Procedural barriers
- As part of its summaries, the defendant repeatedly raises a series of procedural arguments which, according to it, block the investigation of the claim on its merits, including claims of statute of limitations, delay, lack of rivalry and lack of cause, as well as claims relating to the assignment of creditors' rights to the liquidators. These arguments are not new, and a significant part of them were explicitly discussed and decided in the Supreme Court's judgment in the appeal decision, in which the dismissal decision was revoked in limine and the hearing was returned to this court for the purpose of clarifying the claim on its merits.
- In these circumstances, the starting point for the discussion is that the rulings of the Supreme Court are binding on this court, both on the consequential and normative levels, and there is no room to re-examine, under one guise or another, issues that have been discussed and decided on their merits. However, once the arguments have been reiterated in the summaries, I will address them briefly, in accordance with the framework outlined by the Supreme Court.
Statute of limitations for the company's claim
- With regard to the statute of limitations for the company's claim, in accordance with the Supreme Court's ruling that for the purpose of examining the claim of limitation in the company's claim, the date of birth of the cause of action should not be located on the date of publication of each of the financial statements claimed to be false, but only on the date on which factual data were first formulated that enable the actual identification of alleged negligence on the part of the accountants, in a manner that deviates from vague suspicion or technical accounting information. In the decision of the appeal, it was held that even assuming that the cause of action is formulated at an earlier date theoretically, in the matter of the beginning of the statute of limitations, weight must be given to the date on which a concrete factual basis was laid out that indicates serious flaws in the audited reports, and the mere existence of the reports or their publication to the public is not sufficient. It was determined that, at most, the date on which the first "lead" was created for the existence of a cause of action was the date of the submission of Barlev's opinion on August 25, 2011, which for the first time pointed to material irregularities in the audited financial statements and their implications. Thus, in the language of the appeal decision (at para. 55):
"55. In any event, I am of the opinion that in our case, whether the "tip of a thread" test is applied or whether the more lenient test is applied from the plaintiff's point of view, of a "claim with a real chance" - the date on which the limitation period should be set to begin is the date of the submission of the Barlev opinion. As detailed at length in paragraph 3 above, the Barlev opinion made extensive reference to the defects that occurred in the company's accounting conduct and in its audited financial statements between the years 2007-2011. Thus, it was clarified there that during these years, "the company's financial statements... did not adequately reflect (to say the least), in accordance with accepted accounting rules, transactions conducted and material data of the company"; and that they "did not allow the company's creditors... to examine the state of society and to act in real time to protect their rights" (ibid., p. 7).