Lease – option to purchase – offer not accepted; no sale. Contract interpretation – rent revision clause construed as upward increases; conduct can evidence acceptance of revised rent. Breach – tenant’s non-payment of rent, wrongful possession. Set-off/recovery for repairs – require written consent, documentary proof and pleaded special damages. Remedies – rent arrears, mesne profits, general damages, substituted interest rates, vacant possession, eviction, costs. (flynote by ULII) Downtown Investments Uganda Ltd v M/S Muwema & Co. Advocates and Others (Civil Suit No. 621 of 2023) [2026] UGCommC 51 (20 February 2026)
The High Court of Uganda (Commercial Division), presided over by Hon. Lady Justice Patricia Mutesi, delivered a judgment on February 20, 2026, in Civil Suit No. 0621 of 2023 between Downtown Investments Ltd (Plaintiff) and M/S Muwema & Co. Advoc ates, Muwema Fred, and Kagoro Friday (Defendants). The case revolved around a lease agreement for property located at Plot 50 Windsor Crescent Road, Kololo, Kampala.
Case Background
- Lease Agreement: On December 15, 2014, Downtown Investments Ltd leased the property to M/S Muwema & Co. Advocates for five years at a monthly rent of USD 5,500 plus VAT, with a 10% annual rent increment after the first 24 months.
- Dispute: The lease expired on December 15, 2019, but the Defendants continued occupying the premises without paying rent consistently. By May 2023, rent arrears amounted to USD 148,300.
- Option to Purchase: The lease agreement included a clause allowing the Defendants the first option to purchase the property for USD 2,000,000 within the first 12 months. However, the Defendants made an offer of USD 1,050,000 on August 2, 2021, which was not accepted by the Plaintiff.
Court Findings
- No Sale of Property: The court ruled that the Plaintiff did not sell the leased premises to the Defendants. The Defendants’ offer to purchase the property was not accepted, and the legal relationship remained that of lessor-lessee.
- Defendants’ Breach of Contract: The Defendants were found liable for breaching the lease agreement by failing to pay rent as agreed. The court noted that the Defendants continued occupying the premises without paying rent, even after the lease was terminated in July 2023.
- Plaintiff Not Liable for Breach: The Plaintiff was not found liable for breach of contract, as it had fulfilled its obligation to provide the Defendants the first option to purchase the property. The court also dismissed the Defendants’ claims for reimbursement of repair and renovation costs due to lack of written consent and insufficient evidence.
Court Orders
The court ruled in favor of Downtown Investments Ltd and issued the following orders:
- Rent Arrears: The Defendants must pay USD 148,300 in rent arrears.
- General Damages: The Defendants must pay UGX 50,000,000 in general damages for breach of contract.
- Mesne Profits: The Defendants must pay USD 224,000 for wrongful possession of the premises from June 1, 2023, to January 31, 2026.
- Interest: Interest on rent arrears (6% p.a. ), general damages (13% p.a. ), and mesne profits (6% p.a.) until full payment.
- Vacant Possession and Eviction: The Defendants must vacate and yield the premises to the Plaintiff immediately. An eviction order was also issued.
- Costs: The Plaintiff was awarded costs of the suit.
Conclusion
The court emphasized the importance of honoring lease agreements and ruled that the Defendants’ continued occupation of the property without paying rent was unjust and constituted wrongful possession. Downtown Investments Ltd was granted relief, including financial compensation and the right to reclaim its property.
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