Judgment

Zaghroun v. Mizrahi Tefahot: the bank was negligent in providing a mortgage, and the customer lost an Israel Land Authority tender

The Magistrates' Court held that the bank was negligent when a customer's equity funds were not reflected in time, causing him to lose an Israel Land Authority tender, and ordered it to pay NIS 300,000 less 40% contributory fault; these findings remained in place.

Background and facts: a Mizrahi Tefahot mortgage and an Israel Land Authority tender

The details in this article are based on a report on ynet, in cooperation with the Psakdin website, on the judgment of the Beersheba Magistrates' Court. The judgment was given by the court's Deputy President, Judge Yaniv Booker. The full text of the judgment was not found openly online.

According to the report, the plaintiff is in the business of selling food and drinks for events, and from time to time bought plots and sold them. He took part in an Israel Land Authority (ILA) tender for a plot designated for an industrial building, and his bid won first place. To complete the transaction he needed a mortgage.

In April 2021, the plaintiff approached the Mizrahi Tefahot branch in Netivot. According to him, the bank approved the loan and made its provision conditional on transferring equity. The claim was filed in September 2022, and the damage was put at NIS 1,227,277.

The parties' arguments

According to the plaintiff, he transferred the equity funds, but the bank was unable to locate them. According to him, the money was found only the next day, and by then his bid in the tender had already been disqualified.

The bank argued that the customer was responsible for his own damage and that the claim was tainted by bad faith. According to the bank, the customer approached the branch more than two months after winning, close to the Passover holiday, when work is reduced. The bank argued that it acted quickly and efficiently to advance the mortgage.

What the court decided in the claim against Mizrahi Tefahot

According to the report, the judge accepted the plaintiff's version. It was held that the equity funds transferred to a dedicated transit account were not reflected in time. This led to a one-day delay in providing the loan and to the voucher for purchasing the plot not being paid on time.

The judge held that the customer could rely on the expertise of the bank clerk. If the clerk estimated that the transfer might not be reflected that same day, she should have told the plaintiff so explicitly. The court's conclusion was that the bank breached its duty of care toward the customer.

At the same time, the judge attributed contributory fault of 40% to the customer. The reasoning: he applied for a mortgage with considerable delay after winning, and on a Thursday in order to receive the funds on Sunday. In the end, it was ruled that the bank will pay NIS 300,000 as compensation for the lost profit from the plot, plus costs and attorney's fees of NIS 33,766.

What it means for Mizrahi Tefahot customers

The report describes a case in which a customer whose funds had already been deposited at the bank was entirely dependent on the actions of the bank's representatives. According to the judgment, in such a situation the bank is required to warn the customer explicitly of a risk of delay. However, the court also placed part of the responsibility on the customer, because of the late application.

A customer harmed by a delay in providing a mortgage can ask the bank for documentation of the dates of the transfers and of when they were reflected. Further mortgage cases appear in the rulings database.

Sources

Frequently asked questions about court rulings against Mizrahi Tefahot Bank

How much compensation did the customer receive from Mizrahi Tefahot because of the mortgage delay?

According to the report on ynet, the Beersheba Magistrates' Court awarded NIS 300,000 as compensation for the lost profit from the plot, plus NIS 33,766 in costs and attorney's fees.

Why was the customer's bid in the Israel Land Authority tender disqualified?

According to the judgment as reported, the equity funds the customer transferred were not reflected in time, the loan was provided one day late, and the voucher for purchasing the plot was not paid on time.

Was the customer also found responsible?

Yes. The court attributed contributory fault of 40% to him, because he approached the bank with considerable delay after winning the tender.

Which judge gave the judgment?

According to the report, the Deputy President of the Beersheba Magistrates' Court, Judge Yaniv Booker.

The full text was not found openly online; details according to a report, not yet verified against the text of the decision

How to cite

Leave to Appeal (Civil) 2231-12-25 (Zaghroun v. Mizrahi Tefahot Bank), following a judgment of the Beersheba Magistrates' Court, Beersheba Magistrates' Court (upheld by the District Court and the Supreme Court). Source: Net HaMishpat (Israeli courts database), case Leave to Appeal (Civil) 2231-12-25 (Zaghroun v. Mizrahi Tefahot Bank), following a judgment of the Beersheba Magistrates' Court.

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