Another aspect of this determination is the exclusion of liability when the creator of the representation expected that an interim examination would be conducted by the recipient of the opinion or another on his behalf. For this reason, the liability was waived in the Weinstein Rule (Weinstein Rule, at pp. 1345-1347). This limitation on the imposition of liability has been repeated in case law (see, for example, Civil Appeal 451/66 Kornfeld v. Shmuelov, IsrSC 21(1) 310, 322-324 (1967); Amidar ruling, at pp. 356-357; Ilanko ruling, at pp. 208-209; Elbit ruling, at p. 796). It seems that these determinations are within the scope of an individual aspect of the expectation test, which is the test of the legal causal connection that applies within the definitions of the tort of negligence, in which the tort of negligent representation was cast. Hence, in the framework of the discussion of the application of liability by virtue of negligent misrepresentation, it must be determined whether the creator of the representation should have expected that the recipient of the representation would act in accordance with it (cf. Civil Appeal 3862/04 Petah Tikva Municipality v. Nakar, dated February 13, 2008, at paragraph 15 of the judgment; Civil Appeal 2413/06 Caspi Rajwan Towers v. Jerusalem Local Planning and Building Committee, dated November 10, 2009, at paragraph 35 of the judgment; Civil Appeal 666/09 Israel Discount Bank in Tax Appeal v. Maariv - Modiin Publishing Ltd., dated July 19, 2011, at paragraph 12 of the judgment).
- It goes without saying that in the framework of negligent misrepresentation, it must be proven that the tortfeasor was negligent. The standard of negligence with respect to the tort of negligent misrepresentation is no different from that which applies in the tort of negligence. This is about imposing an obligation on every person to act as a "reasonable and prudent person" in the circumstances of the case (section 35 of the Torts Ordinance [New Version]). When examining the proper standard of the conduct of a person who is alleged to have wronged his fellow man in the course of his activity as a professional, the reasonableness of his actions must be examined in accordance with what is customary in the relevant professional field. However, Fine's profession has not been clearly defined, and the case law does not deal extensively with the duties imposed on a person who advises on investment matters outside the framework of the definition in the provisions of the law dealing with advice. Therefore, his actions must be examined in accordance with the general standards that apply to negligence, while adapting to the circumstances of the case. In this case, there appears to be a back-and-forth between Payne's expectation that his listeners would rely on his presentation - which was almost non-existent in his relationship with Corey and Guyot since they had examined the details of the matter with Devret - and the standard of conduct by which his behavior would be tested. These will be weighed in accordance with the balance that must be struck between the interest of the injured party - in which the severity of the injury to him and the probability of the realization of that injury must be examined; the interest of the tortfeasor - which requires an examination of the cost of the resources and means required to prevent the risk; and the public interest - which examines the social importance of the risk-creating activity (see, for example only, Civil Appeal 971/03 Avner Baga v. Eli Malul, dated November 10, 2005, paragraph 12 of the judgment of Justice (as described at the time) Hayut; Civil Appeal 3124/90 Sabag v. Amsalem, IsrSC 49(1) 102, 107-108 (1995); Civil Appeal 4025/91 Zvi v. Kroll, IsrSC 50(3) 784, 790 (1996); Civil Appeal 5604/94 Hemed v. State of Israel, IsrSC 58(2) 498, 509 (2004), hereinafter: the Hemed Rule; and many others).
In this context, it should be added that "'reasonableness' is a vague concept. Its power lies in its flexibility and in its adaptation to the changing circumstances of life, which the human ability to anticipate in advance is always limited" (Civil Appeal 3889/00 Lerner v. State of Israel, IsrSC 56 (4) 304, 313 (2002)); Civil Appeal 10083/04 Godder v. Modi'im Regional Council, dated September 15, 2005, in paragraph 12 of the judgment of Justice (as he was then called) Rivlin). It was further held that "the reasonableness of the tortfeasor's conduct is always examined according to the data available at the time of the occurrence, and not in the after-fact" (Civil Appeal 3580/06 Estate of the late Hagai Yosef v. State of Israel, March 21, 2011, at paragraphs 84-85 of the judgment; See also the Hemed ruling, at p. 507; Civil Appeal 9656/08 State of Israel v. Saidi, dated December 15, 2011, at paragraph 29 of the judgment).
- On the basis of all of this, the individual claims of Fine's liability towards each of the plaintiffs will be discussed below. This hearing will give expression to the linguistic difference between the nature of the acquaintance and the strength of the representation between the two groups of plaintiffs (Corrie and Guyut on the one hand and Ancona on the other), as well as the similarity between them regarding the question of the feasibility and expectation of conducting a factual inquiry regarding the representations that are the subject of the lawsuit.
- Fine Liability - Individual Discussion
- The plaintiffs all claim that Payne's captivating personality and descriptions of the low level of risk and guaranteed profitability led them to enter into a loan agreement with the Shop Corporation for the business venture. This argument raises difficulties, some of which are common to all plaintiffs. Since the plaintiffs chose to join their claims together, even though each of them is based on a slightly different factual system, it will be necessary to address the relevant difference as well. I will make it clear by now that the most fundamental difference relates to the fact that Corey and Guyot met with Debrat through Fine's mediation, and had a discussion with him regarding the proposed investments. In any case, Fine's role can be seen as of secondary importance in the decision regarding the investment. At the very least, it should be determined that he was entitled to assume that Debret would provide them with all the relevant information, and that he was not obligated to investigate comprehensively. The situation is different in the case of Ancona, who did not meet with Debret and did not have a dialogue with him.
The discussion below will begin with the factual issue, which is common to all the plaintiffs, which concerns the question of whether Fine could have disclosed the suspicious information even if he had acted for a very comprehensive investigation. It should be noted that such an inquiry is predicted to deviate from any reasonable standard that should be imposed on a person who presents a possible investment before a client. Afterwards, a detailed hearing will be held on the matter of the various plaintiffs.
- The Factual Feasibility of Discovering the Status of the Projects
- The plaintiffs all attribute fraudulent intent to Debreth. However, if Debret did act with the intention of deceiving, there is an inherent difficulty in assuming that he would have disclosed to Fine the full contractual agreements relating to the project. Even if these documents had been exposed before Fine, it can be assumed that Debret would have given him explanations identical to those he gave in retrospect, according to which the status of the projects was excellent; The corporation took upon itself their management to ensure their success; Construction in the ongoing project is underway; The rest of the projects are about to yield significant profits. It is possible that Debreth even believed in the content of these statements. It does not appear that Fine would have been able to refute such explanations without a comprehensive accounting and professional investigation, which undoubtedly exceeds what was expected of him.
- The WhatsApp correspondence between Fine and Debert indicates that Fine acted with due caution. Even before the date on which the plaintiffs lent their money to the business venture, he asked Debret for documents relating to the project and even received them. Thus, from the exchange of messages on June 17, 2018, it appears that Fine asked Debret for the agreements signed between Schopp and Schopenhauer, and Debreth sent them to him. The notice dated January 2, 2019 indicates that apparently the appraiser's zero report was also forwarded for his review. These facts are significant in terms of Fine's compliance with the standard of reasonable conduct expected of an investment advisor. A review of these documents should have strengthened Payne's positive impression of the business venture. The original agreement between Shofet and Schopenhauer, which only existed in June 2018, attested to an orderly and serious engagement, and should not have aroused any suspicion regarding the possibility of the success of the projects. The zero report - mentioned above - included the appraiser's conclusion that the Matmid project should yield a profit of ILS 4,200,000. The sunken costs that Debreth and Kestenbaum knew about were not included in the appraiser's report. This fact was discovered only after a more comprehensive and professional examination of the trustee in the liquidation case. Hence, after Fine's review of those documents, he should have strengthened his opinion that these were projects with a high chance of success.
- As noted, Kestenbaum's testimony showed that he and Debret were aware of the existence of costs embedded in the constant project. It seems that the assumption that Debreth would have disclosed to Fine about these difficulties is unreasonable. As a matter of fact, he did not do so. At least no evidence was presented that this was done; And Payne did not say anything about this in a statement referring to the zero report.
It is not superfluous to note that according to the plaintiffs, they were tempted to invest in projects because they encountered financial difficulties and the owner of the corporation needed external investments. Assuming - unproven - that this was the motive behind Debreth's action, he had a clear negative incentive not to reveal Fine's ear regarding difficulties that are not expressed in the Bible.