Background
Following arbitration over payments for construction work, arbitral awards issued in 2009 and 2010 were confirmed as a judgment. A 2011 formal judgment order required David Heyman and other debtors to pay Aharon Brzeski, among other sums, NIS 173,833 in VAT attributable to an earlier payment made without VAT, plus amounts for delay. Brzeski opened enforcement proceedings to collect the judgment debts.
Heyman filed a “paid” objection before the Enforcement Registrar, arguing that Brzeski had neither remitted the VAT to the tax authorities nor issued a tax invoice. He asked the Registrar to require an invoice as a condition of payment or, alternatively, to reduce the accrued interest. The Registrar canceled default-interest charges accruing before Heyman was deemed aware of the enforcement proceeding on April 9, 2014, but otherwise rejected his arguments. The Tel Aviv–Jaffa Magistrates’ Court dismissed his appeal, and the District Court denied leave for a further appeal.
The Court’s Holding
Justice Yechiel Kasher denied Heyman’s request for leave to appeal, describing it as a fourth-level challenge to the Enforcement Registrar’s decision. Although the District Court’s reference to a “third appeal” created doubt about whether it had applied the more permissive standard governing review of an Enforcement Registrar’s legal ruling, remand was unnecessary because the Magistrates’ Court’s decision was correct even under that standard.
An Enforcement Registrar must execute a judgment according to its terms and may not add conditions absent from the judgment or its formal order. Determining when tax law requires issuance of an invoice involves judicial discretion and is not suitable for resolution through a “paid” objection. A registrar may require an invoice before payment only when the underlying judgment or formal order expressly makes payment conditional on delivery of one. Because the order here contained no such condition, the Registrar could not impose it.
The Court also upheld the refusal to reduce the remaining interest. Heyman knew that the VAT debt had to be paid but did not pay it even after receiving the enforcement warning, and the order did not support treating the VAT component differently from the construction-work component for interest purposes. Once payment is made, Brzeski must comply with applicable tax and invoicing law; any failure to do so must be addressed before the competent authority. Because no response was requested, the Supreme Court made no costs order.
Key Takeaways
- An Enforcement Registrar cannot condition payment of a judgment debt on delivery of a tax invoice unless the judgment or formal order expressly imposes that condition.
- Disputes requiring interpretation and application of VAT-invoicing law generally fall outside the Registrar’s role in deciding a “paid” objection.
- A creditor’s invoicing obligations after receiving payment remain enforceable under tax law, but alleged noncompliance does not rewrite an unconditional monetary judgment.
Why It Matters
The decision draws a firm boundary between enforcing a judgment and adjudicating related tax-law obligations. Parties who want payment conditioned on receipt of an invoice must obtain language to that effect in the judgment or seek its amendment through the proper judicial procedure.
For international practitioners, the ruling also illustrates Israel’s highly restrictive approach to fourth-level appellate review while confirming that a possible error in the intermediate court’s review standard will not require remand when the underlying enforcement ruling is substantively correct under the more permissive standard.