In Judge Horowitz’s approach: “even if ‘coronavirus’ is not a magic word, there is no doubt that these are not ordinary times,” and he held that there was no reason to halt the forfeiture of the bank guarantee, saying: “why is her blood redder than that of the respondent, and why is the harm that will be caused to her by paying the rent on time greater than the harm that will be caused to the respondent by postponing the payment of rent and spreading it out?”
This decision certainly made waves, since the State of Israel and the entire world are experiencing a deep economic crisis with wide-ranging implications for everything relating to the parties’ contractual rights.
And behold, the ink had not yet dried on the paper when, in the Jerusalem Magistrates’ Court, from the mouth of the Honorable Judge Bilha Yahalom, a different decision was handed down, holding that in a similar situation that yielded an opposite outcome, the forfeiture of the bank guarantee by the property landlord was halted.
Judge Yahalom addressed Judge Horowitz’s decision, saying:
The respondent referred to OM 12741-04-20 Rav Bariach Industries Ltd. v. P.L.A.R. Asset Management 15 Ltd. et al. (decision of 20.4.16) and to the fact that a similar request in that proceeding was rejected.
I have read it and my opinion on the matter differs. Even if “coronavirus is not a magic word,” there is no doubt that these are “not ordinary times,” in the words of the Honorable Justice Y. Amit in HCJ 2435/20 Yedidia Loewenthal et al. v. Benjamin Netanyahu, Prime Minister et al. (decision of 7.4.20): the coronavirus pandemic leaves its mark on all areas of life. Since the pandemic broke out in December 2019, the countries of the world have been contending with the rapidly spreading virus, which has to date left behind a long trail of more than a million patients and tens of thousands of dead. Israel’s place in this struggle has not been absent, and, regrettably, as of the writing of these lines, in Israel there are already more than 9,000 diagnosed patients and dozens of deaths. On the legal plane, the pandemic leads us in this country into an unsown land, into legal and constitutional regions and paths that the earliest did not imagine and that even the prophets of doom did not foresee…
Since then, 12 days have passed, and as of the writing of these lines there are in Israel already more than 13,000 patients. At a time when the news broadcasts open each evening with a count of our dead, and most of the countries of the world have ceased their routine and the number of the deceased rises from day to day, and especially when all the restaurants in the State of Israel, including the applicant, have been closed for more than a month and until further notice, which is not expected to be received in at least the coming two weeks — so that in practice the state does not allow the applicant to run its business in any manner whatsoever — one could have expected different conduct, and at the very least, that the respondent would act in accordance with the terms of the lease agreement under which it seeks to realize the guarantee. This was not done, since the respondent did not act in accordance with the lease agreement and did not deliver to the applicant a 14-day warning, when even the interpretation of those 14 days still requires clarification as to whether the count of the Passover recess days and the current emergency recess is counted within this count of days. I find that there is room to grant the request”.
Summary
In our humble opinion, in a courageous decision Judge Yahalom did not hesitate to rule against the property landlord, and granted the tenant’s request. For there is no logical or legal basis whatsoever for paying rent at a time when there is no access to the leased property and the tenant cannot use it.
We support the decision, and until the legislature intervenes — including the expression of a position by the Attorney General — we will see a flood of the justice system on this same subject.
It is important to note that the decision handed down in the Tel Aviv Magistrates’ Court did not address the issue of frustration of contract and focused mainly on the independence of the bank guarantee and its absolute standing, and Rav Bariach did not succeed in proving their claim.
As for the decision in the Jerusalem Magistrates’ Court, the Honorable Judge Yahalom attributed importance to the coronavirus pandemic and to the situation in the State of Israel — which was lacking and called for in Judge Horowitz’s ruling.
