Evans Mutale v Luxhome Properties Limited and Ors (2022/HP/0882) [2025] ZMHC 45 (19 June 2025)

IN THE HIGH COURT FOR ZAMBIA 2022/HP/0882 ... .. AT THE PRINCIPAL REGISTRY HOLDEN AT LUSAKA (Ciuil Jurisdiction) BETWEEN: EVANS MU1'ALE AND LUXHOME PROPERTIES LIMITED EUGENl!--; CHISENGA lGNGA KHONJE auc OF coURTOF PRINICIPAL 1 :, JUN 2025 PLAINTIFF 1 ST DEFENDANT 2ND DE:f4'ENDANT 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 Defend ants: Mr. MC. Hamachilla of Messers 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 Judgme nt 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 8 th , 2022 claimed the following: i) A d eclaration that the Defendants actions of removing the Plaintiff as Director and Sha reholder 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 De fendant's profile and have the Plaintiff re-register ed as Director a nd Shareholder; iii) An Orde r directing the Defendants to furnish the Plaintiff with the comprehensive s tatement ·of accounts of the 1st Defendant and thereby pay out all dues owing to the Plaintiff in dividends and any othe r profit r ealised; 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 31 st, 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 , 20 19 with the first Shareholders being the Plaintiff, one Brenda Nyirenda, the 2 nd Defendant and the 3 rd Defendant. 2.4. PW testified that sometime in April 2021, the 2n d and 3 rd Defendants fraudulently carried out activities which led to the removal of the Plaintiff as Director and Shareholder. 2.5. PW testified that the 2 nd and 3 rd 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 en gaging and entering into contractual obligations on behalf of the l M Defendant without the Plaintiffs consen t and participation. 2.7. PW testified that the 2 nd and 3 rd Defendant willfully neglected to comply with th e 1st Defendant's Articles of Association and the provisions of the Companies Act No. 10 of 2017 on removal of Director and forfeitu re of shares in a Limited company by only making a call on shares to the Pla intiff without doing the same to the 2 nd a nd 3 rd Defendants and the 2 nd and 3 rd Defendants proceeded to remove him as Director of the 1st Defend ant company. 2 .8. PW testified that th e 1st and 2 nd Defendant also resolved that th e Plaintiff be removed as signatory to the Compa n y Account held with Stanbic Bank and late r filed a Notice of Forfeiture of Shares for the Plaintiff to forfeit the shares held in the Company and notified th e Registrar of th e same. 2.9 . PW further testified that the Defendants have continued to withhold all dues owed to h im from the Divid ends from the time the 1st Defendant was incorpora ted. 2.10. PW testified that on several occasions, h e has written to the Defen dants demanding among other things; salary arrears and payment for the illegal actions carried out by the Defendants but the Defendants h ave failed and/ or n eglected to meet the demands contain ed 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 1s t 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 m ention of the K20 ,000.00 in 2. 13 a bove in his Statement of Cla im. 2.17. PW testified under cross examination that there is no mention of th e outstanding balance in respect of the loa n agreem ent in the Sta tem ent of Claim. 2. 18. PW testified under cross examina tion th at he did not agree with the Defendants pos ition that he was paid in full a nd n eeded 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 2 nd 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 2 nd 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 2 nd and 3 rd 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 22 nd , 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 31 st, 2021 and that DW 1 made payment on behalf of the of the Company to the Plaintiffs Advocates. 2.34. DWI testified that a fter the loan was settled, it was agreed by the other Shareholders that the Company needed to be re structured as the Shareholders no longer had a good working relationship. 2.35. DWI testified that on April 7 th , 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 n ot paid up on h is shares in the Company and efforts were made to bring it to the Plaintiffs attention so that he ensured that his shar es were paid up. 2.37. DWltestified th at 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 unpa id shares was K4500 .00 . 2 .38. DWI testified that on August 6 th , 2021, a m eeting was held by the Shareholders of the 1st Defendant Company and an ordinary resolution was passed where it was resolved that the Pla intiff had forfeited his shares to the Company as a result of his failure to make payment on the call on his s hares. J9 2.39. DWI testifi ed that the Plaintiff wa s properly removed a s Director and .. Shareholder of the 1st Defendant Compa ny as procedure was followed. 2.40. DWI testified under cross examination that h e h as a diploma in law and is currently pursuing a Bach elor of Laws Degree a nd performs secretarial duties for the 1st Defendant. 2.41. DWI testified under cross examination that h e was tasked to incorporate the 1st Defenda nt Company by the promoters of the Compa ny who are; on e Brenda Nyire nda , the Plaintiff, th e 2 nd Defendant a nd the 3 rd Defendant. 2.42. DWI testified under cross examination that h e holds the least shares. 2 .43. DW 1 further testified under cross examination that the promoters agreed to contribute incorporation fees but h e did not contribute a nything. 2.44. DWI testified under cross exa mination that th e Plaintiff paid a portion of the contribution towards incorporation fees. 2.45. DWI testified under cross examination that th e Plaintiff was a Shar eh older and a Director. 2.46. DWI testified under cross examination that in a special resolution passed on April 7 th , 202 1, the following decisions were passed; i) ii) Removal of the Plaintiff as Director ; and Removal of Brenda Nyirenda as Director. J l O 2.47. DWI testified under cross examination that Directors a re 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 th e Directors and that t h ere was no notice calling the meeting. 2.49. DWI testified under cross examination that h e was the author of the special re solution and th at h e did not get any legal a dvise from a competen t person . 2.50. DWI testified under cross examination that the Plaintiff did n ot forfeit his s h a res 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 3 rd Defendant did not receive calls to pay their shares. 2 .52. DWl testified under cross examination that h e has not forfeited his shares as there in n o call on his shares. 2.53. DWl testified under cross examin ation that the Shareholders did not authorize th e call on the Pla intiffs shares. 2.54. DWl testified unde r cross examination t h at only on e Director signed the call on the Plaintiffs s hares and the call was made by one Director. J 12 the Shareholders included one Brenda Nyirenda, the Plaintiff and the 2 nd and 3 rd Defe nda nt. 2.64. DW2 testified that the Articles of Associa tions were lodged at PACRA and indicate the Shareholders of the said Company. 2 .65. DW2 testified that the Pla intiff 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 a pproached in ord er to secure a loan from him. 2.67. DW2 testified that on March 11 th , 2020, the Plaintiff and the 1st Defend a n t 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 loa n before it was due and the pa rties called for a meeting to resolve the is sue. 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 Pla intiff in the Company in respect to the loan, an Alternate Director would be a ppointed 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 a mount the Pla intiff collected for his rentals. 2.72 . DW2 testified that DW2 testified that on September 18th , the Plaintiff responded indicating that only K3 000 .00 should be deducted. 2.73. DW2 testified that on September 21 st, 2020, the Plaintiff wrote to th e Defendants acknowledging receipt of the sum of K48 ,412.50. 2 .74 . DW2 testified that the Plaintiff was paid a furth er sum of K 400,000.00 on November 3rd, 2 020 . 2.75. DW2 testified that th e parties h a d a meeting a nd agreed that they would pay the Plaintiff the sum of K 90,000.00 and there wou ld be an outstanding sum of K36.547.50. 2 . 76. DW2 testified that on December 2 nd , 2 0 20 the Plaintiff was pa id the sum of K 103,038.02. 2.77. DW2 testified that the Plaintiff indicated that th e was a n 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, 202 1, 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 th e sum of K 108,888.89 as full and fina l payment, the sum which was p a id on Ma rch 23rd, 2021. 2.80. DW2 testified that on April 7 th , 2021 , a meeting was held as a Special Resolu tion 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 a nything as full and final payment h a d 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 s hares 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 m eeting was held by the Shareholders of the 1st Defenda nt Compa n y and a n ordinruy resolution was passed were it was resolved that the Plaintiff had forfeited his shares to th e Company as a result of his failure to m ake payment on the call on his shares. 2 .84. DW2 furth er testified that on April 1st, 2022, the Pla intiff wrote to the 1st Defenda n t d emanding 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 2 nd and 3 rd 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 1s t 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 1s t Defendant has 10 residential property for leasin g and if a ll were leased out th e 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 a ll the Shareholders to come together. 2.96. DW2 testified under cross examination th at no notice was issued to the Plaintiff to attend th e meeting at which the decision to remove th e Directors would be made. 2.97. DW2 testified under cross examination that as at August 6 th , 2021, the Shareholders listed at PACRA were the Plaintiff, the 2 nd Defen dant and the 3 rd Defendant. 2.98. DW2 testified under cross examination that there was a meeting held by the Shareholders on August 6 th , 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 th e plot to the Plaintiff. J17 3. LAW AND SUBMISSIONS. 3 . 1. All Parties filed their written submissions. The Plaintiff filed on November 29 th 2024, the 1st De fendant filed on December 30th , 2024. 3.2. Placing reliance on the case of Wilson Masauso Zulu v Avondale Housing Project (1982) ZR 172 1 , 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 proba bilities 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 t he 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 2 nd a nd 3 rd Defendants as they did not fo llow 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 accoun t on the books and/ or statemen ts of the l st Defend ant as the Plaintiff was frau dulently ~ 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 3 rd Defendants did not fo llow the laid down procedure for the removal of Directors. The Plaintiff places reliance on Section 98 of the Companies Act wh ich provides as fo llows: "98. (1) A company may remove a director from office by an ordinary resolution passed at a general meeting of the company. (2) A m ember 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 s t atement, made in accordance with paragraph (b), be read at the meeting" .... 3.5. The Plaintiff submits that the impor t of Section 98 of the Companies Act is that a member ought to give notice of intention to the Company J19 Secre tary to move a resolution to remove a Director 28 days before the m eeting. 3.6. The Plaintiff submits that the 2nd and 3 rd Defendants did not follow the procedure as the notice of intention was not issued by a ny member and the Company Secretary did not give such notice. Further, that the 2 nd and 3 rd Def end an ts proceeded to hold a meeting where they resolved that the Plaintiff be removed as Director. 3 .7. The Pla intiff submits that the actions of the 2 nd and 3 rd Defendants are totally null a nd 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 a re appoin ted 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 2 nd and 3rd Defendants in their capacities as Directors a nd not Shareholders and consequ ently 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 th e call issued by the 2 nd Defendant to the Plaintiff is null and void for failure to follow the law regardin g issuing a call for share and forfeiture of shares. 3 .11 . The Plain tiff submits that Part 3 of the 1 st Defendant's Articles of Association provides the manner in which a call on s h ares s hould be made but that the call was only m ade on th e Plaintiff's shares and not the rest of the Shareholders a nd no resolution was made to make such call on shares. In ligh t of th is, th e Plaintiff submits that th e fo rfeiture of shares was fraudulen t and th erefore null and void . 3 .12. The Plaintiff further submits that the Pla intiff's removal as Director was not in accordance with th e law and that the Plaintiff remains Director of the l5t Defendant Company entitled to the books and record s of the Company. 3 . 13. The Plaintiff further submits that if upon inspection of th e statements and books it is revealed that the Company has accu mulated profits subsequent to the removal of th e Plaintiff as Shareholder, the Defendant should be paid Divid ends. 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 Sha reholder is null and void and that th e Plaintiff is entitled to his rights as Director and Sha reholder and one of these rights include his J21 entitlement to a share in the profits made by th e Company as well as a n account of the 1st Defendants records or statem ents 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 Pla intiff submits that as the loan to the 1s t De fendant was not fully paid; th e 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 Compa ny as the meeting was properly convened by the 2 nd 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 s ubmits that the Plainff's shares were forfeited due to th e Plaintiff's failure to pay for h is shares after a call was m ade by the Company. Relia n ce was pla ced on Section 148 of the Companies Act wh ich provides as follows : "148. (1) A shareholder may forfeit or surrender shares t o 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 a nd 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 2 nd and 3 rd Defendants actions were fraudul ent; 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. Se ction 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 direct or 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 th e 1st Defendant company by special resolution dated April 7 th , 2 021 signed by the 2 nd and 3 rd 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) wa s sent to the Plaintiff informing him tha t he will be entitled to be h eard a l the m eeting or to submit a written s tateme nt. J24 4. 7. The 1st Defendant testified under cross examination that the Shareholders did not call for a m eeting 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 2 nd 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 m a de in contravention of the law cannot stand. 4.9. It was the testimony of the 1st Defe nda n t that the Plaintiff forfeited his shares because o f his failure to answer to the call on shares. 4. 10. Section 148 (2) of the Companies Act p rovides 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 re solution 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 Pla intiff 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 a llegation 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 a lso 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 a m 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 a nd Shareholder and those rights include his entitlement to a share in the profits made by the Company and an account of th e 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 1s t 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 s h are of profits if a ny 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 a nd 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 h as a lso made a n allegation of fraud on the part of the 2 nd a nd 3 rd Defend a nt. The Plaintiff a lleges that the 2nd a nd 3rd Defendant were fraudulent in the removal of the Plaintiff as Director and Shareholder of the Company. Further, that the 2 nd and 3 rd Defenda n ts have been entering into contractual obligations on behalf of the Compa ny th at the Plaintiff h as not been privy to. 4 .24 . The Courts h ave on many occasions guided tha t a llegations of fra ud must be proved on a h igh er standard of proof, than on a mere balance of probabilities because they a re criminal in n a ture. The Court of Appeal in the case of Leymond Mwale (As Administrator of the Estate of Augustine Nsangu Mwale) v Mable Lungu Appeal No. 86/2021 6 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 evid ence on record , I am of th e con s idered view th at the Plaintiff h as not proved the alleged fraud. I do not see any apparent fraud incasu but rathe r, what I see is failure to comply with th e laid down procedures and impropriety in th e change/removal of Directors a nd J28 Shareholders. The Plaintiff also has not proved its allegation that the 2 nd and 3 rd 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 Def end ant. 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 th e 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 th e issue of the unpaid loan a nd the Defendants· h ave 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 2 nd and 3 rd Defendants admitted in their testim ony 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 th at the Plaintiff succeeds, I Order as follows: i) That a declaration that the actions of t h e 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 a ll 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 Defenda n t Company and pay t he Plaintiff all Dividends due a nd 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 du e at the s h ort-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 ' ... I "A~- ~ I l L-~J ~l:l ;; JU.l'I 1 L) - ~ i i ' " - . ___ ....,,,...--....:;::....__::~-=-z4,' ~tf;:,1;--;, s. CHOCHO HIGH COURT JUD S. CHOCHO .,J P. 0 . BOX 50067, LUSAKA J