Kampala, Uganda: The High Court (Commercial Division) has ordered M/S Muwema & Co. Advocates to pay a total of USD 372,300 (approx. Shs1.34bn) in rent arrears and mesne profits, and to immediately vacate prime premises in Kololo following a protracted lease dispute with Downtown Investments Ltd.
In a strongly worded judgment delivered by Hon. Lady Justice Patricia Mutesi in Civil Suit No. 0621 of 2023, the Court found that the law firm had breached its lease agreement, wrongfully remained in possession of the property, and failed to prove claims of a binding sale or entitlement to reimbursement for renovations.
The dispute centered on premises located at Plot 50 Windsor Crescent Road, Kololo, which were leased to the Defendants under an agreement executed on December 1, 2014. The lease required payment of USD 5,000 per month plus VAT, subject to a 10% increment after the first 24 months.
Downtown Investments Ltd sued for vacant possession, recovery of rent arrears, mesne profits, and damages after alleging persistent non-payment of rent and continued occupation beyond the agreed lease period.
The Defendants contended that they had exercised an option to purchase the property in August 2021 and that the Plaintiff failed to conclude the sale.
Justice Mutesi dismissed the argument that a sale agreement had arisen, emphasizing that the option to purchase under Clause 5 of the lease was time-bound and conditional.
The judgment reiterated that acceptance of an offer must be clearly communicated and that silence does not constitute acceptance under contract law. She further held that the legal relationship between the parties remained that of landlord and tenant and that no vendor-purchaser relationship was ever established.
Breach and Liability
The Court also found that the Defendants defaulted on rent obligations and unlawfully remained in possession after termination of the lease.
Justice Mutesi ruled that rent arrears and mesne profits were due and payable and that the Plaintiff was entitled to compensation for the continued occupation of the premises.
The Defendants’ counterclaim seeking reimbursement of renovation expenses—estimated at over USD 186,000—was rejected on grounds that the lease required written approval for structural alterations and that insufficient evidence was adduced to support the claimed expenditure.
The Court, ruling in favour of Downtown Investments Ltd, ordered the full payment of USD 372,300 in rent arrears and mesne profits, payment of UGX 50 million in general damages and an immediate vacant possession of the Kololo premises.
The high court’s ruling underscores the strict enforcement of commercial lease terms and signals that courts will not entertain implied property sales or informal negotiations as substitutes for formal contractual compliance.
The judgment marks one of the most significant recent rulings in Kampala’s commercial property sector, reinforcing landlords’ rights in cases of prolonged rent default and contested purchase options.
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