IN THE HIGH COURT OF UGANDA SITTING AT KAMPALA

(COMMERCIAL DIVISION)
Reportable
CIVIL SUIT No. 1026 of 2020
In the matter between
MEGHA INDUSTRIES UGANDA LIMITED
And
BBROOD UGANDA LIMITED
Heard: 13 April, 2022.
Delivered: 17 June, 2024.

Periodic tenancy — Termination of a periodic tenancy— Taking possession, to the

exclusion of the tenant, will be deemed to have been undertaken with an intention to
determine the lease or periodic tenancy, where the nature of the possession practically
shuts down the business operations of the tenant by denying the tenant access to the
premises, in circumstances where is not clearly set out. — A surrender cannot be done
unilaterally; both landlord and tenant need to agree for a surrender to occur. A tenant
cannot unilaterally divest itself of its obligations under a lease or periodic tenancy. In
absence of a deed of surrender, the conduct of both parties must unequivocally amount
to an acceptance that the tenancy has ended.
Remedies of an un-paid landlord — A landlord owed arrears in rent has traditionally
had two remedies available to collect from a delinquent tenant. The tenant could be sued
for the arrears in an action for rent. Alternatively, the landlord could levy distress by
seizing and selling the tenant’s goods to recover the arrears. — Under the common law,
a lease or tenancy cannot be terminated at the same time as distraining for rent. In other
words, distress proceedings and termination are mutually exclusive remedies and the
landlord must only choose one.
______________________________________________________________________

JUDGMENT
______________________________________________________________________
STEPHEN MUBIRU, J.

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Introduction:
[1] The plaintiff is a private limited liability company incorporated in Uganda, that is
engaged in multiple businesses including the manufacture and sale of foam
mattresses, car sales, quarrying and is also the proprietor of real property under
the name and style of the “Best Western Premier Garden Hotel” and “Victoria Mall”
in Entebbe. The defendant too is a private limited liability company incorporated in
Uganda, that is engaged in bakery business and the sale of an assortment of
grocery products. On or about 5th October, 2015 the two corporations executed a
lease or periodic tenancy agreement by which the defendant occupied space on
part of the ground floor, unit G09A of the “Victoria Mall” in Entebbe, for the
marketing of its bakery products and groceries. They operated a bakery and coffee
shop on the premises. The lease or periodic tenancy was for a fixed term of six
years commencing on the day of signing, with the agreed rent of US $ 33.42 per
square metre per month, hence US $ 1,246.23 per month, payable quarterly in
advance. It was to be subject to a 3% increment per annum for the first two years
and thereafter at the rate of 5% per annum for the rest of the years.

[2] During the course of the lease or periodic tenancy, the defendant defaulted on its
rental payments which by 21st October, 2020 had accumulated to an outstanding
sum of US $ 26,473, inclusive of the service charge. In response to the plaintiff’s
demands for those arrears, the defendant’s Managing Director by a letter dated
19th September, 2019 notified the plaintiff that “I confirm that we are no longer
interested in the shop and therefore you have the mandate to give it to another
tenant.” It is on that basis that the plaintiff now claims recovery of a sum of US $
26,473, inclusive of the outstanding rent, rent payable for the remaining period of
the lease or periodic tenancy following the defendant’s unilateral termination, and
the service charge. The plaintiff further claims US $ 1,000 as restoration costs,
being the equivalent of two months’ rent, and the costs of the suit.

[3] By its written statement of defence, the defendant denied liability for the claim. The
defendant contends that three years into the lease or periodic tenancy, it

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 experienced significant difficulty with its business operations largely attributable to
low sales against the high cost of its operations. Consequently, on or about 9th
May, 2019 the defendant approached the plaintiff with a proposal to reduce the
rent to a monthly rate of US $ 500. The plaintiff rejected the proposal but offered
to avail the defendant the services of its marketing team to assist the defendant
improve on its sales. The plaintiff thereafter on or about 25th July, 2019 locked up
the defendant’s business premises. The defendant then suggested to the plaintiff
to apply the security deposit toward the rent arrears and thereafter open the
premises and permit the defendant take out its inventory. The plaintiff rejected all
proposals by the defendant for an amicable settlement. The defendant thus
counterclaims for an award of general damages for the plaintiff’s wrongful
termination of the lease or periodic tenancy agreement, unreasonable conduct in
rejecting the defendant’s proposals and locking up the premises instead, as well
as the cost of the suit and the counterclaim.

The Plaintiff’s evidence:

[4] The Plaintiff Exhibited a tenancy agreement, exhibit P. Ex.1 dated 5th October,
2015, together with a number of letters/correspondences exchanged with the
defendant, P. Exs 2, 3, 4 and 5. P.W.1 Mr. Marc Du Toit testified that the premises
have not been opened since 26th July, 2019. All the tenant’s property is still in the
plaintiff’s possession.

The Defendant’s evidence:

[5] The defendant led evidence to show that it conceded the re-possession and
indicated to the plaintiff that the security deposit should be applied to the
outstanding sum, and sought permission to remove its stock-in-trade from the
premises. As per exhibit D. Ex.4, a letter dated 9th July, 2019 the defendant sought
a reduction of rent due to the financial hardships it was facing at the time. In its
response, by exhibit D. Ex.5, a letter dated 26th July, 2019 the plaintiff rejected the

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 request for rent revision and the defendant’s opting to treat the lock-up as effective
termination of the tenancy.

Arguments of Counsel for the defendant:

[6] Counsel for the plaintiff did not file written submissions. On their part, M/s Lex
Uganda Advocates and Solicitors on behalf of the defendant submitted that
although the lease or periodic tenancy was supposed to have expired on 30th
September, 2021 the plaintiff terminated it on 25th July, 2019 when it locked the
premises, constituting a re-entry. The defendant’s letter dated 9th July, 2019 did
not constitute a surrender of the lease or periodic tenancy since it was not accepted
by the plaintiff. The defendant’s notification of the plaintiff by the leter dated 19th
September, 2019 of loss of interest in maintenance of the lease or periodic tenancy
was inconsequential. The plaintiff is entitled to rent that had accrued until 25th July,
2019, the date of the re-entry. The outstanding rent at the time of the re-entry was
US $ 1,617 only. No rent is recoverable for the period after the termination of the
lease or periodic tenancy. The plaintiff retained US $ 3,745.41 as a security deposit
which the defendant allowed the plaintiff to apply towards settlement of the
outstanding rent. When the rent is offset against that amount, the amount
outstanding due to the defendant is US $ 2,128.48. The plaintiff had no right to
confiscate the defendant’s property. The Court should therefore order an
immediate release or periodic tenancy of the defendant’s retained property,
alternatively the value of the retained stock in trade, general damages, interest and
costs.

The issues for determination;

[7] In the joint scheduling memorandum filed on 14th May, 2021, the parties agreed
on the following issues for the Court’s determination, namely;

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 1. Whether the defendant unilaterally terminated the lease or periodic tenancy
agreement on 19th September, 2019 when it informed the plaintiff that it was
no longer integrated in the premises.
2. Whether the defendant is indebted to the plaintiff in the sum of US $
48,317 as outstanding arrears for rent and the service charges.
3. Whether the plaintiff is in wrongful detention of the defendant’s property.
4. What remedies are available for the parties.

The decision;

[8] In all civil litigation, the burden of proof requires the plaintiff, who is the claimant,
to prove to court on a balance of probability, the plaintiff’s entitlement to the relief
being sought. The plaintiff must prove each element of its claim, or cause of action,
in order to recover. In other words, the initial burden of proof is on the plaintiff to
show the court why the defendant liable for the relief claimed. Generally, the
plaintiff in the instant suit must show: (i) the existence of a contract and its essential
terms; (ii) a breach of a duty imposed by the contract; and (iii) resultant damages.
As regards the counterclaim, the defendant bears the burden of proving the same
elements in order to succeed.

First issue; whether the defendant unilaterally terminated the lease or periodic tenancy
agreement on 19th September, 2019 when it informed the plaintiff that it was
no longer interested in the premises.

[9] It is common ground between the parties that the lease or periodic tenancy
executed between them on or about 5th October, 2015 came to an end. Whereas
the plaintiff contends tit was terminated by the defendant’s repudiation and
surrender by way of a letter dated 19th September, 2019, the defendant refutes
that and contends that letter did not constitute a surrender since it was never
accepted by the plaintiff. Instead, the defendant’s case is that the lease or periodic
tenancy was terminated by the plaintiff’s re-entry that occurred on 25th July, 2019

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 when it locked the defendant’s premises. The Court has to determine by which of
the two modes the lease or periodic tenancy was actually terminated.

i. Termination by re-entry.

[10] The “right of re-entry” or “forfeiture right” is a landlord’s unilateral right to bring a
lease or periodic tenancy to an end in the event of a breach by the tenant. If a
lease or periodic tenancy is successfully forfeited, then all interests created out of
it will also come to an end. A lease or periodic tenancy may be determined by the
re-entry of the lessor, i.e. the lessor may peaceably and lawfully recover
possession of the leased land or premises if the lessee breaks any of the
covenants specified in the lease or periodic tenancy, e.g. non-payment of rent. The
“peaceable” aspect simply means that the landlord re-enters the property without
requiring a formal court order or eviction notice. Peaceable re-entry is the act of
physically turning up at the property, re-possessing, and securing it. This
repossession commonly occurs during after-hours by changing the locks so that
the Lessee or tenant cannot enter. The lease or periodic tenancy must also not
include a clause that states the landlord needs to issue a formal demand before
they can peaceably re-enter the property. If there is such a clause, the landlord
needs to make a formal demand, with a visit on the final day the tenant can repay
their debts, before the landlord has the right to forfeit. Peaceable re-entry is a self-
help remedy which takes effect from the date of re-entry.

[11] According to section 101 of The registration of Titles Act the proprietor of any
freehold or mailo land under the operation of this Act may, subject to any law or
agreement for the time being in force, lease or periodic tenancy that land for any
term exceeding three years by signing a lease or periodic tenancy. By virtue of
section 103 (b) of the Act, it is implied in every lease that the landlord or its
transferees has the power, in case the rent or any part of it is in arrear for the space
of thirty days, although no legal or formal demand has been made for payment of
that rent, or in case of any breach or non-observance of any of the covenants

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 expressed in the lease or periodic tenancy or by law declared to be implied in the
lease or periodic tenancy on the part of the lessee or his or her transferees, and
the breach or non-observance continuing for the space of thirty days, the lessor or
his or her transferees may re-enter upon and take possession of the lease
property.

[12] The landlord has an obligation to the tenant not to interfere with a permissible use
of the premises. What distinguishes non-payment of rent as a ground for re-entry
from other breaches is that there is no need for the landlord to give any notice to
the tenant prior to forfeiting the lease or periodic tenancy: if the requirements have
been satisfied, and the landlord has not done anything to waive the breach, he can
forfeit by peaceably re-entering the premises. A formal demand for payment of rent
is not required in order to forfeit; all that is required is that payment has become
due. However, where the unpaid sums are service charge, it is likely that the lease
or periodic tenancy will require these to be demanded before they fall due. For the
re-taking of possession to constitute an exercise of the “right of re-entry” or
“forfeiture right” there has to be a clear physical act which is meant to put an end
to the possession.

[13] There are the two basic requirements of forfeiture; one is a breach by the tenant
of an express condition of the lease or periodic tenancy which provides for re-entry
on such breach, and the other is a notice by the landlord expressing his intention
to determine the lease or periodic tenancy (see Giuseppina Canini v. Sofia Binti
Suleman and another [1964] 1 EA 619). There must be some final and unequivocal
act by the landlord to constitute the exercise of actual physical control to use it as
owner (a manifestation of animus domini - the visible act of intention or disposition
which would normally be found in the owner of the property), accompanied by an
intention to forfeit (actions, statements or declarations indicating an intention to
bring the lease or periodic tenancy to an end). Any degree or form of intended use,
however limited in extent or in duration, may, if exclusive for the time being, be
sufficient to constitute possession.

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[14] Acts of the landlord which amount to protecting or preserving the property, such
as taking security measures or doing necessary repairs, will not in itself give rise
to a re-entry because such self-help, necessary to preserve the landlord’s interest
in the value of his property, is a reasonable response to the tenant’s evinced
intention not to perform the obligations of the tenancy (see Padwick Properties Ltd
v. Punj Lloyds Ltd [2016] EWHC 502). Taking possession does not constitute a re-
entry to the extent that it is not inconsistent with holding the defaulting tenant to
performing the lease or periodic tenancy. The landlord need not evict the tenant;
he simply has to re-enter. In every case the question to be asked is whether the
landlord went beyond the protection of its interests, and demonstrated taking
possession, to the exclusion of the tenant, with an intention to determine the lease
or periodic tenancy.

[15] In Owiafe v. Zubriski, 2006 MBQB 209 (CanLII) the tenant leased a parking lot for
used cars. Following notice of default, the landlord changed the locks to the office
and barricaded the lot. The landlord took the position that these restrictions on
access were necessary to protect its distress rights. Moreover, the landlord offered
to allow the tenant to “access” if he paid a portion of the rent. The Manitoba Court
of Queen’s Bench ruled that locking the door terminated the lease and therefore
the entire distress was unlawful. The bailiff had other options available to it to
protect the distrained goods such as removing them to another location which
would not have deprived the tenant’s access. Once the landlord locked the tenant
out of the leased premises, he had terminated the lease. A landlord could not
terminate the lease and distrain the tenant’s goods at the same time.

[16] Therefore, where the landlord under the guise of distress, effectively takes
possession and shuts down business operations of the tenant by denying access
to the premises, the lease or periodic tenancy will be deemed terminated. The
lease agreement between the landlord and tenant is terminated by the landlord’s
re-entry for clear breaches of covenants by the tenant (see Lugogo Coffee
Company Limited v. Singo Combined Growers Limited [1976] HCB 92; Executrix

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 of the Estate of the Late Tebajjukira and another v. Stanzi, S. C. Civil Appeal No.
2 of 1988 and Erukana Kuwe v. Vasrambhai Damji Vader [2003] 1 EA 117).
Termination may be achieved by taking physical possession of the property, or by
putting a tenant in possession thereof, thereby taking constructive possession of
the property; what matters is that the tenant is thereby put out of possession of the
property and no longer enjoys the right of exclusive possession and occupation.

[17] Taking possession, to the exclusion of the tenant, will be deemed to have been
undertaken with an intention to determine the lease or periodic tenancy, where the
nature of the possession practically shuts down the business operations of the
tenant by denying the tenant access to the premises, in circumstances where is
not clearly set out that the denial of access to the premises is temporary and is
only intended to distrain the goods left at the premises; and that although the locks
have been changed, the tenant would be provided with access to the premises
whenever asked for, under the landlord’s supervision. Remedies such as
terminating utilities, changing the locks, removing doors or windows, or removing
the tenant’s property, in order to end the tenant’s occupancy, will be deemed to be
intended to terminate the lease or tenancy.

[18] In contrast, in Queen Street Holdings v. Z. Teca Inc. 2017 ONSC 5890 (CanLII)
the Ontario Court found that the landlord’s locking of the premises did not
constitute termination on ground that; (i) the notice of distress clearly set out the
landlord’s intention to distrain the goods left at the premises; (ii) the notice also
clearly informed the tenant that the locks were being changed but that it would be
provided with access; (iii) the landlord acted quickly to retain a bailiff for the
purposes of the distress and instructed the bailiff to provide the tenant access to
the premises under its supervision; and (iv) while the locks were changed the
tenant asked for and was provided with further access.

[19] The Court was satisfied that the purpose behind changing the locks in this latter
instance was to secure the goods subject to distress and prevent risk of loss while

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 clearly showing the landlord’s intention not to terminate. The Court did go out of its
way to distinguish this case from others where the landlords under the guise of
distress, effectively terminated the lease and shut down business operations by
denying access to the premises. There must be some final and unequivocal act by
the landlord to take back possession, accompanied by an intention to forfeit.
Regaining physical possession is not of itself necessarily clear proof of the
landlord’s intention and election to forfeit the lease or periodic tenancy.

[20] Intention to forfeit is inferred from the specific plan or goal a person has in mind
when they take an action, while motive refers to the underlying reason or drive
behind the action. An intended action is a decision that is made with full awareness
and understanding of the consequences of the action, while motive is the
underlying reason or drive for doing something. A motive is an explanation of a
person’s actions while intention is a willingness to act; a conscious decision to
carry out a specific act. Locking up premises occupied by a tenant entitled to
elusive possession of premises is a specific act of re-taking possession, hence a
re-entry where the tenant’s possession is as a consequence terminated. Clause
43.1 of the tenancy agreement, exhibit P. Ex.1 dated 5th October, 2015 provided
as follows;

43. The Landlord may at any time after the occurrence of any of
the following events, re-enter the premises or any part of
them in the name of the whole whereupon this demise shall
absolutely determine (but without prejudice to any right of
action of the Landlord in respect of any arrears of rent….

43.1 if any rent remains unpaid 21 days after written notice is given
to the Tenant that it is due;

[21] In the instant case, by a letter dated 1st July, 2019 (exhibit P. Ex.3) the defendant
was given up to 21st July, 2019 to pay up the then outstanding debt of US $
5,532.08 or be sued for recovery of the rent. Instead, when the defendant did not
pay, the plaintiff locked up the premises on 25th July, 2019, not for enabling the

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 plaintiff to enter into the property for its own beneficial use, or for the protection of
its interest in recovering the outstanding rent by way of distraining the goods
therein, but for preventing the defendant access to the premises until payment in
full. The premises were locked for the purpose of excluding the defendant until
payment of the arrears of rent in full. In the letter dated 26th July, 2019, (exhibit D.
Ex.5) the defendant conceded the re-possession and indicated to the plaintiff that
the security deposit should be applied to the outstanding sum, and sought
permission to remove its stock-in-trade from the premises.

[22] P.W.1 Mr. Marc Du Toit testified that the premises have not been opened since
26th July, 2019. Although locking up the premises was done in the course of
asserting a claim for rent against the tenant, the manner in which it was done, by
totally denying the defendant access to the premises, was consistent with an
intention to re-take possession of the property, even if with a motive to collect
outstanding rent. Although by its letter dated 26th July, 2019 (exhibit D. Ex.5), the
plaintiff rejected the defendant’s choice to treat the lock-up as effective termination
of the tenancy, the plaintiff’s conduct, viewed in its totality, was inconsistent with
the continuation of the lease or periodic tenancy, and the defendant understood it
to be so, not only in the letter dated 26th July, 2019, (exhibit D. Ex.5) but also in the
subsequent one dated 5th August, 2019, (exhibit D. Ex.9.

[23] The plaintiff categorically stated that “your client will not be able to access their
property till the outstanding has been cleared.” Locking the premises without
permitting the defendant any form of access, including supervised access
thereafter, is an act inconsistent with the continuation of the landlord-tenant
relationship, since it deprives the tenant of future access to the premises. It was
an unequivocal action by the plaintiff that manifested the termination of the
tenancy, despite the plaintiff’s motive to use that action as a mechanism for
collection of rental arrears. The action had the requisite finality and intention to
constitute a re-entry, even if that was not the desired outcome. By locking the

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 premises, the landlord for all practical purposes evicted the tenant and the tenant
rightly believed it had been constructively evicted.

ii. Termination by surrender.

[24] Tenant to bring the lease or periodic tenancy to an early end, with the landlord
agreeing to take back control of the property. A surrender cannot be done
unilaterally; both landlord and tenant need to agree for a surrender to occur. A
tenant cannot unilaterally divest itself of its obligations under a lease or periodic
tenancy. In absence of a deed of surrender, the conduct of both parties must
unequivocally amount to an acceptance that the tenancy has ended, for example
by the relinquishment of possession and its acceptance by the landlord. Neither
the landlord nor tenant should dispute that the tenancy has ended. There must be
a clear agreement by either the landlord or the tenant that the tenancy is ended,
indicated by the tenant quitting the premises and the landlord taking possession;
the giving and taking of possession must be unequivocal. The lease or periodic
tenancy is surrendered when the tenant’s interests are transferred back to the
landlord by mutual consent. It must be clear from the landlord’s conduct that the
tenant’s act of giving up the property is accepted as a surrender.

[25] For an implied surrender to take effect, the parties must have acted towards each
other in a way which is inconsistent with the continuation of the tenancy. There has
to be some unequivocal act or series of acts that show that the tenant and landlord
have accepted that the lease or periodic tenancy is ended or about to end, such
as when the tenant abandons the property and stops paying rent. The
circumstances have to be such as to render it “inequitable” for the landlord or
tenant to dispute that the tenancy has ceased. Where possession is unequivocally
offered and retaken, it will, without more, be inequitable for the landlord to deny
that the tenancy has ended, because he cannot at one and the same time have
both possession and continuing rent under the tenancy. Where the conduct of a

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 party is inconsistent with the continuation of the tenancy, that party is estopped
from contending that the tenancy subsists.

[26] Implied surrender therefore occurs when the landlord and tenant by their
unequivocal conduct demonstrate that they no longer regard the lease or periodic
tenancy as continuing between them. Where both parties act on the basis that the
tenancy has ended, the result will be that the tenancy has ended. The conduct of
both parties must be inconsistent with the continuation of the lease or periodic
tenancy. The court looks at the whole of the conduct of the landlord prior to the
filing of the suit. If, by the time of filing the suit, it is quite plain that the landlord had
accepted by its conduct, or shown by its conduct, that the tenancy no longer
existed, then the conditions giving rise to implied surrender are established.

[27] It takes acts by both the tenant and the landlord to bring about an implied
surrender; the relevant conduct must be unequivocal. The Court should look
holistically at the circumstances. Individual acts which, viewed in isolation, might
be considered consistent both with the continuation and the termination of the
tenancy, and therefore as equivocal for these purposes, can nevertheless
cumulatively amount to an unequivocal acceptance that the tenancy is at an end.
However, a collection of what are, at best, individually equivocal events many
times cannot be combined to surmount the high evidential threshold which implied
surrender requires.

[28] Commencing a suit for recovery of possession is an indication of a final

determination to forfeit the lease or periodic tenancy. According to English law,
service of a writ for possession operates as a final election by the lessor to
determine a lease or periodic tenancy. (see Serjeant v. Nash Field & Co [1903] 2
KB 304; [1900-3] All ER 525 and Billson v. Residential Apartments Ltd. [1992] 2
W.L.R. 15). The lease or periodic tenancy is forfeited on the date of service of the
court process, even though possession may not be gained until the court

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 proceedings have been determined and a possession order granted by the court:
the subsequent order for possession has retrospective effect to the date of service.

[29] In the instant case, by exhibit D. Ex.4, a letter dated 9th July, 2019 the defendant
sought a reduction of rent due to the financial hardships it was facing at the time.
In its response, by exhibit D. Ex.5, a letter dated 26th July, 2019 the plaintiff rejected
the request for rent revision and the defendant’s opting to treat the lock-up as
effective termination of the tenancy. The defendant opted to treat the tenancy as
having bene terminated by re-entry (exhibit D. Ex.5) which the plaintiff rejected
(exhibit P. Ex.4). In the defendant’s letter dated 19th September, 2019 (exhibit P.
Ex.5) the defendant stated that “I confirm that we are no longer interested in the
shop and therefore you have the mandate to give it to another tenant.” The
defendant continued on 10th October 2020 and 3rd December, 2020 (exhibits D.
Ex.10A and 10B respectively), to demand access to its stock-in-trade but to no
vail. It is the plaintiff’s case that the defendant’s letter of 19th September, 2019
constituted a termination by surrender.

[30] Having come to the conclusion that the plaintiff’s action of closure of the premises
on 25th July, 2019 in a manner that denied the defendant any access thereto,
constituted a re-entry, and hence a termination of the tenancy, the defendant’s
letter of 19th September, 2019 was inconsequential. The tenancy was no longer
capable of termination by surrender, it having been terminated before by re-entry.
In conclusion therefore, the issue is answered in the negative. The defendant did
not unilaterally terminate the lease or periodic tenancy agreement on 19th
September, 2019 when it informed the plaintiff that it was no longer interested in
the premises; it is the plaintiff’s closure of the premises on 25th July, 2019 that
terminated the tenancy.

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Third issue; whether the plaintiff is in wrongful detention of the defendant’s property.

[31] A landlord owed arrears in rent has traditionally had two remedies available to
collect from a delinquent tenant. The tenant could be sued for the arrears in an
action for rent. Alternatively, the landlord could levy distress by seizing and selling
the tenant’s goods to recover the arrears. Distress for rent is the seizure of a
tenant’s goods for failure to pay rent with a view of selling them to recover the
outstanding rent arrears. It is “the seizure of someone’s property in order to obtain
payment of rent or other money owed” (see Walsh v. Lonsdale (1882), 21 Ch. D.
9). The Distress for Rent (Bailiffs) Act and The Distress for Rent (Bailiffs) Rules
provide the legal framework for the distress for rent process. Under section 2 of
that Act, a landlord in person, his or her attorney or the legal owner of a reversion,
or a bailiff may levy distress

[32] Distress for rent is a self-help remedy by which landlord may enter the
rented/leased premises if rent is in arrears and confiscate any goods found on the
premises of the value of outstanding rent (see Musumba Joseph v. Haji M. Kasaka
and Mbarara Auction Mart (1971) 1 ULR 222; [1971] HCB 143). The right only
accrues where rent is in arrears. It is only applicable where the landlord does not
intend to terminate the tenancy. A landlord cannot terminate the tenancy and
distrain the tenant’s goods at the same time. Once the tenancy is terminated, the
subsequent distress is unlawful (see Owiafe v. Zubriski, 2006 MBQB 209 (CanLII)
and Delane Industry Co. Ltd. v. PCI Properties Corp. 2014 BCCA 285). After
termination of the tenancy, the landlord’s only remedy is a suit for damages and
for arrears of rent.

[33] In order for the remedy of distress to be available, there must be a legal relationship
of landlord and tenant (see Souza Figueiredo & Co. Ltd. v. George and others
[1959] E.A. 756; Joy Tumushabe and another v. M/s Anglo Africa Ltd and another
S.C. Civil Appeal No. 7 of 1999 and Male H. Mabirizi K. Kiwanuka and another v.
Owere Franco and three others, H.C. Misc. Application No. 2763 of 2014). It is

15
 unavailable after the termination of the tenancy. If the tenancy is terminated, there
is no such relationship, so the remedy of distress is not available to a previous
landlord after termination of a tenancy. Distress and termination are mutually
exclusive remedies that cannot be exercised concurrently. In other words, a
landlord cannot distrain and terminate the lease or tenancy at the same time. Nor
can a landlord terminate the lease and then distrain, since distress is only available
while the lease is alive. In Delane Industry Co. Ltd. v. PCI Properties Corp., 2013
BCSC 1397, as appealed to 2014 BCCA 285, the parties entered into a sublease,
which included the following provision dealing with cumulative remedies:

[34] No remedy conferred upon or reserved to the Landlord herein, or by statute or

otherwise, will be considered exclusive of any other remedy, but the same will be
cumulative and will be in addition to every other remedy available to the Landlord
and all such remedies and powers of the Landlord may be exercised concurrently
and from time to time and as often as may be deemed expedient by the Landlord.

[35] The tenant stopped paying rent due to a dispute with its landlord. The landlord
commenced distress proceedings and sold the tenant’s goods. The landlord
alleged there was unpaid rent and, after giving the required notice (the “Demand
Notice”), it chose to exercise the remedy of distress. The seized goods were sold
but there remained a balance owing to the landlord. Later that same day, the
landlord delivered a subsequent notice to terminate the sublease, effective
immediately (the “Notice of Termination”). The sale proceeds were not sufficient to
satisfy the rent arrears, so the landlord terminated the lease for non­payment of
rent immediately after the sale, relying on a notice of default delivered to the tenant
during the distress proceedings. The tenant brought an action against the landlord
for, among other things, a declaration that the landlord illegally terminated the
lease. The court held that the landlord had not effectively terminated the sublease.
It began with the proposition that a landlord cannot levy distress against a tenant’s
property and terminate the lease at the same time (as these remedies are mutually
exclusive). The Court noted that since termination is fundamentally inconsistent

16
 with distress, the two remedies cannot be exercised concurrently. The Court also
held that the “cumulative remedies” clause in the lease could not be extended to
permit concurrent remedies that are, by definition, mutually exclusive. The Court
found that in order to terminate the lease, the landlord was required to provide the
tenant with a fresh notice of default and opportunity to cure after the distress was
completed. The Court noted that “distress is an unequivocal election to continue
the landlord and tenant relationship and any subsequent forfeiture for the same
breach is illegal.”

[36] A landlord who has elected distress may not terminate the lease on the basis of
the same breach on which the distress was founded. That is not to say that a
landlord is without a remedy for the recovery of the prior rental arrears. However,
a landlord cannot rely on notice of default given while distress is ongoing to
terminate the lease immediately upon completion of the distress. A new notice of
default is required after a fresh default has occurred in order to claim rental arrears
that pre-dated the distress proceeding. That is, a landlord may not rely on rental
arrears that accrued prior to the completion of the distress as the basis for
terminating a lease. The Court of Appeal noted that in order to terminate the lease,
a fresh default, unrelated to the breach that led to the distress, would be necessary.
Such new notice of default must be based on a new default or breach by the tenant
and the landlord must comply with the requirements in the lease, such as notice
and cure periods, for termination by the landlord. All in all, an election between
two mutually exclusive remedies is irrevocable, and once the election is made, the
other remedy is unavailable. Moreover, a “cumulative remedies” clause in a lease
will not alter this outcome.

[37] Therefore, if a tenant fails to pay rent, the landlord has a decision to make: whether
to terminate the lease and sue for the unpaid rent and for future rent, or to continue
the tenancy and distrain on the tenant’s goods. It is an illegal and blatant abuse of
process for a landlord to just take the law into their hands and lock-up premises
that has been contractually handed over to a tenant, just to intimidate or coerce

17
 the tenant into paying rent (see Sophie Nakitende v. Mabu Commodities Limited,
H.C. Civil Suit No. 117 of 2016; Komakech Sam and seven others v. Ayaa Corina
and another, H.C. Civil Appeal No. 0028 of 2016 and Gusii Mwalimu Investment
Co. Ltd and others v. Mwalimu Hotel Kisii Ltd, [1995–1998] 2 EA 100). An illegal
distress is one that is wrongful from the start.

[38] At common law, virtually any goods or chattels found on the tenant’s premises
were subject to distraint. Once a chattel has been “affixed” to the land, it loses its
character as personalty and becomes part of the realty. Since fixtures are no
longer chattels, it is not surprising that they are exempt from distress at common
law. Chattels are items which have not been affixed to the land or which are so
loosely fixed as not to be regarded as fixtures. They continue to belong to the
tenant even after the lease or periodic tenancy comes to an end, and the tenant
has left anything behind, the landlord should make a careful inventory and the
tenant should always be given an opportunity to come and collect them.

[39] A landlord may enter on the rented premises, so long as no breach of the peace
is occasioned, and no more damage is done than is necessary to remove the
goods being seized. No door, lock or window may be broken by a landlord to enter
a residence (see Semayne’s Case (1604), 77 E.R. 194, 5 Co. Rep. 91a). Through
distress, the landlord can raise the rent owing by sale of the tenant’s goods. The
distrained goods may either be impounded on the premises and sold from there,
or removed to a place of safe custody off the premises. Notice of the distress must
be left at a conspicuous place on the premises and at least five days must elapse
before distrained goods may be sold. The notice must contain a statement of the
fact that distress has been made, the time when the rent and other charges must
be paid to avoid sale of the distrained goods, the amount of arrears due, and the
place where the goods are impounded.

[40] When chattels remain on the premises following forfeiture, they remain the tenant’s
property and the landlord has certain obligations, including not to deliberately or

18
 recklessly damage or destroy them. If, following a landlord taking back possession
of premises (by peaceable re-entry, court order or upon determination of the lease
or periodic tenancy by effluxion of time or break notice etc) the former tenant has
left any goods at the premises, in the absence of any express terms in the lease
or periodic tenancy dealing with this scenario, the landlord will become involuntary
bailee of the goods and could be liable in conversion if they sell the goods and
offset them against arrears, or for damages if they dispose of the goods.

[41] In the instant case, P.W.1 Mr. Marc Du Toit testified that the premises have not
been opened since 26th July, 2019. All the tenant’s property is still in the plaintiff’s
possession. It includes stock, machinery and furniture. Although the plaintiff
receives requests for the property to be released, it has not been released because
the tenant is in arrears and is in default. D.W.1Mr. Denis Awio confirmed that the
landlord has not returned the defendant’s property.

[42] Under the common law, a lease or tenancy cannot be terminated at the same time
as distraining for rent. In other words, distress proceedings and termination are
mutually exclusive remedies and the landlord must only choose one. While the
plaintiff in this case had the right to sue the defendant for the outstanding arrears
that remained following re-entry, consistent with the termination of the lease or
tenancy implicit in the re-possession, it could not exercise the right to distress for
rent on the basis of the same breach on which the re-entry was founded. Once the
plaintiff locked the premises on 25th July, 2019 with the intention of denying the
defendant access thereto until full payment of the outstanding rental arrears, the
plaintiff effectively impounded the defendant’s goods, since the defendant has
since then been unable to use any of the goods in the premises or to trade from
the premises.

[43] P.W.1 Mr. Marc Du Toit testified that the property has not been released because
the tenant is in arrears and is in default. On his part D.W.1 Mr. Denis Awio testified
that the defendant cannot access the property because the landlord has the

19
 second key. There are two locks and the defendant has the key for the tenant. The
landlord cannot access without breaking the tenant’s lock. There being no legal
basis for the plaintiff’s taking possession of the defendant’s property. The law is
clear that when a tenant defaults in the obligation to pay rent, the landlord has two
mutually exclusive legal remedies, and must elect which remedy to pursue. The
landlord can elect to enter the premises and distrain the goods owned by the tenant
for purposes of satisfying the debt owed by way of rent, but with a view to
continuing the lease. Alternatively, the landlord can elect to re-take possession of
the premises and terminate the lease, and potentially pursue other additional
remedies. Where the landlord elects forfeiture, a simultaneous distress is illegal
and will result in the landlord being liable to the tenant for the full extent of the
tenant’s damages. This issue is therefore answered in the affirmative; the plaintiff
has wrongfully detained the defendant’s property since 25th July, 2019. This forms
the basis of the defendant’s counterclaim.

[44] A claim for the value of property kept under wrongful detention being a claim for
special damages, the law is that not only must they be specifically pleaded but they
must also be strictly proved (see Borham-Carter v. Hyde Park Hotel [1948] 64 TLR;
Masaka Municipal Council v. Semogerere [1998-2000] HCB 23 and Musoke David
v. Departed Asians Property Custodian Board [1990-1994] E.A. 219). Special
damages compensate the plaintiff for quantifiable monetary losses such as; past
expenses, lost earnings, out-of-pocket costs incurred directly as the result of the
breach. Unlike general damages, calculating special damages is much more
straightforward because it is based on actual expenses. It is trite law though that
strict proof does not necessarily always require documentary evidence (see
Kyambadde v. Mpigi District Administration, [1983] HCB 44; Haji Asuman
Mutekanga v. Equator Growers (U) Ltd, S.C. Civil Appeal No.7 of 1995 and Gapco
(U) Ltd v. A.S. Transporters (U) Ltd C. A. Civil Appeal No. 18 of 2004).

[45] In paragraph 3 (ii) of the counterclaim, the defendant attached an inventory of the
items of its property claimed to have been wrongfully detained by the plaintiff, and

20
 assigned them a total value of shs. 70,523,431.18. It its defence to the
counterclaim, the plaintiff presented a general denial which did not deal specifically
with the material facts raised in the counterclaim as required by Order 6 rules 8
and 10 of The Civil Procedure Rules. Such a defence precludes the right to call
evidence to controvert the specific claim (see Weitherger v. Englis (1916) ALLER
Rep. 843; Pinson v. Lloyds and National Provincial Foreign Bank Ltd. [1941] 2 ALL
ER 636; Joshi v. Uganda Sugar Factory [1968] EA 570 and Ben Byabashaija and
another v. Attorney General, H.C. Civil Suit No. 134 of 1991). The implication is
that where a material averment is passed over without specific denial, it is taken
to be admitted. An evasive or non-specific denial therefore constitutes an implied
admission in a judicial proceeding of a civil nature.

[46] According to Order 8 rule 3 of The Civil Procedure Rules, every allegation of fact
in the plaint, if not denied specifically or by necessary implication, or stated to be
not admitted in the pleading of the opposite party, is taken to be admitted, but the
court may in its discretion require any facts so admitted to be proved otherwise
than by that admission. This is also in consonance with the provisions of Section
57 of The Evidence Act which provides that facts admitted need not be proved.
The plaintiff neither specifically denied in its pleading nor led evidence to controvert
the defendant’s itemisation of the stock, machinery and furniture currently under
the plaintiff’s custody nor its stated value of shs. 70,523,431.18 It is expected that
an inventory of goods must be made at the time of distraining, but none has been
produced to controvert the claim. A landlord has, by law, the special privilege of
paying himself his rent by seizing his tenant’s goods, and where he takes that
proceeding in a way not authorised; he is a trespasser in seizing and disposing of
the goods taken, and the ordinary rule is that the injured party shall recover their
full value. The Court therefore finds that the defendant has proved its counterclaim
to the required standard.

Second issue; whether the defendant is indebted to the plaintiff in the sum of US $
48,317 as outstanding arrears for rent and the service charges.

21
[47] Fixed-term contracts are, as the name implies, contracts concluded to commence
on a specified date and terminate on another determined or specified date. The
contract may contain a provision that a party can give notice to terminate the
contract earlier than the original termination date. If no such provision is included,
then a fixed-term contract will automatically expire at the end of its term. Where a
contract stipulates a specific duration but is silent as to termination, it may be
construed as a fixed-term contract. Where a long-term agreement has no provision
for unilateral termination and no expiry date, Courts may be prepared to imply a
term allowing a party to terminate on reasonable notice (see Martin-Baker Aircraft
Co. v. Canadian Flight Equipment, Ltd., [1955] 2 All E.R. 722).

[48] A right to determine a lease or tenancy by a landlord is a right of forfeiture if; - (a)
when exercised, it operates to bring the lease or tenancy to an end earlier than it
would “naturally” terminate; and (b) it is exercisable in the event of some default
by the tenant. A fixed-term tenancy does not include such a tenancy that is
terminable by notice. A fixed-term tenancy without a forfeiture clause cannot be
terminated until the fixed-term expires by effluxion of time (see Croydon London
Borough Council v. Kalonga [2022] UKSC 7 and Clays Lane Housing Co-operative
Ltd v. Patrick [1985] 17 HLR 188). The premature termination of a fixed-term
contract amounts to a breach of contract, unless the contract specifically makes
provision for earlier termination.

[49] If the landlord terminates the tenancy by re-entry or accepts a surrender (whether
impliedly or deliberately), the tenant will be released from performing the rest of
the lease or periodic tenancy covenants in the future. The tenant will still be liable
for rent already due and any other existing breaches. The landlord may be able to
pursue the tenant for unpaid rent and other breaches. Under common law the
damages that a landlord is able to claim for breach of such a fixed term contract,
is limited to the amount still due for the remainder of the period of the contract.

22
 i. Rental liability for the full term.

[50] When a lease or tenancy agreement is for a fixed term, it obligates the tenant to
pay rent for the entire term. The fact that rent is paid in monthly or quarterly
instalments does not change the fact that the tenant owes the landlord for the entire
amount. So, if the tenant unilaterally terminates the tenancy early, the landlord may
sue for the remaining months’ rent. If a party terminates a fixed-term contract
before the end of the term without agreeing on it with the other party, the party
terminating the contract is obliged to compensate the other party for the damage
caused.

[51] The position of the law is that the innocent party should, so far as money can do
so, be placed in the same position as if the contract had been performed, and this
is to be done by awarding as damages the amount of rent that he or she has been
prevented from earning by the wrongful termination. In the case of a fixed term
contract this means that the starting point is the rent for the remainder of the fixed
term. When a fixed term contract is terminated, the terminating party owes the non-
terminating party damages equal to the amount that would have been earned
under the contract for the duration of its term, subject to the non-terminating party’s
duty to mitigate unless there is an enforceable early termination clause (see
Gullabhai Ushillani v. Kampala Pharmaceutical Ltd, S.C. Civil Appeal No. 6 of
1999; Southern Highlands Tobacco Union Limited v. David Mcqueen [1960] EA
490 and Barclays Bank of Uganda v. Godfrey Mubiru, S.C. Civil Appeal No.1 of
1998 and Uganda Revenue Authority v. Wanume David Kitamirike, C.A. Civil
Appeal No.43 of 2010). The principle is that in circumstances where there is no
early termination clause, the fixed-term contract unambiguously ousts the common
law presumption of reasonable notice on termination by providing a clear end date.

[52] In order to recover compensatory damages, the tenancy must have been for a
fixed period or for a period terminable by notice, and yet was terminated either
before the expiration of that fixed period or without the requisite notice, as the case

23
 may be. Most fixed term contracts are terminable by notice so that the innocent
party is entitled to recover only the amount of rent during the notice period (see
Halsbury’s Laws of England, 4th edition, Volume 16 paragraph 307 and Kimotho v.
Kenya Commercial Bank [2003] 1 EA 108).

[53] Clause 43.1 of the tenancy agreement, exhibit P. Ex.1 dated 5th October, 2015
allowed the plaintiff to terminate the contract by re-entry, in the event of any rent
remaining unpaid 21 days after written notice was given to the defendant that it
was due. There is no provision enabling either party to terminate the contract by
giving the other notice. Indeed clause 1.26 (a) of the agreement specifically
provides that; “the tenant shall not have the right to terminate this lease before the
expiration of the initial term of six (6) years.” This being a fixed term contract
therefore, the measure of damages for its premature termination is the sum due of
the unexpired period of the contract, less any sum the landlord could reasonably
have earned during that period.

a. Arrears of rent and service charges.

[54] Section 61 (1) of The Contracts Act, 7 of 2010, provides that where there is a
breach of contract, the party who suffers the breach is entitled to receive from the
party who breaches the contract, compensation for any loss or damage caused to
him or her. Compensation is awarded for the personal inconvenience suffered by
a party by reason of the breach, which naturally arose in the usual course of things
from such breach, or which the parties knew, when they made the contract to be
likely to result from the breach of it. For a loss arising from a breach of contract to
be recoverable, it must be such as the party in breach should reasonably have
contemplated as not unlikely to result. The precise nature of the loss does not have
to be in his or her contemplation, it is sufficient that he or she should have
contemplated loss of the same type or kind as that which in fact occurred. There
is no need to contemplate the precise concatenation of circumstances which
brought it about (see The Rio Claro [1987] 2 Lloyd’s Rep 173).

24
[55] A claim for arrears of rent being a claim for special damages, the law is that not
only must they be specifically pleaded but they must also be strictly proved (see
Borham-Carter v. Hyde Park Hotel [1948] 64 TLR; Masaka Municipal Council v.
Semogerere [1998-2000] HCB 23 and Musoke David v. Departed Asians Property
Custodian Board [1990-1994] E.A. 219). Special damages compensate the plaintiff
for quantifiable monetary losses such as; past expenses, lost earnings, out-of-
pocket costs incurred directly as the result of the breach. Unlike general damages,
calculating special damages is much more straightforward because it is based on
actual expenses. It is trite law though that strict proof does not necessarily always
require documentary evidence (see Kyambadde v. Mpigi District Administration,
[1983] HCB 44; Haji Asuman Mutekanga v. Equator Growers (U) Ltd, S.C. Civil
Appeal No.7 of 1995 and Gapco (U) Ltd v. A.S. Transporters (U) Ltd C. A. Civil
Appeal No. 18 of 2004).

[56] According to paragraph 4 (i) of the plaint, the amount owing from the beginning of
the term up to 21st October, 2020 was US $ 23,121 and service charge invoices of
US $ 3,351, hence a total of US $ 26,473. However, since the tenancy had
terminated on 25th July, 2019, the amount recoverable under this head is that
which was outstanding by the date of termination, which by virtue of exhibit P. Ex.3
dated 1st July, 2019 was US $ 5,532.08 and service charge which at the time was
yet to be ascertained. That charge was subsequently ascertained at the sum of US
$ 3,351. In the defendant’s letter of 26th July, 2019 (exhibit D. Ex.5), the defendant
did not dispute the computation of the amount outstanding, but only suggested that
it should be offset from the security deposit. I find therefore that the plaintiff has
proved on the balance of probabilities that by the time of termination of the tenancy,
the defendant was indebted to it in the sum of US $ 8,883.08 being rental arrears
and service charges.

b. Future basic and additional rent owing from 25th July, 2019 until the end of
the term.

25
[57] Damages for fixed term contracts are usually easier to calculate than those for
indefinite contracts terminable after reasonable notice. Where the Court finds that
the landlord has made reasonable efforts to re-let the property, it may award the
landlord the full amount of unpaid rent under the remainder of the lease or tenancy
as damages. Clause 1.20 of the contract set the rent payable at US $ 30 per square
meter per month for the 37.29 square meters of lettable area. This translates into
US $ 13,424.40 per annum (hence US $ 1,118.70 per month, or US $ 3,356.10
per quarter, translating into US $ 29,086.20 for the remainder of the tenancy), in
addition to variable service charges and costs of US $ 1,557.23 per annum (hence
US $ 129.77 per month or US $ 389.31 per quarter, translating into US $ 3,374 for
the remainder of the tenancy) set out by Clause 1.26 of the contract.

[58] However, by virtue of Clause 1.20 (4) to (6) the rent payable for the period from 1st
October, 2018 to 30th September, 2019 would be US $ 33.42 per square metre per
month (a total of US $ 2,492.46 for the months of August and September, 2019);
that from 1st October, 2019 to 30th September, 2020 would be US $ 35.09 per
square metre per month (a total of US $ 15,702.07); and that from 1st October,
2020 to 30th September, 2021 would be US $ 33.42 per square metre per month
(a total of US $ 16,485.16).

[59] The proper measure of damages for a terminated lease or fixed term tenancy is
the arrears of rent plus the present value of the loss of the future rent, which is the
present value of the unpaid rent for the unexpired period of the lease, less the
actual rental value of the premises for that period. In effect the landlord will hold
the tenant liable for any deficiency in rental income for the balance of the lease
term or tenancy. A landlord may be able to recover rent due until the end of the
term from the former tenant, but only if the landlord acts reasonably to mitigate its
losses. In short, the landlord is entitled to recover rent due until the end of the term,
but the extent of that recovery may depend on whether he has taken reasonable
steps to avoid its unreasonable accumulation. This is part of the common law duty

26
 to mitigate when a breach of contract has occurred, which prevents plaintiffs from
simply doing nothing and thereby accumulate losses.

[60] By the time the contract was terminated by re-entry on 25th July, 2019 there were
two years and two months left to its expiry on 30th September, 2021. The damages
recoverable being equal to the amount that would have been earned under the
contract for the duration of its term, the plaintiff is in principle entitled to recover the
sum of US $ 34,679.69 for the unexpired term, less any sum it could reasonably
have earned during that period.

ii. The duty to mitigate.

[61] The doctrine of mitigation of damages, the contract rule of avoidable

consequences, holds that a party who suffers damage as a result of a breach of
contract has a duty to take reasonable steps to mitigate those damages; to prevent
an increase or extension of the injury, and will not be able to recover for any losses
which could have been avoided. The plaintiff is bound to act not only in his own
interests, but in the interests of the party who would have to pay damages, and
keep down the damages, so far as it is reasonable and proper, by acting
reasonably in the matter (see African Highland Produce Ltd v. Kisorio [2001] 1 EA
1). If any part of his (the plaintiff’s) damage was sustained by reason of his own
negligent or unreasonable behaviour, the plaintiff will not be recouped as to that
part.

[62] The law is clear that when a fixed term contract is terminated, the terminating party
owes the non-terminating party damages equal to the amount that would have
been earned under the contract for the duration of its term subject to the non-
terminating party’s duty to mitigate unless there is an enforceable early termination
clause (see Hillis Oil & Sales v. Wynn’s Canada [1986] 1 SCR 57). Landlords
cannot simply sit back and wait for the term to end, then sue the tenant for the rent
due after they left. In other words, the landlords must act to ensure that they are

27
 not deliberately exacerbating the tenant’s damages. If the tenant can prove that
the landlord failed to mitigate its damages, such as failing to secure a new tenant,
then the damages paid to the landlord can be reduced.

[63] Landlords must take reasonable steps to re-let the premises and, if they are
successful in re-letting, credit the rent received from the new tenant to the un-
utilised period of the exiting tenant (see Thompson Holdings Ltd. v. Haztech Fire
and Safety Services, 2016 SKQB 294 and F.M. v. D.D.A. and S.K.,2017 CanLII
60075). Following the landlord’s termination of a lease or tenancy by re-entry, the
landlord’s claim is one for money damages, and not for rent since the tenant no
longer has a right to possession. The landlord’s right to collect damages must be
governed by contract law principles. As a result, if a landlord terminates a lease or
tenancy, or accepts a surrender of possession of the premises, it has a duty to use
reasonable efforts to mitigate damages.

[64] Landlords must take reasonable steps to re-let, not heroic ones. Toward that end,
landlords are expected to retain a real estate broker or property manager to market
to new tenants; work with the tenant to find a replacement tenant or subtenant;
resist unreasonable rejection of a potential subtenant; and be flexible about lease
terms and tenant improvement requests. The question what is reasonable for the
plaintiff to do in mitigation of damages is not a question of law, but one of fact in
the circumstances of each particular case. The landlord is not required to do
anything other than in the ordinary course of business. When determining the
reasonableness of the effort, the Court will consider; - whether the landlord
searched for tenants using appropriate means; whether the landlord unreasonably
delayed their search, though landlords are not expected to start their search the
day after termination; whether the geographic scope of the search was reasonable;
whether the tenant provided any assistance and whether the landlord made use of
the assistance provided; where the landlord chooses to remodel the premises,
whether the remodelling is reasonable in the circumstances.

28
[65] Landlords do not have to give special priority to a unit in order to re-let it, nor do
they have to lower the rent for the unit. Landlords do not have to accept any
applicant who walks in the door. Instead, landlords attempting to mitigate their
damages need only to apply the same application criteria they used when they
rented to the original tenant. In all cases, the Landlord’s recovery will be limited to
damages that would have been incurred by a landlord who took all reasonable
steps to mitigate losses. A landlord is able to recover damages for unpaid future
rent only if it acted reasonably and in a good-faith effort to mitigate the damages.

[66] Additionally, the landlord required to mitigate by taking reasonable steps to

mitigate the harm caused by the tenant is also entitled to seek reasonable costs
incurred in the effort to mitigate; and accordingly, when a tenant improperly
vacates, or fails to occupy, and the landlord is required to take reasonable steps
to source a substitute tenant, the tenant may be found liable for advertising,
brokers’ commission, the cost of preparing a new tenancy agreement including
legal costs, among other reasonable expenses incurred by the landlord.

c. Future basic and additional rent owing from 25th July, 2019 until it would be
reasonably possible for a replacement tenant to occupy the premises.

[67] When a landlord terminates the lease or tenancy and claims for damages under
the law of contract, Courts have generally assumed an obligation on the landlord
to mitigate its damages by finding a new tenant and offsetting the amount owing
by the tenant by the amount it receives from the new tenant. Under this concept,
a landlord cannot simultaneously collect unpaid rent owed for the remainder of the
lease term as damages from the original tenant and monthly rent from a new
tenant. Therefore, once the landlord re-lets the property to a new tenant, the
original tenant’s rent owed under the lease stops accruing.

[68] The landlord cannot allow the property to remain empty and unpaid rent to continue
to accrue each month and then sue the tenant for the full amount of unpaid rent

29
 under the lease (see Kiddle v. Yajm [2022] QDC 82). Instead, the landlord must
affirmatively take reasonable measures to mitigate those damages. The duty does
not require one to act in a commercially unsound fashion (see Deer Valley
Shopping Centre Ltd. v. Sniderman Radio Sales and Services Ltd [1989] A.J. No.
305). The amount of time it would take a landlord acting reasonably to find a new
tenant. Whether a landlord’s efforts at mitigation are “reasonable” depends on the
circumstances. Reasonable efforts are those steps that the landlord would have
taken to rent the premises if they had been vacated in due course, provided that
those steps are in accordance with local rental practice for similar properties.
Generally, reasonable efforts at re-letting a commercial property and finding a
replacement tenant include activities such as advertising the property for rent by
posting signs or advertisements online or other relevant publications, engaging
local brokers of the vacancy, and so on.

[69] In discharging its duty to mitigate, a landlord is not required to go above and
beyond what a reasonable but conservative person would do in like circumstances.
The landlord carries the ultimate burden to prove, on a balance of probabilities,
that it discharged this duty. However, if the tenant contends that the loss proved
by the landlord could have been minimised or avoided altogether by the taking of
some step which the landlord could reasonably have taken but did not take, the
onus is on the tenant to make out that contention on the evidence. The burden is
on the tenant to prove failure to mitigate or that the efforts made were not
reasonable. If a reasonable but conservative person in the shoes of the landlord,
knowing only the facts then known, might have made the same choices and taken
the same steps as the landlord did, there is no failure to mitigate. If the landlord
fails to exert reasonable diligence to re-let the premises, the tenant’s liability for
rent after re-entry is reduced by the amount which the lessor could have earned
by reasonable efforts to re-let. A tenant ought not to be penalised beyond the
damages that his default sparking off the re-entry makes difficult to avoid.

30
[70] Once the plaintiff has made out a prima facie case of damages, actual or
prospective, to a given amount, the burden lies upon the defendant to prove
circumstances whereby the loss could have been diminished (see Janiak v.
Ippolito, [1985] 1 S.C.R. 146; Halsbury’s Laws of England, 3rd ed. vol. 11, par. 477,
p. 290 and Buczynski v. McDonald (1971), 1 S.A.S.R. 569). The defendant bears
the onus of proving, on a balance of probabilities, that the plaintiff failed to make
reasonable efforts to mitigate and that mitigation was possible. Not only must the
defendant discharge the onus of showing that the plaintiff could have mitigated his
loss if he had reacted reasonably, but he must also show how and to what extent
that loss could have been minimised. If a tenant wishes to set up a positive case
that the landlord has failed to mitigate its loss, the tenant must plead the allegation
with particulars specifically in its defence. A landlord that unreasonably fails to
mitigate their losses reduces the quantum of damages to the extent that mitigation
would have avoided the loss.

[71] Tenants in the defendant’s position are expected to gather evidence of the
landlord’s attempt to minimise its loss, or the lack of it. This could include:
monitoring and keeping copies of advertisements for the property; making sure
that the property is being advertised at the same rent as they were paying; driving
past the property regularly, or keeping in touch with former neighbours, to check
that the landlord is not keeping the property vacant while attending to repairs or
renovations, or using the property for its own purposes; making enquiries about
the property, to make sure that it is being shown to potential tenants for the
advertised rent; and arranging for people to attend showings of the property for the
same reason. Evidence of this is then adduced at the trial.

[72] From the evidence before Court, the plaintiff has made out a case for the recovery
of the sum of US $ 34,679.69 for the unexpired term. Ther is also evidence that it
sought the defendant’s authorisation to find a new tenant. The onus then was on
the defendant not only to show that the plaintiff could have mitigated its loss if it
had reacted reasonably, but also show how and to what extent that loss could have

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 been minimised. The defendant did not adduce any evidence in this regard. The
defendant has not established, on a balance of probabilities, the following: (i) steps
the plaintiff could have taken in mitigation; (ii) the reasonableness of pursuing
those steps; and (iii) the extent, that is, in actual percentage terms, to which the
loss would have thereby have been avoided. Accordingly, the plaintiff is entitled to
assert the claim for US $ 34,679.69 as damages for the unexpired term.

iii. Offsets between landlord and tenant cross-claims.

[73] The equitable right of set-off allows the tenant to offset the damages claim against
the rent. Set-off is essentially a defence, or excuse, for non-payment. For equitable
set-off to take place, the cross-claims must be connected, it being unjust to grant
the claimant the benefit of his claim without giving credit for the defendant’s cross-
claim (see Federal Commerce & Navigation Co Ltd v. Molena Alpha Inc (The
Nanfri) [1978] QB 927, 981; [1978] 2 Lloyd’s Rep 132, 144). Where they both arise
from a single contract, such as a tenancy agreement, the right to set-off will arise,
for example as in this case, a tenant owes rent to the landlord but also has a claim
for damages against the landlord (see Emomeri Julius v. Shell (U) Ltd [1997] HCB
58; BICC Plc v. Burndy Corp [1985] Ch 232; Muscat v. Smith [2003] EWCA Civ
962; [2003] 1 WLR 2853 and Fearns (t/a “Autopaint International”) v. Anglo-Dutch
Paint & Chemical Company Ltd and others [2010] EWHC 2366). For the damages
to be offset against any rent due, the court would have to: - establish the amount
of the arrears, establish the validity of the cross-claim, and the amount due as
damages, calculate interest on both and offset one against the other.

a. The value of the wrongfully detained property.

[74] Trespass to goods consists in any unlawful possession of the goods by seizure,
removal or by direct act causing damage to the goods. Conversion of the goods is
committed by acting in such a manner as would be inconsistent with the owner’s
rights, or acting with an intention to deny the owner rights to assert some right

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 inconsistent with the owner’s rights. It is the unauthorized exercise of dominion or
control over property by one who is not the owner of the property which interferes
with and is in defiance of a superior possessory right of another in the property. It
comprises two key elements; (i) the owner’s possessory right or interest in the
property and (ii) the defendant’s dominion over the property or interference with it,
in derogation of the plaintiff’s rights.

[75] The law is clear that a landlord cannot both terminate and distrain, which the
plaintiff did here. The plaintiff committed an unlawful detention of the defendant’s
property and continues to retain wrongful possession of the defendant’s property.
From the sum of US $ 34,679.69 due to the plaintiff for the unexpired term (hence
shs. 128,488,251.45 at the rate of US $ 1: 3,705 U shs) will be deducted the value
of the defendant’s wrongfully detained property in the sum of shs. 70,523,431.18.
This leaves a net balance in the plaintiff’s favour in the sum of shs. 57,964,820.27
(hence US $ 15,645.02 at the rate of US $ 1: 3,705 U shs).

b. Lost income from the wrongfully distrained property.

[76] A claim for damages for loss of business must be pleaded with sufficient particulars
of the loss, and then supported by evidence (see Departed Asians Property
Custodian Board v. Issa Bukenya t/a New Mars Warehouse, S.C. Civil Appeal No.
26 of 1992). In order to award damages for lost income, the Court must be satisfied
that the business would have generated sufficient revenue to constitute a profit
had the property not been wrongfully distrained. The onus is on the claimant to
establish that the business would not have generated revenue sufficient to
constitute a profit.

[77] The Court is alive to the requirement that in assessment of the quantum of
damages, it should be mainly guided by the value of the subject matter, the
economic inconvenience that the plaintiff may have been put through and the
nature and extent of the injury suffered (See Uganda Commercial bank v. Kigozi

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 [2002] 1 EA 305). Furthermore, that a plaintiff who suffers damage due to the
wrongful act of the defendant must be put in the position he or she would have
been if she or he had not suffered the wrong (See Hadley v. Baxendale (1894) 9
Exch 341; Charles Acire v. M. Engola, H. C. Civil Suit No. 143 of 1993 and Kibimba
Rice Ltd v. Umar Salim, S. C. Civil Appeal No. 17 of 1992). General damages are
the direct natural or probable consequence of the wrongful act complained of and
include damages for pain, suffering, inconvenience and anticipated future loss (see
Storms v. Hutchinson [1905] AC 515; Kabona Brothers Agencies v. Uganda Metal
Products & Enamelling Co Ltd [1981-1982] HCB 74 and Kiwanuka Godfrey T/a
Tasumi Auto Spares and Class mart v. Arua District Local Government H. C. Civil
Suit No. 186 of 2006). All this is subject to the duty to mitigate.

[78] In the absence of proof one way or the other of the profitability of the enterprise, it
is to be assumed against the wrongdoer that the enterprise would at least have
broken even, that is, that the expenses would at least have been covered by
revenue. Without proof of actual loss or damage, courts usually award nominal
damages. Damages are said to be “at large”, that is to say the Court, taking all the
relevant circumstances into account, will reach an intuitive assessment of the loss
which it considers the plaintiff has sustained. The award of general damages is in
the discretion of court in respect of what the law presumes to be the natural and
probable consequence of the defendant’s act or omission (see James Fredrick
Nsubuga v. Attorney General, H.C. Civil Suit No. 13 of 1993 and Erukana Kuwe v.
Isaac Patrick Matovu and another, H.C. Civil Suit No. 177 of 2003).

[79] In Alaka and Company Advocates v. Metropolitan Properties Ltd, H. C. Civil Suit
No. 621 of 2007, a law firm sued its landlord for the wrongful impounding of its
business assets in a misconceived distress for rent, as a result of the plaintiff’s
failure to give the defendant a three months’ notice before terminating their tenancy
with the defendant. The property impounded included chairs, desks, law books,
computers, important documents such as court files, wills and even their
professional attire, which property was retained as security for the payment of a

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 sum of Shs. 6,729,000/= in lieu of the notice to terminate the tenancy. As general
damages for the ninety days for which the items were wrongfully impounded, by a
judgment delivered on 24th April 2012 the court awarded the plaintiff shs.
60,000,000/= as general damages to atone for such a prolonged disruption,
professional embarrassment, humiliation and general inconveniences.

[80] In Power and City Contractors Ltd v. LTL Projects (PVT) Ltd, H.C. Civil Suit No.
24 of 2012, in a judgment delivered on 11th September 2015, the court awarded
shs. 80,000,000/= as general damages for the wrongful seizure and detention of a
Pajero Station Wagon, a self-loader lorry, a Tipper and a compressor belonging to
the plaintiff. The defendant had directed the police to detain the plaintiff’s property
resulting in a six months’ long, wrongful detention of the chattels.

[81] The broad general rule is that damages which are uncertain, contingent and
speculative in their nature cannot be made a basis of recovery; but this rule against
recovery of uncertain damages is directed against uncertainty as to cause rather
than as to the extent or measure. The fact that it is difficult to calculate damages
is not a reason not to calculate them. Where it is clear that the wrongful distraint
caused loss to the claimant but it is very difficult to quantify that loss, the difficulty
in assessing damages is not a basis for refusal to make an award in the claimant’s
favour. One of the frequent difficulties in assessing damages is that the claimant
is unable to prove loss of a definite benefit but only the “chance” of receiving a
benefit had the wrongful distraint not occurred. In those circumstances, rather than
refusing to award damages, the courts have attempted to estimate the value of the
lost chance and awarded damages on a proportionate basis (see for example
Sigrist et al. v. Keri McLean et al., 2011 ONSC 7114 (CanLII).

[82] Taking into account the gross sales for the period from January, 2019 to June,
2019 that averaged at shs. 15,887,768.35, as reported by the defendant in exhibit
D. Ex.11 at page 32 of the defendant’s trial bundle, the fact that business was not
doing well prior to the illegal eviction and distraint, and the fact that period after

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 July, 2019 was untested, I will average the profits earned at 15% of the average
sales for the six-month period before its closure, to determine the business loss
occasioned by the plaintiffs due to the unlawful eviction and distraint. This yields a
sum of shs. 2,383,165/= per month. The plaintiffs’ business loss for the two years
and two months of eviction amounts to shs. 61,962,290/= which is hereby awarded
as loss of business income resulting from the wrongful distraint of its business
property and assets. The defendant’s claim therefore fully offsets the plaintiff’s
claim, leaving a balance of shs. 3,997,469.73 in the defendant’s favour.

c. The security deposit.

[83] A security deposit is a payment of a specific sum of money to secure the tenant’s
performance of duties under the lease. If the tenant fails to pay the rent or
otherwise defaults, the landlord may use the money to make good the tenant’s
performance. It is also known as a financial collateral for the landlord in case the
tenant causes damage, or choose to disappear without paying rent. The
application of a security deposit to cover unpaid rent is a right of the landlord, not
the tenant. If the tenant caused substantial damage to the premises or leaves
behind a great deal of property or trash, the landlord may incur expenditure and
needs time to make repairs or restore the property to a presentable condition
before attempting to re-let it.

[84] Clause 1.23 of the agreement required the defendant to deposit the equivalent of
“three months’ rent and variable service charge…as commitment fee.” It was not
paid to secure the defendant’s performance of duties under the agreement, but
rather as a “commitment fee.” A commitment fee is used as a way to ensure that
the tenant is serious about taking out the tenancy. The fee serves as a commitment
from the tenant that it will follow through with the agreement, even if it finds a better
deal elsewhere. Additionally, the fee can provide some protection to the landlord
in case the tenant is unable to perform its duties under the agreement. Clause 6
of the agreement provides as follows;

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 6. SECURITY DEPOSIT
6.1 On signature of the Heads of Terms offer, the Tenant shall
pay to the Landlord a deposit set out in clause 1.23 hereof
which deposit may be appropriated by the Landlord against
the amount/s which may be outstanding at any time during
the duration of this lease and which in any event shall be
retained by the Landlord throughout the lease. Upon
termination of the lease the landlord shall be entitled to apply
the deposit or any portion thereof towards the reduction or
payment in full of any sums due under the lease, or as
damages, by the Tenant to the Landlord. Any balance
remaining shall then be refunded to the Tenant.

6.2 The tenant shall not be entitled to set off against the deposit
any rental income or other amounts payable by it.

[85] A security deposit is an amount of money paid before or at the start of the tenant’s
lease, sometimes together with first month’s or first quarter’s rent. The landlord
holds onto this sum of money throughout the rental period. After the lease ends,
the landlord must return this money to the tenant minus any itemised deductions
for damages. This does not include normal wear and tear. Clause 6 of the
agreement is an express provision authorising the plaintiff, as landlord, to deduct
from the security deposit the amount of any rent and other charges payable
thereunder and any costs, expenses or loss sustained by it as the result of any
non-observance or non-performance by the defendant, as tenant, of any of the
said agreements stipulations obligations or conditions. Therefore, the plaintiff is at
liberty to apply it as it deems fit, to satisfy any sum due by the defendant to it as
compensation for a tenant’s failure to pay rent, or to cover rental repairs or damage
above ordinary wear and tear caused by the defendant.

[86] Although a tenant cannot elect to use the security deposit as the last month’s rent,
since tenants must pay the last month’s rent when it comes due, a security deposit
cannot be “non-refundable,” i.e., it may only be used by a landlord to pay for
damage to property or unpaid rent or other unpaid debts, and otherwise must be
returned. Since this sum is refundable at the end of the lease, the landlord ought

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 to account for its appropriation by way of an itemised list of expenses, including
the variable service charges. After the deposit has been applied to these
expenses, and applicable deductions are made, the remaining deposit plus any
interest earned, will be returned to the tenant. In the instant case, the plaintiff not
having provided any account of deductions made, the entire sum of US $ 3,356.10
is refundable and is thus added onto the already offset overall balance in favour of
the defendant.

d. Interest on the security deposit.

[87] The common law principle is that a security deposit creates a debt owed by the
landlord to the tenant, payable within a reasonable time at the end of the tenancy,
less any contractually agreed deductions. The intent of the parties under Clauses
1.23 and 6 of the lease agreement is that the defendant would have a matured
right to a refund of an amount of money equivalent to the deposit, or the balance
of it, after termination of the tenancy and settlement of the account. In the event,
such as this, that the contract is silent on the period within which the deposit should
be returned, the Court is inclined to consider a period of thirty days as reasonable.
A landlord who does not return the full deposit within that time, without providing
an “accounting” showing how the deposit was spent, is alible to return the full
amount, with interest at the discretion of Court.

[88] An award of interest is discretionary. The basis of an award of interest traditionally

is that the defendant has kept the plaintiff out of his money, and the defendant has
had the use of it himself so he ought to compensate the plaintiff accordingly (see
Harbutt’s Placticine Ltd v. Wayne tank and Pump Co Ltd [1970] QB 447). In
determining a just and reasonable rate of interest, courts take into account the
ever-rising inflation and drastic depreciation of the currency. A successful litigant
is entitled to such rate of interest that takes into account the prevailing economic
value of money, but at the same time one which would insulate him or her against
any further economic vagaries and the inflation and depreciation of the currency in

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 the event that the money awarded is not promptly paid when it falls due (see
Mohanlal Kakubhai Radia v. Warid Telecom Ltd, H. C. Civil Suit No. 234 of 2011
and Kinyera v. The Management Committee of Laroo Boarding Primary School H.
C. Civil Suit No. 099 of 2013).

[89] Interest on special damages is awarded from the date of filing the suit until
payment, while interest on general damages is awarded from date of Judgment
until payment (see Mukisa Biscuits Manufacturing Co. Ltd v. West End Distributors
Ltd No.2 [1970] EA 469). I consider a rate of 8% per annum appropriate as interest
on the security deposit of US $ 3,356.10 from the date of filing the counterclaim,
i.e. 22nd December, 2020 until payment in full, and it is accordingly awarded.

Fourth issue; what remedies are available for the parties.

[90] In a suit for remedies springing from the defendant’s default on rent, the plaintiff’s
entire claim has been offset by the defendant’s counterclaim. The counterclaim
has not simply diminished but rather has defeated the recovery sought by the
plaintiff, since it exceeds the value of the claim.

e. The costs of the suit and the counterclaim.

[91] According to section 27 (2) of The Civil Procedure Act, costs of any action, cause
or matter follow the event unless Court for good cause orders otherwise. The
defendant being the successful party in this case is therefore entitled to costs of
the suit and the counterclaim. For the foregoing reasons, the suit is dismissed and
Judgment is instead entered for the defendant against the plaintiff on the
counterclaim, in the following terms;

a) Refund of the security deposit of of US $ 3,356.10

b) Interest on the award in (a) above at the rate of 8% p.a. from 22nd
December, 2020 until payment in full.

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 c) General damages of shs. 3,997,469.73
d) Interest on the award in (c) above at the rate of 6% p.a. from the date of
judgment until payment in full.
e) The costs of the suit and of the counterclaim.

Delivered electronically this 17th day of June, 2024 …Stephen Mubiru………...

Stephen Mubiru
Judge,
17th June, 2024.

Appearances
For the Plaintiff : M/s Kampala Associated Advocates.
For the Defendant : M/s Lex Uganda Advocates and Solicitors.

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