Tenant passed away – municipality attempted to shift property tax debt to heir
A protected tenant of a shop in Jerusalem died, leaving a property tax debt of approximately 100,000 shekels. Although his son continued to operate the business, the municipality demanded payment from another heir. The court ruled the municipality's actions were in bad faith.
The Jerusalem Magistrate's Court has ruled against the Jerusalem Municipality, which attempted to shift a property tax (Arnona) debt of approximately 100,000 shekels for a shop under protected tenancy onto one of the heirs of the deceased tenant.
Judge Nail Mahana criticized the municipality's conduct, attributing bad faith to the city's actions. The property, located on Al-Wad Street, had been held under protected tenancy since 1988. Following the tenant's death, his son continued to operate a fabric shop on the premises without formally notifying the municipality, which only learned of the change in occupancy in May 2019.
For reasons not specified, the municipality chose to pursue a different heir of the deceased rather than the son who had been operating the shop. Upon receiving no response to its inquiry, the city registered the defendant as the holder retroactively, dating back to 1988. In court, the municipality argued that, under the Municipalities Ordinance, it was entitled to impose the debt on the defendant as a rights-holder in the property due to the lack of formal notice.
Conversely, the defendant maintained that he had never held or used the property, arguing that the municipality was negligent for failing to take effective collection measures against the actual occupants in real-time. Judge Mahana emphasized that case law does not allow the municipality to rely on the lack of notice of cessation of use to shift debts onto owners when the city was aware of the actual occupants' identities.
"The plaintiff delayed for many years in collecting the debt from the actual holders, and only after it became clear that it was impossible to collect from them, did it choose to shift the debt onto the defendant's doorstep," the ruling stated. The judge concluded that the municipality's conduct was tainted by bad faith and excessive delay, justifying the cancellation of the retroactive tax charge.
The court determined that the municipality failed to meet the burden of proving that the defendant was the actual holder of the shop. The judge noted that if any party were liable, it would be the son of the protected tenant, who was identified as the "driving force" behind the business after his father's death. The claim was dismissed, and the municipality was ordered to pay the defendant 15,000 shekels in legal expenses and attorney's fees.
