In order to accurately discuss these questions, it is necessary to begin with the normative framework relating to the tort of negligent misrepresentation. After the rulings relating to this matter have been elaborated, it will be possible to turn to the examination of those questions that are relevant to the decision. I will note that since Fine's actual knowledge has not been proven, there is no need to discuss the tort of fraud.
- Negligent Misrepresentation - The Normative Framework
- The tort of "negligent misrepresentation" (also known as "negligent statement" - cf. Tamar Gidron, "The Duty of Care in the Torts of Negligence and Pure Economic Damage" Hapraklit 42 126 (5755); Gidron) was recognized in Israeli law about seventy years ago (M. 106/54 Weinstein v. Kadima Cooperative Society Ltd., IsrSC 8 1317 (1954), hereinafter: the Weinstein Rule). It developed and progressed as the years passed (see, for example, Civil Appeal 37/86 Levy v. Sherman, IsrSC 44(4) 446 (1990); Civil Appeal 5302/93 Massad Bank v. Levitt, IsrSC 51(4) 591 (1997); Civil Appeal Authority 378/96 Weinblatt v. Bornstein, IsrSC 55(3) 247 (2000); Civil Appeal 153/04 Rubinowitz v. Rosenbaum, dated February 6, 2006 and many others). It is now accepted that in order for it to apply, the plaintiff is obligated to prove the existence of five conditions: a presentation of facts; a determination that the representation was unreliable; the exhibitor should have expected the other party to rely on the representation; the exhibitor could have expected that damage would be caused as a result of the representation; and the other party actually relied on the representation (see, inter alia, the Weinstein Rule, at pp. 1320-1321; 1327-1350; Civil Appeal 790/81 American Microsystems Inc. v. Elbit Computers Ltd., IsrSC 39(2) 785, 795-797 (1985), hereinafter: the Elbit ruling; Civil Appeal 3824/13 SF Wing Overseas Real Estate Investments Ltd. v. Yaniv, dated March 1, 2016, at paragraph 25 of the judgment of the Honorable Justice (as he was then called) Amit).
- The recognition of this tort was groundbreaking at the time, due to the fact that it granted relief for economic damage caused to the injured party as a result of the representation of the tortfeasor. The question of whether the granting of relief for "pure" economic damage is appropriate or not deviates from the framework of the discussion in this case, especially when it was not raised by the parties. Suffice it to say that the application of liability in torts for causing pure economic damage raises many difficulties. Among these we can mention the possible result of applying "open liability", excessive deterrence, excessive cost, violation of fairness, invasion of the domain of other laws and disruption of the discussion thereof, violation of the principle of dispersal of damage, and causing "negative dispersal". These and others have been discussed extensively in the literature on this issue (see, for example, Gidron, at pp.1-44, 37; David Ronen, "Pure Economic Damage from a Comparative Perspective," Hapraklit 44, 5, 5, 10-50, 6 (1999); Israel Gilad Torts Law - Limits of Liability 805 onwards (Vol. 2, 2012), hereinafter: Gilad; Ariel Porat Torts 223-230 (Vol. 1, 2013), hereinafter: Porat).
The ruling did not remain indifferent to these difficulties. Thus, the Honorable Justice (Sec.6at the time) M. Cheshin was of the opinion that it was appropriate to hold another hearing in the Weinstein case due to the difficulties surrounding the absorption of such a tort (Additional Criminal Hearing 983/02 Yakubov v. State of Israel, IsrSC 56(4) 385, 398-399 (2002)). The difficulties accompanying the imposition of liability for pure economic damage have been addressed by the Supreme Court quite a few times over the years, both in the framework of the tort of negligent misrepresentation and in other legal contexts in which the difficulty that arose was more moderate (see, for example only, the position of the Honorable Justice Sohlberg Other Municipal Applications 8146/13 Josha v. Aldjani Hospital, dated July 21, 2016, at paragraph 3 of its judgment and inCivil Appeal Authority 7265/23 Amidar The National Housing Company in Israel in Tax Appeal v. Anonymous, of March 4, 2024, in paragraph 24 of the decision; Civil Appeal 7125/20 Success for the Promotion of a Fair Company v. UBS AG, dated January 2, 2025, at paragraph 133 of the judgment of the Honorable Justice Kabub, hereinafter: the Success Rule; For the possibility of imposing liability in cases where pure economic damage was caused, in contexts other than that of negligent misrepresentation, see, for example, Civil Appeal 3464/05 Paz Oil Company in Tax Appeal v. State of Israel, dated July 12, 2006, at paragraph 7 of the judgment; and compare Civil Appeal 4493/05 Yerushalmi v. Polaris Import Tools Ltd., of March 7, 2007, at paragraph 13 of the judgment; success rule, at paragraphs 134-140 of the judgment). These concerns and difficulties were, inter alia, at the basis of some of those limitations that were set within the framework of the conditions for the application of the tort.
- Despite the difficulties inherent in the absorption - and in fact in the creation - of this type of injustice, its application has expanded over the years. Initially, the tort was recognized as a purely professional opinion (the Weinstein ruling). Subsequently, it was expanded to other areas, so that it also applies to the provision of information, especially when the person providing the information is a person in charge of it (see the various opinions, Other Municipality Applications 86/76 Amidar v. Avraham, IsrSC 32(2) 337 (1978), hereinafter: the Amidar Rule) and one that gathers the relevant information for the purpose of the matter (it seems that this is the reasoning that emerges from the judgments concerning them In the planning authorities - see Civil Appeal 209/85 Kiryat Ata Municipality v. Ilanco, IsrSC 42(1) 177 (1988), hereinafter: the Ilanco ruling; Civil Appeal 324/82 Bnei Brak Municipality v. Rothbard, IsrSC 45(4) 102 (1991), hereinafter: the Rotbard ruling; Civil Appeal 80/87 Zalesky v. Rishon LeZion, IsrSC 45(4) 604 (1991), hereinafter: the Zalesky ruling; Civil Appeal 119/86 Keni Houses v. Netanya Local Planning and Building Committee, IsrSC 46(5) 727; Civil Appeal 3862/04 Petah Tikva Municipality v. Ora Nakar, dated February 13, 2008, at paragraph 14). It was held that the tort will apply to a person who presents himself as having special expertise or skill, even if he is not, and that the very fact that he presented himself as such justifies the application of the tort to him (Amidar ruling; for a review of the case law, see Porat, at p. 234 ff.). Liability was also imposed for creating a negligent misrepresentation at the stage of a preliminary inquiry, which was conducted orally with the relevant parties (Civil Appeal 1540/97 Local Planning and Building Committee Holon v. Rubinstein & Co. Contracting Company Ltd., IsrSC 57(3) 374, 378-379 (2003); and compare Civil Appeal 2413/06 Caspi Rejwan Building Towers in Tax Appeal v. Holal Jerusalem, dated November 10, 2009, in paragraphs 33-37 of the judgment). Inlight of these criteria, it was held that the information providers, in whose hands the information is concentrated, have a duty "not to be negligent in providing the requested information and to provide true and reliable information, where reliance on that information is expected and reasonable in the circumstances of the case" (Ilenko Rule, at p. 204; and compare the Rothbard ruling, at p. 108; The Zalesky ruling, at p. 611; Civil Appeal 666/09 Discount Bank v. Maariv, dated July 19, 2011, at paragraph 12 of the judgment).
The case law regarding the boundaries of the tort has not been quiet, to the point that it was held that "subsequently the boundaries of liability were expanded and it is customary to view any transfer of negligent information or the provision of erroneous information in writing or conduct to another party that is expected to rely on the information as negligent misrepresentation" (Civil Appeal 666/09 Discount Bank v. Maariv, of July 19, 2011, at paragraph 12 of the judgment; Civil Appeal 7440/19 Emblaze inTax Appeal v. Double U Trading Fund Inc., dated April 27, 2021, at paragraph 18 of the judgment; In Tax Appeal 4181/22 Anonymous v. Anonymous, dated May 19, 2024, in the judgment of the Honorable Justice Grosskopf).
- Simultaneously with the expansion of the scope of the tort, various components have been cast into it that limit and fence its interpretation. In doing so, the case law sought to give expression to the unique, fence-breaking and unusual nature of the tort, as well as the fear of "flooding the courts" due to its possible scope of application, which has no end and no end. One of the main filters of liability recognized in case law concerns "proper reliance" (for this terminology, see Gilad, at p. 820). This excludes those who were not entitled to a claim by virtue of the tort those who did not rely on the representation.
The examination of proper reliance is expressed in two stages: in the examination of the existence of reliance in practice, i.e., the existence of a factual causal connection between the representation and the action of the injured party; and in the normative determination that the reliance was justified. In this context, it was held that liability would apply to the creator of the representation if he should have expected that the person requesting the information or the person before whom the representation was made would indeed rely on him (the aforementioned judgments; in summary of this matter, see the two alternative tests in the judgment of the Honorable Vice-President S. Levin in the Massad case, in paragraph 9 of the judgment; although his words remained a minority opinion, the two members of the panel joined the determinations in principle regarding the scope of the obligation; and compared Civil Appeal 578/88 Tefahot Mortgage Bank of Israel in Tax Appeal v. Netzer, IsrSC 34(3) 828, 836 (1989)).