And as for the tort of causing breach of contract, the directors cannot be held liable for it. They had full justification for entering into an engagement with the Dayan Group, in light of Mr. Knepfler's conduct and his failure to meet his obligations in accordance with the agreement. In any event, the director's action is the company's, and Mr. Knepfler's relevant litigant is the company. An exception to this rule is when it is proven that the officer actively acted to mislead or deceive the plaintiff, and this was not proven here.
- The focus of the lawsuit is a company that was in severe cash flow distress. All the actions taken by the directors were intended to improve her situation against the background of her distress, to steer her to safety, and to prevent her collapse. They exercised independent judgment. Therefore, the claim of negligence raised by Mr. Knepler should be rejected even in light of the business judgment rule. This rule also applies as protection against third parties, and not only in relation to the company. In the circumstances of the case, the directors acted in good faith, and their decisions were made in an informed manner. They should not have been familiar with every detail of the transaction, and the counter-plaintiff seeks to impose on them an unrealistic business standard.
- Knepfler's arguments regarding the alleged misrepresentations made to him must be rejected. His testimony should not be trusted, when he changed his versions. At first, he claimed that he had entered into an agreement with the company based on a representation that the expected income of the French company would generate a free cash flow of about 1.7 million euros. Afterwards, the amounts were changed and even reached 600,000 euros. He tried to hide the fact that the Tamir-Fishman Fund opposed the deal after examining ADN's public economic data. In any event, the claim of misrepresentations raised by the counter-plaintiff also collapsed, after it became clear that the various representations were accurate. Mr. Knepfler, on the other hand, did not conduct a single serious examination before moving forward with the deal. The "forecast" document on which he relied was not binding, and even the data in it was accurate.
As for the directors, they did not make false representations to Mr. Knepfler. The forecast document was not prepared by any of them, not approved by them, and was not transmitted to them through them. In any event, the counter-plaintiff presented contradictory factual versions regarding what was stated in the forecast document, and hence his claim that he relied on it is unreliable. Mr. Knafler even admitted in the course of his interrogation at the hearing of the injunction that he was presented with cash flow within the range discussed by the company's board of directors, and hence the infrastructure underlying the transaction was accurate and not misleading. The commercial conditions, which could affect the rental status of the properties in France, were also known to Mr. Knefler, as these appeared in the company's reports.