and loss of use of the premises.
For Hussein Kakooza, the court found that specific performance was no longer possible because the ground-floor units had already been disposed of.
Instead, the court awarded him Sh957.5m in damages in lieu of specific performance. The amount reflected the value of the lost commercial opportunity.
He was also awarded Sh15m in general damages.
Justice Mubiru further ordered the defendants to pay interest at 8% per year on the decretal sums from the date of judgment until full payment.
The defendants were also ordered to pay the costs of the suit.