- On May 27,2020, after the death of the deceased, the Applicant filed a claim for property sharing in which she petitioned for half of the company's active betterment that had accumulated during her and the deceased's joint life (hereinafter: the property claim or the Applicant's claim).
- On May 31,2020, an order was granted - at the request of the Applicant and in the absence of objection on behalf of the Respondents - an order to execute the will.
- On October 28,2020, the Respondents filed a claim on their behalf to activate the Disposal Clause against the Applicant, claiming that the property claim violates the Disposal Clause and the provisions of the Letter of Undertaking (hereinafter: the Respondents' claim).
The Family Court's Judgment
- The property claim and the respondents' claim were decided jointly by the Family Court. The Family Court (Judge Shani) accepted the property claim and ruled that the Applicant is entitled to 32% of the company's shares or to a monetary payment expressing the value of the shares in an estimated sum of approximately ILS 19,876,000 (hereinafter: part of the common property). At the same time, the Family Court accepted the Respondents' claim to invoke the Disposal Clause against the Applicant. Therefore, the operative result of the judgment was that the Applicant is entitled to part of the common property, but is not entitled to the property that the deceased bequeathed to her in the will.
- With regard to the respondents' claim, the Family Court ruled that "the legal situation is that a dismissal clause must be fulfilled unless there is a significant justification for ruling otherwise." It was further held that the letter of undertaking creates "additional validity in the matter of the dismissal [...] and constitutes a waiver on the part of [the applicant] of any action that would harm the scope of the estate and the provisions of the will"; that this is a binding legal document that silences the Applicant from raising any property claim in relation to the estate; and that the undertaking led to the fact that the deceased relied on the understanding that the Applicant would not make any claim to property right in the assets that he bequeathed in his will (see: paragraphs 18-22 of the Family Court's judgment).
The District Court's Judgment
- Appeals were filed with the District Court against the Family Court's ruling. The respondents argued that there was no reason to accept the property claim, or alternatively, they claimed that there was an error in the calculation made by the Family Court with respect to the Applicant's share of the common property. The Applicant, for her part, argued that there was no reason to invoke the dismissal clause against her.
- The District Court (Justices Shilo, Wizenblit andEliyahu) unanimously decided to partially accept the Respondents' appeal and ordered that the Applicant's share of the common property be reduced, so that it would be ILS 5,963,500, instead of the amount awarded to her by the Family Court. In addition, the District Court rejected the Applicant's appeal by a majority of Justices Shilo andEliyahu, against the dissenting opinion of Judge Wizenblit.
- Judge Shilo ruled that the Family Court was right when it applied the dismissal clause against the applicant, so that she would receive her share of the common property but would dispose of her share of the estate. Judge Shilo noted that the dismissal clause stated that it would apply to anyone who objected to the will or any of its provisions "for any reason". Therefore, Judge Shilo ruled that the applicant's claim - which attacked the mass of the estate in order to detract from her share of the common property - triggered the dismissal clause. He further held that the Applicant's claim caused a certain property that the deceased bequeathed only to the Respondents, to be transferred to her, and thus the Applicant thwarted "the intention and the clear and clear will of the deceased" with respect to the manner in which the property was divided as outlined in his will (see: the Trial Judgment, at paragraph 2 of the judgment of Judge Shilo). Justice Shilo further argued that every heir has the right to choose: "to be satisfied with what was granted to him in the will or to receive rights to which he is entitled from the estate" (see: the trial judgment, at paragraph 7 of Justice Shiloh's judgment); and he also ruled that the "test of good faith and reasonableness" is not relevant when we are dealing with non-claim clauses. In determining this, Justice Shiloh relied on the position of Justice Shochat in the D. case. In this context, Justice Shilo argued that in Yona's case "it appears [indeed] that the requirement of good faith also applies to a claim in relation to the mass of the estate [but] the aforementioned words of the court in the judgment [in the Yona] case were said there beyond necessity" (see: the trial judgment, at paragraph 8 of Justice Shiloh's judgment).
- Justice Wiesenblit disagreed with Justice Shiloh's position, and remained, as stated, in the minority. First, according to his interpretive approach, the dismissal clause in the deceased's will is a non-assault clause and not a non-claim clause, and therefore the property claim filed by the applicant, which validated the mass of the estate, in any case does not trigger the dismissal clause (which, in his view, prohibits only opposition to the validity of the will). In this regard, Justice Weizenblit relied on the language of the Disposal Clause; on a comparison with the language of the secondary Disposal Clause; on the fact that the deceased was accompanied by legal counsel at the time of drafting the will; and on the need to interpret such stipulations narrowly, taking into account their infringement of the right of access to the courts. Justice Weizenblit noted that "the desire of the deceased to extend the application of the Disposal Clause to the prohibition of claims against the mass of the estate as he sees it, must be expressed relatively explicitly" (see: Trial Judgment, at paragraph 19 of Justice Weizenblit's judgment).
- Second, Justice Wizenblit ruled that the "test of good faith and reasonableness" also applies with respect to non-claim clauses: that is, it must be applied even when it comes to claims in connection with the mass of the estate. This is in light of what was stated in the Yona case, and in view of theviolation of the winner's right of access to the courts. Contrary to the opinion of Justice Shiloh, Justice Wizenblit was of the opinion that "the choice described given to the heir in the case of a stipulation of dismissal dealing with the attack on the mass of the estate, and describing it as a simple and legitimate choice given to him, does not reflect the complexity of the relationship between the parties concerned and the risks at hand, and is likely to lead to improper results" which include "disproportionate infringement of the heir's right of access to the courts" (see: the trial judgment, at paragraph 27 of Justice Wiesenblit's judgment). As an example of these complex situations, Justice Weizenblit noted, for example, the case of a common-law spouse who has to make such a choice (between the property claim and the estate) when she does not know whether she will be recognized as meeting the definition of "common-law spouse" and does not even know what the value of the estate is and what the value of the joint assets is. At the same time, Justice Weizenblit ruled that an exception to this rule should be recognized, according to which when it comes to a non-claim clause that "prohibits the filing of a secure and clear proprietary claim regarding a defined property [...] The dismissal clause will be enforced without limitation as to good faith and reasonableness" (see: Trial Judgment, at paragraph 34 of Justice Weizenblit's judgment). With regard to the case at hand, Justice Weizenblit ruled that the Applicant's claim was reasonable and was filed in good faith.
- Justice Eliyahu, who, as stated, joined Justice Shiloh's position, added in relation to Justice Wizenblit's position that "the legal world is not an exact science, and the filing of any legal proceeding entails taking a risk to one degree or another [...] and in any case, it can be overcome or reduced by contacting a professional, an appraiser, an accountant, etc., in order to make an informed decision in choosing between the possibility of sufficing with the part that the deceased ordered to that beneficiary in his will or filing a claim for his rights" (see: Trial Judgment, at paragraph 13 of Justice Eliyahu's judgment). He further added that the application of the "good faith and reasonableness test" in relation to the non-prosecution clauses would lead to a violation of the principle of fulfilling the will of the testator.
- This is the place to elaborate on the proceeding before us.
The parties' arguments
- On the judgment of the District Court, the application for leave to appeal was filed before us. The Applicant focused this application on the argument that the dismissal clause should not be applied against her (without reference to the decisions that were made regarding the scope of her share in the common property).
- The Applicant argues that in the present case, a fundamental legal question arises with regard to the manner in which disposal clauses should be exercised, and in particular in relation to the distinction between the different types of stipulations. The Applicant further argues that following the rulings of the courts below, she was subjected to a serious distortion of law and a violation of her proprietary and procedural rights. For these reasons, the Applicant is of the opinion that her case deserves to be heard "in a third incarnation".
- On the merits of the matter, the Applicant argues that we must adopt the minority opinion of Justice Wizenblit. According to her, a correct interpretation of the disposal clause in the deceased's will shows that the stipulation does not relate to claims in relation to the mass of the estate; and in any event, it was argued, the property claim does not activate the disposal clause. This is because the Applicant did not claim any right in the deceased's property, but only a declaration of her rights in her own property by virtue of cohabitation - rights that the deceased's estate does not include in any case. In this sense, the Applicant argues that the property claim did not impair the fulfillment of the deceased's will, nor even the manner of division between the beneficiaries as outlined by the deceased in his will - a division that was determined in percentages and was fulfilled as written. The Applicant further emphasizes that it is inconceivable that the deceased's desire was to bequeath her own property to others; and that she was the one who requested the order to probate the will, so that she cannot be considered as opposing it. The Applicant argues that the application of the disposal clause against her caused severe harm to her property rights, which had accumulated over decades, and also caused a material violation of her right to access the courts and public policy.
- The Applicant further argues that in accordance with the Supreme Court's ruling, it should be determined that the terms of dismissal, whatever they may be, will not be enforced whenever it is a reasonable claim that was filed in good faith, such as her own claim. Without derogating from her other arguments, the Applicant argues that once her rights in the common property became clear, the Family Court should have allowed her to choose between this property and the property bequeathed to her by the deceased.
- On the other hand, the respondents claim that the application in question does not meet the stringent criteria for obtaining leave to appeal "in a third incarnation", since it is an individual family dispute, with no broad ramifications; and that the legal situation with respect to the terms of their dismissal has already been clarified in case law. It was further argued that the Applicant did not suffer a miscarriage of justice, since she was entitled to her full share of the common property.
- The Respondents claim that the Applicant had a free and simple choice between the property claim and the rights by virtue of the will, and in accordance with the law, she is not entitled to benefit from both of them. The Applicant, it is argued, has no vested right to inherit an asset from the deceased's assets; and that the main interest that must be realized in such a case is the fulfillment of the will of the deceased as expressed in the dismissal clause. The Respondents claim that the fact that the division of the property in the will was made in percentages does not mean that the will of the deceased was not thwarted by means of the property claim, since this claim led to a deduction of millions of shekels from the value of the company that was supposed to be transferred to the Respondents. According to the respondents, the disposal clause in our case restricts both claims with respect to the validity of the will and claims with respect to the mass of the estate - as determined as a factual finding by the previous courts, and as we will learn from the broad and sweeping language of the stipulation and the content of the letter of undertaking.
- With regard to the applicability of the "test of good faith and reasonableness" in relation to the non-claim clauses, the respondents rely on the majority opinion of the District Court. According to the respondents, the applicant's claim was lacking in good faith, since it was filed in contravention of the stipulation of dismissal, despite the clear agreement that was anchored in the letter of undertaking, and while harming the deceased's reliance interest. The respondents further claim that the exception that the minority judge in the District Court sought to establish has no basis in the existing case law.
00Discussion and Decision