Civil Case (Jerusalem) 74304-12-20 Moshe Hotuel v. Housing and Development for Israel Ltd. - part 6

The plaintiffs' summaries:

56. In their summaries, the plaintiffs sought to first address the claim of limitation on the part of the defendants and referred to the ruling according to which since they did not know about the failure and the damage, they did not have the power to make a concrete claim and therefore the statute of limitations applies, i.e., the statute of limitations is from the date the damage was discovered in 2014 and therefore there was no statute of limitations on the case. According to them,  section 89(2) of the Torts Ordinance  does not apply in their case because it applies to cases in which only the damage was discovered after 10 years, and not when the other elements of the cause of action were discovered after this period.  Moreover, the aforementioned section applies to torts and not to contractual or  causes of action by virtue of the Sale Law.
57. As to the source of the damage, they repeated the claim that the floor was 5 centimeters thick, based on the opinion of Engineer Nisman and Engineer Polyakov on behalf of the municipality, who arrived at the site during the work.
58. Referring to the opinion of the engineer on behalf of the defendants, Mr. Benwalid, they claimed that he had changed his claim that it was a suspended floor, and testified that it was a reclining floor that did not conform to the plan. On the basis of this material change in his testimony, they argued that his testimony no longer has any weight.

Defendants 1-2 summaries:

59. The defendants reiterated their argument that since the alleged tort includes a damage component, it is covered by the Torts Ordinance and therefore  section 89(2) applies  in their case and the claim should be dismissed according to the statute of limitations.
60. Beyond the claim of limitation, the plaintiffs raised the claim of lack of rivalry and lack of cause of action because the plaintiffs purchased the apartment from defendant 3, and not from defendants 1-2. In addition, defendant 1 was engaged in the management and marketing of land for construction for the Ministry of Housing, and the fact that it handled the registration of the condominium does not impose liability on it for the manner of construction.
61. With regard to the alleged damage, the plaintiffs claimed that all the professionals who testified and gave their opinions in the case were unanimous in their opinion that a 5 cm thick concrete floor would not have lasted 40 years. The fact that the plaintiffs chose not to summon Mr. Polyakov to testify, as well as the absence of positive and unequivocal evidence with respect to the structure of the floor in the apartment, are sufficient to show the severance of the alleged causal connection.
62. The plaintiffs built a warehouse and a balcony directly adjacent to the area under the living room and did not present a permit for the renovation. Their actions led to the weakening of the building and the chain of events.

Discussion and Decision:

63. After hearing the parties and witnesses and reviewing all the documents that were attached to the various reporters and affidavits and the various opinions, I have reached the conclusion that the claim should be accepted in full.
64. I will first discuss the claim of limitation raised by defendants 1-2, as well as the question of their liability in light of the fact that the apartment was purchased from defendant 3 and that defendant 1 claims that it is not responsible for the construction of the building, and finally, the existence of a causal connection between the crystallization of the damage and the manner of construction in the construction of the building.

The Statute of Limitations Claim

65. As stated, the defendants' claim of statute of limitations is based on section 89(2) of the Torts Ordinance [New Version], according to which the claim for tort tort will be statute of limitations at the latest ten years after the date of the event of the damage.  According to the defendants, the element that was not discovered by the plaintiffs is the damage component, and therefore the clause stated in the Torts Ordinance applies.  On the other hand, the plaintiffs, as stated above, claim that all the elements of the tort have been discovered after more than 10 years, and therefore the section of the Torts Ordinance does not apply, but  only section 8 of the Statute of Limitations.
66. An examination of the language of the law of each of these sections, as well as the case law, teaches us the validity of the aforementioned sections in question.

Section 8 of the Statute of Limitations

Unwitting Statute of Limitations *

8. If the facts constituting the cause of action were absent from the plaintiff, for reasons that were not dependent on him and which he could not have prevented even with reasonable care, the limitation period will begin on the day on which the plaintiff became aware of these facts.

Section 89(2) of the Torts Ordinance

 Beginning of Statute of Limitations

89. With regard to the limitation period in tort claims – "The day on which the cause of action was born is one of the following:

(2) Where the cause of action is damage caused by an act or omission – the day on which that damage occurred; The damage was not discovered on the day it occurred – the day on which the damage was discovered, but in the latter case the claim will become statute of limitations if it is not filed within ten years from the date of the damage event.

67. In the case of a construction defect that was discovered late, the division of duties between the sections states that section 89(2) will apply with the 10-year limit if only the damage was discovered late.  If additional material facts forming the cause of action were discovered late,  section 8 of the Statute of Limitations will apply and the section of  the Torts Ordinance will prevail.
68. In our case, the plaintiffs bought the apartment in 1975 and discovered a construction defect in 2014. Since the plaintiffs did not know the facts that constitute the cause of action beyond the damage itself,  section 8 of the Statute of Limitations will apply.  The statute of limitations began only from the day these facts were discovered, without a 10-year limit.

Plaintiff No. 2, whose testimony I found the most reliable, said that throughout all their years of living in the apartment, they were not aware of the existence of that space under the floor of their apartment, and only when the renovations began, was the space discovered.  This is also consistent with the engineer's documents on behalf of the municipality submitted by the plaintiffs.

69. I will also note that the interpretation of defendants 1-2 according to which the damage is the same construction defect is not acceptable to me. Indeed, the construction defect occurred during the construction of the building, however, the damage, the subsidence of the floor in the plaintiffs' apartment and the danger to the building occurred in 2014 when the renovation work began (see, among many,  CA 8210/19 Anonymous v. Leumit Health Services (February 14, 2021)).

Responsibility for building the building

70. As for the responsibility for the construction of the building, defendant 1 claimed that it did not construct the building, but rather engaged in management for the Ministry of Housing. There is no dispute that defendant 1 was engaged in the registration  of the condominium, published the building specifications and therefore can be defined as the "developer of the project".  When no evidence was presented by any of the parties that would answer the question of the contractor executing the building, the question arises as to whether the definition of defendant 1 as the initiator of the project imposes liability for the construction defects  on it.  A further study of the halakha in this context also details  at length the role of a company that assumes responsibility for the management and marketing of a residential project, and the fact that taking on this type of responsibility also entails responsibility for risks and defects that may come with the construction of the building.  This liability is further strengthened where in clause 11 of the sale agreement between the plaintiffs and defendant 3 (Appendix A to the affidavit of plaintiff 2) it  is declared that the apartment was originally purchased from defendant 1.  In CA 6341/12 Yahalomit Peretz Building and Development Works Ltd. v. Ben Zvi Tali and Yitzhak et al. [Nevo] (January 27, 2014), the court addressed the matter of this liability:
71. The hearing of the appeal before us requires that we begin with the definition of the scope of the construction company's liability. There can be no doubt that a company that assumes the role of constructing a building is responsible to the tenants for the risks arising from the project and which it could have foreseen. This conclusion stems first and foremost from the company's role in promoting The Project.  It is the one who outlines it, it hires the services of the appropriate professionals, and it purchases the other means of production necessary for the construction of the structure.  She is also the marketer of the project and signs the sales agreements with the tenants.  In all of its actions, it must define the areas of responsibility and ensure the appropriate performance (see: CA 451/66 Kornfeld v. Shmuelov, Piskei Din 21(1) 310, 315-316 (1967) (hereinafter: the Kornfeld case); CA 725/78 British Canadian Builders Ltd. v. Oren, P.D. 35(4) 253, 261 (1981)).  The Sale of Apartments Law Gives substance to this warranty by imposing on the seller of the apartment the responsibility towards the buyer in the event that a "non-conformity" was discovered in the apartment during the inspection period or during the warranty period, as the case may be.Section 4 to the Apartment Sale Law).  This law, of course, has a social purpose that seeks to ensure the interest of the apartment buyer who receives the product from the seller, who in the usual case is also the contractor (even if not necessarily), also in view of the inherent power disparities between the parties to the sale contract of a new apartment.  For this reason, the law even stipulates that its provisions can only be stipulated in favor of the purchaser (Section 7A(a) to this law). 
72. The company's responsibility is further strengthened when it comes to risks related to safety aspects. This does not detract from the responsibility for the general quality of the sale. However, when it comes to safety aspects, it can even be said that the degree of care with the construction company is even intensified.  (Judgment of the Honorable Judge D.  Barak-Erez, my emphases; H.P.).

The Responsibility Between a Contractor and a Sub-Buyer

71. The defendants claim that there was no liability when the apartment was purchased by the plaintiffs from defendant 3. As stated above, the plaintiffs attached to their affidavit of August 10, 2021, the apartment purchase agreement marked as Exhibit A from 1982.  In this agreement, in clause 11, the plaintiffs declare that they were told by defendant 3 that the apartment was purchased from defendant 1 by it and that it was not used and that it was not known of any defect in the apartment, while transferring undertakings between defendant 1 and defendant 3 to the plaintiffs.
72. In their statement of defense, the defendants claimed that they are not protected under the definition of "seller" under the Sale (Apartments) Law because Amendment No. 5 to this law came into effect in 2011. I accept this argument, but the rule teaches that even before Amendment 5 to the Law, the liability of the construction company towards sub-buyers, i.e., the plaintiffs in our case, is not limited to the contractual relationship between the parties and applies between the company and the sub-buyers just as it applies between the company and the direct buyer before transferring his rights.  (See paragraph 9 of the judgment of the Honorable Justice A.  Rivlin in CA 8265/96 Ramat Ltd. v. Baribrom, 57(1) 486 (01.12.2002)).

A contractor is liable to a sub-buyer by virtue of an assignment of rights from the original buyer, defendant 3, in favor of the plaintiffs, and there is no obligation to use Amendment No. 5 to the Law to substantiate this claim.