Adv. Yonathan Kanir and Adv. Shahar Malul Shiber || 20.6.18

Introduction

For at least three decades every Advocate specializing in personal status law has known that that the rule is that registration of the title to property in the joint names of spouses, regardless of the size and sources of their respective contributions to its purchase price, attests to an intention to divide the rights in the property between them in equal shares ("the Decker Rule") [1]. This ruling of the Honorable Former Chief Justice M. Shamgar, symbolizes the customary property sharing between spouses and also sits well with the provisions of section 125 of the Land Law, 5729-1969 ("the Land Law"), which stipulates that an entry in the Land Registers shall constitute conclusive evidence of its contents.

For many years, the changes resulting from the enactment and implementation of the Financial Relationships between Spouses Law, 5733-1973 ("the Law"/"the Financial Relationships Law") did nothing to alter the explicit approach prescribed in the Decker Rule, according to which the registration alone creates certainty and finality, while neither the provisions of section 5 of the Law nor even the exception specified in section 8 of the Law could alter the validity of the registration.   

In practice, section 8 of the Financial Relationships Law in general and section 8(2) in particular, are seen as exceptions and are used sparingly and in extraordinary circumstances only [2]. Over the years, the courts have explicated the term "special circumstances" which appears at the start of the section, and have prescribed a number of considerations for deviating from an equal division of the matrimonial assets, including arrogation of property [3], physical and psychological violence [4] and economic disparities [5].

As a scarlet thread, the courts' rulings implementing the exception prescribed in section 8(2) of the Law, prior to Amendment No. 4 to the Law [6], demonstrate the congruence between the Decker Rule and the provisions of that section. The parties' contributions to the purchase price of the property are never included in the considerations for activating the provisions of section 8(2) of the Law in a way that creates an imbalance, but only, at the most, other balanceable joint assets, such as social welfare rights and accumulated funds.

The explanation given by the courts for the distinction made between real estate assets and other assets is that registration of the title to a real estate asset in the spouses' joint names indicates a specific express and implied intention to share the ownership which is covered by a specific statutory provision in the Land Law, the Land Register being conclusive evidence, and hence the provisions of the Financial Relationships Law do not apply to it [7]. 

A further reason, is that a real estate asset purchased with a larger contribution from one of the spouses and which is subsequently registered as jointly owned constitutes a perfected gift [8], and therefore comes within the exception appearing in section 5(a)(1) of the Financial Relationships Law and cannot be balanced pursuant to section 8 of the Law [9]. Moreover, the registration of an asset in the names of both parties meets the written record requirement prescribed in section 5(a)(3), which therefore also means that, since the exception in section 8 of the Law also does not apply to the excluded assets, it cannot be the subject of another balancing under section 8 of the Law, [10].

Thus, the provision in section 5(a)(1) of the Law excludes from equal balancing an asset which was gifted to one of the spouses, while registration of an asset which was acquired through a larger contribution by one of the spouses in the name of both parties, constitutes a peremptory and perfected gift to the party whose contribution was smaller. We would also mention section 5(a)(3), which provides that the value of assets which the parties agreed in writing to exclude from the resource balancing arrangement shall not be balanced. Since registration of property satisfies the written agreement condition, property registered in the names of both parties shall be divided in accordance with the registration requirement.

Application of the exception in section 8(2) of the Law following Amendment No. 4 in the context of the Decker rule

In 2008, Amendment No. 4 was added to the Financial Relationships Law, which extends the ambit of section 8(2) of the Law, and enables various policy considerations to be taken into account for the purpose of unequally balancing the parties' assets upon the dissolution of their marriage (or earlier, in accordance with the provisions of section 5A of the Law).

With regard to real estate assets, it is evident from a perusal of the Bill, and the provisions of the Law as enacted, that nothing has changed. The provisions of the Amendment to the Financial Relationships Law do not appear to contain any exception to the Decker Rule, since that Rule focuses on an equal division of rights despite reasons related to the past, while the Amendment to the Law facilitates an unequal division of rights based primarily (although not exclusively) on reasons relating to the future.

And indeed, since Amendment No.4 to the Financial Relationships Law, the Decker Rule has stood firm, and the courts have cleaved to the approach that a real estate asset registered in the names of both spouses cannot be unequally balanced pursuant to section 8(2) of the Law. See for example the following cases in which the courts ordered an unequal distribution of jointly owned assets except for real estate assets registered in the names of both spouses:

Family Case (Jerusalem Family Court) 11849-07-10 T.A. v. M.A. , page 16 of the judgment of His Honor Justice D. Teperberg (published in the Nevo legal database, 06.04.2011):

"The just result required therefore, is that the woman's retirement assets, which were saved by her while supporting the man, the pension rights and all the pecuniary rights which are registered in her name, shall not be divided, but shall remain in the woman's possession. Conversely, for two reasons, the parties' apartment shall be divided equally between them in accordance with the registration: Firstly, according to the Decker Rule (CA 66/88 Decker v. Decker, IsrSC 43(1) 122(1989), registration of the title to an apartment constitutes evidence of joint ownership of the property, and that fact transcends claims such as the sources which the apartment was purchased from.

See also Family Case (Be'er Sheva Family Court) 15300-09 M.S. v. B.S., paragraph 21 of the judgment of Her Honor Justice G. Levin (published in the Nevo legal database, 28.08.2012):

"In this regard, it seems that it is not possible to deviate from an equal division of the rights in the parties' shared apartment pursuant to section 8 of the Financial Relationships Law. The severance claim is not based on the Financial Relationships Law but on joint ownership of the apartment, which was purchased jointly by the parties and registered in both their names in equal shares. Indeed, the claim regarding the apartment is based on a proprietary right and is regulated by the Land Law, 5729-1969 and not by the Financial Relationships between Spouses Law."

Family Case (Rishon LeZion Family Court) 26409-11-09 N.A. v. D.A. paragraphs 30-31 of the judgment of Her Honor Justice A. Golan Tavori (published in the Nevo legal database, 30.09.2013):

"A person who claims that the registration is incorrect and seeks to invalidate it bears the burden of proving this, and that burden is a very onerous one. (CA 2576/03 Weinberg v. Custodian of Absentees' Property [published in the Nevo legal database] Takdin Supreme Court Cases 2007(1)2445). Moreover, the Supreme Court held that when a couple are registered as joint owners of property, the assumption is that they intended balance and equality, even if one of them contributed more during the marriage (CA 66/88 Decker v. Decker, IsrSC 43 (1) 122, 127); it has also been held that the parties' apartment is a clear family asset. (HCJ 8214/07 Plonit v. Ploni, [published in the Nevo legal database], 22.7.2010)."

Family Case (Jerusalem Family Court) 12316-04-12 A'R' v. M'R' paragraph 26 of the judgment of Her Honor Justice O. Ben Dor Lebel (published in the Nevo legal database, 29.03.2014):

"26. Ex gratia, and even though the defendant did not claim this, I did not find that in the circumstances of the present case, the provision of section 8(2) of the Financial Relationships Law applies which allows an unequal division as an exception to the rule prescribed in section 5 of the Financial Relationships Law. Firstly, the parties' rights in the apartment do not derive from the resource balancing regime in the Financial Relationships Law but from the direct contract in the purchase agreement and registration of title. Therefore, nothing in the exceptions listed in section 8 of the Financial Relationships Law repudiates the rights in the property which is registered in both spouses' names. Even if section 8 did apply to the apartment, in the circumstances I have found no cause for an unequal division of any of the parties' properties. And I shall elaborate."

And see Family Appeal (Haifa District Court) 61008-06-13 N' M' v. Y' A' paragraphs 41-42 of the judgment of His Honor Justice Sari Jayyoussi (published in the Nevo legal database, 11.06.2014):

"Does the fact that the laws of property, severance and coownership apply to an apartment mean that this asset is not balanceable? The answer to this question is affirmative, because, as stated in section 5(a)(3) it may be said of an asset which the parties agreed to divide between them and even registered that they agreed in writing that this asset would not be balanced. This determination equally applies to other assets, and there is no necessity for the asset to be a real estate asset.

…

We learn from the foregoing, that within the framework of family law the laws of property-joint ownership apply to a shared apartment, since the proprietary registration attests to and constitutes a written record of the arrangement between the parties regarding exclusion of the property from resource balancing under section 5(a)(3). A shared apartment which is registered in the names of both parties cannot therefore be divided in a manner which contradicts the registration, so long as it faithfully reflects the agreements that were formed between them, through use of section 8(2) of the Law.

…

In my opinion, the legislator should consider amending the law so that it addresses those exceptional cases in which the court is asked to balance resources unequally, although the spouses' only or significant asset which if unequally divided would result in economic justice between the parties is a shared apartment, which cannot currently be severed or balanced unequally in accordance with section 8 (2) of the law."

While the certainty and finality of registration appear, prima facie, to transcend the provisions of the Law, and an unequal balance of a jointly owned property is inconceivable, the courts have seen fit to deviate from the Decker Rule while undermining legal stability and obfuscating the reliance on registration of property ownership.

Seeds of change can be found in the obiter dictum of the Honorable Supreme Court (per His Honor Justice (Ret.) E. Rubinstein) in LFA 4480/14 Plonit v. Ploni (published in the Nevo legal database 30.07.2014). His Honor Justice Rubinstein denied the motion for leave to appeal against the judgment of the Honorable Haifa District Court, in which it held that section 8(2) of the Law cannot be used in relation to an apartment the ownership of which is registered in the names of both parties, while at the same time ruling that denial of the motion should not be interpreted as expressing an opinion on the question of whether the title to a property registered in the names of both spouses can be unequally balanced pursuant to section 8(2) of the Financial Relationships Law, thereby implying that the die had not yet been cast regarding this issue.

His Honor Justice E. Rubinstein was again required to address the issue in LFA 2045/15 Ploni v. Plonit (published in the Nevo legal database, 21.05.2015), a motion filed by a husband for leave to appeal against the judgment of the Honorable Nazareth District Court, in which it was held that the circumstances of the case, which included a substantial contribution of the wife to couple's assets, the wife's relinquishment of further career development and her investment in the husband's professional development, justified an unequal distribution of the proceeds from the sale of the wife's apartment, which in 2006 were deposited in the couple's joint account and were used to purchase their shared home.

The Honorable Supreme Court denied the motion for leave to appeal on the grounds that adjudication of the matter by a third bench was unwarranted since it involved an issue which depended upon the circumstances of each case and the general parameters for application of the exception of section 8 of the Financial Relationships Law had long since been established by case law, chief amongst them being "doing justice in special circumstances which constitute an exception" (see paragraph 10 of His Honor Justice E. Rubinstein's judgment). In addition, His Honor Justice E. Rubinstein found no flaw in the Honorable District Court's use of section 8 of the Law.

While the Honorable Supreme Court's judgment does not appear to deviate from the Decker Rule, since the unequal balancing under section 8 was indeed made for past considerations, the proceeds of property which was owned by the wife only, at the end of the day this ruling relates to an unequal balancing of proceeds from an apartment, the title to which was registered in the parties' joint names, the funds from the sale of the wife's apartment having been assimilated within the joint property and used to purchase the shared apartment.

These determinations, although only incidental and requiring review, are widening the opening more and more. See, for example, the judgment of the Honorable Family Court (His Honor Justice A. Zaguri) [11], which, while it adhered to the Decker Rule and directed that where spouses were registered as joint owners of a real estate asset for past reasons it should not be unequally balanced, the court did not rule out the possibility of unequally balancing a jointly owned apartment for considerations relating to the future.