Arusha. The Court of Appeal has overturned a High Court Commercial Division decision ordering Exim Bank (Tanzania) Limited to pay more than $11 million to M & Five B Hotel and Tours Limited, ruling that the dispute had already been conclusively determined in an earlier case.
The judgment was delivered in Dar es Salaam on May 12, 2026, by a panel of Justices Dr Gerald Ndika, Zainab Muruke, and Agness Mgeyekwa, before a copy was later uploaded to the court’s website.
The appellate court agreed with Exim Bank’s submissions that the suit was barred by the doctrine of res judicata, which prevents courts from rehearing matters already conclusively determined.
Earlier, the High Court Commercial Division had ruled in favour of M & Five B Hotel and Tours Limited and ordered Exim Bank to pay special damages exceeding $11 million, punitive damages of $1 million, interest, and costs.
The High Court found that the bank had acted negligently by failing to verify signatures and authenticate payment instructions issued on the company’s accounts, resulting in unauthorised withdrawals.
Exim Bank challenged the ruling before the Court of Appeal, faulting it on several legal grounds.
According to court records, the bank granted the company a loan of Sh900 million on May 12, 2011, at an annual interest rate of 10 percent.
Later, on July 11, 2012, the facility was restructured, and a further term loan of $3 million was issued to facilitate completion of a five-star hotel project in Arusha and boost the company’s working capital.
The loan was repayable within 36 months and secured through various guarantees, including company assets and personal guarantees from directors Mathias Manga and Belinda Manga.
On August 30, 2016, Exim Bank filed Commercial Case No. 109 of 2016 against the company and its guarantors, alleging breach of the loan and guarantee agreements.
It sought recovery of an outstanding debt exceeding $2.8 million, together with interest and costs.
In their defence filed on October 4, 2016, the company and its guarantors denied liability, arguing that their failure to repay the loan resulted from the bank’s negligence in operating their accounts.
They alleged that more than $1.4 million had been fraudulently withdrawn without their knowledge or authorisation.
While that case was still pending, the company filed another commercial case, No. 104 of 2017, on June 22, 2017, against Exim Bank, seeking compensation for alleged negligence, fraud, and unauthorised withdrawals.
It accused the bank of improperly managing its current and loan accounts, leading to the withdrawal of more than $1.4 million without approval.
The bank opposed the suit, arguing that the dispute had already been raised in earlier proceedings and should be struck out.
However, the High Court dismissed the objection, finding that the two cases arose from different causes of action, one concerning breach of a loan agreement and the other negligence and conversion of funds.
The High Court subsequently heard the matter and ruled in favour of M & Five B Hotel and Tours Limited.
Meanwhile, the first case, which had already proceeded to a hearing, was dismissed with costs, prompting Exim Bank to appeal through Civil Appeal No. 193 of 2023.
On July 31, 2024, the Court of Appeal upheld Exim Bank’s appeal, ordering the company to pay an outstanding debt exceeding $2.8 million.
Current appeal
In the present appeal, Exim Bank challenged the High Court ruling that had ordered it to pay more than $11 million to the company.
It argued that the High Court erred by hearing a matter that had already been conclusively resolved in earlier proceedings.
The bank maintained that allegations of negligence and poor account management had already been raised in the earlier case relating to the loan facility.
It further submitted that the second suit was barred by the doctrine of res judicata, which prevents courts from revisiting matters already determined.
Judges’ findings
After reviewing the submissions and the record, the judges agreed that the matter was barred by the doctrine of res judicata, as the central dispute had already been conclusively determined in earlier proceedings involving the same parties.
The court noted that allegations of negligence and unauthorised withdrawals had already been addressed in the first case concerning the loan facility.
Although the first case focused on breach of a loan agreement and the second on negligence and conversion of funds, the court held that both arose from the same dispute over the operation of the company’s accounts.
It stressed that differences in how claims were framed could not change the substance of the dispute.
The judges further noted that the company had already raised claims of unauthorised withdrawals exceeding $1 million in the earlier proceedings.
They concluded that the second case merely repeated issues already heard and determined.
For res judicata to apply, the court said, it must be shown that the matter was previously decided, involved the same parties, and was determined by a competent court.
The Court of Appeal also referred to its earlier judgment of July 31, 2024, in Civil Appeal No. 193 of 2023, in which it ruled that Exim Bank had not breached the loan agreement as there was no contractual duty to manage accounts in the manner alleged.
Following that decision, the judges held that the High Court should not have proceeded with the second case.
“We therefore find that the judgment of the court in the first case had the effect of res judicata, thereby rendering the second case liable to dismissal,” the judgment stated.
The court added that there was no need to consider the remaining grounds of appeal.
The appeal was allowed, and the High Court judgment, including orders for damages, interest, and costs, was quashed.
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