Exim Bank (Tanzania) Limited vs M & Five B Hotel & Tours Limited (Civil Appeal No. 511 of 2023) [2026] TZCA 522 (12 May 2026)

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM (CORAM: NDIKA. J.A.. MURUKE. J.A.. And MGEYEKWA. J.A.) CIVIL APPEAL NO. 511 OF 2023 EXIM BANK (TANZANIA) LIMITED .................................................. APPELLANT VERSUS THE M & FIVE B HOTEL AND TOURS LIMITED..............................RESPONDENT (Appeal from the Judgment and Decree of the High Court of Tanzania, Commercial Division at Dar es Salaam) (Mruma. J.) dated the 5th day of July 2022 in Commercial Case No. 104 of 2017 JUDGMENT OF THE COURT 13t hApril & 12t h May 2026 NDIKA. J.A.: The respondent, The M & Five B Hotel and Tours Limited, commenced legal action against Exim Bank (Tanzania) Limited, hereafter referred to as "the appellant", in the High Court, Commercial Division at Dar es Salaam, henceforth "the trial court", alleging mismanagement of its current and two loan accounts after the disbursement of a project loan. The court determined that the appellant was negligent for not verifying signatures and confirming instructions with the designated signatory, deeming the withdrawals unauthorised and fraudulent, constituting conversion. The court denied general damages but awarded the respondent special damages amounting to USD 11,021,018.00, punitive damages of USD 1,000,000.00, interest and costs of the action. The

appellant, dissatisfied with the verdict, now contests the judgment on multiple grounds of appeal, citing evidentiary and procedural concerns. The context of the appeal can be succinctly outlined as follows: On 12th May 2011, the appellant granted the respondent an overdraft credit amounting to TZS 900,000,000.00 at an interest rate of 10% per annum. On 11th July 2012, the appellant reviewed the said facility to be settled by 1s t September 2012 and granted a term loan facility of USD 3,000,000.00, to be repaid within thirty-six months from the date of the initial disbursement following a twelve-month grace period, in accordance with the offer letter and credit facility agreement (exhibits P4 and P5 respectively). The facilities, which garnered interest at a rate of 10%, were intended for completion of the respondent's five-star hotel building in Arusha and for augmenting the respondent's working capital. The facilities were secured by legal mortgages on two properties, along with personal guarantees and indemnities executed by Mathias Erasto Manga and Belinda Mathias Manga, the directors of the respondent, henceforth "the guarantors" On 30th August 2016, the appellant instituted in the trial court Commercial Case No. 109 of 2016, henceforth referred to as the "the first suit", against the respondent and the guarantors seeking, inter alia, a declaration that the respondent and the guarantors were in breach of the term loan facility agreement and the contracts of guarantee and indemnity 2

respectively by their failure to discharge their obligations under the agreements. Besides the appellant praying for immediate settlement of the outstanding sum of USD 2,878,100.00, it sought payment of interests and costs of the action. In their joint written statement of defence submitted on 4th October 2016, the respondent and the guarantors refuted the alleged outstanding amount while attributing the failure to repay the loan to the appellant's negligence in managing the operations of the respondent's loan account maintained at the appellant's bank. They specifically asserted, in paragraph 4.3, that: "[DJuring the period o f disbursement o f the term loan facility, the plaintiff [now the appellant] grossly and recklessly mismanaged the 1st Defendant's loan account whereby an amount o f more than US$ 1,435,757.25 (the "Amount o f the Unauthorised Withdrawals") o f the term loan facility [was] fraudulently and or wrongly withdrawn from the 1st Defendant's account without the 1st Defendant's instructions or mandate and paid to third parties for no consideration at all. The particulars o f the plaintiff's gross negligence and the want o f care in managing the operations o f the 1stDefendant's loan account contrary to the terms o f the 3

agreement contained in the Offer Letter are given hereunder". While the first suit remained unresolved, the respondent sued the appellant on 22n d June 2017 vide Commercial Case No. 104 of 2017, henceforth referred to as "the second suit," in the trial court, claiming the following in paragraph 3 of the plaint: "3. The Plaintiff's [now the respondent's] claims against the Defendant [now the appellant] are based on: 3.1 The Defendant's wrongful, negligent and fraudulent withdrawals from the Plaintiff's current account and loan accounts with (sic) unknown amount but exceeding US$1,435,757.75 (the "Amount o f the Unauthorised Withdrawals") and payment o f the entire sum o f the Amount o f the Unauthorised Withdrawals as money due and owing by the Defendant to the Plaintiffas per the terms o f the Facility Agreement; alternatively, 3.2 The wrongful conversion by the Defendant o f the Plaintiff's moneys held in the Plaintiff's current and loan accounts operated in the Defendant's bank and, in further alternative, for conversion o f the Plaintiff's moneys converted by the Defendant as moneys had, and received by the Defendant to the use o f the Plaintiff; and, 4

3. The Defendant's wrongfuland fraudulent debit o f the Plaintiff's account for the Amount o f Unauthorised Withdrawals and for breach o f contract and the total negligence in managing the operations o f the Plaintiff's current and loan accounts held and operated by the Plaintiffin the Defendant's bank.... In its written statement of defence, the appellant not only contested the respondent's claim but also argued that the second suit was barred by the doctrine of res sub judicedue to the pending first suit. After considering the arguments presented by the counsel for both parties regarding the aforesaid issue and reflecting on the provisions of section 10 of the Civil Procedure Code, Cap. 33 R.E. 2023, henceforth referred to as "the CPC", Songoro, J. dismissed the preliminary objection on the ground that the two actions were based on distinct causes of action. He reasoned that the first suit claimed a breach of a term loan facility, while the subsequent action was based on tort, alleging wrongful, negligent, and fraudulent withdrawals that led to the conversion of moneys. Following the aforesaid dismissal, a full trial ensued. In the end, the trial court (Mruma, J.) entered judgment and decree for the respondent, as previously stated. On the other hand, the first suit advanced to a complete trial but was eventually dismissed with costs by Magoiga, J. on 10th June 2023. 5

The appellant, dissatisfied with the verdict, appealed to this Court in Civil Appeal No. 193 of 2023. On 31s t July 2024, this Court allowed the appellant's appeal and annulled the High Court's judgment and decree. The Court granted all the appellant's prayers in the plaint, including an order for the respondent to pay the appellant the outstanding amount of USD 2,878,100.00. Mr. Gaspar Nyika, learned counsel, collaborated with Dr. Onesmo Kyauke and Mr. Li bent Rwazo, learned advocates, to represent the appellant during the hearing of this appeal. On the opposing side, Messrs. Mpaya Kamara, Deusdedith M. Duncan, and Emmanuel D. Saghan, learned advocates, appeared. At the commencement of the hearing, we permitted Mr. Nyika, pursuant to rule 113 (2) of the Tanzania Court of Appeal Rules, 2009, to present an additional ground of appeal besides the initial thirty-two grievances articulated in the memorandum of appeal. The new ground asserts the following: "That, the final determination by this Court o f the first suit has the effect o f res judicata on the second suit in terms o f section 11 o f the CPC". We propose to begin with the above ground. In Peniel Lotta v. Gabriel Tanaki & 2 Others [2003] T.L.R. 312, we affirmed that the doctrine of resjudicata, as articulated in section 11 6

of the CPC, prohibits multiple actions to ensure the finality of litigation. It achieves this by making conclusive a final judgment on the same issue between the same parties or their privies rendered by a court of competent jurisdiction over the subject matter of the case. We stated in the aforesaid decision that for res judicata to apply, the following conditions must be met: first, that the matter directly and substantially in issue in the subsequent suit or issue must be the same matter which was directly and substantially in issue in the former suit, whether actually or constructively. Secondly, that the former suit must have been a suit between the same parties, or between parties under whom they or any of them claim. Thirdly, that the parties, as aforesaid, must have litigated under the same title in the former suit. Fourthly, that the court which decided the former suit must have been a court of competent jurisdiction to try the subsequent suit or the suit in which such issue has been subsequently raised. Finally, that the matter directly and substantially in issue in the subsequent suit must have been heard and finally decided by the court in the first suit - see also Mulla, The Code of Civil Procedure, Sixteenth Edition, Butterworths, at page 173. To ascertain the applicability of res judicata in this case, we intend to analyse the aforesaid conditions sequentially. Thus, we begin with whether the matter directly and substantially in issue in both suits is the same. 7

Mr. Nyika prefaced his submission on the above condition by reviewing the pleadings in both suits. He then posited that one of the central issues in both suits was whether the appellant negligently and fraudulently mismanaged the respondent's current and loan accounts. He argued that the respondent's defence to the appellant's claim in the first suit mirrors the essence of its claim in the second suit as presented in the plaint. The learned counsel emphasised that what mattered was the substantiality of the matter in issue, not similarity of the causes of action in both suits. To bolster his submission, Mr. Nyika referred us to pages 27 and 28 of the judgment of the Court in Civil Appeal No. 193 of 2023, which originated from the first suit. He argued that the Court was firm that the contention whether the appellant was negligent and fraudulent in managing and operating the respondent's accounts was one of the issues for trial. He reiterated that the said issue was also the substantial question in the second suit. On the adversary side, Mr. Duncan determinedly submitted that the suits involved different causes of action, the first one being founded on alleged breach of the loan agreement and the contracts of guarantee and indemnity whereas the second one concerned the torts of negligence and conversion. He implored us to be persuaded by Songoro, J.'s reasoning on that aspect in his ruling on the preliminary objection. 8

Mulla {supra) at page 174 states that: "A matter cannot be said to have been 1 directly and substantially' in issue in a suit unless it was alleged by one party and denied or admitted, either expressly or by necessary implication by the other. It is not enough that the matter was alleged by one party. A matter in issue is the matter claimed by one and denied by the other" Initially, we noted that the appellant claimed that the respondent and the guarantors had failed to fulfil their contractual responsibilities to repay the debt or guarantee its full repayment. At that time, the unpaid amount was purportedly USD 2,878,100.00. The respondent and the guarantors contested the claimed outstanding amount and attributed the inability to repay the loan to the appellant's negligence in managing the respondent's loan accounts at the appellant's bank, which led to the misappropriation of over USD 1,435,757.25. In adjudicating the dispute, the trial court was required to ascertain whether the respondent and the guarantors had defaulted and owed the appellant USD 2,878,100.00, as well as to evaluate if the appellant had mismanaged the respondent's accounts, resulting in a conversion or loss exceeding USD 1,435,757.25 due to the alleged unauthorised withdrawals. To determine the culpability of the respondent and the guarantors to the appellant, it was essential to ascertain if the appellant mismanaged the finances as claimed, to offset

or mitigate any losses incurred by the respondent due to the appellant's actions. In Civil Appeal No. 193 of 2023 this Court noted that while the primary focus at the trial was on whether any party violated the loan facility agreement and the contracts of guarantee and indemnity, the trial also hinged on the secondary issue of whether the appellant exhibited negligence and fraud in managing and operating the respondent's accounts. To ensure clarity, we excerpt the pertinent portion from pages 27 to 28 of the Court's judgment: "[W]e are firstly in agreement with Mr. Kamara for the respondents that, based on the pleadings and particularly on the kind o f defence raised by the respondents, it cannot be complained that in determining the suit, the High Court turned the appellant's case for recovery o f the outstanding loan amount into the case raised by the respondents. In determining whether the appellant was negligent and fraudulent in the management and operation o f the 1st respondent's accounts and also in ascertaining whether the appellant fraudulently allowed unauthorized withdrawals from the 1st respondent's accounts, the High Court was dealing with the first issue on who between the parties was in breach o f the Term Loan Facility. It should be borne in mind that, the first issue, as 10

framed and recorded by the High Court, did not come out o f the blue. The issue came from the pleadings. The issue arose from the respondents' defence in which the respondents denied to have breached the Term Loan Facility contending that it was the appellant who had breached the Loan Facility first, not only by negligently and recklessly managing the 1st respondent's loan account but also by allowing fraudulent withdrawals from the said account without the 1st respondent's authorization". Concerning the second suit, we have no doubt that it rehashed the defence the respondent raised in the first suit. Certainly, the respondent transformed the said defence into a claim that the appellant purportedly mismanaged its accounts, resulting in the conversion or loss of over USD 1,435,757.25 due to illegal withdrawals. The sole distinction is that this time the allegation was presented with much detail and greater specificity. The appellant, having refuted the claim in its written statement of defence, the issue in the second suit became whether the purported unauthorised withdrawals occurred and if so, whether the appellant bore responsibility for them. With much respect to the learned counsel for the respondent, we think that whether the appellant's liability could arise from tort, breach of contract, or breach of the banker-customer relationship does not matter, in contrast to the first suit, which was solely based on alleged ii

contractual breaches. Consequently, we conclude that the first condition was satisfied. As regards the second prerequisite: whether the two suits involved the same parties or parties under whom they or any of them asserted claims, Mr. Nyika submitted, in effect, that even though the second suit involved only two parties while the first had one plaintiff pitting against three defendants the parties were effectively the same in both actions. Mr. Duncan disagreed with his learned friend, contending that since the first suit as compared to the second suit involved two additional parties (that is, the guarantors) it cannot be held that the parties in both actions were the same. Indeed, it is settled that "parties" for the purpose of resjudicata are the litigants whose names are stanchioned in the record when the decision alleged to be res judicata was rendered. Whereas we agree with Mr. Duncan that while the first suit pitted the appellant against the respondent and the two guarantors, in the second suit the respondent did not cite the guarantors as parties, hence the case only involved the two protagonists in this case. We ask ourselves whether Mr. Duncan is right in his characterisation that the suits involved distinct parties. We respectfully disagree with him. Insofar as the central question in the two cases whether the appellant mismanaged the respondent's accounts and converted over USD 1,435,757.25 in illegal withdrawals is concerned, the 12

two cases essentially pitted the appellant against the respondent. The presence of the guarantors was immaterial on that aspect. Whatever is determined in the first suit on that issue would be binding as between the parties in this case rendering the same question indeterminable in the second suit. We would, therefore, find the second condition fully satisfied. The third condition poses no difficulty. None of the parties canvassed it in their respective written or oral submissions. We think that they most probably assumed that the parties in this case litigated in the same title as they did in the first case. Mulla {supra) states at page 257 that the expression the "same title" means the same capacity. We think that it is too plain for argument that in both suits the appellant was cited in the same capacity as lender, mortgagee and banker whereas the respondent featured in the same title as borrower and customer. In the aforesaid capacities, the appellant had rights and obligations vis-a-vis those of the respondent in its capacities as a borrower and customer. Whether there was any breach of contractual obligations or existence of tortious conduct between the parties, we do not see anything suggesting that they acted under different titles in the cases. The final two elements, namely whether the court that adjudicated the first suit possessed competent jurisdiction to hear the subsequent suit, and whether the issue at hand was adjudicated and conclusively resolved 13

by the court in the first suit, also received no substantive oral arguments for or against from the learned counsel. We were completely unperturbed by the lack of submissions since the learned counsel understandably focused on the first two conditions. In our view, the jurisdiction of the trial court and this Court in the first suit is unequivocal. In determining Civil Appeal No. 193 of 2023, which, as stated earlier, arose from the first suit, this Court took the view that the High Court erred in finding the appellant in breach of the Term Loan Facility by mismanaging the borrower's account because the Term Loan Facility did not contain a contractual term obliging the bank to manage or operate the borrower's account in a particular manner. Insofar as that issue is concerned, the above determination by this Court is not only final and conclusive but it is also binding on the parties. Thus, the High Court, which later adjudicated the second case, should not have proceeded with the trial. The doctrine of res judicata barred it, as the first suit was ultimately and definitively adjudicated by this Court, as the court of competent jurisdiction, against the defendant (now the respondent), albeit belatedly, on 31s t July 2024. Consequently, we determine that the said judgment of the Court had a resjudicata effect rendering the second suit liable for dismissal. Considering the above findings, we see no urgent necessity to consider the rest of the grounds of appeal. 14

We finally find merit in the appeal, which we hereby allow. We quash and set aside the trial court's judgment and decree with costs to the two law firms retained by the appellant. For the record, the respondent's suit stands dismissed. DATED at DAR ES SALAAM this 11th day of May 2026. G. A. M. NDIKA JUSTICE OF APPEAL Z. G. MURUKE JUSTICE OF APPEAL A. Z. MGEYEKWA JUSTICE OF APPEAL Judgment delivered this 12th day of May, 2026 in the presence of Mr. Gaspar Nyika, Libent Rwazo and Daniel Yona, all learned counsel for the appellant, Ms. Ashura Mansour, Mr. Gilbert Masaga, both learned counsel for the respondent and Ms. Janekissa Bukuku, Court clerk; is hereby certified as a true copy of the original. 15