Court: Creditor can't seize shared assets

One member of a couple cannot be culpable for debts incurred by the other.

By DAN IZENBERG
December 14, 2006 02:46
2 minute read.
high court of justice 298.88

high court 298.88. (photo credit: Ariel Jerozolimski [file])

One partner in a union cannot be held liable for debts incurred by the other for actions that are not directly related to their intimate life as a couple, the Supreme Court ruled on Wednesday. The ruling came in a case involving Anita Shalem, whose husband had failed to honor three checks he had signed over to a supplier. The supplier applied to the bailiff's office and took out a lien on the man's apartment with the intention of selling it so that he could get his money back. The apartment was registered in the name of the husband only. Shalem lodged a complaint against the intention of the creditors to seize her home. She argued that judicial law regarding shared ownership of property by couples decreed that half the apartment belonged to her. Since she was not directly responsible for the debt, the creditors could not take the apartment from her. The creditors filed their own complaint, arguing in return that according to the same judicial law of shared ownership, Shalem's husband's debts were also hers and therefore she, too, was liable to them. Shalem lost her case in the Magistrate's Court and her appeal to the District Court was also rejected. She then asked for permission to appeal to the Supreme Court. A panel of three justices headed by retired Supreme Court President Aharon Barak ruled in favor of the woman. Barak, who wrote the decision, said the question at stake in the appeal focused on when the principle of shared ownership of property went into effect. There were three possibilities, he wrote. The first was that it went into effect from the moment the couple began to share their lives. But this would mean that either partner would have to get the other's permission to take any action of any kind regarding any of their possessions (or at least those accrued after the union.) That might put too heavy a strain on the relationship and make it more difficult to make decisions. A second possibility was that the principle only went into effect at the moment of crisis, as the union was breaking up, whether because of divorce, death or other reasons. This option recognized the fact that even in union the two partners remained individuals in their own right, wrote Barak. However, it did not give any recognition to the uniqueness of the shared relationship between the two partners. Barak suggested a middle road which would recognize both the shared and the autonomous elements of the union. The principle of shared ownership of property would apply from the beginning of the union to all assets directly related to the life of the partners as a couple. With regard to everything else, however, including a business run by one of the partners, the shared partnership would only be realized on the eve of its dissolution. According to this principle, Barak ruled that the husband's debt was related to his business affairs, which his wife did not share. Therefore, the man's creditors could not seize the house, because that property was half hers since it was intimately related to the union. According to this ruling, creditors will not be able to seize the property of a couple which is directly related to their lives as a couple, for debts accrued by either partner in his or her private affairs.


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