Bank Leumi disclosed a customer's secret account to his ex-wife - and was ordered to pay compensation
The Tel Aviv District Court held that the bank acted in violation of the law and violated banking secrecy ● This, when in a divorce dispute of its client, Bank Leumi transferred confidential bank details to ex-wife of client, although it was not required to do so.
Avishai Grinzig 24/9/2020
The Tel Aviv District Court held that Bank Leumi acted in violation of the law and violated banking secrecy. This, when it imposed a foreclosure order on a joint account of an elderly couple and their son, Adv. Doron Afik, and provided secret details about the account to the son's ex-wife in a divorce dispute. It is also held that the Bank acted in bad faith when it provided details regarding the joint account, to which the foreclosure order clearly does not apply at all.
The decision of the Tel Aviv District Court was given in connection with a divorce dispute in which the ex-wife opened an execution case the day after the decision was made in the Family Court. The ex-wife persuaded the Execution Office to issue foreclosures in ex-parte on the accounts of her ex-husband, Adv. Afik. The Execution Office determined in its decision that the foreclosure will not apply to current accounts or joint accounts. This is because a warning about the foreclosure procedure has not yet been issued to the husband.
The husband, Adv. Afik, who had no knowledge of the execution procedure, found out about the issuance of the foreclosure order, when his ex-wife submitted confidential and secret information to the Court at the expense of his parents' bank, where he was registered as another owner for decades - The fact that he is another owner kept hidden.
Adv. Afik approached Bank Leumi demanding that the foreclosure be removed from the joint account with his parents, and the bank eventually canceled the foreclosure. The bank contended that this was a technical malfunction that had been addressed, and that the foreclosure was recorded inadvertently.
The right to privacy and the duty of confidentiality
Adv. Afik and his parents filed a lawsuit against Bank Leumi in the Tel Aviv Magistrate's Court, contending that the bank had committed a number of injustices against them, including a violation of their privacy and a breach of the duty of banking secrecy. This is when, in response to the foreclosure order, the bank informed Adv. Afik's ex-wife that there is a joint account for him and his parents and that there are funds in it.
In response, the bank claimed that in view of the receipt of the foreclosure order from the execution he acted as obligated by law, complied with the decision to impose the foreclosure, and gave notice to Adv. Afik's ex-wife “which are held by the bank ", including his joint account with his parents.
The bank argued that "not only was the bank legally obliged to give this notice, but the Execution Office even reiterated that the foreclosure would apply to the funds in the joint account, even after hearing the motion of Adv. Afik and his parents to cancel the foreclosure." Basis for an allegation that he violated the privacy of Adv. Afik and his parents, or violated the duty of confidentiality to which he owes them. According to the bank, the claim had no basis.
"The Bank acted reasonably"
Tel Aviv Magistrate's Court Judge Ilan Ronen dismissed the lawsuit of Adv. Afik and his parents, despite ruling that the bank did violate their duty of confidentiality. According to Justice Ilan, "Although the foreclosure order was restricted so that it does not apply to a joint account, it is not possible. Complain to the bank, for providing a detailed answer in its response to the foreclosure order, which indicates the existence of a joint account for Adv. Afik with his parents and even the existence of funds in the account."
Judge Ilan clarified that providing a detailed answer in such a situation, protecting the bank, exposes the claim that Adv. Afik smuggled funds into his joint account with his parents. Public interest requires that in these situations gives precedence to the desire to assist the creditor (Adv. Afik's ex-wife) to repay his debts over the debtor's right (Adv. Afik) to privacy.
Judge Ilan added that "when a bank receives a foreclosure order, and has doubts about the information it must retire in response to the foreclosure order, it must not be taken into account if for the sake of caution it chose to provide information on a reasonable scale. "Specifying the existence of joint accounts for the debtor and others, even the foreclosure order does not apply to them, it can not be said that in doing so the bank acted in bad faith and not in a reasonable manner.
"The bank acted in violation of the order"
Adv. Afik and his parents appealed the decision of the Magistrate's Court to the Tel Aviv District Court. Justice Sarah Dotan accepted the appeal in relation to the invasion of privacy and the breach of the duty of banking secrecy. Dotan criticized Judge Ilan's ruling, which dismissed the lawsuit on the grounds that the bank had doubts as to whether the foreclosure order also applied to joint accounts. This is despite the fact that the bank did not make such a contention at all. "It can be determined that the version adopted by the Magistrate's Court is a third version, which has no evidentiary basis, and in any case the parties did not address it," it held.
In addition, Dotan held that the bank acted in complete violation of the language of the foreclosure order, which explicitly stated that it would not apply to joint accounts. "The wording of the foreclosure order does not raise doubts as to how it was executed. The wording of the foreclosure order explicitly excludes joint accounts," Judge Dotan held. Therefore, Dotan concluded that there was no legal obligation for the bank to disclose the joint account of Adv. Afik and his parents.
Judge Dotan also referred in principle to the question of whether the bank should provide information in case of doubt regarding the interpretation of a foreclosure order. According to her, she does not disagree with "the Magistrate's Court's interpretation that in cases where the bank has a doubt as to the information it must disclose in response to the foreclosure order, it should not be taken into account if, as a precaution, it chose to provide reasonable information." However, she noted that the Magistrates' Court erred in its application of the principle. "The scope of reasonableness in case of doubt is a request for clarification to the Execution Bureau, or alternatively - a request to the account holder for clarification or prior notification (on the provision of information)," she held.
In the end, Dotan decided to reverse the Magistrate's Court's decision. However, she ordered a low compensation of ILS 5,000 per plaintiff.
Bank Leumi: "This is a specific fault in relation to the registration of the foreclosure"
Bank Leumi responded: "The holding, which partially accepted the appellant's allegations, was given on the basis of a specific error of the bank in relation to the registration of the foreclosure.
Advocate Doron Afik, who is both one of the three plaintiffs and the representing lawyer in the case, responded: "I think the compensation decided by the District Court is very low and creates an incentive for Bank Leumi to continue to violate customers' banking confidentiality.
"This is an account of an elderly couple who have been running an account at the bank for many decades and found themselves one day with a lien on their accounts, with the son's divorcee receiving confidential and private information about the account.
"It would have been appropriate for the bank to apologize to the elderly and compensate them adequately instead of abusing them for years, and it is unfortunate that this was the bank's conduct even after the mistake was discovered. I hope the bank will now educate, as part of its social commitment, to compensate the couple."