The Court of Appeal has ordered Muwema & Co. Advocates, a prominent law firm in Kampala, to deposit security of $100,000 (Shs370 million) before it can benefit from a stay of execution in its long-running dispute with Downtown Investments Ltd over an eviction dispute.
The court also ordered that if the money is deposited in court, it should be placed on an interest-bearing account.
However, in a minor win for Muwema, Justice John Mike Musisi allowed the law firm to temporarily stop Downtown Investments from pursuing the monetary award in the High Court judgment as it prepares to pursue its appeal.
The dispute goes back to a lease signed on December 15, 2014, between Muwema & Co. Advocates and Downtown Investments for premises on Plot 50, Windsor Crescent, Kololo, Kampala.
The lease was for five years. Muwema agreed to pay Shs 20 million plus VAT in rent every year in advance, with the rent subject to a 10% increase every 12 months after the first two years.
The lease expired on December 15, 2019, but the two sides continued their relationship.
At the centre of the dispute was Clause 5 of the agreement, which gave Muwema the first option to buy the premises.
During the first 12 months of the lease, the clause provided for a price of Shs 7 billion. After that period, however, the purchase price was to be determined by the market.
This provision later became the main battleground between the law firm and the property company.
On August 2, 2021, Muwema wrote to Downtown Investments offering to purchase the property for Shs 3.8 billion, and their proposal included a 10% commitment fee, amounting to Shs 380 million, while the balance would be financed by a bank.
Downtown Investments acknowledged the proposal but said the amount was below what the company expected and that it would consult other stakeholders.
Muwema maintained that its August 2021 letter amounted to an exercise of its option to purchase the property.
The firm argued that from that moment its relationship with Downtown Investments stopped being that of landlord and tenant.
Downtown Investments disagreed, arguing that Muwema’s letter was simply an offer to buy the property which had never been accepted. It therefore said that Muwema remained a tenant and was still required to pay rent.
That disagreement eventually resulted in a High Court Civil suit instituted by Downtown Investments for rent arrears, vacant possession, eviction, mesne profits, general damages, interest and costs.
Muwema filed a counterclaim, asking the court to declare that it had properly exercised its option to buy the property and that Downtown Investments was obliged to complete the transaction.
But on February 20, 2026, the High Court ruled in favour of Downtown Investments.
The court found that the first option did not force Downtown Investments to accept whatever price Muwema offered. Instead, the parties still had to negotiate and freely agree on the terms of the sale.
The court therefore found that Muwema’s Shs 3.8 billion offer to buy the property had not been accepted “absolutely and unconditionally” and had not matured into a completed sale.
The court also found that Muwema had paid the demanded rent up to December 15, 2021, but later fell into arrears.
When Muwema paid Shs185 million on June 5, 2023, it was treated as part-payment of rent arrears.
In its final orders, the court ordered Muwema to pay Shs 550 million in rent arrears, Shs50 million in general damages and Shs 831 million in mesne profits for the period from May 29, 2023 to January 31, 2026, together with interest and costs.
The court also granted Downtown Investments vacant possession and the right to evict Muwema from the premises.
Muwema, dissatisfied with that decision, lodged a notice of appeal but before its application for a stay of execution could be decided, Downtown Investments evicted the law firm from the premises on March 6, 2026.
In his ruling, Justice Musisi made it clear that the legality of that repossession or eviction was not being decided in this application.
Muwema had first asked the High Court to stop execution of the judgment, but the application was dismissed on June 25, 2026.
The law firm then turned to the Court of Appeal, where it argued that it faced serious consequences if Downtown Investments continued with execution, including the attachment of properties belonging to individual partners and garnishee proceedings against its bank accounts.
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Justice Musisi agreed that these particular threats were serious because the appeal raised important questions about Clause 5 of the rental agreement, the nature of the purchase option, the treatment of payments made after August 2021 and the award of mesne profits.
But he also pointed out weaknesses in Muwema’s case, noting that the firm had offered Shs 3.8 billion when the agreement required the price to be determined by the market.
Downtown Investments had not accepted the offer, no agreed market valuation had been shown, and there was no evidence that the Shs 380 million commitment fee had actually been paid by Muwema.
He said these issues could ultimately weigh against the appeal, adding that Muwema had failed to prove that paying the rent arrears and mesne profits would cause irreparable harm.
