"Adv. Gerson: Have there been jobs that suited you yet?
The witness, Mr. Porat: Nothing, nothing, nothing, nothing, a shell of walls.
Adv. Gerson: So if nothing needs to be put on.
The witness, Mr. Porat: We put 15,000,000 shekels.
Adv. Gerson: You put OK.
The witness, Mr. Porat: Therefore The attorneys understood that there is no(m) movables or anything, it's not like someone is there fixed(page 117, lines 1-7 For the minutes of June 17, 2024),
"We knew there was an event, it didn't endanger us in terms of the fact that the property was empty, I took assets in bankruptcy and the property didn't invest a penny in it, it's not like I took it and dismantled it to someone..." (Page 117, lines 22-23 for the minutes of June 17, 2024). All the emphases have been added - see R.
- Therefore, I am persuaded that the cancellation of the agreement was lawful, in good faith and due to clear breaches by the tenant.
Was Proper Notice Given to Cancel the Agreement
- The defendants claim that they were not given proper warning. According to them, on January 3, 2021, a letter was received from the plaintiff, announcing the cancellation of the lease agreement while giving a short and unreasonable notice of 7 days to correct the violations. I do not accept this argument.
- First, the defendants' demand for proper notice must be examined. According to Article 17.2 of the 2018 Agreement, "In the event of a fundamental breach of the Agreement by any of the parties to the Agreement, the party injured by the fundamental breach may terminate this Agreement, insofar as the breaching party has not corrected the fundamental breach within 30 days from the date of sending written notice of the fundamental breach." Failure to pay rent constitutes a clear fundamental violation. A notice of the fundamental breach was sent already on October 27, 2020 by email from the company's attorney (Appendix 9 to the defendant's affidavit), with a written warning to the defendants to correct the violations violated by them, including arranging the payment of the rent they were required to pay. And in the same letter it is explicitly clarified: "There is no need to say that this is a fundamental and basic commitment to the engagement between us, without which there is no contract."
Hence, according to clause 17.2 of the 2018 agreement, the defendants had 30 days, i.e., until November 27, 2020, to correct the breach, and not only was the breach not corrected, i.e., the rent for the month of October and the Corona arrangement was not paid, but the rent for the following months was also not paid.
- Moreover, on November 10, 2020, when the violations were not settled, the company's attorney wrote an email again, stating: "We reiterate that you pay your debt immediately and hand over checks for the minimum rent immediately, otherwise our company will be forced to resort to collection proceedings and to fully exercise its rights according to the agreement and the law."
- On November 15, 2020, an email was again sent to the defendants by the company's attorney, demanding that their debt be settled quickly.
- 12.2020 An email was sent by the defendants' attorney, Adv. Orit Gruber, entitled "An Outline for the Settlement of a Rent Debt at Ahad Ha'am 20", which was answered on December 24, 2020 in the negative, and again the defendants were required to pay the rent debts immediately.
- The defendants did not act to correct the fundamental violations at all, during all those months.
- Therefore, on January 3, 2021, an additional warning letter was sent to cancel the agreement if and within 7 days the defendants do not correct the fundamental breaches. Since they did not act to correct the fundamental violations, an email was sent again on January 11, 2021, from the company's attorney, in which the defendants were given an additional and final extension of 48 hours to correct all the fundamental violations.
- Hence, the defendants have been given warnings since October 2020, first and foremost, to pay the rent debts, otherwise the plaintiff will act to exhaust all her rights under the law, including the remedy for canceling the agreement, which is set forth in the law and explicitly in clause 17.2 of the agreement. Therefore, it cannot be said that the defendants were not given sufficient warnings, and they even knew and understood their situation well and even requested time to bring in another investor until the end of January 2021. A landlord is not obligated to wait for an investor who may arrive in a month and a half, and in the meantime restrain himself from continuing to accumulate rent debts, which constitutes a fundamental violation.
- Therefore, the plaintiff acted in complete good faith and gave the defendants the maximum opportunity to correct the breaches, and therefore the cancellation of the agreement was lawful and in good faith.
Was the plaintiff entitled to evict the defendants by way of replacing the lock
- The defendants did not pay even part of the rent debt, which was accumulating; the defendants even neglected the property for a long period of time to the point that homeless people entered it and lived in it, pigeons found a dwelling in it, and even graffiti was painted on the walls and on the door (see photos attached to pages 23-45 of the second affidavit of the company's attorney (filed on April 8, 2024), which were also attached to the company's attorney's email dated October 27, 2020) a building that was built with special care, High quality and under severe preservation with an investment of ILS 30,000,000 to ILS 35,000,000 (see the shareholder's testimony on page 124, lines 1-6 of the minutes of May 21, 2024) was abandoned and deteriorated during the defendants' lease period. I will note that after warnings in November it was written that the building was indeed cleaned by the defendants, but this does not diminish the severity of the neglect over the course of months, and we will recall that one of the heavy obligations of a tenant is to protect the leased property; The defendants did not pay water and electricity debts for a long period; They also did not present an agreement with a contractor to carry out renovation work or written permits to carry out the renovation, as they were obligated to carry out under the agreement back in January 2019.
- Two and a half years after the signing of the agreement, when there is no real seizure of possession, no commencement of work, no entry of workers, no even a guard post or any action indicating the defendants' use of the leased property; There are also no electricity and water payments for the leased property, which indicates the absence of complete use of the leased property (page 185, lines 15-22 of the minutes of June 17, 2024), since the act of replacing the lock does not constitute a violation of the use that was never made of the leased property by the defendants. This is an exceptional case, when more than two years passed without the use of the leased property, the defendants accumulated a rent debt that grew with each month without any payment, and when the leased property was completely neglected for many months to the point that homeless people and animals entered it, the plaintiff could have acted by way of changing the lock, and this can be seen as insisting on her rights as the owner of the property. The fact is that the change of the lock was sufficient, and there was no need to evacuate people, and all that was required was to return to the defendants very few items, including bookkeeping binders that were at the site (page 185, line 11 of the minutes of June 17, 2024).
- For the avoidance of doubt, I did not find that the plaintiff acted in bad faith in ensuring that the new tenant entered the property as soon as possible. There is no dispute that on January 14, 2021, a lease agreement was signed between the plaintiff and the current tenant. This is a long time after the 30 days have passed since the first warning letter was sent (October 27, 2020), and the violations have not been corrected, but have increased. Therefore, the plaintiff did well to act to reduce her damages.
I note that the company's attorney was asked about the proximity of the time between the deadline for correcting the violation and the signing of the agreement with the new tenant, and she answered: