If the claim against the directors is dismissed, the directors petitioned for the possibility of submitting references regarding the amount of expenses they incurred and for which Mr. Knepfler should be liable.
The main answer of Mr. Knepler
- The directors' claims are not supported by the evidence. This material indicates that these are people who do not check data, do not ask questions, make decisions without basis, and act as a tool in the hands of Mr. Nehemiah.
- Both Mr. Knepfler and Mr. Lorenzi confirmed that ADN was entitled to seek an additional investor, but only in relation to the balance of its rights in the French company, and subject to Mr. Knepfler's rights to distribute 80% of the current flow. If the transaction with the Dayan Group had been made subject to Mr. Knepfler's rights in the original agreement, he would not have had a claim on the matter, as opposed to his claims regarding the misrepresentations. The directors led to the company selling rights that included those that had previously been sold to Mr. Knefler, and therefore a counter-transaction arose. His rights in the future income stream were not taken into account. The need to address him arose only after Mr. Knepfler approached the Board of Directors on his own initiative, and only then did the Board of Directors advise on how to get out of his negligent actions, and the solution found was to aggravate the breach vis-à-vis Mr. Knepfler by way of unlawful sending of a cancellation notice.
- Nehemia also tries to conceal in his summaries the significance of a huge debt that existed to the property management company in France. The management fees collected from the tenants were taken out of the property companies for other uses of ADN, and all of this was not disclosed to the counter-plaintiff.
- Knepfler does not, of course, deny at all the separate legal personality of the company, or that personal liability of officers for their actions and omissions is the exception and not the rule. Still, Israeli law does not grant immunity to officers of a corporation.
It is clear that Mr. Nehemiah was the living spirit in the entire conduct, and he must be held personally accountable. And the conduct of the directors, including in light of their serious failures, justifies imposing liability on them. It is certainly possible to impose a duty of care on them towards third parties as well, and this is the appropriate case for this. They approved a transaction in which Mr. Nehemia had a personal interest, paid him at the expense of the company's empty coffers, made it impossible to return to Mr. Knepfler, and did not ensure that the trust funds in the contrary transaction would be deposited in the hands of the trustee, who was not appointed at all. In the circumstances that have been proven, they also do not have the protection of the business judgment rule. The dominant director was Mr. Nehemiah, and his conduct stained the entire board of directors. His prominent personal interest stains the entirety of the decisions made in his favor. The liability of the defendants in torts was therefore established both by virtue of the tort of negligence and by virtue of the tort of causing breach of contract.
- Moreover, there is no substance to the claim that Mr. Knepfler was not presented with false representations. The defendants claim that there was an As Is transaction, but this matter does not exempt them from the obligation to disclose economic data that showed that the company's situation is different from the data found in the public information. The lack of public reporting of problems that were known and discussed in the company's rooms substantiates the aforementioned misrepresentations.
- Finally, the counter-defendants' arguments regarding the failure to prove the damages claimed should be rejected. Their counsel did not bother to cross-examine him in this matter, did not present alternative evidence, and hence his claims were substantiated.
- So far the corridor and from here to the lounge.
Discussion and Decision
- On the agenda is a claim of personal liability of the company's officers.
Ordinarily, this claim is accompanied by attribution of liability to the company in which the officers operate. It is a routine practice that the lawsuits in these matters, which come and go in the halls of law, seek relief from the company and from the officers jointly and severally. But our matter is different. The counter-plaintiff reached an agreement with the company. As part of it, he received back the money he had invested in the original deal. He waived his claims against her. At the same time, he reserved the right to continue to conduct the proceedings against the officers: four directors, one of whom controlled the company and served as its director.