Justice Stephen Mubiru of the Commercial Division of the High Court has directed two Real Estate Companies Opec Prime Properties Uganda Limited and Bankshire Africa Limited which are affiliated with the United Kingdom’s Comer Group to compensated their clients with Shs4.556bn with 25% interest, general damages and costs of suit.
According to court documents, in 2006, Opec Prime Properties limited a private limited liability real estate developer company was contracted by the Government of Uganda under a public-private partnership agreement, to redevelop 138.62 acres of land located at Naguru-Nakawa in Kampala city.
The court documents read that the developer was promised an ultra-modern satellite city with affordable housing and as the project proceeded, the original tenants were evicted from the land and were promised compensation or new housing.
As the developer processed the development on the land, he made advance sales of multiple Townhouses and Spring Villas forming part of that project to Grace Kerali, Henry Kerali, Lucy Florence Amito Obwonya, Hellen Kerali and Martin John Hula the plaintiff in the suit
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They agreed the purchase price for the townhouse between US $ 205,000, US $ 50,000, US $ 205,000, US $ 155,000 and US $ 195,000. The developer was supposed to deliver vacant houses for possession on 29th February, 2016.
Court documents indicate that the transaction of the deal was managed by Bankshire Africa Limited.
However, the project stalled with the developer failing to develop the land within the agreed timeframe and the Public Private Partnership Agreement was terminated by the government in 2019 over allegations of financial and technical incompetence of the developer leading to government repossesing the land in 2021.
The plaintiff through their lawyers of Okecha Baranyanga & Company Advocates instituted a commercial suit against the defendants seeking to recover their paid money with interest after accusing the defendants of breaching the signed agreement.
In their defence, the defendants through their lawyers of Kampala Associated Advocates (KAA) told Court that when the government interfered with the developer’s possession of land, they reduced the acreage of land available for development and later terminated the Public Private Partnership Agreement, and took possession of the entire land.
Defendants insist that they were incapacitated from performing their obligations of delivering a vacant possession as they agreed with the plaintiff because the government took over the land in a manner akin to compulsory acquisition.
They denied the allegations of breaching the contract with the plaintiffs insisting that after contesting the decision of government to terminate their agreement, they sued the Attorney General and entered a consent judgement where the Attorney General admitted that what was done was illegal and chances are still available that the plaintiffs will get their land as agreed in their signed agreement.
However, the judge disagreed with the defendants explaining that the agreements between the parties shows that the plaintiffs were supposed to get their vacant properties in 2016.
He noted that it is wrong for the defendant to claim that they were unable to comply with that obligation due to cancellation of all title deeds which happened in 2018 and termination of the agreement was done.
“This though is irrelevant on account of having found that the alleged breach by the Government did not constitute a frustrating event. There being no other justification of the defendants’ inability to meet their contractual deadline for handing over vacant possession of the units purchased by the each of the plaintiffs, this issue is answered in the affirmative; the defendants are liable for breach of each of the respective contracts,” the judge stated.
The judge cited section 60 (1) of The Contracts Act which states that, where there is a breach of contract, the party who suffers the breach is entitled to receive from the party who breaches the contract compensation for any loss or damage caused to him,
He thus declared that the defendants should compensate the plaintiffs accordingly adding that the defendants are also supposed to pay general damages to the plaintiffs because of the loss they suffered in paying rent in homes which are not theirs at a cost of US $ 2,500 per month because they were very sure that by that time, they will be in their home
The judge based on the open internet sources which show that the average monthly rent for an upscale residential unit in prime suburbs for upscale living in Kampala, in such areas as Kololo, Nakasero and Naguru at the time of these contracts generally ranged from US $1,000 to over US $3,500 per month, depending on the size and amenities.
“It is on that account that I find a sum of US $2,500 per month, to be a reasonable, pre-agreed sum to compensate for potential losses arising from the respective contracts, and hence a genuine liquidated damages clause, rather than a clause intended to punish the defendants for breach of the agreements. Each of the plaintiffs is accordingly awarded a sum of US $ 2,500 per month from 30th June, 2016 until a full refund of their respective part payment of the purchase price, is made,” the judge noted.
