The High Court in Kampala has ordered New Park Lockup Owners Association and its officials to pay more than Shs1.26 billion in damages after finding breach of members’ resolutions and fiduciary duties in the redevelopment of lock-up shops linked to Kampala’s former New Taxi Park. Commercial Division Judge Stephen Mubiru ruled that the association violated binding resolutions that had guaranteed pioneer members ground-floor commercial units upon completion of the redevelopment project.
The dispute arose after Kampala Capital City Authority (KCCA) directed traders around Mackay Road and Namirembe Road to form an association to collectively secure and redevelop the land previously occupied by the old taxi park. The court heard that members, including Hussein Kakooza and Sarah Nabuuma Kakooza, contributed funds toward the construction of a multi-storey commercial complex after a resolution passed on December 11, 2010, promised pioneer members ground-floor units measuring 10 by 10 feet upon full payment of their contributions.
The applicants told the court that they each paid Shs88.5 million after the association revised contributions to service a bank loan but were later allocated smaller upper-floor units or excluded from the promised allocation. The association argued that allocation was based on a “first pay, first allocate” system and that all members had equal rights under its governing documents. However, Justice Mubiru held that resolutions passed at properly convened general meetings are binding and enforceable against both a company and its directors.
“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, thereby waiving strict enforcement of earlier timelines. Justice Mubiru further held that the association’s leadership had fiduciary duties to act in the interests of pioneer members who had contributed funds for specific allocations, and that those obligations could not be overridden by later resolutions opening up sales to outsiders.
He also ruled that the affected property was held under a constructive trust for the benefit of qualifying members. While fraud allegations were dismissed for lack of sufficient proof, the court upheld claims of breach of contract and breach of fiduciary duty. In its final orders, the court directed the association to immediately hand over ground-floor shop No. 763 with its condominium title to Nabuuma and awarded her Shs283.5 million in damages for lost rental income.
Kakooza was awarded Shs957.55 million in damages after the court found that specific performance was no longer possible because all ground-floor units had already been allocated, along with Shs15 million in general damages. Interest at 8 percent per annum and costs of the suit were also awarded to the applicants. The case had been in court since 2017-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
