Civil Case (Nazereth) 48902-01-22 Ganim Ganim v. Suhail Diab - part 5

Judge Kama was of the opinion that the agreed compensation rate, which amounts to about 10% of the contract amount, does not stand without a reasonable proportion to the expected damage, because a delay in registering the ownership is liable to prevent the sale of the apartment by the buyer when necessary and cause him great damage.

I accept this view.  A potential buyer may be reluctant to deal in real estate, which has not been registered in the seller's name for so long.  Such a prolonged delay may arouse in the heart of such a buyer a fear that there may be a violation of the seller's rights, and cause him to cease to be interested in the apartment without further investigation into the reason for the delay.  Admittedly, it is not the ratio between the amount of the agreed compensation and the price of the apartment, which was examined by the trial judge, that determines, but rather the ratio between the agreed compensation and the reasonably expected damage.  However, the rate of the expected damage is also greatly affected by the value of the apartment.  The court's consideration, which determined that the agreed compensation is in a reasonable proportion to the damage, is a correct consideration, and there is no room for us to intervene in" (ibid., at pp.  328 C-F)

81. See also Civil Appeal (Tel Aviv District) 2105/06 Moran Levitt Ltd.   Eli, Roni, Avi Initiative and Development Ltd.  [Nevo] (October 11, 2012), in which there was a 6-year delay in the registration of the condominium, and the court did not intervene in the agreed compensation rate of 10% of the contract amount (ibid., paragraph 12).
82. It should also be noted that a delay in registering the rights in a real estate property that can be built on may prevent the buyer from obtaining a building permit, and one of the documents that must be attached to the permit application is a registration document from the Land Registry Office (Regulation 33(a)(4) of the Planning and Building Regulations (Building Licensing), 5776-2016), and thus prevent him from building on the land during the delay period, which may cause him, inter alia, financial damages as a result of a possible increase in construction inputs. This is especially so when in our case the seller-defendant was not registered as the owner of the rights in the land and therefore it was not possible to suffice to obtain his consent to submit an application for a permit (see Regulation 36 of the said Planning and Building Regulations).
83. See also: Tel Aviv (Shalom Tel Aviv) 70060-05-19 Idan Ohana v. State of Israel Administrator General of the Jerusalem District [Nevo] (April 15, 2024), in which the plaintiffs' claim of infringement due to failure to register the rights in the apartment on time was accepted.  The court did not intervene in the amount of the agreed compensation, which constituted 10% of the contractual consideration.
84. It should be noted that in CA (Tel Aviv District) 33449-10-14 Yifat Kfir v. Hannah Tamir [Nevo] (October 28, 2015), an appeal was accepted against a judgment in which the Magistrate's Court intervened in the amount of the agreed compensation, which stood at about 20% of the consideration, while reducing it significantly and drastically, since it was proven that the parties attached great importance to the date of registration of the rights, and therefore it was determined that there was no reason to reduce the agreed compensation (ibid.), paragraphs 8, 15-16).  Our case is different because it has not been proven that the parties attributed great importance to the date of the transfer of the rights and there was no claim of specific damage that the plaintiffs feared at the time of concluding the contract in the event of a delay in registering the rights, and the fact is that the plaintiffs agreed to extend the date of registration of the rights in the defendant's name for a period exceeding three years.
85. Taking into account the totality of the circumstances of the case, and since an intervention in the amount of the agreed compensation must be done in moderation, and the reduction must be made "to the high end of the limit of reasonableness" (the Howard case), and since in the Sinai case and the Levitt case it was not determined that the percentage of 10% meets the maximum threshold of the required reasonableness, and taking into account the customary agreed compensation rate and is customary in real estate sale agreements as a rule, as mentioned above, which was also approved in the Kfir case Above, I found it appropriate to set the agreed compensation amount at ILS 79,500, which constitutes 15% of the contractual consideration.
86. As a rule, the amount of the agreed compensation will bear linkage differences from the date of the breach (the date set for the fulfillment of the charge) [CA 281/83 Suleiman Haronian v. Estate of the late Menashe Khalifa, IsrSC 39(4) 20 (1975), at pp.  25b-e.  See also: CA 439/85 Hershfinkel & Son Ltd.    Yitzhak Goldstein, IsrSC 42(1) 286 (1988), at p.  291], where the fact that the plaintiff delayed filing the claim does not justify their non-ruling [CA 525-81 Gazit and Shaham Building Company Ltd.  v.  Zvi Rosen, IsrSC 36(2) 337, at pp.  343-344; and CA 527/89 Majed Rabah v.  Kibbutz Nahsholim - Agricultural Cooperative Society Ltd., IsrSC 46(1) 375 (1991), at pp.  378 E-F].
87. However, in our case, both in the statement of claim (section 20) and in the summaries (section 40), the plaintiffs requested a ruling on the linkage differences and interest "from the date the claim was filed", and the court will not grant them more than they requested. Therefore, the estimate of the amount will be from the date the claim is filed.

The Notice to the Third Party against the Receiver

88. As stated above, in parallel with the filing of the statement of defense, the defendant filed a notice to a third party against the receiver. In the framework of the notice, he argued that to the extent that he is obligated to pay agreed compensation, the receiver should be obligated to pay it because he owes the defendant a conceptual and concrete duty of care, he breached it by his actions, and that negligence caused the defendant damage (which is the payment of the agreed compensation).  He also claimed that the receiver had breached the agreement between them and that this breach caused the said damage.  In addition, he claimed additional torts of breach of statutory duty and caused breach of contract (paragraphs 69-70 of the notice to the third party).
89. On the other hand, in the statement of defense filed on his behalf, the receiver denied the claim that he had violated the first agreement. He emphasized that there is no provision in the first agreement that sets a date for registering the rights in the property in the defendant's name.  This is because we are dealing with an obligation to make an effort.  He did not foresee the damage in the specific case and did not expect the defendant to sell the property within a short period of time, contrary to the prohibition set forth in the first agreement.  He further claimed that according to the first agreement, the responsibility for registering the property rested with the defendant himself.  As to the claim of negligence, the receiver argued that in this case he does not have a concrete duty of care since he was not aware of the second agreement at all and therefore did not foresee the damage, and that in any case it must be determined that the defendant's conduct constitutes contributory fault at a rate of 100%.
90. From a reading of the defendant's summaries, it appears that he reduced the cause of action against the receiver to the ground of breach of contract between them only, while neglecting the other grounds raised in the notice (paragraph 37 of his summaries). It should be noted that the defendant's summaries do not contain a legal discussion of the cause of action against the receiver and do not include an analysis of the foundations of the cause.  All that is argued in this matter is that the receiver's conduct constitutes a gross breach of the provisions of the first agreement, and that the receiver should have foreseen in advance the damages that may be caused to the defendant as a result of his unreasonable conduct (paragraphs 37-38 of the defendant's summaries).
91. Since the plaintiff has abandoned in his summaries the tort ground based on the three torts mentioned in the notice to the third party (negligence, breach of statutory duty and breach of contract), then, and in accordance with the case law (the Roth case and the additional case law mentioned in section 51 above), I have no need to discuss this ground, and the discussion will focus on the contractual cause, on which the defendant based his claim of liability to the receiver in his summaries.
92. On the face of it, it appears that there is indeed a reason for the defect in the fact that several years have passed from the date of signing the first sale agreement (about six years) to the day on which the rights were registered in the defendant's name. It is not possible to determine on the basis of the evidence that the receiver did act with proper diligence, as he claims, and took all the means at his disposal within reasonable times in order to enable the registration of the rights in the property in the defendant's name.  Specifically, the fact that no specific date was set in the first agreement does not release the receiver from his obligation to act within a reasonable time, and on the face of it, it certainly seems that it would have been possible to take the same procedures that made it possible at the end of the day to register the rights, at an earlier date [see and compare: Tel Aviv (Hai District) 53239-02-16 Mira Tours Ltd.    Doron Zar, Adv. - Receiver [Nevo] (02/02/2020), paragraph 24].  However, I did not find it necessary to elaborate on this matter because in my opinion, even accepting the defendant's arguments regarding the receiver's conduct and determining findings for the receiver's duty do not save the defendant, and the reasons for this will be presented below.
93. Section 10 of the Medicines Law states:

"The right to compensation

10. The injured party is entitled to compensation for the damage caused to him as a result of the breach and its consequences, and which the breacher saw or should have seen in advance, at the time of the conclusion of the contract, as a probable result of the breach" (emphasis added)
11. "The expectation of the violator is examined at the time of the conclusion of the contract. This element is at the basis of the argument that the scope of the breacher's liability reflects the risk that he was willing to take upon himself at the stage of concluding the contract.  Hence, even if the breacher becomes aware after the conclusion of the contract of damage caused to the other party as a result of the breach, this will not expand his liability" (emphasis in original) [Daniel Friedman, Nili Cohen, Contracts (Vol.  4, 2011), pp.  614-615].
12. In our case, it was not proven that the receiver foresaw the damage, or should have foreseen it at the time of the conclusion of the first agreement, since at that time there was no agreement at all between the defendant and the plaintiffs, and it was signed about two years later.
13. This is even more acute, when in clause 14.2 of the first agreement it was clarified that the defendant would be entitled to sell the property only after receiving possession of the property or after the transfer of the rights in the property to him in accordance with clause 10 of the agreement, whichever is later.
14. It should be noted that it is clear from the evidence material, and there is in fact no dispute about this, that at no stage after the signing of the second agreement was the receiver informed by the defendant of the transaction that was entered into between him and the plaintiffs, and in fact this information was concealed from the receiver's eyes.
15. Indeed, if the receiver had known before signing the first agreement that the defendant intended to sell the property to another, it might have been appropriate to oblige him - by virtue of contract law - to compensate the defendant for the amount of agreed compensation that the latter was required to pay to the plaintiffs [see examples of this in CA 734/84 Shimon and Elisheva Avidan v. Mordechai and Aliza Ben Hamo, IsrSC 41(4) 078 (1987); CA 329/89 Gil Sabo v.  Nechama Malach [Nevo] (December 31, 1989); and CA 879/92 Makor Offerings and Rights Ltd.    Lynn Rosman, IsrSC 50(1) 774 (1996), at p.  791].
16. Moreover, in our case, the first agreement expressly stipulated that if the property is sold by the defendant (when the defendant will be entitled to do so in accordance with what is stated in clause 14.2 of the first agreement), then "this shall not establish any obligation (sic., in the original, AS) of the seller towards the buyer and/or the other and/or whoever else" (clause 14.2 at the end of the first agreement). This provision in effect exempts the receiver from any liability towards the defendant in the event that the property is sold by the buyer (the defendant), and it is sufficient to reject the defendant's claim based on the claim of breach of contract, and as a result, the rejection of the notice to a third party.
17. In his summaries, the defendant completely ignored the provision of clause 14.2 of the first agreement, and did not explain why, despite the provision of the said clause and even though the receiver was not informed of the agreement with the plaintiffs, the receiver should have foreseen the damage, just as he did not explain why the receiver should still be obligated despite the said provision that exempts him from any obligation towards the defendant in the event of the sale of the property to a third party.
18. Counsel for the receiver elaborated in his summaries regarding the claim of negligence, but as stated above, this argument was also neglected in the defendant's summaries, who did not mention the word "negligence" in all its derivatives at all, and in any case without discussing the foundations of the tort of negligence and without showing that they exist in our case. Therefore, there is no need for me to discuss the claim on its merits, and it is sufficient to dismiss it, beyond the question of whether it is at all possible to circumvent a contractual stipulation that exempts from liability by relying on the tort of negligence [see, for example, Tel Aviv (Be'er Sheva District) 5016-08 Farms Rodad Cooperative Agricultural Society Ltd.    Eilat Municipality [Nevo] (September 9, 2013), para.  19].
19. Before necessary, I will note that even if the defendant had reiterated the claim of negligence in the framework of his summaries, I would have rejected it. It has already been held that a receiver has a conceptual duty of care towards the parties involved in the receivership proceeding [LCA 9227/12 Shai Granot, Receiver v.  Spizer Ruth [Nevo] (August 27, 2013), para.  19; Civil Appeal (Jerusalem District) 8247-11-14 Nissim Adika v.  Yaakov Amster [Nevo] (04/06/2018), para.  38; CA (District Court) 33890-03-14 Hanoch Adi Zahav v.  Yosef Shabi [Nevo] (09/07/2014), para.  11], but it still needs to be shown that in the specific case the tortfeasor has a concrete duty of care [CA 145/80 Shlomo Vaknin v.  Local Council, Beit Shemesh, 37(1) 113, at p.  125 (1982)].
20. The defendant did not claim that in the specific circumstances of our case, the receiver should have expected that he, i.e., the defendant, would violate the provisions of the first agreement and sell the property to the plaintiffs, while providing an undertaking to register the rights in his name within a short period of time. Even if the defendant had raised the aforementioned claim, it would have been difficult to accept it, since it meant that the receiver should have anticipated a breach of the first agreement by the defendant by selling the property to a third party before the date for this came according to the agreement, and without any indications thereof.
21. Even if we were willing to assume that there was a concrete duty of care, this would still not have saved us, since it seems that the contributory fault of the defendant in the circumstances of our case cries out to heaven and is a significant and decisive contributory fault. The defendant entered into a sale agreement with the plaintiffs in contravention of the agreement with the receiver.  In the agreement with the plaintiffs, he undertook to register the rights in the land in his name within only 40 days.  At this stage, the process of the defendant vis-à-vis the receiver, and of that vis-à-vis the tax authorities and the Nazareth Municipality, was transitory and it was not yet clear when the rights would be registered in the defendant's name.  The defendant himself admitted that this obligation he took upon himself was "unreasonable" (paragraph 39 of the notice to the third party).  Moreover, the defendant did not inform the receiver at any stage about the transaction with the plaintiffs.  If the defendant had done so, it is certainly possible that the dominoes would have fallen differently and perhaps the legal mask before me would not have been born.  Hence, there was certainly room to impose significant contributory fault on the defendant.
22. Although the claim of causing breach of contract was also abandoned in the defendant's summaries, I will note that it should also be rejected on the merits, since it has been proven that the receiver had no knowledge whatsoever of the second agreement, and there is no claim that he should have known about it, that one of the elements of the tort is "the knowledge of the third party - both in relation to the existence of the contract and in relation to the fact that his conduct is liable to lead to a breach of the contract, including constructive knowledge or turning a blind eye" [CA 1137/23 Eliyahu Deri v. Jewish National Fund [Nevo] (May 5, 2025).  Paragraph 178.  See also: CA 8191/16 Dialet Ltd.    Avraham Harar [Nevo] (June 17, 2019), para.  39].

Conclusion

106. Therefore, I accept the claim in part and obligate the defendant to pay the plaintiffs the sum of ILS 79,500. This amount will bear linkage differentials and interest as required by law from the date of filing the claim, January 23, 2022, until the full payment is actually made.
107. In addition, I order the defendant to pay the plaintiffs, through their counsel, legal expenses in the total amount of ILS 3,000 (taking into account the amount awarded compared to the amount claimed), as well as attorney's fees in the total amount of ILS 14,000 (including VAT). If these sums are not paid within 30 days from the date of the judgment being served on the defendant's attorney, then a shekel interest will be added to them as stated in section 2(a) of the Interest and Linkage Clause Law, 5721-1961, from today until the full payment is actually made.
108. I reject the notice to a third party. In light of the evidence regarding the receiver's conduct, I have decided to award him legal expenses and attorney's fees in his favor in a reduced amount, which I set at a total sum of ILS 8,000, to be paid by the defendant to the receiver through his counsel within 30 days from the date of the judgment to the defendant-informant's attorney, otherwise a shekel interest will be added to it as stated in section 2(a) of the Interest and Linkage Clause Law.  5721-1961, from today until the full payment is actually made.

The Secretariat will provide a copy of the judgment to the parties through their counsel.