A company sought to offset royalty amounts collected in excess from future royalties to the Israel Land Authority. This was done taking into account that the cause of action for the collection of the excess had become statute-barred and the Israel Land Authority knew that, according to the company, the remuneration had been collected from it in excess.
The court ruled that the company’s claim regarding set-off could be clarified since the Israel Land Authority knew that the issue of compensation remained open from the company’s perspective throughout those years. The right to set-off is a fundamental right that allows a debtor to exercise his right without the need for a court hearing. The statute of limitations does prevent the court from hearing the right to a claim that has expired and providing relief to the injured party, but the statute of limitations in itself does not cancel the right itself. Consequently, a right holder whose cause of action has expired is entitled to exercise his right through set-off, but this should be allowed in exceptional cases, such as when it was clear to the opposing party that the right holder did not waive his right and litigation is expected between them. Here, we are talking about someone who claimed that money was collected from her in excess and who over the years did not waive her right and even transferred data on the subject to the Israel Land Authority as part of a similar third-party claim. Therefore, it should have been clear to the Israel Land Authority that it had not given up its claims in the matter, and therefore, it should be allowed to raise the offset claim even when the cause of action has become time-barred.
Published in Legal Channel 430 08.01.2025 Afik & Co. https://he.afiklaw.com/
