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Are You a Defendant? How Do You Protect Your Rights During a Claim?

Writer: Ruth Spitzer, Attorney.

As part of my work I have often represented defendants in various and varied financial claims. One of the steps that claimants often take is imposing "restrictions" on the defendants, or in legal language "temporary relief," which is designed to ensure the claimant's ability to receive the amount of his claim if he is successful.

Thus, for example, liens are imposed on a defendant's property, as well as court orders of various kinds, which are sometimes done ex-parte, that is, without the defendant being given the opportunity to respond to the restriction. The imposition of temporary relief, especially when done ex-parte, raises the concern that the defendant will not be able to claim the damage caused him as a result of imposing the restriction if he wins the action.

Thus, for example, in the case of a limited company (that is, a company in which the liability of the shareholders is limited, and therefore, the damage caused by the company can be sued for only in a fairly restricted manner), the concern that the defendant will not be able to receive the money owed to him is significantly increased.

The potential damage to the defendant ranges over a wide range of options, from damage to the marketability of an asset (for example, if I want to sell an apartment or take out a mortgage, I cannot do so because liens have been imposed), and up to affront to the good name of the defendant (which could also lead to immediate business damage).

Requiring a Bond from a Claimant

Therefore, so that defendants do not find themselves in a hopeless situation, when they are subject to various restrictions, they do have some legal tools that may protect them from harm to their property. One of the tools we most often use is to require a bond from the claimant. As part of this request, the defendant asks the Court to require the claimant to deposit a certain amount of money with the Court, so that when the day comes, and if the party is successful, the defendant's expenses and damages will be paid to him without the claimant being able to escape the damages.

One day, some new clients who were being sued in 5 different claims by a limited liability company came to our office, and the company had imposed some restrictions on them. Because of the concern that our clients would not be able to recover from any damage if they would win, we filed a request with the Court to require a bond from the claimant company. We asked the Court that if the claimant should not deposit a bond in an amount that would cover the damages to our clients, the claim should be dismissed.

Indeed, in light of the fact that the company failed to prove to the Court that it had the required assets, that is, that it could pay our clients the money they deserved, the Courts have ruled in various other cases that if the claimant does not deposit significant sums of money (of up to thousands of Shekels), its claim would be dismissed. In this way, we were able to secure the rights of our clients, even before the Court was required to rule on the claim according to its merits.

This is one of many examples of the tools available to a defendant to defend himself from futile claims or from claimants who cannot pay if they fail. It is important to note that this is a tool that can be used at an early stage of the hearing, even before the defendant has submitted a statement of defense. In other words, even if the defendant is not sure that he has a strong "case," he can defend himself by requesting a bond, even before he gives his version to the Court.

Additional tools for dealing with claims will be discussed in further articles.

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*This article is not meant to constitute legal advice for a particular client, for which consultation with a qualified attorney is required.