Christopher Chilongo (Suing as Secretary General of City of Lusaka Football Club 1970) v Cavmont FMO Corporation Limited and Anor (2018/HP/848) (9 December 2024) – ZambiaLII

.. IN THE HIGH COURT FOR ZAMBIA 2018/HP/848 AT THE PRINCIPAL REGISTRY HOLDEN AT LUSAKA (C 'iuil .Jurisdictio11) PRINCIPAL BETWEEN: o 9 0£C 2024 CHRISTOPHER CHILONGO PLAINTIFF (Suing as Secretary General of City J,'c,otball Clvb 7 t..)70) AND CAVMONT FMO CORPORATION LIMITED 1 ST DEFENDANT FORLI LIMITED 2ND DEFENDANT Before the Honourable Lady Justice S. Chocho, on 9th Dccember,2024. Fo•-the J>ic1intiJT l\lls. C. Puto of l\llessers Robson l\llolipenga and Company Fur the Dcferu}w Lis: Ms. 13. Nachimba of Messers J &M l\duocates --·--- --- JUDGMENT ·---- ·-----·------- Cases re_{§rred to: 1. Zambia High Light Mining Investments Limited V Register and Chief Executive Officer Patents and Companies Regulations Agency (2021) ZMHC 50 2. Dunlop Pneumatic Tyres Company Limited V Selfridge and Company Limited 1912 AC 3. Rat'ing Valuation Consortium and D. W. Zyambo and Associates (suiny as a firm) V The Lusaka City Council Zambia National Tender Board (2004) ZR 183 4. Friday Mwamba V Sylvester Nthenge and Others (2010) SCZ .l0 J2 5. Kunda v. Konkola Copper mines Plc Appea l No. 48 of 2005 6. Marshlands Consortium Limited and Others v Felicitus Kabwe Chibamba Appeal No 154 of 2021 7. Gemistar Enterprises Limited v Afgri Corporation Limited {2017] ZMSC 159 8. Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd (1943) AC 32 Legislation and other authorities referred to: 1. The Companies Act, Act No. of 10 of 2017 2. The Companies Act, 1994 3. The High Court, Chapter 27 of the Laws of Zambia. 4. Phipson on Evidence, 17th Edition (London; Thomson Reuter 2010 5. Murphy on Evidence 5th Edition (2002) Universal Publishing Company, New Delhi. 1 . INTRODUCTION 1.1. This ,Jucigmcnt 1s 111 respect. or Lhc Pl;:-1int.iff's claim commenced by Writ of Summons nnd accomp~rnying SLD!emcnt. of Claim daLed 2nd M<1y, 2018 \,vhich was amended by a consolidaLcd WriL and amended Statement of Claim dated 20L11 Sept.ember, 2020 for the following claims against the Dcfendan ls; i) /\11 Order Lo chc:rngc the clirectorship or the Ci Ly of Lusaka l◄oolball Club (2000) Pie and refleeL new LrusLces. ii) /\n Order Lo nullify Lhc changes made lo Lhc shareholding of the City of Lusaka l•ootball Club (2000) Pie, rrom its incept.ion. iii) An 01-c.kr that Lhc Plaintiff never owed USD 562,000.00 lo t.hc 1st l)cfendanl al the Lime the debl was sold lo Lhe 2nd Defendant.. J3 iv) /\n Order Lhat Lhc debL assignrnenl of USI) 562,000.00 by Cavmonl F'MO Corporation LimiLed lo l<'orli Lhc 2nd Defendant herein was i I lcga I. v) An Order Lo nullify I.he sale of Cavmonl F'MO Corporation Limited shan:holding in I.he City or l,usaka l◄ooLball Club (2000) Pie Lo a third-party F'orli Limited. vi) /\n Order t.o nullify Lhc illegal or unlawful convention of all preference shares by Cavmonl l◄'MO Corporal.ion Limited in the City or l,usaka l◄'ooLball Club (2000) Pie to ordinary shares. vii) /\11 Order Lo nullify illegal or unlawful changes of registered sccrcLarics of City of Lusaka F'ooLball Club (2000) Pie, Messcrs Chifumu Banda and /\ssociaLcs. i) /\n Order of clcclc.11·aLion Lllat. Lhc Defendant. having forged Lhc lease agree men l, the lease agree men L be declared null and void. ii) /\n Order of paymcnl of Lhc sum or ZMW 500,000.00 being 5% 1·cnlals anci lli1·i11g Lhc sladiurn. iii) /\n Order of payrncnL or 5'¾, 1-c11tals anc.l hiring or sLadium from dat.c of Wril Lo dale of ,Judgcmcnl. iv) An Order of payment of the sum of ZMW l 0,000,000.00 demolished club house. v) /\n Order for canc:clation of lease agreement.. vi) /\n Order Lo demolish illegally built st.ruclures less whal is owecl LO Lhc Plaintiffs vii) /\n Order restraining Lhc Defendant from interfering wilh the running or the football club by Lhc PlainLiff and allowing them use \\'l)Odlands st.c1diurn and handover Lhc fool.ball learn. viii) 1\n Order 1.hal Lhc cily or Lus,.1kc1 Fool.ball Club arc equitable owners of bolh sland No. :3034 Lo Lhc cily of Lusaka football club1 970 ;:1s beneficial owner. J4 ix) /\n Order for Lransfcr of Lhc ccrLificaLc of Lille being Sland No. 2757 and stand 3034 and oLhcr imporlanl club docurnenls. x) l)am,tgcs. xi) In tcrcsl. xii) /\ny olher rclids as Lhe Courl may deem fil. 1.2. In response and ddcncc Lo Lhc Plainliffs' claims, Lhc Defendants filed a l)cf"cncc a1HI Cou!llcr claim on I.he 25th October, 2018 in which Lhcy denied t.hat t.hc Ph--iinliffs claims i:111d counter claimed Lhc following; i) Damages. ii) /\n injunclion Lo rcslrain Lhc Plainliff by himself and all Lhc rncmbci-s of the cit.y of Lusaka football club (1970), their servants, agents or ol hcrwisc frurn clllcl lo prcvcn L Lhcm from: a) Cornmilling a rcpcliLion t.hcreof, inducing or procuring breaches or unlawfully interfering in conlraels between Lhc second defendant. and ciLy of Lusaka foolball club (2000) Pie; and tile: leases between I.he 2nd l)cfcndanl and ils lenants on Su.rnd No. 303,--1, Lusctka; the dcvclop1ncnl of Lewanika Mall on SLand No. 2757, Lusaka; b) lnlcrfcring in the affairs of City of Lusaka F'ootball Club. iii) Int.crest on l.hc amounL thaL will be found clue and payable to the ) 11d l)cfcnclunL iv) Cos Ls occasioned by I.his c1cLion. 2. EVIDENCE/TESTIMONY ),_I . In aid of Lhcir case i he Plai1ll ifT called one Witness and WiLness statemenL filt'd on 30th ,June, 2023. 2.2. PW 1 Chrislophcr Chilongo Lcslificd Lhal Lhc I st Dcfcndanl w1LhouL a valid meelin° valid resoluLion and consent. of Lhe Plaintiff increased Lhe b> company's share capilal. JS :s 2.3. PWl Lcslificd Lhal Lhc 1 Dcfcndanl connived wilh one truslee and crcc.ned preference shares ·which were subscquenlly convcrled inlo ordinary shares ,.. 111d lhe I Dcfcndanl al lolled ilsclf. si 2.4. PW I leslified lhal lhc 1st Dcfcndanl also illegally increased lhe share capilal or Lhc company wilhoul a valid resolution through its lruslee. 2 5. })WI LcsLificcl thm the 211<1 Dcfcnclant did not carry oul due diligence and proceeded lo buy Illegal sha1-cs l'rolll t.hc I si l)ckndanl. 2.6. PW 1 tcslil'icd under cross examination the he was appoinled Seerclary General of thc Plaintiff Company in 20 I al lhe ushering of the new executive aflcr 2017 election. 2.7. PW ! lestified under cross examination Lhal prior t.o his appoinlmenl, Uw Sccrela1·y General vvas one Charles Tcmbo. 2.8. }JW I testified thal as Sccret:1ry General, he was provided with Lhe docurncnu..1tio11 rcl;.1Ling Lo Lhc records of' Lhe !)laintiff. l lowcvcr, PWl testified that he was nol aware Lhc1t Lhe l)laintiff had been dcregislercd as he did was nol availed with documcnlalion Lo Lhal effect if any. 2.9. PW 1 tcslified under cross examination Lhal ,,vhal was deregisLCred 1s a club called C1Lv or Lusaka Foolball club and that when the Plaintiff Company ,-vas formed, il was an unincorporated cnliLy c.rnd was only registered in 2018. 2. 10. PW1 furlher gave conlradicling Lcslimony under cross examination the Plaint ilT Company was in existence and incorporated as of Lhe year 2000. 2. 11. PW I tcslif"icd under cross exarninaLion Lhal he was aware or Lhc Shardrnlding sLrucLu1-c or City or Lusaka l•'ooLball Club 2000 PLC in 2000 and !isled t.hcrn as follows; • Mr. Henry Sichernbc • Lale ,Judge Le·waniki-l • Lale ,Judge L◄:sau Nebwe • 1,a Le M, tsiyc Masiyc • Mr. J3rillianl Muchima • Mr. Yuyi Lishomwa • Lale Chrisline M ulundika • Slate Counsel Chifumu 13anda 2. 12. PW l Leslified furlher under cross examination Lhal he was never a share holder of Ci Ly of Lusaka Foolball Club 2000 PLC 2. 13. l.)W l Lcslificcl under cross cxarnin;-tl ion Lhal there was a mortgage which \\'us p,1icl f"or hv Cavrnont 13ank Limited. 2. J 4. PW l Lcslified under cross cxaminaLion LhaL Ci Ly l)f Lusaka fi'oolball Club 1970 was racing financial ch;-1llcngcs and Mr. I lc:111-y Sichcmbc in his capc.1eit.y as interim Chairperson approached Cavmonl Bank Limiled seeking financial assislance. 2. 15. PW l conceded under cross examination Lhal a duly convened meeling consists of 50%, of Lhe duly paid-up members and Lhal he did nol know vvho the fully paid-up members were al Lhal Lime. 2. J 6. PW 1 LcsLifiecJ under cross examination that he vvas aware of Lhc existence of a proposed subscriplion agreement between Cily of l~w,aka Football Club PLC and Lhe 1st l)cfencl::.rnl buL wc1s not aware of any execulion Lhercor. 2. 17. PW 1 was rcfu rcd Lo pages 7 I and 77 of the Defcndan ls bundle of documents and he agreed Lhal Lhc subscriplion agrecmenl referred Lo in 2.16 al.Jove was i11 fact cxc:cut.cd. 2. 18. PW 1 t.cslificd under cross cxaminal ion that Lhc Lruslee Lhal was being referred to as to have connived with the 1st Defendant was one Henry Sichcmbc and Lhe basis of this suspicion is Lhal Henry Sichembe is the only one docurnc11Led Lo have dealt wilh the 1st Ddcndanl. J7 2.19. PW 1 conceded under cross examinaLion Lhat. he was preview Lo mi nu Les which suggeslcd Lhal olher members of Lhe Plaintiff Company in fact. dcalL wilh Lhc I s1 l)cfcndan!. ;.20. i>WJ !vstii'i~:d t111tk1 cross cx.-11ni11,11iu11 Lilal Lhc evidence he has Lo csLc:1blish LhaL indeed Lhc PlainLiff Companv ovvns Lhc properly 111 question is conlained in Lhe Js1 Dcfendanls witness slalemenl. 2.21. In rcexaminalion, l.JW I LcsLificd Lhal Lhere were Lwo more shareholders in ~HlcliLion lo the ones listed in 2. '. 1 above namely; • Lale ,John Cruickshank • Thomas l◄'ransis Ryan 2.22. The DdendanLs called one witness and filed a witness slatemenl on 14th ,July, .JU.2.3. 2.23. DW 1 Th,rn1as l◄'rancis l<yan LesLified thal Lhc I si Ddcndant ,,vas somel1mc or in 1999 approached by Lhc l~xeculivc commit Lee CJf the City Lusaka fooLball club under Chairmanship of Mr. l-lenry Sichembe concerning Lhe possibility of Lhc l "1 ])cfcncfonl funding or invcsLing in Lhe club. DWl referred Lhc Court Lo a lcllcr contained on pages 24--25 oft.he Defendants Bundle of documents. 2.24. DW 1 LcsLified Lhal in the course of Lhe discussions bet.ween the 1 sL Ddenclclnl and the officials from Lhc club under I.he Chairmanship of Mr. I lc11ry Sichcmbe, Lhe parties agreed to incorporate c:1 new public lirnilccl company t.u be known as City of Lusaka l◄ootball club Limiled '2000 Pie (LIH' club). 2.25. DW 1 testified that iL was also agreed thc:1L Lhe l st Dcfcndanls would provide funds Lo clear the club's exposure lo Lhe Bank and Lhal t.he [ sL Ddendanl would invesl 1(500,000,000.00 (unrebasecl) in the club. DWl referred Lhe Court Lo Lhe resolution passed on I 1111 /\p,-il, 2000 on page 32 of Lhc Defendants bundle of docurncnls. JS 2.26. l)W I testified Lhat Lhc Is, f)cfcndanl entered into a subscription ag1·ecrncnl with the club under which il was agreed thal Lhe Defendant would make a cash subscript.ion of K5,000,000.00 con sis ling of K300,000,000.00 in ordinary shares consisting of 3,000,000 shares I< I 00 each and 1<200,000,000.00 consisting of 200 redeemable prclcrcnce shares of l< 1,000,000.00 each c.1t par redeemc.1blc at Lhe option or the club. 1)\,\/ I referred the Court LO pc.1ges 70 lo 88 of Lhe Defendants bundle of docurncnt.s. 2.27. l)Wl st1bmittcci th,1l. it wc.1s on the strength of the subscription ugreemcnt Lhe /\rticlc 25 of the articles of c.1ssociation was amended. 2.28. DW l submillc-d Lhat. the 211<1 l)cfcndanl entered inlo a lease agreement wilh lhc club Lhal the 211d Dcfcndanl would rent St.and 3034, Lusaka for a period of 25 years rcncvvable for purposes or carrying out. development vvhieh would include rcfurbishmcnt of the stadium. OW 1 referred the Court to rages 3311 Lo 354 of the Defendants bundle of documenls. 2.29. DWl testified Lhal il was on Lhc strength of Lhc: lease agreement. Lhat U1~· 211c1 Dcfcncirn1t carricci out. refurbishment or Lhe stadium and erected a ur toUll 117 shops for rent. 2.30. DW l Lc!:>Lil'ied Lhat Lhc l)laint.ill wrongl'ully and wilh inlcnL t.o injure lhc 2nd Defendant allemplcd Lo procure and induce t.he parties lo these agreements t.o break Lhe agreements wilh Lhe 2nd Dcfcndanl. 2.31. IJWl tcslificd under cross exarr11nHtion thal t.hal Lhe 1s1 Defendants consideration for Lhe shares in City of Lusaka 2000 PLC was cash in Lhe sum off K500,000,000.00 (un rcbascd). 2.32. UW I furLlicr t.cst.ificd u11clcr cross examinmion Lhal Lhc consideration l\'krrcd to in ~ 31 above was c-111 i11vcs1n1cnt. in the company and Lhal it wi-1S ro,· co11ti11uccl rchabililc1tio11 ur Lile grnu11ds c111d club hou~c. J9 2.33. ])W l tcsLificd Ll1,1l the considcrnlion rdcrrcd Lon in 2.3 1 above was paid 10 C1L_v or l,usuka l•'ooLlJc.ill Club '2000 l)LC buL docs nol have evidence before Lhc Courl. 2.34. DWl further testified Lhal he was certain Lhat Lhcrc is in existence an acknowicdgcmcnt of receipt of Lhe consideration only that it is not before Cuun. 2.35. OWl testified that the subsequent K 150,000,000.00 was also paid m cash but. there arc no receipts before this Court. '2 3(). DW1 tc'slific-d under noss examination that the shareholders of Lhe club n)11vc11cd Lo pass a 1-csoluLion and docs nol reecill any evidence of the meeting. 2.37. DW1 Lesuficd under re-exarni11ation Lhat the Jst Defendant. is a special vehicle in which investments were made and il was originally managed l>y Cavrnom Merchant f3c.1nk. 3. LAW AND SUBMISSIONS. 3. 1. 13olh l'arlies filed their wriLlen submissions. The Plain Liff filed on the 5t.h l·'t·brw1ry, '.),024 and t.hc Defendants on the 4th of /\pril, 2024. 3.2. The Plaintiff submits Lhal before issuing shares, a company musl ensure to issue Lhcrn in accordnncc wilh ils /\rLiclcs or Association. 3.3. The Plain Li fl submits Lha1. issuing of shares \,\·ill require r1 resolution Lo be passed by a Cenernl MceLing of the cornp,1ny shareholders. 3.4. The Plaintiff relied on Section 140(1) of the Companies Act which provides tha L; "A company may, unless its articles provide otherwise, by special resolution, alter its share capital as stated in the certificate of share capital by- JlO (a)increasing its share capital by issuing new shares of such an amount as it considers expedient". 3.5. The J>lainliff relied on Lhe case of ZAMBIA HIGH LIGHT MINING INVESTMENTS LIMITED V REGISTER AND CHIEF EXECUTIVE OFFICER PATENTS AND COMPANIES REGULATIONS AGENCY (2021) ZMHC 501 and submilt.ed Lhal Lhe arlicles of a company rcgulalc ils internal affnirs and thnt. Lhrn. Lile art.icles amount lo a binding conlracl bclwccn Lhc company and iLs members. IL was furlhcr submitted Lhal Lhc Companies /\cl has c:1 recommendation form of articles termed as the st.andard articles which companies arc al liberly Lo slylc otherwise and thal t.hc standard arLiclcs allow for allcrnlion of share capit.al by way of ordinary rcsolut.ion. 3.6. The Plaintiff submiLLed Lhal according Lo Lhc first schedule of Section i :2(3) slandard /\1ticlcs, a resolution means an ordinary resolution of the Company. 3.7. The Ph-1i11urr ::;ubmiLs Ll1al t.hc Is: l)dcndam illegally incrcc:1scd Lhc share capiw! und subsequcnt.ly alloLLed it.self wilhout. investing the K500,000,000.00 into the club as agreed. 3.8. The Plc1intiff submits Lhm t.hc 1" 1 l)dendc1nl also illegally chc1ngccl the Compc:1ny Secrclar_v and proceeded convert. preference shares into LO ordinary shc.11-cs. 3.9. Funhcrmore, the Plain Liff submits Lhat the 1st Ddcndant claimed an amount of US$562,000 from the city of Lusaka (2000) despite the morncs never being ndv,incccl Lo t.lic club and subscqucnlly assigned Lhc dcbL lo chc L11d l)cl'c11cl,int. wit.bout ,111y -;pc(·i,1I IT!:>\)lut.ion. 3.10. In response, t.hc Defendants submit t.haL Lhc Plaintiff lacks locus slanc.li m this maLLcr as City of Lusc1ka l•'oolbc1ll Clu b (1970) on whose behalf Lhc !)lainliff brings this action was non-cxist.cnt and not privy to what Jll transpired ,1L tile time.: Lhc chc1:1~c·:-i i11 sharcholcli11g were being made in Ci Ly or Lusaka l<'oolball Club (2000) Pie. 3.1 I. The Ddcndanls rurlher submil lhal the Plaintiff was nol privy lo the subscriplion agreemcnl and eannol make allegalions regarding lhc shareholding changes made and placed reliance on Lhc case of DUNLOP PNEUMATIC TYRES COMPANY LIMITED V SELFRIDGE AND COMPANY LIMITED 1912 AC2 Lo supporl Lhcir argumenl. 3.12. The Dcfendanls submitled LhaL Lhe subscription agreemenl was duly executed by Lhe parlies (CiLy l)f l,usaka FooLball Club 2000 Pie, The CcJ\'Crwntors and the l "1 l)dcndnnt.) thereto and any changes made 1.o lhe shareholding a11cl governance slruclure were rightly clone and placed reliance on Lhe case of' RATING VALUATION CONSORTIUM AND D.W. ZYAMBO AND ASSOCIATES (SUING AS A FIRM) V THE LUSAKA CITY COUNCIL ZAMBIA NATIONAL TENDER BOARD (2004) ZR 1833 111 which iL was held as follows; "What is regarded as an important criterion is for the Court to discern a clear intention of the parties to create a legally binding agreement between themselves. This can be discerned by looking at the correspondence and the contract of the parties as a whole". 3.13. The Dcfendanls submil Lhat lhe DW1 's leslimony provides lhc faelual background known lo t.hc parlics as well as whc1l objective of the trnnsaclion was and that DW 1 provided all delails and relevant ciocumcntat.ion rclc1Li11g Lo how Lhc ch,111g(·s v,crc made. 3.14. The Dcfcndanls placed reliance on Lhe case of FRIDAY MWAMBA V SYLVESTER NTHENGE AND OTHERS (2010) SCZ 84 in which iL was slc.llcd as follows; 'In constructing any written agreement, the Cott.rt is entitled to look at the evidence of the objective factual background known J12 to the parties at or before the date of the contract, including evidence of the "genesis" and objectively "aim" of the transaction". J. I~- Tl,t· l)dv1H.. L111ts sulrn1iuvcl lhdl Llw Pl<-1i11tifT ha::-. a duly Lo prove iLs case and Lhc Plaintiff hus railed Lo prove iLs case and relied on Lhc case of KHALID MOHAMED V THE ATTORNEY GENERAL (1982) ZR 495 where iL was held Lhat a Plain Liff musL prove his case and if he faiis Lo do so Lhe mere failure of Lhe opponenL's defence docs not cntillc him to judgenwnt.. 3.16. The OcfendanLs submiL LhaL Lhc Plaintiff 1s noL enLiLlcd Lo any of the reliefs sought. 4. COURT'S ANALYSIS AND DECISION 4.1. I have C(JJ1sidcrccl Llw cvidC'11cc on t-ccurcl ;-111cl the Parties rcspecLive submissions. The PlainLiffs have before Lhis Court a cockLail or claims. However, having considered Lhc argurncnLs advanced by the parties, Lhe real quest.ion for dcLcnninaLion is whcLhcr Lherc was illegality in the alt.crat.ion or shat·cs a11d cha11gc or sha1·eholding and govcnrnnc-~ sLrucLurcs in Lhc Company known as Ci Ly of Lusakc1 F'ooLball Club (2000) PLC by Lhe DcfcndanLs. The answer Lo this question will have a bearing on Lhc oLhcr issues raised. 4.2. The Ddcnclat11s submit thaL Lhc Plaintiff lacks locus stancli LO bring the ,urporls Lo bring aello1rn'I inn n il I Ill• 01·r" 11,ri I h ..-11'~ · 1 on bchc:1lf was noL in existence during the t.rnns8 ;Lions in issue. IL is the DcfendanLs position LhaL Lhe Ci Ly of Lusaka foot ,all club (1970) was nol in existence in 2000 (havi11g being officially reg sLcrcd in 2018). I have considered this submission and I i"i11d thLll Lh : evidence or boLh Lhc Plaintiff and Defendants points Lo the: rollm,ving: Jl3 i) Pages 32-68 of Lhe Defcndanls bundles of documenls conLain various documents and correspondence bet.ween Lhc Plain Liff (City of Lusal«:1 F'oolball Club 1970) and Lhc 1st Ddene.font. The same chronicles t.he genesis of discussions and agreements between Lhe l.\MO parties resulting into incorporation of Lhe Cily of Lusaka F'oolball club 2000 Plc. ii) The inco1-poralion documents show trustees of the Plaintiff (i11clt1cling its C~cneral Secretary) as Shureholdcrs and Directors of Cit_v of l~usak,1 l•ootball Clti!J 2000 l)Jc. This also included lwo reprcsenlalives of Lhc first. Dcfenclanl. iii) The names of the first. Directors of City of Lusaka Foot.ball club 2000 Pie were; ,John M;1itland Crt1ickshank Thomas l•'ra11cis l~yan Henry Sichembc ,Justice David Mbelele Lewanika Yuvi Lishorrn~ a With till· Co1np;i11v Sccn·1nr_v n·conlt-d as Cliifurnu l(.l1andc.1 S.C. 4.3. In light. of the finding above, il is my considered 1)pinion Lhc Plain Liff docs in fact have Lhc locus slandi in Lhis malt.er. The Plairitiff is suing in his capucit.y as Secretary Ckncral, Lhc same posit.ion that was previously held b_v one l lcnn· Sichernbc wiLl1 whom tJ1c l sl Dcfc11dc1nt had dealings wilh. 4.4. l now direct my mind Lo Lhc one quesuon thal 1 deem cardinal in clcll:rrnining the c·lc.iims ;me! counLn-claims in this action. Thal question or or is v\·hcthcr or not. the resolution C11_\' Lusaka FooLl:.iull Club 2000 Pie, dated 4th August. 200() (which rn,,dc rdcrcnce to the Subscription /\grecmcn L). J14 i) SubscripLion AgreemenL dalcd 31 sl ,July, 2000 as appears on page or 7U 7 / t.hc l)ck11d,tnl~ ht1ncllc signed by Thomas l~yan and ,JusLicc Davie! Mbcklc l,C'\,vanika. 4 .5. l will di reel my mind lo the 1994 repealed Companies Act as it was the applicable law at the Lime of Lhe occurrences of the issues raised by the panics 8vc11 though Lhc clauses relevant. Lo Lhis mallcr, read Lhe same. 4.6. Section 74(a) of the repealed Companies Act provides as follows; "A company may, unless its articles provide otherwise, by special resolution alter its share capital as stated in the certificate of share capital by doing any of the following: increasing its share capital by new shares of such an amount as it thinks expedient". 4. 7. Section 74(a) of the repealed Companies Act mirrors Section 140(1) of the Companies Act, 2017 cit.eel in 3.4 above ancl I am of lhe consicJcrccJ opi11ion Lhal the provision means LhJL a company u,rn alter ils share capital by making a special resoluLion unless the articles provide otherwise. L8. I a1n guided b_y the decision 1n Lhe case of ZAMBIAN HIGH LIGHT INVESTMENTS LTD V REGISTRAR AND CHIEF EXECUTIVE OFFICER PATENTS AND COMPANIES REGISTRATION AGENCY (2021) ZMHC 501 in which Lhe Cou1·L slated as follO\,vs: "It is manifestly clear that the intention / objective of the legislature was for the threshold of a special resolution under section 140(1) of the Companies Act to simply be the default position which can however be relaxed (by the articles) to the lower threshold of an ordinary resolution as per example given in the Standard Artie les". JlS 4.9. Vrorn Lhe evidence before me, Lhc Ct)mpany's articles 111 rclaLion lo creation of ncvv shares mirror I he standard articles. Regulation 9 paragraph 37 as shown on Pc1gc 51 of lhc Defendants bundle of docurnen ls provides as follows; "The company may by resolution: {a)increase its authorised share capital by the creation of new shares of such amount as is specified in the resolution" .... l<'l.1rlher, regulation 1 paragraph I defines a resolution as "an ordinary resolution". 4. 10. IL Lhercfore follows Lhal, in order for Lhe Company's share slruclure Lo be altered, Lhcrc was need for an ordinary rcsoluLion lo be passed. The Defendants have filed inlo evidence and referred Lhis Court lo t.hc copies of resolutions which cffcclcd of gave rise Lhe increase in share capital or ,11HI ailot111v11l shares. The issue this raises c1nd Lo be determined by tl11s Cuun is'" itli rcg,1:·cls :.lie , alic.liL, ~rnd lcgct!iL)' or the :mid rcsoluLicrns. 4.11. have drmvn my at.Len Lion Lo Lhe special ,-esoluLion d,1lccl !J:li August,2000 on pc1gc 89 of the l)cfcndanLs buncllcs of documcnLs. F'rom l he evidence prcsc11tcd h:,' l.hc p,1rtics to I.his CourL, il appears Lo be Lhc rirsl resolution pusl incorpormion or City or Lusaka Football Club 2000 Pie. The said resolution is reproduced below as follows; "The Shareholders of the City of Lusaka Football Club 2000 Plc HEREBY RESOLVED at a meeting held on the 4th ofA ugust 2000 that the Directors of the Company are generally and unconditionally authorised pursuant to Section 216 of the Companies Act, Chapter 388 of the Laws of Zambia to exercise all powers of the company to allot Two Thousand (2000) redeemable preference shares of Kwacha One million {Kl,000,000=00) each at par and Three Million (3,000,000) Ordinary Shares of Kwacha One Hundred (Kl 00=00) each at par in accordance with the terms of an agreement dated 31st J16 July 2000 entered into between the company (1) certain individuals (2) and the certain investor ("The Subscription Agreement"). This authority shall expire on the 31st August 2000 but shall extend to allotment of shares pursuant to the Subscription Agreement made after that date. And it was FURTHER RESOLVED that the Articles of Association shall be amended accordingly. " 4. l 2. Section 216 of the repealed Companies Act provides as follows; "The directors of a company shall not, without the approval in accordance with this section of an ordinary resolution of the company- (a) sell, lease or otherwise dispose of the whole, or substantially the whole, of the undertaking or of the assets of the company; (b) issue any new or unissued shares in the company; or (<::J cr~at£! or:_gr.ant any_r_ights or options entitling the holder§ t_hereqf to af_qul!"e ~_har:,~s gf any 2lass in the company". 4. 13. The Court or /\ppcal in Lhc cusc of MARSHLANDS CONSORTIUM LIMITED AND OTHERS V FELICITUS KABWE CHIBAMBA APPEAL NO .. The Directors of a company cannot issue shares in a company without the approval of an ordinary resolution of the company. Therefore, in the present case, we are of the view that the Directors of Ultimate Insurance lacked the authority to issue shares ... as no prior resolution of the members authorising such an allotment had been 111ade in accordance with Section 216(1) of the repealed Companies Act". J17 4. 14. In casu, lhe rcsolulion stales lhat a meeting was held on lhe 4Lh of Augusl 2000 nl which the Shareholders gave powers LO lhc Dircclors in ;wcord,rncc with Section 216 of the repealed Companies Act_. OW 1 ,t!S<l kst1fwc! tlllclcr cross t'X~1rni11,1tion th,1t the Shareholders of City of Lusaka F'ooLball Club (2000) PLC convened to pass lhc special resolution in 4.8 above but has not shown anything in evidence lo show that there 1.,·c1s :1 duly co11vc11cd mc<·ting at ,,vhich the resolution was passed. 4.15. l! is a trite pri11eiplc that. t.hc partv vvllo alleges a fact rnusL prove. The Supreme Courl guided on who bears t.hc burden of rroof in a civil mallcr in lhe case of KUNDA V. KONKOLA COPPER MINES PLC APPEAL NO. 48 OF 20055, \\'lh·n it s;1id: "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. 16. The gc11cral ,·ulc relating Lo t.hc burden of proof in civil cases is slated as follO\-\'S by Lhc learned authors of Phipson on Evidence, seventeenth edition (Thomson Reuters (Legal) Limited 2010) "So far as the persuasive burden is concerned, the burden of proof lies upon the party who substantially asserts the affirmative of the issues. If, when all the evidence is adduced by all parties, the party who has this burden has not discharged it, the decision must be against him. It is an ancient rule founded on considerations of good sense and should not be departed from without strong reasons." 4. 17. The learned authors or Phipson on Evidence, (supra) continue in paragraph 6-06 at page 151 as follows: "This rule is adopted principally because it is just that he who invokes the aid of the law should be first to prove his case; and J 18 partly because, in the nature of things, a negative is more difficult to establish than an affirmative. The burden of p roof is ftxed at the beginning of the trial by the state of the pleadings, and it is settled as a question of law, remaining unchanged throughout the trial exactly where the pleading place it., and never shifting in deciding which party asserts the affirmative, regard must be had to the substance of the issue and not merely to its grammatical form; the latter the p leader can frequently vary at will." 4. 18. I:unhn, Lill' lu1rncd auL11or I>elc1· Murphy in his book "Murphy on Evidence' i,1 n·spcct of Lill' burden or proor sLmcs al i,agcs 89 and 90 Lhal: "The legal burden of proof as to any fact in issue in a civil case lies upon the party who affirmatively asserts that fact in issue and to whose claim or defence proof of the fact in issue is essential. .. if the p laintiff fails to prove any essential element of his claim, the defendant will be entitled to judgment. The position of the defendant is somewhat different. Since the plaintiff affirmatively asserts his claim, the plaintiff bears the burden of proving the claim and the defendant assumes no legal burden of p roof by merely denying the claim. However, if the defendant asserts a defence which goes beyond a mere denial (sometimes) referred to as an affirmative defence) the defendant must assume the legal burden of proving such defence. An affirmative defence is most easily recognised by the fact that it raises facts in issue which do not form part of the plaintiffs claim" 4.19 111 lliis pIT~cn1 c,1sc, t.hL' l')lainlilT has L11c burden ot' pruving its case on a balance of probabililics in order LO cslablish ils claims before Lhis Courl crnd saLisfy lhat. Lhc Plain Liff is cnlilkd lo lhc relief's soughl in Lhis action. J19 tJ .20. The l)cfcnclrnns rnT u11c!cr 1w ol)lirw ion 10 prove Lhc falsity of Lhc of lhc l)l.11nltffs' claim. I lowcvcr I fi11cl 1h,1t, Lhe l)efcnclclnLs have gone hcyond mere denial and have made an c:11Tirmmivc defence and have assumed 1.he le~!al burden of proving IIs defence. ~ .21 . In the absc11cc- of cviclcncc-, I find l)W l's Lcslimony that cl duly convened rnccling was held on Lhc 4th of /\ugusl, 2000 ralhcr unconvincing. The Defendants have not produced anything in evidence Lo show thal the mcc1 ing was rropcrly called in accorrlancc vvit h the provisions of Lhc law, let alone to sho\\' tlrnt the n1ccting notice was sent oul Lo Lhc members \\'HS called \\'ho attcnclccl a11d anwlll_v LOok place. ti .22. Whal I have before for me is only a rcsolutio11 and in order the Court t.o <lc-t1T1ni1H· \\'hvthcr or 1101 the resolution is valid, the Defendant oughl lo have shown !hat the rcsolut.ion wc1s passed in accordance v,,ilh lhc provIsIons of the /\cl c.111d Lhc c.1rticlcs. They ought lo have shown thHL a meeting was properly called and thc.11 indeed 1hc Shareholders convened Lo pass Lhc resolution dalcd 4i1i /\ugusl, 2000. The members/ :-;hc-1rcholdcrs of the Comp~rny were IO in number as indicated in p,1r:1grnph -~- 1 l cine! 2.21 above. 4 .23. in ~he cibscncc of proof, I rind the l<csolution dated 4i:, Augusl,2000 i11valid and LainLcd \\'ith illegality. It Lhcrdorc, follows that any .:-;ul1sc·quc111 c!c-t i~iu11 :111cl cl1c111gcs 111c1dc on the s!r,:ngth of 1.his special rcsolutio11 is illcg~.1I 4 .24. The finding on Lhc illegality or Lhc rcsolulion LhaL Lhc I st Defendant presented to Lhc Court means Lhal all subsequent acLions and resolutions by the I sL Dcl'c11dclnl. ,ire: fruiL of an illcguliLy and Lhus void abinitio. J20 4.25. IL follows from Lhc discussion above Lhal the purported Lrnnsf"cr/sell of Lhe shares c1nd dcbl is void at. law. The 1st DdcndanL did nol possess !cg,il right/rnancbtc to lrnnsfc-r anything Lo the 2nci l)cfendanl. 1J .26. 13) rc.ison ol Lhc finding 8l)(>Vc: iL l>cc1>111t·s oLiCJse 10 consider the olhcr of the Pi.l!n{iffs cl,1ims, and counLcT claims on record. IJ.27. In light of Lhc c1bovc. I am alive lo Lhe subslanlivc dcvclopmcnls that Lhc 1nd Defendant has made on the land Lhat was illegally Lransfcrred Lo or them. I Lc.1kc judicial 110Licc ll1c c.kvclopmcnt s to include but nol limited Lo Lhc conslruclion of Lhc mall knovm as Lcwanika Mall and Lhc improvements lo the club house/offices and the fields/pitch. Surely the Plrnnuff or a party cannot be unjuslly enriched. •1.28. IL I!-. a scLLkcl principle or la\\· that la\\' and cc.iuiLy srwll be administered co:1cu1Tc11tl_v. Section 13 of the Hight Court Act pr~)vicicc; ,rnd follows: "In every civil cause or matter which shall come irt dependence in the Court, law and equity shall be administered concurrently, and the Court, in the exercise of the jurisdiction vested in it, shall have the power to grant, and shall grant, either absolutely or on such reasonable terms and conditions as shall seem just, all such remedies or reliefs whatsoever, interlocutory or final, to which any of the parties thereto may appear to be entitled in respect of any and every legal or equitable claim or defence properly b1·ought forward by them respectively or which shall appear in such cause or matter, so that, as far as possible, all matters in controversy between the said parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of such matters avoided; and in all matters in which there is any conflict or variance between the rules of equity and the rules J21 of the common law with reference to the same matter, the rules of equity shall prevail". 4.29. The Zambian Supreme Courl in lhc case of GEMISTAR ENTERPRISES LIMITED V AFGRI CORPORATION LIMITED (2017) ZMSC 1597 upheld lhe principle staled by Lord Wrighl in lhe case of FIBROSA SPOLKA AKCYJNA V PAIRBAIRN LAWSON COMBE BARBOUR LTD (1943) AC 328 as follows: "It is clear that any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep .... " :). CONCLUSION -·-- --- 5.1. The Plaintiff's case succeeds based on Lhe grounds advance above. l Order Lhat the status of ownership of Stand No. 2757 and Stand No. 3034 and shareholding and governance structures revert Lo the position al incorporalion of City of Lusaka F'ootball Club (2000) PLC. I.e. lhe representatives of Cavmonl Securities Ltd and currenl truslces of City of Lusaka roolball Club 1970. 5.2. I Order Lhal Lhe Plaintiff should nol be unjustly enriched and il is in lhe int.crests of justice that the 2nd Defendant be reslituled/eompensated for the developments on the PlainLiff's land/ properly. The PlainlifT shall bear I oc¼i of the eslimc.1Lec..l value of the dcvl·loprnc11ts by the 2nd Dcfcndanl. The 90% shall be borne by the I st Defendant. who in my opinion orchestraLect the events leading Lo this acLion and lhe 211c1 dcfendanl's loss/ damage. 5.3. I also Order t.hat the I st Defendant adequately compensates the 2nd Dcfendanl for all losses and damages, suffered by reason of Lhe l st J22 DclcnclanL's illcg":I and irregular aclions surrounding Lhc rcsoluLions and purported s<'ll or shc11 L's .rnd ;1ssc1s of Cit_v or Lusc1kc1 Football Club 2000. S.'-1. I lurthcr Order that Lhe l)arlics arc given 4 months wiLhin which Lo sc!tlt-/;__1grn· Llit· d:1111ngcs, luss ,111cl 1c·sLiluLio11 amounts c.1mong t hcnisclvcs. Failure to which any party be al liberLy lo apply before the l<cgislrar or Lhc I ligh Court siLLing at Lusaka for assessment. 5.5. Costs for Lhc Plain Liff Lo be borne bv Lhc 1 sL Ddcndanl ancl taxed in rldault of agrccmcnl. S.6. Leave Lo c.1ppcal is gramcd. Delivered at Lusaka on 9th December, 2024. REPUBLIC OF ZAMBIAHIGH COURT OF ZAMBIA . r-- -·-, ~ o;:c ,J. t1 u ~ ···,2· '/r't." S. CHOCHO ,( • L , l•J 'f ~\ '---- -- __J HIGH COURT JUDGE S. CHOCf 10 .,J P. O. BOX ;:,Qu6 7, LUSAKA