Torts

            LCA 444/87

            LCA 452/87

CA 80/88

           

Abu Sirchan Araf Makabel Munhar Alsoucha and Another

v.

Estate of the late David Dehan and Others

    LCA 444/87

Estate of the late David Dehan and Others

v.

Abu Sirchan Araf Makabel Munhar Alsoucha and Another

    LA 452/87

Hitam Zeidan Jizmawi

v.

Aiyash Jamal and Another

    CA 80/88

           

The Supreme Court Sitting as a Court of Civil Appeals

 

Before Shamgar, p., Barak, J., and D. Levin, J.

 

 

Editor's Synopsis

            These combined appeals raise a common issue, whether a person who suffered mental injury in consequence of the death or severe bodily injury negligently caused to a close relative can recover damages in tort under the Civil Wrongs Ordinance [New Version], which establishes a cause of action based on common law negligence, and under the Road Accident Compensation Law, 1975, which imposes absolute liability for injuries suffered "in a road accident". After surveying the English, Australian and American judgments relating to compensation for mental injuries suffered because of severe injury to a loved one, the Supreme Court ruled that such damages were recoverable under both the Civil Wrongs Ordinance and the Compensation Law, pursuant to certain guidelines laid down by the Court.

                     

1.  Generally, the conceptual duty of care not to cause mental injury to third persons in consequence of bodily injury caused to the primary victim should be limited to those third persons who are related to the primary victim in the first degree, such as parents and children or spouses. Exceptional circumstances which might also be worthy of legal protection may be left to later cases.

 

2.     It is not necessary that the secondary victim suffer the mental injury by virtue of his having directly perceived the original injury or its immediate aftermath. There should be no such special requirement, whether as part of or superimposed upon the general foreseeability test.

 

3.     Similarly, the significance of the injured person's proximity or remoteness from the scene of the original accident should also be examined in the context of its influence on the foreseeability of the harm.

 

4.     Nor should recovery be limited to such mental injury as is induced by shock. Injury that is the result of continuous exposure to the primary harm, for example by lengthy treatment and care of the primary victim, may also be compensable.

 

5.     Only severe and substantial mental reactions are compensable. Lesser mental effects such as distress, pain and anger, that are daily occurrences and, in the nature of things, temporary and ephemeral, are not recoverable.

 

6.     The same standards for recovery should apply under the Civil Wrongs Ordinance and under the Compensation Law.

 

Israel Supreme Court Cases Cited:

[1] CA 294/54 Zvii v. Shamir, 12 P.D. 421.

[2] CA 4/57 Nadir v. Kahanowitz, 11 P.D. 1464.

[3] CA 813/81 Zion Insurance Co. v. Estate of the late David Buskila, 38(4) P.D. 785.

[4] Cr.A. 6/55 Dahoud v. The Attorney General, 9 P.D. 1009.

[5] Cr.A.402/75 Algavish v. The State of lsrael, 30(2) P.D. 561.

[6] CA 145/80 Waknin v. The Bet Shemesh Local Council, 37(1) P.D. 113.

[7] Cr.A. 186/80 Yaari v. The State of lsrael, 35(1) P.D. 769.

[8] CA 243/83 Jerusalem Municipality v. Gordon, 39(1) P.D. 113.

[9] CA 358/83 Shulman v. Zion Insurance Co. Ltd., 42(2) P.D. 844.

 

District Court Cases Cited:

[10] C.C. (Jerusalem) 583/66 Kardi v. Feltzgein, 61 P.M. 161.

[11] Motion (Beersheva) 109/78 Peretz v. Carmi, 1978(1) P.M. 506.

[12] C.C. (Haifa) 910/69 Estate of the late Yehudit Haleb v. Carmel Beach Ltd., 72 P.M. 161.

[13] C.C. (Tel Aviv) 582/72 Shakui v. Salmon, 1979(2) P.M. 77.

[14] C.C. (Jerusalem) 907-09/81 Estate of the late Salhav v. Shalhav, 1984(2) P.M. 441.

 

Australian Cases Cited:

[15]Jaensch v. Coffey (1983-84) 155 C.L.R. 549.

[16] Pratt Goldsmith v. Pratt [1975] V.R. 378.

[17]Mount lsa Mines Ltd. v. Pusey [1970] C.L.R. 383.

 

American Cases Cited:

[18] Dillon v. Legg 441 P.2d 912 (1968).

[19] Champion v. Gray 478 so.2d 17 (1985).

[20]Brown v. Cadillac Motor Car Div. 468 so.2d 17 (1985).

[21] Paugh v. Hanks 451 N.E.2d 759 (1983).

 

English Cases Cited:

[22] Victorian Railway Commissioners v. Coultas (1888) 13 App. Cas.

222 (P.C.).

[23] Dulieu v. White & Sons [1901] 2 K.B. 669.

[24] Hambrook v. Stokes Bros. [1925] 1 K.B. 141 (C.A).

[25] Bourhill v. Young [1942] 2 All E.R. 396 (H.L.).

[26] Boardman v. Sanderson [1964] 1 W.L.R. 1317 (CA).

[27] King v. Phillips [1953] 1 Q.B. 429 (CA).

[28] McCloughlin v. O'Brian [1982] 2 All E.R. 298 (H.L.).

[29] Anns v. Merton London Borough [1978] A.C. 728.

[30] Attia v. British Gas Plc. [1987] All E.R. 455 (CA).

[31] Chadwick v. British Transport Commission [1967] 2 All E.R. 945 (Q.B.).

[32]Dorset Yacht Co. v. Home Office [1970] A.C. 1004.

 

 

 

JUDGMENT

SHAMGAR, P.:

 

            1. Before us are two reciprocal requests for leave to appeal against a judgment of the Jerusalem District Court in an action for damages under the Road Accident Victims Compensation Law, 1975 (hereinafter the Compensation Law). We decided to consider them as though such leave had been granted and the appeals had been brought pursuant to such leave.

 

            An appeal against a judgment of the Nazareth District Court will be considered at the same time.

           

            The two judgments appealed against raise the same question, namely, the liability - within the meaning of the Civil Wrongs Ordinance [New Version] (hereinafter - the Civil Wrongs Ordinance) and the Compensation Law - for mental injury caused to relatives of a person injured in a road accident. That is why we decided to consider the appeals together.

           

            2. LCA 444/87 and 452/87

           

            The relevant facts were surveyed in the partial judgment of the Jerusalem Magistrate Court, which considered the action brought by the applicants in LCA 452/87 (who are the respondents in LCA 444/87).

           

            These are the principal facts:

           

            On 8.1.82, the boy David Dehan was injured by a car driven by the first respondent in LCA 452/87 (the first applicant in LCA 444/87). David was born on 11.9.76 and on the day of the accident he was not yet six years old. He was taken to the Hadassah Hospital, Ein Karem, and died 24 days later. David's parents were not with him at the time of the accident and when they heard about it they went to the hospital where, according to the trial court, "they saw him in serious condition and in terrible agony and sat with him all the time until he died."

           

            After David died, his parents and his estate brought an action under the Compensation Law in the Jerusalem Magistrate Court in which they sought, inter alia, compensation for mental injuries caused to the parents, who are the second and third respondents in LCA 444/87. The injuries were defined as follows:

           

"9. As a result of the accident, the serious injury to the deceased, the stay at his side in the hospital and the sight of his dying and final decease, the plaintiffs' mental and physical health declined.

 

10. The plaintiffs no longer function as in the past. They suffer from stress, depression, fears and nervousness. They are frequently absent from work and require physical and psychiatric help."

 

            3.         The argument of the applicants in LCA 444/87, as set forth in their statement of defence submitted to the Magistrate Court, was that the compensation claimed by the parents was not actionable under the Compensation Law.

           

            In its partial judgment the Magistrate Court held as follows: first, the parents have a cause of action for compensation in tort against the driver for the mental injury "caused in consequence of the trauma which the parents suffered as a result of the injury caused to their son, which includes both pain and suffering". Second, the parents also have a cause of action under the Compensation Law as "victims" who suffered "bodily damage" in a "road accident".

           

            4. The driver and his insurers (the applicants in LCA 444/87 and the respondents in LCA 452/87) appealed against the above two findings in the partial judgment.

           

            The District Court concluded that the injury does not come within the scope of the Compensation Law, because the condition that the bodily damage be caused by a "road accident" was not satisfied. The District Court was of the opinion that:

           

"The respondents' son was injured in the road accident, not the respondents themselves. The respondents were injured at a later time and by something else - by their son's suffering. If there is any connection between their injury and the road accident, it is remote. Moreover, as defined in the Law, an 'injured person' is a person who is injured in a road accident. The preposition 'in' points to a direct injury in the accident, at the time of the accident, at its place and by its force."

 

            As to the cause of action based on the Civil Wrongs Ordinance, the District Court found that the parents had an action for negligence against the defaulting driver. The District Court found that he had a duty of care toward a relative of the direct victim, since he should have foreseen such relative's mental injury, whether the relative was present at the scene of the accident and witnessed it or whether the consequences of the accident were brought to his knowledge at a later stage.

           

            According to the District Court:

           

"It is not the proximity in time and space to the accident that determines but the emotional suffering, and what is the difference between suffering which began at the time of the accident and suffering caused when the relative first sees the victim? ... Once incidental mental injury is brought within the bounds of foreseeability, we say thereby that the negligent person owes a duty of care not only to the immediate victim but also to his relatives who are injured by his suffering. And if that is so, then what is the difference between relatives who were present at the accident and those who were not?"

 

            The driver and his insurers (in LCA 444/87) appealed against the finding of liability in tort; and the parents and the deceased's estate appealed (in LCA 452/87) against that part of the judgment in which the court found that there was no cause of action under the Compensation Law.

           

            5. CA 80/88

           

            The facts in this case were summarized by the parties who formulated an agreed version of the preliminary question now before the court:

           

" 1. The first defendant's lorry hit the plaintiff’s mother while she was returning from the grocery store in her village and injured her critically.

 

2. The mother was hospitalized in the Hillel Yaffe Hospital in Hadera on 18.6.82 and died there of her injuries on 26.6.82.

 

3. The event described above is within the scope of the Compensation Law.

 

4. The plaintiff was not present at the scene of the accident, but was informed about her mother's injury a short time later at her home nearby.

 

5. The plaintiff visited her mother in the hospital during her stay there and afterwards saw her corpse when her mother's body was brought home for burial.

 

6. On the assumption that, as a result of hearing of her mother's injury and seeing her corpse, the plaintiff suffered mental illness - is this illness bodily damage that is compensable under the Compensation Law".

 

            In the District Court, the plaintiff claimed compensation for the mental illness she suffered, and for all her injuries resulting therefrom.

           

            6. The Nazareth District Court's conclusion was that the daughter had no cause of action for compensation in tort in the circumstances of the case before us. The reason for this was the absence of any legal causal connection between her illness and the accident. In the words of the District Court:

           

"The injury which has a legal causal connection with the accident (as opposed to a factual causal connection), and the injury which is directly foreseeable from the accident, is the injury caused in consequence of the accident and not that which is caused because of or in consequence of the someone else's injury in the accident... Once we allow an action for injury which is not directly connected with the accident itself, and the connection with it is only secondary - we are no longer concerned with injury whose cause is legally connected with the accident".

 

            With regard to the cause of action under the Compensation Law, the Nazareth Court was inclined to accept the conclusion of the Jerusalem District Court in the above additional judgment that is before us on appeal - that the plaintiff does not come within the definition of the term "injured person" in a "road accident". The Nazareth Court added:

         

  "The Law is intended to provide relief to victims of road accidents by imposing an absolute duty of compensation. Prima facie, it would appear that the legislature's intention was to compensate the injuries of those actually involved in the accident".

 

            The deceased's daughter - the plaintiff - appeals against the District Court's judgment in both of its aspects (CA 80/88).

           

            7. The Legal Question

           

            Within the framework of cases before us we are asked to reply to each of the following questions:

           

            First, is there liability under the Civil Wrongs Ordinance for mental injury caused to a family member, whose dear one was injured, killed or threatened with such harm, by the defendant's negligent act or omission, when such mental injury is caused by the said harm or as a result thereof.

           

            Second, is a person who suffers such mental injury an "injured person" in a "road accident" within the meaning of the Compensation Law.

           

            The "family members" or "relatives" of whom we speak here are the parents in one case and the daughter in the other; the mental injury we consider is "stress, depression, fears and nervousness" in the one case and "mental illness" in the other. In both matters, we deal with mental injury that caused the plaintiffs both pecuniary injury and non-pecuniary injury.

           

            8. The Israeli Precedents

           

            The courts in Israel have considered the question before us on a few occasions, while examining the English law on the subject and its adoption in our system.

           

            (A) In CA 294/54 [1] the parents of a minor who drowned in a cesspool sued for damages in tort. Among other claims, they sought compensation for the mental shock suffered by the mother when she heard of her son's death and for her mental depression ever since the event. This condition, she claimed, prevented her from pursuing her profession (dressmaking).

           

            The Supreme Court, at page 443, in a judgment delivered by Justice Agranat (as his title was then), refused to compensate this injury, for two reasons: "First, because the English courts have not gone so far, in a single one of their judgments, as to hold that hearing, from a third person, after the fact, of a tragic accident that occurred to a blood relative, and that was caused by the defendant's negligence, could serve as grounds for compensation." The second reason concerns the kind of damage caused. The court reaffirmed what it had held in CA 4/57 [2], at page 1467, that "emotional disturbances, such as emotional trauma and cognitive shock caused to a person as a result of the negligence of another, do not entitle him to damages unless they result in a visible injury or illness". In the circumstances of the case, it was held, as a finding of fact, that the mental suffering caused to the mother as a result of the tragedy that occurred to her son did not express itself in any illness at all.

           

            It may be said, therefore, that the court's opinion in this matter was that, on the one hand, no duty of care existed toward the mother - and it could therefore not have been breached - because of her distance from the scene of the accident; and, on the other hand, that the mother's injury is not compensable as it is solely emotional, unaccompanied by any visible external manifestation.

           

            (B) C.C. (Jerusalem) 583/66 [10] considered the claim of a husband whose wife and youngest son were killed in an accident. The plaintiff claimed, inter alia, that because of his broken heart and the deep sadness which he suffered since the tragedy he forgot to feed his horse, which died as a result. He sued for compensation in the amount of the horse. The court, in a judgment delivered by Judge M. Ben Porat (as her title was then), considered the question whether the wrongdoer owed a duty of care to the husband and held that the husband did not belong to the circle of persons toward whom the wrongdoer owes a duty not to be negligent:

           

            "When a mother sees with her own eyes how her son is run down, she being close to the scene of the accident, she has a cause of action for compensation  against the wrongdoer, if she suffers emotional shock as a result thereof. In such circumstances she is within the scope of persons to whom the wrongdoer owes a duty of care Hambrook v.  Stock Bros. (1925) 1 K.B. 141, 152, because a reasonable driver should foresee the possibility that a mother would be injured by such a sight. However, the situation is different when the parent, or the husband, of the victim was not present at the scene and did not experience the event directly, but heard about it from another person. In such a case he does not come within the range of foreseeability on the part of a reasonable driver, and the latter, therefore, does not owe him a duty of care”.

 

          A similar conclusion was reached in Motion (Beersheva) 109/78 [11]. In that case a son, who suffered a nervous breakdown as a result of his mother's death in a road accident, claimed varying damages (including pain and suffering, costs of treatment and loss of future earnings). The plaintiff was not at the scene of the accident and heard about it afterward from a third party. The court, at page 510, was of the opinion that in establishing a duty of care -

         

"the plaintiff’s geographic relation, time relation or visual relation to the event are relevant considerations in deciding whether the breakdown was a reasonably foreseeable result of the defendant's conduct...

 

In this continuum, it is not necessary that the plaintiff be present at the place where the accident actually occurred; but it is still necessary that the plaintiff should have been an eye-witness to the tragedy or to its immediate aftermath."

 

          The son's action was dismissed for failure to establish any one of the above relations.

         

          (C) A certain relaxation of the limitation that the relative be physically present at the scene of the event for the wrongdoer to be liable for damages toward him was established in the case that was considered in C.C. (Haifa) 910/69 [12]. In that case the plaintiff and her two children were at the seashore. Her children went swimming while the plaintiff remained on the shore. Both children drowned and the plaintiff saw them being brought out of the water and the attempts to revive them. In her presence they were taken to a hospital, where she was informed of their death. The plaintiff claimed that she became mentally ill as a result of the emotional shock she suffered and supported her claim with a medical certificate.

 

            In this case, too, the question confronting the court was whether, in the circumstances, the defendants had breached "a duty which they owed the mother under the Civil Wrongs Ordinance to ensure that she be protected against emotional shock". The court thought, in an opinion written by Judge Schall, that the test to be applied is the foreseeability test, which is accepted as the test for fixing the limits of the duty of care in negligence. The court's conclusion was that the mother had a cause of action in negligence for the emotional shock caused her. It said, at page 166:

           

"The precedents which I have reviewed show that today emotional shock caused by fear or terror can furnish a cause of action against the person who negligently caused a situation which caused the shock, not only when there is a threat of bodily injury to the person himself but also when his children are threatened... The cause of action will be complete even if the mother was not present at the scene of the accident and did not see the tragedy with her own eyes. It is sufficient that it was foreseeable that she would be in the vicinity of the accident, and learn there of the tragedy that befell her child, or that she be in fear that a tragedy had happened to him... If the defendants owed the children a duty to care for their safety while swimming in the sea, then they also owed a duty to the mother, who was on the beach near the place where the children were brought after they were drawn out of the water, to protect her against the emotional shock that the sight of her drowned children was likely to cause" (Emphasis added - M.S.).

 

            (D) Based on the principles laid down in the above judgments, relatives who were involved in, or witness to, an accident to someone dear to them, caused by the defendant's negligence, and who suffered therefrom emotional injury in the form of shock, nervous breakdown or mental illness, were entitled to compensation for their injuries. In C.C. (Tel Aviv) 582/72 [13] the plaintiff was present at the accident to her son which resulted in his death. A medical expert found that she suffered 10% permanent mental disability. The District Court, at page 80, awarded the mother compensation for pain and suffering "both for the suffering itself and because it was likely that her disability makes it more difficult for her to work than otherwise..." Other pecuniary damage was not proved.

 

            The same principles have been applied in matters adjudicated under the Compensation Law. In C.C. (Jerusalem) 907-09/81 [14], at page 458, the court considered the claim of a woman whose husband and two children were killed in a road accident in which she, too, was involved. She claimed compensation for "the shock and grief caused her when she witnessed with her own eyes the tragic results of the accident and the loss of her dear ones in this accident." No defined mental injury was proved. Relying on the principle concerning the plaintiff s presence at the scene of the accident, the court awarded her damages in the amount of 5% of the maximum sum payable under Regulation 2(b) of the Road Accident Victims Compensation Regulations (Calculation of Compensation for Non-Pecuniary Injury), 5776-1976 (cf. CA 4/75 [2], referred to above, which required proof of a "visible injury or illness").

           

            (E) This court affirmed the District Courts' position concerning compensation to a relative for his emotional injuries. CA 813/81 [3] considered, among other matters, a widow's claim for compensation for emotional suffering due to the death of her husband in a road accident. The widow was herself involved in the accident and sat beside her husband who drove the car.

           

            Deputy President, Justice M. Ben Porat, said the following in this context:

           

          "The argument that the widow should not be compensated for her emotional suffering as a result of her husband's death must be dismissed, in my opinion. She was in the car at the time of the accident, and her loss of consciousness was the result of this event and not unconnected with it. This is sufficient under the Israeli precedents, in my opinion, to recognize her cause of action for compensation for the suffering resulting from her husband's death: C.C. (Haifa) 910/69; C.C. (Tel Aviv) 582/72. There is similarly no reason not to interpret the term "bodily injury" in section 1 of the Compensation Law to include emotional shock caused to the injured person by the actual injury (and perhaps even by the possible injury) to a relative, and no one has argued otherwise in the proceedings before us. It should be noted that the English judgments in recent years reflect a departure from the demand for immediate presence as an eye witness (McLoughlin v. O'Brian (1982)). In any event, it is the fact that the widow received a shock from the very event which was common to her and to her husband. It would, therefore, be artificial to separate her suffering in consequence of the shock caused by the event itself, from her suffering caused by the death of her husband when the event occurred".

 

            (F) To sum up, the Israeli courts have allowed a first-degree relative's claim and have awarded him damages on account of emotional injury caused him when he was witness to a negligent act or omission, committed by the defendant against his dear one, that caused such person actual injury or death. The rule is the same when the relative was at least in the vicinity of the scene of the event.

           

            So far as a cause of action under the Civil Wrongs Ordinance is concerned, it has been held that in such circumstances the defendant owes the plaintiff relative a duty of care not to cause him to suffer any mental shock, since a reasonable person, in such circumstances, should have foreseen that the plaintiff, who witnessed with his very own eyes the tragic occurrence to his dear one, will be injured emotionally as a result thereof. Foreseeablity of the injury has been the key to the establishment of the duty of care owed to the relative, as an independent duty separate from the duty of care which the wrongdoer owed to the direct victim who was injured bodily as a result of the breach of the duty of care in the same event.

           

            Concerning the cause of action under the Compensation Law, the relative who was present was recognized, by virtue of the same principles, as an "injured person" in a "road accident", who is entitled to compensation under the Law and the Road Accident Victims Compensation (Calculation of Compensation for Non-Pecuniary Damage) Regulations.

 

            9. The English Precedents

           

            The Israeli courts have referred to English law in connection with the question before us. It would not be superfluous, therefore, to examine, by way of comparison, the developments in English law.

           

            (A) The issue of mental injury, in its various forms, has been examined in English law with the greatest of caution. This restraint has its source in two central considerations.

           

            First, there was the fear that the treatment of injuries in man's mental system with the concepts and the same legal framework as are used with respect to bodily injuries could flood the courts with baseless claims based either on deliberate deception or false illusions. Doubt was also expressed in this context concerning the reliability of medical opinions, with regard to both the very existence of mental injury and the causal connection between the injury and the defendant's negligence. The English courts tended to regard mental injury as incidental to bodily injury, hence their reluctance to recognize mental injury, standing by itself pure and simple, as compensable. They required that the mental injury be accompanied by external physiological consequences (such as a miscarriage or a heart attack) or that there be a severe mental injury (such as hysteria or neurotic fright).

           

            Second, there was the fear that if liability for mental injuries per se were recognized, this would impose too heavy a burden on the conduct of the person who is required to refrain from causing such injury to a fellow-man (see J.G. Fleming, The Law of Torts (Sydney, 7th ed., 1987) 145; H. Street, The Law of Torts (London, 8th ed., by M. Brazier, 1988) 177).

 

            This is the basis of the judgment handed down by the Privy Council in 1888 (Victorian Railways Commissioners v. Coultas (1888) [22]). In that case a woman claimed compensation for the nervous shock caused her by the negligence of the person in charge of a railway gate who allowed the carriage in which she was travelling to cross the railway tracks just a moment before the train passed. As a result of the shock which she suffered she miscarried. The Privy Council allowed the defendant's appeal against the judgment of damages in the lower courts. It stated in the judgment, at page 225:

 

"According to the evidence of the female plaintiff her fright was caused by seeing the train approaching, and thinking they were going to be killed. Damages arising from mere sudden terror unaccompanied by any actual physical injury, but occasioning a nervous or mental shock, cannot under such circumstances, their Lordships think, be considered a consequence which, in the ordinary course of things, would flow from the negligence of the gate-keeper."

 

            (B) In the judgment in the case of Dulieu v. White & Sons (1901) [23] the above approach was abandoned for the first time, and the court recognized liability for the injury to a pregnant woman who miscarried as a result of nervous shock occasioned when a cart to which a horse was harnessed was driven negligently into the inn in which she was at the time. It was stated in the judgment that in order for the shock to be compensable, it had to flow from fear, that was reasonable in the circumstances, of physical injury to the person himself.

           

            In the judgment in the case of Hambrook v. Stokes Bros. (1925) [24] the Court of Appeals recognized the right of a mother to compensation for the nervous shock she suffered because she saw a lorry roll down a hill toward the place where her children were at the time. It transpired, in the end, that one of the children was injured. The mother died a few months later. An action was brought against the driver of the lorry who had negligently parked it in such a way that it began rolling down the slope of the hill by itself. It should be stressed that the mother herself was not exposed to threat of bodily harm from the lorry and that only her children were endangered. It was held that there was no logic and reason to distinguish between a mother's fear of threat of injury to her children and her fear of injury to herself. In the words of Bankes I, at page 151:

           

"Assume two mothers crossing this street at the same time when this lorry comes thundering down, each holding a small child by the hand. One mother is courageous and devoted to her child. She is terrified, but thinks only of the damage to her child, and not at all about herself. The other woman is timid and lacking in the motherly instinct. She also is terrified, but thinks only of the damage to herself and not at all about her child. The health of both mothers is seriously affected by the mental shock occasioned by the fright. Can any real distinction be drawn between the two cases? Will the law recognise a cause of action in the case of the less deserving mother, and none in the case of the more deserving one? Does the law say that the defendant ought reasonably to have anticipated the non-natural feeling of the timid mother, and not the natural feeling of the courageous mother? I think not."

 

            Later on the judge enumerates the factors which the injured mother's husband must prove in order to succeed in an action for compensation (id., at p. 152):

           

"... that the death of his wife resulted from the shock occasioned by the running away of the lorry, that the shock resulted from what the plaintiffs wife either saw or realised by her own unaided senses, and not from something which someone told her, and that the shock was due to a reasonable fear of immediate personal injury either to herself or to her children."

 

In sum, the conditions are:

 

(1) Shock caused by the threat to the woman or to her children.

 

            (2) Direct perception of the event, that is seeing or hearing the injury, as opposed to being informed about it by someone else.

           

            (3) Reasonable fear of injury to herself or to her children.

           

            (C) The first case, on the issue before us, that reached the House of Lords concerned a woman who, when getting off a tram, was witness to an accident in which a bicycle rider, who rode negligently, collided with a car. The bicycle rider was killed. The plaintiff heard the sound of the crash of the collision and saw the blood on the street after the body was removed from the scene. The plaintiff, who was pregnant, miscarried as a result of the shock. The reference is to Bourhill v. Young (1942) [25]. The House of Lords dismissed the woman's appeal on the ground that the bicycle rider owed no duty of care toward a person who it could not be foreseen would be injured bodily or mentally as a result of his negligent conduct. It was held that a reasonable person could not foresee, in the circumstances of the case, that a passer-by with ordinary phlegm and fortitude would suffer emotional shock as a result of the noises and the sights which the plaintiff experienced. This judgment laid down the basis for the rule that the question of compensation for emotional shock must be resolved in each case according to the foreseeability test. Compensation would be awarded only when a reasonable person in the wrongdoer's position would have foreseen that the plaintiff would suffer nervous shock as a result of his negligent act.

 

            In the words of Lord Porter, at page 409:

           

"The question whether emotional disturbance or shock, which a defender ought reasonably to have anticipated as likely to follow from his reckless driving, can ever form the basis of a claim is not in issue. It is not every emotional disturbance or every shock which should have been foreseen. The driver of a car or vehicle even though careless is entitled to assume that the ordinary frequenter of the streets has sufficient fortitude to endure such incidents as may from time to time be expected to occur in them, including the noise of a collision and the sight of injury to others, and is not to be considered negligent towards one who does not possess the customary phlegm."

 

            Later judgments adopted the test laid down by the House of Lords in the Bourhill case. Thus, for example, a father was given compensation for emotional shock caused him when the defendant drove his car backwards onto his son's leg. The father did not see the accident, but heard his son's screams from nearby. Boardman v. Sanderson (1964) [26]. On the other hand, in another case a mother's claim was denied where, upon hearing screams, she looked out of the window and saw her son under the wheels of a taxi (King v. Philips (1953) [27]. It was held, at page 442:

 

"The taxicab driver cannot reasonably be expected to have forseen that his backing would terrify a mother 70 yards away..."

 

            The judgment in King [27] was severely criticized, mainly because, in the light of the rule laid down in Hambrook [24], there was no ground to distinguish between the two cases (see, for example: H. Teff, "Liability for Negligently Inflicted Nervous Shock" 99 L.Q.R. (1983) 100, 101; fleming, supra, at 149 n. 79).

           

            (D) To sum up, until the leading judgment by the House of Lords in McLoughlin v. O'Brian (1982) [28], which will be referred to below, the rule which guided the English courts in the matter of compensation for nervous shock was as follows:

           

            (1) The right to compensation exists only for a relative who is very close to the victim of the accident;

           

            (2) The right is limited to a relative who was present at the scene of the accident, or was in very close proximity to it.

           

            In the words of Street, supra, at 179:

           

"The limits on liability established by analysis of the case-law up to 1982 appeared to be that the plaintiff should be present at the scene of the accident, or very near to it, so that with his unaided senses he realised what had happened, and that generally he must be very closely related to the person suffering physical injury. Indeed in the vast majority of cases the plaintiff has been the parent of a young child".

 

            10. (A) A leading judgment on our subject is that of the House of Lords in McLoughlin [28].

           

            The plaintiff, Mrs. McLoughlin, was at home when her husband and three children went for a drive in the family car. A lorry collided with their car two miles away from the house. It was determined that the accident occurred as a result of the lorry driver's negligence. Mrs'. McCIoughlin's daughter was killed and her husband and two other children were injured in varying degrees. Mrs. McLoughlin was informed about the accident an hour later and immediately went to the hospital to which the injured were taken. There she saw her injured family in the state in which they were brought from the scene of the accident and grasped the extent of the disaster that had befallen her. As a result of her tragic experience, the plaintiff suffered "severe trauma, organic depression and a change of personality, accompanied by physiological manifestations" (i.e., mental injury with physical-external expression): id., at p. 301.

 

          The lower court thought that the defendants did not care Mrs. McLoughlin a duty of care since her injuries from shock were not foreseeable in the circumstances. The Court of Appeal held that the injury caused to her was foreseeable, but refused to recognize a duty of care in the circumstances, since Mrs. McLoughlin was not present at the scene of the accident and there was no basis in the existing precedents for finding liability in these circumstances. In other words, considerations of judicial policy caused the appellate court not to recognize liability in tort, despite the finding concerning foreseeability.

         

          (B) The House of Lords reversed the decision and Mrs. McLoughlin's appeal was allowed. The rule which was established there was that a relative, who suffered mental shock as a result of seeing an accident or its immediate aftermath, could recover compensation from the negligent wrongdoer, if the shock which was caused to him was reasonably foreseeable in the circumstances of the case. This judgment, which is considered till today to be the leading judgment on the subject, examined the existing English case-law and laid out the central rules in the matter before us.

         

          Lord Wilberforce was of the opinion that Mrs. McLoughlin's case could be examined in the light of the precedents which had been established in England until that time and could be seen to be an additional link in the chain, that is, a direct and natural continuation in the development of the law. In his opinion, one could claim compensation for nervous shock caused by negligence, under English common law, and the plaintiff need not prove that he suffered bodily injury or fear of such bodily injury, it being sufficient that there was such injury, or the fear thereof, to a person close to him (his spouse or child). Until then, as indicated, the courts had recognized liability for injury caused when the plaintiff saw or heard, that is, when he was present at the scene of the accident in which his close relative was injured, or even if he did not see or hear it, but he arrived at the scene immediately thereafter and discovered its immediate aftermath.

 

            Lord Wilberforce was of the opinion, therefore, at page 302, that:

           

"If one continues to follow the process of logical progression, it is hard to see why the present plaintiff also should not succeed. She was not present at the accident, but she came very soon after on its aftermath. If, from a distance of some 100 yards... she had found her family by the roadside, she would have come within principle 4 above. Can it make any difference that she comes on them in an ambulance, or, as here, in a nearby hospital, when, as the evidence shows, they were in the same condition, covered with oil and mud, and distraught with pain?”.

 

            Further on in his judgment Lord WilbeKorce reiterated the principle (which he had laid down in his judgment in Anns v. Merton London Borough (1978) [29]) that foreseeability of the damage is not sufficient per se to establish a duty of care and liability for compensation in tort, but that one should set out the boundary-lines of liability on the basis of considerations of legal policy, and one should consider whether it is proper to impose responsibility toward every person whose injury is a likely probability in the circumstances. In other words, foreseeability of damage is an essential condition but not a sufficient one; particularly when the damage is of the nature of mental shock or disturbance, which could, in the natural course of events, occur to very many "secondary injured parties". There is, therefore, a real need to limit the scope of recoverable damages.

           

            Lord Wilberforce reviewed the considerations by which he thought one should be guided in establishing the limits of liability (such as, for example the fear that the courts would be inundated with claims, ("the floodgates argument"), the fear of dissimilation and fraud, increasing the onus of insurance on road-users, etc.), and listed three factors which should be considered when examining liability for nervous shock. According to him, there are three policy constraints which it is essential to apply alongside, and in addition to, the foreseeability test. They are: the class of persons whose claims will be recognized; their proximity to the scene of the accident in time and place; and the means by which the shock was caused.

 

            As to the first element, the choice is between the closest of family relationships (parent-child) and opening the court portals to a casual passersby who happened by chance to be at the scene of the accident and suffered nervous shock in consequence thereof. The House of Lords did not need to decide this matter on its merits, since Mrs. McLoughlin's relationship with those who were physically injured in the accident was of the first kind. The view was expressed, on page 304, that:

           

          "the closer the tie (not merely in relationship but in care) the greater the claim for consideration. The claim, in any case, has to be judged in the light of the other factors, such as proximity to the scene in time and place, and the nature of the accident".

           

            Concerning proximity to the scene of the accident it was held that such proximity most certainly must exist, since it should not be forgotten that the plaintiff must prove that it was the defendant's negligence that caused the nervous shock and not later developments. It was further noted that experience shows that insistence upon physical presence at the scene of the accident is not realistic and is even unjust. Therefore, the claim of one who arrived immediately after the traumatic event and observed its immediate aftermath would not be dismissed. This is the "aftermath" doctrine, by means of which the courts overcame the demand for physical presence before the judgment in the McLoughlin case. In summing up this point, he said, at page 305:

           

          "Finally, and by way of reinforcement of 'aftermath' cases, I would accept, by analogy with 'rescue' situations, that a person of whom it could be said that one could expect nothing else than that he or she would come immediately to the scene (normally a parent or a spouse) could be regarded as being within the scope of foresight and duty. Where there is not immediate presence, account must be taken of the possibility of alterations in the circumstances, for which the defendant should not be responsible".

 

            As for the question of the means by which the shock was caused, there had not been any occasion which recognized the claim of a person who had suffered a shock as a result of receiving information from a third party, so that (page 305) -

           

"the shock must come through sight or hearing of the event or of its immediate aftermath. Whether some equivalent of sight or hearing, e.g. through simultaneous television, would suffice may have to be considered".

 

            It should be noted that Mrs. McLoughlin heard about the accident from a third party, who informed her about the tragedy to her home. But the duty of care which was recognized toward her concerned only what she saw with her own eyes, that is, the aftermath of the accident which she observed in the hospital and not the information she received before that second hand.

           

            (C) A second judge, Lord Bridge, also discussed the question of the appropriate legal policy and said the following in this context, at page 319:

           

"On the one hand, if the criterion of liability is to be reasonable foreseeability simpliciter, this must, precisely because questions of causation in psychiatric medicine give rise to difficulty and uncertainty, introduce an element of uncertainty into the law and open the way to a number of arguable claims, which a more precisely fixed criterion of liability would exclude. I accept that the element of uncertainty is an important factor. I believe that the 'floodgates' argument, however, is, as it always has been, greatly exaggerated. On the other hand, it seems to me inescapable that any attempt to define the limit of liability by requiring, in addition to reasonable foreseeability, that the plaintiff claiming damages for psychiatric illness should have witnessed the relevant accident, should have been present at or near the place where it happened, should have come on its aftermath and thus have some direct perception of it, as opposed to merely learning of it after the event, should be related in some particular degree to the accident victim - to draw a line by reference to any of these criteria must impose a largely arbitrary limit of liability. I accept, of course, the importance of the factors indicated in the guidelines suggested by Tobriner J in Dillon v. Legg as bearing on the degree of foreseeability of the plaintiff’s psychiatric illness".

           

            (D) The legal literature regards the positions of Lord Wilberforce and Lord Bridge as representing the majority opinion in the McLoughlin case [28]. Lord Scarman commented that there is no room for considerations of policy in this context and that the legislature should express its opinion on the subject. Lord Edmund-Davies examined the matter before him in light of the situation of the "rescuer", toward whom it has long been recognized there is a duty to take care not to cause him nervous shock (see: P. Handernon, "Shock and Policy: McLoughlin v. O'Brian" 15 U.W. Aust. L. Rev. (1983) 398, 401). Nevertheless, it is customary to distinguish between the approaches of the above two judges on the question of the application of legal policy considerations in establishing liability for negligence in tort. While Lord Wilberforce is though to have added to the pure test of foreseeability additional external conditions, Lord Bridge's stand is that such conditions are merely considerations for establishing the degree of foreseeability in the circumstances of the case. It would seem that the first approach is stricter and more dogmatic, while the second appears more flexible, since it does not obviate the possibility of recognizing liability in a future case in which foreseeability will be established despite the failure to fulfil all three conditions with respect to proximity and immediacy. An example can be found in the words of Lord Bridge himself, who was prepared to leave for further consideration the possible claim of a woman who read in a newspaper (accompanied by pictures) that the hotel in which her family was staying was burnt down and only later was informed that her entire family had perished, with the consequence that she lost her reason. In such circumstances, Lord Bridge said, the mental illness was most certainly foreseeable, and therefore, would compensation be refused only because of the lack of presence at the scene of the catastrophe and because the mosaic of tragic events was completed with the aid of imagination (see pages 319-320 of the judgment[28])?

 

            On the question of the decisive weight of considerations of policy in fixing the boundaries for liability for nervous shock, the majority opinion sides with Lord Wilberforce's system, with which Lord Edmund-Davies and Lord Russell concurred (see also in this connection Attia v. British Gas Plc. (1987) [30], at 463-464).

           

            Among the writers, there are those who prefer Lord Wilberforce's approach, which produces, it is argued, a higher degree of certainty and predictability. Thus, for example, R.A. Buckley, The Modem Law of Negligence (London, 1988) 23:

           

"Nevertheless it is submitted that it is likely to remain true that the application of the forseeability test is subject to some degree of qualification in this area. Accordingly Lord Wilberforce's overt recognition of this in McLoughlin v. O'Brian is to be welcomed. It is both more convincing and, insofar as the special factors can be specifically identified, likely in this unusual area to produce a higher degree of certainty and predictability than insistence that assertion of the foreseeability test leaves nothing further to be said".

 

            On the other hand, there are those who prefer to rely on the foreseeability test exclusively. For example, Teff, supra, at page 102:

           

"The key consideration is whether or not the plaintiff ought to have been in the contemplation of the defendant as someone who might suffer psychiatric illness, given the particular circumstances".

 

            11. Another judgment, which interpreted the McLoughlin [28] rule and discussed it sseveral aspects was handed down recently by the Court of Appeals in Attia [30]. There, a woman sued the gas company that installed a heating system in her home negligently, which caused the house to bum down. The claim was both for damage to property and psychiatric damage resulting from nervous shock. The Court of Appeal considered the question of liability for psychiatric illness whose origin was damage to property, as distinct from death or bodily damage to another. The plaintiff s right to compensation was recognized (see id., page 458, opposite the letter D). The facts in this case are different from the issue before us: whereas in the cases discussed hitherto the courts considered the legal possibility of recognizing a duty of care toward someone who was injured mentally in addition to the duty which was owed to the direct victims of the accident and which was breached; Attia recognized a duty of care not to act negligently toward the plaintiff as regards her property; and the question was whether the plaintiffs mental injury was not too remote and whether it was included within the scope of the duty that was breached.

 

            On the question of the dispute between Lord Wilberforce and Lord Bridge - that is, considerations of policy as against the foreseeability test simpliciter - Lord Justice Woolf said, at page 461:

           

"...differing views were taken by the members of the House of Lords in McLouglin v. O'Brian and by the members of the High Court of Australia in Jaensch v. Coffey on the question whether, if the injury was foreseeable, liability could be excluded as a matter of policy. Fortunately, for the purposes of this appeal I do not consider that it is necessary to resolve this divergence of opinion. Even assuming that the test is not confined to being one of foreseeability, I cannot conceive that, if the injury which the plaintiff alleges that she suffered was a foreseeable consequence of the defendant's negligence, there could be any overriding policy reason for preventing her recovering damages. As I have already pointed out, she could well have sustained physical injuries as well as the psychiatric injuries of which she complains when she would have been entitled to damages and in my view there can be no reason of policy for distinguishing between the two types of injury".

 

            12. Lord Justice Woolf refers above to the judgment of the Australian Court of Appeals in Jaensch v. Coffey (1983-1984) [15].

           

            In that case the plaintiff was a woman whose husband was hurt in a road accident caused by the defendant's negligence. The plaintiff, who was at home at the time, did not come to the scene of the accident but was brought to the hospital immediately thereafter, where she saw her husband being taken in and out of the operating room several times. Late at night she left the hospital and went home. During the course of the night she received several telephone calls in which she was informed that her husband's condition had deteriorated. She arrived at the hospital the following morning and during the course of the day it was not certain whether her husband would survive or not. In the end, the husband recovered and left the hospital after several weeks, whereas the plaintiff was soon found to be suffering from mental illness characterized by depression and a high degree of fear. It was found that the matters which she had seen and heard in the hospital on the night of the accident and the following day had caused the mental illness. The Court of Appeals, relying, inter alia, on the English decisional law in McLoughlin [28], awarded the plaintiff damages, applying the following rules:

           

            (a) One who claims for damages because of nervous shock, must prove, by expert medical testimony, that he suffers from "a recognized psychiatric illness".

           

            (b) The illness must be "shock induced", that is, it must be caused by a sudden shock, and not be the result of a continuous process of exposure to, and involvement in, the suffering of another, for example, by caring for him.

           

            In the words of Judge Brennan, at page 565:

           

          "A plaintiff may recover only if the psychiatric illness is the result physical injury negligently inflicted on him by the defendant or if it is induced by 'shock'. Psychiatric illness caused in other ways attracts no damages, though it is reasonably foreseeable that psychiatric illness might be a consequence of the defendant's carelessness. The spouse who has been worn down by caring for a tortiously injured husband or wife and who suffers psychiatric illness as a result goes without compensation; a parent made distraught by the wayward conduct of a brain-damaged child and who suffers psychiatric illness as a result has no claim against the tortfeasor liable to the child".

           

            (c) The psychiatric illness must flow from a negligent act of the defendant, who caused bodily injury to or endangered another. An act or omission of personal risk, that causes mental illness to another, cannot raise a right to damages.

           

            The court was unanimous insofar as the rules enumerated above are concerned. A majority of the judges of the Australian Court of Appeals supported the additional rules which will be enumerated later.

           

            (d) As stated above, there was general agreement that the plaintiff would not be entitled to damages for nervous shock caused by negligence unless

           

            "some recognisable psychiatric illness induced by shock was reasonably forseeable" (ibid, at 566).

           

            The minority were of the opinion that the foreseeability test is the only test that should be applied in establishing liability, whereas the majority (as the majority position in the McLoughlin case [28]) were of the opinion that the foreseeability test alone is insufficient, and that several external limitations should be added, whose origin is in considerations of legal policy. According to the majority approach, then, the foreseeability of injury as a probable result of the defendant's negligence is an essential condition, but not a sufficient one.

           

            (e) According to the majority opinion, another element which must be proved in order to establish the duty of care is that there be a relationship between the plaintiff and the person who was killed or injured or exposed to danger as a result of the defendant's negligence. The relationship must be "close and intimate" (ibid [15], at 555).

           

            (f) So, too, it is necessary that the plaintiff be present and perceive with his senses the accident or its immediate aftermath (Judge Deane, as Lord Bridge in the McLoughlin case [28], left the question of damages for mental injury reasonably and foreseeably resulting from information given to the plaintiff second hand for further consideration).

           

            (g) The plaintiff must prove proximity in time and place between the accident and its immediate aftermath, on the one hand, and the mental injury caused him, on the other hand.

           

            13. It is not superfluous to note that in some of the Australian states there is express legislation awarding compensation to a relative (a parent or a spouse) of one who is killed or injured or exposed to danger, who suffers mental shock. The compensation is not conditional on establishing an independent duty of care toward the relative or complying with the test of foreseeability. Similarly, proximity to the event in time or place is not required. As to other relatives of the direct victim, who are neither parents nor spouses, they are entitled to compensation if the accident occurred within the range of their sight or hearing (for fuller details, see Fleming, supra, at 150-15 l; and Jaensch [15], at 601-602).

           

            14. Interim Summary

           

            It would be useful to make an interim summary of the guiding principles that have taken shape in English common law over the years with respect to compensation for mental injury resulting from negligence.

           

            (A) A plaintiff seeking to recover compensation for mental injury must prove that he suffered "nervous shock". This has been interpreted to mean "any recognisable psychiatric illness", as distinct from sorrow, grief or any other mental distress, which are not compensable. The reference is, therefore, to a sick mental reaction, which has to be proved by means of suitable medical evidence:

           

"The plaintiffs right of action depends on proof of 'nervous shock'. It is clear from the cases that, for legal purposes, this term implies mental distress which results in an acknowledged medical condition, whether physical, such as a heart attack or miscarriage, or psychopathological, as with various neuroses, hysteria, schizophrenia or morbid depression. Emotional distress without objective symptoms will not suffice. Thus mere temporary sensations of fright, tension or anger, and feelings of grief, anguish or sorrow without more cannot ground an action" (Teff, supra, at 105).

 

            I shall enlarge upon the medical aspects of the subject (including the distinction between "primary" and "secondary" reactions to a traumatic event) at a later stage (see also Jaensch [15], at 600-60).

           

            (B) An additional requirement concerns the process of causation, or the manner in which the mental illness was caused, which is that it has to be shock induced. As explained above, the mental illness must be the immediate consequence of a sudden and severe emotional experience and not the product of the cumulative influence of the accident and its aftermath on the plaintiff.

           

            In Pratt & Goldsmith v. Pratt (1975) 116], the court of the State of Victoria, in Australia, dismissed the action of a mother who suffered mental illness, whose symptoms appeared weeks (if not months, as stated in the judgment) after the accident. It appears that the reason for dismissing the action was based more on the absence of a causal connection and the remoteness of the injury rather than on the .existence of a duty of care, since according to the facts of the case, the plaintiff witnessed the immediate aftermath of the accident but she failed to prove that her illness was "shock induced".

           

            Based on scientific criteria, this condition for imposing liability appears not to be connected to the foreseeability test, that is to the requirement that the mental illness which the plaintiff suffered was probably foreseeable as a result of the defendant's negligent act: one can find in the medical literature support for the opposite thesis concerning mental illness as a result of continuous pressure and strain resulting from exposure to and involvement in the aftermath of the physical injury caused to another. This condition is, therefore, external to the manner in which the duty of care is established and its source is in considerations of legal policy and the inclination to limit the circle of persons entitled to compensation for mental illness caused by negligence (see Fleming, supra, at 149 n. 85).

           

            In the Jaensch case [15], it was stated in this connection, at p. 601:

           

"There is also strong expert support for the proposition that there is a real - and foreseeable - risk that psychiatric illness may result from mental stress during the period consequent upon bereavement, particularly conjugal bereavement, or during a period of constant association and care of a badly injured spouse or other close relative independently of any shock sustained at the time of the actual death or injury. While it must now be accepted that any realistic assessment of the reasonably foreseeable consequences of an accident involving actual or threatened serious bodily injury must, in an appropriate case, include the possibility of injury in the form of nervous shock being sustained by a wide range of persons not physically injured in the accident, the outer limits of reasonable foreseeability of mere psychiatric injury cannot be identified in the abstract or in advance".

           

            (C) The nervous shock to the plaintiff must result from a negligent act that caused physical injury or threatened such injury to someone other than the defendant himself. Thus, for example, a pregnant woman, who had a miscarriage as a result of nervous shock she suffered when she saw a window-cleaner who, in the course of working outside a window, lost his hold and fell to the ground, would not be entitled to compensation even though her injury could have been reasonably foreseen in the circumstances (for discussion of this subject, which does not directly apply in our case, see F.A. Trindade, "The Principles Governing the Recovery of Damages for Negligently Caused Nervous Shock" 45 Camb. L.J. (1986) 476, 481-482, 484; F.A. Trindade, "Negligently Caused Nervous Shock - An Antipodean Perspective" 5 Oxford J. Legal Stud. (1985) 305, 307).

           

            (D) The plaintiff must show that the defendant owes him a duty of care not to cause him harm of the nature of mental illness which is foreseeable in the circumstances of the case. In other words, there must be foreseeability of mental illness caused by shock, but it is not necessary that the specific mental illness suffered by the plaintiff be foreseen or every stage of its development. It is sufficient to prove the causal chain with reference to foreseeability on the part of a reasonable person, in the circumstances.

           

            We have seen that considerations of legal policy have been superimposed on the pure foreseeability test, in order to limit the scope of liability and to deny recovery to some persons for various reasons (including the fear of imposing too heavy a burden on the defendants, of flooding the courts with actions, some of which are vexatious, and the like), despite the fact that their injury was foreseeable. Only thus, for example, can we explain the third principle enumerated above concerning the absence of compensation for mental injuries resulting from negligence that caused an accident to oneself. Furthermore, it would appear that limiting the compensable damage to mental illness (as opposed to lesser mental harm) derives from the same source. This is the reason also for the demand that the mental illness be caused by shock:

 

"...An examination of all the decided cases on nervous shock in Britain and Australia is more likely to lead to the conclusion that reasonable foreseeability by the defendant of some recognised psychiatric illness induced by shock cannot be the sole test for determining whether a duty of care is owed. If it were the sole test, it would be difficult to exclude, from those owed a duty of care, the close relative or friend who has no contact with the accident or its immediate aftermath but who suffers reasonably foreseeable nervous shock by reason of constant social contact, as loyal nurse or companion, with the injured victim" (Trindade, Camb. L.J., supra, at 484).

 

            15. As mentioned above, it is customary to enumerate three conditions which the plaintiff must fulfil in order to establish an action for compensation for mental injury, in addition to the requirement of foreseeability of the injury in the circumstances of the case. The common characteristic of these three conditions, which will be enumerated below, is that they relate to proof of proximity between the accident and its immediate aftermath, such as the death, injury or threat of injury to the direct victim, and the person who was injured mentally as a result thereof.

           

            The first condition is that there be a close relationship between the plaintiff and the direct victim of the accident. A family relationship of the first order (spouse, parents, children) is sufficient, of course. But a relationship of intimacy and care - a "tie of care" - not based on a family relationship, can also justify imposing liability. One who is injured mentally but is not within the category of "relative" will be deemed to be a casual passerby, toward whom there is no duty of care. However, liability was recognized in the past for the injury caused to a person who rushed to rescue persons injured in a terrible train accident and was hurt mentally as a result of the traumatic scenes he witnessed. (Allowance of compensation to a rescuer also stems from the consideration, based on the public interest, that such behavior should be encouraged; see Chadwick v. British Transport Commission (1967) [31]). It has been held in Australia that close work relations are also sufficient for this purpose: Mount Isa Mines Ltd. v. Pusey (1970) [17]. (For a fuller discussion of this subject, see Trindade, Cam. L.J., supra, at 486-489).

 

            According to the known medical information, the most important factor explaining the phenomenon of mental illness caused by injury to another is the extent and intensity of the relationship between the direct victim of the negligent event, who was killed or suffered actual or threatened injury, and the person who became mentally ill:

           

"Much of the artificiality surrounding the analysis of foreseeability in the cases could be avoided if the courts paid more attention to what medical science can tell us about the causes of nervous shock. Thus, in the absence of fear for himself, the crucial determinant of whether the plaintiff is so affected as to suffer from a 'recognisable psychiatric illness' is almost invariably the nature of his relationship with the victim. Since it is normally only when the relationship between plaintiff and victim is in fact exceptionally close that medical experience indicates a degree of reaction that would be compensable, fear of the floodgates seems misconceived" (Teff, supra, at 104).

 

And see also the Jaensch case [15], at 600.

 

            The second condition is that there must be proximity of place and time, between the accident and its aftermath, on the one hand, and the shock which caused the mental illness from which the plaintiff suffers, on the other hand. The origin of this condition is in the requirement that the plaintiff be present at the accident and see or hear the injury done to his relative. This condition has not been preserved in its original form but has been softened by the decisions over the years, so that what is required today is that the plaintiff be close to the accident or to its immediate aftermath. For example, though he is not present at the scene of the accident itself when it occurred, he learns of the tragedy from his own senses, at the first opportunity, for example in the ambulance or in the hospital to which the injured person was taken.

 

            "Laibility cannot rationally be made to depend upon a race between a spouse and an ambulance; it must depend upon what the spouse perceives, its effect upon her, and whether her perceptions and their effect are the reasonably foreseeable result of the defendant's careless conduct" (ibid, at 578).

           

            This condition is linked to the third condition, in addition to the condition of foreseeability itself, that the plaintiff must actually feel the effect of the accident and its aftermath with his own senses. This means that it is not sufficient that he receive the information second hand, even if it be imparted to him close to the event in time and in place. "What is required is that the plaintiff must actually experience the accident or its immediate aftermath himself.

           

            The source of these last two conditions concerning the direct contact and the degree of proximity in time and place between the plaintiff and the traumatic event is in the belief that the closer the plaintiff is to the tragic occurrence, the more likely it is that the mental injury he incurred was foreseeable as a probable consequence of the defendant's negligence. The theory is that the further one is distanced and removed from the scene of the accident the less likely it is that one would suffer mental injury as a result of someone else's death or bodily injury. The power of the severe event is softened and blunted so that it cannot any longer be said that the defendant should have foreseen that the plaintiff would suffer shock which would cause him mental illness (since, it must be remembered, the requirement is that the mental illness be shock induced); and although exposure to the later consequences of the accident (such as, through caring for the direct victim) can cause mental injuries, and even mental disease, this would be the product of a continuous process of confrontation with the results of the tragedy. As explained above, the requirement is that the mental illness result from sudden nervous shock. The assumption is that an event that is later than the tragedy itself and its results cannot cause so severe a shock as to develop into mental illness:

         

  "When the scene of an accident is left behind, and the perception of some later phenomenon induces a psychiatric illness in a plaintiff, the factual difficulties in the way of establishing negligence occasioning nervous shock are greatly increased though the principles are unchanged. The occurrence or existence of the later phenomenon, its sudden perception by the plaintiff and the inducing of the plaintiff s psychiatric illness must be proved to be the results, and the reasonably foreseeable results, of the defendant's conduct. But the separation in time and distance of the later phenomenon from the immediate consequences of the defendant's conduct may make it difficult to prove the elements of causation and reasonable foreseeability as they apply in cases of nervous shock. The cry of distress which summons a rescuer, spouse or parent to the scene of an accident may lose some of its urgency as time passes after the initial injury; later visits by a spouse or parent to the injured person in hospital may not be so distressing as to induce psychiatric illness in a spouse or parent of a normal standard of susceptibility - especially if the injured person's condition and treatment proceed without dramatic fluctuations. It may not be reasonably foreseeable that the perception of the injured spouse or child in hospital might induce a psychiatric illness" (ibid, at 570).

 

            The imposition of these two last conditions in addition to the requirement of foreseeability has been heavily criticized. The criticism stems from Lord Bridge's speech in the McLoughlin case [28], where he left open for further consideration the possibility of awarding compensation for mental illness suffered by someone who heard about the tragedy to his dear one from a third party. In the Jaensch case [15], too, Deane J left the said question for further consideration (id., at p. 608).

           

            The legal literature published after the above two judgments brings many examples of instances in which insistence upon the two conditions mentioned above would lead to illogical and even unjust results. For example, the existing law would not recognize the claim for compensation of a woman who, while watching her husband participate in a car race on television, sees that car catch fire with him inside and develops mental illness in consequence of the shock. Should the answer be different if the race were televised directly from a place near where she happened to be, so that the requirement of proximity of time and place would appear to be satisfied? Another example is that of a bedridden husband who cannot visit his wife who is injured in an accident, but he receives photographs and details from a third party which cause him to lose his mind. A third example brought is that of a blind and deaf grandfather waiting for his granddaughter on the opposite side of the street and because of his blindness and deafness he is unable to hear or see that she has fallen into a pit, negligently dug there, while crossing the street. (For further details, see Trindade, Camb. L.J., supra, at 490-493).

 

            These examples are presented to make the criticism of the above two conditions concerning "proximity" to the traumatic event more concrete. The theory behind the criticism is that application of these conditions could be arbitrary in certain circumstances, in which it can be said, despite their absence, that the mental injury was foreseeable and that considerations of justice and the public interest render it mete to impose liability in the circumstances.

           

            16. American Precedents

           

            (A) In the United States, too, there was consistent opposition in the judgments in the various states to the recognition of liability for purely emotional damage. The reasons have already been mentioned above, and will be repeated here briefly:

           

"There are at least three principal concerns, however, that continue to foster judicial caution and doctrinal limitations on recovery for emotional distress: (1) the problem of permitting legal redress for harm that is often temporary and relatively trivial; (2) the danger that claims of mental harm will be falsified or imagined; and (3) the perceived unfairness of imposing heavy and disproportionate financial burdens upon a defendant, whose conduct was only negligent, for consequences which appear remote from the 'wrongful' and (W.L. Prosser and W.P. Keeton, On The Law of Torts (St. Paul, 5th ed., by W.P. Keeton, 1984) 360-36 l).

           

            The American courts entrenched their reservations about providing legal protection not to be harmed or distressed emotionally by means of the following two "threshold rules", which the plaintiff had to satisfy before his right to be compensated for the harm caused to him would be considered.

           

            The first rule was that a claim may be brought for mental injuries only when they accompany, secondarily, bodily injuries negligently caused. When the bodily injury is not immediate, but occurs later, as a result of the mental injury (as in the case of a miscarriage following upon severe emotional upset), most of the courts established the condition that there be physical impact between the defendant and the injured person. The demand for physical impact also was satisfied by mild bodily injuries, such as a light push, dust in the eye or smoke inhalation. But in recent years the tendency in the judgments in the states is to recognise a cause of action in negligence for causing serious emotional distress, without distinguishing whether the plaintiff fell ill or was harmed because of it (ibid, at 364-365).

           

            The second rule was that where the mental injury is not the result of the plaintiff s fear for his own safety, but its source is in seeing bodily harm to, or the threat to the life or health of another, then a condition for the recognition of liability was that the plaintiff himself must be in the zone of physical danger created as a result of the defendant's conduct ("the zone of danger rule"). This rule was abandoned in a 1968 judgment of the Supreme Court of California, Dillon v. Legg (1968) [18]. Incidentally, this judgment served as one of the comer-stones upon which the McLoughlin ruling [28] was based.

           

            (B) The above Dillon case [18] recognized the right of a mother to compensation for mental injuries caused her as a result of witnessing a road accident in which her daughter was killed. It was expressly established that the mother witnessed the accident from a place in which she herself was absolutely safe physically. In other words, a duty of care not to cause the plaintiff mental injury will arise when a reasonable defendant would have foreseen that his negligent acts will cause mental injury to the plaintiff, or to persons of a like nature, as a probable consequence, in the circumstances of the case (see Dillon [18], at 919). It was further held there that three measures of proximity should be taken into account in establishing the probable foreseeability: "physical proximity", "temporal proximity", "relational proximity" (see Prosser and Keeton, supra, at 366).

 

            It was said there [18], at pages 920-921:

           

"We note, first, that we deal with a case in which plaintiff suffered a shock which resulted in physical injury and we confine our ruling to that case. In determining, in such a case, whether defendant should reasonably foresee the injury to plaintiff, or, in other terminology, whether defendant owes plaintiff a duty of due care, the courts will take into account such factors as the following: (1) Whether plaintiff was located near the scene of the accident as contrasted with one who was a distance away from it. (2) Whether the shock resulted from a direct emotional impact upon plaintiff from the sensory and contemporaneous observance of the accident, as contrasted with learning of the accident from others after its occurrence. (3) Whether plaintiff and the victim were closely related, as contrasted with an absence of any relationship or the presence of only a distant relationship.

 

The evaluation of these factors will indicate the degree of the defendant's foreseeability: Obviously defendant is more likely to foresee that a mother who observes an accident affecting her child will suffer harm than to foretell that a stranger witness will do so. Similarly, the degree of foreseeablity of the third person's injury is far greater in the case of his contemporaneous observance of the accident than that in which he subsequently learns of it. The defendant is more likely to foresee that shock to the nearby, witnessing mother will cause physical harm than to anticipate that someone distant from the accident will suffer more than a temporary emotional reaction. All these elements, of course, shade into each other; the fixing of obligation, intimately tied into the facts, depends upon each case".

 

                      (C) The judgment in the Dillon case [18] was adopted in a substantial number of states in the United States of America, while only a few continued to abide by the earlier requirement that the plaintiff must have been within the zone of physical danger.

         

          In some of the states which adopted the Dillon ruling the law further developed such that it abandoned the pure foreseeability test and applied the three criteria concerning proximity as principles of the substantive law limiting responsibility, rather than as tools for examining the existence of a duty of care, as had been expressly emphasized in the Dillon case (see further: P.A. Bell, "The Bell Tolls: Toward Full Tort Recovery for Psychic Injury" 36 U. Flo. L. Rev. (1984) 333, 338-340). Thus, the judgments of the Supreme Court of Florida in Champion v. Gray (1985) [19]; Brown v. Cadillac Motor Car Div. (1985) [20], represent the tendency to narrow the Dillon holding. In the Champion case [19] a mother witnessed her daughter's death in a road accident, fainted and died on the spot. It was held that although impact was not required - that is, there was no need for physical harm prior to the occurrence of mental injury, the mental injury must be accompanied by concrete physical results. Mental injury, alone, is not sufficient. In the Dillon case, too, the ruling was based on the assumption of mental injury that is expressed physically. The court thought that the plaintiff must establish the three additional criteria, in addition to the usual tests for foreseeability of injury, as set forth in detail below. Thus, the Dillon ruling, which had emphasized that these are criteria of foreseseeability, not additional conditions, was in fact narrowed thereby:

         

          "Foreseeability is the guidepost of any tort claim. Because we are dealing with an unusual and nontraditional cause of action in allowing damages caused by psychic injury following an injury to another, however, public policy comes into play and some outward limitations need to be placed on the pure foreseeability rule. We have already referred to the requirement of a significant discernible physical injury. In addition the psychically injured party should be directly involved in the event causing the original injury. If such a person sees it, hears it, or arrives upon the scene while the injured party is still there, that person is likely involved... Another factor in the foreseeability requirement is that the secondarily injured party must have an especially close emotional attachment to the directly injured person. A child, a parent, or a spouse would qualify; others may or may not, depending upon their relationship and the circumstances thereof' (Champion [19], at 20).

 

            On the other hand, the judgment of the Ohio Supreme Court in Paugh v. Hanks (1983) [21], is representative of the opposing thesis. In that case road accidents occurred on three separate occasions near the plaintiff s house, which was opposite a road junction that connected an interstate highway with a state highway. All three accidents also caused property damage as the cars involved hit the plaintiff’s courtyards. The plaintiff sued all three drivers, and claimed, in addition to her property damage, that she suffered "depression, including neurotic fear with depressive characteristics". The court held that it was not necessary that the mental injury be accompanied by physical manifestation. Instead, it held that it had to be "serious", page 765:

           

"In delineating the standards to guide Ohio courts in reviewing cases seeking damages for the negligent infliction of serious emotional distress, we wish to underscore the element of 'seriousness' as a necessary component required for a plaintiff-bystander in order to sufficiently state a claim for relief. We view the standard of 'serious' emotional distress as being a more reliable safeguard than an 'ensuing physical injury' requirement in screening out legitimate claims. By the term 'serious', we of course go beyond trifling mental disturbance, mere upset or hurt feelings. We believe that serious emotional distress describes emotional injury which is both severe and debilitating. Thus, serious emotional distress may be found where a reasonable person, normally constituted, would be unable to cope adequately with the mental distress engendered by the circumstances of the case".

 

            As to the three criteria established in the Dillon case [18] (physical proximity, temporal proximity and relational proximity) it was emphasized, on page 766, that these were guiding principles for establishing the existence of a duty of care and not prior conditions which the plaintiff had to prove in addition to the foreseeability of the injury:

 

"Concomitant with this test of foreseeability, we add several factors which should be considered in order to determine the reasonable foreseeability of a negligently inflicted emotionl injury to a plaintiff-bystander. These factors are by no means exclusive, and the mere failure of a plaintiff to satisfy all of them should not preclude an aggrieved party from recovery. Thus, the term 'factors' should be underscored to alleviate any misconception that such factors are requirements. The purpose of these factors is to assist and guide the determination of whether the serious emotional injury was reasonably foreseeable to the defendant at the time the accident (which precipitated the cause of action) took place".

 

            The legal literature published in the United States following upon the Dillon case and later judgments also set forth the two theories discussed above. Thus, for example, Bell's article, mentioned above, sets forth the thesis that tort damages can be recovered for any mental injury (the full recovery rule). The underlying principle is that every person is entitled to psychic well being, and this right should benefit from the protection of the law. The author supports his approach with various economic considerations, and, in his opinion, acceptance of his approach would reduce the overall cost of road accidents, on the one hand, while general principles of fairness and justice would be advanced, on the other hand. This approach was criticized in an article by R.N. Pearson, "Liability for Negligently Inflicted Psychic Harm: a Response to Professor Bell" 36 U. flo. L. Rev. (1983) 413.

           

            The Law in Israel - The Civil Wrongs Ordinance

           

            17. Until now we have discussed the legal thinking on our subject, as it has been developed in England, Australia and the United States of America. We return now to our own law. We shall first refer to the legal situation from the perspective of the law of negligence in tort, and then we will examine the application of the Compensation Law.

           

            18. (A) Let us now examine the legal criteria pertaining to the establishment of liability in tort for mental injuries caused to Reuben as a result of the death of, or injury or threat of injury to, Simon (Reuben's relative), by means of Levi's negligent act or omission.

 

            (B) The key to the solution of the question of liability lies in establishing the existence or absence of a duty of care, owed by Levi, the tortfeasor (whose negligence caused physical injury, or the risk of physical injury, to Simon, who is the immediate and direct victim of his act), and to Reuben, who was injured mentally as a result of the injury to Simon. We have seen that it has been held in England and the United States that, in certain circumstances, a defendant owes a duty of care in tort toward someone who is injured mentally, not to inflict such an injury on him, where the mental injury was the probable, foreseeable consequence of the defendant's conduct.

           

            (C) There are three building blocks in the process of establishing liability for the tort of negligence (Cr.A. 6/55 [4], at p. 1012; Cr.A. 402/75 [5], at p. 570):

           

            (a) the existence of a duty of care on the part of the tortfeasor toward the injured person;

           

            (b) a breach of the said duty;

           

            (c) causing injury as a result of the breach of the duty.

           

            With regard to the question of the duty of care, the first building block, we examine two aspects - one in principle, the other specific - that apply directly to the facts of the case (CA 145/80 [6], at p. 122). The aspect of principle deals with what is known as "the conceptual duty of care"; the specific aspect concerns the concrete duty of care. In the words of P.H. Winfield & J.A. Jolowitz, On Torts (London, 11th ed. by W.V.H. Rogens (1979) 67:

           

"The concept of the duty of care performs two distinct functions. If the plaintiff is to succeed it must be established first that the circumstances in which his damage was caused were capable of giving rise to a duty of care, and, secondly, that the defendant actually owed him a duty on the particular facts of the case."

 

            The first aspect, as stated, concerns the conceptual duty of care. In the words of my honorable colleague, Barak J, in Cr.A. 186/80 [7], at p. 776:

           

"The first aspect considers the conceptual question (the 'conceptual duty of care') whether the general categories to which the tortfeasor, the victim, the act and the injury belong can create a duty of care. According to Shamgar J, in CA 343/74, at p. 156:

 

'Reference to the existence or absence of a duty between one person and another is not anchored, fundamentally, in any particularized decision concerning the nature of the specific relations which should exist between the two individuals. Its existence is a matter of law, built on the general distinction and classification of types of injuries and types of wrongdoers and of victims, and its limits are influenced first and foremost by legal policy'".

 

            The existence of the conceptual duty of care is established on the basis of the foreseeability test, that is, according to the answer to the question whether a reasonable person should have foreseen the occurrence of the injury. My honorable colleague, Barak J, said in CA145/80 [6] supra, at p. 123:

           

"Normative foreseeability - where technical foreseeability exists in first - serves to limit the scope of liability. In principle, where injury can be foreseen technically, there exists a conceptual duty of care, unless considerations of legal policy negate the duty (see Lord Reid in Home Office v. Dorset Yacht Co. Ltd. (1970)). Such considerations of legal policy serve to strike a balance between the various interests struggling for priority. The court takes into consideration the need to ensure freedom of action on the one hand and the need to protect property and life on the other hand. It takes into account the nature of the injury and the manner in which it occurred. It takes into account the influence its decision will have on people's conduct in the future. It weighs the financial burden which will be imposed on a certain class of tortfeasors or victims in the wake of its decision. These and other considerations are balanced in the court's judicial consciousness, as it weighs them on the scales of justice, and based on them, the court fixes the scope and limits of the conceptual duty of care, which constitutes the consideration in the parallelogram of forces".

 

            In this connection recall the words of Lord Diplock in Dorset Yacht Co. v. Home Office (1970) [32], at 1059:

           

          "And the choice is exercised by making a policy decision as to whether or not a duty of care ought to exist..."

           

            Similar in spirit are Lord Wilberforce's words in the McLoughlin case [28], supra, at 303:

           

"It is not merely an issue of fact to be left to be found as such. When it is said to result in a duty of care being owed to a person or a class, the statement that there is a 'duty of care' denotes a conclusion into the forming of which considerations of policy have entered".

 

            (D) Does a conceptual duty of care exist in the relations between the tortfeasor and the injured person's relative in our case, as described above?

           

            Before we deal with this question in detail I must state that I accept the view that we do not refer merely to one, solitary duty of care, which carries others along with it, in numbers equal to the number of secondary victims. If that were the case, then we could deal with the problem before us solely on the basis of considering the degree of remoteness of the injury (see J.C. Smith, Liability in Negligence (London, 1984) 121-125).

           

            The duty of care owed to the person injured bodily (the main victim) and the duty of care owed to additional secondary victims arise and exist in parallel. We are concerned with an independent and separate duty of care between the tortfeasor and the person who is injured mentally. Incidentally, we call the one duty "primary", not because of the significance of its consequences in comparison with those of the "secondary" duty, since the consequences of a breach of the latter duty can be much more serious than those of a breach of the former duty (see the Jaensch case [15]. infra), but because a breach of the primary duty of care is a condition of fact for the other breaches, even when the consequences of the primary injury pass on before those of the secondary injury:

 

"Though the plaintiffs shock in these cases is typically consequent on the defendant's having injured or imperilled someone else, his cause of action is not dependent on, or 'secondary' to, the primary victim's. The defendant's liability arises from a breach of a duty of care owed to the plaintiff directly, not derivatively, even if it is generally at once also a breach of duty to the other. Thus it is no defense that the primary victim could not himself recover, be it because he suffered no injury or because he was contributorily negligent or because he lost his claim for some other reason" (Fleming, supra, at 150).

 

            In the Jaensch case [15], supra, the husband recovered from his injuries, but his wife - the plaintiff - developed a mental illness. The fact that the direct victim recovered was irrelevant to the question of liability towards the wife for the mental illness caused her.

           

            19. As stated, the considerations of legal policy serve to strike a balance between the various interests. Causing bodily damage by negligence is an event which occurs in the world of reality. This event, in the nature of things, is not confined to causing such damage alone, but has secondary consequences and incidental results, including its being the source of mental injuries of varied kinds and strength, caused to another. Thus, for example, causing bodily damage to one person can induce a variety of mental injuries to an indefinable number of victims, from the injured person's close relatives through the circle of his friends and, finally, to innumerable casual passers-by who witnessed the event itself by chance, or read about it in a newspaper or saw its immediate consequences in a television broadcast.

           

            Establishing the limits of tort liability in a matter such as that before us, on the basis solely of the possibility of the physical foreseeability of any kind of mental injury, would mean that the tortfeasor, who negligently injured someone physically, would find himself obligated to compensate a great number of people, whose feelings and mental stability were in some way affected by his negligent act. This result, naturally, would not be reasonable, both because of the heavy burden it would impose on the tortfeasor in particular and on human conduct in general, and because of the burden it would impose on the judicial system, by seeking to harness it to the cause of spreading the law's protection over the interest not to be injured mentally. The application of the foreseeability test exclusively would lead to a multiplication of claims, including, in all probability, claims on account of trivial damage, and baseless and false claims. The judicial system which, because of its limitations, copes with great difficulty with the flood of litigation even today, would be faced with double and perhaps even triple, the number of cases connected with each accident: a reasonable legal policy cannot lend its hand to this.

 

       20. A filtering device is therefore required, within the framework of establishing the conceptual duty of care, which will select from amongst all the foreseeable mental injuries only those which deserve to be included within the bounds of liability. One can try to enumerate the various considerations on the basis of which the existence of liability for compensation for mental injuries should be assessed. Of course, this is not an exhaustive list and it is subject to the test of judicial practice and the development of the law from case to case.

      

       (A) The Identity of the Plaintiff - The case under consideration before us does not require us to decide this question directly, since both appeals concern first-degree relatives (parents; daughter), who claim to have suffered mental injury as a result of the bodily injury inflicted on their dear ones.

      

       It is logical to establish, at this stage, a condition that the action may be brought by first-degree relatives (parents, children, spouses) only. We have seen that according to known medical data, the process of causing mental damage and its severity are to a considerable extent the result of the degree of relationship which existed, in fact, before the accident, between the primary victim of the accident and the person who became mentally ill as a result thereof. That is, the degree of actual intimacy and relationship is a very important factor. In other words, there is a degree of relationship that speaks for itself in which the mental effect of the injury is foreseeable, but other different degrees of relationship could produce the same results. It is, therefore, proper to leave the question whether to add to the list of first-degree relatives, in exceptional cases, an additional victim whose right not to be injured mentally would be deemed worthy of the law's protection, for future consideration by the courts .

 

            (B) Direct Perception of the Tortious Act - The foreign precedents require that the plaintiff be an eye- and ear-witness to the traumatic event or that he discern its immediate aftermath by means of his own senses (whether as an element of the foreseeability test or as a limiting condition extraneous to the foreseeability test). On the other hand, we have seen that the demand for a direct perception of the tortious act, as a material bar to imposing liability, has been strongly criticized. This criticism argues that the possibility of recognizing mental injury caused by information received second-hand from a third party should not be barred.

           

            It is obvious, on the face of it, that the nearer the plaintiff was to the tortious act and the more he perceived its traumatic impact himself, the more the mental injury he suffered was foreseeable as a probable consequence in the circumstances. When there is distance from the events as they occur and the information about them is received second hand, one may reasonably conclude that the strength of the difficult events has become blunted and softened, and in such circumstances, the foreseeability of real mental injury decreases. This is so generally, but not always. I do not think that we should establish a preliminary condition that the right to compensation should be denied, at the very threshold, to a relative who was not present at the scene of the accident and who does not, therefore, comply with the condition that he perceive it directly, though his injury was foreseeable in the circumstances. We have seen that there are many examples of situations in which it can be imagined that insistence on the demand for direct perception of the injurious event would lead to unjust results. It is therefore proper, in my opinion, to adhere to the foreseeabiity test in this connection, that is, to examine in each case whether the plaintiffs injury - even if caused by second-hand information - was foreseeable in the overall circumstances of the case as a probable consequence of the defendant's negligent conduct. The manner in which the information was received should be considered in this framework. I would not deny compensation, where appropriate, for the injury caused, for example, by listening to a verbal report, as described above. Incidentally, seeing the catastrophic occurrence while fortuitously watching television appears to me, logically, equivalent to direct observation of the event at its scene.

 

            (C) degree of Spatial and Temporal Proximity to the Injurious Event - Another condition established in the foreign precedents for recognizing liability for mental injury is that the plaintiff be a witness to the accident or to its immediate aftermath. In this context, the arena of events also includes the ambulance or the hospital to which the person who was bodily injured was taken, but not beyond this.

           

            A distinction was drawn between two possible scenarios in connection with this question: the first, when the mental injury was created by shock, which was caused to the plaintiff whose initial encounter with the injurious event was by observing its later consequences, far from the scene of the events (for example, a parent who was abroad when he was informed of an accident to his child and arrives at the hospital a few days later; or when the accident victim's body is not identified on the spot, but in the hospital, some time after the accident, as, for example, in the case of a mass catastrophe). The second, when the mental injury is the product of a continuous process of exposure to the consequences of the injurious event. Here, the mental injury is not created by way of a one-time experience, but it is the result of constant and continuous contact with the developments after the injurious event occurred, in a manner that leads finally to the creation of mental injury (for example, mental injury caused to a relative - a parent or a spouse - who cares regularly for someone physically injured by the injurious event).

           

            It would not be superfluous to quote, in this context, the following words Of Deane J in the Jaensch case [15], at 606-607:

           

            "...it would seem reasonably clear that the requisite duty relationship will not, on the present state of the law, exist in a case where mere psychiatric injury results from subsequent contact, away from the scene of the accident and its aftermath, with a person suffering from the effects of the accident. An example of psychiatric injury suffered as a result of such post-accident contact is that which may result from the contact involved in the nursing or care of a close relative during a period subsequent to immediate post-accident treatment: see, e.g. Pratt. There are at least two possible rationales of the distinction, for the purposes of the requisite duty relationship, between cases where psychiatric injury was sustained as a result of direct observation at the scene of the accident and its aftermath and cases where the psychiatric injury was sustained from subsequent contact, away from the scene of the accident and its aftermath, with a person suffering from the effects of the accident. One such rationale lies in considerations of physical proximity, in the sense of space and time between the accident and its immediate aftermath on the one hand and the injury on the other. The other lies in considerations of causal proximity in that in the one class of case the psychiatric injury results from the impact of matters which themselves form part of the accident and its aftermath, such as the actual occurrence of death or injury in the course of it, whereas, in the other class of case, the psychiatric injury has resulted from contact with more remote consequences such as the subsequent effect of the accident upon an injured person. The choice between one or other or a combination of these two distinct rationales may obviously be of importance in the more precise identification of any essential criteria of the existence of the requisite duty relationship. On balance, I have come to the conclusion that the second, which justifies the line of demarcation by reference to considerations of causal proximity, is to be preferred as being the less arbitrary and the better attuned both to legal principle and considerations of public policy" (Emphasis added - M.S.).

 

            Both situations described above concern mental injury that occurs after the injurious event and removed from it, but in the one instance the injury is the product of the initial encounter between the plaintiff and the results of the injurious event, while in the second case the injury is the product of a series or succession of encounters that culminate in creating mental injury.

           

            As to the first set of circumstances described, there is, in my opinion, no justification to decide arbitrarily in advance what would be sufficient proximity in space and in time as a condition for imposing liability. In general, the further one is removed in space and in time from the scene of the harmful event, the less foreseeable is the mental injury likely to be (see laensch [15] at 601, quoted in paragraph 13(B) above). Direct and contemporaneous observation of an accident in which a beloved person is injured is not the same as a visit some time later to the hospital in which he is confined. The first situation involves a sudden shock resulting from a sudden and dramatic event, whereas the second entails an experience which could indeed be harsh and depressing but does not contain the surprise and is not as drastic as presence at the injurious event itself. However, as already stated, generalizations are not in place and each case should be examined on its own merits, whether the wrongdoer, as a reasonable person, should have foreseen the likelihood that injury would occur, in the circumstances, as a result of the negligent event. Furthermore, it should also be remembered that in addition to determining the duty of care, the injury incurred must be causally related - both factually and . legally - to the harmful event. In examining the question of causality, especially when the injuries occurred far away, in time and space, from the negligent act, attention must of course be given to the influence of later events on the establishment of liability.

           

            As far as the second set of circumstances described above is concerned, that is, the occurrence of mental injury as the result of a continuous process of exposure to the results of the harmful event, such injury is not compensable according to the foreign precedents. The reason for this is not linked to considerations of foreseeability, since it is often foreseeable that continuous and constant contact with someone who was physically injured by a harmful event (for example, by taking care of him) would ultimately lead to the development of mental injury, even of a severe nature. The requirement that the mental injury be shock induced is based on considerations of legal policy and on the sense that it would impose too severe a burden on the tortfeasor to be responsible for such damages.

           

            It should be remembered that we are concerned here with the establishment of an independent and separate duty of care that the tortfeasor owes to the one who was injured mentally, to avoid causing him injury, that is, that the tortfeasor should not cause such injury by his acts.

 

       In contrast to the criteria adopted by other countries, I do not see the need to advance the distinction between injury caused on the spot, as an immediate result of shock from the main injury, and damage caused at a later stage. The proper distinction should be according to the extent of the damage. As held, for example, by the court in the Paugh case [21], supra, what should govern is the severity of the damage as a result of which the victim is deprived of his ability to cope with the mental pressure. Such severe injury may stem from the shock of immediate observation, while even more severe damage might result from the continuous observation of a dying child's suffering. The requirement that the injury be shock induced appears to me to a large extent artificial. It would be more in keeping with the demands of logic and justice that the governing test should be causal proximity and clear proof of real and definite mental injury, not proximity of time and place.

      

       (D) What is Mental Injury - We have seen above that the rule in England and the United States is that the plaintiff must suffer severe mental injury before he will be entitled to a remedy. This requirement is phrased in different ways: a substantial recognized mental illness, mental injury with physiological manifestations, severe mental injury, and the like. The idea at the basis of this condition is that legal protection should be given only to mental injury that clearly and obviously amounts to illness, since slight mental harms are an everyday matter in the reality of our lives and a person must overcome them by his own means. These injuries, such as distress, pain and anger are, in the nature of things, temporary and ephemeral and should not be compensable even if they do not disappear. In general, they furnish no justification to impose liability on the wrongdoer, on the one hand, and one should also not burden the legal system on their account, on the other hand. It should be emphasized and reemphasized that in the absence of any clear criterion, there is a substantial reason to fear the false creation of injuries that never occurred. The absence of acknowledged medical classification would also make it extremely difficult to estimate the extent of the injury, and might even prevent it  completely.

      

            In CA 243/83 [8] my honorable colleague, Barak I, held, at p. 142, that "... non-property injury, too, is injury for purposes of the tort of negligence, and it is compensable, if a reasonable person had the duty (both conceptual and concrete) to foresee its occurrence because of the negligence". He said further that "... according to all considerations of legal policy there exists a (normative) duty to foresee non-property injury to a person who is within the primary circle of risk, that is, the person against whom the injurious act was aimed... We can leave for further consideration whether additional victims, who suffer non-property injury, come within the scope of those who must be taken into account as likely to be injured" (Emphasis added - M.S.). In our case the direct victim of the negligent act is the person who was killed, injured or imperilled. The duty owed to him not to cause him any bodily injury was infringed. The victim's relatives who were injured mentally as a result of the injury to him come within the "circle of secondary risk" and, therefore, we must examine the question whether all purely non-property damage caused to a relative is sufficient to create liability toward him. Clearly, this is a question of the duty to foresee from a normative aspect, since some mental injury will generally be an automatic consequence of the negligent event.

           

            Without laying down any hard and fast rule, it appears to me that there are weighty reasons to limit compensable damage to substantial mental reactions (as distinguished from negative human reactions that the person who experiences them can cope with and overcome them by his own means) as, for example, mental illness plain and simple (a psychosis) and other clear and severe, and even continuing, mental ailments (neuroses), though they do not amount to mental illness per se. This question will undoubtedly recur to be considered by the courts from case to case, taking into account the circumstances of each case and the evidence of medical experts that will be adduced. But it is clear that cases that do not come within the definition of recognized psychoses can serve as a basis for an action only in clear and serious instances.

           

            21. The Law in Israel - The Road Accident Victims Compensation Law

           

            The two appeals before us involve events which were road accidents within the meaning of the Compensation Law and therefore an additional question to be answered is whether the applicants in LCA 452/87 and the appellant in CA 80/88 are entitled to compensation for the injury they suffered as "injured persons" to whom "bodily injury" was caused in a "road accident".

 

          Section 1 of the Compensation Law defines an "inured person" as "a person to whom bodily injury has been caused in a road accident". 'Bodily injury" is defined to include mental or cognitive defect". Hence, the injury in both cases before us is "bodily injury". The question is whether this injury was caused in a "road accident". "A road accident" is defined as "an event in which bodily injury is caused to a person as a result of the use of a motor vehicle" (Emphasis added - M.S.). The combination of these definitions creates the condition that an "injured person" must be a person to whom bodily injury has been caused in an event in which a person was caused bodily injury as a result of the use of a motor vehicle.

         

          The Jerusalem District Court held, in the combined cases LCA 452/87 and LCA 444/87, that:

         

          "the word 'in' points to direct injury in an accident, at the time and place of its occurrence and by virtue of its force. It does not say 'because of an accident', nor does it say 'in consequence of an accident'. It says 'in an accident', which indicates that the reference is to a direct injury".

         

          The District Court relied also on the opinion of Professor I. Englard, Compensation for Victims of Road Accidents (Yahalom, 5739) 30 n. 78, and on Professor D. Kretzmer "Road Accident Victims Compensation Law, 5735-1975" Lectures Given During Discussion Session for Judges 5736 (The Hebrew University and The Courts Administration, S. Shitreet ed., 5737) 113, 116-117, according to whom a shock which occurs at a distance from the scene of an accident is not a "road accident" within the meaning of the law. This was the opinion also of the Nazareth District Court in CA 80/8, which also supported its opinion by considerations of legal policy, as follows:

         

          "The law is designed to provide a remedy for victims of road accidents, by imposing an absolute duty of compensation. On its face, the legislator's intent was to provide for the injuries of persons actually involved in the accident, and since this is one of the possible interpretations of the law's terms, - and the more common one at that, in every day parlance - I think it should be adopted rather than interpret the law in a way that expands the scope of liability".

           

            22. (A) From the point of view of legal policy, it is of course desirable that there be a unified approach in tort actions and actions under the Compensation Law that relate to the same accident. There is no sense or logic in a situation in which the main victim sues under the Compensation Law while the relative who is mentally injured sues under the Civil Wrongs Ordinance, particularly since in the case of a road accident both claims will be based on the same insurance policy. Of course, on the other hand, it can be argued that in fixing absolute liability the legislature intended to provide compensation only to one "actually involved" in an accident, and that the law should not be interpreted so as to expand the bounds of liability. The answer to this argument is that the legislature's main aim was that, in light of the extent and frequency of road accidents, it should no longer be required to litigate the question of guilt, and from this aspect, therefore, it is not necessary to interpret the law so as to confine its application to the main victim alone.

           

            (B) The central question is, of course, whether the Compensation Law, as it stands, can encompass liability such as that under consideration here.

           

            The answer to this question is in the affirmative. My honorable colleague, Barak J, discussed the question of interpreting the term "road accident", inter alia, in CA 358/83 [9]. As said there, an event in which a person is injured bodily is a road accident under that law if the injury was caused "in consequence of' the use of a motor vehicle, that is: where there is a causal connection between the use of a motor vehicle and the injury, then there is a road accident. The expression "in consequence of', in the Compensation Law, includes not merely the causal-factual test but also a causal-legal connection, which selects from amongst the sine-qua-non causes those causes which, because of their nature, provide a basis for imposing liability (id., 862-863). To quote Judge Orr in another case, as referred to in the same judgment, at p. 864:

 

"Much has been written about the nature of the required causal connection or, in other words, the nature of the use to which a vehicle must be put so that the injury which is caused will be regarded as having been caused 'in consequence of the use of a vehicle' within the meaning of the Law. The District Courts have deliberated hard to solve the problem of finding the redeeming formula... Most of the disputes concerning the meaning of the required legal causal connection derive from the fact that the Law does not define the nature of this connection clearly, but leaves the matter to the courts. It has been left to the courts, therefore, to resolve this matter on the basis of the appropriate legal policy, all the while it is difficult to anticipate the great variety of instances which will require such resolution, and occasionally the court is forced to decide on the basis of facts which it can be assumed that the legislature did not foresee, and perhaps could not have foreseen (C.C. (Nazareth) 230/86, at p. 233)".

 

          Barak J. summarized the question of the legal-causal connection applied in the Compensation Law as follows:

         

"...the foreseeability tests looks at the conduct, as it could have been seen in advance, while the Compensation Law looks upon the conduct, as it appears after the fact. In these circumstances, generally, it is not mete to have recourse to the causal test of foreseeability, where the basis of the liability is absolute liability...

 

These considerations for rejecting the foreseeability test as an appropriate causal-legal test point, in my opinion, to the risk test as the proper causal-legal test. This test holds that the required causal-legal connection exists 'if the injurious result is within the scope of the risk that the tortfeasor's conduct created, even if the injurious result was caused by the intervention of a foreign cause' (CA 576/81, at p. 7). According to the risk test 'the question is what risk did the legislature seek to prevent, and once the 'scope of risk' has been established, every harmful consequence which falls within this zone satisfies the required legal-causal connection' (CA 145/80, at p. 146). 'The question this test asks is whether a particular process of causing injury is within the zone of risks for which the Law provides a remedy' (Gilad, in the above article, at p. 30). When we apply this test in the setting of the Compensation Law, it was said that the use of a vehicle is a substantial cause of bodily injury if the injury is within the scope of the risk (both primary and secondary) which the use of the vehicle creates and for which the legislature sought to provide compensation. In my opinion, this is the principal test that arises from the interpretation of the Compensation Law:

 

'This test fulfills the legislature's aim. It has appropriate flexibility and it is suitable to the nature of the liability... which is liability without fault...' (CA 804/80, at p. 439)".

 

            This is also the answer to the question before us: the legal-causal connection also embraces mental injury to a first-degree relative of the person directly injured in the accident itself. The injury to the relative is a risk which should be taken into account. It is within the scope of the risk created by the tortfeasor's conduct. Professor Englard expressed the same opinion in his book referred to above (2nd ed. 1990), at page 59:

           

"In our opinion, the preferred approach in this matter is that which expands liability under the Law up to the limits of liability for the tort of negligence. Formally, the risk test adopted in the Shulman case tends toward expanding the right to a remedy. According to this test, the exact process of causing damage is not important; the kind of general risk is the important factor. It would appear that a mental shock at the site of the accident is not different in essence from one that occurs a bit more removed. Both come within the zone of risk which accompanies the use of a motor vehicle. From a substantive point of view, as well, narrowing recovery appears unjustified. It would require splitting the actions when grounds exist for liability in tort: the primary victims would claim under the Compensation Law while the indirect victims would claim under the Civil Wrongs Ordinance. The simultaneous administration of two compensation systems would complicate orderly litigation unnecessarily. This stands out particularly in light of the fact that one insurance policy covers both cases. For all these reasons, one should coordinate between the rule applicable to mental shock under the Compensation Law and that applicable in the tort of negligence".

 

            I am, therefore, of the opinion that mental injury to a relative comes within the scope of the Compensation Law. The tests will be the same as those set forth in great detail above, in our discussion of liability in tort.

           

            It should be added in this context that, based on the principle of unification of causes of action, anyone who has a cause of action because of a "road accident" within the meaning of the Compensation Law, may not sue for compensation for bodily damage under the Civil Wrongs Ordinance (section 18(a) of the Compensation Law). But the provisions of the Civil Wrongs Ordinance will apply in all cases in which the injury does not occur in a "road accident", as defined in the Compensation Law (for example, damage because of a child drowning in a swimming pool or similar tragedies).

           

            23. In the light of what has been said above, the cases before us should be returned to the courts of first instance to allow amendment of the statements of claim and for reexamination in accordance with the guidelines set forth at the end of paragraph 22 of this judgment.

           

            24. To sum up, the appeal in LCA 444/87 is dismissed.

           

            LCA 452/87 and CA 80/88 should be returned to the District Court or to the Magistrate Court, whichever is appropriate, for further proceedings in accordance with the guidelines detailed above.

           

            The applicants in LCA 444/87 and the respondents in CA 80/88 will pay costs in the amount of NIS 5000 to each of the opposing sides.

            Justices A. Barak and D. Levin concur.

            Decided as stated in the president's Opinion.

            Judgment given on 30.7.90.

 

 

 

 

 

Appeal CA 754/05 allowed in part. Appeal CA 759/05 denied.

19 Sivan 5767.

5 June 2007.

 

 

 

 

 

 

 

 

CA 11152/04

A

v.

1.         Migdal Insurance Company Ltd

2.         Avner Car Accident Victims Insurance Association Ltd

3.         Attorney-General

CA 11313/04

1.         Migdal Insurance Company Ltd

2.         Avner Car Accident Victims Insurance Association Ltd

v.

1.         A

2.         Hotline for Migrant Workers

3.  Hebrew University Legal Aid Clinic for Combating Trafficking in Women

 

 

The Supreme Court sitting as the Court of Civil Appeals

[16 October 2006]

Before President Emeritus A. Barak, President D. Beinisch

and Vice-President E. Rivlin

 

Appeals of the judgment of the Tel-Aviv-Jaffa District Court (Justice Dr D. Pilpel) on 26 October 2004 in CC 1553/99.

Facts: The appellant in CA 11152/04 (‘the appellant’) was injured in a road accident. As a result of the accident, his sexual functioning was impaired. The main issue addressed by the court regarded the compensation awarded to the appellant for the use of escort services.

 

Held: The appellant did not succeed in proving, from a factual viewpoint, a need for resorting to escort services. In addition, the law of compensation does not recognize the possibility of pecuniary damages for the expenses of using escort services. Compensation for impairment of sexual functioning can be awarded for pecuniary loss, i.e. expenses for medications and recognized therapies. It can also be awarded for non-pecuniary loss that is expressed in the pain and suffering of the injured person that arises from the impairment. Pecuniary compensation should also not be awarded for the use of escort services for reasons of public policy, in view of the many problems of criminality that are associated with the ‘prostitution industry’ in Israel, and especially trafficking in women for the purposes of prostitution, which have significantly increased in the last decade.

 

Appeal CA 11313/04 allowed in part.

 

Legislation cited:

Contracts (General Part) Law, 5733-1973, ss. 30, 61(b).

Inheritance Law, 5725-1965, s. 143.

Names Law, 5716-1956, s. 16.

National Health Insurance Law, 5754-1994, third schedule.

Penal Law, 5737-1977, ss. 199, 201-203, 203A, 203B, 205A-205C, 215(c).

Rehabilitation of Psychologically Disabled Persons in the Community Law, 5760-2000.

Road Accident Victims Compensation Law, 5735-1975, s. 4(a)(3).

Road Accident Victims Compensation (Calculation of Compensation for Non-Pecuniary Loss) Regulations, 5736-1976.

Torts Ordinance [New Version], s. 2.

 

Israeli Supreme Court cases cited:

[1]         CA 243/83 Jerusalem Municipality v. Gordon [1985] IsrSC 39(1) 113.

[2]         CA 518/82 Zaitsov v. Katz [1986] IsrSC 40(2) 85.

[3]         CA 22/49 Levy v. Mosaf [1950] IsrSC 4 558.

[4]         CA 557/80 Naim v. Barda [1982] IsrSC 36(3) 762.

[5]         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.

[6]         CA 10064/02 Migdal Insurance Co. Ltd v. Abu-Hana [2005] (3) TakSC 3932.

[7]         CA 773/81 Estate of Robert Freilich v. State of Israel [1982] IsrSC 36(4) 816.

[8]         CA 541/63 Reches v. Hertzberg [1964] IsrSC 18(2) 120.

[9]         CA 209/53 Weizman v. Zucker [1954] IsrSC 8(2) 1412.

[10]      CA 12/55 Kleiman v. Glabgisser [1956] IsrSC 10(2) 1030.

[11]      HCJ 114/86 Weil v. State of Israel [1987] IsrSC 41(3) 477.

[12]      LHCJA 5614/04 Amir v. Israel Prison Service [2004] (3) TakSC 3446.

[13]      CA 52/54 Golob v. A.B. [1955] IsrSC 9(2) 841.

[14]      CA 541/63 Reches v. Hertzberg [1964] IsrSC 18(2) 120.

[15]      CA 3417/00 Yaniv v. Hadar Insurance Co. Ltd [2001] (2) TakSC 714.

[16]      CrimA 3520/91 Turgeman v. State of Israel [1993] IsrSC 47(1) 441.

[17]      CrimA 2885/93 Tomer v. State of Israel [1994] IsrSC 48(1) 635.

[18]      CrimA 94/65 Turgeman v. Attorney-General [1965] IsrSC 19(3) 57.

[19]      CrimA 1609/03 Borisov v. State of Israel [2003] (3) TakSC 1919.

[20]      CrimA 6568/93 Krugoltz v. State of Israel [1995] IsrSC 49(1) 397.

[21]      CrimA 765/78 Yanko v. State of Israel [1979] IsrSC 33(3) 219.

[22]      CrimA 648/77 Kariv v. State of Israel [1978] IsrSC 32(2) 729.

[23]      CrimApp 7542/00 Hanukov v. State of Israel [2003] (3) TakSC 1992.

[24]      CrimApp 9274/01 State of Israel v. Yishai [2001] (4) TakSC 57.

[25]      CrimApp 7544/03 Rahimov v. State of Israel [2003] (3) TakSC 1501.

[26]      CrimA 419/05 Vodovichenko v. State of Israel [2005] (2) TakSC 3903.

[27]      LCA 8925/04 Solel Boneh Building and Infrastructure Ltd v. Estate of Alhamid [2006] (1) TakSC 2609; [2006] (1) IsrLR 201.

[28]      HCJ 58/68 Shalit v. Minister of Interior [1969] IsrSC 23(2) 477; IsrSJ SV 35.

[29]      HCJ 6893/05 Levy v. Government of Israel [2005] IsrSC 59(2) 876.

[30]      HCJFH 4191/97 Recanat v. National Labour Court [2000] IsrSC 54(5) 330.

[31]      HCJ 693/91 Efrat v. Director of Population Registry, Ministry of Interior [1993] IsrSC 47(1) 749.

[32]      CA 552/66 Levital v. General Federation Medical Fund Centre [1968] IsrSC 22(2) 480.

[33]      HCJ 143/62 Funk-Schlesinger v. Minister of Interior [1963] IsrSC 17 225.

[34]      CA 200/63 Tzuf v. Ushpiz [1963] IsrSC 17 2400.

[35]      CA 5794/94 Ararat Insurance Co. Ltd v. Ben-Shevach [1997] IsrSC 51(3) 489.

[36]      CA 589/89 Rakovitsky v. Yaakobov [1993] IsrSC 47(1) 726.

[37]      CA 235/78 Hornstein v. Ohavi [1979] IsrSC 33(1) 346.

[38]      CA 146/87 Katz v. Rosenberg [1989] IsrSC 43(3) 421.

[39]      CA 2801/96 El-Al Israel Airlines Ltd v. Yifrach [2001] IsrSC 55(1) 817.

 

Israeli District Court cases cited:

[40]      CC (TA) 11/97 Sebag v. Israeli Car Insurance Pool (unreported).

[41]      CC (TA) 754/93 Kan-Dror v. Clal Insurance Company Ltd (unreported).

[42]      CC (Hf) 1269/93 Sharon v. Mizrahi (unreported).

[43]      CC (Jer) 1433/96 Maimuni v. Jerusalem Municipality (unreported).

[44]      CC (TA) 569/96 Dahari v. Nevaro (unreported).

[45]      CC (BS) 2817/98 Asor v. Levidei Ashkelon Ltd (unreported).

[46]      CC (Hf) 709/03 Mizrahi v. Aryeh Insurance Co. Ltd (unreported).

[47]      CC (Hf) 10312/97 Reitman v. Israeli Phoenix Insurance Co. Ltd (unreported).

[48]      CC (Hf) 1102/94 Dayan v. Karnit Road Accident Victims Compensation Fund (unreported).

[49]      CC (Jer) 82/94 Panon v. State of Israel, TakDC 96(3) 748.

[50]      CC (Hf) 820/98 Hattib v. Fox, TakDC 2004(1) 110.

[51]      CC (TA) 2191/02 K.A. v. Igor, TakDC 2006(1) 7885.

 

Israeli National Labour Court cases cited:

[52]      NLC 56/3-180 Eli Ben-Ami Classa Institute v. Galitzensky, TakNLC 96(3) 245.

 

Israeli Regional Labour Court cases cited:

[53]      LabC (BS) 4634/03 V.M. v. Salasrabsky, TakLC 2005(3) 97.

 

American cases cited:

[54]      Felice v. Valleylab, Inc., 520 So. 2d 920 (La. App. 3d Cir. 1987).

[55]      Isgett v. Seabord Coast Line R. Co., 332 F. Supp. 1127 (D.S.C., 1971).

[56]      Quade v. Hartfield Enterprises Incorporated, 120 Mich. App. 704 (1982).

 

Australian cases cited:

[57]      Lawrence v. Mathison (1982) 11 NTR 1.

[58]      Hills v. Transport Commission, Tas SR 154.

 

Canadian cases cited:

[59]      Andrews v. Grand & Toy Alberta Ltd. [1978] 2 S.C.R. 229.

 

English cases cited:

[60]      Wise v. Kaye [1962] 1 Q.B. 638.

[61]      Cook v. J.L. Kier & Co. [1970] 1 WLR 774.

[62]      Hodges v. Harland & Wolff [1965] 1 WLR 523.

[63]      Burns v. Edman [1970] 2 Q.B. 541; [1970] 1 All ER 886.

 

Italian cases cited:

[64]      Piccioli c. Meie Assicurazioni, Court of Cassation, n. 4927, 1986.

 

For the appellant in CA 11152/04 — Z. Kalir.

For Migdal Insurance Co. Ltd and Avner Vehicle Accident Victims Insurance Association Ltd — I. Weinberg, A. Zohar.

For the Attorney-General — O. Sonn, O. Mor-El.

For Hotline for Migrant Workers and Legal Aid Clinic for Combating Trafficking in Women at the Hebrew University — N. Levenkron, U. Sadeh.

 

 

JUDGMENT

 

 

Vice-President E. Rivlin

The appeals before us raise several issues, including the question whether an injured party suffering from sexual dysfunction should be awarded compensation for requiring escort services.

Background

1.    The appellant in CA 11152/04 (the respondent in CA 11313/04; hereafter — the appellant), who was born in 1975, was injured in 1998 in a road accident. The medical experts who were appointed by the court determined that he suffered from various disabilities, which the trial court enumerated as follows: 20% for an injury to his left thigh, 10% for scarring, 10% for difficulty in focusing his eyesight, 5% for damage to his hearing, 10% for tinnitus, 5% for dizziness, 10% for urological problems, 10% for sexual dysfunction caused by psychological problems and 70% for psychological disability. The combined medical disability was held to amount to 83%. The question of the actual liability of the respondents in CA 11152/04 (the appellants in CA 11313/04; hereafter — the respondents) to compensate the appellant for his injuries is not in dispute. Both the trial in the District Court and the present hearing therefore focused on the question of the quantum of damages.

After the District Court held, as a finding of fact that was based inter alia on the opinion of the medical expert, that the appellant’s disability, and especially his psychological disability, was not malingering and was a result of the accident, the court addressed the degree of the appellant’s functional disability. On the basis of all the facts and testimonies, the appellant’s functional disability was set at 100%. The court went on to hold, in view of the appellant’s personal characteristics, his qualifications and his abilities, that the appellant’s earning capacity, had it not been for the accident, would have amounted to NIS 10,780 per month (before deducting tax), and that his future loss should be calculated until age 70. For the past loss of earnings, the court made a calculation for a certain period, in view of the appellant’s plans prior to the accident, on the basis of the national average wage in the economy.

The trial court found that the appellant required psychiatric treatment, and that he needed to be treated privately, mainly in view of the trust that the appellant had in his doctors. According to the details that were submitted, it was held that a calculation should be made on the basis of two treatments per week, at a cost of NIS 500 each. He was also awarded a global amount of NIS 30,000 for the purpose of purchasing medications. The court did not find sufficient grounds for awarding additional medical expenses, apart from the purchase of a masking machine for treating the tinnitus in an amount of NIS 36,721. The court thought that in the circumstances of the case the proper treatment of the appellant’s sexual dysfunction should be by means of ‘medication therapy and/or visits to an escort agency’ and not by means of sex surrogate therapy. The appellant was therefore awarded a sum of NIS 150,000, which included the costs of ‘medications (such as Viagra) and other injections that are not covered by national health insurance, which was calculated on a once-weekly basis, as well as an additional visit to an escort agency once a week.’ Among the additional heads of damage that the court awarded were telephone expenses and mobility expenses. For telephone expenses the court awarded sums of NIS 25,416 for the past and NIS 108,674 for the future, and for mobility it awarded a sum of NIS 55,000. With regard to these two heads of damage, the court addressed inter alia the fact that as a result of the accident the appellant was hyperactive and was ‘compelled’ to talk on the telephone (including on a mobile telephone when he was away from home) and to drive (‘a driving obsession’). An additional amount of NIS 250,000 was awarded for the head of assistance and supervision, and a further NIS 150,000 was awarded for help in housekeeping; the court awarded a sum of $78,000 for housing expenses. An amount of NIS 20,000 was awarded for expenses involved in sports activity; the court ordered that the calculation of compensation for pain and suffering should be made for 83 days of hospitalization (without taking into account visits to ‘day clinics’ made by the appellant). The court ordered that immediate payments should be deducted from the amount of compensation, and that benefits from the National Insurance Institute given to the appellant according to the temporary disability that was recognized should be frozen until his claim was decided.

It should be noted that the District Court did not, in its judgment, make a calculation for each head of damage, and with regard to some of these it only outlined criteria for the compensation. In my opinion, there is an advantage in making such a calculation, both in order to prevent potential disputes with regard to the interpretation of what the court says, and also in order to give a complete and tangible picture of the separate and total amounts of the compensation. In any case, according to the respondents the total amount of compensation is approximately NIS 5,500,000.

3.    This judgment is being challenged by the parties on both sides. The dispute concerns every aspect of the case. We ought to emphasize once again that the discretion of the trial court, in a case such as this, has great weight, from the viewpoint of determining the findings of fact, from the viewpoint of analyzing the expert testimonies and reaching its conclusions therefrom, and from the viewpoint of the evaluations and assessments in determining the compensation. Notwithstanding, in this case we have found that with regard to some of the heads of damage the District Court went too far in the amounts that it awarded, and in particular we have found that the total compensation is in excess of what is proper and reasonable. We should first say that the high damages that were awarded were determined on the basis of a picture of an injured person who does not work for his livelihood, can only be treated by private medical services, burns up many miles in driving, speaks at length on a mobile telephone and requires escort services once a week. Notwithstanding the proven injuries of the appellant, we do not find that the amount awarded has a factual or a normative basis. We shall therefore focus first on those heads of damage that we think require addressing; thereafter we shall discuss in detail the main question arising in the appeals before us, namely the compensation for escort services.

Deliberations

4.    The respondents devoted a large part of their closing arguments to an attempt to undermine the findings with regard to the appellant’s psychological disability. Their objections concern both the actual determination that he has such a disability and the determination that the disability, in so far as it exists, was caused by the accident. These arguments were considered by the trial court, but it did not find that there was any reason, in the circumstances of the case, to reject the conclusion of the medical expert, who was of the opinion that the disability was genuine and not feigned, that the amount of the disability was 70% and that it derived from the accident. We do not find any sufficient reason to intervene in this conclusion of the District Court, which was based on the expert’s opinion. We will merely emphasize the following: the appellant’s head was injured in the accident. The medical documents indicate ups and downs in the psychological sphere. Psychological symptoms in the appellant were observed by various doctors. He was hospitalized in psychiatric wards and was treated, time after time, with medications (he did not always persist with the treatment). The court-appointed expert said that these ups and downs — deteriorations and remissions — are characteristic of this type of case. This expert gave details of his impressions and his findings with regard to the appellant’s psychological condition, and he ruled out the possibility that the current psychological condition is a result of problems and illnesses that are unrelated to the accident. The District Court, which also had the opportunity to form a direct impression of the appellant, adopted the expert’s conclusions. In this regard it has broad discretion, and although the respondents succeeded in raising certain questions, there is insufficient cause for intervention in the conclusion of the District Court concerning the psychological disability. We should also point out that even the questions raised by the respondents with regard to the opinion of Dr Lazri in the field of rehabilitation cannot lead to the conclusions of the trial court being overturned. We are of the opinion that the trial court relied on this opinion, in those matters where it did so rely, after considering all of the evidence that came before it, and in a manner that does not justify intervention.

5.    With regard to the degree of the disability and the loss of earnings: there is no doubt that the appellant’s psychological disability has a very significant effect on his functioning and his ability to earn a livelihood. Notwithstanding, it should be noted that there is no dispute as to the fact that the trial court listed two disabilities that are really one: 10% for urological problems and 10% ‘for erection impairment caused by psychological problems with a possibility of enjoying limited sexual relations with penetration.’ It should also be said that not all of the respondent’s disabilities have a functional significance. Moreover, it appears to me that even when one takes into account the reasoning of the trial court with regard to the appellant’s difficulty with regard to his regular taking of the medications that his doctors have prescribed him, a certain weight should still be given to the fact that the appellant does not minimize his damage in this way and does not fully cooperate with the professionals who are treating him. It should also be recalled that the respondent studied, after the accident, at the Academic College of Engineering, engaged in social relationships, including with girlfriends, drove his car and also travelled abroad.

We should also consider the salary basis that the trial court used to calculate the loss of earnings. The court addressed the relevant factors in this regard: the appellant had a qualification as an electronics technician. At the time of the accident he was 22 years old and served with distinction in the armed forces as an electronic warfare technician in the Israel Air Force. He earned at that time a salary of NIS 3,500 a month and was considering whether to study engineering or to continue his military service. The court went on to say that the appellant’s friend, whose qualifications are similar, earns NIS 15,600, and the appellant’s commanding officer earns NIS 11,000. The court adopted the calculation submitted to it by the appellant — a salary of NIS 10,780 before deducting tax — for the reason that ‘it also constitutes a possible average of his commander’s salary and his friend’s salary.’ Indeed, the appellant’s qualification and abilities — at least in the field of electronics — gave him the potential to obtain a good salary, but at the same time, as we have said, the appellant had not yet chosen his career path and was at the beginning of his professional career.

In view of all of the facts, we have decided to reduce by a relatively moderate amount the compensation for the head of loss of earnings, and to determine the monthly loss in an amount of NIS 8,000. This figure is before the deduction of tax.

6.    The appellant requires psychiatric treatment and help. Notwithstanding, we have found that the amount of compensation awarded to him to cover these expenses — approximately one and a quarter million new sheqels — requires our intervention. In determining the compensation, the court assumed that the appellant needed and will continue to need to be treated privately, because of the relationship of trust he had developed with certain doctors before he filed the claim, a relationship which is of great importance in cases of this kind. The court emphasized that the appellant asked his Health Fund for psychiatric treatment and was refused, and that the Rehabilitation of Psychologically Disabled Persons in the Community Law, 5760-2000, which offers a ‘rehabilitation basket’ at no expense to persons who suffer from psychological disability, was enacted after the relationship of trust between the appellant and his private doctors was created. The court also held that the calculation should be made on the basis of two sessions a week. As I have said, I am of the opinion that the result obtained from the method of calculation that the trial court outlined is excessive, and it does not take into account the need to minimize the damage while properly taking into account the interests of the defendant. As the trial court said, the need for psychiatric treatment and supervision may change from time to time, according to changes in the appellant’s psychological condition. It would appear that under the provisions of the law the appellant is entitled to receive various psychiatric services from his health fund (see especially the third schedule to the National Health Insurance Law, 5754-1994). It also transpires that the appellant himself changed his psychiatrists in the past. On the other hand, I do not see any basis for intervention in the actual finding that the appellant requires and is likely to require private treatment. In the overall balance and after examining the various figures that were presented, I am of the opinion that the amount should be determined by way of a global assessment and should be set at NIS 600,000 as of the date of the District Court’s judgment.

7.    I did not find any basis for awarding the appellant compensation in an amount of $78,000 for housing expenses. The District Court said that the appellant lives in rented accommodation, together with a friend, and the rent is $530. The court emphasized that there is no reason why it should order that the appellant should be placed in protective housing or a ‘hostel,’ and it added that ‘we should take into account the fact that the plaintiff will be interested in living in rented accommodation with another person. The total rent that the plaintiff pays for a three-room apartment is $530, and the total overall capitalized amount (rounded) is $78,000.’ The court ordered the respondents to pay this amount to the appellant. The problem is that not only does the appellant himself dispute the factual basis that underlies the court’s conclusion in this matter — namely, the renting of an apartment together with a friend — but it should also be remembered that even had the accident not occurred the appellant would, it may be supposed, have needed to live in an apartment, and no explanation was given as to whether, and to what extent, his housing expenses increased as a result of the accident. It is clear that compensation should only be paid for additional expenses resulting from the accident, and in this case no such additional expenses were proved in the field of housing. Consequently, the compensation for this head of damage should be cancelled. Similarly, the compensation for telephone expenses — in an amount of NIS 25,416 for the past and NIS 108,674 for the future — seems too high in view of the aforementioned duty of minimizing the damage and the need to award only additional expenses. I would set the compensation for this head of damage in a global sum — for the past and the future — of NIS 50,000. In so far as the head of damage of assistance required from others and help in housekeeping is concerned, I should say that after examining the claims of the parties in this regard, I have not found any reason to intervene in the discretion of the District Court, which awarded a global sum that takes into account all of the facts that were brought before it and its findings and conclusions with regard to the appellant’s condition. I have reached a similar conclusion with regard to the other heads of damage that have not been mentioned in our deliberations up to this point.

We can now turn to examine the main issue that requires consideration and a determination of law, which is the issue of compensation for escort services.

Compensation for escort services

8.    The District Court awarded the appellant a sum of NIS 150,000 for medications to improve his sexual functioning and also for the use of escort services once a week. On this issue the parties explained their positions, and we also heard the positions of the Hotline for Migrant Workers and the Hebrew University Legal Aid Clinic for Combating Trafficking in Women, both of which were recognized as amici curiae, and of the Attorney-General. After we have considered all of the arguments, we have decided to allow the appeal on this point and to cancel the compensation for escort services (while leaving the compensation for medication therapies unchanged).

It appears that this is not the first time that the courts in Israel have awarded compensation to pay for escort services. Thus, in CC (TA) 11/97 Sebag v. Israeli Car Insurance Pool [40] the court considered the case of a victim of a road accident who suffered from urological disabilities, including impotence. The court awarded him compensation for treatments and medications that were intended to treat the problem of impotence, in a global amount of NIS 150,000. The court also awarded him compensation in an amount of NIS 50,000, when it was proved that the injured person resorted, from time to time, to escort services. Similarly in CC (TA) 754/93 Kan-Dror v. Clal Insurance Company Ltd [41], the District Court awarded the injured party compensation in an amount of NIS 200,000 for ‘sex services.’ The court emphasized that it did not intend to ‘give approval to such conduct which was not considered proper’ but ‘all that the court was doing was to recognize a reality in which sex services are available.’ Also in CC (Hf) 1269/93 Sharon v. Mizrahi [42] and in CC (Jer) 1433/96 Maimuni v. Jerusalem Municipality [43] amounts of NIS 20,000 and NIS 35,000 respectively were awarded for ‘social needs’ or the ‘loss of social services.’

9.    Other courts have taken a different approach. In several cases compensation claims for escort services have been denied on the grounds that no such need had been proved from a factual point of view. This, for example, was the case in CC (TA) 569/96 Dahari v. Nevaro [44], CC (BS) 2817/98 Asor v. Levidei Ashkelon Ltd [45] and CC (Hf) 709/03 Mizrahi v. Aryeh Insurance Co. Ltd [46]. In one case the court refused to award compensation in excess of the amount that it awarded for non-pecuniary loss (CC (Hf) 10312/97 Reitman v. Israeli Phoenix Insurance Co. Ltd [47]. A fundamental position on this matter was expressed by the District Court in CC (Hf) 1102/94 Dayan v. Karnit Road Accident Victims Compensation Fund [48]. The court, per Justice S. Berliner, said:

‘I reject the plaintiff’s arguments regarding a need for escort girls because of the impotence which he suffers as a result of the accident. My position is that a distinction should be made between the cost of medical treatment or of medications for sexual problems, which the injured party may require as a result of the damage he sustained in the accident (such as Viagra, treatment at ‘On Clinic’ or sex surrogate therapy at a recognized medical institution) and the prostitution fee that he pays, if he indeed does, to escort girls. Such a payment does not fall within the scope of medical treatment or medical expenses, it does not constitute “rehabilitation,” and for reasons of public policy it should not be recognized as a head of damage; moreover this issue was not properly proved in the present case.’

These remarks are a concise statement of the issue: the whole matter in one sentence. We too are of the opinion that in the case before us sufficient evidence was not brought to show that the sexual needs of the appellant can only be satisfied by means of resorting to escort services. But even if such a need were proven, I still do not think that this is a need that justifies compensation in accordance with our accepted principles — the principles of the law of torts and the principles of Israeli law.

The specific case

10. We should begin by saying that the District Court found that in this case, according to its circumstances, there was no basis for awarding the appellant compensation for the cost of sex surrogate therapy. The appellant withdrew his appeal on this issue in his closing arguments, and therefore we do not need to consider the fundamental aspects of the question of compensation for sex surrogate therapy. We should therefore focus on the compensation that was awarded by the District Court for the cost of resorting to escort services.

In the appellant’s case, an opinion was given by Prof. Matzkin in the field of urology. For obvious reasons we will not discuss the details of the opinion, but we will point out that according to the opinion the appellant suffers from a 10% disability because of ‘impotence arising from psychological issues, with objective and subjective symptoms of erectile dysfunction, but there is a possibility of enjoying limited sexual relations (with penetration).’ The expert emphasized that there is no evidence of any organic injury, but at the same time the appellant suffers from sexual dysfunctions, both when he is being treated with medications that suppress sexual urges and when he is not being treated with such medications. The expert found that what is required in this context is ‘both supportive psychological therapy and local medication therapy to improve the erectile dysfunctions.’

11. And so, in so far as the medications and psychological treatment that the expert recommended in his opinion are concerned, the appellant is entitled to compensation. The court also said that this treatment produces results: ‘from the evidence it appears that the plaintiff succeeds in enjoying sexual relations with the aid of medications such as Viagra and injections.’ In view of all of the arguments of the parties in this regard, I would set the compensation for this head of damage at a sum of NIS 100,000.

In addition, the court awarded the appellant, as we have said, compensation for payments to escort agencies. In this context, the court accepted the argument made by counsel for the appellant that the appellant succeeded in enjoying sexual relations only with escort girls. My impression is that this claim was not properly proved or explained. It is not clear what is the cause of the appellant’s alleged inability to enjoy sexual relations with girlfriends — there is no dispute that he had relationships with girlfriends — and why he allegedly succeeds only with escort girls. Opinions that were filed in the court do admittedly speak of the appellant’s difficulty in creating long-term relationships with girlfriends, but, as we have said, the appellant did enjoy sexual relationships, and he himself, in his closing arguments before the trial court, explained his demand for compensation on other grounds, namely that he goes to escort girls because ‘with them he is successful because no emotion is involved.’ Indeed, it would appear that the trial court awarded the compensation on the basis of this argument. But in my opinion the matter was not properly established in a medical opinion or in other evidence, and there is no clear answer to the question why the appropriate treatment, such as psychological and medication treatment as recommended by the expert urologist, cannot deal with this problem, in so far as it exists, for the benefit of all the parties concerns and especially the appellant himself.

There is consequently a difficulty, from a factual point of view, in the compensation that was awarded for escort services. Notwithstanding, it is not for this reason alone that we think it right to cancel the compensation for this head of damage. There may be circumstances in which there will be a factual basis to a claim for escort services. Thus, for example, an injured person may succeed in proving a claim that, because of his external appearance or psychological problems that are the result of the accident, he has difficulty in creating relationships with partners (even though from a physical viewpoint there is nothing that prevents him from enjoying sexual relations). The question is whether in such a case we ought to recognize the expenses of escort services as a head of damage for which compensation should be awarded.

Sexual dysfunctions: pecuniary loss and non-pecuniary loss

12. Compensation in the law of torts is given for damage, namely ‘loss of life, property, convenience, physical welfare or reputation, or a reduction therein, and any similar loss or reduction’ (s. 2 of the Torts Ordinance). The definition of damage is broad:

‘It includes all types of damage, whether physical or non-physical, whether pecuniary or non-pecuniary. The definition is based upon a tangible reality. It covers both physical injury and pecuniary loss, both personal injuries and discomfort that have a physical expression and also personal injuries and discomfort that have no physical expression’ (CA 243/83 Jerusalem Municipality v. Gordon [1]).

As a rule, damage is identified by comparing the injured person’s position before the tortious act to his position after and as a result of the act. The difference between one and the other reflects the reduction or the loss that is a result of the tortious act, and it is this reduction or loss that the compensation seeks to make good, in so far as this is possible with money. ‘… in order to determine the damage, the [plaintiff’s] position before the incident for which he is suing should be compared… with his position as a result of the respondents’ negligence…’ (CA 518/82 Zaitzov v. Katz [2]). This is the principle of restitution, which lies at the heart of the law of compensation. Indeed, awarding compensation in the law of torts seeks, as its primary goal, to restore the injured person to the position he would have been in had it not been for the tortious act, in so far as it is possible to do this with money (CA 22/49 Levy v. Mosaf [3], at p. 564; CA 557/80 Naim v. Barda [4], at p. 772; A. Barak, ‘Assessing Compensation for Personal Injury: The Law of Torts As it Is and As it Should Be,’ 9(2) Tel-Aviv University Law Review (Iyyunei Mishpat) (1983) 243; CA 140/00 Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter [5]; CA 10064/02 Migdal Insurance Co. Ltd v. Abu-Hana [6]).

One of the distinctions made by case law with regard to the concept of ‘damage’ is the distinction between pecuniary loss and non-pecuniary loss. ‘Pecuniary loss’ — as s. 2 of the Ordinance states — is ‘a real loss or expense that can be assessed in money and of which details can be given.’ And what is non-pecuniary loss? This damage has been defined as ‘intangible losses, which cannot be represented by a mathematical figure’ (see T.M. Tabacchi, ‘Hedonic Damages: A New Trend in Compensation?’ 52 Ohio St. L. J. 331 (1991), at p. 337). But in truth this distinction is not clear and simple. It should be recalled that even non-pecuniary loss is ultimately assessed in money; moreover, pecuniary loss, which is characterized by the possibility of assessing it in money, often involves uncertainty, estimates and even guesswork. Notwithstanding, the dichotomy between pecuniary loss and non-pecuniary loss is well-established, and it can be regarded as follows: pecuniary loss reflects specific expenses and losses, which case law has chosen to reimburse by means of compensation that is calculated specifically and usually actuarially. This is purpose-oriented compensation, which is intended to ensure that the injured person has means for his support, medical care, nursing and rehabilitation. Thus, for example, compensation for nursing is intended to provide payment for the caregiver; compensation for medical expenses is intended to pay for medications; all compensation seeks to achieve restitution when there is a specific need and a specific way of dealing with that need.

Non-pecuniary loss reflects an additional potential aspect of the injury to the victim’s body and mind. Indeed, in addition to pecuniary expenses and a loss of income the injured person may claim, and prove, that he has suffered, as a result of the accident, pain and suffering, distress and anguish, frustration, disappointment, loss of his ability to realize himself and loss of the pleasures of life. Indeed, a hand is not only a means of obtaining a livelihood, and its loss is not merely a loss of income. This additional aspect is reflected in the non-pecuniary heads of damage — pain and suffering, loss of life expectancy, and, according to some authorities, also the loss of the pleasures of life (see Tabacchi, ‘Hedonic Damages: A New Trend in Compensation?’ supra; CA 773/81 Estate of Robert Freilich v. State of Israel [7]). Admittedly, ‘no money in the world can compensate for physical and emotional suffering, for the loss of the chance to have a family, or for the loss of the normal pleasures of life’ (CA 541/63 Reches v. Hertzberg [8], at p. 126). But difficulties in assessing damages do not lead the court to abandon its efforts. Indeed, compensation for non-pecuniary loss is not usually compensation that is paid upon production of receipts. It also does not necessarily seek a specific method of benefiting the injured person nor does it purport to define such a method. To a large extent, compensation for non-pecuniary loss gives the injured person the choice of the manner in which he may assuage his pain and suffering. This choice replaces the choices of which the injured person was deprived as a result of the tortious act. In one case President A. Barak said with regard to compensation for non-pecuniary loss:

‘The court awards the injured party such a sum of money that is capable of allowing the injured party to purchase pleasures that will replace those that have been lost. Therefore, when the damage is pain and suffering and awareness of the loss of the pleasures of life, the injured party will be given compensation that will allow him to purchase other pleasures, which, in so far as possible, will balance the damage that was inflicted. Someone who knows that his life expectancy has been shortened will receive compensation that will allow him to enjoy the years of life that he has left (Estate of Robert Freilich v. State of Israel [7]).

Thus we see that, unlike pecuniary loss which concerns a defined loss and a corresponding compensation that is also defined, non-pecuniary loss is more abstract, and the compensation for it gives the injured party the possibility of choosing for himself the manner in which he will fill the void that has been created by the tortious act. I should emphasize that in saying this I am not trying to express the full complexity of non-pecuniary loss, nor also to make any hard and fast rules with regard to the approach that should be adopted when assessing this loss (see the different approaches that were reviewed in Estate of Robert Freilich v. State of Israel [7]; see also Andrews v. Grand & Toy Alberta Ltd. [59]; Wise v. Kaye [60]; Lawrence v. Mathison [57]). Even the adoption of a functional approach to non-pecuniary loss — and this is not necessarily always the approach that should be adopted — does not provide an unequivocal answer to all the problems. For example, there is a question as to how much the court ought to concern itself with details, where the injured person sets out before the court the remedial pleasures that he wishes to acquire and their exact cost. My opinion is that the consideration of such details is undesirable. Compensation for non-pecuniary loss is not compensation that is paid upon production of receipts, nor does it purport to set a price upon what has no fixed value. It does not seek to pass judgment on the injured person’s choice, nor does it try to ascertain the exact nature of the remedial measures for which the defendant will need to pay. The compensation seeks to improve the condition of the injured person, but it does not specifically define the method in which his condition should be improved. An additional advantage that arises from this approach lies in the consistency and equality that it promotes, i.e., giving similar compensation to injured persons who suffer from similar injuries, without making the amount of the compensation dependent upon the degree of ‘frugality’ or ‘extravagance’ with which they intend to live their lives with their injury.

13. In view of all this, it is not surprising that the same injury of an injured person may often have ‘pecuniary’ ramifications and ‘non-pecuniary’ ramifications. Thus a person who has suffered personal injury may be entitled to compensation both for the ‘pecuniary’ aspect, such as the loss of earnings that arises from the disability and the medical expenses that are required to treat his injuries, and also for the ‘non-pecuniary’ aspect, such as the pain and suffering he experiences as a result of the personal injury. Consider, for example, the case of an injured person whose injuries have seriously deformed his external appearance. This physical injury, which may have pecuniary ramifications, is taken into account when awarding compensation for pain and suffering (see, for example, CA 209/53 Weizman v. Zucker [9]). And in another context, alongside the compensation for the pecuniary loss of a loss of earnings, compensation is sometimes awarded — under the head of damage for pain and suffering — for the ‘loss of work satisfaction’ (CA 12/55 Kleiman v. Glabgisser [10]), in view of the belief that working men or women do not only receive an income but also job satisfaction, self-respect and social recognition.

14. A tortious impairment of an injured person’s sexual functioning or his ability to enjoy sexual relations may also give rise to a right to compensation both for pecuniary loss and non-pecuniary loss. In the pecuniary sphere, the injured person may require medications or various (psychological, psychiatric or sexological) treatments. These are no different from any other medication or treatment, and they are included among those expenses for which the injured person is entitled to compensation. In addition to this, the injury may have a non-pecuniary aspect. The injured person may show that the loss of sexual functioning affected his joie de vivre and reduced his enjoyment of life. He may argue that his ability to form relationships and to feel closeness, warmth and love have been impaired. Indeed, in another context it has been held in the past that:

‘Denying an adult person the possibility of enjoying sexual relations, for a considerable period of time, is a serious injury to the person who is so deprived. The sexual urge is a natural and human instinct, and the suppression of this urge against a person’s will is contrary to human nature and needs’ (HCJ 114/86 Weil v. State of Israel [11], at pp. 483-484).

Similarly —

‘It is possible to argue that enjoying sexual relations is an inseparable part of the instinct for life and survival — personal survival and survival of the race and species — and suppressing such a major instinct in a living being is a violation of a person’s dignity and his ability to realize his life as a human being’ (LHCJA 5614/04 Amir v. Israel Prison Service [12]).

The tortious impairment of the ability to enjoy sexual relations may also be considered a part of the injury to the possibility of having a proper family life and intimacy, and indeed an injury to the possibility of having a family has often led to an award of compensation for pain and suffering — CA 52/54 Golob v. A.B. [13]; CA 541/63 Reches v. Hertzberg [14].

The approach that an impairment of sexual functioning or of the possibility of enjoying sexual relations constitutes non-pecuniary loss has found a place in our law (see for example CC (Jer) 82/94 Panon v. State of Israel [49], where compensation was awarded for non-pecuniary loss as a result of ‘impotence, loss of marriage prospects and shortening of life expectancy’; see also CC (Hf) 820/98 Hattib v. Fox [50], where it was said that ‘the anguish of the plaintiff resulting from his becoming impotent will be taken into account in assessing the compensation for pain and suffering’). The same approach has been adopted in other legal systems as well. In England, for example, the court considered a case of a man who was injured in a work accident, as a result of which he suffered from impotence, loss of his sense of taste and smell and additional physical injuries. The court awarded him compensation for the loss of sexual functioning, within the scope of the non-pecuniary head of damage of loss of the enjoyment of life (Cook v. J.L. Kier & Co. [61]). In the United States, Felice v. Valleylab, Inc [54] was a case that concerned a circumcision operation that had disastrous results. The damage was serious, and the court said:

‘Sexual pleasure, procreativity, marriage in any normal sense, these things will never exist for him. The suffering of deprivation, both physical and mental, that will accompany him throughout his life can be only vaguely imagined. What will his puberty be like? Where will he go to escape the cruel and ribald jokes of his comrades? For that matter who will be his comrades? Into what corner of his dark cell will he seek refuge when the natural urgings of his body wage battle?’

In these circumstances the court awarded the injured person a large amount of damages, which included the cost of medical treatments and an additional non-pecuniary component (see also Hodges v. Harland & Wolff [62]; Isgett v. Seabord Coast Line R. Co. [55]; Quade v. Hartfield Enterprises Incorporated [56]; Hills v. Transport Commission [58]).

Compensation for escort services

15. The District Court recognized expenses that the appellant will incur in order to pay for escort services as a pecuniary head of damage. The court assessed the compensation on the basis of one visit to an escort agency each week. The compensation that was awarded reflects the thinking that resorting to escort services provides a solution to the void suffered by the appellant because of the tortious act, and as such it constitutes pecuniary damage that can be assessed in money and compensated for, all of which in view of the purpose of restitution. I should point out immediately that in my opinion this thinking is problematic.

As I have said, there is a basis for awarding an injured person, whose ability to enjoy sexual relations has been impaired, compensation for pecuniary loss, where use of medications or a visit to a doctor, psychologist or psychiatrist (and even, perhaps, a sex surrogate therapist — we are not expressing any opinion on this matter) may help him and improve his condition. But beyond this, it would appear that the remedy that the law of compensation provides for damage of this kind is not a purpose-oriented remedy. It is questionable whether it is possible to classify the use of escort services as a remedy for the damage involved in the loss of the ability to enjoy sexual relations. A sexual encounter with an escort girl cannot be compared to a medication or a visit to a psychologist, for example, since these — the medication and the visit to a psychologist — have a clear and well-established purpose of healing or rehabilitation, and therefore they fall within the scope of the recognized pecuniary heads of damage. Moreover, the fee paid to a prostitute does not compensate for the loss of all the possible aspects of a sexual relationship and for the decreased opportunities that the injured person has in this sphere. This is not a compensation that corresponds to the damage, which is the accepted requirement for pecuniary damage. By way of comparison, let us consider the case of an injured person whose friends abandon him because of his disabilities and who argues in court that another person is prepared, for payment, to sit with him once a week and speak to him. Unless this person is a psychologist, it is hard to imagine that the court will award compensation in the amount of the capitalized rate of that ‘friend for payment.’ The court may admittedly take into account the injured person’s need to communicate, when, for example, it is choosing between an Israeli therapist and a therapist who is a foreign worker (see, for example, CA 3417/00 Yaniv v. Hadar Insurance Co. Ltd [15]). But there is no precedent for the court awarding pecuniary purpose-oriented compensation, which does not satisfy the accepted and established criteria of professional therapy, for the needs for intimacy, warmth, love, conversation and the other possible characteristics of interpersonal relationships.

This void in pecuniary heads of damage is filled by non-pecuniary compensation, and for good reason. It is precisely the classification of the damage within the category of the non-pecuniary heads of damage, which give expression to an injury but refrain from defining the ways of compensating for it, that is the proper classification. This conclusion can also be reached from another perspective: consider the case of two injured persons whose ability to enjoy sexual relations has been impaired to the same degree. One wishes to avail himself of escort services. The other does not regard this as a proper solution. He wishes to compensate for the anguish caused by his loss in other ways — perhaps by flying in a balloon, perhaps by purchasing a subscription for the theatre or for soccer games, perhaps in another manner that he will choose later in life. Is it proper that the former should receive greater compensation than the latter? Is the method chosen by the former worthy of being considered pecuniary damage, unlike the other methods that do not give rise to pecuniary compensation? Our answer to these questions is no, and this answer is proof of the correct classification of the damage as a type of non-pecuniary loss, which leaves the choice to the injured person.

The accepted rules of compensation therefore do not support the awarding of compensation that is designated for the purpose of financing escort services. Some will argue — and indeed this was argued before us — that this compensation is also inconsistent with the general principles of the Israeli legal system. We also agree with this position, and therefore we will say something on this subject.

Restitution in the light of policy considerations and public policy

16. The proper way in which society should contend with the phenomenon of prostitution has been the subject of great debate for many years. Some people regard escort girls as victims who are forced into prostitution, whereas others claim that some of them knowingly choose this path as a means of obtaining a livelihood (cf. CrimA 3520/91 Turgeman v. State of Israel [16]). Some seek to eliminate the phenomenon, whereas others are of the opinion that it is an unavoidable evil that cannot be eradicated (see the remarks of President M. Shamgar in CrimA 2885/93 Tomer v. State of Israel [17], at p. 638). Some believe that prostitution should be institutionalized, and that denouncing it and banishing it to the fringes of society ultimately harms precisely its victims, who are the women that are employed in prostitution (cf. CrimA 94/65 Turgeman v. Attorney-General [18]). Besides feminist groups that regard prostitutes as victims and prostitution as a violation of human rights, there are other approaches, such as that of sex-worker feminism, which seek to distinguish between forced prostitution and voluntary prostitution and seek protection for the rights of prostitutes. Various legal systems have adopted different approaches, ranging from a blanket prohibition of prostitution and everything connected with it (an approach that is common in the United States) to a regulation of the occupation (an approach that is accepted in countries such as Holland, Switzerland and Spain), with an intermediate position that prohibits certain aspects of the occupation (an approach that exists, for example, in France).

The difficult questions concerning prostitution will not, of course, be resolved here. But when considering the question before us, we should address the law in Israel and, what is no less important, the reality in Israel with regard to the prostitution industry, a reality that is reflected inter alia in the case law of this court. The criminal law in Israel expresses a negative attitude towards the occupation of prostitution, and especially towards pimping, exploitation and benefitting from the profits of prostitution (see CrimA 1609/03 Borisov v. State of Israel [19]; Turgeman v. State of Israel [16]). Admittedly, prostitution in itself is not prohibited. ‘It is well known that prostitution (like suicide) is not an offence, and only the incitement to prostitution (like aiding or inciting suicide) constitutes an offence’ (CrimA 6568/93 Krugoltz v. State of Israel [20]). Even the customer usually does not commit a criminal offence. However, the occupation of prostitution has criminal aspects — see for example the offence of a public nuisance resulting from the occupation of prostitution (s. 215(c) of the Penal Law) and the offence of having possession of premises for the purpose of prostitution (s. 204 of the Penal Law; see also Turgeman v. Attorney-General [18]; H. Ben-Itto, ‘Statute, Case Law and Reality,’ Sussman Book (1984) 55, at pp. 66-69). With regard to employers and the other persons involved in the occupation of prostitution, see the offences of pimping (s. 199 of the Penal Law); inducing a person to commit an act of prostitution and to engage in the occupation of prostitution (ss. 201-203); trafficking in human beings for employment in prostitution (s. 203A); exploiting minors for prostitution (s. 203B); advertising prostitution services of minors and adults (ss. 205A-205C) and additional offences.

17. Moreover, the situation in Israel with regard to the ‘prostitution industry’ is very disheartening. The serious phenomena that characterize prostitution in Israel were addressed years ago by a commission of enquiry headed by Justice Hadassah Ben-Itto (see Report of the Commission of Enquiry for Examining the Problem of Prostitution, Ministry of Justice Publishing Office, Jerusalem, 1977). The courts have on several occasions discovered serious exploitation and abuse suffered by escort girls (see, for example, CrimA 765/78 Yanko v. State of Israel [21]; CrimA 648/77 Kariv v. State of Israel [22]). Illuminating remarks can be found in this context in the State Attorney’s guidelines concerning the policy for the investigation and prosecution of prostitution offences and trafficking in human beings for employment in prostitution:

‘The phenomenon of managing massage parlours and agencies that provide escort services, which constitute de facto a cloak for the occupation of prosecution, is a very widespread phenomenon. Very often, within the framework of the various kinds of massage parlours, some of the most serious offences are committed, such as trafficking in human beings, trafficking in drugs, extortion, money laundering, etc.. We should aspire to eradicate these phenomena that arise from the occupation of prostitution, on the basis of our recognition of human dignity and the fundamental principles of the Israeli legal system. Nothing stated in this guideline should detract from the aspiration and goal of eradicating the phenomenon of prostitution in general — a phenomenon that in itself constitutes a degradation of the human dignity of women — and even if this goal takes a long time we should work to achieve it (State Attorney’s Guideline no. 2.2 — Enforcement Policy for Offences Related to the Occupation of Prostitution, para. 1, Ministry of Justice website).*

The serious incidents that accompany the ‘prostitution industry’ in Israel became particularly grave when the phenomenon of trafficking in women for prostitution purposes spread. Justice M. Cheshin said that the offence of trafficking in human beings —

‘… is an especially grave offence, and it is not for nothing that anyone who commits it is liable to sixteen years imprisonment… This is an offence that is derived from contemptible phenomena that have arisen in Israel, phenomena of “importing” and abominable and contemptible behaviour towards these girls and women who are trying to find food to eat’ (CrimApp 7542/00 Hanukov v. State of Israel [23]).

Justice Türkel also said that —

‘… the offence of trafficking in human beings for the purpose of employing them in prostitution is one of the most despicable and abominable offences on our statute books. It includes the outrage of selling human beings, the cruelty and degradation of sexual exploitation and the terror of extortion. Within this offence are contained the fear and dread that the trafficker imposes on his victims — and even on others who are involved in his trafficking — during the period of the enslavement, and also after they have been released from their slavery’ (CrimApp 9274/01 State of Israel v. Yishai [24]).

18. Trafficking in human beings in Israel has reached ‘alarming proportions’ (Justice T. Or in Borisov v. State of Israel [19]). It affects the way in which we should address the whole ‘prostitution industry.’ In CrimApp 7544/03 Rahimov v. State of Israel [25], Justice D. Beinisch said the following:

‘In view of the change that has taken place in the character of the offence of pimping against the background of the dark age of trafficking in women, the courts should reassess their attitude to the offence of pimping. The change that has occurred in the Israeli criminal scene in this sphere has found expression in new legislation whose purpose is to fight the phenomenon of the contemptible trafficking in human beings and to eradicate it utterly. In new legislation that introduced the offence of trafficking in women that came into force in July 2000, the offences of pimping were re-enacted, the maximum sentences for the offence of pimping were increased and offences of aggravated pimping were also introduced; these include offences that treat offenders so severely that the maximum sentence for them is identical to the maximum sentence provided for trafficking in human beings’ (see ss. 201-203 of the Penal Law).

In CrimA 419/05 Vodovichenko v. State of Israel [26], Justice E. Rubinstein said the following:

‘The State of Israel, as a society that wishes to be civilized, is at war with the shameful industry that has developed in our midst in the last decade in the sphere of prostitution, with its phenomena of trafficking in women, traffickers and their abetters, brothel owners and modern-style slave masters, who reduce human dignity to the lowest level and sully the name of the whole human race. The courts have an important role in this war. This court has repeatedly emphasized the seriousness of the phenomenon, which the legislature and the law enforcement authorities are vigorously fighting, and it has given expression to this in the cases that have come before it and will continue to do so as long as the phenomenon has not been eradicated, denounced and wiped out. The chain of trafficking and its abetters, the “buyers” of women and pimps are all targets of this struggle; what a degradation it is to “buy” others as if they were objects that can be transferred from one person to another!’

19. Against the background of the provisions of law and the policy that the court is adopting in view of the situation that prevails with regard to the ‘prostitution industry’ in Israel, we find it difficult to accept the argument that restitution requires an award of compensation whose purpose is to finance escort services. Indeed, the principle of restitution, which is the underlying principle that governs an award of damages in torts, ‘is based on a perspective that focuses upon the specific damage that has been suffered by the injured person, for which the tortfeasor is liable’ (Naim v. Barda [4], at p. 775). Notwithstanding, the principle of restitution does not stand alone nor does it operate in a vacuum. Restitution cannot be divorced, nor should it be divorced, from the society in which it is applied and from the accepted general principles of that society. Not every situation permits restitution, nor does every situation merit restitution. This approach derives not only from the understanding that case law in the law of torts may have far-reaching economic, social and other ramifications that sometimes cannot be ignored (cf. LCA 8925/04 Solel Boneh Building and Infrastructure Ltd v. Estate of Alhamid [27]); it derives not only from the fact that sometimes compensation that allows an undesirable situation to continue does de facto perpetuate that reality (see Migdal Insurance Co. Ltd v. Abu-Hana [6]); this approach derives its force also from an outlook that the law of compensation is a part of Israel law — a ‘creature that lives in its environment’ (in the words of Justice Sussman in HCJ 58/68 Shalit v. Minister of Interior [28], at p. 513). ‘This environment’ — in the words of President A. Barak — ‘extends not only to the close legislative context, but also to wider circles of accepted norms, fundamental goals and basic principles. These constitute a kind of “normative umbrella” that extends over all legal texts’ (HCJ 6893/05 Levy v. Government of Israel [29], at pp. 884-885). The law of torts and the law of compensation are not exceptions to this rule. They are a part of the fabric of Israeli law, and they operate from within Israeli society (see also J. Cassels, Remedies: The Law of Damages (2000), at p. 4).

20. These general principles that extend over Israeli law like a ‘normative umbrella’ find their way into civil law through various points of entry. One of these, which is the relevant one for our purposes, is the principle of ‘public policy.’ This principle is one of the legal tools that are intended to preserve the basic values of the legal system and to direct the implementation of legal rules in a way that is consistent with these basic values. This principle ‘injects’ basic values into private law (see HCJFH 4191/97 Recanat v. National Labour Court [30], at p. 363):

‘“Public policy” means the central and essential values, interests and principles that a given society at a given time wishes to uphold, preserve and develop… Public policy is the legal tool by means of which society expresses its credo. With this it creates new normative frameworks and prevents the introduction of undesirable normative arrangements into existing frameworks’ (per President A. Barak in HCJ 693/91 Efrat v. Director of Population Registry, Ministry of Interior [31]; emphasis supplied).

The words ‘public policy’ are stated expressly in various acts of legislation (see for example s. 30 of the Contracts (General Part) Law, 5733-1973; s. 143 of the Inheritance Law, 5725-1965; s. 16 of the Names Law, 5716-1956). ‘Public policy’ is regarded as an umbrella concept (see Efrat v. Director of Population Registry, Ministry of Interior [31]; see also CA 552/66 Levital v. General Federation Medical Fund Centre [32], 483). Section 61(b) of the Contracts (General Part) Law applies it ‘also to legal acts that do not constitute a contract and to obligations that do not arise from a contract.’ I think that in applying the principle of restitution the court has a tool that can prevent the introduction of arrangements that are inconsistent with the basic ethical principles of the legal system (see HCJ 143/62 Funk-Schlesinger v. Minister of Interior [33]).

21. ‘Public policy’ may affect the application of the principle of restitution where the original position or the result that the compensation seeks to achieve involves illegality or a violation of the basic values of society and the legal system. Indeed, in certain cases the court may reach the conclusion that the result of the restitution is illegal or inconsistent with those values. Then it should consider whether this restitution does not undermine the court’s function of enforcing the law or, in appropriate circumstances, of giving expression to the ethical principles and basic values that are accepted by society. But here we should utter a warning: we should take care not to deny compensation simply on the grounds of immorality. A distinction should be made between ‘enforcing morality’ for its own sake and determining a legal rule whose purpose is to prevent others being harmed or exploited. The difficulty in identifying prevailing morality, the fear that a judge will enforce his own private concepts of morality, and the fear that moral concepts that will not stand the test of time will be enforced all lie at the heart of the differences of opinion that exist on this issue (see the classic dispute between Lord Devlin and Professor Hart: P. Devlin, The Enforcement of Morals (1965); H.L.A. Hart, Law, Liberty and Morality (1963)). Difficult questions arise with regard to the fundamental aspect of the enforcement of morality by means of an award of compensation (see R. Gavison, ‘Enforcing Morality, Compensation for Breach of a Promise of Marriage and the Duty of Giving Reasons,’ 8 Hebrew Univ. L. Rev. (Mishpatim) (1978) 282).

22. But where we are not merely speaking of enforcing morality but of preventing restitution that is tainted by criminality, exploitation or the violation of the basic rights of another person, the principle of restitution may yield to public policy. One example that has arisen in various legal systems concerns the question of compensation in cases where the loss of the plaintiffs’ earnings is a consequence of unlawful (or even immoral) activity before the accident. Take the case of a plaintiff who was a thief and can no longer practice this occupation because of the damage caused by the accident. Various authorities have held that it is not possible to award compensation for this loss, even though the question is the subject of debate (C. von Bar, The Common European Law of Torts (2000), at no. 149). Awarding compensation in such circumstances — so they thought — is contrary to the principle that no right of action should arise from wrongdoing (ex turpi causa non oritur actio) (see for example in England the judgment in Burns v. Edman [63] and in Italy Piccioli c. Meie Assicurazioni [64]).

I should point out that the question of restitution in the aforesaid context is a complex one, and we do not intend to make any hard and fast rules in this matter. I should emphasize, however, that in my opinion care should be taken not to apply legal rules that will ultimately harm the victim, deny him rights and benefits and add to his suffering. An example of this is where an injured person worked as an escort girl before she was injured in an accident. In this context, it should be noted that courts in Israel have found, in various circumstances, that a woman who worked in prostitution should not be denied the right to compensation, since they regarded her as a victim and said that she did not herself commit any criminal offence nor perpetrate any wrongdoing from which, according to the well-known principle, no right of action should arise (see for example CC (TA) 2191/02 K.A. v. Igor [51]; LabC (BS) 4634/03 V.M. v. Salasrabsky [53]; NLC 56/3-180 Eli Ben-Ami Classa Institute v. Galitzensky [52]). And the courts were right to do so.

23. An example of another case in which the principle of restitution conflicts with the interests of society as a whole with regard to the criminal law can be found in the entitlement of an injured person, who has defrauded the tax authorities, to compensation in accordance with his real income, which is higher than his reported income (see CA 200/63 Tzuf v. Ushpiz [34]). The courts have admittedly expressed discomfort and hesitation where they have been asked to assess compensation in accordance with figures that are higher than the reported income, and they have made strict probative demands in this regard; but ultimately they have ruled that compensation should be based upon the true income that has been proved (CA 5794/94 Ararat Insurance Co. Ltd v. Ben-Shevach [35]).

Another example of a difficulty in restitution because of illegality or immorality that existed prior to the tort is the case where the significance of the compensation is merely that it provides a means of perpetuating prohibited activity. Admittedly, in the examples given above — compensation for loss of earnings when the earnings are tainted with criminality, or assessing earnings in accordance with income that is higher than that reported to the tax authorities — the compensation was not directly intended to finance the activity or allow its continuation. But take another example, a case in which the injured person, who suffers from physical and emotional pain, petitions the court to receive compensation that is intended for buying prohibited drugs (by which I do not mean drugs that are approved for medical purposes). It would appear that here, even if the injured person miraculously proves that this compensation, with which he will buy dangerous drugs, will make it easier for him to deal with his physical pain or his emotional difficulties, the court will not be a party to this.

24. Our case is not far removed from this last example. Indeed, our conclusion is that there is no basis for the court to award compensation whose purpose is to pay for escort services. We are of the opinion that such compensation is inconsistent with the purposes of the criminal law, especially in view of the situation in Israel and the unrelenting war of the law-enforcement authorities against phenomena involved in the prostitution industry. It should be emphasized that denying compensation is not merely a matter of enforcing morality; its purpose is to prevent the encouragement and financing of phenomena that involve, at least in a large number of cases, exploitation, damage and dependence (see and cf. the remarks of Justice Cheshin in Turgeman v. State of Israel [16]). Israeli law is one system, and the courts that denounce the phenomena with which the prostitution industry in Israel is tainted are the same courts that are being asked to award compensation for escort services. The courts must speak with one voice. In these circumstances we should say clearly that in view of Israeli law and Israeli realities, we should not recognize the use of prostitution services as ‘compensation’ for an injured person, and there is no basis for the court to order a payment of money that is most likely to find its way into the pockets of those persons who earn their livelihoods from the profits of prostitution.

25. It should be reiterated that our position is that it is the law of compensation itself that does not recognize the possibility of awarding compensation for a pecuniary head of damage of escort services; this is not compensation that is required by the principle of restitution. As we have said, this conclusion is not intended in any way to leave the injured person whose sexual functioning has been impaired as a result of the accident without any recourse for his suffering and without compensation for his loss. We are of the opinion that the loss should be expressed by means of two possible tracks, which can be combined with one another: one is the pecuniary track, namely compensation for treatments of various kinds (medications, psychological, psychiatric and other treatments), and the other is the non-pecuniary track, which reflects an additional possible aspect and also allows the injured person, in so far as possible, to choose the ways in which he will compensate for his pain and suffering. Indeed, there are sound reasons why the court should award the injured person compensation for the loss of sexual functioning, but there is no reason why it should allocate compensation for the pecuniary damage expressed in the costs of resorting to escort services.

Admittedly, in the present case, in addition to the pecuniary compensation that was awarded to the respondent for medications and treatments that are intended to improve his sexual functioning (in an amount of NIS 100,000, as aforesaid), there is a restriction upon the possibility of awarding additional compensation for non-pecuniary loss. We are dealing with a claim under the Road Accident Victims Compensation Law, 5735-1975, in which there is a ceiling for non-pecuniary loss (s. 4(a)(3)), and which is determined in accordance with standard rates (see the Road Accident Victims Compensation (Calculation of Compensation for Non-Pecuniary Loss) Regulations, 5736-1976). The ‘standard rate’ approach that is reflected in the compensation for non-pecuniary loss caused by road accidents has an element of objectivity, even though it is not arbitrary (CA 589/89 Rakovitsky v. Yaakobov [36], at p. 733). The compensation ceiling is the downside of strict liability. It creates a standardization of compensation, as opposed to the individualistic approach that prevails when awarding compensation for non-pecuniary loss under the Torts Ordinance (see CA 235/78 Hornstein v. Ohavi [37], at p. 348). The compensation awarded according to the formula provided in the law encompasses all of the aspects of non-pecuniary loss arising from the accident, namely pain and suffering, shortening of life expectancy, loss of marriage prospects, etc.. These are all taken into account in the formula (see CA 146/87 Katz v. Rosenberg [38]; CA 2801/96 El-Al Israel Airlines Ltd v. Yifrach [39]). Nor is compensation for the impairment of sexual functioning or the possibility of enjoying sexual relations an exception to the rule; in other words, it is not excluded from the formula.

The result is that for the pecuniary head of damage of impairment of sexual functioning, the appellant should be awarded compensation of NIS 100,000, and the compensation for the use of escort services should be cancelled. The non-pecuniary aspect of the damage is included in the compensation for the non-pecuniary head of damage.

Conclusion

CA 11313/04 is allowed in the senses set out in paragraphs 5, 6, 7 and 25. The first respondent in that appeal shall be liable for the appellant’s costs and legal fees in an amount of NIS 15,000.

 

 

President Emeritus A. Barak

I agree with the opinion of my colleague Justice Rivlin with regard to the quantum of damages for loss of earnings, psychiatric treatment expenses and housing expenses. I also agree with my colleague’s determination that the compensation for the use of escort services should be cancelled. This consent of mine is based on the factual viewpoint according to which the appellant did not succeed in proving properly, by means of a medical opinion and other evidence, the need for resorting to escort services. With regard to the principle involved in the recognition of expenses for escort services as a head of damage that merits compensation, no decision on this question is required. The principle involved in this matter gives rise to a host of social, moral and ethical problems of supreme importance, which I would wish to leave undecided.

 

 

President D. Beinisch

I agree with the opinion of my colleague Vice-President E. Rivlin and with the result that he reached. With regard to the compensation that was awarded to the appellant and that recognizes the cost of escort services, from a factual viewpoint no basis for this compensation was proved, and this can be regarded as a sufficient reason for intervening in the judgment of the trial court on this matter. Notwithstanding, my colleague did not take the easy route, but chose to address in his opinion the important question of principle concerning the nature of the compensation for the loss of an injured person’s sexual functioning or the loss of his ability to enjoy sexual relations. In this matter I am inclined to agree with my colleague’s outlook that the compensation for this damage falls at least partly outside the scope of pecuniary loss and is a part of the non-pecuniary loss, as distinct from medical and other treatments that should be recognized specifically for the purpose of compensating the damage to sexual functioning.

I also agree with the principled analysis concerning the relationship between the question of ‘public policy’ and the social ramifications of encouraging, even if only indirectly, the activity of those persons who live off the profits of prostitution as a result of their engaging in the prohibited occupation of pimping, and those persons who enjoy the profits of trafficking in women. For all of the reasons mentioned by my colleague in his opinion, the approach adopted by the courts that recognizes the services of escort girls as pecuniary loss that justifies ‘purpose-oriented’ pecuniary compensation is unacceptable. I would further add that my colleague’s opinion sets out the rule of proper judicial policy, which is capable of guiding the trial courts when they award compensation in torts. Notwithstanding, I think that my colleague’s legal analysis does not take into account all of the circumstances and situations in which there may arise a need to consider the relationship between pecuniary compensation and escort services, whether these may concern an escort girl who is a victim of a tort, or other situations of damage whose character and nature we have not considered and are therefore not included in the present deliberations. These are complex questions that we need not consider at the moment; the question whether there is an exception to the general rule and, if so, what is the scope of this exception, can be left to a later date.

Subject to the aforesaid, I agree with the opinion of my colleague the vice-president.

 

 

Appeal CA 11313/04 allowed in part.

24 Tishrei 5767.

16 October 2006.

 

 

*   http://www.justice.gov.il/NR/rdonlyres/A799E348-DA71-439D-B1DE-A1D6E1E0D....

HCJ 8276/05

Adalah Legal Center for Arab Minority Rights in Israel

and others

v.

1.             Minister of Defence

2.             State of Israel

HCJ 8338/05

Estate of the late Shadan Abed Elkadar Abu Hajla

and others

v.

1.             Minister of Defence

2.             Minister of Justice

3.             Attorney-General

HCJ 11426/05

Estate of the late Iman Alhamatz

and others

v.

1.             Minister of Defence

2.             State of Israel

 

 

The Supreme Court sitting as the High Court of Justice

[12 December 2006]

Before President Emeritus A. Barak, President D. Beinisch

and Justices A. Procaccia, E.E. Levy, A. Grunis, M. Naor, S. Joubran,

E. Hayut, D. Cheshin

 

 

Petition to the Supreme Court sitting as the High Court of Justice.

 

Facts: In 2005, an amendment was made to the law of torts with regard to the liability of the State of Israel arising from the activities of its security forces in the territories of Judaea, Samaria and the Gaza Strip. Section 5C of the Torts (State Liability) Law, 5712-1952, which was introduced by the amendment, increased the scope of the state’s exemption from liability, which was previously limited to combatant activities, to any activity (subject to some exceptions) taking place in a ‘conflict zone,’ and the Minister of Defence was authorized to determine which areas would constitute ‘conflict zones.’ He exercised this power on a large-scale basis.

The petitioners attacked the constitutionality of this amendment.

 

Held: Section 5C of the Torts (State Liability) Law, which was introduced by the 2005 amendment, is unconstitutional. It releases the state from liability for tortious acts that are in no way related to ‘combatant activities,’ no matter how broadly the term is defined. The proper approach is to consider each claim on a case by case basis, in order to determine whether the damage is the result of combatant activities or not.

 

Petition granted.

 

Legislation cited:

Basic Law: Human Dignity and Liberty, s. 3.

Torts Ordinance [New Version], ss. 38, 41.

Torts (State Liability) Law, 5712-1952, ss. 1, 2, 5, 5A, 5A(2), 5A(3), 5A(4), 5C(b), 5C(b)(1), 5C(b)(3), 9A.

Torts (State Liability) Law (Amendment no. 4), 5762-2002.

Torts (State Liability) Law (Amendment no. 7), 5765-2005.

 

Israeli Supreme Court cases cited:

[1]           CA 5964/92 Bani Ouda v. State of Israel [2002] IsrSC 56(4) 1.

[2]           CA 623/83 Levy v. State of Israel [1986] IsrSC 40(1) 477.

[3]           HCJ 7957/04 Marabeh v. Prime Minister of Israel [2005] (2) IsrLR 106.

[4]           HCJ 1661/05 Gaza Coast Local Council v. Knesset [2005] IsrSC 59(2) 481.

[5]           CA 6821/93 United Mizrahi Bank Ltd v. Migdal Cooperative Village [1995] IsrSC 49(4) 221.

[6]           HCJ 1715/97 Israel Investment Managers Association v. Minister of Finance [1997] IsrSC 51(4) 367.

[7]           HCJ 6055/95 Tzemah v. Minister of Defence [1999] IsrSC 53(5) 241; [1998-9] IsrLR 635.

[8]           HCJ 1030/99 Oron v. Knesset Speaker [2002] IsrSC 56(3) 640.

[9]           HCJ 6427/02 Movement for Quality Government in Israel v. Knesset (not yet reported).

[10]         HCJ 4593/05 United Mizrahi Bank Ltd v. Prime Minister (not yet reported).

[11]         HCJ 4128/02 Man, Nature and Law — Israel Environmental Protection Society v. Prime Minister of Israel [2004] IsrSC 58(3) 503.

[12]         HCJ 366/03 Commitment to Peace and Social Justice Society v. Minister of Finance [2005] (2) IsrLR 335.

[13]         HCJ 2334/02 Stanger v. Knesset Speaker [2004] IsrSC 58(1) 786.

[14]         HCJ 5026/04 Design 22 Shark Deluxe Furniture Ltd v. Director of Sabbath Work Permits Department, Ministry of Labour and Social Affairs [2005] (1) IsrLR 340.

[15]         HCJ 450/97 Tenufa Manpower and Maintenance Services Ltd v. Minister of Labour and Social Affairs [1998] IsrSC 52(2) 433.

[16]         HCJ 1435/03 A v. Haifa Civil Servants Disciplinary Tribunal [2004] IsrSC 58(1) 529.

[17]         HCJ 10026/01 Adalah Legal Centre for Arab Minority Rights in Israel v. Prime Minister [2003] IsrSC 57(3) 31.

[18]         HCJ 3434/96 Hoffnung v. Knesset Speaker [1996] IsrSC 50(3) 57.

[19]         CA 1432/03 Yinon Food Products Manufacture and Marketing Ltd v. Kara’an [2005] IsrSC 59(1) 345.

[20]         CA 6521/98 Bawatna v. State of Israel (unreported).

[21]         CA 6790/99 Abu Samra v. State of Israel [2002] IsrSC 56(6) 185.

[22]         CA 1354/97 Akasha v. State of Israel [2005] IsrSC 59(3) 193.

[23]         CFH 1332/02 Raanana Local Planning and Building Committee v. Horowitz (not yet reported).

[24]         HCJ 2390/96 Karasik v. State of Israel [2001] IsrSC 55(2) 625.

[25]         CA 2781/93 Daaka v. Carmel Hospital [1999] IsrSC 53(4) 526; [1998-9] IsrLR 409.

[26]         HCJ 7052/03 Adalah Legal Centre for Arab Minority Rights in Israel v. Ministry of Interior [2006] (1) IsrLR 443.

[27]         HCJ 4769/95 Menahem v. Minister of Transport [2003] IsrSC 57(1) 235.

[28]         HCJ 5016/96 Horev v. Minister of Transport [1997] IsrSC 51(4) 1; [1997] IsrLR 149.

[29]         LCA 3145/99 Bank Leumi of Israel Ltd v. Hazan [2003] IsrSC 57(5) 385.

[30]         HCJ 2056/04 Beit Sourik Village Council v. Government of Israel [2004] IsrSC 58(5) 807; [2004] IsrLR 264.

[31]         AAA 4436/02 Tishim Kadurim Restaurant, Members’ Club v. Haifa Municipality [2004] IsrSC 58(3) 782.

[32]         HCJ 7015/02 Ajuri v. IDF Commander in West Bank [2002] IsrSC 56(6) 352; [2002-3] IsrLR 83.

[33]         CFH 9524/04 Yinon Food Products Manufacture and Marketing Ltd v. Kara’an (unreported).

[34]         CrimA 4424/98 Silgado v. State of Israel [2002] IsrSC 56(5) 529.

 

American cases cited:

[35]         Koohi v. United States, 976 F. 2d 1328 (1992).

[36]         Sosa v. Alvarez-Machain, 542 U.S. 692 (2004).

 

English cases cited:

[37]         Mulcahy v. Ministry of Defence [1996] 2 All ER 758.

[38]         Bici v. Ministry of Defence [2004] EWHC 786.

 

For the petitioners in HCJ 8276/05 — H. Jabareen, O. Kohn, D. Yakir, Y. Wolfson.

For the petitioners in HCJ 8338/05 — H. Abuhussein, R. Masarwa.

For the petitioners in HCJ 11426/05 — O. Saadi, A. Yassin, L. Tsemel, G. Hliehel.

For the respondents — A. Licht, S. Nitzan.

 

 

JUDGMENT

 

 

President Emeritus A. Barak

The Torts (State Liability) Law (Amendment no. 7), 5765-2005, provides that the state shall not be liable in torts for damage that occurred in a conflict zone as a result of an act carried out by the security forces. There are several provisos to this rule. Is the law constitutional? This is the question that needs to be decided in the petitions before us.

A.            Factual and normative background

1.             The first Intifadeh began at the end of 1987. It was characterized by demonstrations, tyre-burning, the throwing of stones and Molotov cocktails at the security forces and Israeli citizens in Judaea, Samaria and the Gaza Strip, stabbings and the use of firearms and other weapons (see CA 5964/92 Bani Ouda v. State of Israel [1], at p. 4). The security forces operated in the territories in order to maintain order and security there. In the course of these operations, they used weapons and ammunition. This resulted on more than one occasion in injuries to persons and damage to property that was suffered by inhabitants of the territories, whether they were involved in the disturbances and hostile acts or not. In consequence, actions for damages were filed in the courts in Israel against the state by inhabitants of the territories who claimed that the state was liable under the law of torts for damage that they suffered as a result of what they alleged were negligent or deliberate actions of the security forces. From figures submitted by the respondents it can be seen that thousands of claims of this kind were filed in the various courts in Israel.

2.             These actions were tried in the courts in Israel in accordance with the Israeli law of torts. Under Israeli law, the state’s liability in torts is governed by the Torts (State Liability) Law, 5712-1952 (hereafter — the Torts Law). The fundamental principle enshrined in s. 2 of the law is that ‘For the purpose of liability in torts, the state is like any incorporated body.’ There are several provisos to this principle. The relevant proviso for our purposes concerns ‘combatant activity,’ which states (in s. 5):

‘The state is not liable in torts for an act that was caused as a result of combatant activity of the Israel Defence Forces.’

The Intifadeh claims gave rise to the question of how the term ‘combatant activity’ should be interpreted. Judgements that were given in these claims by the District Courts varied, on this question, between a ‘broad outlook’ and a ‘narrow outlook’ (see A. Yaakov, ‘Immunity under Fire: State Immunity for Damage caused as a result of “Combatant Activity”,’ 33(1) Hebrew Univ. L. Rev. (Mishpatim) 107 (2003), at pp. 158-172). The two approaches held that the activity of the security forces to maintain order and security in the territories during the First Intifadeh might be protected by this immunity. The broad approach tended to regard most of the operational activity of the security forces, which was intended to maintain order and security, as combatant activity. The narrow approach distinguished policing activities from combatant activities and sought to examine the circumstances of each activity in order to determine whether it was a combatant activity or not.

3.             This question of interpretation came before the Supreme Court at the beginning of the 1990s in Bani Ouda v. State of Israel [1]. During the hearing in that appeal, the respondents said that they intended to regulate the question of the state’s liability for damage caused in the Intifadeh by means of Knesset legislation. This led to the publication of the government-sponsored draft Treatment of Defence Forces Claims in Judaea, Samaria and Gaza Strip Law, 5757-1997 (Draft Laws 2645, at p. 497). The draft law sought to give the term ‘combatant activity’ a broad interpretation. It was proposed that ‘any operational activity of the Israel Defence Forces whose purpose was to combat or prevent terrorism, and any other action of protecting security and preventing a hostile act or an uprising that was carried out in circumstances of risk to life or body…’ should be regarded as combatant activity. But the legislative process was unsuccessful, and the draft law did not become statute. In these circumstances, the Supreme Court was required to make a decision in Bani Ouda v. State of Israel [1].

4.             The question that arose in Bani Ouda v. State of Israel [1] was whether shooting by the IDF in the direction of wanted persons who were in flight, without there being any danger to the lives of the soldiers, fell within the scope of combatant activity. For the purpose of the definition of combatant activity, it was held that:

‘The activity is a combatant one if it is an act of combat or a military-operational act of the army. The act does not need to be carried out against the army of a state. Acts against terrorist organizations may also be combatant activities’ (ibid. [1], at p. 7).

Notwithstanding, it was held that not all activity of the security forces should be considered combatant activity:

‘“Only genuine combatant activities within the narrow and simple meaning of this term… in which the special character of combat with its risks, and especially its ramifications and consequences, finds expression, are those that are intended by the wording of s. 5” (per Justice Shamgar in CA 623/83 Levy v. State of Israel [2], at p. 479)… The army carries out various “activities” in the territories of Judaea, Samaria and the Gaza Strip, which create risks of various kinds. Not all of its activities are “combatant” ones. Thus, for example, if the injured party is harmed by an assault of a soldier because of his refusal to comply with an order to erase slogans that are written on a wall, the act of assault should not be regarded as a “combatant activity,” since the risk that this act created is an ordinary risk of an act of law enforcement. This is not the case if an army patrol in a village or town finds itself in a situation of danger to life or serious physical risk because of shooting or the throwing of stones or Molotov cocktails, and in order to extricate itself it fires and injures someone. The act of shooting is a “combatant activity,” since the risk in this activity is a special risk. Between these two extreme cases there may be intermediate positions’ (ibid. [1], at p. 8).

It was therefore held that:

‘When answering the question whether an activity is a “combatant” one, all the circumstances of the incident should be examined. The following should be considered: the purpose of the act, the place where it occurred, the duration of the activity, the identity of the military force that is operating, the threat that preceded it and is anticipated from it, the strength of the military force that is operating and the duration of the incident’ (ibid. [1], at p. 9).

5.             Meanwhile the second Intifadeh broke out in September 2000. A fierce barrage of terrorism befell Israel and the Israelis in the territories. Thousands of terror attacks, which were mainly directed at civilians, were committed inside Israel and in the territories. More than a thousand Israelis lost their lives in the years 2000-2005. Approximately two hundred of these were in Judaea and Samaria. More than seven thousand Israeli citizens were injured. Approximately eight hundred of these were in Judaea and Samaria. Many of the injured became seriously disabled (see HCJ 7957/04 Marabeh v. Prime Minister of Israel [3], at para. 1 of my opinion). The terrorist organizations and terror operatives employed many different methods in their war against Israel. Frequently they operated from among the civilian population inside the territories. The security forces required special deployments and special operations in order to contend with the terrorism and its perpetrators. Sometimes they were compelled to fight in densely populated areas. Between 2000 and 2005 thousands of Palestinians living in the territories were injured as a result of the activity of the security forces. Some of these took part in the hostilities; others did not. As a result of these injuries, once again many claims were filed against the state for damage that was sustained, according to the plaintiffs, as a result of negligent or deliberate activity of the security forces.

6.             Against the background of these events, and in view of the interpretation given to the expression ‘combatant activity’ by the Supreme Court in Bani Ouda v. State of Israel [1], which in the opinion of the Knesset was too narrow, there was a further attempt to regulate in statute the question of the state’s liability for damage caused during the Intifadeh. The government-sponsored draft law that was formulated in 1997 was once again tabled in the Knesset. This time the legislative attempt was successful, and the Knesset adopted (on 24 July 2002) the Torts (State Liability) Law (Amendment no. 4), 5762-2002 (hereafter — ‘amendment 4’). This amendment added to s. 1 of the Torts Law a definition of the expression ‘combatant activity,’ which said the following:

‘“Combatant activity” — including any act of combating terror, hostilities or an uprising, as well as an act for the prevention of terrorism, hostilities or an uprising that was carried out in circumstances of risk to life or body.’

In addition, amendment 4 added s. 5A to the Torts Law, which provides special arrangements for claims that would be filed after its enactment for damage that was caused as a result of the activity of the security forces in the territories. Inter alia, s. 5A provides that notice should be given of damage within 60 days as a condition for filing a claim (s. 5A(2)); the limitations period for these claims is reduced to two years instead of seven (s. 5A(3)); and the rule concerning the transfer of the burden of proof in negligence with regard to dangerous items that is provided in s. 38 of the Torts Ordinance [New Version] and the rule of res ipsa loquitur provided in s. 41 of the Ordinance shall not apply (s. 5A(4)). The law allows the court to depart from these rules for special reasons that should be recorded. Obviously these restrictions apply in cases of claimants who have shown that their damage does not derive from ‘combatant activity,’ according to the new definition in the law, since otherwise the state would have immunity under s. 5 of the law.

B.             Amendment no. 7

7.             The legislature was not satisfied with this. On 27 July 2005, the Knesset amended the Torts Law once again in a manner that restricted even further the state’s liability for tortious acts that occurred in the territories. It passed the Torts (State Liability) Law (Amendment no. 7), 5765-2005 (hereafter — ‘amendment 7’). This amendment is the focus of the petitions before us. The essence of the amendment was the addition of ss. 5B and 5C of the Torts Law, which state:

‘Claims of an enemy or an operative or member of a terrorist organization            5B. (a) Notwithstanding what is stated in any law, the state is not liable in torts for damage that is caused to anyone stipulated in paragraphs (1), (2) or (3), except for damage that is caused in the types of claims or to the types of claimants as stated in the first schedule —

                (1) A national of an enemy state, unless he is lawfully present in Israel;

                (2) An operative or a member of a terrorist organization;

                (3) Anyone who is injured when he is acting on behalf of or for a national of an enemy state or a member or an operative of a terrorist organization.

                (b) In this section —

                ‘enemy’ and ‘terrorist organization’ — as defined in section 91 of the Penal Law, 5737-1977;

                ‘the state’ — including an authority, body or person acting on its behalf.

Claims in a conflict zone     5C. (a) Notwithstanding what is stated in any law, the state is not liable in torts for damage that is caused in a conflict zone as a result of an act done by the security forces, except for damage that is caused in the types of claims or to the types of claimants as stated in the second schedule —

                (b) (1) The Minister of Defence shall appoint a committee that shall be competent to approve, beyond the letter of the law, in special circumstances, a payment to an applicant to whom subsection (a) applies and to determine the amount thereof…

                                …

                (c) The Minister of Defence may declare an area to be a conflict zone; if the minister makes such a declaration, he shall determine in the declaration the borders of the conflict zone and the period for which the declaration shall apply; notice of the declaration shall be published in Reshumot.’

The first schedule provides that state immunity under s. 5B shall not apply to damage that is suffered by someone who is held in custody by the State of Israel. The second schedule provides that state immunity under s. 5C shall not apply to damage that is caused by a criminal offence, damage that is suffered by someone who is held in custody by the State of Israel, damage that is suffered as a result of an act of the civil administration that was done without reference to the conflict and damage that is suffered as a result of a road accident in which a vehicle of the security forces is involved when it is not being used for security operations.

8.             Section 3(b) of amendment 7 authorizes the Minister of Defence to declare areas conflict zones retroactively for the period from the beginning of the conflict (29 September 2000) until six months from the date of publication of amendment 7. The significance of this declaration is that tortious claims that were filed in the years 2000-2005 cannot be tried if the Minister of Defence has declared that they concern events that occurred in a conflict zone. The Minister of Defence made use of his power under this section and on 9 February 2006 and 12 February 2006 he declared (in Yalkut Pirsumim 5942 and 5943 respectively) various areas to be conflict zones for periods that preceded the enactment of the amendment. The territory of Judaea and Samaria was divided into 88 districts and an additional 22 crossing points. Some of these districts were declared conflict zones during a part of the period under discussion. Thus, for example, the Hebron district was declared a conflict zone during 100% of the period from September 2000 until the end of that year; during approximately 90% of the years 2002 and 2003, and during approximately 80% of the time in the years 2001, 2004 and 2005. The Greater Tulkarm district was declared a conflict zone during approximately 88% of the time in the years 2002 and 2003, and during approximately 82% of the time in 2004. The Greater Ramallah district was declared a conflict area during approximately 75% of the time in the years 2001-2003. District 64, which includes villages to the north of Jerusalem, was declared a conflict area during approximately half of the time since the Second Intifadeh broke out until the date of publishing the declaration. The territory of the Gaza Strip was divided into four districts and seven crossing-points. The southern district of the Gaza Strip was declared a conflict zone throughout the period. The central district of the Gaza Strip was declared a conflict zone during approximately 86% of the time. The northern district of the Gaza Strip was declared a conflict zone during approximately 95% of the time. Since 12 September 2005, when the IDF forces withdrew from the Gaza Strip, the whole of the Gaza Strip has been declared a conflict zone.

9.             The Minister of Defence exercised his power under s. 5C(b)(3) of the Torts Law and on 13 June 2006 enacted regulations that govern the activity of the committee for paying compensation beyond the letter of the law, which was established under s. 5C(b) of the law. In the regulations, it was held that the committee is competent to make payments to family members of anyone who was killed in a conflict zone, and to anyone who was seriously injured, on the conditions prescribed in the regulations. Inter alia, the committee should consider the seriousness of the injury and its circumstances, the family status of the injured person and to what extent making the payment will contribute towards the rehabilitation of the injured person. The committee is also authorized to make payments, for personal injury and property damage that are not insignificant, to anyone who is injured as a result of a criminal act, even if no one has been convicted of that act.

C. The contentions of the parties

10. The petitioners in HCJ 8276/05 are human rights organizations. The petitioners in HCJ 8338/05 are the estate and surviving relatives of the late Shadan Abed Elkadar Abu Hajla. According to them, on 11 October 2002 in the evening the deceased was sitting with her husband and their son on the balcony of their house at Rafidia in Shechem. Two IDF jeeps stopped on the road that passes by the house. Several shots were fired from the vehicle in the direction of the windows of the house. As a result of the shooting, the deceased was killed instantly and her husband and son were wounded. In December 2004, the Chief Military Advocate gave instructions to begin an army investigation to establish the circumstances of the deceased’s death. Before the investigation was completed, the petitioners filed a claim in torts against the state in the Nazareth Magistrates Court. After the enactment of amendment 7, and before the claim was tried, the state filed an application to dismiss the claim in limine. In its application the state said that the Minister of Defence had declared the Shechem district a conflict zone during the whole period from June 2002 until the end of March 2003. For this reason the court was requested to dismiss the claim in limine. In HCJ 11426/05 the petitioners include two separate groups. Each group filed a claim in torts against the state with regard to deaths or serious injuries that were caused, according to them, as a result of negligent and even deliberate activity of the security forces in the territories. All of the events took place between 2001 and 2004. After the enactment of amendment 7, these claims cannot be heard, if the districts in which the events took place are declared conflict zones.

11. The petitioners’ position is that amendment 7, and especially ss. 5B and 5C, are unconstitutional and therefore should be set aside. According to them, the Basic Laws apply to the violations of rights that arise from amendment 7, for four reasons. First, the Basic Laws apply to the violations of rights that arise from the amendment, because the amendment denies rights in Israel itself and in its courts; second, because the amendment applies, according to its wording, both to Israelis and to Palestinians; third, the Basic Laws apply in the territories because these laws apply to all the organs of government, and therefore every soldier carries in his knapsack not only the principles of administrative law but also the Basic Laws; fourth, because the Basic Laws give rights to Palestinians who are inhabitants of the territories, by virtue of their being protected persons who are present in an area that is subject to Israel’s belligerent occupation.

12. The petitioners argue that several constitutional rights have been violated. First, amendment 7 violates the constitutional right to life and physical integrity, in that it denies someone who has lost his life or suffered personal injury as a result of a deliberate or negligent act any relief for this injury. Second, the amendment violates property rights, in that it denies someone whose property has been damaged as a result of a deliberate or negligent act any relief. Third, the amendment violates the constitutional right to apply to the courts. Fourth, the amendment violates the constitutional right to equality, since it is intended to apply mainly to claims of Palestinians. Especially serious, according to the petitioners, is the fact that all of these violations include a retroactive violation of the rights of those persons who were harmed by negligent acts of the security forces and who filed a claim in the years preceding the enactment of the amendment. According to them, the violations are particularly grave when we consider the application of the law de facto. In this regard, the petitioners say that the Minister of Defence has declared extensive areas of the West Bank and the Gaza Strip conflict zones for long periods of time. Thereby he has denied the right of many persons to obtain relief for their damage. The petitioners discuss how Israel holds the territories under belligerent occupation. It maintains strict urban control in most of the towns and villages of the West Bank. This control of the towns and villages, streets and crossings, involves close daily contact between soldiers and civilians. This contact is really a form of police work. Notwithstanding, it sometimes involves harm to civilians, whether negligent or deliberate. The result of amendment 7 is that the law exempts the security forces from liability for all the consequences of their acts in the territories that have been declared conflict zones. It justifies, inter alia, shooting injuries and physical injuries in the course of regular checks at roadblocks, property damage in the course of searches, and looting in the course of patrols and arrests. In all of these cases, the injured parties cannot obtain any relief. This results in contempt for the lives of the Palestinians who live in the territories, and contempt for their rights to physical integrity and their property rights.

13. The petitioners’ position is that the violations of the constitutional rights do not satisfy the conditions of the limitations clause. First, legislation that violates rights retroactively cannot be said to satisfy the condition that the violation should be made in ‘statute.’ Second, amendment 7 was not intended for a proper purpose, nor does it befit the values of the State of Israel. The purpose of the legislation is to prevent Palestinians who live in the territories from applying to the courts in Israel. This is a purpose that is improper. It undermines the status of the judiciary. It also violates the rule of law. Another purpose underlying the law is to exempt the state from the financial cost involved in paying compensation. Considerations of economic cost and administrative efficiency do not constitute a proper purpose for a violation of human rights. An additional purpose that underlies the law is to provide a solution to the special difficulties of evidence that confront the state when it seeks to defend itself against tort claims that are related to combat incidents. The petitioners’ position is that the state has not made clear what is special about these difficulties, especially in view of the fact that the burden of proof in claims of this kind rests in any case with the plaintiffs, and therefore the objective difficulties of proof fall mainly on the shoulders of the plaintiffs. Third, even if we say that the purpose is a proper one, the measures adopted in amendment 7 are disproportionate. The state and its agents have already been granted immunity from claims concerning damage that is caused during combatant activity under the provisions of s. 5 of the Torts Law. The definition of ‘combatant activity’ was even expanded in amendment 4. That amendment also introduced additional substantial and procedural advantages for the state in tort claims. All of these are sufficient in order to achieve the proper purpose, which is to protect the state from tort claims that arise from combatant activity.

14. The petitioners further argue that amendment 7 also violates the rules of humanitarian law that apply in territories that are under belligerent occupation, as well as the provisions of international human rights law. The petitioners say that Israel’s control of the territories is a belligerent occupation. The military commander is responsible not only for security interests but also for the safety, security and rights of the protected inhabitants in the territories. Inter alia, the military commander has the duty to compensate protected inhabitants who are harmed as a result of the negligent actions of the security forces. The amendment denies this obligation of the military commander and therefore it is contrary to the provisions of humanitarian law and the provisions of international human rights law.

D. The respondents’ arguments

15. The respondents discuss at length the security background to the enactment of amendment 7. Their position is that the second Intifadeh is a ‘war in the common meaning of the word’ (para. 1 of the respondents’ reply of 6 July 2006) that is being waged in the streets of Israel as well as in the territories of Judaea, Samaria and the Gaza Strip. The scope of the security activity whose purpose is to contend with the threats of terrorism in the second Intifadeh is very great. The conflict has a special character, because the terrorist organizations operate frequently from within residential areas. This requires activity of the security forces inside those residential areas. This activity is intended to target terrorists, but unfortunately inhabitants who are not involved in terrorist activity are also sometimes harmed. These inhabitants file thousands of tort claims against the state for personal injury and damage to property that they allegedly suffer as a result of the activity of the security forces. But the law of torts was not designed to deal with a situation of this kind. Inter alia, this is because the risks in times of war are greater in scope and of more diverse kinds than in times of peace and because of the difficulties of obtaining evidence in cases concerning war damage. Moreover, it is intolerable that the State of Israel should be liable to compensate not only its citizens who are injured by the armed conflict, but also the inhabitants of the Palestinian Authority. The principle that should be followed is that each party to the armed conflict should be liable for its own damage. The Palestinian Authority has mechanisms that are designed to compensate persons who are injured by the armed conflict for their damage. In addition, the Palestinians receive aid from international organizations. For these reasons, there is no basis for applying the law of torts to damage resulting from the armed conflict between the State of Israel and the Palestinians who inhabit the territories. The law of torts should be adapted to the new reality that has been created. Amendment 7 was intended to achieve this goal. The provisions of s. 5B enshrine in the law the principle that is accepted in international law, in English common law and also in Israeli common law, according to which a state is not liable for damage sustained by an enemy alien.

16. The respondents’ position is that it is doubtful whether amendment 7 violates constitutional rights, since it is doubtful whether the Basic Laws give constitutional rights to inhabitants of the territories. Notwithstanding, in view of their position that, even if there is a violation of constitutional rights, it satisfies the conditions of the limitations clause, the respondents focused their arguments on the conditions of the limitations clause. The respondents’ position is that the purposes underlying the amendment are proper ones. The main purpose of the amendment is, as aforesaid, to adapt the law of torts to the special characteristics of the armed conflict with the Palestinians. The amendment was not intended to undermine the status of the judiciary, but to limit the scope of the state’s liability in torts. Therefore the amendment does not conflict with the principle of the separation of powers. The law also does not contain any approval for or consent to negligent or unlawful activity of the security forces. The absence of any liability in torts does not prevent scrutiny of the conduct of the security forces within the context of the criminal law and disciplinary proceedings. It cannot therefore be said that the amendment undermines the rule of law. In addition, the amendment seeks to avoid an undesirable and unjust result, whereby Israel is responsible both for damage to Palestinian inhabitants and for the burden of the considerable damage suffered by Israel and Israelis. The respondents discuss how this purpose, which does indeed involve an economic element, reflects a proper ethical purpose. Finally, in so far as enemy aliens and members of terrorist organizations are concerned, amendment 7 seeks to restrict their claims in order not to aid the enemy in its war against Israel.

17. The respondents’ position is that the violations of rights in amendment 7 satisfy the requirements of proportionality. First, the arrangements in the amendment make it possible to overcome the ethical and practical difficulties of implementing the law of torts in the course of an armed conflict. The amendment also realizes the principle that each party in a war is liable for its damage. This satisfies the rational connection test between the purpose of the amendment and the arrangements provided in it. Second, the arrangements in the amendment satisfy the second test of proportionality (the least harmful measure test). The amendment does not provide an arrangement that amounts to a sweeping denial of the right to compensation. The application of the amendment is conditional upon a declaration that a certain district is a conflict zone. These declarations are limited in time and place and they are made only after a careful examination of the conditions in the area. Admittedly, because of the large scale of the war, large parts of the territories of Judaea, Samaria and the Gaza Strip have been declared conflict zones for lengthy periods. But this is not a sweeping and general declaration, merely a declaration that is based on a careful and precise analysis. Moreover, the broad principle ruling out liability in torts is accompanied in the second schedule by exceptions to the rule. These exceptions reduce the intensity of the violation. Furthermore, the Minister of Defence may add to the list of exceptions. Finally, the law provides a further ‘exceptions mechanism’ that allows compensation to be paid beyond the letter of the law. On the basis of all of these, the respondents’ position is that amendment 7 reflects an arrangement that satisfies the requirements of proportionality. The respondents’ position is that amendment 4 cannot be regarded as an arrangement that violates rights to a lesser degree. There are several reasons for this. According to them, amendment 4 was prepared after the first Intifadeh, and it does not provide a solution to the unique nature of the current armed conflict. Moreover, amendment 4 does not reflect the ethical purpose that each party in an armed conflict should be liable for its losses. Finally, amendment 4 does not address the claims of enemy aliens and members of terrorist organizations. Therefore for this reason also it is insufficient. Third, the respondents’ position is that amendment 7 satisfies the third condition of proportionality (the test of proportionality in the narrow sense). The benefit of the amendment is very great. It adapts the law of torts to the unique circumstances of the armed conflict. It enshrines ethical standards and solves practical problems in implementing the existing law. The amendment also prevents an abuse of Israeli law for the purpose of obtaining money that may be used to wage war against Israel. On the other hand, the harm caused by the amendment is not as serious as the petitioners claim. The respondents discuss how even according to the law that prevailed before the amendment was enacted, the state had immunity against a claim for combatant activity. Many claims arising from events that occurred in the territories since September 2000 may be dismissed on this ground alone. Moreover, some of the claims can be addressed within the framework of the exceptions to the rule or by the committee that is authorized to pay compensation beyond the letter of the law. Finally, it should be remembered that the plaintiffs have an alternative relief of receiving compensation from the Palestinian Authority. In view of all this, the respondents’ position is that the amendment to the Torts Law satisfies the third requirement of proportionality.

18. The respondents’ position is that the amendment does not violate the provisions of international humanitarian law or international human rights law, since both of these sets of laws restrict the right of claim of enemy aliens and recognize the immunity of the state against claims arising from combatant activities during an armed conflict. The respondents point out that exceptions to the state’s liability for claims in torts that derive from combatant activities are recognized in the law of many countries such as the United States, England, Canada, Italy, Japan and Germany.

E.             The proceeding

19. The petitions in HCJ 8276/05 and HCJ 8338/05 were filed at the beginning of September 2005. The petition in HCJ 11426/05 was filed in December 2005. The hearing of the petitions was deferred twice (in March 2006 and April 2006), with the consent of the parties, until regulations were enacted with regard to the committee for paying compensation beyond the letter of the law. The first hearing of the petitions took place on 13 July 2006 before a panel of three justices. At the end of this, an order nisi was made. On 17 July 2006 it was decided that the petitions would be heard before an expanded panel of nine justices. According to an agreed statement filed by the parties, an interim order was made on 30 July 2006, according to which the hearing of pending claims that the state contended were subject to amendment 7 was suspended. The hearing of the petitions on their merits took place before the expanded panel on 30 August 2006.

F.             The questions that arise

20. The petitions challenge the constitutionality of amendment 7. A claim of this kind should focus on one of the Basic Laws. In our case, this is the Basic Law: Human Dignity and Liberty. Claims that amendment 7 violates human rights that are recognized in Israel under Israeli common law, international human rights law or international humanitarian law cannot — according to the constitutional structure of the State of Israel — lead to the unconstitutionality of a statute. The Supreme Court discussed this in HCJ 1661/05 Gaza Coast Local Council v. Knesset [4], where it held:

‘It is not sufficient to find that the Israeli settlers in the area being vacated enjoy human rights that are enshrined in Israeli common law. It is not sufficient to find that they enjoy human rights that are recognized by public international law. Such recognition — and on this we are adopting no position — while important, cannot give rise to a constitutional problem in Israel. The reason for this is that when the violation of a right that arises in common law or public international law conflicts with an express provision of a statute of the Knesset, the statute of the Knesset prevails, and no constitutional problem arises. Indeed, a constitutional problem arises in Israel only if the right of the Israeli settlers is enshrined in a constitutional super-legislative normative provision, i.e., in a Basic Law. Moreover, it is insufficient that the Disengagement Implementation Law violates a right enshrined in a Basic Law. A constitutional problem arises only if the Disengagement Implementation Law violates the right unlawfully. When these conditions are satisfied, we say that the law is unconstitutional and we consider the question of the relief for the violation of the Basic Law’ (Gaza Coast Local Council v. Knesset [4], at p. 544).

This is the position in our case. We should examine whether amendment 7 unlawfully violates the Basic Law: Human Dignity and Liberty. This examination, according to our accepted practice, is done in three stages (see CA 6821/93 United Mizrahi Bank Ltd v. Migdal Cooperative Village [5]; HCJ 1715/97 Israel Investment Managers Association v. Minister of Finance [6]; HCJ 6055/95 Tzemah v. Minister of Defence [7]; HCJ 1030/99 Oron v. Knesset Speaker [8]; Gaza Coast Local Council v. Knesset [4], at p. 544; HCJ 6427/02 Movement for Quality Government in Israel v. Knesset [9]; HCJ 4593/05 United Mizrahi Bank Ltd v. Prime Minister [10]). The first stage examines whether the law — in our case, amendment 7 — violates a human right that is enshrined and protected in a Basic Law. If the answer is no, the constitutional scrutiny ends (see HCJ 4128/02 Man, Nature and Law — Israel Environmental Protection Society v. Prime Minister of Israel [11]; HCJ 366/03 Commitment to Peace and Social Justice Society v. Minister of Finance [12]). If the answer is yes, the constitutional scrutiny passes to the second stage. In this stage, we consider the question whether the law containing the violation, in whole or in part, satisfies the requirements of the limitations clause. Indeed, our basic constitutional outlook is that not every violation of a constitutional human right is an unlawful violation. We recognize lawful violations of constitutional human rights. These are those violations that satisfy the conditions of the limitations clause (see HCJ 2334/02 Stanger v. Knesset Speaker [13]; HCJ 5026/04 Design 22 Shark Deluxe Furniture Ltd v. Director of Sabbath Work Permits Department, Ministry of Labour and Social Affairs [14]). If the violation of the constitutional human right is lawful, the constitutional scrutiny ends. If the violation does not satisfy one of the conditions of the limitations clause, the violations is unlawful. In such a case, we pass on to the third stage of the scrutiny, which concerns the consequences of the unconstitutionality. This is the relief stage. I discussed the importance of this division of the constitutional scrutiny into three stages in Movement for Quality Government in Israel v. Knesset [9], where I said:

‘This division into three stages is important. It is of assistance in the legal analysis. It is intended “to clarify the analysis and focus the thinking” (HCJ 450/97 Tenufa Manpower and Maintenance Services Ltd v. Minister of Labour and Social Affairs [15], at p. 440; …). It clarifies the basic distinction, which runs like a golden thread through human rights law, between the scope of the right and the degree of protection afforded to it and its de facto realization (see A. Barak, A Judge in a Democracy (2004), at p. 135; …). It serves as a basis for the distinction between the horizontal balance (in the first stage) and the vertical balance (in the second stage), between human rights inter se and between human rights and social values and interests (see HCJ 1435/03 A v. Haifa Civil Servants Disciplinary Tribunal [16], at p. 537); it is of assistance in outlining the distinction between the role of the court in the interpretation of the rights in the Basic Law (in the first stage) and its role in the constitutional scrutiny of the violation of these rights in legislation (in the second stage). It is of assistance in examining arrangements in the law, such as affirmative action, while examining the question whether this falls within the scope of the right to equality (the first stage), or whether is constitutes a violation of equality that satisfies the requirements of the limitations clause (the second stage) (see HCJ 10026/01 Adalah Legal Centre for Arab Minority Rights in Israel v. Prime Minister [17], at p. 40; …). It clarifies disagreements on the question of the burden of proof’ (Movement for Quality Government in Israel v. Knesset [9], at para. 21 of my opinion).

Let us now turn to the required constitutional scrutiny.

G.            First stage: the violation of the constitutional right

(1) Presentation of the problem

21. The first stage of the constitutional scrutiny examines whether the statute of the Knesset — in our case, amendment 7 — violates a human right that is protected in the Basic Law: Human Dignity and Liberty. This stage is comprised in our case of two separate questions. The first of these is whether the Basic Law: Human Dignity and Liberty applies in the petitioners’ case, since the damage was caused to them outside Israel. This is a question that arises specifically with regard to amendment 7. If the answer to this question is yes, then the second question arises. This question arises in all the cases where a constitutional contention is raised. The question is whether a human right that is enshrined in a Basic Law has indeed been violated. As we have seen, it is insufficient that a law violates a human right. The constitutional question arises only if the human right is enshrined in a Basic Law. For our purposes, this is the Basic Law: Human Dignity and Liberty. It is also customary to consider at this stage whether the violation is not merely a trivial one (see United Mizrahi Bank Ltd v. Migdal Cooperative Village [5], at p. 431; HCJ 3434/96 Hoffnung v. Knesset Speaker [18], at p. 57). Let us turn to the first of these two questions.

(2) The first question: does the Basic Law apply?

22. In general, Israeli legislation has territorial application. When a law is intended to apply to persons or acts outside Israel, this needs to be stated in statute (expressly or by implication). Indeed, there is a presumption that the laws of Israel apply to legal relationships in Israel, and they are not intended to regulate legal relationships outside Israel. This is the case with criminal legislation in Israel; it is also the case with legislation in other spheres. This presumption is rebuttable (see A. Barak, Legal Interpretation: Statutory Interpretation (vol. 2, 1993), at p. 578). This rule also applies to Israeli legislation in the territories. Judaea, Samaria and the Gaza Strip are not a part of the State of Israel; no declaration has been made that they are subject to the ‘law and jurisdiction and administration of the state.’ There is a presumption that Israeli legislation applies in Israel and not in the territories, unless it is stated in legislation (expressly or by implication) that it applies in the territories (ibid., at p. 579). A similar rule applies also to the Basic Laws. There is therefore a presumption that the various Basic Laws apply to acts done in Israel. As we have seen, this presumption may be rebutted (either expressly or by implication). Can it be said that this presumption is rebutted when the Basic Law concerns human rights? Should the need to enforce human rights against the state not lead to a conclusion that the Israeli organs of government are obliged ‘to uphold the rights under this Basic Law’ everywhere? Should it not be said that any Israel official carries in his knapsack the Basic Law: Human Dignity and Liberty? Should it not be said that wherever the official goes, the Basic Law goes with him? Should it not be said that this approach is particularly appropriate when the act of the official is done in a place that is subject to Israel’s belligerent occupation (see A. Barak, Legal Interpretation: Constitutional Interpretation (vol. 3, 1994), at p. 460)? These questions are good ones. We considered some of them in Gaza Coast Local Council v. Knesset [4] (at p. 560). We held in that case that the Basic Laws concerning human rights ‘give rights to every Israeli settler in the area being vacated. This application is personal. It derives from the fact that the State of Israel controls the area being vacated’ (ibid. [4]). We left unanswered the question whether the Basic Laws concerning human rights also give rights to persons in the territories who are not Israelis. Should we not say that with regard to ‘protected inhabitants’ international human rights law replaces Israeli internal law in this regard? There is no simple answer to these questions. Indeed, in its reply the State does not devote much attention to this question, since in its opinion amendment 7, even if it violates rights that are enshrined in the Basic Law: Human Dignity and Liberty, does so lawfully. It is also our opinion that there is no reason to consider the question of the territorial application of the Basic Law: Human Dignity and Liberty, since the rights that amendment 7 violates are rights in Israel, not rights outside Israel.

Let me explain.

23. Section 5B of amendment 7 applies, according to its wording, to tortious acts done in Israel. The question of the application of the Basic Law therefore does not arise at all in this context. By contrast, s. 5C of amendment 7 provides that ‘the state is not liable in torts for damage that is caused in a conflict zone as a result of an act done by the security forces.’ A ‘conflict zone’ is outside Israel. Does the question of the application of the Basic Law: Human Dignity and Liberty outside Israel arise with regard to this provision? My answer is no. The rights of the residents of the territories which are violated by amendment 7 are rights that are given to them in Israel. They are their rights under Israeli private international law, according to which, when the appropriate circumstances occur, it is possible to sue in Israel, under the Israeli law of torts, even for a tort that was committed outside Israel. Indeed, since the Six Day War, and especially since the first Intifadeh, the courts in Israel have heard claims in torts filed by Palestinian inhabitants of the territories who were injured in the territories by Israeli tortfeasors in general (see, for example, CA 1432/03 Yinon Food Products Manufacture and Marketing Ltd v. Kara’an [19]), and by the activities of the security forces in the territories in particular (see, for example, Bani Ouda v. State of Israel [1]; CA 6521/98 Bawatna v. State of Israel [20]; CA 6790/99 Abu Samra v. State of Israel [21]; CA 1354/97 Akasha v. State of Israel [22]). This situation is consistent with the principles of the conflict of laws in torts that prevail in our legal system (for an extensive survey, see Yinon Food Products Manufacture and Marketing Ltd v. Kara’an [19]). Even the state made no claims against this application of the Israel law of torts. During the oral pleadings in the petitions before us, we asked the state’s representatives whether they had any contention under Israeli private international law with regard to the application of Israeli tort law to the Intifadeh claims. The reply of the state’s representatives was no. It follows that amendment 7 violates the rights given in Israel to inhabitants of the territories who are harmed by tortious acts of the security forces in the territories. This was the position before amendment 7. This position was changed by s. 5C of amendment 7. The rights in Israel under the law of torts were taken away from the inhabitants of the territories for tortious acts done by the security forces in a conflict zone. The effect of amendment 7 is therefore in Israel. It violates rights that the injured parties from the territories had in Israel. The denial of these rights is subject in principle to the Basic Law: Human Dignity and Liberty. This application is not extra-territorial. It is territorial. Of course, this still leaves us with the second question of whether amendment 7 violates one of the rights prescribed in the Basic Law: Human Dignity and Liberty. Let us now turn to consider this question.

(3) The second question: has a right enshrined in the Basic Law: Human Dignity and Liberty been violated?

24. Amendment 7 provides that the state is not liable in torts when the conditions set out therein are satisfied. Does this denial of liability for torts violate rights that are enshrined in the Basic Law: Human Dignity and Liberty? The answer is yes. There are two main reasons for this. First, the right in torts that is given to the injured party (or to his heirs or dependants) and that was denied by amendment 7 is a part of the injured party’s constitutional right to property. Indeed, the word ‘property’ in s. 3 of the Basic Law: Human Dignity and Liberty — ‘A person’s property should not be harmed’ — means a person’s property rights. In Gaza Coast Local Council v. Knesset [4] it was held with regard to the word ‘property’ in the Basic Law: Human Dignity and Liberty:

‘“Property” in this provision includes every property right. The Basic Law protects against any harm to a person’s property rights. It follows that the protection of property extends not only to “property” rights such as ownership, a lease and an easement, but also to “obligatory” rights that have a property value’ (ibid. [4], at p. 583; see also United Mizrahi Bank Ltd v. Migdal Cooperative Village [5], at pp. 431, 572).

In United Mizrahi Bank Ltd v. Prime Minister [10] I added:

‘The question “what is property?” has arisen in several judgments. The answer to this is not at all simple. The difficulty arises from the complexity of the theoretical concept of “property” and the lack of a consensus as to the reasons underlying it… It would appear that everyone agrees that property in the Basic Law extends to all the various kinds of property rights according to their meaning in private law. Everyone also agrees that property in the Basic Law is not limited merely to property rights. Indeed, property in its constitutional sense is not the same as property in its private law sense… Therefore the constitutional concept of property also includes the right of possession and obligatory rights… In one case it was held that the word property in the Basic Law includes a pension… Against this background it has been held that property in its constitutional sense means a property right, whether it is a right in rem or a right in personam’ (ibid. [10], at para. 9).

This approach to the constitutional concept of property is accepted in most countries where property is given a constitutional status (see Y. Weisman, ‘Constitutional Protection of Property,’ 42 HaPraklit (1995) 258; see also A.J. van der Walt, Constitutional Property Clauses (1999), at p. 22). This leads to the conclusion that the right of an injured party under the law of torts is a part of his property rights and therefore part of his ‘property.’ Moreover, the right of a person to compensation for a violation of his right against the state is also a part of his ‘property.’ Indeed, ‘the right to compensation that is intended to restore the injured party to his original position… is a property right according to its meaning in the Basic Law’ (E. Rivlin, Road Accidents — Procedure and Calculation of Damages (New Extended Edition, 2000), at p. 932). The violation of the right to compensation is also a violation of property rights (see Gaza Coast Local Council v. Knesset [4], at p. 589; CFH 1332/02 Raanana Local Planning and Building Committee v. Horowitz [23]; HCJ 2390/96 Karasik v. State of Israel [24]; CA 2781/93 Daaka v. Carmel Hospital [25]).

25. Second, liability in torts protects several rights of the injured party, such as the right to life, liberty, dignity and privacy. The law of torts is one of the main tools whereby the legal system protects these rights; it reflects the balance that the law strikes between private rights inter se and between the right of the individual and the public interest. Denying or restricting liability in torts undermines the protection of these rights. Thereby these constitutional rights are violated. Indeed:

‘The basic right of a person, who has been injured by a tortious act, to compensation is a constitutional right that derives from the protection afforded to his life, person and property… Any restriction of the right to compensation for a tortious act needs to satisfy the constitutional test of having a proper purpose and not being excessive’ (I. Englard, Compensation for Road Accident Victims (third edition, 2005), at p. 9).

Other legal systems that afford constitutional protection to human rights are also familiar with the approach that the law of torts is subject to constitutional restrictions, and changes to it require constitutional scrutiny (I. Englard, The Philosophy of Tort Law (1993), at pp. 125-134).

H.            Second stage: Is the violation of the constitutional rights lawful?

(1) The limitations clause

26. The second stage of the constitutional scrutiny considers the limitations clause in the Basic Law: Human Dignity and Liberty, which states:

‘Violation of rights                8.             The rights under this Basic Law may only be violated by a law that befits the values of the State of Israel, is intended for a proper purpose, and to an extent that is not excessive, or in accordance with a law as aforesaid by virtue of an express authorization therein.’

This provision plays a central role in our constitutional system. It has two aspects. On the one hand it protects the human rights that are set out in the Basic Law; on the other hand it determines the conditions for violating the basic right (see HCJ 7052/03 Adalah Legal Centre for Arab Minority Rights in Israel v. Ministry of Interior [26], at para. 54 of my opinion). The limitations clause is based on the outlook that in addition to human rights there are also human obligations; that the human being is a part of society; that the interests of society may justify a violation of human rights; that human rights are not absolute, but relative. The limitations clause reflects the approach that human rights may be restricted, but there are limits to such restrictions (see Design 22 Shark Deluxe Furniture Ltd v. Director of Sabbath Work Permits Department, Ministry of Labour and Social Affairs [14], at para. 11; Movement for Quality Government in Israel v. Knesset [9], at paras. 45 and 46 of my opinion). Indeed, human rights are not afforded the protection of the law to the fullest extent; the constitutional system does not allow the realization of human rights in their entirety.

27. The limitations clause is based on two main elements. The first element concerns the purpose of the legislation. The limitations clause provides that a statute that violates a constitutional human right should satisfy the requirement that it ‘… befits the values of the State of Israel, is intended for a proper purpose…’. The second element concerns the means used to achieve the purpose. The limitations clause provides that the means adopted by the statute to realize the purpose should violate the constitutional human rights ‘to an extent that is not excessive.’ There is a close relationship between these two elements. The means are intended to realize the purpose. Therefore we should examine whether the purpose is constitutional. When this has been determined, we should examine whether the means for realizing that purpose are constitutional.

28. The question of purpose is complex. In our case, it is sufficient if we determine that the purpose that should be considered is the main purpose of the statute (see HCJ 4769/95 Menahem v. Minister of Transport [27], at p. 264). This purpose should be a ‘proper’ one in the context of a violation of human rights (see Gaza Coast Local Council v. Knesset [4], at p. 548; Adalah Legal Centre for Arab Minority Rights in Israel v. Ministry of Interior [26], at para. 61 of my opinion). The characteristics of the proper purpose are that it ‘is intended to realize social purposes that are consistent with the values of the state as a whole, and that display sensitivity to the place of human rights in the overall social system’ (see Adalah Legal Centre for Arab Minority Rights in Israel v. Ministry of Interior [26], at para. 62 of my opinion). From the viewpoint of the need to realize the purpose, the law is that this need varies according to the nature of the right and the degree of the violation thereof (see Tzemah v. Minister of Defence [7], at p. 273; Menahem v. Minister of Transport [27], at p. 258; HCJ 5016/96 Horev v. Minister of Transport [28], at p. 52 {206}). When a central right — such as life, liberty, human dignity, property, privacy — is violated, the purpose should realize a significant social goal or an urgent social need (Adalah Legal Centre for Arab Minority Rights in Israel v. Ministry of Interior [26], at para. 62 of my opinion).

29. In addition to the proper purpose, there are the proportionate means. It is insufficient that the purpose of the statute is a proper one. The means that are adopted to realize it should be proper ones. The means are proper is they are proportionate. The principle of proportionality is based on the outlook that ‘the end does not justify the means’ (per Justice T. Or in Oron v. Knesset Speaker [8], at p. 465); see also Movement for Quality Government in Israel v. Knesset [9], at para. 47 of my opinion). In a host of cases, this court has consistently held that proportionality is determined by three subtests (see A. Barak, A Judge in a Democracy (2004), at p. 346). The use of the subtests is affected by the nature of the right being violated, the degree of the violation thereof and the importance of the values and interests that the violation is intended to realize. The first subtest is the rational connection test or the suitability test. The means that the statute adopts should be suited to realizing the purpose that the statute seeks to realize. The second subtest is the least harmful measure test or the necessity test. It demands that the statute that violates a constitutional right should not violate it to a greater degree than is necessary in order to achieve the proper purpose. ‘The legislative measure can be compared to a ladder, which the legislator climbs in order to achieve the legislative purpose. The legislator must stop at the rung on which the legislative purpose is achieved and on which the violation of the human right is the least’ (Israel Investment Managers Association v. Minister of Finance [6], at p. 385; LCA 3145/99 Bank Leumi of Israel Ltd v. Hazan [29], at p. 405; HCJ 2056/04 Beit Sourik Village Council v. Government of Israel [30], at p. 840 {297-298}). The third subtest is the proportionate result test or the test of proportionality in the narrow sense. The benefit arising from achieving the proper purpose should be commensurate with the harm caused by the violation of the constitutional right (see Beit Sourik Village Council v. Government of Israel [30], at p. 850 {309-310}; Marabeh v. Prime Minister of Israel [3], at para. 116 of my opinion). This is an ethical test (see the opinion of Vice-President M. Cheshin in Adalah Legal Centre for Arab Minority Rights in Israel v. Ministry of Interior [26], at para. 107). It focuses on the outcome of the legislation, and the effect that it has on the constitutional human right. It is a balancing principle.

30. With regard to the three subtests of proportionality, we should point out the following: first, there is a major difference between the first and second subtests and the third subtest. The first two subtests — the rational connection and the least harmful measure — focus on the means of realizing the purpose. If it transpires, according to these, that there is a rational connection between realizing the purpose and the legislative measure that was chosen, and that there is no legislative measure that is less harmful, the violation of the human right — no matter how great — satisfies the subtests. The third subtest is of a different kind. It does not focus merely on the means used to achieve the purpose. It focuses on the violation of the human right that is caused as a result of realizing the proper purpose. It recognizes that not all means that have a rational connection and are the least harmful justify the realization of the purpose. This subtest seeks in essence to realize the constitutional outlook that the end does not justify the means. It is an expression of the concept that there is an ethical barrier that democracy cannot pass, even if the purpose that is being sought is a proper one. Second, the three subtests do not always lead to the same outcome. On more than one occasion there is a margin of possibilities that satisfy the proportionality tests to a greater or lesser degree. The fundamental approach is that any possibility that the legislature chooses is constitutional, if it falls within the margin of proportionality. This is the constitutional margin of appreciation given to the legislature within the limits of the margin of proportionality (see United Mizrahi Bank Ltd v. Migdal Cooperative Village [5], at p. 438; Menahem v. Minister of Transport [27], at p. 280; AAA 4436/02 Tishim Kadurim Restaurant, Members’ Club v. Haifa Municipality [31], at p. 815; Gaza Coast Local Council v. Knesset [4], at pp. 550, 812; Movement for Quality Government in Israel v. Knesset [9], at para. 61 of my opinion; Adalah Legal Centre for Arab Minority Rights in Israel v. Ministry of Interior [26], at para. 77 of my opinion).

(2) The constitutionality of section 5B of amendment 7

31. The question of the constitutionality of s. 5B of amendment 7 arose before us in a marginal manner only. The parties focused their main arguments on the provisions of s. 5C. They did not discuss s. 5B at length. We were not presented with any cases in which the question of its application arose. All of this reflects upon the question of the constitutional of the section. In these circumstances, as long as these questions have not been properly addressed, the time has not come to decide the constitutionality of s. 5B. Much depends on the manner in which it is implemented and the interpretation that is given to the provisions of the section. Thus, for example, we have heard no argument on the question whether the correct interpretation of the section includes a causal relationship between the activity and the membership of the terrorist organization or what was done on its behalf and the damage suffered by the injured parties. Naturally the parties have the right to raise their arguments concerning the constitutionality of s. 5B in so far as it will arise in specific cases. The civil courts are competent, in specific tort cases, to examine arguments concerning the constitutionality of the section. In the circumstances of this case, we see no reason to decide the question of the constitutionality of s. 5B of amendment 7.

(3) The constitutionality of s. 5C of amendment 7

32. Section 5C of amendment 7 provides that the state is not liable in torts for damage that is caused in a conflict zone as a result of an act done by the security forces. This rule has several exceptions. The exclusion of liability does not depend on the identity of the injured party but on the fact that the damage occurred in a conflict zone. The purpose underlying this provision was addressed by the respondents before us:

‘The main purpose of the amendment, which justifies a restriction of claims that are filed for damage caused in a conflict zone, is to adapt the law of torts to the special characteristics of the war with the Palestinians. Within this framework, the amendment also seeks to prevent an improper and unjust outcome that Israel should be liable for the damage of Palestinian inhabitants, in addition to being liable for the huge damage caused to the Israeli side’ (para. 275 of the respondents’ reply of 6 July 2006).

The respondents’ position is that the law of torts was designed to regulate ‘risk management for harmful acts in ordinary life within a given society’ (para. 26). It is not suited to dealing with damage caused in a time of war. There are several reasons for this:

‘First, the risks in times of war are different from those in times of peace. We are speaking of risks to the soldiers and risks to the state if they fail in their operations… Second, in war the scale of the damage is greater, and sometimes it is caused during a short period… Third, in times of war many soldiers and citizens are harmed… Fourth, war is, as a rule, a confrontation between states, or between a state and organizations, who operate from within the territory of another state… Fifth, litigating a claim in torts is not completely practical with regard to damage that is caused in war, or it encounters many difficulties… Sixth, the law of torts naturally examines a given incident on the basis of a specific and particular set of facts… Therefore, for all of the aforesaid reasons, there is no basis for applying the law of torts to war damage’ (para. 33 of the respondents’ reply of 6 July 2006).

This background gives rise to the question whether the provisions of s. 5C of amendment 7 are constitutional. As we have seen, they violate the rights of a Palestinian who was injured in a conflict zone by a tortious act of the security forces. Before amendment 7 was enacted, the state was liable to Palestinians in conflict zones if the tortious act was caused by a non-combatant activity of the security forces. Now the law provides that the state is not liable in torts for damage caused in a conflict zone as a result of an act carried out by the security forces, irrespective of the question whether the tortious act was caused by a ‘combatant activity’ or a non-combatant activity. This restriction of the state’s liability has violated the constitutional right of the Palestinian (or his heirs or estate) who was injured by a tortious act that was caused by a non-combatant activity. Does this violation of the constitutional right satisfy the provisions of the limitations clause?

33. Is the purpose underlying the provisions of s. 5C of amendment 7 a proper purpose? In my opinion, the answer to this question is yes. Indeed, the ordinary law of torts was not designed to contend with tortious acts that are caused during the combatant activities of the security forces outside Israel in an armed conflict. Excluding liability in torts in situations of ‘combatant activity’ is also accepted in other legal systems (for a survey, see Yaakov, ‘Immunity under Fire: State Immunity for Damage caused as a result of “Combatant Activity”,’ supra, at pp. 115-125). An arrangement whose purpose is to adapt the law of torts to the special circumstances that prevail during the combatant activity of the security forces is an arrangement that is intended for a proper purpose. I discussed this in Bani Ouda v. State of Israel [1]:

‘Combatant activities that cause harm to the individual should not be tried according to the ordinary law of torts. The reason for this is that combatant activities create special risks which should be addressed outside the framework of ordinary tort liability… Combatant activities create, by their very nature, risks that the “ordinary” law of torts was not designed to address. The purposes underlying the ordinary law of torts do not apply when the damage derives from combatant activity that the state is waging against its enemies… It should be noted that the approach is not that “combatant activity” is beyond the reach of the law. The approach is that the problem of civil liability for combatant activities should be determined outside the scope of the classical law of torts’ (ibid. [1], at p. 6).

34. Is s. 5C of amendment 7 proportionate? The first subtest, which concerns a rational connection between the proper purpose and the provisions of s. 5C, is satisfied. The exclusion of liability in torts provided by s. 5C of amendment 7 removes the damage caused by the security forces in a conflict zone from the scope of the ordinary law of torts. This realizes the proper purpose that amendment 7 sought to achieve.

35. Does s. 5C of amendment 7 satisfy the second subtest of proportionality? According to this test, the statute should adopt the measure that is least harmful. Does s. 5C satisfy this constitutional requirement? My answer is that it does not. In order to realize the purpose underlying s. 5C of amendment 7, it is sufficient to provide legal arrangements that the state is exempt from liability for combat activities. The ordinary law of torts is not suited to addressing liability for tortious acts in the course of combat. Arrangements of this kind were provided in s. 5 of the original Torts Law, which determined that the state is not liable in torts for an act done in the course of the combatant activity of the Israel Defence Forces. Amendment 4 extended the definition of ‘combatant activity’ beyond the scope that was given to it in decisions of the courts. It was provided in amendment 4 that combatant activity includes ‘any act of combating terror, hostilities or an uprising, as well as an act for the prevention of terrorism, hostilities or an uprising that was carried out in circumstances of risk to life or body.’ It further provided that notice of the damage must be given within sixty days; it shortened the prescription period and it ruled out the application of laws that transfer the burden of proof to the state. This amendment is proportionate, and it does not give rise to any constitutional difficulty. It realized the purpose underlying amendment 7, which is the need ‘to adapt the law of torts to the special characteristics of the war with the Palestinians’ (para. 27 of the respondents’ reply of 6 July 2006). Amendment 7 goes far beyond this. It excludes liability in torts for all damage that is caused in a conflict zone by the security forces, even as a result of acts that were not done in the course of the combatant activity of the security forces. This amplification of the state’s exemption from liability is unconstitutional. It does not adopt the least harmful measure that achieves an exemption from liability for combatant activities. It releases the state from liability for tortious acts that are in no way related to combatant activities, no matter how broadly the term is defined. Nothing in the ordinary activities of law enforcement that are carried out by the security forces in a territory controlled by them justifies an exclusion from the ordinary law of torts. This is certainly the case when the tortious act is totally unrelated to security activity. Only combat activities justify, as the purpose of amendment 7 indicates, an exclusion of the arrangements in the ordinary law of torts. Excluding tortious acts in which the security forces are involved but which have no combatant aspect does not realize the proper purpose of adapting the law of torts to combat situations. It seeks to realize an improper purpose of exempting the state from all liability for torts in conflict zones. This is certainly the case in view of the retroactive nature of this provision.

36. Section 5C of amendment 7 rules out any liability in torts on the part of the state with regard to any claim in torts that was filed with regard to an incident that occurred in a ‘conflict zone.’ From the respondents’ statement it appears that after the enactment of amendment 7, large areas of the territories of Judaea, Samaria and the Gaza Strip were declared conflict zones for lengthy periods. The territories were divided into several large districts. Sometimes one district encompasses whole cities or several villages and towns. According to the criteria that were determined in this regard, it was sufficient for one terrorist incident to occur in one part of a certain district in order to declare the whole district a conflict zone for several days. In these circumstances, the exclusion of the state’s liability under s. 5C causes a major violation of constitutional human rights. We should remember that the territories of Judaea and Samaria, and until August 2005 also the territory of the Gaza Strip, have been subject to a belligerent occupation for almost forty years. Thus the Israeli security forces are present in the territories on a constant basis and in large numbers. The inhabitants of the territories come into close contact with them on a regular and daily basis, on their way to and from work and school, at checkpoints and roadblocks inside the territories and at crossings into and out of Israel. The security forces have a fixed and permanent presence in the territories. They are deployed and operate in the territories both in combatant activities and in activities that have the character of law enforcement, both in areas where there is terrorist activity and in quiet areas, both in times of conflict and in times of relative calm. In these circumstances, a sweeping immunity of the kind given to the state by s. 5C of amendment 7 means that the state is given an exemption from liability in torts with regard to many kinds of operations that are not combatant activities even according to the broad definition of this term. This means that many injured persons, who were not involved in any hostilities whatsoever and who were injured by operations of the security forces that were not intended to contend with any hostile act, are left without any relief for the injury to their lives, persons and property. This sweeping violation of rights is not required in order to realize the purposes underlying s. 5C of amendment 7. Exempting the state from liability under s. 5C does not ‘adapt the law of torts to the state of war.’ It excludes from the scope of the law of torts many acts that are not combatant ones. It is inconsistent with Israel’s duty that arises from its belligerent occupation in Judaea, Samaria and the Gaza Strip. This occupation imposes on the state special duties under international humanitarian law, which are inconsistent with a sweeping immunity from all liability in torts. We are not adopting any position — since the matter did not arise before us — with regard to changes that may arise from the Oslo accords (see Gaza Coast Local Council v. Knesset [4], at pp. 523-524; HCJ 7015/02 Ajuri v. IDF Commander in West Bank [32], at p. 364 {96}). Obviously we are making no determination with regard to the legal status of the Gaza Strip after the disengagement. Even if Israel’s belligerent occupation there has ended, as the state claims, there is no justification for a sweeping exemption from liability in torts.

37. Indeed, the proportionate approach is to examine each incident on a case by case basis. This examination should consider whether the case falls within the scope of ‘combatant activity,’ however this is defined. It is possible to extend this definition, but this case by case examination should not be replaced by a sweeping exemption from liability. I discussed this in Adalah Legal Centre for Arab Minority Rights in Israel v. Ministry of Interior [26]:

‘The need to adopt the least harmful measure often prevents the use of a blanket prohibition. The reason for this is that in many cases the use of a criterion of an individual examination achieves the proper purpose while using a measure whose violation of the human right is less. This principle is accepted in the case law of the Supreme Court… A blanket prohibition of a right, which is not based on an individual check, is a measure that raises a suspicion of being disproportionate. This is the case in our law. It is also the case in comparative law’ (ibid. [26], at paras. 69-70 of my opinion).

This approach was accepted by additional justices in that case. The vice-president (Justice M. Cheshin) said that the question is whether it is possible to create ‘a mechanism of an individual check for every resident of the territories who is a spouse or parent of an Israeli citizen, instead of imposing a blanket prohibition on all the residents of the territories who are of certain ages’ (ibid. [26], at para. 105 of his opinion). Justice D. Beinisch said that ‘Not carrying out an individual check and determining a blanket prohibition gives too wide a margin to the value of security without properly confronting it with the values and rights that conflict with it’ (ibid. [26], at para. 11 of her opinion). Similarly, Justice E. Hayut said that:

‘… security needs, no matter how important, cannot justify blanket collective prohibitions that are deaf to the individual… there is certainly a basis for a presumption of dangerousness that the respondents wish to impose in this matter of family reunifications between Arab citizens of Israel and residents of the territories. Notwithstanding, in order that the fear of terror does not mislead us into overstepping our democratic limits, it is proper that this presumption should be rebuttable within the framework of an individual and specific check that should be allowed in every case…’ (ibid. [26], at paras. 4-5 of her opinion).

Justice A. Procaccia emphasized in her opinion that:

‘We should beware of the lurking danger that is inherent in a sweeping violation of the rights of persons who belong to a particular group by labelling them as a risk without discrimination… we should protect our security by means of individual scrutiny measures even if this imposes on us an additional burden…’ (ibid. [26], at para. 21 of her opinion).

Justice M. Naor said that ‘… I do not dispute the importance of making an individual check, where this is possible… As a rule I accept that a violation of a basic right will be suspected of being disproportionate if it is made on a sweeping basis rather than on the basis of an individual check’ (ibid. [26], at para. 20 of her opinion). Justice E. Rivlin also emphasized the importance of the individual check, but he thought in that case that such a check would not realize the purpose of the law. Justice E. Levy emphasized in his opinion that ‘… in the final analysis there will be no alternative to replacing the blanket prohibition in the law with an arrangement based on an individual check…’ (ibid. [26], at para. 9 of his opinion). The case before us is different from Adalah Legal Centre for Arab Minority Rights in Israel v. Ministry of Interior [26]. Notwithstanding, there are similarities between the two. In both cases very important human rights were violated. Amendment 7 denies the right to compensation, and thereby it is likely to result in the injured person or his family becoming destitute. In both cases, the state chose a sweeping denial (‘the state is not liable in torts’) to an individual check on a case by case basis to discover whether ‘combatant activity’ is involved. In Adalah Legal Centre for Arab Minority Rights in Israel v. Ministry of Interior [26] it was argued that it was not possible to realize the purpose of the statute by means of an individual check. This argument cannot be made in the case before us. The individual check is capable of realizing the purpose of the statute.

38. The state addressed extensively in its written pleadings the arrangements that prevail in comparative law in this matter. A study of the state’s claims shows that in the countries surveyed by the state in its pleadings, the arrangements prescribed with regard to the liability of the state in torts are similar to the arrangement provided in amendment 4, whereas the sweeping arrangement provided in amendment 7 is unprecedented. Thus, for example, in American law, the Federal Tort Claims Act recognizes, alongside the general liability of the Federal government in torts, an exception that releases the state from liability in torts for combatant activities. But this exception is limited to acts of the security forces in a time of war (section 2680(j)). Admittedly this section has been interpreted broadly. It has been held that a ‘state of war’ prevails even in a period of significant hostilities between the United States army and other military forces, and that ‘combatant activities’ include both the actual combat operations and activities that are directly related to them (Koohi v. United States [35]). But even with its broad interpretation, this section provides arrangements that are similar in essence to the arrangement provided in amendment 4, and not the sweeping immunity provided in amendment 7. The same is true in English law, which recognizes the immunity of the state with regard to tort claims arising from combatant activities (combat immunity). In the words of Sir Iain Glidewell, ‘… during the course of hostilities, no duty of care is owed by a member of the armed forces to civilians or their property…’ (Mulcahy v. Ministry of Defence [37]). Even this immunity from liability has been interpreted broadly, but without resorting to a sweeping exemption:

‘[Combat immunity] must cover attack and resistance, advance and retreat, pursuit and avoidance, reconnaissance and engagement. But the real distinction does exist between active operations against the enemy and other activities of the combatant services in time of war’ (Bici v. Ministry of Defence [38]).

That case (in 2004) concerned a claim in torts of Albanians living in Kosovo who were injured by gunfire from British troops who were in Kosovo as part of the NATO force sent there. The court held that the soldiers were negligent in that they violated the rules of engagement, and in the circumstances of the case, it rejected the state’s contention that it should enjoy combat immunity. Thus we see that the arrangement in English law is also similar in essence to the arrangement provided in amendment 4. State immunity from liability for combatant activities is the broadest in Canadian law. Section 8 of the Crown Liability and Proceedings Act provides that:

‘… nothing in those sections makes the Crown liable in respect of anything done or omitted in the exercise of any power or authority exercisable by the Crown, whether in time of peace or of war, for the purpose of the defence of Canada or of training, or maintaining the efficiency of, the Canadian Forces.’

This clause excludes the liability of the state in tort claims that arise from actions of the Canadian army that are done in order to defend Canada, whether in time of peace or of war, and whether it is actually a combatant activity or training for it. But even this broad arrangement does not give the state a sweeping immunity, and the state needs to show that the activity of the security forces that caused the damage was done in the defence of Canada. By contrast, in Israel the state is released from any burden of proof, and it is sufficient for it to show that the damage was caused in a conflict zone.

39. Section 5C has several exceptions. The second schedule of amendment 7 provides that the state’s immunity under s. 5C shall not apply to damage that is caused as a result of a criminal act, damage that is caused to someone who is held by the State of Israel in custody, damage that is caused as a result of an act of the civil administration that was not done within the framework of the conflict, and damage that is caused as a result of a road accident in which a vehicle of the security forces is involved but not in the course of operational activities. Do these exceptions to the general arrangement, which are stipulated in s. 5C, save it from being disproportionate? Are they capable of changing the conclusion with regard to the second subtest? My answer to this question is no. These provisos and exceptions cannot constitute a less harmful measure to human rights. On the contrary, if the immunity from liability that is provided in amendment 7 does not apply to these cases, why does it apply in other cases of torts that do not derive from ‘combatant activities’? If the liability for a ‘road accident’ in which a military vehicle is involved does not fall within the scope of the state’s immunity from liability, why in other accidents that are not road accidents is liability excluded in a sweeping manner without allowing an individual check? It is true that there are difficulties in producing evidence. But the way to overcome this is not to exclude liability, but to make individual checks and determine burdens of proof and shorter limitation periods.

40. Does s. 5C of amendment 7 satisfy the third subtest of proportionality, the test of proportionality in the narrow sense? Is the benefit to the public interest from excluding the state’s liability for the damage caused in a conflict zone commensurate with the loss caused to individuals who are injured as a result of tortious acts of the security forces? It should be noted that the question of proportionality in the narrow sense does not arise in all those cases where it transpires in the trial that no tortious act was committed at all, whether because there is no (conceptual or concrete) duty or because there is no carelessness or because there is no causal link or for any other reason (with regard to other torts). Moreover, the question of proportionality (in the narrow sense) does not arise at all with regard to a tortious act that was done as a result of ‘combatant activities’ of the security forces. The state is not liable in torts for this tortious act under the law that was in force before amendment 7. It follows that the question that we should ask ourselves is the following: is the benefit to the public interest that is afforded by excluding the state’s liability for a tort that was not caused by ‘combatant activities’ commensurate with the damage that is caused to someone who is injured as a result of this tort? We asked the respondents once again what public benefit is realized by amendment 7 that was not realized under the law of torts that preceded it, including amendment 4. We sought to ascertain in what additional circumstances does amendment 7 give the state immunity from liability, as compared with the legal position that preceded the amendment, and how do these realize the legislative purpose and the public interest. The following was the answer that we were given:

‘First, amendment 4 is an amendment that was prepared against the background of the Intifadeh that broke out in 1987. The draft of amendment 4 was tabled before the armed conflict broke out in the year 2000, and it was not intended at all to provide a solution to the unique nature of the armed conflict with the Palestinians. Indeed, amendment 4 also does not provide a solution to the armed conflict de facto. This is reflected in the fact that amendment 4 is a limited amendment. It deals mainly with the technical-procedural aspect of claims that arise in the territories. This amendment looks at the damage from within the law of torts. By contrast, amendment 7 is a substantial amendment.

The purpose of amendment 7 is different from the purpose of amendment 4. The amendment seeks to exclude war damage from the scope of the law of torts, and not to adapt the law of torts to war damage. The purpose of the amendment is mainly ethical. It is completely different from the purpose of amendment 4. Therefore amendment 4 on its own is insufficient.

Second, amendment 4 does not address claims of enemy aliens and claims of members of a terrorist organization at all, and therefore for this reason also amendment 4 is insufficient.’

In my opinion, these reasons are unconvincing. First, it was not made clear how the date of preparing the legislation is relevant to the question of the public benefit that the legislation realizes and why amendment 4 does not also provide a legal solution to the conflict that broke out in the year 2000. Second, the assertion that amendment 4 is technical-procedural is unacceptable. Amendment 4 made a major change to the definition of the term ‘combatant activity.’ The definition greatly broadened the interpretation given to this term in case law, and thereby significantly restricted the liability of the security forces operating in the conflict with the Palestinians. Third, we received no explanation of the significance of the distinction between ‘excluding war damage from the scope of the law of torts’ and adapting ‘the law of torts to war damage.’ With regard to the second reason given by the state, this relates solely to s. 5B of amendment 7.

41. The respondents also discussed the general benefit of amendment 7:

‘The amendment restores the balance in the law of torts, and adapts it to the new circumstances of war. It enshrines ethical principles and solves practical difficulties in implementing the existing law. It enshrines the principle that in times of conflict each side is liable for its own damage, and it prevents the outcome, which currently exists, in which Israel is compelled to bear a double burden of claims for war damage suffered both by its own citizens and also by the inhabitants of the Palestinian Authority.’

These remarks also do not answer the question as to how exempting the state from liability for committing tortious acts that do not fall within the scope of ‘combatant activities,’ as defined in amendment 4, realizes a public benefit from an ethical viewpoint. Prima facie, the immunity from liability for ‘combatant activities’ in its broad sense is sufficient in order to adapt the law of torts to a situation of war and in order to release the state from the burden of liability for claims arising from war damage. It would appear that the main benefit does not lie in realizing these purposes, but in releasing the state from conducting legal proceedings in order to determine the question of whether there were ‘combatant activities.’ Indeed, giving the state a sweeping immunity makes it unnecessary to conduct many proceedings in which the state is required to prove that the damage for which it is being sued was caused by combatant activities. But this benefit to the public interest — a benefit that lies mainly in a savings of administrative resources — is disproportionate in comparison to the damage to the various individuals, which was caused by non-combatant activities. This damage often involves great suffering. Injured parties suffer major injuries; they become seriously disabled; their ability to earn a livelihood is significantly impaired. All of these — and of course the loss of life — are far greater than the limited benefit that arises from releasing the state from liability and from the need to defend its position in court, both when the damage is caused by combatant activities and when it is caused by non-combatant activities.

42. Amendment 7 established a committee that was authorized ‘… to approve, beyond the letter of the law, in special circumstances, a payment to an applicant to whom subsection (a) applies and to determine the amount thereof…’ (s. 5C(b)(1)). It was also provided that ‘The Minister of Defence, in consultation with the Minister of Justice and with the approval of the Constitution, Law and Justice Committee of the Knesset, shall determine the preconditions for submitting an application to the committee, the manner of submitting the application, the work procedures of the committee and the criteria for making payments beyond the letter of the law’ (s. 5C(b)(3)). Do the existence of this committee and its payments of compensation make the arrangements in s. 5C of amendment 7 proportionate? My answer is no. Naturally, where the disproportionality is based on the absence of a ‘beyond the letter of the law’ arrangement, the provision of such an arrangement can remove the disproportionality. But where the disproportionality in an arrangement arises from a disproportionate violation of human rights — and certainly when the rights that are violated are fundamental and important ones and the violation thereof is serious and painful — the violation does not become proportionate by means of a payment beyond the letter of the law. Someone who has been injured by a non-combatant activity of the security forces is entitled to compensation by law, and not to compensation beyond the letter of the law. We should give him justice, not charity. Of course, the state would act meritoriously if it considered making payments beyond the letter of the law to someone who is seriously injured as a result of ‘combatant activities’ of the security forces, in circumstances where the state thinks that a charitable payment is justified (cf. the remarks of Vice-President M. Cheshin in Adalah Legal Centre for Arab Minority Rights in Israel v. Ministry of Interior [26], at para. 126 of his opinion).

The result is that we deny the petitions in so far as the constitutionality of s. 5B of amendment 7 is concerned. We grant the petitions and make the order nisi absolute, in so far as the constitutionally of s. 5C of amendment 7 is concerned. This section is void.

 

 

President D. Beinisch

I agree with the opinion of President Emeritus A. Barak.

 

 

Justice A. Procaccia

I agree with the opinion of my colleague, President Emeritus A. Barak.

 

 

Justice E.E. Levy

I agree with the opinion of the honourable President Emeritus A. Barak.

 

 

Justice M. Naor

I agree with the opinion of my colleague, President Emeritus Barak.

 

 

Justice S. Joubran

I agree with the opinion of my colleague, President Emeritus A. Barak.

 

 

Justice E. Hayut

I agree with the opinion of my colleague, President Emeritus A. Barak.

 

 

Justice D. Cheshin

I agree with the opinion of my colleague, President Emeritus Barak.

 

 

Justice A. Grunis

1.             I agree with the outcome in the opinion of my colleague, President Emeritus A. Barak. My agreement with the outcome derives mainly from the fact that the respondents did not address, and certainly did not address satisfactorily, two main questions: first, what — under the rules of private international law — is the substantive law that governs claims filed in Israel against the state and its agencies for acts outside Israel? Second, do the Basic Laws have extra-territorial application? It should be noted that the respondents raised certain arguments that my colleague, President Emeritus A. Barak, did not address, even though I am of the opinion that they should be mentioned with regard to these two questions. I am referring to various arrangements in English and American law, which I shall address below, that apply to factual situations that are relevant to our case and that may prevent the courts from giving relief.

2.             One of the first questions that are relevant to an action filed in an Israeli court with regard to an incident that occurred outside the borders of Israel concerns the substantive law that should be applied. This question also arises in every case of a tort action that is brought before an Israeli court with regard to an incident that occurred in Judaea and Samaria. The cases under discussion can be of many different kinds. Thus it is possible that an Israeli citizen who works for an Israeli employer in an Israeli settlement in Samaria is injured in a work accident and files an action on account of this in the court in Israel. A small change in the facts presents a case in which the worker who is injured is a Palestinian. Another possibility, which brings us closer to the cases addressed in the petitions, concerns a claim filed by a Palestinian resident of Samaria on the grounds that he was injured by the gunfire of IDF soldiers. In each of these examples, the court is supposed to consider the question of which law will apply to the claim under the rules of private international law. My colleague, the president emeritus, says that under the conflict of law rules that are practised in Israeli law, the Israeli law of torts applies to actions of the security forces in the territory of Judaea and Samaria. In my opinion, the answer to this question is not so clear. CA 1432/03 Yinon Food Products Manufacture and Marketing Ltd v. Kara’an [19] (an application for a further hearing was denied: CFH 9524/04 Yinon Food Products Manufacture and Marketing Ltd v. Kara’an [33]) comprehensively considered the position of Israeli private international law with regard to a tortious act that took place in the aforesaid territory. It was held that the rule is that the law of the place where the tort was committed (lex loci delicti commissi) applies. Therefore in principle Jordanian law should apply. The aforesaid rule is subject to a rare exception, according to which the court should apply the law of the country that has the closest connection with the tort (Yinon Food Products Manufacture and Marketing Ltd v. Kara’an [19], at pp. 374-375, 377). Yinon Food Products Manufacture and Marketing Ltd v. Kara’an [19] concerned an action of a Palestinian woman that was filed in a court in Israel. The plaintiff was injured in a work accident, while working at a plant of an Israeli company that was situated in an Israeli town in Samaria. The Israeli aspects of the case — an Israeli employer, an Israeli plant that was situated in an Israeli town in the territories — led the court to say that ‘the exception begs to be applied’ (ibid. [19], at p. 378). Therefore in that case it was held that the Israeli law of torts would apply, rather than the Jordanian law. Indeed, as my colleague President Emeritus A. Barak says, claims of Palestinians against the state for alleged tortious acts of the security forces have been tried for years under Israeli law. It is to be wondered why in those cases the state did not raise the argument that the substantive law that should apply, under the conflict of law rules, is the law of the place where the tort was committed. This argument was also not raised in the petitions before us. It is possible that a determination that Jordanian law applies would make it unnecessary to consider the constitutional question. This would be the case if Jordanian law does not give rise to a cause of action in the situations that we are considering, as a result, for example, of an ‘act of state’ doctrine (paras. 6-7 below). If there was no right of action until amendment 7 of the Torts (State Liability) Law, 5712-1952 (hereafter — the Torts Law), under the law of the place where the tort was committed, it would not be possible to argue that the amendment denied an existing right and therefore no constitutional question would arise. Nonetheless, we should note that it would appear that the premise for changing the Torts Law in amendment 4 and amendment 7 was that the law of torts that applies with regard to claims concerning the activities of IDF soldiers in the territories is the Israeli law.

3.             The other main question that should be considered is the question of the application of the Basic Laws — in this case the Basic Law: Human Dignity and Liberty — to events that occur outside the borders of Israel. According to the approach of my colleague President Emeritus A. Barak, there is no need to consider the aforesaid question. According to his position, the rights of Palestinians who are inhabitants of the territories ‘are rights that are granted to them in Israel’ and amendment 7 of the Torts Law violates those rights. And why are these rights that are granted to them in Israel? It is because under Israeli private international law they may, in certain circumstances, sue in Israel under the Israeli law of torts for tortious acts that were committed outside Israel (para. 23 of the opinion). We have already seen (para. 2 supra) that the conflict of law rules in Israel provide that the law of the place where the tort was committed should apply. When we are dealing with the territory of Judaea and Samaria, the significance of this is that we should refer to Jordanian law. Indeed, the aforesaid rule is subject to an exception, as was indeed held in Yinon Food Products Manufacture and Marketing Ltd v. Kara’an [19]. For the purpose of considering this question I am prepared to assume that the conflict of law rules in Israel lead to the application of the Israeli law of torts with regard to an incident in which a Palestinian is injured as a result of shooting by IDF soldiers. According to the approach of my colleague the president emeritus, ‘The rights in Israel under the law of torts were taken away from the inhabitants of the territories for tortious acts done by the security forces in a conflict zone. The effect of amendment 7 is therefore in Israel. It violates rights that the injured parties from the territories had in Israel’ (para. 23 of his opinion). This leads my colleague to conclude that there is no need to consider the question of the application of the Basic Law outside the borders of Israel. I cannot agree with this.

Let us remember that we are dealing with events that took place outside the borders of Israel. Even if according to the conflict of law rules the Israeli law of torts applies to those events, this does not change the place where the tort was committed. Applying the Israeli law of torts does not create a fiction whereby the event occurred in Israel. The mere fact that the matter is tried before an Israeli court, under Israeli law, cannot lead to the conclusion that the rights are given to the injured parties in Israel. If you say this, then you arrive at a far-reaching conclusion that the Basic Laws apply to every proceeding that takes place in an Israeli court where the conflict of law rules determine that Israeli law applies. No connection should be made between the rules of Israeli private international law and the scope of application of the Basic Laws. Therefore it would appear that we need first to decide the question of the extraterritorial application of the Basic Law: Human Dignity and Liberty. However, since the respondents stated that in their opinion no decision on this question is required, there is no reason to address it in the present case. It would appear that it will be necessary to address the issue in the future, if an argument is presented before the courts.

4.             Ultimately we are determining that s. 5C of the Torts Law is unconstitutional. By contrast, we are not deciding the question of the constitutionality of s. 5B of the law. It can be assumed that this question will be brought before the courts again. In the opinion of my colleague President Emeritus A. Barak, section 5B of the Torts Law applies, ‘according to its wording, to tortious acts done in Israel.’ This leads to his conclusion that the question of the application of the Basic Law does not arise. I would point out that a careful reading of section 5B shows that it is indeed possible that it will also apply to tortious acts committed by the state and those acting on its behalf outside Israel. Therefore it is possible that in the future it will be necessary to consider the question of the application of the Basic Laws with regard to the aforesaid section as well.

5.             In consequence of the finding that the Basic Law applies in this case, my colleague goes on to consider the question whether amendment 7 of the Torts Law violates a right that is included in the Basic Law. His conclusion is that such a violation does indeed exist with regard to the right to life, liberty, dignity, privacy and property. My colleague adds that ‘Denying or restricting liability in torts undermines the protection of these rights’ (para. 25). I am prepared to agree that in the present case a basic right has been violated. This is because of the broad application of s. 5C of the Torts Law. Notwithstanding, I cannot agree that any restriction or denial of liability in torts will constitute a violation of a constitutional right, just as I cannot accept that every new criminal norm or stricter penalty constitutes a violation of a constitutional right (CrimA 4424/98 Silgado v. State of Israel [34], at pp. 553-561 (per Justice T. Strasberg-Cohen); see also para. 2 of my opinion in HCJ 7052/03 Adalah Legal Centre for Arab Minority Rights in Israel v. Ministry of Interior [26]).

6.             The respondents mentioned in their arguments arrangements that exist in foreign law, even though they did not go so far as to claim that those arrangements constitute in themselves a response to the petitions. Thus the respondents raised an important doctrine that exists in English law, the act of state doctrine. According to this doctrine, certain acts of the state and its agents may not be tried in the English courts, if they were committed outside the borders of the state with regard to persons who are not British nationals. These also include acts of a violent nature that are committed by the state and its agents (see H.W.R. Wade & C.F. Forsyth, Administrative Law (ninth edition, 2004), at pp. 838-840; O. Hood Phillips & Jackson, Constitutional & Administrative Law (eighth edition, 2001), at pp. 320-326; Halsbury’s Laws of England, vol. 18(2) (fourth edition, 2000), at pp. 452-455; see also CA 5964/92 Bani Ouda v. State of Israel [1], at p. 7, and A. Yaakov, ‘Immunity under Fire: State Immunity for Damage Caused as a Result of “Combatant Activity”,’ 33(1) Hebrew Univ. L. Rev. (Mishpatim) 107 (2003), at pp. 124-125 and the references cited there). The scope of the doctrine’s application is unclear. It also appears that there is now a trend to limit its application (Yaakov, ‘Immunity under Fire,’ supra, at p. 194). In American law there is a similar rule to that of an act of state, by virtue of a specific provision of statute. Section 2680(k) of the Federal Tort Claims Act provides that the government of the United States shall not be liable ‘for any claim arising in a foreign country.’ The American rule, like the English doctrine, is not limited to acts carried out by military forces nor is it limited to combatant activities. Thus the United States Supreme Court has held that it is not possible to file a claim in torts in an American court against the United States government and agents of the Drug Enforcement Administration with regard to their liability for the abduction of a Mexican citizen from Mexico to the United States (Sosa v. Alvarez-Machain [36]).

7.             The act of state doctrine is part of English common law. Therefore it was prima facie incorporated into Israeli law. One might argue that even if it was incorporated, it was abolished by the enactment of the Torts Law. It is well known that this law was intended to replace the common law rule that the state has immunity in torts. It would appear, without making a firm determination, that the enactment of the law did not abolish the act of state doctrine, just as that doctrine was not abolished in England by the Crown Proceedings Act 1947. It should be remembered that the doctrine applies to acts that are carried out outside the jurisdiction of the state. Indeed, s. 5A of the Torts Law expressly addresses the territories, i.e., Judaea, Samaria and the Gaza Strip, and therefore it seems that the aforesaid doctrine does not apply in the territories. We should point out, in passing, that the aforesaid s. 5A was adopted when Israel was in control of Gaza. It may be asked whether there is any need today for the aforesaid provision following the withdrawal from Gaza, if the act of state doctrine applies to that area. In any case, it is possible that the doctrine will apply in other places outside the state, as for example with regard to the combat activities that took place last summer in Lebanon or acts of Israel’s secret services outside the state. It should also be noted that it is possible that a hint of the act of state doctrine may be found in the provisions of s. 9A of the Torts Law, which was adopted in amendment 7. The section provides that ‘Nothing in the provisions of sections 5B and 5C shall derogate from any defence, immunity or exemption given to the State of Israel under any law.’ We should add that the act of state doctrine may apply in addition to the statutory rule that exempts the state from liability in torts ‘for an act that was done by a combatant activity of the Israel Defence Forces’ (s. 5 of the Torts Law). Even if the act of state doctrine has no relevance to the matters that arose in the petitions, it is possible that it will be important in future cases.

8.             Since the respondents did not address central questions, and since in practice they agreed, if only by implication, that the tort actions under discussion are subject to Israeli law and that there is no need to consider in this case the extraterritorial application of the Basic Law, I can only agree with the outcome proposed by my colleague President Emeritus A. Barak. It would appear that the time will come for deciding the aforesaid questions.

 

 

Petition granted.

21 Kislev 5767.

12 December 2006.

CA 4493/05

 

1.            Eyal Yerushalmi

2.            Beit Nir Kibbutz

v.

1.            Polaris Machine Imports Ltd

2.            Yaadim Development Co. Ltd

3.            Yoav HaRamati

4.            Dan Horovitz

 

 

The Supreme Court sitting as the Court of Civil Appeals

[22 February 2006]

Before Justices A. Grunis, M. Naor, E. Hayut

 

Appeal of the judgment of the Tel-Aviv-Jaffa District Court (Judge Z. Brun) on 14 March 2005 in CC 3413/98.

 

Facts: The first respondent agreed to sponsor the first appellant to represent it in a motorbike race in Egypt. In the race the first appellant was seriously injured. There was no statutory duty to take out personal accident insurance for the first appellant, and no such insurance had been taken out. The main issue in the appeal was whether the first respondent had been negligent in not taking out insurance for the first appellant or at least in not ascertaining that the first appellant had taken out insurance for himself.

 

Held: In general, where there is no statutory duty to take out insurance, one party to a joint venture will not be required by the tort of negligence to take out insurance for the other, unless there is a special relationship between them or a reliance of one party on the other. In this case there was no such special relationship or reliance.

 

Appeal denied.

 

Legislation cited:

Aviation Services Licensing (Aviation Schools) Regulations, 5731-1971, r. 4(5).

Contracts (General Part) Law, 5733-1973, ss. 24, 26.

Immunization Victims Insurance Law, 5750-1989, s. 2.

Insurance Contract Law, 5741-1981, chs. 2 and 3.

Motor Car Insurance Ordinance [New Version], 5730-1970, s.2.

National Insurance Institute Law [Consolidated Version], 5755-1995, s. 79.

Road Accident Victims Compensation Law, 5735-1975.

Sports Diving (Imposing an Insurance Liability on Divers) Regulations, 5740-1980

Sports Law, 5748-1988, s. 7(a).

Sports Driving Law, 5766-2005, ss. 2(c), 15, 23(c), 30(b), 34, 35.

Torts Ordinance [New Version], 5728-1968.

 

Israeli Supreme Court cases cited:

[1]          LCA 11049/03 Israeli Phoenix Insurance Co. Ltd v. Nidaf [2004] (1) TakSC 3305.

[2]          FH 20/82 Adders Building Materials Ltd v. Harlow and Jones GMBH [1988] IsrSC 42(1) 221.

[3]          CA 37/86 Levy v. Sherman [1990] IsrSC 44(4) 446.

[4]          CA 735/75 Reutman v. Aderet [1976] IsrSC 30(3) 75.

[5]          CA 153/04 Rabinovitz v. Rosenbaum [2006] (1) TakSC 1549.

[6]          CA 485/60 Berman v. Marziof [1961] IsrSC 15 1913.

[7]          CA 371/90 Subhi v. Israel Railways [1993] IsrSC 47(3) 345.

[8]          CA 4025/91 Zvi v. Carroll [1996] IsrSC 50(3) 784.

[9]          CA 285/73 Lagil Israel Trampoline and Sports Equipment Ltd v. Nahmias [1974] IsrSC 29(1) 63.

[10]        CFH 7794/98 Moshe v. Clifford [2003] IsrSC 57(4) 721.

[11]        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.

[12]        CA 3464/05 Paz Oil Co. Ltd v. State of Israel [2006] (3) TakSC 430.

[13]        CA 145/80 Vaknin v. Beit Shemesh Local Council [1983] IsrSC 37(1) 113.

[14]        CA 2906/01 Haifa Municipality v. Menora Insurance Co. Ltd [2006] (2) TakSC 2504.

[15]        CA 931/99 Menorah Insurance Co. Ltd v. Jerusalem Candles Ilum (1987) Ltd [2002] IsrSC 56(2) 550.

 

Israeli District Court cases cited:

[16]        CC (TA-DC) 2474/86 Netzer v. Kanfonit Light Aircraft Co. Ltd [1994] (2) IsrDC 441.

 

American cases cited:

[17]        East River Steamship Corp. v. Transamerica Delaval Inc., 476 U.S. 858 (1986).

[18]        LaClair v. Silberline Manufacturing Co., Inc., 379 Mass. 21, 393 N.E. 2d 867 (1979).

 

English cases cited:

[19]        Henderson v. Merrett Syndicates Ltd [1995] 2 A.C. 145, [1994] 3 All ER 506 (HL).

[20]        Van Oppen v. Clerk to the Bedford Charity Trustees [1989] 3 All ER 389 (CA).

[21]        Reid v. Rush & Tompkins Group PLC [1989] 3 All ER 228 (CA).

[22]        Naylor v. Payling [2004] EWCA (Civ) 560 (CA).

 

For the appellants — S. Savion.

For the respondents — E. Levi.

 

 

JUDGMENT

 

 

Justice E. Hayut

Synopsis of the facts and details of the legal proceedings

1.            The first appellant, who was born in 1961 and is a member of the Beit Nir Kibbutz (the second appellant), was injured on 12 October 1994 during the Pharaohs’ Rally motorcycle race in Egypt in which he participated (hereafter: the accident). As a result of the accident the first appellant seriously injured his back and was left paralysed in the lower half of his body. In a claim that he filed at the National Insurance Institute, the first appellant argued that he participated in the race as an employee of the first respondent that engaged, at the times relevant to the case, and among other things in the business of importing KTM all-terrain motorcycles. The first appellant rode one of these motorcycles during the race in which he was injured (hereafter: the motorcycle). The first appellant’s claim to recognize the accident as a work accident was rejected by the National Insurance Institute even though after the accident the first respondent reported to the National Insurance Institute that he was its employee. The National Insurance Institute decided in this context that, according to the information received by it, the accident did not occur ‘in the course of and as a result of’ the first appellant’s employment with the first respondent and therefore it concluded that it was not a ‘work accident’ as defined in s. 79 of the National Insurance Institute Law [Consolidated Version], 5755-1995 (hereafter: the National Insurance Institute Law). In its judgment of 23 September 1997, the Beer Sheba Regional Labour Court (the honourable JudgeJ. Hoffman) adopted the position of the National Insurance Institute and rejected the first appellant’s version of events that the accident was a work accident. An appeal that the first appellant filed in the National Labour Court was also denied in a judgment of 8 June 1999 (the honourable President S. Adler, Vice-President Y. Eliasof, Judge Y. Flitman, Workers’ Representative S. Guberman, Employers’ Representative G. Stoietzky).

2.            When the first appellant’s claim was denied by the Regional Labour Court, the appellants filed a monetary action in the Tel-Aviv-Jaffa District Court against the first respondent, the second respondent (a company that imports agricultural machines that managed its business on the premises where the first respondent operated) and also against the third and fourth respondents, who are the directors of the first respondent and shareholders in both companies. In his action the first appellant continued to claim that he went to the race as an employee of the first respondent and he argued that the first and second respondents, as his employers, breached their undertaking in the contractual sphere to ensure his maximum safety. The first appellant further argued, alternatively, that the accident occurred as a result of the negligence of some or all of the respondents towards him when he rode the motorcycle that was under their complete control, and that they had the burden of showing that they were not negligent because the incident that caused the damage was more consistent with the conclusion that they acted without reasonable care than the conclusion that they acted with reasonable care. In addition to these arguments, by means of which the first appellant sought to attribute liability for the actual accident to some or all of the respondents, the first appellant raised additional claims in the contractual realm and in torts with regard to the duty owed to him by some or all of the respondents to purchase for him a personal accident insurance policy to cover damages of the kind that he suffered as a result of the accident. The first appellant further argued that the respondents breached this duty and as a result of this he was left without cover for the damage that resulted from the lack of insurance for his participation in the race. The kibbutz, the second respondent, based its claim against the respondents on the fact that it paid for the damage that was caused to the first appellant as a result of the accident.

3.            In its judgment of 14 March 2005 the District Court (the honourable Judge Z. Brun) denied the action. The court held that the decision of the Labour Court gave rise to collateral estoppel with regard to the first appellant’s claim that he participated in the race as an employee of the first respondent. Beyond what was strictly necessary for its decision, the District Court went on to find that the very same conclusion could be drawn from the evidence presented before it. The court said in this regard that the relationship between the first appellant and the first respondent was created as a result of an advertisement published by the first respondent in which it said that ‘it wanted to send on its behalf three experienced and qualified all-terrain riders to compete in the Pharaohs rally.’ The first appellant, who is a mechanic by profession and an amateur race driver, had taken part in the past in various races in Israel and abroad. He replied to the advertisement and during August 1994 he concluded a basic oral arrangement with the first respondent with regards to the terms of his competing in the race on its behalf. Only subsequently, on 30 August 1994, did the first appellant and the first respondent reach an additional agreement that the former would be employed by the latter as a mechanic. The District Court held that from the evidence that was presented it was persuaded that ‘the participation of the plaintiff in the race was not a condition of his employment and it would have happened even without the sponsorship of the defendant’ and that ‘we are speaking in a case such as this of funding in return for advertising only, without any employee-employer relationship.’ The District Court went on to agree in this respect with the remarks of the Regional Labour Court, which said:

‘This factual position is consistent with the definition that the company was a “sponsor” of the plaintiff’s participation in the race and it should not be defined in this framework as his employer. A sponsor means a company or an agency that funds the expenses of the project in return for advertising, facts that even the plaintiff does not dispute.’

The District Court also said that the arguments of the first appellant with regard to the liability of some or all of the respondents for the accident ‘do not have an evidentiary basis’ and he abandoned them in the course of the trial. In addition the District Court held that there is no basis for the claim insofar as it was directed against respondents 2-4. The court therefore focused its decision on the question of whether the first respondent breached its obligations and undertakings to the first appellant inasmuch as if failed to ensure that he was insured for personal accidents for the risks of participating in the race. In this respect the District Court held that the group of Israeli motorcycle riders whom the first appellant joined for the purpose of the race was a group that was independent of the first respondent and it was privately organized for this purpose, and the first respondent, so the District Court held, ‘did not organize or manage this group.’ The District Court also held, relying inter alia on the testimony of the first appellant himself, that it was not agreed between him and the first respondent, either expressly or by implication, that the first respondent would insure him for personal accidents and therefore no contractual obligation should be imputed to the first respondent in this regard. In its judgment the District Court did not address the claim of negligence raised by the first appellant against the first respondent because it did not take out personal accident insurance for him. Therefore there is no decision in the judgment on the question of whether the first respondent is liable under the law of torts for the economic damage caused to the first appellant (and the second appellant for redressing the the damage) as a result of his not having the aforesaid insurance.

This led to the appeal before us.

The arguments of the parties

4.            The appellants argue that the trial court erred in finding that they were estopped from arguing that an employment relationship existed between the first appellant and the first respondent because of the rule of res judicata and because of collateral estoppel which applies in this context as a result of the decisions of the Labour Courts. They claimed that the tests for the existence of an employment relationship for the purpose of the National Insurance Institute Law differ from the tests that apply in this regard under the law of torts. The appellants go on to argue that evidence that was presented in the Labour Court is not admissible in the civil court and that one of the witnesses who was involved in the case and testified in the civil court did not testify at all in the Labour Court. On the merits of the matter the appellants once again claim that there was an employment relationship between the first appellant and the first respondent for the purpose of his participation in the race. They claimed the first appellant was under the complete control of the first respondent, the offer that he accepted was in fact an employment offer and he would not have taken part in the race had he not been sent by the first respondent. The appellants also claim that the payment of the expenses for the race by the first respondent, its contract with additional sponsors, the organization of training races, the sending of a mechanic to the race on its behalf in order to supervise the first appellant, and the lack of any distinction between the first appellant’s work as a mechanic and his participation in the race, all show the active involvement of the first respondent in the organization of the race that is not explained by a mere sponsorship. Alternatively, the appellants claim that the first appellant participated in the race as an agent of the first respondent and that the latter took upon itself, by its conduct or by implication, a contractual duty to insure him. The appellants further argue that the first respondent breached the duty of care that it had as the employer or principal when it failed to take the precautionary measure that was required in the circumstances of the case to ensure that any damage to the first appellant would be compensated and passed on to others by purchasing insurance for him or at least by ensuring that he bought such insurance for himself. The appellants further argue that when someone carries out a dangerous task for another person, that other person is obligated to insure him or to make sure that he has insurance for the risks involved in that task, since that other person has all the information concerning the risks involved and he has the necessary financial resources to pay for it. According to the appellants, the first respondent was in fact aware of the risks involved in the race and even insured the mechanic that it sent on its behalf with the first appellant against these risks. The appellants also argue that imposing a duty on someone who funds sporting activity to ensure that the risks are covered by insurance is capable of serving the interests of society in promoting sport and is consistent with the proper standard of conduct provided in the Sports Law, 5748-1988 (hereafter: the Sports Law). The appellants raise additional arguments with regards to the fact that the first appellant relied on the first respondent’s responsibility for insurance in view of its undertaking to pay all the expenses of the race, in view of its purchase of compulsory insurance, and in view of an express request that the first appellant claims to have made to it in this regard. Alternatively, the appellants argue that the first respondent was negligent in that it made a representation that the participation of the first appellant in the race was within the framework of an employment relationship or an agency relationship between him and the first respondent and that he was therefore insured, and also in its failure to examine the instructions given to the participants in the race. With regards to the third and fourth respondents, the appellants argue that by inducing the first appellant to participate in the race without insurance, they took an unreasonable risk that amounts to an abuse of the veil of incorporation in such a way that it justifies the lifting of the veil in the relationship between them and him. The appellants also argue that the third and fourth respondents were personally negligent in that they did not ensure that insurance had been taken out and in that they initiated the first appellant’s participation in the race even though they did not have any previous experience in organizing a project of this kind.

5.            The respondents rely on the judgment of the District Court and argue that the in this case, the judgment of the Regional Labour Court that held that the accident was not a work accident satisfies all of the conditions that give rise to collateral estoppel. The respondents argue in this regard that the difference between the procedural arrangements and the rules of evidence in the Labour Court and those in the civil court are of no relevance in this case, and that the estoppel was intended to prevent a situation in which the Labour Court and the civil court arrive at contradictory conclusions on the basis of the same evidence. On the merits of the case the respondents argue that there is no basis for intervening in the factual determination of the trial court, which was properly based on the evidence that shows that the first appellant did not participate in the race as an employee of the first respondent. The respondents further argue that this court should accept the findings of the District Court that the case involves a sponsorship transaction that was based on advertising the motorbike in return for a contribution to the expenses of the race and the sale of the motorbike at a cheap price to the first appellant, and not on an employment relationship or agency, and that within the framework of this transaction the first respondent did not undertake to purchase personal accident insurance for the first appellant. With regard to the appellants’ claim concerning liability in torts, the respondents claim that this argument constitutes the introduction of a new claim into the case, which is not permitted, and in any case the claim should be rejected. The respondents further argue that the issue here is one of voluntary insurance and that the first appellant, who had knowledge and previous experience of races of this kind, never insured himself for personal accidents. The respondents argue that the Sports Law is not relevant here since this case only concerns the sponsorship of someone who participated in a private capacity in a race that took place outside Israel. Finally the respondents argue that the appeal should be dismissed in limine in so far as it relates to respondents 2-4 since there is no real claim against them. With regard to the second respondent it is claimed that it is a separate company, engages in a different type of activity from the first respondent and the shareholders of the two companies are not identical. It is also argued that the claims against the second respondent were in fact abandoned by the appellants at the appeal stage and this reason in itself is sufficient reason to deny the claim in so far as the second respondent is concerned. With regard to respondents 3 and 4 it is argued that the appellants did not succeed in showing any cause of action whatsoever against them, including by virtue of lifting the veil of incorporation of the first respondent.

6.            In their reply to the respondents’ arguments the appellants claim, inter alia, that the argument that the first respondent had a duty of care towards the first appellant under the law of torts is a legal argument that may be raised at any stage and therefore it does not amount to the introduction of a new claim, and they also argue that the first and second respondents made a representation to the first appellant that the second respondent was not a separate company but a part of one corporation called ‘Yaadim-Polaris,’ and therefore the second respondent should be regarded as responsible jointly and severally with the first respondent for all the damages that were caused in the circumstances of the case.

Deliberation

7.            In the appeal before us, the appellants restricted their arguments to the issue of the economic damage arising from the lack of personal accident insurance and to the respondents’ liability for this damage in the field of contracts and torts. The other arguments concerning the respondents’ liability for the actual occurrence of the accident and the damage arising directly from it were abandoned during the proceedings in the trial court and were not raised again before us. I will begin by saying that I agree with the findings and conclusions of the District Court with regard to respondents 2-4 and I found no merit in the arguments in the appeal relating to this. The appeal is therefore denied in so far as it is directed against the findings of the District Court with regard to respondents 2-4, and the deliberations will focus on the relationship between the first respondent and the first appellant and the question of the first respondent’s liability for the appellant’s damage in the absence of personal accident insurance.

The nature of the relationship between the first respondent and the first appellant

8.            The scope of the duties and undertakings for which the first respondent is liable to the first appellant insofar as his participation in the race is concerned, including the duty to insure him against personal accidents, necessarily derives from the nature of the relationship that existed between the parties at the relevant time. Therefore the decision on this issue is the basis and the premise for addressing all the other questions that are under consideration. The District Court held that the first appellant participated in the race as a part of a whole group of motorbike riders that was organized for this purpose on a private basis, independently of the first respondent, and that the first respondent paid for the participation of the first appellant in the race for the purpose of advertising the motorbike imported by it. The District Court also held that the relationship between the first appellant and the first respondent, in so far as it concerned his participation in the race, was one of sponsorship. After it defined the relationship between the parties as a relationship between a sponsor and an amateur race driver who took part in a race in a private capacity, the District Court went on to hold that in this relationship there was no express or implied undertaking in the contractual sphere on the part of the first respondent to insure the first appellant against personal accidents. The court was also of the opinion that in these circumstances the first respondent should not be held liable in torts. The first appellant, who disagrees with the findings of the trial court, argues that the relationship that existed between him and the first respondent for the purpose of his participation in the race should be defined as an employment relationship, or alternatively as an agency relationship, and he seeks to derive from this that the first respondent had a duty in the contractual sphere, or alternatively in the field of torts, to insure him against personal accidents for the risks in the race.

9.            How should we classify the relationship that existed between the first appellant and the first respondent in so far as the participation of the first appellant in the race is concerned? Was this, as the District Court held, a relationship between a sponsor and an amateur driver who participated in the race in a private capacity? Was this, as the appellants claim, an employment relationship or an agency relationship? Or is it perhaps possible to define the relationship that existed between the parties in this case in another way, on the basis of the evidence that was presented and the arguments that were heard?

The conclusion that there was no employment relationship between the first appellant and the first respondent, in so far as the first appellant’s participation in the race is concerned, is based soundly on the evidence that was before the trial court, and there is no basis for any intervention in this regard. The trial court held that two separate contracts were made between the parties: the first contract was made orally during the month of August 1994 and it addressed the participation of the first appellant in the race on behalf of the first respondent in order to promote the product that it had begun to import at that time; the second contract was made on 30 August 1994 and it addressed the employment of the first appellant by the first respondent as a mechanic, without any connection to the race. This second contract was enshrined in a written employment agreement that was made between the kibbutz (the second appellant) and the first respondent, in which the terms of employment of the first appellant were set out as aforesaid. This finding of the trial court that the participation in the race was agreed independently, without any connection to the employment of the first appellant by the first respondent as a mechanic, is based, as I have said, on the evidence and reflects the intentions of the parties that can be seen from that evidence. Thus the first appellant confirmed in his testimony that his participation in the race on behalf of the first respondent was agreed between them approximately a month before they agreed upon his employment as a mechanic; the written employment agreement does not address the first appellant’s participation in the race at all; and the first appellant even said in his statement to the National Insurance Institute of 29 June 1995 that he was not obliged to go to the race in the course of his work as a mechanic. The trial court was therefore correct in rejecting the appellant’s claim that there was an employment relationship between the first respondent and the first appellant with regard to his participation in the race. There was no such relationship between the parties when the contractual relationship concerning the participation in the race was created, nor was such a relationship created between them at a later stage when the first appellant began to be employed by the first respondent as a mechanic. Since I have seen fit to approve the findings of the trial court in this regard on their merits, I have no need to consider the arguments that the appellants raised against the trial court’s finding that collateral estoppel applies in this matter by virtue of the judgment of the Regional Labour Court. It will be sufficient to say that this finding does indeed raise considerable difficulties (see LCA 11049/03 Israeli Phoenix Insurance Co. Ltd v. Nidaf [1]).

10. I do not agree with the additional conclusion of the trial court that we are speaking in this case merely of a sponsorship. From the evidence we see that the first appellant was involved in sports driving as a hobby and accumulated knowledge and experience in riding all-terrain motorcycles, even though he did not make this a profession or a source of income. The goal that the first appellant sought to achieve when he made the agreement concerning his participation in the race with the first respondent was to compete in a competitive sporting challenge and to acquire additional experience in this field. The first appellant did not ask the first respondent for remuneration for his participation in the race; he asked for his expenses to be paid. He even testified that ‘at that time I wanted to go to every race that I could; and if the opportunity presented itself - I went.’ Moreover, when he was asked whether he would have looked for another ‘sponsor’ if he had not made the agreement with the first respondent, he answered: ‘I would have looked, but I would not necessarily have gone.’ From the viewpoint of the first appellant the agreement with the first respondent with regard to his participation in the race realized his independent aspiration to take part as a motorbike rider in an international race, while the expenses required for this purpose would be paid by the first respondent. The first respondent, for its part, published an advertisement of its intention ‘to send on its behalf three experienced all-terrain riders’ and after the interview process it chose only one rider, who was the first appellant. In parentheses it should be pointed out that in the group of riders that was organized for the race without any connection to the first respondent, of which the first appellant was a member, there was an additional rider called Hezzy Elon who also rode a KTM motorbike that he bought from the first respondent (the other members of the group rode other types of motorbike). But from the testimony of the third respondent we see that this rider did not go to the race on the first respondent’s behalf. In any case, the advertisement that the first respondent published testifies to the initiative and the active steps that it took in order to have motorbikes that it imported be involved in the race. This initiative and also the resources that it was prepared to invest and did actually invest for this purpose definitely show that the interest that it had with regard to the participation in the race goes beyond the normal conduct of a mere sponsor and this was reflected in the testimony of the first appellant. The first appellant testified with regard to his experience of the usual types of agreement with sponsors in this field, and from his evidence, which was not contested, it appears that the agreement between him and the first respondent with regard to the participation in the race definitely went beyond the usual practice in this field in agreements concerning sponsorship of a motorbike rider in return for advertising the business of the sponsor. In the case before us the first respondent provided the first appellant with the motorbike that he rode during the race and also paid for the direct expenses involved in his participation, including the registration fee for the race, the visa and border fees for going to Egypt, spare parts for the motorbike and also compulsory insurance for the use of the motorbike in Israel and Egypt. An employee of the first respondent, a mechanic by profession, was also sent by it to accompany the group of riders to which the first appellant belonged (an additional mechanic was sent by a rival Israeli importer of motorbikes).

11. The background to the agreement between the first appellant and the first respondent and the nature of the provisions of this agreement lead in my opinion to the conclusion that the relationship that was created between the parties for the purpose of the first appellant’s participation in the race was of a special kind. As I have already said, we are speaking neither of an employment relationship nor of a sports sponsorship relationship, and it appears that the most precise definition of the relationship between the parties in this case is one of a joint venture. The focus of the relationship was that the parties were interested in participating in the race in order to realize their respective interests. In order to further these interests, the first respondent and the first appellant agreed to cooperate with one another and to combine the sporting abilities of the first appellant and the economic resources of the first respondent that initiated the relationship and was prepared to be involved in the furthering of the venture in the very intensive manner described above. Support for the conclusion that we are dealing with a special agreement — a kind of joint venture — can be found in the fact that in the relationship between the parties the first respondent was entitled to enter into agreements with various sponsors in order to advertise their products through the first appellant during the race, and it actually did this in an agreement with Delek the Israel Fuel Corporation Ltd. The first respondent also provided the necessary equipment (the motorbike, spare parts and clothing) and also dealt with making the payments that were required so that the first appellant could participate in the race. It can therefore be said that in return for the economic involvement of the first respondent in the joint venture, the first respondent expected an economic return, whereas the first appellant contributed his sporting ability to the venture in the expectation of success in terms of sporting achievement.

Now that we have defined the nature of the agreement between the first appellant and the first respondent as a joint venture, we should go on to examine, against this background, the arguments raised by the appellants in the appeal before us. As we have already said, these arguments focus on the liability of the first respondent in the fields of contracts and torts for the economic damage caused to the appellants as a result of the fact that the first appellant did not have personal accident insurance, which entitles an injured person to insurance payments for medical disability and incapacity to work in his profession or the professions stated in the policy (see chapters 2 and 3 of the Insurance Contract Law, 5741-1981).

The contractual cause of action

12. In the contractual sphere I agree with the factual finding of the trial court that there was no express agreement between the parties that the first respondent would take out insurance for the first appellant’s participation in the race, as distinct from the compulsory insurances that the first respondent undertook to pay for the first appellant that, in so far as can be seen from the testimonies that were presented, did not include insurance cover for personal injury that might result from the actual participation in the race. Thus the request sent by the first appellant to the first respondent ‘to obtain insurance for one month’ did not refer to personal accident insurance but to the compulsory insurance for the motorbike only, as can be seen clearly from his testimony:

‘It says [in the request] to insure the motorbike for a period of a month… the request for insurance was not made as a result of the organizers’ document, but since the motorbike had already passed its licensing test and in order to move it from place to place and prepare it for the race, this was the first condition if we wanted to begin to move the project forward’ (emphases supplied).

But according to the first appellant, even though it was not agreed between them expressly, it is possible to understand that the first respondent made such an undertaking from the circumstances of the agreement and from the matters that the first respondent undertook to handle with regard to the first appellant’s participation in the race. This argument of the first appellant gives rise to a difficulty because it invites the court to read undertakings into the parties’ agreement which they did not expressly agree to. This involves a violation of the principle of the freedom of contracts, whether they are written or oral, according to which the parties have the autonomy to determine the terms of the contract, and the content may be whatever they agree (s. 24 of the Contracts (General Part) Law, 5733-1973 (hereafter: the Contracts Law)). In the case before us no claim was raised that it is possible to supplement the terms of the agreement between the parties by virtue of s. 26 of the Contracts Law in accordance with a prevailing practice between the parties, or in accordance with the prevailing practice in contracts of this type, which is understandable in view of the fact that we are dealing with a one- time contract between the first respondent and the first appellant and with a contract that was not typical of what was customary in the racing world with regard to sponsorship, but with a type of joint venture whose terms were from the outset unique to the parties, as we have explained above. Notwithstanding, it is not denied that within the framework of the division of roles agreed upon by the parties, the first respondent undertook to take care of the expenses involved in the first appellant’s participation in the race. Is it possible to understand from this by means of interpretation that there was an undertaking to ensure that the first appellant was insured against personal accidents? I think not. Taking out personal accident insurance is not included in the immediate and direct expenses required for participation in the race, which the first respondent undertook as stated above. Our concern is with an additional expense that was intended to guarantee the first appellant an insurance payment in the event of disability as a result of an accident, if it occurred during his participation in the race. Such insurance, while desirable and appropriate in the circumstances of the case (and we will discuss this later within the framework of the tortious cause of action), was not necessary as far as the actual participation in the race was concerned. Therefore the contractual undertaking of the first respondent to pay for the first appellant’s participation in the race does not lead — on the basis of a purposive interpretation of that undertaking — to the conclusion that it should also include insuring him against personal accidents.

The tortious cause of action

13. An additional cause of action by virtue of which the appellants are seeking to impose liability on the first respondent for the damage caused to them because he did not have insurance against personal accidents is the tortious cause of action. The appellants argue in this context that the first respondent was negligent in that it did not take care to insure the first appellant or at least did not ascertain that the first appellant took care to insure himself against personal accidents. In this context we should emphasize that the existence of a contract between the parties does not necessarily rule out the possibility that one of them will be liable to the other in torts (see I. Englard, A. Barak and M. Cheshin, The Law of Torts — The General Doctrine of Torts (G. Tedeschi, ed., 1976), at p. 14; D. Friedmann and N. Cohen, Contracts, vol. 1, at pp. 81-82 (1991); R. Sanilevitz and D. Ronen, ‘Competition between the Contractual Cause of Action and the Tortious Cause of Action in Compensation Claims — A Comparative Look,’ Shamgar Volume (vol. 3, 2003) 93, at pp. 118-120; FH 20/82 Adders Building Materials Ltd v. Harlow and Jones GMBH [2], at pp. 268-269; A. Herman, Introduction to the Law of Torts (2006), at pp. 327-329; with regard to the various difficulties that this approach raises in the context of economic loss, see D. Ronen, ‘Pure Economic Loss from a Comparative Perspective,’ 44 Ha-Praklit 504 (1999), at pp. 506-510; T. Gidron, ‘The Duty of Care in the Tort of Negligence and Pure Economic Loss,’ 42 Ha-Praklit 126 (1995), at pp. 137, 139-144; East River Steamship Corp. v. Transamerica Delaval Inc. [17]). Many examples in which Israeli case law has applied the principle that the contractual cause of action and the tortious cause of action are not mutually exclusive can be found in those cases where an employment relationship or a legal representation relationship exists between the parties (see, for example, CA 37/86 Levy v. Sherman [3], at p. 462; CA 735/75 Reutman v. Aderet [4]; CA 153/04 Robinovitz v. Rosenbaum [5], at para. 5 of the opinion of the honourable Justice E. Rubinstein). In English law the prevalent outlook in the past was that, as a rule, the law of contracts takes precedence over the law of torts and therefore the scope of the liabilities and undertakings that the parties to the contract took upon themselves should not be extended by means of the law of torts. This outlook underwent a change as a result of the judgment of the House of Lords in Henderson v. Merrett Syndicates Ltd [19], which held that liability in torts would only be ruled out where it was contrary to the contents of the contract between the parties (see R.A. Buckley, The Modern Law of Negligence (third edition, 1999), at pp. 148, 153; J. Murphy, Street on Torts (eleventh edition, 2003), at pp. 210-212; W.V.H. Rogers, Winfield and Jolowicz on Tort (seventeenth edition, 2006), at pp. 10-13; see also Englard, Barak and Cheshin, The Law of Torts — The General Doctrine of Torts, supra, at p. 15). In the case before us, the agreement between the parties is silent on the subject of taking out personal accident insurance to insure the first appellant against the risks involved in the race, and therefore it can be said that the tortious cause of action exists alongside the contractual cause of action, even if we adopt the reservation that was determined in this regard in Henderson v. Merrett Syndicates Ltd [19].

Negligence on account of not taking out insurance within the framework of a joint sporting venture

14. Before we examine the question of the first respondent’s liability in torts for not taking out personal accident insurance, we should first say that there is no merit in the argument that the tortious cause of action raised by the appellants constitutes a new claim that is not permitted at the appeal stage. This cause of action was brought before the trial court and was mentioned by it in the judgment (p. 10 of the judgment), even though it did not see fit to discuss it at length. On the merits of the matter, the question is whether it is desirable to impose on someone, by virtue of the tort of negligence, a duty to take out insurance for someone else where the law does not demand this. Indeed, in a case of this kind, the alleged liability does not derive from negligence that caused the direct damage, but from negligence that resulted in there being no insurance cover for the direct damage, when it occurred. This is the position in our case, where we are speaking of activity involving inherent risks that are not necessarily the result of negligence. Sports driving, even if done with reasonable care, involves risks. In practice, most branches of sport — and especially competitive sport — involve a degree of risk even if proper precautionary measures are taken. Therefore the question in our case is whether someone, who is involved in a sporting event and derives a benefit from it, should be made liable to insure his participants even when there is no statutory duty to do so.

I will examine this question below.

15. Let us first say that when speaking of activity that involves considerable risks that cannot be negated even by taking reasonable precautions, taking out insurance may be a proper and even a required normative standard. Policy considerations that justify determining such a normative standard are based mainly on the consequences that may result from a lack of insurance for activity of this kind in the ethical, economic and social spheres. There is a real likelihood that engaging in dangerous activity may result in significance injuries for which no one will be liable in torts within the framework of the tort of negligence, since from an overall perspective we are speaking of activity that is reasonable and even desirable. Insurance provides an important ‘safety net’ in this context. Indeed, it is especially when we are speaking of organized activity that involves considerable risks that the parties who derive a benefit from the activity can be expected to ascertain that insurance is taken out. It should be remembered in this context that apart from the personal cost that the injured person will be likely to pay if he is injured and pays for the damage out of his own pocket, there is also a social cost, since an injured person in such a case will almost certainly become a burden on society as a whole or on the community to which he belongs. This shows the importance of insurance, which provides a solution to these difficulties by spreading the risk inherent in the dangerous activity among the group of persons that benefit from it. Spreading the risk in this manner is just and efficient and allows the direct damage caused as a result of the dangerous activity, as well as the ‘secondary’ indirect damage that accompanies it, to be minimized (see Y. Elias, Insurance Law (vol. 1, 2002), at pp. 3-5; S. Weller, The Insurance Contract Law, 5741-1981 (vol. 1, 2005), at pp. 43, 45-47; for a distinction between primary damage and secondary damage in the context of torts law, see I. Gilead, ‘Liability and Insurance in Cases of Damage Caused by Terrorist Attacks — Economic Analysis,’ in Terrorism, Tort Law and Insurance: A Comparative Survey (B.A. Koch, ed., 2004) 238, at pp. 241-242).

16. Insurance is an integral part of the way in which modern society contends with risks. In various contexts the legislature saw fit to enact a provision of statute that obliges the relevant parties to take out insurance in favour of a potential victim (see s. 2 of the Motor Car Insurance Ordinance [New Version], 5730-1970; s. 2 of the Immunization Victims Insurance Law, 5750-1989; r. 4(5) of the Aviation Services Licensing (Aviation Schools) Regulations, 5731-1971; Sports Diving (Imposing an Insurance Liability on Divers) Regulations, 5740-1980; and in English law see R. Lewis, When You Must Insure — Part 1, New Law Journal  8  October (2004) P1474). The law of torts for its part has chosen various legal systems to handling activities that involve considerable risks by imposing a system of strict or absolute liability. In this regard see, for example, the wording of the Restatement of the Law, Third, Torts: Liability for Physical Harm (Proposed Final Draft no. 1, April 6, 2005) §20, which is entitled ‘Abnormally Dangerous Activities’:

‘(a) An actor who carries on an abnormally dangerous activity is subject to strict liability for physical harm resulting from the activity.

(b) An activity is abnormally dangerous if:

(1) the activity creates a foreseeable and highly significant risk of physical harm even when reasonable care is exercised by all actors; and

(2) the activity is not one of common usage.’

The purpose of this arrangement is to impose upon someone, whose activity creates a serious and unusual risk of physical injury to his neighbours, the liability for damage that is caused as a result of the realization of that risk, something that is not possible within the framework of the tort of negligence because the damage cannot be prevented by reasonable measures (see and cf. Restat. 2d of Torts §519-520). It should be noted that one of the exceptions to this provision concerns the choice of the injured person to be involved in the dangerous activity in return for some benefit (see Restatement of the Law, Third, Torts: Liability for Physical Harm (Proposed Final Draft No. 1, April 6, 2005) §24). An arrangement of strict or absolute liability may in turn be combined with an insurance arrangement, whether by virtue of an express provision of statute or by virtue of the incentive that such an arrangement creates, from the viewpoint of the potential tortfeasors, who face the threat of being liable even if they act carefully. It should be noted that the increased or absolute liability, together with the incentive to take out insurance, is not limited to someone who actually carries out the dangerous activity, and sometimes it will be justified to impose it on other parties, such as the promoter or funder of the activity, for various reasons such as an ability to prevent the damage. 

17. The social and private interest in obligating those who benefit from dangerous activities to take out appropriate insurance exists inter alia with regard to sporting activity, which as we have said inherently involves considerable risks to sportsmen. Sports racing is an obvious example of this. I think that the importance of insurance that is intended to compensate for personal injuries that may be caused as a result of dangerous sporting activity cannot be overstated (T. Kevan, D. Adamson & S. Cottrell, Sports Personal Injury: Law and Practice (2002), at pp. 259-264; D. Pilpel, Sports from a Legal Perspective (1994), at pp. 272-274). The clear social interest that appropriate insurance be taken out with regard to injuries that arise from sporting activity found expression in s. 7(a) of the Sports Law, 5748-1988, which provides:

‘(a) A sports club, sports organization, federation and union shall insure the sportsmen who take part in sporting competitions that are organized by them or on their behalf.’

On 29 December 2005 the Sports Driving Law, 5766-2005, was published. It comes into effect on 15 March 2007. This law regulates the field of sports driving in various respects and it establishes, inter alia, penal provisions with regard to anyone who uses or causes or allows another to use a competitive vehicle without appropriate insurance. In this regard s. 15 of the Sports Driving Law provides:

‘Insurance obligation      15. (a) A person shall not use, nor shall he cause or allow another person to use, a competitive vehicle that has been given a competitive vehicle licence, unless there is a valid insurance policy for the use of that competitive vehicle by him or the other person, which was issued by an insurer, in accordance with provisions that shall be determined by the minister, after consulting the Supervisor of Insurance, which insures the owner of the competitive vehicle and its rider as follows:

                (1) Against liability for rescue, evacuation, medical treatment, assistance, nursing services and rehabilitation services that will be given to the driver of the competitive vehicle for personal injury that he suffers as a result of sports driving that took place in accordance with the provisions of this law;

                (2) Against liability for personal injury that is caused to a person by a competitive vehicle as a result of sports driving, apart from the driver of the competitive vehicle.

                (b) Notwithstanding the provisions of subsection (a), the minister may, after consulting the Supervisor of Insurance, determine types of competitive vehicles, fields of sports driving and types of approved race tracks, with regard to which the duty to take out insurance under this section shall be the liability of the licence holder under sections 8 or 9, as applicable.

                (c) In this section, ‘insurer’ — according to the meaning thereof in the Supervision of Insurance Transactions Law, 5741-1981.’

Section 23(c) of the law provides that anyone who breaches the provisions of the aforesaid s. 15 is liable to imprisonment for one year or a fine. The provisions of the Sports Driving Law do not apply in our case because the events that are the subject of the appeal took place approximately twelve years before the law came into effect. Moreover, the law relates mainly to sports driving in Israel (see s. 2(c) of the Sports Driving Law; the draft Sports Driving Law, 5765-2004, Draft Laws 2004, 474, at p. 476), whereas the incident in the appeal before us occurred in Egypt. Notwithstanding, this legislative development indicates that sports driving is one of those dangerous activities that we should ensure take place with insurance cover for those taking the risks, and the legislature has taken care to ensure that persons using competitive vehicles have a suitable insurance policy by imposing the duty to take care of this on whoever benefits from this activity (and not on drivers in general — see ss. 34-35 of the Sports Driving Law, which excludes sports driving from the application of the Motor Vehicle Insurance Ordinance and the Road Accident Victims Compensation Law, 5735-1975). It should be noted that s. 30(b) of the law provides that ‘the driver of a competitive vehicle shall not have a cause of action under the Torts Ordinance [New Version], against another driver of a competitive vehicle, for damage that is caused to him as a result of sports driving, unless the aforesaid damage is caused to him by the other driver intentionally’ — i.e., between the drivers inter se compulsory insurance replaces the law of torts. It is not superfluous to point out in this context that in our case the organizers of the race compelled the participants to take out Israeli and Egyptian compulsory insurance and they recommended — and it should be noted that this was only a recommendation — that they take out personal accident insurance.

18. The social and private interest in the existence of insurance will usually be furthered in the best way by means of clear provisions of statute such as those discussed above. But in the case before us it was not proved that there is a relevant statutory arrangement. In Israel, there is no strict liability provision that we can consider applying in this case. Therefore the petitioners ask us to go one step further and to impose an insurance obligation on the first respondent by virtue of the tort of negligence. This approach raises difficulties and should not be adopted. As I have already said, from a normative viewpoint it is unreasonable that a venture concerning participation in a motorbike race should be undertaken without personal accident insurance. Notwithstanding, choosing the framework of negligence as a means of creating an insurance obligation stretches the limits of the tort and raises a concern that negligence will gradually turn into a strict or absolute liability. This is because of the proximity between imposing a duty to take out insurance and imposing absolute liability which Prof. I. Englard discussed when he said ‘Absolute liability is in essence a reflection of the idea of insurance’ (see I. Englard, Compensation for Road Accident Victims (third edition, 2005), at p. 6). Indeed, determining an insurance obligation as a protected norm within the framework of the tort of negligence may blur the line that divides absolute liability from liability that is based on the principle of fault. The distinction that exists between these two regimes was discussed by this court in CA 485/60 Berman v. Marziof [6], at p. 1918, where it was said: ‘[someone with a duty of care] is not like an insurer, who is liable to compensate for the damage whatever its source’ (see also CA 371/90 Subhi v. Israel Railways [7], at p. 349; CA 4025/91 Zvi v. Carroll [8], at p. 790). Justice Witkon also uttered some remarks in this vein in CA 285/73 Lagil Israel Trampoline and Sports Equipment Ltd v. Nahmias [9], at p. 75, where he said:

‘It is common today to suggest to the supplier another solution to the dilemma. We ask what difference does it really make to the supplier that he is presumed to be negligent (even if he did not have a reasonable possibility of preventing the danger), since in any case he should be insured against third part risks, and thus he passes the risk on to all consumers or all taxpayers. In my opinion this is not a path that the court can follow. In this way we are in practice eliminating the concept of “negligence” (with all of its moral significance) and replacing it with absolute liability… and I am not at all sure whether this is desirable in all circumstances and in every case. The public’s resources are not unlimited. Public money is a resource of the economy, and when there are insufficient resources to satisfy all of the desirable social purposes, an order of priorities needs to be determined. It is clear that this is a matter for the legislature (or the government) to address, after it examines thoroughly the need for the service and the scope of the risk that it involves, the cost of insuring against absolute liability and the relative importance of this social burden in comparison to the importance of other burdens… I do not mean to argue that the court is not competent to consider a question that is entirely a matter of policy, but it is clear to me that this debate requires research and that we do not have the necessary tools for this (for the position that the legislature should be left to determine arrangements that impose increased or absolute liability, see also A. Barak, ‘Forty Years of Israeli Law — The Law of Torts and the Codification of Civil Law,’ 19 Hebrew Univ. L. Rev. (Mishpatim) 631 (1990), at p. 642; CFH 7794/98 Moshe v. Clifford [10], at pp. 738-739).

Choosing the path of legislation in order to determine an insurance obligation has an additional advantage over the path in which such a norm is determined within the framework of the tort of negligence: it would appear that the legislative path advances the interest of spreading the risk by means of taking out insurance more effectively. Imposing a duty of care as opposed to imposing a duty in statute means that the potential tortfeasor has the choice of the possibility of taking out insurance and the possibility of taking the risk involved in not purchasing insurance (a risk whose realization will render the tortfeasor liable to compensate the injured person in the absence of insurance). It cannot be ruled out that, in the absence of a statutory duty to take out insurance, the potential tortfeasor will choose the second possibility according to which he will be liable to pay for the whole damage when it occurs, for many different reasons (see Weller, The Insurance Contract Law, 5741-1981, supra, at p. 44; G. Calabresi, The Costs of Accidents (1970), at pp. 55-59; also see and cf. Weller, supra, at pp. 126-127; D. Schwartz and R. Schlinger, Insurance Law (2005), at pp. 113-114, 138). With regard to the possibility of finding the tortfeasor liable for punitive damages as an incentive to take out insurance and the disadvantages of this possibility, see and cf. CA 140/00 Estate of Ettinger v. Company for the Reconstruction and Development of the Jewish Quarter in the Old City, Jerusalem, Ltd[11], at pp. 562-567 {180-186}).

19. But despite the difficulties inherent in the approach whereby failure to take out insurance constitutes negligent conduct that gives rise to liability under the law of torts, I do not think it right to rule out this possibility in principle; each case should be examined on its merits and according to its circumstances. The fact that we are talking in this context of economic loss that is reflected in a pecuniary loss as a result of not receiving an insurance payment — ‘pure’ economic loss — also does not in my opinion rule out, always and in all circumstances, the duty of care. I agree in this regard with the opinion of Deputy President E. Rivlin in CA 3464/05 Paz Oil Co. Ltd v. State of Israel [12], at para. 7, where he said:

‘It is doubtful whether the fact that we may be talking here about “pure” economic loss, i.e., pecuniary loss that is not accompanied by physical damage to the person or property of the plaintiff, is capable on its own, in the circumstances of the case, of ruling out the duty of care. Admittedly in foreign case law there has sometimes been a reluctance to impose liability for this type of damage, for various reasons that mainly arise from a concern that it will lead to an uncontrollable increase in the number of persons entitled to compensation, the concern that the courts will be flooded with cases and the difficulty of assessing the amount of the damages (see D. Ronen, ‘Pure Economic Loss from a Comparative Perspective,’ 44 HaPraklit 504 (2000)). These considerations may fall within the scope of the policy considerations that are usually examined within the framework of the duty of care. As I have said, I doubt whether the nature of the damage in our case can rule out the duty of care (and see in this regard, for example, Jerusalem Municipality v. Gordon, supra, at p. 139; and with regard to negligent misrepresentation, see App 106/54 Weinstein v. Kadima Cooperative Society Ltd).’

(For classification of the damage see: Buckley, The Modern Law of Negligence, supra, at pp. 149, 153-154; Van Oppen v. Clerk to the Bedford Charity Trustees [20]; for the characteristics of economic loss and the aforementioned doubts, see Ronen, ‘Pure Economic Loss from a Comparative Perspective,’ supra, at pp. 504, 508-509, 522; Gidron, ‘The Duty of Care in the Tort of Negligence and Pure Economic Loss,’ supra, at pp. 128-130, 136-138; N. Cohen, ‘Strike Damage, Deliberate Negligence, Economic Loss and Causing Breach of Contract,’ 14 Tel-Aviv University Law Review (Iyyunei Mishpat) 173 (1989), at pp. 183-185; Winfield and Jolowicz on Tort, supra, at pp. 191-194).

Thus we see that each case should be examined in accordance with its characteristics and all of the factors that are relevant to the case, including considerations concerning the reasonableness of the conduct, the likelihood of the damage, the relationship between the tortfeasor and the injured party and the dependence of one on the other. The concern that the limits of the tort of negligence will be eroded should not be the determining factor in every case.  This is a consideration whose relevance and weight should be considered on a case by case basis. Moreover it would appear that there are certain situations in which it will be right to recognize a cause of action of negligence as a result of not taking out insurance. Thus, for example, the considerations weighing against the imposition of liability on the grounds of negligence lose their strength where there is a statutory duty to take out insurance (see and cf. LaClair v. Silberline Manufacturing Co., Inc. [18]; CC (TA-DC) 2474/86 Netzer v. Kanfonit Light Aircraft Co. Ltd [16], at pp. 476-478; on the connection between a statutory duty and the tort of negligence see: CA 145/80 Vaknin v. Beit Shemesh Local Council [13], at p. 139; CA 2906/01 Haifa Municipality v. Menora Insurance Co. Ltd [14], at paras. 17, 23, 27). Moreover, in circumstances where there is a relationship between the tortfeasor and the injured party and a dependence of one on the other, there may be a duty of care on the part of the tortfeasor to the injured person to protect his economic interests. It is possible that in such circumstances it will be possible to regard a failure of the tortfeasor to insure the injured party as a negligent omission. The aforesaid relationship and reliance element may exist, inter alia, where one party expressly promised the other that he would take out insurance for him or where this is required by the custom between the parties. By contrast, where the injured party chose to become involved in dangerous activity in return for benefits that it gives him, it will be difficult to argue in the absence of an express agreement that he relied on the other party to insure him.

20. In English law the lack of a special relationship between the tortfeasor and the injured person has indeed been a main consideration in two judgments in which the claim of negligence was raised in the wake of the failure to take out insurance. In a case that concerned an employment relationship (Reid v. Rush & Tompkins Group PLC [21]) and in a case that concerned the sporting activity of a school pupil (Van Oppen v. Clerk to the Bedford Charity Trustees [20]) it was held that even where a tortfeasor has a duty of care to ensure the physical safety of the injured person, he does not necessarily have a duty of care to ensure his economic welfare. Therefore the court rejected the claim that was raised in those cases that the defendants (the employer in Reid v. Rush & Tompkins Group PLC [21] and the school in Van Oppen v. Clerk to the Bedford Charity Trustees [20]) had a duty to take out insurance to cover economic loss arising from events for which they had no liability in torts.

In Naylor v. Payling [22] the English Court of Appeal considered whether a landowner had a duty to ensure that an independent contractor employed by him on the land had taken out insurance for damage to third parties that might be caused as a result of the contractor’s negligence. In discussing the distinction between a freestanding duty to do this and a duty derived from the general duty of employing a competent and qualified contractor, Justices Waller and Neuberger expressed their opinion that as a rule no freestanding duty as aforesaid should be recognized apart from in special circumstances — cases where the employer is himself under a duty (whether statutory or not) to insure himself, or where the employer accepts that he should insure himself. Justice Waller went on to hold that an additional condition for the existence of such a freestanding duty is that the contractor is employed in a hazardous activity. But in that case, the court went on to hold, the circumstances justifying the imposition of such a duty did not exist. From the decision of the English Court of Appeal in Naylor v. Payling [22] it is possible, with the requisite caution, to infer that when the special circumstances mentioned above do indeed exist, it cannot be ruled out that there will be an independent or freestanding duty to ensure the existence of insurance as a cause of action in negligence (but see Winfield and Jolowicz on Tort, supra, at pp. 407-408). As I have already said above, I too am of the opinion that the recognition of this duty is not based on sweeping rules but on the application of policy considerations that lie at the heart of the tort of negligence, which include reasonableness, reliance expectations, the neighbour principle and avoiding excessive deterrence and overextending the limits of the tort.

From general principles to the specific case

21. Does the first respondent have a duty of care to the first appellant with regard to taking out personal accident insurance? In order to answer this question we should examine the relationship between the parties and the duties that arise from it against a background of the normative position set out above. In this case the first respondent did not have a statutory duty to take out insurance. We have also seen that the insurances that were a precondition for participating in the race were taken out, whereas the insurance that we are discussing — personal accident insurance — was a recommendation of the organizers. This recommendation was sent to the sportsmen themselves but the first appellant chose to ignore it. In the circumstances of the case there is no basis whatsoever for the argument that a special relationship existed between the parties or that the first appellant relied on the first respondent in a way that imposes on it a duty of care to insure him. The essence of the contract between the parties (a joint sporting venture) does not in itself indicate such a relationship or reliance, since we are speaking of a contract between two parties of equal bargaining power where each of them was free to negotiate the terms of the contract or alternatively to choose to enter into a contract with another party (a sportsman or sponsor, as applicable). Moreover, in so far as the insurance is concerned, the relationship between the parties was not characterized by one party being more knowledgeable or being more able to prevent the damage that was caused, thereby giving rise to reliance on the part of the other. Even from the viewpoint of sharing the benefits, we are speaking of a venture in which both parties were expecting to derive an advantage, one in the economic sphere and the other in sporting achievements. Moreover it would appear that in the circumstances of the case and in view of the division of functions between the parties in the venture that they wished to promote, the first appellant does not have a convincing argument as to why the first respondent should be liable to take out personal accident insurance, rather than the first appellant himself. In this context it should be recalled that the first appellant participated in the past on more than one occasion in motorbike races, and he was able to make a proper assessment of the risks involved in them and the economic loss that he was likely to suffer if he was injured and did not have insurance. It should also be recalled that his argument that he asked the first respondent to ensure that he had personal accident insurance was rejected by the trial court on the facts. In these circumstances it would appear that imposing a duty of care on the first respondent to take out insurance would be going too far. Therefore the argument that the first respondent is liable for the appellant’s damage by virtue of the tort of negligence because of the lack of insurance should be rejected.

Conclusion

22. For the reasons set out above I would propose to my colleagues that we deny the appeal, but because of the special circumstances of the case I would further propose not to make an order for costs.

 

Justice M. Naor

I agree with the opinion of my colleague Justice Hayut. The tragic incident before us in this case shows the need for parties who have a common interest in a project or a property to determine the question of insurance coverage for personal injuries or damage to property. Preplanning avoids both underinsurance and double insurance (see and cf. CA 931/99 Menorah Insurance Co. Ltd v. Jerusalem Candles Ilum (1987) Ltd [15], at p. 564).

My colleague mentioned (in para. 16 of her opinion) several statutory provisions that contain a binding duty to take out insurance. Such provisions are dispersed in legislation and regulations in a sporadic and haphazard manner. I am of the opinion that the legislator should address the question of the proper scope of the duty to take out insurance and in what areas it should apply, in order to prevent situations like the one in which the appellant finds himself, where an accident has occurred and it is not covered by insurance.

 

 

Justice A. Grunis

I agree with the opinion of my colleague Justice E. Hayut and also with the remarks of my colleague Justice M. Naor.

 

 

Appeal denied.

17 Adar 5767.

7 March 2007.