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Tefahot Mortgage Bank of Israel, Ltd. v. Tsabach

CA 5893/91, 58(2) PD 573 (1994)

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Tefahot Mortgage Bank of Israel, Ltd. v. Tsabach

Israel Supreme Court
CA 5893/91, 58(2) PD 573 (1994)

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Facts

Tsabach and other individuals (plaintiffs) borrowed money from Tefahot Mortgage Bank of Israel, Ltd. (Tefahot) (defendant) to purchase apartments that were under construction. The builder of the apartments was also a customer of the Tefahot and was having financial problems. Tefahot was aware of the builder’s financial problems, but it loaned the money to Tsabach and the other purchasers anyway, and Tefahot stood to gain a lot of money from the transactions. The builder went bankrupt and could not complete the construction of the apartments. Tsabach and other purchasers sued Tefahot, demanding that the loans be canceled and that all sums paid to Tefahot be returned. The district court ruled in favor of Tsabach and the other purchasers. Tefahot appealed to the Israel Supreme Court, arguing that it could not disclose the builder’s financial problems to other bank customers based on its duty of confidentiality.

Rule of Law

Issue

Holding and Reasoning (Shamgar, C.J.)

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