This rule, which is clearly and orderly expressed in the judgment of my colleague the President in the aforementioned Apropim case , is appropriate in my opinion. It allows the courts to carefully reveal the true intention of the parties, and to reach authentic and just conclusions. A review of the case law and the literature written since the judgment was rendered reveals that the Apropim rule stands firmly on its feet , and today there is hardly any dispute about it (see: Friedman and Cohen, in their above-mentioned book, at pp. 245-249; Friedman, in his aforementioned article, at pp. 23-26; Mautner, in his aforementioned article, at pp. 53-55; A. Zamir, Interpretation and Completion of Contracts (1996) 84; G. Shalev, Contract Law (Second Edition, 1995) 302-303. See, without exhaustion: Additional Civil Hearing 2485/95 Apropim Housing and Development v. State of Israel, [published in Nevo]; Civil Appeal Authority 5438/95 David Rosenwasser in Tax Appeal v. Lloyds & Co., IsrSC 51(5) 855, 866; Civil Appeal Authority 6999/96 Hadera Machinery in Tax Appeal v. Roichman, IsrSC 52(2) 752, 764; Civil Appeal 300/97 Hasson v. Shimshon Insurance Company Ltd., IsrSC 52(5) 746, 755-757; Civil Appeal 6726/98 Ariav v. Cohen, [published in Nevo]).
- The judgment that is the subject of the additional hearing touches on the question of the relationship between the objective purpose and the subjective purpose in authority contracts. In it I expressed the position that even contracts to which the public authority is a party have a subjective purpose, but a contradictory presumption must be established according to which the public authority acts fairly, reasonably, equally and in good faith, in accordance with its status as a public trustee and in accordance with the rules of administrative law. A similar opinion was expressed by my colleague the President. However, this issue is not the focus of the discussion in our case, since according to the result we have reached, the subjective purpose of the agreement in question is consistent with its objective purpose. We will now move on to the examination of the subjective purpose as it arises from the totality of the evidence material.
- I am of the opinion that even if there are those who believe that it is appropriate, as a rule, to give the language of the contract one weight, and there are those who believe that it should be treated differently, this dispute does not arise in the present case. We are dealing with a contract written by non-lawyers and its wording is flawed. In these circumstances, the relative evidentiary weight of the language of the contract decreases in any case, and the counterweight of the external circumstances to it increases. The fact that this is not a common contract, such as a contract for the sale of an apartment, but rather an unusual contract, strengthens the need to examine its general context and its external circumstances in order to learn about the intention of the parties to it. As stated above, in accordance with the procedural agreement between the parties, only a few exhibits were brought before the District Court (and thereafter before us), which were attached as appendices to the pleadings, and no testimonies were heard at all. Nevertheless, it is possible to locate in the circumstances of the case the subjective intentions of the parties to the effect – the intention of the parties to create a dependence between the actual scope of the import and the scope of the compensation, i.e., without actual importation – and in the absence of consequential damage – no compensation will be paid. This is clearly clear against the background of the relevant circumstances.
- Beginning in the late 1950s, statutory councils were established with the aim of regulating certain branches of agriculture. An important tool in the hands of these councils was production quotas that allowed for internal regulation of the market. The quotas were intended, in essence, to achieve social goals, by controlling the supply and the identity of the growers, and they were managed by the councils. At the end of the 1960s and early 1970s, as the Respondent explained in its summaries, all the growing quotas in the vegetable sector were canceled, with the exception of four species: tomatoes, onions, carrots and potatoes. The cancellation of quotas in the various vegetable industries was done without any compensation being paid to the growers. Similarly, quotas were abolished without any compensation for breeders in the turkey industry in 1989, and in the fruit and flower industries in the mid-1980s. Alongside the rule that no compensation is given for the cancellation of growth quotas, there are exceptions. In 1993, the quotas in the tomato industry were canceled, in part due to the smuggling of tomatoes from the Palestinian Authority to Israel, which caused damage to the industry. The cancellation of the quotas was accompanied by the payment of compensation to the growers, but the payment was not intended to compensate the growers for the cancellation of the quotas itself, but rather for the damage caused to them as a result of the illegal imports. In 1996, the breeding quotas in the broiler industry were abolished, as part of a reform in the industry, and the breeders were compensated for the removal of the breeding quotas. The compensation was regulated by primary and secondary legislation, and its rate was 9.5% of the value of production – a rate that is significantly lower than the rate of the grant claimed by the petitioners. An examination of the state's conduct over the years thus shows the general rule – the cancellation of growth quotas in itself is not accompanied by compensation.
It is clear that a condition for the success of regulation through production quotas is the blocking or restriction of the import of agricultural produce from abroad. When the market is opened for imports from abroad, the taste of maintaining the internal crop quotas diminishes. However, these two are not completely mutually exclusive: a ban on imports may also be made without a quota regime. The petitioners reiterate in the additional hearing that "the cancellation of the quotas stemmed from changes that occurred in the agricultural crops market, against the background of general liberalization trends, technological improvements, lowering tariffs, and other factors." According to them, the Cairo Agreement was indeed "a final catalyst for the abolition of the quotas," but the contract in question was intended to compensate them for the removal of the quotas. These claims, so I believed and still believe, are completely unfounded. As we saw above, as a rule, the cancellation of crop quotas does not entitle growers to compensation. And what is the significance of her in this case? The Cairo Agreement exposed the Israeli market to competing imports of agricultural produce from the territories of the Palestinian Authority. In some industries, including potatoes, import restrictions were set that were supposed to be phased out (see Article 10 of the Cairo Agreement). Imports (unrestricted or partially restricted) dropped the ground under the domestic quota regime. According to the agreement, most of the likely harm to Israeli growers was not the cancellation of the arrangement between them (an arrangement created by the production quotas), but rather the possibility that large amounts of agricultural produce from the Palestinian Authority would enter Israel, which would lead to a reduction in their market share and a significant drop in prices. The contract we are dealing with comes – as its title attests – to provide "compensation to the growers of the vegetable industry following the peace agreements." The title of section 5, which is the section in which the compensation mechanism for potato growers was determined, clarifies that its purpose is "additional compensation for the cancellation of quotas as a result of the exposure of quota crops to autonomy". This is also evident from the summary of the discussion between the parties of June 6, 1994, which formed the basis of the agreement. It should be emphasized that growers of crops that were not subject to a quota regime at the time, which are listed in clause 1 of the agreement, were also compensated under the agreement for the exposure to imports from the autonomy. Clause 3(a) of the agreement also allows to expand the list of industries entitled to compensation set out in clause 1 and to add to it "crops that will severely harm autonomy." Thus, the agreement was not intended to compensate the growers for the cancellation of production quotas, but rather for exposing them to imports of products from the Palestinian Authority.
- Against this background, it cannot be said under any circumstances that the language of clause 5(f)(1) of the contract is "clear", and it should not be attributed to it the literal meaning that its purpose was to compensate the growers for the very cancellation of the growth quotas. The context and circumstances described above tip the scales in the direction of the Respondent's interpretation, according to which the subjective purpose of the agreement was to compensate the potato growers for the damage that would actually be caused to them as a result of the importation from the Palestinian Authority.
Moreover, the agreement stipulates two different compensation mechanisms. One mechanism is general and relates to all the industries in which growth quotas were still introduced (parts of the agreement are indeed worded in general terms, but the parties' arguments indicate that at the time of the conclusion of the agreement, only carrots and onions were relevant to this arrangement). The second mechanism is unique to the potato industry. As part of the first mechanism, the growing quotas on the site were canceled, and the carrot and onion growers were compensated in the amount of NIS 1,700 per dunam, without the compensation being conditional on the fulfillment of any conditions. In light of the circumstances, the establishment of this mechanism is, in my understanding, an assessment by the parties according to which the import of carrots and onions is expected to be expected to justify this compensation (an estimate that turned out to be erroneous – as appears from the Respondent's summaries). Why was a unique compensation mechanism established for potato growers?
- If the parties had wished that the compensation to the potato growers would also not be conditional on the fulfillment of certain conditions, they could have included the compensation within the framework of the first, general mechanism, as compensated by the carrot and onion growers. There is no dispute that the compensation mechanism for potato growers links the degree of compensation to the actual degree of importation. The question is whether this connection also exists in the second stage of compensation, i.e., the stage of the complete cancellation of the growth quotas. The very link between the compensation and the actual imports is unique, as stated, in comparison to all the other growing industries that were exposed to imports from the autonomy following the Cairo Agreements, and in the light of the entire agreement. The uniqueness of the compensation arrangement for potato growers and the fact that the amount of compensation is dependent on actual imports indicates that the purpose of the arrangement was to fully connect the two. What is the point of a partial connection, in relation to only the first stage of compensation, if in the end the growers will be fully compensated? But it is natural that if the compensation is conditional on the actual entry of potatoes, the condition is complete. Therefore, this condition applies to the two stages of compensation. Support for this can also be found, for example, in a letter from the Deputy Director General of the Ministry of Agriculture for Creation and Economy, dated July 25, 1995, addressed to the Agriculture Coordinator in the Budget Division of the Ministry of Finance. According to this letter, in her opinion, about a year after the agreement, the conditions for canceling the quotas and providing full compensation to potato growers due to "the influx of quantities from the autonomy" were "ripe." In the response of the Agriculture Coordinator, dated July 31, 1995, it was written in this regard that despite the entry of potatoes from the autonomy into Israel, there was a shortage in the Israeli market – that is, no damage was caused to the Israeli growers. It may be added that the authors of the agreement chose to relate in the framework of the agreement to the crop quotas – the scope of production permitted to each farmer – as a basis for assessing the relative share of each farmer in the market, in order to estimate and delineate the relative harm to him as a result of the opening of the market to imports, to the extent – and on condition – that such damage is caused.
- The petitioners attached to their statement of claims a number of affidavits and letters from various officials involved in the agreement, including a letter from the Minister of Finance at the time, and affidavits from the Minister of Agriculture and Rural Development at the time, the Director General of the Ministry of Agriculture and Rural Development at the time, and the Director General of the Council for the Production and Marketing of Vegetables at the time. In these letters and affidavits, which were written – almost all of them – retroactively, it was claimed that the payment under the contract in question was intended to compensate the growers for the very cancellation of the quotas. These documents were reviewed extensively in the judgment of Vice-President Matza, who chose to attribute high evidentiary weight to them. There was no room for this in the circumstances of the case and in view of the date on which they were written. On the other hand, the respondent attached an affidavit of someone who served at the relevant times as an agriculture coordinator in the Budgets Division of the Ministry of Finance. The first affidavits have no advantage over the latter. The nature of most disputes of this type, which reach the court's doorstep, is that the parties do not agree ex-post to their intention ex-ante. If it were not for these disputes, the law of contracts would never have come into existence.
In light of all of the above, after examining the language of the contract and the various circumstances of its conclusion, we have reached the conclusion that the Respondent has proven on a balance of probabilities that according to the subjective purpose of the agreement, the compensation of the potato growers was conditional on the actual import of products from the territories of the Palestinian Authority. This conclusion has not changed. Therefore, I propose to dismiss the petition, which does not, at the end of the day, raise issues of principle. Beyond necessity, I will add that if it had been necessary to examine the objective purpose of the agreement in this case, I would have reached the same result as the examination of its subjective purpose led me, and in this regard I fully accept the reasoning of my colleague President A. Barak in the judgment in the previous hearing.