Civil Case (Tel Aviv) 44767-04-14 Israel Alhalal v. Rami Geva Mikulitsky - part 6

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And second, the parallel question is, what about incentivizing thieves? Suppose that a thief will see a safe that is not his, open to the public due to the negligence of its owner; Would we want to incentivize him to storm it with determination, knowing that he would be able to keep some of the stolen assets in his hands in the face of some contributory fault of its owners? Perhaps he will be able to leave in his hands jewelry that has been inherited through the generations? Or the first edition of a cultural summit that was priceless, all because of our desire to send a message to property owners to lock their safes? I don't think that's what our legal system is aimed at or should aim for."

83. There is no denying that proper caution and the necessary vigilance on the part of the plaintiff could have prevented, at least some of the damage. This is especially true where I do not attribute to the plaintiff the status of a person "naïve to the extreme", as he tries to argue in his summaries (paragraph 2 of the plaintiff's summaries).  However, acknowledging contributory fault in the tort of theft means providing an incentive to steal, with all that this entails.  On the face of it, the opinion has already been voiced in the Supreme Court's ruling, according to which in any case there is no room to recognize this defense in the tort of theft, and see the words of Justice Englard (Civil Appeal 3656/99 Transclal in Tax Appeal v.  A.R.  Trade and Shipping Ltd., IsrSC 56(2) 344, 361-362 (2001)):

"It is highly doubtful in my opinion that in the circumstances of the case in question, a claim of self-fault will be heard from the thief at all, directed at the robber.  An example of what this is like: according to a thief's claim that the thief did not properly guard his assets and thus allowed him to steal and therefore the obligation to pay compensation on his face should be reduced."

84. Therefore, in the circumstances of the case, I did not find room to impose on the plaintiff contributory fault for the act of stealing his money from his own accounts. At the same time, I will reiterate that this conclusion is valid only on the level of the relationship between the plaintiff and the defendants, who acted contrary to the internal authorization he gave them.  This is different for all of us: the checks were signed by the plaintiff himself and were not forged; The third party who holds the check has nothing to do with that authorization and towards third parties the plaintiff bears liability, here he bears the consequences of his failures in supervising what is done in his accounts, and see also what is stated in sections 92-93 below.

The extent of the damage

85. In paragraph 18 above, I reviewed the heads of damage listed by the plaintiff in his summaries, and according to him, the direct and indirect damage caused to him by the defendants' actions is more than ILS 5 million, and the final scope has not yet been clarified, since there may be additional checks "outside". For reasons of fees, the plaintiff based his claim on a total sum of 2.ILS 7 million, plus legal expenses.  It should be remembered that during the course of the proceeding, the plaintiff signed settlement agreements with some of the defendants and received a sum of ILS 500,000.  Therefore, this amount must be deducted from the amount of the claim.  Was this amount of damage proven by the plaintiff? I have come to the conclusion that this question should be answered in the affirmative.
86. As may be recalled, in order to trace the (many) actions carried out in the plaintiff's accounts, I appointed CPA Buchnik, who is an expert in the field of investigation and auditing, see the quotes from the appointment decision in paragraphs 9-10 above. CPA Buchnik submitted a detailed opinion, the conclusions of which are quoted in paragraph 11 above.  The rule is that it is not easy for a court to invalidate the opinion of an expert on its behalf.  The opinion will be disqualified only in cases where it has a defect that goes to the root of the matter or is capable of causing a miscarriage of justice, all while taking into account the good faith of the expert, his ability to correct the mistake and the circumstances of the case (see Various Many: Civil Appeals Authority 7714/05 Cohen v.  Haifa Port Ports and Railways Authority (Nevo 16.1.2006); Civil Appeal Authority 7323/11 Vaknin v.  The Israeli Database of Car Insurance (Bepool) Ltd., para.  6 (Nevo 28.12.2011)).  The matter before me does not fall within the scope of these cases.
87. As clarified, the court's expert found that the business had "a financial deficit of at least ILS 2,627,284, which indicates that money was taken from the business. This conclusion is supported by the loss of the business during the relevant period in the amount of ILS 2,695,387, the cancellation of invoices in the amount of ILS 2,880,010 and the difference between checks drawn from the bank accounts and the cash deposited, in the amount of ILS 3,026,724, during the relevant period" (paragraph 107(b) of the Buchnik opinion).
88. CPA Buchnik was even asked about the meaning of these words in his interrogation before the attorney general, and he clarified them in an unambiguous manner (p. 107, paras.  6-25):
89. I would like to read you one of your main conclusions from the summary chapter of the opinion, 107/B (...) All of this actually points to money taken from the business in the sums of ILS 2.6-3 million. Now for all these gaps between ILS 2.6 million and ILS 3, that means it's money that you didn't have accounting references to explain this gap, right?
90. It is funds taken from the account without any basis.
91. They have no explanation.
92. That's right.
93. That is, for the sake of the matter, once again and again they don't say who, someone or someone took money from this account, that's what you're saying simply. Exactly.
94. Yes. That's what it says (my emphases).
95. CPA Buchnik also noted this conclusion during his interrogation by counsel for defendants 1 and 5, and clarified once again that the data support this conclusion (p. 127, questions 8-14; p.  128, questions 6-13):
96. I conclude with paragraph 109/b of the opinion, which is in fact the section of the main finding of the opinion. You note there that the cash flow analysis of the business's bank accounts that I conducted indicates a financial deficit of at least ILS 2.6 million, and then your conclusion is that it indicates that it [indicated] taking money from the business.
97. Yes.

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1. Now, after you have heard and presented other theses (...) your conclusion that the fiscal deficit (...) necessarily indicates the taking of money, can't it point to other things that we said earlier?
2. First of all, no. These funds are missing.  The finances, the financial analysis here-
3. So there may be a loss for the business.
4. There may be a loss, but all the characteristics of the business's pattern of activity are that money went out and was not used for the benefit of the business.
5. That's because there are no references.
6. That's right. (my emphases).
7. Indeed, counsel for the defendants argued in his summaries that those deficiencies indicate that the business was "loss-making", and at most the plaintiff "erred in the feasibility of the transaction". I do not accept this argument and the evidence presented to me is more consistent with the conclusion that funds in the scope indicated by the court's expert were taken for needs that are foreign to the joint business and do not constitute a business loss.  First, as stated, this is a pattern of conduct that has been proven before me, see paragraphs 49-51 above; Second, the income generated by the joint business during the period of the partnership was 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 revenues (paragraph 55 of the Buchnik opinion).  It is illogical to me that the expenses of such a business were about ILS 4.5 million, over a period of 9 months, so that all the income was wiped out and a "hole" of ILS 2.6 million was created.
8. Third, it is sufficient to review the endless list of checks that were scattered; the parties who received the checks; the absence of invoices for a significant part of them; the fact that Rami was bankrupt, with all that this entails; the personal uses made of the credit cards; and the words of the expert, CPA Buchnik, mentioned above. All of these together indicate, at the level of proof required in the civil proceeding, that the defendants used the business's funds other than its purposes, at least in the amount indicated by an expert in court.  This sum alone supports the amount of the claim (2.ILS 7 million) and does not require additional calculations.
9. I will clarify that as I noted above, this lawsuit focuses on the relationship between the plaintiff and Rami and Ofer, and in the framework I found room to obligate these defendants to return the theft from the business funds. At the same time, it is not possible to accept the plaintiff's request to declare the checks signed before third parties null and void, even if some of them were given not for the purposes of the joint business.  The plaintiff signed the checks "on the part", which Rami distributed as he saw fit.  As long as it is not proven otherwise, the third parties are in good standing, and their right cannot be deprived only because of the plaintiff's negligence, which was expressed, among other things, in a lack of supervision and an almost blind approach to what was done, and in his words (p.  340, paras.  9-10): "At the height of my innocence and at the height of my stupidity, I did not check and trust them, and later in retrospect I realized that this was the mistake I made."
10. In this context, I refer to the similar decision of Judge Yemini in Civil Case 50814-06-15 Yad Global Automotive in a Tax Appeal vs. Geva Point in a Tax Appeal (Nevo 21.12.2017), where Sigalit was charged with the business's debts to third parties.  What was said in verse 26 by Justice Yemini is also relevant to our case, with the necessary changes:

"In view of all that has been written so far, I am of the opinion that defendant 2 managed the company in a manner that is capable of defrauding a person or depriving a creditor of the company and in a manner that harms the purpose of the company and while taking an unreasonable risk as to its ability to repay its debts, while being aware of such use (...) In light of this determination, I am of the opinion that the veil of evaporation between the company and defendant 2 should be lifted, and the company's debts should be attributed to defendant 2."