Case Number
C.A. 248/53
Date Decided
4-4-1955
Decision Type
Appellate
Document Type
Full Opinion
Abstract
In September 1950, the appellant lent to the respondents for a period of two years the sum of I.L. 800.- secured by a mortgage on land and a building registered in the Land Registry. To ensure the return of a sum equivalent to the amount lent, and having regard to a possible fall in the value of the Israel pound, it was provided by clause 9 of the mortgage deed that, if at the time of payment the value of the land and building had risen, the lender should receive on repayment an addition to the sum of I.L. 800.- representing the change in value.
When the time for repayment of the loan arrived the value of the property had risen owing to a fall in the value of the Israel pound and the respondents offered to repay the sum of I.L. 800.- but refused to pay the additional sum provided for. They sought a declaration in the District Court that they were entitled to redeem the mortgage and have the registration money removed from the Land Registry upon payment of I.L. 800.- and expenses. The respondents contended (a) that clause 9 of the mortgage deed was illegal, being contrary to Ottoman legislation regarding a maximum rate of interest that might lawfully be charged and (b) that clause 9 was unenforceable as being contrary to public policy, in that it encouraged inflation. On the basis of these two contentions the court made a declaration in favour of the respondents and the appellant appealed.
Held, allowing the appeal, that clause 9 of the mortgage deed was not contrary to the Ottoman legislation. A clause in a mortgage deed calling upon the mortgagor to pay in Israel pounds a higher sum than that lent, if at the time of redemption the value of the land and building, subject to the mortgage, had risen because of a fall in the value of the Israel pound, is not contrary to the Ottoman legislation regarding interest and there is nothing contrary to public policy in such a clause.
Keywords
Contracts, Jewish Law -- Contract law
