Judge A. Arbel:
- The main question that arises in this appeal is whether to allow the respondent to be released from the arnona agreement that was signed pursuant to a compromise between it and the appellant. My colleagues disagree on this question, with Justice Naor of the opinion that there is no reason to be released from the agreement in the circumstances of the case, and Justice Procaccia is of the opinion that the release from the consent of the parties should be allowed. In the dispute that arose between my colleagues, I join the judgment of my colleague, Justice Procaccia, and I will briefly clarify my position.
- I agree with my colleagues that the governmental authority's duty to honor agreements is necessitated by being a party to a contract governed by the laws of private law, and is nourished by the need to maintain the citizen's trust in the authority, while the latter is careful to fulfill the obligations it has undertaken while upholding and respecting the law. However, as my colleagues noted, this obligation is not absolute, and it can be released when the public interest in liberation is of great weight, in which case it may override the initial obligation to honor agreements. This release will be done by the authority while exercising discretion in a careful and reasonable manner within the framework of the rules of administrative law. My colleagues detailed relevant considerations that must be considered when striking a balance between the obligation to honor agreements and the public interest, which is even relevant when it comes to an agreement between the authority and the individual in matters of municipal taxes, in which case the public interest is expressed in the collection of real tax. At the core of the appeal, as stated, is the question of whether the respondent can be released from the property tax agreement that was signed according to an agreement between the parties in 1996; Is the Authority's decision to release from the agreement tainted by administrative impropriety or exceeds the realm of reasonableness? I will admit that I debated between the opinions, especially on the question of application in this case.
- As my colleague, Justice Naor, pointed out, this is a question of the application of the precedent that was established Other Municipality Requests 2064/02 Complex H. Aloni in Tax Appeal v. Nesher Municipality, IsrSC 59(1) 111 (2004) (hereinafter: The Matter of the Oak Complex). Rule Aloni Complex It raises two types of considerations for the purpose of examining the authority's exemption from an agreement in the matter of property tax. One type of consideration relates to the stage at which the agreement was drawn up between the parties and the purpose of the agreement. "After all, an agreement on an assessment that is contrary to the law is not the same as an agreement on an assessment that constitutes a compromise between the parties. After all, an agreement on an assessment caused by a factual or legal error in the classification of a structure is not an agreement on an assessment that is intended to save the costs involved in the factual and legal clarification of the parties' claims" (Matter Aloni Complex, at p. 120). The second type of consideration examines the current state of affairs and the public interest in being released from the agreement at the current point in time. Thus, for example, if the property tax rules are changed in such a way that the collection under the agreement is significantly lower than the tax collection under the new rules, this will be one of the considerations that tip the scales in favor of the public interest in collecting real tax.
- I found great reason in the arguments raised by Justice Naor, especially with regard to the second type of considerations, which examines, as stated, the public interest in the present to be released from the agreement. Indeed, as a rule, when the amount in dispute is small, it will not be possible to say that there is a public interest in getting rid of the agreement. Moreover, the mere litigation between the parties is much more expensive than this sum, and it is clear that there is no reason to encourage multiple litigation in respect of disputes similar to the one before us, without there being a weighty consideration that justifies it. As for the first type of considerations, which examines the stage at which the agreement was made between the parties and the purpose of the agreement. I agree with Judge Naor's principled approach, which leaves an opening for compromises between the taxpayer and the municipality. Such compromises do not necessarily lead to the collection of the tax in full, but they do save litigation, and therefore, in appropriate cases, they are consistent with the public interest. However, as stated, I found it necessary to join Judge Procaccia's position.
- My colleague, Justice Procaccia, emphasizes the 2002 reform in the field of property taxes, which obligated the authority to impose municipal taxes in minimum amounts, which created a significant gap regarding the rates according to which the company was charged in the settlement agreement. This unequal situation, in her opinion, between the owner of the benefit by virtue of the agreement and an ordinary resident constitutes a heavy consideration for the Authority's release from the shackles of the contract. Moreover, the governmental contract was tainted by exceeding the authority's authority by defining the entire complex as "occupied land", while the correct classification required of the buildings on it would have required increased municipal tax rates in any case. The practical and public reason for drafting the beneficial agreement between the council and the IEC has not been clarified to this day. Perpetuating such an agreement is contrary to the public interest. The IEC, which is a government company, is intended to promote clear public goals. Therefore, there was no basis for the company's expectation that the agreement would last, especially when there was an extreme gap between it and the law that binds all residents. She further adds that contracts, especially with a governmental authority, cannot be fulfilled forever, and in this regard, no date has been set when the contract will expire.
- At the end of the day, I was convinced, in the opinion of my colleague Justice Procaccia, that in the circumstances of the case there was room to allow a release from the agreement. I am convinced that the continued existence of the agreement as it would have led to a violation of the principle of equality in tax collection and discrimination against the rest of the citizens in the local authority who are required to pay much higher municipal taxes than those that apply to the company by virtue of the agreement. I agree with Justice Procaccia that the case at hand raises questions as to the nature of the compromise between the parties, and leaves great ambiguity as to the purpose of the agreement between the parties and the background to the creation of this agreement. As my colleague notes, "it is difficult, indeed, to get rid of the impression that the high status of the Electric Company, and the bargaining power in its hands, made it easier for it to obtain the agreement" (paragraph 43 of its opinion). In this state of affairs, the inequality that has arisen between the tariffs collected from the appellant and those collected from other citizens in the local authority, together with the other considerations mentioned by Sociali, justify the release from the agreement.
- The balance between the considerations detailed in this case leads to a result that allows the respondent to be released from the agreement with the appellant. Admittedly, the amount in dispute is not high, and normally it would not have been justified to let the Authority be released from the agreement. However, when it appears that the initial agreement between the parties was reached on an unequal and unjustified background in principle, the preference should be given to maintaining the principles that bind the Authority when it comes to entering into such an agreement, over the considerations of efficiency that justify its continued existence. As Justice Procaccia noted, "The test of this matter does not lie in the size of the amount in dispute, but in the principles that will be formulated around it, and in their projection beyond the specific matter before us." Even if we do not want to encourage a result whereby an authority will be able to break free from agreements in which it has undertaken, it is important to convey the message that the authority is committed to maintaining equality among its citizens in the collection process, and especially in the overall public interest.
Therefore, as stated, I concur with Justice Procaccia's position.