The Commercial Division of the High Court of Uganda has directed M/S Muwema & Co. Advocates to pay USD 372,300 (about Shs 1.34 billion) in accumulated rent arrears and mesne profits, and to vacate commercial premises in Kololo after losing a long-running tenancy dispute with Downtown Investments Ltd.
In a decision delivered by Lady Justice Patricia Mutesi in Civil Suit No. 0621 of 2023, 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 centre of the dispute is property situated 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 Ltd sought court intervention after 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.
The ruling sends a clear 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.
Legal observers say the decision stands out as a significant development in Kampala’s commercial property landscape, reinforcing the rights of landlords where tenants default on rent or rely on unperfected purchase options.
