The High Court in Kampala has ordered real estate developer Opec Prime Properties and its marketing agent, Remax Uganda, to refund Shs 3.8 billion to a group of homebuyers after finding that the companies breached housing sale agreements linked to the failed Naguru-Nakawa redevelopment project.
In a judgment, Justice Stephen Mubiru ruled in favour of five plaintiffs led by Grace Kerali, who had paid large sums of money for townhouses and villas that were never built or handed over.
The dispute dates back nearly two decades and is rooted in Uganda’s ambitious but troubled Naguru Nakawa satellite city project.
In 2006, Opec Prime Properties was contracted by the government under a public-private partnership to redevelop 138 acres of land in Naguru and Nakawa. The developer promised a modern satellite city with affordable housing.
As part of the project, Opec Prime began selling off-plan houses to private buyers. Between March and April 2005, Grace Kerali and four others signed agreements to buy townhouses and spring villas within the project.
The buyers paid between Shs 180 million and Shs 740 million as part payment for the houses. The contracts stated that vacant possession would be handed over by either February 29, 2016 or June 30, 2016, depending on the unit.
The sales were handled by Bankshire Africa Ltd trading as Remax Uganda, a real estate firm that managed the transactions and received payments on behalf of the developer. Muhammed Kaliisa, a businessman, operates Remax Uganda,
However, construction stalled. Years passed without completion of the houses. The buyers neither received their homes nor land titles.
In 2019, cabinet terminated Opec Prime’s agreement with the government, citing financial and technical incompetence. The government later repossessed the land, bringing the project to a complete halt.
Left with no houses and no refunds, the buyers went to court in 2020 seeking recovery of their money, damages for breach of contract, interest, and costs.
Through their lawyers of Okecha Baranyanga & Co Advocates, the buyers argued that Opec Prime had clearly breached the sale agreements by failing to deliver the houses on time.
They rejected claims that government actions frustrated the contracts, saying the developer had already missed the handover deadlines long before the government cancelled the public-private partnership.
“The defendants knew that their ability to perform depended on fulfilling their obligations to the government. They failed to do so and cannot hide behind their own breach,” the lawyers submitted.
The buyers also relied on clauses in their contracts that required a full refund plus 25% interest if the developer repudiated the agreement.
They further demanded liquidated damages of Shs 9 million per month for delayed delivery, as agreed in the contracts.
Lawyers from Kampala Associated Advocates (KAA), representing both Opec Prime and Remax Uganda, blamed government interference for the failure of the project.
They argued that once the government reduced the land size, cancelled titles, and eventually terminated the agreement, it became impossible to deliver the houses.
They said the buyers were aware that the project depended on a government concession and had assumed the risk.
The defence also pointed to a consent judgment in a separate case where the Attorney General admitted breach of contract, arguing that Opec Prime was still capable of delivering titles once disputes with the government were resolved.
On that basis, they asked the court to dismiss the suit.
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Justice Mubiru rejected the defence of frustration and found that the developer had already breached the contracts before the government took any action.
“What the defendants claim to constitute frustrating events occurred more than two years after the due dates for performance,” the judge held.
He added that frustration only applies where an unforeseen event occurs before performance is due, not after a party has already defaulted.
“The breach occurred first, fixing the rights and liabilities of the parties,” he said.
The judge also dismissed arguments that the contracts were still alive, ruling that the buyers were entitled to treat them as terminated due to anticipatory repudiation.
“The defendants clearly indicated that they would not be able to fulfil their contractual duty to hand over vacant possession,” the court ruled.
Role of Remax Uganda
Although Remax Uganda did not build the houses, the court held it jointly liable because it managed the transactions and facilitated the sale agreements.
Judgment was entered against both defendants jointly and severally, meaning the buyers can recover the full amount from either party.
The court ordered full refunds of all money paid, plus 25 percent interest, amounting to a total of US$1,012,500 in special damages.
This includes Shs 923 million to Henry Kerali, Shs 225 million jointly to Henry and Hellen Kerali, Shs 923 million to Grace Kerali, Shs 698 million jointly to Grace Kerali and Martin John Hula, and Shs 878 million to Lucy Florence Amito Obwonya.
At current exchange rates, this translates to approximately to total of Shs3.8 billion that Remax and Opec Prime have to pay to the funders.
In addition, the court awarded liquidated damages of Shs 9 million per month to each plaintiff from July 2016 until full payment is made, plus interest at six percent per year.
Remax and Opec Prime were also ordered to pay the costs of the suit.
“This was a clear case of breach,” Justice Mubiru concluded.
