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Leave for Civil Appeal 5150/02
In the Supreme Court
Before: The Hon. Judge D. Dorner
The Hon. Judge E. Chayut
The Hon. Judge S. Jubran
The Applicants: 1. Dr. Moshe Weinberg, Adv.
2. Weinberg - Doron & Co., Law Office
versus
The Respondents: 1. Karen Bails, Adv.
2. Shula Navon
3. Yoram Navon
An application to appeal a ruling of the Tel Aviv - Jaffa District Court handed down on 12th May 2002 by the Hon. Judge Mrs. H. Gerstel in Application for Leave to Appeal no. 2352/01.
Date of hearing: 25th May, 2003
On behalf of Applicants: Adv. Moshe Weinberg
Adv. Micha Barnea
On behalf of Respondent no. 1 Adv. Dor Shaham
Adv. Natali Zelcer
On behalf of Defendants nos. 2-3 Adv. Zvi Kahane
Rationale
Civil hearing - service of suit to Third Party outside the jurisdiction no longer involves service to an Israeli defendant.
In this case the Supreme Court ruled that the time has come to change the procedures which were also set down by the Supreme Court, in request for leave for civil appeal 3765/90 Alba Metal Processing Machines Ltd. v. Colgar SPA, where it was found that in service of suit outside the jurisdiction according to Regulation 500(10) of the Civil Procedures Regulations - 1984, does not enable service of a third party policy in which the foreign "defendant", is the sole "defendant".
The Court ruled that it is possible and even proper to prefer another interpretation, according to which a foreign "defendant" in a Third Party Notice can be considered as a necessary or correct litigant for the purpose of the claim which is being conducted in Israel, even if in the said third party notice, there is no "defendant" in addition to the foreign "defendant" to whom to serve the suit in Israel was served properly. In other words, the same test can be applied to a foreign third party as was applied on a foreign defendant, with the necessary changes, and to say that the foreign third party is the necessary or correct party in the claim if, had he been resident in Israel, the Court would have been authorised to hear the third party notice filed against him.
J U D G E M E N T
Judge E. Chayut
General:
The District Court of Tel Aviv - Jaffa (the Hon. Judge Mrs. H. Gerstel) decided to decline the application for leave to appeal filed by the Applicants in respect of the decision of the Tel Aviv - Jaffa Magistrates Court (Hon. Judge Mrs. R. Ronen) to cancel leave for service of suit outside the jurisdiction which was given against Respondent no. 1. In respect of the decision of the District Court, the Applicants filed a request for leave to appeal to this Court, and on 25th May 2003 we decided to grant the leave to appeal, and enabled the parties to file supplementary pleadings.
The question which arises in this appeal is whether the Court is entitled to permit service of third party notice outside the jurisdiction according to Regulation 500(10) of the Civil Procedure Regulations - 1984 (hereinafter: Civil Procedure Regulations), and how to interpret this regulation which provides that permission may be granted to service court documents to a person outside the jurisdiction of the State if he is a "necessary or correct party in a suit which was duly filed against another person to whom a summons was properly served within the State of Israel".
In A.L.A no. 3765/90 Alba Metal Processing Machines v. Colgar SPA, PD 45(1), 353 (hereinafter: the Alba Matter), Judge S. Levin of this Court (his title at the time), determined that the clear language of Regulation 500(10) of the Civil Procedure Regulations does not enable the service of a notice to a third party where the foreign "defendant" is the sole "defendant". In view of the dissatisfaction which Judge S. Levin expressed at the results he reached in the Alba matter (page 356) and in view of the time which has passed since that decision was handed down, we are of the opinion that this question should now be dealt with once again.
The Facts and the Procedures Forming the Basis of the Appeal
1. Respondent no. 2, Shula Navon, engaged the legal services of the Weinberg - Doron & Co. Law Offices (hereinafter: the office). At the relevant time the office had a branch in the U.S.A. which constituted an independent entity from both the professional and budgetary point of view. Respondent no. 1 Adv. Keren Bails is a Canadian lawyer whose services were engaged by the office in the U.S.A., to deal with the matter of Shula Navon. In due time the office filed a claim for payment of fees against Shula Navon, and she on her part, filed a counter-claim, inter alia, for over-charging, misappropriation of expenses and damages which she allegedly sustained, as a result of the negligence in dealing with her case.
The office requested to adjoin Adv. Bails as a defendant in the claim filed, but this request was denied. Therefore, the office filed a request within the framework of the counter-claim, for leave to serve a third party notice against Adv. Bails outside the jurisdiction. In the application for leave, it was alleged that Adv. Bails caused damage while handling the matters relating to Shula Navon, and that if the firm will be liable to indemnify Shula Navon, according to her demands in the counter-claim, Adv. Bails must indemnify the office in respect of any amount which it will be ordered to pay, as stated.
At first the Magistrates Court allowed the service, but later on cancelled it, in view of the objection raised by Adv. Bails. In respect of this decision, an application for leave to appeal was filed in the District Court, and the District Court in denying the application, based its decision on the decision of this Court in the Alba matter.
The Parties Allegations
2. In their appeal the Applicants alleged that it would be appropriate to once again consider the narrow interpretation which was given by this Court in the Alba matter, on the provisions of Regulation 500(10) of the Civil Procedure Regulations. The Applicants point out in this respect, the fact that in the modern times in which we live, numerous international transactions are contracted which involve parties from various countries, and they relate to technological developments which enable easy communication between the various countries. The Applicants add and contend further that in the Alba matter the facts which were the basis of the Fourth Party Notice, were different in their content from the facts which are the basis of the principal claim, whereas in the case before us there is a wide common denomination between the facts and the issues which are about to be determined in the two proceedings.
The Respondents, on their part, rely on the decisions of the Magistrates Court and the District Court, and in their view no change should be made in the decision of this Court in respect of the Alba matter.
Discussion
3. The jurisdiction of the Courts in Israel is acquired, as a rule, by issuing a summons (Y. Sussmann, Civil Procedure, (7th ed. - 1995), 34, (hereinafter: Sussmann, Civil Procedure). The main way to serve a summons is to serve it to the defendant who is to be found in Israel. This is the case when he is permanently located in Israel, and also when the defendant is present in Israel by chance, and so too when the defendant himself is not present in Israel, but his authorised representative or the lawyer representing him in the matter being heard are present (Regulation 477 of the Civil Procedure Regulations).
In all these cases the Court in Israel acquires the jurisdiction to hear the claim by virtue of the summons served within the Israeli jurisdiction. Alongside such cases, there are cases where the service cannot be carried out in the main way, and even so it is the proper and correct way for the Court in Israel to acquire the jurisdiction to hear the claim. In these cases Regulation 500 of the Civil Procedures deals with various matters in which the Court is entitled to permit service of Court documents to the party who is located outside the borders of Israel. The common denominator of the matters which are detailed in the Regulation, is the existence of one such link or another between the dispute which is to be heard and Israel; for instance when the subject of the claim is real estate which is situated in Israel, or when the claim is based on an act or omission perpetrated within Israel. Granting leave to serve a summons outside the jurisdiction is subject, as stated, to approval of the Court and the rule is that even if the Court is convinced that a cause exists to grant a leave as provided in the regulation, it must further examine whether it is proper to grant the leave in the specific circumstances of the case (L.C.A. 2705/97 Hageves A. Sinai (1989) Ltd. v. The Lockformer Co. and Others, 52(1), PD 109). The reason for a careful approach which the Court should take in this context, lies in the fact that the service outside the jurisdiction provides the Court in Israel with the jurisdiction to hear the claim, which in general it does not have the jurisdiction to hear, and the hearing thereof may result in a clash of jurisdiction and may affect the international rules of etiquette (C.A. 837/87 Sergio Hoyda v. Dan Hindi & Others, PD 44(4), 545).
4. The option according to which the Applicants requested leave for service outside the jurisdiction in the case before us is, as stated, stipulated in Regulation 500(10) of the Civil Procedures Regulations �The court or the registrar who is a judge, may to grant leave to serve court documents outside the jurisdiction of the State in one of these instances: ...
10) The person who is outside the State, a necessary party, or a proper party, in the claim which was properly filed against another person, to whom a summons was duly served within the State.
According to that provided in this regulation, leave for service of suit outside the jurisdiction may be granted when a claim is being conducted in Israel against a person and another person, who is not in Israel, is a necessary party or proper party in respect of the said claim.
The test which has been set for the purpose of determining the answer whether the foreign party is "the necessary party or the proper party" is whether, had the foreign party been in Israel, the Court would be authorised to hear the cause of the claim against him, and whether it was proper to hear the claim together with the claim in question in Israel (C.A. 98/67 Hans Liebhar v. Gazit and Shacham Building Co. Ltd. and Others, 21(2) PD, 243). In the case before us, we are dealing with an application for leave to serve a foreign party, against whom a third party notice has been filed, and not leave for service to a foreign party who is being sued as a defendant.
Is it possible to say that the third party is "a necessary party or a correct party in the claim"?
In the matter of Alba a similar question was discussed. In that case a request was filed on behalf of an Israeli third party for leave to serve a fourth party notice, outside the jurisdiction. Judge Levin determined that in this respect based on Regulation 500(10) a fourth party notice constitutes a separate "action", which is not part of the main proceedings, and therefore it is necessary that the party to whom a summons has been duly served in Israel, will too be a party to the same fourth party notice.
Judge Levin substantiated his determination in the language of the regulation and on English Court judgements where a regulation similar to Israeli regulation 500(10) was in force. Judge Levin, as stated, expressed his dissatisfaction at the results he reached, and also explained that it is only proper that the legislator consider amendment of the regulation in Israel, similarly to the amendment made in the meantime in the wording of the English regulation.
5. Dissatisfaction from the results of the Alba matter is also expressed in L.C.A. 4633/92 Holmsunds Stuveri AB and Others v. Yanor Marine Services Ltd. (in liquidation), (not published), (hereinafter: the Yanor matter). In that matter Judge Levin qualified the application of his determination in the Alba matter and ruled that when the third party is also a defendant in the main proceedings, he can be served outside the jurisdiction, with a third party notice which is sent by another defendant in the main proceedings, and this is also possible in the absence of another Israeli third party. Judge Levin substantiated his decision on the fact that there is in any case, a possibility that the Court will determine the apportionment of liability among the defendants, and the Israeli defendant will be able to sue for participation by the foreign defendant - third party - by virtue of the said decision, and added that "what can be sued in a separate claim can also be sued - in the circumstances of this matter - when a third party notice is involved".
6. Over ten years have passed since the judgement in the Alba matter was handed down, but the wording of regulation 500(10) remained as is. Therefore, it is proper to reconsider and see whether a different conclusion can be reached as to the interpretation of this regulation. I will state at the outset, that in my view the language of the regulation does not oblige the interpretation which Judge Levin adopted, and therefore, it is agreed by all that the results to which this interpretation leads, are not acceptable.
It appears that it is possible, and indeed necessary, to prefer another interpretation according to which a foreign "defendant" in a third part notice can be considered as a necessary or correct party for the purposes of an action being conducted in Israel, even if in the same notice there is no "defendant" other than the foreign "defendant" who has been properly served in Israel.
7. Regulation 500(10) enables, as stated, leave to be granted for service of suit outside the jurisdiction when the person who is outside the country is "a necessary party or the proper party" in an action which has been properly filed against another person, who has been duly served with a summons, within the State. The key question is, therefore, how to interpret the term "action" which is mentioned in the regulation. In my opinion, the term "action" may be interpreted as referring to the main proceeding including all its various extensions, and including the third party proceedings, which are none other than ancilliary proceedings to the main action (as the status of the hearings of a third party notice is an ancilliary proceeding annexed to the main action). See: C.A. 775/75 Nathan Zarklevitz and Others v. Nazam Abed Erahim Elnabulsy and Others 30(3) PD, 102.
From the wider point of view, it is sufficient that the third party, the foreigner, meets all the criteria set down in regulation 216 relating to the filing of a third party notice, in order that he should be considered a "necessary party or proper party in the action". In other words, the same test can be applied on the foreign third party which was applied in the judicature on foreign defendant, with the necessary alterations, and to say that a foreign third party is "a necessary, party or a correct party in an action" if, had he resided in Israel, the Court would have the jurisdiction to hear the third party notice against him. This approach implements considerations of substance as compared with narrow linguistic considerations, and it fits very well with the joint purpose which lies at the base of the third party notice proceedings, as with the possible basis for granting leave to serve outside the jurisdiction, according to Regulation 500(10) of the Civil Procedure Regulations.
The principle of this purpose - the will to solve efficiently and completely, and in one proceeding all the issues which arise in connection with the same matter. Indeed, in order to achieve this purpose the regulation legislator determined that an ancilliary proceeding may be annexed to the main action - the third party notice (See: U. Goren, Issues in Civil Proceedings (7th ed. 2003), 335; Sussmann, Civil Procedures, 635); for the same purpose the possibility is provided in Regulation 500(10) for leave for service of a suit outside the jurisdiction, where the foreign party is a necessary party or the proper party in the proceedings which are being conducted in Israel against a party, to whom a summons has been duly served in Israel.
Therefore, I do not see any reason to differentiate between a party necessary to the main claim as a defendant and between a party necessary to an action, in the wide sense which includes also the third party notice as an ancilliary proceeding to the main action.
This interpretation corresponds with the legislative purposes and the general policy considerations (see A. Barak Interpretation in Law (2nd vol. - Legislative Interpretation 1993), 99). In the case under discussion, the literal, narrow interpretation leads to undesired results, and the unjustified distinctions between cases in which there is no real difference and to which Judge Levin referred to in the Alba matter and in the Yanor matter. Therefore, it appears that it should no longer be adopted.
8. To sum up - I suggest to allowed the appeal and return the hearing to the Magistrates Court in order that the question of leave for service of suit outside the jurisdiction of a third party notice against Adv. Bales to be tested according to the above described test.
In view of the fact that the lower Court followed the Alba matter, on which the Respondents also relied, I am of the opinion that there is no point in ordering costs.
Judge Mrs. D. Dorner
I agree
Judge S. Jubran
I agree
It was agreed as stated in the judgement of Judge Mrs. E. Chayut.
Given this day, 3rd December, 2003.
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