The Commercial Division of the High Court of Uganda has ordered M/S Muwema & Co. Advocates to pay $372,300 (Shs1.4 billion)in accumulated rent arrears and mesne profits, Shs50 million in general damages, and to immediately vacate commercial premises at Plot 50 Windsor Crescent Road in Kololo after an exhaustive judicial examination of a contested lease and a disputed option to purchase.
This follows a ruling seen by Eagle Online dated February 20, 2026.
The decision, delivered by Lady Justice Patricia Mutesi in Civil Suit No. 0621 of 2023, followed a full trial in which both parties presented documentary evidence and testimony concerning the 2014 lease agreement, subsequent correspondence, and the purported exercise of an option to purchase.
At the centre of the dispute was a lease executed on December 1, 2014, between Downtown Investments Ltd and the defendant law firm at a monthly rent of $5,000 plus VAT, subject to a 10 percent increment after the first two years. The agreement contained Clause 5, granting the tenant an option to purchase the property subject to specified conditions and timelines.
Downtown Investments Ltd moved to court contending that the defendants defaulted on rent and continued to occupy the premises after the lease had effectively run its course. The company sought recovery of rent arrears, mesne profits for unlawful occupation, general damages and vacant possession.
In their defence, the defendants asserted that in August 2021, they invoked the option to purchase and that the plaintiff failed to complete the sale. They argued that once the option was exercised, the relationship ceased to be one of landlord and tenant and transformed into vendor and purchaser. On that basis, they maintained that rent was no longer payable and that they were entitled to remain in possession pending completion. They also counterclaimed more than $186,000, allegedly spent on renovations and structural improvements.
Justice Mutesi framed the dispute around key questions, including whether a binding sale agreement arose from the alleged exercise of the option, whether rent remained payable after August 2021, whether the continued occupation was lawful and whether the defendants were entitled to reimbursement for renovation costs.
On the option to purchase, the court subjected Clause 5 to close scrutiny and held that an option in a lease does not by itself amount to a concluded contract of sale. It is merely an offer that must be accepted strictly in accordance with the terms set out in the agreement.
“The option to purchase was conditional and required strict compliance with the timelines and procedure stipulated in the lease,” Justice Mutesi ruled.
The court analysed the correspondence relied upon by the defendants and found no evidence of unequivocal acceptance by the landlord capable of crystallising into a binding sale agreement. The judge underscored a central principle of contract law.
“Acceptance of an offer must be clear, unambiguous and communicated to the offeror. Silence or inaction cannot amount to consent,” she stated.
The argument that ongoing negotiations or expressions of interest displaced the lease was rejected. The court found that the defendants did not fulfil the strict conditions necessary to validly exercise the option within the contractual framework.
“The relationship between the parties never shifted from that of landlord and tenant to vendor and purchaser,” the judge declared.
On the issue of rent, the court held that since no enforceable sale agreement came into existence, the lease remained operative and the obligation to pay rent persisted. Evidence before the court demonstrated substantial arrears had accumulated over time. The court therefore computed rent arrears and mesne profits at $372,300.
Addressing occupation after termination, Justice Mutesi found that once the lease expired and was not lawfully renewed, the defendants’ continued stay amounted to unlawful possession.
“Where a tenant remains in possession without legal right after termination of a lease, the landlord is entitled to mesne profits for the period of such occupation,” the court held.
The award of Shs50 million in general damages was made in recognition of the inconvenience and financial prejudice suffered by the landlord due to prolonged deprivation of its property.
The counterclaim for renovation costs was equally examined in detail. The lease expressly required prior written authorization for structural alterations. After reviewing invoices and other materials presented by the defendants, the court found that they did not demonstrate compliance with the contractual requirement for written approval.
“The lease required prior written consent for structural alterations. The defendants did not prove that such consent was obtained,” Justice Mutesi observed.
The court further noted that even where improvements are made to leased property, recovery of such expenditure is not automatic and must be grounded in clear contractual entitlement. The entire counterclaim exceeding $186,000 was dismissed.
The final orders directed immediate vacant possession of the Kololo property in favour of Downtown Investments Ltd, payment of $372,300 in rent arrears and mesne profits, Shs50 million in general damages, and dismissal of the counterclaim in its entirety.
