Civil Appeal 10189/07 Sasson v. Mizrahi Tefahot: Supreme Court grants the customer leave to defend against the whole debt claim

What this page is based on

This page is based on the full text of the judgment in Civil Appeal 10189/07, as published on a law firm's website. We did not find the judgment on the courts' website. The District Court decision itself was not found, and the details about it are taken from its description in the Supreme Court judgment.

Background: the bank's summary-procedure debt claim

The judgment was given on 15 June 2009 by the Supreme Court, sitting as a court of civil appeals. It was written by Justice Y. Danziger, with Justices A. Procaccia and E. Rubinstein concurring. The hearing took place on 12.2.2009. The appellant is Ezra Sasson, a customer of Mizrahi Tefahot Bank.

According to the judgment, on 5.4.2006 the bank filed a summary-procedure claim against the customer for NIS 3,932,773. Of this, NIS 996,523 was the debit balance in the current account and the rest was loan balances. The bank said that on 28.8.1999 the customer was given a loan of NIS 1,165,000 at a fixed annual rate of 14%, repayable in one instalment on 3.1.2000, which was not repaid, and that the current-account balance accrued interest at 16% a year. This is an amount the bank claimed, not a debt that was established.

On 24.9.2007 Registrar S. Baruch of the Tel Aviv-Jaffa District Court granted the customer leave to defend only regarding the sale of the securities and the need for the loan. No leave was given for the current-account balance, and on 17.10.2007 an order was signed requiring the customer to pay NIS 996,523 plus interest at 16% a year from the date the claim was filed.

What each side argued

The customer argued that he and the bank had agreed on debit interest of prime plus 0.75%, and that the bank charged him a higher rate. He said the bank pressed him in March–April 1999 to sell securities, although under a 1992 agreement the bank could sell them only when the debt reached 75% of the portfolio's value. He also argued that the bank did not give him an agreed 50% discount on securities custody fees, and charged high credit-allocation fees and management fees. On appeal he argued that the District Court weighed the evidence as if a trial had already taken place.

The bank argued that the customer had laid no evidentiary basis for an agreement on reduced interest, and that even if there had been one, it was cancelled once the account worsened. On the fees, it argued that the claims were not properly included in the affidavit, and that the defences were general and unsupported.

What the Supreme Court decided

The appeal was allowed. The court restated the rule: leave to defend is refused only if it is clear that "the defendant has no chance at all of succeeding in his defence", and at this stage the court does not examine credibility or weight. According to the judgment, the customer's defence was not a "sham defence", and the District Court had not found that it was.

On interest, the court found a "trace of evidence": a letter from which a debt calculation at prime plus 1% could be inferred, and a statement of 22.4.1996 in which the account was credited NIS 628.87 for "refund of interest and setting it as agreed". It also noted that the bank's counsel said at the hearing that in 1992 there had been an agreement on special interest, but that he "does not know when it ended". On the fees, the court held that the customer, who was not represented in the District Court, should not be prevented from substantiating his claims on procedural grounds. It added that leave had in any case been granted for most of the debt, so extending it would not place an unreasonable burden on the bank.

The order of 17.10.2007 was set aside, and the bank was ordered to pay the customer's costs and NIS 20,000 in legal fees. Justice Rubinstein joined "not without hesitation", wrote that the case was "to a large extent borderline", and added that if the leave to defend turned out to be "empty", the court could impose heavy costs.

What it means for customers

The decision does not hold that the customer owes the bank nothing. It holds only that he is entitled to have his defence heard in full. Anyone sued by a bank in summary procedure should set out the defence in an affidavit and attach every document that supports it, even partly: a letter, a statement, a credit entry. The outcome of the case on the merits is not stated in the sources we opened. Related guides: objection to execution of a bill and fixed-sum claims and enforcement proceedings against the bank.

Sources

• Civil Appeal 10189/07 Sasson v. Mizrahi Tefahot Bank, full text of the judgment (law firm website, Hebrew)

Frequently asked questions about court rulings against Mizrahi Tefahot Bank

Source grade: Full text, verified. This article was written from the text of the decision itself.

Verified against the full text of the judgment, published on a law firm's website (not on the courts' website). The judgment was written by Justice Y. Danziger, with Justice A. Procaccia concurring; Justice E. Rubinstein joined "not without hesitation". The decision deals only with whether the customer may defend; it does not decide whether the debt exists or in what amount. The outcome of the later District Court proceeding is not stated in the sources.

Sources

1. https://www.barelaw.co.il/he/%D7%A2%D7%90-10189-07-%D7%A2%D7%96%D7%A8%D7%90-%D7%A9%D7%A9%D7%95%D7%9F-%D7%A0-%D7%91%D7%A0%D7%A7-%D7%9E%D7%96%D7%A8%D7%97%D7%99-%D7%98%D7%A4%D7%97%D7%95%D7%AA-%D7%91%D7%A2-%D7%9E.html

How to cite

Civil Appeal 10189/07 Ezra Sasson v. Mizrahi Tefahot Bank Ltd (appeal against the decision in Misc. Civil Application 18464/06 of 24.9.2007 and the judgment in Civil Claim 1441/06 of 17.10.2007, Tel Aviv-Jaffa District Court, Registrar S. Baruch), Supreme Court of Israel, sitting as a court of civil appeals, 15.06.2009. Source: Net HaMishpat (Israeli courts database), case Civil Appeal 10189/07 Ezra Sasson v. Mizrahi Tefahot Bank Ltd (appeal against the decision in Misc. Civil Application 18464/06 of 24.9.2007 and the judgment in Civil Claim 1441/06 of 17.10.2007, Tel Aviv-Jaffa District Court, Registrar S. Baruch).