Court Rules Funds Were Salary, Not Loan, in Israeli Company Dispute
Translated & summarized from N12 by baba
An Israeli company sued its former accountant for NIS 401,000, claiming it was a loan, but the Labor Court ruled the funds were salary. The court found the employment relationship continued until 2013, and the money's transfer pattern matched salary payments. The accountant's counterclaim for NIS 250,000 was dismissed due to being time-barred and lacking sufficient evidence. Both parties were ordered to bear their own legal costs.
The story in 5 lines · by baba
- The Labor Court ruled that NIS 401,000 transferred by a company to its former accountant was salary, not a loan.
- The court found the employment relationship continued until 2013, despite the accountant issuing invoices.
- The company's lawsuit was dismissed for failing to prove the funds were a loan and for lack of collection attempts.
- The former accountant's counterclaim for NIS 250,000 was rejected as time-barred and lacking evidence.
- Both the company's claim and the accountant's counterclaim were fully dismissed.
A computer import company, Mono-Mode Trade and Marketing, sued its former accountant, Benjamin Odani, for NIS 401,000, claiming the money was a loan. Odani had worked for the company for 26 years, with a close relationship with its owner, Yechiel Dayan. The dispute began in 2013, and the company filed its lawsuit in 2020.
The company alleged that in 2008, Dayan agreed to lend Odani NIS 266,151 for investments in Romania, with repayment expected within seven years plus interest. Odani, however, claimed the funds received between 2007 and 2010 were for salary differentials and bonuses due to increased responsibilities. He asserted the money was recorded as a loan to present better financial statements for the company's credit needs and to avoid potential tax authority scrutiny.
The Labor Court in Tel Aviv ruled that the employment relationship between Odani and the company continued until 2013, even after Odani began issuing invoices instead of receiving payslips in 2008. The court noted that Odani continued to work primarily from the company's offices, was subordinate to Dayan, received holiday gifts like other employees, and worked exclusively for the company from 2009. The court also questioned why a non-financial institution would provide such loans.
Key testimony from the company's accountant at the time, Zvika Drucker, stated he recorded the funds as a debit balance, not a loan, and defined a loan as a structured agreement with repayment dates and interest. The court found no signed loan documents, unlike small loans Odani had repaid promptly. The transfer of funds in question, in smaller, undocumented installments, resembled salary payments more than a land purchase loan. The company also failed to provide evidence of attempts to collect the money before filing the lawsuit in 2020, years after the alleged repayment date.
Consequently, the court dismissed the company's claim, stating the funds were not actually a loan. Odani's counterclaim for approximately NIS 250,000, including compensation for distress, defamation, VAT reimbursement, salary for July-August 2013, and severance pay, was also rejected. The court ruled Odani's counterclaim was time-barred, as it was filed nearly a decade after their relationship ended in 2013. The court also found that Odani had not provided sufficient details for his defamation claim, lacked proof of work for the disputed months, and was not dismissed, having stated he would not continue working without a signed agreement and salary.
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