We are concerned here with a typical case of a motion to certify a dual derivative claim, in which it is sought to set the wheels of Carmel's lawsuit against its officers. Carmel's arguments cannot rule out this move, let alone in the preliminary motion of dismissal out of hand.
- In response to the requests for dismissal, the Applicant noted that her argument is that Gadiv and Carmel suffered direct damages that are distinct from the damages caused to Bazan, and that for these damages "the right to sue is [Carmel and Gadiv], and if the claim is accepted, the payment will be made to the [Carmel and Gadiv] fund" (paragraph 62 of the Applicant's response to the Removal Motions). This is because the motion for approval encapsulates two separate double derivative claims, one by Carmel and the other by Gadiv. Moreover, during the hearing, the court sought to clarify whether the Applicant claims that Carmel has the right to sue the officers of Bazan, and the Applicant's counsel clarified that "...We are not claiming that [Carmel] has a lawsuit against an officer and Bazan who is not an officer of [Carmel]... The Carmel Officer... Defendants who are officers of Carmel owe them duties of care and fiduciary duty to Carmel, and Carmel, in our opinion, has prima facie cause of action to sue them for the damages they caused it" (p. 24, para. 33 of the transcript onwards). Therefore, and as noted earlier, we are not required to answer questions related to the liability of the officers of the parent company for what happens in the subsidiary.
- In short, I do not believe that Carmel's arguments lead to the dismissal of the motion for approval in limine.
- The Carmel application includes claims of the absence of a proper infrastructure underlying the application and the lack of proper detail, in the specific context of a dual derivative claim. These arguments are "close" in essence to the claims of Bazan and the Respondents, and therefore they will be discussed together in the next chapter.
Lack of proper details and lack of proper infrastructure – the applications of BAZAN and the respondents and the completion of the hearing on the Carmel application
- The main arguments of Bazan and the respondents relate to the lack of proper detail and the lack of an evidentiary basis, which, in their view, creates a situation that does not allow them to defend themselves against the application. Carmel raises arguments of a similar nature, regarding the possibility of filing a lawsuit on its behalf in the manner of a dual derivative claim.
- A motion to certify a derivative claim must include proper details of the claims raised against the respondents, and a sufficient evidentiary basis must be laid in support of the application. These requirements exist, and even more so, with respect to an application that is based on claims of officers' liability towards the company. In the matter of Africa Israel, paragraph 55, the Honorable Justice Amit (as he was then called) addressed this issue and noted the following:
"...The respondent must detail the factual background against each and every one of the directors. Indeed, as the respondent noted in his response, since the duties of care and fiduciary duty apply to every director, there is no point in getting tired of repeatedly formulating the same cause of action for each of the directors. However, on the factual level, it is necessary to specify what is attributed to each of the directors separately, and not to put them all in the same basket without distinguishing between them" (and see also the judgment of the Honorable Justice Baron in that judgment).