Compensation

Barazani v. Bezeq

Case/docket number: 
CFH 5712/01
Date Decided: 
Monday, August 11, 2003
Decision Type: 
Appellate
Abstract: 

Facts:    Respondent 1 (hereinafter: Bezeq) advertised an international dialing service (hereinafter: the Service), and represented that a customer would be charged only for the exact amount of time that he used Service. In practice, it turned out that the method that Bezeq used for its calculations resulted in overcharging the users of the Service relative to what was expected according to the advertisement.

 

                The Petitioner, who used the Service supplied by Bezeq, but who had not seen the said advertisement, initiated a suit in the District Court for pecuniary damages against Bezeq. He claimed that the advertisement was one “liable to mislead a consumer” under sec. 2 (a) o the Consumer Protection Law, 5741-1981 (hereinafter: the Law), in regard to the actual cost of international calls. He also requested that the suit be certified as a class action.

 

                The District Court certified the suit as a class action. However, on appeal, the Supreme Court reversed that decision, based upon the provisions of sec. 31 (a) of the Law, according to which an act or omission in contravention of sec. 2 of the Law “shall be treated as a tort under the Civil Wrongs Ordinance [New Version]”. Therefore, and despite the finding that the advertisement was one that was “liable to mislead a consumer”, the Court applied the causal-link test established by the Civil Wrongs Ordinance [New Version] (hereinafter: the Ordinance), and found that since the Petitioner had not been exposed to Bezeq’s misleading advertisement, a causal link was not established between the advertisement and the damage putatively caused him. That being so, the Court held that the Petitioner did not have a personal cause of action against Bezeq under sec. 2 (a) of the Law, and in any case, was not a proper plaintiff in a class action.

 

                The Further Hearing focused upon the question whether or not the prohibition of misleading under sec. 2 (a) of the Law constitutes a “regular tort” like every tort in the Ordinance, subject to the doctrines established under the Ordinance, among them the causal-link doctrine.

 

Held:   The Supreme Court held:

 

A.            (1)          The provisions of sec. 2 (a) of the Law, prohibiting deceit, create a prohibition upon conduct. A “dealer” contravenes that prohibition even if the thing that he does by act or omission is “liable to mislead”, that is, whether or not a person was actually misled by that thing that he did. The standard of conduct required by the provisions of this section is one that is higher than that required by many statutes, which require a direct causal link between an act and a result – the harm caused the victim – whereas sec. 2 (a) prohibits conduct, as such, even if it does not lead to harm. That requirement is intended to protect consumers and ensure that they receive reliable information about the goods or services being offered, so that they can make informed choices about whether or not to make the transaction.

 

(2)          Under sec. 31 (a) of the Law, an act or omission proscribed by sec. 2(a) shall be treated as a tort under the Ordinance. Nothing in the language of sec. 31(a) of the Law would show that the tort under sec. 2 (a) removes it from the fundamental principles or the doctrines of the Ordinance, and nothing therein might show that a consumer is entitled to compensation merely because a dealer contravened a provision of the Law. On the contrary, the Law unconditionally refers to the provisions of the Ordinance.

 

(3)          In addition to the clear language of the Law, expediency also argues that the sec. 2 (a) of the Law establishes a tort like any other tort under the Ordinance, for if those same acts and omissions external to the Ordinance are tortious in nature, it is but natural that we should employ the same traditional, familiar doctrines that tort law created and developed over so many years such that they have become foundational to the legal system, subject, of course, to special, exceptional cases

 

(4)          Nevertheless, there is a difference between the native torts of the Ordinance and those external to it that are treated as torts under the Ordinance. A tort external to the Ordinance should be scrutinized carefully in order to determine whether or not a particular doctrine of the Ordinance is compatible with the elements, nature and construction of the external tort.

 

B.            (1)          In accordance with the causal-link doctrine in sec. 64 of the Ordinance, there must be a causal connection between a person’s act or omission – an act or omission that constitutes a tort – and the harm caused to the victim, for which he demands compensation. In the instant case, there was no causal connection between the advertisement and the “harm” caused to the Appellant, inasmuch as the Appellant did not read that advertisement, and in any case, was not influenced by it and did not rely upon it. While Bezeq perpetrated a tort by publishing that advertisement to the public, the existence of a tort is insufficient to entitle a person to compensation. Rather, that person must show that he was harmed as a result of that tort, and that precondition was not met in regard to the Appellant.

 

(2)          Similarly, the compensation doctrine, enunciated in sec. 76 of the Ordinance, states that a person is not entitled to compensation except in regard to damage that arose from a tort. In regard to compensatory relief, the Law requires that the plaintiff prove the damage arising from the misrepresentation, that is, the existence of actual deceit, and an act arising from that deceit. In the circumstances of this case, the publication of something that might tend to mislead – the advertisement itself – is not sufficient to for a consumer to acquire a right to compensation if he suffered no actual damage. The rule is that damages will not be awarded unless harm was caused, and damages will be awarded only to the extent of the harm caused. In the absence of an express, unequivocal provision granting a person damages for virtual harm without the proof of actual harm, it is difficult to imagine that a court will award damages. Such significant creativity is intended for the legislature, and not the courts.

 

(3)          The causal connection (both factual and legal) required under sec 2 (a) of the Law does not require a consumer’s explicit reliance upon the representation presented by the dealer. Unlike other legal provisions, which explicitly require a causal connection of reliance, it is possible that a consumer will not directly rely upon the dealer’s representation, and the required causal connection will, nevertheless, exist, that is, that the dealer’s representation “was the cause or one of the causes of the damage”, as stated in sec. 64 of the Ordinance. That would be the case, for example, where it can be shown that an advertisement – capable of misleading the consumer – that was published by a dealer, initiated a factual chain of events that ultimately caused damage to the consumer. In such a case, it would be appropriate to interpret the concept of reliance broadly, such that it would not be restricted exclusively to direct reliance.

 

(4)          However, there must be an appropriate causal connection between the misleading publication and the injury that a consumer incurs. The fact that the purchase of the goods or services occurred after the publication is not, in and of itself, sufficient to show a causal connection between the potentially misleading publication and the consumer’s acquisition of the advertised goods or services. There must be an appropriate causal connection between the two occurrences, and that link will be deduced from the circumstances of each and every case with the help of the relevant evidence.

 

C. A class action is, in effect, an extension of the personal right to sue, and in the absence of a personal right to bring suit, there can be no class action. The import and scope of the personal suit will only be influenced marginally, if at all, by the class action. A class action does not grant a consumer an independent cause of action. It is merely a procedural tool for joining individual suits in a single proceeding. Class actions were added to the Law some thirteen years after its enactment, and its addition to the Law merely expanded the personal suit – procedurally – into many personal suits, but the principles of the personal suit remained unchanged. Therefore, sec. 2 (a) of the Law should be construed as it was prior to the addition of class actions to the Law, that is, without reference to such a class action.

 

D.            (Justice T. Strasberg-Cohen, dissenting):

 

(1)          The phrase “shall be treated as a tort under the Civil Wrongs Ordinance” should be construed as establishing a new cause of action that is like a tort. This cause of action is not identical to a tort, but is equivalent to a tort in the sense that it applies the same doctrines of the Ordinance to the act or omission – in the present case, the compensation and causal link doctrines. However, it is a cause of action that is unique to this Law. It is substantively independent, and must be construed in its own context, in light of the objective it was intended to serve, while taking the said doctrines into account, and which must be given content that corresponds to the objectives of the Law and its enforcement in the framework of a class action.

 

(2)          For the purpose of establishing a cause of action for compensation for damage caused by a publication liable to mislead, it must be shown, prima facie, that the publication was liable to mislead, that damage was incurred, and that there is a factual and legal causal connection between the publication and the damage. However, even in the absence of the consumer’s reliance upon the potentially misleading publication, there may be a causal link between the publication and the damage. This is so because, first, establishing a prohibition upon conduct that is liable to mislead without recognizing the remedy of compensation for its contravention without proof of actual deception, renders the Law’s primary prohibition lacking any real civil remedy. Second, there is little possibility that a consumer will devote significant effort and money solely for the purpose of obtaining a restraining order for the benefit of the general public. Third, over the years that the Law has been in force, the criminal sanction has been applied with measured restraint, and it would seem that the criminal sanction cannot provide significant deterrence for powerful dealers that expect to garner huge profits from misleading the public, and the same is true of administrative sanctions. Fourth, an approach that would require actual deception in order to obtain compensatory relief would limit the scope of a dealer’s liability only to those consumers who could actually prove that they were indeed misled by the dealer’s representations, and would make deception worthwhile from the perspective of the dealer. Fifth, a construction that would grant relief only to those consumers who were actually deceived would create an artificial distinction between the consumer public that used the goods or services that were the subject of the misleading advertising, but who were not exposed to it, and the consumer public who were exposed to the misleading information. Sixth, in other cases in the past, the Supreme Court did not hesitate to expand the available types of relief beyond those set out in a law, in order not to eviscerate the law. Seventh, the Law establishes other prohibitions that do not require proof of reliance, the violation of which grants the consumer a broad right to compensation. There is little reason to granting an independent remedy of compensation, which includes granting broad discretion to the court, for the violation of those prohibitions, while not doing so in regard to the Law’s central prohibition – the prohibition upon misrepresentation.

 

(3)          The tort perpetrated by publishing something liable to mislead does not require reliance in order for the consumer to be entitled to compensation for damage incurred due to the publication, and it is not tied to the demand of reliance. Had the legislature intended to limit the prohibition of deceit to one of the torts requiring reliance, one would expect that it would have done so explicitly. Reliance is not required by the language of the Law or by its objective for the purpose of the existence of a causal connection. Thus, there can be a causal connection without reliance.

 

(4)          Holding that there is no requirement that the consumer rely upon the misleading publication does not obviate the need for a causal connection, and in the instant case, the representation made by the dealer should be deemed a binding promise to the consumer public that requires that it act in accordance with the promise. That promise bestows a right upon the consumer, and places the dealer under an obligation in regard to the consumer public. If the dealer does not meet the obligation it undertook by means of the advertisement, and charges more than what was promised in the advertisement, it breaches its duty, and as a consequence of that breach, the consumer incurs damage. Therefore, even if the consumer was not exposed to the misleading publication, and did not change his behavior in regard the use of the product or service, he will still be deemed harmed, since the price he was charged for the product or the service was higher than the price at which he was entitled to purchase the product or service.

 

(5)          The consumer incurs injury in the form of a “price differential”, which is a real loss. Appropriate construction of the required causality would see this injury as connected to the breach of the proscribed misrepresentation, as due to the misleading advertisement and the difference between it and the manner in which the dealer actually acted, the consumer suffered injury. Such a construction would meet the requirement of a causal link, both factually and legally. Factually, the said injury caused to the consumer is a consequence of the fact that the dealer made a representation that it did not honor. Legally, the injury is causally related to the representation under the foreseeability test, in that when a dealer makes a false representation, it foresees that charging contrary to the representation will cause harm due to the “price differential”, under the risk test, since that harm falls within the scope of risk of the dealer’s act, and under the common-sense test, by which we examine the overall actions of the tortfeasor and their contribution to the harmful result.

 

E. (Justice E. Mazza, dissenting):

 

(1)          It is possible and proper to restrict the application of traditional tort law to consumer causes of action. Such restriction is clearly required by the significant, substantive difference between the purpose of consumer torts and the purpose of regular torts.

 

(2)          The consumer laws of deceit must contend with the requirements of reliance and causality differently than tort law. Instead of the personal reliance of each and every consumer – that of traditional tort law – we should adopt a doctrine that recognizes “constructive reliance” of the consumer public to which the advertiser directed its misleading advertisement, while instead of requiring proof of a factual causal connection between the deception and the injury caused to each of the complaining consumers, we should adopt a doctrine that recognizes a “consumer causal link” that would be inferred from the merger of the potentially misleading publication and the intention of the advertiser that the advertisement reach the consumers, mislead them, and thus influence their conduct.

 

(3)          Consumer deception would give rise to a (personal or class) cause of action for monetary relief upon the fulfillment of three elements: an offending publication, injury, and a “consumer causal link”. As opposed to this, we should also recognize a defense that would be available to the advertiser if he can show that the plaintiff was aware of the true facts, and that the offending advertisement could not, therefore, negatively influence his situation.

 

(4)          The reliance requirement undermines the objectives of consumer protection laws –leveling the playing field for the parties; increasing personal autonomy; the concept of consumer sovereignty; protection of the public welfare and of social rights; advancing commercial fairness; protecting the credibility of the local market and public confidence in the social regime – and it frustrates their realization. Once a potential to mislead is proved, and it is shown that the advertiser indeed intended that the misleading advertisement reach the public and influence its consumer conduct, we should properly hold that there is constructive consumer reliance upon the misleading advertisement. The question whether the dealer actually achieved its purpose, i.e., that the misleading publication actually reached its audience and actually influenced it, is of limited importance.

 

F. (Justice D. Dorner, dissenting):

 

(1)          The Law, which intervenes in contracts between unequal parties, and subjects the stronger party – the supplier – to an increased duty of fairness towards the weaker party – the consumer – is firmly anchored in the established doctrines of contract law. Many consumer transactions are anchored in the accepted contractual doctrines under which if a supplier charges a higher price than the correct, advertised price, consumers are entitled to a refund of the difference. In the reality created by those doctrines, and in which consumers actually operate, consumers trust suppliers without verifying that each and every transaction conforms to the advertised price.

 

(2)          A supplier’s advertisement of a specific price creates a consumer right not to pay a higher price. If the supplier charges a higher price, that will, in any event, constitute a breach of contract that would give rise to monetary relief even for consumers who were not exposed to the advertisement.

 

(3)          That entitlement can be grounded at least three ways. The first deems the dealer’s publication about the price an irrevocable offer to the public, which can be accepted by the objective performance of its conditions, while the supplier is bound to the publicized price, and provides an opportunity for the public to purchase the product or service for a price that will not be higher. In accepting the offer, the parties agree to the published price, and the supplier must refund any additional amount charged. The second approach deems the contract to have an implied term under which the supplier undertakes not to charge the consumer more than the advertised price. Such a term reflects the expectations of the parties. Overcharging constitutes a breach of that term. The third approach would classify such overcharging – particularly if it targets only consumers who were not exposed to the publication – as a breach of contractual good faith.

Voting Justices: 
Primary Author
majority opinion
majority opinion
majority opinion
Author
concurrence
Author
dissent
Author
dissent
Author
dissent
Full text of the opinion: 

In the Supreme Court

CFH 5712/01

 

 

Before:                                                            The Hon. Chief Justice A. Barak

                                                            The Hon. Deputy Chief Justice T. Orr

                                                            The Hon. Justice E. Mazza

                                                            The Hon. Justice M. Cheshin

                                                            The Hon. Justice T. Strasberg-Cohen

                                                            The Hon. Justice D. Dorner

                                                            The Hon. Justice D. Beinisch

 

The Petitioner:                                     Yosef Barazani

 

                                                                        v.

 

The Respondents:                               1. Bezeq – Israeli Telecommunications Company Ltd.

                                                            2. Israel Consumer Council    

 

A Further Hearing on the judgment of the Supreme Court of July 2, 2001 in CA 1977/97 by the Hon. Chief Justice A. Barak and Justices T. Strasberg-Cohen and I. Englard

 

Date of submission of briefs: 17 Shevat 5763 (Jan. 20, 2003)

Attorney for the Petitioner:                Avigdor Feldman, Adv.

 

Attorneys for Respondent 1:              Avner Gabbai, Adv.

                                                            Gil Lotan, Adv.

                                                            Shiri Kasher-Hitin, Adv.

Attorney for Respondent 2:                Prof. Sinai Deutch, Adv.

Facts:  Respondent 1 (hereinafter: Bezeq) advertised an international dialing service (hereinafter: the Service), and represented that a customer would be charged only for the exact amount of time that he used Service. In practice, it turned out that the method that Bezeq used for its calculations resulted in overcharging the users of the Service relative to what was expected according to the advertisement.

            The Petitioner, who used the Service supplied by Bezeq, but who had not seen the said advertisement, initiated a suit in the District Court for pecuniary damages against Bezeq. He claimed that the advertisement was one “liable to mislead a consumer” under sec. 2 (a) o the Consumer Protection Law, 5741-1981 (hereinafter: the Law), in regard to the actual cost of international calls. He also requested that the suit be certified as a class action.

            The District Court certified the suit as a class action. However, on appeal, the Supreme Court reversed that decision, based upon the provisions of sec. 31 (a) of the Law, according to which an act or omission in contravention of sec. 2 of the Law “shall be treated as a tort under the Civil Wrongs Ordinance [New Version]”. Therefore, and despite the finding that the advertisement was one that was “liable to mislead a consumer”, the Court applied the causal-link test established by the Civil Wrongs Ordinance [New Version] (hereinafter: the Ordinance), and found that since the Petitioner had not been exposed to Bezeq’s misleading advertisement, a causal link was not established between the advertisement and the damage putatively caused him. That being so, the Court held that the Petitioner did not have a personal cause of action against Bezeq under sec. 2 (a) of the Law, and in any case, was not a proper plaintiff in a class action.

            The Further Hearing focused upon the question whether or not the prohibition of misleading under sec. 2 (a) of the Law constitutes a “regular tort” like every tort in the Ordinance, subject to the doctrines established under the Ordinance, among them the causal-link doctrine.

            Held:  

The Supreme Court held:

  1. (1)        The provisions of sec. 2 (a) of the Law, prohibiting deceit, create a prohibition upon conduct. A “dealer” contravenes that prohibition even if the thing that he does by act or omission is “liable to mislead”, that is, whether or not a person was actually misled by that thing that he did. The standard of conduct required by the provisions of this section is one that is higher than that required by many statutes, which require a direct causal link between an act and a result – the harm caused the victim – whereas sec. 2 (a) prohibits conduct, as such, even if it does not lead to harm. That requirement is intended to protect consumers and ensure that they receive reliable information about the goods or services being offered, so that they can make informed choices about whether or not to make the transaction.

 

(2)        Under sec. 31 (a) of the Law, an act or omission proscribed by sec. 2(a) shall be treated as a tort under the Ordinance. Nothing in the language of sec. 31(a) of the Law would show that the tort under sec. 2 (a) removes it from the fundamental principles or the doctrines of the Ordinance, and nothing therein might show that a consumer is entitled to compensation merely because a dealer contravened a provision of the Law. On the contrary, the Law unconditionally refers to the provisions of the Ordinance.

 

(3)        In addition to the clear language of the Law, expediency also argues that the sec. 2 (a) of the Law establishes a tort like any other tort under the Ordinance, for if those same acts and omissions external to the Ordinance are tortious in nature, it is but natural that we should employ the same traditional, familiar doctrines that tort law created and developed over so many years such that they have become foundational to the legal system, subject, of course, to special, exceptional cases

 

(4)        Nevertheless, there is a difference between the native torts of the Ordinance and those external to it that are treated as torts under the Ordinance. A tort external to the Ordinance should be scrutinized carefully in order to determine whether or not a particular doctrine of the Ordinance is compatible with the elements, nature and construction of the external tort.

B.        (1)        In accordance with the causal-link doctrine in sec. 64 of the Ordinance, there must be a causal connection between a person’s act or omission – an act or omission that constitutes a tort – and the harm caused to the victim, for which he demands compensation. In the instant case, there was no causal connection between the advertisement and the “harm” caused to the Appellant, inasmuch as the Appellant did not read that advertisement, and in any case, was not influenced by it and did not rely upon it. While Bezeq perpetrated a tort by publishing that advertisement to the public, the existence of a tort is insufficient to entitle a person to compensation. Rather, that person must show that he was harmed as a result of that tort, and that precondition was not met in regard to the Appellant.

            (2)        Similarly, the compensation doctrine, enunciated in sec. 76 of the Ordinance, states that a person is not entitled to compensation except in regard to damage that arose from a tort. In regard to compensatory relief, the Law requires that the plaintiff prove the damage arising from the misrepresentation, that is, the existence of actual deceit, and an act arising from that deceit. In the circumstances of this case, the publication of something that might tend to mislead – the advertisement itself – is not sufficient to for a consumer to acquire a right to compensation if he suffered no actual damage. The rule is that damages will not be awarded unless harm was caused, and damages will be awarded only to the extent of the harm caused. In the absence of an express, unequivocal provision granting a person damages for virtual harm without the proof of actual harm, it is difficult to imagine that a court will award damages. Such significant creativity is intended for the legislature, and not the courts.

            (3)        The causal connection (both factual and legal) required under sec 2 (a) of the Law does not require a consumer’s explicit reliance upon the representation presented by the dealer. Unlike other legal provisions, which explicitly require a causal connection of reliance, it is possible that a consumer will not directly rely upon the dealer’s representation, and the required causal connection will, nevertheless, exist, that is, that the dealer’s representation “was the cause or one of the causes of the damage”, as stated in sec. 64 of the Ordinance. That would be the case, for example, where it can be shown that an advertisement – capable of misleading the consumer – that was published by a dealer, initiated a factual chain of events that ultimately caused damage to the consumer. In such a case, it would be appropriate to interpret the concept of reliance broadly, such that it would not be restricted exclusively to direct reliance.

            (4)        However, there must be an appropriate causal connection between the misleading publication and the injury that a consumer incurs. The fact that the purchase of the goods or services occurred after the publication is not, in and of itself, sufficient to show a causal connection between the potentially misleading publication and the consumer’s acquisition of the advertised goods or services. There must be an appropriate causal connection between the two occurrences, and that link will be deduced from the circumstances of each and every case with the help of the relevant evidence.

C. A class action is, in effect, an extension of the personal right to sue, and in the absence of a personal right to bring suit, there can be no class action. The import and scope of the personal suit will only be influenced marginally, if at all, by the class action. A class action does not grant a consumer an independent cause of action. It is merely a procedural tool for joining individual suits in a single proceeding. Class actions were added to the Law some thirteen years after its enactment, and its addition to the Law merely expanded the personal suit – procedurally – into many personal suits, but the principles of the personal suit remained unchanged. Therefore, sec. 2 (a) of the Law should be construed as it was prior to the addition of class actions to the Law, that is, without reference to such a class action.

D. (Justice T. Strasberg-Cohen, dissenting):

     (1)   The phrase “shall be treated as a tort under the Civil Wrongs Ordinance” should be construed as establishing a new cause of action that is like a tort. This cause of action is not identical to a tort, but is equivalent to a tort in the sense that it applies the same doctrines of the Ordinance to the act or omission – in the present case, the compensation and causal link doctrines. However, it is a cause of action that is unique to this Law. It is substantively independent, and must be construed in its own context, in light of the objective it was intended to serve, while taking the said doctrines into account, and which must be given content that corresponds to the objectives of the Law and its enforcement in the framework of a class action.

     (2)   For the purpose of establishing a cause of action for compensation for damage caused by a publication liable to mislead, it must be shown, prima facie, that the publication was liable to mislead, that damage was incurred, and that there is a factual and legal causal connection between the publication and the damage. However, even in the absence of the consumer’s reliance upon the potentially misleading publication, there may be a causal link between the publication and the damage. This is so because, first, establishing a prohibition upon conduct that is liable to mislead without recognizing the remedy of compensation for its contravention without proof of actual deception, renders the Law’s primary prohibition lacking any real civil remedy. Second, there is little possibility that a consumer will devote significant effort and money solely for the purpose of obtaining a restraining order for the benefit of the general public. Third, over the years that the Law has been in force, the criminal sanction has been applied with measured restraint, and it would seem that the criminal sanction cannot provide significant deterrence for powerful dealers that expect to garner huge profits from misleading the public, and the same is true of administrative sanctions. Fourth, an approach that would require actual deception in order to obtain compensatory relief would limit the scope of a dealer’s liability only to those consumers who could actually prove that they were indeed misled by the dealer’s representations, and would make deception worthwhile from the perspective of the dealer. Fifth, a construction that would grant relief only to those consumers who were actually deceived would create an artificial distinction between the consumer public that used the goods or services that were the subject of the misleading advertising, but who were not exposed to it, and the consumer public who were exposed to the misleading information. Sixth, in other cases in the past, the Supreme Court did not hesitate to expand the available types of relief beyond those set out in a law, in order not to eviscerate the law. Seventh, the Law establishes other prohibitions that do not require proof of reliance, the violation of which grants the consumer a broad right to compensation. There is little reason to granting an independent remedy of compensation, which includes granting broad discretion to the court, for the violation of those prohibitions, while not doing so in regard to the Law’s central prohibition – the prohibition upon misrepresentation.

(3)   The tort perpetrated by publishing something liable to mislead does not require reliance in order for the consumer to be entitled to compensation for damage incurred due to the publication, and it is not tied to the demand of reliance. Had the legislature intended to limit the prohibition of deceit to one of the torts requiring reliance, one would expect that it would have done so explicitly. Reliance is not required by the language of the Law or by its objective for the purpose of the existence of a causal connection. Thus, there can be a causal connection without reliance.

(4)   Holding that there is no requirement that the consumer rely upon the misleading publication does not obviate the need for a causal connection, and in the instant case, the representation made by the dealer should be deemed a binding promise to the consumer public that requires that it act in accordance with the promise. That promise bestows a right upon the consumer, and places the dealer under an obligation in regard to the consumer public. If the dealer does not meet the obligation it undertook by means of the advertisement, and charges more than what was promised in the advertisement, it breaches its duty, and as a consequence of that breach, the consumer incurs damage. Therefore, even if the consumer was not exposed to the misleading publication, and did not change his behavior in regard the use of the product or service, he will still be deemed harmed, since the price he was charged for the product or the service was higher than the price at which he was entitled to purchase the product or service.

(5)   The consumer incurs injury in the form of a “price differential”, which is a real loss. Appropriate construction of the required causality would see this injury as connected to the breach of the proscribed misrepresentation, as due to the misleading advertisement and the difference between it and the manner in which the dealer actually acted, the consumer suffered injury. Such a construction would meet the requirement of a causal link, both factually and legally. Factually, the said injury caused to the consumer is a consequence of the fact that the dealer made a representation that it did not honor. Legally, the injury is causally related to the representation under the foreseeability test, in that when a dealer makes a false representation, it foresees that charging contrary to the representation will cause harm due to the “price differential”, under the risk test, since that harm falls within the scope of risk of the dealer’s act, and under the common-sense test, by which we examine the overall actions of the tortfeasor and their contribution to the harmful result.

E. (Justice E. Mazza, dissenting):

(1)   It is possible and proper to restrict the application of traditional tort law to consumer causes of action. Such restriction is clearly required by the significant, substantive difference between the purpose of consumer torts and the purpose of regular torts.

(2)   The consumer laws of deceit must contend with the requirements of reliance and causality differently than tort law. Instead of the personal reliance of each and every consumer – that of traditional tort law – we should adopt a doctrine that recognizes “constructive reliance” of the consumer public to which the advertiser directed its misleading advertisement, while instead of requiring proof of a factual causal connection between the deception and the injury caused to each of the complaining consumers, we should adopt a doctrine that recognizes a “consumer causal link” that would be inferred from the merger of the potentially misleading publication and the intention of the advertiser that the advertisement reach the consumers, mislead them, and thus influence their conduct.

(3)   Consumer deception would give rise to a (personal or class) cause of action for monetary relief upon the fulfillment of three elements: an offending publication, injury, and a “consumer causal link”. As opposed to this, we should also recognize a defense that would be available to the advertiser if he can show that the plaintiff was aware of the true facts, and that the offending advertisement could not, therefore, negatively influence his situation.

(4)   The reliance requirement undermines the objectives of consumer protection laws –leveling the playing field for the parties; increasing personal autonomy; the concept of consumer sovereignty; protection of the public welfare and of social rights; advancing commercial fairness; protecting the credibility of the local market and public confidence in the social regime – and it frustrates their realization. Once a potential to mislead is proved, and it is shown that the advertiser indeed intended that the misleading advertisement reach the public and influence its consumer conduct, we should properly hold that there is constructive consumer reliance upon the misleading advertisement. The question whether the dealer actually achieved its purpose, i.e., that the misleading publication actually reached its audience and actually influenced it, is of limited importance.

            F. (Justice D. Dorner, dissenting):

(1)   The Law, which intervenes in contracts between unequal parties, and subjects the stronger party – the supplier – to an increased duty of fairness towards the weaker party – the consumer – is firmly anchored in the established doctrines of contract law. Many consumer transactions are anchored in the accepted contractual doctrines under which if a supplier charges a higher price than the correct, advertised price, consumers are entitled to a refund of the difference. In the reality created by those doctrines, and in which consumers actually operate, consumers trust suppliers without verifying that each and every transaction conforms to the advertised price.

(2)   A supplier’s advertisement of a specific price creates a consumer right not to pay a higher price. If the supplier charges a higher price, that will, in any event, constitute a breach of contract that would give rise to monetary relief even for consumers who were not exposed to the advertisement.

(3)   That entitlement can be grounded at least three ways. The first deems the dealer’s publication about the price an irrevocable offer to the public, which can be accepted by the objective performance of its conditions, while the supplier is bound to the publicized price, and provides an opportunity for the public to purchase the product or service for a price that will not be higher. In accepting the offer, the parties agree to the published price, and the supplier must refund any additional amount charged. The second approach deems the contract to have an implied term under which the supplier undertakes not to charge the consumer more than the advertised price. Such a term reflects the expectations of the parties. Overcharging constitutes a breach of that term. The third approach would classify such overcharging – particularly if it targets only consumers who were not exposed to the publication – as a breach of contractual good faith.

 

Judgment

 

Justice M. Cheshin:

            A Further Hearing on the judgment of the Supreme Court in CA 1977/97 Yosef Barazani v. Bezeq – Israeli Telecommunications Company Ltd. (55 (4) IsrSC 584).

2.         The Consumer Protection Law, 5741-1981 (the Consumer Protection Law or the Law) – true to its name – places various obligations upon a “dealer” – one who sells goods or provides a service by way of dealer – to a “consumer” – one who purchases an commodity or obtains a service from a dealer in the course of his business for use that is primarily personal. One of those obligations is stated in sec. 2 (a) of the Law: “A dealer must not do anything…which is liable to mislead a consumer in regard to any material element of a transaction …”. Section 31 (a) further informs us that “Any act or omission in contravention of Chapters Two, Three or Four shall be treated as a tort under the Civil Wrongs Ordinance [New Version]”. And this is the heart of the matter before us: To what extent do the doctrines and principles of the Civil Wrongs Ordinance apply to the “tort” created under sec. 2 (a) of the Law? Shall we treat it as a “normal” tort – as if it were a tort comprised by the Civil Wrongs Ordinance – that integrates itself into the fundamental principles and doctrines of the Civil Wrongs Ordinance, or shall we say that the legislature created a special quasi-tort – a sui generis tort – that is not subject to the doctrines and fundamental principles of the Civil Wrongs Ordinance as they are usually construed?

             A company advertises one of its products in a way that is “liable to mislead a consumer” in regard to a material matter. Reuben buys the product without having seen the misleading advertisement, and thus, without having been misled. Reuben later discovers the misleading advertisement, and sues the company for monetary compensation for his claimed loss, solely because the company did not keep its advertised promise. Reuben does not make do with a personal suit, but requests that the court certify it as a class action: He asks to sue on behalf of the entire public that purchased that product, and obtain relief for that entire public. Can Reuben prevail in that suit?

3.         The Supreme Court ruled – by the majority opinion of Chief Justice Barak and Justice Englard – that Reuben cannot prevail in his personal suit. The reason is that in purchasing the product, Reuben did not rely upon the publication that was liable to mislead, and therefore no causal connection was shown between the publication and the injury allegedly caused to Reuben. As he could not prevail in his personal suit, he was not an appropriate plaintiff in a class action. Justice Strasberg-Cohen, dissenting, thought otherwise. In her opinion, considering the purpose of the Consumer Protection Law and the nature of a class action suit, such a person should be entitled to proceed with the suit, and there is, indeed, an appropriate causal link. Those, therefore, are the disagreements and the core of the issue that we will address in this Further Hearing. But first, the facts.

The Basic Facts

4.         I will begin with a brief, preliminary statement: Reading the briefs submitted to the Court surprisingly reveals that the parties do not only disagree on the legal questions – as is usual in a Furhter Hearing – but on no small number of factual issues. The appeal is even directed at findings of fact in the Supreme Court’s judgment. We will not address those disputes, and the factual foundation that we will address is the factual foundation that grounded the Supreme Court’s judgment.

5.         And now to the matter before us. Over the course of the years 1989 through 1996, the Respondent, Bezeq – Israeli Telecommunications Company Ltd. (Bezeq), conducted an advertising campaign to encourage the use of its international direct-dialing service, a service meant to replace the “188” service by which international calls were placed through an operator. The advertising campaign emphasized that “the call will be charged only for the exact time that you spoke, even if you only spoke for half a minute…”, and published the tariff that Bezeq was meant to charge for calls to various places around the world. The advertisement added that the quoted price was for a time unit of “one minute of conversation”. For example, a direct-dial call to the United States…NIS 3.53 per minute; a direct-dial call to France…NIS 3.14.

6.         In practice, it turned out that call time was not calculated on the basis of minutes, but rather on the basis of meter units. The length of each meter unit – whose length is set according to the country called – was several seconds, and Bezeq calculated the last meter unit of a call as if it had been entirely used, even if the customer spoke for only part of the unit. The customer did not, therefore, pay for the “exact time” that he spoke on the phone, as several seconds were added from the meter unit to every call – or to be precise – to almost every call. Due to that manner of calculation, the price of (nearly) every call was higher than the advertised price. For example, a “one-minute call” to the United States – 60 seconds – was calculated as comprising 14.23 meter units, the price of which was NIS 3.53, which was the advertised price. But in practice, Bezeq charged more for a (precisely) one-minute call. The reason for that was that Bezeq “rounded up” the 14.23 units to 15 units, and charged the customer for 15 units, whose price – needless to say – was higher than the advertised price. That, of course, was also the case for every call that was longer than a minute. The caller was charged for the last meter unit even if he did not completely use it.

7.         The Petitioner, Barazani (Barazani or the Petitioner) was a “consumer” as defined by the Consumer Protection Law, and Bezeq was a “dealer”. In 1996, Barazani initiated a monetary suit against Bezeq, along with a request that the suit be certified as a class action. Barazan claimed that Bezeq’s advertisements were “liable to mislead” consumers in regard to the true price of international phone calls, and that Bezeq had, therefore, contravened the prohibition of deceit under sec. 2 (a) of the Consumer Protection Law. Barazani claimed that the injury incurred by him was equal to the difference between the price that Bezeq advertised and the price that it actually charged him for international calls. Although Barazani incurred negligible injury, the total harm to Bezeq’s consumers – all those who had made international direct-dial calls in the relevant period – amounted to tens of millions of shekels. And, Barazani argued, Bezeq had pocketed those vast sums by misleading its customers. Barazani therefore asked that his suit be certified as a class action under the Consumer Protection Law, viz., that he be permitted to sue on his own behalf, and on behalf of all of Bezeq’s customers who made direct-dial international calls, and that he be awarded compensation for the injury incurred, i.e., compensation for the difference between the advertised price and the price actually paid by all of Bezeq’s customers.

8.         But Barazani himself was never exposed to the misleading advertisement. When he made his international calls, he had no knowledge of the misleading advertisement, and thus, in any case, did not rely upon it, was not influenced by it, and was not misled by it. The question, therefore, arose whether Barazani had a personal cause of action against Bezeq by reason of the misleading advertisement of which he was not aware. We would add – and this is the main point – that under the provisions of the Law, a person cannot present himself as a plaintiff in a class action unless he has a personal cause of action. Therefore, the absence of a personal cause of action by Barazani led to the collapse of the entire suit.

9.         The District Court decided that the conditions for a class action had been met, but further held that the class action could be submitted solely for declaratory relief and not as a suit for a monetary remedy. Both parties appealed that decision, and the Supreme Court decided (by a majority decision) to grant Bezeq’s appeal and deny Barazani’s appeal.

 

The Relevant Legal Provisions

10.       The three key legal provisions in this matter are as follows: first, sec. 2 (a) of the Consumer Protection Law, which establishes the prohibition upon deceit:

                        Prohibition of Deceit

2. (a)    A dealer must not do anything – by deed or by omission, in writing, by word of mouth or in any other manner … which is liable to mislead a consumer in regard to any material element of the transaction …

This provision limits itself to relations between a “consumer” and a “dealer” as defined under sec. 1 of the Law: A “dealer” is “a person who sells a commodity or performs a service by way of dealer and includes a producer”, and a “consumer” is “person who buys a commodity or receives a service from a dealer in the course of his business for mainly personal, domestic or family use”. The prohibition is one of conduct, and a dealer contravenes the prohibition even if he does something – by act or omission – that is only “liable to mislead” a consumer, i.e., even if no one was misled by it. Therefore, as stated in sec. 23 (a) (1) of the Law, a dealer commits an offense and is liable to punishment if “did anything liable to mislead a consumer in violation of the provisions of section 2”. The standard of conduct required under sec. 2 (a) is higher than the usual standard in other laws. Such is the case, for example, in regard to the torts of fraud and injurious falsity under secs. 56 and 58 of the Civil Wrongs Ordinance, and misrepresentation under sec. 15 of the Contracts (General Part) Law, 5733-1973. In those provisions – and in many others – a direct causal connection is required between an act and a result – injury to a victim – whereas sec. 2 (a) of the Consumer Protection Law prohibits the conduct per se, even in the absence of resultant injury. This requirement of the Consumer Protection Law is, of course, intended to protect the consumer – to ensure that the consumer will receive reliable information about a commodity or service offered to him, so that he may make a reasoned decision whether or not to make the transaction. See: Explanatory Notes to the Consumer Protection Law Bill, 5740-1980, 5740 H.H. 302; and compare: CA 1304/91 Tefahot Mortgage Bank for Israel Ltd v. Liepart, 47 (3) IsrSC 309, 326.

11.       The second legal provision is that found in sec. 31 (a) of the Consumer Protection Law, from which we learn that an act or omission under sec. 2 (a) – and many other provisions – is to be treated as a tort:

                        Compensation

31. (a) Any act or omission in violation of Chapters Two, Three, or Four shall be treated as a tort under the Civil Wrongs Ordinance [New Version].

It would appear, therefore, that contravening the prohibition of deceit – as specified in sec. 2 (a) of the Law – is to be treated as a tort under the Civil Wrongs Ordinance, and therefore, should be adjudged according to the principles and doctrines established by the Civil Wrongs Ordinance that apply to torts under Ordinance.

12.       The third relevant legal provision is sec 35A of the Law, which treats of class actions under the Law:

                        Class Action

35A. (a) A consumer… (hereinafter – the plaintiff), may bring suit subject to the provisions of this chapter, on behalf of a group of consumers for a cause of action under which, in accordance with this law, he could personally bring suit, and against every defendant that the consumer could personally sue (hereinafter – a class action).

(b) Where the cause of action is damage, it is sufficient that the plaintiff show that damage was caused to a consumer.

(c) …

The plain-meaning of this legal provision is that an individual victim can present himself as a representative plaintiff in a class action – subject to these and other provisions – if and only if he has a personal cause of action. In other words: there is no “public” class action. The possibility of an actio popularis in the field of class actions is ruled out by the Consumer Protection Law.

13.       Let us examine the opinion stated in the judgment before us in light of these provisions.

 

The Opinion in the Judgment under Appeal in the Further Hearing

14.       The starting point for this interpretive journey is that Bezeq’s advertisement was (purportedly) something that was “liable to mislead a consumer in regard to any material element of the transaction”, as stated in sec. 2 (a) of the Consumer Protection Law. Therefore, as all three justices agreed, Bezeq breached a prohibition established by under sec. 2 (a) of the Law. However they disagreed on the question whether Barazani was harmed as a result of the advertisement. Did Barazani incur damage even though he had not rely upon those advertisements, and even though there was no causal connection, in the accepted sense, between the advertisement that ex hypothesi did not mislead him, and the harm he claims that he incurred? Or, as Justice Strasberg-Cohen stated the matter (ibid., 594):

Section 2 (a) of the Law, titled “Prohibition of Deceit”, forbids a dealer from doing anything that “is liable to mislead” a consumer in regard to any material element of a transaction, and sec. 31 of the Law establishes that violating the prohibition upon deceit is to be treated like a tort, which entitles the victim to compensation. We learn from the two sections that in order for a consumer to have a cause of action against the dealer for a breach of the “prohibition of deceit”, the consumer must show that the dealer breached the duty imposed by the “prohibition of deceit”, that the consumer suffered harm as a result of the breach of that duty, and that there was a causal connection between the breach of the prohibition established under sec. 2 (a) of the Law and the harm suffered by the consumer.

15.       In her dissent, Justice Strasberg-Cohen argued that the purpose of the Consumer Protection Law – and the purpose of class actions, as well – both require that we interpret the provision of sec. 2 (a) of the Law as granting a consumer a cause of action even if he did not rely upon the misleading representation. After all, the Law speaks of something that is “liable to mislead”, and not about something that “misleads”. Therefore, once an advertisement that is “liable to mislead” is published, the dealer is under an obligation to fulfill what it promised in the advertisement, while opposite that duty stands the right of the consumer that the dealer will act in conformance with the advertisement. If the dealer breach that duty, the consumer incurs damage that entitles him to compensation. The dealer causes damage to the consumer by the very breach of the duty imposed upon him, even if the consumer was unaware of the advertisement. Indeed, the causal connection between the advertisement and the damage is not the accepted one that we know from tort law, but one that is not bound by the provisions of the Civil Wrongs Ordinance in this regard.

16.       That view was not acceptable to Chief Justice Barak. The Chief Justice agreed, as we noted, that Bezeq had breached the prohibition upon publishing an advertisement that was “liable to mislead a consumer”, but he did not share the opinion that that breach entitled Barazani to sue for compensation. The reason for that was that, as we know, Barazani did not rely upon the advertisement when he made international calls – inasmuch as he was unaware of it – and there was, therefore, no (factual or legal) causal connection between Bezeq’s breach and the alleged damage caused to Barazani. In the opinion of Chief Justice Barak, as stated in sec. 31 (a) of the Law, the normal doctrines of tort law – among them the causal-link doctrine, and the rule that compensation is granted only for damage that is causally connected to the tortfeasor’s wrongful act – apply to the breach of the duty established by sec. 2 (a) of the Consumer Protection Law. Thus, in light of that, in the matter before us there was no causal connection – a causa sine qua non connection – between the advertisement and Barazani’s alleged damage, and a necessary condition for compensation was not met. Since Barazani did not have a personal cause of action for a suit for damages, he could not, in any case, act as a representative plaintiff for compensatory relief.

17.       Justice Englard was of the opinion that Bezeq’s advertisements were not liable to mislead the consumer public, and that Bezeq had not, therefore, breached its duty under sec. 2 (a) of the Law. In regard to the disagreement between my colleagues Justice Strasberg-Cohen and the Chief Justice, Justice Englard concurred with the view of the Chief Justice, holding that compensation should not be awarded to a consumer who was not actually misled by the misleading advertisement. The reason for this was that “no obligation for compensation should be imposed in the absence of a causal connection between the wrong and the damage”.

 

The Question at Issue

18.       This, therefore, is the question at issue: Reuben, a dealer who sells commodities or supplies services, publishes an advertisement that is “liable to mislead a consumer” in regard to a material element. We all agree that by doing so, Reuben violates a prohibition established under sec. 2 (a) of the Consumer Protection Law. Simon, a consumer, purchases one of those commodities or services that Reuben offers for sale. Does Simon acquire a cause of action against Reuben for damages even if he never saw the advertisement, and thus was neither influenced nor misled by it? Is a consumer who purchased some commodity or service from a dealer entitled to damages from that dealer merely by virtue of the fact that the dealer violated sec. 2 (a) of the Law by publishing an advertisement liable to mislead the consumer public in regard to that commodity or service – which is the view of Justice Strasberg-Cohen – or, as Chief Justice Barak and Justice Englard argue, is the burden upon the consumer to show not merely that he purchased the commodity or service, but also that he did so in reliance upon the misleading advertisement?

 

A Methodological Note concerning the Core

19.       Before delving into the heart of the dispute, we would preface with a methodological observation that we deem of singular importance.

20.       When Barazani’s petition for a Further Hearing on the Supreme Court’s judgment was granted, the Israel Consumer Council (the Consumer Council or the Council) requested to join as a party to the proceedings. The Court granted that request, and in lengthy pleadings, brimming with arguments and supporting sources, the Council lent its support to Barazani’s position and arguments. Central to the Council’s arguments is the view that adopting the majority’s opinion would eviscerate class actions in the framework of the Consumer Protection Law, and would thus entirely frustrate the purpose of sec. 2 (a). Here is a typical example of the Council’s arguments:

It would be hard to overstate the importance of the rule established in the Barazani case. As will be explained below, in accordance with that rule, in every instance of a misleading advertisement it will be necessary to prove that each of the consumers saw the advertisement, read it, understood it and acted in reliance upon it. Where we are concerned with a consumer class action in which tens of thousands were harmed, it is not at all practical to examine which of them saw the advertisement, which of them relied upon it and to what extent the advertisement influenced their discretion in purchasing the commodity or service.

Inasmuch as consumer class actions generally represent a very large number of consumers, and are often the result of advertisements by the relevant companies, all such cases will be denied at the stage of requesting certification, based upon the argument that personal reliance of each and every member of the class cannot be proven. In other words, it will be possible to block almost every consumer class action. Moreover, as will be explained below, this construction will inflict substantial harm upon the Consumer Protection Law, at least in regard to the civil remedies that the Law provides.

If the construction under which personal reliance of each consumer is accepted as the relevant construction for the remedy of damages under the Consumer Protection Law, the result will be that it will be impossible to sue for damages by way of a class action in cases of false advertising. This rule is liable to result in abuse, and a situation in which advertisers will not worry about making imprecise statements, as the primary remedy of a class action will not be available to the consumer public.

The Council and Barazani (the Petitioners) further explain that the Consumer Protection Law – and sec. 2 (a) thereof, with which we are concerned – was intended to protect consumers from large companies, and to deter such companies from harming consumers. In the opinion of the Petitioners, class actions are vital to the realization of that objective, as without them, the Law will not be enforced, and the obligations it places upon dealer will come to nothing. The other enforcement measures in the Law are secondary measures and inadequate. The primary means for enforcing the Law is by class actions, which place enforcement in the hands of the individual consumer, and thus appropriately lead to a distribution of enforcement. The Petitioners argue that the majority opinion would sound the death knell for class actions and should, therefore, be rejected. The Petitioners find further support for their position in the American consumer protection laws, which, they argue, do away with the need for reliance, and that, they claim, is also the case in regard to Israeli securities law. They therefore pray that we interpret secs. 2 (a) and 31 (a) of the Law broadly and generously, as does Justice Strasberg-Cohen. I believe that I would not exaggerate in saying that the class action constitutes the central pillar of the Petitioners’ argument, as if class actions are the whole Torah on one foot, and all the rest of the Consumer Protection Law is but commentary.

            Bezeq replies to the Petitioners’ arguments at length and in detail, and we shall briefly refer to part of that reply.

21.       We have no intention of delving into the subject of class actions for the purpose of deciding the instant case. However, we will make some observations in regard to how class actions are integrated into the provisions of sec. 2 (a) of the Law, and primarily in regard to the consequences of such actions upon the interpretation of sec. 2 (a).

22.       In accordance with the provisions of sec. 35A (a) of the Law (see para. 12 above), a person cannot initiate a class action unless he has a personal right to bring suit. Compare (in regard to actions under the Securities Law, 5728-1968): CA 2967/95 Magen vaKeshet Ltd. v. Tempo Industries Ltd. IsrSC 51 (2) 312, 329, and in regard to an action on the basis of sec. 29 of the Civil Procedures Regulations, 5744-1984, see: LCA 3126/00 State of Israel v. A.S.T Project Management and Manpower Ltd., IsrSC 57 (3) 220, at para. 24 of the opinion of Strasberg-Cohen, J. A class action is a type of extension of the personal suit, and in the absence of a right to bring a personal suit, there can be no class action. A class action is like a chamber within a chamber. You cannot enter the inner chamber without first passing through the outer one. If that be the case – and I believe that to be so – then it would be difficult to conjecture from class actions to personal actions. If a person must first show that he has a personal right to sue, and if overcoming that hurdle is a precondition to a class action, then the interpretation and scope of personal actions can be influenced but little, if at all, by class actions. If that is the general case, then clearly class actions cannot be seen as independently granting causes of action. A class action is nothing but a procedural means for joining several personal actions into a single proceeding. That being the case, we cannot say that class actions might provide inspiration for interpreting sec. 2 (a) of the Law, let alone that the fundamental basis for its construction is to be found in class actions.

23.       Moreover, the provisions of sec. 2 (a) of the Law, along with sec. 31 (a) –  legal provisions that grant a consumer a personal right – were part of the original Law as enacted in 1981. At the time, class actions were not included in the Law. Class actions only boarded the moving train of consumer protection some thirteen years later in the Consumer Protection (Amendment No. 3) Law, 5754-1994. And see: the Explanatory Notes to the Consumer Protection Law (Amendment No. 3) Bill, 5754-1994, H.H. 5754, 396:

It is recommended that an additional chapter be added to the Consumer Protection Law, 5741-1981, that would make it possible to initiate a class action.

A class action, which saves the need for submitting a large number of individual consumer suits, is the efficient, and sometimes the only way by which consumers can contend with powerful economic bodies for which an independent suit of a single consumer, or even of several consumers together, is meaningless.

Knowing this to be the case, we can return to the question of how class actions influence the interpretation of personal suits, and say: until the institution of class actions, we had to interpret sec. 2 (a) on its own, from within and in the general context of the Law as it then was, and in the broad context of the existing legislation and the general principles for the interpretation of statutes, as normally applied. Class actions were not part of that interpretive process, as they had not yet been recognized, and therefore could not have influenced our interpretation. The interpretation of sec. 2 (a) of the Law was thus grounded before class actions were part of the Law. With the introduction of class actions in 1994, we find nothing among its provisions but the procedural expansion of the personal suit into very many personal suits.  The fundamentals of personal suits did not change. As Justice Strasberg-Cohen notes in LCA A.S.T. (above, at para. 26 of her opinion):

The arrangement for submitting a class action is essentially a procedural one. It facilitates joining the individual suits of many, mostly unknown, plaintiffs, into one suit. The fact that a class action has many ramifications for various areas does not change its basic procedural nature.

Indeed, “a situation in which a single plaintiff (or a number of plaintiffs) sue on behalf of a group of individuals for harm (of a similar kind), where each member of the group was harmed by an identical breach of duty, stands at the base of class actions” (LCA 4556/94 Tazat v. Zilbershatz, IsrSC 49 (5) 774, 783). A class action “represents a collection of personal suits” (the Magen vaKeshet case, above, 324), and it does not create causes of action for the representative plaintiff or for the members of the group. Class actions are an important tool – of great value and power – and in being what they are, they influence the material rights of the parties – the defendants, the representative plaintiff, and the members of the group. However, their influence is in providing an opportunity to realize rights, rather than in the creation of new causes of action. The power and importance of a class action are expressed in its size, and in making it possible to join a large number of existing actions in one procedure, where treating each action individually would lack significance. At the same time, the class action does not grant the representative plaintiff, or any member of the group, a cause of action that he would not have were it not for the class action. How, then, do class actions influence the interpretation of what preceded them in time, as alleged?

24.       We would emphasize that, of course, it is not our intention to say that a later law – that of 1994 – cannot influence the interpretation or scope of prior rights. However, in a case such as ours, we would expect that the new law would send us some sign or signal that would inform us – expressly or impliedly, directly or indirectly – that it is intended to change the mode or manner of the prior law, or, in the case before us, that it would entirely change the interpretation of sec. 2 (a). But in the 1994 law “there was no response, no one answered, no one paid attention”.[1] It is simply that sec. 2 (a) of the Law should be interpreted after 1994 as it was understood before that year, i.e., without reference to class actions as such (see and compare: HCJ 6194/97 Nakash v. National Labor Court, IsrSC 53 (5) 433, 455-456; and see: A. Barak, Interpretation in Law, v. 2 (Nevo, 1993) 51-54).

25.       We would add that we do not mean, and have not said, that the provisions regarding class actions cannot, by their very nature, affect the interpretation of the personal suit. It can be argued that had the class action been created in the original law – joined at birth to the personal suit – then it could retroactively, so to speak, influence the interpretation of the personal suit. “There is no early or late in the law”,[2] and all of its provisions are part of a unified whole. Thus, provisions that, in terms of the internal logic of the law, appear to “precede” other provisions of the same law, will not be interpreted independently, in isolation from the “later” provisions. The law is like a living creature, and each of its organs affects the others, and vice versa (see and compare: CrimA 4389/93 Mordechai v. State of Israel, IsrSC 50 (3) 239, 260 ff.). However, in this regard, we would expect that the later law would send us some message telling us that it is intended to shed new light on the preexisting law. But the 1994 amendment – that which introduced class actions – says absolutely nothing that might affect the interpretation of sec. 2 (a) as it stood prior to the amendment.

26.       Our conclusion is, therefore, that, as opposed to the argument of the Petitioners, class actions will not play a decisive role in the interpretation of the provisions of sec. 2 (a) or of sec. 31 (a) of the Law. That is not to say that we may not glance in the direction of class actions in the course of interpretation, since, after all, after the amendment of the Law, a class action is one of the organs of the Law (and that, bearing in mind, as we said, that had class actions been created with the Law, then it would be appropriate to interpret personal suits differently). However, the influence of class actions, to the extent that they may exert some influence – which is a separate question – will only be marginal.

27.       This matter of interpretation that we just addressed is of singular importance. As we all know – and as stated – class actions are an important, valuable tool. But first and foremost – and this is the main point – it is a powerful tool. However, the synergetic power of a class action makes it a non-conventional weapon, and not surprisingly, it strikes fear into the hearts of dealers. For that reason – and primarily for that reason – we must take special care in treating of the class action, as it is a hand-grenade with the pin pulled out.  We celebrated the birth of the class action, as in the “balance of terror” between dealers and consumers – particularly in a society such as our own, in which we are assured that “it will be alright” and “you can rely on me” – consumers require that power they would not otherwise have in confronting dealers. But that joy can be a mixed blessing, and we must take care that the class action not exert undue influence over the scope of personal suits.

            Let us now, first and foremost, turn to the question of Barazani’s right to bring a personal suit against Bezeq.

 

The Nature and Category of the Right established under Section 2 (a) of the Law

28.       Section 2 (a) of the Law does not inform us of the remedy that a consumer may seek from a dealer that did something “liable to mislead a consumer” in regard to a material element of the transaction. This gap – if it is a gap – is filled by the provisions of sec. 31 (a) of the Law, which informs us that an act or omission contrary to Chapters Two, Three or Four of the Law is to be treated as a tort under the Civil Wrongs Ordinance (see para. 11, above). Section 2 (a) is located in Chapter B of the Law – the chapter comprising secs. 2 through 7, titled “Deceit and Exploitation” – and we therefore know that an act or omission prohibited under sec. 2 (a) is to be treated as a tort under the Civil Wrongs Ordinance. It would appear as if the Consumer Protection Law planted sec. 2 (a) – like many other provisions – into the “Civil Wrongs” chapter of the Civil Wrongs Ordinance, and that sec. 2 (a) is the same as any of the other torts under the Ordinance. One of the necessary conclusions to be drawn from that would be that sec. 2 (a) is subject to the doctrines and principles set out in the Civil Wrongs Ordinance, which are applicable to all the torts in the Ordinance. And as Justice Strasberg-Cohen instructed us in LCA 6567/97 Bezeq – Israeli Telecommunications Company Ltd. v. Estate of Eliahu Gat, IsrSC 54 (2) 713, 717:

In practice, Bezeq cannot be directly attacked in regard to the applicable tariff, as its actions are under the aegis of the Regulations [Bezeq Regulations (Payments for Bezeq Services detailed in Schedule Two of the Law – Services in Israel), 5756-1996], and, therefore, enjoy apparent immunity by virtue of sec. 6 of the Civil Wrongs Ordinance [New Version], which grants a defense to an action under a statute, and according to sec. 31 (a) of the Law, an act or omission contrary to Chapters Two, Three or Four is to be treated as a tort under the Civil Wrongs Ordinance [New Version].

 

29.       My colleague now reads sec. 31 (a) of the Law differently, and sec. 31 (a) no longer directs us to the Civil Wrongs Ordinance as it stands, but rather to a general law that is similar but not identical to the Civil Wrongs Ordinance, or as she describes it (at p. 605):

 

In my opinion, we should bear in mind that an act or omission contrary to the prohibition upon deceit established by the [Consumer Protection] Law is not a “regular” tort but it is to be treated “as a tort”. Therefore, we are not limited to “traditional” tort law – upon which my colleague the Chief Justice bases his opinion – and we should also give appropriate weight to the purpose of the Law and the purpose of class actions … [emphasis original – M.C.].

 

I find it hard to accept such reasoning.

 

30.       In my opinion, sec. 31 (a) should be read and understood in accordance with its plain meaning, and the plain meaning is that the prohibition stated in sec. 2 (a) of the Consumer Protection Law is a tort for the purpose of the Law. Or, as stated in the Explanatory Notes of the bill (Consumer Protection Law Bill, 5740-1980, H.H. 5740, 302, 313), Explanatory Notes to secs. 30 through 33):

 

The granting of civil remedies to the harmed consumer allows him to compensate himself with relative ease for damage he incurred as the result of an act or omission contrary to Chapters B through D.

 

And further on (ibid., 314, in the Explanatory Notes to sec. 35):

 

The basic concept grounding the law is that deceiving a consumer, defrauding a consumer, and similar acts or omissions stated in the law are torts, and the consumer should be compensated for the damage caused him.

 

My colleague does not interpret the prepositional “kaf of comparison” prefix “as”[3] in forming the phrase “as a tort”[4] in the usual way. In my opinion, the interpretation of the prefix is “as this so this, the two are exactly identical” (Even Shoshan, The New Dictionary, 1991, s.v. “kaf”  (Hebrew)), or as Jehoshafat King of Judah said to Jehoram King of Israel: “ I am as thou art, my people as thy people, my horses as thy horses” (I Kings 22:4; II Kings 3:7) (and notwithstanding the statement of the Sages that “an egg is superior to anything as an egg…” (Babylonian Talmud, Tractate Berakhot 44b), which is clearly not applicable here, as is easily seen from the context[5]). Of course, the legislature could have worded the provision of sec. 31 (a) such that an act or omission etc. would constitute a tort under the Civil Wrongs Ordinance – it would be a tort rather than be treated as a tort – but I fear that the preposition is not strong enough to support the superstructure that my colleague wishes to build upon it. 

            I also do not find any merit in the arguments of the Consumer Council comparing the phrase “as a tort” in our case to similar but not identical wording in other statutes. Thus, for example, sec. 11 of the Commercial Torts Law, 5759-1999, states “The violation of the provisions of Chapters One and Two is a tort, and the Civil Wrongs Ordinance [New Version] … shall apply to it…”. At times we find this wording and at times other wording, and we will not hang mountains by a hair.[6] The same is true in regard to other statutes that employ various wordings. See, for example: sec. 28 of the Adoption of Children Law, 5741-1981; sec. 5 (a) of the Prohibition of Discrimination in Products, Services, and Entry into Public Places, 5761-2000; sec. 15 of the Banking (Customer Services) Law, 5741-1981, and others. In my opinion, the purpose of the Law in this case is crystal clear, and comparisons to other laws will not succeed.

31.       Indeed, nothing in the language of sec. 31 (a) of the Law would show that the tort under sec. 2 (a) removes it from the fundamental principles or doctrines of the Civil Wrongs Ordinance, and nothing therein might serve to show that a consumer is entitled to damages merely because a dealer contravened a provision of the Law. On the contrary, the Law refers us clearly and unreservedly to the Civil Wrongs Ordinance. Section 2 (a) situates itself as one of the native torts of the Civil Wrongs Ordinance, and it would therefore appear that the fundamental principles and doctrines of the Civil Wrongs Ordinance apply, in their entirety, with the same effect and force with which they apply to the native torts.

            Moreover, not only is the language of the Law crystal clear, but efficiency also points to the solution presented by the Law. Inasmuch as the acts and omissions external to the Ordinance are tortious in nature, it is but natural that we should employ the same traditional, familiar doctrines that tort law created and developed over so many years such that they have become foundational to the legal system, subject, of course, to special, exceptional cases.

 

Application of Fundamentals Principles and Doctrines of the Civil Wrongs  Ordinance to Torts external to the Ordinance

32.       We have stated that the doctrines of the Civil Wrongs Ordinance “appear” to apply to the prohibited acts under sec. 2 (a) of the Consumer Protection Law. Indeed, there are differences between the native torts of the Ordinance and those external to it that are treated as torts under the Ordinance. The native torts were created together with the Ordinance’s doctrines, and they reside in the same structure. Other than in exceptional cases, the doctrines of the Ordinance will apply with full force to every tort in the Ordinance. In regard to those exceptions, see Cheshin, Chattels in the Law of Torts (Magnes, Jerusalem, 1971), secs. 168-172 (pp. 167-170). As opposed to the native torts, the external torts, among them those under sec. 2 (a) of the Consumer Protection Law, are different. Indeed, the general doctrines of the Ordinance apply to them, however, here we must take special care. Since we are concerned here with transplanting a new organ into the body of the Civil Wrongs Ordinance, we must closely examine whether any particular doctrine of the Ordinance is compatible with the foundations, essence and structure of the new tort. This question was addressed in I. Englard, A. Barak & M. Cheshin, The Law of Civil Wrongs – General Principles of Tort Law, G. Tedeschi, ed. (2nd ed., Jerusalem, 1977) pp. 74 ff. and especially p. 81, and we shall elaborate no further. And see: CA 3666/90, 4012/90 Zukim Hotel Ltd v. Netanya Municipality IsrSC 46(4) 45, 73 [1992]; CA 804/80 Sidaar Tanker Corporation v. Eilat-Ashkelon Pipeline Company Ltd., IsrSC 39(1) 393. And so we stated in CrimA 3417/99 Har Shefi v. State of Israel, IsrSC 55 (2) 735, 766-767 [English translation: http://versa.cardozo.yu.edu/opinions/har-shefi-v-state-israel]:

 

And indeed, this is – in general – the relationship between the general definitions and doctrines which cut across the law lengthwise and widthwise, and specific statutory provisions.  General definitions and doctrines will attach themselves to all statutory provisions and laws they wish to apply to. But where a certain specific statutory provision seeks to expel from within its bounds the general definition or doctrine—and this expulsion is derived by way of “interpretation”, in the broad sense of the concept of interpretation, including from the basic tenets of the system: logic, justice, first principles, social doctrines, etc. — the specific statutory provision prevails, while the general definition and doctrine will retreat. The general definition and doctrine will apply, as per the language of the Interpretation Law 5741-1981 in section 1, “… if there is no other provision as to the said matter, and if there is nothing in the said matter or its context which cannot be reconciled with…” the general definition or doctrine.

Elsewhere I raised the theory that the term “tort” in the Civil Wrongs Ordinance [New Version] is not limited only to those torts listed in the Ordinance.  I opined that the concept “tort” is a conceptual term, and from this I concluded that there are “torts” outside of the Civil Wrongs Ordinance [New Version].  Against this background I further asked myself, what is the relationship between the doctrines that were established in the Civil Wrongs Ordinance [New Version] and those unspecified torts.  I answered the question by saying that an unspecified tort will not “be controlled mechanically by the doctrines established by the Ordinance.”  And that the doctrines in the Ordinance will apply to unspecified torts only “… if the application of a certain doctrine from the Ordinance is consistent with the foundations, essence, and structure of the tort at issue, and with the framework in which it is found”.

 

Causal Connection and Awarding Damages

33.       Barazani claims damages from Bezeq by virtue of the advertisement that it published, and which – as stated in sec. 2 (a) of the Consumer Protection Law – was liable to mislead a consumer in regard to a material element. We are all in agreement that Barazani did not see the advertisement, that he was not influenced by it, and that he did not rely upon it when he made international calls. Nevertheless, and deeming himself wronged, he demands damages – and asks to sue for those damages in a class action on behalf of all those harmed – claiming that he incurred harm for which he is entitled to compensation. The damage, he argues, is the difference between the advertised price and the price he actually paid Bezeq. Here, Barazani confronts the doctrines of the Civil Wrongs Ordinance, and the question is whether those doctrines bar his path to compensation.

34.       Among those doctrines, two concern us here. My colleague Chief Justice Barak addresses those doctrines in his opinion, and inasmuch as I agree with his opinion, I will be brief rather than elaborate at length.

35.       One doctrine is that of causation, under which – in accordance with sec. 64 of the Civil Wrongs Ordinance – there must be a causal connection between a person’s act or omission – an act or omission that constitute a tort – and the harm incurred by the victim, for which he seeks redress. As stated in sec. 64 of the Civil Wrongs Ordinance: “… a person shall be deemed to be at fault for such damage when the fault was the cause or one of the causes of the damage”. In the matter before us, there was no causal connection between Bezeq’s advertisement and the “damage” caused to Barazani, if only by reason of the fact that Barazani never read that advertisement, and therefore, in any event, he is not entitled to sue on that basis. Indeed, Bezeq committed a tort by publishing the advertisement – that is the basic assumption in this case – but the mere existence of a tort is insufficient to entitle a person to redress. That person must show that due to that tort, he incurred harm, and that precondition was not met in regard to Barazani.

36.       This is also the case in regard to the compensation doctrine. In accordance with sec. 76 of the Civil Wrongs Ordinance, and as has always been the case: a person is entitled to compensation only for harm caused as a result of the tortious act. A person will be entitled to compensation only to the extent of the harm incurred, and as stated in sec 76: “only in respect of such damage which may naturally arise in the usual course of things and which directly arose from the defendant’s civil wrong”. A fundamental principle of tort law is that of restitutio ad integrum, and therefore, a person who did not suffer harm will not be entitled to compensation. See and compare: LCA 378/96 Sagi Weinblatt v. Moshe Burstein Ltd., IsrSC 54 (3) 347, 361; CA 5465/97 Kenny Housing Ltd. v. Netanya Local Planning and Building Board, IsrSC 53 (3) 433, 440-441.

            That is also the opinion of Prof. Sinai Deutch in his book Consumer Protection Law, vol. 1 (2001) 376 (Hebrew), who wrote the following about the causal link required under sec. 2 of the Law and the compensation to which a victim is entitled:

 

In a tort claim under the Consumer Protection Law (sec. 31 of the Law), there is no need to prove a causal connection between the mistake and the contractual agreement, but a causal connection must be shown between the deceit and the harm caused to the consumer. While sec. 2 of the Consumer Protection Law prohibits doing anything liable to mislead the consumer, and it would therefore appear that there is no requirement of actual misleading, the sanction attendant to such an act can only be administrative or penal. If, in fact, there was no misleading and no harm, damages cannot be awarded. Compensation owing to a tort can be awarded only for demonstrated harm.

 

Thus, publishing something that is liable to mislead, per se, does not grant a consumer a right to compensation if he was not actually harmed. That is also the view of Dr. Orna Deutch, who writes in her book The Legal Status of Consumers (Nevo, 2002) 414-415 (Hebrew):

 

As far as the remedy of damages is concerned, a suit under the Consumer Protection Law would require proof of the harm deriving from the deception, in other words, the existence of actual deception and action on the basis of that deception. There must be a causal connection between the deception and the harm, as is the normal rule in regard to damages. That was the majority opinion in Barazani v. Bezeq. Indeed, there is no justification for allowing a person to collect damages where he did not incur harm as a result of the deception. The purpose of damages is to require that the person responsible make restitutio ad integrum. There is no need for a causal connection in relation to any harm when a declaratory order is sought to stop the misrepresentations…

And see: Prof. Miguel Deutch, Commercial Torts and Trade Secrets (Nevo, 2002) (Hebrew) 48-50.

            And if that is not sufficient, we would note the opinion of Chief Justice Shamgar in the Liefert case (Note to editor: I assume the reference is to CA 1304/91 Tefahot Mortgage Bank v. Liefert, IsrSC 47 (3) 309). In that case, the Court addressed sec. 3 of the Banking (Service to Customers) Law, 5741-1981, that prohibits a banking corporation from doing anything “liable to mislead a customer as to anything material to the performance of a service to the customer”. In that regard, Chief Justice Shamgar wrote (at p. 326):

 

The prohibition in the Banking (Service to Customers) Law is broad, and prohibits any act or omission liable to mislead. In other words, it is not necessary that there be actual deception (although in the absence of such deception, it is doubtful that it would be possible to point to some harm that might support a cause of action for damages under the law) [emphasis original – M.C.].

 

Of course, the legislature is free to deviate from this principle, and decide – for various reasons – that a victim be granted compensation without showing harm. See, for example: sec. 7A of the Defamation Law, 5725-1965; sec. 11 of the Contracts (Remedies for Breach of Contract) Law, 5731-1970; sec. 10 (a) (1) of the Employment (Equal Opportunities) Law, 5748-1988; sec. 6 (b) of the Prevention of Sexual Harassment Law, 5758-1998; sec. 3A of the Copyright Law; sec. 13 (a) of the Commercial Torts Law, 5759-1999. However, these are but exceptions to the rule. The rule is that compensation will be granted only if harm was done, and compensation will be granted only to the extent of the harm done. In the matter before us, and inasmuch as Barazani was unaware of Bezeq’s advertisements and did not rely upon those advertisements, we cannot say that he is entitled to compensation. Indeed, depriving Barazani of the right to compensation primarily derives from the absence of a causal connection between the tort and the “harm” he allegedly incurred, and the compensation doctrine simply confirms the lack of a claim for compensation against Bezeq.

37.       The absence of Barazani’s right can also be demonstrated in another way. An action in tort that concerns an injury to a person, begins with that injury. When a person incurs injury as a result of the act or omission of another, we examine whether that injury was caused by a tort perpetrated by that person against the injured party, or whether that person breached some duty toward that injured party. See and compare: LCA 5768/94 A.S.I.R Import, Manufacture, and Distribution v. Forum Accessories, IsrSC 52(4) 289, 334. If that examination show that a tort was committed or that a duty was breached, and that the tort or breach of duty was the cause of the harm, then the tortfeasor will be liable for damages. However, if no connection be found between the act or omission of the tortfeasor and the harm, then damages will not be awarded, and the injury will be damnum sine injuria – a loss without a wrong.

38.       In the matter before us, things appear topsy-turvy. Unlike the situation of a normal tortious event, Barazani cannot show the actual “harm” that was caused him unless we first say that the provision if sec. 2(a) of the Consumer Protection Law entitles him to damages. In that case, we would say that Barazani incurred “harm” because he is entitled to damages by virtue of the Law. His “harm” is a sort of “statutory harm” – harm ex lege. However, unlike other statutory provisions that grant a consumer a monetary right – see, for example, the provisions of secs. 10 and 17B of the Consumer Protection Law – sec. 2 (a) of the Law does not establish a consumer’s right to damages in the absence of proof of injury, or a consumer’s right to pay a particular price advertised by a dealer. And see: LCA 8733/96 Robert Langbert v. Israel Lands Administration, IsrSC 54 (1) 168. Thus, while in a normal tort case, the injured party can easily point to the harm he incurred, in the matter before us, Barazani cannot show that he suffered any real “injury”, if only because he never saw Bezeq’a advertisement. The existence of an “injury” must be derived from sec. 2 (a), which does not address compensation. We thus find ourselves locked in a vicious circle. We assume the existence of “injury”, and then find that injury has been caused on the basis of that assumption. We therefore state that just as a person is not entitled to sue a person for negligence unless that negligence caused him harm, a person cannot sue a dealer for publishing something liable to mislead in regard to a material element of a transaction if that deceit did not cause him harm. We therefore declare that in the absence of an explicit, unambiguous provision granting damages for virtual harm, like that suffered by Barazani, we cannot imagine that a court will award damages. Such significant creativity is a matter for the legislature, not the courts. The legislature did not say what the petitioner wishes to put in its mouth, and we will not usurp the role of the legislature to say what it did not.

39.       Having said all that in regard to causation and damages, we would add that the (factual and legal) causal connection required by sec. 2 (a) of the Law does not unambiguously require a consumer’s explicit reliance upon a dealer’s representation, as opposed to sec. 56 of the Civil Wrongs Ordinance that explicitly requires a causal connection of reliance. It is possible for the necessary causal connection to exist even where a consumer does not directly rely upon a representation, as where the dealer’s representation (as stated in sec. 64 of the Civil Wrongs Ordinance) “was the cause or one of the causes of the damage”. That would be the case, for example, where it can be shown that a dealer’s representation that was liable to mislead a consumer in regard to a material element motivated a chain of events that resulted in injury to the consumer. For example: a certain advertisement misled a person, and it is possible to show a sufficiently proximate causal link between that person and the consumer who suffered the injury. In other words, in this context, we should broadly interpret the concept of reliance such that it comprises more than just direct reliance.

            However, there must be some (appropriate) causal connection between a misleading advertisement and the injury incurred by the consumer. Thus, the two successive events for our purposes are: first, a publication that is liable to mislead a consumer in regard to a material element of the transaction, and the second, that the consumer purchased the commodity or the service that was the subject of the advertisement. In this regard, the fact that the purchase of the commodity or the service followed the advertisement in time is not sufficient, in and of itself, in order to show a causal connection between the two events, or to put it in terms of the well-known Latin fallacy, post hoc, ergo propter hoc? – after this, therefore because of this? The mere fact that event B follows event A does not mean that event B was caused by event A. There must be an appropriate causal connection between the two events, and we learn of that connection from the circumstances of each case, by the usual procedure of examining the relevant evidence.

40.       A publication that is liable to mislead a consumer gives rise to a tort under sec. 2 (a) of the Law, and when there is an appropriate causal connection between that publication and the injury caused – whether a direct connection deriving from reliance, or an indirect connection deriving from an appropriate chain of causation from the publication to the consumer – the consumer will be entitled to compensation. In other words, the complaining consumer must show that the misleading publication initiated a chain of events that reached him and caused him injury.

            Let us look at the case of securities. In accordance with the Securities Law, 5728-1968, the tort resulting from deceptive conduct does not require a consumer’s reliance upon a misleading publication. A party signing a prospectus that comprises a misleading element “is liable to anyone who bought securities from the offeror … for damage caused to them by the inclusion of a misleading item in the prospectus” (sec. 31 of the Securities Law. And further see: secs. 32 and 52K of that law). And as held in LCA 8268/96 Dan Reichert v. Moshe Shemesh, IsrSC 55 (5) 276 (per Strasberg-Cohen, J.), there must be a causal connection between the misleading publication and the injury incurred by the consumer (reduction of value of the security), although it is not necessary that there be direct reliance upon the publication. And see, ibid., 311-312. What applies there can be instructive here, and I believe that it should be.

41.       In conclusion, what we set out above merely establishes general guidelines for the interpretation of sec. 2 (a) of the Consumer Protection Law. In the case before us, we would say that since Barazani was unaware of Bezeq’s misleading advertisement, and knowing that Barazani was neither directly nor indirectly influenced by that advertisement, we have no need to explore the issue of reliance or that of the appropriate causal connection between a misleading advertisement and the injury incurred by a consumer who purchased an commodity or service that was the subject of the advertisement. In the future, the courts will address those issues and corollary issues, and the law will develop from case to case. For our purposes, the main point is that we will always require the existence of an appropriate causal connection between a misleading publication and the injury incurred by a consumer, and in establishing that causal connection, we will find a place for including “constructive reliance” where appropriate. In other words, sec. 2 (a) will be interpreted as comprising not only direct reliance – as would be the case were we addressing the tort of fraud under sec. 56 of the Civil Wrongs Ordinance – but also indirect reliance, reliance whose practical import is an appropriate causal connection between the publication and the injury such that we might say that the plaintiff was misled in purchasing the commodity or service. The questions that present themselves are not simple at all, as the sharp disagreements testify. Indeed, American jurisprudence overflows with examples in both directions, upon which we will not elaborate for the purpose of the matter before us, but by way of example, see Mark Oliveira v. Amoco Oil Co., 776 N.E. 2d 151 (2002) and the cases cited there.

 

On the Uniqueness of the Consumer Protection Law

 

42.       “We cannot suffice with literal interpretation, and must continue to seek the purpose of the law in order to discern the appropriate interpretation”. Having said this (at p. 598 of the judgment), my colleague Justice Strasberg-Cohen turned to the purpose of the Consumer Protection Law. In doing so, she found that the provision under sec. 2 (a) of the Law – in terms of its substance – does not accord with the fundamental principles of injury and the causation doctrine established in the Civil Wrongs Ordinance. In my colleague’s opinion, we are have a duty to interpret the Consumer Protection Law in accordance with its purpose, and that purpose leads to the conclusion that sec. 2 (a) would award damages to a consumer even if he did not himself rely upon the dealer’s offending advertisement. As my colleague writes:

 

The Law is meant to impose modes of conduct upon the commercial sector, and establish fair rules-of-the-game in the relationship between consumers and dealers. The Law intends to ensure that a dealer will not exploit its greater economic power in order to profit unlawfully at the expense of the consumer. In order to protect the consumer, the Law established “… a line of obligations and prohibitions for dealers – producers, importers, dealers and service providers – with the overall purpose of preventing deception of consumers, providing the consumer with as much information as possible about the nature of the transaction he intends to make, and giving him the tools for realizing his rights …” … the tool of class actions was intended to ensure efficient enforcement of the norms established by the Law, and to deter those with an economic advantage from any attempt to abuse the consumer’s innocence, his weakness in the contest between the two, and the inherent lack of worthwhileness in bringing suit against dealers for the injuries caused by their conduct, which may be very small relative to each consumer, yet a source of unlawful wealth for the dealer. The prohibition of deceit under sec. 2 (a) of the Law should be interpreted against the background of these objectives. Therefore, in my view, the legislature did not choose its words by accident. The statement that the “prohibition of deceit” applies to any act or omission liable to mislead a consumer was intended to establish an objective-normative test for evaluating a dealer’s conduct, and to raise the normative bar that a dealer must pass in order to meet the requirement that the Law establishes to protect consumers. A construction that would grant relief only to those consumers who were actually deceived would create an artificial distinction between the consumer public that used the goods or services that were the subject of the misleading advertising, but who were not exposed to it, and the consumer public who were exposed to the misleading information. An approach that would require actual deceit would limit the liability of a dealer only to those consumers who could show that they were actually misled by the dealer’s representation. Such an approach would reduce the deterrence that is one of the purposes of the Law, if not its main purpose.         It would make deception worthwhile from the point of view of the dealer, and would undermine enforcement of the Law. Such an approach would undermine the achievement of the Law’s purpose, in general, and class actions in that framework, in particular.

And further on (ibid., 602):   

 

In my opinion, a consumer suing on the basis of the Law is not required to show that he was actually misled in order to for him to enjoy a cause of action for damages due to a breach of the “prohibition of deceit” established under sec. 2 (a) of the Law. It is sufficient that he show that the dealer committed an act “liable to mislead a consumer”.

 

43.       Needless to say, the Petitioners agree with the opinion of Justice Strasberg-Cohen, and add that another interpretation of sec. 2 (a) – one that would require reliance upon the misleading representations of a dealer in order for a consumer to demand compensation from the dealer – would eviscerate the Law. How? An interpretation like that of the majority would, in practice, prevent the submission of class actions for deceit, and seeing as an individual action (like that of Barazani) would not be initiated, if only due to the negligible injury to each individual consumer, the result would be that the Law would not be given effect. It would be a voice crying out in the wilderness. The benefit of the Law would be lost, and we would be left with an empty shell.

44.       We addressed the issue of class actions above (see paras. 19-26), and we will comment only briefly. We do not intend to minimize the distinguished place of class actions, nor in any way detract from their importance. We would, however, add that in the absence of a clear, explicit provision –which there is not – we will not permit class actions to rule the entire field of consumer protection, while allowing it to trample fundamental principles and doctrines that have been adopted over the course of time. In this regard. We would particularly note that, from its inception, the class action was not created as a substantive right or a cause of action. A class action, for all its importance – and it is of great importance – is nothing but a procedural tool for the joining of many actions under one roof. Being what it is, we find it hard to interpret it such that it would have the retroactive power, so to speak, to change substantive principles of tort law, and among them the rules concerning causation and the principles for awarding damages. While one can question the conception created by my colleague Justice Strasberg-Cohen, it cannot be entirely ruled out. But that conception deviates so drastically from what has long been accepted, that we would expect that the Law would explicitly instruct us in this regard, and it does not.

45.       When a new law is enacted, it becomes an integral organ of the legal corpus. That is true of every law, and it is true in regard to the Consumer Protection Law. A new law is not a Robinson Crusoe who comes to a place uninhabited by laws, fundamental principles, doctrines, classifications, modes of thought and legal culture. A new law must find its place and integrate itself into the thick forest and become part of the landscape. That is the background of sec. 31 (a) of the Law, which instructs us that a prohibited act under sec. 2 (a) of the Law is to be treated as a tort. Chief Justice Barak instructs us that even without sec. 31 (a), we would classify conduct contrary to sec. 2 (a) of the Law as a tort of breach of a statutory duty. But by enacting sec. 31 (a), the legislature made that unnecessary. But either way, the main point is that the Law recognized the need to weave the new law into the cloth of the general law, and found a place for it in the Civil Wrongs Ordinance. The Law thus informs us that a prohibited act in contravention of sec. 2 (a) of the Law – and contrary to other legal provisions as well – is a tort, and thereby saved us the trouble of classifying it in one way or another. As we stated elsewhere (Cheshin, Chattels in the Law of Torts, sec. 161 at p. 161, fn. 2 (Hebrew)):

 

Classification organized “Julian laws”, and is based upon fundamental principles established therein. Commonalities and distinctions among the rules to be classified is a fundamental principle of thought. The doctrines that apply to the rules that unify a category (capacity, consideration, proximity, etc.) are causes and effects of classification. At a given point in time, classification is made on the basis of the equivalence of doctrines that apply to various rules of law. After making the classification, and the creation of the doctrine that applies to a particular cluster of laws, the doctrine will govern all that is within that cluster because they are members of a single legal class. That will also hold, mutatis mutandis, with the creation of any specific legal rule that is a member of a particular legal class (whether explicitly or by its “explication”), which will then be governed by the doctrine pertaining to that class.

 

Classification in law (and in general), is intended to simplify the task of the researcher and the interpreter, but we must always bear in mind that what we are concerned with is “nothing more than a guideline, and while it would seem proper that we employ it, there is no a priori requirement that it apply, in practice, to a given legal issue” (ibid., 161). Indeed, functionality is the main thing, while “doctrines, classifications, and definitions, we have created these for our own use; they were intended to serve us; we will control them and not allow them to control us; the power is in our hands, and we will now allow our own creations to rise up against us” (the Har Shefi case, 767, and see: CrimA 4675, 4961, 4962/97 Yisrael Rozov v. State of Israel, IsrSC 53 (4) 337, 377). As for the matter before us, we find no good reason to distinguish the cause of action under sec. 2 (a) of the Consumer Protection Law, and treat it differently than any other tort.

 

The Consumer Protection Law – A Multidisciplinary Law

 

46.       The Petitioners place class actions at the center of Creation, and in reading their briefs, it is hard to rid oneself of the impression that the substantive provisions of the Consumer Protection Law were created solely, or at least primarily, to honor class actions. Thus they conclude that in denying Barazani a right granted under sec. 2 (a) of the Law, we render the Law an empty vessel. The claim is readily refuted by the fact that class actions were introduced into the Consumer Protection Law only in 1994, that is, some thirteen years after the Law was enacted. It seems to me that portraying class actions as the prime purpose of the Consumer Protection Law, around which all other provisions of the Law orbit and bow down, does injustice to the Law.

47.       We can all agree that the purpose of the Consumer Protection Law is to achieve an appropriate balance between the individual consumer and dealers – particularly large dealers – and the Law achieves this by placing greater burdens upon the dealers. See, e.g., the Consumer Protection Law Bill, 302; LCA 8733/96 Langbert v. State of Israel, IsrSC 55 (1) 168, 175; LCA 2701/97 State of Israel v. Chertok Daniel, IsrSC 56 (2) 876, 884. For a general survey, see especially, Dr. Orna Deutch, ibid., 27-37; Prof. Sinai Deutch, ibid., 118-128. However, the Consumer Protection Law is a multidisciplinary law. It simultaneously situates itself in private law and in public law, in public administrative law, and in criminal law. The Law integrates provisions form these various fields of law in order to serve the purpose of protecting the consumer.

48.       Indeed, we find three different enforcement mechanisms in the Consumer Protection Law: an administrative enforcement mechanism, a criminal enforcement mechanism, and a civil enforcement mechanism. These three mechanisms can be found in Chapter Five (The Consumer Protection and Fair Trade Commissioner), Chapter Six (Penalties and Remedies), and Chapter Six 1 (Class Actions).  These mechanisms are separate from the substantive provisions that impose specific obligations upon dealers.

49.       In regard to the Consumer Protection and Fair Trade Commissioner, an examination of the relevant provisions of the Law reveals that the Commissioner enjoys many potent powers for overseeing the execution of the Law, for addressing complaints, etc. As stated in the Bill (ibid., 301, 311):

 

For the purpose of enforcing the law, a Consumer Protection and Fair Trade Commissioner will be appointed, who will be granted many powers to enable him to ensure that the provisions of the law are indeed carried out, and to enforce them upon dealers that do not comply.

The powers granted by the law to the Commissioner will grant him the status of an independent authority that can act efficiently … to this end, the Commissioner is granted powers that are not generally granted to authorities, among them – the authority to obtain an undertaking by a dealer to abstain from repeating offenses, accompanied by a guarantee of up to NIS 10,000, and the authority to publish the findings of his examinations, and to obtain a restraining order from the court. In addition to those powers, the Commissioner will have the authority to investigate, to seize documents and chattels, and additional executionary powers.

 

The above receives full expression in the Law. Here are a few of the powers of the Commissioner, as set out in secs. 21-22 of the Law:

 

Powers of the Commissioner

21.       If the Commissioner or the person appointed by him for that purpose concludes that it is necessary to do so for the implementation of this Law, then he may –

(1)        Enter any place used for a business, and there check whether the provisions of this Law are observed, examine documents, samples and goods, and seize anything, if it is reasonable to presume that in its respect an offense against the provisions of this Law was committed or is planned;

(2)        Interrogate any person who is connected to the matter or has information about it, and demand that he appear before him, deliver to him documents, samples and information related to the investigation, on condition that the date of a person's appearance under this paragraph shall – as far as possible – be set in coordination with him and be at a reasonable time;

(3)        Carry out tests of goods or services and publish their results, but he shall not publish anything that is liable to injure any person, if he had not been given an opportunity to present his arguments;

(4)        Inform dealers of their obligation to stop or not to repeat practices that constitute prima facie violations of the provisions of this Law.

                        Auxiliary Powers

22. (a)              The Commissioner or a person appointed by him for that purpose shall have the powers of a police officer of the rank of inspector under the provisions of section 2 of the Criminal Procedure Ordinance (Testimony), and section 3 of the said Ordinance shall apply to information recorded by him.

 

In addition, the Commissioner also enjoys additional powers, such as the power to demand an undertaking that a dealer will abstain from violating the Law (sec. 28), the authority to apply for a court order that a dealer abstain from violating the Law (sec. 30), and more.

            In addition to the Commissioner, the Law backs up the obligations that it imposes upon dealers with criminal sanctions, upon which we need not dwell. However, we would especially note sec. 23 (a) (1) of the Law, under which a dealer is subject to a year imprisonment and a fine “if it did anything liable to mislead a consumer in violation of the provisions of section 2”.

50.       These consumer protection mechanisms do not impress the Petitioners. They argue that public enforcement by means of the provisions of the Law is not enough, and add that in practice, there is under-enforcement by the authorities. They further argue that class actions are the – with a capital “T” – primary tool for the enforcement of the provisions of the Law, and we must not let this valuable tool slip from our hands. And see and compare: the A.S.T. case, para. 7 of the opinion of Beinisch, J.; the Consumer Protection Law (Amendment No. 3) Bill, 5754-1994, H.H. 396; Bar-Niv (Bornowski), “The Limits of the Consumer Class Action,” 19 Iyunei Mishpat 251 (1994) (Hebrew); Bar-Niv, “Enforcement of the Consumer Protection Law by the Commercial Sector,” 17 Iyunei Mishpat 299 (1992) (Hebrew). And compare: M. Agmon & D. Lachman-Messer, “Theories of Enforcement in the New Companies Law Bill,” 26 Mishpatim 543, 577 (1996) (Hebrew).

51.       We would answer the Petitioners’ arguments as follows. First, we have not said – and will not say – that class actions are not an important means for the enforcement of the substantive provisions of the Consumer Protection Law. Second, and this is the main point, examining the Law from within shows that, in principle, the Law rests upon several foundations. Reviewing the powers of the Consumer Protection Commissioner and examining the penal section of the Law will show that the legislature is of the opinion that those powers and sanctions greatly strengthen the position of consumers. If the authorities have demonstrated laxity in enforcing the Law, that retrospective laxity cannot influence the interpretation of the law. We would recall how other authorities operated in the past and how they operate today. We would recall the Antitrust Commissioner and the Securities Authority – how those two operated in days gone by and how they stand today. We should remember, and hope that the Consumer Affairs Commissioner will similarly gain strength, and that the enforcement authorities of the Consumer Protection Law will follow suit in regard to penalties. But that is for the future. As for the present, the Petitioners’ arguments say nothing that would directly influence the interpretation of the Law.

52.       One last comment in this regard. We have stated elsewhere (see para. 12, above) that the Consumer Protection Law does not accept the actio popularis “in blank”. The proof is that a person does not acquire a right to bring a class action unless he also has an actionable personal right (see sec. 35A (a) of the Law). If we were to adopt the interpretation of sec. 2 (a) of the law advanced by the Petitioners, we would find ourselves indirectly introducing the actio popularis into the Law, if not in its fullest sense, at least in principle. By this interpretive process, we borrow a concept of public law – from constitutional law, administrative law, and primarily, from criminal law – and make it part of private law. It is as if we have returned to the days of old, when the enforcement of the law – civil and criminal – was in the hands of the individual. In those days, and in the absence of a central government that could impose its will upon the entire state, law enforcement was decentralized, and the powers and authority of the individual were of primary importance for the enforcement of the law. Granting Barazani a right to sue, as the Petitioners understand the Law, returns us to those early days, if by a sophisticated, modern apparatus. We would immediately add that we do not mean to criticize the need for decentralization of enforcement. We say this because we do not believe that the Law intended, as the Petitioners argue, to affect such a mini-revolution as that we have described without saying anything expressly to that effect. But we have not heard the Law say anything – neither loud nor clear.

 

Presumption

 

53.       Justice Strasberg-Cohen recommends that we establish a presumption that would assist consumers in their battle with dealers, or in her words (at p. 603):

 

Were I of the opinion that actual deception of the consumer, and reliance upon the dealer’s representation were required – and I do not – then, in light of the relative power in the relationship between the consumer and the dealer, and in order to deter the commercial sector, I would favor a presumption by which when a dealer makes a representation that is liable to mislead the consumer, and that representation is widely publicized in order that it reach the consumer public, the consumer who purchases the goods or services that were the subject of representation would be deemed to have been exposed to the representation and had relied upon it…

 

Chief Justice Barak preferred to leave that question in abeyance, inasmuch as there was no need to decide it (ibid., 621). Careful examination – even without delving deeply into it – shows that the subject of the presumption raises no small number of difficulties. Inasmuch as it is not necessary that we decide the issue, we will leave it for the future.

           

Does this spell the End of Collective Actions on the basis of the Consumer Protection Law?

 

54.       The Petitioners raise the fear, and even argue, that the conditions of reliance, or if you prefer, the conditions of causation – as established in the judgment under review – between the conduct of the dealer and the harm to the consumer will put an end to class actions under the Law, by which we will call down great harm upon ourselves. I cannot agree. Our opinion is centered upon the question of when, and under what circumstances, does a plaintiff under the Consumer Protection Law acquire a personal cause of action against a dealer. Indeed, each one of the plaintiffs in a class action must himself have a personal right to compensation – like the representative plaintiff – and have suffered harm causally connected to the conduct of the dealer. So much for the right itself. However, the legislature and secondary legislature took a significant step toward the members of the class insofar as proving the cause of action. Thus, if the consumer prove the existence of a personal cause of action, and if the complaint be certified as a class action, then the court may decide how the members of the class are to prove the injury they incurred. Or, as set forth in reg. 9 of the Consumer Protection (Procedures in regard to Class Actions) Regulations, 5755-1995:

 

                        Actions deriving from Judgments

                        9.  (a)   If a court decides that a cause of action has been proven, it may order that every member of the class prove his right to the requested remedy by means of an affidavit in which he details the harm he incurred.

                             (b)   …

                             (c)   Subsection (a) notwithstanding, the court may, at the request of the plaintiff, exempt the members of the class, or part of them, from submitting affidavits if it finds, under the circumstances of the case, that submitting them will unduly burden the members of the class, and it may order that the damage be proven in another manner as it shall see fit.

 

In terms of the matter before us, if Barazani had a personal cause of action, and the court had recognized his right to submit a class action, and if the court had accepted the class action as such, then the court would have been free to establish appropriate means for proving the causal connection between the misleading advertisement and the harm caused each of the members of the class, as well as the harm caused to each of them, as it saw fit. Or, as stated in reg. 9 (a) above: “that every member of the class prove his right to the requested remedy by means of an affidavit in which he details the damage he incurred”. So, by affidavit, or as stated in reg. 9 (c), even in any other way that the court shall see fit.

55.       Moreover, in CA 1337/97 Tnuva v. Rabi (recently delivered and as yet unpublished), Justice Naor (dissenting) stated that, in her opinion, the Consumer Protection Law should adopt an arrangement called “indemnification and special compensation” which is found in regard to class actions in several laws, among them sec. 46I of the Restrictive Trade Practices Law, 5748-1988, sec. 16I of the Banking (Service to Customer) Law, 5741-1981, and sec. 62I of the Insurance Business (Control) Law, 5741-1981. These provisions are identically worded, and we shall quote sec. 46I of the Restrictive Trade Practices law:

 

Indemnification and Special Compensation

46I.      (a) In the case that a ruling of pecuniary compensation is handed down by a Court in a Class Action, such Court may:

(b) In the case that the Court believes that pecuniary compensation of all or some of the members of the group is impractical under the circumstances, either because they cannot be identified and the payment cannot be made at a reasonable cost or for any other reason, it may provide for any other remedy as it deems fit under the circumstances, whether in favor of all or some of the group, or in the public interest.

 

A similar – though somewhat different – arrangement can be found in sec. 216 (b) of the Companies Law, 5799-1999, which addresses damages in class actions under that law. From these provisions, we learn that where awarding separate compensation to each member of the class is impractical, the court may impose special compensation arrangements or other remedies upon the defendant, as it may deem appropriate, as long as the defendant is not required to pay more than the damage it caused. And see: Daar v. Yellow Cab Company, 433 P. 2d 732 (1967).

 

Comparative Law

 

56.       The attorneys for the parties, each in its own cause, relied upon comparative legal precedents, primarily from American consumer protection law. An examination of the case law serves to show that support can be found for (virtually) every approach. American law is state based, and despite the reciprocal influences of the laws of the various states, each state follows its own path. While the language of the laws is similar – and even similar in certain ways to our own Consumer Protection Law – the interpretive policy of the courts differs from place to place. The primary differences center, not surprisingly, upon the subject of reliance and causation. Thus, for example, there are places where a precondition to the tort of consumer deception is that the consumer relied upon the misleading representation. In other places, no reliance is required at all. And still in others, the case law has created a presumption of reliance. And we need not point out that each is unlike the others.

            Moreover, reading the American case law reveals variations in the application of the various laws, both in regard to the conditions for reliance and in regard to causation. Thus, for example, in the case of Miller v. General Motors Corp., 2003 U.S. Dis., Lexis 1467 (a case decided in January 2003 by the United States District Court for the Northern District of Illinois, Eastern Division), the court addresses some of the differences between the laws of the various states – primarily in regard to issues of reliance – and we find the following marginal note by the court:

Some of the issues on which differences exist include: … differences in standards of reliance.

The court adds that the law of the state of Illinois is also insufficiently clear in regard to reliance. And also see, for example: the Oliveira case (above, para. 41), Connick v. Suzuki Motor Co., Ltd., 675 N.E.2d 584 (1996); Zekman v. Direct American Marketers, Inc., 695 N.E.2d 853 (1998).

            Precedents are thus brought to us from the four corners of the earth, and there is much confusion. Indeed, the legal provisions differ, as do the trends and social, economic and legal outlooks that characterize the different states and that guide the courts – each according to its own path – and we would be hard pressed to distinguish the universal from the particular. We may learn techniques and modes of thought from American law, but I fear, not much more.

57.       In reviewing the sea of citations imported from the United States and laid out before us, I cannot but be reminded of the words of Justice Haim Cohn in FH 12/63 Leon v. Ringer IsrSC 18(4) 701 [1964], where the Supreme Court was asked to decide upon the “eggshell skull” rule. This is how Justice Cohn began his opinion in that case (ibid., 706):

 

The rule established in CA 378/62 … it that the tortfeasor is responsible for the harm caused by his negligent act, even if – due to the “eggshell skull” of the victim – the extent of the injury exceeded anything that could be expected or foreseen. In the Further Hearing on this doctrine, the learned counsels called down upon us an abundant rain of precedent, sources, articles and comments, among them Israeli, American, South African, and Australian, to the point that the waters of the foreseeability doctrine flooded the banks. In fear of being swept away by such a torrent, and drowning in a sea of various decisions and statements, I cleared my desk of all the books – among them a compendium of nineteen articles published on the subject in various journals, which the attorney for the National Insurance Institute compiled and bound for us with discerning taste – and I commenced writing with only the Civil Wrongs Ordinance, 1944, and the said decision of this Court in CA 378/62; 390/62 set before me.

 

Indeed, in a moment of such distress – a distress of lémbarras du choix (de richesse) – we can but latch onto the fundamental principles of the law. That is what we have done, to the best of our ability, in this opinion. And see, for example: Gary L. Willson & Jason A. Gilmer, “Minnesota’s Tobacco Case: Recovering Damages without Individual Proof of Reliance under Minnesota’s Consumer Protection Statutes”, 25 Mitchell L. Rev. 567 (1999); Samuel Issacharoff, “Class Actions in The Gulf South Symposium: The Vexing Problem of Reliance in Consumer Class Actions”, 74 Tulane L. Rev. 1633 (2000).

 

Conclusion

 

58.       The Petitioner before us, Barazani, did not see the misleading advertisement, did not rely upon it – either directly or indirectly – and in any case, was not misled. There is no appropriate causal connection between the advertisement and the injury allegedly incurred by Barazani, and, therefore, his suit must be denied. I would, therefore, recommend to my colleagues that we dismiss the petition and affirm the judgment of the Supreme Court.

 

And it came to pass after these things[7]

 

59.       I have read the opinion of my colleague Justice Mazza. My colleague comments rather sharply upon my opinion. He primarily seeks to smash the wall I built around the judgment, and pulverize the foundations upon which I built my legal conclusions. Inasmuch as my colleague’s opinion was not before me when I wrote my opinion, I would ask that what I wrote be seen as an answer to my colleague’s remarks. And having thus replied to my colleague, I would add two observations in regard to the disagreements that have arisen between us.

60.       My colleague is of the opinion – and so he holds – that in interpreting and deciding upon the scope of the Consumer Protection Law, we must bear in mind that we are in a “consumer environment” as distinguished, for example, from a tort-law environment, and that we must give special force to the “uniqueness of the consumer cause of action”. Because we are acting in a consumer atmosphere, we must realize that the causal connection between a prohibited act and the injury in the Consumer Protection Law must be a “consumer causal connection”, that a prohibited act of deception is “consumer deception”, that the injury incurred by the consumer is “consumer injury”, etc. The borders and scope of each of these concepts – concepts whose core is the consumer as such – remain somewhat blurry. However, it is unambiguously clear that appending the term “consumer” to each of these long acknowledged concepts – the concepts of “causal connection”, “deception”, “injury”, etc. – shows that the interpretation of those concepts is not the usual one, and may contradict the usual interpretation. A “consumer causal connection” is not a regular “causal connection”, “consumer deception” is not the usual “deception”, “consumer injury” is not regular “injury”, etc. Thus, even though the Law clearly instructs us that acts and omissions prohibited under Chapters Two, Three and Four of the Consumer Protection Law are to be treated as torts under the Civil Wrongs Ordinance, my colleague intends to disengage himself – in practice – from the doctrines of tort law, while seeking to construct a new conceptual universe whose terms and expressions are the terms and expressions of concepts familiar to us from tort law, but whose content is a “consumer content” that is remote from tort law.

61.       In essence, my colleague’s words destroy the existing world – the old world – and create a new world in its place. Thus, the passes the old world and a new world comes into being, all on the basis of the purpose of the Consumer Protection Law. For my part, I would argue that I find such an interpretation problematic, and I fear “the disengagement from firmly-rooted, ancient legal traditions” (Prof. Sinai Deutch, “Consumer Class Actions: The Demand for Personal Reliance on Misrepresentations of the Deceiver,” (2 Moznei Mishpat 97, 126 (2001-2002) (Hebrew)). Not only do I not find any firm anchor in the Law for my colleague’s far-reaching interpretation, but the fears gnaw at me if only because the boundaries of the new world are not sufficiently clear, and the consequences that may result from the new conception are beyond me. My colleague seeks to disengage us from the gravitational center that we have become accustomed to orbit for so many years, but he does not provide us with a firm footing to tread upon. I would go so far as to say that in this new world that my colleague creates, we must begin from the beginning. The sensation is of floating in space, and the spirit of God hovers upon the waters.

            Thus we see that sec. 35A (b) of the Consumer Protection Law states: “Where the cause of action is injury, it is sufficient that the plaintiff show that the consumer suffered injury.” On this provision, my colleague states as follows:

 

I am of the opinion that we may learn from sec. 35A (b) that for the purpose of filing a class action, it is sufficient to show the existence of a consumer injury, and there is no need to show a factual causal connection between the breach and that injury. This construction accords with the special purposes of the consumer class action, which I addressed above, which are also not consistent with the requirement of personal reliance.

 

For my part, I would say that I tried but could not understand how we could award one person damages from another person for an injury that was not causally connected to that other person’s acts or omissions. What would that be like? It would be like saying that Reuben and Simon make a binding agreement between themselves solely on the basis of Reuben’s offer. Then, even if Levi breaches an obligation placed upon him, and even if Judah incurs the injury, Judah will not collect damages from Levi for that injury – so it appears to me – unless he can show some rational causal connection between Levi’s breach and the injury that he, Judah, incurred.

            My colleague’s construct may have been appropriate to the formative period of the Common Law, but today, with statutes from horizon to horizon, I find it difficult to free myself from the feeling that adopting my colleague’s approach – on its face – would tresspass the boundaries of the legislature by no small measure, and first and foremost, lead us into unknown territory. I would quickly add this: I did not say – and do not mean to say – that my colleague’s approach (at least in part) is not the lex ferenda. I did not say – and do not mean to say – that it is not proper that we interpret the Consumer Protection Law in a “consumer spirit” and more broadly than tort law. I agree that it would be appropriate to do so. But I fear that my colleague may have gone too far in his interpretation of the Law.

62.       A second comment: Over the course of his entire opinion, my colleague attacks the reliance doctrine, as well as my opinion allegedly based upon that doctrine. I am afraid that my colleague is mistaken. My opinion is expressly based upon the subject of the proper causal connection, and not upon the reliance doctrine in the narrow sense, and I believe that, in that regard, there are no deep disagreements between us. See, for example, paras. 39 through 41 of my opinion.

63.       Unlike my colleague Justice Mazza, whose approach is a torts approach – “torts” in the broad sense of the term – my colleague Justice Dorner chose to follow a different path, one beginning in contract law and ending in the Consumer Protection Law. My colleague is of the opinion that a consumer’s right against a dealer in circumstances like those before us “is firmly anchored in established doctrines of contract law,” and upon those doctrines, she grounds her conclusion that the Petitioner is entitled to the status of a class-action plaintiff. More precisely, my colleague is of the view that the Petitioner incurred compensation-worthy injury even though he was not exposed to the misleading advertisement, and that injury can serve as a springboard to the status of a representative plaintiff.

64.       I do not intend to argue with my colleague on the matter of the lex ferenda. The matter is too complex for me even to wish to express an opinion upon it, and we have heard no arguments grounded upon contract law. Our common assumption was, and is, that we are concerned with tort law. That was the field that was plowed by the plowers, and the one that we, too, plowed. For my part, I can say that to the best of my understanding, sec. 2 of the Consumer Protection Law – by its plain language and on its face – does not state what my colleague seeks to find there. The case law has always assumed that Section 2 of the Law addresses precontractual deceit, and in any case, it was the (alleged) existence of “deceptive advertising” that formed the basis of the Further Hearing with which we are concerned. That is the basis of the disagreement before us, and that – and only that – was addressed in our opinion above. See and compare: Prof. Sinai Deutch, Consumer Protection Law, ibid., 398-400, and the sources cited there.

            Contract law indeed adds causes of action and remedies to those causes of action and remedies provided by the Consumer Protection Law, but consumer protection as expressed in the Consumer Protection Law did not situate itself in the field of contract law. On the contrary, consumer protection law distanced itself from the field of contracts, seeking to reside in the field of tort law. That is, after all, what the Law says in stating that a deception such as that before us is to be treated “as a tort under the Civil Wrongs Ordinance [New Version]”. Consumer protection law lives its civil life in the field of tort law, the doctrines of that field serve as the basis for the rights that the Consumer Protection Law grants to consumers, and the general atmosphere is one of tort law. Knowing that, we further know that a class action under the Consumer Protection Law – as provided under sec. 35A of the Law – treats of that “tort” action that the Law created. Thus, when sec. 35A of the Law states that a consumer may bring a class action “on behalf of a group of consumers on a cause of action under which he can bring suit in his own name under this Law, and against any defendant that the consumer may sue in his own name”, it is speaking of nothing other than that cause of action in “tort” that the Law grants the consumer. Even if the consumer has a cause of action against a dealer in “contract law” – whether directly based upon contract law or more closely related to contract law – that suit will find its place – to the extent that it has one – in general contract law and not specifically in the Consumer Protection Law. In any case, the consumer will not be able to initiate a class action based upon the Consumer Protection Law for such a cause of action.

 

                                                                                                            Justice

 

Chief Justice A. Barak:

 

            I concur in the opinion of my colleague Justice Cheshin. I also concur with his comments in regard to the opinion of my colleague Justice Mazza. As for the opinion of my colleague Justice Dorner, I, too, am of the opinion that, inasmuch as arguments were not heard in regard to the application of contract law to this case in the District Court, or before the three-judge panel of the Supreme Court or in this Further Hearing, I would not wish to take a stand upon that issue in these proceedings.

 

                                                                                                            Justice

 

Deputy Chief Justice T. Orr:

 

            I concur in the opinion of my colleague Justice M. Cheshin.

 

                                                                                                                        Justice

 

Justice D. Beinisch:

 

            I concur in the opinion of my colleague Justice Cheshin, and thereby also add my voice to that of the majority in CA 1977/97.

            The approach of my colleagues, who seek – each in his own way – to construe the provisions of the Consumer Protection Law in a spirit of a consumer doctrine that would protect class actions, is very appealing. Protecting consumers against economically powerful dealers by levelling the playing field is not merely an appropriate purpose, but also expresses values that we seek to further as part of an overall economic vision. I also agree with the approach that sees class actions as an important tool for advancing consumer protection and for restraining economically dominant bodies from abusing their power.

            Nevertheless, I do not see how one can extricate oneself from the legal framework that the legislature established, under sec. 33(a) of the Consumer Protection Law, for damages for a “consumer tort”, which is a tort-law framework. For my part, I do not share my colleagues’ fear that a demand for a causal connection between the tort and the injury will eviscerate the remedy of damages that the Law provides. One must distinguish between the substance of applying tort-law doctrines and the nature of the causal connection and its proof. The nature of the causal connection, the strength of its proof and the means for its proof may be decided in accordance with the circumstances of each case, and the consumer background may result in more lenient rules. One must not, in principle, confuse that with the foundations upon which the legislature grounded the remedy of damages. The wording of sec. 31 (a) of the Consumer Protection Law bars the way to developing a theory of consumerism as a branch of compensation divorced from the foundational concepts of tort law.

            We may assume that a theory of consumerism will develop, and that consumer suits will find their path in regard to the remedy of compensation, as well, and case law and practical experience will lay the appropriate groundwork for proving the causal connection, without casting off the foundational principles of the theory of compensation for loss.

 

                                                                                                            Justice

 

Justice Tova Strasberg-Cohen:

 

1.         The suit before us was filed on the basis of the Consumer Protection Law, 5741-1981 (hereinafter: the Law). It is based upon a cause of action and a remedy established in the Law, and it was filed as a class action in accordance with it.

            The provisions of the Law that are relevant to these proceedings are sec. 2 (a), secs. 31 (a) and (a1), and sec. 35A of the Law. The central question that we must consider and decide is whether, under the prohibition upon deceit established in sec. 2 (a) of the Law, a plaintiff can be awarded pecuniary damages even if he was not exposed to the misleading representations and therefore, did not rely upon them. I addressed this question at length in my dissent in the Appeal that is the subject this petition (CA 1977/97 Barazani v. Bezeq – Israeli Telecommunications Company Ltd., IsrSC 55 (4) 584 (hereinafter: the Appeal). I have reviewed all of the relevant material in the Appeal, and especially the opinions of my colleagues Chief Justice Barak and Justice Englard, who formed the majority, as well as that of my colleague Justice Cheshin in these proceedings, and the conflicting opinions in the publications of the various scholars (Prof. Sinai Deutch, whose opinion coincides with mine, and Prof. M. Deutch and Dr. O. Deutch, whose opinions correspond with that of my colleagues, see: S. Deutch, “Consumer Class Actions: The Demand for Personal Reliance on Misrepresentations of the Deceiver,” 2 Moznei Mishpat 97, 121 (2001-2002) (Hebrew) (hereinafter: Deutch, “The Demand for Personal Reliance”); O. Deutch, The Legal Status of Consumers (Nevo, 2002) 414 (Hebrew); M. Deutch, Commercial Torts and Trade Secrets (Nevo, 2002) 49 (Hebrew). After reading all of the above, I have concluded that my opinion remains unchanged. I will, therefore, clarify my position and focus upon the questions under debate, and preface my opinion with a few words on the integration of a cause of action under the Consumer Protection Law in a class action under that law.

 

The Consumer Protection Law

 

2.         The Consumer Protection Law, which forms part of the consumer legislation, serves many purposes, but at their heart is the protection of consumers against economically advantaged dealers, and narrowing the power gap and lack of equality in the relative negotiating positions of the parties. Its purpose is to impose proper conduct upon the commercial sector, and to establish rules of fair play in the relationship between consumer and dealer. It was intended to reinforce the personal autonomy of the consumer and his right to dignity by ensuring his ability to make informed choices in regard to products and services on the basis of accurate, relevant information, and by preventing abuse of the consumer’s relatively weaker position. It was intended to deny a dealer the ill-gotten gains obtained from the consumer for a product or service, and thereby restore to the consumer what had been unlawfully taken, and to make such conduct not only improper but also unprofitable. Consumer protection also serves to encourage fair competition among dealers, which is an important factor in proper market and economic activity (for a survey of the purposes of consumer law, see: O. Deutch, supra, at pp. 27-37, and see the Explanatory Notes to the Consumer Protection Law Bill, 5740-1980, at p. 302).

3.         As for as consumer contracts, there are those who view them as a separate branch of general contract law. Each of those branches has its own point of reference. That of general contract law is the glorification of the autonomy of the parties. Its provisions are dispositive, and governmental intervention through criminal and administrative provisions is limited. As opposed to this, consumer protection law is obigatory, and in achieving its objectives, it comprises criminal and administrative sanctions. (For a survey of the characteristics of civil law as opposed to consumer law, see: S. Deutch, “Consumer Contracts Law versus Commercial Contracts Law,” 23 (1) Iyunei Mishpat 135, 150-152 (5760) (Hebrew); S. Deutch, Consumer Protection Law – Fundamentals and Principles, vol. 1 (5761) 294-289 (Hebrew)).

 

Class Actions

 

4.         The Consumer Protection Law provided consumers with efficient enforcement mechanisms for the protection of their rights, and primary among them is the class action. I have had the opportunity to address the purposes of class actions on more than one occasion, and I shall not repeat what I have already stated (see: CA 2967/95 Magen veKeshet Ltd. v. Tempo Beer Industries Ltd. [1997], IsrSC 51(2) 312, 322-323; LCA 4474/97 Tatzet v. Silberschatz, IsrSC 54 (2) 577, 586-587; LCA 8268/96 Reichert v. Shemesh, IsrSC 55 (5) 276, 288-289; LCA 3126/00 State of Israel v. A.S.T Project Management and Manpower Ltd., IsrSC 57 (3) 220). I will suffice in saying that in the broad sense, class actions are intended to prevent the unjust enrichment of powerful economic actors that concentrate production, industry and services for mass consumption at the expense of the man in the street who turns to such actors for the goods and services that he uses. They are also a means for enforcing the law at the civil level. The possibility afforded to the individual consumer of bringing suit, by class action, in the name of an anonymous group of consumers who were harmed by a violation of the law, achieves proper enforcement and prevents situations of under-enforcement that harm the individual consumer, the group of consumers and the general public. Under-enforcement leads to the undermining of public faith in the general social order and the rule of law. Class actions also serve the public interest in efficiency and economy of resources, and prevent a lack of uniformity in the decisions of the courts in similar individual cases (see: Nina Zaltzman, Res Judicata (Ramot, 1991) 427 (Hebrew).

 

Interpretation

 

5.         The suit before us is based upon a cause of action in the Consumer Protection Law, and the request that it be certified as a class action is based upon the same Law. This brings about an merger that has consequences for the proper interpretation of the provisions of the Law relevant to our examination. That interpretation begins with the language of the Law but does not end there. From among the possible interpretations that the language of the Law makes available, we must choose the possibility that is consistent with the objective and purpose of the Law. We can learn the purpose from the Law, the placement of the provision in the Law, the general structure of the Law, from the normative economic and social context of the Law’s provisions in relation to one another and in relation to other laws of similar character, and from extra-legal sources, such as the legislative and parliamentary history, all against the background of the accepted values of our legal system (CA 165/82 Kibbutz Hazor v. Rehovot Assessment Officer, IsrSC 39 (2) 70).

            From reading the relevant legal provisions, and especially secs. 2 (a) and 31 (a) and (a1) of the Law, we find that the words of the Law alone are insufficient to exhaust the substance of these provisions. It seems to me that the use of the procedural device of initiating a suit as a class action, and the nature of the Law as a consumer law, pave the way for an appropriate interpretation of the Law, and for providing the correct meaning to its provisions.

 

What is Agreed and What is Disputed

 

6.         At the outset, I would like to remove the stumbling blocks from the path that my colleagues and I are travelling, clarify what is and what is not in dispute, and focus upon what is in dispute.

            There is no dispute that a class action does not create new causes of action and that it is but a procedural device that allows for the joining of many actions into one, for procedural and substantive reasons. There must be a personal cause of action as a precondition to making a class action available to the plaintiff. This requirement is common to all the laws that regulate class actions (in this regard, see, for example, my opinion in CA 2967/95, above). My colleague Justice Cheshin addresses this matter at length, and I will not add to that. I will only state that, like him, I was and remain of the opinion that a class action does not create new causes of action and is nothing other than a procedural device available to a person who has a personal cause of action under the Law (sec. 35A (a) of the Law).

7.         From here I will now proceeed to the cause of action of “prohibition of deceit”, which is the cause of action in the matter before us, and I will begin by pointing out the questions that are not in dispute in regard to this cause of action established under sec. 2 (a) of the Law, which states as follows:

 

                        Prohibition of Deceit

2. (a) A dealer must not do anything – by deed or by omission, in writing, by word of mouth or in any other manner, also after the transaction has been contracted – which is liable to mislead a consumer in regard to any material element of the transaction … (emphasis supplied – T.S.C.).

 

There is no dispute that the prohibition of deceit established under sec. 2 (a) of the Law is not a prohibition of “result” that requires actual deceit, but rather a prohibition of “conduct” according to which one may not do anything “liable to mislead a consumer”. Therefore, in order for a cause of action to arise, there is no need to show actual deceit in practice. And so I stated in my opinion in the judgment under appeal:

 

…in my opinion, the consumer who files suit under the Law is not required to show that he was actually deceived…it is sufficient that he show that the dealer committed an act that was “liable to deceive a consumer” (p. 602).

 

Similarly, Chief Justice Barak states in the same judgment:

 

…sec. 2 (a) of the Law does not require deceit in actual practice. What is prohibited thereby is doing something “liable to deceive a consumer”. The purpose of the prohibition is to ensure that the consumer receive full and accurate information. The prohibition established by sec. 2 (a) of the Law is not a prohibition of “result”; it is a prohibition of “conduct”. The prohibition established in sec. 2 (a) of the Law… (p. 617).

 

And thus states Justice Cheshin in this Further Hearing:

 

The prohibition is one of conduct, and a dealer contravenes the prohibition even if he does something – by act or omission – that is only “liable to mislead” a consumer, i.e., even if no one was misled by it. …The standard of conduct required under sec. 2 (a) is higher than the usual standard in other laws. … whereas sec. 2 (a) of the Consumer Protection Law prohibits the conduct per se, even in the absence of resulting injury (para. 10, emphasis supplied – T.S.C.).

 

            (And see: Deutch, “The Demand for Personal Reliance”; O. Deutch, supra, p. 390; M. Deutch, supra, p. 49).

8.         There is no question that Bezeq’s advertisements appeared to be “liable to mislead a consumer” in regard to the manner of calculating charges for direct-dial international calls and their price (see: my opinion in the Appeal, at pp. 594-596); the opinion of the Chief Justice in the Appeal, at p. 617, opposite the marginal letter B). That being so, the consumer acquired a cause of action under sec. 2 (a) of the Law, and a restraining order and declaratory relief could be granted (the Chief Justice, ibid., at p. 617, opposite the marginal letter B). However, in the matter at hand, the class action that the court was asked to certify was not for declaratory relief, but rather for damages arising from injury incurred by consumers as a result of the advertisement that was liable to mislead. Here, too, my colleagues and I travel the same path, inasmuch as I agree that in order to acquire a cause of action for damages for injury caused by a publication that is liable to mislead, one must make a prima facie showing that the publication was liable to mislead, that injury was incurred, and that there was a factual and legal causal connection between the publication and the injury (see my opinion in the Appeal, at p. 602, opposite marginal letter A, and at p. 604, opposite marginal letter C).

9.         No one disputes that, in the case before us, the requirement of “liable to deceive” in sec. 2 (a) of the Law was met. My colleagues and I part ways in regard to the question of whether the Petitioner-consumer suffered harm, and whether there can be a causal connection between the publication and the injury in the absence of the consumer’s reliance upon the potentially misleading publication. My answer to both questions is in the affirmative for a number of reasons. First, establishing deceit as a prohibition of conduct but recognizing a remedy of damages for its violation only if actual deceit is proven, renders the primary prohibition of the Consumer Protection Law lacking of any real civil remedy. Although sec. 32 of the Law grants the remedy of cancelling the sale, the limitations of that remedy are so numerous that there is almost no reason to employ it, and indeed, not a single example of the application of this provision of the Law is to be found in the case law. Second, it is unlikely that a consumer will go to the effort and expense involved in obtaining a restraining order for the benefit of the general public. Third, over the years of the existence of the Consumer Protection Law, only limited recourse has been made to the criminal sanction, and it would appear that the criminal sanction does not significantly deter a powerful dealer from misleading the consumer public when he can pocket large profits (ibid., at p. 106). The same is true of administrative sanctions. Fourth, an approach that makes damages contingent upon actual deceit limits the dealer’s liability only to those consumers who can prove that they were actually misled by the dealer’s misrepresentations, and makes deception worthwhile from the dealer’s perspective. Fifth, an interpretation by which damages can be sought only by those consumers who were actually misled will create an artificial distinction between those consumers who actually used the misrepresented product or service but were not exposed to the misrepresentation, and those consumers who were aware of the misrepresentation. Sixth, in other cases in the past, this Court did not hesitate to broaden the choice of remedies beyond those delineated by a law, so as not to empty the law of content (thus, for example, in regard to sec. 12 (b) of the Contracts (General Part) Law, the case law established that even though the provision provides only the remedy of damages, the available remedies should not be limited only to those set out in the law when broader remedies, like enforcement, are justified (CA 829/80 Shikun Ovdim v. Zepnick, IsrSC 37 (1) 579; CA 579/83 Sonnenschein v. Gebso Bros., IsrSC 42 (2) 278; CA 986/93 Kalmar v. Guy, IsrSC 50 (1) 185)). Such an expansion is also appropriate in regard to the interpretation of secs. 31 (a) and 31 (a1) of the Law for the purpose of protecting consumers. Here I should note that such a partial expansion was made by my colleague the Chief Justice, who was of the opinion that even a consumer who was not misled and who did not suffer injury could be granted a restraining order against a dealer, although such a remedy does not appear in the Consumer Protection Law. Seventh, the Consumer Protection Law establishes other prohibitions that do not require proof of actual reliance, and their breach entitles the consumer to a broad right to damages (thus, for example, in regard to a failure to supply particulars in regard to a credit transaction (sec. 9), the court may – in addition to the provision for cancelling the transaction and refunding the consideration or part thereof to the consumer – “charge the dealer with the expenses caused to the consumer, and it may issue any other direction which it deems just” (sec. 11)). What reason is there to grant an independent remedy of damages that includes granting broad discretion to the court in regard to a violation of these prohibitions, while not for a violation of the Law’s central prohibition – the prohibition upon deception? (also see: Deutch, “The Demand for Personal Reliance,” at pp. 106, 121-127).

 

As a Tort

 

10.       All of the above reasons constitute a conceptual foundation for examining whether it is possible to interpret the relevant sections of the Law in a manner that would grant damages to a consumer in the circumstances of this case, while remaining faithful to the principles grounding the rules of interpretation. The provisions of the Law relevant to the remedy of damages are secs. 31 (a) and 31 (a1) which state as follows:

 

Compensation            

31. (a) Any act or omission in violation of Chapters Two, Three, or Four "A" shall be treated as a tort under the Civil Wrongs Ordinance [New Version].

(a1) Consumers injured by the wrong are entitled to remedies for the wrong and so are dealers, who in the course of their business are injured by deceit, as said in section 2 (emphasis added – T.S.C.).

 

The upshot of these sections is that the “prohibition of deceit” shall be treated “as a tort” under the Civil Wrongs Ordinance, and that the right to a remedy for the tort is granted to an injured consumer. The wording of these sections is problematic, and raises a question as to the meaning of the phrase “as a tort”. Much was written on the meaning of that phrase in the Appeal and in the opinion of my colleague Justice Cheshin in this Further Hearing. It might be noted that a review of the statutes reveals a number of laws comprising various statements in regard to the definition of “tort” in regard to the Civil Wrongs Ordinance. Conduct in violation of the law has been defined as “constituting a tort and the provisions of the Civil Wrongs Ordinance [New Version] shall apply thereto” and a wrongful act has been defined as being “as a tort under the Civil Wrongs Ordinance [New Version]” or “as an injury for which damages may be sought under the tort law” [for a list of the laws, see: Deutch, “The Demand for Personal Reliance,” at pp. 128-129). The differences in wording may be intentional or may be accidental. In any case, it is clear that this expression makes certain legal prohibitions into prohibitions that are like torts under the Civil Wrongs Ordinance. The question is whether they thus become torts for all intents and purposes. In my view, the statement “Any act or omission … shall be treated as a tort under the Civil Wrongs Ordinance...” should be understood as creating a new cause of action that is like a tort. Such a cause of action is not parallel to a tort but comparable to a tort in the sense that it applies the doctrines of the Civil Wrongs Ordinance to the act or omission. In the matter before us, it applies the compensation doctrine and the causation doctrine (see the opinion of Justice Cheshin, para. 34). However, this cause of action is special to the Consumer Protection Law. It is independent in nature, and it must be interpreted within its context, in the framework of the purpose it was intended to serve, and in relation to the said doctrines, which must be interpreted in a manner that is consistent with the purpose of the Consumer Protection Law and its enforcement by means of class actions. Chief Justice Barak’s statement in his recent opinion in CA 2622/01 Director of Property Improvement Tax v. Aliza Levanon (not yet published) are apt to the matter before us:

           

A statute is a living entity that resides in its social environment. With changes in social conceptions, the meaning of the statute changes in the understanding of the social environment in which it operates. … Life is in constant motion, and with it, the law. This is the basis of the interpretive approach – accepted in England and Israel – that “the law is always speaking”, and that the law must be given an updated interpretation. Interpretation is a renewing process. Old language must be given modern meaning that is consistent with the needs of modern life. Thus the statement of Prof. Radbruch, that “The interpreter may understand the law better than its creators understood it; the law may be wiser than its authors” (see G. Radbruch, “Legal Philosophy,” in The Legal Philosophies of Lask, Radbruch and Dabin,   K. Wilk, trans. (1950) 141). … The laws of a society move with it over the course of its history, and in that movement, their meaning changes in order to serve the society in which they act. I addressed this is the Lindorn case, noting:

“The meaning to be given to a legal statement – like the statement ‘his spouse’ – is not fixed for all times. The law is part of life, and life changes. As reality changes, the meaning of the law changes. The language of the law remains as it was, but its significance changes along with the ‘changing conditions of life’ (ibid., p. 32).”

 

I need only adopt this appropriate, correct approach in the matter before us, and applying it requires an interpretation that is appropriate and proper to the issue of injury and causation. In my opinion – as opposed to the opinions of my colleagues – the requirements of injury and causation between the violation of the “prohibition of deceit” and the injury are met in the matter before us.

 

Injury

 

11.       Injury how? Section 31 (a1) of the Law states: “Consumers injured by the wrong are entitled to remedies for the wrong…”, while sec. 35A (b) states: “Where the cause of action is injury, it is sufficient that the plaintiff show that the consumer incurred injury”. In the matter before us, monetary injury is claimed as the result of overcharging consumers in comparison to what should have been charged had the calculation been made as advertised. That differential is sufficient to meet the Law’s requirement of injury. The injury incurred by a consumer who utilized the international direct-dialing service is expressed in the difference between the price advertised by Bezeq, and the price actually charged (hereinafter: the “price differential”). The price differential is an injury, inasmuch as had the advertised price been charged, the consumer would have saved the excess payment. That differential is an actual out-of-pocket loss that should be deemed an injury as required by the Law.

 

Causation

 

12.       Causation how? As no one doubts that there was a publication liable to mislead, and having found that injury was caused to the consumer, we must consider whether there was a causal connection between the publication and the injury. I addressed the nature of causation in general in the Appeal, and I will not repeat what I wrote in that regard (p. 605). I will, therefore, consider the disputed issue of whether the consumer meets the requirement of causation when he was not actually misled by the misrepresentation. In my view, the required causal connection exists for the purpose of the cause of action granting a consumer damages for the injury incurred by him.

13.       Inasmuch as the Law establishes that an act or omission (including a misleading publication) is to be treated as a tort under the Civil Wrongs Ordinance, and does not create a parallel to specific torts in the Civil Wrongs Ordinance, we cannot say that the prohibition of deceit under sec. 2 (a) of the Law is like the tort of fraud or the tort of negligent misrepresentation, which require reliance as a precondition (on the tort of negligent misrepresentation, see: CA 106/54 Weinstein v. Kadima Cooperative Association Ltd., IsrSC 8 1317; and on the tort of fraud, see: CA 614/84 Sapir v. Eshed, IsrSC 41 (2) 225, 239). My position is that the tort perpetrated by a publication that is liable to mislead does not require reliance in order to entitle a consumer to damages for injuries incurred by him due to that publication, and we are not bound by the reliance requirement of those torts. Had the legislature intended to draw a parallel between the prohibition of deceit and one of the torts requiring reliance, we would have expected that it would have done so expressly. Moreover, there is no logic behind creating a separate tort in a special law with a special purpose that corresponds to a tort that already exists in the Civil Wrongs Ordinance, for if that were the case, what would be achieved by enacting the separate tort? We should not assume that the legislature wasted its words, and moreover, the Consumer Protection Law was enacted in order to create special causes of action for the special area of consumer protection. In addition, it should be noted that there is no small number of torts that do not require reliance, both in the Civil Wrongs Ordinance and outside it. It would appear to me that the reliance requirement is not required for establishing causation by the wording of the Law and its purpose.

14.       As a rule, the reliance requirement comprises the assumption that were it not for the representation upon which you relied, and were it not for your reliance thereupon, you would not have negatively altered your situation, and would not have acquired the service or product misleadingly represented. In other words, you would have chosen to refrain from acquiring the product or service. In the case of the service in this matter – direct-dialed international calls – there was no such choice at the relevant time. It was a monopoly of Bezeq, which was a government corporation. The service itself is one that is incomparable. Modern life is inconceivable without it. And at the relevant time, it could not be obtained from any other provider. In such circumstances, one can say that the reliance requirement is of no consequence or significance. Moreover, in the modern age, in which the consumer receives services from large public corporations – sometimes exclusive in the field – the consumer public cannot be expected to keep abreast of the “flood” of advertisements published by the various corporations in regard to discounts, promotions, etc., as a condition for obtaining damages for injury incurred as a result of misleading advertising. Consumers cannot be expected to scrutinize the accounts and calculations of those corporations, and investigate whether they correspond to their advertisements. It is not even clear that they could do so. In the matter before us, Bezeq conducted ongoing advertising campaigns, and the consumers cannot be asked to keep track of those advertisement as a condition for an award of damages. They should be able to rely upon the assumption that if a company decides to conduct a campaign or grant discounts or make calculations that are more beneficial to the consumers, and publishes that, then it will act in accordance with what it published and will grant the benefit to the consumers regardless of whether or not the consumers saw, read or relied upon the advertisements when making use of the service. Moreover, a large proportion of the consumers pay their telephone bills by means of standing bank orders. The details of the bills are not always examined before payment. I find no economic or other logic to awarding a refund for overcharging only to those few who keep track of advertisements and check bills. I do not believe that it is just or fair to “punish” the consumer who does not do so, and to allow the company to profit from the loss of the consumer that derives from the supplier’s misleading advertisements. Indeed, Bezeq is under no obligation to advertise discounts, campaigns or beneficial charging plans, but if it does so, it must stand behind those advertisements and put them into practice for the entire consumer public. Having failed to do so, it committed a tort that resulted in injury for which it is liable for damages to all the consumers who used the service, whether or not they relied upon the advertisement and whether or not they were aware of it, and it must refund the overcharged fees to the consumers. All of the above leads me to the conclusion that there is no need of reliance in order to meet the causation requirement for the purpose of obtaining damages.

15.       If I were of the opinion that actual deception of the consumer, as well as reliance upon the supplier’s representation were required as a precondition to the remedy of compensation – and I do not so hold – I would favor adopting a presumption that when a supplier makes a representation that is liable to mislead a consumer, a consumer who purchases the product or service would be deemed to have been exposed the representation and to have acted thereupon. My reasons for adopting that presumption partially correspond to those that lead me to conclude that reliance is not required.

            The import of the said presumption is that a consumer who purchases a product or service from a supplier may assume that the price charged for the product or service is the correct price in accordance with the supplier’s advertisements, without regard for whether or not he was exposed to the advertisements. This assumption is all the more justified when we are concerned with a product or service provided by a monopoly. Such a presumption would prevent the artificial distinction between the consumer public that used the product or service misleadingly advertised, while unaware of the misrepresentation, and the consumers who were aware of the misleading information. (in regard to the presumption of reliance, see; LCA 8332/96 Shemesh v. Reichert, IsrSC 55 (5) 276, and what was stated there in regard to securities is equally applicable to the matter before us).

16.       Holding that there is no need for the consumer’s reliance upon the misleading publication does not render the need for causation superfluous. In regard to the need for a causal connection between the publication and the injury, I am in full agreement with my colleague the Chief Justice and my colleague Justice Cheshin, but as opposed to them, I am of the opinion that such a causal connection exists in the case before us, as I explained in the Appeal, and I will quote what I stated there: “In my view, the representation created by the supplier should be deemed as a promise to the consumer public, which binds it and requires it to act in accordance with the representation. That promise grants the consumer a right, and places an obligation upon the party making the representation to the consumer public. When the supplier fails to meet the obligation that it assumed by means of the representation, and charges a price higher than that promised in the representation, it breaches its obligation, and the consumer incurs injury in consequence of that breach. Therefore, even if the consumer was not exposed to the misleading publication and did not alter his manner of use of the product or service – in the matter before us, the number or duration of calls – he still incurs injury, inasmuch as the price he was charged for the product or service was higher than the price at which was entitled to purchase the product or service” (the Appeal, at p. 605, between marginal letters D and E). Take, for example, a situation in which a consumer purchases a product in a supermarket, regarding which there is an advertisement at the entrance of the store stating that the price has been lowered. The consumer does not see the advertisement (or due to a language problem, does not understand it). He purchases the product, paying the full price at the checkout. Clearly, the advertisement that the price was lower than that actually charged is liable to mislead a consumer. Similarly, I believe that the consumer incurs an injury in the form of a “price differential”, which constitutes a real, tangible loss. By an appropriate interpretation of the necessary causation, that injury is causally connected to the prohibition upon deceit, inasmuch as due to the misleading advertisement and the difference between it and the actual conduct, the consumer suffered injury. That is sufficient to meet the causation requirement both factually and legally. Factually, the said injury caused to the consumer is a result of the fact that the supplier published a representation that it did not put into practice. Legally, the injury is causally connected to the representation by the foreseeability test, inasmuch as when a supplier makes a false representation, it foresees that charging contrary to the representation will cause a loss in the form of a “price differential”. It also meets the risk test, as the injury falls within the scope of risk of the supplier’s conduct, and the common-sense test, which looks at the total conduct of the tortfeasor and its contribution to the injurious result (on the legal tests for causation, see: CA 145/80 Vaakin v. Beit Shemesh Local Council, IsrSC 37 (1) 113, 145-146; CA 576/81 Ben Shimon v. Barda, IsrSC 38 (3) 1, 7; CA 119/86 Keny Housing v. Netanya Local  Planning and Building Board, IsrSC 46 (5) 727, 749).

            The issues before us in this case, and the proposed solutions, are not exclusively ours. In interpreting Israeli law in regard to the subject of consumer deception in general and class actions in particular, we should also look to American law, which inspired the adoption of class actions in our legal system.

 

Comparative Law

 

17.       The consumer protection laws of various states of the United States establish the prohibition of deceit in language such as “an act liable to mislead a consumer”, similar to the wording adopted in sec. 2 (a) of the Consumer Protection Law. Thus, secs. 349 and 350 of New York’s General Business Law establishes that deceptive acts or practices by a business are unlawful, as are misleading advertisements. Although the sections speak of deception and its prohibition, the New York courts have held that they should be understood as prohibiting any act that is liable to mislead a consumer (Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, 623 N.Y.S.2d 529 (Ct.App.1995); BNI New York Ltd. v. DeSanto, 675 N.Y.S.2d 752 (City Ct.1998), at p. 755; Small v. Lorillard Tobacco Co. Inc., 679 N.Y.S.2d 593 (A.D. 1 Dept.1998, at p. 599).

            Section 2 of the Consumer Fraud and Deceptive Business Practices Act of the State of Illinois expressly establishes that deception is unlawful, whether or not any person has actually been deceived or damaged thereby. Identical wording appears in the law of the State of Minnesota (sec. 325F.69 of the Consumer Fraud Act).

18.       The various wordings there are similar to the wording of our Consumer Protection Law. It is worth noting that the construction given to similar sections in various states is not uniform insofar as the requirement of reliance upon the misrepresentation for the purpose of receiving a compensatory remedy. Three basic trends can be identified: The first requires proof of reliance upon the deceptive representation. The second does not require reliance upon the representation, and it is sufficient to prove a causal connection between the deception and the injury incurred. The third does not completely abandon the requirement of reliance, but it is a reduced requirement that is met by assumptions, presumptions and conclusions drawn from the circumstances (for a survey of the American legal situation in this regard, see the comprehensive article of G. Wilson & J. Gilmer, “Minnesota’s Tobacco Case: Recovering Damages without Individual Proof of Reliance under Minnesota’s Consumer Protection Statutes,” 25 Wm. Mitchell L. Rev. (1999) 567). Below, I will note a number of cases from among the many available that demonstrate each of the said approaches. For the first approach, see Oliveira v. Amoco Oil Co., 201 Ill. 2d 134, 776 N.E.2d 151, 201 Ill. 2d 134, 267 Ill. Dec. 14 (2002); and see: Zekman v. Direct American Marketers, Inc., 695 N.E.2d 853, 182 Ill. 2d 359, 231 Ill. Dec. 80 (1998). For the second approach, see: Brooks v. Midas-International Corp, 47 Ill. App. 3d 266, 361 N.E. 2d 515 (1977) in which the defendant guaranteed in its advertisements that it would replace a muffler for only an installation charge but charged the full replacement price. The suit was certified as a class action for the purpose of seeking damages, holding that reliance is not a requirement for the purpose of obtaining damages for consumer deception. This approach is consistent with mine. The same is true in regard to the judgment in Connick v. Suzuki Motor Co., Ltd., 174 Ill. 2d 482, 675 N.E.2d 584, 174 Ill. 2d 482, 221 Ill. Dec. 389 (1996), in which a class action was certified against a company, inter alia, for publishing the safety features of an automobile based upon allegedly incorrect information that the company gave to a magazine. The Supreme Court of Illinois held that the plaintiffs did not have to prove reliance as a condition to establishing a cause of action. It further held that in the absence of proof of an intervening cause, it was sufficient that the plaintiffs show that the automobiles were purchased after the misleading information was published in order for there to be causation between the misleading publication and the injury incurred. For the third approach, see Vasquez v. Superior Court of San Joaquin County, 484 P.2d 964(S.Ct.Cal.1971), in which the Supreme Court of California held that there was no need to prove reliance upon the misrepresentations of the sellers by direct evidence, and that it could be proved implicitly by inference from the circumstances of the case, or even by a presumption of reliance. Similarly, in Amato v. General Motors Corp., 463 N.E. 2d 625 (Ct. App. Ohio, 1982), the majority of the Ohio court certified a class action against General Motors for equipping Oldsmobiles with less prestigious engines without informing the buyers.  The court did not entirely waive the reliance requirement, but held that it could be inferred from the circumstances of the case, or by establishing a presumption of reliance.

            As we see, people are the same everywhere, and not only are the issues and problems similar, but so are the disagreements among jurists in various states with similar, if not identical, legal foundations.

            Weighing all of the considerations, balancing them, and giving due weight to each of them, tilts the scales in favor of the trend that deems misleading advertising to be an act that establishes a cause of action for damages, if injury was caused, without requiring reliance for the purpose of establishing causation between the act and the injury.

19.       In conclusion, in my view, the Petitioner has a cause of action for damages for the injury caused him by the misleading advertisement, due to the overcharging. Therefore, if my opinion were adopted, the petition would be granted and the Petitioner’s suit would be certified as a class action.

 

                                                                                                                        Justice

 

Justice E. Mazza:

 

            I have reread the opinions of the majority in the Appeal – my colleagues the Chief Justice and Justice Englard – and the dissent of my colleague Justice Strasberg-Cohen. I have also read the opinions of my colleagues Justice Cheshin and Justice Strasberg-Cohen in this Further Hearing. I cannot concur in the opinions of the majority in the Appeal and that of Justice Cheshin in this proceeding. In my view, that approach does not give proper expression to the special purpose of the consumer class action. Instead, it transfers the traditional doctrines of tort law – foremost among them the doctrine of tortious causation – to the consumer environment, in which they are inappropriate, and sanctifies them as is. As a result of this view, the approach focuses too much upon Barazani the man, and too little upon the group of consumers that he seeks to represent, and the injury that it suffered. In this regard it is important to emphasize that it was never positively proven in the proceedings before the District Court that Barazani was not exposed to the misleading advertisement. The factual assumption in this regard, upon which the majority largely relied in the Appeal, as did Justice Cheshin in the Further Hearing, is based exclusively upon the fact that Barazani did not claim that he was exposed to the advertisement. Here, too, I believe that the view of my colleagues is deficient in its almost mechanical adoption of traditional rules of proof. That approach, which I do not believe represents the desired law, is also not required by the existing law. In presenting my dissenting opinion, I will first consider the uniqueness of the consumer cause of action and the appropriate scope of consumer class actions for misleading advertising. I will conclude by addressing the matter of Barazani and the question of whether he has a personal cause of action and for which remedies.

 

The Purposes of Tort Law as opposed to the Purposes of the Consumer Class Action

 

2.         The purposes of traditional tort law are not congruent with the purposes of consumer protection law and do not exhaust them. It is commonly said that the primary purposes of tort law are achieving corrective justice, effective deterrence of potential nuisances, and distributive justice (see, for example: D. More "Human Rights from a Tort Law Perspective" 12 Tel-Aviv U. Stud. L. 81, 90-93 (1994); A. Porat, “Collective Responsibility in the Law of Torts," Mishpatim 23 (1994) 311, 330-333, 344-349, 369-371). We can agree that corrective justice and effective deterrence are common to both tort law and consumer protection law. However, other important purposes are served by consumer protection law with which traditional tort law is not generally concerned. In her book, Dr. Orna Deutch lists no less than seven purposes that are special to consumer protection law: levelling the playing field; reinforcing personal autonomy; the concept of consumer sovereignty; protecting the rights to prosperity and social welfare; ensuring the credibility of the local market; and maintaining trust in the social order (O. Deutch, The Legal Status of Consumers (2002) 27-37 (Hebrew). She emphasizes that “the purpose of consumer protection is not limited to the law’s support of the individual consumer. Improper conduct toward consumers harms not only the consumer, but also honest business people and the entire commercial sector, as well as public trust in the local economy and the public authorities that oversee the commercial sector” (ibid., p. 15). Prof. Sinai Deutch suggests a somewhat different division and definition of the purposes of consumer protection law (S. Deutch, Consumer Protection Law, vol. 1 (2001) 119-126, and see the purposes listed in paragraphs 2-3 of the opinion of Justice Strasberg-Cohen in this Further Hearing). However, each of the approaches undeniably leads to the conclusion that consumer protection law is intended to realize special objectives that go significantly beyond the basic objectives of traditional tort law.

3.         To these general objectives of consumer protection law one may add the special objectives of consumer class actions. We can find an expression of this in a case recently decided by this Court:

 

As a legal institution, the class action is of special importance in realizing objectives that individual actions cannot attain. It serves the interest of the individual by providing a remedy for injury in circumstances in which filing suit would not be worthwhile without the other members of the group. It serves the public interest that strives to deter large economic institutions from violating the law, and that seeks to achieve more effective enforcement of behavioral norms intended to protect citizens and prevent the exploitation of their weakness as individuals. It may also advance the objectives of procedural efficiency, uniformity of decisions, and reducing litigation (CA 1338/97 Tnuva Central Cooperative for the Marketing of Agricultural Produce in Israel Ltd. v. Rabi Tawfiq (not yet published), para. 2 of the opinion of Procaccia, J.).

And also see LCA 3126/00 State of Israel v. A.S.T Project Management and Manpower Ltd., IsrSC 57 (3) 220, paras. 7-8 of the opinion of Justice Strasberg-Cohen, and the citations there.

4.         The material difference between the purposes of tort law and consumer protection law yield the conclusion that the traditional legal doctrines of tort law must be examined carefully – and changed and adapted as necessary – before applying them to consumer law in general, and class actions in particular. Generally speaking, one might go so far as to say that no traditional doctrine is self-evident in the context of consumer law. We are concerned with a unique area that requires distinct treatment that accords with its special purposes.

 

The Meaning of Section 31 (a) of the Consumer Protection Law

 

5.         Against this background, we can proceed to the interpretation of sec. 31 (a) of the Consumer Protection Law. This provision states: “Any act or omission in violation of Chapters Two, Three, or Four shall be treated as a tort under the Civil Wrongs Ordinance [New Version]”.  My colleagues are divided as to the meaning of the prepositional prefix “as” – referred to by Justice Cheshin as the “kaf of comparison” [8]  – in the phrase “as a tort”. In my opinion, this question is of little importance. Even were we to assume that the prefix was of no significance, and that sec. 31 (a) should be read as if it stated that an act or omission as stated were torts, it would not mean that certain parts of the Consumer Protection Law should be treated as if they were actually comprised by the Civil Wrongs Ordinance. And clearly, changing the physical location of consumer provisions does not alter their special objectives. So, let us take go even further: even were the Consumer Protection Law, in its entirety, comprised by the Civil Wrongs Ordinance, and even if it were subject to sec. 3 of the Civil Wrongs Ordinance, according to which “the matters enumerated hereinafter in this Ordinance shall constitute civil wrongs,” even then we would have to interpret and apply these special torts in accordance with their consumer purposes, which, in general, are not identical to the purposes of the other torts established under the Ordinance.

6.         Consider, for example, sec. 4 of the Civil Wrongs Ordinance, which states:

 

                        Trivial Act

4.      An act shall not be considered a civil wrong where had it been a repeated act it would not lead to establishing an adverse claim, and where a person of ordinary sense and temper would not complain with regards to it.

 

Obviously—and so it has also been held – sec. 4 expresses the traditional doctrine of de minimis in the context of tort law. See: CA 3901/96 Ra’anana Local Planning and Building Board v. Horowitz, IsrSC 56 (4) 913, pp. 928-929, and the citations there. Adopting the approach that would apply the doctrines of the Civil Wrongs Ordinance – as is and in in their entirety – to the consumer causes of action defined in sec. 31 (a) of the Consumer Protection Law would require that we apply sec. 4 of the Civil Wrongs Ordinance to those causes of action. One will readily realize that such an approach would entirely nullify the primary purpose of the consumer class action, which is of particular importance specifically in regard to cases in which each individual claim is, itself, de minimis, and “a person of ordinary sense and temper would not complain with regards to it”. We would note that the facts of the case before us in this Further Hearing constitute a good example of such a situation. Applying the traditional de minimis doctrine to class actions would, therefore, lead to the result that most legitimate potential plaintiffs would have no personal cause of action, inasmuch as under the plain language of sec 4, the act (or omission) of the dealer who harmed them “shall not be considered a civil wrong”. The conclusion to be drawn from this is that not only is it necessary to adapt the de minimis doctrine of sec. 4 of the Civil Wrongs Ordinance to collective consumer protection before applying it (and compare: the Tnuva case, ibid., at para. 11 of the opinion of Naor, J.), but that the same is true for all the other doctrines of the Ordinance as a precondition to applying them to the consumer causes of action and to consumer class actions.

7.         My colleague Justice Cheshin concludes from the absence of any provision to the contrary in sec. 31 (a) of the Consumer Protection Law, that there is no alternative to applying the doctrines of the Civil Wrongs Ordinance to a consumer tort under sec. 2 (a) of the Law. As he states:

 

Indeed, nothing in the language of sec. 31 (a) of the Law would show that the tort under sec. 2 (a) removes it from the fundamental principles or doctrines of the Civil Wrongs Ordinance … On the contrary, the Law refers us clearly and unreservedly to the Civil Wrongs Ordinance. Section 2 (a) situates itself as one of the native torts of the Civil Wrongs Ordinance, and it would therefore appear that the fundamental principles and doctrines of the Civil Wrongs Ordinance apply, in their entirety, with the same effect and force with which they apply to the native torts.

 

With all due respect, I am of the opinion that even in the absence of an express provision to that effect in sec. 31 (a) – and I question whether such an express provision is needed at all – the application of traditional tort law to consumer causes of action can and should be restricted. The need for such restriction is clearly required by the substantial material difference between the purposes of consumer torts and of the regular torts. Indeed, one can understand the problem and discomfort involved in new and different interpretation of first principles. My colleague Justice Cheshin explained it well in the case before us:

 

Moreover, not only is the language of the Law crystal clear, but efficiency also points to the solution presented by the Law. Inasmuch as the acts and omissions external to the Ordinance are tortious in nature, it is but natural that we should employ the same traditional, familiar doctrines that tort law created and developed over so many years such that they have become foundational to the legal system.

 

However, despite the difficulty, it is unavoidable. Prof. Sinai Deutch (the attorney for the Israel Consumer Council in this Further Hearing) addressed this in an article that referred to the case under appeal:

 

The Consumer Protection Law is an innovative law, inasmuch as Israel’s highest court is first addressing its interpretation only at the present time. It may also be reasonably assumed that, in the early stages of its interpretation, there will be some fear of disconnection from firmly-rooted, ancient legal traditions. However, it is the understanding of the importance of the subject that must lead to reconsideration in this regard…there is no reason to apply the rules of civil law in their entirety to the Consumer Protection Law. Independent interpretation of the Consumer Protection Law’s legal terminology is needed in accordance with its purpose and objective (S. Deutch, “Consumer Class Actions: The Demand for Personal Reliance on Misrepresentations of the Deceiver,” (2 Moznei Mishpat 97, 126 (2001-2002) (Hebrew) (hereinafter: “Consumer Class Actions”).

 

Even Justice Cheshin would appear to agree that the traditional tort doctrines are not “revealed truth”. He expressly notes that, “Since we are concerned here with transplanting a new organ into the body of the Civil Wrongs Ordinance, we must closely examine whether a particular doctrine of the Ordinance is compatible with the foundations, essence and structure of the new tort”. But after stating that – and referring to the sources he cited – he did not set out to “closely examine” whether the traditional doctrines were indeed compatible to the cause of action of consumer deception, but rather assumed their compatibility as if it were self-evident.

 

The Compatibility of the Tort-Law Causation Doctrine to a Class Action for Deceptive Advertising

8.         As we have seen, the traditional doctrines of tort law must be adapted to the special purposes of the consumer class action. In regard to the case before us, it will suffice to focus upon the adapting of the doctrines of tortious causation to the special needs of a class action filed in regard to the mass publication of a misleading advertisement.

            I refer to the “doctrines of causation” in the plural, inasmuch as even in traditional tort law, the subject of the existence of a causal connection between the tortious conduct and the harmful result is subject to a number of doctrines, which occasionally compete and occasionally operate in unison (see, in general: I. Englard, “Causal Connection” in The Law of Civil Wrongs – General Principles of Tort Law, G. Tedeschi, ed. (2nd ed., Jerusalem, 1977) 178; I. Gilead, “Causation in Israeli Tort Law – A Reexamination,” 14 Mishpatim 15 (5744) (Hebrew)). The need for creating different doctrines of causation derived from the need to contend with different aspects of a complicated and complex phenomenon that earned the nickname “indeterminate causation” (see: A. Porat & A. Stein, Tort Liability under Uncertainty (2001); A. Porat & A. Stein, “The Evidential Damage Doctrine: A Positive Analysis of the Law,” 21 Iyunei Mishpat 191 (Hebrew); A. Stein, “How to Resolve the Indeterminate Causation Problem that Arises in Medical Malpractice Litigation,” 23 Iyunei Mishpat 755 (Hebrew)).

            Traditional tort law proposes practical solutions for situations of “indeterminate causation” in which it would be too much to ask the plaintiff to prove positively the existence of a direct, factual causal connection between the tort of the defendant and the injury incurred, under the “but-for” test (i.e., the “sine qua non test”). Under such circumstances, when the plaintiff proves the defendant’s tortious behavior, that his injury, and the possible existence of a factual causal connection between the tort and the injury, then tort law may come to his aid and fill in what is missing for proving the existence of a factual causal connection. This legal “aid” may be expressed in various recognized ways: by transferring the burden of proof to the defendant, who will be required to prove the absence of a causal connection; by establishing presumptions against the defendant in regard to various aspects of the causal dispute; by imposing liability upon “joint tortfeasors”, where their relative part in causing the injury is unknown; in defining an injury as an “indivisible injury” that the tortfeasor must bear in its entirety, even if he caused only part; and by recognizing alternative tests to the but-for test for factual causation (such as the “common man” test or the “substantial factor” test. See: Englard, ibid., at pp. 193-195; Gilead, ibid., at pp. 17-19; Porat, ibid., at p. 376). It should also be noted that new doctrines have been added to the traditional doctrines of causation over the last few years, which primarily serve to circumvent the problems and injustices that are sometimes involved in the strict application of the traditional but-for test. Among these new doctrines, some of which have already been adopted (in various contexts) by the case law, one can find the doctrines for probabilistic damages for the loss of a chance of recovery, or for loss of chance and creation of risk, and for MSL (Market Share Liability) suits; as well as the doctrine of mass liability and the doctrine of evidential damage (see the survey in Porat & Stein, in the second, fifth and seventh chapters of their above book).

9.         We can conclude from the above that even in traditional tort law – and all the more so in modern tort law – the but-for test is no longer the answer to everything. In many cases – where the purposes of tort law justify it – the right of a plaintiff to damages is recognized even when he is unable to show that no injury would have been caused but for the tort of the defendant. Against this background we may more sharply ask why the majority in the Appeal, and why Justice Cheshin in this Further Hearing, found it necessary to be so demanding in regard to the proof of reliance of Bezeq’s customers upon the misleading advertisements, as part of their insistence upon the demand for a causal connection in accordance with the but-for test. As the Chief Justice stated in the Appeal (IsrSC 55 (4) 584, 622-623), in referring to the approach of Justice Strasberg-Cohen:

 

As we know, the meaning of the factual causal connection is that but for the tort, the injury to the victim would not have occurred. This is the sine qua non test. In the matter before us, the factual causal connection requires that but for the prohibited deceit, the consumer would not have talked on the telephone in the manner that he actually did. Such a causal connection occurs only if the consumer relies upon the misleading character of the advertisement. If the consumer does not rely upon the misleading advertisement, then the extent of his phone calls is not influenced by the content of the advertisement. My colleague emphasizes the creation of the representation, but she does not prove the existence of the factual causal connection between creating the representation and the occurrence of the injury. In the absence of a factual causal connection, there is no possibility of examining the existence of a legal causal connection, which is based upon the factual background of the factual causal connection.

 

Justice Cheshin also notes – although in less emphatic language – that:

 

…there was no causal connection between Bezeq’s advertisement and the “harm” caused to Barazani, if only by reason of the fact that Barazani never read that advertisement, and therefore, in any event, he is not entitled to sue on that basis. Indeed, Bezeq committed a tort by publishing the advertisement – that is the basic assumption in this case – but the mere existence of a tort is insufficient to entitle a person to redress. That person must show that due to that tort, he incurred harm, and that precondition was not met in regard to Barazani.

 

What derives from this approach is that in order to ground a (personal or class) action for pecuniary damages for misleading advertising, the plaintiff must show that he relied upon the misleading advertisement, which led to a direct change in consumer conduct. With all due respect, I am of the opinion – which I will explain below – that this demand is not necessarily required by the language of the Law. The question, then, is what is the purpose of this demand, and what rationale does it serve? To this, I have found no convincing answer in the opinions of my honorable colleagues. It would appear that their only explanation is that class actions are a powerful tool, comprising many dangers, and should, therefore, be used with caution (see, in this regard, the opinion of my colleague the Chief Justice in the Appeal, at p. 620). That is, of course, undeniable. But defining Barazani as not being a “proper plaintiff” for a class action is based solely upon the finding that he does not meet the reliance requirement. Even if that finding were well founded – and I have questioned that from the outset – I cannot agree that Barazani’s non-reliance upon Bezeq’s misleading advertisement disqualifies him as a representative plaintiff in a class action.

10.       A requirement by which a consumer can acquire a cause of action only if he can prove that he relied upon the misleading advertisement and changed his consumer conduct as a direct result would frustrate ab initio the possibility of many potential suits based upon a cause of action of consumer deception by mass advertising. The reason for this is that in many such cases the requirement cannot be met. Few consumers can recall the details of the commercial advertisements to which they are exposed, directly or indirectly, and few consumers can honestly testify that were it not for the exposure to a particular advertisement, they would not have acquired the advertised product or service, or would have used it to a lesser extent. After all, it is well known that modern mass advertising is often intended to influence consumers in strange and mysterious ways, and not necessarily by speaking directly to their consumer consciousness. Often, consumers are not even aware of being influenced by an advertisement, neither when they are exposed to it, nor after the advertisement is supposedly forgotten. And we need hardly mention that these assumptions are particularly true in regard to advertisements in regard to matters of little consequence, which are the ones that hold the primary potential for consumer class actions. Thus, the procedural solutions that Justice Cheshin mentions in paras. 54-55 of his opinion – such as that each consumer prove his right to a remedy by means of an affidavit – cannot be deemed practical.

            Moreover, in many cases of consumer deception through advertising, it can be established positively that, as a result of the advertisement, there was no direct change in modes of consumer conduct of the sort that my colleagues require for “reliance”. The case before us provides a good example of this. The deception in Bezeq’s advertisements concerned a fraction of a meter unit – of several seconds – at the end of every international phone call. Would anyone imagine that a Bezeq customer, assuming he were aware of the deception, would put down the phone precisely at the end of a meter unit in order to avoid being charged for fractions of a unit as for whole unit? The obvious conclusion is that Bezeq’s deceptive advertising did not lead to customer reliance upon the content of the advertisement, and certainly did not lead to a direct change in the modes of consumer conduct. The change that the advertising may have caused in consumer consciousness – and conceivably the one that Bezeq sought to achieve by the said advertisement – was a change of a general nature in the perception of Bezeq as a reliable, fair company that charges only for the services it provides. Such a change in the advertiser’s reputation could cause – and we may assume that it indeed causes – a change in consumer consumption habits, which may be expressed in generally greater frequency of use of the advertised product or service, as well as other products or services of the advertiser. But this is an indirect – and generally unconscious – change in consumer consumption habits. It is doubtful that any of the consumers whose consumption habits were indirectly influenced by the advertisement could prove that he relied upon the advertisement, and the extent of the advertisement’s influence upon his consumption habits. But the advertiser benefits from its deceptive advertising, which indirectly led to an increase in its market share. The additional profits that the advertiser realizes from the increase in its market share – which also involve unjust enrichment at the expense of both its customers and its competitors – are, truth be told, the true injuries inflicted upon the consumer interest as a result of the misleading advertisement. It is only because those injuries are impossible – or, at least, are very difficult – to measure and quantify that the examination typically focuses only upon the direct damages that my colleague Justice Strasberg-Cohen refers to as “price differentials”. As a result, insisting upon reliance in regard to misleading mass advertising would severely impact upon the very possibility of initiating class actions for misleading advertising.

11.       In his opinion in the Appeal, the Chief Justice noted the possibility of creating a “presumption of reliance” in favor of consumers, but left the matter open for future consideration (ibid., at p. 621). In his opinion in this Further Hearing, Justice Cheshin adopted a similar position. He also notes that “we should broadly interpret the concept of reliance such that it comprises more than just direct reliance”. These solutions present something of a desirable development, but I fear that their practical advantage is limited. Proving a consumer’s reliance is no simple task, and it is sometimes impossible. That is not the case in regard to an advertiser’s ability to contradict the presumption of reliance. It is sufficient that it ask each of the consumers if and how he would have changed the manner of his use of the advertised product or service were it not for the misleading element in the advertisement. At the very least, those consumers who used the product or service prior to the misleading advertisement will find it very difficult to answer that question. We can almost assume that most, if not all, will have to answer in the negative, or that they do not recall the advertisement or its details, or that they do not know the answer, and the dealer will be deemed to have met the burden of proof and refuted the presumption of reliance. On the other hand, it is clear that my colleagues do not suggest creating an absolute presumption of reliance in favor of consumers. Such a presumption would greatly improve the chances of success of a consumer class action, like that before us, but would entirely nullify the requirement – to which my colleagues cling – of a factual causal connection between the misleading advertisement and the injury incurred by the consumers.

12.       It should be obvious that the requirement that a misleading advertisement lead to a direct change in modes of consumer behavior – which is what the “reliance requirement” demands –not only does not advance the special purposes of the consumer class action. Let us return to the seven objectives as set out by Dr. Orna Deutch: levelling the playing field; reinforcing personal autonomy; the concept of consumer sovereignty; protecting the rights to prosperity and social welfare; ensuring the credibility of the local market; and maintaining trust in the social order. Clearly, the demand for reliance advances none of these objectives. Rather, it leads to negating many consumer causes of action that might advance those objectives. In practice, the demand for reliance undermines those objectives and frustrates their realization. The same is true in regard to the special purposes of consumer class actions. As Justice Procaccia pointed out in the aforementioned Tnuva case, the class action “serves the interest of the individual by providing a remedy for injury in circumstances in which filing suit would not be worthwhile without the other members of the group. It serves the public interest that strives to deter large economic institutions from violating the law, and that seeks to achieve more effective enforcement of behavioral norms intended to protect citizens and prevent the exploitation of their weakness as individuals”. In those case in which the personal injury of each of the individuals is very small, one might say that there is no real importance to the personal interest involved in the class action. The primary importance of such cases is focused upon the public interest. But the public interest in enforcing law and integrity in the consumer field has little in common with the reliance requirement, and certainly not with requirement of a direct, factual, causal connection between the misleading advertisement and the harm to the consumers. The public interest focuses primarily on the violation itself and the possible harm to the public as a whole, and not upon the question of whether there was an actual causal relationship between the violation and the harm caused to some consumer. We thus find that strict observance of the demand for a causal connection – like the requirement of proof of reliance – will lead to the frustration of many consumer class actions, and the public interest that they were meant to serve suffers.

 

Constructive Reliance and a Consumer Causal Connection

 

13.       From the perspective of the laws of consumer deception in advertising, the main thing is the very existence of an advertisement with the potential to mislead in regard to a material aspect of a transaction, which the advertiser intended to reach as large a public as possible, and influence modes of consumer behavior. Once the potential to deceive is proven, and once it is proven that the advertiser indeed intended that the misleading advertisement reach consumers and influence their consumer behavior, it is only right that we hold that there is a basis for the existence of constructive reliance by the consumers upon the misleading advertisement. The question of whether the dealer actually achieved its goal – i.e., that the misleading advertisement indeed reach its intended audience and actually mislead it – is of limited importance. This expresses a central difference between the law of consumer deception and general tort law (as opposed to certain particular torts, such as the torts of fraud, deceit, etc.). The normal starting point in tort law is that the tortious event was not planned by the tortfeasor, and that the tortfeasor was not interested in its occurrence. The assumption is that potential tortfeasors do not have an interest in causing injury, and that they generally have an interest in preventing injury, unrelated to the risk of being required to pay damages to the victims. From this, inter alia, we derive the principle that tort law is not intended to punish the tortfeasor, but rather to compensate the victim for his loss. For the same reason, tort law does not impose liability for the mere creation of a danger, which, in and of itself, is not deemed an injury (for a broader discussion, see: A. Porat, "Compensation for Risk-Creating and Loss of Chances," 23 Iyunei Mishpat 605 (2000) (Hebrew)). That is not the case in regard to consumer deception. The typical situation that these laws address is one in which the supplier of a product or service who publishes a misleading advertisement is interested in and intends to cause the consumer injury, inasmuch as, from its perspective, it reaps direct profit from that injury. Therefore, the incentive to cause harm in the area of consumer deception is inestimably greater than the incentive to invest in preventing harm, which is the typical fear in the field of torts. Experience shows that the fear that consumer deception may harm the reputation of the advertiser is often distant and ineffective. In any case, when it is shown that the advertiser intended to mislead, the necessary conclusion is that, at least in that case, the said fear was not sufficient to deter. Indeed, the temptation to deceive consumers – as a means for increasing an advertiser’s profits – is not inconsequential. The purpose of the tort regarding misleading advertising does not focus upon the harm caused by the advertisement to a particular consumer, but rather upon the existence of a potential for the causing of harm to the consumer public, and the advertiser’s intention to cause that harm in order to reap profits. Conceivably, that was the reason that, in defining the prohibition of deceit in sec. 2 (a) of the Consumer Protection Law, the legislature chose the phrase “liable to mislead”. Moreover, another interpretive conclusion that derives from the definition of the tort is that the legislature also intended to create a unique definition of the causal connection required for consumer deception. With all due respect, assuming that this wording is relevant only to actions for declaratory and preventative remedies renders the definition of a publication “liable to mislead” as a tort nearly devoid of all practical content, inasmuch as it is hard to imagine that any consumer would be interested in filing a suit for the sole, ultimate purpose of merely obtaining declaratory or preventative relief.

14.       The conclusion required from the distinctions I addressed above is that the laws of consumer deception must contend with the reliance requirement and the issue of causation differently than tort law. Instead of the requirement of personal reliance by each and every consumer – which is the requirement of traditional tort law – we should adopt a doctrine that recognizes “constructive reliance” of all the consumers at whom the advertiser directed its misleading advertisement. And rather than the requirement of proof of a factual causal connection between the misleading advertisement and the injury of each and every one of the plaintiff consumers, we should adopt a doctrine that recognizes a “consumer causal connection” that would be derived from the combination of a potentially misleading advertisement and the intention of the advertiser that the advertisement reach the consumers, mislead them and thereby influence their behavior. The elements of the suggested formula for establishing a consumer cause of action overturn the accepted formula for a cause of action in tort to some degree. Whereas in an action in tort, meeting the reliance requirement is a precondition to the existence of a causal connection, in a consumer action, the existence of constructive reliance is derived as a necessary result of proof of the elements of the consumer causal connection. But this reversal does not detract from the completeness of the formula, in all of its elements. And note: adapting the tort doctrines to the consumer tort does not contradict the legislative imperative. On the contrary, such an adaptation is part of an interpretive process that makes it possible to advance the special objectives of the consumer cause of action in general, and of consumer class actions in particular, and as I shall demonstrate below, does not contradict the language of the law.

 

A Pecuniary Remedy for Consumer Deception

 

15.       When can consumers obtain a pecuniary remedy due to a potentially misleading advertisement? In my opinion, it would be proper to establish that consumer deception gives rise to a (personal and class) cause of action for pecuniary relief upon the fulfillment of three conditions: a violating advertisement, injury, and a “consumer causal connection”. As opposed to this, we should also recognize a defense that would generally be available to the advertiser if it be found that the consumer-plaintiff knew the actual facts, and the violating advertisement could not, therefore, negatively influence his behavior.

            The first element (the element of breach) is fulfilled upon proof of a breach of one of the prohibitions upon deceit established under the Consumer Protection Law for which one may sue for damages under sec. 31 (a) of the Law. For our purposes, the relevant prohibition is that established under sec. 2 (a) of the Law, according to which even an advertisement that is “liable to mislead” in regard to a material element of a transaction is deemed a violating advertisement. And note: once it is proved that the advertisement is liable to mislead, there is no further need to address the question of actual deceit.

16.       The second element is that of injury. While achieving the consumer objectives could suffice with the potential for causing harm to the consumer interest that is presented by an advertisement liable to mislead, in the absence of proof of injury, damages cannot be awarded to consumers claiming to have been injured by the violating advertisement. That is the import of the reference of sec. 31 (a) – titled “Compensation” – to the Civil Wrongs Ordinance. That is also the import of sec. 31 (a1), which states: “Consumers injured by the wrong are entitled to remedies for the wrong and so are dealers, who in the course of their business are injured by deceit, as said in section 2” (for a different view, see M. Deutch, Commercial Torts and Trade Secrets (2002), p. 49). This is simply the legislature’s decision to limit the scope of potential plaintiffs to that group of consumers and dealers who were actually injured and that, therefore, have a direct interest in suing and obtaining a pecuniary remedy. However, the injury that the plaintiffs must prove is not necessarily the injury that each victim can prove by direct evidence. Provable injury caused to a group of consumers can also entitle the group to global damages from the advertisers without a need for the court to determine the personal injury of each member of the group (see, in this regard, reg. 9 (c) of the Consumer Protection (Procedures in regard to a Class Action) Regulations, 5755-1995, and paras. 13-20 of the opinion of Naor, J. in the Tnuva case, above). We should also recognize the possibility that bringing evidence of the profit that accrued to the advertiser from the misleading advertisement be deemed sufficient proof of the injury to the injured consumers. My assumption is that, on the basis of such evidence, the court can award pecuniary damages, which are not necessarily restitution, to the injured consumers. As we have stated, the injury to the consumers from a misleading advertisement constitutes profits for the advertiser, and evidence proving the extent of that profit would therefore prove the extent of the injury. I would parenthetically note that, in my opinion, defining consumer deception as a tort does not detract from the victims’ right to sue for restitution, whether by force of contract (where the product or service was provided to the consumer in the context of a contractual undertaking), or upon a cause of unjust enrichment.

17.       The third element addresses the existence of a consumer causal connection. As explained above, I am referring to a causal connection adapted to the special objectives of consumer protection law – both personal and collective – and in the case before us, the special needs of the laws of consumer deception. Some form of causal connection between the breach and the injury is, indeed, required. That, as my colleagues have shown, is required by the Civil Wrongs Ordinance referred to by sec. 31 (a) of the Consumer Protection Law, and it is also required by sec. 31 (a1) of the Law, under which (as earlier noted) the right to relief is granted to one “injured by the wrong”. However, an examination of secs. 2 (a) and 35A (b) of the Consumer Protection Law reveals that the existence of a causal connection – required, as noted, by secs. 31 (a) and 31 (a1) of the Law – cannot be construed as identical to the requirement of the traditional causal connection of the Civil Wrongs Ordinance. Section 2 (a) expressly suffices with a publication that is “liable to mislead”, and does not require that there be actual deception, while sec. 35A (b) of the Law – treating of “class actions” – states that “where the cause of action is an injury, it is sufficient that the plaintiff show that injury was caused to a consumer”. In addressing the meaning of sec. 35A (b), Dr. Orna Deutch writes:

 

The legislature provided a certain leniency in regard to consumer actions in that when injury is an element of the cause of action (such as in the tort of negligence), there is no need that the plaintiff show that he himself incurred an alleged injury, but rather it is sufficient that an injury was caused to some consumer (O. Deutch, in her abovementioned book, at p. 244).

 

I am of the opinion that we may learn from sec. 35A (b) that, for the purpose of filing a class action, it is sufficient to show the existence of a consumer injury, and there is no need to show a factual causal connection between the breach and that injury. This construction accords with the special purposes of the consumer class action, which I addressed above, which are also not consistent with the requirement of personal reliance.

18.       It would appear that in regard to the question of the existence of a causal connection between consumer deception and the injury caused to the victim, secs. 2 (a) and 35A (b) of the Law contradict secs. 31 (a) and 31 (a1) of the Law. Whereas the latter (which are of a “general” nature) appear to reflect a requirement of a causal connection, it would appear that one may understand from the former (which are of a “specific” nature) that no causal connection be proved. However, I do not believe that the contradiction between the general provisions and the specific provisions in this matter can be resolved by preferring the specific provisions (by virtue of their being lex specialis). In the matter before us, we should prefer the interpretive principle that requires that we find a way to harmonize the provisions so that they may coexist. The formula that I suggested above for a “consumer causal connection” accords well with the appropriate interpretive approach. The requirement of a consumer causal connection – based upon a merger of the requirements for injury together with potential causation and intention to injure – prevents the possibility that liability might be imposed for the mere creation of a danger by a tortfeasor acting in good faith, and thereby gives proper expression to the purposes of the general provisions. At the same time, this formula grants preference to the consumer objectives of the specific provisions. That is expressed in the replacement of the requirement for an actual factual causal connection between the misleading advertisement and the injury under the but-for test with a requirement that suffices with proof of a potential factual causal connection (similar to the concept of apportioning tort damages based upon probability), together with proof that the advertiser intended to create an actual factual causal connection. In other words, meeting the demand for a consumer causal connection would not require proof that the advertisement actually misled the victim and caused his injury, and not even that he was aware of the advertisement and relied upon it in some way, but rather it would suffice to show that the advertisement was liable to mislead the victim and cause his injury, and that the advertiser intended that.

            It would appear to me that, in the context of the prohibition of consumer deception, the requirement of a consumer causal connection also reflects the lex ferenda. Adoption of the said formula would advance the special objectives of consumer protection law and of consumer class actions, and would ensure protection of good-faith advertisers who do not intend to mislead and cause harm when the factual causal connection between their advertisements and the injury is in doubt (needless to say, when the factual causal connection is not in doubt, nothing would prevent the filing of a class action even for injury resulting from an advertisement that was not intended to mislead, but that nevertheless, actually misled). I would like to emphasize that even in the absence of secs. 2 (a) and 35A (b), which support my suggested interpretation, the tort requirement of a factual causal connection can and should be made more flexible and should be adapted to the special needs of consumer deception. I have already pointed out that such flexibility has been adopted in a variety of ways in tort law itself, for the purpose of realizing appropriate objectives of tort law. Thus, for example, Israeli law recognized the possibility of awarding tort damages based upon probability in cases in which it was not proved – as would be required by the balance of probabilities – that but for the tortious conduct of the defendant, the plaintiff would not have incurred injury. This was held in regard to the loss of a chance of recovery (see the landmark case, CA 231/84 Histadrut Health Fund v. Fatach, IsrSC 42(3) 312., which has been followed repeatedly in later cases), as well as in regard to not obtaining informed consent for medical treatment (CA 4384/90 Vaturi v. Leniado Hospital, IsrSC 51 (2) 171, 191-192, and compare CA 2781/93 Daaka v. Carmel Hospital, Haifa, IsrSC 53 (4) 526 (English translation:  http://versa.cardozo.yu.edu/opinions/daaka-v-carmel-hospital). Having found that it is possible to arrive at a desired result by means of interpretation even within the confines of the Civil Wrongs Ordinance, that should be the case a fortiori in the framework of the Consumer Protection Law, whose special objectives justify and require that we not subject it to the regular doctrines of tort law.

19.       On the other hand, as stated, a defense should be allowed to an advertiser on the claim that the victim was actually aware of the true facts of the situation and, therefore, the violating advertisement could not have negatively affected him. The reason for this is that the prohibition upon consumer deception is not intended to protect such victims. The prohibition upon consumer deception is intended to protect consumers who are liable to be misled, and not those who cannot be misled. In effect, this can be seen as an aspect of the good-faith duty that applies to every person seeking pecuniary redress for consumer deception. After all, it would not be appropriate to obligate a supplier of a product or service, who published a misleading advertisement, to compensate a person who was not a potential victim of the deception, and an action for compensation in such circumstances might be deemed to constitute abuse of process.

            The said defense must be positively proven by the advertiser. In other words, in order to meet the burden of proof, uncertain answers like “I don’t know” or “I don’t recall” to questions put to the consumer-plaintiffs will not suffice. It may be assumed, therefore, that an advertiser may make effective use of this defense primarily in response to suits by “special” plaintiffs, such as its employees, commercial competitors, or other experts in the relevant field, regarding whom it would be possible to bring evidence in regard to the state of their knowledge at the time they acquired the service or product.

 

The Matter of Barazani

 

20.       At the outset I noted that the approach of the majority in the Appeal and of Justice Cheshin in the Further Hearing focuses overmuch upon Barazani himself, and too little upon the large pubic of victims of the misleading advertisement whose case Barazani sought to press. A perfect expression of this can be found in the very establishing of the Archimedean assumption that Barazani was not exposed to the misleading advertisement and did not rely upon it, and that this is sufficient for the conclusion that Barazani is not an “appropriate plaintiff”. Of course, I do not disagree that a precondition for certifying a class action is that the representative plaintiff have a personal cause of action against the defendant. That is expressly required by sec. 35A (a) of the Consumer Protection Law. But, in my view, we should not exaggerate the importance of that condition. In ascertaining whether it has been met, the court need not split hairs in its examination of the details of the personal suit of the representative plaintiff, but should suffice with facial proof that he has a personal cause of action, and that we are not concerned with a person who is merely hitching a ride on someone else’s dispute. The court should concentrate its examination upon two other questions: Is the subject of the suit appropriate to a class action? And is the representative plaintiff qualified and equipped to properly represent the interest of the public on behalf of which he seeks to sue? These considerations are of special importance in a consumer class action. Dr. Orna Deutch addresses this (in her abovementioned book, at pp. 245-246):

 

The personal interest of the injured plaintiff who files the class action is, in any case, negligible in relation to the amount of the suit for the entire class. In a realistic view of the significance of the suit, it is of no consequence whether the personal suit of the victim constitutes a negligible part of the entire suit, or is actually nonexistent. In both cases, he presumably “defends the honor” of the entire group, and actually advances a different personal interest, which is the benefit that accrues from his representative standing in the suit, which is expressed in the special damages and compensation awarded to the plaintiff for his efforts. Why condition standing in the suit upon a formal demand for the existence of such minimal involvement on his part?

It would seem that it is, indeed, difficult to justify the said requirement. What must be ensured is that the representative of the group be a proper representative who can bear the burden of conducting the suit both in terms of its material and its costs, and that he not have a conflict of interests. However, there is nothing in common to these requirements and the question of whether the plaintiff was personally harmed by the act at issue. His personal injury represents but an insignificant part of the whole suit. In any case, the matter pursued is a “public suit”, while the significance of the personal suit of the plaintiff is but symbolic. In that light, I think it proper to refrain from this demand in its entirety.

The reason given for this demand, which I noted above, according to which if the plaintiff has no personal cause of action, the proceedings will focus upon the personal defense against the plaintiff, and the matter of the entire group will be sidelined, begs the question. If the law establishes that the question of the existence of a personal cause of action is irrelevant, then the defenses against the individual plaintiff are irrelevant, and the proceedings will, in any case, focus upon the entire class of plaintiffs.

In the consumer framework, the requirement of a personal cause of action leads, in practice, to one of two results: either no appropriate plaintiff will be found who is willing to “contribute” his cause of action to the proceedings in the service of the general public, or, if such a consumer be found, he will often be nothing more than a kind of “straw man” backed by some commercial group organized for the purpose of obtaining the compensation attendant to succeeding in a class action.

And indeed, the demand for the existence of a personal cause of action in the consumer context has drawn criticism in the legal literature.

(and see: M. Bar-Niv, (Bornowski), “The Limits of the Consumer Class Action,” 19 Iyunei Mishpat 251, 257-258 (1994) (Hebrew).

 

21.       On point, I am of the opinion that Barazani showed that he had a prima facie personal cause of action – and most important – that Bezeq’s misleading advertisement, upon which his suit was based, was appropriate for a class action. Indeed, Barazani did not claim that he had been exposed to the advertisement, but he also did not state the opposite. In fact, in the proceedings before the District Court – which did not focus upon this question – Barazani was never asked if he had been exposed to the advertisement. Under these circumstances, we may, and should, assume that Barazani’s situation is no different than that of most of Bezeq’s other customers. Whether the consumers were exposed to the advertisement and remember it, or whether they learned of the matter of the advertisement at a later stage, it is clear that it would only have aroused their attention when it was discovered that the advertisement was misleading, and that as opposed to what Bezeq had promised its customers, it continued to charge them for whole meter units. It  is clear from the apparent facts that the advertisement was intended to influence Bezeq’s customers to increase their use of the advertised service, and that would appear, on its face, to lead to a conclusion that the misleading advertisement could justify recognizing the concrete reliance of all the customers to whom Bezeq directed its advertisement.

            The suit that Barazani submitted to the court was appropriate, by its nature, to be addressed as a class action. We are concerned with a large community of Bezeq subscribers whose accounts were charged for international telephone calls at a rate that was higher than the rate that Bezeq was entitled to charge according to its advertisement. Addressing the class action on the merits would allow the court to decide whether Bezeq’s advertisement indeed comprised the elements of a misleading publication that warranted pecuniary relief. If the court were to answer this question in the affirmative, it could easily determine the extent of direct injury. Proving the direct injury is not contingent upon the question of whether the customers made greater use of the specific service as a result of the advertisement, but upon the difference between the amounts the customers who used the service were charged and the amounts that Bezeq was entitled to charge its customers based upon its advertisement. This can easily be determined, inasmuch as Bezeq undoubtedly has all of the necessary data for calculating the difference in regard to each customer, and I cannot imagine that Bezeq would seek to conceal that information from the court.

22.       One last comment in conclusion. While the District Court decision that was the subject of the Appeal dismissed Barazani’s request to permit him to file a class action for pecuniary relief, it accepted his alternative request to file a class action for declaratory relief. However, the majority in the Appeal granted Bezeq’s counter-appeal and rescinded the permission granted to Barazani to submit the suit for declaratory relief. In stating the reasons for that decision in the Appeal, the Chief Justice wrote:

 

Should we not recognize Barazani’s ability to serve as a representative plaintiff for declaratory relief stating that Bezeq’s advertisement was “liable to mislead” a consumer? This question raises several problems, which can be left for future consideration for the following reasons: In his complaint, Barazani defined the members of the group as the community of Bezeq customers who paid a higher fee than that advertised by Bezeq, and as a result incurred monetary harm. Barazani does not “properly represent the interests of all the members of the group” (sec. 43B (4) of the Law), inasmuch as he did not himself suffer monetary harm as a result of the deception. Therefore, Bezeq’s we should grant the appeal, and find that Barazani is also not an appropriate representative plaintiff in regard to the declaratory remedy.

 

Was it proper to deny Barazani the limited permission granted him to file a class action for declaratory relief? The answer to this question – that Justice Cheshin did not address in his opinion – must, in my opinion, be no. After all, even according to the approach of the Chief Justice in the Appeal, Barazani has a personal cause of action against Bezeq because its advertisements were “likely to mislead” him, in which framework he could have petitioned for non-monetary relief, such as a restraining order. The basis for denying his request to file his personal suit for declaratory relief as a class action could accord with the opinion of the majority in the Appeal if there were another representative plaintiff before the court – who met the reliance requirement and even suffered monetary harm as a direct result of the deception – who might represent the interests of the consumers better than Barazani. But I fear that such was not the case. To date, no such alternative representative plaintiff has presented himself before the court, and even if we were to assume that such a plaintiff may yet appear in the future, I fear that his suit may be denied in limine by reason of prescription.

 

Conclusion

 

23.       Subject to the above, I concur in the opinion of my colleague Justice Strasberg-Cohen that the petition for a Further Hearing should be granted, and that the Petitioner should be allowed to file a class action, as requested.

 

                                                                                                            Justice

 

 

Justice Dalia Dorner:

 

            In my opinion, the Petition should be granted. The reason for this is that the Petitioner relied upon the misleading representations of Bezeq and was harmed as a result of that concrete reliance. In any case, all of the elements of the tort were present, and the Petitioner is an appropriate plaintiff for a class action.

 

The Legal Foundation

 

1.         The Consumer Protection Law, 5741-1981 (hereinafter: the Law), intervenes in contracts between unequal parties, and imposes an increased duty of fairness upon the stronger party – the supplier – toward the weaker party – the consumer. See LCA 8733/96 Langbert v. State of Israel, IsrSC 55 (1) 168 (hereinafter: CA Langbert), at p. 174. The Law is firmly anchored in established doctrines of contract law. See Sinai Deutch, “Consumer Contracts Law versus Commercial Contracts Law,” 23 (1) Iyunei Mishpat 135 (2000). The purposes of the Law – among them, reinforcing personal autonomy, advancing commercial fairness and the protection of market integrity – well accord with the freedom of contract, which requires the full realization of a true meeting of minds of the parties to a transaction. This freedom is infringed when the consumer is misled into believing that he is undertaking obligations under transaction conditions that are different from the actual ones. Moreover, the duties of the dealer clearly reflect the overarching good-faith principle of Israeli contract law, which justifies eroding the once accepted principle of caveat emptor. See Gabriela Shalev, Contract Law (2nd ed., 1995), 221.

            The Law was intended to provide an additional layer of defense to the consumer public that is exposed to deception by means of well-developed marketing and advertising methods (see the Consumer Protection Law Bill, H.H. 5740 at p. 302). This is achieved both by augmenting the duties of suppliers, and by broadening the means available to consumers for enforcing their rights. These means include criminal offenses and civil causes of action, among then the tort prohibiting deceit in sec. 2 (a).

 

The Contractual Framework for the Relationship between Dealers ad Consumers

 

2.         Many consumer transactions are premised upon a significant amount of consumer faith in the suppliers. In the framework of such relationships, consumers are not expected to check, before purchasing a service, that they will be charged the declared price, and they can rely upon the suppliers not to charge more than that price. If the consumer should discover at a later date that he was overcharged, he can demand and receive a refund. That is well-established in the accepted contractual doctrines that require that if a supplier charge more than the correct, advertised price, the consumers will be entitled to a refund of the difference, as well as in the social reality grounded upon them, in which consumers actually tend to place their trust in suppliers without checking that every transaction conforms with the advertisements.

            A supplier’s advertisements concerning a specific price grants the consumers a right not to pay more. In any case, if the supplier charge a higher price, that would constitute a breach of contract that would entitle even consumers who were not exposed to the advertisement to a pecuniary remedy. That right can be grounded in the following three different ways.

            The first way sees a supplier’s advertisement of a price as an irrevocable offer to the public, which can be accepted by the objective performance of its conditions, while the dealer is bound by the advertised price, and makes the possibility of purchasing the product or service for a price that will not exceed it, available to the public.  See Daniel Friedman & Nili Cohen, Contracts, vol. 1 (1991) 182; Shalev, ibid., at p. 115. The consumers are not expected to check the price prior to the transaction. In any case, by accepting the offer, the parties agree to the advertised price. The supplier will be required to refund any additional charge to the consumer.

The second way sees the contract as comprising an implied term that requires the supplier not to charge a consumer more than the advertised prices. Such a term is required by the expectations of the parties. Overcharging constitutes a breach of that term.

The third way classifies the said overcharging, particularly where it concerns consumers who were not exposed to the advertisement, as a bad-faith performance of the contract.

3.         It is on the basis of this legal conception, independent of the precise manner of its grounding, that consumers actually behave in practice. Typical Israeli consumers do not check, and are not expected to check, that the prices they are charged for each and every product in the supermarket are identical to the price printed on the product, and certainly do not check, and are not expected to check, that they received the discounts that were advertised by the chain from which they made the purchase. Consumers rely that they will be charged the prices, and credited with the discounts, as advertised. Similarly, the consumers of the telephone companies do not check the prices and current discount campaigns before each and every phone call, relying that they will be charged in accordance with the correct advertised prices.

 

Section 2 (a) of the Law

 

4.         When a supplier publishes notice that the price of a service is lower than a specific price, the consumer public to which the advertisement is directed – including consumers who are not exposed to the advertisement – acquires a right to receive the service at the price stated by the supplier. When consumers purchase the services of the supplier, they rely, in practice, on the fact that the price they will be charged will be the advertised price.

            That reliance exists regardless of whether the advertisement is innocent and clear or whether it is ambiguous and misleading (and see, for example, CA Langert, above). In both cases, the consumers acquire a right, and the suppliers are subject to an obligation, that they will not be charged more than the maximum price reflected in the advertisement, less the deceit, that they would be have been charged in accordance with the advertisement. The difference between the two types of cases regards the consequences that directly result from the advertisement. Only in the case of a misleading advertisement can one acquire those remedies established by law that do not require proof of injury, such as restraining orders. Moreover, only a misleading advertisement can be deemed tortious conduct. The potential to mislead must be evaluated at the time of publication, in accordance with the factual situation at that time. An innocent advertisement cannot be deemed misleading if its content is unambiguous, only as the result of the future conduct of the supplier. Otherwise, every advertisement would be deemed “liable to mislead”, as suppliers always have the ability to breach their obligations.

            However, a supplier commits a tort under sec. 2 (a) of the Law even in the absence of a misleading advertisement both when he presents a consumer with an invoice based upon a price that is different and higher than the advertised price, and when he charges a consumer – e.g., by means of a standing bank order – a higher price than that advertised. Such conduct constitutes an instance of doing “anything – by deed or by omission, in writing, by word of mouth or in any other manner … which is liable to mislead a consumer on any substantive element of the transaction”. That is so because when a supplier demands or charges a particular price, he makes a representation upon which consumers rely, and according to which, that is the correct price as advertised. The consumers are entitled to purchase the service at the advertised price, whatever it may be, and when they pay the supplier the amount in the invoice, or permit the supplier to charge their accounts, they do so on the basis of reasonable reliance that the supplier will not charge more than what was advertised. There is a kind of “integrity of the price” (see Basic v. Levinson, 485 U.S. 224, 247 (1988)).

            The difference between the amount the consumer should pay according to the advertisement and the amount actually charged is the injury caused to that consumer. This injury caused to the consumer is connected by a direct, factual connection to the tortious conduct of the supplier. The consumer paid the additional amount due to the supplier’s deceit. Had the supplier not breached its duty, and had it charged the consumer the correct price, the consumer would have paid the correct price and would not have been injured.

            Therefore, there is no need to prove exposure to the advertisement and conduct resulting from that advertisement in order to be entitled to damages for that deceit, and it is not required under current Israeli law. Other countries that have similar tort and consumer protection laws do not all have a similar requirement, particularly in regard to class actions. Compare, for example, Slaney v. Westwood, Inc. 366 Mass. 688 (1975); Amato v. General Motors Corporation, 463 N.E.2d 625 (1982); Carpenter v. Chrysler Corporation, 853 S.W.2d 346 (1993); Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972); Seth William Goren, “A Pothole on the Road to Recovery: Reliance and Private Class Actions Under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law”, 107 Dick. L. Rev. 1.

 

From the General to the Specific – Bezeq and Barazani

 

5.         Bezeq does not currently expect its customers – and certainly did not expect its customers at the time relevant for this case, when it was a monopoly – to use its telephone services only after checking their price. Thus, there is a “standing payment order” arrangement by which the consumer grants Bezeq the right to access his bank account, and the consumer absolutely relies upon Bezeq, while Bezeq des not usually append to a consumer’s bill the full details of phone calls charged. In doing so, Bezeq intends to create an equal arrangement for those who were exposed to the advertisement in regard to its fees and acted thereupon, and those who were not exposed to the advertisement and, therefore, did not act thereupon. As noted, according to the factual findings in the earlier proceedings, the meaning of the advertisement was simple and clear. Nevertheless, Bezeq made a different representation to the consumers, whether in the telephone bill or in charging their accounts, according to which the correct method for calculating was different from the method of calculation in the advertisement, and led to a higher charge. In doing so, Bezeq deceived the consumers, and committed the tortious act. There is no difference between this conduct by Bezeq’s and a case in which it would include the advertised method of calculation in the telephone bill, except that, in practice, it charged a higher fee.

            Considerations of “legal causation” also do not require reducing the tortious liability. Compare sec. 16 of the opinion of Justice Tova Strasberg-Cohen in this Further Hearing, and see FH 12/63 Leon et al. v. Meshullam Ringer, IsrSC 18 (4) 701, at p. 715 per Witkon, J.; CA 145/80 Vaaknin v. Beit Shemesh Local Council, IsrSC 37 (1) 113, at p. 145; and compare Itzhak Englard, Aharon Barak & Mishael Cheshin, The Law of Civil Wrongs, Gad Tedeschi, ed., (1970) 187.

            It should be noted that in light of the finding that the meaning of the advertisement – that Bezeq would not charge “for the time period not actually used for the call” – was clear, the conduct could not have constituted tortious conduct under sec. 2 (a) of the Law. But even if it had been found that the advertisement was misleading, there still would have been legitimate, concrete reliance by the consumer that he was being charged the correct amount as advertised, and therefore the elements of the tort would have crystalized on the basis of the tortious conduct committed in the charging.

            Barazani therefore has a personal cause of action against Bezeq. The existence of Barazani’s personal cause of action having been proved, whether or not he was exposed to the misleading representation, the path to representing the group in a class action is open to him.

            I, therefore, concur with the result recommended by my colleagues Justices Tova Strasberg-Cohen and Eliahu Mazza, according to which the Petition should be granted and the filing of the class action should be allowed.

 

                                                                                                                        Justice

 

The petition is dismissed in accordance with the majority opinion, and the judgment of the Supreme Court in CA 1977/97 is affirmed.

Given this 13 day of Av 5763 (11 August 2003).

 

The Chief Justice                                The Deputy Chief Justice                               Justice

Justice                                                 Justice (ret.)                                                     Justice

           

 

 

[1] Translator’s note: I Kings 18:29.

[2] Translator’s note: The phrase is a reference to a rabbinic principle of biblical hermeneutics, see, e.g., Mekhilta deRabbi Ishmael, Masekhta deShira 7; Sifrei Numbers, Beha’alotekha 64; Babylonian Talmud, Tractate Pesaḥim 6b.

[3] Translator’s note: The original Hebrew employs the letter kaf as a prepositional prefix, called the “kaf of comparison”, meaning “as” or “like”.

[4] Translator’s note: The original Hebrew phrase is “ke-din avla”.

[5] Translator’s note: The Talmudic quote is a wordplay that exploits the use of the word beitza to mean an egg and to designate a measure of volume.  In its original context, the phrase means “an egg is superior to any other food of an equal amount”.

[6] Translator’s note: The reference is to Mishna Ḥagigah 1:8 “The laws concerning the Sabbath, festival offerings and the trespass of consecrated objects are as mountains hanging by a hair, that have few supporting scriptural verses but many laws”.

[7] Translator’s note: Genesis 22:1

[8] See note 3, above.

Full opinion: 

Tnuva Central Cooperative v. Raabi Estate

Case/docket number: 
CA 10085/08
Date Decided: 
Sunday, December 4, 2011
Decision Type: 
Appellate
Abstract: 

[This abstract is not part of the Court's opinion and is provided for the reader's convenience. It has been translated from a Hebrew version prepared by Nevo Press Ltd. and is used with its kind permission.]

 

An appeal and cross appeal challenging the decision of the Tel Aviv District Court (Partial Judgment and Supplementary Judgment,) where the court partially granted a consumer class action suit, which was granted leave to be submitted in CC 10085/080 (hereinafter: Tnuva). The class action suit revolved around the misleading of the consumer public and the production of a milk product in violation of binding official standards that were in effect in the relevant period of time. The product was long life low fat (1%) milk to which silicone was added and which Tnuva manufactured and marketed from January 25, 1995 until September 6, 1995, without listing the silicone component on the product. (The silicone was added to the mild – in a total amount of approximately 13 million liters of milk – in order to remedy a problem of over whipping.) The court helf that the number of members of the class were about 220,000 people, and that members of this group were entitled to compensation for the autonomy infringement and that half (110,000 people) were also entitled to additional compensation for negative emotions experienced after learning that the milk they had been drinking contained silicone. Under the circumstances, the court found it fit to award compensation according to the mechanism set in section 20(c) of the Act, where ultimately it was ruled that Tnuva must pay a total compensation amount of NIS 55 million, which reflects an estimated personal damage of NIS 250 to each of the members of the group for the general damages, without distinction between group members who experienced negative emotions and those in whose regard a consumer report has proven that they did not experience such emotions. It was held that the only actual remedy would be a remedy to the benefit of the group, which ought be divided to three purposes: reducing the cost of the product; a fund for research and grants in the field of food and nutrition; and distributing free milk to needy populations. Additionally, a NIS 4 million partial attorneys’ fees were awarded (the heirs of the class action plaintiff were awarded NIS 500,000, the Israeli Council for Consumerism was awarded NIS 1 million, and the representatives of the class action plaintiffs were awarded NIS 2.5 million.)

 

At this stage of the appeal, Tnuva no longer disputes that it mislead its consumers. However, according to its approach, the lower court’s decision must be reversed, or alternatively the amount of compensation it was obligated to pay must be drastically reduced. The essence on Tnuva’s arguments is that its misleading caused no real and compensable harm to any of the group members, and sadly this is a negligible matter that does not justify compensation. Even had any damage been caused, no causal connection was proven between the claimed harmed and the misleading it did. In the cross appeal, the class action plaintiffs claim that a higher compensation should have been awarded.

 

The Supreme Court (in an opinion written by Justice E. Hayut, with Justice I. Amit and U. Vogelman concurring) granted the appeal by Tnuva in part and rejected the cross appeal, for the following reasons:

 

Misleading consumers as a class action tort: The legal field where the outcome of Tnuva’s actions must be examined in this case is tort law, to which section 31(a) of the Consumer Protection Act refers. In other words, in order for a plaintiff according to this consumer tort would be awarded financial compensation they must show damages as well as a casual connection between the tortuous conduct and the alleged harm. However, when a class action claim is concerned, the court must integrated the general tort law and principles and rules taken from class action law, among others, by softening the requirements necessary for showing the harm caused to group members. Therefore, the court must not limit itself to examining the remedy under general tort law which apply to individual suits and it must rather fold into its decision principles and rules taken from class action law.

 

Negligibility: Indeed, not every case where there was a flaw in the listing of a food product’s ingredients this would justify compensation for autonomy infringement or negative emotions and there may certainly be cases where despite the existence of a particular flaw in the listing of the product’s components this would not justify compensation when the harm constitutes de minimis… in the words of Justice Naor. However, this does not benefit Tnuva, because in this case the lower court’s finding that under the circumstances the consumer’s autonomy to decide whether he wishes to put into his body milk that contains silicone or not was well founded. And as the lower court correctly held, this is not an infringement that constitutes de minimis, from the group-class action perspective.

 

The court noted that the rule regarding de minimis does not apply in its plain meaning on the damage element of a typical class action suit because “a central characteristic of it is the accumulation of small damages that independently would not have led to legal proceedings.” This in approach that has precedent in the jurisprudence of this Court. Still, it is important to note that the fact that a large group of plaintiffs argue in a class action suit for the accumulation of small damages, does not necessarily in itself negate the possibility of de minimis in the group context as well. Even in a procedure of a class action the answer to the question when is there a negligible harm that does not justify compensation depends on the circumstances of the case and it may change considering the entirety of circumstances involved.

 

Autonomy infringement: in CA 2781/93, the Dakka case, Israeli law first recognized that general damages involving autonomy infringements is a “damage” as understood by the Torts Ordinance and that as such it warrants compensation. The fundamental right to autonomy, as the Court held in Dakka is the right that every person has “to decide about his actions and his desired according to his choices, and to act according to such choices.” This right, it was held, encompasses all the central aspects of one’s live, and it results, among others, in “each person having liberty from intervention in his body without his consent.” It was additionally held that that liberty is one of the expressions of the constitutional right to dignity granted to each person and enshrined in Basic Law: Human Dignity and Liberty. In contrast to Tnuva’s argument, recognizing this cause of action of autonomy infringement is not limited and should not be limited to cases of medical malpractice or bodily autonomy violations alone. The principles at the basis of recognizing this cause of action and the constitutional right this recognition is designed to protect justify in the appropriate cases awarding compensation for autonomy infringement even when other torts, such as the consumer tort in our case, exist.

 

The causal connection requirement: Indeed in the Barzani further hearing, the Court ruled that the requirement of a causal connection established in section 64 of the tort ordinance applies to consumer torts in terms of misleading advertising as well as cases where such tort constitutes cause for a class action suit. Still the Court also ruled there that to the extent that consumer torts are concerned the reliance requirement that derives from the causal connection requirement must be interpreted “in a broad context, to include more than mere direct reliance” but rather “an indirect causal connection through a proper chain or causation from the advertisement to the consumer.” It was also held in Barnzani that a process for a class action suit based on the instructions of chapter F1 of the Consumer Protection Act and the regulations made by it in this matter (instructions that have since been repealed by the Class Actions Suit Act) may require a softening of the means of proof considering the unique nature of this procedure and that “the court may establish proper means, as it sees fit, for the ways in which the element of causal connection between the misleading advertisement and the damage caused to each group member including the harm caused to each and every one of them, may be proven.” However, Tnuva’s attempt to rely on the Barzani rule and argue that in this case, too, no causal connection between Tuva’s conduct and the general damage for which it is sued was not proven, must be rejected and this for several reasons.

 

First, Tnuva raised the claim at the stage after the class action was approved, and to the extent it addressed the class as such it must be remembered that about the three years after the decision in the Barzani further hearing the Class Action Suit Act was enacted to aggregate the principles and rules that must be applied to class actions in their various forms. Among others, the Act permits granting remedies to the benefit of the public in appropriate cases where it is impractical to prove the harm caused to each and every group member and therefore also the causal connection between that harm and the conduct of the damaging party (section 20(c) of the Act.) This is the guideline adopted by the lower court and under the circumstances the requirement to prove, for each and every individual member of the group, the causal connection between Tnuva’s conduct and the harm is an overly burdensome requirement. Second, to the extent that the consumer tort upon which the class action suit is based is a misleading through failure to act (in the form of failure to disclose, as in the case at hand, as opposed to active misleading as was the case in Barzani) this may justify softening and flexibility in terms of proving the causal connection between the tortuous conduct and the claimed harm. Third, as opposed to the Barzani case, where monetary damages were sought (differences in rate), the damage sought in our case goes to general damage of autonomy infringement. For this type of damage, it was ruled there is no need to prove causal connection between the failure to disclose and the harmed party’s choice.

 

However, even had it been decided that under the circumstances here proof that members of the group would not have purchased the milk had they known it contained silicone was required, it is possible that the requirement for a causal connection would have been satisfied in the class action suit here by finding there was a “class causal connection.” Such class causal connection maybe be based on the assumption that the class members, and sadly most of them, would have responded in the negative had they been asked in advance whether they would consider consuming milk to which Tnuva added, in violation of a binding standard, an artificial additive of which they are unaware in order to fix a problem of over whipping.

 

However, the Court rejects the objective approach for evaluating compensation for autonomy infringement. The Court’s approach is that the compensation for autonomy infringement is granted for a subjective outcome damage that is expressed through emotions of anger, frustration and similar additional negative emotions caused by the damaging party’s conduct. This conclusion leads to another conclusion which is that there is no place to divide the compensation for autonomy infringement and the compensation for suffering and negative emotions caused to the harmed party due to that infringement (as opposed to general damage that relies on other harms in the same claim.) therefore, where it was proved that some members of the class remained indifferent to the autonomy infringement, there is no place to award compensation for this type of damage.

 

In this case, the court’s finding that the class includes 220,000 members is a careful and conservative finding in which we must not intervene. However, the data presented by the class action plaintiffs themselves (statistical data and expert opinion) there is foundation for the conclusion that 30% of the group members remained indifferent to the silicone addition in the milk. Therefore, they did not experience any negative emotions even once they learned that the milk they consumed contained silicone and that Tnuva failed to detail this ingredient on the packaging. Therefore, the extent of the class entitled to compensation for autonomy infringement that caused them negative emotions includes only 154,000 people.

 

This is a group that consists of more than 100,000 people, who cannot be identified or located. Even had it been possible to locate them there is doubt as to whether it is appropriate to order that each and every one of them – or even some of them – would submit affidavits to detail the depth of the negative emotions they experienced, in order to make it possible to award them compensation according to one of the mechanisms established in section 20(a) of the Class Action Suit Act. Once it is impossible to determine the harm based on individual evidence or an accurate calculation, and once it is impossible to identify the members of the group entitled to compensation, we are left with the compensation mechanism established by section 20(c) of the Class Action Suit Act, which permits setting a total compensation through estimates to the benefit of the entire class or to the benefit of the public.

 

The compensation amount: In light of the diversity in class members in terms of their consumer habits of the long life milk that contained the silicone and in light of the additional characteristics of autonomy infringement in this case, including the severity of the harm (when one can imagine worse harms) and the limited period of time in which group members experienced negative emotions, the Court believed the sum of NIS 250 is acceptable as a suitable amount for setting the standard individual compensation. This sum, multiplied for the number of class members who suffered the outcome damage of autonomy infringement brings us to a total compensation amount of NIS 38,500,000 (250 X 154,000). Therefore, the total compensation the Tnuva must be obligated to pay in this case according to the formula adopted in the decision is a sum of NIS 38.5 million, valued for the day the lower court’s decision was handed down (October 7, 2008).

 

The manner of dividing the compensation: Under the schedule set in section 20 of the Class Action Suit Act, priority must be given as much as possible to the mechanisms of compensations that fit this order as such, and even when coming to award compensation under section 20(c) in the absence of possibility to award it under sub section (a) and (b), it must be attempted as much as possible to design the mechanism for allocating the collective compensation in a manner that allows some link between the group of compensated parties and the group of harmed parties.

 

Under the circumstances, the Court has concluded it is best to do without allocating part of the compensation to the discount arrangement and instead to focus on the two other goals set by the lower court, which serve worthy purposes to benefit the public. The part missing from the discount arrangement (22%) would be divided equally between the two goals in the following manner: the research and grants foundation 44.33% and provision of milk products to the needy 55.66%.

 

As a result of the reduction in the compensation amount, the award Tnuva must pay the class action plaintiffs and the attorney’s fees it must pay their representative were also reduced. The award to Reevi’s heirs stands at NIS 300,000. The award for the Israel Consumer Council stands at NIS 550,000 and the rate of the attorney’s fees to the plaintiffs’ representatives stands at NIS 1,500,000.

 

Voting Justices: 
Primary Author
majority opinion
Author
concurrence
Author
concurrence
Full text of the opinion: 

CA 10085/08 and

Counter Appeal

CA 6339/09

CA 7607/09

 

Tnuva Central Cooperative for the Marketing of Agricultural Produce in Israel

 

v.

 

1. Estate of the late Tufik Raabi

2.  Israeli Consumer Council

 

 

The Supreme Court sitting as the Court for Civil Appeals

[29 November 2010]

 

Before Justices E. Hayut, U. Vogelman,  Y. Amit

 

 

Israeli Legislation  Cited

Class Actions Law, 5766-2006, ss. 20, 22, 23

Restrictive Trade Practices Law,  5748-1988

Banking  (Service for Customer) Law, 5741-1981

Equal Rights for Disabled Persons Law, 5758 – 1998, ss. 19 (54)   - 19 (64)

Male and Female Workers Equal Pay Law 5756- 1996, s. 11

Standards Law 5713-1953, ss. 9(a), 17 (a) (1), 17 (b)

 

 

Israeli Supreme Court Decisions Cited

 

[1]        CA 1338/97  Tenuva Central Cooperative for the Marketing of Agricultural Produce in Israel Ltd v. Raabi,  IsrSC 57 (4) 673 [2003]

[2]        CA 1977/97 Barazani v. Bezeq Israel Telecommunications Company Ltd, IsrSC 55 (4)  584 (2001);

[3]        FHC 5712/01 Barazani v. Bezeq Israel Telecommunications Company Ltd, IsrSC 57 (6)  385 (2003);

[4]          CA 2781/93 Daaka v. Carmel Hospital, Haifa   IsrSC 53(4)  526 [1998-9] IsrLR 409

[5]          LCA 3126/00 State of Israel v. E.S.T. Project Management and Manpower Ltd, IsrSC 57 (3), 220 (2003)

[6]        FHC 5161/03  E.S.T   Project Management and Manpower Ltd v. State of Israel, IsrSC  60 (2) 196 (2005)

[7]        CA. 8430/99 Analyst I.M.S. Trust Funds Management (1986) v. Ard Industrial Investment and Development, 256  IsrSC 56 (2)

[8]        LCA 4556/94 Tetzet v. Zilbershatz, IsrSC 49(5) 774 (1996);  

 

[9]        CA 345/03 Reichart v. Raabi Moshe Shemesh Heirs  (not yet reported) 7.6.2007)

 

[10]      CA 3506/09 Zaig v. Waxelman, Waxelman Accountants (not yet reported)( 4.4.2011)

 

[11]      CA 3613 Ezov v Jerusalem Municipality  IsrSC 56 (2) 787 (2002).

 

[12]      LCA 8733/96 Langbert v. State of Israel – Israel Lands Administration, IsrSC 55 (1) 168  (1999).

 

[13]      CA 7028/00 A.B.A. Trust Funds Management Ltd v. Elsynth Ltd (not yet reported, 14.12.2006)

 

[14]      HCJ 2171/06 Cohen v. Knesset Speaker (not yet reported, 29.8.2011)).

 

[15]      CA 10262/05 Aviv Legal Services Ltd v. Hapoalim Bank, Head Management  (not yet reported, 11.12.2008)

 

[16]      CA 3901/96 Local Planning and Building Committee v. Horowitz, IsrSC 56 (4) 913, 328 (2002)

 

[17]      CA 4576/08 Ben-Zvi v. Prof. His  (not yet reported, 7.7.2011)

 

[18]      CA 8126/07 Estate of the Late Bruria Zvi  v. Bikkur Holim Hospital (not yet reported, 3.1.2010);

[19]      CA 9590/05 Rahman Nuni v. Bank Leumi LeIsrael Ltd , (not yet reported  10.7.2007)

 

[20]      CA 6153/97 Shtendal v. Prof. Yaakov Sadeh , IsrSC 56 (4) 746 (2002)

 

[21]      CA 9936/07 Ben David v. Dr. Entebbe (22.2. 2011)

 

[22]      CA 9817/02 Weinstein v. Dr. Bergman, (not yet published, 16.6. 2005)

 

[23]      LCA 9670/07 Anon v. Anon (not yet reported,6.7.2009)

 

[24]      CA 2967/95 Hanan Vakshet Ltd v. Tempo Beer Industries Ltd,  IsrSC 51 (2), 312 (1997)

 

 [25]     FHC 4693/05 Carmel Haifa Hospital v. Malul  (not yet reported, 29.8.2010)

 

[26]      355/80 Anisimov Ltd v. Tirat Bat-Sheva Hotel. IsrSC 35 (2) 800 (1981)

 

[27]      CA 4022/08 Agbaba v. Y.S. Company Ltd],(21 October 2010 paras 10 – 24; 

 

[28]      C.A. 754/05 Levi v. Share Zedek Hospital) (2007) IsLR 2007  131

 

[29]      CA Reznik v. Nir National Cooperative Association for Workers Settlement [not yet published]   (20.7 2010]

[30]      CA  1509/04 Danush v  Chrysler Corporation (not yet published, 22.11.2007)

[31]       CA 9134/05  Adv. Eliezer Levit v. Kav Of Zafon, Cooperative Association for Services Ltd  [not yet reported, 7.2.2008)

[32]      AAA 2395/07  Accadia Software Systems Ltd v. State of Israel – Director of Tax and Stamp Duty 27.12.2010)

[33]      CA 7094/09 Borozovsky  Conveyancing Ltd v. Ichurn Itur Veshlita Ltd (14.12.2010) 

           

 

American Cases

 

[34]Affiliated Ute Citizens of Utah v. United States 406 U.S. 128, 153-154 (1972) ;

 

[35 ]Binder v. Gillespie 184 F.3d 1059, 1063-1064 (9th Cir. 1999)

 

[36]; Poulos v. Caesars World Inc. 379 F.3d 654, 666 (9th Cir. 2004

 

[37] Kennedy v. Jackson National Life Insurance Company, 2010 U.S. Dist. Lexis 63604, 25-28 (N.D.Cal 2010)

 

[ 38]  Negrete v. Allianz Life Insurance Company of North America 238 F.R.D 482, 491-492 (C.D. Cal. 2006)[.

 

[39]Klay v. Humana, Inc.382 F.3d 1241, 1259 (11th Cir. 2004)

 

[40] Johnson v. The Goodyear Tire & Rubber Company, Synthetic Rubber Plant, 491 F.2d 1364, 1379-1380 (5th Cir. 1974);

 

[41]Cooper v. Allen, 467 F.2d 836, 840 (5th Cir. 1972)

 

[42]Allison v. Citgo Petroleum Corp., 151 F.3d 402, 417 (5th Cir. 1998);

 

[43 ]Reeb v. Ohio Department of Rehabilitation and Correction, 435 F.3d 639, 650-651 (6th Cir. 2006);

 

[44] Fuhrman v. California Satellite Systems, 179 Cal. App. 3d 408, 424-425 (1986);

[45] Altman v. Manhattan Savings Bank, 83 Cal. App. 3d 761, 767-769 (1978);

 

[46] Stilson v. Reader's Digest Association, Inc., 28 Cal. App. 3d 270, 273-274 (1972);

 

[47] Birnbaum v. United States, 436 F. Supp. 967, 986 (1977).

 

[48] Bates v. UPS 204 F.R.D. 440, 449 (N.D. Cal. 2001)

 

[49]  Olden v. LaFarge Corp. 383 F.3d 495, 509 (6th Cir. 2004)-

 

[50] Hilao v. Estate of Ferdinand Marcos, 103 F.3d 767, 782-787 (9th Cir. 1996)

 

[51 ] Wal-Mart Stores, Inc. v Dukes, 131 S. Ct. 2541, 180 L. Ed. 2d 374 (2011)

 

[52] Midwestern Machinery v. Northwest Airlines 211 F.R.D. 562, 572 (D. Mn. 2001)

 

[53 ] McLaughlin v. American Tobacco Co.

 

[54 ]: Pettway v. American Cast Iron Pipe Co., 494 F.2d 211 (5th Cir. 1974);

 

[55] Stewart v. General Motors, 542 F.2d 445 (7th Cir. 1976);

 

[56]  Bowe v. Colgate-Palmolive Co., 489 F.2d 896 (7th Cir. 1973); 

 

[57] United States v. Wood, Wire & Metal Lathers Int. Union, Local Union 46, 328 F.

 

[58]Hood v. Eli Lilly & Company 671 F. Supp 2d  397, 434-453 (E.D.N.Y. 2009)

 

[59] Long v. Trans World Airlines, Inc., 761 F. Supp. 1320 (N.D. Ill. 1991))

 

[60] Allison v. Citgo Petroleum, 151 F.3d 402, 414-415 (5th Cir. 1998);

[61] Lemon v. Int'l Union of Operating Engineers, Local No. 139, AFL-CIO 216 F.3d 577 (7th Cir. 2000);

[62] Jefferson v. Ingersoll Int'l, Inc. 195 F.3d 894 (7th Cir. 2001); 

[63] Reeb v. Ohio Department of Rehabilitation and Correction, 435 F.3d 639 (6th Cir. 2006).

[64]  Fibreboard Corp., 893 F.2d 706, 712 (5th Cir. 1990).

 

[65]  Windham v. American Brands, Inc., 565 F.2d 59 (4th Cir. 1977)

 

[66]  Redish; Powell v. Georgia-Pacific Corporation, 119 F.3d 703, 706 (8th Cir. 1997)

 

[67]  Airline Ticket Commission Antitrust Litig, 268 F.3d 619, 625 (8th Cir 2001)

 

[68] Folding Carton Antitrust Litig. 744 F.2d 1252 (7th Cir. 1984)

 

[69]  Houck v. Folding Carton Admin. Comm., 881 F.2d 494 (7th Cir. 1989)

 

[70]  Cuisinart Food Processor Antitrust Litig38 Fed. R. Serv. 2d (Callaghan) 446 (D. Conn.1983).

 

[71] Democratic Cent. Comm. v. Washington Metro. Area Transit Comm'n

 

[72]  Domestic Air. Transp. Antitrust Litig

 

 

 

For the petitioners — T. Feldman, Y. Elam, F. El-Ajou, H. Jabarin.

For the respondents — A. Helman, A. Segal-Elad, H. Gorni.

 

 

JUDGMENT

 

Justice E. Hayut

 The decision forming the subject of the appeals before us was given in a consumer class action that was approved for filing against Tnuva Central Cooperative for the Marketing of Agricultural Produce in Israel Ltd (hereinafter – “Tnuva”).  The suit concerns the misleading of the consumer public and the production of a dairy product in contravention of the official standard in force on the dates relevant to the suit, by reason of the addition of silicon to  long lasting low fat (1%) milk, that was manufactured and marketed by Tnuva, without making any mention of the silicon component on the product.

Factual Background and the Process of Approving the Suit as a Class Action

     1. At the end of 1993 a problem of over-frothing arose in the process of mixing long lasting milk containing 1% fat (hereinafter: “the milk”) as a result of a problem in one of the machines on the production line. Given the high cost of the malfunctioning machine (about 300 – 400 thousand  U.S dollars) the personnel of the Rehovot dairies decided to solve the problem of  frothing  by adding a chemical substance known as “Polydimethyilsiloxane” , the trademark for which is E-900, to the milk.  This substance is known as “silicon” and was purchased by the dairy in Rehovot, from Amgal Production of Chemicals (1989) Ltd (hereinafter: "Amgal")  without informing the central management of Tnuva.  The Amgal company purchased the silicon from an English company. The aforementioned addition of the silicon to the milk continued from 25 January 1994 until 6 September 1995, just after the affair was exposed. During that period the Tnuva dairy in Rehovot produced and marketed to the public an overall amount of 13 million liters of milk.

The addition of the silicon to the milk was first exposed in the media on 30 August, 1995 and Tnuva's initial reaction consisted of a sweeping denial  of the allegation against it.  This was the case both in an interview of the director of the  Tnuva Milk department, Mr. Yosef Yudovitz and in the official press releases on behalf of Tnuva published in a number of papers on 31 August, 1995, in which it stated that the Tnuva long life milk was free of the silicon supplement and that independent laboratory tests verified this (similar pronouncements also appeared on  1 September, 1995).  The Tnuva representatives continued to deny the addition of silicon in a hearing conducted in the Knesset Economic Committee on 5 September 1995, but soon after that, on 10 September 1995 an internal commission of inquiry appointed in the wake of the publication determined that indeed a silicon supplement had been added to the long life milk that contained 1% fat, in the Tnuva dairy of Rehovot, and the commission's conclusions were published in the media. In the wake of these conclusions, Tnuva recalled all of the cartons of 1% long life milk from the shelves of the stores, to which it was feared that the silicon had been added, and the manager of the Rehovot dairy was suspended from his position.   The National Food Service of the Ministry of Health likewise decided  that Tnuva would have to destroy all of the milk containing silicon and it was prohibited to use it, even as food for animals.  It was further decided on 12 September 1995 to revoke the permit that had been given to Tnuva confirming appropriate conditions of production. Tnuva on its part decided on the same day to establish a commission to investigate the affair, which would give recommendations on "lessons to be learnt and conclusions to be drawn in each and every area that it found appropriate, including personal conclusions"  The committee  headed by Prof. Yehuda Danon, and after it had heard the testimonies and examined the documents,  it published the "Committee's Report on the Examination of Long Life Milk" (hereinafter: the Danon Committee Report"). In the framework of the Report criticism was leveled against senior workers in the Tnuva dairy, against the senior management of Tnuva by reason of the absence of supervision and inspection in the Tnuva dairy, and even against the Food Service in the Ministry of Health, and the Institute for Inspection and Quality in the Trade and Industry Office that was supposed to have conducted supervision and inspection of the quality of the food.

2.    The state on its part on 30 January, 1996 filed an indictment against Tnuva in the Magistrates Court of Rehovot, and against  its CEO and against the manager of the Milk Department and the manager of the dairy for offences of misleading in an advertisement, pursuant to ss. 2(a), 7 (a)(1), 23 and 27 of the Consumer Protection Law 5741-1981 (hereinafter:
"Consumer Protection Law") and against Tnuva and the manager of its dairy in Rehovot for the offences of failing to comply with an official standard pursuant to ss.  9(a), 17 (a)(1) and 17 (b) of the Standards Law 5713-1953 (hereinafter:"Standards Law"). On 4 March 1997 the defendants were convicted by force of their confessions for the offences that were ascribed to them, and the Court accepted the plea bargain that was reached between them and the state, in accordance with which a financial penalty was imposed on Tnuva and the other defendants  (the financial penalty imposed on Tnuva was for the sum of NIS 28,000).

Another proceeding instituted against Tnuva was the present proceeding, which began in a suit filed in the Tel-Aviv Jaffa District Court  on 14 September, 1995 by the late Tufik Raabi (hereinafter:  "Raaabi") along with an application for the certification of the suit as a class action (CF 1372/95, Mot. 11141/95. In his (amended) suit, Raabi claimed that he had consumed long lasting low fat (1%) milk during the relevant period and that the silicon was not specified as one of the ingredients on the packaging of the product, and as such Tnuva had violated the provisions of sections 2,4, and 17 of the Consumer Protection Law.  Raabi further alleged a infringement of an “unwritten contract” with him and with the consumer public in its entirety and negligence on the part of Tnuva in all of the stages involved in “production, supervision, marketing and advertising of the facts related to the addition of the prohibited material to the milk and the fact of the reasonable probability of a real and/or potential health hazard in the product that it marketed”.  In his petition Raabi requested restitution of the sums he had paid in consideration for the milk that he had purchased in the relevant period and compensation for the mental anguish caused to him by the addition of the silicon and by reason of the “misleading and contemptuous” conduct of Tnuva. Raabi’s request for his suit to be recognized as a collective action relied on Chapter F’1 of the Consumer Protection Law, which at that time included an arrangement for the filing of a collective action based on the grounds specified therein. 

3.    The Tel-Aviv District Court (the late Honorable Judge M. Telgam), on 13 June 1996 certified Raabi’s request to file a class action in the name of all of the milk consumers during the relevant period, but the court stressed that in this case it would not certify the remedy of restitution because Raabi had already consumed the milk and had not claimed that any real damage had been caused by its consumption, and he further stressed that even though there was nothing to prevent Raabi from proving that his health had been damaged thereby,  he was not permitted to represent the members of the group regarding “future bodily damage”.

An appeal and a counter appeal against the certification decision were filed by the parties to the Supreme Court (CA 1338/97 Tnuva Central Cooperative for the Marketing of Agricultural Produce in Israel Ltd v. Raabi  [1]  (hereinafter: Decision on the Certification Request)). Tnuva challenged the certification of the suit as a class action and Raabi challenged the determination that the class action would not include the remedy of restitution, and the fact that there was no award for legal fees in his favor. The Israeli Consumer Council joined as a party to the hearing (Raabi and the Israeli Consumer Council will hereinafter be referred to as “the representative plaintiffs”), and in the Attorney General joined as a party in the appeal proceedings, in support of the confirmation of the class action

4.    On 19 May, 2003 in a majority decision, this Court rejected the aforementioned appeals filed by the parties and left the decision of the District Court intact in the sense of certifying the filing of a class action. Regarding this, Justice M. Naor held that the damages claim by Raabi concerns the  non-pecuniary damage that was caused to him by negative feelings, and feelings of disgust, which stem from the consumption of milk that contains silicon “with all of the associations attendant thereto” and that damage of this kind was prima facie “remunerable damage”. The justice further ruled that the addition of the silicon supplement to the milk in defiance of the standard constitutes an  infringement of individual autonomy, and that under the circumstance this not a “trivial matter) (de minimis), and that despite the fact that the Consumer Protection Law does not contain a provision that enables a compensatory award for the benefit of the public or the benefit of a group (all or in part) the court is permitted to award this kind of remedy in a suit under the Consumer Protection Law in appropriate cases in which there is a structural difficulty in locating the consumers. All the same, Justice Naor ruled that the Court would not intervene with the District Court’s decision not to award restitution in this case. Regarding the plaintiffs’ group Justice Naor ruled that it would include all those who had consumed  long life milk of 1% to which silicon was added  during the period between 23 October 1994 and September 1995”, having regard for the fact that the provision in the Consumer Protection Law that allowed the filing of a collective action came into effect on the 23 October 1994 and the fact that in the month of September 1995 the dairy products containing silicon were removed from the shelves.

Deputy President, S. Levin concurred with the ruling of Justice Naor (subject to the issue of awarding a remedy to the public being left as requiring further consideration), and Justice Proccaccia ruled in her minority opinion that the suit should not be recognized as a class action.  She held that the chances of Raabi’s personal suit succeeding are not “self evident” and in her view, "the claim concerning the injury as a result of the inclusion of the supplement in the food product, in deviation from the standard, but without having caused any damage to health, does not dictate, "self evidently" that damage flows naturally in the regular course of events".  Justice Proccaccia added that she would also have refrained from approving the suit as a class action in accordance with the discretion conferred to the court in this matter  (s. 35A of the Consumer Protection Law), inter alia given the fact that the nature of the alleged damage  is not necessarily common to the entire consumer public, and "it is connected to the individual health threshold of each consumer and significantly dependent upon it."

The Class Action Proceedings

5.    Once the suit was certified as a class action, the District Court (Judge Dr, E. Benyamini)  ordered the publication of a notification to the public and the filing of amended claim sheets in accordance with the prescribed conditions of the certification. In the amended statement of claim that they filed, the representative plaintiffs claimed that the approximate number of members in the plaintiff group was estimated at about 43% of the population, which constitutes over two million consumers, and that the members of the group should be compensated for infringement of their autonomy and negative feelings occasioned by inter alia deception, contempt, mental anguish, nausea, aversion to essential food products, fear and anxiety.  According to the representative plaintiffs, the members of the group in their entirety should receive compensation of NIS 8000 for each consumer included in the plaintiff group.  Tnuva on its part argued that the claim relating to the infringement of individual autonomy should be rejected, because no such infringement was actually  caused, and if caused, it was minor and peripheral, in the category of de minimis.  In this context Tnuva stressed,  inter alia  that the addition of silicon to the milk  did not harm the consumers and that silicon was a recognized, approved, and frequently used food supplement all over the world.

6.    The first stage of preliminary proceedings in the Lower Court was intended,  inter alia to crystallize the proceedings for the hearing and the means of proving the suit. In this framework the Lower Court  ruled that the evidentiary stage would not be divided into separate hearings for the question of responsibility and the question of damage.  The court further rejected Tnuva's request to establish a system for proving the non-pecuniary damage on an individual basis, ruling that already at the preliminary stage  "it was clear that the only way of proving damage in this case, if at all, in the absence of any method for locating the purchasers of the milk, is by way of market surveys for the entire consumer public, or even a few sample affidavits of milk consumers, along with the affidavit of [Raabi]” (para. 14 of the decision). On the other hand, the court left open the question of whether it was possible to award general compensation to the entire plaintiff group based on this form of proof.  In addition the court ruled that insofar as in accordance with the standard silicon was prohibited for the use of cows'  milk for drinking, there was no need to rule on the question of whether its use constitutes a health hazard, but it added that when examining the non-pecuniary damage caused by an infringement of autonomy and negative feelings, importance attached to the question of whether there are studies that show the possibility of damage to health as a result of the use of silicon and the question of the quantity necessary to cause such a risk. The reason for this is that if there are experts who contend that there is a possibility of damage to health, then it becomes necessary to address the question of  the consumer’s right “to decide whether he was interested in refraining from taking any risk involved in the consumption of the  milk”. The court further ruled that to the extent that there was proof for the ground of the claim and the alleged damage, and it was determined that compensation should be ruled for the benefit of the group or the public, it would consider the appointment of an expert- examiner and Tnuva would be obligated to supply him with the required economic data.

On 13 October, 2004 the Court actually appointed an expert-examiner in accordance with Regulation 124 of the Civil Procedure Regulations, 5744-1984  (Prof. Yechezkel Ofir, an expert in economic and marketing (hereinafter – Ofir)), and in its decision of 17 March, 2005  the Court further ruled that “the relevant population for this claim is, essentially, the people who actually purchased the milk” and that the intention was to those who purchased the milk in Israel (para. 16 of the decision). All the same, in that decision the Court ruled that the plaintiff group would also include persons who had consumed the milk in hotels, restaurants, and cafes (as distinct from those who consumed it at places of work and who did not actually purchase the milk that was consumed), notwithstanding that with respect to them it would be difficult to prove an infringement of autonomy because they did not choose the category of milk that they had drunk..

 

The Partial  Decision of the District Court

7.    In its partial decision of 7 October 2008 the District Court ruled that the class action suit should be accepted.  In its opening comments the Court noted that the Class Action Law, 5766-2006 (hereinafter – “the Law” or the “Class Action Law”) which was enacted and came into force after the certification of the suit as a class action, would also apply to suits pending at the time of its publication, and hence would also be applicable to this particular class action suit. Even so, the Court ruled that “regarding the ground of claim and the plaintiff group, a decision would be given in accordance with the Consumer Protection Law, which as stated, only applies to the a “consumer” as defined in the law”, while also pointing out that with the enactment of the Class Actions Law, the representative plaintiffs had not petitioned to amend the statement of claim and broaden the scope of the group in accordance with the broadened grounds of claim for which a class action can be filed under the Law.

In the partial decision the Court conducted an extensive survey of the evidentiary material submitted to it, including, inter alia, the Report of the Danon Committee, an expert opinion and public opinion surveys. Regarding the criminal proceedings, the Court held that for purposes of the class action it was not possible to base "factual findings" on the holdings of the Court in the criminal proceedings, inter alia because in that proceeding, witnesses were not heard and evidence was not submitted. Still, the Court ruled that Tnuva's admission to the commission of the offences and the convicting verdict also constitute evidence against it in the proceeding at hand ( whether by force of an admission of a litigant or by force of the provision of section 42A of the Evidence Ordinance [New Version] 5731-1971).  

As a preliminary remark, with implications for both the grounds of the suit and the proof of damage, the Court ruled that it was not required to rule on the "scientific question" pertaining to the existence of a health risk in the drinking of milk containing silicon, and that for purposes of the suit it was sufficient to examine the question of whether it was possible to rule out the possibility of such a health hazard. The Court determined that based on the evidentiary material presented, it could rule that even if there was no proof that the drinking of milk containing silicon caused, or was liable to cause immediate health damage to the consumers, it was not possible to rule out the existence of a health hazard in the long term, especially for children. The Court added that according to its approach, the consumers were entitled to know that the milk contained silicon  in defiance of the law and the relevant standard,  and that in these particular circumstances it was not possible to rule out the health risk involved its consumption, and it also added that had it been required to rule on the aforementioned scientific question  it would answered it in the affirmative, given  the existence of a standard which was presumably based on considerations of  public health and which would transfer the onus of proving the absence of a health hazard to the party in breach, and Tnuva, had not discharged that onus.

8.    In adopting Raabi's version, which was that he purchased within the State of Israel (and not within the areas of Judea and Samaria) as claimed by Tnuva, low fat long life mile of Tnuva which was produced in the Tnuva dairy in Rehovot in the period relevant to the suit, the Court held that Raabi has a personal ground of claim against Tnuva. The Court likewise held that even had its conclusion been different it would not have determined the fate of the class action, inasmuch as following the certification, the suit was that of all of the members of the group, and at all events, it was possible to replace a representative plaintiff who lacked a person grounds of claim, by force of s.8(c) (2) of the Class Actions Law

Regarding the existence of the ground of misleading, the Court noted that in fact it was not disputed that Tnuva misled its consumers and added that "misleading" is too delicate a word to describe Tnuva's conduct, which bordered on consumer fraud". This act of misleading, he added ,was done intentionally with respect to matters that were most definitely essential from the consumers' perspective, because it was an act of misleading regarding the essence and nature of the product (s. 2(a)(1) of the Consumer Protection Law), its components (section 2(a) (2) of the Consumer Protection Law), the risks involved in its use (s. 2(a)(4) of the Consumer Protection Law), and relating to its compliance with the standard (2(a) (11) of the Consumer Protection Law). The Court stressed in this context that the milk was a product that was supposed to be "as pure and natural as possible" and that to a large degree it was consumed by a relatively vulnerable population. It should also be added that the misleading in this case was compounded with the breaching of the obligations imposed on Tnuva by force of the Standards Law, and in this context the Court addressed the fact that the Israel Standard relating to drinking milk which prohibited the addition of silicon to milk is a binding official standard which also involves (as opposed to the "general" Israeli standard) "significant obligations", and it is prohibited to produce or to trade in a product that does not comply with its conditions.  By the same token, Tnuva did not indicate the existence of the silicon supplement on the packaging, and in doing so breached its disclosure duties pursuant to section 4(a) of the Consumer Protection Law, because the product that did not meet the requirements of the standard and was substantively defective and in accordance with section 17 (a) of the Consumer Protection Law.  The Court further held that once it was proved that Tnuva as a dealer had made a misleading representation, the assumption should be that the consumers were exposed to the representation and acted upon it, and the Court emphasized that misleading with respect to the Consumer Protection law can also take place by way of failure to make proper disclosure. In this context the Court further ruled that it was not necessary to prove what exactly each consumer knew and the presumption was that the consumer placed his trust in the dealer and there were no grounds for imposing a duty upon the consumer to clarify whether the product he had purchased complied with the requirements of the Law or the standard.  In view of this the Court ruled that in the case before us the foundation of misleading was fulfilled.

9.    In referring to the rule established in CA 1977/97 Barazani v. Bezeq Israel Telecommunications Company Ltd, [2] at p. 584 (hereinafter "Barazani"); and FHC 5712/01 Barazani v. Bezeq Israel Telecommunications Company Ltd [3] at p. 386  (2003) (hereinafter Further Hearing Barazani the Court noted that the misleading of a consumer constitutes a grounds in tort, by force of the provision of s. 31 (a) of the Consumer Protection Law, and that as such, it was subject to the "doctrinal first principles of the Tort Ordinance [New Version]. The Court further added that even if it was a conduct based grounds (as opposed to consequential) for the purposes of the receiving compensation it was necessary to prove damage and a causal connection between the act of misleading and the damage, as wall as the consumer's awareness of the misleading picture and his reliance thereupon. In our case, so ruled the Court, there was misleading by way of omission, "and it is undisputed that the consumers relied on the fact that the milk that Tnuva produced complied with the requirements of the Law and the standard also indicating that Tnuva never claimed to the contrary.

Regarding the categories of damage by dint of which the action was approved as a class action, the Court noted that these included "non pecuniary, non-tangible, damage that included  negative feelings, such as the feelings of disgust, mental anguish and discomfort, as well as the infringement of individual autonomy" , the thrust of which was the right to formulate a decision  whether to agree to a certain proceeding, in a considered, intelligent and informed manner and with knowledge of the relevant facts. The Court further noted that the non-pecuniary damage caused as a result of the infringement of autonomy admitted of compensation even in the absence of bodily damage, in accordance with the criteria established CA 2781/93 Daaka v. Carmel Hospital, Haifa  [4] 526 (hereinafter – Daaka).  In that context the Court rejected Tnuva's claim that the suit should be rejected given that the injury falls into the category of a "trivial matter", holding that that fact of the damage being mild need not stand in the plaintiff's way, and the very fact that the act damaged the public at large indicates that the act is not trivial.  According to the Court's approach, the severity of the act in this case must be assessed from the perspective of the group in its entirety and not that of the individual consumer.  According to this approach an act consisting of the misleading of the broad consumer public regarding the contents and legality of the production of milk, which is a basic product, cannot be considered as "trivial"..

Regarding the proof of personal damage that was caused to  Raabi, the Court adopted the essence of his claim, which was that as a result of his exposure to the case he experienced negative feelings such as disgust, anger and annoyance by reason of the fraud  and anxiety regarding the consequences of drinking.  The Court noted that though it could be argued that Raabi's feelings were "exaggerated" it was not possible to argue with subjective feelings., and it rejected Tnuva's claim that his feelings stemmed from the publications in the media according to which silicon is suspected of being a carcegengous product. Regarding the damage caused to the members of the group, the Court noted that in principle they were obligated to prove the alleged damaged that they sustained, but that in a mass collective action, as in the case before us, it is not practically possible for each one of the members of the group testify, or even to actually locate all of the milk consumers.  Referring to Regulation 9 (c ) of the Consumer Protection (Procedure for a Class Action), 5755-1995, and s. 20 of the Class Actions Law, the Court ruled that under these circumstances it would suffice to prove the damage in "from a general perspective". The Court noted that the representative plaintiffs had sufficed with the testimony of Mr. Raabi and in the expert opinion prepared by the experts Prof. Mevorach and Dr. Katz on behalf of Maagar Mohot based on a telephone consumer survey (hereinafter: “computer survey”), and that they should rather have filed the affidavits of a number of consumers; however, its position was that the evidence filed was sufficient for the proof of the damage and the determination of its rate, and in this context the Court rejected the claims raised by Tnuva against the consumer survey and its reliability, noting inter alia that drafters of the expert opinion had made a reliable impression, and that they had knowledge and experience in their field.

10.  Giving detailed consideration to the results of the consumer survey the Court noted that the survey indicates that the range of negative feelings (including revulsion, anxiety, fear, anger hatred, disappointment) were to a large or intermediate degree shared by about 66% of the milk consumers. At the same time, the Court accepted Tnuva’s claim concerning a certain inconsistency between the data presented and its claim that in the fifth question, (pertaining to the time at which the negative feelings emerged) the interviewees should not have been presented with the representation whereby the publications concerning the health hazards of silicon were verified both by the Ministry of Health and by Tnuva. However, since the two questions defined by the Court as “cardinal” questions in the survey  (the feelings of the interviewees and the grading of their severity) were asked before the question tainted with the aforementioned defect,  the Court deemed that there was no concern  that the survey  was  biased. The Court was prepared to assume, to be on the safe side,  that the survey’s findings tended to somewhat exaggerate the negative feelings, but ruled that this did not lead to the conclusion that the survey was defective in its entirety, and it further held that it had been persuaded that the survey was adequately grounded and that its findings were consistent with plain common sense.

In this context the Court further added that Tnuva on its part had sufficed with claims against the consumers survey presented by the representative plaintiffs, but did not present its own consumer survey from the relevant period and one can only wonder why. Accordingly, despite the element of exaggeration evident in the survey data presented by the plaintiffs, the Court deemed that its conclusion should be accepted, namely that various non-pecuniary damages were caused to the majority of the consumers, unrelated to the question of the health hazards involved in the consumption of milk containing silicon. On this count the Court dismissed Tnuva’s claims, based on the survey conducted by Prof. Gotlieb on its behalf in 2004 and the expert opinion of Prof. Hornik and Prof. Perry that it had submitted.  The Court stated that indeed there is a hierarchy in the categories of infringements of individual autonomy, but this, and the conceivable existence of damages graver than those in the case at hand, does not compel the conclusion that Tnuva’s conduct did not cause a substantial infringement of the consumer’s autonomy. The Court also rejected additional arguments made by Tnuva concerning the proof of the damage in this case, pointing out, inter alia, that for purposes of proving the damages head of infringement of autonomy it was not necessary to prove that the plaintiff would have refrained from acting in the manner that he acted had he been aware of the true situation, and for our purposes – that the consumers would have refrained from purchasing the milk had they known that it contained silicon.  A fortiori there is an infringement of the  consumers’ autonomy when it can be reasonably assumed that most of them, indeed, would not have purchased the milk had they known that the “classic health product” was actually manufactured in defiance of the Law and the standard, using silicon at a rate that was ten times greater than the rate permitted in other food products, and especially if they had known that some of the experts maintain that consumption of milk containing silicon may be a health hazard.  In this context the Court rejected Tnuva’s argument that silicon is a food supplement in other food products and is not harmful, pointing out that the silicon was purchased by Tnuva as a cleaning product, and which was not supposed to have been in the milk. The Court further noted that the infringement of individual autonomy emerges clearly from the consumers’ survey, but its approach was that it was not necessary to produce evidence of this damage – “the infringement of autonomy occurs along with the violation of the obligation to provide the consumer with all of the information, and the violation is an immanent result of tortuous conduct. The denial of the consumers’ right to decide whether to purchase and consume Tnuva milk, in a balanced, informed and knowing manner, being aware of the relevant facts, constitutes independent remunerable  damage, even in the absence of any other damage, and even absent proof that the consumers would have avoided purchasing the milk had they known all the facts”.  The Court added that the fact that Tnuva concealed  the insertion of the silicon into the milk from its consumers, combined with the fact that this was a matter critical for the consumers, is proof of the infringement of the consumer's autonomy in terms of being denied the right to choose the product of his choice in a considered, intelligent and informed manner, in other words the right to prefer a product that does not contain silicon manufactured in compliance with the requirements of the law and the standard. The Court further ruled that the right to autonomy is a basic constitutional right, the infringement of which mandates a appropriate and significant compensation.

11.  Regarding the evaluation of the damage the Court held that it was appropriate to have consideration for the gravity of the infringement of the right on Tnuva’s part in this case, and the infringement’s influence on the consumers’ decision and its degree of importance for them (in as much as the issue concerns a basic, “pure” product consumed by a vulnerable population. The Court added that even after giving consideration for the fact that the feelings of the interviewees may have been significantly affected by the media publications concerning the health hazard attendant to the consumption of milk containing silicon, half of those asked experienced negative feelings that are unrelated to anxiety, and it ruled that feelings of anxiety do not necessarily stem from the publications, but rather from Tnuva’s conduct. In this context the Court rejected the claim that the media publications severed the causal connection between the acts of Tnuva and the damage, stressing that the consumer cannot be expected to undertake an in-depth investigation of medical studies before he purchases milk, and if the addition of silicon to the milk was proscribed by law and the standard, and there are experts who deem that it may constitute a health hazard under certain circumstances, then the fear of the consumers is understandable and natural. This concern, it was ruled intensifies the infringement of the consumer’s autonomy,  just as it intensifies the accompanying negative feelings. The consumer is permitted to assume, and presumably did assume that the milk standard is intended to protect his health , and when Tnuva absolutely ignored the standard, the fear for health is justified and well based, even without the publications to the effect that silicon is suspected of being carcegenerous.

Accordingly, it was held that it had been proved that the group in its entirety had incurred damage by reason of infringement of individual autonomy.  The Court further determined that about a half of the group’s members suffered non-pecuniary damage that found expression in various negative feelings, based on the consumers' survey and an estimation that took into account the possibility that exaggerated media publications had partially contributed to the negative feelings.

Regarding the size of the group, in other words, the number of consumers in Israel who purchased the silicon during the determining period (between 23 October, 1994 and September 1995) for domestic needs, or for hotels, restaurants and cafes, the Court endorsed the expert opinion of  Ofir, the court expert, being impressed by his reliability and expertise, and preferring it over the expert opinions submitted by Tnuva.   The Court further mentioned that Ofir had determined (based on the weighted average of the various methods of calculation) that 166, 307 households had purchased the milk, but given that in an average household a number of people purchase milk, Ofer determined that the number of people who had purchased the milk ranged between 166,307 (number of households) and 330,000  (adult purchasers) with a tendency towards the lower number. This being so, the Court determined that the number of members in the group, i.e. the adults who purchased the milk during the relevant period, was 220,000 people, and that the members of this group were entitled to compensation for an infringement of their autonomy and a half of them were entitled to additional compensation by reason of negative feelings.  

12.  The plaintiffs requested that the remedy be calculated the sum of the damages to be awarded to each one of them  multiplied by their total numbers and in this context the Court noted that the high road was indeed that of individual compensation for each member of the group (sections 20(a)(1) and 20 (a) (2) of the Class Actions Law). This however is only possible when the number of members in the group is not large, when their identities are known and where they are able to prove their damage in the customary manner. On the other hand, there is a need for a certain degree of flexibility in proving damage when there is a practical difficulty of requiring each group members to prove his claim in the customary manner (by reason of their large numbers or because they cannot be expected to retain the relevant documents), and also where there is no practical means of locating all the members of the group  or where many of them will simply not bother to prove their damage due to its low rate. To overcome the difficulties involved in proving damage, its allocation and quantification in such cases, case law in the U.S.A developed a mechanism known as (FCR) Fluid Class Recovery, which was dwelt upon extensively by this Court. The Court did not ignore the fact that the case law in the U.S.A in this context is not uniform  but deemed that with the necessary caution “ideas can be drawn from it” for our purposes, while stressing that from the Explanatory Note to the Class Actions Law it emerges that the Israeli legislator “had this mechanism”. The Court referred to section 20(a) (3) of the Class Actions Law in accordance with which the Court is entitled to award overall compensation to a group, indicating that this section refers to the granting of a personal remedy to the members of the group and seeks to overcome the difficulty in calculating personal damage. The Court likewise referred to section 20 (c ) of the Law that allows an award of a general compensation to the public  or to the members of group, all of them or in part, while pointing out that this section is intended for cases in which it is not possible to locate the members of the group or to pay them compensation on a personal basis, notwithstanding that for purposes of granting this remedy too it is appropriate “to attempt to evaluate the sum of personal compensation owing to each individual member of the group in order to determine the sum of the overall compensation, and to ascertain that the sum of overall compensation does not exceed the estimated sum of aggregate damage that was caused to the group members…. it is likewise important to determine, at least by way of estimation the number of members in the group. This will assist the court to determine in the most accurate manner possible the overall sum for the group, for purposes of granting a remedy to the group or to the public” (para. 107 of decision).

On the other hand, the Court stressed that this sum of overall compensation does not necessarily reflect the product of the sum of personal damage suffered by each member multiplied by the number of members in the group, and some of the group’s members may actually not receive compensation at all, whereas other, non-members, will benefit from the compensation. The Court further added that the infringement of autonomy and the “negative feelings” in this case are at all events non-pecuniary damages the determination of which by definition requires estimation and hence by nature cannot be precise.  Accordingly, it is possible to determine the compensation for non-pecuniary damage by way of estimation alone and then to multiply it by the number of members in the group, which can similarly be determined on the basis of estimation, or the global payment can be determined by way of estimation. The Court mentioned that at all events, the unavoidable reality of it being an estimate need not negate the granting of a remedy in the group’s benefit. The Court did not ignore the fact that section 20 (a)(3) of the Law states that the court may award an overall pecuniary compensation that will be divided between the members of the group, provided that it admitted of “precise calculation” but it deemed that this term should be interpreted in accordance with the purpose of the law and the section.  The Court further mentioned that this term is missing from section 20 (c ) of the Law, which deals with a remedy for the benefit of a group or the public and that s. 20 (e) of the Law stressed that the demand for the proof of damage would not prevent compensation for non-pecuniary damage. The Court further mentioned that occasionally the practical goal of the legal process requires that compensation be awarded in accordance with a uniform criterion even if it is clear that there are differences between the various plaintiffs, and this is the case at hand. The Court addressed the consumers survey that was presented and ruled that it proved the damage relating to the negative feelings in accordance with the degree of certainty required in a civil proceeding, especially having consideration for the fact that it only concerned the criterion or calculating the global compensation that could be determined on the basis of an evaluation. Similarly, the Court noted that in the decision pertaining to application for confirmation of the suit as a class action, the Supreme Court assumed that there was no escaping the award of compensation for the benefit of the group, and it further mentioned that Tnuva’s claims in the respect undermine the decision to approve the suit as a class action. The Court further rejected Tnuva’s alternative claim to the effect that at the very most it was possible to base the compensation on “wrongful profit” that it gained by reason of the acts forming the subject of the suit. The Court likewise rejected Tnuva’s claim that at the end of the day it had only incurred losses by reason of the affair and as such it had no wrongfully gained profits. The additional claim raised by Tnuva as an alternative claim, argued that the profit made reached amounted to NIS 350,000 only and it was likewise rejected by the Court

Regarding the determination of the damage, the Court stressed that in its claim sheets Tnuva did not refer to section 20 (d)(2) of the Class Actions Claim which authorized the court to have consideration for the damage liable to be caused to the defendant or to the public requiring its services due to the payment of the compensation.  All the same, and even though no claims or explicit data was presented to it regarding this matter, the Court ruled that the evidential material indicated that the compensation would not impair the ongoing activity of Tnuva or jeopardize its economic stability and that at the very most, the compensation would have a negative effect on its profits in the near future. The Court similarly emphasized that in order to achieve the aims that are at basis of the class action, the remedy for the plaintiff groups must be efficient and substantive.    

13.  For all of the reasons mentioned, the Court decided on a monetary remedy in favor of the group, by force of s. 20 (c) of the Class Actions Law, to be calculated on the basis of an identical sum for each member of the group. The Court further ruled that awarding compensation for the sum of NIS 8000 for each member of the group, as requested by the representative plaintiffs, was perhaps appropriate for a personal claim, but in this particular class action would have meant a monetary remedy amounting to an overall sum of NIS 1.76 billion, which is unreasonable. Having consideration for the entirety of the data, the Court ruled that Tnuva should pay a global sum of NIS 55 million, which reflects personal damage at the sum of NIS 250 for each member of the group (NIS 250 X 220,000), while pointing out that this sum, and even in excess thereof, was most definitely suffered by each members of the group, even if only by reason of the breach of individual autonomy.

The Court further determined that the sole practical remedy was the remedy in favor of the group, which should be divided in accordance with three objectives:

       (1)        Awarding a benefit to the members of the group by  reducing the price of the product (or increasing its contents without raising the price). The Court noted the difficulties involved in the realization of this remedy, noting that its certification would require an economic expert opinion, the certification of the Director of Antitrust and the position of the Attorney General, and supervision of its execution by force of s. 20 (f) of the Law;

  1. Transfer of  part of the compensation sum to a research and scholarship fund in the field of food and nutrition which have implications for public health
  2. Distribution of milk free of charge to populations in need via non-profit organizations so involved.

The Court further ruled that “the allocation of the sum between the three approved objectives will be determined after it becomes possible to confirm the discount from the price, in accordance with the conditions determined, and after an allocation plan is filed for the two other objectives”, and it noted that it could be expected that the parties would reach agreement concerning the manner of allocation of the sum of compensation in accordance with the above, so that the Court would not be compelled to enforce a settlement upon them.

Regarding the compensation for the representative plaintiffs and the legal fees for their attorney, the Court noted that the application for a legal fees award for the sum of NIS 400 million is unreasonable and unfounded. It further ruled that at that stage the compensation and legal fees should not awarded given that the final conclusions had yet to be drawn regarding the manner of allocating the overall sum of compensation, but after having considered the criteria for the determination of the rate of  legal fees and compensation, the Court ordered the payment of an intermediate sum “against the account of the final sums” as follows: compensation to Raabi's heirs for the sum of NIS 150,000; compensation to the Consumers Council for the sum of NIS 250,000; legal fees for the sum of NIS 500,000; and court expenses for the sum of NIS 100,000.

Tnuva rejected the partial decision of the trial court and appealed against it in this Court (CA 10085/08; hereinafter – the Tnuva appeal); the representative plaintiffs on their part filed a counter appeal against the decision (hereinafter: the appeal of the representative plaintiffs) but before the hearing of these appeals, the District Court gave a supplementary decision

The Supplementary Decision of the District Court –

The Final Compensation and Legal Fees Awarded and the Manner of Allocating the Compensation

14.  In the supplementary decision of 17 June 2009, the District Court gave effect to the agreements reached by the parties, with the cooperation and the agreement of the Attorney General. The agreements were as follows: (a) The allocation between the three objectives would be – the discounts arrangement 22%, the research and scholarship fund 33.33%, and the distribution of milk products to the needy 44.6%; (b) the distribution of milk products (not only the long lasting milk forming the subject of the suit) would be over a period of five years, beginning as of the commencement of fulfillment of the decision, via a NPO known as "Latet" ["To give" – Trans.] and Mishulhan leShulhan  ["From One Table to another Table" – Trans.]; (c )For purposes of transferring the compensation for research purposes in the field of food and nutrition, a research fund would be established, headed by the Chief Scientist of the Ministry of Health. The management of the fund (whose members are stipulated in the agreement) will select the research programs that will be entitled to the scholarships and supervise them. The sum of the compensation will be utilized over a period of five years, unless the need arises to continue to use the sum thereafter as well; (d) the particulars of the discounts arrangement will be formulated following the decision on the appeal filed against the partial decision and will be based on the existing data at that time and will apply to all categories of long lasting milk (1% to 3% fat)  and will be completed within five years from the commencement of execution. This arrangement merited the certification of the Director of Antitrust but the Court noted that there might be a need to return to the Court in the event of a significant time period passing until the beginning of its execution. The Court further mentioned that should the parties fail to agree on the details of the discounts arrangements, it would appoint an expert to determine its details. The Court further added that the execution of the partial decision in accordance with the agreements specified would be delayed until  a decision was given on the appeal that was filed against it.

Regarding the final compensation and legal fees the Court ruled that the interim sums determined in the decision were to be supplemented by the following sums: Raabi’s heirs would receive compensation for the sum of NIS 350,000; the Consumer Council would receive compensation for the sum of NIS 750,000; the attorneys of the representative plaintiffs would receive the sum of NIS 2,000,000 and regarding this the parties agreed that the compensation would be paid within thirty days of handing down the supplementary decision, as well as 60% of the fees that was to be awarded and that payment of the balance would be postponed until after the decision on the appeal. Finally, the Court ruled that an advertisement should be published in the three main newspapers, including the central elements of the decision.

The parties have also challenged the supplementary decision before us.  The representative plaintiffs on their part appealed this decision ( CA 6339/09) and Tnuva too  has requested our intervention (CA 7607/09). The parties' claims in the appeals against the partial decision and the supplementary decision (which will hereinafter be jointly referred to as “the decision” were filed together). 

Tnuva’s Claims

  1. Tnuva claims that the Lower Court's decision should be overturned, and alternatively that the sum of compensation ruled against it should be significantly reduced. They claimed that the District Court had aimed at accepting the class action and had avoided the accepted procedural rules. Tnuva further argues that from the decision it emerges that the basic principles of tort law do not apply to consumer class actions for non-pecuniary damage, and that this unlawfully defies the parameters of the Class Actions law contrary to its language, its guiding principles and in defiance of the law determined in the further hearing in the matter of Barazni [2] . Tnuva claimed that the Lower Court actually cancelled the requirement for a causal connection between the misleading and the damage, and emphasizes that in the decision in the matter of Daaka [4] the infringement of the autonomy stemmed from the urgency of the information and its centrality in the individual decision making process. It follows that when the information does not influence the individual decision making process there is no basis for awarding him compensation. Alternatively Tnuva claims that if the  Daaka  [4]  decision is interpreted as a decision that which abandons the requirement of the causal connection, it should be restricted to its specific context and the exceptional circumstances in that case that pertained to the infringement of  informed consent to medical treatment, and it claimed that a deviation from the classical rules of tort is not justified in the context of the tort consumer deception and deviates from the Supreme Court’s decision in the Barazani Further Hearing [3]  Here, Tnuva refers to the Court’s decision to the effect that for purposes of compensation under the tort head of infringement of autonomy, there is no requirement for an examination of the personal particulars of each victim, and the conclusion is that the victim himself does not constitute a factor in the calculating formula

Tnuva further claims that the representative plaintiffs did not prove that they incurred any damage as a result of its acts and that in fact, the damage was caused as a result of media publications and not as a result of the negating of their choice in purchasing milk. Tnuva further claims that  the Court erred in its estimation of the  sum of compensation in a uniform manner for all members of the group, notwithstanding the differentiation in the sum of compensation that the members of the group are prima facie entitled to based on their personal particulars. Its claim, which it seeks to anchor in the Israeli and American case law, is that non-pecuniary damages are by definition individual and cannot be assessed in a uniform manner, and that they include the damage caused by infringement of autonomy which likewise is individual-subjective. Furthermore, Tnuva claims that in the case at hand compensation for the group and the public should not have been awarded and that at all event there was no basis for calculating the overall damage based on a simple multiple of the number of members in the group by the rate of personal damage. Tnuva also claims that the sum assessed by the Court as representing the damage from which each member of the plaintiffs group suffered  - NIS 250 – is an arbitrary sum that was determined without any supporting evidence and without giving any substantive reasons for the manner of its determination.  In addition, Tnuva points out that in awarding a uniform damage the Court failed to distinguish between the members of the group, who according to its own determination had suffered from negative feelings as a result of the consumption of the milk, and those who did not suffer these feelings; nor did it distinguish between those for whom the fact of the addition of the silicon would have influenced the decision to consume the milk and those for whom it would not have influenced is consumer conduct.

16.  Tnuva also claims that the overall compensation awarded by the Court is exaggerated and unprecedented and it stressed that its entire profits from the sale of milk during the relevant period stood at  NIS 3.4 million. The claim was that the Court actually awarded penal compensation as attested to by the “penal” terminology that is used in the decision, even though this has not place in the framework of a class action, in accordance with the provisions of section 20 (e) of the Law.

Tnuva found an outstanding example of this in the Court’s rulings regarding the health hazard in the consumption of food containing silicon and argued that the sole purpose of the discussion of the matter was to clarify to the reader exactly “why Tnuva is deserving of a punishment”. Tnuva claims that in this matter the Court handed down contradictory decisions as well as decisions that contradict that which was stated in the decision relating to the certification application. It further argues that the trial court avoided the exercise of its authority to rule on the veracity of the claims of the representative plaintiffs, and that it imposed a “featherweight” evidentiary because it contented itself with the existence of a few studies (which were presented to it incidentally), without ruling on their veracity, and without having been presented with a detailed expert opinion on the matter. Tnuva emphasized that the official standard prohibited the addition of any substance to the milk (apart from Vitamin A or D  in particular circumstances) and did not relate specifically to the addition of silicon. Similarly, Tnuva claimed that the official force of the standard had already expired in 1998 and that it was no longer binding upon milk producers, and that in other standards it had been permitted to add silicon to food products, even to such as are consumed by infants, in quantities similar to those that it added to the long standing milk and in dimensions in excess of those involved in the case at hand. Tnuva further added that the trial court’s determination that the health hazard could be inferred from the very violation of the standard was unfounded and was actually in contravention of the provision of s. 17C (a) of the Standards Law. Tnuva further argued that the absence of a health hazard from the consumption of silicon may be inferred from the Danon Committee Report and the holdings of the court in the criminal proceeding conducted against it. At all events, its approach was that even given a determination of the possibility of a health hazard, this would not constitute sufficient basis for a ruling of compensation, because compensation cannot be ruled  based on a possibility, not proven, of negative feelings being caused by a theoretical risk to health.  In this context Tnuva added that the Court’s determination to the effect that milk is a “natural and pure” product cannot stand, because the consumer conception is that milk is a processed product that contains different food supplements and only a minority of consumers are of the opinion that was presented by the Lower Court.  Tnuva also dwelt on the discrepancy between the compensation awarded in the case at hand and the compensation ruled in other class actions.

17.  Tnuva further claimed that s. 20 (c ) of the Class Actions Law establishes  compensation for cases in which there is  no possibility of determining or locating the members of the plaintiff group, and hence the Lower Court erred when determining that the section applies when it is not possible to determine the sum of the damage.  Tnuva stresses that the section was not intended to “supersede” the regular rules of evidence and to enable an arbitrary determination of the amount of scope of the damage and sums of compensation. Furthermore, Tnuva argues that the Lower Court erred in determining that the compensation mechanism of s. 20 (a)(c) of the Law differed from that of s. 20 (c) of the Law, claiming that compensation under s.20( c) was also subject to the requirement of “precise calculation” prescribed in s. 20 (a)(c ) of the Law.  Accordingly, compensation for the public benefit or for the benefit of a particular group can only be awarded when personal compensation would not be practical were the requirement of “precise calculation” to be complied with.  Tnuva submitted that insofar as the case at hand does not admit of accurate calculation of the damage or even estimation based on “stable” statistical data, the Court had no choice other than to reject the suit. Tnuva further added that in the U.S.A., when there is no possibility of accurately calculating the damage to a group or where the damage is non-pecuniary, the Court does not approve the filing of a class action.

Alternatively, Tnuva claims that even if the case at hand warrants the ruling of compensation for the benefit of the group’s members, it should not have been assessed in the manner adopted by the Lower Court.  Its argument was that since the damage caused to each member of the group cannot be determined it is not correct to arbitrarily determine the compensation based on multiplying any particular sum of damage by the number of members in the group. Rather, it should be based on the "wrongful profit" that it accumulated.  Tnuva claims that compensation based on calculation of profit overcomes the difficulties in the case before us: it would  reflect the consequences of the event that gave rise to the suit; it would prevent the difficulty of assessing non-pecuniary damage and the unified "pricing" of the negative feelings, despite the differences between the members of the group. It will also prevent the difficulty of assessing damages in accordance with unsubstantiated surveys. According to Tnuva, the profit it gained from the execution of the wrong is NIS 1,645,900 in the terms of the principal, and with the addition of the interest and linkage differentials (from the middle of the period) it  comes out to NIS 4,981,616.  Alternatively, Tnuva claims that the compensation should be calculated based on the sum saved by using the silicon to solve the problem of frothing, which comes out to  USA$400,000 (which with the addition of linkage differentials and interests comes out to NIS4, 346,991). It was claimed that this sum can be supplemented by a reasonable deterrent factor. In addition, Tnuva claims that even if it be determined that the number of members of the group should be multiplied by any particular sum of damage, certain substantive defects in the method of evaluation  conducted by the Lower Court must still be remedied. Its claim was that this multiplication should only include consumers who suffer from substantive negative feelings due to the consumption of milk and it should not include feelings related to "positions or viewpoints" which they hold as a result of the Tnuva's conduct (such as temerity and contempt).  Tnuva's position is that based on the data presented in the court, consumers who answer that definition constitute about 15% of the members of the group defined by the District Court. Tnuva also maintains that the number of members in the group should be fixed at 166,000 (the minimal threshold determined in Ophir's expert opinion) and alternatively at 200,000 (allegedly claimed by Ophir in his testimony.

18.  Tnuva further claims that the sum awarded by the Lower Court for remuneration and legal fees is excessively high, emphasizing that it constitutes 7% of the total sum of compensation. In addition, it claims that this sum deviates from the  guiding criterion for such matters, prescribed in the Law (ss. 22 and 23 of the Law)  and in settled case-law. Regarding the Israeli Consumer Council Tnuva argues that the former did not invest significant work, nor did it assume any risk; that it is a budgeted statutory body and not a private person who requires incentives; that the Consumer Council did not initiate the proceeding and joined it at a relatively late stage; and finally, that its degree of involvement was minimal and negligible. Regarding the legal fees of the representative plaintiff's attorneys, Tnuva claims that the fee is unprecedented, that has no consideration for the manner in which the suit was handled and the discrepancy between the remedies that were requested and those that were ultimately awarded, and adds that the sums awarded by the  Lower Court are liable to pave the way towards abuse of the tool of the class action.

Claims of the Representative Plaintiffs

19.  In the counter appeal, the representative plaintiffs claim that  given the Court's holding that the sum of NIS 8000 for each consumer is appropriate for a personal claim, there is no justification for reducing it to NIS 250 just because the context is that  of a class action. They stressed that Tnuva too did not claim that the defense under s. 20 (d)(2) of the Class Actions Law was applicable to this case.  The representative plaintiffs further claim that the reduction of the compensation empties the class action proceeding of its contents and is inconsistent with the Court's determinations to the effect that grave damage was caused, justifying commensurate compensation. The representative plaintiffs add that increasing the compensation sum will not harm the public, inter alia having consideration for the sales data and profits of Tnuva, and they complain that the group of those represented was significantly reduced, to include only those who purchased the milk regularly, whereas it should also have included incidental purchasers.  They add that the sole reason for the reduction of the group was that Tnuva provided partial information to the court expert who was appointed for purposes of assessing the size of the group.

The representative plaintiffs further claim that Tnuva's pleadings ignore the decision given on the certification application, in an attempt to revisit an already settled matter. Regarding Tnuva's claims concerning the health risks posed by the milk, the representative plaintiffs claim that the Lower Court ruled on this matter in the wake of Tnuva's request to present evidence on the matter and that the findings themselves were over and above what was required. According to the representative plaintiffs, the very prohibition on the addition of silicon to the milk in an official, binding standard (published as a regulation of legislative effect) and its breach, combine to establish the grounds for claim in the framework of the suit. In addition, there was proof of the grounds for action under the Consumer Protection Law (also having consideration for the provisions of the Standards Law). It was proven that silicon posed a potential health hazard, and it was proven that Silicon was aware of the problem and of the defect involved in the addition of silicon to the milk. In this context the representative plaintiffs stress that when Tnuva purchased the silicon from the Amgal company, it made a representation that it was purchasing it as a cleaning material and they also stress that silicon was added to the milk at a rate that was ten times higher than the level permitted under the provisions of the silicon producer for purposes of using silicon in food (they claim that the silicon was added at a rate of one liter per 10000 liters of milk, whereas according to the manufacturer’s instructions it is permitted to add it at the rate of a “ten parts for a million”). The representative plaintiffs further claim that both in relation to Raabi and in relation to the group as a whole, damages had been proved with respect to infringement of autonomy and negative feelings relating to the consumption of milk. The representative plaintiffs stress that in this context it was proved that had the consumers been aware of the existence of silicon in the milk they would not have purchased it, and this is by virtue of both the importance of the official standard and the fact that its breach renders the product “worthless at best”. The representative plaintiffs also add that there are likewise no grounds for interfering with the findings of the Court regarding the occurrence of damage and the gravity of Tnuva’s acts in view of the positive impression made by the witnesses and the experts on behalf of the court. They also stress that the autonomy of the individual is a constitutional right, and hence its infringement should merit commensurate compensation, and they claim that this does not constitute an award of punitive compensation.

The representative plaintiffs add that there are no grounds for interfering with the Lower Court ’s holding that the damage caused as a result of the infringement of autonomy is an inherent element of the tortuous conduct, and that this is also the conclusion from the Daaka [ 4 ] ruling. In addition, they claim that in the present case it is appropriate to award uniform compensation based on an assessment stating that inasmuch as the right to autonomy is a constitutional right, it is an identical right for each member of the group, and that the provisions of the Class Actions Law enable a cumulative calculation of the damage incurred by all the members of the group. They further add that the damage caused in this case is essentially given to assessment by way of estimation; that the arrangements in the Law enable the proof of damage in a manner that is not particularistic and individually based but rather general and all inclusive and that the tendency in case law is consistent with the need to award uniform and equal compensation to all of the plaintiffs as such. The representative plaintiffs stress that this result does not contradict the ruling given in the Barazani Further Hearing [3] and they add that as opposed to Tnuva’s argument, the FCR mechanism does not negate awarding compensation in cases of this kind, indicating that in certain cases American case law awarded “average compensation” multiplied by the estimated number of members in the group. They further state that the FCR mechanism is essentially intended for the distribution of overall compensation, and that the current criticism of this mechanism pertains to the question of distribution of compensation to a group or the public and not to the manner of evaluation of the compensation in accordance therewith.  

20.  The representative plaintiffs further request to dismiss Tnuva’s argument for reducing the sum of compensation owing to them, emphasizing that the compensation  awarded to them constituted a mere  2.5% of the sum ruled in favor of the group as a whole. The attorneys for the representative plaintiffs argue that in fact the Court “punished” them for the discrepancy between the sum ruled in favor of the group (which was unjustifiably reduced) and the remedy which they petitioned for in the name of their principals. Their argument is that in this context the Court mistakenly applied the provision of s. 23 (b) (5) (which provides that in ruling attorneys fees the court may have consideration for the discrepancy between the remedy sued for and the remedy actually awarded), and that it failed to consider all the relevant factors  The attorneys for the representative plaintiffs claimed that they had done a significant amount of work, directing attention to the novel claims that they raised in the proceeding, and they challenged the Lower Court ’s determination that part of the proceeding had not been properly conducted, pointing out that all of their objections had been relevant.

The Class Action and the Consumer Protection Laws -  Meeting of Principles

21.The class action is a special procedural tool for the effective and efficient promotion of principles, values and substantive legal rights. This legal institution is currently regulated in the Class Actions Law which is a comprehensive and detailed framework law that established standard rules for the filing and conducting of class actions. The Law was enacted in 2006 after this Court called upon the legislator to regulate the institution of a class action in a comprehensive statutory arrangement (see LCA 3126/00 State of Israel v. E.S.T. Project Management and Manpower Ltd [5]; FHC 5161/03  E.S.T  Project Management and Manpower Ltd v. State of Israel [6],  but the importance of the class action had been recognized in Israel many years before the enactment of the Class Actions Law. Thus, a series of laws and “local” arrangements relating to the filing and conduct of class actions was already in place, most of which were incorporated as chapters in those laws during the nineties of the previous century. They included provisions that are essentially similar to  the criteria and conditions the fulfillment of which enables the filing of a class action in that particular realm. See Chapter F’1 of the Restrictive Trade Practices Law,  5748-1988 (hereinafter – the Restrictive Trade Practices Law); Chapter F’1 of the Banking  (Service for Customer) Law, 5741-1981 (hereinafter – the Banking Law); ss. 19 (54)   - 19 (64) of the Equal Rights for Disabled Persons Law, 5758 – 1998; s. 11 of the Male and Female Workers Equal Pay Law 5756- 1996. All of these specific arrangements were repealed with the enactment of the Class Actions Law (see ss. 32 – 35, 38 – 40, and 42 of the Class Actions Law) and even before its enactment, the E.S.T [6] decision negated the possibility of basing a class action on Regulation 29 of the Civil Procedure Regulations, 5744-1984, which until that time had served as a normative source and a procedural framework for the filing of class actions in areas lacking a specific statutory arrangement as mentioned above.

This  importance of the class action was discussed by this Court both before and after the enactment of the Class Actions Law in a series of decisions that address its advantages as a legal tool for enabling the realization of the right to file a personal claim in cases where the filing of a claim was not profitable or not feasible for the individual. In addition, this Court’s case-law has dwelt upon the importance of the class action in the promotion of public interest as a legal tool that assists in the efficient enforcement of the law and deters financial magnates who rely on the passivity of the individual, abuse their power, and harm unincorporated groups such as consumers or investors in securities. An additional element of importance of the class action considered in the case-law is that this procedure prevents the multiplicity of suites and hence saves judicial resources, and from this perspective too, the institution of class actions makes its contribution from a public interest perspective (for the definition of the objectives and goals of the Class Action, see s.1 of the Class Actions Act; on this matter see also: CA. 8430/99 Analyst I.M.S. Trust Funds Management (1986) v. Ard Industrial Investment and Development, [7] at p. 256; 8 LCA 4556/94 Tetzet v. Zilbershatz, pp. 783-785 [8]; CA 345/03 Reichart v. Raabi Moshe Shemesh Heirs, paras. 8 – 9 of opinion of the President Beinisch [9]; Sinai Deutch “A Decade for the Class Action  Suit – Interim Summary and Looking to the Future  Shaarie Mishpat 4, 9, 21- 24 (5765) (hereinafter – Deutch -  Decade for the Class Action); Steven Goldstein and Talia Fisher “Interaction Between Mass Actions and Class Action:  Procedural Aspects”  Mishpatim 34, 21, 24- 26 (5764) (hereinafter – Goldstein and Fisher)).

Along with the inherent advantages of the class action it should be remembered that incorrect use of this tool involves not insignificant dangers (see Analyst  [7], at p 256; Tetzet [8], FHC E.S.T [6] at p. 785 [6] at p. 237; Alon Klement The Boundaries of the Class Action in Mass Tort”,  Mishpatim 34, 301, 325- 331 (5764) (hereinafter – Klement, Boundaries of the  Class Action)). The laws of class action and their judicial supervision are thus intended to maintain an appropriate balance between the risks and chances of the proceeding and to ensure  that it realizes the legal, economic and social goals for the promotion of which it was established (see CA 3506/09 Zaig v. Waxelman, Waxelman Accountants [10] paras. 7 – 8 ; and Tetzet [ 8] at pp. 785 – 786).

22.  One of the outstanding areas in which the advantages of the class action are demonstrated is the laws of consumer protection. Israeli legislation contains a large series of legislative acts intended for consumer protection. The central law in this context is the Consumer Protection Law, enacted in 1981. This law includes detailed provisions concerning the duties and prohibitions applicable to dealers, in other words, to manufacturers, importers, tradesmen  and providers of services, with the aim of subjecting the business sector to a regime of appropriate conventions of behavior, to establish fair game rules in dealer-consumer relations, and to prevent the misleading of consumers with regard to an asset or service that he consumes (on the goals of the Consumer Protection Law - see Sinai Deutch, Consumer Protection Law 120 – 126 (Vol. A. 2001); Explanatory Note for the Draft Bill (Hatza’ot Hok 1469, 302- 303, 5740).  Other laws intended for a similar purpose are for example, the Banking Law (Service to Customers), Supervision of Financial Services (Insurance) Law, 5741-1981 and the Restrictive Trade Practices Law. These laws and additional laws admitting of classification in the category of consumer protection law regulate various aspects of this protection and are intended to prevent unjust enrichment on the part of large financial concerns or on the part of State authorities, at the expense of the individual.  

The point of departure for consumer protection law is the structural imbalance that characterizes the consumer transaction when struck between a financial body, occasionally a large and multi-tentacled company, or even a retail trader and the individual consumer (assuming that he lacks the size advantage of organized consumption).  The legislator accordingly pinpointed this population sector as requiring intensified legislative protection to ensure that the dealer, having the advantages of knowledge and economic ability, does not misuse these advantages for reaping quick profits at the consumer’s expense, while deceiving him in essential matters affecting the nature of the transaction.  For example, the Consumer Protection Law seeks to ensure that when entering into a transaction the consumer has full and fair information concerning the nature and the details of the transaction, the assumption being that this will enable the consumer to plan his actions and enter into a transaction that is optimal and desirable from his perspective. Additional prohibitions in the Consumer Protection Law concern the exploitation of the consumer’s distress, exploitation of his physical or mental weakness, or his ignorance of the language, and the prohibition of exerting undue influence upon him (see CA 3613 Ezov v Jerusalem Municipality [11 ], at p. 801; LCA 8733/96 Langbert v. State of Israel – Israel Lands Administration [12], pp. 175- 176 (hereinafter – Langbert); Sinai Deutch “Consumer Class Actions: The Requirement for Personal Reliance on the Misrepresentation of the Deceiver” Nethanya Law Review 2, 97, 110 – 114 (5762) (hereinafter – Deutch, The Requirement for Personal Reliance). Apart from the importance of the consumer protection laws in redressing the imbalance of power between the dealer and the consumer and strengthening the consumer’s personal autonomy, these laws are also important in realizing public interest of inestimable importance such as: the notion of consumer sovereignty; protection of the right to welfare and social rights, promotion of the principle of fairness in trade, protection of the reliability of the local market, and maintaining trust in the social order and the provisions of the law.

23.  Having synoptically outlined the underlying objectives and goals of consumer protection law, and the objectives and goals of the class action as a legal procedural institution, we can easily identify the “meeting of principles” between the goals intended to be promoted by the class action tool and the values and rights that these laws seek to protect. Hence, the class action can overcome both the inbuilt balance of power between the dealers – those with the economic advantage - and the consumers, and the lack of profitability that frequently accompanies the filing of a claim by the isolated consumer, given the relatively small amount of damages he has incurred (See Barazani [2]; Deutch - The Requirement for Personal Reliance, 115. Regarding the systems for civil enforcement in the area of consumer protection, see Moshe Bar-Niv (Bornovski)).

Indeed, the tool of the class action is actually one of the most significant measures placed by the legislature at the consumer’s disposal for the enforcement of his rights under the laws of consumer protection (see Deutch – a Decade for the Class Action, 18 – 20 according to which most of the class actions filed in Israel are “consumer actions” by force of the various consumer laws.  On the other hand, the implementation of the provisions pertaining to consumer class actions has also been criticized. See Deutch “Consumer Class Actions – Difficulties and Proposed Solutions” Bar Ilan Law Studies 20,  299 (2004); see also CC (Center) 5567-06-08 (Nazareth) Bar v. Ateret Industries 1996 Ltd, para. 39  [  ] where the court observed that in many of the cases it would have been preferable had the consumer deception been handled in an alternate framework, such as the imposition of punitive compensation rather than as a class action proceeding). As mentioned, the provisions for filing a class action under the Consumer Protection Law used to be included in Chapter F’1 of that law, along with additional enforcement measures included therein, inter alia - the administrative mechanism in the charge of the Commissioner of Consumer Protection, and the Consumer Protection Authority, and the criminal system which purported to enforce the norms established by this law via the criminal law  With the enactment in 2006 of the Class Actions Law and the establishment of a comprehensive framework arrangement for the filing and conduct of class actions, came the revocation inter alia of Chapter F’1 of the Consumer Protection Law, so that as of today, as mentioned, the provisions of the Class Actions Law govern the filing and the conduct of class actions in all areas, including in the areas of consumer protection (see s. 3 of the Class Actions Law, and item 1 of the Second Schedule of the Law). 

Tnuva’s Act of Misleading

24.  The proceeding before us began with an application for the certification of a class action, filed in 1995 in reliance on the provisions of Chapter F’1 of the Consumer Protection Law. As described above in the chapter on the facts, already in 1996 the District Court approved the filing of Raabi’s personal claim as a class action, and Tnuva’s appeal against the certification decision was rejected by this Court in the year 2003 (CA 1338/97). The proceedings for the certification of the class action were similarly handled in accordance with the provisions of Chapter F’1 of the Consumer Protection Law then in force.  However, after the District Court began hearing the approved class action, the Class Actions Law was enacted, and as indicated by the decision of the Lower Court, its provisions provided the basis for the decision on various issues, including the provisions pertaining to the compensation and fees. The application of these provisions to our proceeding was correct, given the provision of s. 45 (b) of the Class Actions Law, which determines that the provisions of the Law (apart from the provision of s. 44) “shall also apply to application for a  certification of a class action and a class action that was pending before the court on the date of publication of this law” (see CA 7028/00 A.B.A. Trust Funds Management Ltd v. Elsynth Ltd [13] paras 16-18 ; HCJ 2171/06 Cohen v. Knesset Speaker [14] para. 46.  The Lower Court further added, and rightly so, that even though the Class Actions Law did not limit the grounds for a class action exclusively to the “consumer”, as defined in the Consumer Protection Law, the class action in this case should be adjudicated in accordance with the original grounds that were based on the Consumer Protection Law  and in relation to a consumer group answering the definition of “consumer” in that law (“one who purchases an asset…..primarily for his personal, domestic or family use”, given that the representative plaintiffs did not apply to amend the claim  and file additional evidence in the  wake of the new law, that broadened the circle of potential plaintiffs in this context (and see Alon Klement “Guidelines for the Interpretation of the Class Actions Law, 5766-2006), Hapraklit 49, 1354-135 (5767) (hereinafter – Klement).

25.    In the class action before us it is claimed that Tnuva violated the prohibition on misleading  established in s.2 of the Consumer Protection Law, which provides that

A dealer shall do nothing—by an act or an omission, in writing, by word of mouth or in any other manner—likely to mislead a consumer as to any matter material to a transaction (any such act or omission hereinafter referred to as a “misleading act”…)

The thrust of the misleading act ascribed to Tnuva is that Tnuva added silicon to low fat (1%) long lasting milk without this ingredient being mentioned on the packaging and in defiance of the official and binding standard in force at that time, and in so doing mislead the members of the group, consumers of long lasting milk regarding a “material aspect of the transaction” pertaining to the “the quality, nature, quantity and type of any commodity or service” (s. 2 (a) (4);  and “the conformity of the commodity or service to a standard, specification or model” (s. 2 (a)(11).

It was further claimed that Tnuva breached the duty of disclosure imposed on it as a dealer, pursuant to s. 4 (a) of the Consumer Protection Law, to disclose to the consumer, inter alia:

(1) any defect or qualitative inferiority or other feature known to him that materially diminishes the value of the commodity;

   Likewise it was claimed that Tnuva had breached the obligation of indication  as prescribed in section 17 of the Consumer Protection Law, which likewise expresses the broad duty of disclosure imposed on the dealer and which provides  inter alia that:

A dealer shall indicate the following particulars upon, or upon a thing attached to, goods intended for the consumer:

                          ------

(a)  the quantity of the commodity and a detailed statement of the basic materials of which it consists.

The prohibition on misleading and the duty of disclosure and indication imposed on dealers in accordance with the Consumer Protection Law, were intended to realize one of the Law’s central underlying goals, namely providing all of the information required by the consumer in order to enter into an intelligent engagement that gives true expression to the principle of the freedom of contractual engagement (see Langbert  [12], p. 175 – 176).

26.              The Lower Court accepted the claims of the representative plaintiffs, and in its decision ruled that the Tnuva had committed an act of misleading that was prohibited under the Consumer Protection Law and had breached its statutory duties of disclosure by adding silicon to the milk without disclosing that fact to the consumers and without disclosing that the addition of silicon as stated contravenes Standard No. 284 of the Israeli Standards Institution, which at that time was the official and binding standard for purposes of “cow’s milk for drinking” (hereinafter: “the standard).

Evidently,  at this stage of the hearing of the appeal, Tnuva no longer contests the fact that it mislead its consumers. Indeed, in the summations filed on its behalf in the appeal it confirms that it “mislead the consumers by way of omission in its failure to indicate on the packaging of the long standing milk that a froth preventing food supplement was added, bearing the trade name “E-900” (section 2.1 of Tnuva’s summations).  Similarly, it would seem that there can be no doubt regarding the consumer’s right to be aware of the ingredients of the product that consumes . This right is the basis of the duties of disclosure and indication imposed on the dealer in this context, which we addressed above, and it may be asserted that these duties become doubly important when considering that the issue concerns milk which is a basic food product consumed by numerous consumers.

As mentioned, one of the substantive matters to which the prohibition of misleading applies under the Consumer Protection  Law is the “conformity of the asset or service to the standard, specification or model” (s. 2 (a)(11)). In our case Tnuva contravened the prohibition in this sense too because the definition in  s. 105 of the standard enumerates the materials that can be added to the various milk products and silicon is not included among these products.  Our concern is with a standard  that was declared as the Official Standard on 13 October. 1987 (O.G. 3473, 2274). As such Tnuva is bound by s. 9 (a) of the Standards Law, which prohibits the production and the sale of a milk product that does not comply with the requirements of the standard (for an analysis of the grounds for declaration of a standard as official and the duties established by the standards (see Eliyahu Hadar, Behind the Standards Law, 56- 92 (1997)), and accordingly Tnuva mislead its consumers with respect to the product’s conformity to the standard (see also s. 107.5 of the standard, which establishes that the supplements – if added -  must be indicated, and see Official Standard No. 1145 regarding the “Indication of Prepackaged food”).  Parenthetically, it bears note that nonetheless, in 1998 the declaration concerning the official status of some of the sections, including s. 105, was cancelled, and today they have the status of recommendations only (see Notification of Expired Validity of Standards (Food Standards) as Official Standards, O.G. 4649, 5759, 334, 336). Tnuva argues this issue is also of substantive significance for purposes of this proceeding too, and this claim will be discussed below. 

27.  As mentioned, Tnuva no longer disputes the fact that its acts are tainted by having been misleading within the meaning of the Consumer Protection Law and by its violation of the disclosure duties imposed on it by force of that Law. Nonetheless, Tnuva maintains that the Lower Court erred in ruling that it must compensate the group members for the non-pecuniary damage allegedly caused to them under the circumstances. The thrust of Tnuva’s claims as dwelt upon above, is that the act of misleading did not cause any real and compensable damage to any of the group members , and that even if thy incurred real damage,  the causal connection between the alleged damage and the act of misleading was not proved. At all events, Tnuva further added that the Court erred in holding that compensation must also be awarded under the head of infringement of autonomy to group members in respect of whom it was not proved that they had experienced negative feelings due to their consumption of milk containing silicon.

Misleading a Consumer as a Wrong in Tort in  the Representative Context

28.  The legal field in which the consequences of the Tnuva’s actions must be examined in this case is the field of Tort, referred to by s.31 (a) of the Consumer Protection Law, which instructs us that:

“Any act or omission in contravention of Chapters Two, Three or Four shall be treated as a civil wrong under the Civil Wrongs Ordinance (New Version)”

Our concern is with a consumer tort rooted in the Consumer Protection Law, but the body and head of which are formulated in accordance with the basic principles and doctrines of Tort Law.  In other words, to merit a pecuniary remedy based on a consumer tort the plaintiff must prove damage and demonstrate the causal connection between his tortuous conduct and the alleged damage. This applies both to an individual suit relying on a Consumer Protection Law and to a class action relying on that kind of tort (see comments of Justice (former title) M. Cheshin in Barazani Further Hearing [3]. Still, it bears note that to the extent that our concern is with a class action, the court’s application of Tort Law must also be based on the specific principles and rules drawn from the specific field of class actions, which occasionally pose practical problems relating to the location of the members of the group and awarding compensation to each one of them, as well as difficulties in proving the causal connection and proving the damage caused to each one of the group members. There may also be cases in which had a single plaintiff filed a monetary suit by reason of a consumer tort his suit would have been rejected by reason of the negligibility of the remedy – being in the category of des minimis, which does not justify compensation under the general law of Tort (see s. 4 of the Tort Ordinance). On the other hand, when concerned with a consumer tort committed against an entire group of consumers and not just against the single plaintiff, the court will be required to take a different perspective of the remedy requested in the name of the group in the framework of the class action. In such a case the court will be required to examine the class action and the requested remedy taking into account the underlying principles of this specific proceeding, which is intended inter alia to provide a solution to sub-enforcement in cases in which the individual claim would be considered as a negligible claim. When hearing a class action the court cannot limit itself to examination of the remedy in accordance with the regular laws of Tort that would be applicable to an individual suit, and its decision must incorporate the principles and rules drawn from the specific field of class actions.

The need to combine the general laws of Tort with the principles and rules drawn from the laws of class actions, inter alia by relaxing the requirements pertaining to the proof of the damage caused to the members of the group, was dealt with by Justice M. Cheshin (former title) in Barazani Further Hearing [3]  (ibid,  423 – 425). Today, with the enactment of the Class Actions Law, the legislature has equipped us with a detailed statutory arrangement that consolidates the principles and the rules to be applied to the various kinds of class actions and provides a solution to the typical difficulties, some of which we dwelt upon above, and which may arise in this particular proceeding. For example, s. 20 of the Law, to which we will return below, relates to “proof of entitlement to a remedy and payment of financial compensation” and prescribes the specific arrangements for the award of remedies in class actions. The unique nature of the class action proceeding and the need for awareness thereof in the application of principles of the general law of Tort to such an action were addressed by Deputy President E. Rivlin in CA 10262/05 Aviv Legal Services Ltd v. Hapoalim Bank, Head Management [15] where he stated that:

It cannot be denied that that in certain cases the collective-representative character of the proceeding may affect the manner of examining the causal connection, just as it has implications for other elements. The subject of the causal connection in class action suites was discussed at length in Barazani Further Hearing [3]. The majority view as penned by Justice Cheshin dwelt on the basic need for fulfillment of the elements of a personal claim as a condition for the certification of the representative proceeding, specifically the  foundation of the causal connection required for certain grounds of claim. The court noted that the representative context may influence the interpretation of the foundation of the personal grounds, but noted that this possibility was limited and qualified. Conceivably and without making a definite determination on the matter at this time, the Class Actions Law may extend this possibility in view of its emphasis on the collective aspect and its relaxation of the conditions required to be fulfilled for the collective action, all with the purpose of realizing the objectives of the class action…  A strict and case specific interpretation of the foundation of the causal connection would thus be liable to seal the fate on numerous class actions, contrary to the objective of the Class Actions Law. According to another approach, in suitable cases there would be an examination of the causal connection from the perspective of a “meta-plaintiff” who reflects the shared interest of all of the potential plaintiffs, and takes the cumulative damage into account.  Such an examination of the causal connection could fulfill the requirement of the causal connection even in cases where it would not have existed in accordance with the individual case based examination.

   De Minimis

29.  The representative plaintiffs claimed that the group members should be compensated for the non-pecuniary damage caused to them under the circumstances, under two heads of damage: One of them is the infringement of the personal autonomy of the group members and the other for the negative feelings that they experienced upon being informed that they had drunk milk containing silicon.

Upon certifying Raabi’s claim as a collective suit this Court, per Justice M. Naor, in the decision on the certification application, ruled that:

 “The damage claimed by Raabi consists of non-pecuniary damage; negative feelings and feelings of repulsion. The non-pecuniary damage claimed by the plaintiff is the feeling of repulsion stemming from the fact that the case concerns silicon, with all of its negative associations. In my view, damage of this kind is prima facie compensable damage. The act of misleading regarding the contents of the milk in this case is prima facie an infringement of individual autonomy” (p. 681- 682 of the decision).

In that decision, this Court further noted that the infringement of individual autonomy had already been recognized in Tort Law as a compensable head of damage, referring to the decision in Daaka [4].  In its discussion of the class action that was certified as stated, the Lower Court deemed that in the circumstances of our case the group members suffered non-pecuniary damage and in this context dismissed Tnuva’s claim that the failure to specify all of the product’s ingredients did not gave rise to an infringement of autonomy and did not justify the alleged negative feelings. This is Tnuva’s argument before us.

Indeed, a defect in the indication of a food product’s ingredients will not always warrant compensation for infringement of autonomy and negative feelings, and there may certainly be cases in which notwithstanding the existence of a particular defect in reporting the contents of a product, compensation will not be justified.  Justice Naor dwelt on this point in the decision on the certification of the application, noting that:

The insertion of a silicon supplement in the milk, in defiance of the standard constitutes an infringement of individual autonomy, but my comments should not be taken to mean that any case of a deviation from a provision of a standard or of inaccurately reporting its contents will justify a suit. There may be quite a few cases in which a slight deviation from the provisions of any particular standard, even where it concerns food, will not justify a personal suit and by extension a class action. A suit will not be justified where the infringement is de minimis ….  (p, 684).

I concur with Justice Naor’s comments, but they are of no avail to Tnuva in this case, for as noted by the Lower Court, the harm in this case is not in the category of de mimimis from the collective-representative aspect.  

30.  In support of its claims in this matter Tnuva presented the expert opinion of Prof. Hernik who evaluated “from the perspective of a researcher of consumer behavior (the marketing person) whether and if so to what extent, there was an infringement of what is referred to as the consumers' 'autonomy of will'". In his expert opinion, Prof. Hernik acknowledged that in principle and conceptually there was an infringement of the autonomy of will in any case in which the list of contents does not actually conform to the ingredients of the product, except that in order to assess the degree of harm one must evaluate the influence of the misleading act on the consumer’s ability to choose. Prof. Hernik determined that according to his approach, the harm to infringement of autonomy caused to the consumers in this case was negligible and that the misleading media publications had generated a public storm, and lead to an 'imaginary infringement'  of autonomy of the consumers' will.” Tnuva also presented the expert opinion of Prof. Michael Perry who reached a similar conclusion and noted that in accordance with the criterion he had established for examining whether substantive harm had been caused to the autonomy of the consumer’s will, the harm in this case did not exceed a harm that was “trifling” and did not justify compensation.

I do not accept this approach and as I mentioned above, my view is that the Lower Court was correct in its dismissal of Tnuva’s claim that the harm was “trifling” and “negligible” and not deserving of compensation.

The concept of “de minimis” is one that does not admit of advance demarcation and in another context it has already been ruled that:

The question is how to measure harm and when to consider harm as being minimal, The answer depends on the nature of the right that was violated, the purpose of the infringement and additional circumstances of each particular case, and in accordance with which it may vary from case to case (see citation in CA 3901/96 Local Planning and Building Committee v. Horowitz [16]

In the case at hand Tnuva added silicon to low fat long lasting milk to overcome the problem of over frothing  and it chose this solution to save the cost of replacing a machine that was broken. In doing so Tnuva contravened the official standard then in force, according to which it was prohibited to add supplements to the milk that were not specified in that standard. Furthermore, Tnuva failed to indicate on the packaging that the milk contained silicon and the Lower Court established a factual finding that the silicon added to the milk was purchased by Tnuva as a cleaning material from the Amgal company (paras. 35 and 144 (b) of the decision ). In its appeal Tnuva challenges this factual finding but I have not found grounds for interfering with it, and given that this finding remains intact it supports the conclusion that in the first place Tnuva sought to conceal the fact that it had added silicon to the milk.  A similar conclusion also emerges from Tnuva’s conduct after the exposure of the case, when it denied having added silicon to the milk. Tnuva’s problematic conduct as described supports the presumption that the omission of silicon from the list of the ingredients specified on the relevant package was not incidental and that its purpose was to  blind the consumers to the fact that the milk it produced and marketed included this ingredient, in the knowledge that this was a substantive matter that was likely to influence the consumers’ decision whether to purchase the milk.

This was therefore a conscious and illegitimate act of misleading by the intentional concealing of information with all of its attendant severity in terms of the relations between Tnuva as a dealer and the relevant consumer group. Furthermore, silicon is an artificial chemical substance which has absolutely no nutritional value and should not be found  in milk. Accordingly, the reasonable consumer does not expect to find it in milk. Tnuva’s effort in its summations to present the silicon, post facto as a popular “food supplement” in food products lacks sufficient anchorage in the evidence and cannot be accepted,  especially given that it emerged that the Tnuva’s sole reason for adding the silicon was its desire to resolve the problem of frothing for a low cost.  Likewise, no substantive significance can be given to the fact that the standard for cows milk for drinking was officially cancelled already back in 1998. Tnuva repeatedly stresses this fact in its summations and attempts to derive therefrom that adding supplements to the milk, including the addition of silicon, is not a negative act  However, it would seem undisputed that even after the cancellation of the aforementioned standard as a binding standard, silicon did not become a supplement for milk with any of its producers, including Tnuva.   We may therefore continue on the assumption that even in the absence of a binding standard, this was a substance that the reasonable consumer would not expect to be added to the milk that he consumed.  

31.  Another claim stressed in Tnuva’s summations is that silicon is not likely to cause damage to health.  Regarding this matter Tnuva relies inter alia on the conclusion of the Danon committee and the findings of the Magistrates Court in the criminal proceeding, as well as on the expert opinion of Dr. Aharon Eizenberg and Prof. Nissim Garti,  submitted on its behalf. In the absence of damage to health Tnuva contends that no damage was caused to the milk consumers that we are concerned with and that at the most this is a trifling matter that does not warrant compensation. Indeed, the representative plaintiffs did not present an expert opinion on their behalf to prove the allegation hat silicon is injurious to health and neither did the District Court rule on this matter, writing that:  

Indeed, it has not been proved that drinking milk containing silicon caused or is liable to cause immediate harm to the health of consumers. However, in the view of Health Ministry experts, also representing the position of the Ministry of Health as presented by the Attorney General in the appeal against the decision to certify the suit, it is not possible to rule out the existence of a health hazard in the long run, primarily to children, in the wake of drinking milk that contains silicon in view of the fear of consumption in excess of the acceptable daily intake (ADI)…

In the framework of this proceeding there is no cause for ruling on the scientific question of the degree to which the drinking of milk containing silicon poses a health risk. For purposes of this claim it suffices that the existence of such danger cannot be ruled out, at least according to some of the experts. From the plaintiffs’ perspective, it suffices that it was proved that Tnuva’s consumers were entitled to know, upon deciding to purchase milk that it had produced, that it contained silicon in defiance of the law and the standard and that under certain circumstances one cannot rule out the risk to health posed by its consumption” (para. 35, emphasis added).

In this ruling, the Court relied largely on the position of the Attorney General that was submitted to this Court in the framework of an appeal against the decision concerning the certification of the suit as a class action, which it stated that:

In an examination conducted by the National Food Authority of the Ministry of Health, it was not found that this substance is harmful to health, but the fact that there was a determination of ADI [acceptable daily intake) indicates that in excess of ADI there is no certainty concerning its safety in terms of health and the existence of a long term risk cannot be ruled out.  Given that in Israel large quantities of milk are consumed (not necessarily long lasting milk) primarily by children, then with respect to the consumption of milk containing silicon the consumption may exceed the ADI level.  The position of the Ministry of Health is therefore that it lacks information indicating that silicon is harmful to health, but it cannot rule out the existence of a long term risk, in cases involving the consumption of large quantities [para.3, emphasis added]

In addition,  regarding this matter it would not be superfluous to refer to the Danon Report which Tnuva seeks to rely upon.  The Danon Commission did indeed conclude that experience shows that silicon is not harmful to health, does not cause birth defects and that there is no scientific proof of it being carcinogenous (p. 55 of the Danon Commission Report). All the same, the Commission took into consideration the fact that Tnuva had added silicon to the milk “to a degree that exceeded what was permitted according to the manufacturer’s instructions, without examining and considering the effects of its heating and the attendant dangers. The Report further mentioned that “attempts were made in the dairy to reach a dosage that would be suffice for the required blocking of the froth, but without consulting with any entity in the Ministry of Health or any other licensing authority”, and that the silicon was added to the milk in a quantity and dosage that exceeded the level approved for foods other than drinking milk that this fact “necessitates an additional investigation of matters relating to the ordering of the material and the use thereof (p. 14-15 of the Danon Commission Report).

Accordingly it is difficult to accept Tnuva’s claim that there are unequivocal conclusions regarding the influence of the silicon added to the milk with respect to its influence on the consumers’ health, and this is sufficient grounds for not interfering with the Lower Court ‘s conclusion that under certain circumstances one cannot rule out the possible health risk involved in the consumption of milk containing silicon. Similarly, I also accept the Lower Court’s position that at all events every person has the right to choose whether he wishes to expose himself and his family to the material the nature of which is unknown to him. Hence, the fact that it was not positively proved that silicon is actually liable to harm consumers’ health has implications for the intensity of the infringement of autonomy (see Daaka  [4 ], p. 583; Nili Karako-Ayal, “Estimation of Compensation Due to Damage from Infringement of the Right to Autonomy”  - in the wake of CA 2781/93 Ali Daka v. Carmel Hospital, Hamishpat, 11,  267, 270-271 (5767) (hereinafter – Karako-Ayal)), but not on its infringement per se as a result of the fact that the consumer introduced a chemical substance into his body, the essence and character of which were unknown to him without having had the opportunity of deciding whether he wanted it (see s.1 of the Attorney General’s response to Tnuva’s application to submit additional evidence in the framework of the hearing on the application for certification in this Court. Regarding the significance of the health risk in class action proceedings in the case law of the District Court, see also CF 2593/05 (Tel-Aviv Jaffa) Solomon v. Guri Import and Distribution Ltd, para. 44 [   ] ; CF 1624/07 (Capp 8767/07)(Tel-Aviv Jaffa) Hova v. Milko Industries Ltd  [   ](27.1.2020); CF. 1126/07 (CApp 3058/07) (Tel-Aviv Jaffa) Arges v. Tnuva Central Cooperative for Marketing of Agricultural Products in Israel Ltd, para. 16 [   ] ; CF 1545/08  Alfasi v. Super Pharm Israel Ltd  [     ] and CF 1424/09 ((Tel-Aviv Jaffa) Guttman v. Neviot – Teva Hagalil Ltd.

In view of all the above, there is grounds for the Lower Court’s determination that under these circumstances there was an infringement of the consumer’s autonomy to decide whether or not he desired to consume  milk containing silicon and prima facie this is not a “trifling” infringement falling into the category of de minimis,  not warranting compensation.

32.  This conclusion gains added force inasmuch as our concern is with a class action in which it was proved that Tnuva’s act of misleading harmed the broad consumer public and the Lower Court  rightly ruled that under these circumstances the severity of the harm must be examined from the perspective of the entire group and “not from the perspective of an isolated consumer”. Indeed, I already mentioned the approach whereby the de minimis  rule does not apply, in the simple sense, to the foundation of damage in a typical class action,  insofar as “its central feature is the accumulation of insignificant instances of damage, which when considered individually would not have materialized into a legal proceeding; this approach has established itself in the case law of this court (see Aviv Legal Services Ltd [15], para. 10; also see comments of Justice Mazza in Barazani Further Hearing [3], 447). All the same, it should be emphasized that the fact that a large group of plaintiffs in a class actions alleges an accumulation of minor damages, does not necessarily negate the possibility that the matter is de minimis  from the group perspective as well. As noted, the precise borders of this concept do not admit of determination in advance and in a class action proceeding the answer to the question of whether the damage is of a minimal nature that does not warrant compensation depends on the circumstances of each case and may change having consideration for the particular circumstances of each case.

At all events, in the case before us, given the existence of a large group that  alleges damage as a result of Tnuva’s actions, the severity of which from a consumer perspective has already been discussed, precludes the conclusion that the matter is de minimus, even in the context of a class action. This is the case even though one cannot rule out the possibility that the existing discrepancy between the members of the group in terms of the intensity and scope of the injury may lead to the conclusion that had each member of the group filed a  personal claim the remedy claimed by each one of them separately would be de minimis.  Another question  concerns the number of group members who are entitled to compensation for this injury and what is the rate and the model of compensation for purposes of ruling in our case. When considering the number of the members of the group entitled to compensation attention should also be given to the issue of splitting up the compensation for non-pecuniary damage in the current case.  The reason for this is that the Lower Court held that compensation should be awarded for the Tort head of infringement of autonomy and separately for the tort head of negative feelings.  It will be recalled that in this context the Lower Court accepted the position of the representative plaintiffs and in reliance on the consumer survey that was presented to it (adjusting its results downwards), and ruled that: "a uniform rate should be ruled for the infringement of individual autonomy, whereas with respect to about half of the members of the group it will be supplemented by damage by reason of negative feelings" (para. 84 of decision).  Nonetheless, it bears note that ultimately the Lower Court ordered the payment of overall compensation (NIS 55 million), stating that this sum "reflects the personal damage that is estimated for each individual of the group, of the sum of NIS 250 (para. 134 of decision), and without actually distinguishing between the heads of damage that were mentioned and without differentiating between the members of the group in its entirety whom it had determined were entitled to compensation for the infringement of autonomy and half of the members of the group, who were additionally entitled to compensation for negative feelings. Accordingly in their appeal the representative plaintiffs challenge this ruling, and we must therefore address the fundamental issue of the splitting up of the non-pecuniary compensation, as mentioned.

However, prior to addressing the subject of the scope of the compensation  awarded we must first address the essence of the central damages head  which was at the forefront of this class action.

 Infringement of Autonomy

       33.  In the Daaka  [4] case, Israeli law recognized for the first time that the non-pecuniary damage involving the infringement of autonomy is "damage" in the sense of the Torts Ordinance, and that as such is compensable (on compensation for non-pecuniary damage in Tort Law in general, see s. 76 of the Torts Law. Also see CA 4576/08 Ben-Zvi v. Prof. His  [17] (hereinafter: Ben Zvi); Eliezer Rivlin " Compensation for Non Pecuniary Damage –Broadening Tendencies" -  Shamgar Volume,  Part 3, 21, 45 (2003); Yifaat Biton Dignity Aches: Compensating Constitutional Harms, 9 MISHPAT UMIMSHAL (Haifa University LR) 137 (2005) (hereinafter: Biton).   In the Daaka [4] case the court held that the  fundamental right to autonomy means the right of every person "to decide his or her deeds and wishes in accordance with his or her choices, and to act in accordance with those choices". It ruled that this right encompasses all of the central aspects of a person's life, from which it may be derived inter alia that "every person has freedom from unsolicited non-consensual interference with his of her body". It further held that this freedom is one of the expressions of the right to dignity given to every person, and is anchored in Basic Law: Human Dignity and Freedom.

These rationales, which in Daaka [4] lead to the recognition, protection and compensation for an infringement of autonomy of the body, are relevant and applicable to cases in which there is an infringement of the victim's autonomy in central aspects of his life due to the denial of his freedom to choose and the breach of the duty of disclosure to him. For example, the court recently recognized the damages head of infringement of autonomy in a case in which the autonomy violated was that of the family relatives of the deceased person, and pertained to the manner of treating his body (see in Ben- Zvi [17]. Hence, contrary to Tnuva's claim, the recognition of the damages head of infringement of autonomy is not, and should not be limited to cases of medical negligence or exclusively to autonomy of the body. The principles underlying the recognition of this head of damages and the constitutional right protected by such recognition, in appropriate cases, will justify compensation for infringement of autonomy even where other torts are concerned, such as the consumer tort in our case (see Tzachi Keren-Paz "Compensation for Violation of Autonomy: Normative Evaluation, Developments and Future Trends" Hamishpat 11, 187, 192-194 and the examples cited in the footnotes) (2007) (hereinafter – Keren-Paz); Dafna Barak – Erez, "Constitutional Torts in the Era of Basic Rights" Mishpat UMimshal 9, 103, 121-122, 129 (2006)).  In her in her decision to certify Raabi's suit as a class action, Justice Naor was guided by the approach that rejects the limitation of the boundaries of the damages head of non-pecuniary damages for infringement of autonomy to Tort of negligence in general and specifically medical negligence.  Her approach was rightly adopted by the Lower Court when it awarded compensation for the damages head of infringement of autonomy, having found that by its actions Tnuva had committed an act of misleading against Raabi and against the group of consumers that he represented, by failing to disclose the existence of silicon on the packaging of the milk that it produced and marketed.

34.  It is important to note that in the Daaka [4] case the infringement of autonomy was classified as a head of non-pecuniary damage in the framework of the tort of negligence, and not as a separate tort in its own right. Following the decision in Daaka [4] the view was expressed that it was appropriate to recognize the infringement of autonomy as a constitutional tort that gives rise to an independent grounds of claim (on this, see the comments of the Deputy President in CA 8126/07 Estate of the Late Bruria Zvi  v. Bikkur Holim Hospital [18]; Ben-Zvi [17] in para. 54 of his decision and in the same vein, the opinion of Justice Amit, in Ben Zvi  para. 21.  Also see Rivlin, 45 and see and compare to Keran Paz;  Nili Krako Ayaal "The 'Informed Consent' Doctrine – An appropriate Ground of Claim where the Patient's Right to Autonomy was Violated" Hapraklit 49, 181, 222-223 (2006)). However, our case law  has yet to give deep consideration to this weighty issue of recognizing a new tort created by case-law and the case at hand does not require  a discussion and decision on the matter. The reason is that the representative plaintiffs in this case took the path of settled case -law, and classified the infringement of autonomy as a  non-pecuniary head of damage in the framework of the tort of misleading which it attributed to Tnuva in accordance with the Consumer Protection Law. Inasmuch as the representative plaintiffs did not claim in the Lower Court or before us that in this context the plaintiff's  right to compensation for infringement of autonomy should be recognized as a  (sic)right ,should be recognized as an independent tort based on the violation of a constitutional right entitling the plaintiff the issue can be left pending further examination and there is not cause for us to address the matter on refer to it on our own initiative.

The Requirement of a Causal Connection

35.  Tnuva further added that the Lower Court erred by deviating from the law set forth in FHC Barzani [3 ] dwelt on above, and had actually waived the requirement for a causal connection between the act of misleading and the damage. Tnuva claimed that the representative plaintiffs failed to prove that their decision would have been influenced by having been informed in advance.  Since the grounds of misleading, by definition, requires that the consumer rely upon the dealer’s conduct, then absent proof of such reliance, according to Tnuva, there are no grounds for an act of misleading under the Consumer Protection Law.

On the other hand, the representative plaintiffs claim that to the extent that the concern is with the head of damage in the form of infringement of autonomy, then it will be regarded as having been proved, even if the victim would have acted in the same manner had he been presented with all of the information, and that at all events, in the case at hand it had positively been proved that the consumers would not the purchased milk containing silicon.

36.  Indeed, in the Further Hearing Barazani [3] and we already addressed this point above, the court ruled that the requirement for a causal connection in s. 64 of the Tort Ordinance also applies to consumer torts pertaining to misleading advertising, and even where the tort is grounds for a class action. All the same, the court also ruled that to the extent that the matter concerns consumer torts, the requirement of reliance deriving from the requirement for a causal connection will be interpreted broadly so as not to include to direct reliance only” but also “an indirect causal connection by way of a reasonable chain of causes from the publication and until the consumer” (ibid.,  414- 415). In Barazani [2] it was further ruled that in a class action proceeding based on the provisions of Chapter F’1 of the Consumer Protection Law and its relevant regulations enacted by force thereof  (provisions that as stated were cancelled in the interim in the Class Actions Law) it may be necessary to relax the stringency in proving the causal connection having consideration for the nature of this unique proceeding, and the fact that “the court is entitled to prescribe appropriate methods of proof at its own discretion for the causal connection between the misleading publication and the damage caused to each one of the members of the group, including the damage that was caused to each and every one of them (ibid.,  424). In that matter there was no proof at all of a causal connection, not even indirect, as claimed by Barazani, given that Barazani was not actually exposed to the publication. For this reason the court dismissed Barazani’s application to approve his personal claim as a class action and ruled that his personal suit does not show any grounds.

Tnuva’s attempt to rely on the Barazani ruling and to claim that in this case too it was not proved that there was a causal connection between its conduct and the non-pecuniary damage being claimed, cannot stand, for a number of reasons:

First, the claim was raised by Tnuva at the stage following the certification of the class action and to the extent that it is directed against the group as such, it must be remembered that three years after the decision in the  Further Hearing Barazani  [3], the Class Actions Law was passed, unifying all of the principles and rules to be applied to the various categories of class actions. The Law consists of a comprehensive, detailed statutory arrangement, including the methods of proving entitlement to the remedy being claimed, and inter alia it enables the granting of remedies for the public good in appropriate cases where it is not practical to prove the damage caused to each member of the group and  a fortiori the causal connection between the damage and the tortfeasor’s conduct (s. 20 (c ) of the Law). As specified below, this outline was adopted by the Lower Court and under these circumstances the demand to prove the causal connection between Tnuva’s conduct and the damage in respect of each individual of the group is problematic.

Second, the decision in Barazani [3] concerned misleading by action due to the misleading advertisement of Bezeq concerning the tariffs per conversation, and as mentioned it was held that insofar as Barazani was not even exposed to the misleading advertisement, there was no causal connection between the publication and his alleged damage.  Our case on the other hand concerned misleading by omission committed by Tnuva in its failure to disclose the fact of the silicon being added to the milk. Tnuva claims that the plaintiffs must prove that had they been exposed to that fact in a timely manner they would not have purchased the milk. It would seem that a requirement of a plaintiff to prove that had he been aware of the fact he would have acted otherwise would be particularly difficult to prove and in many cases even impossible. Indeed, this position is reinforced to the extent that our concern is with a class action. On the difference between misleading by an act and misleading by omission with respect to proving a causal connection in the representative context, see our comments in CA 9590/05 Rahman Nuni v. Bank Leumi LeIsrael Ltd [19] which overturned the District Court’s decision to dismiss the application for certification of a class action because of the plaintiff’s failure to prove the causal connection. In our judgment in the appeal we reversed this decision and ordered that the file be remanded to the lower court, indicating that “it seems that the question of the requirement of the causal connection in this case is also worthy one further consideration. This matter involves complex questions, the first of which is whether to apply the rule set by this Court for purposes of the ground of misleading, in FHC 5712 Barazanai  [3] even where it concerns the grounds of “non-disclosure” (ibid., para. 6) (regarding the similar approach taken in American Law in various contexts, see: Affiliated Ute Citizens of Utah v. United States 406 U.S. 128, 153-154 (1972) [34]; Binder v. Gillespie 184 F.3d 1059, 1063-1064 (9th Cir. 1999) [35]; Poulos v. Caesars World Inc. 379 F.3d 654, 666 (9th Cir. 2004) [36 ]. See also, CF (Tel-Aviv-Jaffa) 2405/04 Ben Ami v. Hadar Ltd [  ] paras. 72- 73 (14.2.2010).

We may thus conclude that to the extent that the consumer tort on which the class action is based on is misleading by way of omission, (by way non-disclosure) this may justify leniency regarding the proof of the causal connection between the wrongful conduct and the alleged damage.

Third, as opposed to the Barazani case [2], which was a monetary claim (tariff differentials), the head of damage being sued for in this case pertains to non-pecuniary damage  in the form of infringement of autonomy. Regarding this head of damage it was ruled that there was no need to prove a causal connection between the failure to disclose relevant information and the choice made by the victim (see: Daaka [4], 567-570; CA 6153/97 Shtendal v. Prof. Yaakov Sadeh [20], at p. 760; CA 9936/07 Ben David v. Dr. Entebbe [21] para 11 of Justice Hendel’s decision; CA 9817/02 Weinstein v. Dr. Bergman,[22]  para. 18). For a critique of the Daaka [4] decision, see Assaf Yaakov “Informed Consent and Duty to Disclose, Tel-Aviv University Law Review  31, 609 (2009). The rationales in this context that guided the court in Daaka [4] and in other matters pertaining to medical negligence are applicable to the same degree with respect to an infringement of autonomy caused as a result of the consumer tort committed by a dealer who misled a consumer.  Indeed, the non-disclosure per se involves the denial of the consumer’s freedom of choice. In our case, by failing to specify silicon as one of the components of the product, Tnuva deprived the consumers of the possibility of making an intelligent choice and deciding whether they wish to purchase and consume it. This suffices as proof of an infringement of autonomy. Another question is whether this suffices to establish a right to compensation or whether it must further be shown that consequential damage was also caused to the plaintiff, finding expression in negative feelings given the denial of his freedom of choice. I will address this point further on. 

37.  At all events, even had we ruled that the circumstances of this case necessitated bringing proof that the members of the group would not have purchased the milk had they known that it contained silicon, this requirement for a causal connection in a class action  might conceivably have been satisfied by a determination in the manner of a "collective causal connection" (on this see Aviv Legal Services [15]para. 10). This kind of collective causal connection may be substantiated by the assumption that the group members, and at least the majority thereof, would have replied in the negative had they been asked in advance whether they would purchase milk to which Tnuva had added an artificial  supplement the  nature of which they were ignorant, and in defiance of the standard,  in order to overcome the problem of excessive frothing (compare C.F. 1036/66 (Capp. 1877/06) (Tel-Aviv Jaffa) Tal v. Rabin Medical Center (Beilinson Campus), para. 12) [  ] See also regarding the use of "generalized evidence" in American Law: Kennedy v. Jackson National Life Insurance Company, 2010 U.S. Dist. Lexis 63604, 25-28 (N.D.Cal 2010) [37];   Negrete v. Allianz Life Insurance Company of North America 238 F.R.D 482, 491-492 (C.D. Cal. 2006)[38]; Klay v. Humana, Inc.382 F.3d 1241, 1259 (11th Cir. 2004) [39]. Regarding the exception to the application of the doctrine in cases in which extensive differentiation between the members of the group was proved, see Poulos v. Caesars World, Inc. [36]. Further support for the application of this doctrine in the circumstance of the case before us can be adduced from the fact that it was Tnuva's intentional actions that created the situation which encumbered the process of locating the members of the group and the conduct of an individual examination of each of the elements that must generally be proved in the according to the law of tort.  Additional support for the existence of a causal connection between the act of misleading committed by Tnuva and the consumers' choice to consume the milk, can be fond in the trends evidenced in the consumers survey that was presented, and which we will address further on.

   38.  Tnuva further adds that at all events, the publications in the press concerning the damage to health caused by silicon consumption severed  the causal connection between its own acts and the bad feelings experienced by consumers, which it claims were  by and large the result of publications that post facto turned out to be unfounded.  This claim regarding the causal connection is not grounded in evidence, and in this matter as the one whose act of mass misleading caused uncertainty regarding the precise influence of the publications on the feelings of the consumers, it is Tnuva that bears the onus of proving the opposite (compare: Johnson v. The Goodyear Tire & Rubber Company, Synthetic Rubber Plant, 491 F.2d 1364, 1379-1380 (5th Cir. 1974)[40]; Cooper v. Allen, 467 F.2d 836, 840 (5th Cir. 1972) [41]. Accordingly, this argument is rejected.

Assessment of the Compensation for the Infringement of Autonomy – The Objective Approach and the Splitting Up of the Compensation for Non-Pecuniary Damage.

39.  How does one assess the compensation for the tort head of infringement of the right to autonomy?

Based on the constitutional features of the right to autonomy some favor the objectification of the assessment of the compensation for its infringement. For example, Dr. Tzahi Keren-Paz argues that "freedom of choice can be viewed ….as an asset with objective value" and hence "it is appropriate to award a sum that reflects the social value attaching to the denial of freedom of choice. This sum should even be awarded absent proof of consequential, subjective damage (feelings of shock and anger) by reason of the denial of freedom of choice" (Keren-Paz, 196-198). Keren-Paz sees special justification  for an objective assessment of compensation for infringement of autonomy in the consumer context. In his view, "the deterrent consideration (that focuses on the dealers) must also justify the compensation award in circumstances in which the compensatory factor (that focuses on the legitimate damaged interest of the consumer) does not provide sufficiently strong support for the compensation due to the problem of under-deterrence of the dealers…"(Keren-Paz, 242).  The scholar Dr.Nili Karko-Ayal likewise suggests that compensation should be assessed  in accordance with the value of the right to autonomy on the one hand, and the gravity of its infringement, on the other hand (see Karko-Ayal and see the opinion of Judge Strasbourg-Cohen in the Daaka case [4], at p. 619).

This approach deviates from the traditional principles of the laws of tort, that are based on a subjective, individual assessment of amount of compensation, and from the conception of compensation as being intended to restore the victim's position to the status quo ante and to provide him a remedy for the damage caused to him, including non-pecuniary damage. This point was mentioned by Justice Or in the Daaka case [4 ] when he awarded compensation for a  victim under the tort head of infringement of autonomy, where he said:

Naturally, matters relating to the proof and the extent of damage are determined in accordance with the particular data in each individual case and the evidence submitted in court. The substantive criterion for generally determining the amount of compensation to which the victim is entitled is the criterion of restoring the situation to its original [ex ante – ed.] state. This criterion is an individual one. It requires an individual assessment of the gravity of the harm caused to the specific victim (p. 582-583)

The difficulty involved in application of a "pure" objective criterion for purposes of determining the sum of the compensation for an infringement of autonomy was likewise addressed by scholar Prof. Dafna Barak-Erez in her discussion of claims filed by the individual against an authority, where  she emphasized that in this context as well:

…the principles of tort should not be deviated from  by awarding compensation that is detached from the concrete infringement and its circumstances. The sum of the damages cannot and need not reflect the universal value of the right… compensation that purports to reflect the general value of the right should be rejected  for a number of reasons. First it is illegitimate from a principle-value based perspective, because it purports to attach a price tag to the right itself. Second, it benefits the plaintiff in a manner that extends beyond his own particular damage, and thus deviates from the principle of restoring the status quo ante. In the realm of Tort law, compensation is determined in accordance with the damage to the victim himself, and not in accordance with the value of his right from the perspective of the other person (Dafna Barak-Erez, Constitutional Torts 277 (1993) (hereinafter – Barak-Erez)).

It is not superfluous to mention that in academic writing in the field of tort one can discern trends that deviate from the traditional perception whereby Tort law is intended to grant remedial damages to the specific victim in order to restore the status quo ante. Hence for example, there are some who contend that punitive damages that are not derived from the victim's damage may in appropriate cases provide a solution to sub-enforcement and therefore constitute an efficient form of deference A. Mitchell Polinsky & Steven Shavell, Punitive Damages: An Economic Analysis, 111 Harv. L. Rev. 869 (1998), as well as to heal societal damages caused by the tortfeasor to the victims who did not come to court  (Catherine M. Sharkey,Punitive Damages as Societal Damages, 113 Yale L. J. 347 (2003). Deputy President, E. Rivlin recently addressed this matter in the matter of Ben Zvi  [17] in  where he treated the matter of punitive damages, noting that today, the case law in Israel too has recognized the court's authority to award damages of this kind in the framework of the law of tort, and he also mentions that :"despite the sharp analytical distinction between punitive damages and remedial damages, on a practical level the contradiction is not so sharp, at least in the realm of non-pecuniary damage"  (paras. 37- 39 of his opinion, see also in LCA 9670/07 Anon v.Anon [23], paras 22-27 or the opinion of Justice E. Rubinstein, and the opinion of the Deputy President E. Rivlin).

However, to the extent that the compensation to be evaluated and awarded is claimed as part of a class action, one must remember the provision of section 20 (e) of the Class Action Law, which provides that: 

In a class action the Court shall not adjudge exemplary compensation and it shall also not adjudge compensation without proof of damage….but the aforesaid shall not prevent the award of compensation for other than monetary damage.

    Thus, the Class Actions Law stymied the possibility of awarding punitive damages in a class action. All the same, the Law established other special compensatory mechanisms that enable realization of the principle of remedial justice, for example, by way of imposing a cy-pres obligation on the tortfeasor for the damage caused, and principles of efficient deterrence, such as obligating the tortfeasor to provide a remedy for the public interest for the widespread social damage that he caused, and I will address this matter below.

40.  I do not accept the objective approach to the evaluation of the sum of damages for infringement of autonomy that I reviewed above. The head of damage of infringement of autonomy is encapsulated in the negation of the victim’s freedom of choice, and in the majority of cases involves the non-disclosure of a matter that is critical for the victim. Accordingly at the very least as far as it concerns class actions, a presumable starting point for evaluation of the non-pecuniary damage caused to those whose autonomy was violated, is that as a result of that infringement they experience anger, frustration and insult (of varying degrees of intensity, according to the concrete circumstances of the case).  These feelings which resulted from the tortfeasor’s conduct, justify compensation for non-pecuniary damage. However, there is no conclusive presumption that these feelings are experienced by the victim in every case of an infringement of autonomy. Accordingly, should the tortfeasor successfully prove that notwithstanding that his conduct negated the freedom of choice of the plaintiff or of the members of a group, they remained indifferent and unmoved, it may be determined that they are not entitled to damages under this head of damage because in truth, despite the denial of their freedom of choice, they did not sustain any non-pecuniary damage as a result. My approach, whereby the compensation for infringement of autonomy is awarded by reason of the subjective consequential damage expressed in feelings of anger, frustration and other similar negative feelings caused by the tortfeasor’s conduct, gives rise to the another conclusion – that there are no grounds for severing the compensation for infringement of autonomy from the compensation for mental anguish and negative feelings caused to the victim by that infringement (as distinct from the non-pecuniary head of damage relating to other infringements in framework of the same claim). A different approach to this matter was expressed by the Lower Court, even though, at the end of the day, as mentioned, the Lower Court awarded a sum total of NIS 250 as non-pecuniary damages for each member of the group without distinguishing between those members of the group who experienced negative feelings and those regarding whom it was proved by the consumers survey did not suffer feelings of this kind (regarding this matter, see the dispute between the Deputy President E. Rivlin and Justice Y. Amit, in the matter of Ben – Zvi [17] (see Keren-Paz, 203-208). 

A conclusion similar to my conclusion on the matter also emerges from the findings of Justice M. Naor in the decision given in the appeal on the decision to approve Raabi's suit as a class action.  In that context Justice Naor relates in the same breach to the non-pecuniary damage caused by the infringement of autonomy and to the negative feelings attendant to that damage. In her own words:

…..[t]he damage claimed by Raabi is non-pecuniary damage, negative feelings and feelings of revulsion. The non-pecuniary damage which he claims is characterized by the feeling of revulsion that stems from the fact that the material concerned is silicon with all of its attendant associations. In my view damage of this kind is compensable damage. The act of misleading concerning the contents of the milk in this case, prima facie, constitutes, an infringement of individual autonomy. Our concern is with a food product.  Consumers are entitled to determine what to ingest into their mouths and bodies and what to avoid. For example, if a person wishes to only eat kosher food and post facto it becomes clear to him that the food that was misleadingly presented to him, was not of that nature, will feel a sense of revulsion and an infringement of his autonomy…  (ibid.  681-682, emphases added).

     Indeed, to the extent that it concerns Raabi  - the representative plaintiff – after hearing his testimony and the testimony of his son, the Lower Court ruled that Raabi had experienced substantial negative feelings upon becoming aware that the milk that he had consumed contained silicon, and that Tnuva had refrained from specifying this component on the packaging; in the words of the Lower Court:

,,,[a]s a result of these acts the plaintiff was denied the ability to make an intelligent and informed choice concerning the purchase of an alternative product, that does not contain  a supplement that it prohibited by law for use in milk for drinking. It is likewise clear that the negative feelings experienced by Raabi stem from the acts of Tnuva. It could be claimed that these feelings were exaggerated, having consideration for the fact that it was not proved that silicon causes a health risk. But one cannot dispute his [Raabi's] feelings as such: [Raabi] subjectively felt a sense of disgust (nausea), anxiety,  as a result of having drunk the milk containing silicon as well as anger and rage by reason of the fraud.  All of these fall into the category of non–pecuniary damage that is neither peripheral nor negligible and is indeed compensable… " (para. 57, emphases added).

     There is no justification for interference with these rulings of the Lower Court, for as stated they are based on the testimonies of  Raabi and his son, and on the Court's direct impression from those testimonies. However, in order to determine the precise compensation to be awarded, if at all, in favor of the group on whose behalf Raabi handled the class suit, proof of subjective damage caused to Raabi will not suffice and additional complex questions must be addressed, relating to proving the entitlement of the members of the group to the pecuniary compensation that was claimed, including, inter alia,  the question concerning the difference between the group members who experienced negative feelings as a result of the denial of their right to chose whether nor not to consume milk containing silicon and the group members who remained indifferent to the aforementioned denial of their free choice.

41.  As mentioned above, under the circumstances, at the time of the handing down of the decision on the class action it was not possible to individually identity each member of the group and to determine the individual right of each one of them to  a remedy. As such it was not possible to rule on the class action in favor of the group in accordance with the evidentiary paths  set forth in section 20(a) of the Class Actions Law. In order to determine the compensation, the Court was required to utilize the framework of s.  20 (c) of the Class Actions Law, which was intended for those cases in which "Court concluded that, under the circumstances, pecuniary compensation for all or some members of the group is not practical, either because they cannot be identified and the payment cannot be made at a reasonable cost, or because of other reason".

Based on the opinion of Prof. Ofir, who was appointed as expert on the Court’s behalf, the Lower Court ruled that during the relevant period 220,000 consumed the long-lasting milk containing silicon.  Basing himself inter alia on the data he received from Tnuva, Prof. Ofir estimated that the number of households that had purchased the milk stood at NIS 166,307, and in his testimony in Court Prof. Ofir noted that the number of adult purchasers during the relevant period stood at 330,000. As such, according to his approach, the number of members in the group ranged from between 166,307 to 330,000 (p. 672 of the protocol). The Court’s determination that in this context one should consider a group number about 220,000 persons is therefore a cautious and conservative estimate (see comments of Prof. Ofir, p. 672 – 674 of the protocol), which will not be interfered with.

What remains to be examined is how many of those belonging to the aforementioned group of milk consumers actually experienced negative feelings as a result of the infringement of their autonomy.

The representative plaintiffs submitted an expert opinion drawn up by Dr. Katz and Prof. Mevorach, based on a consumers survey, from which it emerges that 26% of those questioned, who represent the general population, were indifferent to the publication to the effect that the milk contained silicon. Under the assumption that this percentage, pertaining to the general population, is also likely to reflect the interviewees who did not actually consume the long lasting low-fat milk during the relevant period, it would be appropriate to address the essential findings of the expert opinion that reflect the percentage of consumers of this milk before the publication from out of the total population (43%), and the percentage of consumers from out of these who continued to drink this milk even after the publications concerning the inclusion of silicon therein (30% out of the 40%, which represents 13% of the entire population). The expert opinion of Dr. Mevorach and Dr. Katz indicates that 66% of those who previously consumed long lasting, low fat milk of Tnuva (which they claim represent 28% of the total population) experienced negative feelings  in the wake of that publication, at various levels of intensity, including "revulsion, nausea, anxiety, fear, anger, hatred, disappointment, deceit, lying, fraud, temerity, contempt, irresponsibility, bad feelings (section 3 of the survey), whereas 30% continued to consume the milk even after the publication.

In our case and based on the data presented by the representative plaintiffs, there are grounds to conclude that some of the group members remained indifferent to the addition to the silicon to the milk.  26% of those asked specifically stated that this was their feeling: "indifference, no problem, not correct and other feelings that are not negative"- page 5 of the expert opinion of  Dr. Katz and Dr. Mevorach, subsection (b) of the answers to question 3, and "nothing, unmoved and indifferent" and "they made a mountain out of a molehill" – (the encryption page of the answers to question 3), and in the absence of a datum in the survey conducted regarding how many of those questioned had consumed silicon in the past, I think that the percentage of "indifferent consumers" can be derived from the datum in the expert opinion relating to those who continued to consume long lasting milk even after the publication of the silicon matter (30% of the overall number of consumers in the past, and 13% of the entire population). Accordingly, from out of the overall number of consumers of long lasting low fat milk during the relevant period, the number of whom stood at 220,000 according to the determination of the Lower Court there should be a reduction of  30% of "indifferent consumers" who did not experience negative feelings even after having been informed that the milk that they had consumed contained silicon, and that Tnuva refrained from indicating this element on the packaging.  The scope of the group entitled to compensation for the infringement of autonomy that caused them negative feelings, therefore stands at 154,000 people.

42.  In its pleadings, Tnuva objected on a number of counts to the  Lower Court's willingness to base findings and conclusions on the consumer survey relied upon in the expert opinion of Dr. Katz and Dr. Mevorach. Basing findings concerning subjective feelings on surveys is problematic. Even so, inasmuch as the Lower Court ruled that the structure for proving the pecuniary compensation to be awarded in this case is the one prescribed by s. 20 (c ) of the Class Actions Law in view of the practical impossibility of identifying the group members and in ruling individual compensation, under the circumstances, the reliance on an expert opinion based on a consumers survey gives expression to a degree of leniency regarding the modes of producing evidence which is occasionally required in the context of class actions. The need for such leniency was already addressed by the court in Barazani [3], as mentioned above and is now grounded in explicit legislation in the provision of s. 20 (c ) of the Class Actions Law (on the "enlisting" of statistic data for proof of damage where there is structural vacuum in terms of the possibility of presenting individual data, see and compare: Eliezer Rivlin and Gai Shani "A Rich Conception of the Principle of Restoring the Status Quo Ante in the Doctrine of Compensatory Damages"  ,  (hereinafter: Rivlin and Shani); Gai Shani: "The Principle of 'the Matter Speaks for Itself' in the Law of Torts – Revisited”; A. Porat & A. Stein Tort Liability under Uncertainty 87-92 (2001);  Naturally, the court's reliance on the expert opinion based on the consumers survey is conditional upon the court having found the expert opinion to be worthy of reliance, having considered the entirety of claims raised regarding it.

In the case before us, having examined the survey's findings,  the expert opinion of the Dahaf Institute on Tnuva's  behalf (drawn up by the expert, Dr. Mina Zemach), and the expert opinion of the Court expert who gave his opinion on the survey, the Court held that "The testimony of Professor Mevorach and Prof. Katz made a reliable impression, and  my impression is that they are professionals with experience and knowledge in their field" (para. 60). The Court rejected Tnuva's claim that the survey's results are biased, and that the questions presented to the interviewees included the assumption that silicon causes health hazards. For example, Dr. Mina Zemach on Tnuva's behalf mentioned question three that was presented to the interviewees ( "What did you feel in the wake of the publications  concerning  Tnuva's insertion of silicon into long lasting low fat milk, and its health risks?"). She claimed that the final clause of the question relating to health risks was altogether unnecessary and that there was reasonable grounds to fear that "this biased wording contributed to part of the serious defects of the study" (page 4 of the expert opinion, page 11 of the expert opinion).  Rejecting this assertion, the Court ruled that the presentation to the interviewees was authentic because it was proved that at that time there were publications concerning the health risks of silicon.  All the same, to be on the safe side, the Court was prepared to assume that the survey’s findings that tended to exaggerate the negative feelings somewhat, even if not to the extent of justifying the survey’s disqualification, as claimed by Tnuva, should be taken into account when determining the number of consumers who experienced negative feelings (about half according to the Lower Court’s holding as opposed to 66% according to the survey).  There was no justification for interfering with the conclusion that the wording of question number three did not warrant interference (regarding this, see comments of Prof. Mevorach in his testimony, p. 287 – 291, 296- 298 of the protocol). Furthermore the Court further ruled, correctly, to disqualify the fifth question of the survey, in which the interviewees were asked “Did your negative feelings emerge immediately with the initial publications or after that publications were also verified by the Ministry of Health and by Tnuva. The Court noted that this question contains potentially misleading information because of the possible implication that Tnuva and the  Ministry of Health had verified the publication concerning the health hazard, when in fact this was not the case/

  Accordingly no defect can be found in the Lower Court’s willingness in this case to rely on the expert opinion of Dr. Katz and Prof. Mevorach (that relies on a consumers survey) for purposes of determining the portion of the group that experienced negative feelings as a result of the infringement of their autonomy. By extension  our own reliance on this expert opinion cannot be negated as a means of determining the size of the group, along with the deletion of the “indifferent consumers” as set forth in section 41 above.

The Degree of Damage

     43.  We are required to determine the degree of damage, which in this case means the non-pecuniary damage incurred by consumers as a result of drinking milk containing silicon. Assessing the degree of damage expressed in victim’s negative feelings of anger, frustration and insult, and other like feelings caused by the tortfeasor’s wrongful conduct, and determining the compensation owing to him by reason of such damage, is no easy task. The reason is that damage of this kind is essentially subjective-individual damage, largely dependent upon the personal emotional barometer of each individual. This point was addressed by Justice T. Or in the Daaka [4] case in his ruling on the specific, non-pecuniary damage incurred by the plaintiff  due to the infringement of his autonomy. He wrote the following:  

The damage in this kind of case involves a predominantly subjective aspect, giving rise to inevitable difficulties in assessing it. Ultimately, the sum of compensation in each particular case, similar to compensation for other non-pecuniary damages, is a matter of judicial discretion, and it is thus determined by making an evaluation based on all the relevant circumstances and the impression of the court. The court must therefore adopt a balanced approach. It should give the appropriate weight to the fact that basic human rights were violated, which dictates an award of appropriate compensation as opposed to a symbolic compensation. On the other hand, considering the difficulties inherent in the procedure of accessing the damage, judicial restraint is required, and exaggerated compensation awards should be avoided.

    If the assessment of non-pecuniary damage for infringement of autonomy poses difficulties in individual cases, the difficulty is multiplied sevenfold when the court is required to assess the damage in a class action, and particularly when it is impossible to locate the members of the group and form an individual assessment regarding each member concerning the intensity of the infringement of autonomy and the subjective negative feelings experienced by reason of the infringement.  The subjective nature of the damage also impedes upon ‘damage averaging’  and for this reason in the U.S.A. there is a reluctance to approve a class action for compensation for non-pecuniary damages (see Allison v. Citgo Petroleum Corp., 151 F.3d 402, 417 (5th Cir. 1998)[42]; Reeb v. Ohio Department of Rehabilitation and Correction, 435 F.3d 639, 650-651 (6th Cir. 2006)[43]; Fuhrman v. California Satellite Systems, 179 Cal. App. 3d 408, 424-425 (1986) [44]  ]; Altman v. Manhattan Savings Bank, 83 Cal. App. 3d 761, 767-769 (1978) [45]; Stilson v. Reader's Digest Association, Inc., 28 Cal. App. 3d 270, 273-274 (1972)[46]; Birnbaum v. United States, 436 F. Supp. 967, 986 (1977) [48].

See also the comments of Justice A. Proccaccia in a minority opinion in the decision on the application for certification, 697.

In Israel, this approach was rejected by Justice Naor, with whom the Deputy President S. Levine concurred. In the application for certification, Justice Naor held as follows:

The court will not award penal compensation in a class action, and similarly will not rule compensation without proof of damage, other than as specified in item 9 of the Second Schedule. However, the aforementioned does not preclude the ruling of compensation for non-pecuniary damage (emphasis added).

 All the same, while there is no impediment in principle to the awarding of non-pecuniary compensation, in the framework of a class action, cases may arise in which the difficulty of determining the rate of damage will justify non-certification of the filing of a class action or its dismissal on its merits (regarding this, see the case law of the district courts before and after the enactment of the Class Actions Law (CC (TA-Jaffa) 388/96 Yaari v. Israel Lands Administration, [   ] s. 6 (e) and (f); CC  (TA-Jaffa) 2331/06 Lubinsky v. Nazrian, [    ] 5- 6  ; CApp (Naz.) 1528/05 Barzilai v. Frinir (Hadas 1987)  Ltd,[    ]s. 27.2  (d). On the other hand, see CC (TA-Jaffa) 1586/09 Hayyut v. Telran Immediate Messages Ltd [   ]para. 4 (b) (5); CC (TA) 1341/00 Mazal v. Discovery International Modelling Agency Ltd [   ].

44. In our case, the Lower Court deemed that the difficulties in assessment of damage by reason of it being pecuniary damage and by reason of the practical difficulty of locating the members of the group and forming an individual impression of the damage caused to each one of them, do not justify the dismissal of the class action.  For purposes of assessing the damage and fixing the compensation, it resorted to the specific mechanisms of s.20 of the Class Actions Law,  and fixed the complex model for compensation that we described above, and in accordance with which it ultimately determined the remedy.

In this appeal, Tnuva again argues that our concern is with tortuous compensation that is generally assessed on an individual basis, and that given the representative plaintiff’s failure to prove the precise damage caused to each member of the group, the Court erred in its failure to dismiss the suit for that  reason. Tnuva further claims that the damage in this case does not admit of “uniformity"” because  the degree of damage incurred by each consumer differed, hence it argued that the sum awarded by the Court to each member of the group (NIS 250) was arbitrary and with no evidentiary grounding and should thus be set aside.

The representative plaintiffs claim on the other hand that the Lower Court rightly determined that this case admits of  an “average reasonable compensation” which when multiplied by the number of the members of the group would constitute the overall sum of compensation and that its determinations in this regard are consistent with the legislative intention as well as with the American case law in this context. However, their claim is that the sum per individual as determined by the Court is too low and in their appeal they seek to fix it at a minimum of NIS 8000, in view of the Court’s own determination to the effect that had it been confronted with an individual claim, this is the sum that is could have awarded for non-pecuniary damage.

45.  Section 20 of the Class Actions Law, titled “ “Proof of Entitlement to Remedy and Payment of Pecuniary Compensation” provides as follows:

(a) If the Court decided all or part of a class action in favor of all or part of the group in whose name the class action was conducted, than as part of its decision to award pecuniary compensation or other relief to members of the group it may make, inter alia, an Order specified below, as the case may be, on condition that doing so will not place an unnecessarily heavy burden on members of the group or on the parties:

 

(1) to pay pecuniary compensation or to provide some other relief, at a rate and in a manner that it will prescribe, to each member of the group whose entitlement to the said compensation or relief has been proven;

 

(2) that each member of the group prove his entitlement to the compensation or other relief;

 

(3) to pay pecuniary compensation in an overall amount and how to calculate the share of each group member, on condition that the total compensation can be calculated exactly on the basis of evidence before the Court: if the Court ordered compensation to be paid in a said overall amount, then it may order how the remaining amount is to be divided among the members of the group in proportion to their damage, if one or several members did not claim their share, did not prove their entitlement to compensation or relief, were not located or could not be paid their share for some other reason; however, no member of the group shall receive pecuniary compensation or other relief in excess of the full compensation or relief due to him; if, after the said distribution to the members of the group an amount is left, then the Court shall order it to be transferred to the State Treasury.

(b) If the Court ordered that every group member prove his

entitlement to pecuniary compensation or other relief, then it may make Orders about:

 

(1) how and when entitlement shall be proven by members of the group and how it is to be divided, and for that purpose it may appoint a person with suitable qualifications (in this section: the appointee); if the Court decided to appoint an appointee, then any person who deems himself injured by an act or omission of the appointee may apply to the Court that ordered the appointment and the Court may approve, cancel or change the act or omission and make any Order on this matter, all as it finds proper; the appointee's pay and

expenses, as well as how they shall be paid, shall be

prescribed by the Court;

 

(2) the payment of expenses to a group member, in an amount to be set by the Court or by the appointee, for the trouble involved in proving entitlement to the said compensation or relief.

c) If the Court concluded that, under the circumstances, pecuniary compensation for all or some members of the group is not practical, either because they cannot be identified and the payment cannot be made at a reasonable cost, or because of some other reason,

In the  Reichart [9] case, Justice Adiel pointed out in that in class actions there are a variety of methods of determining the damages, which are applied to a broad range of circumstances and in addressing the provisions of section 20 of the Class Actions Law he stated that:

…[O]n the other hand the point of departure may be the means of proof prescribed in s. 20 (a) (2) of the Class Actions Law….

whereby damage is proved by affidavits filed by each member of the group. Additional means of proof, essentially similar to the individual process, are based on the determination of damage for each member of the group, but without the conduct of the detailed process of filing affidavits, but rather by a general calculation based on undisputed factual data or admitting of simple proof.  Naturally, the two methods may be combined by drawing up a general formula to be applied to each individual of the group, in accordance with data specifically concerning him. On the other hand, there are additional ways of determining compensation, based on determining an overall sum of damages that was caused to the group in its entirety, using the methods outlined above. Finally, in cases in which the damage cannot be calculated (even where it is undisputed that it was incurred) there is the possibility of determining the sum of compensation by way of estimate (para. 67 of his opinion).   

    Justice Adiel further noted that Israeli law, similar to American law outlines two principal methods for determining damages in class actions. The first is the individual calculation whereby the damage is determined giving distinct consideration to each member of the group. According to this approach, after establishing the responsibility of the defendant in the question common to all of the group members, a separate decision is made regarding the damage caused to each one of its members and the cumulative sum of damages proved by the group members will constitute the sum of the defendant’s final liability.  This method of calculation is anchored in s. 20 (a) (1) and (2) of the Class Actions Law, cited above. Its advantage is that is consistent with the method of compensation prescribed in the General law and the principles of rectificatory justice on which it is based. It is generally involves the acceptance of affidavits from the group members or a calculation based on undisputed factual data or such as admits of simple proof (see Reichart [ 9 ], para. 67). In American law various additional  mechanisms were established, intended to assist in the individual assessment of damages in an efficient and economic manner (see e.g. Bates v. UPS 204 F.R.D. 440, 449 (N.D. Cal. 2001) [48] – the conduct of separate actions following the date of establishing the tortuous liability); Olden v. LaFarge Corp. 383 F.3d 495, 509 (6th Cir. 2004) [49]- the appointment of an expert whose role was to conduct separate hearings for each victim).  Some of these found their way into Israeli law (see se\. 20 (b)(1) of the Class Actions Law (see E.S.T  Project Management[6], pp.. 246-347; and Tetzet  [8], 788)

46.  Given the advantages of the approach based on individual calculation, it would seem that it is to be preferred or purposes of determining the remedy in class actions, to the extent that it is possible and this indeed was the approach taken  by the court in Reichart where it stated that “inasmuch as our case enables the determination of damages on an individual basis, I see no grounds for taking the path of the overall calculation (see Reichart para. 72). However this approach is not always applicable. The difficulty in applying it arises for example when the group members cannot be identified or located; when under the circumstances it is not possible to present data or documents sufficient for proving individual damage; when the damage incurred by each member of the group is minimal and presumably the group members or most of will be  unwilling to cooperate for purposes of proving it on an individual basis. Likewise, where the clarification of the individual damage caused to each one of the group members requires the investment of expensive resources and considerable judicial time  which have no justification under the circumstances, (see Steven Goldstein “The Class Action Suit – For What and Why Mishpatim  9 (5739 416, 430 – 431) (hereinafter:  Goldstein))

The first difficulty that we addressed, of locating the members of the group is characteristic of representative plaintiffs in consumer matters (see decision in the certification application, p. 685) and  as mentioned, this difficulty also arose in our case given the impossibility of locating all of the consumers who consumed long lasting low fat milk during the relevant period. In confronting difficulties of this nature and others, some of which we mentioned, American law developed a second method of calculation – the method of overall calculation which was also adopted in Israeli law. According to this method, a “group compensation” can be determined on the basis of the damage caused to the group as a whole, even if the damage incurred by each member of the group was not proved prior to the determination of the overall compensatory sum. The purpose is to prevent the frustration of the goals of the class action in cases in proving individual damage is problematic. In the same vein, there were cases in which American case law resorted to “hybrid mechanisms” such as: an expert using a statistical formula to calculate the damages of the group members; an expert who conducts hearings and individual evaluations in relation to a representative sample of victims  (Hilao v. Estate of Ferdinand Marcos, 103 F.3d 767, 782-787 (9th Cir. 1996)[50](even though it appears that the use of this mechanism was restricted in a recent case: Wal-Mart Stores, Inc. v Dukes, 131 S. Ct. 2541, 180 L. Ed. 2d 374 (2011) [51] (hereinafter  Wal-Mart); the division of the group into sub-groups bearing typical features and the determination of an overall compensatory sum for each sub-group (see also LabA (NLC) 633/08 Erez v. Gal Maton Newspaper Marketing and Distribution Ltd [23], para. 18 (11 January, 2011)

The development of the system of overall calculation in American law began with the establishment of the Fluid Class Recovery mechanism (FCR), dwelt upon by the District Court in its decision. In its classical format, this is a three stage mechanism intended for compensation of the group members, and was described by the Californian Supreme Court as follows:

First, the defendant's total damage liability is paid over to a class fund. Second, individual class members are afforded an opportunity to collect their individual shares by proving their particular damages, usually according to a lowered standard of proof. Third, any residue remaining after individual claims have been paid is distributed by one of several practical procedures that have been developed by the courts" (The State of California v. Levi Strauss & Co. 41 Cal. 3d 460, 472-473 (1986)

       (hereinafter: Strauss)

The first stage of this mechanism is the determination of the sum of the group compensation which the defendant must pay and which he will deposit in a special fund established for that purpose.  At the second stage members of the group are given an opportunity to prove (at level of proof lower than the accepted level in personal suits)  the individual damage and in doing so receive their portion as personal compensation. At the third stage the balance of the sum is allocated in accordance with the various models that were developed by the court for that purpose. It is quite apparent that the three stages of the FCR process described do not provide an answer to all of the difficulties we mentioned. For example, in cases which preclude a determination of the sum owing to each member of the group, or such as the case before us, in which there is no possibility of locating the members of the group.   In order to provide a solution for these cases American law developed a variety of methods that deviate from the classic FCR model, some of which will be considered in what follows, along with the challenges raised against them, as we will presently show. (until here Case Review)

47.  In Israeli case law, the overall calculation approach was mentioned as a possible method of calculation already before the enactment of the Class Actions Law. For example, Justice (former title) Cheshin wrote in the Barazani Further Hearing [3] that: "Where awarding separate compensation for each of the group members is not practical, the court is permitted to obligate the defendant to pay compensation using special compensatory systems or other remedies, as it deems appropriate, provided obviously that the defendant is not compelled to pay more than the damage that was actually incurred" (ibid, at p. 425. See LCA E.S.T.  [5]; the decision on the certification application, at pp. 685-688; CC (TA – Jaffa) 2036/01 Mannela v. Mifal HaPayis  [  ]  para. 8). The mechanism of the overall calculation method was further established as part of the individual arrangements interspersed among the various legislative acts and by force of which class actions could be brought in the past (see e.g. the provisions established in s. 216 (b) of the Companies Law, 5759-1999; in s. 46I of the Restrictive Trade Practices Law, 5748; s. 16 I of the Banking (Customer Service) Law 5741-1981). This mechanism appears in s. 20 (a)(3) of the Class Actions Law, that as mentioned, replaced the individual arrangements and which regarding this matter states that the court may rule that:

"payment of pecuniary compensation in an overall amount and how to calculate the share of each group member, on condition that the total compensation can be calculated exactly on the basis of evidence before the Court…."

Furthermore, s. 20 (a)(3) of the Law contains a provision regarding the division of the compensation according to which in the event of a balance remaining after the distribution of the compensation to those victims who proved their damages and claimed compensation, it will be allocated proportionately between the group members, "provided that no member of the group shall receive pecuniary compensation or other relief in excess of the full compensation or relief due to him" and in that case the balance will be transferred to the State Treasury.

This provision is essentially similar to the classic format of the FCR mechanism mentioned above, and it enables the Court to determine overall compensation subject to the conditions prescribed in the section. In  Reichart  [   ] the court emphasized in this regard that the condition for the determination of overall compensation under s. 20 (a) (3) of the Law is that "the sum of overall compensation admits of precise calculation based on evidence before the court", and the court further added that "in terms of the principles for calculating the damage and its manner of determination, including the evidentiary law concerning weight and admissibility, there is no substantive difference between the methods used for an overall calculation and the methods used  for establishing individual damage…". The court further stressed in Reichart  [9] that even at the stage of allocating compensation among the group members consideration may be given to special individual data that is proved with respect to its individual members (para. 64 of the decision).

The difference between the various alternatives established in s. 20(a) relating to the manner of calculating the compensation and its allocation among the group members is that in first two alternatives (s.s. (1) and (2) the method of calculating damage  proceeds from the individual to the general, and the sum imposed on the defendant is the sum total  of the amounts to be received by each one of the group members.  In the third alternative, on the other hand (s.s. (3))  the process is reversed in the sense that initially the overall sum for the which the defendant is liable is determined, after which  that sum is allocated between the group members in accordance with the court's instructions, and subject to the caveat that overall compensation will not be awarded unless admitting of precise calculation based on the evidence before the court.

   48.  We already mentioned that the classic format of the FCR mechanism did not resolve all of the problems that arose in American Law concerning entitlement to a remedy and pecuniary compensation in class actions. This is also true with respect to the overall calculation method prescribed in s. 20 (a)(c), under the inspiration of that mechanism. The Israeli legislator was aware of this and hence added further mechanisms in s. 20 (c) of the Class Actions Law for determining remedies in class actions. Given the importance of this section for our purposes, we will again present the provision verbatim, which provides as follows:

"If the Court concluded that under the circumstances pecuniary compensation for all or some of the members of the group is not practical either because they cannot be identified and the payment cannot be made at a reasonable cost or because of some other reason then it may order other relief to be given for the benefit of all or part of the group or for the benefit of the public, as it deems appropriate under the circumstances of the case"

Is the court's permission to grant a remedy under this section "for the benefit of all or part of a group" or "for the benefit of the public" subject to the conditions enumerated in s. 20(a)(3) of the Class Actions Law, including the condition concerning "exact calculation" of the sum of overall compensation, as argued by Tnuva?.

The Lower Court dismissed this claim and ruled that:

Section 20 (a)(3)  [enables] the calculation of the overall compensatory sum for the group, and the waiver of individualized proof of damage. However, this is still considered as personal  compensation or a remedy for those members of the group who can be located and whose entitlement was proved, by way of allocating the sum of overall compensation between the those members. This must be clearly distinguished from the additional possibility at the court's disposal under s. 20(c ) of the Law, to rule a relief for the benefit of all or part of the group  or for the benefit of the public in those cases in which the Court concluded that under the circumstances pecuniary compensation for all or some of the members of the group is not practical either because they cannot be identified and the payment cannot be made at a reasonable cost or because of some other reason" (para. 104 of the decision, emphasis in source).

   Thus, according to the approach of the Lower Court s. 20(a)(3) of the Law establishes an independent for the determination of remedies and compensation in collective suits, existing alongside the other tracks prescribed in this context in s. 20(a)(1) and (2) and in s. 20(a)(3).  The Lower Court further added that in any case it was also unable to accept the interpretation that Tnuva attempted to give to the requirement for “precise calculation” included in s. 20(a)(3) of the Law, writing that:

Regarding that requirement for “precise calculation” of the overall sum of pecuniary compensation, it bears note that this requirement is implemented in a liberal manner in the U.S.A.  and it would seem that the legislative intention in Israel was to the take the path of American judicial experience. As noted by Hon. Justice Adiel (paras. 63 and 67) the overall calculation in U.S.A. relies on statistical calculations,  such as sample testing, or the use of mathematical models, which by definition do not lead to a “precise” calculation of the damage caused to the group. Likewise, and this point too was mentioned by Judge Adiel, the overall calculation system is used to overcome the difficulty of “simply calculating the damage of each individual of the group”, for example, in the absence of admissible documents or the difficulty of locating all of the members of the group.  Likewise, there is a difficulty in “precisely” calculating non-pecuniary damage, which necessarily involves estimation. Under these circumstances it is clear that the calculation of the compensation cannot be mathematically precise, and this was not the legislative intention. It is further important to point out that the requirement for “precise calculation” of the sum of the overall compensation was established in section 20(a)(3) of the Law, which deals with personal  compensation, for the group members, but not in s. 20(c) of the Law which relates to the a remedy for the for the benefit of the group (para. 100 of the decision, emphasis in source).

 49.   I accept the Lower Court's  position that the mechanisms of s. 20  (c ) of the Class Actions Law are intended to provide an answer for those cases in which it is not possible to precisely calculate the damage and distribute it according to one of the mechanisms prescribed in s. 20 (a) of the Law. Indeed, contrary to the position presented by Tnuva, s. 20(a) is not limited to difficulties in distributing the compensation between the members of the group ("because they cannot be identified and the payment cannot be made at a reasonable cost"). Section 20 (c) of the Law enables the award of a flexible remedy "for the benefit of the group" or "the benefit of the public" even in cases in which the awarding of compensation to the members of the group is not practical "for some other reason". Another reason of this kind may exist in those cases that preclude a precise calculation of the overall damage given that the data indicating the damage are not external data, such as a price hike of defined sum, but rather a collection of individual damages the precise proof of which depends on the testimony of each and every member of the group and  obtaining these testimonies is problematic – by way of example – if there is no possibility of identifying the members of the group.  In that situation, adherence to the regular rules of compensation in tort would frustrate the rationale and the underlying goals of the institute of the class action, which is intended to "protect the interest of the individual harmed who does not bother bringing an action; it represents a public interest in enforcing the provisions of the Law of which the class action is a part; it has a deterrent value against the violation of Law; it prevents the abuse of power by holders of control, whose portion of the capital is occasionally totally disproportionate to their power, and hence prevents manipulations at the expense of the "small investor"; it saves resources and prevents the multiplicity of suits" (CA 2967/95 Hanan Vakshet Ltd v. Tempo Beer Industries Ltd [24] at p. 323. See also the goals enumerated in s. 1 of the Law). It is for these reasons that the Class Actions Law outlines special arrangements that "occasionally deviate from the regular law and leave a broad margin of discretion for the court) Hanan Vakshet Ltd v. Tempo Beer Industries Ltd (as per President D. Beinisch, para. 6 of her opinion).

Structural failures of the kind discussed above in terms of the ability to prove "by precise calculation" the overall damage that was caused to the group or the individual damage caused to each member of the group, are particularly typical of consumer class actions. In cases of this kind there is an increased risk that the tortfeasor will profit and the profits reaped as a result of the tort committed will remain in his hands purely because of the difficulty of arriving at a precise calculation of the damage  which is spread over a large group of victims who cannot be identified (see Deutch, "A Decade for the  Class Action Suit", 33). American case-law refers to these profits as "ill-gotten gains". Regarding the justification for deviating from the classic principles of rectificatory justice in tort in this context, the Supreme Court of California wrote the following in the aforementioned Strauss case:

Fluid recovery may be essential to ensure that the policies of disgorgement or deterrence are realized. Without fluid recovery, defendants may be permitted to retain ill gotten gains simply because their conduct harmed large numbers of people in small amounts instead of small numbers of people in large amounts" (Strauss, p. 472).

50.  Indeed, s. 20 (c) of the Class Actions Law deviates substantially from the correlative principle underlying the regular principles of compensation which mandate total correlation between the circle of victims and the circle of the compensated. Compensation funds are not transferred to the victims and are used for "the benefit of the group" as such or "the benefit of the public", the assumption being that the victims  will derive indirect benefit. As such, the victims' interest in receiving compensation for the damage incurred is not realized in full.  However, from the victim's perspective the alternative of no remedy at all being awarded would support the award of a  remedy for the benefit of the group or the public, because partial and indirect benefit is preferable to not receiving any remedy at all.

A similar rationale also underlies the developing trend  that has developed in general Tort law, other than in the context of the class action, in cases of repetitive tendency. This tendency reflects the recognition that when applying the balance of probability rule in examining the causal connection between the acts of a particular tortfeasor and the damages caused to the victims at large it is preferable to promote the principle of rectificatory justice, even by way of cy pres comme possible, because the application of the principle in the classical sense, will in many cases achieve a result that is altogether remote from the restoration of the status quo ante.  This point was addressed  by Deputy President E. Rivlin in FHC 4693/05 Carmel Haifa Hospital v. Malul  [25] where he noted:

…in certain cases the principle of rectificatory justice  should be adjusted so that it focuses on the overall picture and not just on the isolated claim of a particular plaintiff before the court.  This enables a harmonization between the conception of rectificatory justice and the notion of relative compensation (para. 52 of his opinion. See also in para. 48 of Justice M. Naor's opinion).  

If the general law of tort is prepared to deviate from the principle of correlativity in suitable cases then a fortiori  it is both appropriate and correct to do in class actions. This is because in the class action and primarily those concerning consumer wrongs, the fundamental principle and goal that we seek to realize focuses on the achievement of effective and efficient deterrence against the dealers who breach the law and the consumers' rights ( see Deutch. "A Decade for the  Class Action Suit", 33). For otherwise the ones who profit are the tortfeasors who are large bodies that provide services to immense numbers of clients, and as such spread their damages among a large group of victims whose identity is not known, and their ill-gotten gain will remain in their own hands.  Redressing the injury caused to the individual victim on the other hand, is a less dominant interest in the class action given the fact that in most cases the damage caused to the individual consumer is relatively minor.

   Regarding the awarding of a remedy in the area of class actions in the U.S.A. by application of the principle of cy pres comme possible which originates in the laws of trust and means "as near as possible" and is also referred to as "next best recovery" see Natalie A. DeJarlais, The Consumer Trust Fund: A Cy Pres Solution to Undistributed Funds in Consumer Class Action, 38 Hastings L.J. 729 (1987); Stewart R. Shepherd, damage Distribution in Class Actions: The Cy Pres Remedy, 39 U. Chi. L. Rev. 448 (1972))for a critique of the expansive application of this principle, see  M. H. Redish, P. Julian & S. Zyontz, Cy Pres Relief and the Pathologies of the Modern Class Action: A Normative And Empirical Analysis, 62 Fla. L. Rev. 617 (2010) (hereinafter" Redish).

Hence, in terms of policy considerations both those anchored in the general rules of tort and those specific to the laws of class actions, we should strive to ensure that inability to identify the victims does not create an insurmountable obstacle to filing a claim in court (see A. Porat, "Collective Liability in Tort Law", Mishpatim 23, 311, at pp. 384-385), and see also comments of Justice E. Mazza in Barazani Further Hearing [3], at pp. 449 – 451).  In this context, for purposes of the class action proceedings the possibility of awarding a remedy for the benefit of a group or the public as established in s. 20 (c ) of the Class Actions law constitutes an important component.    

51.  All the same, we should not forget that another one of interests to be pursued in the class action proceeding is that of fairness to the defendant and protection of his substantive and procedural rights. From this perspective, and given that our concern is with a monetary remedy, we are obligated to ensure that the relaxing and flexibility of the procedural rules anchored in the Class Actions Law do not produce a situation in which obligation imposed upon him exceeds the sum of the damage that he caused) (regarding the dismissal of the motion to certify a class action inter alia by reason of this concern, see McLaughlin v. American Tobacco Co. [53 ]. Indeed, from the tortfeasor's perspective less importance attachés to the question of how the compensation is distributed. His substantive interest concerns the extent of the sums that he will be obliged to pay, and less with the question of how they are utilized thereafter. The desire to protect the interest of the defendant as mentioned underlies, inter alia, the provisions of the s. 20 (e) of the Class Actions Law, which negates the awarding of exemplary damages against the defendant and also negates the awarding of compensation without proof of damages (apart from in a suit in accordance with s. 9 of the Second Schedule). Another balance between the public interest of the victims on the one hand, and the defendant's interest on the other hand may also be found in the provision of section 20 (d)(2) of the Class Actions law in accordance with which in the awarding of the remedy the court may also have consideration for "the damage that is liable to be caused – by the payment of compensation, its amount or the manner of its payment – to the defendant, to the public that uses the defendant's services or to the general public by damaging the defendant's economic stability, as opposed to the expected benefit for members of the group  or for the public".  Parenthetically, it should be noted that Tnuva did not make any claims in court in reliance on the provisions of s. 20(d) (2) of the Law. It was for this reason that the Lower Court found no reason to consider these provisions and there are no grounds for us to address them at the appeal stage.

52.  American case-law offers a variety of approaches to the question of whether and under what circumstances the sum of compensation in class actions can be determined other than by a precise calculation. Some have contended that where there is no possibility of determining the overall sum in a precise manner, there are generally no grounds for using the FCR doctrine (on this interpretation of the FCR doctrine, see Michael Malina, Fluid Recovery as a Consumer Remedy in Antitrust Cases, 47 NYU L. Rev. 477, 488-491 (1972)). All the same, in order to resolve the difficulties that arise in this context the various U.S.A. courts, the courts have developed statistical mechanisms that enable the evaluation of the damage caused to a group, while waiving to certain degree the demand for "precision" (hence  damage was determined in relation to the average wage which was determined based on statistical means, see: Pettway v. American Cast Iron Pipe Co., 494 F.2d 211 (5th Cir. 1974) [54]; Stewart v. General Motors, 542 F.2d 445 (7th Cir. 1976)[55]; Bowe v. Colgate-Palmolive Co., 489 F.2d 896 (7th Cir. 1973)  [56]; United States v. Wood, Wire & Metal Lathers Int. Union, Local Union 46, 328 F. Supp. 429, 442 (S.D.N.Y. 1971)[57].  Similarly, the court enabled proof of damage by way of sampling and by means of other statistical methods. See e.g. Hilao v. Estate of Ferdinand Marcos [50].  For a different approach see Hood v. Eli Lilly & Company 671 F. Supp 2d  397, 434-453 (E.D.N.Y. 2009)  453 [58].

In Another case  (Long v. Trans World Airlines, Inc. 761 F. Supp. 1320 (N.D. Ill. 1991 [[59]) the court wrote that:

"Defendant has no "right" to an individualized determination of damages for each plaintiff; the desire for accuracy must be balanced against other factors such as the burdens of discovery in relation to the size of the individual claims." (Id. at 1327).

Even among scholars it has been contended that creative use should be made of "aggregate proof) in order to assess the rate of collective damage caused to the members of a group. This was noted by the scholars A. Conte & H.B. Newberg, in their book Newberg on Class Actions (Vol. 3, 4th ed.2002):   

"There are occasions when it is feasible and reasonable to prove aggregate monetary relief for the class from an examination of the defendant's records, or by use of a common formula or measurement of damages multiplied by number of transactions, units, or class members involved, or by reasonable approximation with proper adherence to recognized evidentiary standards". (Id. 476).

53.  The interests we have examined that underlie the class action lead to the conclusion that where a remedy is awarded for the benefit of a group or the benefit of the public under s. 20 (c ) of the Class Actions Law, we should aspire to ensure that the overall sum of liability is consistent with the overall damages caused by the defendant. In order to determine this sum there is no impediment to adopting a method of estimation, which is an accepted and recognized method in our system for quantifying damages  in cases in that do not admit of precise calculation of the  damage incurred by the individual victim. This point was addressed by this Court in CA 355/80 Anisimov Ltd v. Tirat Bat-Sheva Hotel  [26],:

In those cases, in which, the nature and character of the damage, enable the production of accurate data, the victim-plaintiff must do so, and should he fail to do so damages will not be awarded to him. On the other hand, in cases in which the character and the nature of the damage render it difficult to prove the degree of damage and rate of compensation with certainty and accuracy, it will not frustrate the victim's claim, and it will suffice if adduces such data as can reasonably be obtained, while granting discretion to the court to make an estimate that supplements that which is missing  (p. 899).  

It was further ruled that in appropriate cases statistical data can be used for determining the scope of the damage (see; Rivlin, Shani, at pp. 506 – 507), and the expert opinion. As such, and a fortiori, this method may be used where it concerns a group. All the same, it is stressed that the evaluation of the damage by estimation does not mean the determination of an arbitrary amount which seems to be no more than a guess, and the court using its discretion in such a case must base the sum it determines upon  appropriate anchors that enable the evaluation of damage by way of estimation, as stated (see Daaka [4] at p. 583, Barak Erez, 277).

54.  The non-pecuniary damage which the Lower Court was requested to award in this class action is in the genre of damages the nature and character of which  do not admit of precise calculation and in cases of individual claims too, will always be subject to the court's estimation (apart from compensation claims for road accidents in respect of which the Compensation for Road Accident Victims (Calculation of Compensation for Non-Pecuniary Damages)  Regulation 5736-1976 (hereinafter Road Accident Regulations), prescribes  formula for determining non-pecuniary damage as a derivative of the rate of disability and a ceiling sum determined in the ss. 4 (a)(3) and 4 (b) of the Compensation for Road Accident Victims Law, 5735-1975). Regarding the essence and the methods for calculating non-pecuniary damage in differing contexts, see CA 4022/08 Agbaba v. Y.S. Company Ltd [27], paras 10 – 24;  C.A. 754/05 Levi v. Share Zedek Hospital [28]).

In s. 20 (e) of the Class Actions Law, the legislator authorized the court to  award compensation for non-pecuniary damage caused to the group member. However, the determination of non-pecuniary damage in the present case is no simple task. As mentioned, there is no possibility of identifying the group members who consumed long lasting, low fat milk during the relevant period for the suit, and hence the Court availed itself of statistical data and expert opinions in reliance upon which it reached a conservative, cautious determination that the group comprised 220,000 members. We concluded that the reference group for purposes of compensation for damage occasioned by infringement of autonomy is limited to that portion of the consumers group who incurred consequential damage due to the infringement of autonomy and who experienced negative feelings in various forms upon becoming aware that the milk they drank contained silicon.  Our determination regarding the number of group members included in the group of those entitled to the said compensation (154,000) was also based on statistical data and the expert opinions presented in the proceeding. Our concern is therefore with a group numbering over 100,000 people, whom can be neither identified nor located, and even were it possible to locate them, it is doubtful whether it would even be appropriate to instruct each one of them, or even some of them to submit an affidavit specifying the intensity of the negative feelings that they experienced in order to award compensation in accordance with one of the mechanisms established in s. 20 (a) of the Class Actions Law. Given the impossibility of determining compensation based on individuated evidence or precise calculation and the impossibility of identifying the members of the group entitled to compensation, we are left with the compensatory mechanism established in s. 20 (c ) of the Class Actions Law, which enables the determination of overall compensation based on an estimation for the benefit of the group or the public. The question that presents itself is how, if at all, to estimate the "collective" non-pecuniary damage in this case, and whether the fact of its being non-pecuniary damage that is characterized by subjective, individualistic features, should preclude the possibility of "uniformity" in determining the overall sum of compensation, due to the differences between the victims in terms of the results of the damage.

In rejecting Tnuva's claim in this context, the Lower Court ruled that "It is no longer possible to make a sweeping claim that uniform compensation cannot be awarded for non-pecuniary damage, absent the possibility of proving individuated damage" (para. 128) and hence the court fixed the sum of compensation at NIS 55 million, stating that this sum reflects uniform compensation for the sum of NIS 250 for each victim (220,000 X 250) for the non-pecuniary damage caused to the members of the group. The Court further mentioned that had a non-pecuniary compensation for Tnuva's action been awarded in the framework of an individual suit, the sum of the compensation would have been higher, but the court's approach was that this context demanded consideration of the fact that the issue was one of overall compensation being ruled for the group in its entirety or for the benefit of the public, in the absence of the possibility of having consideration for the individual damage caused to each one of its members. In the courts' words:

 [a]fortiori the court does not examine the individual damage of each member of the group, given that  not only is the remedy awarded to the group as a whole, but it is also given to the group and not to its individuals. The court is even entitled to fix the overall sum of compensation for the group based on estimation. This does not mean that the court should avoid the determination of important parameters for purposes of calculating the overall damage. The court must definitely determine the number of members in the plaintiff group, at least by way of estimate. Similarly, the court must assess the scale of the individual damage caused to  each one of the group members, to ascertain that the overall sum of compensation awarded to the group does not exceed the aggregate damage caused to its individuals. However, at the end of the day, the court must determine an overall sum of compensation to be awarded to the group having consideration for the totality of considerations, but it must not ignore the fact that the compensation is not intended as individual =  compensation for each of the group members. The overall compensation  must be commensurate and in proportion to the wrongful act and the circumstances of its commission, even if the division of the sum by the number of group members would indicate a lower rate of compensation by comparison to the rate of individual compensation that would have been awarded had a personal claim been filed against the defendant by reason of that tort.   

Granting the plaintiffs' request would have meant determining Tnuva's liability for an overall sum of NIS 1.76 billion (NIS 8000 X 220,000 members of the group). It is absolutely clear that this result is unreasonable and unrealistic. Having considered all of the circumstances as set detailed above, I determine an overall sum of compensation for the group of NIS 55 million which reflects an estimated rate of damage for each members of the group of the sum of NIS 250. This degree of damage, and even higher, was most definitely caused to each member of the group, even if only by reason of the infringement of individual autonomy (para, 134 (b) of the decision, emphasis in source).

55. In this appeal, Tnuva challenges the determination of the compensation according to the mechanism prescribed in s. 20 (c ) of the Law, arguing that  given the type of the damage (non-pecuniary damage, with subjective-individual features), and given the impossibility of proving the damage to the group in terms of its individual members due to the impossibility of identifying its members, there were no grounds for determining uniform compensation for the group, even at a minimal rate  NIS 250 for each individual). On the other hand, Raabi claims that given the Court's view that the appropriate compensation for the infringement of autonomy had it been a personal suit was not less than NIS 8000, it should have awarded that rate of compensation multiplied by the number of members in the group (which was similarly challenged on the part of Raabi, as detailed above), and the fact that such a significant figure was received as a result

Indeed, in cases in which there is significant differentiation between the group members it may yield the conclusion that the matter is not suited for adjudication as a class action (see s. 8 of the Class Actions Law; CA Reznik v. Nir National Cooperative Association for Workers Settlement  [29] paras. 24 – 27 (hereinafter: Reznik), See also LabApp (Nat.) 425/00 Goldberger v. Guards Association Ltd  [    ] para. 8 ; Civ.App. (Naz) 1528/05 Barzilai v. Ferinir (Hadas1987 ) Ltd (para. 27.2) [  ]; on the other hand, see TM 105/06 (CivApp.30858/06) (Tel-Aviv-Jaffa) Feldman v Municipalities Sewage Association (Dan Region) para. 52 ; CF (Tel-Aviv-Jaffa) 2719-06 Levi v. Israeli News Company Ltd para. 17; and see also Klement, "Boundaries of the Class Action", at pp. 345-346).   It would seem however that the claim concerning differentiation between the group members has the power to bring about the non-certification of the suit as a class action and even its rejection if certified, in those cases in which the differentiation has implications for the establishment of liability or even the very existence of an actionable cause.  The main concern in this context is that it may prejudice the defendant's right to a fair proceeding and to be able to defend himself against each and every one of the group members. This happened in the Resnik [29] case where the defendants raised the prescription claim, the decision on which was not necessarily identical with respect to each and every member of the group, and for that reason the court did find grounds for its certification as a class action.  In that case Justice Gronis stated that "Certain solutions for the absence of homogeneity between the group members are found in ss. 20 (a) – (c) of the Class Action Law, that includes provisions  regarding the remedy that will be awarded by the court".  The court further added that it was not required to rule on the question of the "cases in which the suit should be certified as a class action notwithstanding the existence of individual features, by having resort to the mechanisms of s. 20 of the Class Actions Law, or other solutions" but it still saw fit to stress that there are cases in which "these solutions are unable to provide a solution" and as a result they cannot be certified for filing  as a class action (ibid, para. 27). The issue of differentiation (the foundation of commonality) between the group members was likewise the subject of discussion in  recent decision of the Supreme Court of the U.S.A in the Wal-Mart  issue. In that case a request for certification of a class action was filed in the name of a million and a half employees of the Wal-Mart network based on illegal discrimination against them as women with respect to matters of salary and promotion.  The trial instances and the appellate instance certified the suit as a class action Dukes v. Wal-Mart Stores, Inc. [51] . The Supreme Court however reversed the decision, ruling that the suit should be be certified in view of the plaintiffs' failure to prove that the company had conducted a general policy of discrimination, in other words, it failed to prove the existence of a grounds for claim regarding every single group member. It also held that under the circumstances it was not possible to calculate a compensation sum by statistical methods and by way of a representative sampling, inter alia  in view of the defense claims in the law itself, which the company was able to raise regarding each and every company in the group.

Tnuva's argument concerning differentiation is to no avail in our case.  Its argument relates exclusively to negating the possibility of awarding uniform compensation for the non-pecuniary damage sustained by the group members under the circumstances, in view of what it claims is the lack of uniformity among the victims in this context.  In the Court's eyes, this differentiation did not justify the non-certification of the suit as a class action and I concur with the stance of the Lower Court that neither does it preclude the award of a remedy after the clarification of the class action that was certified as stated.   First, even in suits that are not conducted as class actions in which there are multiple plaintiffs, such as suits for building defects, the court does not refrain from awarding uniform compensation by way of estimation for the non-pecuniary head of damage (on "uniformity of damage" for mental anguish in regular suites filed on behalf of a number of plaintiffs, see the district court decisions cited in para. 121 of the decision). Second, as distinct from differentiation among the members of the potential group, that may have implications for the existence of an actionable cause and the basic entitlement of each member to a remedy, where the differentiation concerns the sum of compensation, it finds its solution in the various mechanisms of s. 20 of the Class Actions Law that deal with the remedy that the court is authorized to award. The establishment of these mechanisms is intended to ensure that the differentiation among the group members regarding the determination of the remedy, just like other difficulties in proving damage which stem from the inability to identify or locate the group members, will not frustrate in limine  the clarification of the matter by way of a class action and the realization of the goals upon which this proceeding is based in terms of the public interest and in terms of the group concerned, which we dealt with above at length.  Accordingly, differentiation relating to the rate of the damage, will not  in general prevent the clarification of the class action and the award of a remedy in the framework thereof, including with respect to the award of uniform compensation that will be determined by way of estimation, unless under the circumstances of the particular case prevent the award of an appropriate remedy in accordance with one of the mechanisms set forth in s. 20.

56.       That said, it would not be superfluous to note that differentiation between the group members may occasionally be raised as an argument for denying certification of suit as a class action, or against the award of a uniform compensation in the framework thereof, specifically from the perspective of the potential group members, in those cases in which awarding uniform compensation prejudices the rights of those group members who wish to prove their suit on an individualized basis and thereby merit larger compensation. American case-law treated this concern as a potential violation of due process rights, which  in turn lead to the rejection of the certification applications for class action suits, stressing the fact that the mechanisms established in the relevant statutory provisions do no include the right to opt-out of a class action proceeding, see  - Federal Rules of Civil Procedure,  Allison v. Citgo Petroleum, 151 F.3d 402, 414-415 (5th Cir. 1998) [60]; Lemon v. Int'l Union of Operating Engineers, Local No. 139, AFL-CIO 216 F.3d 577 (7th Cir. 2000) [61]; Jefferson v. Ingersoll Int'l, Inc. 195 F.3d 894 (7th Cir. 2001) [62]; Reeb v. Ohio Department of Rehabilitation and Correction, 435 F.3d 639 (6th Cir. 2006) [63].

For additional cases in which class actions were not certified in the U.S.A. against the background of the differentiation between the group members, see In re Fibreboard Corp., 893 F.2d 706, 712 (5th Cir. 1990) [64]; Windham v. American Brands, Inc., 565 F.2d 59 (4th Cir. 1977) [65]. However, in the U.S.A. this approach is not relevant to certification applications for class actions in accordance with legislative provisions that contain mechanisms for an opt-out right.

 Israeli law in this context differs. The Class Action Law mandates the registration of the application to certify the suit as a class action, and the registration of its certification in the Class Actions Register (ss. 6 (a) and 14 (b) of the Law, and irrespective of the nature of the suit each and every group member is entitled to give notice that he does not wish to be included therein (s. 11 of the Law).   Moreover, proponents of the approach that views the group as an entity in its own right have  opined that there is need for a "sacrifice" on the part of each member of the group of with respect to his individual rights as a litigant, in view of his obligation to "tie his fate" with the fate of the group  (see David L. Shapiro, Class Actions: The class as Party and Client, 73 Notre Dame L. Rev. 913, 919 (1998).

The claim raised by Raabi in his appeal concerning the paucity of the uniform sum  that was awarded is not based on the claim of differentiation and the claim that any particular member of the group suffers as a result.  Raabi does not dispute the fact that in this case, in the framework of a class action, it was not possible to clarify the individualized damage incurred by each and every group members nor does he dispute that it was not possible to identify or locate them.  His claim relates solely to the smallness of the sum awarded as uniform compensation (NIS 250), given the fact that the Lower Court expressed its view that had the case been adjudicated as an individual claim it would have been appropriate to award far higher compensation (NIS 8000). Accordingly, Raabi claims that the sum of uniform compensation for purposes of calculating the overall compensation for the benefit of the group should be set at  NIS 8000.

57.  Examination of the Raabi's testimony (pp. 71-81 of the protocol) indicates that over a period of years that included the entire period that was relevant for the class action (23 October 1994 until September of 1995) he consumed significant quantities of  long lasting low fat milk. However, the range of consumers of long lasting milk is varied both in terms of the duration of the consumption period and in terms of the scope of consumption. Hence, it may be assumed that the relevant group includes those who did not consume the milk for the duration of the period, those who consumed it in far smaller quantities than those consumed by Raabi and those who drank fresh milk on a regular basis and who only consumed the long lasting milk that they had purchased on rare occasions, when under various circumstances it served as substitute for fresh milk.  This varied range of consumers of long lasting milk that contained silicon must be taken into consideration when determining the uniform compensation to be awarded for the violation of the autonomy of the group members who suffered consequential damage as a result.  The claim of the  representative plaintiffs' that the group in its entirety should be awarded the same compensation (NIS 8000) that was demanded by Raabi as the main plaintiff, fails to consider the differentiation between the group members that we discussed above, and for that reason alone we can dismiss the claim.   Furthermore, contrary to the position of the Lower Court, even on an individual level I see no justification for awarding Raabi compensation for the sum of NIS 8000 (as valued on the date of the suit) for the damage head of infringement of autonomy. This takes into account the fact that we are no concerned with an infringement of the highest conceivable level and the fact that as distinct from compensation awarded in other contexts of non-pecuniary damage, our concern is with negative feelings experienced by the group members for a limited time, the peak of which was presumably when it became known to those who had consumed the milk, post factum, that it contained silicon.  In other words, the non-pecuniary damage is not of the kind that accompanies the victim for life, such as pain and suffering in the wake of permanent physical disability as a result of medical negligence.  As such I think  that on an individual level too, even where it concerns a permanent consumer of long lasting  low-fat milk for the entire relevant period, the compensation sum awarded for consequential damage (feelings of anger, frustration, revulsion, anxiety, fury etc)  resulting from the infringement of his autonomy should not be exaggerated.  A fortiori, the uniform  compensation to be awarded to the entire group should not be exaggerated, given the differentiation between its members in terms of the scope of the damage and its intensity.

58.  This brings us back to the question of what constitutes the group compensation to be awarded in the case at hand, and whether the path taken by the Lower Court was appropriate for its ruling. As mentioned, the Lower Court concluded that compensation amounting to NIS 1.76 billion, which is arrived at by multiplying NIS 8000 for an individual by the number of group members (220,000), is a result that "is unreasonable and unrealistic" and it therefore set the sum of the overall group compensation at  NIS 55 million, stating that this sum "reflects an estimated individual damage of  NIS 250 for each of the individuals of the group".

In view of the great variety in the group in terms of its habits of consumption of long lasting milk containing silicon and in view of other features of the infringement of autonomy which we discussed above, including: the intensity of the infringement, and the fact that one can imaging higher rates of intensity, and the limited duration of the time during which the members of the group experienced negative feelings, I believe that the sum of NIS 250 can be accepted as a sum that is commensurate for purposes of setting the individual, uniform compensation.  The multiplication of this sum by the number of group members who suffered consequential damage by reason of the infringement of autonomy gives us an overall compensation sum of NIS 38,500,000 (250 X 154,000).   In its pleadings, Tnuva proposed that to the extent that it be obligated to pay compensation, it would be appropriate that the profit it made should serve as a basis for its calculation, indicating that the profit was NIS 1,645,900 in terms of the principal and with the addition of interest and linkage differentials (from the middle of the period)  - NIS 4,981, 616. In principle, this model for calculating compensation should not be negated (on the approach whereby compensation based on denial of the tortfeasor's profits realizes the principle of corrective justice in the law of tort, in appropriate cases, see Ernest J. Weinrib Restitutionary Damages as Corrective Justice 1 Theoretical Inquiries in Law 1 (2000).  It has even been claimed that this model is preferable for class actions in which the compensation awarded is a compensation for the benefit of the public under s. 20 (c ) of the law. This is because in cases like these there is no real correlation between the obligation imposed upon the tortfeasor and the public of those who are compensated, and the purpose of remedying the damages of the victims is not really achieved due to the practical inability to identity the members of the group, to identify them or to compensate them. As such, the emphasis should be placed on the other objectives of the law of tort, including effective deterrence and prevention of unlawful enrichment of the tortfeasor. Indeed, the use of unlawfully obtained profit as a departure point for calculating compensation maintains the correlation between the intended purpose of the compensation and the manner of its calculation. However, even though on the level of principle the model based on the denial of profit for calculating compensation for the benefit of the public under section 20 ( c) of the Class Actions Law  should not be dismissed, it must be remembered that this model is not appropriate and not applicable in all of the cases. For example, it would difficult to apply it in a case which the tortfeasor did not profit as a result of the wrongdoing.  As such, when awarding compensation for the benefit of the public the court must examine all of the data before it, and in accordance therewith to formulate the model best suited for its ruling. In our case, at the very outset Tnuva did not present us with detailed, substantiated and reliable data on the basis of which it would have been possible to examine the possibility of calculating overall compensation based on the denial of profit model.  For example, Hagit Adler (who was employed in Tnuva as of 1996 and who served as the marketing manager when she gave her affidavit), stated that at the time of giving the affidavit (November 2004) “Tnuva does not have ….precise data regarding the rate of profitability of long lasting milk of 1% fat during the relevant period (section 17 of the affidavit). Adler did propose to base the findings in this case on the rate of the profitability of long last milk with 1% fat on the later years (1999 – 2001), but regarding these years too, the only thing that was attached was a page of pricing relating to these years, taken from a document that was not presented in full, the authorship of which is not clear nor the data on which it is based, One of the other possible models or purposes of determining compensation for the benefit of the public, is the model that was adopted by the Lower Court and which we too endorsed. This formula, based on statistical data (regarding the number of victims) and uniform individual compensation, complies – albeit in the form of cy-pres calculation -  with the traditional and accepted method of calculating compensation in torts law. All the same, and given that our concern is with cy-pres calculation, the application of the this model must be subject to the caveat that the cy-pres calculation must be done with the requisite caution and tend to be conservative, so that the sum of overall compensation will not spill over into the realm of punitive exemplary compensation which are not to be awarded in representative suits, pursuant to the legislative fiat in section 20 (e) of the Class Actions Law.

In conclusion, the overall compensation that should be imposed on Tnuva in this case according to the model that we endorsed is fixed at NIS 38, 500,000 as valued at the date of the decision of the Lower Court, (17.10.2008).

The Method for Distributing the Compensation Awarded for the Benefit of the Public

59.       In order to balance between the public objectives and the private objective, American law has formulated a variety of mechanisms for providing a remedy for the benefit of the group in its entirety or for the public benefit, including discount mechanisms (“price rollbacks”); the transfer of the compensation funds to government body by way of their designation for goals that will benefit the actual victims (“earmarked escheat”);  a “consumer trust fund”; and in appropriate cases, the relative participation (pro rata) of the current group members in balance of the funds (“claimant fund sharing” (regarding this, see Strauss, at pp. 473- 476). All the same, there are those who have sharply criticized the use of collective compensatory mechanisms for the public benefit in cases in which it is difficult or impossible to the individually compensate the members of the group (see e.g. Redish; Powell v. Georgia-Pacific Corporation, 119 F.3d 703, 706 (8th Cir. 1997) [66]; In re: Airline Ticket Commission Antitrust Litig, 268 F.3d 619, 625 (8th Cir 2001) [67].Regarding the variety of approaches adopted in American case-law on this matter and the differing approaches to the most optimal correlation between the distributive mechanism and the goals of the particular suit and the interests of the group members, see  In re Folding Carton Antitrust Litig. 744 F.2d 1252 (7th Cir. 1984) [68] ; Houck v. Folding Carton Admin. Comm., 881 F.2d 494 (7th Cir. 1989) [69]; In re Cuisinart Food Processor Antitrust Litig.38 Fed. R. Serv. 2d (Callaghan) 446 (D. Conn.1983) .[70]; Democratic Cent. Comm. v. Washington Metro. Area Transit Comm'n [71]   ], 84 F.3d 451 (DC cir. 1996); In re Domestic Air. Transp. Antitrust Litig,    148 F.R.D. 297 (ND Ga 1993) [72] . 

On the approaches adopted by scholars on this issue, see Newberg, 505-543; Anna L. Durand, An Economic Analysis of Fluid Class Recovery Mechanisms, 34 Stan. L. Rev. 173 (1982); Kerry Barnett, Equitable Trusts: An Effective Remedy in Consumer Class Actions, 96 Yale L.J. 1591 (1987); Christopher R. Leslie, A Market-Based Approach to Coupon Settlements in Antitrust and Consumer Class Action Litigation, 49 UCLA L. Rev. 991 (2002).

See also Goldstein, 430- 431. on the use of systems of collective compensation in the Common law states, see Rachel Mulheron, The Class Action in Common Law Legal Systems: A Comparative Perspective, 426-430 (2004)

As indicated by the provision of section 20 (c ) of the Class Actions Law, the Israeli legislator chose an approach that enables an award of compensation for the benefit of the group as a whole and for the benefit of the public according to a system of collective compensation, even in the cases in which technical reasons preclude individuated compensation for the group members. In doing so the legislator expressed the view that the public goals which the Class Actions Law is designed to serve and which we dwelt on at length above are of no less importance than the private goals and hence the  reason to strive to realize those goals even where various difficulties prevent the proving of the precise aggregate of the individual damages caused to the group and the maintenance of conformity between the public of victims and the public of those who are compensated. At the same time, it is important to note that according to the hierarchy prescribed by section 20 (c ) of the Class Actions Law, preference should be given, to the extent possible, to compensatory mechanisms that reflect such conformity, and even when awarding compensation according to section 20 (c ), in the absence of the possibility of awarding it under sub-sections (a) and (b), every effort should be made to structure the mechanism for distribution of compensation in a manner that achieves at least an element of connection between the public of those compensated and the public of victims.

60.  In the case before us, regarding the distribution of the Lower Court held as follows regarding the distribution of the

“Having consideration for the difficulties involved in the solution of the reducing the price of milk, given the immense sum of overall compensation ruled in favor of the group (NIS 55 million) and for reasons of the benefit of the group and the public – the sum of the compensation should be designated for three essential goals – First, benefitting the group members by reducing the price of the product (or increasing the contents without raising the price); second – research and scholarship fund in the field of food and nutrition which have implications for public health; third - distribution of milk free of charge to populations in need via non-profit organizations so involved (para. 144 (O), of the decision, emphasis in source).

In holding that one of the objectives for which part of the compensation sum should be awarded is the providing of a benefit via a discount from the product price, the Court, by its own account,  was at the every least attempting to establish a group connection between the victims of Tnuva’s conduct and those who would gain from the benefit. However, in our case it is doubtful whether such a connection actually exists. The connection which the Lower Court sought to establish in this context proceeds from the assumption that those who consumed long lasting low fat milk of Tnuva during the relevant period continue to do so today as well. The problem is that there is only a low probability that this assumption actually materialized, inter alia because of the passage of time and changes in consumption habits and even more so when considering our conclusion to the effect that compensation for infringement of autonomy during the relevant period (23 October 1994 – September 1995) should not be awarded exclusively according to objective criteria and the victims group should be limited to those who suffered consequential damage as a result of the infringement and experienced revulsion, frustration, anger, and other similar negative feelings. When supplementing this by the considerable dangers generally involved in a discounts arrangement that requires a detailed examination of the influence manner in which the arrangement affects the relevant market (see Amir Israeli “Settlement in a Class Actions that Infringes Free Competition, in the wake of CF 1012/02 Yifaat v. Delek Motors Ltd   [   ] Hearat Din 2 (2) 112, 118 – 125) (5665), and the need to receive a reconfirmation from the Director of Antitrust (due to the passage of time from the time of that the gave the previous confirmation in this context) it would seem that in the current case it is preferable to waive the allocation of part of the compensation for the purposes of the discounts arrangement and to focus on the two other objectives determined by the Lower Court, which serve worthy interests for the benefit of the public in its entirety. The portion deducted for purposes of the discount arrangement will be divided equally between these two objectives and hence the compensation sum shall be distributed in the following manner:

       a.         For the study and research fund – 44.33% and for the distribution of milk products to the needy 55.66%.

       b.         The distribution of the  milk products (and not just long lasting milk that formed the subject of the claim) will be effected over a period of five years from commencement date for the execution of the decision, by way of the 2 non-profit organizations "latet" and “Mishulhan leShulhan”  both of which supply food to dozens of other non-profit organizations around the country, as held by the Lower Court in its decision of 17 June 2009, which gave force to the agreements reached between the parties with the cooperation of the representative of the Attorney General and with his consent, attached to the notification of the parties dated 10 June 2009, in the Lower Court (hereinafter: the supplementary decision”).

       c.         For purposes of transferring the compensation for research purposes in the field of food and nutrition, a study fund will be established, headed by the Head Scientist of Ministry of Health. The fund management will choose the studies that are to receive scholarships, and will supervise them. The members of the management will be the entities specified in section 6C of the agreements reached between the parties and which were approved in the supplementary judgment.  The intention is to use the entire sum of compensation earmarked for the study fund within 5 years, unless it becomes necessary to use the sum thereafter as well, in keeping with the Lower Court’s decision in the supplementary decision.

       Compensation for the Representative Plaintiffs and

    61.          In its partial decision and its supplementary decision the Lower Court ordered the payment of compensation and advocates fees to the representative plaintiffs and their attorneys, and all told ordered Tnuva to pay the sum of NIS 500,000 to the Raabi heirs; the sum of NIS 1,000,000 to the Israel Consumer Council and the sum of NIS 2,500,000 to the attorneys of the representative plaintiffs.

       Tnuva argues that according to the criteria outlined regarding this issue in the Class Actions Law, there were no grounds for awarding such high sums to the representative plaintiffs and their attorneys. In this context Tnuva contends inter alia that the involvement of the Israeli Consumer Council in this context was only minimal, that it did not assume any risk and did not require any monetary incentive for acting in consumer related matters.  It further submits that the rate of the compensation and advocates fees awarded is far in excess of the rate awarded in other cases, and that in this context it would have been appropriate to have consideration for the discrepancy between the sums demanded by the representative plaintiffs (who initially set their at NIS 4 billion) and the sum that was finally awarded.

The representative plaintiffs on the other hand claim that there are no grounds for interfering in the rate of compensation fixed by the Supreme Court, which does not deviate from the criteria prescribed by statute and case law in this context. On the other hand, they see cause for interfering in the sum of fees awarded to their attorneys and contents that the considerations that guided the court in this matter were mistaken. Inter alia they argued that there was no basis for the finding of the Lower Court to the effect that "the case was not always handled in "the best and most efficient manner" and that under the circumstances there were no grounds for attaching weight to the discrepancy between the sum demanded and the sum awarded  and that their attorneys invested extensive and intensive work over the years in this precedential case, which is tremendously important from a public and consumer perspective.  As such they claim that an order should be given for fees amounting to 20% of the overall sum of compensation.

62.  The criteria for the determination of compensation for the representative plaintiffs are set forth in section 22 of the Class Actions law, which states:

 

Compensation for the representative plaintiff

22. (a) If the Court decided all or part of a class action in favor of all or part of the group, including by way of approving a compromise, then it shall order compensation to be paid to the representative plaintiff,

taking into account considerations said in subsection (b), unless it concluded – for special reasons that shall be recorded – that that

is not justified under the circumstances of the case.

 (b) When it sets the amount of compensation the Court shall, inter alia, take these considerations into account:

 (1) the effort exerted and the risks assumed by the

representative plaintiff by bringing and conducting the class action, especially if the relief requested in the action is declaratory relief;

 (2) the benefit which the class action yielded for members of the group;

 (3) the degree of public importance of the class action.

 (c) In special cases and for special reasons that shall be recorded, the Court may:

 (1) adjudge compensation to the petitioner or representative plaintiff, even if the class action was not approved or if the  

class action was not decided in favor of the group, as the

case may be, taking the considerations said in subsection (b) into account;

 (2) adjudge compensation to an organization that participated in hearings of the class action under the provisions of section 15, if it found that to be justified by the trouble taken and the  contribution made by its said participation in the hearings.

 

Section 23 of the Law established criteria for the ruling of the legal fees of the representative attorney, as follows

23. (a) The Court shall set the representative attorney's legal fees for conducting the class action, including the petition for certification; the representative attorney shall not accept legal fees in excess of the sum determined by the Court as aforesaid.

 (b) When it sets the representative attorney's legal fees under subsection (a), the Court shall, inter alia, take the following considerations into account:

 (1) the benefit which the class action yielded for members of the group;

 (2) the complexity of the proceeding, the trouble taken by the representative attorney and the risk he assumed by bringing and conducting the class action, as well as the expenses he  incurred for that purpose;

(3) the degree of public importance of the class action;

 (4) the manner in which the representative attorney conducted the proceeding;

 (5) the gap between the relief sought in the petition for approval and the relief adjudged by the Court in the class action….".

   The criteria for determining compensation and legal fees are essentially similar and reflect the desire to incentivize the filing of class actions (on the importance of this consideration see Moshe Telgam, "The Class Action – Considerations for the Determination of Fees and Compensation" Shaarei Mishpat 4, p. 227 (5768). All the same, it should be noted that an overincentive in this context could encourage the filing of trivial suits or "inflated" suits with no justification, given that those filing these suits would be primarily interested in the compensation and legal fees that they could expect to receive (on the negative influence of trivial suits and the attendant concern of a weakening of the standing of the class action, see CA  1509/04 Danush v  Chrysler Corporation [30] para. 15).  An additional, and important criteria for the determination of legal fees, reflected in s. 23 of the Law cited above, is the existence of a commensurate relationship between the legal fees and the effort invested in the suit and the benefit it produced. The Law further adds and prescribes in this context a number of criteria intended to guide the conduct of the attorney of the representative plaintiff' so as to create a positive incentive for conducting the suit efficiently and fairly (see CA 9134/05  Adv. Eliezer Levit v. Kav Of Zafon, Cooperative Association for Services Ltd  [31] para. 12 (hereinafter – Levit), regarding s. 23 of the Law.  And see also AAA 2395/07  Accadia Software Systems Ltd v. State of Israel – Director of Tax and Stamp Duty [32] para. 20 (hereinafter – Accadia);  CA 7094/09 Borozovsky  Conveyancing Ltd v. Ichurn Itur Veshlita Ltd [33] paras 11- 14).  As evidenced by the wording of ss. 22 and 23 of the Law, the list of considerations enumerated is not exhaustive and is intended to outline "general guidelines which attest to the general intention of the law and the objectives it seeks to realize" (see Levitt, para. 12). That said, in general the criteria enumerated in the law may be divided into three principal categories: considerations of expenses, considerations of yield for the group represented, and considerations of public guidance (see Klement, at pp. 158 – 162).

63.  A central question to be considered in determining the rate of compensation and the legal fees is whether the filing of the class action was necessary in order to merit the particular remedy (Levit [31] para. 14). The case before us is a classic example of a case which would not have been decided had it not been for the class action. In determining the compensation the court gave consideration to this central consideration as well as to the other pertinent considerations, indicating that the task of differentiating between the representative plaintiffs was done for the main part by the Consumer Council, and in dwelling on the importance of creating incentives for the filing of suits for the Consumer Council as well. The Court further dwelt on the fact that this case made an important contribution to the group and the public and addressed the protracted time period during which the suit was conducted. Regarding the legal fees to be awarded to the representative attorneys the Court addressed the immense amount of work that they had invested, the tremendous benefit bestowed by the suit itself, its importance for the group and for the public as a whole, and the complexity of the issues raised in the file. At the same time, the Court stressed the gap between the remedies demanded and what was ultimately granted, noting that the suit had not always been conducted in the best and most efficient manner"

The rule that the appellate forum does not interfere in the rate of legal fees awarded by the trial forum applies to and is implemented with respect to the rates of legal fees and compensation awarded in class actions, other than in cases where one of the sums awarded is legally flawed or where the decision of the trial forum is otherwise fundamentally flawed in a manner that warrants intervention (see Accadia [32] para. 28, Analyst [7] at p. 263). The policy of non-intervention in sums awarded as legal fees and compensation by the trial forum is even more appropriate where it concerns considerations pertinent to the manner in which the proceeding was conducted.  In the case at hand, the Lower Court examined all of the relevant considerations and balanced between them as required.  Accordingly, had we not reached the conclusion that the sum of compensation to be imposed on Tnuva should be significantly reduced, we would not have intervened in the sums of compensation and legal fee that it awarded. However, since we set the sum of compensation at NIS 38,500,000 instead of NIS 55,000,000  awarded by the Lower Court I think that this also warrants a reduction in the sum of compensation that Tnuva has to pay to the representative plaintiffs and the legal fees to be paid to their attorneys. I therefore propose that we set the sum of compensation for the Raabi heirs at the sum of NIS 300,000, the compensation for the Israeli Consumer Society at NIS 550,000 and the rate of legal fees for the representative attorneys at NIS 1,500,000. In order to remove all doubt, it is clarified that the sums specified above, like the sum of compensation awarded, are according to their value on the day of the decision of the Lower Court (7 October 2008).

 

       Final Word

For all of the reasons set forth above I propose to my colleagues to partially allow Tnuva’s appeal with respect to the rate of the compensation (CA 10085/08) and its appeal regarding the compensation for the representative plaintiffs and the fees of their attorney (CA 7607/09). I further propose to my colleagues to dismiss the counter appeal of the representative plaintiffs in CA 10085/08 and their appeal against the decision in CA 6339/09)

Under the circumstances and bearing in mind that these appeals raised questions of principle that were fleshed out for the first time since the enactment of the Class Actions Law, I would propose to my colleagues not to make any order for the costs of the appeal proceeding

 

                                                                   Justice

Justice I. Amit

 

 I concur with the comprehensive and thorough judgment of my colleague Justice Hayut. My colleague concluded that compensation for infringement of autonomy should only be awarded to those group members who experienced various negative feelings upon becoming aware that they had drunk milk containing silicon. My colleague's approach is consistent with the view that I expressed in CA 4576/08 Ben Zvi v. Prof. His [ 17] paras. 25 – 29, according to which an infringement of autonomy is now included within the framework of non-pecuniary damage. An infringement of autonomy means negating the victim's freedom of choice by failing to disclose a substantive detail, but the infringement of autonomy is expressed by negative feelings such as anger, frustration, insult, revulsion,shock etc.  

                                                                   Justice

 

 

Justice  E.  Vogelman

 

 I concur with the comprehensive judgment of my colleague, Justice E. Hayut.   I am a partner to my colleague's conclusion that the objective approach to the assessment of compensation for infringement of autonomy should not be accepted and that accordingly, where proved that some of the members of the group remained indifferent to the infringement of autonomy, there are no grounds for awarding compensation for that head of damage.

 

                                                                                    Justice

.                      

                  

 

 

 

 

 

 

 

                       

 

 

"

 

 

 

 

 

 

 

 

said in subsection (b) into

account. 

 

Atia v. Rosenbaum

Case/docket number: 
C.A. 176/53
Date Decided: 
Friday, September 24, 1954
Decision Type: 
Appellate
Abstract: 

The plaintiff was employed by the defendant to work an electrically-driven wool-teasing machine. On January 17, 1951 the plaintiff was cleaning the machine when his hand got caught and, before it could be released, was seriously injured. The plaintiff sued the defendant for damages for negligence and breach of the statutory duty to fence securely every dangerous part of any machinery or to provide the other safety measures set out in s. 18(1) of the Factories Ordinance, 1946.1)

           

The Court of first instance, in dismissing the claim, held that there had been no breach of statutory duty because the employer had put the necessary fence on the machine and although there might be greater protection for the worker by use of a morticed lock, in fact no such lock was in use or available in Israel nor was it used to a great extent outside Israel.

           

Held, allowing the appeal, that the duty to secure the safety of the employee was absolute, and that this duty was not discharged by employing a method by which the safety of the employee was in fact not secured although such method was the one generally employed.

           

The appellant was awarded IL.15,000.- as damages for the injuries received.

 

1) The text of this section is set out infra p. 441.

Voting Justices: 
Primary Author
majority opinion
majority opinion
majority opinion
Full text of the opinion: 

C.A. 176/53

 

           

MORDECHAI ATIA

v.

MOSHE ROSENBAUM

 

 

In the Supreme Court sitting as a Court of Civil Appeal

[September 24, 1954]

Before Goitein J., Landau J., and Berinson J.

 

 

Tort - Factories Ordinance, 1946, s. 18(1) - Breach of statutory duty - Dangerous machinery - Failure to fence - Injury to employee - Liability of employer - Assessment of damages - Expectation of life - Loss of future earnings - Pain and suffering.

 

            The plaintiff was employed by the defendant to work an electrically-driven wool-teasing machine. On January 17, 1951 the plaintiff was cleaning the machine when his hand got caught and, before it could be released, was seriously injured. The plaintiff sued the defendant for damages for negligence and breach of the statutory duty to fence securely every dangerous part of any machinery or to provide the other safety measures set out in s. 18(1) of the Factories Ordinance, 1946.1)

           

            The Court of first instance, in dismissing the claim, held that there had been no breach of statutory duty because the employer had put the necessary fence on the machine and although there might be greater protection for the worker by use of a morticed lock, in fact no such lock was in use or available in Israel nor was it used to a great extent outside Israel.

           

            Held, allowing the appeal, that the duty to secure the safety of the employee was absolute, and that this duty was not discharged by employing a method by which the safety of the employee was in fact not secured although such method was the one generally employed.

           

                The appellant was awarded IL.15,000.- as damages for the injuries received.

           

Israel cases referred to:

 

(1) C.A. 70/52 Yehoshua Grossman and Egged Ltd. v. Henry Roth (1952), 6 P.D. 1242.

(2)   C.A. 62/53 Yehoshua Daum and Egged Ltd. v. Nissim Aharonof and Others (1954), 8 P.D. 128.

 

English cases referred to:

 

(3) Dennistoun v. Charles E. Greenhill Ltd.; [1944] 2 All E.R. 434.

(4) Davies v Thomas Owen and Company, Ltd.; [1919] 2 K.B. 39.

(5) Pugh v. Manchester Dry Docks Company, Ltd.; [1954] 1 All E.R. 600.

(6) Carroll v. Andrew Barclay and Sons, Ltd.; [1948] 2 All E.R. 386.

(7) Sutherland v. Executors of James Mills, Ltd.; [1938] 1 All E.R. 283.

(8) Harris v. Bright's Asphalt Contractors, Ltd.; [1953] 1 All E.R. 395.

(9) Roach v. Yates; [1937] 3 All E.R. 442.

(10) Rowley v. The London and North Western Railway Company; (1873), 29 L.T. 180.

(11) The "Swynfleet"; (1947), 81 Lloyd's List Law Reports 116.

 

Katz for the appellant.

Rotenstreich for the respondent.

 

BERINSON J. giving the judgment of the court. The appellant was employed as a labourer by the respondent, the owner of a wool factory for a period of about two months. During this time he was engaged in various tasks, including the operation of a wool-teasing machine.

 

            On January 7, 1951, the appellant was temporarily engaged in operating the machine in question. He started this work at 4 p.m. and at 8 p.m. he put his left hand into the machine while cleaning it. His hand was caught in one of the wheels of the machine and was severely injured.

           

            The appellant sued his employer under the Civil Wrongs Ordinance for damages in respect of the physical injury suffered by him, basing his claim upon two causes of action:

           

            (a) breach of the statutory duty imposed upon the employer by sections 10(1)1) and 18(1) of the Factories Ordinance, 1946 relating to the illumination and fencing of dangerous machines in places of work:

           

            (b) negligence.

           

            The learned judge held that not only had the plaintiff failed to establish even one of the causes of action upon which he relied, but that it was his own negligence that had caused the accident. He therefore dismissed the claim. The appellant appealed to this court. Before us his counsel confined his submissions to one point alone, namely, the breach by the respondent of his statutory duty to fence the machine operated by the appellant - a duty imposed upon him by section 18(1) of the Factories Ordinance, 1946 (hereinafter called "the Ordinance"). That section provides as follows:

           

            "Every dangerous part of any machinery, other than prime movers and transmission machinery, shall be securely fenced unless it is in such a position or of such construction as to be as safe to every person employed or working on the premises as it would be if securely fenced:

 

            Provided that, in so far as the safety of a dangerous part of any machinery cannot by reason of the nature of the operation be secured by means of a fixed guard, the requirements of this subsection shall be deemed to have been complied with if a device is provided which automatically prevents the operator from coming into contact with that part."

 

            Before dealing with the accident itself, it is desirable that we have a clear picture of the machine involved in the accident and the way in which it works. We adopt the description of the learned judge in the court below who said:

           

            "I held an inspection in loco on two occasions. I examined the machine and found it to be composed of the following parts: 1) a table which oscillates while the machine is being operated; 2) a wooden cylinder at the end of the table; 3) a metal rod; (Note: there are in fact two metal rods, one above the other). 4) a cog wheel; 5) a guard above the cog-wheel.

 

            The method of operating the machine is as follows: the workman stands in front of the table and places the wool upon it. The wool is then conveyed towards him (by the oscillating table) from under the wooden cylinder, it enters the metal rod and is conveyed to the cog-wheel. The metal pivot is protected by a metal guard. The cog-wheel remains clean, but the wool accumulates under the metal rod and must be extracted from time to time with the help of a device called by the workmen a "hook".

           

            The machine is operated by electric power, the starter switch being situated close to it. To stop the machine completely, however, one operates another switch. situated about three meters from the machine. Even when the electric current is cut off, the machine continues to work - that is to say, the table still oscillates and the wheel, the rod and the cylinder continue to revolve for some seconds."

           

            This is the description given by the judge, to which must be added two important details which also emerge from the evidence:

           

            a) the table moves at a relatively slower speed than the cogwheel, which oscillates at a great speed. When the electric current is cut off, the various parts of the machine continue to move under their own power, but the table - which is a slow-moving object - comes to a stop before the cog-wheel which moves at a higher speed. A person unaware of these facts may therefore fall into error and think that when the table stops moving the wheel also stops. In fact however, the cog-wheel continues to revolve at a high speed for some time after the table has ceased to oscillate.

 

            b) The workman operating the machine stands facing it in front of the moving table. and in that position his hands - even when stretched straight out - do not reach the metal rods and also, therefore, do not reach the cog-wheel, which is even further away from them.

           

            How did the accident occur? The appellant was the only workman at the machine which stood in a room by itself. There was no eye-witness to the accident nor to what preceded it. The appellant stated in his evidence that on the day of the accident, at about 8 o'clock in the evening, the wool accumulated in the machine, and new material could not be served to it but kept flying back towards him. He therefore cut off the electric current by operating the two switches. and when the machine had stopped altogether he put in his left hand in order to clean away the wool. He did not see then that the cog-wheel was still turning since it was full of wool. and this wheel drew his hand inwards. The appellant added that the metal guard over the rods was not in position and that "had the guard been in position then, the wool would not have blown towards me and I would have been able to see the wheel". Under cross examination, however, he said that he could not remember if the guard was there at that time.

           

            The learned judge repeats the story of the appellant in his judgment, his only comment relating to the question of the metal guard. He says that he prefers the version of the respondent that the guard was in its place on the day of the accident, such version being supported by the clear evidence of the respondent and the works manager whose evidence on this point was unshaken.

           

            The remaining details in the appellant's story of the occurrence are not only uncontradicted by the other witnesses, but are in fact supported in the main by the witnesses Pessah Cohen and Simha Sverdlik. These witnesses, who are also workmen in the factory, were attracted to the scene by the cries of the appellant immediately after the accident, and it is they who dismantled the machine and removed the injured hand of the appellant. Moreover during one of the visits of the learned judge to the factory Sverdlik demonstrated the position in which he found the appellant after the accident and this demonstration coincided with the appellant's story. From all this it must be assumed that the learned judge accepted this portion of the appellant's evidence.

           

            The findings of the learned judge that the machine operated by the appellant is dangerous and that the metal rods were guarded on the day of the occurrence were not disputed before us. The real dispute, however, related to the question whether the guard conformed with the requirements of the law. The learned judge reached the conclusion that the respondent had discharged his duty by providing "reasonable means to make that portion of the machine safe". Counsel for the respondent, of course, supports this view of the matter while counsel for the appellant, in arguing against this finding, submits that reasonable means are not sufficient. Section 18(1) of the Ordinance requires, that the dangerous part of the machinery be securely fenced" or, in certain circumstances, that alternative means be taken to provide the same measure of safety. If, by reason of the nature of the operation, the safety of a dangerous part of the machinery cannot be secured by means of a fixed guard, it is necessary to provide what is called an interlocking guard. This device automatically prevents the operator of the machine from coming into contact with the dangerous part while it is in motion since the lifting of the guard in itself brings the machine to a standstill.

           

            The English courts1), on the basis of a similar provision in the English statutes requiring safety in the operation of dangerous machinery, have held repeatedly over a period of decades that the duty of fencing machines securely is an absolute duty in the sense that the safety to be provided by the fencing must be absolute. In other words, the fencing must provide the workers who come into contact with the machine with an absolute guarantee that they will not be injured by it. The factory owner, therefore, does not discharge this duty even if he fences the dangerous machine in accordance with the best and most modern system known at the time if, in fact, the machine is not guarded thereby as the law requires (see Dennistoun v. Charles E. Greenhill Ltd. (3)). In the same way the factory owner does not discharge his duty if he does not provide the safety required for his workmen because to do so is technically impossible or commercially unfeasible. It has accordingly been held by the English courts that in cases such as these there is no alternative but to withdraw the machine from use. (Davies v. Thomas Owen and Company Ltd. (4), and Pugh v. Manchester Dry Docks Company, Ltd. (5).)

           

            In the case before us evidence was given by two labour inspectors who are responsible for ensuring compliance with the provisions of the Ordinance. They both stated that the guard over the metal rod is inadequate because it is possible to raise it while the machine is working without thereby stopping the machine. Both these experts stated, therefore, that there can be no absolute protection for the operator of this machine unless by means of an interlocking guard (by the raising of which the operation of the machine is stopped automatically, while it is impossible to set the machine in motion unless the guard is in position) although they had not demanded up to that time that such a guard be provided. The learned judge, however, did not accept these opinions but upon the evidence of the defendant and an expert engineer called Avni, who gave evidence on the defendant's behalf, he reached the conclusion that in providing the guard as it was, the defendant had taken reasonable steps to discharge his statutory duty. The defendant, who is very experienced in his profession, stated in evidence that he had visited many factories of the same kind in the country and that in not a single one had he seen an interlocking guard. He also said that "the guard must be free and flexible so that it can be raised with ease" - in other words, that in view of the nature of the work it is impossible to use a guard that is absolutely rigid. The engineer Avni also confirmed that the guard in the present case must be flexible, so that it can be raised in order to enable the wool to pass in accordance with the thickness of the material and that it is therefore impracticable to operate this machine with a morticed fence. He also stated that he had not seen such a fence on machines of this kind either in this country or elsewhere, and that only recently he had seen a modern machine of this type made in Belgium, and that even on that machine there had been no interlocking guard. On the basis of this evidence the judge concluded that the metal guard constituted reasonable protection, sufficient to satisfy the requirements of section 18(1) of the Ordinance, and that there is no necessity in this case for an interlocking guard in terms of the proviso to that section.

 

            It seems to us for more than one reason that the learned judge erred in his conclusion.

           

            In the first place it is clear that the metal guard does not allow for the machine to be "securely fenced". It moves up and down according to the amount of material which enters the machine, and sometimes it rises to such an extent as to enable the operator of the machine to put in his hand and reach the point between the two metal rods which revolve at a high speed (see the evidence of the labour inspector Stein and of the defendant). In other words, the guard does not constitute a reliable and fixed partition which would prevent a workman from coming into contact with the dangerous parts of the machine, and as long as this is so the requirement that the machine should be securely fenced has not been fulfilled (see, for example, the remarks of Lord Porter in Carroll v. Andrew Barclay & Sons Ltd. (6) at pp. 390-1). Moreover, when the metal guard is lowered it covers the metal rod and protects the workman from the cog wheel, but when it is raised - and there is no difficulty or impediment in raising it at any time - it exposes both of them, and there is then nothing to prevent the workman from coming in contact with them. This arrangement does not fulfil the requirements of section 20 of the Ordinance which provides, inter alia, that all fencing or other safeguards provided in pursuance of that Part, namely Part IV of the Ordinance, shall be constantly maintained and kept in position while the parts required to be fenced or safeguarded are in motion or in use, save in certain exceptional circumstances which are not relevant to the present case. In the case before us, as we have seen, it is possible to raise the guard with ease and expose the dangerous parts even when they are in motion, and we know from the story of the appellant that his hand was drawn towards the cog wheel while it was still in motion.

 

            In the second place, it is clear from the evidence of the respondent and the engineer Avni - which was accepted and relied upon by the learned judge - that because of the nature of the machine it is impossible to secure the safety of the workman from the metal rods. Their evidence was that the guard must be flexible and free, so as to be raised and lowered in accordance with the thickness of the layer of wool entering the machine. In this case, therefore, the proviso to section 18(1) of the Ordinance applies, in terms of which a device is to be provided which automatically prevents the operator from coming into contact with the dangerous part of the machine, viz., a device called an interlocking guard. There is no doubt that it is a matter of great, if not insuperable, difficulty to fix an interlocking guard to this type of machine. As we have already seen, however, there is no solution other than to fulfil the statutory obligation or to cease to use the machine. The fact that this machine has been used as it is in the respondent's factory and in other factories for a considerable time without any accident having occurred, and that the labour inspector did not demand an interlocking guard on this type of machine, is immaterial. See Sutherland v. Executors of James Mills, Ltd. (7).

           

            This brings us to the second question, namely, whether the appellant was negligent, and if it was his negligence which caused the accident. The learned judge found that the appellant well knew from the directions and instructions which he had received from the respondent and the Works Manager that the machine was to be cleaned by means of a hook, and not by hand, and that the appellant's negligence consisted in acting against this directive. The learned judge found additional negligence on the part of the appellant in his standing at the side of the machine instead of facing it - as he was obliged to do - and in his introducing his hand under the metal rod, although this part of the machine is always free of wool. Had there been some foundation in the evidence for the findings of fact upon which the judge based his conclusion of negligence we could not have interfered with that conclusion. However, after having examined and re-examined the evidence in its entirety, we have been unable to discover any basis for the findings of the learned judge. We shall deal with them separately.

           

            (a) The appellant acted against the directions and instructions which he received. In connection with this the respondent stated in evidence: "When the appellant started to work, I showed him how to clean the machine and I explained to him that the electric current must be stopped before the cleaning and that he must not touch any part of the machine as long as it is in motion... I told him that when the machine is already working he must only use the hook in order to clean it and must not use his hands...... The worker who operates this machine is the one who must clean it and he is not to rely on any one else to do it". And the Works Manager stated in evidence: "When it is desired to clean the machine it must be turned off. It is possible to remove the wool both with the hook and also by hand where there are no cogs... I told the plaintiff that it was forbidden to introduce the hand while the machine was in motion.. ."

           

            And what did the appellant do? He first turned off the electric current with both switches, and when it seemed to him that the machine was no longer in motion he started to clean it by hand. This was in accordance with the instructions given to him and not contrary to them. The appellant did not know that the cog wheel continues to move for some little time after the current is turned off, and there was no evidence that instructions were given to him not to approach the machine for some time after the current had been turned off.

 

            (b) The appellant stood at the side of the machine at a time when he should have stood facing it. It is true that the appellant stood at the side of the machine while he was cleaning it, and not facing it, but according to all the evidence he was not obliged to stand facing the machine at that time. It is only while the machine is in motion and the workman is operating it or cleaning it with a hook, that he is obliged to stand facing it. When, however, he has to clean it by hand after it has ceased to operate, he is obliged to stand to one side, otherwise his hand cannot reach the machine at all.

           

            (c) The appellant introduced his hand underneath the metal rod, although that part of the machine is always clear of wool. In point of fact the appellant did not introduce his hand into that portion of the machine. The eye-witnesses, Pessah Cohen and Simha Sverdlik, who helped to extract the appellant's hand from the machine immediately after the accident, stated clearly that "the hand was caught between the big cylinder and the cogs" and that "he held his hand above the cylinders between the drum (that is to say, the cog wheel) and the upper cylinder (that is to say, the rod)..."

           

            It is clear, therefore, that there is no proof of negligence on the part of the appellant which caused the accident. The accident was caused in fact by the breach of the statutory duty imposed upon the appellant relating to the fencing of the machine.

           

            The plaintiff, in his Statement of Claim, claimed damages in an inclusive sum of I.L. 17,000.- Of this amount I.L. 500.- were claimed as special damages for loss of past wages, that is to say, from the date of the accident, January 7, 1951, until the date of the institution of action, July 1, 1952, less the amount received by him until then, and general damages in an amount of I.L. 16,500.-.

           

            In the course of argument before the District Court counsel for the plaintiff amended this account and argued that on the basis of the evidence led by him his client was entitled to damages for loss of wages until that date (April 1, 1953) in an amount of I.L. 1,534.-. In this court counsel for the appellant again amended the account for damages and in his written argument filed in this court on June 10, 1954, claimed an amount of approximately I.L. 4,000.-. He based his claim for this sum on his client's total inability to work during the whole period, and he argued that this amount should be awarded to his client in full as the actual loss which he had sustained for the period which had already passed, as special damages.

 

            It is clear that this contention is erroneous. Special damages must be proved in a trial as the actual loss or expense sustained by the plaintiff until the date of his claim or, at the latest, until the date upon which the case is heard. All other loss, expense, or damages which are anticipated in the future form a portion of the general damages.

           

            The learned judge dealt with the question of damages only to meet the eventuality of an appeal, and he expressed the opinion that the loss of past wages should be assessed in the amount of I.L. 500.-and that the claim for general damages in the amount of I.L. 16,500.-should be dismissed for lack of proof.

           

            We do not think it would be right in this case to vary the amount awarded by the learned judge in respect of damages for loss of past wages - down to the date of the institution of the action - in the sum of IL. 500.-, since this is the sum which was claimed by the plaintiff in his Statement of Claim, and he did not claim that damages under this head should be calculated until the date of the hearing of the case.

           

            We turn now to the question of general damages. The plaintiff in his Statement of Claim did not claim the general damages claimed in the amount of I.L. 16,500.- under the two heads of damage of which they are composed, namely, loss of wages or profits in the future, and pain and suffering. Only in the course of argument in the District Court was it stated by counsel for the plaintiff that, in accordance with the accepted standard in the courts of this country in such matters, it was in his opinion proper to fix the amount of damages for pain and suffering caused to the plaintiff at I.L. 5.000.-and damages for loss of wages from the date of the institution of action until the end of the plaintiff's life in the amount of I.L. 11,500.-as was done in the case of Grossman & Egged Ltd. v. Henry Roth (1) and the case of Daum & Egged Ltd. v. Aharonof (2).

 

            As far as damages for pain and suffering are concerned it seems to us that the damage in this case is less serious than in that of Grossman, in which the damages awarded were fixed at I.L. 5,000.-and in that of Daum, in which the greater part of the sum of nine thousand two hundred and thirty pounds was awarded. In Gross man's case the left hand of the injured man was amputated completely leaving only a stub the length of which was 16 cm. In the case of Daum the victim suffered severe injuries to his head and remained with a deep hollow in his forehead. After an operation and lying in hospital for twenty-six days, a further period of five months elapsed before he started any work at all. He lost his sense of taste and his sense of smell, and at times even his sight was affected. The doctors were also of opinion that it was possible he would become epileptic as a result of the accident. It is true that in the case before us the appellant lay in hospital on more than one occasion and underwent four operations in the course of nine months, and that after all this he remained with a permanent disability in his hand. The hand itself, however, was not amputated, although it has remained patently deformed. Having regard to all the circumstances of the case it seems to us that an amount of I.L. 4,000.-is a reasonable sum of damages under this head.

 

            It remains to consider the measure of damages to be awarded for loss of ability to work in the future. There is no rigid rule to be applied to this matter and the court will assess these damages to the best of its judgment having regard to all the circumstances and the factors affecting the case before it. As a general rule the court must assess "how much the injured man would have earned but for his disability and how much he is likely to earn with his disability" during the rest of his life, and must determine the damages upon the basis of the difference between these two amounts. See Grossman's case (1).

           

            It follows that the learned judge was correct in saying that it was for the plaintiff to prove his age and his prospects of living in order to estimate thereby his expectation of life. We are not however, in agreement with the conclusion of the learned judge that the plaintiff's prospects of life were not proved.

           

            It is true that these two elements, namely, the age of the plaintiff and the length of life which he could be expected to live were not mentioned in his Statement of Claim. The plaintiff stated in evidence, however, that he is twenty one years of age and that he completed his army service with medical category "A" about three months before the accident. Counsel for the defendant did not object to this evidence at the time nor did he bring any evidence to contradict it. In these circumstances there was nothing to prevent the learned judge from accepting the age of the appellant and his state of health in general, as facts which had been proved.

 

            What, however, is the appellant's expectation of life for the purpose of assessing general damages? No positive evidence on this point was adduced, but in his argument before the lower court, counsel for the plaintiff relied upon the statistical tables published in Bingham's book on Claims in Vehicle Cases, second edition, p. 372, and on the Israel Statistical Monthly, from which it appears that the average expectation of life of a normal man of twenty one years of age in England and in Israel is about 45 years. The learned judge, however, apparently following an obiter dictum of Cheshin J. in Grossman's case (1), paid no attention to all this and did not even mention it in his judgment. In our opinion once the judge had seen the plaintiff in the witness box and his age and state of health were known to him, there was no reason not to estimate the expectation of life of the plaintiff - upon the basis of his general knowledge of the average and usual length of life of the inhabitants of this country. It has been an accepted practice in the courts of England in recent times to estimate the expectation of life of a plaintiff upon the basis of their general knowledge and experience without any additional positive evidence. (See Harris v. Bright's Asphalt Contractors Ltd. (8), and Roach v. Yates (9).)

           

            That is also the law in the United States, as appears from Sherman and Redfield on Negligence, Revised Edition (1941), vol. 4, p. 1972, in which the following two cases are cited:

           

            "Where the plaintiff was personally present held that the jury might judge her life expectancy without any other evidence on the subject."

           

            "Where the evidence discloses the age and health of the deceased, it is competent for the jury to estimate his probable duration of life without the assistance of mortality tables".

           

            After all, every case of the possible expectation of life of a particular person is in the realm of conjecture, even after consideration of tables of life and mortality, and evidence of experts regarding them. In the absence of special circumstances pointing to the necessity of departing from the general rule in respect of any particular person, the expectation of life of an ordinary man must be assessed according to the average that is proved in the case or which is determined by the court upon the basis of its own knowledge and personal experience.

 

            "If there are special considerations such as these, the party who relies upon them to reduce the period of life must prove that they exist." See Rowley v. The London & North Western Railway Company (10), at p. 184.

 

            In the present case the respondent has not established the necessity of departing from the general rule in the case of the appellant. It seems to us, therefore, that it would be right to fix his future expectation of life at 40 years.

           

            As far as the wages of the appellant at the time of the accident - and thereafter - are concerned, it has been proved that his daily wage at the time of the accident was I.L. 1.659.- and that the daily wage of a healthy workman of the type of the appellant at the time of the institution of action in July, 1952, had risen to I.L. 4.333. When this evidence was heard in January 1953, the daily wage was I.L. 4.854. As is known, wages in general have continued to rise, regularly and continuously, but since we must take into account a length of life of 40 years which the appellant may expect from July, 1952, and that there may be in the course of that time both rises and falls in the wages which can by no means be anticipated, it seems to us that we are entitled to assume, on the basis of the position of today, that were it not for the appellant's disability he would in the course of the whole period mentioned earn an average of I.L. 5.- per day, together with the rises and increments which he would receive as a result of expert knowledge and progress in his work which would increase with time.

 

            In view of the judgment in the case of The "Swynfleet" (11), it is clear that in fixing the estimated wage which would be earned by an injured man for the rest of his life were it not for the accident, we are not entitled to disregard the general changes which operate in the meantime on the wages of workmen of the same type as the injured man. We must take them into account as the basis of our assessment in place of the actual wage earned by the injured man at the time of the accident. In that case the damages payable to the family of two workmen in a French ship who lost their lives when the ship sank as a result of a collision with the British ship "Swynfleet" in December 1939, fell to be considered. By reason of the second World War the matter came to trial only in 1947, and a number of major changes in the wage of shipworkers of the type of the two deceased persons (and also in the rate of exchange between the French franc and the pound sterling) had taken place in the meanwhile.

 

            The court held that in assessing the damages payable to the families of the victims the wage which the victims would have earned had they remained alive until the hearing of the case was to be taken into account. In so holding the court based itself upon the principle that damages must replace what the deceased would have given his family had he remained alive and continued to support them. The same principle applies in the case of bodily injury in which case, too, the damages must compensate the injured man as far as possible for the anticipated loss which was caused to him by his injury. Since we know today, more than three and a half years after the occurrence, what has happened in the meantime in regard to wages generally, we must make use of this knowledge and not be content with considering the state of affairs that existed at the time of the accident as if nothing had happened since.

           

            It is more difficult to assess what the appellant is likely to earn, with his disability, for the remaining portion of his life. More particularly is this so since up to the date upon which he gave evidence he had not yet succeeded in obtaining any kind of work, despite continuous efforts to do so, nor has it been proved what his prospects of work are in the future. In the absence of any other criterion, we may derive assistance from the evidence of the doctors who stated that the appellant - as a result of the accident - suffered at least a thirty-five per cent disability in his capacity to engage in physical labour, and take this finding as a measure of his loss of wages. On the basis of I.L. 5.- per diem and an average of 300 working days per annum for a period of forty years, the loss - at the rate of 35 per cent of this sum - amounts to I.L. 21,000.-. Taking into account that the appellant will receive his damages in one lump sum instead of in weekly payments, and also having regard to the other factors and occurrences which may operate to reduce his income (sickness, unemployment, and other expected and unexpected eventualities), we fix the sum of damages under this head at half the estimated loss, namely, the sum of I.L. 10,500.-.

 

            In conclusion there remains the argument of the respondent that in view of the provisions of section 62 of the Civil Wrongs Ordinance, 1944, the appellant is precluded from bringing his present claim for damages since he has received damages for a year and a half under the Workmen's Compensation Ordinance. We see no substance in this submission.

           

            Section 62 of the Civil Wrongs Ordinance provides as follows:

           

            "Notwithstanding anything contained in the Workmen's Compensation Ordinance or any enactment as to workmen's compensation in force in Palestine for the time being, no workman (which term, for the purpose of this section, shall be deemed to include his dependants) shall, by reason of the happening of any event, recover from his employer both compensation under the provisions of this Ordinance and compensation under the provisions of the Workmen's Compensation Ordinance or such other enactment for any injury or damage caused by such event.

 

            For the purposes of this section, the expression 'dependents' has the same meaning as it has in section 2(1) of the Workmen's Compensation Ordinance."

 

            It is not disputed that the appellant received from the respondent and his insurance company various sums amounting to I.L. 647.- which were paid to him regularly from February, 1951, until June, 1952. These sums however were not payments of damages under the Workmen's Compensation Ordinance, and in the receipts signed by the appellant (which were submitted to the court) it is merely said that the amounts in question were paid "in respect of damages" without stating whether they were paid under the Workmen's Compensation Ordinance or The Civil Wrongs Ordinance. It was also not proved in evidence that the injured man knew and agreed to receive this money as damages under the Workmen's Compensation Ordinance.

           

            The result is that we allow the appeal, set aside the judgment of the District Court, and award to the appellant an amount of damages of fifteen thousand pounds as follows:

           

For loss of past wages                                     I.L.    500.-

For pain and suffering                                                I.L.   4000.-

For loss of wages in the future                       I.L. 10500.-

Total                                                                            I.L. 15000.-

 

            We also award costs against the respondent both in this court and in the District Court together with an inclusive amount of I.L. 200-. as counsel's fees in both courts.

           

Appeal allowed, and damages awarded to the appellant in the sum of I.L. 15,000.-.

Judgment given on September 24, 1954.

 

1) The text of this section is set out infra p. 441.

1) Factories Ordinance 1946, s. 10(1):

Lighting                        10(1) Effective provision shall be made for securing and maintaining sufficient and suitable lighting, whether natural or artificial, in every part of a factory in which persons are working or passing.

1) The law in England has since been changed.

Full opinion: 

Hammer v. Amit

Case/docket number: 
CA 1326/07
Date Decided: 
Monday, May 28, 2012
Decision Type: 
Appellate
Abstract: 

[This abstract is not part of the Court's opinion and is provided for the reader's convenience. It has been translated from a Hebrew version prepared by Nevo Press Ltd. and is used with its kind permission.] 

 

This opinion is a result of cases joined together in order for the Court to resolve the general questions regarding the cause of action known as “wrongful birth”. This issue arises when a person born with a congenital disability claims that careful conduct by petitions – usually medical professionals who treated the pregnant mother – would have entirely prevented that person’s birth. Two distinct causes of action might be triggered by the negligent conduct: a claim by the parents and the claim by the child. These claims were recognized 25 years ago in the Supreme Court’s decision in CA 518/82 Zeitzov v. Katz (“Zeitzov decision”). The child’s claim is termed “wrongful life”, and thus is distinguished from the parent’s claim, termed “wrongful birth”. All five justices who sat on the Zeitzov panel found that there is no bar to recognizing the parents’ claim – the “wrongful birth” claim – as a subset of the tort of negligence and according to the general principles of tort law. The dispute, even back then, revolved around the issue of recognizing a claim by the child. In a majority ruling, the Court recognized the child’s claim of “wrongful life”. Still, the four justices of the majority were split on the reasons for recognizing the “wrongful life” cause of action and therefore were also split on the question of quantifying damages. This fundamental question was left unresolved there. As a result, in the years since the decision, real difficulties have arisen in applying the principle rule about recognizing a child’s claim of “wrongful life”. In the absence of binding precedent, the Zeitzov decision was implemented inconsistently. In light of these difficulties and in light of the need to resolve additional related issues, we joined the discussion.

 

The Supreme Court, in an expanded panel of seven justices (authored by Deputy President E. Rivlin) ruled that:

 

The child’s claim of “wrongful birth” can no longer be recognized. Each of the two different modes of reasoning that support the “wrongful life” as presented by the Court in Zeitzov hold significant legal challenges that go both to the element of damage and the element of causation, making it difficult to recognize this cause of action under the tort of negligence. Deputy President Ben-Porat’s approach inevitably leads to finding that there are situations where it would have been preferable for one not to have been born at all. This finding cannot be based on any legal foundation and should not be based on any morals or values. In the absence of such findings, the element of damage in a wrongful life claim cannot be proven. President Barak’s position in Zeitzov is also problematic as there is no causal link between the breach and the damage of life with a disability. But beyond these legal difficulties, there is a moral difficulty in the view that the life of one born with a disability can be considered – in the eyes of the child itself – as “damage”. The finding that it is better for a certain person not to have been born at all carries the impermissible implication that life has no intrinsic value, that is not reduced – and certainly not eliminated – due to a disability. This view is a necessary and important part of our recognition and belief in the sanctity of life, human value and dignity, and the rights of people with disability to dignity and equality. This position is reflected in the jurisprudence of courts in common law countries as well.

 

That said, there is neither law nor principle preventing the recognition of the parents’ cause of action for “wrongful birth” – a cause of action whose recognition is not in dispute. On this issue there is no place to do away with the ruling in Zeitzov.

 

Alongside the general recognition of the parents’ claim of wrongful birth, the Court found it appropriate to address three issues arising from this claim. These were not discussed in Zeitzov in depth and it is time for this Court to establish clear precedent about them. These issues concern the matter of proving causation, quantifying damages, and damage, specifically for infringement of autonomy.

 

Ruling on these issues ultimately led to a significant expansion of the “wrongful birth” cause of action of parents, who may be compensated for expenses incurred in raising the child and providing for its needs throughout the child’s life. In this manner, the Court (here) realizes the worthy objective at the basis of the Zeitzov decision – to compensate as fully as possible for the medical and rehabilitative needs and the care of a child born with a disability, but to do so through the parents’ wrongful birth claim.

 

Proving causation: insofar as parents wish to bring a cause of action for “wrongful birth”, they must prove the existence of a causal connection. To prove this causal link between the breach of duty of care and the different damages caused by the disability, they must show, as the first stage, that had the committee for pregnancy terminations possessed all relevant medical information (information that was not provided to the parents because of the negligent conduct) it would have permitted the parents to terminate the pregnancy. At the second stage, and only if the answer to the first question is in the affirmative (otherwise the causal link is broken anyway), the parents must show that but for the breach of duty of care, they would in fact have approached the committee for pregnancy terminations for permission.

 

Because of the difficulties the second stage causes, significant weight should be given to the first question in terms of causal link – the question whether the committee for pregnancy terminations would have permitted termination in a particular case. In addition it is appropriate that the decision by the committee for pregnancy terminations would serve as a rebuttable presumption regarding the parents’ position on termination. Further, general factors, such as allegiance to a particular religion group,do not suffice to rebutt the presumption that if the committee had permitted the termination then the parents would have approached it with a request. These factors may be relevant, but since they might reflect a single aspect among the entirety of the woman’s individual circumstances, much caution must be taken when drawing any conclusions based on that aspect. Therefore, for instance, it is insufficient that the parents’ religion may forbid them from terminating a pregnancy; the court must be persuaded that the mother would have actually obeyed the religious prohibition. Finally, it must be emphasized that, when it is proven that the committee for pregnany terminations would have permitted a termination, the parents' failure to prove that they  would have chosen to terminate the pregnancy does not negate their possible claim for damages due to the violation of their autonomy, that is, their right to make such an important decision about their lives in an informed manner. For this damage, they are entitled to separate compensation.

 

The issue of damage and quantifying compensation: the parents are entitled to compensation from the defendant for the additional expenses required to fulfill their child’s medical needs and provide the child with care, and when, because of the disability, the child continues to depend on them beyond childhood, they are entitled to compensation for expenses they incure for the rest of the child’s life. This includes ordinary maintenance expenses, at least to the extent that there the child has limited income potential and there are no special circumstances that deny this right. When a child is expected to have an income despite the disability, the expected income is to be deducted, that is, the appropriate rate of the average wages must be deducted from the compensation to the parents.

 

General damages: in cases of wrongful birth the mental and psychological harm continues throughout the parents’ (plaintiffs) lives. This damage is different and separate from the harm to autonomy, which is a one-time harm that occurs at the moment where choice is denied them. The ongoing and excruciating mental harm therefore warrants a significant level of compensation.

 

Violation of autonomy: the question of the link in the parents' suit between the causes of actions for wrongful birth and violation of autonomy is that in some cases where the harm to the parents for denying their right to autonomy – to decide whether to continue a pregnancy or to terminate it – can be distinguished from other harms and where violation of autonomy is an additional, substantial harm that goes to the core of the right, the violation of autonomy must be separately compensated (in addition to their right to claim compensation for any other direct damage caused to the parents). As for the extent of the compensation – the compensation must be individual, considering the concrete violation and its circumstances. That said, it has already been found that since this is an estimate of general damage, courts would make this estimate based on the circumstances and judges’ life experiences. As a general rule, the extent of the compensation for violation of autonomy must be directly proportional to how material the missing information was and how the violated interest was to the core of the right and how much it implicated that right. Where the court was persuaded that the plaintiff’s autonomy had been violated in a way that reaches the core of that right and on a material aspect, it must grant appropriate compensation that reflects the full severity of the violation.

 

The Matza Commission recommended that the legislature  “authorize the courts to include in their decisions instructions regarding the use of the financial compensation, as much as the court may see fit to do so in order to ensure the child’s needs are met. Additionally, we recommend legislation stating that the compensation designed to guarantee the needs of the child would not be considered property of the parents in case of bankruptcy, nor would it become part of their estate or be available for any garnishment or enclosure of any kind.” These recommendations are wise and reasonable, not just for this cause of action, but more broadly as well. We hope that the legislature will answer this call, and that until then courts develop the appropriate mechanisms with the tools at their disposal.

 

The outcome: in terms of abolishing the child’s cause of action, it will not apply to pending cases where the parents’ suit was not brought. Justice Rubinstein, in concurrence, believes that the outcome of this decision should be stayed for a year, and Justice Naor points out that there is no place to determine, through a transitional provision in the matter at hand, the fate of a child’s claim that has not yet been brought.

 

Justice Rubinstein believes that we are replacing a theoretically and practically difficult system with one that has no theoretical challenges but gives rise to practical difficulties. However, at the end of the day, he joins in principle the opinion of the Deputy President, while pointing out the difficulties and calling upon the legislature to pronounce upon the issue.

 

Voting Justices: 
Primary Author
majority opinion
Author
concurrence
majority opinion
Author
concurrence
Author
concurrence
majority opinion
Author
concurrence
Full text of the opinion: 

CA 1326/07

and counter appeal CA 572/08

CA 8776/08 CA 2600/09 CA 2896/09 CA 3856/09 CA 3828/10

 

 

 

Appellant in CA 1326/07 (Respondent in the counter appeal):

 

Lior Hammer

 

 

Appellant in CA 572/08:                                    The State of Israel

 

 

Appellant in CA 8776/08:                                  A (a minor)

 

 

Appellant in CA 2600/09 and Respondent in CA 2896/09:

 

Maccabi Healthcare Services

 

 

Appellants in CA 3856/09:

1.  Eran Sidi

2.  Tsipora Sidi

3.  Yigal Sidi

 

Appellant in CA 3828/10                                   Clalit Health Services v.

Respondents in CA 1326/07 (Appellants in the counter appeal):

1.  Professor Ami Amit

2.      Mor      Institute     for       Medical

Information Ltd.

3.  Clalit Health Services

 

Respondent in CA 572/08:                                A (a minor)

 

Respondents in CA 8776/08:

1.  Victoria Sharai

2.  Alex Walpert

3.  Maccabi Healthcare Services

4.  Dr. Yivgenia Mazor

5.  Kolmedic Ltd.

6. Dr. Yosef Bracha

 

Respondents     in      CA      2600/09                         and Appellants in CA 2896/09

1. Noam Sabagian

2.  Tsiona Sabagian

3. Hayim Sabagian

 

Respondents in CA 3856/09:                             1.     The  Sick  Fund  of  the  Histadrut haClalit

2.  Dr. David Kampf

 

Respondents in CA 3828/10:

1.  Chen Na'ava

2. Chen Eli

3.  The estate of Chen Ziv Or z"l

 

 

 

 

The Supreme Court sitting as a Civil Appeals Court

 

CA 1326/07 and counter appeal from the judgment of the Haifa District Court of 25 December 2006 in CC 745/02, given by the Honorable Judge

B. Gillor

 

CA 572/08 from the judgment of the Haifa District Court of 2 December 2007 in CC 259/02, given by the Honorable Judge B. Gillor

 

CA 8776/08 from the judgment of the Be'er Sheva District Court of 31 August 2008 in CC 3344/04, given by the Honorable Judge S. Dovrat

 

CA 2600/09 and CA 2896/09 from the judgment of the Jerusalem District Court of 29 January 2009 in CC 8208/06, given by the Honorable Judge

Y. Adiel

 

CA 3856/09 from the judgment of the Jerusalem District Court of 2 April 2009 in CC 1338/97, given by the Honorable Judge A. Habash

 

CA 3828/10 from the judgment of the Jerusalem District Court of 11 April 2010 in CC 8459/06, given by the Honorable Judge I. Inbar.

 

 

 

Before President D. Beinisch (emeritus), President A. Grunis, Deputy President E. Rivlin, Justice M. Naor, Justice E. Arbel, Justice E. Rubinstein & Justice S. Joubran

 

For Petitioner in CA 1326/07:            Carmi Bustanai, adv.;

Shimrit Cohen-Daum, adv.

 

For Respondent 1 in

CA 1326/07 and counter appellant:    Chaim Zelichov, adv.; Ofir Ben Moshe, adv.

 

For Respondents 2-3 in CA 1326/07

And counter appellants:                      Ilan Uziel, adv.

 

For Appellant in CA 572/08:              Orit Sohn, adv.; Michal Sharvit, adv.

 

For Respondent in CA 572/08:           Meiron Cain, adv.; Akram Mehajne, adv. For Appellant in CA 8776/08:                                              Eli Lotan, adv.; Dalia Lotan, adv.

For Respondents 3-6 in CA 8776/08, Appellant in CA 2600/09 and Respondent in CA 2896/09, Respondents in CA 3856/09 and

Appellant in CA 3828/10:                   Yaakov Avimor, adv.

 

For Respondents in CA 2600/09 and Appellants in CA 2896/09

and Appellants in CA 3856/09:          Amos Givon, adv.; Itai Givon, adv. For Respondents in CA 3828/10:                                              Anna Rife-Liganza, adv.

For Amicus Curiae:                             Eli Zohar, adv; Inbal Zohar, adv.; Meirav Sagi, adv.

 

For the Israel Bar Association:           Asaf Posner, adv; Eti Libman, adv.;

Avishai Feldman, adv.

 

 

JUDGMENT

 

 

Deputy President E. Rivlin: Background

1.ThehearingofthebeforeuswasconsolidatedfordecisionthequestionstheissueknownasacauseofforTheariseswhereaiswithsomeitisthatbydefendants–usuallypersonnelwhohadtheasapatient–wouldhisTwoseparatecausesofactionarisethenegligentconduct: parents' causeof action,andthecauseof action thechild The

 

child's cause of action is customarily called "wrongful life", in order to differentiate it from the parents' cause of action, which is called "wrongful birth".

 

2.Thetheoffor"wrongfuland"wrongfulwastwentyfiveagointheoftheCourtinCA518/82Zeitsov v. Katz,40(2)IsrSC85(1986)ZeitsovInthatwhichwashandeddownbyapaneloffiveitwasheld,thatisnothingpreventingrecognitionoftheparents'causeofaction–"wrongfulofaction –inofthetortandinaccordancewithregularTheeventhen, around the question the of the cause of action.

 

The Court, per the majority of Justices on the panel, recognized the cause of action of the child – the "wrongful life" cause of action. However, the four majority Justices disagreed regarding the theoretical reasoning for recognizing the "wrongful life" cause of action, and as a result, also regarding the question how the extent of the damage should be measured.  That decisive question remained answerless in that case.

 

3.DeputyM.D.Levinconcurring,heldthatthecauseofactionshouldbeonlyintherare"initcanbeheldthatitwouldhavebeenbetterforacertainpersontohaveborn. Atitwillbeasocietalthatitisaofconsensusitwouldhavebeenbetterforacertainnottohavebeenbornthantohavebeenbornwithsevereatp.97).Inthosetoherthebirthof thechildisthatwas causedtoofthatinmonetary itwas is"he isliableforbeingshouldprovidehimthroughwhichtheofthecanbelessenedtotheboundaryofthepossible"(Zeitsov,p.100).Ben- Porat, DP clarifiedthatherisnotforatobebetweenachildwithandaborn"buttoexhausttheinorderthathefunctionandininferiorThissolution,sheleadsto"thetakingintoofthefactthathavingbeenborn(evenifagainsthisbestisachildbeforeuswho isentitledto athatis worth evenif onlywithinthe of his at p. 100).

 

4.(thenJustice)A.Barak,inwhoseopinionJustice)S.Levin,alsodeterminedthatcauseactionfor"wrongfullife"shouldberecognized.However,theuponwhichhispositionisisandcaninfluencescopeofcasesintheofaction"wrongfulandthewayisAtofthisviewaccordingto"thedutycareofthedoctorhimtotakereasonablecautionarysothatthewillnothaveadefect.Itisthusalsotherightthatnotbeturnhislifealifeofdefect.Theminordoeshaveanyrighttoalackofalife.Thewhichthelawisnottheinhavingalife,butrathertheinterestinlifewithoutdefect.Thus,thewhichtheisliableforisthecausingoflife,orlackofalife.Thedamagewhichthedoctorisliableforisthecausingofdefectedlife… the doctor is liable for causing defected life, and that is

 

formulated by comparing the defected life to life with no defect" (Zeitsov, at p. 117). According to that approach, the child's cause of action will be recognized also in cases in which the disability is not exceptionally severe, and does not necessarily lead to the conclusion that it would have been better for the child not to have been born. Estimation of the damage, according to this approach, is not calculated according to the difference between the disabled life and a lack of life (as per the approach of Ben- Porat, DP), but rather according to the difference between the disabled life and life without disability. Although had the tort not been committed the damaged party would not be alive, and certainly would not live a life with no disability, according to the position of President Barak, the uniqueness of the issue allows estimating the compensation in comparison to life without disability, in the framework of flexible interpretation that is adapted to the principle of restitutio in integrum.

 

  1. Justice E. Goldberg, dissenting, determined that the existence of a cause of action for the child against the doctor, due to whose negligence the child was born disabled, cannot be recognized at all in circumstances where without the negligence the child would not have been born at all. Preferring the pre-creation nihil over life, even in rare cases – thus determined Justice Goldberg – is impossible.

 

6.Althoughin theZeitsov casethecase of aninfantdueto"wrongfullife",fromitundecided.Asainthethatpassedsincethewashandedaroseintheruleofthecauseofactionforofthesefromtheexistenceof twotheofthecauseofandthewayiscalculated,andfromtheveryofcauseof Thus,thecourtstointer aliawhatapersonwithhowextentofthatshouldbewhetherslight(oronlyseverecanacauseofactionforaninfant.However,withoutstare decisistheZeitsov rulingwasnotinafashion.Duetoandtothetoalsorelatedwedecidedtotheofthecasesbeforeus,andtoorderbeforeanexpandedpanelofsevenjustices.IntheofD.of292011,wediscussedquestions ofthat decision:

 

  1. Does a cause of action exist and what is its legal basis? In light of the time that has passed since the Zeitsov ruling was handed down and/or the continual difficulty in implementing it, should it be altered, or should one of the approaches expressed in the Zeitsov ruling be preferred over the other?

 

  1. Assuming that a cause of action exists: should the parents' action (wrongful birth) or the child's action (wrongful life) be recognized, and in which cases will each of the causes of action arise?

 

  1. The principles of calculation of compensation in both actions: in the parents' action: comparison between a healthy child and a child with defects, or another standard? In the child's action: comparison between no life and a life with defects? A comparison between a life with defects and a healthy life?

 

  1. Proving a causational link in the parents' action (proof that they would have terminated the pregnancy had they known of the expected defect). In the child's action – is his death better than his life?

 

  1. Is violation of autonomy – as a cause of action in the parents' action – an additional cause of action, or an alternative to the cause of action for wrongful birth?

 

It was further held in that decision that the questions of principle shall be decided first in the framework of a partial judgment, after which the  individual hearing in each of the cases would continue, to the extent that would still be necessary. Thus, we shall relate in this decision to the questions of principle only and to the arguments regarding those issues. The decisions in the various cases shall be heard separately and not before this panel, and we are not determining anything regarding the liability of any of the defendants in the cases before us.

 

The Parties' Arguments

 

7.Thecounseloftheinthecasesbeforeussupportedrecognitionofthecauseoffor"wrongfullife",totheofPresidentBarakinZeitsov Itwasthatofthisisitunnecessarythebetweenlifeandnolife,andoflifeInaddition,arguethatapproachadvancescertaintyandintheasitnotawhichisinherentlyvague,adefectandadefect;andevenisincomparisontoaiscalculatedbyathatisintortforbodilywhichisacceptedbytheItisthecomparisonsuchthatofthementitleatoandothersdoentitleapersontoisnotappropriateeither,asitbetweenofconsiderationsandsupportorderingfortheinvolvedindisability,evenifitisaThecounselevennotethattotheiritispossibletoprovideafullfortheofthechildintheoftheaction,theoftheparentsistotheperiodwhichthechildisuponhisItisthatfromthestandpoint,itisappropriate to the of action of thechild when thedoctorevenifisinthelinkbetweentheandthefromtheThethatnon-recognitionoftheactionwouldquasi-immunitythetodoctorswhoactedandthatthereisimproperinthatwithdefectispreferable tono life, when itisraisedbyadoctorwho performstests the purpose ofwhich isto allow in case ofa defect.

 

  1. The counsel of the defendants in the various cases, on the other hand, support annulment of the child's action for "wrongful life". According to their position, President Barak's approach in the Zeitsov case is at odds with fundamental principles of tort law, whereas the approach of Deputy President Ben-Porat is impractical, because the court has no real tools with which to compare between a situation of life

 

with disability and a situation of no life. In addition, the very decision that there are situations in which it would have been better for a person not to have been born since he has a defect contains a problematic societal-moral statement which contradicts fundamental values of society regarding human dignity and the sanctity of life. In any case, the defendants are of the opinion that if the cause of action for "wrongful life" is recognized, the approach of the Deputy President should be preferred, and differentiation should be made, between "severe" defects regarding which it can be said prima facie that it would be better for a person had he not been born and more "minor" defects which do not establish a cause of action, according to the extent of the person's independence of functioning and his ability to be of benefit to himself and others, to be integrated into society and to live a life that entails satisfaction, meaning, and enjoyment. It is argued that an additional possibility is to make such a differentiation on the basis of criteria used by the pregnancy termination committees when deciding upon authorization to perform an abortion at the viability stage. Moreover, it is argued that the parents' cause of action should not be recognized either, as the expenses they bear in caring for their child constitute mitigation of damage, and where the party who suffered the direct damage – the child – has no cause of action, nor do the parties who mitigate the damage have a cause of action. The conclusion, according to the defendants' approach, is that only the parents' action for violation of autonomy should be recognized.

 

  1. The Israeli Medical Association and the Israel Bar Association also appeared in the proceedings, with the status of amicus curiae.

 

The medical association extensively discussed the existence of a trend which it calls the aspiration to give birth to "the perfect child." According to its stance, the statement that it would be better for a person not to have been born leads to an intolerant attitude toward disabled persons, and as such considers them as having an inferiority due to which their birth should be prevented in advance. Thus, the medical association is of the opinion that the approach of Deputy President Ben-Porat in the Zeitsov case should be adopted, whilst determining clear criteria which would limit the use of the cause of action for "wrongful birth" (or "wrongful life") to the most difficult and severe cases, as per its definition. These criteria, proposed the medical association, can be based upon Health Ministry instructions to the multi-district pregnancy termination committees. The medical association further points out the sentiment of doctors in the field of obstetrics and gynecology, as well as that of those serving in the pregnancy termination committees, according to which the concern regarding a law suit is likely to lead to an increase in medical tests and to "superfluous" medical procedures or abortions.

 

  1. The Israel Bar Association is of the opinion that the causes of action for "wrongful birth" and "wrongful life" should be recognized. It is further of the opinion that the practical difference between the various stances that recognize actions for "wrongful life" in principle is smaller than it first appears. Thus, because even according to the position of President Barak the child-claimant must prove, in the framework of the element of causal link, that the defect is so severe that the pregnancy termination committee would have authorized an abortion due to it; and because, on the practical plane, there is no essential difference between the two approaches regarding compensation. The Israel Bar adds that to its understanding, the caselaw on the question of wrongful birth does not have an influence on the number

 

of abortions that will be performed or upon the scope of tests during pregnancy, as it is the parents' desire for a healthy child that leads to these results, not the question of provision of retrospective compensation. Furthermore, the Israel Bar Association argues that public policy regarding the question of performing abortion should be determined in the framework of the law applying to it, and not in the framework of tort law. On the merits, the Israel Bar Association supports the position expressed by President Barak in the Zeitsov case. Decision of the question whether it would be preferable for a person not to have been born, it is argued, is a difficult one, which should be avoided and which is likely to lead to caselaw that is not uniform. The Israel Bar Association further argues that refraining from recognition of the child's cause of action is likely to leave him with no compensation if his parents make unenlightened use of the compensation granted them, or if he is put up for adoption after birth.

 

  1. Last, note that the Attorney General notified us that the Minister of Justice ordered the establishment of a public commission, at his request, headed by the Honorable Deputy President (emeritus) E. Mazza (hereinafter: the Mazza Commission), in order to formulate his stance regarding the existence of a cause of action due to wrongful birth and the question of the appropriate boundaries of such a cause of action. The findings of the Mazza Commission were submitted to the Court on 19 March 2012, in the framework of "the Report of the Public Commission on the Subject of 'Wrongful Birth'" (hereinafter: the Commission Report). However, the Attorney General did not express his stance regarding the questions put up for decision before us. Thus, we refrained from viewing the findings of the report themselves as part of the parties' arguments, as they lack the status in law of the stance of the Attorney General.

 

The operative findings of the commission did not serve as part of the pleadings before us; nonetheless, it is worth noting that the Commission Report is the fruit of circumspective, serious and thorough work; sitting in the commission were the best of experts, many witnesses were heard, position papers from various sources were submitted, a survey of all the relevant issues was presented, and all was examined thoroughly and meticulously. We read the report and found that in certain respects, the commission went in the direction of the findings we reached. In light of that, we shall refer below to the Commission Report to the extent that it is relevant to the cases at hand.

 

12.consideringtheoftheaspectsofissue,wehavereachedtheinthelegalrealityofourtwentyfiveyearstheZeitsov rulingwashandeddown,thecauseofaction–thecauseofactionfor"wrongful – can no longer berecognized.

 

There are substantial legal difficulties, regarding both the element of damage and the element of causal link, which make difficult the recognition of this cause of action in the framework of the tort of negligence. But above and beyond these legal difficulties, there is moral, substantive difficulty in the view that the life of a person who was born with disability can be considered – in the eyes of the infant himself – as "damage". Recognizing this difficulty, we in effect continue according to the moral view outlined by President Barak in the Zeitsov ruling. Furthermore, as detailed below, we wish to realize the proper purpose at the foundations of the Zeitsov ruling –

 

granting compensation, as fully as possible, to fulfill the needs of the disabled child; however, to do so via the cause of action of the parents, which does not raise those difficulties.

 

The Difficulties in Recognizing the Cause of Action for "Wrongful Life"

 

13.Asnotedabove,attheoftheZeitsov ruling,whichthecauseofactionforlife",aretwoandseparateAccordingtobothapproaches,aofactionfor"wrongfullife"isbaseduponthetortofnegligence.Theelementofnegligenceisinby notin of theonthepriortoorduringthe(orconcernofadefectinthefetuswhichisgoingtobeborn,orbynottheoftheinfantinwhetherregardingexistenceofconcernofadefectorregardingtheneedfor,oradditionaltestscanorruleexistenceofconcern"(theCommission Report, at

p. 38). Both approaches assume that this element has been established. However, each of the approaches raises logical or legal difficulties regarding the existence of one or more or the other elements of the tort of negligence: damage or causal link.

 

The Difficulties regarding the Element of Damage

 

14.TheintheofDeputyBen-Poratraisessubstantivethe element of damage. Accordingtotheofisdefinedinthecauseofaction,astheornolife(theofthechildnotandwith(theofthetoofthechildisthedamagetodefinitionrequiresjudicialofthequestionthereareinwhichithaveforanottobeenandthusrequiresquestionsfoundinofphilosophy,morals and religion, regarding the of existence, asopposedto withtheseisanissueforfromthestandpointthe(theCommission Report,at39).Andindeed,President(thenJustice)A.Barakout inhis theZeitsov ruling,as follows:

 

 

This approach [of Deputy President Ben-Porat – E.R.]… once again raises the question whether the Court is able to determine that in certain conditions the lack of a life is preferable to a life of suffering. Do our worldview, our approach regarding life and our lack of understanding of non-existence, allow us, as judges, to determine that there are indeed situations, even if they be rare, in which it is preferable not to live than to live a life of suffering? What is the meaning of such "preference"? When the life expectancy of a person is shortened, we assess this suffering of his. This assessment is difficult, but it is possible, as we are able to assess the meaning of life; but how can we assess the meaning of the lack of life? … When we compensate for death or for shortening of life expectancy, we do not compare the state of life to the state of death, and we do not determine

 

the preference of one over the other, as we do not have the tools to do so. All we do is recognize the right to continue living – even if in suffering, and even if with defect… thus, how can we assess lack of life? According to which rational standards can a reasonable person determine that even in the most extreme case, lack of life is preferable to life with defect? (Zeitsov, at p. 116; emphasis added).

 

15.Indeed,fromthenormativeitappearsthatitisnotfortheCourttoawhosuffersfromacertainofdisabilitywouldbeifhehadnotborn.theCourtinno wayhasthetoolstoreachaasthelacksnatureofandsuchcourse,isnottobe("nohasyetfromthere"–saidtheCourt–"noonehasyetfromthereinordertotellwhatthelackofalsothebyRonenPerryolohaImZoTviotNezikinbeginb'Avla'33(3)M507,545-546andreferencesinnote177PerryFromtheaswell,itisbetterthatthediscussionnotbebycourts.Asaccordingtothe of Deputy Ben-Porat, to onlyinrarecases,andinfantmostapproachrequiresdecisionthequestionwhatthoseseveredefectshowever,lackingaforsuchtheisthatcourtisnotsocialthat canrulingsonquestions" Commission Report,at p. 39).

 

16.Itshouldthatinsuchacasetheisnotquantifyingthebutratherifanydamageoccurredall.Indeed,generallycaselawisflexibleregardingprovingofofthereinherentprobativewhichdonotdependupontheparty.Soitisprovingfuturelossese.g.:CA10064/02"Migdal" Chevra l'Bituach Ltd. V. Abu Hana,60(3)IsrSC13,par.7-9Abu Hana)).flexibilityshouldbewithpurespeculation.Intheus,theisnotonlyintheofthedamage,buta–whetherthereis, oris not, Thus notes Perryin this context:

 

I agree that difficulties of calculation and assessment… need not deter the courts from determining liability; however, a differentiation should be made between cases in which the existence of damage is obvious but it is difficult to assess its scope, and cases in which the question of the existence of damage cannot even be decided. Non-monetary damages are damages that most of us have experienced, directly or indirectly. Our acquaintance with various situations of non-monetary interests allows us to know when a change for the worse in the situation of such an interest takes place. The question of the existence of damage is not unsolvable. The only question, of course, is the question of quantification – but in light of the fact that from the conceptual standpoint this problem arises only after the question of liability has already been decided, it cannot justify (a priori) negation of that liability. The situation under present discussion is different.  Non-existence is a situation with which nobody is familiar, and

 

thus comparing it to a situation of existence is always impossible. Without a relational plane to which the present situation of the plaintiff can be compared, we cannot determine if damage has been caused or not. The problem is not merely a problem of quantification" (Perry, at p. 547).

 

17.ThestateintheUnitedtheofdefining thenature of a of life":

 

The argument that the child was in some meaningful sense harmed by being born and would have been better off not being born suggests that there is a perspective, apart from our life and world, from which one can stand and say that he finds nonexistence preferable to existence (Goldberg v. Ruskin (1986), 113  Ill.  2d 482).

 

It was further written that:

 

Whether it is better never to have been born at all than to have been born with even gross deficiencies is a mystery more properly to be left to the philosophers and the theologians. Surely the  law  can assert no competence to resolve the issue, particularly in view of the very nearly uniform high value which the law and mankind has placed on human life, rather than its absence ( Becker v. Schwartz (1978), 46 N.Y.2d 401, 386 N.E.2d 807).

 

18.Lackingthecapabilitytothequestionifandistoadisabledlife,theisthetheofapproachesontheNota bene: itisnotaofapproaches;ifitwere,itbetobetweenthembyaCourtruling.Astheare itis to anycriteriondecidinganditistoaextentuponfeelingandworldview.Thus,foronecanwhatthelifeclearlytotheofenjoymentandapersonoutofhistofillhiswithvalue;topersonalqualityhisofhisandthesurroundinghissubjectivetoalive;histoandbeawareofthewondersofandability.Aquestionisthosebemeasured–fromtheofthechild,whodoesnotknowanyrealityfromtheonewhichhewasborn,ortheviewpointahealthyperson.aretoacannotbeT.Orrwellinin 5587/97 The Attorney General v. A, 51(4) 830, 858 (1997):

 

… we must refrain from adjudicating regarding the quality of life of [the child] in comparison to a regular child his age. We must focus upon examination of the well being of [the child] from his own viewpoint. When dealing with a child who suffers from defects from birth – even severe defects, like in the case before us – his life, with its disability – is the "whole" which that child enjoys. From the standpoint of [the child], another way of life was never a matter of consideration.  The quality of

 

life is that quality which is possible in light of the severe defects he suffered. That, from his standpoint, is everything. Such a life is not worthy of less protection than the life of a child who was born and developed normally.

 

Even if it were possible to point out situations in which it is clearly preferable for a person not to have been born – and, as aforementioned, we lack that ability – there is real difficulty in defining and demarcating those situations in a way that would allow prediction.

 

  1. Deputy President Ben-Porat proposed in Zeitsov to solve this difficulty through examination of the question if it would have been better for a person not to have been born through the lens of "the reasonable person"; in other words: whether the reasonable person would be of the opinion that the life of the damaged party isn't worth living. However, without any knowledge regarding the quality of the alternative to life with disability, nor is it possible to find assistance in a standard of reasonableness in order to find a proper answer. Furthermore, the ability to get enjoyment and value out of life despite disability is also subjective, and one can assume that it varies from person to person. Indeed, at times use is made of the term "not worth living" regarding life with severe disability; however, that is merely a phrase intended to indicate the existence of great difficulty, and in no way whatsoever can it be derived from it that the situation of nonexistence is truly preferable.

 

  1. Nor does the proposal to rely upon criteria of the pregnancy termination committees in order to demarcate the type of cases in which the "wrongful life" cause of action would be recognized provide a real solution to the question whether and when nonexistence is preferable to existence. The considerations which guide the pregnancy termination committees are not limited to the question if being born or not being born serves the welfare of the fetus; the committees also consider, in the framework of the entire balance, the welfare of the parents and their desire to terminate the pregnancy. Authorizing an abortion in a given situation does not necessarily inform of a widespread societal view according to which in such a case it is better not to be born. The authorization is based, at least partially, upon the societal view regarding the pregnant woman's right to autonomy, her dignity and privacy, and the scope of the right to have an abortion. The scope of the right to terminate the pregnancy is not, therefore, comprised of the interests of the fetus alone. For that reason, and as I shall yet clarify, non-recognition of the child's action does not create legal disharmony in relation to the recognition of the right to have an abortion in certain situations.

 

21.AninDeputyapproachexistenceofthenotional duty of care thechild,whichisprovideandcorrecttohisastoanabortion.Indeed,thereisnoadutyofcareapersonwhohasnotbeenborn(asisdoneinofmedicalrecognitionofadutyofcareina"wrongfullife"requiresofaprotectednottobebornincertainThisbeonthetoanabortion,as(andtheanddoesadutytowardthefetus. Andindeed,theopinionof

 

Justice Goldberg in Zeitsov was based upon the view that a right not to be born does not exist.

 

In conclusion, the approach of Deputy President Ben-Porat requires determining, in certain cases, that there are situations in which it would have been preferable for a person not to have been born. That determination cannot be established from the legal standpoint, and it is not proper to establish it from the substantive-moral standpoint. Lacking such a determination, it is not possible to prove the element of damage in the wrongful life cause of action (and see also: Bilha Kahane "Pitsui begin Kitsur Tochelet Chayim 've'haShanim ha'Avudot' baTviot b'Ila shel Holada b'Avla" Mishpatim al Atar D 1, 4 (5772)).

 

The Difficulties Regarding the Element of Causal Link

 

22.TheofPresidentA.BarakinZeitsov theintoabetweenlifewithdisabilityandnon-existence.Barakabasisforof"wrongfullife"ofaction.Accordingtohistheelementshoulddefinedas"defectedlife",inwithwithoutdefect.inthisasolutionisprovidedfortheinthedamageinthetortandavoidstheneedtotheinit(thatis:whetherandwhenitcanbesaiditwouldbebetterforaninfantnottohavebeenbroughttheotherareno regardingthe of causallink.

 

  1. The difficulty in determining a causal link between the negligence and the damage of a life with disability stems from the uncontroversial fact that it is not the negligence of the doctor which caused the damage of "defected life" (as per the definition of President Barak). Indeed, it is not the doctor who caused the disability of the infant, as even without the negligence, the infant could not have entered the world any other way than with his disability. In other words: proper medical care could not have led to prevention of the disability, and the possibility of that particular child being born without disability does not even exist. Deputy President Ben-Porat discussed this in Zeitsov, stating that:

 

There was no possibility that the minor would enter the world whole and healthy. Determination of damage, by the vary nature of damage, requires comparison between the situation of the claimant without the tort, and the situation after it. The only interpretation of this rule in our case is, to my best understanding, the comparison between nonexistence (without the negligence) and defected existence (as a result of the negligence). Charging the harmer on the basis of a comparison with a healthy child means punishment on foundations of an imaginary reality… The solution which my colleague supports seems to me to be impossible from the legal standpoint, and with all due respect – also unjust (Zeitsov, at p. 105; emphasis added).

 

The approach of President Barak thus deviates from the fundamental principle of the law of compensation regarding restitutio in integrum (and see the criticism by Perry in his aforementioned article, at pp. 559-560).  Note that President Barak was

 

aware of these difficulties, but wished to find a solution which would allow appropriate compensation for the children and their parents.

 

24.Thelegalarenottobe"overcome".Fromofjustice,ofthelackofcausallinkbetweenthenegligenceandtheonlydamagewhichcanbebetweenwithdisabilityandwithnoisthatdidnottotheparty;inacasewouldbeanFromthatthereisalsonoplaceforthethat"oneoftheweightyreasonsfordoctorsotherinthecaseathand,isthereasonisatortfeasor,acrossfromhimthereisaninfantwithadefect–asevereone–andinthatiscalledforthetwo,theofjusticetendstowardthetheinfant,wholivewithhisdisability…itbesaidthatthesituationistoawhoincarwithandandaninnocentwhoatlastescapedawithaCanitbesaidthatthe'mens rea'ofahastydriverwho,onlybychance,didconcludedrivingafatal is fromthedriverwhomthe drivingconcludedinaresult?"T57-58(1997)).Thistypeofalthoughitbevalidfroman(andinfactistheofisnotvalidthetortlawlawdoesnotduetonegligent conduct,butratherduetocausing damage negligentlySoitisofjustice,andsoitisfromtheofdeterrence.itbesaidthattheresultsofdefendant'sconductwithversusnonexistence)aredamage;andwheretheonlydamagethatcanbeshown(lifewithdisabilitylifewithnowasnotby –it is not or just to upon the defendant.

 

Note also, that the path from recognition of the child's action for wrongful life directed against the doctor, to recognition of the child's action against the parents who begat him, is a short one; and no approach is interested in advancing that.

 

Annulling the "Wrongful Life" Cause of Action – The Moral Aspect

 

  1. Recognition of the cause of action for "wrongful life" is faulty not only due to legal difficulties, but also due to difficulties regarding principles and values.

 

Definition of life itself – even if it is life with disability – as damage, and the determination that it would have been better for a certain person not to even have been born, contain an unacceptable violation of the view that life has inherent value, that does not diminish, and certainly does not disappear, due to the existence of a defect or the existence of a disability (see, e.g.: Roee Gilber "haTsorech baHachra'ot Kashot baTviot shel Chayim b'Avla veHolada b'Avla: He'arot v'Hearot b'Ikvot T.A. (Mechozi Haifa) 259/02 A v. The State of Israel" MOZNEI MISHPAT 7 441, 466-467 (2010)). This view is an important and necessary part of our belief and recognition of the sanctity of life, the value of the individual and his dignity, and the right of people with disabilities to dignity and equality.

 

26.SinceZeitsov wasdownfiveyearsago,thesereceivedBasicLaw:DignityandLibertyinArticle1,thetowhichthebasicoftheindividualinareupontherecognitionof the value of the individual and the sanctity of his life.TherecognitiontheseisbasedonuniversalvaluesandvaluesoftheStateofasaJewishstatethattheoflife.Theisborninimage.Havingbeenborn,hisdignityandthesanctityofhislifearetobeHisisbetheastheyHislifeispriceless,bethethey   Life is a value– for all.

 

This moral-legal view is expressed well in the Equality of Rights for People with Disabilities Law, 5758-1998, which determines as a "basic principle" in section 1 that:

 

The rights of people with disability and the commitment of society in Israel to those rights are based upon the recognition of the principle of equality, the recognition of the value of the individual who was created in [God's] image and on the principle of the dignity of every person.

 

Section 2 of the law determines that its objective is:

 

…to protect the dignity and liberty of a person with disabilities, and to entrench his right to equal and active participation in society in all areas of life, as well as to provide an appropriate solution for his special needs in a way which will enable him to live his life with maximal independence, privacy and dignity, whilst realizing his full ability.

 

  1. According to our societal view, in the framework of our moral belief, and pursuant to our legal principles, the definition of the life of a person with disabilities as "damage" is not appropriate, is not moral and is not possible. It substantively violates the principle of the sanctity of life. Quantification of the damage of a person with disability – in comparison to the possibility that he would not have been born at all or in comparison to a person with no disability – is itself a violation of the value of his life and of the presumption, which is not to be negated, that the value of the lives of people with disabilities is absolute, and not relative.

 

28.Indeed,thecostofof"wrongfulofactionissosevere,thatinFrance,inwhichCourdeCassationrecognizedcauseofactionforlife,itwasofdisabledwhichthatandthatitrelatestoinferiorevento(asaresultofthatinter alia,lawinwasSee:GilSigalhaMa'arechet–alHoladaveKol(vol.4)10,12SigalPerry,pp.524-525;M.Duguet,Wrongful Life: The Recent French Cour de Cassation Decisions 9 J. HealthLaw 139 (2002)).

 

This position of principle is also expressed in the caselaw of the courts in the various United States. Thus, for example, it was determined in the aforementioned Bruggeman case:

 

It has long been a fundamental principle of our law that human life is precious. Whether the person is in perfect health, in ill health, or has or does not have impairments or disabilities, the person's life is valuable, precious, and worthy of protection. A legal right not to be born – to be dead, rather than to be alive with deformities – is a theory completely contradictory to our law (718 P.2d at 642).

 

So it is there, and so it is here in Israel as well.

 

In Berman v. Allan, 80 N.J. 421, 404 A. 2d 8 (N.J. 1979) it was written that:

 

No man is perfect. Each of us suffers from some ailments or defects, whether major or minor, which make  impossible participation in all the activities the world  has  to  offer.  But  our lives are not thereby rendered less precious than those of  others whose defects are less pervasive or less severe.

 

For the same reasons themselves, the Court in Canada refrained from recognizing the "wrongful life" cause of action, clarifying that this view is common to all of the Common Law systems, excepting a small number of states in the United States:

 

It is Unlikely that Canadian courts will entertain wrongful life claims in the near future. There are many technical and policy objections to them and this has led to a rejection of these claims in all common law jurisdictions other than a few American states… There is a risk that the recognition of a wrongful life claim will devalue the sanctity of life in general and the plaintiff’s life in particular. A finding of liability may  be  interpreted  as  a  finding that the plaintiff’s life is a legally recognized loss and  that  he would be better off dead (Osborne, supra, at 141).

 

  1. It is thus no wonder that the result we have reached unanimously, regarding the need to annul the "wrongful life" cause of action, was reached also by the majority of the members of the Mazza Commission, who determined that "the recognition of the cause of action is at odds with the fundamental values of our law" (the Commission Report, at p. 38). This result is also in line with the current law in the great majority of the Common Law states, as clarified below.

 

Comparative Law

 

  1. The difficulties I have discussed led the great majority of the various legal systems not to recognize a  cause  of  action  for  "wrongful  life".  The great majority of courts in the states of the United States do not recognize the cause of action for "wrongful life" (see, e.g.: Phillips v. United States, 508 F. Supp. 537 (D.S.C. 1980) (applying South Carolina law); Elliott v. Brown, 361 So. 2d 546, 548 (Ala. 1978); Walker ex rel. Pizano v. Mart, 790 P.2d 735, 740 (Ariz. 1990); Lininger v. Eisenbaum, 764 P.2d 1202, 1210 (Colo. 1988); Garrison  v.  Medical  Center  of  Delaware,  Inc. , 571   A.2d   786 (Del. 1989); Kush  v.  Lloyd, 616  So.  2d  415,  423  (Fla.  1992); Spires  v.  Kim,  416

 

S.E.2d 780, 781 - 82 (Ga. Ct. App. 1992); Blake v. Cruz, 108 Idaho 253, 698

P.2d 315 (Idaho 1984); Clark v. Children’s Memorial Hospital, 955 N.E.2d 1065, 1084 (Ill. 2011); Siemieniec v. Lutheran General Hospital, 117 Ill. 2d

230, 251, 512 N.E.2d 691, 702 (Ill. 1987); Cowe v. Forum Group, Inc., 575

N.E.2d  630,  635  (Ind.  1991);  Bruggeman  v.  Schimke,  718  P.2d  635 (Kan.

1986); Kassama  v.  Magat,  792  A.2d  1102,  1123  (Md.  2002);  Viccaro  v.

Milunsky, 406  Mass.  777,  783,  551  N.E.2d  8,  12  (Mass.  1990); Taylor  v.

Kurapati, 236 Mich. App. 315, 336 - 37, 600 N.W.2d 670, 682 (Mich. 1999);

Eisbrenner v. Stanley, 106 Mich. App. 357, 366, 308 N.W.2d 209, 213 (Mich.

1981); Miller  v.  Du  Hart,  637  S.W.2d  183,  187 (Mo.  App.  1982); Smith  v.

Cote, 128 N.H. 231, 252, 513 A.2d 341, 355 (N.H. 1986); Becker v. Schwartz,

46  N.Y.2d  401,  386  N.E.2d  807 (N.Y.  1978); Azzolino  v.  Dingfelder,  315

N.C. 103, 337 S.E.2d 528 (N.C. 1985); Hester v. Dwivedi, 733 N.E.2d 1161,

1165 (Ohio 2000); Ellis v. Sherman, 512 Pa. 14, 20, 515 A.2d 1327, 1339 - 30

(Pa.  1986); Nelson  v.  Krusen,  678  S.W.2d  918 (Tex.  1984); James  G.  v.

Caserta,   332   S.E.2d   872,   880   (W.   Va.   1985); Dumer   v.   St.   Michael's

Hospital,   69   Wis.   2d   766,   233   N.W.2d   372 (Wis.   1975); Beardsley   v.

Wierdsma, 650 P.2d 288, 290 (Wyo. 1982).

 

31.ThereasoningusedasabasisincaselawistoThus,foritwasthatcourthasnostandardaccordingtowhichitthatithavepreferableforanottobeenborn,thatincaseadoeshavetherighttobeborne.g.:Elliot v. Brown, 361 So. 2d546, 548 (Ala. 1978)).The lackof therightnottobeborn, itis does not contradictthe of a to have an abortion:

 

[A] legal right not to be born is alien to the public policy of this State to protect and preserve human life. The right of women  in certain cases to have abortions does not alter the policy ( Elliot, 361 So. 2d at 548).

 

An additional reason, that is also used by the courts in the various states, is that there is no real possibility of quantifying the compensation for "wrongful life", as that would require determining the relative value of the situation of nonexistence – a situation regarding which there is no information (see: Siemieniec, 512 N.E.2d at 697). The courts in the United States also discussed the difficulty in determining criteria for differentiation between cases where the severity of a person's disability leads to a situation in which it would have been preferable for him not to have been born, and cases where the disability is not that severe (see, e.g.: Siemieniec, 512 N.E.2d at 699).

 

  1. Three states alone in the United States have judicially recognized the cause of action for "wrongful life": California (see: Turpin v. Sortini, 31 Cal. 3d 220, 643 P.2d 954, 182 Cal. Rptr. 337 (Cal. 1982) ; Curlender v. Bio-Science Laboratories, 106 Cal. App. 3d 811, 165 Cal. Rptr. 447 (Cal. 2d Dist. 1980)); Washington (Harbeson v. Parke-Davis, Inc., 98 Wash. 2d 460, 656 P.2d 483 (Wash. 1983)); and New Jersey (Procanik v. Cillo, 97 N.J. 339, 478 A.2d 755 (N.J. 1984)). In this caselaw no answer is found for the difficulties in recognizing the "wrongful life" cause of action. In fact, most of the reasoning at the basis of the judgments that recognized the "wrongful life" cause of action regards the desire to assist, by way of charging compensation, people

 

who need it due to their disability, at least where it is possible to locate a person who acted negligently.  Thus, for example, the court declared expressly in Procanik:

 

Our decision to allow the recovery of  extraordinary  medical expenses is not premised on the concept that non-life is preferable to an impaired life, but is predicated on the needs of the living. We seek only to respond to the call of the living for help in bearing the burden of their affliction (478 A.2d at 763).

 

It is obvious that we cannot use such reasoning to recognize a cause of action in tort law. It might be taken into consideration, and should be taken into consideration, in determining the amount of compensation after the tort has been recognized.

 

  1. A similar approach, which characterizes most of the courts in the United States, was taken by other Common Law states. In McKay v. Essex Area Health Authority [1982] 1 QB 1166, it was determined in England that lacking express legislation determining otherwise, Common Law does not recognize a cause of action for "wrongful life" (in England such a statute was enacted; the case revolved around a girl born before the statute  entered effect). Influenced by this case, and for reasons  similar  to  those  detailed above, the cause of action for "wrongful life" was rejected in Canada as well (see e.g.: Bovingdon v. Hergott, 2008 ONCA 2, 290 D.L.R. (4th) 126; Phillip

H. Osborne, Essentials of Canadian Law: The Law of Torts 140-141 (2000)) and in Australia (Harriton v. Stephens (2006) HCA 15).  In the latter case, the Supreme Court of Australia rejected the action of a child for wrongful life, ruling that the damage cannot be assessed by comparing life with a defect to no life whatsoever (see also: Waller v. James (2006) HCA 16).

 

In Germany the Federal Constitutional Court ruled that the cause of action for "wrongful life" should not be recognized ( BVerfGE 88, 203 (269)), as it contradicts the constitutional principle of human dignity, entrenched in Article 1 of the German basic law. Germany of today, having internalized the horrors of the past, has recognized in its constitution and the caselaw of its courts the duty to sanctify human life.

 

The Supreme Court of Australia also reached a similar conclusion (OGH (25.5.1999) JB1 1999, 593). In France as well, as a result of caselaw that recognized the cause of action of the child, the law was amended in 2002, determining that a person cannot claim that his very birth caused him damage. The law allows the child's action only if the doctor's conduct directly caused his disability or worsened it (for a circumspective survey of the comparative law and of caselaw of additional states, see: Perry, at pp. 518 -525; the Commission Report, at pp. 32-38; Sigal, at p. 12).

 

  1. The understanding that an independent cause of action for "wrongful life" should not be recognized is thus shared by many legal systems. There is, then, a sort of "global consensus", common to the various legal systems, regarding negation of the cause of action for "wrongful life" (at very least without  legislation  that  determines  otherwise).   It  seems  that  a  judge,  who

 

sees himself (inter alia) as part of this global legal system, and who takes part in his writing in the "global chain novel", to paraphrase the well known metaphor of Ronald Dworkin ((RONALD DWORKIN, LAW'S EMPIRE 228-29 (1998)), will place before his eyes the existence of the existing consensus regarding a certain legal issue:

 

[Global judicial cooperation] can also serve as a restraint imposed upon domestic courts, preventing them from exceeding the borders of the general consensus about what the "novel" should tell... referral to foreign law is similar to Dworkin's metaphor of a chain novel. When a judge considers himself part of the system - for that matter the global legal system - he will tend to avoid a significant departure from the global consensus (Eliezer Rivlin, Thoughts on Referral to Foreign Law, Global Chain-Novel, and Novelty, 21 Fla. J. Int'l L. 1, 15 (2009).

 

Indeed, a global consensus does not oblige a court in our legal system, and in fitting cases, there might be a good reason to deviate from it; however, there is no doubt that it should be given appropriate weight, while relating to the reasons and reasoning that led to its creation, and examining whether it should be adopted in the framework of the Israeli legal system as well. In the issue before us, we should not deviate from the global consensus. The Israeli legal system sanctifies human life, and blocks any detraction from the value of life.  The life of a person, any person, is better than his death.

 

  1. Thus, our conclusion is that the child's cause of action for "wrongful life" can no longer be recognized. However, from the practical standpoint, as clarified below, a significant expansion of the cause of action at the disposal of the parents of the infant due to "wrongful birth" – a cause of action the recognition of which is not controversial – will allow granting the parents compensation that will cover the costs of raising him and all of his needs even after he grows up, and for the entire period of his life expectancy.

 

The Parents' Cause of Action – an Action for "Wrongful Birth"

 

  1. Recognition of the action for wrongful birth – the parents' action – does not raise the same problems of law and principle involved in recognition of the child's action. On that issue there was full agreement between all the Justices on the panel in Zeitsov. Thus wrote President (then Justice) Barak in that case (at p. 113):

 

"Indeed, recognition of the liability of the doctor toward the parents is in line with the regular rules of negligence law… between the doctor and the parents (who belong to the type  of people who are cared for by the doctor) there is proximity, and the doctor has a notional duty of care. On this issue, there is no importance to the differentiation between a situation in which a doctor was negligent and without the negligence the minor would have been born healthy, and a situation in which had it not been for the negligence the minor would not have been born at all.   In both

 

cases, we are dealing with the damage of parents and the deviation of doctors from the proper level of care. In the proper balancing between the interests of the various parties, the monetary burden of the medical negligence should be cast upon the creator of the risk and his insurer. It is to be hoped that in this way a proper level of health can be ensured. There is no justification for granting immunity to doctors who have caused  damage  by  their negligence… parents have a right to plan their family, and in that framework it is appropriate for the attending doctor to take proper cautionary measures toward them and inform them of the risks involved in conception, pregnancy, abortion, and birth.

 

A necessary element in formulating liability through the tort of negligence is the element of damage. The existence of this element does not, in and of itself, raise any special problem in the context of the parents' action…

 

We too are of the opinion that the parents' cause of action for wrongful birth is in line with the regular definition of the tort of negligence, and does not raise any real difficulty regarding the issue of restitutio in integrum. Indeed, in the context under discussion this cause of action raises difficulties regarding the element of causal link. In addition – and President Barak discussed this Zeitsov – "questions might arise regarding the heads of damages for which compensation is given (i.e., whether compensation  is given for the expenses and pain and suffering involved in the  raising  of  a child), and regarding the calculation of the compensation ( i.e., should the benefit stemming from raising the child be set off from the loss)" (id, at p. 113). These difficulties cannot negate the recognition of the parents' cause of action, and in any case, they will be fully worked through below.

 

  1. From the standpoint of morality and principle as well,  the  parents' claim does not raise the same difficulty that arises regarding the  infant's action. In the parents' action, the life of the child itself is  not  defined  as damage. The damage is manifest in the additional monetary implications and the psychological implications which the parents are forced to bear, due to the negligence. Accepting the parents' claim does not mean that the child's life has no worth, or that it would be better for him himself had he not been born; its meaning is that the parents were denied the possibility of choosing not to raise a child with disability, with all the difficulty that entails. There is a real difference between relating to a living and breathing child, with a personality, desires and feelings – as someone whose life is worthless, to the point that it would be better for him had he not been born, an attitude which we are not willing to accept; and relating to the right of the parents, as they were, prior to the negligent act, to choose whether to continue the pregnancy or to have a legal and permitted abortion, at the stage when their child was a fetus, devoid of independent life. Therefore, there is no contradiction between  my approach regarding the inherent value of life and the recognition of the right of the parents to choose not to bring into the world a child with disability of a severity that legally allows having an abortion.

 

When examining the parents' aforementioned right to choose, the entirety of the considerations must be taken into account, including their right to build their lives as they choose (within the law) and the considerable difficulties on the psychological, practical and even economical planes involved in raising a child with disability. Nota bene: that is not decisive in the moral issues that are external to the tort issue, which deal mainly with the question when and to what extent the parents' choice to do everything in order to avoid raising a child with disability  is  legitimate,  from  the  moral standpoint. It suffices to say that this choice is composed of many factors, which do not necessarily include a worldview according to which the life of a child with disability is not a life worth living; it is a legal choice, which is at the disposal of the parents and is denied them due to an act of negligence.

 

  1. Indeed, naturally the point of view of the parents usually changes after the birth of their child. Naturally,  once  their  child  has  been born, his parents love him. The disability only intensifies  the  love. Nonetheless, they are often capable – and the court too is capable – of separating their present love for their child from their sincere statement that if they would have been given the choice in advance, before their child was born and became a person, they would have chosen not to bring into the world a child with disability like his.

 

  1. Finally, note that we found no basis in the argument raised before us, according to which the parents do not have a cause of action as sufferers of direct damage, but only as mitigators of the child's damage. In CA 754/05 Levy v. Mercaz Refui Sha'arei Tsedek (yet unpublished, 5 June 2007)(hereinafter: Levy) we discussed the  nature  of  the  differentiation between a sufferer of primary damage and a sufferer of secondary damage:

 

"Classification of damage sufferers as primary or secondary is the result of the attempt to identify the character of the causal link between the damage caused them and the tortious conduct. The primary damage sufferer is the party whose injury – physical or property – is the direct result of the tort; the sufferer of secondary damage is the party injured as a result of the injury caused to another party" (id, at par. 22 of the judgment).

 

According to that standard, the parents' damage, which establishes a cause of action for them due to "wrongful birth", puts them in the position of primary damage sufferers. The injury to them, both on the monetary plane (derived from their duty to care for the special needs of the child) and on the non-monetary plane, is a direct injury, due to the very fact that their child was born due to the negligence.  The tortious conduct led directly to the damage of the parents. Not only was the negligent act committed directly toward the parents; the injury to them was also a  direct  injury.  The  injury  does  not derive from the disability of the child – as that disability was not even caused by the negligence; the injury stems from the costs that they bear and from the pain and suffering that they experience. The birth of  the  child  was accompanied with an economic and psychological injury to the parents. This injury  is  in  fact  the  realization  of  the  risk  at  the  outset,  which  makes  the

 

conduct of the damager tortious. If in the Levy case the mother was on the borderline between being a sufferer of primary damage and the sufferer of secondary damage, in the case under discussion the border is crossed, and it can be clearly said that there is a direct injury (and see, also: Asaf Posner "haIm Yoter hu Tamid Yoter? Hebetim Ma'asi'im laMachloket baSugiat haHolada b'Avla", at note 6 (to be published in the S. Levin Volume)).

 

  1. The conclusion is that there is no or hurdle of law or principle preventing recognition of the parents' cause of action for wrongful birth, and regarding that issue we should not stray from the rule determined in Zeitsov. Twenty five years after the Zeitsov ruling was handed down, we are making more flexible the worthy purpose which stands at its base, and allowing a solution to the great majority of the medical, rehabilitation,  and  assistance needs of the child, but we do so in the framework of his parents' action for wrongful birth.

 

  1. Alongside the theoretical recognition of the parents' cause of action due to wrongful birth, I see fit to discuss three issues that arise regarding the implementation of that cause of action.  They were not discussed extensively in Zeitsov, and the time has come for a clear rule to be determined regarding them by this Court – these issues regard the question of proving the causal link, assessment of damage, and the head of damages of injury to autonomy.

 

Proving the Causal Link

 

  1. A central difficulty inherent in the wrongful birth cause of action relates to the element of causal link between the tortious act (the doctor's negligence) and the alleged damage (that stems from the child's disability). Indeed, as any tort action, the parents' action also requires proof of a causal link, and it has already been ruled on that matter that "the task of deciding the question of the existence of a causal link between the breach of the disclosure duty of the doctor and the damage manifest in wrongful birth – is not at all easy. It requires the court to try to search the souls of the parents and to determine what their position would have been regarding the question of continuing the pregnancy had they been exposed to all of the information they needed (Hendel, J. in CA 9936/07 Ben David v. Entebbi (yet unpublished, 22 February 2011)).

 

In the cases under discussion, it is clear that the infant's disability is a birth defect that was not caused as a result of the doctor's act or as a result of his omission. In such circumstances it must be proven in the framework of proving the element of causal link, that had it not been for the negligence, the parents of the infant would have chosen to terminate the pregnancy by having an abortion, and thus would have refrained from bringing him into the world. Against that backdrop, a number of practical, moral and theoretical questions arise: how will the parents prove in such actions the element of causal link, in other words, that had it not been for the negligence they would have chosen to terminate the pregnancy? Is it appropriate, in light of the psychological and moral difficulties which examining the parents on the witness stand raises, to waive the requirement of proving causal link in cases for wrongful birth completely?  Is the court permitted to rely upon group considerations

 

as a basis for deciding the question of causal link? These questions will be examined below.

 

  1. In order to prove the causal link between the negligence and the various types of damage stemming from the child's defect, it must be shown, in the first stage, that if all of the relevant medical information (information which was not brought to the knowledge of the parents due to the negligence) would have been before the pregnancy termination committee, the committee would have permitted the parents to terminate the pregnancy. In the second stage, and only if the answer to the first question is positive (as otherwise, in any case the causal link is broken), the parents must show that if it weren't for the negligence, they indeed would have applied to the pregnancy termination committee for permission (Mr. Posner, in his aforementioned article, calls stages "hurdles": "the objective hurdle" requires proof that the pregnancy termination committee would have approved the termination of the pregnancy; and "the subjective hurdle" requires showing that if it weren't for the negligence, the woman would have decided to terminate the pregnancy).

 

  1. Proof of the parents' entitlement to terminate the pregnancy pursuant to a decision of the pregnancy termination committee relies on clear criteria, entrenched in statute and in Health Ministry guidelines. Performing artificial abortions in Israel is arranged in sections 312-321 of the Penal Law, 5737-1977 (hereinafter: the Penal Law). Pursuant to the provisions of that law, performing an abortion ("termination of pregnancy") is conditional upon the informed consent of the woman and permission from the pregnancy termination committee. The makeup of the committee and the causes for granting permission are generally set out in sections 315-316 of the Penal Law. For our purposes the cause determined in section 316(a)(3) of the law, regarding an infant that is "liable to have a bodily or psychological defect," is important. To this general provision we must add the guidelines of the Health Ministry, which detail how the committee is to employ its discretion, according to the stage which the pregnancy has reached. On this issue, an important criterion is the question of the fetus' reaching the "viability stage", set at the age of 24 full weeks. Whereas the "regular" committee hears applications for termination at the beginning of a pregnancy, over this age of pregnancy, a "multi-district committee", as defined in Health Ministry circular 76/94 of 28 December 1994, hears the application for termination of pregnancy. Health Ministry circular 23/07 of 19 December 2007 is intended to arrange the issue of termination of pregnancy at the viability stage, and determines on that issue a detailed hierarchy of disabilities, ranked according to their influence on functioning (slight, medium, and severe disabilities). The circular determines a clear relationship between the type of disability, the risk that it will occur, and the stage of pregnancy.

 

  1. The criteria that guide the committees serve, de facto, to demarcate the boundaries of the wrongful birth cause of action, as this cause of action does not arise
  • due to lack of causal link – where the disability is not of the type that would lead to the granting of permission to perform an abortion. Furthermore, there is a logical- statistical fit – which is an appropriate one – between the considerations that the committees take into account in their decisions, and the considerations that guide the parents when they wish to receive permission to terminate a pregnancy. In light of that, it is appropriate that the pregnancy termination committee decision serves also as

 

a sort of refutable presumption regarding the parents' stance about terminating the pregnancy.

 

That presumption may help in solving a part of the difficulties that arise from the second stage needed in order to prove the causal link. As stated above, the parents must prove that if it hadn't been for the negligence (that is to say, if the full relevant medical information had been before them), they would have chosen to terminate the pregnancy. It is uncontroversial that requiring the parents to prove that they would have terminated the pregnancy, by examining them on the witness stand after their child has come into the world, raises considerable difficulties.

 

46.Thefirstfromtheveryneedtoahypothetical factualchain:wouldifthewouldhaveknownabouttheyindeedappliedtofortotheiftheyhaveapplied–wouldthehavetheirAndifitwouldhavethe–wouldtheThisnotonlyfortheneedtoquestionsariseseverydayincases.fortheKadosh rulingtheinthecausaltestsinoftheconsentcauseofaction,totheneedtoassesanevent(CA1303/09 Kadosh v. Beit haCholim Bikur Cholimpar.ofopinion5MarchKadosh"Theaccepted–thuswaswritteninanothercase–"arenotappropriateforcasesinwhichtheassesshowagivenwouldhaveactedifthehadprovidedhiminadvance with the information the and in a (CA4384/90Vaturi v. Beit haCholim Laniado,51(2)IsrSC171,191 (1997)).

 

47.InKadosh –inofconsent–we regarding theproperforprovinglink (id, par.26 ofopinion).Inotedthattheobjective testtotheinterestthe control his as it"distances fromthe desire ofparticularandreliesupondesireconsiderationsof J. inCA2781/93Da'aka v. Beit haCholim  'Carmel', Haifa,IsrSC526,606Da'aka)).Yet,aschoiceofasubjective alsoraisesbecausethestagewhenthepartyknowsthetortioushisOnissue(thenJustice)D.isnodoubtthatisintheoftheattheashealwaysdealsthiswithabackwardglance,atatimewhen hefromtheof Inthe courts thatitisnottorequireainagonyduetothathewasgiven,totestifyandpresenttheanswertothewhathewouldhavedoneatthethedecisiontothewasmade,ifhehadknownofallthe (Da'aka, at p.553).

 

These difficulties raised by the implementation of the subjective test for examining the existence of causal link are infinitely intensified when dealing with the

 

parents' claim for wrongful birth. The assumption that "it isn't human" to expect that a patient "testify and reliably present" how he would have acted had he known the facts necessary for decision as they really were, is reinforced in the context under discussion and emphasizes the psychological difficulty that parents are forced to deal with. Indeed, in addition to the regular difficulty inherent in such testimony, the parents are also forced to explain how their testimony on the witness stand, that they would have chosen to terminate the pregnancy in case of a defect like the one that occurred, is in line with their love for their child, once he has been born. In this context, the argument has been made that where the court accepts the parents' factual version, according to which they would have aborted the fetus, a moral problem is also created, and a rift is liable to be caused between the parent and the child. That, however, is not so.

 

  1. Indeed, the moral dilemma involved in investigating the parents on the witness stand reflects, in full force, the complexity of the cause of action for wrongful birth. The question of causal link is examined ex ante, and examines what the parents would have decided at the time of the pregnancy had they been supplied with the full relevant data; however their testimony is given ex post, after their child has already been born (this dilemma also arises regarding the damage question, and shall be discussed in that context below). Mr. A. Posner answers this dilemma, in the framework of a dissenting opinion in the commission, as follows: "a completely correct answer is that when the question of termination of pregnancy (or the question whether to get pregnant) was under discussion, the infant did not exist, at all (in case the question was whether to get pregnant), or in his present form, the form of a living person. A parent is not required to tell his child 'I am sorry that you are alive' or 'I don't love you'; it is sufficient that he persuade that when the pregnancy was in its early stages, or the fetus not yet a known person, the mother would have terminated the pregnancy" (Commission Report, at p. 105). There is no better concretization of parental sentiment than the words which came from the heart in one testimony before the district court (in CC (Be'er Sheva District Court) 3344/04 R. W. v. Maccabi Sherutei Briut (unpublished, 21 August 2008)). The testimony – of a woman raising her handicapped son – was that she would not have hesitated to terminate the pregnancy had she known of the existence of any defect, on the basis of the difficulties she experiences in the daily confrontation with the difficulties of her previous child, who suffered from cerebral palsy. Despite her unwavering position regarding getting an abortion, the mother testified: "I love R. very much, he contributes an enormous amount to the family, he is our light, he is our sun… I do not say he constitutes damage to the family, but if I would have gotten an abortion, in another year the same R. would have been born, but with a hand, and then he would have contributed to the family in the same way but he would not suffer from all the problems that a handicapped child has… we now are crazy about him, he is everything for us, that is clear…" (id, par. 4 of the judgment).

 

  1. An additional difficulty arises on the practical level. It is argued that proving the causal link element might be more difficult for certain groups of claimants than for other such groups. The courts have concluded, more than once, that certain parents would have chosen not to have an abortion, even if they would have had all the needed information. The courts so ruled, finding assistance in data on issues such as lifestyle and religious belief; existence of fertility problems and difficulty in conceiving in the past; as well as the age of the mother and her obstetric history.

 

According to this argument, for example, an ultra-orthodox mother, whose first pregnancy was achieved in excruciating fertility treatments at a relatively late age, is likely to have a more difficult time proving that she would have an abortion had she been aware of the existence of a risk that the child would be born with a defect, in comparison to a secular young mother with a number of children whose pregnancy was spontaneously achieved. Moreover, the use of such data led to the argument – which was sounded in the hearing before us as well – that the requirement of proving that had it not been for the negligence the parents would have chosen to terminate the pregnancy, harms parents who are willing to bear the difficulty of raising a child with disability and rewards the very parents who are not willing to bear that difficulty (a similar argument is also raised in the legal literature in the United States, and see: Wendy F. Hensel, The Disabling Impact of Wrongful Birth and Wrongful Life Actions, 40 Harv. C.R.-C.L. L. Rev. 141, 172 (2005); it is further claimed that parents who due to their religious beliefs would not have an abortion are thus discriminated against.

 

  1. As a result of these difficulties, in a number of judgments of the first instance the opinion was expressed that the requirement of proof that the parents would have chosen to have an abortion can be completely waived, and replaced with a legal presumption. Thus, for example, Judge M. Drori ruled in CC (Jerusalem District Court) 3198/01 A. v. The Jerusalem Municipality (unpublished, 12 May 2008) that:

 

prima facie, such an a-priori presumption stands in contradiction to one of the foundations of tort law, that the conduct of the defendant or defendants was the sine qua non of the damage… thus, for example, if it is positively proven that the damaged party would have been born with the defect even if there hadn't been any negligence, prima facie, it should not be said that the negligence is the reason for the damage, and the defendants should not be charged for it…

 

However, in my opinion, there is great and important public benefit in adopting the approach of Judge Benyamini [regarding waiving the requirement of proof that the parents would have had an abortion – E.R.]. Not only do we prevent the need for the parents' testimony, with their retroactive vacillations, but Judge Benyamini's approach entails equality between all pregnant women, regardless of religion, race or belief.

 

… is compensation for a secular Jewish woman certain, but all the other women must explain what the range of beliefs is in the religion to which each of them belongs, and whether or not they would have had an abortion?! Is there a need, in each particular case, to focus upon the details of that religion, on the approaches and nuances in it, and to determine whether according to that religion abortion would have been permitted in the circumstances of that defect, and after that, will there be a need to categorize the claimant mother in the relevant subgroup in that religion and to determine whether she would have had an abortion, according to what is customary in that subgroup of that religion?!" (id, par. 285-286 of the judgment).

 

And see the judgment of Judge A. Benyamini: CC (Tel-Aviv District Court) 1226/99 A.L. v. Yaniv (unpublished, 29 March 2005).

 

  1. Despite the difficulties described above, the requirement of proving the existence of a causal link between the negligence and the damage cannot be waived (this conclusion was reached both by the majority and by the minority opinions in the Mazza Commission – see p. 47 and 98, respectively). A solution like that proposed above is not possible in the framework of existing tort law. It is, de facto, the forfeiting of proof of one of the elements of the tort of negligence, as without proving that if it had not been for the negligence the parents would have chosen to have an abortion, it is not possible to prove causal link between the negligence and the birth of the child. Waiving proof of the causal link element in actions of this type would lead to casting liability upon parties who may not have actually caused the damage, and to entitlement of plaintiffs with compensation for damage which was not caused them by a tort. Not only is such a result at odds with tort law and its objectives; in addition, it does not do justice, in that term's basic meaning, with the parties in the suit. In the American legal system as well the mother is required to prove that had it not been for the negligence, she would have had an abortion (see, e.g.: Dumer v. St. Michael’s Hospital, 69 Wis. 2d 766, 776, 233 N.W.2d 372, 377 (Wis. 1975); Alan J. Belsky, Injury as a Matter of Law: Is this the Answer to the Wrongful Life Dilemma? 22 U. Balt. L. Rev. 185 (1993)), despite the potential that the parents' testimony on the issue may harm the welfare of the child )Keel v. Banach, 624 So. 2d 1022, 1026 (Ala. 1993)(.

 

  1. Thus, to the extent that the parents are interested in suing on the basis of the cause of action of "wrongful birth", they must prove the causal link element of that cause of action. The refutable presumption, based upon the decision of the authorized committee, will assist in overcoming these difficulties.

 

Despite the fact that the proof of the causal link element cannot be waived, there is difficulty in dealing with the details of the religious beliefs of the parents, as well as in dealing with other group-based considerations. In any event, attempting to retrospectively determine how the parents would have chosen to act inherently involves a great extent of uncertainty. The various indications in which courts find assistance – including data such as a religious lifestyle, age, obstetric history and performance of additional tests in the framework of private medicine, are merely general indications, which, practically, rely to a significant extent upon group data. Categorizing the parents in one of these groups or another is plagued with a significant extent of speculation. In cases in which the court must rely upon general, group data, there is no choice but to choose a certain level of abstraction, and courts often determine working assumptions which assist in dealing with the inherent uncertainty (and see, in the context of calculation of compensation: Eliezer Rivlin and Guy Shani "Tfisa Ashira shel Ikaron Hashavat haMatzav le'Kadmuto baTorat haPitsui'im haNeziki'im" Mishpat v'Asakim 10 499 (2009)). Furthermore, group data are not always evidence of the tendencies of the individual. Even in routine times – but especially in times of crisis – the individual is likely to stray from group dictates and conventions, especially when they are group conventions. In fact, the individual's original position might be more complex and multifaceted than can be assessed according to his belonging to one group or another. Thus, significant weight should be given to the first question that was presented regarding causal link – the question

 

whether the pregnancy termination committee would have approved an abortion in a given case.

 

As mentioned above, the decision of the pregnancy termination committee should serve as a sort of refutable presumption regarding the parents' stance about having an abortion. In general, where an abortion is permissible according to the societal convention, as expressed in the criteria which guide the pregnancy termination committee, as said, it can be assumed, as a factual assumption, that typically, the individuals in society would also plan their actions in a similar fashion. Nonetheless, it should be emphasized that this is a factual, not a normative, assumption; in no way can it determine that refraining from having an abortion, in circumstances in which the pregnancy termination committee would have allowed an abortion, is unreasonable or undesired conduct. Its meaning is merely that from the practical standpoint, it should be assumed that typically, the individuals in society usually act, at least proximately, in a way that fits the criteria that guide the pregnancy termination committees.

 

  1. It should also be emphasized that the presumption according to which, in circumstances where the pregnancy termination committee would allow an abortion the parents would also have submitted an appropriate application to the relevant committee, can not be refuted exclusively through general data, i.e.. regarding membership in a certain religious sector. Such data is at times likely to be relevant, but since it represents a single aspect of all the individual data regarding the woman, great caution should be employed in making conclusions upon it. Thus, it should be remembered that the question to be decided is not what is the stance of the religion to which plaintiffs belong regarding having an abortion in the circumstances of the case, but rather how the particular claimants standing before the court would have acted. As mentioned above, the individual himself is likely to stray from group dictates or conventions, especially when the conventions are group conventions; and relating to him, factually and normatively, as an individual whose choice is not predestined, is inevitable. Thus, it is not sufficient that the parents' religion prohibits them from having an abortion to determine the result; in order for that datum to be relevant for decision, the court must be persuaded that the mother would have obeyed that prohibition de facto. Of course, it is not impossible that having an abortion in certain circumstances would be permitted within the various religious beliefs, and often there are various approaches in the different religions regarding the circumstances which justify having an abortion (on this issue see, e.g.: CC (Jerusalem District Court) 3130/09 A.K.V. v. Sherutei Briut Klalit (unpublished, 28 November 2011); CC (Jerusalem District Court) 9134/07 Alsayad v. The State of Israel (unpublished, 17 February 2011)).

 

In fact, even today the courts of first instance do not rely exclusively upon data such as religious affiliation, and more significant weight is given to the individual data of the case (see e.g.: CA 7852/10 Tidona v. Kupat Cholim Leumit shel ha'Histadrut ha'Ovdim (unpublished, 15 March 2012); CC (Haifa District Court) 1014/05 Zidan v. The State of Israel (unpublished, 24 December 2011); CC (Central District Court 5193-11/07 S.M.S. v. Malach par. 5(d)(99)(unpublished, 14 September 2010); CA (Haifa District Court) 10492/97 Aftabi v. Sherutei Briut Clalit (unpublished, 30 September 2001)).

 

  1. Finally, it should be emphasized that where it has been proven that the pregnancy termination committee would have allowed an abortion, even if the parents could not prove that they themselves would have chosen to terminate the abortion, that does not derogate from their ability to sue for the damage caused to them due to the violation of their autonomy, and in other words: their right to make such a significant decision in their lives in an enlightened fashion. For that damage they are entitled to separate compensation, and I shall discuss that extensively below.

 

The Question of Damage and Calculating Compensation

 

  1. Having passed the hurdle of the causal link, it must be further determined, in the framework of the parents' action, what damage entitles them to compensation. The question that needs to be considered is whether the parents are entitled to compensation only for the additional expenses they must bear for the medical care and assistance for their child – and at a certain point living expenses (hereinafter: the Additional Expenses), or should they also be compensated for the expenses involved in raising their child, including those which they would have borne had the child been born healthy. These expenses, which a healthy child requires in any case (hereinafter: the Regular Expenses), are considered the "base cost" (or "base layer", in the words of commission member Asaf Posner, adv), as opposed to the Additional Expenses which stem from the child's disability.

 

56.Itisinatortaction,compensationisgivenonlyforthebytheandisnottheexpenseswhichwouldhavebeenborneevenifthewouldnotoccurred.Thus,forexample,whenaninfantisinjuredto(and birth), the for the of aidThecourtreduces,theofhoursneededtotakecareofthetheofhoursneededtoforachild,andisgivenfortheresultinginotheronlyfortheadditionalapersonwhoiswoundedinanandneedsa vehiclein ordertoget around, will receive only theadditionthatisfromhisinotherthethetheanditsandofacarandits(andtheexamplesintheCommission Report –thePosner opinion, at p. 115).

 

It would have been possible to think that the implementation of the restitutio in integrum test in the parents' action for wrongful birth would determine that had the negligence not occurred, the child would never have been born, so the parents would not have had to bear any expenses whatsoever for raising the child. Making the parents' situation as it would have been had the negligence not occurred according to the regular rules requires, prima facie, compensating them both for the regular expenses involved in raising a child and for the special expenses caused to them due to the child's disability. The "Additional Expenses", according to those principles, also include the regular living expenses.

 

57.inpractice,intheparents'actiononbasisofbirthcauseofthe"Additionaladultarethosebeyondregularexpenses. shouldnotbetotheparentsforthe

 

regular expenses involved in raising a healthy child, during the period before he reaches adult age; they should be compensated only for the additional, special expenses, which they bear due to the birth defect. Indeed, had the negligence not have occurred, the child would never have been born; however, there are  good reasons not to charge the negligent damager to pay all of the expenses of raising the child. These reasons reflect the complexity of the cause of action under discussion, and emphasize the theoretical and practical difficulties inherent in this cause of action, with which the courts of various instances have dealt over the years. What are these reasons?

 

Casting liability upon the defendant who caused the damage, as detailed above, is done from an ex ante point of view, and under the assumption that if the parents had been given a choice in advance, before their child was born, they would have preferred, under the particular circumstances, not to bring a child with that disability into the world; however, examination of the damage caused to the parents cannot be performed whilst ignoring the change which has occurred in the passage from liability to damage – the change manifest in the birth of the child. Examination of the damage must thus be done from an ex post point of view, which takes into consideration the fact of the child's existence, which is not considered, and must not be considered, in and of itself, to be damage. In retrospect, after the disabled child has been born, his very birth is not considered to be damage in his parents' eyes. The feeling of love which the parents feel toward their child also exists when the child is born with disability. Those feelings also exist if, had they been given a full choice at the outset, the parents would have chosen not to bring the child into the world. After he has entered the world, his parents want him and enjoy the intangible advantages stemming from his very birth and his upbringing. The Mazza Commission described this well in its report: "Indeed", it was noted, "the disabled life of the child itself does not constitute damage to the infant, and his parents as well, after he has entered the world, are not considered injured due to his very existence; however, as needs have been created which involve special expenses, the party without whose negligence these special costs would not have been created should bear them" (id, at p. 60).

 

The American Court described this in Marciniak v. Lundborg, albeit in a different context (of raising a healthy child whose parents did not want to be born), but from the viewpoint of the child, whose parents are suing for compensation for his birth. The following is applicable also to the need to compensate the parents for the Additional Expenses:

 

Defendants next argue that "awarding damages to the parents may cause psychological harm to the child when, at a later date, it learns of its parents' action for its wrongful birth thereby creating an 'emotional bastard.'" Again, we do not agree. The parents' suit for recovery of child rearing costs is in no reasonable sense a signal to the child that the parents consider the child an unwanted burden. The suit is for costs of raising the child, not to rid themselves of an unwanted child. They obviously want to keep the child. The love, affection, and emotional support any child needs they are prepared to give. But the love, affection, and emotional support they are prepared to give do not bring with them the economic means that are also necessary to feed, clothe, educate and otherwise raise the child. That is what this suit is about and we trust the child in the future will be

 

well able to distinguish the two. Relieving the family of the economic costs of raising the child may well add to the emotional well-being of the entire family, including this child, rather than bring damage to it (Marciniak  v.  Lundborg,  153 Wis. 2d  59,  67,  450  N.W.2d  243,  246

(Wis. 1990)).

 

  1. Of course, that cannot detract from the severity of the difficulties which the parents of disabled children experience or the suffering which is the destiny of parents who themselves experience the suffering of the child; for these damages – to the extent they are proven – the parents will be compensated separately, in the framework of the head of damages for pain and suffering. At the same time, the point of departure for the assessment of the parents' damage is that the life of the child – after he has been born – is not, in any way whatsoever, damage for which compensation should be made, and that this is how the parents also see it. Thus, the regular expenses which the parents bear for raising the child – are not damage. The damage is thus manifest in the Additional Expenses – the additional costs stemming from the negligence of the damaging defendant, and it is only natural that the parents receive compensation for them.

 

  1. Here the special and extraordinary force of the action for wrongful birth is revealed: the inherent dissonance between the negligence in providing the information necessary to make a decision whether to bring the child into the world and the character of the damage, which is caused after the child has already entered the world, when his very life is not considered damage.

 

Nota bene: the same conclusion, according to which the defendant is charged with the Additional Expenses, can also be reached from another perspective, which is actually the other side of the same coin: in principle, the positive results of the birth of the child must also be expressed, and as a practical issue, the way this is done in the framework of the doctrine of compensation is quantification of all of the intangible benefits stemming from the birth of the child and his upbringing, and discounting them from the compensation to which the parents are entitled. A general estimation of these benefits will approximately equal the regular expenses involved in raising a child. Discounting the regular expenses involved in raising the child from the total of all the expenses involved in raising him leads to those very Additional Expenses, which stem from the child's disability (to which the non-monetary damage must be added).

 

This concludes the discussion of compensation for the parents for the period before the child reaches adulthood.

 

60.theafterchildhisshouldbegrantedfortheiroftheirchild,asunlikecase,hisdependenceuponthemcontinuestodisabilityduringthisaswell,andinfact,for the entire period of his life expectancy.Inofforthesedamages,thereispreventingtakingintoaccountlengthofperiodofhiswhere,tohischildcontinuestobedependentuponhisparentsasanadult,especiallyduetofactthatthereisnoabouttheparents'intocareforneedsoftheirchildrenwhoareuponthatdutyis

 

even manifest in law, in sections 4-5 of the Family Law Amendment Law (Support), 5719-1959. It is uncontroversial that had there been no negligence, the parents would not have to bear the expenses of support for their child after he reaches adulthood.

 

During the period of his adulthood, had it not been for his disability, the child would be expected to earn his living. To the extent that the disability detracts from his earning ability, his parents have the duty to sustain him and to supplement what he lacks. In other words: during the child's adulthood, his parents bear both the special expenses due to his disability and his regular living expenses, which he himself would have borne, were it not for his disability.

 

  1. Where the child is expected to earn money despite his disability, the amount of his expected earning – in other words, the relevant part of the average salary in the economy – must be subtracted from the compensation granted to his parents. We have already ruled that it should be assumed that a healthy minor, when reaching adulthood, would earn the average salary in the economy, and that this salary would be used for his sustenance, in other words: his living expenses and welfare. From the practical standpoint, the parents should be compensated for the period of the child's adulthood, for all the "Additional Expenses", which, in said period, are the regular living expenses and the special medical and assistance expenses. Only if the infant is expected to earn a certain percentage of the average salary is there a need to subtract this percentage from the compensation. De facto, in the usual case, in which the injured child continues to be in his parents' house or in the community, the compensation paid to his parents will not be different than the amount of compensation which would be paid to him himself if he had a cause of action, in the framework of which he would sue for earning losses.

 

  1. This will be demonstrated numerically:

 

Let us assume that the average salary in the economy is 10,000. Due to his disability, the child's earning ability is reduced by 50%, in other words, a loss of 5,000 has been caused him, and this amount would be paid to him if he had a cause of action of his own. Let us assume, in addition, that he is also entitled to additional medical and assistance expenses (in comparison to a healthy child) of 15,000. In total, the compensation he would receive in his own suit would be 20,000. Seeing as the child does not have a cause of action, and the cause of action is that of the parents, they are entitled, in the usual case, to compensation for all the additional expenses, that is: 15,000 for medical and assistance expenses, and in addition, the child's regular living expenses, which they have to bear due to the detraction from the child's earning ability, in other words: an additional 5,000. In total, the amount that the parents will receive is identical to the amount that the child would receive if he had a cause of action.

 

It should however be remembered that the compensation is always individual; there thus might be situations in which the compensation changes; for example, when dealing with a child who is expected to live in an institution, which certainly might influence his living expenses.

 

  1. For the sake of comparison: in most of the cases from states in the United States, the parents were granted compensation only for the Additional Expenses that

 

they must bear in order to care for their child which are due to his disability, and they were not compensated for the regular expenses involved in raising a child:

 

Although the question of damages has presented a difficult and troublesome problem to those courts which have  considered  wrongful birth claims, we align ourselves with the majority of jurisdictions which have limited the parents' recovery of damages to the extraordinary expenses - medical, hospital, institutional, educational and otherwise - which are necessary to properly manage and treat the congenital or genetic disorder. Siemieniec v. Lutheran Gen. Hosp., 117 Ill. 2d 230, 260, 512

N.E.2d 691, 706 (Ill. 1987).

 

Another case clarified (emphasis added):

 

Indeed, the central policy of all tort law is to place a person in a position nearly equivalent to what would have existed had the defendants' conduct not breached a duty owed to plaintiffs, thereby causing injury. In the context of wrongful birth, this means the situation that would have existed had the child actually been born in the state of health parents were led to believe would occur. Damaged are not gauged against the state of affairs that would have existed had the child never been born, because parents always assume the costs of healthy children born to them, even if unplanned. This policy can be fulfilled here only by allowing recovery of all future extraordinary expanses [the child] will incur. Kush v. Lloyd, 616 So. 2d 415, 424 (Fla, 1992).

 

The decisions of the American courts were based upon various reasons, including those detailed above. Thus, for example, it was held that if, in principle, the parents were entitled to compensation for all of the expenses of raising their child, as had it not been for the negligence he would never have entered the world and his parents would not be required to bear any expenses for him, the intangible benefits involved in the birth and raising of a child, including a child with disabilities, must be set off from that compensation. It was held that those benefits equal, at very least, the regular expenses involved in raising a child (Ramey v. Fassoulas, 414 So. 2d 198, 200-01 (Fla. App. 3d Dist. 1982)). It was further determined that casting the regular expenses involved in raising a child upon a third party is not proportionate to the fault of the negligent party and is contradictory to the idea that the primary and predominant duty to care for the needs of the child, whether wanted or not, is that of the parents (see: Rieck v. Medical Protective Co., 64 Wis. 2d 514, 518-19, 219 N.W.2d 242, 244-45 (Wis. 1974); Ramey, at p. 200). Last, it has been emphasized that in their decision to bring a child into the world, the parents necessarily agree, of their own volition, to bear the regular expenses of his upbringing, and thus it cannot be said that these expenses were caused by negligence (Clark v. Children’s Mem. Hosp., 955 N.E.2d 1065, 1083 (Ill. 2011)). On the other hand, a minority of US state courts charged expenses for all of the expenses of raising a child born due to the defendant's negligence, as had it not been for the negligence, the child would not have been born at all (Robak v. United States, 658 F.2d 471, 479 (7th Cir. 1981)(.

 

64.InEnglandaswellthecourtstendnottoforfullexpensesoftheandtheisforthe

 

additional expenses. The English judgment in Parkinson v. St. James and Seacroft University Hospital NHS Trust  explained:

 

A disabled child needs extra care and extra expenditure. He is deemed, on this analysis, to bring as much pleasure and as many advantages as does a normal healthy child. Frankly, in many cases, of which this may be one, this is much less likely. The additional stresses and strains can have seriously adverse effects upon the whole family, and not infrequently lead, as here, to the break up the parents' relationship and detriment to the other children. But we all know of cases where the whole family has been enriched by the presence of a disabled member and would not have things any other way. This analysis treats a disabled child as having exactly the same worth as a non-disabled child. It affords him the same dignity and status. It simply acknowledges that he costs more. (Parkinson v. St. James and Seacroft University Hospital NHS Trust [2001] EWCA Civ 530).

 

Similarly, the courts in Canada follow the English system, and the compensation is granted only for the additional expenses stemming from his upbringing (Zhang v. Kan, [2003] B.C.J. 164, 2003 BCSC 5 (Can); Dean Stretton, The Birth Torts: Damages for Wrongful Birth and Wrongful Life, 10 Deakin L.R. 319, 324 - 25, (2005)).

 

65.Thisaccordingtowhichtheparentsshouldbeonlyforadditionalexpenses–wasalsobytheofoftheMazza CommissionItwasinCommission Report inthisthat"theofforthewehavedecidedtoisthatthewhonegligentlythebirthachildexpressedrealhandicapwhowouldnotbeenbornhaditnotbeenforthishasthedutytobearthemonetaryin providing the special needs of the infant which stem from his disability added–E.R.).Asthepeoplewhoareresponsibleforfortheinfantandcareofhisneedshisandtheybeartheofthiscostde factotheoftheparentstoandreceivetocoverneedsoftheinfantduetohisfromthepartyforshouldbe(id, p. 60).

 

However, as noted, "the Additional Expenses" in the usual cases also increase during the child's period of adulthood, such that they include his regular living expenses, which his parents must bear. Whereas the child lacks earning capability, the "Additional Expenses" thus include, in the usual cases, the living expenses as well, which, lacking evidence showing otherwise, equal the average salary in the economy.

 

  1. To sum up: a party who, by his negligence, caused the birth of a child with disability, who would not have come into the world had it not been for that negligence, has the duty to bear the additional expenses involved in raising the child, expenses which stem from his negligence, which reflect the child's special needs due to his disability, in accordance with the circumstances of each given case and for the entire period of the child's life expectancy. This compensation shall include all the additional expenses needed in the particular case, including: medical expenses, third

 

party assistance, rehabilitation expenses, education expenses including ancillary expenses, housing expenses and mobility expenses. During the child's adulthood, and for the entire period of his life expectancy, his parents shall be entitled to compensation for his regular living expenses as well, to the extent that he lacks earning ability and there are no special circumstances negating that entitlement.

 

  1. Note, incidentally, that a different question arises where the cause of action is for "wrongful pregnancy" (or "wrongful conception"), where the parents wished to avoid bringing children into the world at all, even healthy children, and due to negligence in medical care that choice was denied them (see, e.g., CC (Jerusalem District Court) 1315/97 A. v. Kupat Cholim shel haHistadrut haKlalit shel haOvdim b'Yisrael, IsrDC 5763(2) 309 (2004); CC (Haifa Magistrates Court) 4503/06 A. v. the State of Israel (unpublished, 4 March 2012)). Discussion of actions such as these and the scope of compensatable damage is not necessary for our purposes, and I shall leave it for when it arises. Note, however, that in other legal systems in cases in which a disabled child is born as a result of wrongful pregnancy as well, compensation has been granted only for the Additional Expenses (see e.g. in England, the aforementioned Parkinson case). This result is correct a forteriori in our case, in which the pregnancy in and of itself was wanted, but the parents wanted a healthy child. In any case, as mentioned above, there is no need in the circumstances of these cases to express an opinion on the question what the proper compensation is in the case of unwanted pregnancy in our legal system.

 

Non Pecuniary Damage

 

  1. Customarily, psychological damage sued for in an action for wrongful birth is categorized as "pure" psychological damage, lacking physical damage to the claimants. This classification is not devoid of doubts (compare, e.g. the enlightening judgment of Baroness Hale in the Parkinson case). In any event, the psychological damage in the case before us is ancillary to pecuniary damage, so it in any case does not stand alone.

 

  1. Even if the psychological damage caused to the claimants before us is categorized as pure damage, the entitlement to compensation for pure psychological damage which is not ancillary to relevant physical injury (see: Eliezer Rivlin "Pitsui'im begin Nezek lo Muchashi u'begin Nezek lo Mamoni – Megamot Harchava" The Shamgar Volume – Part C 32 (2003)), was already recognized in CA 243/83 Jerusalem Municipality v. Gordon, 39(1) IsrSC 113 (1985), where negligence liability was determined for pure psychological damage caused to the party directly damaged; later, the status of "quasi-directly" damaged parties was recognized as equal to that of directly damaged parties (the Levy ruling). In that case, compensation was granted to parents suffering psychological damage due to the death of fetuses due to negligence; similarly, the entitlement of partners to compensation for psychological damage caused them due to the woman's unnecessary abortion caused by medical negligence was recognized (CA 398/99 Kupat haCholim shel haHistadrut haKlalit v. Dayan, 55(1) 765 (1999)).

 

  1. In cases of wrongful birth the psychological damage continues for the lifetimes of the parents (the claimants). It is not single-event damage. It is not damage that is caused over a short period.  The parents must care for the child for the

 

rest of their lives. They are vulnerable to his suffering, and are entrusted with his welfare. They accompany his pain, his suffering day and night, and these become their pain and suffering. They direct their lifestyle in a way that will allow them to fulfill their responsibility for the child. Their life changes, at times completely. Activities that once seemed natural and easy to do become unbearably difficult. The need to care for the future of the child, with all their might, keeps them awake at night and drains their resources. This is continuous damage. It is different and separate from the violation of autonomy which is a single-event violation which takes place at the moment when the choice was denied them. The continuous and severe psychological damage thus requires large and significant compensation.

 

Violation of Autonomy

 

  1. The final question which requires our decision is the question of the relationship between the cause of action for wrongful birth and the cause of action for violation of autonomy, in the framework of the parents' action.

 

In Kadosh we extensively discussed the importance of the right to autonomy and the individual's right to sue for compensation due to violation of that right. It was again clarified that the right to autonomy is "the right of every individual to decide about his acts and desires according to his choices, and to act according to those choices" (the Da'aka ruling, at p. 570); this is a persons right "to write his life story" (the Abu Hana ruling, at p. 48). It was emphasized in Kadosh that "the individual's autonomy stands at the heart of human dignity. It is a right that constitutes a fundamental value in the Israeli legal system, and 'constitutes one of the central manifestations of the constitutional right of every person in Israel to dignity, entrenched in Basic Law: Human Dignity and Liberty' (the Da'aka ruling, at p. 571; HCJ 4330/93 Ganem v. Va'ad Mechoz Tel Aviv shel Lishkat Orchei haDin, 50(4) IsrSC 221, 233-234 (1996))"(par. 31 of my opinion).

 

Demarcation of the boundaries of the entitlement to compensation for violation of autonomy is carried out through demarcation of the violation which leads to entitlement to compensation:

 

"Only a violation in the heart of the right to choose, in "the 'inner penumbra' of the human right sanctifying autonomy (as stated in the Bruria Tsvi ruling) and on a substantial matter, will entitle the claimant to significant compensation. An example of such a violation can be found, as noted above, in medical care, "located in the inner penumbra of this right of every person to control his life", as "it might have a direct influence, and at times an irreversible one, both on his lifestyle and on his quality of life" (the Da'aka ruling, at p. 532). An additional example is a violation of a person's ability to weave his life story (the Abu  Hana ruling). A demarcated definition of the injury that leads to entitlement to compensation will help the courts entrench the status of the right to autonomy, but whilst charging compensation only in the fitting cases "(the Kadosh ruling, at par. 39 of my opinion).

 

72.Violationofisaheadofdamagesintheoftheofpar38ofopinion;seealso72oftheopinionofAmit, J.).Of

 

course, in an action for wrongful birth as well the violation of autonomy is likely to serve as compensatable damage. The question arises, what the relationship is between the head of damages of violation of autonomy and the other heads of damages in the parents' action.

 

In Kadosh I wrote that compensation for violation of autonomy is not granted to the damaged party "for the very violation of his constitutional right abstractly and in principle", but for "real result-based damage" caused him (in the words of the article of Yifat Biton "Ke'evim b'Eizor haKavod" Mishpat u'Mimshal 9 137, 145-146 (2005)(hereinafter: Biton)). These damages, which can be identified as "violation of feelings", include the feelings regarding "violation of dignity, psychological suffering, humiliation, shame, sorrow and insult, frustration, undermining of trust in others, undermining of one's view of oneself, and injury to the self assessment of the individual or his ability for self realization, both as an individual and as part of a group, and more (Biton, at p. 184). In order for damage for violation of autonomy to stand on its own –

 

Compensation for violation of autonomy can be sued for, even lacking other damage; in other cases it is possible to sue for such compensation in addition to or aggregation with bodily damage that has been caused, including in addition and aggregation to other non-pecuniary damage, in a situation of two separate kinds of damage. This is not novel, as the tortfeasor must compensate for all the damage he caused, and if he caused more than one kind of damage, he shall compensate for that which he caused. In that sense it is a factual and not a legal question" (Kadosh, par. 45 of my opinion).

 

This view derives from the recognition of violation of autonomy (to the extent that it is in the penumbra of the right and regards a substantial issue) as reflecting real and true damage. Such damage might come separately and differentiated from other damages, both pecuniary and non-pecuniary, because refraining from charging compensation for it would deviate from the principle of restitutio in integrum (and see also the opinion of the commission – the Commission Report, at p. 62). Of course, not in every case is there separation between the damage from violation of autonomy and other damage (for a survey of various possible cases in this context see: the Kadosh ruling, at par. 45 of my opinion). There might be overlapping between them. However, where separation is possible, and the violation of autonomy is an additional substantial violation in the penumbra of the right, negating additional compensation for it is like revoking the injured party's entitlement to compensation for any other head of damages (and see also the Commission Report, in which it was emphasized (on p. 62) that "the proposed arrangement cannot violate the rights of the parents to sue for compensation for the violation of their autonomous right to chose to continue or terminate the pregnancy, or their right to sue for compensation also for any other direct damage caused them, or some of them"; emphasis added). On this issue, compare the ruling that determines that if there is an action by dependants and an action by the estate, side by side, compensation should not be made only according to the sum in the claim for a greater amount, as the caselaw determined in the past; it must be examined whether there is a zone of overlap between the two actions, regarding which compensation should be made only once. If there is damage beyond the zone of overlap, then refraining from compensation for each of those damages will

 

lead to under-compensation (see: CA 4641/06 Menorah Chevra le'Bituach Ltd. V. Karkabi (19 December 2007); CA 2739/06 Dubitsky v Razkalla (1 June 2008)).

 

  1. Regarding the amount of compensation: like Justice E. Hayut, I too am of the opinion that compensation for the violation of autonomy should not be standard, but should rather be individual, taking into consideration the concrete violation and its circumstances (see: CA 10085/08 Tnuva Merkaz Shitufi l'Shivuk Totseret Chakla'it b'Yisrael v. the estate of Rabi, par. 40 of the judgment of Justice E. Hayut (yet unpublished, 4 December 2011)). Nonetheless, it has already been clarified that "since we are dealing with assessment of intangible damage, the courts will assess on the basis of the circumstances of the case and their life experience. In general it can be determined that to the extent that the information that was not relayed is more important, and to the extent that the harmed interest is closer to the penumbra of the right and affects it more significantly, so shall the compensation for the violation of autonomy increase (see on this issue the standards proposed by Justice Strasberg- Cohen in the Da'aka ruling for assessing the intangible damage that was caused to a person whose right to autonomy was violated during medical treatment, including: the type of information denied to the patient; the scope, quality and special importance of the information that was not relayed to the patient, as opposed to the information that was relayed to him; the patient's stance about and way of relating to the relaying of the medical information regarding him; and the result of the treatment that was carried out… (id, at pp. 619-621))" (the Kadosh ruling, par. 42 of my judgment).

 

In those cases in which the court is persuaded that a violation of the claimant's autonomy has occurred – one that touches upon the penumbra of the right, and on an important issue – it should grant fitting compensation that reflects the full severity of the violation (id, at par. 48 of my judgment. And see also CA 9187/02 Weinstein v. Bergman (yet unpublished, 16 June 2005); CA 9936/07 Ben David v. Antebi (yet unpublished, 22 February 2011)).

 

Practical Considerations

 

74.Theintheoftheofactionfor"wrongfullife",itwasinnopartinfluencedbytoprovideaproperfortheneedsofabornwithdefects,asaofinhisduringpregnancy.weightgiventothisinparties'anditdidnotmissourIndeed,areoftheopinionthattheofaction "wrongfullife"beintheofthetortofduetoandwithinourandduetothehurdleofprovingtheofortheofthecausallink.weareofopinionatrueforthelargeoftheofthecanbeintheofhiscauseofaction for birth".

 

75.Asabove,areentitledtofortheexpensesneededtotheandassistanceneedsoftheirchild,and tothetheir continues tobeupon duetohiswhenhetheyarealsotoforexpensestheybearinforhimduringperiodandfortheentireperiodoflifeexpectancy. Thisincludeshisregularexpenses,tothethathedoes

 

not cover them due to his disability, and lacking circumstances that negate said entitlement. Inter alia, a sufficient legal solution can also be found for the concern that the parents will pass away without ensuring that they make fitting arrangements for fulfillment of their disabled child's needs, in the framework of sections 56-57 of the Inheritance Law, 5725-1965, which regard maintenance payments from the estate. They determine as follows:

 

  1. If the bestower of inheritance is survived by a partner, children or parents, and they need maintenance, they are entitled to maintenance from the estate pursuant to the provisions of this law, whether in inheritance by law or inheritance by will.

57.(a)      The rightto is –

(1)          …

(2)      For the children of the bestower of inheritance – until the age of 18, for a disabled child – the entire period of his disability, for a child who is mentally ill – as long as he is mentally ill, and for a child with mental retardation – as per the meaning in the Welfare Law (Care for the Retarded), 5729-1969 [emphasis added – E.R.].

 

Thus, a broad solution is provided for the needs of the child due to his disability. Naturally, like in other cases arranged by tort law, the question of the ensuring of proper use of the compensation money might arise. This question is not unique to wrongful birth cases. De facto, there are various situations in which the needs of the child will not be sufficiently fulfilled via the tort action that his parents submit, but this result is unavoidable. Difficulty in ensuring the proper use of compensation that a person receives, even if he is an independent adult, exists due to the very fact that usually compensation is granted in advance and in one amount. In compensation law every injured party is presumed to plan his conduct in such a way that the compensation will offer him a proper and continuous solution for mitigating his damage in the future.

 

The Mazza Commission proposed that the legislature "authorize the court to include in its judgment instructions regarding the use of the compensation money, to the extent that the court sees fit to do so, in order to ensure the fulfillment of the needs of the infant. It is also proposed to determine in statute that the compensation intended to ensure the fulfillment of the needs of the infant shall not be considered part of the parents' property in a situation of bankruptcy; shall not be part of their estate; and shall not be the subject of lien, mortgage or assignment of right in any way" (the Commission Report, at p. 62). These proposals are very wise, not only for this cause of action, but also in a more general scope. I hope that the legislature will indeed heed the call, and that until then, the courts will develop the fitting mechanisms with the tools at their disposal.

 

Conclusion

 

76.Forthereasonsabove,wehavefoundthatcauseforanactionbychildfor"wrongfullife"shouldnolongertheoftheparents'causeofactionfor"wrongfulInthelattercauseofactionisnotbyofthechildwasbornwith,tothecauseofactionasper

 

President Barak's stance in the Zeitsov ruling. Nonetheless, it should be remembered that in practice, the requirement of causal link leads to a certain demarcation of the cause of action, as in the framework of both actions it must be proven that the disability would have led to a termination of pregnancy permitted by law.

 

77.ofthecauseactionfor"wrongfulisnotpossiblebytheruleslaw,anditevenstandsintoofthetheofsanctityoflife,protectiondignityandoftherightsofpeopletodignityandequality.Nonetheless,asolutionbefortheoftheofthechildduetointheofparents'cause ofaction.

 

Our task is not complete: in the framework of this decision of principle, from the outset we did not deal with the question of the specific liability of any of the defendants in the cases before us. These questions shall be decided by other panels, separately in each case.

 

 

President (emeritus) D. Beinisch:

 

I concur with the comprehensive judgment of my colleague the Deputy President E. Rivlin. The issue before us is one of the most difficult and complex ones, from the standpoints of law and values, and the moral and societal standpoints. This Court confronted this issue in the important judgment in CA 518/82 Zeitsov v. Katz, 40(2) IsrSC 85 (1986)(hereinafter: Zeitsov), and my colleague discussed it extensively. In that judgment the Court recognized the existence of a cause of action for a child that was born with a disability that was not diagnosed due to negligence in discovering the defect before conception or birth. It is important to note that the positions of the Justices of the majority in Zeitsov were of course not intended to detract from the status or rights of persons with disabilities; and in their various stances, nor did they detract from the view that recognizes the value of human life, which has always been a sacred value in Israeli law. The judgment in that case is an attempt to find a practical legal solution that might allow granting compensation to children and their parents, who must confront disabilities that at times involve great suffering and considerable monetary expenses. However, the two approaches that were adopted by the majority in Zeitsov raise a number of difficulties, which my colleague the Deputy President discussed in his judgment. The approach of Deputy President M. Ben-Porat in the Zeitsov case raises difficulty regarding the way damage is defined, and the approach of Justice (former title) A. Barak raises difficulty regarding the definition of the causal link between the negligence and the damage. Thus, after more than 25 years since the judgment in the Zetisov case was given, it can be said that its creative attempt to develop the causes of tort action has not yet reached fruition, and conceivably caselaw development of tort law on this issue will be possible in the future. I have been persuaded that at this time, that judgment does not provide a fitting solution for the difficulty involved in recognizing the cause of action of a child claiming that his birth (or his birth with a defect) is the damage that was caused to him. And indeed, the cases before us – with the variety of questions that arise in them – demonstrate more than anything else the difficulty involved in recognizing the cause of action for "wrongful life".

 

According to our societal views and values, every person – be his disabilities as they may – was born in [God's] image, and his life has value in and of itself, which must be honored. According to our moral view, it cannot be said that it would have been better for a person had he not been born. In legal garb, the meaning of this view is that the argument that a person's very life is damage that was caused to him cannot be recognized. The following words from the Mazza Commission Report on this issue are fitting:

 

The view that recognizes the value of the individual as a human being, and the sanctity of life as a value in and of itself, was assimilated into our law as part of an all inclusive moral view. The fundamental principles and values of our system constitute a source of inspiration for the interpretation of concepts that have "open and flexible membranes"; and "damage", as per its definition in  the Civil Wrongs Ordinance, as detailed above, is one of the concepts that should be interpreted according to those principles and values. In other words: the question of recognition or non-recognition of the very birth of a disabled person as "damage" should be decided while taking into account legal policy considerations, according to which the competing values and interests are examined; and determining the balancing point between the private interests and the general public interest shall be influenced by the fundamental views of the legal system and in light of moral considerations. Our stance is that taking into account of those considerations leads to the conclusion that the position that sees "damage" in the very birth of a disabled person should not be recognized (see the report of the Public Commission on the subject of "Wrongful Birth", at p. 46).

 

Note further that I have been persuaded by the position of my colleague the Deputy President that recognition of the cause of action of the parents for "wrongful birth" will allow granting compensation that fulfills a significant part, and possibly most, of the child's needs; it may be appropriate to broaden the solutions by alternative arrangements as recommended by the public commission, but that issue must be examined outside the framework of this judgment.

 

Thus, I concur with the judgment of my colleague the Deputy President, which seems, at the present time, to provide a consistent answer, found with the framework of accepted tort law, to the questions that arose before us, and even presents practical solutions to difficulties that arise in actions of this type. Nonetheless, this judgment too does not constitute the end of the discussion, and it appears that even if additional creativity is called for in developing causes of action regarding lack of early discovery of defects in a fetus, the time is not yet ripe for that. Furthermore, the questions that will arise in the parents' actions for wrongful birth, part of which were hinted at by my colleague in his judgment, will certainly engage the courts again in the future.

 

President A. Grunis:

 

I concur in the judgment of my colleague, Deputy President E. Rivlin.

 

 

Justice M. Naor:

 

1.IconcurinoftheDeputyPresident

E. Rivlin.

 

  1. Regarding the transitional provision and par. 16 of the opinion of my colleague Justice E. Rubinstein: in my opinion we should not decide, in the framework of the transitional provision in the case before us, the question what the fate should be of an action of an infant which has not yet been submitted, regarding which the limitations period has, prima facie, expired. The correct parties regarding that question are not before us.  We shall cross the bridges when we reach them.

 

Justice E. Arbel

 

1.The of DeputyPresidentE.Rivlin isain theissue thetortofbirth,whichittwoseparatecausesofaction,causeofofthe"wrongfulandthecauseofofparents,"wrongfulbirth".dealsquestionsofcentral,ofwhichthefromthelife"ofraisingtheoftheofversusalifeofandaoflifeaofdeath.Hereinitsquestionwhetherweasjudgescanwhethertherearerareastheybe,inwhichitisbettertolivethanitistoliveaofsuffering,orinthewordsofBarak,adefectedlife.Mytheofpublicthatdonotsupport"wrongfullife"causeofaction,andtheinvariousIconcurinopinioninoftheseconsiderations,causeofactionfor"wrongfullife"shouldnotbeBeyondtheintheframeworkofthisofthethatdefiningthelifeoftheevenifitisasalifewhichwouldpreferably–forinfant–neverhaveoccurredissanctity of and dignity.

 

  1. I join my colleague's determination that the need to provide a solution to the medical, rehabilitation and assistance needs of the child can be found in the framework of his parents' action for "wrongful birth", which does not raise the difficulties of law and principle involved in recognizing the child's cause of action. The parents are the parties that are directly injured by the fact that their child was born due to negligence. His birth necessarily bears injury to the parents. I agree with my colleague's conclusion that in this case the parents have the right to choose not to bring into the world a child with disability, via legal abortion permissible by law. This determination can be made without entering into the moral questions involved in the parents' choice to refrain from raising a child with disability.

 

3.Iwas notsurehow todecidethe issueof proof ofthecausallinkina "wrongfulaction.Intoprovetheacausalinsuchacauseofitbethatwouldhavetopregnancyhadthefactsthedefectthefetusbeenknown.Thisissuenoitfurtherthatitnotforthewouldhavechosentothepregnancy.Theasithasalreadyariseninthepast,iswhetherofsuchproofshouldnotbewaived.colleaguealsoagreesthe standingonthewitnessstandandtestifyingthattheywouldhavechosentothepregnancy,iftheyhadtheraisesThereisinprovingandawherewitha whenthey already theresult.AlthoughthisisnotuniquetobirthIamofthethatthethatsuchtheirCan a truly looking whetherhe would have abortedthe isnowlivingandchildheisraising?Canapersonwhathewouldhavedonehadhefoundout,whenthechildwasstillafetus,aboutthefetus’sinactionsfor"wrongfultheisintensified,asdiscussedfortwoadditionalreasons.First,themoralbywhothattheywouldhavechosentoabortchildthatisnowlivingandloved,isathatharmeventhechildifheistotheatpointoranotherinlife.intheofpublicpolicyduetotheconcernthataofsuchproofwouldburdencertainofwhichthereisathattheydonottohaveduetothethatwouldharmparentsareto a child.

 

  1. I examined whether it would not be correct to adopt the approach according to which proof of causal link should be waived (CC (Jerusalem District Court) 3198/01

A. v. the Jerusalem Municipality (unpublished, 12 May 2008), Judge Drori; CC (Tel Aviv District Court) 1226/99 A.L. v. Yaniv (unpublished, 29 March 2005), Judge Benyamini). Indeed, this approach constitutes a certain deviation from the regular path of tort law. Nonetheless, in my opinion this approach is likely to be legitimate and fitting for the subject matter at hand, due to considerations of public policy and in light of the uniqueness and complexity of this cause of action. Thus, for example, the complexity of the "wrongful birth" cause of action served the Deputy President in determining that the defendants should be charged to pay the disabled child’s additional expenses only, and not all the expenses of raising him. In addition, I find it doubtful that such a requirement would advance the discovery of the truth, and whether it can advance justice in a specific case, due to the noted difficulty in proving what the parent would have done had he known of the defect his fetus suffers from, whereas it is doubtful if he himself knows clearly how he would have acted. However, I ultimately decided to concur in the opinion of my colleague, both due to the desire to walk along the path of tort law, and due to my colleague's softening of the requirement in two ways: first, in determining that by proving the position of the pregnancy-termination committee to allow an abortion in the certain case, a refutable presumption arises regarding the parents' stance about having an abortion; and second,  in  determining  that  refuting  this  presumption  shall  not  be  done  merely

 

through general information such as sectorial or religious affiliation. I add that in my opinion, courts hearing "wrongful birth" cases must act on this issue in a  very cautious and sensitive fashion, giving weight to the individual, who is not necessarily obligated by the general positions of the sector to which he belongs; the courts must also act with a certain flexibility, to the extent possible, in implementing this requirement in the framework of a proof of the causal link. We are dealing with negligence law, which should be adapted to the ever changing and difficult reality of life.

 

As aforementioned, I concur in the judgment of the Deputy President.

 

Justice S. Joubran:

 

I concur in the circumspective and enlightening judgment of my colleague, Deputy President E. Rivlin.

 

 

Justice E. Rubinstein

 

  1. The issue before us touches upon philosophical questions regarding human existence, possibly similar to the house of Shamai and the house of Hillel, who disputed "for two and a half years" the question whether "it is better for a person not to have been created than to have been created" (Babylonian Talmud, Eruvin 13b); questions which are philosophically difficult, legally difficult, and difficult from a human standpoint. In the annals of the sages a decision was reached: "counted and decided: it is easier for a person not to have been created than to have been created; now that he has been created, he must examine his deeds.  And there are those who

say: he must reckon his deeds" (id; and see Rashi, id; Mesilat Yesharim (Rabbi Moshe Chaim Luzzato (Italy-Holland-Eretz Yisrael, the 18th century) chapter 3); the thrust of this is that having been created, he must search for good and expunge evil, with constant self examination. The subject underdiscussion is more limited than the existential question posed above, which relates to the life of any person, and it relates to a person who entered the world with severe defects; it is fundamentally a situation in which the parents declare that had they known ex ante what the condition of their infant would be they would have refrained from continuing the pregnancy,  and society confirms (via the provisions of section 316 of the Penal Code, 5737-1977) that this is a legitimate choice. Nonetheless, questions from the world of values, philosophy, morals and religion arise, integrated with questions the results of which are financial – such that the legal decision makes (or might make) a moral choice as well; thus the agony in making it.

 

  1. In this context, it is my opinion that a different description of human existence actually characterizes this judgment. The verse "and G-d made man" (Genesis 2:7) is interpreted in the Talmud as follows: "woe is me because of my creator, woe is me because of my evil inclination" (Babylonian Talmud, Brachot 61a): approving the "wrongful life" cause of action raises complex theoretical legal difficulties, which my colleague the Deputy President (following what is accepted in other countries) wishes to avoid, and thus his decision. This is also the approach of the majority of the "Public Commission on the Subject of Wrongful Birth" (hereinafter the Mazza Commission) in  the  important  and  enlightening  report  it  wrote  (the  minority  opinion  is  also

 

important), which in my opinion has a special role in our decision. On the other hand, annulment of the cause of action, as proposed by my colleague, even if that comes alongside an expanded cause of action for "wrongful birth", is not simple, primarily on the practical level. Expansion of the cause of action for wrongful birth in order to provide a solution for the practical difficulties, or some of them, as can be seen in the opinion of my colleague the Deputy President, is also liable to raise various legal difficulties, some of which I shall touch upon below.

 

3.Regardingforon the legal plane,inthetheinthecauseoftoadditional(theexpensesthethethattheraisingofachild),althoughregularalsobeabletobecausallylinkedtotheact(see56-57),mycolleaguetheDeputynotesthat"theresultsofthebirthofthechildmustalsobe(par.weagainfindtheofexistence,wewishedtoavoiddoing.Furthermore,inordertoreacharesultwhichis,intheofthecase,just (toextentcolleagueiswillingtoparentsoftheinfantfortheirexpenses the entire period of [the infant's] life expectancy"(par.60,–eventhoughfromthepracticallawstandpoint,itthattoitistheactiontofortheirsupportoftheinfant,itcouldhavebeentotheoftheirlifetotheintheMazza Commissionthatcanbebasedupontheparentspennytheirinordertoensureofthe needs ofthe infant their p. 64).

 

4.Thatisalsothecaseregardingidentificationlivingexpenses(the"regularexpenses")oftheinfantwhenhehasanadult,asaverage salary in the economy (inthecaseoflossofearningability)–agenerallyexpectedapersonwhowasbyaact, not ofthe expenses aparty bears in tosupport(althoughinMazza Commission wasalsoofthisopinion,p.61).Incontext,itisdoubtfulineyesiftheforsupportpursuantto4oftheLawLaw(Support),(towhichDeputyinpar.ortosectionofInheritanceLaw,5725-1965(towhichheinpar.75)issalaryinthe(forsupportratesCA4480/93A. v. B.,48(3)IsrSC461;PY(AL),5725-1965(part2,37-38).IIamnot,heaven forbid,sayingthatantheintheseissuesshouldbetaken.oppositeisthecase–theofwhichattheof theofmytheDeputyPresident(aswellastheopinionintheMazza CommissionareIacceptthemaswell;however,thearisingfromadaptationoftheparents'causeofactionfor"wrongfultorealityincauseofaction"wrongfullife"should not be ignored.

 

5.On the practical plane, myinter aliaquestionitcanbeensuredthattheparents' tothebirthcause

 

of action will indeed ensure the future of the infant (see par. 75). These questions are difficult to solve, as what will be done, for example, when the parents are irresponsible, or big spenders, and leave the infant with nothing by spending all the money. I shall say at the outset, that in my opinion there is a sufficient legal basis for determining arrangements that will safeguard this interest; in addition, because if the parents' entitlement stems from various duties that the law casts upon them (see, e.g., par. 60 of the opinion of the Deputy President) it is not unreasonable to connect the compensation and these duties (in this context as well the majority opinion in the Mazza Commission proposed unique arrangements, see p. 62). An additional significant difficulty, at least on the level of principle, relates to an infant who has no parents to sue on his behalf (an issue which the  majority opinion in the Mazza Commission discussed on p. 60), or when the parents themselves go bankrupt, etc.

 

6.InotherthetheoftheDeputydespitetheittoensurefutureoftheinfanthisparents'action,–despitetheofcourse–leadtointhewhotodaywouldbeentitledtowillbewithnothing;yetistheandthefromitareexpenses(evenifwefromusingtheofLetusthatJusticesoftheinZeitsov (CA518/82Zeitsov v. Katz,40(2)IsrSC85)wereawareofthevariousinthepresented,yettheytoawhich,ifitensuresthecausedas a result of the negligent care by the doctor,aspertheofthisintortwillbeforseepar.42oftheminorityintheMazza CommissionbyMr.Posner.

 

  1. In this context, the position of (then) Justice Barak in Zeitsov proposes a compensation mechanism which is clear and relatively simple to implement, which avoids entering into complex ethical dilemmas (see also A. AZAR & A. NURENBERG, RASHLANUT REFU'IT (MEDICAL MALPRACTICE)(2nd  ed., 5760) 287);  however, as noted above, it entails legal difficulties (see Deputy President Ben-Porat in Zeitsov, at

p. 105; see also R. Perry "L'hiyot o lo L'hiyot: ha'Im Zo haShe'elah? Tviot Nezikin begin 'Chayim b'Avla' keTa'ut Konseptualit"(To Live or Not to Live – Is that the Question – Tort Actions by Reason of Wrongful Life as a Conceptual Mistake) 33 MISHPATIM (5763) 507, 559-560; A. Shapira, "haZchut lo leHivaled bePgam" (The Right to be Born with a Defect) in DILEMMOT B'ETIKA REFU'IT (DILEMMAS IN MEDICAL ETHICS) (R. Cohen-Almagor ed., 5762) 235, 248). I will not deny that I was taken by the thought of proposing that we continue down that paved path, as per Justice Barak, with certain amendments and despite its theoretical difficulties, until the subject is fully arranged [in legislation]. As long as the subject has not received a full arrangement, we replace a construct with theoretical difficulties but practical validity, with a construct which does not have such theoretical difficulties, but raises practical questions, as mentioned above. The Justices that heard Zeitsov a bit more than a quarter of a century ago knew that they face a difficult mission; but they wished to practically assist those whose fate was bitter, where negligence had occurred, even if the very creation of a fetus with defects was not at the hands of the doctor but by "the dealer of life to all living creatures" (in the words of the hymn for Rosh haShana and Yom Kippur).

 

8.thecreatedtheinZeitsov,thelackofinofthecourts,inter alia regardingthebetweentheopinionsofDeputyPresidentBen-PoratandBarakinZeitsov –requiresandanditisnotfornoreasonthatwedealing,inwithalargeofcasesthatAsearlyas this noted:

 

"a district court judge hearing an action like this stands before a number of possibilities… in each of the cases he will not deviate from the provisions of sec. 20(b) of Basic Law: Adjudication, which determines that 'a ruling of the Supreme Court obligates every court, except the Supreme Court'" (CA 913/91 Azoulai v. The State of Israel (unpublished) par. 3 – Justice Maltz; see also CA 119/05 Amin v. The State of Israel (unpublished))."

 

A generation has passed since the Zeitsov ruling was handed down, and as the members of the Mazza Commission noted: "the lack of decision, as aforementioned, has left the legal arena wide open" (p. 17); this situation, in which the fate of an action depends upon the decision of the judge – it may not be superfluous to note, the random judge – before whom the case is heard "according to his opinions and worldview" (in the words of the commission on p. 17), is hard to accept. Complaints against it were also heard from attorneys who deal in the field during the hearing before us (on 31 January 2012); and I will not refrain from mentioning here that the opinions supporting confirmation of the stance of Judge Barak in Zeitsov were usually heard – before us and in the Mazza Commission – from lawyers who generally represent claimants. Indeed, the majority opinion in the Mazza Commission proposed "as a first and preferred possibility" (p. 60) to create, in legislation, a social arrangement that would ensure fulfillment of the needs of those born with defects that cause them functional disability, and of course there would be much blessing in such an arrangement; it further proposed, as an alternative, a legislative torts arrangement, and there is much positive about that as well. However, as a court that hears tort cases according to the existing law, I fear that there is no evading determination of a caselaw rule in tort law, despite the existing difficulties that accompany each of the alternatives, until legislation of one kind or another is passed. And I call upon a sensitive and conscientious Israeli legislature to reach it as soon as possible.

 

  1. Ultimately, I saw fit to concur, in principle, in the well reasoned decision of my colleague the Deputy President, consisting, at this time, of the part regarding legal principles. I do so whilst pointing out the difficulties and calling upon the legislature to speak. It is an open-eyed decision, aware of the disadvantages and advantages of each of the alternatives, wishing – trying hard – to ensure that basing one's opinion on "the regular legal tort logic" (the purpose of which is also avoiding the type of difficulties in theory and in result found in the various opinions of Zeitsov) does not lead to a practical result which is not just. I go this way also because the stance of my colleague is in line with the opinion of the majority of the members of the Mazza Commission regarding annulment of the "wrongful life" cause of action, and with the caselaw of the courts of the Common Law states (as the commission surveyed in its report, and as my colleague surveyed in his opinion). The moral message that arises from my colleague's decision – both regarding the sanctity of life and regarding treatment of persons with disability – also supports adopting it. It is also in line (as presented briefly below) with what can possibly be defined as the position of Jewish

 

Law, our legal heritage. The position that arises from our decision is that we do not leave people with disability in the category of "it would be easier for him had he not been created"; we must honor their needs and attempt to fulfill them, without a label of societal rejection in the form of "it would be easier for him had he not been created", but rather while treating them as desirable human beings.

 

"Better than both is the one who has not yet been" (Ecclesiastes 4:3)

 

  1. Recognizing the cause of action for "wrongful life" requires, as aforementioned, discussion of weighty moral questions, the answers to which might be able to be found "in the area of philosophy – morality – theology" (in an analogy to the words of Justice Goldberg in Zeitsov, p. 128). Indeed, in the literature of Jewish law we also find positions – based on a religious worldview – according to which for a very defected infant, whose life expectancy is most short, "it is better for him that he was born than had he not been born at all, as those who are born enter the next world" (see the IGROT MOSHE responsa (Rabbi Moshe Feinstein, Russia-USA, 20th century) Even HaEzer first part chapter 62); there is, however, among important religious authorities also broad and significant attention given (in the context of discussion of termination of pregnancy) to the life of suffering to which such an infant, and to a great extent those who closely surround him, are condemned:

 

"Is there need, sorrow, and pain, greater than that under discussion, which will be caused to the mother to whom such a creation is born, one who is all suffering and pain, and whose death is certain within a number of years, and the eyes of the parents see but their hands cannot relieve him? (and it is clear that if this child is taken to a special institution and the parents will not be given access until his death it makes no difference and does not detract from the aforementioned). Added to this are the tortuous and painful contortions of the child with the defect. Thus, if termination of the pregnancy is to be allowed according to Jewish Law due to great need and due to pain and suffering, it seems that this is the most classic case  that  should  be  allowed"  (TSITS  ELIEZER  responsa  (Rabbi  Eliezer

Waldenberg, Israel, 20th century) part 13 chapter 102).

 

The reality of human existence also brings forth cases in which life is not short, but rather continues, without hope, for decades, with all the suffering involved, at times especially to the parents, as the child does not communicate. Indeed, many pens broke in Jewish law attempting to clarify these questions with a forward looking glance (particularly regarding abortions; see, for example, Rabbi E. Lichtenstein "Hapalot Malachutiot – Heibetei Halacha" (Artificial Abortion – Halakhic Aspects), 21 TCHUMIN (5761) 93). The majority opinion in the Mazza Commission included discussion of a number of known sources relating to the question whether life is worth living, for example the words of King Solomon "and I thought the dead, who have already died, more fortunate than the living, who are still alive" (Ecclesiastes 4:2), and the words of Jonah the prophet, who wished to die and said "it is better for me to die than to live" (Jonah 4:8), although, according to their opinion, "there is no doubt that these statements relate to moral and theological aspects only" (p. 65), and I already discussed above the differentiation between the philosophical question and the situations which are before us for decision. The question when "death shall be preferred to life" (Jeremiah 8:3), or when to "long for death but it does not come, and

 

dig for it more than for hidden treasures" (Job 3:21), is a question which has not been decided; however, life is "heritage from the Almighty on high" (id, 31:2; see M. Greenberg "Erech haChayim baMikra" (The Value of Life in the Bible) in KEDUSHAT HACHAYIM VACHERUF HANEFESH: KOVETS MA'AMARIM LEZICHRO SHEL SEGEN AMIR YEKUTIEL (THE SANCTITY OF LIFE AND MARTRYDOM – COLLECTION OF ARTICLES DEDICATED TO MEMORY OF LT. ARNON YEKUTIEL) (Y. Gafni & E. Ravitsky eds, 5753)

35). For example, there are those ill with debilitating disease whose life is not really a life, and who expect to be put out of their misery, and there are those who turn the depths of suffering into a lever for creative activity (see the enlightening and touching writings of Dr. Rachamim Melamed-Cohen, a person with ALS who creates like an ever swelling spring).

 

  1. The stories of the Bible and additional stories appearing in later sources teach that life is not always preferable to nonexistence: thus, for example, the words of King Saul to his porter "draw your sword and thrust me through with it, so that these uncircumcised may not come and thrust me through, and abuse me" (1 Samuel 31:4); or the story of the woman who "grew very old" and said to one of the sages of the Mishna: "I have grown too old and from now on my life is that of disgrace, I do not taste food or drink and I wish to leave the world" (YALKUT SHIMONI Dvarim chap. 11 Remez 871). Note that these acts served halachic authorities in discussion of modern questions regarding lengthening and shortening life (see, respectively, Rabbi Y. Zilberstein "Matan Morphium le'Choleh Sofani haSovel miChenek"(Giving Morphium to a Terminal Payment Suffering from Asphyxia) ASIA 15 (5757) 52; Rabbi Y. Zilberstein, in TZOHAR: KOVETS TORANI MERKAZI C (5758) 218). Then, as now, in Jewish law as in Western law, the considerations are well known, and the dilemmas are difficult.

 

12.itisstillappropriatetocomparingfilledwithtoaandlife,andasitbe,withaofnonexistence.Thatisthewhenwithathatisforof"theextentofthe"bottomline"ofistoamonetaryIn-depthoftheofdiscussing thosequestionscaninmyopinionbefoundinthewordsofthe 10a) King Hezekiah,whofromprocreatingbecauseforesawhiswouldbeevil(theevilMenashe).Inthetells"whatbusinessofyoursarehiddenoftheandofchoiceinsuchitwassaidthat"asoulisnothisproperty,propertyoftheLord,asitiswritten(Ezekiellivesare(theofthe(RabbiDavidbenthe16ofS18,6).ifJewishlawistothatincasesitispreferabletoavoidthatiswithhightoleadtoofdefectedthewordsofprophetaclearthepossibilityofdiscussingasituationoftoaofexistence,asasit

is, and their conclusion that law cannot be decided on the issue. I add that those words – regarding the hidden ways of the creator of the world – are used in religious philosophy in a completely different context as well, regarding ungraspable historical phenomena like the holocaust.

 

13.Thelegal of"wrongfulbirth"or"wrongfullife"has–ontheasopposedtothemoral-religious–inlaw(see,e.g.,S.Yelenik"Holadab'Avla–ZchuyotTviahBirth–RightsofActionS23(5761);Vidal,"Holada–PitsuiyeiNezikinHoladatUbarBirth

  • Compensation in Torts for Birth of Fetus with Defects), TCHUMIN 32 (5772) 222), and the problem of an action on the basis of the cause of action for "wrongful life" was raised: "according to the halacha there should be no action by the minor" – as opposed to his parents' action – "who was born due to a tort, neither against his parents nor against a doctor who gave his mother consultation or diagnosis when she was pregnant" (VIDAL, p. 231). However, the halachic sources referred to in these works may support the conclusion of Dr. Michael Wigoda:

 

"The truth should be said, that the classic sources of Jewish law do not deal with this issue" (thus, in his memorandum submitted to the Mazza Commission with the title "Reflections upon 'Wrongful Birth' in light of the Sources of Jewish law").

 

It can also be understood why: the formulation of tort actions like those before us is the fruit of the modern medical and legal age, in which what was previously in the realm of heavenly secrets and fate, can now be predicted and decoded by tools of medicine and genetics. That does not exempt modern [Jewish law] authorities from dealing with it.

 

Epilogue and Practical Comments

 

14.Thethatcolleaguetheexpansivelygoesalongwaytowardreasoned,andjustoftheandlegalbeforeus.However,incertainregards,thewhichthecourtscontinuetopavetothecasesthatbebroughtusisstilllong(andmyalsothat).TheintheMazza Commission withadditionalprovisionswhichshouldbeintortAttheofthem liesthewhichlies atofopinion:thatapartofthefortheparentsislinkedtotheburdensomeexpensesofensuringcareforhim,anditsistoallowthemtopaytheminawaythatwillcondition,tothepossible(anditbeabletobesaid,toallowthemtotheirduties theinfant).relationswithinthediscussedneedtothattheisusedfortheoftherelationstheandothers,thediscussedneedtothemoneyagainstthirdsuchcreditorsinbankruptcy(p.62).situationinwhichtheinfantdoesnothavewhowillsueinhisadditionalwhich of theMazza Commission discussed.

 

15.Thesemorethanquestionoftheannullingofthelifeofwhichiscentralinthis(partial)Indeed,atstagewearenottheconcretequestionsofofandthuswearealsonotitforthepurposeforwhichitisgiven. Thecourtscanfindthe

 

answer to these questions – at least to part of them – in the Mazza Commission report, and that circumspective legal document should be before the eyes of those hearing such cases. In may be, that the solution to them will resemble relocating the theoretical difficulties from the discussion of the cause of action to a discussion on translating the expanded cause of action into practice. However, the question of the cause of action is the one which is before us, and it is presumed that its translation into practice will find an appropriate solution in the future. The majority opinion in the Mazza Commission noted:

 

"The question is whether such an arrangement can be reached, to the extent that it is found appropriate, by judicial ruling as well, is a matter of the decision of the Supreme Court."

 

Although I am, as aforementioned, of the opinion that there should be a legislative arrangement of the entire issue, and I hope that the call to the legislature will fall on attentive ears, whether in a social scheme (which, in its entirety, would not be before us) or, at least, a legislative arrangement of a complete and detailed tort scheme; the courts have a duty to ensure that the annulment of the wrongful life cause of action prior to enactment of a circumspective scheme in legislation will not derogate from their primary duty – to do justice within the framework of the law. The path that has been determined passes through the parents; the courts have a duty to ensure, in every single case, that the benefit reaches the infant and is earmarked for the infant, and not for other purposes.

 

Transitional Provisions

 

16.Regardingtransitionalprovisionsbycolleagues,I amafraidthataistoininwhichnoactionwasbytheparents,underthethatinthefutureafterclarificationofthecondition)anactionwouldbebyinfant,theoftheZeitsov rulingtoofitanother,andrelying uponit.toaperiodofyearsforthat.provisionthesafeguardspendingcasesinactionswerenotbybutitdoesnotsafeguardhaveyetiftheyearparents expired(asopposedtothetwentyfiveyears),aclaimthatactionisbarredduetoberaised.ThatmayhaveanadditionalconsiderationinfavorofleaningtowardleavingZeitsov standingHowever,Iat least theofthisshallapply,tocasesinwhichanactionwastheforonefromthedateoftheUnfortunatelymyareinthusIonlyhopethatthefindawaytothehasbeenof(to they inthe of justice.

 

Final Comments

 

17.ThisjudgmentisgivenondayoftheoftheDeputyRivlin.Heisretiring36years–twicetheofHebrewwordChai [life]–onbenchofinstances,

 

starting with traffic court, and reaching where he has. His contribution covers all areas of the law, and there is no valley in which he did not stake a claim. The judgment he chose for his retirement day is characteristic of the central field of his judicial legacy, the field of torts, and within it medical negligence. For many future years the mark which Justice Rivlin has made on all branches of tort law, from traffic accident law, regarding which he also wrote a fundamental book, to the complex and sensitive issue decided today, will accompany Israeli adjudication. According to the sages, the existence of fair tort law – relations between man and his fellow (Babylonian Talmud Baba Kama 30a) – is among the foundations of just human society. In his judicial work, Justice Rivlin contributed to that. I wish him, now that he has reached retirement age, that "in old age they still produce fruit; they are always green and full of sap" (Psalms 92:14).

 

 

Decided according to the opinion of the Deputy President E. Rivlin.

 

The result of the judgment – to the extent that it regards the annulment of the cause of action of the infant – shall not apply to pending cases (including cases before us) in which an action was not submitted by the parents. Justice E. Rubinstein was of the opinion that the result of the judgment should not be applied for one year from today, and Justice M. Naor notes that the question of the law regarding a claim on the part of an infant which has not yet been submitted should not be decided in the framework of a transitional provision in the case before us.

 

Given today, 7 Sivan 5772 (28 May 2012).

Full opinion: 

Stroul v. Attorney-General

Case/docket number: 
CrimA 70/64
Date Decided: 
Monday, June 22, 1964
Decision Type: 
Appellate
Abstract: 

The appellant, a qualified hospital laboratory technician, supplied blood for transfusion to a patient without making sure - by inspection of the label on the bottle containing the blood and carrying out certain prescribed tests - that the blood was compatible with that of the patient. The two were in fact not compatible and after being transfused with blood supplied the patient died. The appellant was convicted and sentenced in the Magistrate's Court and his appeal to the District Court failed. On appeal to the Supreme Court, two submissions in law were made: that the acts or omissions of the appellant were only of the nature of "acts of preparation" and the effective cause of the death were the acts and omissions of the hospital staff to whom the appellant had delivered the blood; that the appellant owed no duty of care to the patient since in the circumstances it was not to be assumed that the blood would be administered without examination by others of the hospital staff.

 

Held: First, the mere fact that others are negligent in carrying our their duties does not break the causal connection between a person's initial negligence and the ultimate result. Second, every person owes a duty of care to the eventual victim when he does an act which may endanger the life or health of another and he cannot plead in defence that he relied on the fact that others might or should later take steps to avoid the danger.

Voting Justices: 
Primary Author
majority opinion
majority opinion
Author
concurrence
Full text of the opinion: 

Crim.A. 70/64

 

           

ARMAND STROUL

v.

ATTORNEY-GENERAL

 

 

In the Supreme Court sitting as a Court of Criminal Appeal.

[June 22, 1964]

Before Olshan P., Landau J. and Cohn J.

 

 

Criminal law - administration of wrong blood type - causing death by negligence - causal connection - duty of care - Criminal Code Ordinance, 1936, secs. 218, 219(e) and 231.

 

 

The appellant, a qualified hospital laboratory technician, supplied blood for transfusion to a patient without making sure - by inspection of the label on the bottle containing the blood and carrying out certain prescribed tests - that the blood was compatible with that of the patient. The two were in fact not compatible and after being transfused with blood supplied the patient died. The appellant was convicted and sentenced in the Magistrate's Court and his appeal to the District Court failed. On appeal to the Supreme Court, two submissions in law were made: that the acts or omissions of the appellant were only of the nature of "acts of preparation" and the effective cause of the death were the acts and omissions of the hospital staff to whom the appellant had delivered the blood; that the appellant owed no duty of care to the patient since in the circumstances it was not to be assumed that the blood would be administered without examination by others of the hospital staff.

 

Held                       (1) The mere fact that others are negligent in carrying our their duties does not break the causal connection between a person's initial negligence and the ultimate result.

(2) Every person owes a duty of care to the eventual victim when he does an act which may endanger the life or health of another and he cannot plead in defence that he relied on the fact that others might or should later take steps to avoid the danger,

 

Israel cases referred to:

 

(1)        Cr.A. 180/61 - Baruch Alpert v. Attorney-General (1962) 16 P.D.1416.

(2)   Cr.A. 11/52 - Joseph Menkes and Others v. Attorney-General and Counter-appeal (1958) 12 P.D. 1905.

 

 English cases referred to:

 

(3)        M'Alister (or Donoghue) v. Stevenson & Others (1932) A.C. 562.

 

S. Toussia-Cohen for the appellant.

G. Bach. Deputy State Attorney. for the respondent.

 

COHN J.                     The appellant was convicted in the Rehovot Magistrate's Court of a crime under section 218 of the Criminal Code Ordinance, 1936  (hereinafter called "the Ordinance") in that he caused, by want of precaution not amounting to culpable negligence, the death of Dr. Bela Granadi. The Tel Aviv-Jaffa District Court, sitting on appeal, confirmed the conviction, but gave the appellant leave to appeal again to this Court.

 

            The relevant facts, no longer in dispute, are as follows:

           

(a) The appellant worked as a "qualified laboratory worker" in the blood bank in the "Assaf Harofeh" hospital in Tzrifin. His task was inter alia to supply the operating theater of the hospital, from the stock in the blood bank, the blood required for transfusion of patients. For this purpose a sample of the blood of a patient is given to him; and it is well known, and the appellant knew, that not all types of blood intermingle and that the danger of immediate death exists if a person with one type of blood is infused with one of the other types which do not mix with his blood. The appellant's duty as, therefore, to inspect first the patient's type of blood and mark it with red pencil on the order form sent to him; to take from the refrigerator bottles of blood of the type which suit the patient's blood type and afterwards to do three "cross-breeding" tests, each according to a different method - that is to say, cross-examination tests of blood mixture of the patient's blood with the blood taken from the refrigerator, so as to know and confirm that they really mix. When the time comes for the blood transfusion, the responsible nurse in the operating theater ends a messenger to the blood bank, who receives either from the appellant or another employee in the blood bank the bottles of blood intended for the patient concerned and which were put back, after all the said tests, into the refrigerator, marked with the patient's name and his blood type, and the order form attached to them.

 

(b) When on 19 December 1960 the appellant received a sample of the deceased's blood, he tested it and determined its type as required; afterwards he went to the refrigerator and took out bottles of blood from it, which stood in the place where, to the knowledge of the appellant, bottles of blood of the deceased's blood type stood. On these bottles the type of blood which they contain was marked. Had the appellant looked at them, he would have seen that the blood in one of the bottles was not of the deceased's blood type. The appellant relied, it seems, too much on the place where the bottles stood in the refrigerator, which was, as I have said, the place where the bottles of the suitable blood type stood, and he did not look at the labels of the bottles. Not only that, but he did not do the said "cross­breeding" test; he returned to the refrigerator the sample of the deceased's blood together with the bottles which he had taken from the refrigerator as aforesaid, marked as intended for the deceased, with the order form attached to them.

 

(c) On 20 December 1960, the day of the operation, a messenger from the operation theater came to the blood bank, and another employee in the blood bank went to the refrigerator, found the bottles for the deceased and handed them over to the messenger. Had she looked at the bottles, she would have discovered that the type of blood marked on one of them did not match the type of blood marked on the order form as the patient's blood type, but she also did not look.

 

(d) The messenger brought the bottles of blood to the operating theater, and when the person responsible in the theater at the time wanted to look at them and see if everything was as it should be, the doctor requested him to hand him the bottles of blood, and so he did; and the inspection was not done.

 

(e) The death of the deceased on the same day was caused by the transfusion of blood which was not of the type of the deceased's but of a different type which does not mix with it.

 

            Before us Mr. Shlomo Toussia-Cohen, counsel for the appellant, tried to argue that although the appellant did not do all the "cross-breeding" tests which it was his duty to do as aforesaid, then at least he did some of them - or if he did not carry them out in the way that it was his duty to do, then at least he carried them out in a different way. At this stage we will not entertain such factual arguments, and we do not dispute the finding of the learned judge in the Magistrate's Court that the appellant did not do "cross-breeding" tests, not all of them or part of them (paragraph 19 of the judgment); and we agree with the evaluation of the learned judge that the appellant thereby was in breach of "an elementary obligation" imposed upon him. And furthermore, by writing the word "compatible" on the order form next to the serial numbers of the bottles of blood which he had prepared for the deceased, he created the wrong impression that he had actually carried out the required tests and found that the types of blood were compatible with one another.

 

            Learned counsel for the defence raised two legal arguments: the first, that the acts or omissions of the appellant did not cause the death of the deceased, they were only within the "acts of preparation" of the acts or omissions of others who caused his death; and the second, that an offence of want of precaution is only committed when a duty of care is imposed on the accused in respect of the deceased, and here there was precisely no duty of care imposed on the appellant toward the deceased. I have not found any substance in these arguments.

           

            As to the causal connection between the appellant's acts or omissions and the death of the deceased, it is sufficient for the prosecution to rely on the provisions of section 219(e) of the Ordinance which provides as follows:

           

"A person is deemed to have caused the death of another person although his act or omission is not the immediate or not the sole cause of death -

...

(e) if the act or omission would not have caused death unless it had been accompanied by an act or omission of the person killed or other persons."

 

            Mr. Toussia-Cohen says what is involved are the acts or omissions of others which "accompanied" the appellant's acts or omissions - excluding acts or omissions of others which followed them. The word "accompanied", which the legislator used, indicates, according to this argument, the simultaneity in time of the said acts or omissions, as though they were all done or omitted simultaneously and not one after the other. Here, these were omissions by the rest of the hospital employees who were obliged, in his argument, to inspect whether the blood prepared by the appellant was really suitable for transfusion to the deceased, which occurred after the appellant's acts or omissions and not simultaneously with them; and therefore there is nothing in section 219(e) to constitute the appellant's act or omission as the cause of death by virtue of the law.

 

            There are several answers to this argument: first, the legislator did not in using the word "accompany" adopt technical language at all; his purpose was to assume the existence of different acts and omissions, except for the accused's act or omission, which possibly also caused the victim's death; and it is irrelevant whether they came simultaneously or earlier or later - provided that all of them might have contributed to the death. Secondly, the pleader reveals a misunderstanding of the English language, if he thinks that this word means just to accompany simultaneously; in every dictionary, other meanings will be found in addition to that meaning, such as to supplement, to complete, to coexist, to be added to and not only simultaneously. And thirdly, and this to me is the main point: if you indeed say that the acts or omissions of the rest of the hospital employees did not "accompany" the appellant's acts or omissions in the meaning of this word in section 219(e), the result is not that only because of this are they regarded as the cause of death and not the appellant's act or omission. But the opposite is the case; if there had not been acts or omissions of others which accompanied, in the full meaning of that word in section 219(e), the appellant's act or action, then the appellant's act and omission remained the sole and immediate reason for the death, as stated in the beginning of the section. The mere fact alone that they were "accompanied" by acts or omissions of others as possible causes of the death, creates the problem which section 219(e) is meant to settle.

           

            Accordingly the appellant's act or omission should be regarded as the cause of the death of the deceased, in spite of the possibilities (or even the certainty) that it was possible to avoid the disaster had the rest of the hospital employees subsequently examined the blood prepared by the appellant for that purpose and before the transfusion. Because the rest of the employees are not standing trial before us, I see no need to inquire whether any duty was imposed on them to carry out such additional tests; but as regards the second submission of law I will assume for the benefit of the appellant that he did in fact rely on additional tests being done as aforesaid.

           

            The submission, it will be recalled, is that no duty of care was imposed on the appellant in respect of the deceased and therefore his lack of care gives no cause for his being criminally charged. This argument rests on the rule handed down in the House of Lords in Donoghue v. Stevenson (3), that a person owes a duty of care towards all those to whom a dangerous thing of his manufacture might reach and in the circumstances one may suppose that the dangerous thing will reach that person without further examinations or changes. From the affirmative one arrives at the negative, that if in the circumstances it may be supposed that the dangerous thing will undergo further examinations before reaching that person, then the manufacturer does not owe that person a duty of care.

           

            With due respect to this rule, the cases are not identical. First, there a bottle of beer was involved, in which the remains of a snail which certainly would harm were found, whilst here a prophylactic was involved. Secondly, it was possible to discover the remains of the snail, whether in the bottle before it was emptied or in the glass into which the beer was poured; here the danger of the prophylactic was hidden and could only be discovered by laboratory tests. Thirdly, and this is the main point, there the beer was not prepared for some particular person, either the plaintiff in the case or a specific, known person; here the blood was prepared for the deceased only and had to be prepared according to his real needs. To whom, if not to the deceased, did the appellant owe the duty to prepare the blood with the required care?

           

            Rather, I agree with the submission of Mr. Bach, speaking for the Attorney-General, that the whole question, to whom the appellant owed a duty of care, does not arise at all in view of section 231 of the Ordinance, which imposes a duty on every person doing an act that might endanger the life or health of another to do it with reasonable care; and the section prescribes, at the end that a person who did an act as aforesaid in violation of this duty is regarded as having caused the consequences which result from this omission to the life or health of any person. The appellant well knew how great the danger was to the patient's life if he received a transfusion of blood which did not mix with his own. The duty imposed on him, under section 231 was to prepare with reasonable care the blood for transfusion, that is to say, by taking all the steps and carrying out as aforesaid all the required and fixed tests in the matter. He violated this duty in that he did not take the steps and did not carry out those tests. He is criminally responsible for the consequence of his omissions, the death of the deceased, and it is immaterial that he relied or could have relied on the fact that others would later do the tests.

 

            I am of the same opinion as the learned judges in the District Court, that as to the matter before us it is possible to draw an inference from the matter which was before this Court in Alpert (1). There, a doctor made a mistake in prescribing a medicine which, as prescribed, contained a quantity of poison sufficient to kill the patient. This prescription was directed to the chemist, and there was a clear duty on the chemist to check it and verify that the doctor really did not err in prescribing a quantity of poison which, also according to the knowledge of the chemist, could kill a person. Nonetheless, the doctor was found criminally responsible in that he was in breach of the duty of reasonable care placed on him. And if the doctor there was responsible, the appellant before us a fortiori, because there the act of preparing the medicine was the chemist's, whilst here the act of preparing the blood is the appellant's and precisely his task and responsibility.

           

            I would dismiss the appeal against conviction.

           

            The appellant also appealed against the severity of sentence. The District Court did not see fit to interfere with the sentence, and there is no need to say that it would not have given leave to appeal for a second time to this Court with regard to the penalty. The learned judge in the Magistrate's Court sentenced the appellant to one year's imprisonment, of that six months actual and six months on suspended sentence, and in addition to a fine of IL 1,000. In giving sentence the learned judge says:

           

"Unfortunately the present is not a case of a mere inadvertent mistake, but an act of negligence done intentionally out of disregard for the elementary duties imposed on the accused.... The accused was capable of estimating the extent of danger to a person's life to be expected from his act ... and he was obliged... to pay respect to the essentiality of those means of care which medical science has prescribed in order to prevent danger to a person's life... .

 

It is true that although the act was committed at the end of 1960, the prosecution for some reason found it necessary to lay an indictment only close to the end of 1962, and this delay was an injustice to the accused. But the seriousness of the accused's act is so great that one cannot attribute to this delay a decisive role in fixing the penalty. although I do not disregard it."

 

            The main argument of learned defense counsel before us was that since the accident three and a half years have elapsed, of which two passed waiting for trial and eighteen months during trial, and fear of the law hovered over the appellant for all this long period. This is a consideration which should properly be taken into account in mitigating the appellant's sentence; but since we are convinced that the learned judge also took this consideration into account in mitigating the appellant's sentence, that is no longer ground for our interference.

           

            The appellant was fortunate that he was charged with an offence under section 218 and not with a felony under section 212 of the Ordinance; and in view of the serious consequence of the appellant's act and omission, the punishment imposed on him seems to be too light.

           

            The appeal against sentence is also to be dismissed.

           

OLSHAN P.               I concur.

 

LANDAU J.               I concur.

 

            As to the interpretation of section 219(e), I expressed the opinion in Menkes v. Attorney-General (2) that this section, with its five sub­sections, does not exhaust all the cases in which a person will be regarded as causing the death of another under sections of the criminal law which prescribe the criminal offences of causing death, among which is section 218. Section 219 was drafted on the basis of precedents in English case law, and its source is in section 262 of Steven's Digest of Criminal Law, prepared on the basis of the English case law (see 8th ed., p. 215). I have studied the English judgments mentioned by Steven as authority for his section 262(e), from which our section 219(e) is copied, and I have found that in all of them the accused's act or omission was "accompanied" by the victim's or a third person's act or omission in the narrow sense of the term, that is, the effect of two factors simultaneously and not one following the other. It seems to me that also according to this narrow chronological test, the case before us comes within section 219(e), since the appellant's negligence, expressed mainly in the failure to carry out the required tests, whilst noting "compatible", which is intended to testify that the tests were carried out, continued to have its damaging effect also when each of the other people, who could have avoided the accident, was negligent in fulfilling his duty, till the final stage in which the lethal blood was actually to be used. (Cf. Alpert (1) at pp. 1420-1421.)

 

            Even if we use the flexible test outside section 219 which 1 suggested in Menkes (2): "if according to the facts the causal connection between the accused's act and the death is so strong that criminal responsibility for the death is to be imposed on the accused", there is no doubt that the requirements of this test were here fulfilled. Out of all the measures of care which should have been taken in order to prevent a disaster from transfusion of blood of an unsuitable type, the laboratory test which the appellant should have done was the basic and principal measure. Carrying out this test was entrusted to him and to him alone, in reliance on his special professional capability, and although others could have prevented the consequences of his gross negligence, none of them was obliged to do so by checking by some laboratory test, to do which was imposed on the appellant.

           

            Appeal dismissed

            Judgment given on June 22, 1964

Solel Boneh Building and Infrastructure Ltd 2. Aryeh Insurance Company Ltd v. Estate of the late Ahmed Abed Alhamid deceased

Case/docket number: 
LCA 8925/04
Date Decided: 
Monday, February 27, 2006
Decision Type: 
Appellate
Abstract: 

Facts: Ahmed Alhamid died in a work accident. His estate and dependents (the respondents) filed a claim against the appellants for compensation. During the proceedings, the respondents reached a settlement with the appellants, according to which the appellants would pay a sum of NIS 100,000 to the respondents. This settlement was given the force of a court judgment on 22 February 2004. Three weeks later, the Supreme Court gave its judgment in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter ([2004] IsrLR 101). In that judgment the Supreme Court held that if a person is injured as a result of a tort and his life expectancy is shortened (the ‘lost years’), he is entitled to compensation for the loss of earning capacity in those years. The estate is also entitled to compensation for this head of damage, if the life expectancy of the injured person is shortened and he dies during the tortious act or soon after it. This decision overruled Estate of Sharon Gavriel v. Gavriel, which had been given twenty years earlier, and in which it was held that compensation would not be awarded for the ‘lost years.’

Following the decision in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter, the respondents applied to the trial court to cancel the settlement and to amend their statement of claim. Their application was granted. The appellants’ appeal to the District Court was denied. The appellants applied for leave to appeal to the Supreme Court, and leave to appeal was granted.

The questions before the court were whether the ruling in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter should apply retrospectively to events that occurred before that ruling, and if so, whether the respondents were entitled to cancel the settlement because of the subsequent change in the law.

 

Held: (President Barak) As a rule, case law has both retrospective and prospective effect. There is no reason why the ruling in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter should not apply retrospectively.

(President Barak) The question whether the respondents may cancel the settlement because of the (retrospective) change in the law should be resolved with reference to the doctrine of mistake in the law of contracts. The respondents’ mistake, however, was only a mistake in the ‘profitability of the transaction.’ Such a mistake is not a ground for cancelling an agreement, and therefore the settlement could not be cancelled.

(Vice-President Cheshin) As a rule, case law has only prospective effect. Retrospective application of case law is the exception to the rule. The plaintiff has the burden of persuading the court that considerations of justice require the relevant case law to have retrospective application. In the present case, considerations of justice supported the retrospective application of Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter.

(Vice-President Cheshin) The respondents did not make any mistake in real time. The question whether the law would change was not one of the risks that the parties took into account when they made the settlement. Consequently there was no basis in the doctrine of mistake for cancelling the settlement.

 

Appeal allowed.

Voting Justices: 
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Full text of the opinion: 

LCA 8925/04

1.     Solel Boneh Building and Infrastructure Ltd

2.     Aryeh Insurance Company Ltd

v.

1.     Estate of the late Ahmed Abed Alhamid deceased

2.     Abed Alhamid Mudib

3.     Hatam Mohammed Halef

4.     Engineer Dov Yahalom

5.     Noga Insurance Company Ltd

6.     Farid Attallah

 

 

The Supreme Court sitting as the Court of Civil Appeals

[27 February 2006]

Before President A. Barak, Vice-President Emeritus M. Cheshin and
Justices D. Beinisch, E. Rivlin, A. Grunis, M. Naor, Y. Adiel

 

Appeal by leave of the judgment of the Haifa District Court (Justice B. Bar-Ziv) on 16 August 2004 in LCA 1494/04.

 

Facts: Ahmed Alhamid died in a work accident. His estate and dependents (the respondents) filed a claim against the appellants for compensation. During the proceedings, the respondents reached a settlement with the appellants, according to which the appellants would pay a sum of NIS 100,000 to the respondents. This settlement was given the force of a court judgment on 22 February 2004. Three weeks later, the Supreme Court gave its judgment in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter ([2004] IsrLR 101). In that judgment the Supreme Court held that if a person is injured as a result of a tort and his life expectancy is shortened (the ‘lost years’), he is entitled to compensation for the loss of earning capacity in those years. The estate is also entitled to compensation for this head of damage, if the life expectancy of the injured person is shortened and he dies during the tortious act or soon after it. This decision overruled Estate of Sharon Gavriel v. Gavriel, which had been given twenty years earlier, and in which it was held that compensation would not be awarded for the ‘lost years.’

Following the decision in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter, the respondents applied to the trial court to cancel the settlement and to amend their statement of claim. Their application was granted. The appellants’ appeal to the District Court was denied. The appellants applied for leave to appeal to the Supreme Court, and leave to appeal was granted.

The questions before the court were whether the ruling in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter should apply retrospectively to events that occurred before that ruling, and if so, whether the respondents were entitled to cancel the settlement because of the subsequent change in the law.

 

Held: (President Barak) As a rule, case law has both retrospective and prospective effect. There is no reason why the ruling in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter should not apply retrospectively.

(President Barak) The question whether the respondents may cancel the settlement because of the (retrospective) change in the law should be resolved with reference to the doctrine of mistake in the law of contracts. The respondents’ mistake, however, was only a mistake in the ‘profitability of the transaction.’ Such a mistake is not a ground for cancelling an agreement, and therefore the settlement could not be cancelled.

(Vice-President Cheshin) As a rule, case law has only prospective effect. Retrospective application of case law is the exception to the rule. The plaintiff has the burden of persuading the court that considerations of justice require the relevant case law to have retrospective application. In the present case, considerations of justice supported the retrospective application of Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter.

(Vice-President Cheshin) The respondents did not make any mistake in real time. The question whether the law would change was not one of the risks that the parties took into account when they made the settlement. Consequently there was no basis in the doctrine of mistake for cancelling the settlement.

 

Appeal allowed.

 

Legislation cited:

Basic Law: Freedom of Occupation.

Basic Law: Human Dignity and Liberty.

Contracts (General Part) Law, 5737-1973, ss. 14(b), 14(d).

Interpretation Law, 5741-1981, ss. 1, 22.

Unjust Enrichment Law, 5739-1979, s. 2.

 

Israeli Supreme Court cases cited:

[1]        CA 140/00 Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [2004] IsrSC 58(4) 486; [2004] IsrLR 101.

[2]        CA 295/81 Estate of Sharon Gavriel v. Gavriel [1982] IsrSC 36(4) 533.

[3]        CFH 4011/04 Jerusalem Municipality v. Estate of Ettinger [2005] IsrSC 59(4) 8.

[4]        HCJ 716/86 Moriah Spas Hotel, Dead Sea v. Tamar Neveh Zohar District Council [1987] IsrSC 41(2) 389.

[5]        LCrimA 1127/93 State of Israel v. Klein [1994] IsrSC 48(3) 485.

[6]        CA 6585/95 M.G.A.R. Computerized Collection Centre Ltd v. Nesher Municipality [1996] IsrSC 50(4) 206.

[7]        HCJ 3648/97 Stamka v. Minister of Interior [1999] IsrSC 53(2) 728.

[8]        RT 8390/01 Axelrod v. State of Israel (not yet reported).

[9]        HCJ 221/86 Kanfi v. National Labour Court [1987] IsrSC 41(1) 469.

[10]     CA 2000/97 Lindorn v. Karnit Road Accident Victims Compensation Fund [2001] IsrSC 55(1) 12.

[11]     HCJ 680/88 Schnitzer v. Chief Military Censor [1988] IsrSC 42(4) 617; IsrSJ 9 77.

[12]     HCJ 2722/92 Alamarin v. IDF Commander in Gaza Strip [1992] IsrSC 46(3) 693; [1992-4] IsrLR 1.

[13]     CA 2622/01 Director of Land Appreciation Tax v. Levanon [2003] IsrSC 57(5) 309.

[14]     HCJ 1113/99 Adalah Legal Centre for Arab Minority Rights in Israel v. Minister of Religious Affairs [2000] IsrSC 54(2) 164.

[15]     CA 376/46 Rosenbaum v. Rosenbaum [1948] IsrSC 2 235.

[16]     HCJ 9098/01 Ganis v. Ministry of Building and Housing [2005] IsrSC 59(4) 241; [2004] IsrLR 505.

[17]     HCJ 19/56 Brandwin v. Governor of Ramla Prison [1956] IsrSC 10 617.

[18]     LCA 2413/99 Gispan v. Chief Military Prosecutor [2000] IsrSC 54(4) 673.

[19]     CA 180/99 Director of Purchase Tax v. Tempo Beer Industries Ltd [2003] IsrSC 57(3) 625.

[20]     CA 3602/97 Income Tax Commission v. Shahar [2002] IsrSC 56(2) 297.

[21]     CA 5/84 Yehezkel v. Eliyahu Insurance Co. Ltd [1991] IsrSC 45(3) 374.

[22]     LCA 1287/92 Buskila v. Tzemah [1992] IsrSC 46(5) 159.

[23]     AAA 1966/02 Majar Local Council v. Ibrahim [2003] IsrSC 57(3) 505.

[24]     CA 110/86 Gevaram v. Heirs of the late Shalom Manjam [1988] IsrSC 42(2) 193.

[25]     HCJ 6055/95 Tzemah v. Minister of Defence [1999] IsrSC 53(5) 241; [1998-9] IsrLR 635.

[26]     HCJ 1715/97 Israel Investment Managers Association v. Minister of Finance [1997] IsrSC 51(4) 367.

[27]     CA 2495/95 Ben-Lulu v. Atrash [1997] IsrSC 51(1) 577.

[28]     CA 3203/91 Azoulay v. Azoulay (unreported).

[29]     CA 4272/91 Barbie v. Barbie [1994] IsrSC 48(4) 689.

[30]     CA 2444/90 Aroasty v. Kashi [1994] IsrSC 48(2) 513.

[31]     CrimA 4912/91 Talmai v. State of Israel [1994] IsrSC 48(1) 581.

[32]     CA 6821/93 United Mizrahi Bank Ltd v. Migdal Cooperative Village [1995] IsrSC 49(4) 221.

[33]     HCJ 5843/97 Bar-Gur v. Minister of Defence [1998] IsrSC 52(2) 462.

[34]     HCJ 6126/94 Szenes v. Broadcasting Authority [1999] IsrSC 53(3) 817; [1998-9] IsrLR 339.

[35]     HCJ 4804/94 Station Film Ltd v. Film and Play Review Board [1996] IsrSC 50(5) 661; [1997] IsrLR 23.

[36]     HCJ 606/93 Advancement Promotions and Publishing (1981) Ltd v. Broadcasting Authority [1994] IsrSC 48(2) 1.

[37]     CFH 7325/95 Yediot Aharonot Ltd v. Kraus [1998] IsrSC 52(3) 1.

[38]     LCA 6339/97 Roker v. Salomon [2001] IsrSC 55(1) 199.

[39]     HCJ 57/67 Gross v. Income Tax Commissioner [1967] IsrSC 21(1) 558.

[40]     HCJ 4157/98 Tzevet, Association of Retired IDF Servicemen v. Minister of Finance [2004] IsrSC 58(2) 769.

[41]     CA 8972/00 Schlesinger v. Phoenix Insurance Company Ltd [2003] IsrSC 57(4) 817.

[42]     CA 1761/02 Antiquities Authority v. Station Enterprises Ltd (not yet reported).

 

American cases cited:

[43]     Kuhn v. Fairmont Coal Co., 215 U.S. 349 (1910).

[44]     Great Northern Railway Co. v. Sunburst Oil & Refining Co., 287 U.S. 358 (1932).

[45]     Linkletter v. Walker, 381 U.S. 618 (1965).

[46]     Chevron Oil Co. v. Huson, 404 U.S. 97 (1971)

[47]     United States v. Johnson, 457 U.S. 537 (1982).

[48]     Griffith v. Kentucky, 479 U.S. 314 (1987).

[49]     James B. Beam Distilling Co. v. Georgia, 501 U.S. 529 (1991).

[50]     Harper v. Virginia Dept. of Taxation, 509 U.S. 86 (1993).

 

English cases cited:

[51]     National Westminster Bank plc v. Spectrum Plus Ltd [2005] UKHL 41; [2005] 4 All ER 209.

 

European Court of Human Rights cases cited:

[52]     Marckx v. Belgium (1979) 2 E.H.R.R. 330.

 

European Court of Justice cases cited:

[53]     Defrenne v. Sabena [1976] E.C.R. 455.

[54]     Deutsche Telekom A.G. v. Vick, Conze and Schroder [2000] I.R.L.R. 353.

 

Indian cases cited:

[55]     Golak Nath v. State of Punjab [1967] 2 S.C.R. 762.

[56]     India Cement Ltd v. State of Tamil Nadu [1990] 1 S.C.C. 12.

[57]     Orissa Cement Ltd v. State of Orissa [1991] Supp. (1) S.C.C. 430.

 

Jewish law sources cited:

[58]     Babylonian Talmud, Rosh HaShana 25b.

[59]     Babylonian Talmud, Bava Batra 21a.

 

For the appellants — J. Asulin.

For respondents 1-3 — G. Tannous, R. Tannous.

For the fourth respondent — T. Tenzer.

For the fifth respondent — Z. Rapaport.

For the sixth respondent — D. Attallah.

 

 

JUDGMENT

 

 

President A. Barak

The Supreme Court decided that a person who is injured as a result of a tort and whose life expectancy is shortened is entitled to compensation for the loss of earning capacity in the years by which his working life expectancy was shortened. His estate is also entitled to compensation for this head of damage, if the life expectancy of the injured person is shortened and he dies during the tortious act or soon after it. This is the ‘lost years’ rule. It was decided in CA 140/00 Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1]. In that case the Supreme Court departed from a case law ruling that had been decided twenty years earlier in CA 295/81 Estate of Sharon Gavriel v. Gavriel [2]. When the judgment was given in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] there was a large number of claims concerning compensation for loss of earning capacity pending in various courts. What effect does the new ruling have on those cases? That is the general question that arises before us. The specific question is what effect does Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] have on a settlement concerning the quantum of damages between an injured person and several tortfeasors that was given the validity of a partial judgment, while the action continued with regard to the relationship between the tortfeasors inter se.

The facts and the proceedings

1.    The deceased Ahmed Alhamid Mudib Abu Sahon was killed in a work accident. An action was filed with regard to his death by his estate and his dependents against the employer, the owner of the site where he worked and the insurers. In the course of the proceedings, the parties, at the recommendation of the court, reached a settlement. According to this, the plaintiffs would be paid a sum of NIS 100,000. The trial would continue with regard to division of the liability between the parties. On 22 February 2004, this settlement — which was called in the court’s decision a ‘procedural arrangement’ — was given the force of a court decision.

2.    On 15 March 2004, judgment was given in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1]. The application for a further hearing was denied (CFH 4011/04 Jerusalem Municipality v. Estate of Ettinger [3]). In consequence, on 5 April 2004 the plaintiffs filed an application to cancel the procedural settlement and to amend the statement of claim. The defendants opposed this. The Magistrates Court (Justice I. Ganon) granted the application. He held that his decision (of 22 February 2004) amounted to a ‘procedural arrangement,’ and was not a ‘partial judgment.’ It was not proper or just to prevent the plaintiffs from cancelling the settlement. The defendants appealed to the District Court. The appeal was denied. It was held (per Justice B. Bar-Ziv) that the decision of the Magistrates Court amounted to a partial judgment. For reasons of justice — and according to case law — it was possible to repudiate this partial judgment. The defendants applied to this court for leave to appeal. We granted the defendants’ application and gave leave to appeal. In view of the importance of the questions that arise before us the panel was expanded.

The questions that require a decision

3.    The appeal before us raises two main questions. First, does Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] apply prospectively only (from now onwards) or does it also have retrospective effect (changing the position in the past)? If Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] has no retrospective effect, it does not apply to the accident in this case, and therefore there is no argument that allows the agreement between the parties to be repudiated. But if Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] does have retrospective effect, the second question arises: this concerns the effect that Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] has on the agreement between the parties. Let us turn to consider the first question.

A.    The temporal application of Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter

Time and law

4.    Does the ruling in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] apply to tortious acts that took place before it was decided? Does it have retrospective effect? The answer to this question lies in the status of time in the law. Indeed, every legal norm applies not only in space but also in time. Against this background, we should consider a wide variety of problems in which time, at the heart of the law, is a common factor. One group of problems concerns laws that apply when the law changes at a certain point in time. These are the problems of intertemporal law (droit transitoire). Within this framework, the question of the retrospective, effective or prospective application of the new law plays a central role (see A. Rodger, ‘A Time For Every Thing Under The Law: Some Reflections On Retrospectivity,’ 121 L. Q. R. 57 (2005); R.H.S. Tur, ‘Time and Law,’ 22 Oxford J. L. Stud. 463 (2002); see also A. Barak, Legal Interpretation (vol. 2, 1993), at p. 609). This is the case with regard to the temporal application of new legislation; it is also the case with regard to the temporal application of new case law — whether this overrules previous case law or whether it determines a new case law ruling. In all of these, the question of the temporal application of the new norm arises. We shall focus on the solution to this question in a case where a new judicial ruling gives a new interpretation to a statute by overruling a previous interpretation. What is the temporal application of the new case law ruling? Does it apply both from this moment onward (prospectively) and also to earlier events (retrospectively)? Or does it perhaps apply only from this moment onward (purely prospectively)? If the latter, what is the law with regard to the case in which the new law is decided: does the new law apply to it (a kind of general prospectivity and a specific retrospectivity)? And does it apply also to all the other cases that are being litigated before the courts? This is not a new question in Israel. There is academic discussion of it in Israel (see G. Tedeschi, ‘Case Law for the Future,’ Essays in Law 25 (1978); E. Kaplan, ‘Prospective Application of Supreme Court Precedents,’ 9 Hebrew Univ. L. Rev. (Mishpatim) 221 (1979); A. Barak, Judicial Discretion (1987), at p. 417; E. Kaplan, ‘Future Application of Supreme Court Precedents,’ Avner Hai Shaki Book 125 (2005)). It arose in the past in several judgments, and several obiter statements have been made on this subject (see HCJ 716/86 Moriah Spas Hotel, Dead Sea v. Tamar Neveh Zohar District Council [4], at p. 392; LCrimA 1127/93 State of Israel v. Klein [5], at p. 504; CA 6585/95 M.G.A.R. Computerized Collection Centre Ltd v. Nesher Municipality [6], at p. 220; HCJ 3648/97 Stamka v. Minister of Interior [7]; RT 8390/01 Axelrod v. State of Israel [8]).

The premise: retrospective and prospective application

5.    The fundamental premise is that a new judicial ruling acts both retrospectively and prospectively (see HCJ 221/86 Kanfi v. National Labour Court [9], at p. 480). Justice Holmes rightly said that ‘Judicial decisions have had retrospective operation for near a thousand years’ (in Kuhn v. Fairmont Coal Co. [43], at p. 372). This is the position with regard to the development of the law within the framework of the common law, and it is also the position where case law interprets a legislative provision (a constitution, statute, regulation), or fills a lacuna in it (for the distinction between these, see A. Barak, ‘The Different Kinds of Judicial Creation: Interpretation, Filling a Lacuna and Development of the Law,’ 39 HaPraklit 267 (1990); A. Barak, Selected Articles (H.H. Cohn and I. Zamir eds., vol. 1, 2000), at p. 755). There are three arguments that support this approach (see Barak, Judicial Discretion, at p. 421): a jurisprudential argument, a constitutional argument and a practical argument.

The jurisprudential argument

6.    The jurisprudential argument is the following: since the court decides the law — whether within the framework of the common law or within the framework of interpreting legislation or filling a lacuna therein — it declares the law. It does not create it. When the court departs from a previous judgment, it is deciding that the erroneous judgment never was the law. The overruling judgment does not create new law. It declares what the law always was. This is the declarative theory of law. It was developed by Blackstone. His well known statement was that:

‘... if it be found that the former decision is manifestly absurd or unjust, it is declared, not that such a sentence was bad law, but that it was not law’ (1 Blackstone, Commentaries 71 (1769)).

The declarative theory of law leads to the conclusion that a judgment that overrules a previous judgment acts retrospectively. If the overruled judgment was never law, and the law was never as declared in the overruled judgment, this means that the judgment that overruled it acts temporally in a retroactive manner. An additional jurisprudential argument is this: when a change in case law is merely prospective and it does not act in favour of the parties in the trial (pure prospectivity), the new case law is an obiter dictum, and it is not binding at all.

The constitutional argument

7.    The constitutional argument that supports the retrospective application of new case law is this: a central element in any democratic constitution is the separation of powers. According to this, the legislative branch enacts statutes, and the judicial branch decides disputes. In enacting a statute, the legislative branch is competent to determine its temporal application. This determination will usually be prospective, for constitutional and other considerations. If the judgment can also determine a prospective application of the case law ruling, it will be indistinguishable from legislation. This was well expressed by Lord Devlin, when he said that if new case law has only prospective application, then it —

‘... crosses the Rubicon that divides the judicial and the legislative powers. It turns judges into undisguised legislators’ (P. Devlin, ‘Judges and Lawmakers,’ 39 M. L. R. 1 (1976), at p. 11).

Preserving the proper separation between the legislative and judicial functions leads to a recognition that the application of legislation is only prospective, but the application of case law is otherwise. A merely prospective change in case law makes the judge into a legislator (M.D.A. Freeman, ‘Standards of Adjudication, Judicial Law, Making and Prospective Overruling,’ 26 Curr. L. P. 166 (1973), at p. 204). In addition to this constitutional consideration of the separation of powers, there is an additional constitutional consideration. As we shall see, various prospective approaches distinguish between the litigant who asked the court to overrule the previous case law, to whom the new case law ruling will apply retroactively, and other litigants, whose cases are being considered before the courts and have not yet been decided, to whom the new case law ruling will not apply. This creates a forbidden discrimination that violates the principle of equality. In America there is an additional constitutional consideration that operates against a merely prospective overruling of the previous case law, and this concerns the constitutional requirement that the courts may only decide ‘cases’ and ‘controversies.’ When the new case law is given only a purely prospective force, that new case law ruling does not decide the dispute before the court; it constitutes an advisory opinion with regard to that case, and it is therefore prohibited.

The practical argument

8.    In addition to the jurisprudential and the constitutional arguments, it is possible to find support for the retrospective application of new case law in several practical arguments. First, it is argued that the ability to give only prospective validity to a new case law ruling that overrules its predecessor releases the judge from the constraints that limit his discretion as to whether to depart from a previous case law ruling or not. According to this approach, the retrospectivity of the case law ruling acts as a barrier against too great a departure from the previous law. When this barrier is removed, there is a fear that the proper framework may be undermined, and that there will be too many departures from previous case law rulings (see J. Stone, Social Dimensions of Law and Justice (1966), at p. 663; P. Mishkin, ‘Foreword: The High Court, The Great Writ, And The Due Process of Time and Law,’ 79 Harv. L. Rev. 56 (1965), at p. 70). Second, there are several systems of merely prospective changes in case law (see Barak, Judicial Discretion, at p. 420, and G. Calabresi, A Common Law for the Age of Statutes (1982), at p. 280). Choosing between these systems is complex. The litigants will usually not know which system the court will choose. As a result, the whole judicial process is undermined. Third, if we choose from among the different systems the one that advocates a purely prospective overruling of previous case law — according to which the new case law does not apply even to the litigant who was successful in his argument that the previous case law should be changed — this will reduce the motivation of litigants to argue that the case law should be changed, since in any case they will not benefit from the change. This is a negative consequence that will lead to stagnation in the development of case law (see R. Dworkin, Law’s Empire (1986), at p. 156). Fourth, often a mere prospective application of the new judicial ruling undermines public expectations of the judiciary. This leads to a loss of public confidence in the judiciary, which should be protected at all costs (see A. Barak, A Judge in a Democracy (2004), at p. 49).

Criticism of the jurisprudential argument

9.    The jurisprudential argument is not convincing. Admittedly, often a judgment only declares the law and does not create it. Similarly, sometimes a previous judgment is absolutely wrong, and it should be overruled retroactively. All of this is correct sometimes, but not always. Sometime the new judgment does create new law, which is appropriate for its time and place. The previous law — which the new judgment overruled — was not absolutely wrong. It may be that it was correct and proper in its time, but now the time has come to change it. In these circumstances, there is no jurisprudential reason not to give the new case law ruling only a prospective application. Take a law that was interpreted in the past in a certain way, and now the court departs from that interpretation and adopts a new interpretation. This overruling is not always based on an original error in the first judgment. It is based on the current needs and values of society. Indeed, interpretation of statutes is dynamic (see A. Barak, Purposive Interpretation in Law (2003), at pp. 200, 412; see also R. Eskridge, Dynamic Statutory Interpretation (1994)). ‘Yet their words remain law’ (see F.A.R. Bennion, Statutory Interpretation: A Code (third edition, 1997), at p. 687). I discussed this in one case, where I said:

‘The statute integrates into the new reality. Thus an old statute speaks to modern man... Interpretation is an ever-changing process. Modern content should be given to the old language. Thus the disparity between the statute and life is reduced. Against this background it is correct to say, as Radbruch did, that the interpreter may understand the statute better than the creator of the statute, and that the statute is always wiser than its creator. This leads to the interpretive approach that is accepted in England, whereby statute should be given an updating interpretation... Indeed, the statute is a living creature. Its interpretation should be dynamic. It should be understood in a way that is consistent with and advantageous to modern reality’ (CA 2000/97 Lindorn v. Karnit Road Accident Victims Compensation Fund [10], at p. 32. See also HCJ 680/88 Schnitzer v. Chief Military Censor [11], at p. 629 {90}; HCJ 2722/92 Alamarin v. IDF Commander in Gaza Strip [12], at p. 705 {16-17}; CA 2622/01 Director of Land Appreciation Tax v. Levanon [13]).

The same is true of the interpretation of constitutions and Basic Laws. These are living documents. A modern meaning should be given to the values enshrined in them. A similar approach applies to the development of common law. Since its inception, it has undergone wide-ranging changes that have created new case law principles that are suited to the needs of the time and place. This was discussed by Lord Nicholls, who said:

‘... judges themselves have a legitimate law-making function. It is a function they have long exercised. In common law countries much of the basic law is still the common law. The common law is judge-made law. For centuries judges have been charged with the responsibility of keeping this law abreast of current social conditions and expectations. That is still the position. Continuing but limited development of the common law in this fashion is an integral part of the constitutional function of the judiciary. Had the judges not discharged this responsibility the common law would be the same now as it was in the reign of King Henry II’ (National Westminster Bank plc v. Spectrum Plus Ltd [51], at para. 32).

In situations where the change in the common law is intended to bridge a gap between the law and life, the old precedent is overruled not because it was originally wrong, but because it is unsuited to the new reality. The declarative theory does not give any proper answer to this situation. Naturally, it is always possible to say that changes sprout forth from the fertile soil of the common law, and that the judge brings out the potential latent in it from theory into practice. Even if this is the case, it involves judicial creation. Just as a new statute, which brings out from theory into practice what is latent in the constitution, constitutes a new creation, so too does a new judicial ruling that springs forth from the soil of the law constitute a new creation. Indeed, the declarative theory is incapable of explaining the entirety of judicial activity. It has passed its time. It is based on a fiction that should not be recognized (see Axelrod v. State of Israel [8], at para. 10). It is to be hoped that though we may have buried it, it will not rule us from its grave (in the words of Maitland on the forms of action: see F.W. Maitland, The Forms of Action of Common Law (1941), at p. 2).

Criticism of the constitutional argument

10. The constitutional argument against the merely prospective application of a judicial ruling is also not convincing. The reason for this is that in the course of deciding a dispute, the court is obliged to determine the law according to which the dispute will be decided. Sometimes this decision is merely a declaration of what already exists. Sometimes this decision creates a new law, whether within the framework of the common law or by means of interpretation or filling a lacuna in legislation. Creating this law constitutes ‘judicial legislation’ (see A. Barak, ‘Judicial Legislation,’ 13 Hebrew Univ. L. Rev. (Mishpatim) 25 (1983); Barak, Selected Articles, at p. 821). This is not ‘legislation’ in the institutional sense. That is solely within the jurisdiction of the legislature. This is ‘legislation’ in the functional sense, since it creates a norm that did not exist in the past. This functional legislation does not violate the principle of the separation of powers. Recognizing it does not blur the boundary between legislation (in its institutional sense) and the administration of justice. Giving only a prospective force to a new case law ruling is an expression of judicial creation. It involves no crossing of the Rubicon that divides legislation from the administration of justice (see the judgment of Justice Cardozo in Great Northern Railway Co. v. Sunburst Oil & Refining Co. [44], at p. 366). With regard to the argument that prospective application of a new case law ruling violates equality, this is true only if we do not adopt the system of the purely prospective change. With the purely prospective system, there is no violation of equality. And as for the other systems, even though they involve a violation of equality, we need to consider whether this violation is a proper one. Equality is not an absolute right. It can be violated for proper purposes by means of proportionate measures (see HCJ 1113/99 Adalah Legal Centre for Arab Minority Rights in Israel v. Minister of Religious Affairs [14]).

The decisive consideration — the practical consideration

11. I have therefore reached the conclusion that the jurisprudential and constitutional arguments are incapable of preventing the court from departing from its previous path in giving the new case law ruling retrospective application. Prospective application, in its various forms, is consistent with the jurisprudential and constitutional status of judicial activity (see P.J. Fitzgerald, Salmond on Jurisprudence (twelfth edition, 1966), at p. 127; K. Diplock, The Courts as Legislators (1965), at p. 17). Indeed, the decision as to whether the court should deprive its new case law ruling, in appropriate circumstances, of retrospective application will not be decided by jurisprudential or constitutional considerations. It will be decided by the proper balance between practical considerations. This was well expressed by Justice Cardozo, when he said that the question of the retrospectivity of a case law ruling —

‘… will be governed, not by metaphysical conceptions of the nature of judge-made law, nor by the fetich of some implacable tenet, such as that of the division of governmental powers, but by considerations of convenience, of utility, and of the deepest sentiments of justice’ (B.N. Cardozo, The Nature of The Judicial Process (1921), at p. 148).

We have mentioned several practical considerations that support the retrospective application of the new judicial case law ruling. What are the practical considerations that support the other approach, that it is possible to deny the retrospective application of a new case law ruling? Which considerations have the upper hand? Let us now turn to consider these questions.

12. Rejecting retrospective application and recognizing only prospective application (in one of its forms) is supported by several practical considerations: first, the need to reject the retrospective application of a new case law ruling arises usually when the court examines the previous case law rule and comes to the conclusion that it ought to overrule it. Notwithstanding, the court is concerned about the damage that overruling it will cause those persons and bodies who have relied on the previous case law rule, and who have regulated their relationships on the basis of this reliance. In such a situation, the court faces the following dilemma: either it must leave an undesirable case law rule as it stands because of the reliance interest, or it must change case law and determine a new and better case law rule in its place, even though this harms the reliance interest). The approach that a change in case law should not be retrospective and should act only prospectively extricates the judge from the dilemma in which he finds himself. It allows him to make a change to an erroneous case law rule and to establish a new case law rule in its place, without harming the reliance interest. Thus security and stability are maintained in addition to adapting the law to social change. We have before us a kind of ‘wonder remedy’ that allows both stability and progress (see Barak, Judicial Discretion, at p. 421, and R.J. Traynor, ‘Quo Vadis Prospective Overruling: A Question of Judicial Responsibility,’ 28 Hastings L. J. 533 (1977), at p. 542).

13. Second, the truth is that several systems of prospective application are recognized (see para. 8, supra). This multiplicity does not lead to complexity or confusion. Within a short time it can be determined in what conditions one prospective system will be adopted and when the court will adopt another system. The ‘supply’ of prospective systems is not large, and it is possible without difficulty to choose the appropriate law in this regard.

14. Third, a merely prospective application of a new case law ruling is consistent with the sense of justice. It allows a new and just ruling to be made, without harming the reliance interest. It averts the need to made a decision — such as the one that President Zamora made with regard to the question of precedents — that ‘between truth and stability — truth prevails’ (CA 376/46 Rosenbaum v. Rosenbaum [15], at p. 254).  It makes it possible to achieve both ‘truth’ and ‘stability.’ Thereby it increases confidence in the judicial system. This confidence will be harmed if a proper change does not take place because of the reliance interest, or if the change does take place and harms the reliance interest.

15. The practical considerations lead to conflicting conclusions. How can we decide between or balance the conflicting considerations? It should be stated immediately that every legal system has decisions and balancing points of its own. This is a product of the strength of the jurisprudential and constitutional considerations in that legal system.  The decision is also affected by the way in which the society understands the judicial role, and its willingness to examine realistic arrangements and practical balances. All of these vary from one legal system to another. They also vary over time within the framework of the same legal system. A good example of this can be found in American law. There the courts of the various states first recognized the prospective overruling of case law as long ago as the nineteenth century (see T.S. Currier, ‘Time and Change in Judge-Made Law: Prospective Overruling,’ 51 Va. L. Rev. 201 (1965)). If found recognition in the Federal courts in the 1960s and the beginning of the 1970s in the judgments in Linkletter v. Walker [45]; Chevron Oil Co. v. Huson [46]). Since the 1980s there has been a significant retreat in this sphere. Today the case law of the United States Supreme Court rejects a merely prospective application of new case law rulings (see United States v. Johnson [47]; Griffith v. Kentucky [48]; James B. Beam Distilling Co. v. Georgia [49]; R.H. Fallon and D.J. Meltzer, ‘New Law, Non-Retroactivity, and Constitutional Remedies,’ 104 Harv. L. Rev. 1731 (1991); Harper v. Virginia Dept. of Taxation [50]; J.E. Fisch, ‘Retroactivity and Legal Change: An Equilibrium Approach,’ 110 Harv. L. Rev. 1055 (1997); B.S. Shannon, ‘The Retroactive and Prospective Application of Judicial Decisions,’ 26 Harv. J. L. & Pub. Pol’y 811 (2003); M. Katz, ‘Plainly Not “Error”: Adjudicative Retroactivity on Direct Review,’ 25 Cardozo L. Rev. 1979 (2004)). The original American approach — the one that recognized the possibility of changing case law prospectively — is accepted in India (see Golak Nath v. State of Punjab [55]; India Cement Ltd v. State of Tamil Nadu [56]; Orissa Cement Ltd v. State of Orissa [57]). The original American approach has also been applied by the European Court of Justice in Luxembourg (see Defrenne v. Sabena [53]; Deutsche Telekom A.G. v. Vick, Conze and Schroder [54]), and the European Court of Human Rights in Strasbourg (see Marckx v. Belgium [52], at p. 353).

16. English law wavered for a long time over the question of the prospective application of new case law (for an analysis of the various positions, see the opinion of Lord Nicholls in National Westminster Bank plc v. Spectrum Plus Ltd [51]). In that case, which was decided only a few months ago, it was held, by a majority, that the question whether to adopt only a prospective overruling of previous case law was within the discretion of the court (ibid. [51], at para. 39). It was held that there might be circumstances in which the court would adopt this approach. Lord Nicholls wrote:

‘... there could be circumstances in this country where prospective overruling would be necessary to serve the underlying objective of the courts of this country: to administer justice fairly and in accordance with the law. There could be cases where a decision on an issue of law, whether common law or statute law, was unavoidable but the decision would have such gravely unfair and disruptive consequences for past transactions or happenings that this House would be compelled to depart from the normal principles relating to the retrospective and prospective effect of court decisions’ (ibid. [51], at para. 40).

In that case it was decided to give the new case law ruling retrospective application, since the conditions for prospective application only were not fulfilled.

17. What is the law in Israel? The fundamental premise is that a new judicial ruling applies both retrospectively and prospectively. Notwithstanding, I am of the opinion that there is nothing in principle that prevents us from recognizing the power of the Supreme Court to give its precedents merely prospective force. The declaratory theory of law has not acquired great strength in Israel; there is no constitutional obstacle that prevents recognizing this possibility. The legal community in Israel would not regard this as judicial activity that is inconsistent with the character of the judicial system. The possibility of adopting this approach was raised in several judgments (see para. 4, supra) and it seems to me that Israeli law is ready to absorb it. Therefore the question is not whether we should recognize this possibility in principle. The answer to this is yes. The question is on what conditions and in what circumstances should we adopt this approach. I shall now turn to examine this question.

Protection of the reliance interest

18. What supports the need to resort solely to a prospective overruling of old case law by a new judicial decision is the reliance interest of individuals and (private and government) bodies who have managed their affairs on the basis of the old judicial ruling. ‘The interest of reliance is like a golden thread that runs through Israeli law’ (HCJ 9098/01 Ganis v. Ministry of Building and Housing [16], at para. 19). Indeed, the reliance interest is one of the most protected interests in the law. This is the position in the sphere of administrative law (see D. Barak-Erez, ‘The Protection of Reliance in Administrative Law,’ 27 Hebrew Univ. L. Rev. (Mishpatim) 17 (1996)). The same is true of private law (see D. Friedman and N. Cohen, Contracts, at p. 151; G. Shalev, The Law of Contracts — General Part: Towards a Codification of Civil Law (2005), at p. 247; see also L.L. Fuller and W.R. Perdue, ‘The Reliance Interest in Contract Damages,’ 46 Yale L. J. 52 and 373 (1936-1937)). The rule of binding precedent is also based, in part, on the protection of the reliance interest (see Barak, Judicial Discretion, at p. 441). The outlook concerning a solely prospective application of a case law ruling that changes the previous law is also derived from the need to protect the reliance interest. Indeed, a retrospective change of the existing law may seriously harm someone who relied on it, to such an extent that it may prevent the change in the law. It follows that the examination of this issue should focus mainly on the reliance interest (see Stamka v. Minister of Interior [7], at p. 746; see also P.J. Stephens, ‘The New Retroactivity Doctrine: Equality, Reliance and Stare Decisis,’ 48 Syracuse L. Rev. 1515 (1998)). Therefore, if the issue is new and has never been decided in the past, it cannot be said that there is a reliance interest that is worthy of protection.  The same is true if the old case law ruling did not in practice create any real reliance, or if the reliance was unreasonable, or if it should not be given any significant weight in view of the issue under discussion and the nature of that reliance. In all of these cases, and in others, we should not give much weight to the reliance factor, and there is a basis for applying the new case law ruling retrospectively (see W.V. Schaefer, ‘The Control of “Sunbursts”: Techniques of Prospective Overruling”, 42 N. Y. U. L. Rev. 631, (1967), at p. 638). Examples of this situation can be found in the following situations: the previous case law was not a decision of the Supreme Court; the previous case law was unclear, and it has been interpreted in different ways; the previous case law was accompanied by opposition and proposed changes; in several obiter statements judges have expressed reservations concerning the previous case law; the previous case law was not known to the parties; the parties relied on the old law but each took the risks that it might be changed (see: Note, ‘Prospective Overruling and Retroactive Application in the Federal Courts,’ 71 Yale L. J. 907 (1962)). In these situations and in many others, anyone who relies on the previous case law takes a risk and it is therefore possible to give the new case law retrospective validity. Indeed, in many cases the change in case law is not a surprise. It does not come — in the language of Lord Devlin — ‘out of a blue sky’ (Devlin, ‘Judges and Lawmakers,’ supra, at p. 10). Justice Cardozo rightly said that:

‘The picture of a bewildered litigant lured into a course of action by the false light of decision, only to meet ruin when the light is extinguished and the decision overruled, is for the most part a figment of excited brains’ (B.N. Cardozo, The Growth of The Law (1924), at p. 122).

See also Schaefer, ‘Precedent and Policy,’ 34 U. Chi. L. Rev. 3 (1966), at p. 15.

Indeed cases of reliance that justify giving only prospective force to a new case law ruling are, in the natural course of events, not many (see Traynor, ‘Quo Vadis Prospective Overruling: A Question of Judicial Responsibility,’ supra, at p. 542).

19. The existence of a reliance interest and a violation thereof are essential conditions for a merely prospective application of a new case law ruling. But they are not sufficient conditions. The court should go on to examine whether it may be possible to overcome the reliance problem without adopting a solely prospective application of the new case law. Indeed, the reliance interest is given broad protection by the law. In those cases where general laws protect the reliance interest, there is no basis for giving the interest any additional protection in the form of prospective application. An example of this is the doctrine of the de facto civil servant. According to this doctrine, when a civil servant has acted in a situation where he believed in good faith that he was acting by virtue of legislation that the court declared to be unconstitutional or unlawful, the acts that he carried out during the period of the illegality should be regarded as valid (see HCJ 19/56 Brandwin v. Governor of Ramla Prison [17], at p. 630). In this situation, validity will be given to the reliance interest by means of the doctrine of the de facto civil servant so that it is not necessary to declare the legislation invalid prospectively. We have before us an example of a broader approach, which concerns relative voidance (see LCA 2413/99 Gispan v. Chief Military Prosecutor [18], at p. 684; D. Barak-Erez, ‘Relative Voidance in Administrative Law: On the Price of Rights,’ Itzchak Zamir Book: On Law, Government and Society 283 (Y. Dotan and A. Bendor eds., 2005)). This doctrine distinguishes between a violation of the law and the relief for the violation. Within the framework of the relief, it is possible to take the principle of reliance into account.

20. Another example can be found in a case where tax was paid by virtue of legislation that was set aside because it was contrary to a Basic Law or to a statute. A restitution of the taxes that were collected naturally harms the reliance interest of the government body that collected the tax. Protection for this interest can be found in the argument that the government body is entitled to rely on the general protection given by the laws of unjust enrichment with regard to unfair restitution (s. 2 of the Unjust Enrichment Law, 5739-1979). To the extent that this protection is available to the government body, this is capable of solving the reliance problem, without it being necessary to determine that the decision concerning the unconstitutionality or the illegality of the tax does not act retrospectively. Indeed, the application of this protection to the restitution of tax payments varies from one legal system to another. In our legal system, no ruling has yet been made in this regard. It has been left undecided on several occasions and in this appeal we shall also not adopt any position on this issue (see CA 180/99 Director of Purchase Tax v. Tempo Beer Industries Ltd [19], at p. 644; CA 3602/97 Income Tax Commission v. Shahar [20], at p. 337).

21. In these examples and in many others, there is no basis for resorting to a solely prospective overruling of previous case law in order to protect the reliance interest, since other legal doctrines are capable of giving sufficient protection to this interest. Naturally, we should examine in each case whether the protection of the reliance interest, which these other doctrines provide, is comparable with the protection that the reliance interest would have been given by virtue of a solely prospective overruling of the previous case law. Sometimes the two are not interchangeable: sometimes the cost of resorting to general doctrines is so great — whether from the viewpoint of the parties concerned or from the viewpoint of the courts — that it is better to give the new case law solely prospective validity.

22. Finally, sometimes there will be a basis for giving retrospective validity to new case law even if this harms the reliance interest. It is well known that this interest does not have absolute force. It should be balanced against the values and the principles that conflict with it. Sometimes the court may think that the considerations that support a change of the law are of greater weight than the considerations that support the old law, and the damage that is caused to the reliance interest by the actual change (see CA 5/84 Yehezkel v. Eliyahu Insurance Co. Ltd [21], at p. 384; LCA 1287/92 Buskila v. Tzemah [22], at p. 172; AAA 1966/02 Majar Local Council v. Ibrahim [23]). Indeed, the determination of the question whether to give a new case law ruling solely prospective validity should take into account all of the considerations relevant to the case; the judge should balance these, by giving weight to the conflicting considerations, in the circumstances of the case before him. In all of this, the fundamental premise is the retrospective and prospective validity of the new case law.

The reliance interest and the law of torts

23. What weight should be given to the reliance interest when case law is changed in the field of the law of torts? In order to answer this question, we should examine each issue on its merits. We should examine to what extent the parties relied on the old case law, and to what extent this reliance is harmed by changing that law. The accepted view in legal literature is that, as a rule, reliance in the field of the law of torts is minimal. This was discussed by Justice Traynor, who said:

‘... neither the tortfeasor nor the victim nurses any reasonable expectations about injury that has yet to occur. When everyone’s daily life is prone to risk, it is hardly realistic to suppose that people are assiduously studying current rules of liability so that they may set out to hit or be hit advantageously’ (R.J. Traynor, ‘The Limits of Judicial Creativity,’ 29 Hastings L. J. 1025 (1978), at p. 1036; see also Traynor, ‘Quo Vadis Prospective Overruling: A Question of Judicial Responsibility,’ supra, at p. 545).

Notwithstanding, even in the field of the law of torts, there is a basis for taking the interest reliance into account. This is especially the case with regard to imposing new obligations that were not recognized in the past. It was precisely in the field of the law of torts that the courts in America first recognized the possibility of a merely prospective overruling of previous case law. They did this in the past in those cases in which the old law did not recognize liability in torts (such as the case law ruling that held that hospitals are immune from liability in tort), whereas the new law recognized liability (by cancelling the immunity). The courts decided that the new case law would only have prospective application, since the hospitals had not insured themselves in reliance on the old law (see Currier, ‘Time and Change in Judge-Made Law: Prospective Overruling,’ supra). Naturally, these considerations do not apply where there is insurance. As a rule, significant weight should not be given to an argument that the scope of the old case law ruling determined the amount of the insurance premiums (R. Keeton, Venturing to Do Justice (1969) 42). There are many different considerations according to which insurance premiums are determined, and the extent of liability under case law is only one of them. In any case, the power of insurance companies to ‘spread the loss’ among all of its insureds reduces their reliance interest. There may, of course, be exceptional cases in which the amount of the compensation has a decisive effect on the insurance, but this is not usually the case.

Should the rule in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter be merely prospective?

24. Against the background of all the considerations that we have discussed, I am of the opinion that there is no real reason why we should not give Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] retrospective force. It will therefore apply both retrospectively and prospectively. It will apply to every tortious act that occurred before it and after it. This is the fundamental premise and there is no reason to depart from it in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1]. With regard to this case, the main reason underlying my approach is that a retrospective application of Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] will not harm the reliance interest to any great degree. Potential tortfeasors and injured parties did not rely on Estate of Sharon Gavriel v. Gavriel [2], which was overruled by Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1], in determining how they would conduct themselves. Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] did not impose new obligations; it only affected the quantum of damages, and here too its effect is not significant. Moreover, the liability of the tortfeasor is usually covered by insurance. Even if the insurance company relied in some way or another on Estate of Sharon Gavriel v. Gavriel [2] in determining the premium, it is capable of absorbing the additional payments for which it will be liable under Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1]. In his discussion of the weight of the reliance interest in the law of torts where there is insurance, Keeton says that the need to protect the reliance interest in this situation is small, since the harm to the reliance interest of a specific insurer or a specific insured is less serious. Keeton also says that as a rule it is difficult to determine the effect of a legal doctrine on the amount of the premium (see Keeton, Venturing to Do Justice, at p. 42). In any case, no figures were brought before us to show that this approach does not apply with regard to the ‘lost years.’ The burden in this regard lies with the party that argues for a merely prospective application of the new case law.

25. Moreover, Estate of Sharon Gavriel v. Gavriel [2] has passed its time. In England, Canada, Australia and the United States the approach that was expressed in Estate of Sharon Gavriel v. Gavriel [2] has not been accepted. In several countries express statutory provisions have been enacted in this regard (see Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1], at pp. 528 {143} et seq.). It has been criticized in case law (see the opinion of Justice H. Ariel in CA 110/86 Gevaram v. Heirs of the late Shalom Manjam [24], at p. 199). Criticism was also levelled at it in Israeli professional literature (see D. Katzir, Compensation for Personal Injury (fifth edition, 2003), at p. 381; A. Porat, ‘The Law of Torts,’ Israel Law Year Book 1991, 221 (A. Rosen-Zvi, 1991), at p. 250). In the draft civil codex, the Civil Law (2004), it was proposed that it should be abandoned (see section 544). Justice Rivlin in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] pointed to ‘a change in the legal climate,’ which led to the need to change Estate of Sharon Gavriel v. Gavriel [2] (see Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1], at p. 559 {177}). A change in this climate naturally affects the actual reliance, its strength and its reasonableness. Against this background, it would appear that the weight of the reliance interest of insurers on Estate of Sharon Gavriel v. Gavriel [2] does not justify giving only prospective force to Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1]. In any case, we do not have any reason to assume that the financial burden that Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] is likely to impose on insurance companies falls outside the scope of the professional risks for which insurance companies should be liable.

26. In so far as the retrospective operation of Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] harms the reliance interest, we should turn to the general laws that protect this interest, in order to find a remedy in them. Therefore we should allow parties in the trial court — who filed their written pleadings before the judgment in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] — to amend them as a result of that decision. We should also allow arguments in this matter to be raised in an appeal, as long as the judgment has not become final.

27. Before we conclude this topic, we would like to point out that our approach with regard to a merely prospective change is unrelated to and does not affect those cases in which it is held that a law is unconstitutional and it is also held that the unconstitutionality will come into effect at a future date (see HCJ 6055/95 Tzemah v. Minister of Defence [25], at p. 284 {687}; HCJ 1715/97 Israel Investment Managers Association v. Minister of Finance [26]; see also Y. Mersel, ‘Suspending a Declaration of Voidance,’ 9 Mishpat uMimshal (2006) 39). In all of these cases, the declaration that the provision of statute was void acted retrospectively. All that was decided was that the declaration concerning the retrospective voidance should be suspended temporarily. We therefore adopted an approach that applied the new case law rule retrospectively, by attaching a ‘time fuse’ that postpones the time when the declaration comes into effect. The considerations underlying this approach are fundamentally different from the considerations that we have discussed in our opinion.

B. The effect of Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter on the agreement between the parties

28. The estate and the dependents made an agreement with the tortfeasors that a certain amount of compensation would be paid to end the dispute between them. This agreement was given the force of a court decision. The agreement was made and was given judicial force before judgment was given in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1]. Now that case has come and changed the law of compensation retrospectively. According to the new law, it is possible that the estate and the dependents are entitled to additional compensation. Against this background, the question arises as to whether the estate and the dependents are entitled to repudiate the agreement, in view of the change in case law that was caused by Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1]. This is the second question before us in this appeal. The answer to this question should be found in the law of mistake in contracts. Admittedly, the agreement between the parties was enshrined in a judicial decision, but the law is that for the purpose of the rescission of such an agreement on the ground that it was tainted by a mistake, we should refer to the law of contracts (see CA 2495/95 Ben-Lulu v. Atrash [27]; CA 3203/91 Azoulay v. Azoulay [28]; CA 4272/91 Barbie v. Barbie [29], at p. 699). Thus the question is whether the estate and the dependents have a claim that they were mislead into thinking that the law in their case had been determined in Estate of Sharon Gavriel v. Gavriel [2] and therefore ‘the court may... cancel the contract, if it thinks that it is just to do so’ (s. 14(b) of the Contracts (General Part) Law, 5737-1973).

29. In our opinion, the answer is no. The mistake of the estate and the dependents related to ‘the profitability of the transaction’ and such a mistake does not empower the court to cancel the contract (s. 14(d) of the Contracts (General Part) Law). Indeed, each of the parties to the agreement took upon himself the risk that in view of ‘the change in the legal climate,’ there might be a change in the law of compensation in so far as the lost years are concerned. In such circumstances, there is no ‘operative’ mistake (see Friedman, ‘Contractual Risk and Mistake and Misrepresentation with regard to Profitability,’ 14 Tel-Aviv University Law Review (Iyyunei Mishpat) 459 (1989), at pp. 466-471). This was discussed by Justice Tz.E. Tal:

‘In settlements the parties take upon themselves the risk concerning the legal position. No party can be certain that he will win the case, and even if he wins, perhaps it will not be worth his time and costs, so he therefore makes a settlement. Moreover, the party making a settlement takes upon himself the risk that the law will change retroactively, and on the basis of this knowledge he settles’ (CA 2444/90 Aroasty v. Kashi [30], at p. 527).

In the same spirit, D. Friedman and N. Cohen said:

‘It is assumed that the parties to the settlement take upon themselves the risk of new case law, including that this may change the law retroactively’ (Friedman and Cohen, Contracts (volume 2, 1997), at p. 729).

Indeed, not only the estate and the dependents, but also the tortfeasors (and the insurance company that stands behind them) cannot repudiate the contract that they made because of a retroactive change in the law of compensation. Each of the parties took upon himself the risk that the new law may increase or reduce the compensation.

The appeal is allowed. The decision of the Magistrates Court (of 29 April 2004) and the judgment of the District Court are set aside.

 

 

Justice Y. Adiel

I agree with the opinion of President A. Barak.

 

 

Vice-President Emeritus M. Cheshin

I have read the opinion of my colleague President Barak, and it seems to me like a miniature that contains everything with unbelievable detail. My colleague presents the complex subject of ‘prospectivity-retrospectivity’ clearly and straightforwardly, and this presentation makes it easier for me to present a slightly different version from my colleague’s version, even though I agree with his final conclusion.

Opening remarks

2.    My colleague says (in para. 5 of his opinion; see also para. 17) that in Israeli law ‘The fundamental premise is that a new judicial ruling acts both retrospectively and prospectively,’ and after examining and clarifying the issues on their merits, he comes to the conclusion that the new case law ruling that was determined in this matter ‘will... apply both retrospectively and prospectively. It will apply to every tortious act that occurred before it and after it. This is the fundamental premise and there is no basis for departing from it...’ (para. 24 of the opinion). With regard to these statements I would like to make two comments before I discuss the heart of the matter.

3.    First, even though my colleague speaks of a new case law rule that acts ‘both retrospectively and prospectively,’ the real interpretation is that according to his understanding the new case law acts retrospectively. After all, no one disputes that according to all approaches a new case law ruling operates prospectively. My colleague wishes therefore to establish a presumption — albeit a rebuttable presumption — that a new norm which is determined in case law and overrules a norm that preceded it is valid retroactively; that it applies almost automatically to acts that were done in the period when the old norm that was overruled prevailed. In this matter I disagree with my colleague, since in my opinion a new norm that is determined in case law will apply to events that take place after it, whereas its applicability to events in the past will be the exception. The application of a new norm will therefore be prospective, and someone who wishes to apply it retrospectively — to past cases — will have the burden of proving that it is right and proper to apply that new norm to acts that were done when the previous norm prevailed and in reliance on its existence. Moreover, as I shall explain later on in my remarks below, my opinion is that determining a sweeping retrospective rule is inconsistent with the varied character of the law, and we know that when we are dealing with the retrospective application of a norm, civil law cannot be compared to criminal law, the law of contracts cannot be compared to the law of torts, and even one area of the law of torts cannot be compared to another area of it. Each area of the law should be examined separately, and the determination of a uniform rule will not be successful.

Second — and this is the main point — when President Barak says that ‘the fundamental premise’ is that a new case law ruling acts retrospectively and prospectively, my colleague is relying on the remarks of Vice-President Miriam Ben-Porat in HCJ 221/86 Kanfi v. National Labour Court [9], at p. 480). But to the best of my knowledge, case law has not until now considered in depth the question that is now before us — the question of the ‘prospectivity-retrospectivity’ of the case law rulings of the Supreme Court — and since the panel hearing this case is an expanded panel, I think that it is not right to determine a ‘fundamental premise’ for the voyage of inquiry and interpretation on which we are embarking. If this is true as a rule, it is certainly true in view of the fact that the common law has been influenced considerably, at its roots, by Blackstone’s theory that the courts do not create law but merely reveal it. As we know, there were reasons for this theory, and these reasons are not accepted by us today. See also the penetrating remarks of Prof. Tedeschi in his article ‘Case Law for the Future,’ which was published in his book Essays in Law (1978), at p. 25 (the article is also mentioned in the remarks of Vice-President Ben-Porat, in Kanfi v. National Labour Court [9]).

My opinion is therefore that we are starting without any premise, and what we write will form a first impression.

4.    At the outset I should say that, subject to what we will write below, I agree with my colleague that jurisprudential arguments, a priori legal doctrines and constitutional arguments do not have the power to decide the matter. My colleague considered these arguments and I agree with his opinion in its entirety (see also the remarks of Benjamin Cardozo cited in para. 15 below). But the question that we are called upon to decide is not which considerations will not decide the matter but which considerations will decide the matter. My colleague is of the opinion that practical considerations should prevail, and I will address these. Notwithstanding, I will add, as we shall see below, that the concept of practical considerations assumes, self-evidently, basic principles of law, which are themselves also based, inter alia, on practical considerations.

The relevant question

5.    The question that I intend to answer is this: the Supreme Court makes a case law ruling — as in our case — on an issue that is mainly found in the field of case law, i.e., an area that has not been regulated expressly in statute. Years later the court once again considers the same issue, and after considering the issue, it overrules the original case law ruling. What is the law that applies to events that occurred between the first case law ruling and the second one, which come before the courts for a decision after the second ruling? Does the law that prevailed at the time of the event — i.e., the first case law ruling — apply, or does the law provided in the new ruling apply? We should note, and we will discuss this further in our remarks below, that we have presented the question that is troubling us on a (relatively) low level of abstraction. We are not speaking in general of a case law ruling made by the court — as to whether it merely acts prospectively or whether it also acts retrospectively — but of a ‘common law’ ruling only. Indeed, we could lower the level of abstraction and restrict our remarks to the law of torts, but for reasons that will become clear in our remarks below, we prefer to consider the question in the way that we have presented it.

Past events and retrospective norms

6.    Events in the past are different from those in the present (which immediately becomes the past) and those in the future. The past is frozen in time and cannot be changed. That is how things are in the physical world and this is how things are in the normative world. And if someone asks — what, then, is a retrospective norm? — we shall answer as follows: a retrospective norm is a norm that, once it comes into effect, means that we no longer judge the past in accordance with the norms that prevailed when the events occurred but in accordance with that norm. We discussed the past, norms that apply to the past and questions that concern these in CrimA 4912/91 Talmai v. State of Israel [31], at pp. 619-620, and this is what we said:

‘... We are unable to change the past (to the regret of some and to the relief of others). Acts that were done, were done; omissions that were committed, were committed; events that occurred, occurred; vows that were made, were made; vows that were broken, were broken. All of these are as if they froze on the spot and became stone, and what has been done cannot be undone. We are incapable of doing anything other than describing and recording things that have happened — or that have not happened — but we are unable to change them. The freedom of choice and selection remains only for the future, but as to the past the choice has already been made, and the choice and selection — as choice and selection — are no more.

This is the case in the physical world and it is also the case in the world of norms, in the world that we have created and that is the product of the human spirit. Norms that existed in the past — including principles and rules of law — cannot be changed retrospectively: what was, was, and what was not...

What then is a retrospective norm, and what is a law that acts retroactively? Do these not have the power to change the past, at least in the world of norms? … Our answer to the question is no. This is what we say: the meaning of a norm that is supposed to apply retroactively is this, that from the day on which the norm begins, and thereafter, we shall no longer judge cases from the past in accordance with the norms that originally applied to them but as that norm directs us… All norms are prospective, by their very definition; they look to the future. But some of them also look to the past with regard to their application in the future to acts or omissions in the past…’

Thus, as a premise for our deliberations, the past is like Lot’s wife, whom we cannot return to life. But this is not the case in the normative sphere: if we only wish it, we can change in the future our attitude to what happened in the past. But if this is what we want, we will need to explain why and wherefore we wish to ignore what actually happened in the past and the norms that applied at the time of the event, and to apply to the past, from now on, different norms from those that prevailed at the time of the event.

7.    Every act, every omission, every transaction and everything else that has legal significance is done, or not done, within the framework of a certain legal system at a given time and place. The moment that those things come into the world certain rights and duties are formed and created. Those things are born into a certain legal system, the legal system that surrounds them, and it also gives them a certain character, a certain ‘status.’ That system of rights and duties is born, one might say, with a certain genetic-legal character. Physically that system cannot be changed. Normatively, in the future, it can be changed, and this is within our power. In CA 6821/93 United Mizrahi Bank Ltd v. Migdal Cooperative Village [32], I mentioned the statement that Parliament in Westminster can do everything apart from turn a woman into a man and a man into a woman, and I commented on that statement (ibid. [32], at p. 527):

‘This statement is, of course, imprecise. If the author’s intention is that Parliament does not have the power to make a man a woman and a woman a man — taking the words literally — then the remarks are certainly correct. But then they have no significance whatsoever, since in the same way Parliament does not have the power to move a pencil from one side of the table to the other. Parliament — as such — does not concern itself at all with physical actions, and it does not have the power to make physical changes in the world about us directly. Parliament only concerns itself with norms and normative activity, and it is in this field that it has power and authority. If the intention of the author is therefore that Parliament is “unable” — from a normative point of view — to make a woman a man and a man a woman, it is obvious that the statement is incorrect. In the wonderful world of norms — a world that cannot be perceived by the five senses but rules our lives — the Knesset “can make” a man a woman and a woman a man. It is a separate question whether those persons to whom the norms are supposed to apply will abide by them. That question, it need not be said, falls outside our jurisdiction.’

(See also HCJ 5843/97 Bar-Gur v. Minister of Defence [33], at p. 473). I went on to say in Ganis v. Ministry of Building and Housing [16], at para. 38 of my opinion:

‘And so, in the creation of norms in the world of norms, Parliament is all-powerful. Parliament does not have — nor did it ever have — a surgeon’s scalpel that can draw blood. But it had, has and always will have a normative surgeon’s scalpel.’

Indeed —

‘From the viewpoint of the legislation, in and of itself — or we might say, from a merely normative viewpoint — there is no difficulty in this. Just one stroke of the pen, and a statute that is enacted today carries itself into the past at the whim of the legislator. Such is the act of legislation’ (ibid. [16], at para. 29 of my opinion).

And as I went on to say (ibid.):

‘Therefore a kind of dichotomy arises: reality does not allow us to change events in the past, but from a normative point of view we find legislation that seeks to take control of events in the past that were originally governed by a different law.’

8.    But as long as no change is made to a norm, the norm that prevails at the time when the event occurred is the norm according to which the event will be judged, and it will determine which rights and obligations were created and what is the reciprocal relationship between them. This is true of the law and it is also true of social customs, social ethics, human behaviour and interpersonal relationships between human beings. Every act and all conduct is judged according to its time and place. An ‘enlightened’ emperor is enlightened relative to his time and the times that preceded him. It cannot be otherwise. It would not be right to judge — favourably or unfavourably — persons in the past and acts in the past with the tools that we have today. ‘Jephtah in his generation is like Samuel in his generation’ (Babylonian Talmud, Rosh HaShana 25b [58]).

9.    Everyone agrees without exception that the legal status of acts and omissions that have legal significance should be determined, first and foremost, in accordance with the law that prevailed at the time the act or the omission was committed. This consensus is also the source of the doctrine of acquired rights. In the words of s. 22 of the Interpretation Law, 5741-1981:

‘Qualifications to the power of cancellation

22. The cancellation of a law is not capable of —

(1) reviving something that was not valid at the time when the cancellation came into effect;

 

(2) affecting an earlier act of the law that is cancelled or something that was done thereunder;

 

(3) affecting a right or an obligation under the cancelled law and a sanction for an offence against it.

Here, then, is the principle of prospectivity: a new law is valid from the date of its commencement and thereafter, and it follows from this that when a later law repeals an earlier law, the repeal does not affect rights and obligations (in the broad sense of these concepts) that came into existence by virtue of the previous law. This is, of course, ‘if there is nothing in the matter under discussion or in its context that is inconsistent’ with this provision (s. 1 of the Interpretation Law), i.e., this rule will not apply where the new law itself says that it applies retroactively (on the self-evident assumption that the retroactive application was done lawfully).

This fundamental assumption, that the operation of a statute is prima facie prospective, gives expression to our intuitive feeling and the sense of fairness that is innate in us that this is how it should be. As we said in Talmai v. State of Israel [31], at p. 621:

‘The doctrine concerning “acquired rights” is an effective tool in the law, and usually it gives legal expression to the intuitive feeling of the expert jurist and the sense of fairness innate in us; moreover, all of these are consistent with public order and public security. A contract that is made and that is binding under the law that was in force when it was made will bind the parties to it even if the law, and with it the preliminary conditions for the making of a contract, is subsequently changed (subject to public policy); a tort that was done does not cease to be a tort merely because after the act that particular tort was repealed, and vice versa: an act that did not amount to a tort when it was done will not become a tort merely because after the event the legislature decided that such an act would constitute a ground for a tort; and so on and so forth.’

This is the situation with regard to rights and obligations that have arisen from within Israeli law. It is also the case with regard to rights and obligations that have arisen from within a legal system outside Israel, where that legal system is a legal system to which the rules of private international law that prevail in Israel refer. This is the case with regard to the existence, or the non-existence, of a right or an obligation, and this is the case with regard to the scope of a right or an obligation. This is the theory of acquired rights, even though this theory is capable of making us dizzy by its circular nature (Talmai v. State of Israel [31], at p. 622). We should also add this: a recognition of rights and liabilities under the law that prevailed at the time of the act or omission is not only required by common sense and logic, but this determination, and this alone, is capable of introducing security into practical life. This is how people acquire rights and this is how obligations are imposed on them. This is how people acquire immunity, etc..

10. This, therefore, is the first rule of legislation — the rule of prospectivity. A statute has, in principle, prospective application; its purpose is to create rights and liabilities for the future. And even though it is possible to give a statute retroactive application (subject to the general restrictions of the law), someone who argues this has been done has the burden of proving it.

All of this concerns legislation. What is the position with regard to case law?

A norm determined in case law

11. A long time has passed since we abandoned Blackstone’s theory that the courts merely ‘reveal’ law and do not ‘create’ law. We do not need to look far, for this can be seen in our case: in the earlier case of Estate of Sharon Gavriel v. Gavriel [2] the court created law, and this is also what happened in the later case of Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1]. This is true of every judgment of the Supreme Court, especially of judgments that knowingly and intentionally determine case law rules, whether they are rules that have a larger effect or rules that have a smaller effect. Case law in a judgment, whether it is an important case law ruling or not, whether it is mainly declaratory or it is mainly constitutive, is case law that is created on the date of giving the judgment. On that date the right of the litigant is created de facto. On that day the case law rule is made. In judgments and decisions made by the court, it creates law (‘judicial legislation’) and rights, and in principle there is no reason why I should distinguish between a system in which a statute repeals a statute and a system in which case law overrules case law. Just as when a new statute repeals an old statute the new law does not — prima facie — affect rights and obligations that were created by the old statute, so too when case law overrules case law the new case law does not — prima facie — affect rights and obligations that were created by the old case law. Subject to what we shall say below, there is no difference — prima facie — between statute and case law, whether it is from the viewpoint of practicalities, the viewpoint of justice, the viewpoint of social ethics or any other viewpoint. A norm is cancelled by a later norm, and the same logic that applies in the one case should also apply in the other case.

12. As in all the literature that has been written on the subject of retrospectivity, my colleague the president also raises the element of reliance (which is a close relative of the doctrine of acquired rights) as an element that support the principle of prospectivity. I agree with his remarks, provided that we realize that we are not speaking of a specific or an individual reliance, in a particular case, but of an element of ‘constructive’ reliance. We are speaking of a phenomenon of reliance that derives from an examination of the conduct of human beings; a reliance that originates in experience that is acquired in practical life; a reliance that is based upon the ordinary person and the ordinary case. This extralegal element underwent a process of crystallization, its essence was formulated into a legal rule, and from the time it was formulated the rule prevails and we no longer need to ask the question whether, in one specific case or another, the element of reliance actually occurred. In other words, the element of ‘constructive’ reliance led to the creation of a rule in the law, and it can be said — and this is what we do say — that today we have an institutional rule according to which the application of norms in the law — whether in statute or in case law — is prospective. The meaning of this is that a new statute or a new case law ruling does not purport to affect rights and liabilities that arise and were created by the law or case law that prevailed and existed before the new statute or case law; this, of course, is subject to the exception that we may decide and determine that in the circumstances of a certain case or a certain type of case, the application of a certain norm will be retroactive, and for what period of time it will apply retroactively.

13. To summarize this far, we can say the following: rights and obligations exist by virtue of the legal system; where the court decides a certain rule, rights and obligations, within the scope of that rule, exist by virtue of that rule. The case law that was decided is the law of the state — there is no other law of the state — and everyone is supposed to act accordingly. And if at a later date the court considers the ruling and overrules it, the new case law is valid from the date on which it was decided. The new case law ruling does not, prima facie, affect rights and obligations that were created by virtue of the old law. And if someone argues that the new case law acts retrospectively and that it can change or cancel rights or liabilities that were created and exist by virtue of the old case law, the person making that argument has the burden of justifying and explaining why and how the new case law is capable of cancelling rights and liabilities that were created and exist in accordance with the old law. See also and cf. A. Barak, Judicial Discretion (1987), at para. 283, the excellent article of Dr. E. Kaplan, ‘Prospective Application of Supreme Court Precedents,’ 9 Hebrew Univ. L. Rev. (Mishpatim) 221 (1979), and her revisiting of this article: ‘Future Application of Supreme Court Precedents,’ Avner Hai Shaki Book, 4 Mozenei Mishpat (Netanya Law Review) 125 (2005). I think that Dr Kaplan and I both travel along the same route, each of us in his or her own way.

14. Hitherto I have discussed one half of the picture. The other half, which is relevant to the current case, concerns the question of the application of a norm retrospectively. In so far as we are speaking of statute, the question of its retrospective application will be decided and determined by interpreting the statute and on the basis of the assumption that the statute satisfies the constitutional tests (in our legal system — satisfies the tests of the Basic Law: Human Dignity and Liberty and the Basic Law: Freedom of Occupation). Thus, if the statute is intended by the legislature to be retrospective, i.e., to change in the future rights and obligations that were created by the law that prevailed before the statute, and this designation arises from its interpretation in accordance with the accepted rules of interpretation, then such will be the case. The question that we are asking concerns the status of new case law that overrules previous case law. Can the new case law have retrospective effect? In other words, can case law in the future retroactively change rights that were acquired and obligations that were imposed under the previous law?

15. It is plain and simple that in the absence of any statute that tells us otherwise — and there is no statute in this regard — the question of the retrospective application of case law is also a question of case law. How then should we decide the matter? At this crossroads, we shall find it difficult to draw an analogy from ‘statute repeals statute’ to ‘case law overrules case law.’ The reason for this is that there are many different considerations that lead the legislature to enact or to grant retroactive application to a statute and these include considerations that by their very nature are foreign to the way in which a court works. In the words of R.J. Traynor, in his article ‘Quo Vadis Prospective Overruling: A Question of Judicial Responsibility,’ 28 Hastings L. J. 533 (1977), at pp. 537-538:

‘… In the legislative process there is neither beginning nor end. It is an endless free-wheeling experiment, without institutional restraints, that may have rational origins and procedures and goals or that may lack them…’

The legislature therefore has a broad horizon of considerations. The court is different. Its considerations are restricted to the world of the law, and they are mainly considerations of justice, reasonableness and utility.

In his book, The Nature of the Judicial Process (Yale University Press, 1921), Benjamin N. Cardozo addressed the question whether we should distinguish — for the purpose of prospectivity-retrospectivity — between case law that changes previous case law concerning the validity of statute (from a constitutional point of view), case law that changes previous case concerning the interpretation and scope of a statute and case law that changes previous case law concerning the interpretation or scope of a common law rule. He said in this regard (ibid., at pp. 148-149):

‘… Where the line of division will some day be located, I will make no attempt to say. I feel assured, however, that its location, wherever it shall be, will be governed, not by metaphysical conceptions of the nature of judge-made law, nor by the fetich of some implacable tenet, such as that of the division of Governmental powers, but by considerations of convenience, of utility, and of the deepest sentiments of justice.’

It follows that since the considerations of a legislator in applying a statute retrospectively are different from the considerations of a court in applying case law retrospectively, we will find it difficult to draw an analogy from statute to case law.

16. The main difficulty that stands in our way in applying case law retrospectively lies in those rights that have been acquired and those expectations that have arisen as a result of the previous case law — rights and expectations in the broad sense of these concepts — which the new case law wishes to cancel or restrict. At the time of the event, the law of the state was the original case law, and now we are seeking not to apply to the event that law of the state, but rather case law that was determined later and that overruled the previous case law. We should not take this injury lightly, since it is capable of completely changing legal relationships to the point of causing an injustice. As Lord Diplock said in a lecture in 1965 on the subject of ‘The Courts as Legislators’:

‘… judge-made law… is in theory retrospective. A precedent which reverses or modifies a previous precedent is applicable to all such cases which are tried subsequently even though they arise out of acts done before the new precedent was laid down. This is unjust, and because it is unjust it is itself a factor which makes the courts more hesitant than they would otherwise be to correct previous errors or to adapt an established rule of conduct to changed conditions. And yet the rule that a new precedent applies to acts done before it was laid down is not an essential feature of the judicial process. It is a consequence of a legal fiction that the courts merely expound the law as it has always been. The time has come, I suggest, to reflect whether we should discard this fiction’ (cited in Traynor, ‘Quo Vadis Prospective Overruling: A Question of Judicial Responsibility,’ supra, at p. 535, note 7).

See also the remarks of Lord Nicholls in National Westminster Bank plc v. Spectrum Plus Ltd [51].

17. The conclusion that inevitably follows is therefore that where case law ruling A prevails and subsequently case law ruling B overrules it, we need a substantial reason of great weight in order to agree to apply case law ruling B retrospectively to an event that occurred when case law ruling A was in force, i.e., to an event that occurred after case law ruling A and before case law ruling B. When we consider that the main purpose of the court is to do justice, we will realize automatically that the substantial reason of great weight that tells us to apply the new case law retrospectively also needs to be a reason that is based entirely on considerations of justice. Because if that reason is not entirely based on considerations of justice, it will not have the strength to overcome the premise that an event that occurred when a certain case law ruling was in force ought to have its legal character determined by that case law. This is what ought to happen, and this is how we ought to act. This justice that we should seek may be an individual, specific justice, between a plaintiff and a defendant, and it may be a justice that applies to a whole branch of law. The greater the requirements of justice, the greater the retrospectivity. But we must find justice, which is the force motivating the decision to apply the case law retrospectively.

18. We said at the beginning of our remarks (in para. 4) that we would only consider in this opinion of ours the type of case that is before us, i.e., a case law ruling that overrules a case law ruling in the field of case law (the Israeli version of common law). This is what we said, and for good reason. The reason for this is that this field of ‘case law overrules case law’ extends to various branches of the law and to very different types of cases. It is so wide in the areas that it applies that it would not be right and proper to speak of an all-embracing formula that is supposed to extend to all the different kinds of case. If we find an all-embracing formula of this kind, its wording will be so general and so diluted that we will be unable to make use of it as a tool for examining and considering cases. Indeed, the less the wording is fine-tuned, the greater the erosion of the mechanisms of scrutiny and wisdom.

19. We can find an analogy to our case in the subject of the freedom of expression. Freedom of expression, as we have said elsewhere (HCJ 6126/94 Szenes v. Broadcasting Authority [34], at p. 854 {384}), is not monolithic. It protects different kinds of interests, some of which are interests of great weight and some interests of little weight, and it would not be right and proper for us to give equal protection and equal treatment to all of these interests:

‘… the freedom of expression (like the freedom of creation) is not monolithic; it is a kind of federation, a federation of rights and interests. There are historical chronicles and there are speeches; there are commentaries and there is fiction and poetry; there is political comment and there is commercial advertising, there are marches and there are demonstrations, there are plays and there are films. Each of these methods of expression reflects a certain interest, and not all the interests are the same. Thus, for example, commercial advertising will not receive — and should not receive — the same protection as historical chronicles. It follows that instead of speaking of the freedom of expression in general, we ought to select carefully from the whole gamut of freedom of speech the aspect that is relevant. We are not talking of mere labels — fiction or historical chronicles, a poem or a demonstration. We should investigate to the very roots and do our very best in order to establish the nature of the interest that seeks protection — the essence and the substantial content of the right presented before the court.’

See also HCJ 4804/94 Station Film Ltd v. Film and Play Review Board [35], at p. 689 {57}; HCJ 606/93 Advancement Promotions and Publishing (1981) Ltd v. Broadcasting Authority [36], at p. 25; CFH 7325/95 Yediot Aharonot Ltd v. Kraus [37], at p. 78. Indeed, were we to regard the interest of freedom of expression as a monolithic interest, then we would be mixing together a large number of different ingredients. For everyone will agree — even the most ardent supporters of the freedom of expression — that political comment cannot be compared to commercial advertising.

20. Our case is like the case of freedom of expression, because the issue of ‘case law overrules case law’ is not monolithic and is not made of one material only. Thus, for example, the relevant considerations in a criminal proceeding are different from the relevant considerations in a civil proceeding, and any child will realize this. It is not at all surprising, therefore, that in the article of Richard H. Fallon and Daniel J. Meltzer, ‘New Law, Non-Retroactivity, and Constitutional Remedies,’ 104 Harv. L. Rev. 1731 (1991), the authors speak separately of the question of retroactivity in criminal cases, of limited immunity in constitutional torts cases and in proceedings to impose taxes. Moreover, they discuss separately the various approaches of the Supreme Court on the question of retroactivity in criminal cases in the time of Chief Justice Warren and in the time of Chief Justice Rehnquist (for the doctrine that prevailed in the time of Chief Justice Warren, see also: M. Cheshin, ‘Further on the Reassessment by the Income Tax Commissioner,’ Tax Quarterly, 1968, at p. 3). Moreover, civil law is also not monolithic. Thus, for example, the law of contracts is different from the law of torts, and the factor of reliance — as a factor that runs through the length and breadth of the law — is of prime importance in the law of contracts, whereas it is of secondary importance in the law of torts. Possibly we may even distinguish — in the field of torts — between torts involving property damage and those involving personal injury. The same is true with regard to the question whether in the sphere of ‘case law overrules case law’ the same rule should apply in a common law matter, i.e., in a matter than is not expressly regulated in statute; in a matter of declaring a certain statute to be unconstitutional and therefore void; and in a matter that concerns the interpretation and scope of a statute. All of these cases, and others too — so Benjamin Cardozo taught us (see para. 15, supra) — will be governed by the same basic considerations: justice, utility, etc., but when a specific case is brought before us in the field of ‘case law overrules case law,’ we have the burden of investigating the nature of the matter thoroughly. And we shall decide the law only after examining the specific force of the competing interests.

21. Moreover, as we have said above, case law that has been made becomes the law of the state, and therefore it is supposed to guide people in their actions. Even if it is later held that a case law decision in the past was made in error, that case law was still the law of the state until it was overruled. The Rabbis of the Talmud have already taught us that ‘an error, once made, has effect’ (Babylonian Talmud, Bava Batra 21a [59]). The same is true of a case law ruling that is made (case law A) and that the court later decides to overrule (case law B). This is what has happened in our case; the decision in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] has overruled the decision in Estate of Sharon Gavriel v. Gavriel [2]. The question that arises concerns the interim period, namely what is the law concerning those events that took place in the interim period, between case law A and case law B, which come before the court for consideration after case law B? (Actually, the question also arises with regard to events which occurred before case law A and which come before the court for consideration after case law B). The premise for our case is that in both the first case law ruling (in our case: Estate of Sharon Gavriel v. Gavriel [2]) and in the second case law ruling (Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1]) the court created law — law that applies to the parties and that has normative application for everyone.

22. In so far as the new case law ruling is supposed to apply to events that occurred after it was given, we shall encounter no difficulty. But this is not the case when we seek to apply the new case law retrospectively to the interim period between the two case law rulings. An analysis of this scenario of ‘case law overrules case law’ against the background of the recognition and consensus that both the first case law ruling and the second case law ruling created law necessarily leads us to the conclusion that when the court considers whether the second case law ruling — a ruling that creates law — should apply retrospectively, it should take into account, among the considerations that oppose this, those considerations that conflict with the inclination of applying the new law retroactively. These opposing considerations may lead us to a conclusion that the new law should not be applied retroactively — whether in general, in a class of cases or in one specific case or another — and they may also go on to create qualifications and defences, whether these are qualifications and defences with normative effect that are required by the new rights, or they are qualifications and defences that are required by the general law. After all, during the interim period the first case law prevailed, and we shall find it difficult to accept that after a period of months or years — sometimes quite a long period — the first case law will be struck down, retroactively, without any attention being given to what happened in the interim period. The most important factor for our case here is, of course, the reliance element.

23. I should add in this context, with all due caution, that it is possible to argue that reliance in the context of our case here does not only concern a situation in which someone relies on the existing law (the first case law ruling) and changes his position; reliance also concerns the normal course of events and the reasonable expectation that notice will be given in advance of a change in the law, and that the individual as a rule benefits from certainty with regard to the law. See also Prof. A. Barak, ‘Judicial Legislation,’ 13 Hebrew Univ. L. Rev. (Mishpatim) 25 (1983), at p. 73. Even if a person does not change his position specifically by relying on the existing law, retrospective application of a law is capable of confusing and undermining the confidence of the individual in the system of government. We have known for a long time that a statute requires prior notice, and a change in the proceedings for enacting a statute should also require prior notice. See United Mizrahi Bank Ltd v. Migdal Cooperative Village [32], at pp. 533-534. As we have already said in our remarks above, the main factor in the struggle between stability and change is the principle of justice and fairness — mainly distributive justice — together with the factors of proper practice and utility.

When is retrospectivity appropriate?

24. It is plain and simple that in the absence of a statute that gives us directions pointing one way or another — and there is no statute in the Israeli legal system on this subject — the question of the retrospective application of a particular case law ruling is a question that should be determined by the relevant legal system, whether normatively or on an individual basis. The question is one of determining a rule and establishing the exceptions to it: what will be the rule and what will be the exceptions? Common law, for example, never questioned the retrospective application of new case law — this was the rule that it determined — especially as a result of the doctrine outlined by Blackstone, according to which the courts do not create law but only reveal it. At the same time, the courts in England were aware of the injustice that may be caused by applying a new case law ruling retrospectively, and they sought to remedy this defect by determining a balancing formula that takes into account any exception to the rule. See, for example, para. 40 of the opinion of Lord Nicholls in National Westminster Bank plc v. Spectrum Plus Ltd [51] (which is cited in para. 16 of the opinion of my colleague, the president).

25. My colleague President Barak refers to comparative law, and in his opinion he reviews a broad selection of case law in various countries. In National Westminster Bank plc v. Spectrum Plus Ltd [51] the justices of the House of Lords also referred extensively to comparative law and the various case law rulings that have been made in various countries, and it is possible to say that over the years these have been of all types and kinds. The selection is a wide one, and anyone who wishes to rely on comparative law may choose what he wants. See, for example, P.J. Stephens, ‘The New Retroactivity Doctrine: Equality, Reliance and Stare Decisis,’ 48 Syracuse L. Rev. 1515 (1998). There is much confusion, especially in the United States, and the literature on the subject is extensive and burdensome. It is difficult to avoid the impression that the course of case law in the United States — case law that changes direction from time to time — is affected mainly by the fundamental outlooks of the justices of the United States Supreme Court with regard to the role of the court in the system of government. See also and cf. J.E. Fisch, ‘Retroactivity and Legal Change: An Equilibrium Approach,’ 110 Harv. L. Rev. 1055 (1997). As for us, true to our approach we will say that where ‘case law overrules case law,’ the second case law ruling will apply prospectively, but the court, like the legislature, may apply it retrospectively while taking into account the distribution of justice between those who benefit and those who lose out under the later case law.

26. The first question is: what is the law concerning the plaintiff who won in the later case (case law B) and brought about the overruling of the original case law? In our opinion, the question concerning the distribution of justice between a plaintiff and a defendant should be asked also in the case of this plaintiff, just as it will be asked in the case of plaintiffs who will come after him and seek to benefit from the new case law. We should, however, add that we shall have difficulty in finding a case where that plaintiff will not be found worthy to benefit from the fruits of the new case law. First it should be said — and others have already said this — that if the plaintiff in the later case does not benefit from the application of the new case law to his case, when it is the case law that he himself brought about, we shall not find plaintiffs who bring about a change in case law that ought to be changed, and the public will be the loser. Second, justice demands that the new case law will apply to the person who brought about the change, and that he will benefit from his labours. But we should emphasize that where the interest of the defendant and the public interest outweigh the interest of the plaintiff, the new case law will not apply even to the plaintiff who brought about its creation. The effect of the case law ruling will be merely prospective — i.e., the case law will apply only to events that occur after it is given — and in the language of American jurists it will be said that the case law ruling is ‘purely prospective.’ It need not be said that if the defendant has a specific defence against the right that the court is establishing for the first time, he is entitled to raise that defence in exactly the same way that defendants in the future will be entitled to raise specific defence arguments against the new right that was established in the second judgment. All of the aforesaid concerns the plaintiff who brought about the change in case law. But what is the position with regard to others whose case is identical or very similar to the case of the person who brought about the change?

27. My answer to this question is that the ‘legal burden’ lies with this other plaintiff to persuade the court that the new case law ruling should be applied retrospectively, namely that it is right to change arrangements that were in force and systems of rights-obligations that were established before the new case law, and especially that it is just — in distributing justice between a plaintiff and a defendant — to apply the new case law retrospectively. Indeed, unlike my colleague, who is of the opinion that the new case law applies retrospectively unless the court decides otherwise — I am of the opinion that case law should not apply retrospectively unless the court decides otherwise. The burden of persuading the court that a case law ruling should be applied retrospectively rests with the plaintiff.

28. In this context I would like to ask a question of the supporters of retrospective application. Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] recognized — or perhaps we should say, created — a head of damage that previously had been denied by case law, and thereby it changed the substantive law of torts with regard to personal injury. We should emphasize that we are not speaking of a change of procedure but a change in substantive law. See Dicey and Morris, The Conflict of Laws (thirteenth edition, L. Collins ed., 2000), vol. 1, rule 17, at para. 7-034 et seq.. This gives rise to the question: let us suppose that our case did not concern the creation of a head of damage but the creation of a tort, i.e., the creation of a new cause of action whose existence the court rejected in previous case law. Would we decide to apply this case law retrospectively?

What is the law in Israel?

29. Since we have, until now, spoken at length, we can now speak briefly. My colleague the president is of the opinion that restrospectivity is the rule and non-retrospectivity is the exception. In his words (at para. 17 of his opinion):

‘The fundamental premise is that a new judicial ruling applies both retrospectively and prospectively. Notwithstanding, I am of the opinion that there is nothing in principle that prevents us from recognizing the power of the Supreme Court to give its precedents merely prospective force.’

My opinion is otherwise. Unlike my colleague, who assumes — as a premise — that new case law acts retrospectively unless there is a statement to the contrary, my assumption is that new case law acts prospectively unless there is a statement to the contrary. In other words, in my opinion prospective application is the rule, whereas retrospective application is the exception. Since this is the case, the premise is that new case law has prospective application, and therefore the onus lies with the person arguing that it should have retrospective application. This is how we should address the issue.

From general principles to the specific case

30. Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1], as case law that creates law and as case law that overrules case law, applies to events that will occur after it. Everyone agrees upon this. The relevant question is whether this case law should be applied retroactively, to events that occurred when Estate of Sharon Gavriel v. Gavriel [2] was valid. It would be true to say that the question is not an easy one for us. Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] reversed the ‘lost years’ rule as held in Estate of Sharon Gavriel v. Gavriel [2], and by doing so it created an earthquake in this specific field of the law of torts. A ‘minor revolution’ took place, in the language of President Yitzhak Kahan in Estate of Sharon Gavriel v. Gavriel [2] (at p. 570). Should Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] be applied retrospectively?

The question whether Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] should be recognized as having retrospective application or only prospective application will be determined by the conflict between the competing considerations, and in this regard I was especially impressed by the moral warmth that can be seen in the judgment of the court in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] — a judgment that was written by our colleague Justice Rivlin, with the agreement of President Barak, Vice-President Or and Justices Mazza and Dorner — and from the intensity with which Justice Rivlin spoke of the right of the injured party to receive justice, namely compensation for the lost years. Let us cite several passages from the opinion of Justice Rivlin in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1]:

‘The compensation for the “lost years” is… capable of remedying the unequal state of affairs that was created as a result of the tortious act. It offers a solution to the injustice that is inherent in the denial of the right of compensation to someone who is not able to realize his earning capacity, because of a reduction of his life expectancy brought about by a tort, while at the same time compensation is awarded to someone whose inability to realize his earning capacity derives from his being injured by a tort. This results in it being cheaper to kill than to wound. It should be noted that we are not concerned with punishing the tortfeasor but with balancing the scales and refraining from an unjust reduction of the compensation merely because of the fact that in addition to the harm to the injured person’s earning capacity the tortfeasor also caused him a reduction of his life expectancy’ (ibid. [1], at para. 15).

‘Money cannot replace a damaged limb, the suffering involved in loss of a place of work, and it can certainly not replace years of life that have been lost. However, this alone cannot undermine the power of the courts to award compensation, in so far as this is necessary in order to bring the injured person as close as possible to the position he would have been in, had the damage not occurred… The compensation will not prevent the suffering, but it can make the suffering bearable’ (ibid. [1], at para. 18).

‘Indeed, if compensation for the “lost years” is not awarded, the result obtained from the provisions of s. 78 of the Ordinance, in cases where the deceased does not have, when he died, a claim for compensation, is, from the viewpoint of the dependants, harsh and unjust. Take the case of a person who had a working life expectancy of twenty years, and because of a tortious act his life expectancy is reduced to only two years. The vast majority of the potential earning years, which will not be realized because of the act of the tortfeasor, will not be given any expression in the award of compensation, and the dependants, even if they inherit what he was awarded in his claim, will be left with an empty shell, unless the injured person chose — and to put such a choice before him is inconsistent with criteria of justice and logic — not to file a claim for his damage’ (ibid. [1], at para. 29).

‘… the award of compensation for the loss of earning in the “lost years” corrects — admittedly not in the full sense of the word but in important senses — the major imbalance in the external balance that was caused by the wrongful act of the tortfeasor. The injured person has been deprived, by the wrongful act, of the ability to earn income and to make use of it for his needs and for those of his family. Awarding compensation addresses the need to take this into account, and ensures that the lack of balance caused by the tort will not remain unaddressed especially in cases where the result of the tortious act is particularly serious…

… the award of compensation for the “lost years” prevents the arbitrary results according to which compensation is not awarded for the loss of earnings to an injured person whose life expectancy is shortened, while compensation on this head of damage is awarded to an injured person in a permanent vegetative state, or to the estate for pain and suffering and reduction of life expectancy, all of which without any really adequate justification for the distinction… Perhaps most importantly of all, the awarding of the compensation for the “lost years” (to the living injured person) ensures that a situation will not arise in which, although the dependants have been deprived by the tortious act of the support of the injured person — support that they would have received had it not been for that act — this damage will remain unremedied’ (ibid. [1], at para. 70).

If justice is on the side of the plaintiff — or perhaps we should say, on the side of the injured person or his dependents — then justice appeared in its full glory in the opinion of Justice Rivlin in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1]. This justice, warm human justice, has great weight — maybe even decisive weight — when determining the question of retrospectivity. I have also taken into account the fact that our case concerns differences of opinion between an insurance company and a worker who was killed in the course of his employment, and the plaintiffs are the dependents of the deceased and his estate. In the distribution of justice between these two parties, who are not of equal force, and in view of the ability of the insurance company to spread the damage, the scales tip in favour of the injured person and those dependent upon him. There was a time — a long time ago — when counsel for a plaintiff was not allowed to mention — especially before a jury — that the defendant was insured and that the damages would be paid by the insurance company and not by the defendant personally. That time has passed, and we are in the present.

31. In summary, I agree with the conclusion of my colleague the president that the rule in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] should be applied retrospectively, subject only to specific arguments — including arguments of reliance and other arguments — that defendants may raise in proceedings against them.

The agreement between the parties and the rule in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter

32. On the basis of the assumption that Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] applies to their case — and this is indeed what we are deciding — the defendants raise a defence argument that relies on an agreement that was made between them and the plaintiffs and that was given the force of a court decision. The rule in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] was made on 15 March 2004, but a short time before that the parties made a settlement according to which the defendants would pay the plaintiffs a sum of NIS 100,000 in settlement of the claim. On 22 February 2004 — approximately three weeks before the rule was made in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] — this agreement was given the force of a court decision. The question is therefore whether this agreement, which was given the force of a court decision, stands in the way of the plaintiffs and denies them their (retrospective) right. My colleague, President Barak, is of the opinion that the agreement is a barrier to the plaintiffs’ claim, and I agree with his conclusion. But my method is different from his method.

33. In my colleague’s opinion, the question should be decided in accordance with the provisions of s. 14(b) of the Contracts (General Part) Law, 5733-1973, which provide and tell us the following:

‘Mistake

14. (a) …

 

(b) If someone entered into a contract as a result of a mistake, and it may be assumed that had it not been for the mistake he would not have entered into the contract and the other party did not know or should not have known this, the court may, upon an application of the party that made the mistake, cancel the contract, if it thinks that it would be just to do so; if it does this, the court may hold the party that made the mistake liable for compensation for the damage that was caused to the other party as a result of making the contract.’

This provision of statute concerns a ‘mistake,’ and the relevant question is whether the plaintiffs did indeed fall victim to an operative ‘mistake’ when they signed the settlement. Personally, I find it difficult to see any ‘mistake’ to which the plaintiffs allegedly fell victim.

34. There is no doubt that when it was made the agreement was not tainted by any mistake. But the case law rule in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1], as my colleague says, should be regarded as case law that changed the law of compensation retroactively — in our case, at least to the date of making the agreement — and if this is so, the plaintiffs should be regarded as having fallen victim to a mistake when they made the agreement: the plaintiffs thought that the rule in Estate of Sharon Gavriel v. Gavriel [2] applied to them, whereas it was in fact the rule in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] that applied to the case (as we found out shortly afterwards). I do not accept this line of reasoning. The mistake of which s. 14(b) of the Contracts (General Part) Law speaks is a mistake that is contemporaneous with the time of making the agreement. In other words, the concept of ‘mistake’ in a contract, by its very nature, applies on the date of making the contract. We do not find any mistake of this kind. And if it is argued that the retroactive application of the rule in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] made an agreement that was originally untainted by any mistake (‘in real time,’ as the saying goes) into an agreement that is supposedly tainted by a mistake, it seems to me that we are stretching the concept of ‘mistake’ to the point of bursting, such that its whole content will be spilled. See LCA 6339/97 Roker v. Salomon [38], at p. 253. In a paraphrase of remarks that were written in Roker v. Salomon [38], at p. 254, we can say the following: the concept of mistake is built on the essence of ‘mistake,’ and around that essence there are events and cases that are attracted to its centre of gravity. The essential meaning is what will determine the scope of the concept. The D.N.A. is what will decide it. Introducing an objective element into this concept of mistake will completely undermine the arrangements (see and cf. D. Friedman and N. Cohen, Contracts (vol. 2), at p. 727, para. 14.57).

35. With regard to the present case, we shall say this: there is no doubt that the plaintiffs did not make a ‘mistake’ when the agreement was made — in the fundamental and accepted meaning of the concept of ‘mistake’ — and I have not found any justification for imputing any mistake to them after the rule in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] came into existence, by distorting the language. This is the case even if we adopt the retrospective perspective. But according to our approach, there was certainly no mistake in the agreement, since the retroactive force of the rule in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] was given to it by the court, and not automatically by the general law. And if there was no mistake in the agreement, there is therefore no basis for applying the provisions of s. 14(b) of the Contracts (General Part) Law.

36. I think that the remarks of Justice Tzvi Tal in Aroasty v. Kashi [30] are in agreement with our remarks. At pages 522 et seq. of the judgment, Justice Tal addresses the question of the retrospective application of case law that interprets a law and the issue of a ‘mistake of law’ as a defect in a contract (according to the provisions of s. 14(d) of the Contracts (General Part) Law)), and in his summary of the matter he determines (at p. 524) that ‘a later interpretation of a “statute,” which changes its meaning from what a party to a contract originally thought, cannot be considered a “mistake of law”.’ Later on (at p. 525) Justice Tal goes on to say that —

‘It is difficult to entertain the idea that it is possible to open a matter that has been concluded, such as a contract that has already been performed, with a claim that one of the parties made a mistake of law, as a result of new case law, maybe years later, that changed the previous law.’

37. I should also point out that had the element of mistake existed in the settlement in our case — and in my opinion, as aforesaid, the agreement was not tainted by any mistake — I would have been disposed to consider seriously the plaintiffs’ application — an application based on the provisions of s. 14(b) of the Contracts (General Part) Law — to cancel the settlement ‘for reasons of justice.’ Indeed, were we to agree that the agreement was tainted by a mistake, then the question would have arisen as to whether the plaintiffs’ mistake was an operative mistake, i.e., a mistake that makes a contract defective, or whether it was only a mistake in the ‘profitability of the transaction’ (in accordance with s. 14(d) of the Contracts (General Part) Law, and in such a case there would be no grounds for cancellation of the contract. My colleague the president is of the opinion that the mistake in our case was a mistake in the ‘profitability of the transaction,’ and I find this conclusion problematic.

38. The parties before us made a settlement between themselves, and we agree of course — how could we do otherwise? — that a settlement tells us that the two parties to the settlement made reciprocal concessions with regard to the chance of being entitled to more than what the settlement gave them, something that is commonly known as ‘risk management.’ See D. Friedman, ‘Contractual Risk and Mistake and Misrepresentation with regard to Profitability,’ 14 Tel-Aviv University Law Review (Iyyunei Mishpat) 459 (1989), at p. 469; Friedman and Cohen, Contracts, supra, at p. 736; HCJ 57/67 Gross v. Income Tax Commissioner [39], at pp. 559-560 (per Justice Silberg). The question is simply what chance did the parties to the settlement give up and what risk did they take upon themselves? This question also contains the answer to the question: what is a ‘mistake in profitability?’ We accept the definition of Friedman and Cohen that ‘a mistake in profitability… is a mistake with regard to a risk that the party took upon himself, whether expressly or according to the correct interpretation of the contract or in view of the understanding that we have of contracts of this kind’ (Friedman, ‘Contractual Risk and Mistake and Misrepresentation with regard to Profitability,’ supra, at p. 466; Friedman and Cohen, Contracts, supra, at p. 727). With regard to this risk that a party ‘took upon himself,’ Friedman goes on to tell us (ibid.) that:

‘… We do not necessarily mean that the party took this risk upon himself willingly and knowingly. Sometimes this is indeed the case, but in other cases the law attributes to him the taking of the risk under discussion. In other words, in view of the approach that we have to the nature of contracts and in view of our understanding of the ordinary risks involved therein, we assume (unless it is determined otherwise) that a party took on a certain risk even if he was not actually aware of this.’

The question in a settlement is, therefore, which fact, legal rule or possible development in the future was in dispute between the parties (Friedman and Cohen, Contracts, at p. 736). A settlement is an act of risk management, but ‘the question is always what was the risk that was minimized and what were the assumptions underlying that settlement’ (Friedman, ‘Contractual Risk and Mistake and Misrepresentation with regard to Profitability,’ supra, at p. 470). Thus, a mistake is a mistake in the ‘profitability of the transaction’ — it is not an operative mistake — if it falls within the scope of the risk that each party took upon itself. By contrast, a mistake that falls outside the scope of the risk will not be a mistake in the ‘profitability of the transaction.’ In the language of Friedman (ibid., at p. 466):

‘… There is no basis for the claim of mistake with regard to a risk that a party took upon himself within the framework of a contract (it is possible, if one wishes, to call this mistake a “mistake of profitability”), but there is a basis for a claim of mistake with regard to a matter that was not included within the scope of the risk that the party took upon himself.’

And as Friedman and Cohen say on the subject of settlements (Contracts, at p. 737):

‘… Where a settlement is based upon a fundamental mistake, on a point that was not in dispute and with regard to which the parties did not compromise, the settlement may, like any other agreement, be rescinded provided that the conditions for this are satisfied. Even if the settlement was given the force of a judgment, the settlement and the judgment that is based on it may be cancelled because of a mistake… A settlement is admittedly a case of risk management, but the question is always what is the risk that was minimized and what were the basic assumptions that served as a basis for that settlement.’

39. In our case we can say that when the settlement was made — in ‘real time’ — the question of the ‘lost years’ was far removed from the areas of risk that the parties took upon themselves or from the hopes that the parties entertained. Indeed, like in any settlement of a pecuniary nature, the parties settled with regard to the amount of the compensation that the employer should pay the worker, but the question of the ‘lost years,’ as a question in itself, was very remote from their thinking. We should assume — this is what any reasonable understanding tells us — that when calculating the compensation the parties were mindful of the rule in Estate of Sharon Gavriel v. Gavriel [2], and they made this case law ruling the basis for the negotiations between them.

But now the rule in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] has appeared. The rule in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] is not merely ‘another rule’ in the law of compensation. This is not an ordinary rule, a rule of the kind that we encounter every day. This is a rule that brought into the world a new head of compensation. It is a creation ex nihilo, or perhaps we should say, a creation ex negativo. It is like a case law ruling that creates a new cause of action in torts that never existed when the settlement was made (and what is more — a cause of action whose existence was expressly rejected in case law). This is expressed in the remarks of Justice Rivlin in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1], when he said (in para. 70 of his opinion) that following the rule in Estate of Sharon Gavriel v. Gavriel [2], as the years passed, we expected that legislation would change the case law ruling, but we waited in vain and the legislature failed to step forward and enact legislation. Indeed, in our opinion Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] did cause a minor revolution in the field of the law of compensation in torts. Had Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] been the prevailing case law at the time the settlement was made, then if they had assumed that Estate of Sharon Gavriel v. Gavriel [2] was actually the prevailing case law the parties to the settlement would have made an operative mistake. Their mistake would not merely have been a mistake in ‘the profitability of the transaction,’ since the question of the ‘lost years’ would have been beyond the scope of the concessions that were made and the reciprocal risks that the parties took upon themselves. The plaintiffs did not take into account in their considerations the possibility that the decision in Estate of Sharon Gavriel v. Gavriel [2] would be overruled. In the settlement they did not ‘waive’ the possibility of a change in the law, and it is not just that we should attribute to them a waiver of a chance that the law would be changed.

40. As we have said in our remarks above, Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] is, in our opinion, like a case law ruling that created a new cause of action, and, what is more, a cause of action whose existence was rejected in the past. Just as in the latter case — had it occurred — the question of the existence of that cause of action would have fallen, so it may be assumed in the ordinary case, outside the scope of the risks and chances, so too in our case. Thus, the principle of justice that led us to apply the decision in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] retrospectively is the very same principle of justice that tells us to recognize a ‘mistake’ — in so far as there was one — as an operative mistake, as a mistake that is not merely ‘a mistake of profitability,’ as a mistake that undermines a transaction and cancels a settlement. But in our opinion, as aforesaid, there was no mistake in the settlement. The doctrine of ‘mistake’ is too limited to include a set of facts that did not include a real mistake in ‘real time,’ and for this reason I agree, albeit with some regret, with the conclusion of my colleague the president that the settlement brought an end to the claim of the plaintiffs, who are the respondents before us.

Summary

41. I agree that the rule in Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [1] ought, in principle, to apply retrospectively, but it is subject to defence arguments that a defendant may raise in the specific circumstances of his case. As I said at the beginning of my opinion, I agree with my colleague the president that the appeal should be allowed and the judgment of the trial court should be set aside.

 

 

Justice E. Rivlin

I have read the illuminating opinions of both my colleague President A. Barak and my colleague Vice-President M. Cheshin. I agree with the result that my colleagues have reached that the appeal should be allowed and the judgment of the trial court should be set aside. With regard to the fundamental disagreements between my colleagues, which concern the method of reaching the result, my opinion is in accordance with the opinion of the president, for his reasons.

 

 

Justice A. Grunis

I agree with the opinion of my colleague, President A. Barak.

 

 

Justice D. Beinisch

My colleagues, President Barak and Vice-President Cheshin, have spoken extensively on the question of the temporal application of new case law and in their opinions the question of prospectivity and retrospectivity has been presented in all its multi-faceted complexity. I agree with their opinion concerning the result, according to which the appeal should be allowed and the judgment of the trial court should be set aside. With regard to the fundamental dispute I will add only a few words with regard to my position.

There is no dispute between my colleagues that the application of new case law can be retrospective. The vice-president is of course correct when he says that the real and only question is the question of the retrospective application of new case law, since there is always prospective application. My colleagues also agree that the application of legislation of the Knesset, which is usually prospective unless it contains a statement to the contrary, cannot be compared to the application of case law, which is the ‘common law’ in our legal system. The disagreement revolves around the question of what is the fundamental premise: what is the rule and what is the exception?

In this disagreement, I agree with the opinion of President Barak that ‘The fundamental premise is that a new judicial ruling acts both retrospectively and prospectively.’ The different approaches were presented by my colleagues, as aforesaid, comprehensively and fluently and to attempt to add to them would be merely to detract. In his opinion, the president defined the ‘practical consideration’ as the decisive consideration for his conclusion and he gave his reasons for this. Indeed, in my opinion too the practical consideration outweighs the other considerations and touches upon the heart of the judicial role and the essence of judicial creation.

Let us mention once again the consensus in our legal system that the Supreme Court does not lightly depart from its precedents. New case law is created against a background of new circumstances, and as a rule these are not commonplace in our judicial work. New case law is made when the court is persuaded that the previous case law was erroneous or when its time has passed because circumstances have changed. The need for new case law arises when the law needs to be brought in line with reality, whether this is social reality, practical reality or legal reality. Only then is case law likely to change and thereby develop the law.

A change in case law requires a balancing of the existing position and the extent to which it corresponds with reality against the extent of the harm to legal stability and its consequences. When the judge reaches the point of decision and comes to the conclusion that the legal reality should be changed, from that point onward he will have great difficulty in making a decision that only has prospective application. In the course of applying the law on a daily basis, it will be a very complex if not impossibly difficult task to continue to make judicial decisions that are based on the case law ruling that has been overruled, or to contend with the need to examine the validity of the new case law ruling on a case by case b