Mukwa Investments Limited v Pan African Building Society and Anor (Appeal No. 243 of 2024) (15 September 2025) – ZambiaLII

! IN THE COURT OF APPEAL OF ZAMBIA Appeal No. 243 of 2024 HOLDEN AT NDOLA (Civil Jurisdiction) BETWEEN: MUKWA INVESTMENTS LIMITED APPELLANT AND PAN AFRICAN BUILDING SOCIETY 1sr RESPONDENT BANK OF ZAMBIA 2ND RESPONDENT CORAM: SIAVWAPA JP, CHISHIMBA & PATEL, JJA On 19 th August & 15 th September 2025 For the Appellant: Mrs. S. Kalima-Banda Messrs. J & M Advocates For the Respondents: Ms. G. Mukulwamutiyo In House Legal Counsel JUDGMENT Patel, JA, delivered the Judgment of the Court. Cases Referred To: 1. Nigel George Seabrook and Anr v Cathrine H. V. Aardt -(Application 36 of 2025) - CAZ Appeal No. 220/2024 2. Attorney General v Mwanza and Another (2017) ZMSC 140 3. re Wincham Shipbuilding, Boiler and Salt Co; Poole Jackson and White's case (1879) 9 Ch D 322 4. Salomon v Salomon & Co (1897) AC 22 at p 57 per Lord Davey 5. Khalid Mohamed v The Attorney General (1982) Z.R. 49 6. Gideon Mundanda v Timothy Mulwani and The Agricultural Finance Co. Ltd and S.S.S. Mwiinga (1987) Z.R. 29 Legislation Referred To: 1. The Court of Appeal Rules Statutory Instrument No. 65 of 2017 (CAR) 2. The Banking and Financial Services Act No. 7 of 2017 (BFSA) 3. The Building Societies Act, Chapter 412 of the Laws of Zambia 4. The Bank of Zambia Act No. 5 of 2022 5. The Bank of Zambia Act No. 43 of 1996 6. The Companies Act No. 9 of 2017 J2 1.0 FOREWORD 1.1 When we heard this appeal in the Ndola session of the Court, it transpired after questions from the Bench, that Counsel for the Appellant had not effected service of its Record of Appeal and Heads of Argument until after the publication of the session cause-list, causing the Respondent to file its Heads of Argument in response belatedly on 28th July 2025 (though within 14 days of service effected on them). 1.2 Upon further interrogation, Counsel Kalima- Banda conceded not having sought an Order of extension of time to serve its process on the Respondent, and proceeded to advance explanations of the delay being inadvertent, not intentional and not meaning to disregard the Rules of court. She attempted also to state that the Respondents had not been prejudiced as they had been able to file their heads of argument. 1.3 To add insult to injury, the Appellant continued with its brazen approach by filing Heads of Argument in Reply dated 14th August 2025, obviously without any Order of leave, and that too in Lusaka, when the Session had commenced at Ndola on 12th August 2025. Her justification in filing these rested on the fact that the same were filed within seven (7) days of receiving the Respondents Heads of Argument. Needless to say, two wrongs do not make a right. We will not consider these. 1.4 We informed Counsel, (who had been in Court all day) that an earlier Motion heard the same morning, centered around the argument of violation of Order X Rule 9 {9} of the Court of Appeal Rules1 and in which the Court had sat as an J3 expanded Panel in consolidated Appeal No. 220 of 2024 and Application No. 36 of 20251 . 1.5 We would be failing in our duty if we condoned such a blatant procedural lapse, which touches on jurisdiction of the Court and simply because the Respondent did not see it fit to raise a challenge as in the matter referred to in paragraph 1.4 above. 1.6 We guided we would hear the appeal and subject to our Ruling in the Nigel George Seabrook 1 matter, we would make a considered decision on the fate of this appeal. 1.7 We delivered our Ruling in the Nigel George Seabrook matter on the 4th day of September 2025. 1.8 In the exercise of our discretion, we have considered this appeal on its merits, so as not to 'punish' Parties who fall foul of the provisions of Order X Rule 9 (9) of the CAR retrospectively to the Ruling referred to above. This decision was not taken because there have not been pronouncements by the Court on the same procedural issue, but only on account of heralding a final warning to litigants who appear in this Court. 2.0 INTRODUCTION 2.1 This is an appeal against the Judgment of Mbewe B.C. J; delivered on 25th April 2024, in respect of an action commenced in the commercial division of the High Court under Cause No. 2019/HPC/0422 by way of a Writ of Summons dated 11th J4 !!. September 2019 by the Appellant, (the Plaintiff in the lower court), against the Respondents (the 1st & 2nd Respondents below). 2.2 The learned Judge in the lower Court dismissed the reliefs sought, awarded costs to the Respondents and granted leave to appeal. 2.3 This Appeal interrogates the role of the Board of Directors of a Company, and the supervisory role of the Bank of Zambia as statutory regulator and whether it owes a duty of uberrimae fidei (utmost good faith), a duty of care and fidelity, to the Appellant whilst in the exercise of its supervisory jurisdiction over financial institutions operating in the Country. 2.4 Where applicable, the Judgment will make reference to the Banking and Financial Services Act No. 7 of 2017. (hereinafter referred to as the BFSA)2. 2.5 The Record of Appeal dated 2nd September 2024, is made up of four (4) volumes indexed to page 1171. Reference to page numbers shall refer to the Record of Appeal unless otherwise noted. 2.6 Along with the Record of Appeal, we have seen the Appellant's Heads of th Argument of even date. We have further noted an Order dated 10 September 2024, granted by a single Judge of this Court, granting leave to the Appellant to amend its heads of argument. However, not having had sight of any amended nd Heads of Argument, we shall place reliance on the Heads of Argument of 2 September 2024. th 2.7 The Respondents, as noted above, filed their Heads of Argument on 28 July 2025. JS 3.0 BACKGROUND 3.1 For the purposes of this section, the Parties shall be referred to as they are in this Court. 3.2 It has been noted that the Appellant commenced an action by way of Writ of Summons in the Commercial Division of the High Court under cause number 2019/HPC/0422. The Writ and statement of Claim are noted from pages 85 to 96, seeking the following reliefs: 1. An order that the 2nd Defendant did not properly discharge its statutory functions in the manner it dealt with the Plaintiff regarding the affairs of the ist Defendant; 11. An order that the 2nd Defendant was negligent and perpetrated false representations (misrepresentations) in its dealings with the Plaintiff in relation to the proposed plan for the capitalization of the 1st Defendant; iii. An order that the transaction whereby the Plaintiff tendered its 50% shares in Leopards Hill Memorial Park (LHMP) to the 1st Defendant in fulfilment of nd the recapitalization plan tendered and accepted by the 2 Defendant is null and void on account of negligence and misrepresentations perpetrated by the 2nd Defendant and also on account of mistake in law and fact since the said transaction was incapable of meeting the legal regulatory requirements and because same was tendered on the basis of a mistaken nd understanding that its provision would prevent the action taken by the 2 st Defendant of taking possession and control of the 1 Defendant; J6 nd 1v. An order for the 2 Defendant to issue all necessary directives for the said transaction to be reversed and rescinded and the shares to be issued back to the Plaintiff (through its trustees Hilary Michael Duckworth and Hawkwood Properties Investment Limited); v. An order that the pt Defendant has not furnished any consideration by which it can hold on to the 50% shares in LHMP and must transfer back the shares to the Plaintiff or alternatively, that by the 2nd Defendant's own admission, only 15% can be retained by the 1st Plaintiff and the remaining 35% should be transferred back to the Plaintiff; vi. An order for the pt Defendant through its current management to revert all the 50% shares in Leopards Hill Memorial Park Limited to the Plaintiff; vii. An order for the PACRA records to be rectified to revert to the shareholding structure prior to the injection of shares by the Plaintiff into the 1st Defendant, in other words, an order for restitution in integrum as to the shares in Leopards Hill Memorial Park Limited. nd viii. Damages for misrepresentation as against the 2 Defendant; nd ix. Damages for negligence as against the 2 Defendant; x. Costs of and incidental to the action; and xi. Any other order the court may deem fit. 3.3 It is important to place a contextual matrix of facts in the background section, in order to understand and appreciate the relationship between the Parties to the action. 3.4 As per the statement of claim, the Appellant is a private company limited by shares, incorporated in Bermuda holding various assets in Zambia, including real J7 property and shares in various companies and is a majority shareholder in the st 1 Respondent. 3.5 One of the assets of the Appellant, (and which is at the heart of the matter before us), is its investment through a Company known as Hawkwood Properties Investment Limited, managed by its Trustee Hilary Michael Duckworth, being in the form of 50% shares in a venture known as Leopards Hill Memorial Park {LHMP). 3.6 The 1st Respondent is a private company limited by shares, incorporated pursuant to the provisions of the Building Societies Act3 registered and licensed , to operate as a Financial Institution in accordance with the Banking and Financial Services Act 2 • 3.7 The 2nd Respondent is the Central Bank of Zambia, which by the provisions of the Bank of Zambia Act, the Banking and Financial Services Act2 and other enabling legislation, exercises supervisory and regulatory control over all Financial Institutions operating in Zambia. 3.8 It is not contested that in or about August 2016, the 2nd Respondent, in the exercise of its regulatory and supervisory powers, conducted an inspection of the operations of the 1st Respondent, which culminated in the production of a Report dated 5th January 2017. 3.9 It is further not in dispute that the 2nd Respondent took possession of the 1st Respondent on 19th July 2019 and in accordance with section 72 of the BFSA, prepared a Statement of Affairs of the Assets and Liabilities within 90 days. The J8 Statement concluded that the pt Respondent was insolvent as defined by the BFSA at the time of possession. 3.10 The p t Respondent was placed in compulsory liquidation in accordance with section 127 (2) of the BFSA with effect from 17th October 2019. A copy of the Notice issued from the Office of the Deputy Governor of the 2nd Respondent, is seen as an exhibit attached to several different affidavits on the Record. One copy appears on page 193. · 3.11 Of the issues in contest, and prior to the placement in possession and subsequent compulsory liquidation of the 1st Respondent, is the alleged approval given by the 2nd Respondent to the Appellant, of its rescue and recapitalization plan. (hereinafter referred to as the Recapitalization Plan). These issues formed the crux of the dispute before the lower Court and the grounds of appeal before us. 3.12 It is the Appellant's contention that relying on the Recapitalization Plan, the Appellant carried out the said plan and made various capital injections in the p t Respondent, on the understanding that the 2nd Respondent would subsequently issue the requisite written approvals and that the p t Respondent would be allowed to resume normal trade with all licenses restored. 3.13 The 2nd Respondent entered appearance for itself and the 1st Respondent on 25th September 2019 and settled its defence. The same is noted on pages 99 to 106. J9 3.14 The Appellant filed its Reply on 22nd March 2022 reiterating its entitlement to the reliefs claimed. 3.15 The matter proceeded to trial on 26th October 2022. It is also noted that in the lower Court, there were several competing applications made by the Parties which were seriously opposed and the subject of several interlocutory Rulings. To prevent wandering down an endless rabbit hole, and to the extent of relevance, we have scrutinized all the documents on Record and will mention only the issues pertinent to the appeal before us. 4.0 DECISION OF THE LOWER COURT 4.1 The Judgment, now assailed, is noted from pages 9 to 84 of the Record. The lower Court, having heard from the Parties, was of the considered view that the Appellant had not discharged the burden to prove its claims against the 2nd Respondent. The lower Court dismissed the case and awarded costs to the Respondent. 4.2 Following the delivery of the lower Court's decision, the Appellant promptly took steps to challenge its findings, maintaining that the trial Court erred both in its application of the law and its evaluation of the facts. The grounds for appeal reflect a detailed dissatisfaction with various aspects of the Judgment, particularly with respect to the Court's interpretation of statutory duties and the handling of evidence relating to statutory misrepresentation, negligence, and the propriety of the share transfer in question. J10 4.3 The Appellant contends that the trial court overlooked key statutory provisions and failed to address the substantive legal arguments raised in the pleadings and at trial. Notably, it is asserted that the Court's reasoning on the statutory regulator's duty of care, and the legal framework surrounding the reversal of the impugned share transfers, was fundamentally flawed. The Notice and Memorandum of Appeal thus raise six distinct grounds, each challenging specific findings and legal conclusions of the trial Judge. 5.0 THE APPEAL 5.1 Dissatisfied with the said Judgment in the Court below, the Appellant filed its Notice and Memorandum of Appeal, on 13th May 2024, advancing six (6) grounds of appeal, as follows; l. The learned trial Judge erred in fact and in law when he, in determining whether or not misrepresentation and negligence by the statutory regulator, Bank of Zambia (the 2nd Respondent herein), had been proven, held that there no specific pleading of the statutory provisions proving said a/legations contrary to the settled legal position that there is no requirement to plead a statute. 2. The leaned trial Judge misdirected himself when he held that the statutory regulator, the Bank of Zambia (the 2nd Respondent herein) owed no duty of care of negligence, to the Plaintiff (Appellant herein). 3. The learned High Court Judge erred in law and in fact when he found that the correspondence exchanged between the 1st and 2nd Respondents dated 18th Jll March 2018, 11th April 2018, 3rd May 2018 and the email correspondence of the same period, do not prove that the share transfer of the plaintiff's shares in Leopards Hill Memorial Park to the 1st Defendant was induced by the representations and/or conduct of the 2nd defendant. 4. The learned High Court Judge erred in law and in fact when he found as a fact that the 2nd Respondent had rejected the transfer of shares for recapitalization on the basis that it offended statutory provisions but failed to order the reversal of the said illegal transaction which is proscribed by statute. 5. The learned trial Judge erred in law when he misguided himself by stating that the share transfer transaction could only be reversed if it breached the Companies Act No. 9 of 2017, when the illegality of the transaction arose out of the provisions of Section 75(1) the Banking and Financial Services Act 2017 which is the relevant statute applicable in the circumstances. 6. The learned trial Judge misguided himself and misapplied the provisions of Section 149(1) of the Banking and Financial Services Act No. 7 of 2017 in relation to the facts of this matter. 6.0 APPELLANT'S HEADS OF ARGUMENT IN SUPPORT OF THE APPEAL 6.1 Subject to our observation in paragraph 1.6 above, we have duly considered and appreciated the Appellant's Heads of Argument filed on 2nd September 2024. J12 6.2 In respect of grounds one and two which have been argued together, it is the Appellant's argument that the lower Court erred in holding that the Appellant did not specifically plead misrepresentation and negligence on the part of the 2 nd Respondent and further that the 2nd Respondent did not owe a duty of care to the Appellant. 6.3 In support of these two grounds, the Appellant has canvassed the argument that it had shown in the lower Court that the 2nd Respondent's actions amounted to negligence and misrepresentation. It is argued that negligence of a Central Bank refers to failure to exercise the level of care and skill expected of a reasonable central bank in performing its functions and which results in harm or loss to companies or the financial system. 6.4 It is also argued that to establish a duty of care, the Appellant needs to show that the 2nd Respondent had a specific responsibility towards the Appellant. Reliance was placed on a decision of the Supreme Court rendered in the case of Attorney General v Mwanza and Another2 to advance the argument that a claimant should not only prove that it is owed a duty of care but also prove that the duty was breached resulting in damage. nd 6.5 The Appellant argues that it was owed a duty of care by the 2 Respondent and prays that we find that there was a breach of duty as regulator and supervisor. 6.6 With respect to ground 3, the appellant places reliance on correspondence to advance the argument that the Appellant was induced to proceed with the transaction and the recapitalization plan, the subject of the dispute. It refers to the tacit approval of the 2nd Respondent to support its argument on J13 misrepresentation. It argues that it relied heavily on the 2nd Respondent who did not provide full and frank disclosure with regard to the fact that what was required was in fact cash capitalization and not non-cash assets, such as the transfer of its shares in LHMP. 6. 7 It was argued that the 2nd Respondent, being in a position of power was aware that the Appellant would follow its directions. 6.8 Grounds 4 and 5 were argued together. The combined gist of the argument canvasses the point that the lower Court erred when it found that although the 2nd Respondent rejected the transfer of shares for recapitalization on the basis that it offended the statutory provisions, it failed to order a reversal of the transaction. Reliance was placed on the provisions of section 75 (1) and 84 (2) of the BFSA2 . (We have noted that section 75 {1) is non-existent and in any event section 75 is not relevant to this ground. We shall comment on this later in our Judgment). 6.9 We were thus urged to set aside these findings on the basis of contradictory evidence on the part of the 2nd Respondent. 6.10 With respect to ground 6, the Appellant has argued on the basis of the primary rule of interpretation with respect to section 149 (1) of the BFSA2 to advance the argument that the lower Court misapplied the provisions of the statute in the context of the dispute. J14 7.0 RESPONDENTS' HEADS OF ARGUMENT 7.1 We have fully considered the Respondent's Heads of Argument and noted the thrust of the submissions. 8.0 THE HEARING 8.1 At the hearing, Counsel Kalima-Banda argued that the 2nd Respondent had breached its duty by its tacit approval of the Recapitalization Plan and referred us to various letters in the Record of Appeal. Counsel made extensive reference to pages 698, 703 and 706 of Volume 3 of the Record. 8.2 Counsel Mukulwamutiyo argued that the 2nd Respondent was only acting in its statutory duty as regulator and did not owe a specific duty to render legal advice to the Appellant. Counsel canvassed the submission that the 2nd Respondent acted within its statutory powers to take conduct of the 1st Respondent primarily to protect the interest of the depositors. 9.0 ANALYSIS AND DECISION OF THE COURT 9.1 Subject to our Foreword in paragraph 1 above, this appeal presents an interesting argument centering around the duty of care by the 2nd Respondent, in its capacity as the Central Bank and Regulator of the 1st Respondent. It is cardinal to note that at the heart of the matter is the 1st Respondent, Pan African Building Society, a private company, limited by shares, and registered and licensed to operate as a financial institution in accordance with the BFSA. JlS 9.2 It has been noted and there is no contention that in or about August 2016, the Board of Directors of the pt Respondent uncovered financial irregularities, mismanagement and misappropriation of funds attributed at the time to its erstwhile Chief Executive Officer. 9.3 At the same time, the 2nd Respondent, exercising its regulatory and supervisory powers, conducted its own investigations into the operations of the pt Respondent and produced a Report dated 5th January 2017 in which it concluded inter a/ia that the 1st Respondent was capital deficient and instructed the Board of Directors to remedy the defects outlined in the said Report. 9.4 We have noted the events that led to the recapitalization plan put into place by the Appellant in paragraphs 2.8 to 2.11 above, and the Judgment now assailed. No matter how the six grounds of appeal are cast, the ultimate issue for our determination is whether the Central Bank's actions, or lack thereof, constituted a breach of its regulatory duty, and whether such breach, if established, directly contributed to the Appellant's loss of interest and significant shareholding. Once we have addressed this cardinal issue, the grounds of appeal will have been considered in totality. 9.5 In assessing the interplay between statutory obligations and the respective roles of the Parties, it is clear that the robustness of the regulatory framework under the BFSA places paramount importance on the autonomy and accountability of boards, especially in matters of compliance and prudent governance. The absence of an explicit statutory duty of care owed by the regulator to individual J16 shareholders underscores the legislative intent to safeguard the broader financial system rather than private investment interests. 9.6 The evidence before the Court reveals no departure from either the letter or spirit of the law in the conduct of the 2nd Respondent, whose actions aligned with supervisory imperatives necessitated by the pt Respondent's precarious financial situation. 9.7 We have, however taken keen interest in the arguments advanced by the Appellant which prompt a nuanced consideration of the regulator's communications and the practical expectations of market participants. This distinction is crucial, as it demarcates the threshold between state intervention intended for the wider financial system's integrity and the internal responsibilities shouldered by a company's own governance structures. We have also not lost sight of the evolving landscape of financial regulation, which not only increasingly contemplates rigid compliance, but also the ethos of transparency and good faith in regulatory interactions. The possibility that actions or omissions by the regulator, even absent formal duty, may contribute to stakeholder misunderstandings is an issue warranting careful judicial scrutiny. 9.8 It is in this context that the Appellant's reliance on the 2nd Respondent's conduct and representations, whether tacit or explicit, requires evaluation in light of both statutory provisions and broader principles of fairness. The challenge remains to balance the regulator's mandate to protect systemic stability with the legitimate expectations of those subject to its oversight, recognizing that J17 • the boundaries of duty are not always crisply delineated by statute or precedent. 9.9 The Appellant is obviously aggrieved with the sequence of events which saw it lose not only its interest in the 1st Respondent, but additionally, its shareholding in LHMP. There are various Parties named in the Recapitalization Plan and we have noted names of a Trustee, Hilary Michael Duckworth and Hawkwood Properties Limited through who the Appellant held a stake of 50% shares in LHMP. 9.10 In our considered view, these names and entities are not parties to the action in casu, and our focus will be based on the acts and or omissions of the Appellant, and the 1st and 2nd Respondent. 9.11 In arriving at a thorough understanding of the complex and at times, competing roles of the Board of Directors and Members of a Company, it is trite that it is ordinarily the members of a company who have a proprietary or quasi proprietary interest in the company's assets, based upon their entitlement to its residual assets at the time of its dissolution. It is incumbent upon the Board of Directors to discharge their functions in a manner that best protects the interests of its members in the safeguard of its assets. Applying this in context, it was the intention of the Appellant to safeguard the pt Respondent for its benefit and continued operation as a Financial Institution. 9.12 With reference to the role of the 2nd Respondent, as regulator, where it sees that a Financial Institution is bordering on the verge of collapse, its primary and statutory interest is to safeguard the interest of the depositors and creditors of J18 that Company. It cannot, by any stretch of imagination, be said to be looking after the interest of the 'members' of that Company. It is imperative in that circumstance that the directors are required to manage and protect the interests of the company and ultimately its members. In this regard, we have noted the Appellant's insistence on the duty of care owed to it by the 2nd Respondent. (Paragraph 2.8 of its un-numbered heads of argument refers). 9.13 Th is argument, which forms the crux of the dispute, finds no statutory favor and the Appellant has, in fact, not referred to any statutory provisions, neither in the Companies Act, nor in the BFSA 2 that led credence to its argument. In fact, in , its own statement of claim, the Appellant has pleaded as follows: "paragraph 13. The 2nd Defendant gave mostly verbal approvals and go aheads with this plan with the tacit understanding that once the 1st Defendant, through the Plaintiff had achieved the recapitalization plan as put forward, the 2nd Defendant would later issue the necessary written approvals to indicate that the 1st Defendant had met the requirements put forward by the 2nd Defendant." (emphasis is ours). 9.14 There is settled in common law that a director's duty is to act in the interest of the company. The law has always held that directors in the performance of their duties stand in a fiduciary relationship with the company and exercise their powers bona fide for the benefit of the company. In re Wincham Shipbuilding, Boiler and Salt Co; Poole Jackson and White's case3, Sir George Jessel MR stated: J19 "It has always been held that the directors are trustees for the shareholders, that is for the company." 9.15 It has also long been established that a company is bound in a matter which is intra vires the company by a resolution of the shareholders in general meeting and that even in the absence of a formal resolution, the company is bound in a matter intra vires by the unanimous agreement of its members." Salomon v Salomon & Co4 . 9.16 The above foundational principles in company law have a long-established place in our jurisprudence. We, however, find no support for the duty of care or fiduciary duties of directors extending to the operations of another limited liability company, incorporated under statute, with its own governance policies and independent board of directors. 9.17 The Appellant and the 1st Respondent, being companies registered in Bermuda and the Republic of Zambia respectively, have their own Boards of directors who scrutinized and or approved the implementation of the Recapitalization Plan. We have already spoken of other bodies, corporate and natural, such as the Trustee and Hawkwood Properties Limited, who would have also exercised due care and diligence required in this matter. 9.18 The preamble to the BFSA provides as follows: "An Act to provide for a licensing system for the conduct of banking or financial business and provision of financial services; to provide for the J20 incorporation of standards, principles and concepts of corporate governance in institutional systems and structures of banks and financial institutions; to provide for sound business practices and consumer protection mechanisms; to provide for the regulation and supervision of banking and financial services; to repeal and replace the Banking and Financial Services Act,1994; and to provide for matters connected with, or incidental to, the foregoing." 9.19 The terms: 'board' 'chief executive officer', 'compliance officer' 'and financial institution', in the interpretation part of the BFSA have the meanings as ascribed to them respectively. 9.20 What is not disputed is the fact that the Appellant was the majority shareholder of the ist Respondent and that prior to its take over and possession by the 2nd Respondent, all its actions were perpetuated by the ist Respondent, acting in concert with the Appellant, its majority shareholder. These are findings of fact, and which will not be lightly displaced in the absence of clear evidence of misdirection or misapprehension by the lower Court. 9.21 Part IV of the BFSA2 under the heading 'corporate governance' clearly sets out the duties and functions incumbent on the Board of a company registered under the BFSA2 and provides that a Board shall be responsible for the duties and functions specified in the Companies Act and this Act clearly satisfying the common law requirement as well as under statute for the Board to be responsible for its own corporate decisions. J21 9.22 Key amongst the duties of the Board is the duty under section 32 (2) (d) 2 which provides as follows: "A board shall perform the following functions: (d) ensuring that the business of the financial service provider is carried on in compliance with all applicable laws and regulations and is conducive to safe and sound practices/' (emphasis added). 9.23 As per the established timelines, we note that the 2nd Respondent took possession of the ist Respondent on 19th July 2019 in the performance of its supervisory and regulatory role, to ensure the stability of the entire financial sector in the face of the fast deterioration of the financial status of the ist Respondent. To also ascribe a duty of care on the 2nd Respondent, to safeguard the investment of the Appellant or indeed its proposed additional investment in the form of the Recapitalization Plan, in the 1st Respondent is stretching an imaginary duty which finds no favour in common law or statute. It is also noted that the Appellant has not referred to any statutory duty that has been infringed by the 2nd Respondent. 9.24 We arrive at the only conclusion to the question posed, that the 2nd Respondent did not owe a duty of care to the Appellant in the circumstances canvassed by the Appellant. We have already noted that the Appellant has not pointed to any provision of the BFSA which mandates a duty of care to it. Further, its reliance on authorities which echo settled principles of law with respect to misrepresentation, negligence and or a duty of care, is misguided as the J22 • authorities are cited completely out of context and not applicable to the facts in casu. 9.25 The prohibitions under Part VII of the BFSA under the heading I Restrictions on transactions of Financial Service Providers' and more particularly section 842 with respect to restriction on equity investments, ought to be an area that the pt Respondent and the Appellant ought to have been familiar with as an incidence of being granted a license to operate as a Financial Institution. 9.26 It is trite that ignorance of the law is no defence and it does not aid the Appellant to heap blame on the 2nd Respondent when it has no one but itself and its lack of management and or competence for it to have effectuated the Recapitalization Plan without a thorough understanding of the statutory framework within which the pt Respondent was operating. The duties articulated in the BFSA2 and related statutes are directed toward the stability and integrity of the financial sector, rather than the protection of individual shareholder interests. 9.27 We have painstakingly scrutinized the four volumes of the Record including the correspondence relied on by the Appellant. We have noted the contents of the letters from the 2nd Respondent to the 1st Respondent, dated 16th March 2018 and 13th March 2019, outlining breaches of the BFSA and giving clear directives for the continued operation and variability of the 1st Respondent. These are seen on pages 158 to 161 of the Record. 9.28 We have also noted a letter from the 1st Respondent to the 2nd Respondent dated 11th April 2018 and the reply dated 3rd May 2018 seen on pages 704 to J23 707 volume 3 of the Record. The letter on Page 706/7 from the 2nd Respondent, under the hand of the -Director- Non-Bank Financial Institutions Supervision clearly states the following: "The Bank of Zambia (BoZ) has carefully reviewed your letter and the supporting documentation relating to the recapitalization of Pan African Building Society (PABS) through the transfer of Mukwa Investments Limited's (Mukwa's) 50 percent equity interest in Leopards Hill Memorial Park (LHMP) to PABS as consideration for the 180,000 additional shares issued to Mukwa. Kindly be advised that BoZ has rejected the recapitalization proposal as it contravenes the provisions of Section 75(1) of the Banking and Financial Services Act (BFSA) which prohibits a bank or financial institution from investing in any equity interest in any person, property or undertaking in an amount exceeding 15 percent of the total of all equity interests in the person, property or undertaking. The proposed transaction translates into PABS acquiring 50 percent equity interest in LHMP. Further, Section 75(5) of the BFSA stipulates that a bank or financial institution shall not invest in the shares of its subsidiary, if the aggregate of all investments by the bank or financial institution exceed 25 percent of its regulatory capital. PABS' current regulatory capital stands at negative K24 million and therefore, even if PABS would make LHMP its subsidiary by acquiring additional equity in the institution, it would be in breach of this provision. J24 • However, the shareholders of PABS have an option to restructure the above proposed transaction in such a manner that it meets the requirements of Section 75 of the BFSA. In our meeting of 26 April 2018, you confirmed that changes to the shareholding structure of LHMP had been effected with the Patents and Companies Registration Agency (PACRA) to reflect PABS as a shareholder following the transfer of Mukwa's equity interest in LHMP to PABS, which resulted in Mukwa acquiring approximately 99 percent stake in PABS without prior written approval of BoZ as required by Section 23 of the BFSA. In the light of the breaches of Sections 23 and 75 of the BFSA PABS is directed to immediately reverse this transaction with PACRA." (emphasis is ours). 9.29 We have also seen a Report prepared by the 2nd Respondent relating to the affairs of the 1st Respondent as of 31st October 2018 and which appears at page 727 to 782 in volume 3 of the Record. The risks posed to the public in the continued operation of the pt Respondent, combined with all noted statutory lapses, does little to place confidence in the viability and operation of the p t Respondent. We have also noted that the 2nd Respondent had advised the pt Respondent to immediately reverse the LHMP transaction with PACRA. The fact that it failed to do this, cannot be laid against the 2nd Respondent. 9.30 In the face of all the documentary evidence and in the face of clear evidence from the pt Respondent's witness, that it could not point to any specific approval from the 2nd Respondent regulator, we have no ground to fault the J25 • learned Judge in the lower Court for the findings made. It is clear that the Appellant seeks to protect its interest by its insistence that the transaction be reversed so as to be treated as a preferential creditor. This goes against the grain and nature of the BFSA and contrary to settled practice and custom in the area. 9.31 We cannot fault the lower Court who having analysed the definitions of misrepresentation and negligence, arrived at the settled finding that there was neither misrepresentation nor negligence on the part of the 2nd Respondent. The burden always rested on the Appellant and which burden was not discharged. Whatever may be said of the acts of the 2nd Respondent, did not absolve the burden incumbent on the Appellant. The case of Mohamed Khalid5 needs no amplification. Paragraphs 5:14 through to 5:43 of the Judgment of the lower Court, conclusively deal with the claims of the Appellant. 9.32 We cannot also fault the lower Court for finding that the 2nd Respondent was not in breach of section 5 of the Bank of Zambia Act No. 5 of 20223 the Act not , having come into operation at the time of the cause of action. In any event, and as we have noted the 2nd Respondent's duty as a regulator and supervisor, prioritizing the systemic stability of the financial sector above individual shareholder interests. Any attempt to impose a fiduciary obligation to individual investors on the 2nd Respondent, would be inconsistent with both legislative intent and judicial authority. 9.33 It is obvious that the Recapitalization Plan, though falling foul of section 84 of the BFSA (which was section 75 (1) as stated in the Judgment and as noted at paragraph 6.8 above of the Act at the time, and prior to the BFSA}, and based J26 .; on section 149 (1) of the BFSA , cannot be voided at the instance of the Appellant who seeks to derive a benefit from such Order of the Court. 9.34 It is also clear that section 84 (2)2 does not vitiate a transaction, which on the face of it is legal, but only proscribes restrictions on equity investments. The lower Court duly considered that the share transfer was effected properly and in accordance with the Companies Act. There being no defect in the manner of the transfer, there was no reason to order its reversal. On this finding, the lower Court placed reliance on the decision of the Supreme Court in the case of Gideon Mundanda v Timothy Mulwani and The Agricultural Finance Co. Ltd and S.S.S. Mwiinga6 where the Court held that parties to a contract should be presumed to contemplate a legal rather than an illegal course of proceedings and that the legal performance of a possibly illegal contract is enforceable. 9.35 Looking holistically at the grounds of appeal and having settled the issue that the 2nd Respondent did not owe a duty of care to the Appellant, it is obvious that the entire appeal must fail. There can be no finding of negligence, or misrepresentation on the part of the 2nd Respondent. There was simply no inducement by the 2nd Respondent for the Appellant and the pt Respondent to carry out the Recapitalization Plan. Any attempt by the Appellant to enforce a reversal of the transaction is a feeble attempt at being treated in priority or preference to other depositors and creditors in violation of section 132 of the BFSA2 . 9.36 Section 134 of the BFSA2 caters to the shareholders as envisaged by the law. It would set a dangerous precedent for this Court to impose a duty of care, J27 contrary to established legislative intent and regulatory practice, particularly in circumstances where the Appellant's own conduct and awareness of legal obligations are called into question. The Court will not be complicit in the attempt by the Appellant to secure an advantage for itself. 9.37 In summary, the combined effect of the evidence and the statutory provisions demonstrate that the Appellant failed to discharge the requisite burden of proof to warrant the reliefs sought. The regulatory framework, both under the BFSA and the Companies Act, was duly considered by the lower Court, and in our considered opinion, its findings reflect a careful balance between the public interest and the integrity of statutory oversight. The approach adopted by the trial Judge, carefully weighing the correspondence, statutory provisions, and case law was, in our view, both judicious and in keeping with established legal principles. There is no basis to disturb those findings on appeal. 10.0 Conclusion 10.1 The appeal is dismissed in its entirety. Costs shall be for the Respondent. M. J. SIAVWAPA JUDGE PRESIDENT F.M. CHISHIMBA A.N. PATEL S.C. COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE J28