The High Court has ordered the New Park Lockup Owners Association to compensate two traders more than Shs1.26 billion after finding that they were unlawfully denied lock-up shops they were entitled to at the redeveloped New Taxi Park.
In a judgment delivered by email, Justice Stephen Mubiru ruled that the association breached binding resolutions and failed in its fiduciary duty to pioneer members who had financed the construction of the commercial complex.
The court directed the association to pay a total of Shs1.256 billion in damages to businesswoman Sarah Nabuuma and trader Hussein Kakooza, together with interest at eight percent per annum and legal costs.
Justice Mubiru also ordered the association to allocate Ground Floor Shop No. 763 to Nabuuma after finding that she had fulfilled all the financial obligations required under the project's original arrangements.
The dispute arose from the redevelopment of lock-up shops surrounding the former New Taxi Park after Kampala Capital City Authority directed tenants to form an association to oversee the project and secure a lease for the redevelopment.
Court heard that Nabuuma and Kakooza were among the pioneer members who contributed funds towards constructing the new commercial complex.
Under a resolution passed in 2010, pioneer members who met their financial obligations were guaranteed ground-floor lock-up shops upon completion of the project.
The two traders told court they each paid the required Shs88.5 million but were instead allocated smaller units on upper floors, while the more commercially attractive ground-floor shops were sold to new buyers.
The New Park Lockup Owners Association denied wrongdoing and argued that shop allocation was conducted under a "first pay, first allocate" policy.
However, Justice Mubiru held that resolutions passed during members' meetings were legally binding and enforceable.
He noted that the association continued accepting late payments from members and therefore could not rely on missed deadlines to deny pioneer members benefits they had been promised.
The judge further ruled that the association's leaders owed a fiduciary duty to members after receiving their contributions and that allocating ground-floor units to outsiders amounted to a breach of both contractual and fiduciary obligations.
"The association was obligated to protect the interests of members who financed the project and to honour the resolutions under which those contributions were made," the ruling found.
The court, however, dismissed allegations of fraud against the association, finding that the claimants had not presented sufficient evidence to prove the accusation.
As part of the award, Nabuuma was granted Shs283.5 million in general damages for lost rental income dating back to 2017, in addition to being allocated Ground Floor Shop No. 763.
Kakooza, whose original shop could no longer be allocated, was awarded Shs957.55 million in compensation, together with Shs15 million in general damages.
The case was filed in 2017 and remained before court for nearly nine years before the High Court delivered its final judgment.
The ruling is expected to have significant implications for property allocation disputes involving member-funded commercial developments and the responsibilities of associations entrusted with managing such projects.