Case Number
CFH 1558/94
Date Decided
10-25-1996
Decision Type
Appellate
Document Type
Full Opinion
Abstract
The Petitioner and the Respondent married in Iran, which was their domicile, in 1944. In 1979, the Respondent visited Israel. In the course of his visit, he purchased a store in Tel Aviv, which was registered in his name. In 1983, the couple immigrated to Israel with their five children. Soon after their immigration to Israel, the Respondent opened two bank accounts in his name, and deposited money that he had brought from Iran, in the amount of $320,000. In 1987, a rift developed in the marriage, following which the Petitioner sought a declaratory judgment stating that the store and the money deposited in the bank were jointly owned. The District Court granted the request. The Supreme Court granted the Respondent’s appeal, which is the basis for the Further Hearing.
In granting the petition, the Supreme Court ruled:
A. (1) Whatever the choice-of-law rule may be in regard to property relations between spouses married abroad prior to the enactment of the Property Relations Law, it is a dispositive law. It applies in the absence of an agreement between the parties. The parties are at liberty to decide upon a different arrangement, and Israeli law will credit that arrangement – subject to Israeli public policy and other specific Israeli law.
(2) The content of the agreement between the parties can be conflictual, that is, it may refer to a legal system that differs from that indicated by the rules of private international law.
(3) Anything that the parties can agree to expressly, they can agree to impliedly.
(4) The requirements of writing and of confirmation by the court concern a “property agreement” as defined by the Property Relations Law.
(5) (Pursuant to CA 2/77 [1]), the term “agreement” in sec. 15 has its general meaning, and need not be in writing – as required under sec. 1 in regard to a property agreement – rather, any agreement whatsoever, whether in writing or parol, whether express or implied, can serve to establish the property relations between the spouses, as long as the agreement is in accordance with the law of their domicile at the time of its making.
(6) The community property rule accepted in Israel is one of partnership based upon the idea of an agreement between the parties. It is not a statutory rule imposed upon the parties regardless of their will. The consensual view is a real explanation for a case-law rule that draws its force from the agreement. In the past, this view was founded upon the theory of implied condition. We can now base this view upon the principle of good faith (established under sec. 39 of the Contracts (General Part) Law), which fills the gaps in an agreement between the parties.
(7) In accordance with this principle, we can give expression, first and foremost, to the subjective fundamental assumptions at the foundation of the relationship between the spouses, without need for recourse to a fiction concerning their real intentions. Where the fundamental assumptions of the parties are unproductive, we can employ objective criteria to fill in what the parties left out on the basis of the good-faith principle. Inter alia, these criteria draw upon the fundamental principles of Israeli law. One of those fundamental principles is that of equality. In this manner, we achieve a social objective that brings about social justice.
(8) We can revisit this matter in the future, and consider whether we might base the community property rule upon the general power of an Israeli judge to develop the law in conjunction with the statutory law, without need for the contract construct.
(9) Upon arrival in Israel, spouses married abroad prior to the entry into force of the Property Relations Law who, when in Israel, satisfy the conditions for community property, are deemed as agreeing to maintain a community property regime in Israel. This agreement takes precedence over the application of conflict-of-laws rules, and establishes the regime for the division of their property. That regime applies to property acquired after their marriage but before their arrival in Israel, as well as to property acquired in Israel after the marriage.
B. (Per Justices E. Goldberg and D. Dorner):
(1) Nothing prevents applying the provisions of sec. 15 of the Spouses (Property Relations) Law to spouses who married before its enactment, as long as their vested rights are not infringed.
(2) A choice-of-law principle is categorized as a procedural rule, and this character permits its application to proceedings occurring after its enactment, even if the event itself occurred earlier, as long as vested rights are not infringed as a result.
(3) The initial clause of sec. 15 of the Spouses (Property Relations) Law establishes that, as a rule, the law of the domicile of the spouses at the time of the solemnization of the marriage will apply to their property relations. Foreign law is perceived as a fact that must be proved, and a failure to meet the burden of proof works against the party bearing that burden.
(4) If the party seeking to rely upon the foreign law shows a “solid evidentiary basis” for the identity of the laws, for example, that the foreign law and the domestic law derive from the same system of laws, then it is possible to apply the presumption of identity. However, it is possible that a petitioner who is unable to rely on the foreign law by establishing a solid basis in regard to the identity of the foreign law and the domestic law, may still enjoy the presumption of identity if he can prove that “the elementary concepts of justice in regard to the subject matter at hand are uniform and acknowledged throughout the world”. The burden of proving this preliminary assumption grounding the presumption of identity – i.e., that we are concerned with a general principle of law – falls to the party seeking to rely upon the provisions of the foreign law.
(5) It is doubtful whether the approach that urges the general application of the presumption of identity as long as the content of the foreign law is not proven has gained acceptance in the principles of private international law, which do not support a preference for domestic law, nor is it supported by the law of evidence. After all, if the presumption of identity is not more probable, what is the theoretical justification for shifting the burden of proof?
(6) Foundations of Law, 5740-1980, does not present an obstacle before a party seeking to rely upon the presumption of identity in the present sense. Not only does sec. 2(b) of Foundations of Law instruct us that the repeal of art. 46 of the Palestine Order-in-Council, 1922, “shall not derogate from the law which was accepted in Israel before the coming into force of this Law”, but also – and this is the main point – the law indeed sought to unfasten the tether that bound the Israeli legal system to the Common Law, but not to prohibit adopting appropriate legal arrangements from the Common Law.
(7) Section 15 of the Spouses (Property Relations) Law does not present an obstacle to implementing the presumption of identity.
(8) The legal provisions that establish the character of the property arrangements between spouses reflect a society’s conception of distributive justice, and cultural conceptions regarding equality between the sexes. Therefore, there is no reason to assume that these represent a general legal principle.
(9) The presumption cannot be applied when the choice-of-law rule points to the laws of a non-western state. Having rejected the basis for assuming that the social and cultural climate of this state is identical to that of western states, the presumption as to the identity of Iranian and Israeli law in regard to property relations lacks support.
(10) Once the assumption of similarity between Iranian and Israeli property-relations law is undermined, there is no justification for deviating from the rule that the burden of proving the foreign law falls upon the party that seeks to rely on it.
C. (Per Justices E. Goldberg and D. Dorner):
(1) When the spouses were foreign domiciles at the time of their wedding, the law of their domicile at the time of the solemnization of their marriage applies, rather than the Israeli community property arrangement, in accordance with the initial clause of sec. 15. Similarly, the statutory agreement in regard to the application of resource balancing, under sec. 3 of the Law, does not constitute an agreement in accordance with sec. 15 of the Law, as the freedom to make an agreement, granted the spouses under sec. 15 of the Law, is inconsistent with the nature of the statutory agreement.
(2) The resource balancing arrangement does not apply to spouses who were foreign domiciles at the time of their marriage. Therefore, when an agreement is made between spouses who were foreign domiciles at the time of the solemnization of their marriage, and who became Israeli domiciles at the time of the making of the agreement, the agreement assumes a different character that changes it from an instrument that removes the spouses from the community property arrangement through balancing to an instrument that creates that arrangement.
(3) The purpose for which limitations were placed upon the form of contracts and the freedom of contract does not justify extending those limitations to an agreement between spouses who married while they were foreign domiciles in order to create community property by means of balancing. The proper policy therefore supports limiting the scope of incidence of the provisions of Chapter One, such that they not apply to such spouses.
(4) The case law did not preclude adopting the approach that spouses who were foreign domiciles at the time of the solemnization of the marriage need not make an agreement arranging their property relations as defined in sec. 1 of the Law. This is so if they made the agreement after the enactment of the Law, and all the more so if they made it prior to the enactment of the Law.
(5) Spouses who married in Israel prior to the enactment of the Law are subject to the community property presumption under which spouses who purchase property through their joint effort and from a common purse intend that ownership will be in common. The right to equality, which led to the community property presumption, is what grounded the Law’s resource balancing arrangement.
(6) The difference between the property regime under the community property presumption and the property regime established by the Law, which is expressed in the timing and character of the partnership, does not express a lowering of the status of the principle of equality, but rather reflects the need to balance the principle of equality and the principle of the certainty of ownership.
(7) The deep-rootedness of the right to equality in Israeli society, from which the right to shared ownership derives, is what requires that spouses who immigrate to Israel are presumed to seek integration rather than separation from Israeli society, and therefore, they, too, adopt the principle of equality between the sexes and its derivative of shared ownership of property acquired in the course of marriage, in the absence of evidence to the contrary.
(8) If the conclusion in regard to an implied agreement derives from the presumption that, at the time of their immigration to Israel, the spouses seek to adopt its lifestyle, it may, also be assumed, absent evidence to the contrary, that the content of the agreement is consistent with the character of the property model that applies to local spouses of similar character.
(9) Since we are concerned with an implied agreement between spouses who married before the enactment of the Spouses (Property Relations) Law, the assumption is that they – like local spouses who married prior to the enactment of the Law – intended to establish an immediate community property regime.
(10) Under the present circumstances, inasmuch as the bank accounts were opened after the spouses immigrated to Israel, it can be said that the rights of the spouses to the money crystallized when the accounts were opened, at a time when they were already subject to the community property presumption. That is not the case in regard to the store that was purchased prior to the couple’s immigration to Israel.
(11) When the rights to property are entirely vested in one of the spouses, evidence of his waiver is required. In order to infer a waiver from a person’s conduct, that conduct must be clear, resolute, and unambiguous.
(12) The strength of the presumption that spouses seeking to integrate into local society adopt a community property regime is adequate when the initial division of rights to a property is concerned, but that presumption is undermined when evidence of a waiver of rights to a property that have already vested in one of the spouses is required.
D. (Per Justices E. Goldberg and D. Dorner):
(1) Israeli statutes that comprise special provisions on the subject of private international law indicate a tendency to grant primacy to the principle of domicile in matters of personal status. The flexibility of the domicile principle expresses the individual’s expectations inhering in the choice to dissociate from a particular social regime and adopt another in its place.
(2) The answer to the question whether consideration should be given to the spouses’ intention to settle in another country in the future should be derived, inter alia, from the weight that the statute attaches to their expectations and desires. If the statute respects those, there is no reason for it to close its eyes to the expression of their real intention to leave one social regime and adopt another in its place.
(3) The fundamental approach in the matter of personal status grants weight to the desires and expectations of the spouses, and this consideration underpinned the preference for the domicile principle. This approach deserves reinforcement where we are concerned with an agreement that arranges the property relations of spouses. Therefore, in establishing the definition of domicile of the spouses, weight should be given to their intention to tie their fates to another country, and adopt its lifestyle and social principles, as long as this intention is serious and clear.
(4) The seriousness of the intention and its decisiveness can be expressed, inter alia, in the period of time that passed until the spouses moved to their intended destination. Thus, it can easily be said that during the period immediately preceding the spouses’ immigration to Israel, while preparing for immigration, Israel can be viewed as their domicile for our purposes, even though they did not yet physically live there.
(5) On the basis of the spouses’ concrete intention to immigrate to Israel, there is no reason, in the present case, not to view Israel as their domicile at the time of the purchase of the property, and thus the provisions that recognize the spouses’ competence to stipulate as to property relations apply to the implied agreement to community property in regard to the asset.
E. (Per Justice M. Cheshin):
(1) The balancing of resources established in the Law will apply only from the day that the Law enters into force. Spouses in Israel are thus divided into two classes: those who married prior to the Law, who are subject to the community property presumption that held before the Law, and those married following the Law, who are subject to the provisions of the Law. So much for the situation of Israeli residents.
(2) The Law was never intended to apply to spouses who married abroad and are not Israeli domiciles.
(3) As for spouses whose domicile was outside of Israel at the time of their marriage, and who later became Israeli domiciles, these fall into two categories. One category comprises those who became Israeli domiciles before the commencement of the Law: These are governed, in principle, by the Israeli law in force prior to the Law, including the principle protecting vested rights. The second category comprises spouses who were domiciled outside of Israel at the time of their marriage, and who became Israeli domiciles after the Law. As far as these are concerned, we must address ourselves to the provisions of the Law, and firstly, to the provisions of section 15 therein, which treats of private international law.
(4) The source and legal nature of the alternative arrangements established by section 15 of the Law are different: whereas the first alternative is one that is imposed upon the spouses by virtue of the law, the second alternative is one that derives from two sources. This alternative is primarily founded upon the agreement of the parties, but this agreement must be valid under the law of the parties’ domicile at the time of its making. The legal preference is rather for the second alternative – the agreement alternative – while the first alternative – that of the law – will only hold subject to the second alternative.
(5) The referral by sec. 15 of the Law to the foreign legal system is to the legal system as a whole – including its rules of private international law – and the Israeli court will sit as if it were sitting in the state whose legal system we have turned, and in the very matter currently before the court.
(6) The community property rule between spouses does not actually find support in the law of contracts and agreements. It draws its nourishment from the principles of justice, equality and fairness, while contract law was primarily intended only to serve as a legal framework and form for expressing those principles that create rights.
(7) By the term “agreement” in sec. 15 of the Law, the legislature is addressing a real agreement – even if an implied agreement – and not a fictitious agreement like that which served in the creation of the community property presumption.
(8) The community property presumption in property relations between spouses derives from the same overarching principle of equality between spouses, and it had two spiritual fathers: one, Israeli society’s views on the appropriate norms that should – and do – apply to property relations between spouses, and the other, the courts, as those meant to express society’s views.
(9) Inasmuch as the principle is Israeli – it is a principle that arose from the reality of Israeli society – it was intended to apply only to those who are domiciles of Israel.
(10) The community property presumption between spouses is an overarching principle in our law in its application to Israeli domiciles, but it does not reach the level of (external) public policy. This overarching principle is a quasi-internal public policy, inasmuch as the overarching principle applies only to Israeli domiciles.
(11) Under the circumstances, the community property presumption applies to the Petitioner and to the Respondent, who, from the moment that they immigrated to Israel, became Israeli domiciles.
(12) Property relations between spouses can be classified with the family of “floating” rights. At the first stage we will apply – as to other “floating” rights – the lex fori, that is, Israeli law and the principle of community property of spouses, which represents the accepted Israeli idea of justice. If one of the spouses claims that the principle of community property does not apply to him by reason of the law of domicile at the time of the solemnization of the marriage, he will have to bear the burden of proving that law. If we find that that law does not recognize the principle of community property – unfairly discriminating against women – we will reject it as repugnant to an overarching principle that applies in Israel to Israeli domiciles.
(13) Where recognition of “vested rights” will infringe an overarching principle that applies to Israeli residents, it should be clear that we will not recognize their existence.
F. (Per Justice E. Mazza, dissenting):
In the absence of a claim – and all the more so, evidence – of an agreement between the parties determining or varying the property relations between them, they are bound by the law of their domicile at the time of the solemnization of their marriage, as prescribed by the opening clause of sec. 15 of the Spouses (Property Relations) Law.
G. (Per Justice Z.E. Tal, dissenting):
(1) The community property presumption now stands in its own right on the strength of justice and equality between spouses. Nevertheless, the community property presumption is not a conclusive presumption. The creation of the circumstances for its application must be proven, and it can be rebutted.
(2) A couple’s very immigration to Israel is insufficient to be deemed an implied agreement to community property.
Keywords
Family Law -- Divorce, Family Law -- Marital property
