The factual picture that emerges in Ancona's case is as follows: Although Ancona was well aware that Fine was an agent of Debreth, the first e-mail gave the impression that he was working for a corporation that was involved in the business. This could also be deduced from Fine's later statements in the emails he sent ("We have") and the way he phrased it. Ancona did not contact Debret directly or speak to him. It was Fine who gave him all the information about the economic venture. He also passed on to Ancona the brochures that Debreth had sent him, which included statements about collateral. In retrospect, it turns out that these statements did not reflect the state of affairs as it was. The prospectus did not name Fine as one of the project developers, but this does not rule out an understanding that he has any role in the corporation. Ancona did not tell Payne that he intended to consult a lawyer, and from the correspondence between the two, it appeared that he had no intention of doing so. Therefore, Fine cannot claim that he is exempt from the application of the tort because he expected Ancona to consult with an attorney on his behalf.
- Ancona's understanding that Fine held a position in the company was predicted to be reasonable in the circumstances. Ancona did not talk to Debreth, and this was known to Paine. This has a double meaning: Fine cannot claim that the causal connection has been severed due to the expectation that Ancona will talk to Debreth; And in examining the question of whether he was negligent, one must take into account the fact that he knew that he was the only representative through whom the details were brought before Ancona. Hence, in the context of Ancona's lawsuit, the question of whether Fine was negligent when he did not act to conduct an in-depth examination of the representations made towards Ancona becomes clearer.
- I will note that the fact that Ancona did not consult with an Israeli lawyer regarding his investment in the business venture has real significance for the discussion of the issue of contributory fault: Ancona chose not to do so, even though Fine offered to provide him with the names of English-speaking Israeli lawyers who specialize in TAMA 38. He also did not contact the business venture's law firm, whose name and phone number were listed in the brochure. He consulted with his lawyer, who specializes in real estate transactions, but did not report this until his cross-examination. In any case, it is impossible to know whether the conversation with the lawyer was indeed focused only on the loan agreement or whether his lawyer, who claimed that the issue was outside his jurisdiction, advised him to consult with an attorney in Israel. All this while Ancona clarifies that he does not invest in real estate transactions without verifying that there is collateral.
- From the above, it emerges that there is a real difference between the nature of the relationship between Fine and Ancona and that between him and Corey and Guyot. Fine's knowledge that Ancona had not met with Debrett and that he likely relied exclusively on the representations he had made before him, coupled with the possible understanding of the way he had presented himself to Ancona, imposed a more significant duty on him than he had in the relationship between him and the other plaintiffs. Nevertheless, I have reached the conclusion that there is no reason to charge Fine for the results of the misrepresentation. This is for reasons relating to the lack of feasibility of discovering the "suspicious facts" and the legal result derived from it.
- It was clarified above that the assumption that Fine was able to discover the facts relating to the financial difficulty in which the projects encountered is not reasonable. Hence, even if Payne had been obligated to examine the status of the projects in more depth than he did - and I am not convinced that this is the case - it can be assumed that his findings would not have led to a different presentation regarding the chances of success of the business venture. At the end of the hearing on this factual issue, it was determined that it would be sufficient to undermine the claims of all the plaintiffs, including Ancona, regarding the representations surrounding the chances and risks inherent in the provision of loans for investment in projects.
- All that remains is to examine whether the same conclusion applies with regard to the statement in the prospectus that collateral will be provided to secure the lenders' money. This argument requires discussion only in the context of Ancona, since the other plaintiffs were not provided with prospectus that included such a representation in real time.
In this context, it should be clarified that Ancona's claim that the two discussed the issue of collateral was not raised in the statement of claim and is not anchored in external evidence. The correspondence between the two, both by email and WhatsApp, did not address this issue. It is difficult to reconcile the claim that a subject that was so important to Ancona - according to his version in the affidavit and in his testimony - was completely omitted from the correspondence. This significantly erodes the assumption that the representation in this context, which is rooted only in a general statement in the prospectus, is what motivated Clal to provide a loan to the economic venture.
- An examination of the prospectus shows that it does not say that a warning note or mortgage will be recorded. The expressions used are quite generic. The reference in both prospectuses is to "security/collateral", a phrase that means security for an asset in the broad sense (including an intangible asset); and statements relating to the provision of "lien", a phrase that generally relates to the right of lien (see in detail Judgment on Other Municipal Applications (Jerusalem) 61847-12-23 Cohen v. Zizi, dated June 30, 2024) and also - regarding rights in the new apartments when they are built. An attempt to conduct an independent examination of whether such collateral was registered requires not only legal understanding and knowledge, but also contact with quite a few possible bodies. If Fine had been a lawyer examining the prospectus on behalf of his client, it may have been appropriate to determine that he is obligated to clarify this issue to the fullest. But Fine is not a lawyer. He also did not act as a real estate broker in the framework of the transaction (and I do not come to put any doubts in the question of whether a real estate broker is obligated to examine the legal status of the property, and if so, what checks he is required to perform). Therefore, he was not obligated to carry out a comprehensive examination of possible collateral for the property, which, as stated, it seems that it was not easy to carry out.
- Indeed, there was no reason to prevent Fine from asking a question in this regard to Devrett. It is possible - and it can even be assumed - that this would have appeased him, either by means of a claim of the kind raised by Fine's counsel (according to which there was no need to register collateral until a later stage of the works) or in some other way. It should be remembered that at this stage there was a relationship of trust between Payne and Debreth. However, there is no need to elaborate on this. In practice, it has not been proven that the issue arose in the discourse between Ancona and Payne. It was raised in the margins and in a different context in the statement of claim, and became a central argument in the affidavits. The real-time correspondence apparently indicates that Ancona did not ask about the existence of collateral, and certainly did not receive a misleading answer from Payne. In these circumstances, it cannot be said that negligence should be attributed to Payne due to the very fact that Payne gave Ancona a prospectus - quite long and detailed - in which a general statement about safety was also included.
- What is higher than all of this is that I do not believe that it should be determined that there was negligence in Fine's conduct towards Ancona. The representations he made before Ancona matched his actual knowledge and what he might have known if he had acted for a deeper investigation; He was not obligated to carry out an in-depth investigation into every detail relating to the projects, especially when it did not come up in the discourse between the two.
Needless to say, the claim against Fine in this context would not have arisen at all if Ancona had approached an Israeli lawyer, as proposed, and asked him to conduct a comprehensive examination of the projects. Refraining from contacting a lawyer does not necessarily imply that residual liability can be imposed on another intermediate party.
- If it were possible to reach the conclusion that Fine is liable to Ancona because of the representation, there would be room to attribute to Ancona a very significant contributory fault. As noted, Ancona claimed that he was not entering into a real estate investment transaction without verifying that it was secured to guarantee his rights. Nevertheless, he did not act to examine this matter in this case; He refrained from hiring the services of a lawyer specializing in such transactions, even though Fine offered to give him the names of suitable lawyers; And he did not even contact the lawyers accompanying the projects. In this context, Ancona would have prevented the cheaper and more effective damage. In this totality, there was room to attribute contributory fault at the rate of 40%.
Interim Summary
- In view of all of the above, the plaintiffs' claim against Debret is accepted. The claim of each of the plaintiffs' groups against Fine is dismissed.
The Relief in the Lawsuit Against Debret
- Corey did not present evidence that she intended to invest the funds in one specific investment channel or another. Therefore, Debret must be obligated to return the investment amount in the amount of ILS 400,000, together with linkage differences and interest as required by law from March 9, 2020 (the date of the second investment) until the date of actual payment.
- In the statement of claim, Ancona and Giyot claimed a higher loss, which concerned that they intended to use the money for investment purposes in the United States, which yielded a higher profit than the increase in the indexation rate and interest rates in Israel. Evidence attesting to this effect was attached to their affidavits (Appendices 14-17 to Ancona's affidavit; Appendices 9-12 to plaintiff 3's affidavit; Appendices 8-9 to Giot's affidavit). Ancona claimed in the statement of claim that they should be awarded the sum of ILS 1,412,000 as of the date of filing the claim. Gyut claimed that he should be awarded the sum of ILS 990,000 as of the date of filing the statement of claim. It goes without saying that the plaintiffs are bound by the sums in the statement of claim, which have not been corrected.
- The case law surrounding the tort of negligent misrepresentation was of the opinion, at the outset, that when damage was caused to a person who entered into an agreement as a result of negligent misrepresentation, he was entitled to compensation according to the alternative contract in which he could have entered into it (Zelsky Rule, at p. 85; Civil Appeal Authority 378/96 Weinblatt v. Bornstein, IsrSC 55 (3) 247, 258 (2000), but see ibid., at p. 261; Civil Appeal 153/04 Rubinovich v. Rosenbaum, dated February 6, 2006, in paragraph 7(4) of the judgment of the Honorable Justice (as he was then called) Rubinstein). According to this approach, the compensation is for the harm to the reliance interest, and it is intended to place the injured party in the situation he would have been in had the representation not been made, and not in the situation in which he would have been in the situation in which the reality described by the representation would have been correct (Civil Appeal 8361/09 Delta for Investments and Commerce (Karnei Shomron) in Tax Appeal v. Commander of IDF Forces in Judea and Samaria, dated August 16, 2012, at paragraph 28 of the judgment). The determination granting compensation for the possibility of entering into an alternative contract raises considerable theoretical difficulty (see, for example, Civil Appeal 4948/13 Harkabi v. Avni, dated March 15, 2015, at paragraphs 36-39 of the judgment, hereinafter: the Harkabi ruling; for the lack of entitlement to subsistence compensation in this situation, see the Harkabi ruling, at paragraphs 27-35 of the judgment, and compare Civil Appeal 3496/13 Paldom Feingold Metals v. Gizelter, dated November 12, 2015, in paragraph 34 of the judgment; For possible compensation routes, see Civil Appeal 2274/21 Mor v. Elad Israel Residences Ltd., dated January 1, 2023, at paragraphs 121-125 of the judgment of the Honorable Justice Stein, hereinafter: the Mor Rule). Assuming that there is an entitlement in principle to compensation due to the loss of the alternative opportunity, then the burden of proving it is at least a "regular" burden (the majority opinion in the Rubinowitz case, supra; for the difficulties of proof and the possible scenarios, see the Harkabi ruling, in paragraphs 37 and 39 of the judgment; for the need to prove the alternative scenario in the balance of probabilities, see the Mor ruling, at paragraph 123 of the judgment).
- Since Debret chose not to defend himself, and when Ancona and Guyot presented fairly convincing evidence of the profit they could have made in the alternative investment channel in which other funds were invested, I came to the conclusion that they should be awarded compensation as required by the statement of claim. These amounts will be accompanied by linkage differentials and interest as required by law from the date of filing the statement of claim until the date of actual payment.
- I do not believe that there is room for a non-pecuniary compensation award in the context of the relationship between the plaintiffs and Debrett. The pecuniary damage caused to the plaintiffs is corrected within the framework of the amount awarded to them, and the mere fact that the investment did not pay off well - contrary to Debratt's own interest - does not justify awarding non-pecuniary compensation.
Conclusion
- The plaintiffs' claim against Debret is accepted. Debret must pay plaintiff 1 the sum of ILS 400,000, together with linkage differentials and interest in accordance with the law, from March 9, 2020 until the date of actual payment. He must pay plaintiffs 2-4 (the Ancona brothers and the company they own, from whose account the loan money was transferred) the sum of ILS 1,412,000, together with linkage differentials and interest from the date of filing the claim until the date of actual payment. Debret must pay plaintiffs 5-6 (Giot and the company he owns, from whose account the loan money was derived) the sum of ILS 990,000, together with linkage differentials and interest from the date of filing the claim until the date of actual payment. In addition, Debret will bear the plaintiffs' expenses as well as their attorney's fees in the total amount of ILS 140,000.
The plaintiffs' lawsuit against Fine is dismissed. Nevertheless, and in view of all the events described above, I will not make an order for costs between these parties.