The Tel Aviv Magistrate's Court recently rejected a claim for repayment of a loan of $100,000, given in 2008 to a couple immediately after their marriage, by the husband's brother-in-law, for the purpose of purchasing an apartment.
The loan was accompanied by a special agreement, according to which the couple would be required to repay the money only in the event of the sale of the apartment, transfer of rights, or cessation of their residence there.
Unusually, the agreement also left open the possibility that the money would never be returned, with the understanding that it was a gift, or family assistance, due to the close relationship between the parties.
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About a decade later, in 2017, the couple encountered a crisis in their marriage that led to divorce.
As part of the divorce agreement, which was approved by the Family Court in Rishon LeZion, the husband transferred his rights to the apartment to the wife, and in return she paid him 250,000 shekels. The agreement also stipulated that the parties would mutually waive repayment of all loans given by family members, with the express intention of preventing future demands for the return of the funds.
However, shortly thereafter, the husband's brother-in-law approached the woman, demanding repayment of the loan he had given her a decade ago, claiming that the transfer of rights to the apartment from her ex-husband to her constituted an event requiring repayment.
His demand was accompanied by a lawsuit he filed against the woman in the Tel Aviv Magistrate's Court, in which he claimed that he was not subject to the divorce agreement between the parties, because he did not take part in it, and never waived his right to repay the loan.
In the woman's defense, her attorney, Attorney Avi Geffen, noted that the plaintiff was well aware of the divorce agreement being drawn up between the former couple, and did not protest in real time the waiver stipulated therein. According to Attorney Geffen, the plaintiff thereby created "silence by representation," and in light of Section 39 of the Contracts Law, which requires acting in good faith and in an acceptable manner, he is prevented from raising these claims now.
In addition, Attorney Gefen added the defendant's ex-husband as a third party to the lawsuit, and requested that he be made to repay the loan in the event that the wife was charged with it, because the husband had pledged in the divorce agreement that all loans given by family members were void.
Judge Ronen Ilan of the Tel Aviv Magistrates' Court fully accepted Attorney Gefen's position and ruled in a firm decision that the plaintiff acted in clear and deliberate bad faith.
In his ruling, Judge Ilan explained the concept of 'silence due to representation': "Silence is based on the fact that a representation was made... However, sometimes it is sufficient to exercise it by silence, that is, by an omission expressed in non-disclosure. This is 'silence due to silence.' This is a situation in which one party acts on the basis of a false assumption, in circumstances in which the other party is obligated to clarify the facts to him as they are. If the latter refrains from doing so, and one party acted on the basis of the false assumption and changed his situation for the worse, the other party will be prevented from denying those facts. A condition for 'silence due to silence' is the existence of a duty of disclosure. Such a duty may arise in light of the parties' relationship, especially when there is a relationship of trust between them.".
According to Judge Ilan, the plaintiff was well aware of the parties' summaries as part of their divorce agreement, and did not object to them in real time. By the plaintiff's lack of objection to the divorce agreement, he effectively created a 'silence for the sake of silence.'.
The judge also criticized the brother-in-law's conduct. According to him, his intention was to allow the ex-husband to take the full amount she had committed to from the defendant, and to present the demand for repayment of the loan to her only after she had already paid the full amount, and when she was no longer able to get repayment from her ex-husband.
Ultimately, Judge Ilan rejected the claim to repay the loan, and ruled that the relative would pay the defendant legal costs of 50,000 shekels.
The judge also noted that even if he had accepted the lawsuit, the ex-husband would have been obligated to pay the full amount of 250,000 shekels that the defendant paid him as part of their divorce agreement. This payment would have been imposed on him, by virtue of his inclusion in the lawsuit in a third-party notice, and due to his breach of the obligation to his ex-wife – according to which all loans given by family members would be void upon signing the divorce agreement.
Because of this, the judge ruled that the third-party notice against the ex-husband was invalid, but ordered him to pay additional legal costs in favor of the woman, in the amount of 20,000 shekels, and to pay the fee imposed on her as part of the proceedings.
Attorney Avi Gefen: "The ruling achieved justice, and established precedentially that divorce agreements are also binding on third parties, even if they were not involved in reaching them.".
