The Ninth Civil Bench of the Federal High Court, which has been looking over charges brought by 19 individuals against Shola Real Estate S.C., passed a verdict two weeks ago favouring the plaintiffs.

In this landmark verdict that could set precedence to a similar case pending at the Federal High Court, the Ninth Civil Bench said the plaintiffs are entitled to get plots Shola received from the city administration in the name of the disgruntled home seekers.

It is a the latest twist in a long saga endured by several hundred people deceived by what would have been the first real estate company created since the ousting of the military regime in the early 1990s. The plaintiffs were among the 250 that signed agreements with Jacross Ethiopia, which turned out to be a scam in the late 1990s. The company collected 27 million Br from these individuals to build them homes, but never handed over a single structure.

In 1999, the unhappy home-seekers established a steering committee of 10 people that lobbied on behalf of what was later known as Victims of Jacross Ethiopia. The committee, along with the victims, established the Shola Real Estate S.C. a year later, as a prerequisite to get the plot that was given to Jacross by the city administration.

Shola was established with a registered capital of 4.8 million Br. Shares of the company were divided into three separate funds: A group of 30 people owned 630 shares, 75 others owned 315 shares and 18 investors owned 158 shares. Each share was worth 100 Br.

Shola presented a land request to the Addis Abeba City Administration in 2000, claiming that they were not able to receive the homes they were promised, nor the money they had paid to Jacross. It was only right, they argued, that they be given plots to build other homes.

The Bole City Administration awarded the new company a 62,707sqm plot in the area now known as Yerer. Shola built homes for its 110 members, and 12 additional shareholders who joined the real estate later on, although, crucially, these were not jilted Jacross members.

The controversy that ended up in court began after Shola was given a 24,868sqm plot by the Addis Abeba City Administration in 2004, following a request it made claiming that there were additional 70 members that were not originally included. Shola went on issuing public announcements inviting interested home buyers to enter deals with it to own any of the 44 houses that it was interested to develop at a cost of 41 million Br.

The real estate company was, however, suspended from its attempt to build houses on the newly acquired plot due to a plea that was brought before the Federal High Court by the plaintiffs.

On February 13, 2006, eight individuals, that were part of the original Shola 250, sued the company. The following day, 11 more brought a second suit, both claiming that the company, which was granted the plots on their behalf, had no intention of handing the plot over to the rightful owners. They claimed that Shola had lost site of its obligation to Jacross victims and become a non-discerning real estate developer in its own right.

Lawyers defending Shola Real Estate had argued that the company had indeed nothing to do with the plaintiffs and had received the disputed plot under the lease agreement it has entered with the city administration; a practice they said common to all real estate companies operating in the country. They stated, in their defence that Shola was a legally registered entity established through the commercial codes of the country and not some kind of victims association for people swindled by Jacross.

In court, they challenged the plaintiffs to produce any evidence of power-of-attorney or proof of contractual agreement entered with Shola. 

The argument did not convince the court. It awarded the most recently acquired plot to the plaintiffs, convinced that Shola only existed because of the victims initial attempt to recover from their Jacross losses.

The court, in its ruling, stated that members of Shola were the same victims who created the company, which was specifically established to handle the problems that the individuals faced from Jacross Ethiopia.

“The board of directors at the company [Shola] were the same people that were elected as committee members to lobby in the interest of all members,” stated the Court. “The commitments that the founding members of the company entered into were the same as those that were made by the victims, and those commitments should be met”.

The verdict stated that of the 24,868sqm plot that was awarded to the company, 9,500sqm should be given to the plaintiffs; who should pay the lease amounts to Shola once the handover has taken place.

“You do not need to have material evidence to establish a relationship,” said one of the satisfied lawyers representing the plaintiffs. “It is enough to prove that one party has acted on behalf of another.”

Predictably, the defence lawyer was not happy. 

“I am disappointed with the verdict,” said Seleshi Ketsela, Shola’s lawyer. He told Fortune his team will appeal the decision in front of the Federal Supreme Court.

“We are preparing for the appeals process,” he said.

Tsehaye Feleke, board chairman of Shola and chair of the original steering committee, sees the practical aspect of the verdict. He claims that a company does not have the right to sell or give away land, in violation of the country’s laws.

“If we were to give these people the plot, how is it that they are going to receive title deeds?” Tsehaye wonders.

He rather believes that it would have been more reasonable had the decision been for the company to build the plaintiffs homes that it would have to handover.

“At least that would have been doable,” he said.

Abate Yimer, lawyer for the plaintiffs, was not willing to comment on the situation stating that a similar case that was brought by 14 other individuals is still pending at the High Court.

“My commenting on this could compromise the other case,” he told Fortune. “I am not willing to take that risk.”

Meanwhile, Shola SC has sued the owner of Jacross Ethiopia, Nicholas Mortassen, at the First Civil Bench of the Federal High Court. The case is expected to receive a verdict next month.

Nicholas was also sued by the prosecutor’s office in the Ministry of Justice for alleged fraud, and spent six months in jail before being released on bail. He has never made a court appearance on the charges that were brought against him by Shola.

Fortune’s repeated attempts to reach him for comment were unsuccessful.