The Jerusalem Magistrates’ Court granted in full a claim brought by the First International Bank of Israel against two guarantors of the principal debtor’s obligations. The defendants argued that they had been asked to sign the guarantee documents hastily and without understanding the obligations they were assuming. The Court preferred the testimony of the bank representative and found that she had explained the nature of the guarantees they signed.
Case details: Civil Case 19531-02-21, The First International Bank of Israel Ltd. v. Mimi et al. | Jerusalem Magistrates’ Court | Hon. Judge Orna Sandler-Eitan | Judgment dated July 2, 2024 | The bank was represented by Adv. Yael Sofer of David Sofer Law Offices.
Background to the Dispute
An outstanding balance of NIS 175,541 remained in Ramzi Mimi’s account with the First International Bank of Israel. An insolvency order was issued against the principal debtor on November 30, 2020.
On July 26, 2018, his wife, Amal Mimi, signed a continuing guarantee for all debts, unlimited in amount. On the same day, the principal debtor’s brother-in-law, Riad Tawil, signed a continuing guarantee limited to NIS 190,000.
The defendants refused to honor the guarantees, and the bank consequently filed its claim against them.
What Was in Dispute?
The defendants’ principal argument was that the signing process had been rushed, that the bank representative had failed to ensure they understood the obligations they were assuming, and that they were unaware of the contents of the documents they signed.
The first defendant claimed that she believed she had been asked to come to the bank merely to “approve” the loan being taken by her husband.
The second defendant claimed that he believed his guarantee was limited to NIS 100,000, even though the guarantee he signed expressly stated an amount of NIS 190,000.
What Did the Court Decide?
The Bank Representative Explained the Nature of the Guarantees
The bank called Ms. Merav Avrahami, who had handled the defendants’ signing of the guarantee documents.
The Court noted that the bank representative spoke Arabic at a level that enabled her to explain the nature of the guarantee in spoken Arabic. According to her testimony, communication with the defendants took place in both Hebrew and Arabic “for the avoidance of doubt.”
She further testified that neither defendant told her that they did not understand what was being explained to them, nor did they ask to take the guarantee documents for further review before signing.
The Court found her testimony to be clear, orderly and entirely uncontradicted.
The First Defendant’s Account Was Not Supported by the Principal Debtor’s Testimony
The first defendant testified that her husband and the second defendant were present with her when the documents were signed and that both understood Hebrew.
According to her testimony, her husband had told her that he was taking a NIS 100,000 loan and that she was required to come to the bank merely to “approve” it. She could not explain why such approval would have been required.
She also testified that she trusted the bank, her husband and her brother and therefore did not request an explanation of the meaning of the documents she signed.
The Court noted that the principal debtor, who had been present at the signing and whose alleged statements formed the basis of her account, was not called to testify on her behalf.
The NIS 190,000 Amount Appeared in the Guarantee
The second defendant was unable to explain why he had signed the guarantee alongside the figure of NIS 190,000.
He confirmed that the figure NIS 100,000 did not appear in the guarantee and that he knew what the digit 9 looked like in Hebrew. He testified that he had simply “not noticed” that the guarantee stated NIS 190,000.
He further testified that he would have been willing to sign the guarantee even had he known at the time that it covered a debt capped at NIS 190,000.
Reliance on the Principal Debtor Did Not Release the Guarantors from Their Obligations
The Court found that, even according to the defendants’ own account, they had relied on what the principal debtor told them and had not taken steps to determine for themselves what they were signing, despite having had the opportunity to do so.
The Court added that, even if it were assumed in their favor that events had unfolded exactly as they described, this would not release them from their obligations under the guarantees.
Ultimately, the Court preferred the bank representative’s testimony that she had explained the nature of the guarantees over the defendants’ version, which was not supported by additional evidence.
Significance of the Judgment
The judgment establishes that, in the circumstances of the case, the defendants’ reliance on statements made by the principal debtor and their failure to independently clarify the meaning of the documents they signed did not release them from their obligations.
The Court gave weight to the bank representative’s testimony that she had explained the nature of the guarantees, to the fact that the defendants’ version was not supported by testimony from the principal debtor, and to the fact that the second defendant signed a guarantee expressly stating the sum of NIS 190,000.
In the circumstances considered by the Court, the fact that the guarantors relied on the principal debtor and failed to independently verify the meaning of the documents they signed did not release them from their obligations under the guarantees.
Outcome
The Court granted the bank’s claim in full.
The first defendant was ordered to pay the bank NIS 175,541, together with the interest specified in Section 4 of the statement of claim and NIS 9,500 in combined legal costs and attorneys’ fees.
The second defendant was likewise ordered to pay the bank NIS 175,541, together with NIS 9,500 in combined legal costs and attorneys’ fees.
The Court clarified that the bank may not recover the overlapping portion of the adjudicated debt twice.
Representation
Adv. Yael Sofer of David Sofer Law Offices represented the First International Bank of Israel in the proceedings.
The Court granted the bank’s claim in full.
Source
The judgment was delivered in Civil Case 19531-02-21, The First International Bank of Israel Ltd. v. Mimi et al., by the Jerusalem Magistrates’ Court, before Hon. Judge Orna Sandler-Eitan, on July 2, 2024.
The information provided in this article is for general informational purposes only, does not constitute legal advice and is not a substitute for individualized legal advice based on the circumstances of a particular matter.
