Chanda Lupunga- Philips and 2 Ors v SGC Investments Limited (Appeal No. 187 of 2024) [2025] ZMCA 88 (26 June 2025)

IN THE COURT OF APPEAL OF ZAMBIA Appeal No. 187 of 2024 HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: 2 6 JUN 2025 CHANDA LUPUNGA-PHILLIPS 1 sr APPELLANT HACHU NKONJERA BROWN LUKWESA 2ND APPELLANT LUBUNGA ENTERPRISES LIMITED 3RD APPELLANT AND SGC INVESTMENTS LIMITED RESPONDENT CORAM: SIAVWAPA JP, CHISHIMBA & PATEL, JJA On 17th June & 26th June 2025 For the Appellants: Mr. P. Chulu Messrs. Patrick Chulu Lega l Practitioners For the Respondent: Mr. M. A. Mukupa Messrs. Isaac and Partners JUDGMENT Patel, JA, delivered the Judgment of the Court. Cases Referred To: 1. Re: Avondale Housing Project Limited -SCZ Judgment No. 31 of 1982 2. Nkhata & Four Others v The Attorney General [1966) ZR 124 3. Chuba v The People (1976} ZR 272 4. Sithole v The State Lotteries Board (1975} Z. R. 106 5. Zambia Railways Limited v Paul ine S Mundia and others (2008} Z. R. vol 1287 6. Khalid Mohamed v The Attorney General (1982} Z. R. 49 and 7. Galaunia Farms Limited v National Milling Company li mited and Anr (2004} Z. R. 1. 8 . John Paul Kasengele and others v Zambia National Commercial Bank Limited SCZ Judgment No 11 of 2000 Legislation Referred To: 1. 2. The Companies Act No. 10 of 2017 The Arbitration Act No . 19 of 2000 J2 1.0 INTRODUCTION 1.1 This is an Appeal assailing the Judgment of Hon Lady Justice I. Z. Mbewe delivered under Cause No. 2020/HPC/0260 dated 22nd January 2024. 1.2 This Appeal interrogates issues in Company Law and procedure, more specifically meetings of t he Board of Directors, who is ent itled to be present at the said meetings, the Resolutions passed at the meetings and when the Registrar of t he Patents and Companies Registration Agency (PACRA), (which was a Party in t he lower Court ), ca n act upon Resolu ti ons and Annua l Returns, duly received by it, in the course of its duties. 1.3 Further the Appeal interrogates the actions taken by a disgruntled shareholder and the role of PACRA and the Courts in an action for what can be termed as rectification of the Register. 1.4 The Appea l also looks at the circumstances of grounds which primarily assail findings of fact of the lower Court and the limited circumstances in which those may be reve rsed and set aside. 1.5 The Record of Appeal is presented in th ree vo lumes, two of which were filed on 17tn July 2024 and a Supplementary Record of Appeal filed on 7th March 2025. Reference to page numbers sha ll refer to the Record of Appeal unless otherwise noted. J3 2.0 BACKGROUND 2.1 For the purposes of this section, the Parties sha ll be referred to as they are in this Court. 2.2 It is noted that on 2nd April 2020, (the now Respondent) as Plaintiff in the lower Court, commenced proceedings in the Commercial Division of t he High Court under Cause No . 2020/HPC/0260 seeking reliefs aga inst th e l5t, 2nd and 3rd Respondents (l5t, 2nd and 3rd Defendants in the lower Court) and PACRA as t he 4th Defendant, who is not a party in the appeal before us, which are clearly endorsed on the Writ of Summons and Statement of Claim as can be seen from pages 66 to 71. 2.3 The appearance, defence and counte r claim filed by the p t to 3rd Respondents are noted from pages 142 to 148 respective ly. 2.4 The 4th Respondent' s appearance and defence are noted from pages 151 to 155. 2.5 By a Consent Ord er dated 13th October 2020, th e lowe r Court allowed two f u rther corporate entities to be joined as 5th an d 6th Defendants and also allowed for the originating process to be amend ed. This Order is seen on page 172. 2.6 Subsequent to th e Consent Order referred to above, the Respondent du ly filed it s amended Writ of Summo ns and Statement of Claim which are seen on pages 174 to 180. 2.7 The now added 5th and 6th Defendants' appearance and defence are noted from pages 258 to 261. J4 2.8 The cause of the dispute centers around the passing of a Special Resolution dated 15th January 2018 by the 1st and 2nd Appellant effecting changes in the 3rd Appellant, which changes were objected to by the Respondent. 2.9 From the facts before us, the dispute relates to shareholder disputes in the 3rd Appellant Company (the 3rd Defendant), known as Lubunga Enterprises Limited and in particular the disquiet arising out of a special resolution dated 15t h January 2018, which Resolution was used to effect changes at PACRA. 2.10 Following on from an exchange between PACRA and the Respondent, which did not yield results, the Respondent (Plaintiff in the lower Court), issued process (as amended), against the six (6) Defendants (in the lower Court) seeking the following reliefs: 1. A declaration that the Special resolution dated 15th January 2018 was void ab-initio; ii. iii. An Order that the Resolution dated 23 rd January 2018 was void ab-initio; An Order that the 4th Defendant reverse the changes made in the 3rd Defendant Company; iv. An injunction restraining the Defendant whether its Directors, Officers, Servants or Agents or by any of them or otherwise, howsoever from disposing of Lubunga Emarald mine and/or making any changes in the Company register of the 3rd Defendant pending determination of this matter; v. An Order reversing the transfer of the mining rights relating to Lubunga Emerald mine from the 6th Defendant to the 3rd Defendant; v1. Damages to be assessed; JS vii. Any further or other relief which may seem just and equitable to the Honourable Court; and viii. Costs of and incidental to this application . 3.0 DECISION OF THE LOWER COURT 3.1 After hearing the case, the lower Court, upon considering the documents and evidence before her, arrived at findings of fact, based on which she delivered her now assailed Judgment dated 22 nd January 2024. 3.2 The Judgment of the lower Court is seen from pages 9 to 65. In summary, the lower Court, after reasoning the issue, granted the Oreder that the special resolution dated 15th January 2018, was void ab initio. Upon further reasoning and based on the evidence before her, the learned Judge made a finding that the Resolution dated 23 rd January 2018, was void ab initio. She further granted an Order for the 4th Defendant (PACRA) to reverse the changes made in the company Register of Lubunga Enterprises Limited (the 3rd Appellant). 3.3 The lower Court also considered the counter claims of the 1st to 3rd Appellants and did not find those to be proved to the standard required and dismissed them accordingly. 4.0 THE APPEAL Dissatisfied with the said Judgment in the Court below, the Appellants filed their Notice and Memorandum of Appeal, on 26t h March 2024, advancing seven (7) grounds of appeal, as follows; J6 1. The Lower Court misdirected itself in law and fact when it held that I am of the considered view that the l5t, 2nd and 3rd Defendants have not proved on a higher standard of proof that the extract of minutes of the extra ordinary meeting held on 26th May, 2006 is null and void for fraud. 2. The Lower Court misdirected itself in law and fact when it held that I therefore find the 1st, 2nd and 3rd Defendants have not proved on a higher standard of proof, than mere probabilities, that the forms of transfer of fully paid shares dated 26th May, 2006 is null and void for fraud as alleged. 3. The Lower Court misdirected itself in law and fact when it held that stemming from the foregoing, I am of the firm view that the 2nd Defendant was not a shareholder nor director of the 3rd Defendant as at 15th January 2018. 4. The Lower Court misdirected itself in law and fact when it held that in the circumstances, I agree with the Plaintiff that the special resolution dated 15th January 2018 was void ab-initio. 5. The Lower Court misdirected itself in law and fact when it held that it therefore follows that as at 23 rd January 2018, being the date when the resolution to enter into a joint venture agreement with the 5th Defendant, the 2nd Defendant had no authority to represent the 3rd Defendant. 6. The Lower Court misdirected itself in law and fact when it held that I find that the resolution dated 23 rd January 2018 was void ab-initio. 7. The Lower Court misdirected itself in law and fact when it held that thus, I am of the firm view that the decision was erroneously made and the p t J7 Defendant failed to show any authorization of the execution of th e consent to assign mining rights to t he 6th Defendant. 5.0 APPELLANTS' HEADS OF ARGUMENT IN SUPPORT OF THE APPEAL 5.1 We have duly considered and appreciated the Heads of Argument filed on 17th Ju ly 2024 . 5.2 Not wanting to repeat the arguments here, we have duly stated them and fully considered them under the ana lysis and reasoned part of our Judgment. 6.0 RESPONDENT'S HEADS OF ARGUMENTS 6.1 The Respondent did not file heads of argument. 7.0 THE HEARING 7.1 At the hearing, Counsel Chulu placed entire reliance on the record of appeal and its heads of arguments before the Court. Counsel Mukupa informed the Court that the Respondent had made an application, on 6th June 2025, to file its heads of argument in opposition, which application had been declined by an Order of a single Judge of the Court. That being the case, and there being no opposition, Counsel was not allowed to participate in th e appeal. 8.0 ANALYSIS AND DECSION OF THE COURT 8.1 We have taken on board the arguments and submissions of the Appellants' pertaining to the seven grounds of appeal. We note also that the grounds of J8 appeal, which have been clustered and argued together, all, challenge findings of fact made by the lower Court. This can be clearly seen from the grounds of appeal in paragraph 4 above and from the Appellants' heads of argument. 8.2 At the onset, having already noted that the Appellants' grievance lies with findings of fact made by the lower Court, we remain alive to the holding of the Supreme Court in the case of Re: Avondale Housing Project Limited 1 wherein the Court held: "Before this court can reverse findings of fact made by a trial judge, we would have to be satisfied that the findings in question were either perverse or made in the absence of any relevant evidence or upon a misapprehension of the facts or that they were findings which on a proper new of the evidence, no trial court acting correctly could reasonably make. 11 (emphasis added). 8.3 In the case of Nkhata & Four Others v The Attorney General 2 , the Supreme Court, with respect to findings of fact made by the trial Court, expressed itself as follows: "By his grounds of appeal the appellant, in substance attacks certain of the learned trial judge's findings of fact. A trial judge sitting alone without a jury can only be reversed on fact when it is positively demonstrated to the appellant court that: (a) By reason of some non-direction or mix-direction or otherwise the Judge erred in accepting the evidence which he did accept; or J9 (b) In assessing and evaluating the evidence the judge has taken into account some matter which he ought not to have taken into account, or failed to take account some matter which he ought to have taken into account; or (c) It unmistakably appears from the evidence itself, or from the unsatisfactory reasons given by the judge for accepting it, that he cannot have taken proper advantage of his having seen and heard the witnesses; or (d) In so far as the judge has relied on manner and demeanor, there are other circumstances which indicate that the evidence of the witnesses which he accepted is not credible, as for instance, where those witnesses have on some collateral matter deliberately given an untrue answer. " 8.4 From the foregoing, albeit old decisions of the Apex Court, the principles espoused are as applicable today, as they were then. Consequently, the Appellants must show how the lower Court misapplied the evidence or made perverse findings . With respect to grounds 1 & 2, which are clustered together, it is the Appellant's argument that both grounds assail the finding of fact of the lower Court with respect to the extra ordinary meeting of 26th May 2006 and the forms of transfer of shares. The documents are seen from pages 341 to 343 of volume 2. It is the Appellants' argument that the documents referred to above being forgeries, the lower Court erred in not finding that the same were forged. J10 8.5 We have anxiously considered the assailed Judgment of the lower Court and note at (J32), Page 40, that the lower Court made findings of fact as to the shareholding structure in the 3rd Appellant. Whether the Respondent acquired it s shares in the 3rd Appellant through the initial shareholder, Mr. Lupunga Jasmon Samson or through his Attorney vide a power of attorney, does not change the fact that the Respondent acquired the shares. 8.6 The Appellants further seek to assail this finding on the basis that there was no obligation incumbent upon them to call a handwriting expert to prove the fact of fraud on account of the alleged discrepancy in the signatures. The Appellants placed reliance on a decision of the Supreme Court in the case of Chuba v The People3 to argue the point that the evidence of a handwriting expert is an opinion only and the matter is one on which the Court has to make a finding. While we have no cause to disagree with the authority relied on, the lower Court was not satisfied with the allegations of the signatures on page 302 and 303 being forgeries to those appearing on page 299 and 301 by ocular observation alone. The Supreme Court in the case of Sithole v The State Lotteries Board 4 has guided that even where a handwriting expert is called, it remains in the discretion of the trial Court to accept or reject that opinion . In casu, where nothing more than mere aspersions are cast as to the possible difference in signatures, we remain of the considered view that the findings assailed are neither perverse nor arrived at on a misapprehension of the evidence before the lower Court. We will not set aside this finding. Grounds 1 & 2 are dismissed for being without merit. 8.7 With respect to Grounds 3 & 4, the Appellants' have assailed the finding of the lower Court for holding that the special Resolution of 15th January 2018 was void Jll ab-initio, as a consequence of which, the lower Court made a finding that that nd Appellant was neither a director nor shareholder in Lubunga Enterprises Limited . 8.8 In support of these two grounds of appeal argued together, the Appellants appear to canvass the argument that the Respondent failed to prove this claim in the lower Court. They have relied on the settled decisions in the cases of Zambia Railways Limited v Pauline S Mundia and others5, Khalid Mohamed v The Attorney General 6 and Galaunia Farms Limited v National Milling Company limited and Anr7 . 8.9 It is not in dispute that the 2nd Appellant is the son of the late Hachu Brown Lukwesa Nkonjera whose National registration Card Number was cited. The learned Judge made a finding based on the unchanged details at PACRA, that the 2nd Appellant not having filed his late father's Will appointing him as director and transferring his shares to him. This is noted in paragraphs 9.3 and 9.4 on page 49/50. Section 197 (1) of the Companies Act 1 clearly provides that the legal title to shares in the Company's share register shall be primafacie evidence that legal title to the shares vests in that person. 8.10 In closely scrutinizing the transcript of proceedings of the lower Court, as well as paragraphs 7.8 to 7.10 of the now assailed Judgment at page 43/44, the Court noted that DW2 (the 2nd Appellant) confirmed that there was no proof from t he Records at PACRA reflecting his appointment nor any proof that he registered his late father's Will with PACRA, the 4th Defendant. We are at a loss to understand how this finding can possibly be classified as perverse or a misapprehension of the evidence. We will not interfere with this. J12 8.11 Moving now to interrogate the meeting held and special resolution passed on th January 2018, the learned Judge in the lower Court, relied on the provisions of clause 43 (c) of the Articles of Association of the 3rd Appellant which defined the number of members that would constitute a quorum and proceeded to consider the provisions of section 3 of the Companies Act 1 to arrive at the finding that the meeting attended by the 2nd defendant was a nul lity on account of him being neither a shareholder nor director based on her reasoning above. 8.12 She further reasoned based on the decision in the case of John Paul Kasengele and others v Zambia National Commercial Bank Limited 8 that shareholders as beneficial owners of the company have overriding authority over the affairs of the company and its board of directors. The decision of the lower Court based on who is a member, and who needed to be present at a meeting for the passing of a special resolution, as seen on pages 45/46 cannot be faulted . The learned Judge placed correct reliance on the governing Articles of Association of the Company and the provisions of statute to arrive at this finding. Grounds 3 & 4 have no merit, and we dismiss them. 8.13 Grounds 5, 6 & 7 have been combined by the Appellants, who maintain that these emanated from the same legal issue. We shall accordingly consider them together. Under these grounds of appeal, the Appellants' challenge the finding that the resolution of 23 rd January 2018, is null and void and the correspond ing actions also being found null and void. These grounds collectively assail the Judgment of the lower Court on its earlier finding that the 2nd Appellant was neither a director nor shareholder in the 3rd Appellant Company. Having upheld the finding of the lower Court on the issue of the 2nd Appellant, it will be otiose J13 for us to consider these grounds which are hinged on ground 3 above. Needless to say, grounds 5, 6 & 7 are dismissed as they lack merit. 8.14 Rhetorically, we ask ourselves the question if the procedure invoked in the lower Court was appropriate in view of the reliefs claimed. Section 16 of the Companies Act1, provides as follows: 11A company registered in accordance with this Act, acquires a separate legal status, with the name by which it is registered, and shall continue to exist as a corporate until it is removed from the Register of Companies. 11 8.15 It is elementary Company Law that the constitutional document that governs a Company, incorporated as above, is the Articles of Association of the Company. We have not had to look far to reflect on the Articles of Association of Lubunga Enterprises Limited . A copy of the same are seen on pages 312 to 325 of volume 2 as part of PACRA' s (the 4th Defendant's) Bundle of Documents. Clause 24 under the heading Arbitration is instructive. It provides as follows: 11Whenever any differences shall arise between the company and the Directors on the one hand, and any of the members or representatives on the other hand, or between any members or classes of members, or between the Directors with regards to anything done, executed, omitted or suffered in pursuance or the Act, or with regards to any breach or alleged breach to these presents or the Act, or with regard to any breach or alleged breach of these presents or any claim on account of any such breach or alleged breach, or otherwise relating to the premises or to these premises, or to any of the affairs of the Company then such difference shall be referred to the decision of an arbitrator, to the decision of two J14 arbitrators of whom one shall be appointed by each of the parties in difference, and any such reference shall be subject to all the provisions of the Arbitration Act and any statutory modification thereof for the time being in force. " 8.16 We hasten only to add that although clause 24 of the Articles of Association of the 3rd Appellant provides for reference to arbitration, the lower Court, not having been moved by a section 102 application, by either Party, proceeded to hear the dispute and deliver its Judgment. 9.0 CONCLUSION 9.1 The grounds of appeal, being founded almost entire ly on assa il ing findings of fact, was always going to be a difficult cross to bear. In thi s case, the effort has proved futile. The appeal is dismissed with no order of costs in this Court. M. J. SIAVWAPA JUDGE PRESIDENT F. M . CHISHIMBA COURT OF APPEAL JUDGE A. N. PATEL S. C. COURT OF APPEAL JUDGE JlS