A forecast as its name implies: an assessment of a future event that was made by the company on the basis of the data it had in its possession in real time - prior to entering into the investment agreement.
In the case before me, it should be remembered that this is an assessment that relates to a startup company that is at the beginning of its journey...
The plaintiffs' claim is in fact based on a retrospective result - the failure to fulfill the forecast...
There is no dispute between the parties that the company did not promise or undertake that the forecast would be fulfilled in practice."
- In our case, the plaintiffs claimed that they were presented with a representation by Sarel and Shahar that the product would "go live" and work with customers as early as the 6th month of its establishment, and that starting from the 15th month, the venture would generate a net profit, however, in practice, it turned out that this was a misrepresentation, since the product "went live" only in 2016, about a year and a half after its establishment.
- The fact that the product "went live" only in 2016 and that the goal was not achieved, as initially estimated by Sarel and Shahar, is not disputed.
- However, Sarel testified that the data presented were his estimate only (transcript of March 17, 2025, pp. 154-155) and added:
"OK. My assessment is based on how I thought it would be difficult to establish this system in light of the factors that exist. Can I tell you that I don't know of a single startup that lived up to its evaluation, OK? Not financially and not temporarily, OK? But I really wanted to be in the air after six months." (p. 155, s. 5-8).
- Hence, this is a future forecast that was given at the beginning of CyberTrade's career. The fact that the forecast did not come true at the end of the day does not make the presentation misrepresented, especially when it comes to a start-up company.
- The plaintiffs did not prove that Sarel and Shahar relied on data that they did not believe in their correctness or on data that they knew were incorrect, and therefore did not meet the burden of proof imposed on them to prove this claim, certainly not on the increased burden of proof that applies when it comes to a claim of misrepresentation.
Representations Regarding Sarel and Shachar's Attempt to Establish and Operate the Venture
- Another claim raised by the plaintiffs is that Sarel and Shahar presented Rafi with a representation that they had the ability to carry out the venture, but it turned out that they lacked any professional experience. This claim has not been proven either.
- Shahar stated in his affidavit that he holds a bachelor's degree in computer engineering and specializes in establishing technological ventures on the Internet. There is no dispute that Shahar has decades of experience in this field.
- Sarel stated that he has been a businessman for about 20 years and specializes in establishing technological ventures on the Internet.
- In addition, as appears from Sarel's testimony, he and Shahar were engaged in marketing the activity of Plus500, which is the model on which Cybertrade was established (Minutes of March 17, 2025, p. 135, paras. 21-22).
- The plaintiffs were not able to contradict the version of Sarel and Shahar, and they certainly did not bring evidence in this matter to the extent required to prove that they were presented with a false representation in this matter.
- The fact that the venture was not successful does not necessarily depend on the professional experience of Sarel and Shahar, but on a number of factors and variables.
- Beyond that, Rafi testifies that he has been a businessman for many years. In other words, this is a sophisticated person, who had all the tools to examine the professional experience of Sarel and Shahar in the field of joint venture, and it can be assumed that he did so before he entered into a contract with them.
Claims regarding the scope of work in Cybertrade and the use of its resources
- Additional claims raised by the plaintiffs focused on the fact that Sarel and Shahar used SavierTrade's assets and resources to promote their private businesses and took wages illegally.
- Some of the sums claimed appeared for the first time in Rafi's affidavit of main witness and were not claimed in the statement of claim at all, in a manner that constitutes an extension of the front, which is sufficient to reject them. However, I will also address these arguments on their merits.
- In addition, the sums were claimed by Rafi and Adim, while the alleged damage was caused to Cybertrade itself. Therefore, the cause of action belongs to Cybertrade, and to the extent that it refrained from filing the lawsuit, the plaintiffs should have filed a derivative claim and not a personal claim. However, the case law held that when a minority company is inactive and there is a dispute between the shareholders, it is also possible to file a personal claim in relation to the damage originally caused to the company (see: Derivative Claim (Central District) 40896-01-13 B-4 in Tax Appeal v. Audio Pixels Ltd., paragraphs 78-81 (Nevo, November 29, 2016)). Since, in our case, Cybertrade was voluntarily dissolved and inactive, in any event, the relief awarded in its favor, to the extent that it is awarded, will in practice be a relief for its shareholders only, and therefore the tendency is to prefer in this case the filing of a personal claim over the filing of a derivative claim.
- On the merits of the claims, after reviewing the pleadings and the totality of the evidence presented before me, I have reached the conclusion that they should be rejected.
The Claim of Unlawful Wages
- According to the plaintiffs, Sarel and Shahar illegally took salary from Cybertrade in the sum of ILS 1,106,329 (some of which amounted to ILS 276,582 in respect of this component).
- A perusal of the documents presented to me shows that this claim has no basis in reality.
- The founders' agreement stipulated that Sarel and Shahar would work at Cybertrade as managers for a minimum period of one year (Appendix 1 to Sarel's affidavit in clause 12.1), with no mention that their work would be unpaid. Insofar as the parties' intention was that Sarel and Shahar would work without pay, it can be assumed that this was explicitly stated, since this agreement is unusual, especially when it comes to experienced professionals such as Sarel and Shahar.
- In addition, in an e-mail message that Sarel sent to Rafi in December 2016 (Appendix 75 to Sarel's affidavit), it was explicitly stated in the Excel report that was attached, under "Employess", that Sarel and Shahar's salary amounted to ILS 10,000 each. Therefore, even if, according to the plaintiffs, they did not know at the outset that Sarel and Shahar were being paid for their work in CyberTrade, they certainly learned of this when this report was sent to Rafi.
- As detailed above, Rafi was aware of the scope of Sarel and Shahar's work at Cybertrade, as he even wrote to Oren: "They worked on it for 4 years... 10 percent of their lives from morning to night... ", and as an experienced businessman, he had to assume that they would not work without pay.
- Moreover, the salary they took in the amount of ILS 10,000 is modest, by all accounts, especially in light of the professional experience of Sarel and Shahar and the scope of their work.
- In light of the above, it appears that the argument was raised only to serve as a counterweight to the loan claim and has no substance in it.
The Claim of Taking Cybertrade Equipment
- According to the plaintiffs, Sarel and Shahar took Cybertrade equipment in the amount of ILS 34,870 and should be charged the sum of ILS 8,717 for the plaintiffs' share of this equipment.
- Beyond the pages of Cybertrade's bookkeeping ledger that were attached, in which the value of the equipment in the books is indicated (Appendix 94 to Rafi's affidavit), no other evidence was presented. Thus, no evidence was presented that the equipment was indeed taken by Sarel and Shahar, what equipment was taken, what was its value at the time it was taken, or any other evidence that could support this claim.
- Since the plaintiffs have not met the burden of proof to prove this claim, it must be rejected.
The Claim Regarding the Payment of Maintenance and Rental Fees
- The plaintiffs claimed in the statement of claim that the defendants should be charged the sum of ILS 21,748 for the payment of rent paid by Cybertrade on February 22, 2015, while the offices were used by Cyberlogic. In order to prove this claim, they attached pages from Cybertrade's accounting ledger (Appendix 92 to Rafi's affidavit).
- In Rafi's affidavit, the plaintiffs further argued that the defendants should also be charged the sum of ILS 125,104 for the payment of maintenance expenses and in the sum of ILS 1,000,835 for rent paid from the Cybertrade account, since the actual use of the offices was for private ventures of Sarel and Shahar. In order to prove this claim, the plaintiffs attached pages from Cybertrade's accounting ledger (Appendix 91 to Rafi's affidavit).
- With regard to the payment in the sum of ILS 21,748, the defendants claimed that CyberLogic signed the lease agreement in August 2014 and temporarily financed the rental of the Cybertrade offices and other expenses. When Cybertrade was "officially" established, it reimbursed CyberLogic for the expenses it had paid and stepped into the lease agreement. In order to prove this claim, the defendants attached a lease agreement dated August 28, 2014 between the landlord and Cyberlogic, a confirmation dated October 23, 2014 of the change of tenants (according to which Cybertrade entered Cyberlogic's shoes) and a tax invoice/receipt issued by CyberLogic to Cybertrade on February 22, 2015 for the expenses it paid for it (Appendices 85-86 to Sarel's affidavit). These documents are sufficient to support the defendants' version and refute the plaintiffs' claim.
- With regard to the alleged payment in the sum of ILS 1,000,835 for maintenance and rent expenses, the claim that the use of the offices was made for the purposes of Sarel and Shahar's private business only, was not proven.
- Shachar was asked about this in his interrogation and replied:
"A. Cyber Logic existed before CyberTrade, and as soon as we started the activity of CyberTrade, we moved to a state of minimal maintenance and maintenance, because we entered a large and new project that we really wanted to succeed, in which we invested a lot of money. In the end, I can say that I worked 12 hours a day on Cyber Trade, and when I needed to, I also worked on CyberLogic.
- The question was what percentage of your time?
- I don't know the percentage. I answered, I think.
- Approximately? More than 10 percent, less than 10 percent?
- Less than a percent."
(Transcript of March 17, 2025, p. 221, questions 9-14),