Tinashe Makichi
CFI Holdings has withdrawn a High Court application in which it was claiming $42,7 million from Corporate Excellence for failing to disclose its conflicted position in a transaction involving the disposal of 81 percent shareholding in Langford Estates by the listed
agro-processing company.
According to a notice filed by Nyawo Ruzive Legal Practice to the High Court under Case Number HC 4932, CFI notified its intention to withdraw. Nyawo Ruzive Legal Practice represents CFI Holdings.
“Be pleased to take note that the plaintiff in this matter hereby withdraws its appeal in the above matter. Further take notice that the wasted costs in this matter to be tendered on a party to party side,” read the notice.
Sometime in 2015 CFI Holdings consulted Corporate Excellence as financial advisors in a transaction which CFI sought to dispose of 81 percent in Langford Estates Private Limited where CFI was the sole shareholder.
Pursuant to the consultation, CFI Holdings paid Corporate Excellence about $268 800 as advisory fees. Langford owned as its sole asset a prime piece of land which is some 834 hectares in extent and whose open market value is $75 000. The
claimed purpose of the proposed transaction was to dispose of CFI Holdings 81 percent shareholding to enable CFI to pay off certain loans and commissions the approximate sum of $18 million.
At the time Corporate Excellence was consulted, it was the financial advisors for Fidelity Life Assurance of Zimbabwe which was the purchaser of the aforementioned shares. Fidelity belonged to a group which comprised the major shareholders of CFI Holdings who desired to have the transaction go through for their own benefit.
In acting on the mandate, Corporate Excellence owed CFI Holdings a duty to exercise basic competence, care, skill and diligence. In addition, Corporate Excellence owed CFI Holdings a duty not to have any interest in the transaction of whatever nature and was obliged to
fully disclose any considerations that could potentially affect its judgment and advice.
In breach of the duties, Corporate Excellence was accused of wrongfully and deliberately failing to disclose its conflicted position in the matter and did not recuse itself from rendering advice.
CFI through its lawyers Nyawo Ruzive Legal Practice made a demand for the payment in the sum of $42,7 million being the difference between the actual market value of the shares and the price at which they were sold as a result of the conflicted and negligent financial advice rendered to CFI Holdings by Corporate Excellence.
CFI also demanded the repayment in the sum of $268 000 being transaction fees paid to Corporate Excellence by CFI Holdings.
