- After the submission of the parties' affidavits and Buchnik's opinion, a number of evidentiary hearings were held, during which the affidavit submitters were questioned (with the exception of Shachar, CPA Broder and Melli), and CPA Buchnik was also questioned about his opinion. At the end of the evidence and after extensions given at the request of the parties, an order for summaries was issued. Since these questions have been submitted, I will review the arguments of the parties below and turn to a decision.
Summary of the plaintiff's arguments
- The plaintiff claims that Rami had previously established a car wash business that he operated for many years through companies or authorized dealers of third parties, while each time he was looking for a new "sponsor"/victim to extract money from, including his family members whom he dragged into bankruptcy proceedings (his father, son, brother and wife). Rami, who was in a personal relationship with Nitza in the past and even operated from her son Shahar's authorized dealer, "stung" her as well and even worked with Charlie from that period to illegally deduct checks. Moreover, he acted in a similar manner vis-à-vis Mrs. Sigalit Tubul, who had previously been with him in a similar business partnership (hereinafter: "Sigalit"). In other words, according to the plaintiff's version, this is Rami's method of work, and he is only the last victim in this chain. According to Israel, Rami and Ofer are a pair of crooks who do not hesitate to forge documents and carry out illegitimate business activity, while creating debts to innocent people like him.
- It was claimed that Nitza, also due to her personal relationship with Rami and her son's involvement, gave up an attempt to collect her full debt (according to the plaintiff, over half a million shekels) and only asked for a way to extricate herself from the dubious business. The path chosen was to transfer Nitza's share of the joint business to a new "victim", through whom the business activity would be conducted. For this purpose, Rami approached Israel, whom he knew as a client, and convinced him that the monthly profit of the joint business of the two of them would be ILS 280,000-350,000 (paragraph 21 of the plaintiff's affidavit), without any reference or basis in reality. At the same time, and behind the plaintiff's back, the real negotiations took place on the price of the transaction between Rami and Nitza, and Israel served only as an "ATM" for its execution (paragraph 77 of the plaintiff's summaries; and in this regard, the plaintiff also refers to the exchange of internal emails between Rami and Nitza, Appendix 134). Rami deceived Israel and persuaded him to purchase Nitza's share in his business, at a cost of ILS 500,000, while neither he nor Nitza disclosed to the plaintiff about the past events between them. In this context, the plaintiff argues that Rami's claim that he signed a debt assignment agreement by Rami towards Nitza was first claimed only in the defendants' summaries and constitutes an expansion of a prohibited front.
- Israel claims that Rami and Ofer presented him, on the one hand, with an overt legitimate business mechanism of income and expenses required for the joint business, which is expected to yield tens of thousands of shekels per month (see Appendix 3 to the affidavit and P/7). As part of that legitimate activity, Rami was supposed to manage the car wash activity in the field, locate customers and sign contracts, and locate subcontractors; Ofer's role was to manage the administrative part of the activity, with proper registration. At the same time, according to the plaintiff, the defendants operated a hidden fraudulent financial mechanism, the sole purpose of which was to steal his money. As part of the fraudulent mechanism, Rami was in charge of filling out the checks that Israel signed "on the parcel"; Cash withdrawal against the delivery of checks to check withdrawers; Taking the cash that was given against the checks into his pocket and into the hands of third parties, most of which have nothing to do with the legitimate activity of the business. Ofer's role in the hidden mechanism was to edit and manage the checks separately from the business's official bookkeeping (Appendix 50); inflating revenues through the issuance of fictitious invoices (Appendices 60-62); failure to record expenses; and incorrect registration of checks.
- The plaintiff further claimed that Rami and Ofer had deceived him throughout the entire period of their joint activity, by presenting him with a representation that the business was profitable and that additional loans were required in order to develop it. Israel, in its naivety, trusted them and believed their false representations, inter alia in light of Rami's declaration, which he anchored in his handwriting, according to which "I will earn ILS 180,000 every month" (P/7). These representations were intended to "blind" Israel's eyes, cause it to close its eyes and take risks, and ultimately the defendants left the plaintiff with debts to banks, tax authorities and other creditors, including employees of the joint venture (including employees with whom he did not even know or enter into employment agreements himself). It was further claimed that the defendants deceived the plaintiff until the end of the affair, and even equipped him with fictitious test scales indicating an alleged "profitable business", until these were refuted by CPA Schiffer (paragraphs 106-107 of the plaintiff's summaries).
- The plaintiff detailed the sequence of events that led to the "explosion" of the affair. According to him, the defendants' appetite was insatiable and they sought to persuade him to establish a limited liability company in order to receive state-guaranteed loans. Israel turned to CPA Gaon, and the latter made it difficult and asked why a relatively small business in size required large loan amounts, especially if we are dealing with a profitable business. This question lit a red light, and in response to it, CPA Gaon turned to CPA Schiffer in order for the latter to conduct a comprehensive examination of the business. The plaintiff came to the business together with CPA Schiffer in order to get explanations from Ofer, who is in charge of the administrative department, but Ofer evaded while Rami acted in a threatening manner and slammed the checkbooks on the table. This lack of cooperation led the plaintiff and CPA Shipper to take the computers, documents and all the material that was in the offices of the joint business.
- In section 121 , the plaintiff detailed the damages caused to him, according to him, in the total amount of more than ILS 4,942,257, including loans he took in order to finance debts that were created (ILS 2,684,000); coverage of a debt balance in the bank (ILS 626,313); payment to third parties in the framework of settlement agreements in various proceedings (ILS 133,500); payment to car wash workers after the affair exploded (ILS 241,500); payments to suppliers after the affair exploded (ILS 179,648); payment to the tax authorities (ILS 88,509); equipment and materials taken by the defendants (with a value of ILS 233,079). In addition, he claimed expenses for consultants and legal proceedings in the amount of ILS 755,708; and non-pecuniary damages in the amount of ILS 600,000.
- The plaintiff referred to the findings of CPA Buchnik, which show how his damages were caused. According to him, the court's expert opinion showed that the defendants withdrew checks from his accounts in the amount of ILS 6,648,694, while depositing cash in the accounts in the amount of only ILS 2,258,122 (paragraph 46 of the Buchnik opinion); The income generated by the joint business during the period of the partnership is ILS 1,931,832 (paragraph 53 of the Buchnik opinion), while the scope of the gross profit for the aforementioned income in a normative car wash business is 20%-60% of the income (paragraph 55 of the Buchnik opinion), so that the plaintiff was supposed to have a gross profit in his accounts in the sum of between ILS 386,000 and ILS 1,160,000. This profit was withheld from the plaintiff due to the defendants' exploits. The plaintiff claims that it was proven that the defendants themselves withdrew cash from the account in the amount of ILS 178,131 (paragraph 46 of the Buchnik opinion) and used the business's credit cards for personal needs, in a total amount of ILS 62,967.
- The plaintiff referred to the findings of CPA Buchnik, which were detailed in paragraph 107 of the opinion (see the full quote in paragraph 11 above). Among other things, the expert determined that funds were taken from the business; that there is no correlation between the profit they presented in the balance sheets and the results of the actual joint activity; that funds were taken without proper invoices being issued; and that the scope of cancellations of 60% of the amount of reservations can indicate non-kosher activity. The plaintiff claims that the expert's findings are still doing the defendants a favor, since they did not relate to the later damages caused to him and were not included in the examination period.
- With regard to the defendants' claims (detailed below) regarding the falsification of data on behalf of the plaintiff and the experts on his behalf, the plaintiff denied any suspicion of forgery and insisted that the methodology applied for the purpose of retrieving the data was reliably carried out by expert professionals, and that this was necessary because Rami and Ofer consciously chose not to conduct an orderly and honest monitoring of the expenses of the business, in order to conceal their acts of theft.
- These acts, according to the plaintiff, amount to theft and fraud as defined respectively in sections 52 and 56 of the Torts Ordinance, and the plaintiff details in his summaries how, according to him, in the case before us, each of the elements required for the existence of these torts are met. Alternatively, it was claimed that Rami breached the duties imposed on him in accordance with sections 29, 33-34 and 53 of the Partnerships Ordinance [New Version], 5735-1975, and that Ofer was negligent towards Israel in accordance with sections 35-36 of the Torts Ordinance. The plaintiff insisted that the defendants had enriched themselves unlawfully in contravention of the Enrichment Law, 5739-1979, and even violated section 8 of the Courier Law, 5725-1965 and section 12(a) of the Trust Law, 5739-1979, since they used checks that he gave them in violation of authorization.
- In paragraphs 149-163 of his summaries, the plaintiff details why, according to him, there is no reason to attribute contributory fault to him in the series of events relating to the joint business. Plaintiff Eappealed to the precedent that states that "a person who has been robbed cannot claim contributory fault on the part of the stolen" (Civil Appeal 9178/12 Haifa Arab Academic College of Education v. Kheir (Nevo, September 24, 2015)); He stated that in any case he limited his claim to the sum of ILS 2.6 million, while the damage caused to him exceeded ILS 5 million; he claimed that the defendants did not prove that the plaintiff's actions constituted "contributory fault", since it cannot be assumed that even if he signed checks "on the part" and provided the access code to his account, he knew or was indifferent to the possibility that the defendants would steal his money. According to the plaintiff, the defendants acted deliberately and deliberately in order to steal his money, inter alia, to cover their personal debts, and therefore not only should he not be charged with contributory fault, but there is room to require punitive damages.
- The plaintiff claimed in his summaries (see part six) that "the defendants are two liars, whose testimony cannot be trusted in the cross-examinations" andthat heturned to the protocol to prove the contradictions and lies in which the defendants were caught, according to him. Thus, for example, with regard to Rami's status in the business (employee or partner), and the amount of his income; the question of Israel's guarantee for checks given to the withholding of checks; the question of the deducting entity; The question of his signature on P/7. The same is true in the Ofer case, and see the details in paragraphs 168-170 of the summaries.
- In order to complete the picture, I will note that the plaintiff also held various claims against the defendants with whom he compromised - the plaintiff claimed that Charlie assisted in the theft of the funds and even took an active part in it. He did this using the Barkat company, in which he de facto controlled and placed his mother Simon at its head as a "straw woman." The plaintiff claimed that this fraud was also joined by Michael, who helped Charlie deduct the checks and also stole money illegally. It was further claimed that Nitza and Shahar deceived the plaintiff and cooperated with Rami during their meeting with the plaintiff, while supporting the false data that he presented to the plaintiff (whether in fact or in silence). The plaintiff first settled with Nitza and Shahar for the sum of ILS 100,000, and then with the defendants Charlie, Barkat and Simon for the sum of ILS 400,000. The defendant Michael also joined the final settlement at a later stage, while agreeing to waive a counterclaim that he had previously filed. Therefore, the lawsuit remains pending against Rami and Ofer only.
Summary of Defendants 1 and 5's Arguments
- Defendants Treplied that this was a frivolous and troublesome lawsuit that was filed in blatant bad faith, with the aim of illegally extracting funds from them. According to them, the plaintiff tried to construct a narrative according to which he was an innocent and simple man, naïve and inexperienced, who had fallen victim to an act of sting and deception. However, according to them, this is a shrewd businessman, with extensive experience in business management (see the plaintiff's record, detailed in paragraph 19 of the defendants' summaries), who is well aware of "what is happening in his business and in his private invoices" and knowingly and consentingly signed the checks and gave approval for every move and action. According to the defendants, the only question that requires a decision is whether the actions carried out in the joint business were carried out with the knowledge and opinion of the plaintiff (as the defendants claim), or whether the plaintiff is a "puppet, a puppet on a string", as the court confronted him during his interrogation, and see p. 340 of the transcript, lines 1-4: "What happens there, you are responsible, for better or for worse. Have known a person for two months, sign the part of checks for him and don't follow and don't care about what's going on there? What are you a doll on a string? Marionette? Sign, bring, go, come to the bank, raise a loan, go open another account, transfer 400,000 shekels from your parents?". According to the defendants, if we reach the conclusion that the plaintiff did indeed know about the moves, then the required element of the tort of fraud and theft of "false representation" and reliance on those representations does not exist.
- In the question that the defendants place as a unit that requires a decision, the defendants claim that the plaintiff admitted that he knowingly signed 672 checks; received his bank statement statements on an ongoing basis; gave execution instructions in his accounts during the period of the joint business; was involved in the business activity in the field; and would come to the office every day, the same part with Ofer. In their view, this is sufficient to lead to the dismissal of the claim, and the question of whether or not there was a partnership between the parties is not relevant at all to the decision. Alternatively, the defendants claim that there was no partnership between the parties, inter alia because no partnership agreement was signed; The financial activity was conducted through only four bank accounts of the plaintiff; was presented to third parties that this was a private business of the plaintiff; And Rami did not bear the risk of the "joint business" that the plaintiff claiMs. The defendants further emphasize in paragraph 13 of their summaries that "in any event, a partnership between the parties could not arise for the simple reason that Rami was in bankruptcy at the relevant times and the plaintiff was aware of this and of his difficult financial situation that does not allow him to open bank accounts."
- This is the place to note that in their summaries the defendants chose not to repeat the main argument raised by Rami in his statement of defense and in the amended statement of defense, according to which "defendant 1 worked as an employee for the plaintiff and even received a pay slip, and there is no dispute that the plaintiff did not have any rivalry against defendant 1" (paragraph 1 of the statement of defense), as well as in paragraph 8B of the statement of defense: "The defendant was an employee and served as the plaintiff's employee on the relevant dates, in accordance with the pay slips issued for him". See also paragraphs 2 and 9 of Rami's affidavit, where he repeats his claim that he is an employee, and in paragraph 11 of the affidavit there, Rami says: "The plaintiff's agreement to assist me was based on the understanding that my experience in the field can contribute, in a significant way, to the prosperity of the plaintiff's business."
- In their summary, the defendants continued and answered that during the course of the proceeding, it was proven that the plaintiff and the experts on his behalf committed a criminal offense and caused false registration in corporate documents, by entering journal entries in Rami's card, in order to "tailor a file for him". All this is in addition to the testimony of the plaintiff with lies, evasions and contradictions, and the frequent response of "I don't remember." According to the defendants, the plaintiff's testimony is the sole testimony of a litigant, and the testimony of CPA Gaon and Schiffer should not be viewed as the "assistance" required by the ruling.
- As to the factual basis, defendants Treplied that in the middle of 2013 the plaintiff met with Rami in an attempt to create a kind of business cooperation (as opposed to a partnership), when the idea behind that cooperation was simple - the plaintiff tried to expand his existing business activity (the sale and marketing of cleaning materials), by establishing an additional activity of washing commercial vehicles, in which Rami had experience. As part of the cooperation, it was agreed that Rami would repay Rami's past debt to Nitza, in the sum of ILS 500,000, out of the receipts that were supposed to be received in the laundering business. In return, Rami was supposed to assist the plaintiff in the success of the new laundering business. The defendants noted that both parties had a clear and understandable interest in the success of the laundering business: Rami had an interest in the business being successful and profitable in order to repay his debt to Nitza from his receipts, and the plaintiff had an interest in the business succeeding because it was his business, which was operated through his authorized dealer.
- The defendants claimed that in the agreement entered into between the plaintiff, Rami and Nitza (Exhibit 131) it was written in "white kiddush letters" that the sum of ILS 500,000 that the plaintiff undertook to pay Nitza was for the repayment of Rami's debt to Nitza and that there was no mention in this agreement regarding the sale of activity or the purchase of a share in the partnership, as claimed by the plaintiff. According to the defendants, this claim of the plaintiff constitutes an oral argument against a written document. The defendants noted that at first the plaintiff concealed the existence of this agreement, and when confronted with its signature, he chose to claim that it was a fabricated and forged agreement (paragraph 29 of the plaintiff's affidavit), then he was forced to change his version and claimed that he apparently signed the agreement unconsciously, when he signed a host of other documents, a version that was denied, according to the defendants, also by Nitza in her testimony.
- Rami continued to deny the existence of a partnership between the parties. He did not deny that he had worked for years in the field of car washing, but insisted that he did not establish or manage an independent business under his own name, nor through third parties, neither through Sigalit nor through Nitza (see paragraph 25 of the summaries. However, as stated in paragraph 28 above, he abandoned the claim that he was an employee of the plaintiff). The defendants further emphasized that the plaintiff did not purchase a business or part of the partnership, and the fact that the plaintiff did not report such a purchase to the tax authorities and that not all of the customers declared by Rami (Appendix 3 to the plaintiff's affidavit) moved to the same alleged joint business (Appendix 5) - which indicates that no business activity was acquired.
- The defendants summarized the business structure andanswered: "This is a business opportunity, in which the plaintiff tried to expand his existing business activity (manufacturing and marketing of cleaning materials), and to add to it an additional area of activity (commercial washing of vehicles)." According to them, the plaintiff was aware of the risks and prospects of expanding his business activity and that he was operating the business under his authorized dealer and through his business accounts. Therefore, if at the end of the day he loses from this activity, it is at most a "mistake in the profitability of the transaction" and he has no choice but to complain about himself.
- With regard to the conduct of the business during the joint period, the defendants claimed that the plaintiff was personally entrusted with the financial management of the business; opened four bank accounts during this period; redeemed pension funds and transferred them to the account; bought cars for the business; personally went to the bank to receive loans; took a loan from relatives and flowed them into the business. According to the defendants' version, the court's expert also commented that it was unreasonable in my opinion that the plaintiff did not know what was happening in his accounts (p. 112, questions 17-18), and even the court was under the impression that the plaintiff was knowledgeable in accounting operations (p. 331, question 14). The defendants referred to the plaintiff's interrogation, in which he admitted, according to them, that he was aware of the daily activity of the business, the checks that were issued and the bank transfers (see the references in paragraph 61 of the summaries).
- Defendants Tanswered in their summaries that the use of the plaintiff's checks was authorized, and that it is presumed that the person who issued a note in which material details were missing gave the head to the holder to fill in the missing details. The defendants noted that this presumption would be concealed only if the denier in granting the permission proved that the details were not filled in in accordance with his request (Civil Appeal 434/63 Heruti v. Shoves, 14 18 403, 404 (1964); Civil Case (Tel Aviv-Yafo) 8094-06-14 OT Capital Modiin in Tax Appeal v. Tecom Top Communications Ltd., para. 14 of the judgment (Nevo, September 1, 2016). According to the defendants, the plaintiff did not meet the burden required to prove his claim that the use of the checks was contrary to the inspiration and purpose for which they were given (business expenses). Defendants Treplied that if the plaintiff wished to limit the authorization, it is presumed that he would not have given negotiable checks on the portion, but would have limited the checks "to the beneficiary only". In addition, the defendants replied that during the evidentiary proceeding, it became clear that the plaintiff himself had signed all the checks, 672 in number; had signed a number of checkbooks on different dates; and had authorized a clearing company to carry out check discounting (see his interrogation at p. 326, paras. 15-29).
- The defendants again referred to Ofer's testimony (see paragraphs 15-19 of his affidavit) according to which he worked transparently and under the supervision of the plaintiff, so that every action in the business was done with his approval. As part of this supervision, the plaintiff was given a daily report for all the orders and all the payments to be paid, and the two even reviewed the current account transactions in the business's bank accounts, which were under the sole supervision of the plaintiff. According to them, it is unacceptable that the plaintiff was not aware of the financial transactions in his account for nine months, and therefore any claim of theft or unlawful enrichment should be dismissed from his shares.
- With regard to the court's expert opinion, the defendants did not contradict his findings that the financial deficit of the business was ILS 2.6 million; that invoices in the amount of ILS 2.8 million were canceled and that there was a difference of ILS 3 million between the checks drawn from the bank accounts and the cash deposited. However, according to them, the expert did not determine who took money from the business (see also what is stated in chapter E3 of the defendants' summaries). In this regard , the defendants pointed out that it was precisely the plaintiff who ordered the cancellation of the invoices, after the goal of "inflating" the activity towards the banks was achieved (see chapter E1 of the summaries), and this pattern of action continued even after the defendants left the business.
- The defendants further argued in their summaries that no reliance should be placed on the records of CPA Schiffer, the opinion of Browder, and as a result of this also the opinion of Buchnik, since it was discovered that the plaintiff and the experts on his behalf forged records in the books of the business after they took the movables from the business on the night of March 23, 2014. According to them, the addition of the data was done through the account manager Masha Rickshpon (hereinafter: "Masha"), who was not brought to testify, while receiving instructions from the plaintiff on how to record the data, with the aim of "tailoring" a file for the defendants (chapter E2 of the defendants' summaries).
- According to the defendants, the plaintiff's testimony, which was inconsistent, full of contradictions and inaccuracies, should not be trusted; He should be credited with not bringing the testimony of Grunler, through which the agreement between the plaintiff and Rami Venitza was made; as well as the fact that he refrained from testifying with Masha, Dorit (the bookkeeper in the business at the relevant time), Sigalit, and the customers and suppliers of the business, from whom it was possible to learn about the plaintiff's control of the car wash business.
- The defendants further argued that the plaintiff did not prove the causes of action or the extent of the damages claimed; at most, this is a mistake in the profitability of the transaction and a loss-making transaction into which the plaintiff entered. The defendants concluded and argued, in paragraph 130 of their summaries, as follows:
"Even if the plaintiff succeeded in convincing about the narrative he tried to present, and even if one can get the impression that Rami and Ofer are 'atypical,' 'tricky' or even 'bad' people, this does not lead to the conclusion that they deceived and deceived the plaintiff. Even if the plaintiff succeeded in portraying Rami and Ofer in a negative light, the basic question arises - was the plaintiff really a victim of an act of fraud and deception by Rami and Ofer? Is the plaintiff really an innocent, inexperienced person who was a puppet and carried out what Rami and Ofer told him to be holy and holy? Did the plaintiff prove that Rami and Ofer stole money from him illegally? Did Rami and Ofer perform actions without the plaintiff's knowledge and deviated from the authorization to use the checks that the plaintiff gave them "on the portion"? Did the plaintiff succeed in proving, at the required level, the causes of action? The answer to all these questions is no."