Credit Insurance Zimbabwe Limited (Credsure) has failed to stop a US$1.25 million lawsuit arising from a failed medicinal cannabis export venture after the High Court ruled that there was sufficient evidence for the case to proceed to trial.
Justice Joseph Chilimbe on August 25 dismissed Credsure’s application for absolution from the instance with costs, finding that Harare Receivables Exchange had established a prima facie case of alleged misrepresentation.
The dispute stems from a financing arrangement involving Harare Receivables, Credsure and Nhimbe Fresh Exports, which was seeking to produce and sell medicinal cannabis biomass to an offshore buyer.
Harare Receivables advanced Nhimbe Fresh funding against expected proceeds from a cannabis supply deal worth millions of dollars, with the transaction backed by a credit insurance policy issued by Credsure.
Under the arrangement, Harare Receivables acquired receivables valued at US$1.875 million at a discount and was required to pay Nhimbe Fresh US$1.25 million upfront.
The financier alleges it released the money after receiving assurances from Credsure that there were no circumstances that could lead to rejection of an insurance claim.
But the cannabis buyer allegedly failed to pay, while Credsure later said the policy could not be honoured because Nhimbe Fresh had failed to fulfil certain conditions, including securing a cross-company guarantee.
Harare Receivables sued Credsure and Nhimbe Fresh, initially claiming US$1.875 million over alleged misrepresentations and breaches of undertakings.
Nhimbe Fresh failed to defend the case, resulting in a default judgment against it in August 2024 for US$1.875 million plus interest of 4% per month from August 2023.
The financier, however, continued pursuing Credsure, arguing that the insurer’s assurances had induced it to release US$1.25 million to and on behalf of Nhimbe Fresh.
Credsure sought absolution from the instance at the close of Harare Receivables’ case, arguing that the financier had failed to establish the essential elements of misrepresentation and had no basis for claiming restitution from an insurer with which it allegedly had no direct contractual relationship.
It also argued that Harare Receivables risked recovering more than its alleged loss by pursuing claims against both defendants.
But Justice Chilimbe said those procedural issues could not be resolved through an application for absolution.
The judge noted that Credsure had written to Nhimbe Fresh on November 4, 2022, raising concerns about non-compliance with policy conditions, but three days later gave Harare Receivables assurances that no adverse circumstances were known.
“Credsure drew Nhimbe Fresh’s attention to serious non-compliance with policy conditions on 4 November 2022. Three days later it issued the no-adverse circumstances assurances to Harare Receivables,” the judge said.
Justice Chilimbe said the apparent contradiction required Credsure to explain itself during the trial.
“Credsure has a duty to take the stand and explain, within the contractual relationships, the issuance of those assurances,” she said.
The court found that Harare Receivables’ former chief executive Tinashe Tamba had testified that the company would not have released the funds without Credsure’s assurances.
“It was not in dispute that the no-adverse circumstances assurances were issued by Credsure,” Chilimbe said.
“Prima facie evidence was laid before the court that the assurances were made, material, relied upon, induced a payment, and caused Harare Receivables loss whose restitution it now seeks.”
He said Credsure’s application had focused more on the challenges it could raise against the claim than on whether Harare Receivables’ evidence was intrinsically insufficient.
“The application for absolution from the instance cannot prevail,” the judge ruled.
The dismissal means the multimillion-dollar dispute will proceed, with Credsure now expected to present its defence to allegations that its assurances played a decisive role in the release of funds for the failed medicinal cannabis venture.
