Civil Case (Center) 49145-02-18 Yigal Yadin v. Paragon Plastic Ltd. - part 23

The case law also held that in the framework of a claim for the provision of accounts, only the disclosure of documents required to clarify the question of whether there is room to order the provision of accounts, as opposed to documents requested for the purpose of proving the claim itself, should be ordered.  Moreover, a document disclosure order should not be issued that constitutes the fulfillment of the relief requested in the framework of the claim itself.

R Civil Appeal Authority 8266/11 Hugh.  B.  Am v.  Maoz Travels in Tax Appeal et al.  (16.8.2012); Civil Appeal 1296/14 Zucker v.  Zucker & Sons Investment Company in Tax Appeal (7.5.2014); Civil Appeal Authority 9919/16 Don Gilly in Tax Appeal v.  Lifestyle Equities C.V (20.12.2016)).

169. In the second stage, the defendant will be required to prove that the accounts he provided to the plaintiff are correct and proper, and later the court will determine, based on those accounts, whether the defendant owes the plaintiff money and how much (see Civil Appeal 127/95 Fruit Production and Marketing Council v. Mehadrin in Tax Appeal et al., IsrSC 51(4) 337, 335-334 (August 31, 1997); Cell (Center) 3395-06-14 David Sedak v.  Abba Horowitz (March 19, 2018)).

From the general to the individual;

170. As explained above, from the evidence that was brought before me, it emerged that the plaintiff, as well as Shira, did not have an exclusive right to sell Paragon's products. Moreover, even if it had been found to have determined that such a right existed, it would not have been clear from the evidence that it belonged specifically to the plaintiff, and not to Shira, which is in liquidation proceedings, and which is not a party to the present lawsuit.
171. Taking into account the provisions of the law, the rulings of the Honorable Supreme Court and the specific evidence in this case, I have come to the conclusion that the conditions in Shalem or by virtue of them are not met, and the plaintiff should be regarded as entitled to receive the relief of providing accounts by virtue of the claims stated in this statement of claim, for the reasons that will be detailed below;

Charging Paragon for Paying Bills

172. With regard to Paragon, although the exclusivity claim was not proven, it was clear from the evidence that it was indeed a very close relationship between a supplier and the main marketer of its products, who even stepped into the shoes of a previous marketer who had worked with the same supplier almost exclusively for many years. Therefore, this relationship should be viewed as a close and special relationship, based on a relationship of trust, which on the face of it justifies the granting of accounts.
173. However, as clarified above, the plaintiff did not prove the claim of exclusivity, and inter alia, it was found that his claims should be rejected even insofar as they relate to the commissions that he claimed he received from the sale of the goods to Shufersal.
174. In these circumstances, it is clear that there is no basis for the plaintiff's claim insofar as it relates to the provision of accounts relating to the sums of money that Paragon received from the Shufersal chain, as well as the amount of commissions that the plaintiff claims he received from these sales (a claim that was also rejected).
     Factually, although the relationship between Paragon and Shufersal began in 2013, the plaintiff did not contact, during all the years that have passed since then until the filing of the lawsuit, any demand or request relating to Shufersal or in connection with the commissions due to him from the sales to it.
175. It is not superfluous to note that this is a business activity to which the plaintiff is not a party, the requested data is private commercial data of the parties, and all this without being asked for any of Shufersal's position regarding the disclosure of those data.

Charging Mr. Alfasi to provide bills

176. With regard to Mr. Alfasi, when it comes to a business partnership between the plaintiff and him, it is naturally a relationship based on a relationship of trust between the parties, and these establish the duty of each of the partners to act in good faith, fairness and loyalty to each other. This kind of connection justifies, on the face of it, the granting of bills.
177. However, with regard to the goods that the plaintiff claims were marketed by Paragon to Mr. Alfasi or anyone on his behalf, between the years 2011 and 2014 - when it is found that the plaintiff's claims in this regard should be rejected, where they were allegedly marketed without any evidence being brought to substantiate them - it cannot be determined that the plaintiff has lifted the burden imposed on him to show that he has a right to sue for the funds or goods in respect of which the relief of providing accounts is sought.
178. The aforesaid is even more valid, insofar as the requested relief relates to the period following the termination of the partnership relationship between the parties and Mr. Alfasi's work for Shira, and where it was found that the exclusivity claim was also rejected and it was not proven that Mr. Alfasi was prevented from competing with the partnership after he ceased to work with it and for it.
179. Even with regard to the funds that Mr. Alfasi allegedly took and stole from the plaintiff or from Shira's account in 2014, I found that the claim should be dismissed. Despite the inconvenience that arose from the very fact that Mr. Alfasi operated in the accounts of Shira after the end of the partnership relationship between the parties, the evidence showed that Mr. Alfasi's actions were carried out with the knowledge of the plaintiff.  A significant portion of the checks that were included in Appendix 2 to the plaintiff's exhibits file, and for which the plaintiff allegedly withdrawn, were checks that were drawn in favor of the plaintiff himself, and the relatively negligible balance that is not included in these checks does not justify the granting of the requested relief, even without me addressing the question of the use of the funds for the benefit of a vehicle serving the partnership.

Obligation of Tal Plast to provide bills

180. In contrast to Mr. Alfasi, Tal Plast was not part of the partnership at all, and in fact it had not yet been established, during the period relevant to the claim.
181. The plaintiff himself testified in the course of his interrogation that he did not know Tal Plast, which was established after he said that he "fell", that this company was not a party to the partnership agreement, that he himself had no connection to this company, and that he did not have commercial relations with it (see the plaintiff's testimony at pp. 37, paras.  2-15 of the minutes of the hearing of December 7, 2022).
182. In these circumstances, where there was no partnership or relationship whatsoever between the plaintiff and Tal Plast, let alone a relationship that establishes a special relationship of trust, as well as given the ambiguity of the claims that were raised against this company, I do not find that the balancing point between all the interests that are necessary in the matter is by way of providing the remedy of providing accounts against it.
183. I will add and note that even if it had been factually proven that Tal Plast operated in parallel with the plaintiff and Shira, there would not necessarily be room to order the issuance of an order for the provision of accounts, when we are dealing with two businesses that competed at most with each other. The existence of competition, in and of itself, does not create an entitlement to receive data relating to Tal Plast's profits.  The purpose of an order for the issuance of accounts is not to reverse the burden of proof, and to allow the plaintiff to obtain evidence where it is not in his possession, or where he refrains, for one reason or another, from bringing it.

Reference to Additional Claims Raised by the Defendants

184. In the margins, I find reference to the claim of limitation raised by the defendants, according to which the claims whose cause of action arose in the period preceding the 7 years preceding the filing of the claim should not be discussed.
185. In relation to this, I find it clear that the letter of claim indicated that the commencement of the alleged partnership, and hence also the period relevant to the claim, was in September 2011, so in any event, even if the requested remedies had been granted, there would have been no room to apply them in relation to the period prior to that date.
186. Where the claim was filed in March 2018, there is no statute of limitations for the cause of action in any case.
187. As for the defendants' claims regarding the non-quantification of the remedies claimed and the failure to pay an adequate fee, these were discussed and decided by me in the framework of my decision of January 12, 2022 in the motion to dismiss in limine.

The Counterclaim

188. In the framework of the counterclaim, Mr. Alfasi petitioned for the payment of the plaintiff in the sum of ILS 650,000, for his shares in Shira Company (see paragraph 9 of the counterclaim).

Mr. Alfasi based his claim on what was stated in paragraphs 29-30 of the statement of claim, according to which it was agreed that he would sell his rights in the partnership to the plaintiff in exchange for the sum of ILS 650,000.  According to him, this sum has not been paid to him to this day.

189. The plaintiff, on the other hand, did not deny that he should have paid ILS 650,000 for the shares, but claimed that this sum was paid in full (see paragraphs 13 and 14 of the statement of defense for the counterclaim).
190. The plaintiff's claim that the payment of the said sum was indeed agreed, but that it was actually paid, I find it to be a claim of "admission and dismissal".  The plaintiff admits in fact that he should have paid the sum of ILS 650,000 for Mr. Alfasi's share in the partnership and his shares in the company, and hence the burden of proof to prove that the said sum was indeed paid shifts to his lot.
191. After reviewing the evidence brought before me, I have reached the conclusion that the plaintiff has not met the burden imposed on him to prove that he did indeed pay the sum of ILS 650,000 in respect of and for the purpose of purchasing Mr. Alfasi's shares in Shira Company, and I will elaborate;
192. The plaintiff did not attach any references (bank statements, receipts, etc.) that could indicate that the sum of ILS 650,000 was paid to Mr. Alfasi, and according to him, the share transfer agreement that was attached by him (as defined below) is sufficient to show that the payment was made (see p. 44, paras.  33-36 of the minutes of the hearing).
193. Exhibit 20 (Appendix 12) to the plaintiff's exhibits file is a document dated January 1, 2014, allegedly prepared on the firm page of the firm of Adv. Eli Amar, addressed to all who may be interested, allegedly signed by the plaintiff and Mr. Alfasi, before Adv. Eli Amar, and regulating the transfer of shares in Shira (hereinafter: the "Share Transfer Agreement").
194. In the framework of the same agreement for the transfer of shares, the parties declare that the plaintiff purchased 50% of Mr. Alfasi's shares in Shira Company for the sum of ILS 600,000, while Mr. Alfasi confirms that he received the sum of ILS 600,000 from the purchaser-plaintiff. The parties also confirmed in the framework of the same agreement that they have no claims or claims whatsoever against each other.

It should be noted that although in the agreement for the transfer of shares it is stated that the amount of consideration is ILS 600,000, the plaintiff testified that initially Mr. Alfasi asked for the sum of ILS 600,000, but later he asked for an additional ILS 50,000 and the plaintiff transferred him an additional ILS 50,000 in merchandise (see pp.  45, paras.  1-18 of the minutes of the hearing).  The amount of consideration, according to the plaintiff himself, was therefore ILS 650,000.

195. Alfasi, for his part, denied the existence and content of the share transfer agreement and claimed that he never signed it and in fact was not paid anything for his shares (see paragraphs 44 and 45 of his affidavit).
196. He further testified that in response to his request to the plaintiff's attorney to receive the original document (as well as the original report prepared by BDI, Exhibit H for the plaintiff's exhibits file), for the purpose of examining it by means of a graphologist, it was claimed, by the plaintiff's counsel, that the original documents were in the possession of Adv. Amar. However, later on, after contacting Adv. Amar, it became clear that he was not at all familiar with the said document, did not edit it and did not sign it (see paragraphs 46 and Appendices 8 and 9 to Mr. Alfasi's affidavit), or as Adv. Amar said in the course of his interrogation at the hearing:

"What I see here on page 26 I see Alfasi, but it's not my signature, that's not how I sign.  Neither on page 26 nor on page 27, it is completely different from my signature.  That's not how I sign."