The conservation department from the Tel Aviv Municipality was supposed to return the tenant answers to the execution, and according to this, the restaurant's work was supposed to begin, since the restaurant's planning was almost finished. Also the request for exceptional use (from offices to hotel) was ready to be submitted, but there was no response from this department. It is important to note that the work of the restaurant and the hotel is related to each other since the hotel systems pass through the restaurant and therefore it is necessary to complete both together and it is not possible to finish the restaurant and only then start working on the hotel. Even after the first lockdown, when work in the economy was ostensibly partial, there was still no response from the Tel Aviv Municipality, as they worked in a limited format with a small number of manpower, most of whom worked remotely, and therefore it was difficult or impossible to schedule visits to the field for granting permits. Information regarding the progress of the work was conveyed to the landlord on an ongoing basis.
- The dirt in the property proves that the work on it has begun, as Aharoni and the defendant testified. The work on the leased property began even before the date stipulated in the agreement - within the limits possible before receiving final approvals.
- The plaintiff did not submit a cancellation notice to the defendants after the date of the commencement of the works according to the lease agreement, which proves that there was no breach on the part of the defendants in this matter and that this was not the reason for the cancellation notice that was given at the end of the day, in January 2021. Alternatively, failure to perform work is not grounds for payment of damages, since clause 7 of the lease agreement establishes a terminating condition for the agreement, without payment of any compensation, if the defendants fail to obtain the required approvals. The provisions of this section also prove that the plaintiff knew very well that she was entering into the lease agreement with the knowledge that the permits required to carry out the work in the leased property might not be obtained, and that she would not be compensated for this - with all that this entails. Therefore, the plaintiff is not entitled to claim compensation for the failure to perform the works in the leased property.
- The coronavirus caused severe disruptions, the parties reached an agreement on the issue of the coronavirus, which the defendants met, and then the parties tried to reach an agreement, "and the defendants informed the landlord's representative that a new investor had already been found to invest in the tenant and fill the cash flow gap that she had encountered, and in December 2020 it was proposed to the landlord to agree that by the end of January 2021, all the debt in arrears would be paid to her" (paragraph 71 of the summaries).
- The plaintiff held an autonomous bank guarantee in the amount of ILS 188,000, which is exactly the amount of the debt in arrears from the first lockdown claimed by the plaintiff, but she chose in bad faith not to minimize her damages.
- The defendants admit to a rent debt as of 01.01.2021 in the amount of ILS 689,000 + VAT = ILS 813,020 including VAT. From this sum, the amount of the bank guarantee in the amount of ILS 188,000 and the amount of the financial deposit in accordance with clause 20.1.2 that was approved in cross-examination by the company's attorney must be deducted (line 34, page 55, and line 1-2, page 56 of the minutes). The balance of the defendant's debt in rent therefore stands at most in the sum of no more than ILS 587,220 only.
- In the letter of counsel for the defendants dated January 7, 2021, the defendants propose an appropriate solution for the plaintiff: payment of ILS 130,000 + the realization of the bank guarantee (ILS 188,000) immediately, and an extension of only 30 days for the entry of an investor. However, the plaintiff refused this offer (in a letter of reply sent two days later) because she did not want to continue renting to the defendants at the rent stipulated in the agreement, she wanted to make more profit from the property, and for this reason she contacted the new tenant - even before the cancellation notice was given and even before the end of the period of correcting the violations - with the new tenant to rent the property to him for a larger rent and to put the defendants in front of a complete act of lease agreement with a new tenant who would move into the premises.
- According to the provisions of the 2018 agreement (clause 17.2), in any case of breach of agreement, 30 days' notice must be given to correct the breach before the agreement is terminated, with the aforementioned number of days counted from the date of a formal written demand to correct the breach. The plaintiff did not comply with this provision.
- The extension that was granted was unreasonable and the agreement was canceled in bad faith. The cancellation of the lease agreement after irregularities in the payment of rent due to the COVID-19 pandemic, out of a contractual relationship that has been in place for 6.5 years (since 2014), which was signed for a period of 24 years, is a remedy that contradicts any consideration of justice and good faith in canceling an agreement. "The rule is that the cancellation of an agreement by a victim of a breach when the violator shows a willingness to remedy the breach constitutes a cancellation of an agreement in bad faith, with all that this entails" The defendants referred to the judgments CA 3940/94 Shmuel Ronen Building and Development Company Ltd. S.A.L.R. IsrSC 52(1) 210 (1998); CA 1368/02 Cement B. Kotik Ltd. v. State of Israel, IsrSC 57(1) 516 (2002)) (paragraph 119 of the summaries).
- As a result of her breach of the lease agreement as aforesaid, the plaintiff is liable for the damages of the defendants resulting from the breach, as follows: compensation for forcible eviction from the property; business loss (according to an expert opinion); alternatively, negative compensation for all expenses incurred; The profits of the plaintiff's effective infringement.
- As a result of the cancellation of the aforesaid agreement, which was imposed on the defendants despite the fact that it was unlawful, at most the defendants owe the plaintiff restitution payments, which amount to the differences in the unpaid rent (according to the defendants' calculation) - nothing more. All the other components of the plaintiff's claim are not sued and are liable to be dismissed.
- In light of the existence of mutual obligations between the parties, an offset must be made between them in accordance with the provisions of section 53(a) of the Contracts Law, and taking into account that these are charges deriving from a single transaction (the rental of the leased) after offset, the defendants are not left liable to the plaintiff, but rather the opposite.
- A landowner who vacates by force a tenant must compensate him for this - in accordance with Section 20 of the Land Law, 5729-1969, and Section 29 of the Torts Ordinance. The damages caused to the defendants as a result of the forcible eviction are the damages caused to them as a result of the unlawful cancellation of the lease agreement by the defendants. This sum must be deducted from the plaintiff's alleged damages. Loss of value of the business venture, as presented in the expert opinion on behalf of the defendants. We must accept what was stated in his opinion, which was not contradicted after he was cross-examined about the opinion.
- Alternatively, and just as a precaution, the defendants are entitled to deduct the costs they invested in the venture until the date of the termination of the 2018 agreement by the plaintiff unlawfully. The defendant detailed in his testimony (paragraphs 67-72 of his affidavit and Appendices 24-28 thereof) that the defendants had invested no less than ILS 5,359,270 in the development of the venture, and in his cross-examination he mentioned an investment of ILS 4,000,000 or even more.
- The profits of the effective infringement should be offset - the evidence shows that there is no doubt that the property was rented at a higher price. The defendants are therefore entitled to the profits of the effective breach that arose to the plaintiff as a result of an effective breach of the lease agreement. And to be precise: even if we adhere to the words of the owner of the company, who clearly stated that he would not agree to a rent of less than ILS 2 million per year, i.e., ILS 166,000 per month, for at least 15 years. The plaintiff therefore enriched herself by the effective breach of the agreement and of her statutory duty in the sum of at least ILS 6,480,000 (ILS 166,000 minus ILS 130,000 multiplied by 12 months per year multiplied by 15 years).
- The defendants relate to the damages presented in the damages table one by one - and we will present them and discuss them in the judgment when discussing the damages.
- As to the personal claim against the defendant, the statement of claim, including sections 5 and 10 thereof, does not show a cause of action against the defendant, and therefore it is requested that the claim against him be dismissed out of hand. In the statement of claim, all the claims against the defendant are directed only at his actions as a representative and organizer of the defendants. There is no claim in the statement of claim that the defendant made any personal undertaking towards the plaintiff. Even according to the plaintiff's position, even if all of her claims against the defendant are accepted, the matter will be attributed to the defendants and will not lead to him being charged personally. The court ruled that all of the plaintiff's claims of the "lifting the veil" category are inadmissible in this proceeding and should be deleted (decision in the hearing of June 13, 2023). The plaintiff must be liable for the defendant's expenses for filing a statement of claim in the amount of millions of ILS against him personally without legal grounds for doing so.
Discussion and Decision