On the other hand, the defendants are correct in their claim that the plaintiff did not prove the difference in value between a restaurant and a hotel and an office building. No appraiser's opinion was presented on this issue, and it is impossible to know whether in the long term the plaintiff lost by changing the course of the transaction for rent for offices, as opposed to renting to a restaurant and hotel according to the agreement with the defendants. Since it is not possible to sue for both cancellation and enforcement of an agreement, it is not possible to cancel the agreement and obligate the defendant to invest ILS 8 million in the hotel. It was possible to claim a difference in the final value, if there is one, between the current building and the building designated under the agreement, but such a difference has not been proven and therefore cannot be claimed. Therefore, this component is rejected.
- Finally, I determine that the damage that has been proven to have been caused to the plaintiff is:
For the second damage, the sum of ILS 305,800, together with linkage differences and interest from the date of filing the claim until the actual payment.
For the fifth damage, the sum of ILS 1,824,000, together with linkage differences and interest from the date of filing the claim until the actual payment.
For the sixth damage, the sum of ILS 560,000 plus VAT and linkage and interest differentials according to clause 18 of the 2018 agreement, from the date that was fixed for payment until the date of actual payment.
For the eighth damage, the sum of ILS 20,013, together with linkage differences and interest from the date of filing the claim until the actual payment.
The Defendants' Claims of Offset
- According to the defendants, the compensation awarded to the plaintiff should be offset for damages caused to them as a result of the termination of the agreement. Since I have determined that the plaintiff is not at fault with regard to the cancellation of the agreement, on the contrary, the cancellation of the agreement was lawful, there is no room to offset damages caused to the defendants, who are the ones who breached the agreement to the extent that such were caused. However, in the event of cancellation of an agreement, the restitution relief must be examined. Therefore, I will examine whether the damages that the defendants seek to offset are within the scope of restitution and if so, whether they should be recovered.
- The first amount that the defendants seek to deduct is compensation for the defendants' forcible eviction from the building by replacing the lock. As stated, the claim that the plaintiff unlawfully evicted the defendants was rejected by me in the framework of the above discussion. As stated, I did not find that the eviction was done in bad faith or in an unlawful forceful manner. Therefore, there is no reason to award compensation for the eviction.
- The second sum that the defendants seek to deduct is the sum of ILS 29,000,000, according to what is claimed, which is the expert opinion on behalf of the defendants, expresses the profits that would have accrued to the defendants from the operation of the venture in the leased property in accordance with the lease agreement and throughout the lease period. Even this sum, which is compensation for the existence of the agreement, will not be given to the violating party who thwarted the continuation of the agreement and the ability to generate profits, both by non-payment of rent over several months and by the failure to make progress in the renovation of the building. This is sufficient to postpone this offset. Moreover, the document submitted to the court is not an "opinion" at all. The title of the document submitted to the court reads "Draft for the hearing," and it is not even signed by the expert. The matter was clarified in the cross-examination and the expert confirmed in his cross-examination that this was indeed indeed a draft for discussion only and that he did not sign it (page 83, lines 4-20 of the transcript of May 7, 2024). It should be noted that when the expert was asked if there were other drafts for discussion, etc., he answered that he did not remember and did not testify that this was the only draft that existed. Hence, this draft is indeed not an opinion as required by law, and thus it is sufficient to postpone the sum claimed.
- A third amount that the defendants seek to offset is the "investment costs", i.e., the sums they invested in the venture until the date of termination of the lease agreement by the plaintiff. In my opinion, the defendants are not entitled to receive these funds, even if they would prove their existence, because these funds did not cause the improvement of the property or the enjoyment of the plaintiff. Indeed, when an agreement is cancelled due to its breach, both parties to the contract - both the breach and the injured party - are obligated to reciprocate what they received under the agreement. This right is enshrined in section 9(a) of the Contracts Law (Remedies for Breach of Contract), 5731-1970, and in section 21 of the Contracts (General Part) Law, 5733-1973. The rationale is to prevent the illegal enrichment of the injured party at the expense of the infringer. Teachers Gabriela Shalev and Yehuda Adar write in their book: "The purpose of the restitution obligation is therefore to prevent the situation described, of illegal possession of contractual resources, after the cancellation of the contract. This goal is achieved by returning the resources - received by each of the parties - to the other party, which provided it with those resources. This mutual restitution ensures that neither party will be left with resources and benefits from which - given the fact that the contract has been cancelled - he is not entitled to benefit. Thus, the obligation of restitution protects the interest of restitution (in the narrow sense), which is the interest of each of the parties to the contract - that as a result of the cancellation the other will not be found to be unlawfully enriched at his own expense" (Contract Law, Remedies (2009), chapter eight, p. 699). However, in this case, it is not a matter of restitution, because the defendants' investment, insofar as it was, did not advance the property in practice, and did not roll into the plaintiff's hands, and therefore there is nothing for it to answer. If real renovation work had indeed begun to be carried out, which the plaintiff could have enjoyed, then it would have been appropriate to appreciate the renovation and the pleasure created for the plaintiff and to return to the defendants their investment. However, this is not the case. The defendants did not reach the point of making any contribution to the property and did not improve it in any way, and therefore the plaintiff did not become rich and has nothing to repay.
Moreover, not a single invoice was attached to the defendant's affidavit indicating a payment related to the venture. All that was attached was a financial statement. It is not possible to learn from the financial report what is requested to be learned from it. For example, the report mentions an expense defined as "liabilities to a related company" in the amount of approximately ILS 2,673,000. There is no connection between this sum and the agreement, and so on. Without clear and clear invoices related to the investment in the venture, it is clear that it is not possible to approve a claim for any expenses.