High Court Clarifies Contractual Obligations, Breach, and Remedies in Naalya Pride Apartments Condominium Dispute.
- Waboga David
- Sep 29
- 5 min read
Facts
The Plaintiffs, Dr. Rene Bakashaba and Ann Bakashaba, entered into a contract with the Defendant, National Housing and Construction Co. Ltd (NHCC), on October 26, 2011, for the purchase of Unit No. 12, Block A, Flat No. A 12, in Naalya Pride Apartments (Plot 2273, Block 221, Naalya).
The total purchase price was UGX 240,000,000. The Plaintiffs selected a phased payment option, depositing UGX 24,000,000 (10% of the price) as an initial payment. The unit was expected to be completed by 2013, but construction delays occurred, and it was only finished in 2019.
In July 2013, due to the delays and lack of progress on Block A, the Plaintiffs requested a swap to Unit No. I 22 in Block I, which the Defendant approved via a letter dated July 19, 2013. The new terms required a 20% initial deposit within 14 days, but the Plaintiffs transferred only the original 10% deposit and did not pay the additional 10%. No further payments were made until 2020.
In June 2019, the Defendant notified the Plaintiffs of completion and demanded the balance of UGX 216,000,000. The Plaintiffs did not respond. On January 3, 2020, the Defendant sent a reminder letter, directing the Plaintiffs to contact Ms. Lillian Muleke (Head of Sales and Marketing) for arrangements.
The Plaintiffs engaged Ms. Muleke, who allegedly agreed to hand over the unit upon an additional goodwill deposit and evidence of financing. On February 20, 2020, the Plaintiffs deposited UGX 16,000,000 and secured mortgage financing from Y-Save Multi-Purpose Co-operative Society Limited for UGX 200,000,000, based on assurances from Ms. Muleke.
However, on January 29, 2020 (before the additional deposit), the Defendant had already withdrawn the offer due to non-payment and sold the unit to a third party. The Plaintiffs claimed the Defendant unilaterally rescinded the contract without justification.
The Defendant denied breach, asserting the Plaintiffs failed to meet payment terms, particularly the 20% deposit for the swapped unit, and that the additional payments were voluntary.
The suit was filed in 2020, seeking specific performance (or market value equivalent), a permanent injunction against dealing with the unit, special and general damages, interest, and costs.
Issues for Determination
Whether the parties breached the contract for the sale of the condominium Unit.
Whether the Defendant should provide an alternative Unit at the original purchase price of UGX 240,000,000.
What remedies are available to the parties.
Legal Representation
Plaintiffs: Joseph Sevume (M/s Sevume Advocates)
Defendant: Ruth Kisaakye (In-house Counsel, NHCCL)
Submissions
Plaintiffs’ Submissions
On Issue 1
The plaintiff submitted that the contract was valid and ongoing after the 2013 swap. The initial 10% deposit was transferred without objection, and no demand was made for the additional 10%. The Defendant's Head of Sales and Marketing (Ms. Muleke) engaged with them in 2020, accepting an additional UGX 16,000,000 deposit and guiding them toward mortgage financing from Y-Save.
That the Defendant's unilateral withdrawal on January 29, 2020, was a breach, as it ignored these arrangements and the lack of specified timelines for construction stages in the contract. The Plaintiffs never received the withdrawal letter personally.
On Issue 2
Under the doctrine of pacta sunt servanda (agreements must be honored), the Defendant should honor the contract or provide an alternative unit at the original price of UGX 240,000,000, with interest at 25% from the breach date for 13 years.
On Issue 3
Sought specific performance, special damages (UGX 1,200,000 for valuation costs), general damages for frustration and distress, refund of deposits with interest, a permanent injunction, and costs.
In Rejoinder
The plaintiff, accused the Defendant of "approbation and reprobation" by treating the offers as separate while benefiting from the deposits.
Defendant's Submissions
On Issue 1:
The defendant submitted that no valid contract existed after the 2013 swap, as the Plaintiffs failed to pay the required 20% deposit within 14 days. The original 10% was insufficient, and no further payments were made despite reminders in 2019 and 2020. The withdrawal was lawful due to non-acceptance and non-performance. The 2020 deposits and Y-Save involvement were voluntary and post-withdrawal. Awarding market value would unjustly enrich the Plaintiffs.
On Issue 2
No obligation to provide an alternative unit at the old price, as no valid contract existed. The Plaintiffs can negotiate new terms for other projects.
On Issue 3
No remedies for the Plaintiffs, as they breached first. The Defendant offered to refund deposits but the Plaintiffs never claimed them.
COURT FINDINGS
On Issue 1
A valid contract existed until the Defendant's withdrawal on January 29, 2020. The 2013 swap letter (DEX3) was accepted by conduct, as the Defendant continued treating the Plaintiffs as buyers (e.g., via demand letters in 2020 referring to the balance per DEX3).
The Plaintiffs' failure to pay the full 20% deposit did not invalidate the contract, as the Defendant waived strict compliance by not enforcing it earlier. Oral agreements via
Ms. Muleke (implied by conduct and unrefuted testimony) modified terms, allowing the additional UGX 16,000,000 deposit and mortgage.
The Defendant breached by demanding the full balance in a lump sum (contrary to phased payments), failing to notify construction progress, and withdrawing without sufficient notice. The Plaintiffs did not breach fundamentally.
On Issue 2
No. The original unit was sold to a third party, market prices have risen (e.g., to UGX 350,000,000), and time has passed since 2011. Forcing an alternative at the old price would unjustly enrich the Plaintiffs, who paid only UGX 40,000,000 total. The Plaintiffs can negotiate new terms if interested.
On Issue 3
Specific performance was denied because it was impossible due to sale to third party; would cause undue hardship.
Special damages (UGX 1,200,000 for valuation) was denied; No evidence submitted.
General damages awarded; UGX 20,000,000 for anxiety, stress, and inconvenience from delays and breach.
Refund; UGX 40,000,000 (deposits) to be refunded.
Interest; 24% p.a. on refund from suit filing date; 6% p.a. on general damages from judgment date.
Permanent injunction; Not addressed explicitly, but impliedly denied as unit sold.
Costs; Half awarded to Plaintiffs, as suit partly succeeded.
The burden of proof was on balance of probabilities, and the court emphasized not rewriting contracts but interpreting parties' intentions.
Holding
The court held that the Defendant breached the contract. Judgment was entered partly in favor of the Plaintiffs with the following orders;
The Defendant shall refund the Plaintiffs UGX 40,000,000 (deposits for the unit).
The Plaintiffs are awarded general damages of UGX 20,000,000.
Interest on the refund at 24% per annum from the date of filing the suit (2020) until payment in full.
Interest on general damages at 6% per annum from the date of judgment (September 23, 2025) until payment in full.
The Plaintiffs are awarded half the costs of the suit.
All other prayers (specific performance, alternative unit, special damages, permanent injunction) were denied.
Key Takeaways
Even where formal deposits were incomplete, continuous dealings (accepting payments, facilitating valuation, mortgage arrangements) can create a binding contract.
Sellers must keep buyers informed of construction progress if payment obligations depend on construction milestones.
A seller cannot rescind unilaterally where the buyer is actively performing or arranging financing.
Communications by senior company staff (e.g., sales managers) can bind the company if relied upon by purchasers.
Courts are reluctant to order specific performance where it would cause hardship (e.g., forcing sale at outdated prices).
Parties cannot claim property at historical prices when market conditions have changed and their own payments were incomplete.
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