Illegal Voluntary Collecting By The Authority And Its Consequences

Author:Mr Chen Weinstein
Profession:Efraim Weinstein Law Offices
 
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Summary

It is a well known rule that the municipal authority may not assume authority which was not specifically instilled upon it by law. An act of a governmental authority without the explicit authorization by law constitutes an exceeding in authority: meaning, an illegal act1, and when collecting mandatory payments from the citizen, even unconstitutional2.

At times, collecting mandatory payments (levies, fees or other taxes) without the said explicit authorization by law, is conducted without the citizen's knowledge of the demand's illegality (such as collecting excess municipal tax), however, at times, it is conducted with the citizen's knowledge and even with its explicit consent under the framework of a contractual obligation towards the authority.

This is possible when the citizen is granted with a different benefit. For example, winning a tender which its terms include payment to an authority that has no legal authorization to impose such payments, or expanding building rights as a condition to the authority's support in the bettering plan, etc.

In Israeli case law, the result of an illegal contract is VOID. Section 30 to the Contracts Law determines that "A contract which its execution, contents or purpose are illegal, immoral or which is contrary to public policy - is VOID"3.

But whilst the result of a contract declared as VOID is to obligate restitution from each party to the other according to what it has received under the contract, and if restitution is impossible or unreasonable- to pay the party the worth of what it has received, in the event of an illegal contract, the court is entitled to exempt from the restitution obligation or any part of such4.

Similarly, the Unjust Enrichment Law allows claiming restitution from whomever received an asset or right unlawfully on account of the plaintiff, but on the other hand, the law grants the court discretion in allowing an exemption from restitution under just cause5.

Background

One of the areas of friction between the municipal authority and the individual is in the field of planning and construction. At times, the authority publishes a tender which grants building rights in the land, at times, the developer is requested to bear development levies and fees beyond those who are required by law and at times, the authority requests to impose upon the developer certain public assignments in return for providing building permits or for its support in the benefiting plan of the existing...

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