Muwema & Co. Advocates has announced plans to appeal a court ruling ordering the firm to pay USD 372,300 (approximately Shs 1.34 billion) in accumulated rent arrears and mesne profits, and to vacate commercial premises in Kololo following the loss of a long-running tenancy dispute with Downtown Investments Ltd.
“We are dissatisfied with the judgment of the court due to its factual and legal inconsistencies, which contradict established precedent,” the law firm said in a statement.
The firm stated that the trial judge erred in awarding Downtown Investments USD 148,300 in rent arrears as of May 30, 2023, while allegedly ignoring evidence on record showing a payment of USD 130,000 toward that claim.
Muwema & Co. further argued that the judge erred in awarding USD 224,000 in mesne profits on grounds of wrongful possession of the leased premises, contending that Downtown neither pleaded nor proved any specific amount for mesne profits, nor filed a separate claim for wrongful possession.
“The trial judge erred in law and fact by finding that we did not enjoy the right to purchase the property despite exercising our option to purchase it. In doing so, the judge erroneously relied on Section 36 of the Land Act Cap 236, which grants an option to purchase to tenants by occupancy, which we are not,” the firm stated.
In a decision delivered by Patricia Mutesi, the court held that the law firm remained in occupation of the property without legal justification and had violated the terms of its lease. The judge further ruled that claims of an existing sale agreement and demands for reimbursement for renovations were not supported by evidence.
At the center of the dispute is property located at Plot 50 Windsor Crescent Road in Kololo. The premises were leased to the defendants under a contract signed on December 1, 2014. The agreement provided for monthly rent of USD 5,000 plus VAT, with a 10 percent increment after the first two years.
Downtown Investments sought court intervention, alleging that the tenants had defaulted on rent payments and continued occupying the premises beyond the agreed lease period. The company asked the court to grant vacant possession, recover outstanding rent and mesne profits, and award damages.
In response, the defendants argued that they had invoked an option to purchase the property in August 2021 and blamed the landlord for failing to finalize the transaction.
However, Justice Mutesi found that no enforceable sale agreement had arisen. She emphasized that the option to purchase contained in Clause 5 of the lease was conditional and subject to strict timelines. The court reiterated the principle that acceptance of an offer must be expressly communicated and that silence cannot amount to consent under contract law.
The judge concluded that the parties’ relationship never shifted from landlord and tenant to vendor and purchaser.
The court determined that the defendants had failed to meet their rental obligations and had unlawfully remained on the premises after termination of the lease.
As a result, the court awarded USD 372,300 in rent arrears and mesne profits, along with Shs 50 million in general damages. The defendants were also ordered to immediately hand over vacant possession of the Kololo property.
A counterclaim seeking more than USD 186,000 for renovation costs was dismissed. The court noted that the lease required written authorization for structural alterations and that the defendants did not sufficiently prove the expenditure claimed.
Legal observers say the ruling sends a strong message on the enforcement of commercial tenancy agreements, affirming that courts will strictly interpret lease terms and will not recognize informal negotiations or implied arrangements as substitutes for properly executed contracts.
The decision is seen as a significant development in Kampala’s commercial property landscape, reinforcing landlords’ rights where tenants default on rent or rely on unperfected purchase options.
