Against this background, a dispute arose as to the question of the respondent's entitlement to receive from the State the full calculated price, in exchange for the apartments (at the said stage we were talking about 165 apartments whose construction was completed). In the calculation made by the Ministry of Construction and Housing, 6% of the calculated price was reduced (in other words, the respondent was offered payment at a rate equal to only 94% of the calculated price). The state argued that according to clause 6(h)(3) of the program contract, it is entitled to a reduction in the calculated price by 5% for each month of delay in the execution of the construction, in relation to the agreed execution period, and in the case at hand the delay increased to one month and five days. The Respondent denied the State's claim and insisted that it was entitled to receive the full calculated price. According to her, section 6(h)(3) concerns the contractor's delay in presenting to the state his demand that it fulfill its obligation and purchase the apartments from him. Hence, this clause and the delay in completing the construction have nothing to do with it.
The District Court's Ruling
- The Respondent approached the District Court, by way of an injunction, and placed before it the question in dispute. It should be noted that from the outset, her application also raised a factual dispute. Essentially, this dispute revolves around the question of whether a document known as an "addendum to the agreement", which was drafted by the State but signed only by the Respondent, applies to the relationship between the parties or not. The Respondent argued that this document is part of the program contract and even sought to build from its content in support of its position with respect to the interpretation of clause 6(h)(3). However, the state, although it did not dispute that the document was prepared by the Ministry of Construction and Housing, denounced its application to its relationship with the respondent. However, when the claim reached clarification, the parties agreed to limit their dispute to the question of the interpretation of clause 6(h)(3) only, and to ignore the differences in the questions of fact, including the question of the applicability of the "Addendum to the Agreement" to the parties' relationship. Against the background of this agreement, the learned judge discussed the question of the interpretation of clause 6(h)(3), within the framework of the program contract only, without reference to questions of fact. And when he reached the conclusion that in the interpreter's dispute the law is with the respondent, it was only necessary to allude to the respondent's claim that what is stated in the addendum to the agreement also supports her position.
- Accepting the Respondent's position, the Court ruled that the matter of section 6(h)(3) is, indeed, in the case of a delay in the submission of the contractor's application for the realization of the State's undertaking to purchase the apartments from him. The judge's decisive reason was that this interpretation is required by the clear language of the section and by the fact that it is part of section 6(h). The judge pointed out the identity of the expressions used by the contract in the three sub-clauses of clause 6(h) and attributed to these expressions, within the framework of clause 6(h)(3), the same meaning as that given to them in the framework of its two predecessors (clauses 6(h)(1) and 6(h)(2)), as to the nature of the matters in which no dispute arose. This comparison revealed that only the interpretation proposed by the Respondent raises section 6(h)(3) in line with its two predecessors. On the other hand, the judge argued that the language of the section also does not imply that it is a matter of delay in the execution of the construction. For the sake of comparison, he referred to section 6(g), which deals with the reduction of the price due to the delay in the execution of construction in projects of apartments of the first type; Here it is explicitly stated that apartments whose "execution was completed after the end of the performance period in the specific contract... An amount equal to 2% of the price of the apartment for each month of delay will be deducted from the purchase price calculated in accordance with subsection (f)."
- The State's argument before the District Court was that the language of clause 6(h)(3) (per se) is not unequivocal, and that due to the haste in which the program contract was drafted, no interpretive conclusion can be drawn from the structure of the contract, from the location of the clause within its framework and from the comparison of the language of the clause with the language used in other clauses. In the interpretation of clause 6(h)(3) – the State argued – preference should be given to the interpretation that is consistent with the purpose of the program contract. Since its purpose was to spur the contractors and expedite the construction, it is presumed that the contract intended to establish a sanction for delay in completing the construction is presumptuous. There is evidence that in projects for the construction of apartments of the first type, for which the government is obligated to purchase only half of the apartments, the program contract (in clause 6(g)) ordered a reduction in the price by 2% for each month of delay in completing