The Court of Appeal has ordered law firm M/S Muwema and Co Advocates to deposit $100,000 (about Shs370 million) as security for costs if it is to secure a stay of execution on a high-value monetary decree arising from a commercial property dispute with Downtown Investments Limited.
In a ruling delivered by single appellate judge Justice John Mike Musisi, the law firm was directed to either deposit the cash directly into court or present an unconditional bank guarantee from a reputable commercial bank within one month.
The directive follows an application by Muwema and Co Advocates seeking to halt the execution of a High Court judgment pending the determination of its intended appeal.
The legal tussle originates from a December 15, 2014 lease agreement in which the law firm rented commercial premises on Plot 50, Windsor Crescent in Kololo from Downtown Investments Ltd at an annual rent of $5,500 plus VAT. The agreement included an option for the firm to purchase the property.
In August 2021, the law firm attempted to exercise that option by offering $1.05 million to buy the premises. Downtown Investments rejected the offer, deeming the amount insufficient, which led to a breakdown in relations and the filing of Civil Suit No. 0621 of 2023. In that suit, the landlord sought vacant possession, eviction, rent arrears, mesne profits, damages, and costs.
In February 2026, the High Court ruled in favor of Downtown Investments, ordering the law firm to vacate the premises and pay $148,300 in rent arrears, $224,000 in mesne profits, Shs50 million in general damages, plus interest and legal costs.
Muwema and Co Advocates subsequently launched an appeal and sought a stay of execution. In its application, the law firm argued that once it exercised its purchase option, its legal relationship with Downtown Investments transformed from a tenancy into a vendor-purchaser arrangement. The firm further cautioned that executing the monetary decree-through garnishee proceedings against its bank accounts or the attachment of individual partners’ assets-would inflict irreparable harm on the practice.
In his assessment, Justice Musisi acknowledged that the firm’s intended appeal raised substantive legal issues that warrant full consideration by a panel of appellate judges.
‘The intended appeal is arguable and not frivolous, raises substantial questions deserving determination on appeal,’ Justice Musisi ruled, noting that the legal effect of the purchase option and the computation of mesne profits were key issues to be argued.
However, the judge rejected the law firm’s request to grant the stay without requiring security. While noting that Downtown Investments had already repossessed the Kololo property, Justice Musisi emphasized that the financial obligations imposed by the lower court remained unfulfilled.
‘Recovery of possession satisfied the possessory component of the decree, but it did not discharge or secure the awards of rent arrears, mesne profits, general damages, interest and costs,’ the judge observed.
Balancing the interests of both parties, Justice Musisi concluded that forcing the firm to deposit the entire decree sum-which approaches $400,000-would be overly harsh, yet granting a stay with no security at all would unjustly expose the landlord to further delay.
He established $100,000 as a fair middle ground, pointing out that the sum represents a significant portion of the outstanding rent arrears and closely mirrors the $105,000 commitment fee the law firm had previously offered during purchase negotiations.
While Justice Musisi halted execution of the monetary aspects of the decree, including attachment, garnishee, and taxation proceedings, he explicitly clarified that the order does not reverse the eviction already executed. He cautioned that should Muwema and Co Advocates fail to provide the required security within thirty days, the stay of execution will automatically lapse.
Costs of the application will abide by the final outcome of the appeal.