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

Key Facts

Issues

• Whether the Plaintiff was properly removed as Shareholder following the forfeiture of shares, including compliance with the Companies Act Section 148 and the 1st Defendant's Articles of Association.
• Whether the Defendants have an obligation to provide a comprehensive account of the 1st Defendant Company's transactions and financial records to the Plaintiff.
• Whether the Plaintiff was properly removed as Director in accordance with the Companies Act, specifically Section 98, which mandates notice and a general meeting resolution.
• Whether the Plaintiff is entitled to payment under the loan agreement, considering unpleaded evidence of partial settlement and the reserved plot, and the legal principle that parties are bound by their pleadings.
• Whether the actions of the 2nd and 3rd Defendants in removing the Plaintiff as Director and Shareholder, and engaging in unauthorized contracts, constitute fraud under legal standards requiring distinct proof.
• Whether the Plaintiff is entitled to a share of Dividends despite alleged removal as Shareholder, referencing Section 159 of the Companies Act and Article 72 of the 1st Defendant's Articles of Association.

Holdings

• The court declared that the removal of the Plaintiff as Director and Shareholder of the 1st Defendant Company was illegal, null, and void ab initio, as it did not comply with the procedural requirements under Section 98 of the Companies Act and the company's Articles of Association. The court emphasized that the notice of intention to remove the Director was not issued, and the Plaintiff was not given the opportunity to be heard or submit a statement.
• The court mandated that the Plaintiff be allocated a plot of land (1000 square meters) as part of the loan agreement settlement. The Defendants acknowledged the plot's availability and willingness to provide it.
• The court ordered the Registrar of PACRA to reverse all entries that removed the Plaintiff as Director and Shareholder, reinstating his registration. This was based on the finding that the removal process was void as it failed to adhere to the mandatory legal framework for such actions.
• The court determined the Plaintiff is entitled to a comprehensive account of the 1st Defendant Company and payment of any Dividends due, referencing Section 159 of the Companies Act and Article 70 of the company's Articles of Association. The Defendants were ordered to provide these records.

Remedies

• The Registrar of PATENTS AND COMPANIES REGISTRATION AGENCY is ordered to reverse all entries that removed the Plaintiff as Director and Shareholder and re-register him accordingly.
• Declaration that the Defendants' actions to remove the Plaintiff as Director and Shareholder of the 1st Defendant Company are illegal, null and void ab initio.
• The Defendants are ordered to render the Plaintiff a comprehensive account of the 1st Defendant Company and pay all Dividends due and owing to him.
• The Plaintiff is ordered to be allocated a plot measuring 1000 square meters, with the Defendants confirming it remains available.
• Costs of the proceedings are awarded to the Plaintiff, to be taxed if not agreed.
• Interest will be paid on the sums found due at the short-term deposit rate from the Writ date to Judgment and at the lending rate thereafter.

Legal Principles

• The court applied strict adherence to procedural requirements under the Companies Act (Section 98 for director removal and Section 148 for share forfeiture). Non-compliance with these procedures rendered the defendants' actions void.
• The court emphasized that the plaintiff must prove their claims on a balance of probabilities, as established in civil matters. The plaintiff's failure to meet this burden in certain allegations (e.g., fraud) led to dismissals of those claims.
• Allegations of fraud require a higher standard of proof than balance of probabilities, as noted in the case of Leymond Mwale v Mable Lungu. The plaintiff failed to meet this elevated standard for fraud claims.

Precedent Name

• Kunda v Konkola Copper Mines
• Pouwels Construction Zambia Limited and Another v Inyatsi Construction Limited
• Christopher James Throme v Christopher Mulenga and 2 others
• Macaura v Northern Assurance Company Limited
• Wilson Masauso Zulu v Avondale Housing Project
• Leymond Mwale v Mable Lungu
• Attorney General v Clarke

Cited Statute

Judge Name

Passage Text

• The Courts have on many occasions guided that allegations of fraud must be proved on a higher standard of proof, than on a mere balance of probabilities because they are criminal in nature...
• i) That a declaration that the actions of the Defendants as sought to remove the Plaintiff as a Director and Shareholder are illegal, null and void ab initio;
• 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.