In the event that a party wishes to sell the farm (by agreement) to the remaining party, there will be an initial right over another buyer to purchase the outgoing party's share at an agreed price, and if not, at a price to be assessed by an agreed appraiser."
- Hence, the questions that arise are whether the clauses of the letter of undertaking, including sections 6 and 7, can be separated into parts as determined by the District Court by virtue of section 19 ofthe Contracts (General Part) Law, 5733-1973? And if so, did the Applicant breach his obligation to obtain the consent of his daughter and nephew the Respondent when he sold the farm without their consent? I am of the opinion that these questions should be answered in the negative; I will elaborate.
- Section 2 ofthe Real Estate Law states as follows:
"2. Ownership of real estate is the right to hold, use and do anything and any transaction with it, subject to restrictions by law or by agreement."
- In other words, the ownership of real estate is a "bundle of rights", which grants the owner the comprehensive right to own, use, and carry out any action and transaction with the property as he wishes - subject to the restrictions set forth in the law or the agreement (see and compare: Appeal Petition/Administrative Claim 7711/22 State of Israel v. Shapir Engineering Civil and Marine Company Ltd., paragraph 6 [Nevo] (June 27, 2024)). It is clear that the right to carry out a transaction in real estate without the need for the consent of a third party, as well as the right to perform various actions therein, constitute an essential component of the bundle of rights called ownership (Yehoshua Weissman , Property Law - Ownership and Sharing 25 (1997)).
- It is well known that section 19 of the Contracts Law allows for the partial cancellation of a contract tainted by a cause of disqualification. This is when the contract can be separated into parts, and the cause of disqualification relates to only one of its parts. For this purpose, the contract without the invalid part must have its own logic and reason, otherwise the entire contract will be cancelled (see: Civil Appeal 4183/20 Yatziv v. Ganei Tikva Local Planning and Building Committee, paragraph 43 of the [Nevo] judgment (November 16, 2022) (hereinafter: the Yativ case); and Civil Appeal 6705/04 Vehicle House in Tax Appeal v. Jerusalem Municipality, para. 32 [Nevo] (January 22, 2009)). In our case, as stated, it is clear that the right of ownership, in all its layers, is indivisible. Hence, I cannot agree with the District Court's determination that the letter of undertaking - the subject and essence of which is the transfer of ownership rights in the farm from the applicant to his daughter and the respondent after death - can be separated into parts in accordance with section 19 of the Contracts Law, so that sections 6 and 7 of the letter of undertaking that limit the applicant's ownership right will stand on their own, or alternatively, that the letter of undertaking will be fulfilled as it is written, omitting clauses A and H of the letter of undertaking (clauses for the transfer of rights in the farm). As mentioned, the phrase "one hour before my death" is used. In both cases, the operative significance of this separation is that the letter of undertaking is rewritten from its inception and that the purposes of the inheritance law are violated, as described above. In this regard, the words of President Barak are appropriate:
"The legal part will be able to stand in place if it is capable of realizing, even partially, the business purpose underlying the contract. In this situation, the legal part will continue to stand, without it being seen as a new contract that the court made for the parties. On the contrary: this is the old contract that the parties entered, while removing the illegal and therefore void parts of it. On the other hand, if the illegality of a part of the contract will result in the annulment of the entire contract; If the nullity of the illegal part empties the entire contract of its content or empties its part of its content, without there being a substantive possibility - from the point of view of the purpose underlying the contract - to separate the valid and void parts of the contract; if the parts of the contract are interconnected and intertwined and woven into each other, to the point that separation will lead to damage to the entire contractual structure, in such cases the division is impossible. Dividing in this state of affairs is like drawing up a new contract for the parties, and the court will not do this" (emphases added, A.S.) (High Court of Justice 6231/92 Zagori v. National Labor Court, IsrSC 49(4) 749, para. 36 (1995) (hereinafter: the Zagori case)).
- To this, I will add that even if it had been determined that the clauses of the letter of undertaking were indeed separable as stated above, the wording of clauses 6 and 7 of the letter of undertaking clearly indicates that we are dealing with the commitment of the nephews among themselves, which is intended to come into effect only upon the transfer of the applicant's rights in the farm to them, otherwise clause G of the letter of undertaking has no meaning, and hence this assumption does not benefit the respondents either.
- Even with the District Court's determination as to the relative nullity of the letter of undertaking by virtue of section 31 of the Contracts Law, I cannot agree. This is for two reasons. Section 31 of the Contracts Law provides as follows:
"The provisions of sections 19 and 21 shall apply, with the necessary modifications, also to the annulment of a contract under this chapter, but in the case of nullity under section 30, the court may, if it deems it justified to do so and under the conditions it deems appropriate, exempt a party from the obligation under section 21, in whole or in part, and to the extent that one party has performed its obligation under the contract, to obligate the other party to perform the counter-obligation. All or part." (Emphasis added - A.S.).
- First, section 61(a) of the Contracts Law states that "the provisions of this law will apply when there are no special provisions in any other law for the matter at hand". Accordingly, the nullity of the letter of undertaking in our case may be by virtue of section 8(a) of the Inheritance Law only, and not by virtue of section 30 of the Contracts Law, since there is a special provision in the matter under consideration in the Inheritance Law. Since I have reached the conclusion that the letter of undertaking should be cancelled by virtue of section 8(a) of the Inheritance Law, and not by virtue of "the nullity of a contract under this chapter [chapter 3 of the Contracts Law]" as written in section 31 of the Contracts Law, the provisions of section 31 of the Contracts Law cannot be applied in our case .
- Second, even if we were to determine, contrary to section 61(a) of the Contracts Law, that the annulment by virtue of section 8(a) of the Inheritance Law leads to the conclusion that it is an invalid contract as stated in section 30 of the Contracts Law, and the special provisions of section 31 are applied, respectively As to the Contracts Law with regard to nullity - in our case there is no justification for granting relief in favor of the respondents, since the respondent's claim that she paid consideration for the farm, as determined by the Family Court as a factual finding, was not proven. Moreover, even if the Respondent had lifted the said burden and proved its claim that it had paid consideration for the farm, so that the Applicant could have been obligated to fulfill the counter-obligation in whole or in part, I am of the opinion that considerations of justice would have prevented us from doing so, when we are dealing with an agreement that is wholly tainted by illegality that nullifies the provisions of the Inheritance Law. On this and more, I discussed this in my judgment in the Yatziv case:
"Section 31 further qualifies the absolute nullity of an illegal contract, which is set forth in section 30, by granting the court discretion to order the existence of a contractual obligation. A provision regarding the fulfillment of such an obligation does not mean enforcement of the illegal contract, but only, in a distinct and isolated manner, the fulfillment of the "counter-obligation": i.e., an obligation that stands in contrast to the obligation that has already been fulfilled. The authority to order the fulfillment of such an obligation is contingent upon the fact that the applicant for fulfillment "performed his obligation in accordance with the contract" (hereinafter: the precondition). In our case law, the approach was adopted according to which partial performance of the charge is sufficient for the prerequisite to be fulfilled. [...] The court, which comes to determine whether it is appropriate to order the existence of such an obligation, must take into account the "considerations of justice", as instructed in section 31. In this framework, it is possible to consider: the degree of performance of the illegal contract; the degree of illegality and the degree of moral invalidity that adheres to the contractual obligation; whether it is an illegality that is the focus of the entire engagement, or is it a marginal matter; the relative guilt of the party seeking the fulfillment and the degree of good faith of all the parties; the conduct of the parties after the conclusion of the contract; as well as the reliance of the contractors and innocent third parties on the provisions of the contract." (Emphasis added - A.S.) (Interest Yatziv, in verse 44).