Evans Mutale v Luxhome Properties Limited and Ors (2022/HP/0882) (19 June 2025) – ZambiaLII

IN THE HIGH COURT FOR ZAMBIA 2022/HP/0882 ... AT THE PRINCIPAL REGISTRY HOLDEN AT LUSAKA .. auc OF (Ciuil Jurisdiction) coURTOF PRINICIPAL BETWEEN: JUN 2025 1 :, EVANS MU1'ALE PLAINTIFF AND LUXHOME PROPERTIES LIMITED 1 ST DEFENDANT EUGENl!--; CHISENGA 2ND DE:f4'ENDANT lGNGA KHONJE 3RD DEFENDANT Before the Honourable Lady Justice S. Chocho, on 19th day of June, 2025. For the Plaintiff Mr. P K Chibu.ndi of Messers Mosha and Company For the Defendants: Mr. MC. Hamachilla ofM essers Hamachila Legal Practitioners JUDGMENT Cases referred to: 1. Wilson Masauso Zulu vAvondale Housing Project (1982) ZR 172. 2. Pouwels Construction Zambia Limited and Another v Inyatsi Construction Limited (2016) 2 ZR 1. 3. Macaura v Northern Assurance Company Limited (1982) AC 619. 4. Christopher James Throme v Christopher Mulenga and 2 others (2010) ZR Vol 1. 5. Kunda v Konkola Copper Mines Appeal No. 48 of 2005. J2 6. Leymond Mwale (As Administrator of the Estate of Augustine Nsangu Mwale) v Mable Lungu Appeal No. 86/2021. • 7. Attorney General v Clarke SCZ Appeal No. 96A OF 20047. Legislation and other authorities referred to: 1. Section 98 of the Companies Act, No. 10 of 2017. 2. Section 148 of the Companies Act, No. 10 of 2017. 3. Section 159 of the Companies Act, No. 10 of 2017. 1. INTRODUCTION 1.1. This Judgment 1s m respect of the Plaintiff's claim against the Defendants. The Plaintiff by way of Writ of Summons and Statement of Claim dated June 8th , 2022 claimed the following: i) A declaration that the Defendants actions of removing the Plaintiff as Director and Shareholder in the 1st Defendant Company is illegal and therefore null and void. ii) An Order directing that the Registrar at the Patents and Companies Registration Agency 'PACRA' to reverse all changes in the 1st Defendant's profile and have the Plaintiff re-registered as Director and Shareholder; iii) An Order directing the Defendants to furnish the Plaintiff with the comprehensive statement ·of accounts of the 1st Defendant and thereby pay out all dues owing to the Plaintiff in dividends and any other profit realised; J3 iv) In the alternative, payment by the Defendants to the Plaintiff the sum of ZMW 3,500,000.00 plus 50 high cost residential plots; v) Interest on the sums found due to the Plaintiff; vi) Costs of and incidental to these proceedings; and vii) Any other relief the Court may deem necessary. 1.2. The Defendants entered Appearance and filed a Defence on June 22nd , 2022. 1.3. The Plaintiff filed a Reply to the Defendant's Defence on July 1st , 2022. 2. EVIDENCE/TESTIMONY 2.1. Trial was scheduled and heard on October 31st, 2024. 2.2. The Plaintiff called one witness in aid of his case. PW was one Evans Mutale, who is the Plaintiff herein. 2.3. PW testified in chief that the 1st Defendant company was incorporated on November 13th, 2019 with the first Shareholders being the Plaintiff, one Brenda Nyirenda, the 2nd Defendant and the 3rd Defendant. 2.4. PW testified that sometime in April 2021, the 2nd and 3rd Defendants fraudulently carried out activities which led to the removal of the Plaintiff as Director and Shareholder. 2.5. PW testified that the 2nd and 3rd Defendants fraudulently made the changes by presenting his old Green National Registration before the Registrar of Companies. J4 2.6. PW further testified that the Defendants fraudulently carried out activities by engaging and entering into contractual obligations on behalf of the lM Defendant without the Plaintiffs consent and participation. 2.7. PW testified that the 2nd and 3rd Defendant willfully neglected to comply with the 1st Defendant's Articles of Association and the provisions of the Companies Act No. 10 of 2017 on removal of Director and forfeiture of shares in a Limited company by only making a call on shares to the Plaintiff without doing the same to the 2nd and 3rd Defendants and the 2nd and 3rd Defendants proceeded to remove him as Director of the 1st Defendant company. 2.8. PW testified that the 1st and 2nd Defendant also resolved that the Plaintiff be removed as signatory to the Company Account held with Stanbic Bank and later filed a Notice of Forfeiture of Shares for the Plaintiff to forfeit the shares held in the Company and notified the Registrar of the same. 2.9. PW further testified that the Defendants have continued to withhold all dues owed to him from the Dividends from the time the 1st Defendant was incorporated. 2.10. PW testified that on several occasions, he has written to the Defendants demanding among other things; salary arrears and payment for the illegal actions carried out by the Defendants but the Defendants have failed and/ or neglected to meet the demands contained therein. JS 2.11. PW testified under cross examination that he was not paid the monies due under the loan agreement between the Plaintiff and the 1st Defendant in full. 2 .12. PW testified under cross examination that he was the Director and Chief Financial Officer of the 1st Defendant Company at the time he lent the Company the money. 2.13. PW testified under cross examination that he did not receive the money under this transaction and could not remember how much he received but that there was a shortfall of K20,000.00 and a plot. 2.14. PW testified under cross examination that there is a loan agreement making reference to land worth K95,000.00 but the said agreement was not before Court. 2.15. PW testified under cross examination that the Defendant's Advocates wrote to his Advocates on surrender of shares upon payment of the loan. 2.16. PW testified under cross examination that there is no mention of the K20,000.00 in 2.13 above in his Statement of Claim. 2.17. PW testified under cross examination that there is no mention of the outstanding balance in respect of the loan agreement in the Statement of Claim. 2.18. PW testified under cross examination that he did not agree with the Defendants position that he was paid in full and needed to return the shares. J6 2.19. PW testified under cross examination that he remembers rece1vmg a ... letter from the Defendants containing a call for payment of ordinary shares and in response, he sent an email to the 2nd Defendant stating that they should not send any correspondence without telling him the contents and that they should address all the correspondence to his lawyers. 2.20. PW testified under cross examination that in relation to the 2nd claim, he was not aware of any correspondence from PACRA to his lawyers in respect of the query over his removal from the Company. 2.21. PW testified that the basis of his 4ui claim is that when the parties had a dispute, it was agreed that when the Plaintiff is paid in full, Shareholding must move to the 2nd and 3rd Defendants. 2.22. PW testified under cross examination that they are before Court because the above agreement was not fulfilled and that there was a shortfall of K 26,795.00 as per page 48 of the Defendants bundle of documents. 2.23. PW testified under cross examination that the agreement stated that as long as the Company owes him, he was entitled to a monthly salary which on April 22nd , 2021 amounted to K 60,912.50. 2.24. PW testified under cross examination that the letter at page 38 was from his lawyers but it did not contain his instructions. JS 2.32. DWI testified that the Plaintiff recalled the loan before it was due and the parties called for a meeting to resolve the issue. 2.33. DWI testified that the loan that was due to the Plaintiff was finally settled on March 31st , 2021 and that DW 1 made payment on behalf of the of the Company to the Plaintiffs Advocates. 2.34. DWI testified that after the loan was settled, it was agreed by the other Shareholders that the Company needed to be restructured as the Shareholders no longer had a good working relationship. 2.35. DWI testified that on April 7th, 2021, a meeting was held and a Special Resolution was passed that the Plaintiff and Brenda Nyirenda be removed as Directors in the 1st Defendant Company. 2.36. DWl further testified that the Plaintiff had not paid up on his shares in the Company and efforts were made to bring it to the Plaintiffs attention so that he ensured that his shares were paid up. 2.37. DWltestified that on July 23rd, 2021, the 1st Defendant wrote to the Plaintiff making a call on the unpaid ordinary shares he held in the Company and that the amount due for the unpaid shares was K4500.00. 2.38. DWI testified that on August 6th, 2021, a meeting was held by the Shareholders of the 1st Defendant Company and an ordinary resolution was passed where it was resolved that the Plaintiff had forfeited his shares to the Company as a result of his failure to make payment on the call on his shares. J9 2.39. DWI testified that the Plaintiff was properly removed as Director and .. Shareholder of the 1st Defendant Company as procedure was followed. 2.40. DWI testified under cross examination that he has a diploma in law and is currently pursuing a Bachelor of Laws Degree and performs secretarial duties for the 1st Defendant. 2.41. DWI testified under cross examination that he was tasked to incorporate the 1st Defendant Company by the promoters of the Company who are; one Brenda Nyirenda, the Plaintiff, the 2nd Defendant and the 3rd Defendant. 2.42. DWI testified under cross examination that he holds the least shares. 2 .43. DW 1 further testified under cross examination that the promoters agreed to contribute incorporation fees but he did not contribute anything. 2.44. DWI testified under cross examination that the Plaintiff paid a portion of the contribution towards incorporation fees. 2.45. DWI testified under cross examination that the Plaintiff was a Shareholder and a Director. 2.46. DWI testified under cross examination that in a special resolution passed on April 7th, 2021, the following decisions were passed; i) Removal of the Plaintiff as Director; and ii) Removal of Brenda Nyirenda as Director. J l O 2.47. DWI testified under cross examination that Directors are appointed by Shareholders and it follows that their removal would be by meeting of the Shareholders. 2.48. DWI testified under cross examination that the Shareholders did not call for a meeting for removal of the Directors and that there was no notice calling the meeting. 2.49. DWI testified under cross examination that he was the author of the special resolution and that he did not get any legal advise from a competent person. 2.50. DWI testified under cross examination that the Plaintiff did not forfeit his shares by payment of that loan but because of his failure to answer to the call on shares. 2.51. DWl further testified under cross examination that he and the 3rd Defendant did not receive calls to pay their shares. 2.52. DWl testified under cross examination that he has not forfeited his shares as there in no call on his shares. 2.53. DWl testified under cross examination that the Shareholders did not authorize the call on the Plaintiffs shares. 2.54. DWl testified under cross examination that only one Director signed the call on the Plaintiffs shares and the call was made by one Director. J 12 the Shareholders included one Brenda Nyirenda, the Plaintiff and the 2nd and 3rd Defendant. 2.64. DW2 testified that the Articles of Associations were lodged at PACRA and indicate the Shareholders of the said Company. 2.65. DW2 testified that the Plaintiff availed them with a copy of his NRC at the time of incorporating the said Company. 2.66. DW2 testified that the 1st Defendant required financial capital in order to acquire land in order to sell to its customers and the Plaintiff was approached in order to secure a loan from him. 2.67. DW2 testified that on March 11th, 2020, the Plaintiff and the 1st Defendant entered into a loan agreement in which it was agreed that the Plaintiff would lend the 1st Defendant the sum of K 821,972.00. 2.68. DW2 testified that the Plaintiff recalled the loan before it was due and the parties called for a meeting to resolve the issue. 2.69. DW2 testified that that on July 20th, 2020, a meeting was held with the Plaintiff where it was agreed that in order to safe guard the interests of the Plaintiff in the Company in respect to the loan, an Alternate Director would be appointed to represent the interests of the Plaintiff. 2.70. DW2 further testified that on September 15th, 2020, the Plaintiff through his Advocates wrote to the Defendants demanding the outstanding sums that were due to him in the sum of K 54,412.50. J13 2.71. DW2 testified that on September 16th, 2020, the Defendants wrote to the Plaintiff that the balance would be paid less the sum of K 6000.00 being the amount the Plaintiff collected for his rentals. 2.72. DW2 testified that DW2 testified that on September 18th, the Plaintiff responded indicating that only K3000.00 should be deducted. 2.73. DW2 testified that on September 21st, 2020, the Plaintiff wrote to the Defendants acknowledging receipt of the sum of K48,412.50. 2.74. DW2 testified that the Plaintiff was paid a further sum of K 400,000.00 on November 3rd, 2020. 2.75. DW2 testified that the parties had a meeting and agreed that they would pay the Plaintiff the sum of K 90,000.00 and there would be an outstanding sum of K36.547.50. 2. 76. DW2 testified that on December 2nd, 2020 the Plaintiff was paid the sum of K 103,038.02. 2.77. DW2 testified that the Plaintiff indicated that the was an outstanding sum of K 59,509.26 on the loan, K 12, 182.50 for November salary and K3000.00 rentals that were not collected. 2.78. DW2 testified that on March 3rd, 2021, the Plaintiff wrote to the 1st Defendant demanding payment of the sum of K 605,178.46. J14 2.79. DW2 testified that the 1st Defendant responded and said they would be paying the sum of K 108,888.89 as full and final payment, the sum which was paid on March 23rd, 2021. 2.80. DW2 testified that on April 7th, 2021, a meeting was held as a Special Resolution was passed that Brenda Nyirenda and the Plaintiff be removed as Directors in the 1st Defendant Company. 2.81. DW2 further testified that the Plaintiff on April 22nd, 2021 wrote to the 1st Defendant demanding the payment of the sum of K497,360.96 and in response, the 1st Defendant wrote to the Plaintiff stating that they did not owe him anything as full and final payment had been made. 2.82. DW2 testified that on July 23rd, 2021, the 1st Defendant wrote to the Plaintiff making a call 'on the unpaid ordinary shares held in the Company and that the amount due for the unpaid shares was K 4,500.00. 2.83. DW2 testified that on August 6th, 2021, a meeting was held by the Shareholders of the 1st Defendant Company and an ordinruy resolution was passed were it was resolved that the Plaintiff had forfeited his shares to the Company as a result of his failure to make payment on the call on his shares. 2.84. DW2 further testified that on April 1st, 2022, the Plaintiff wrote to the 1st Defendant demanding the sum of K 3,500,000.00 as compensation for J15 fraudulent activities in respect of altering the Shareholding in the Company and removal of the Plaintiff as Director of the Company. 2.85. DW2 submitted that the Plaintiff also alleged fraud on the part of the 2nd and 3rd Defendants entering into contracts on behalf of the Company without the Consent of the Plaintiff and other Shareholders. 2.86. DW2 testified that the Plaintiff also alleged that there was theft of the profits of the Company in form of Dividends due and payable to him. 2.87. DW2 testified that the Plaintiff also alleged presentation of false information at Stanbic Bank Plc for purposes removing him as a signatory. 2.88. DW2 further testified that the Plaintiff alleged fraud in the use of the copy of his NRC before the Registrar of Companies and to be given fifty high cost residential plots. 2.89. DW2 testified that the Defendants responded and stated that the Plaintiff was not entitled to the sums claimed and residential plots as he was paid the sum of K 805, 592.24. 2.90. DW2 testified under cross examination that that the 1st Defendant has an average bank balance. 2. 91. DW2 testified under cross examination that the 1st Defendant has no assets. J16 2.92. DW2 testified under cross examination that the 1st Defendant is into the business of real estate, rentals, house sales and commercial building lease and sale. 2.93. DW2 testified under cross examination that the money realized from rentals per month is not guaranteed. 2.94. DW2 testified under cross examination that the 1st Defendant has 10 residential property for leasing and if all were leased out the Company would earn K 20,000.00. 2.95. DW2 testified further under cross examination that apart from signing the Articles of Association, she picked all the Shareholders to come together. 2.96. DW2 testified under cross examination that no notice was issued to the Plaintiff to attend the meeting at which the decision to remove the Directors would be made. 2.97. DW2 testified under cross examination that as at August 6th, 2021, the Shareholders listed at PACRA were the Plaintiff, the 2nd Defendant and the 3rd Defendant. 2.98. DW2 testified under cross examination that there was a meeting held by the Shareholders on August 6th, 2021. 2.99. DW2 testified under cross examination that the Plaintiff still has a plot reserved for him, measuring 1000 square meters and that the Defendants are still willing to give the plot to the Plaintiff. J17 3. LAW AND SUBMISSIONS. 3.1. All Parties filed their written submissions. The Plaintiff filed on November 29th 2024, the 1st Defendant filed on December 30th, 2024. 3.2. Placing reliance on the case of Wilson Masauso Zulu v Avondale Housing Project (1982) ZR 1721 , the Plaintiff submits that it is a trite principle of law that in civil matters, the burden of proof lies on the Plaintiff to prove his case on a balance of probabilities. 3.3. The Plaintiff submits that the Plaintiff has established his case on a balance of probabilities as he has produced evidence showing the following; i) That the Plaintiff's removal as Director by the 2nd and 3rd Defendants was not in compliance with the law and as such was null and void; ii) That the call on shares made to the Plaintiff was null and void as it was only made to the Plaintiff and not all the Shareholders and was not in compliance with the law; iii) Thal the Plaintiff's forfeiture of his shares was fraudulently done by the 2nd and 3rd Defendants as they did not follow the procedure at law; iv) That the Plaintiff is entitled to payment and a plot under the loan agreement between the Plaintiff and the 1st Defendant; and J18 v) That the Plaintiff is entitled to an account on the books and/ or statements of thelst Defendant as the Plaintiff was fraudulently ~ removed as Director and Shareholder. 3.4. The Plaintiff submits that the Plaintiff is still; a Shareholder of the 1st Defendant Company as the 2nd and 3rd Defendants did not follow the laid down procedure for the removal of Directors. The Plaintiff places reliance on Section 98 of the Companies Act which provides as follows: "98. (1) A company may remove a director from office by an ordinary resolution passed at a general meeting of the company. (2) A member shall, not less than twenty eight days before the meeting referred to in subsection (1), give the company secretary notice of intention to move a resolution to remove a director, in the prescribed manner and form. (3) The company secretary shall, on receipt of a notice of intention re/erred to in subsection (2), send a copy of the notice to the director concerned and that director shall be entitled to- (a) be heard at the meeting; (b) submit a written statement to the company regarding the notice specified in subsection (2); and (c) require that the director's written statement, made in accordance with paragraph (b), be read at the meeting". ... 3.5. The Plaintiff submits that the import of Section 98 of the Companies Act is that a member ought to give notice of intention to the Company J19 Secretary to move a resolution to remove a Director 28 days before the meeting. 3.6. The Plaintiff submits that the 2nd and 3rd Defendants did not follow the procedure as the notice of intention was not issued by any member and the Company Secretary did not give such notice. Further, that the 2nd and 3rd Defe nd an ts proceeded to hold a meeting where they resolved that the Plaintiff be removed as Director. 3.7. The Plaintiff submits that the actions of the 2nd and 3rd Defendants are totally null and void and placed reliance on the case of Pouwels Construction Zambia Limited and Another v Inyatsi Construction Limited (2016) 2 ZR 12 in which the Court guided as follows: "There can be no presumption of a valid resolution where the requirements of the law have not been satisfied. The resolution is patently invalid as only one Shareholder signed it when the record of appeal shows that the 1st Appellant Company had three Shareholders". 3.8. The Plaintiffs submit that as Directors are appointed by Shareholders, it also follows that the removal of such Directors is by Shareholders. 3.9. The Plaintiff further submits that the resolution made to remove the Plaintiff as Director was only made by the and Defendants in their 2nd 3rd capacities as Directors and not Shareholders and consequently did not follow the procedure prescribed by the law regarding the removal of Director and that the Registrar of PACRA should be ordered to re-register the Plaintiff as Director. J20 3.10. The Plaintiff submits that the call issued by the 2nd Defendant to the Plaintiff is null and void for failure to follow the law regarding issuing a call for share and forfeiture of shares. 3 .11. The Plain tiff submits that Part 3 of the 1st Defendant's Articles of Association provides the manner in which a call on shares should be made but that the call was only made on the Plaintiff's shares and not the rest of the Shareholders and no resolution was made to make such call on shares. In light of this, the Plaintiff submits that the forfeiture of shares was fraudulent and therefore null and void. 3.12. The Plaintiff further submits that the Plaintiff's removal as Director was not in accordance with the law and that the Plaintiff remains Director of the l5t Defendant Company entitled to the books and records of the Company. 3.13. The Plaintiff further submits that if upon inspection of the statements and books it is revealed that the Company has accumulated profits subsequent to the removal of the Plaintiff as Shareholder, the Defendant should be paid Dividends. Reliance was placed on the cases of Macaura v Northern Assurance Company Limited (1982) AC 6193 and Christopher James Throme v Christopher Mulenga and 2 others (2010) ZR Vol 14 which I have taken note of. 3.14. The Plaintiff submits that the Plaintiff's removal as Director and Shareholder is null and void and that the Plaintiff is entitled to his rights as Director and Shareholder and one of these rights include his J21 entitlement to a share in the profits made by the Company as well as an account of the 1st Defendants records or statements of all the transactions done by the 2nd and 3rd Defendant in the name of the 1st Defendant Company from the date of removal of the Plaintiff as Director and Shareholder. 3.15. The Plaintiff submits that as the loan to the 1st Defendant was not fully paid; the Plaintiff is entitled to full payment of the same. 3.16. In response, the Defendant submits that the Plaintiff was properly removed as Director of the 1st Defendant Company as the meeting was properly convened by the 2nd and 3rd Defendants in accordance with Article 40 (1) (2) of the 1st Defendant's Articles of Association which provides as follows: "If no Director is present within Zambia, any two members may convene a general meeting in the same manner, or as nearly as possible, as that in which such meeting may be convened by a Director". 3.17. The Defendant submits that the Plainff's shares were forfeited due to the Plaintiff's failure to pay for his shares after a call was made by the Company. Reliance was placed on Section 148 of the Companies Act which provides as follows: "148. (1) A shareholder may forfeit or surrender shares to the company in accordance with the articles. (2) If a member fails to pay a call on shares, the member may, subject to the articles, forfeit the shares to the company" .... J22 3.18. The Defendant further submits that the Defendants do not have an obligation to render an account to the Plaintiff and that the Plaintiff is not entitled to a share of the profits of the 1st Defendant Company as he ceased to be a Shareholder when his shares were forfeited to the Company. 3.19. The Defendants submit that the evidence on record shows that the Plaintiff was paid the full loan agreement and that there is a plot reserved for the Plaintiff to take possession. 4. COURTS ANALYSIS/DECISION 4.1. I have had occasion to consider the parties arguments, scheduling briefs and submissions for which I am grateful. 4.2. The following are the main issues for determination. i) Whether the Plaintiff was properly removed as Director; ii) Whether the Plaintiff was properly removed as Shareholder; iii) Whether the Plaintiff is entitled to a share in Dividends; iv) Whether the Defendants have an obligation to render an account to the Plain tiff; v) Whether the 2nd and 3rd Defendants actions were fraudulent; and vi) Whether the Plaintiff is entitled to payment under the loan agreement. 4.3. The Companies Act provides for the procedure on removal of Directors. Section 98 of the Companies Act provides as follows: J23 "98. (1) A company may remove a director from office by an ordinary resolution passed at a general meeting of the company. • (2) A member shall, not less than twenty eight days before the meeting referred to in subsection (1), give the company secretary notice of intention to move a resolution to remove a director, in the prescribed manner and form. (3) The company secretary shall, on receipt of a notice of intention referred to in subsection (2), send a copy of the notice to the director concerned and that director shall be entitled - to- (a) be heard at the meeting; (b) submit a written statement to the company regarding the notice specified in subsection (2); and (c) require that the director's written statement, made in accordance with paragraph (b), be read at the meeting. 4.4. On perusal of the evidence before me, the Plaintiff was removed as Director of the 1st Defendant company by special resolution dated April 7th , 2021 signed by the 2nd and 3rd Defendants. 4.5. The record does not show any Notice of Intention to move resolution to remove Director which is a mandatory requirement. contained in Section 98 (2) of the Companies Act. 4.6. Further, the record does not show that the Notice required by Section 98 (2) was sent to the Plaintiff informing him that he will be entitled to be heard al the meeting or to submit a written statement. J24 4. 7. The 1st Defendant testified under cross examination that the Shareholders did not call for a meeting for removal of the Directors and that there was no Notice calling the meeting. ~ 4.8. I am of the considered opinion that resolution to remove the Plaintiff as director is void as the 2nd and 3rd Defendants did not follow the mandatory procedure contained in Section 98 of the Companies Act as relates to removal of Directors. A resolution made in contravention of the law cannot stand. 4.9. It was the testimony of the 1st Defendant that the Plaintiff forfeited his shares because of his failure to answer to the call on shares. 4.10. Section 148 (2) of the Companies Act provides as follows: "(2) If a member fails to pay a call on shares, the member may subject to the articles, forfeit the shares to the company". 4.11. Further, Article 10 of the 1st Defendants Articles of Association provides as follows: "A call shall be deemed to have been made at the time when the resolution of Directors authorising the call were passed and may be required to be paid by instalments". 4.12. From the above provision of the 1st Defendant's Articles of Association it can be concluded that there is requirement for a resolution authorising a Call before a Call can be made. 4.13. The Defendants have exhibited on page 57 of the Defendants bundle of documents a Call made to the Plaintiff stating that a resolution was J25 made on July 16th, 2021 by the Board of Directors authorising the Call to be made on the Plaintiff's shares. 4.14. On perusal of the record, the Defendants have not exhibited the said resolution referred to in the letter containing the Call made on the Plaintiff's shares. It is a trite principle of law that every allegation made must be proved. The Supreme Court in the case Kunda v Konkola Copper Mines Appeal No. 48 of 20055 stated as follows: "He who alleges must prove that allegation. This principle is so elementary, the court has had on a number of occasions to remind litigants that it is their duty to prove their allegation, of course it is a principle of law that he who alleges must prove the allegations". 4.15. It is also the DWl's testimony that the Shareholders did not authorize the Call on the Plaintiffs shares and that only one Director signed the Call on the Plaintiff's shares and the Call was made by one Director. This evidence contradicts the Defendants assertion that there was a resolution prior lo the Defendants making a call on the Plaintiffs shares and in the absence of evidence, I am inclined to believe that no such resolution was made prior to the making of the call. 4.16. I find that the call made by the Defendants on the Plaintiff's shares was in contravention with Article 10 of the 1st Defendants Articles of Association and consequently in contravention of Section 148 of the Companies Act which subjects the making of a call to the Articles of Association. The Call is therefore, void. J26 4.17. Having found that the removal of the Plaintiff as Director and Shareholder was improperly done and in contravention of the law, it follows that the Plaintiff is still a Director and Shareholder of the 1st Defendant Company. 4.18. It is the Plaintiff's contention that he is entitled to rights as Director and Shareholder and those rights include his entitlement to a share in the profits made by the Company and an account of the 1st Defendants records or statements of all the transactions done by the 2nd and 3rd Defendant in the name of the 1st Defendant Company from the date of removal of the Plaintiff as Director and Shareholder. 4.19. In relation to the Plaintiffs claim that he is entitled to a share of the profits, the Companies Act in Section 159 provides as follows: "A company shall not distribute dividends to shareholders, except out of the profits arising or accumulated from the business of the company". 4.20. Further, Article 72 of the 1st Defendant's Articles of Association provides as follows: The Directors may authorize the payment by the company to the members of such interim dividends as appear to the Directors to be justified by the profits of the Company'~. 4.21. I find that the Plaintiff is entitled to a share of profits if any such Dividends were authorised from the time of the Plaintiff's removal as Shareholder. 4.22. Article 70 of the 1st Defendants Articles of Association gives the right to Directors of the 1st Defendant Company to inspect the accounting J27 records and any other document of the 1st Defendant Company. I am of the considered view that the Plaintiff is entitled to inspect the books of the Company. 4.23. The Plaintiff has also made an allegation of fraud on the part of the 2nd and rd Defendant. The Plaintiff alleges that the and Defendant 3 2nd 3rd were fraudulent in the removal of the Plaintiff as Director and Shareholder of the Company. Further, that the 2nd and 3rd Defendants have been entering into contractual obligations on behalf of the Company that the Plaintiff has not been privy to. 4.24. The Courts have on many occasions guided that allegations of fraud must be proved on a higher standard of proof, than on a mere balance of probabilities because they are criminal in nature. The Court of Appeal in the case of Leymond Mwale (As Administrator of the Estate of Augustine Nsangu Mwale) v Mable Lungu Appeal No. 86/20216 stated as follows: "There are numerous authorities on the legal principles that any charge of fraud, undue influence or misrepresentation must be pleaded with utmost particularity and that fraudulent conduct must be distinctly alleged and as distinctly proved. That the standard of proof is higher than on a balance of probabilities, and there is no presumption of fraud". 4.25. On perusal of the evidence on record, I am of the considered view that the Plaintiff has not proved the alleged fraud. I do not see any apparent fraud incasu but rather, what I see is failure to comply with the laid down procedures and impropriety in the change/removal of Directors and J28 Shareholders. The Plaintiff also has not proved its allegation that the 2nd and 3rd Defendants fraudulently entered into contractual obligations. 4.26. r shall now deal with the issue of whether the Plaintiff is entitled to payment under the loan agreement. 4.27. From the testimonies of the witnesses and evidence on record, it cannot be disputed that there was a loan agreement between the Plaintiff and 1st Defe nda nt. 4.28. I however note from the Statement of Claim that the issue of payment under the loan agreement was not pleaded. The Plaintiff also gave testimony that that there is no mention of the outstanding balance in respect of the loan agreement in the Statement of Claim. 4.29. It is a trite principle of law that parties are bound by their pleadings and cannot be awarded a relief which has not been pleaded. However, there are instances when this general principle can be departed from. The Court in the case of Attorney General v Clarke SCZ Appeal No. 96A OF 20047 stated as follows: "A party cannot rely on unpleaded matters except where evidence on the unpleaded matter has been adduced in evidence without objection from the opposing party". 4.30. Incasu, the Plaintiff adduced evidence on the issue of the unpaid loan and the Defendants· have not raised any objection therefore, the unpleaded matter can be relied on. 4.31. On perusal of the evidence on record, particularly pages 39, 41,42,43,46,47 of the Defendants bundle of documents, I find that J29 the 1st Defendant settled the outstanding loan amount due to the Plaintiff in full, save for then transfer of a plot to the Plaintiff. The 2nd and 3rd Defendants admitted in their testimony that the Plaintiff was entitled to a Plot and further, this Plot was and remains available for the Plaintiff. 5. CONCLUSION 5.1. In light of the foregoing and on the claims that the Plaintiff succeeds, I Order as follows: i) That a declaration that the actions of the Defendants as sought to remove the Plaintiff as a Director and Shareholder are illegal, null and void abnitio; ii) That the Registrar of PATENTS AND COMPANIES REGISTRATION AGENCY BE AND IS hereby ORDERED TO REVERSE all such entries as removed the Plaintiff as Director and Shareholder. The Plaintiff be re-registered as Director and Shareholder of the 1st Defendant Company; iii) That the Defendants to render the Plaintiff a comprehensive account of the l st Defendant Company and pay the Plaintiff all Dividends due and owing to the Plaintiff if any; and iv) That the Plaintiff be allocated a plot. 5.2. Interest to be paid on the sums found due at the short-term deposit rate from the date of the Writ to the date of Judgment and thereafter the lending rate determined by the Bank of Zambia up to the date of payment. J30 5.3. Claims at IV and VII fail. • 5.4. Costs to the Plaintiff to be taxed in default of agreement. 5.5. Leave to appeal is granted. Delivered at Lusaka on the 19th of June, 2025. ·- . - REPL:!:"'UC OF ZAMBIA HIGH COURT OF ZAMBIA t ·-1 { - ~ii'" 1 - . "A~- ~ I ___s. .... ,,,...--....:;::....__::~-=-z4' ,~tf;,:1;,- -; L) ' ... I CHOCHO ;; JU.l'I lL-~J ~l:l S. CHOCHO .,J HIGH COURT JUD P. 0. BOX 50067, LUSAKA J