The Court of Appeal has ordered Muwema & Co Advocates to provide security of US$100,000 (about Shs371 million) as it challenges a High Court decision ordering the law firm to pay more than US$372,000 (about Shs1.34 billion) in rent arrears and mesne profits.
The order was issued by Justice John Mike Musisi after the court stayed execution of the monetary part of the decree arising from a long-running tenancy dispute between the law firm and Downtown Investments Ltd.
The court, however, maintained the orders requiring the law firm to vacate the commercial premises in Kololo, saying the eviction had already been effected and could not be reversed through the application before it.
The dispute concerns property situated at Plot 50, Windsor Crescent Road, Kololo, which Muwema & Co Advocates leased under an agreement signed in December 2014.
The lease provided for monthly rent of US$5,500 plus VAT, payable one year in advance, with a 10 per cent increase after the first 24 months.
High Court orders payment
In February 2026, the Commercial Division of the High Court ordered the law firm to pay US$372,300 in accumulated rent arrears and mesne profits and to vacate the premises.
Lady Justice Patricia Mutesi found that the firm had remained in occupation without legal justification and had breached the terms of the lease.
The judge also rejected claims by the law firm that there was an existing agreement to purchase the property and that it was entitled to reimbursement for renovations carried out on the premises.
Muwema & Co Advocates subsequently appealed the decision, arguing, among other things, that the parties’ relationship had continued after the five-year written lease expired on December 15, 2019.
The firm argued that the High Court had treated the lease as continuing on its existing terms despite the absence of a formal renewal.
Disputed purchase option
At the centre of the intended appeal is Clause 5 of the lease, which gave the law firm the first option to purchase the property.
According to the firm, the clause provided for a floor price of US$2 million if the purchase was concluded within 12 months of commencement of the lease, with the sale price thereafter to be determined by the market.
The firm said that on August 2, 2021, it wrote to Downtown Investments proposing to purchase the property for US$1.05 million.
The proposal reportedly included a commitment fee equivalent to 10 per cent of the purchase price, with the balance to be financed through a bank.
Downtown Investments’ then managing director acknowledged the proposal but indicated that the offer was below the company’s expectations and that he would consult other stakeholders. No counter-offer or final acceptance was made before his death in December 2021.
Muwema & Co Advocates nevertheless maintains that its letter constituted an exercise of the purchase option and that the relationship between the parties consequently ceased to be that of landlord and tenant.
Downtown Investments has opposed the application, arguing that no memorandum of appeal was attached and that an unaccepted offer to purchase cannot create an enforceable contract.
Court grants stay
Justice Musisi found that the intended appeal raised arguable issues, including the interpretation and legal effect of Clause 5, the treatment of payments made after August 2, 2021 and the basis for the award of mesne profits.
“I therefore find that the proper construction and legal effect of Clause 5, the characterization of the payments made after 2nd August 2021, and the pleading and proof of mesne profits disclose grounds that are neither frivolous nor vexatious,” Justice Musisi ruled.
He said the unresolved purchase price, absence of demonstrated acceptance and lack of proof of the proposed commitment fee would, however, be relevant in determining the conditions under which the court should exercise its discretion.
The court noted that the High Court had previously declined to stay execution of its decision after finding that the notice of appeal had been filed without unreasonable delay and that the intended appeal was arguable.
However, the High Court held that the orders concerning vacant possession and eviction had been overtaken by events.
Justice Musisi agreed that the eviction could not be undone through the present application.
“I find, equally, that no order of this Court can disturb the vacant possession and eviction already effected, that relief in that respect having been overtaken by events,” he ruled.
The Court of Appeal consequently stayed execution of the monetary component of the High Court decree, including rent arrears, mesne profits, general damages, interest and costs, pending the hearing and final determination of the intended appeal.
The stay also covers attachment, garnishee and taxation proceedings arising from the decree.
Shs 371m security
As a condition for the stay, Justice Musisi ordered the law firm to provide security of US$100,000 within one month.
The money may either be deposited in court or secured through an unconditional bank guarantee issued by a reputable commercial bank.
“The Applicant shall, within one month from the date of this order, provide security in the sum of US$100,000, being a substantial part of the amount decreed as rent arrears,” Justice Musisi ordered.
The court directed that any money deposited in court be placed on an interest-bearing account, while any bank guarantee must remain valid until the final determination of the intended appeal or until further orders of the court.
The ruling means that while the law firm will not be required to immediately satisfy the monetary portion of the High Court decree, the eviction already carried out remains in force.
