Supreme Court Voids Payments in Dispute Over Fictitious NIS 1.2 Million Loan

The Dispute After the Relationship Ended

Osipova and Klishtein were in a romantic relationship and lived in a penthouse at 176 Bar-Lev Street in Tel Aviv. The apartment and an Audi A3 were registered in Osipova’s name. After they separated, Klishtein sought recognition of his rights in the assets or, alternatively, an order requiring her to pay NIS 1.2 million under a loan agreement dated August 1, 2000.

What the District Court Ruled

The parties did not dispute that Klishtein had not actually transferred NIS 1.2 million to Osipova as a loan: the agreement was intended to protect his rights in the apartment. The Tel Aviv–Jaffa District Court found that he had paid at least NIS 297,412 toward the apartment and financed the purchase of the car. Osipova was ordered to pay NIS 297,412 for the apartment and NIS 80,000 received from the sale of the car, plus linkage differentials and interest, as well as NIS 30,000 in court costs and attorneys’ fees.

Why the Supreme Court Overturned the Decision

The Supreme Court held that, as a rule, a court may not award a plaintiff a remedy that was not requested in the statement of claim. A departure from this rule is possible only in rare cases, when the new remedy arises directly from the original remedy and the court has examined all the required facts. In this case, the amounts awarded—NIS 297,412 and NIS 80,000—were not claimed and did not arise directly or indirectly from the original remedies, and the fictitious loan agreement could not cure this defect.

The Case Will Be Reconsidered

The appeal was accepted, the District Court’s judgment was overturned, and the dispute was remanded to it for a new decision based on the causes of action, arguments, and remedies pleaded, taking into account the evidence submitted. The Supreme Court left it to the trial court to decide whether amendment of the pleadings should be permitted, without expressing a position on the issue. No costs were awarded on appeal.

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