Regarding the Association's authority to impose taxes on its members by virtue of the Articles of Association, it was argued that the Articles of Association determine specific taxes to be imposed on the members of the Association, as opposed to granting general authority to impose any tax whatsoever. Even if there were such a general authority, the Association should have exercised it in accordance with the rules of administrative law, as it is a dual entity. In any event, it is argued, the practical possibility of collecting the new tax in the circumstances of the case is questionable.
With regard to the agreement with the insurance company, it was argued that the agreement stipulates as a condition for the transfer of payment not only the termination of the approval request process, but also the termination of any legal proceedings in relation to the prohibited transfers. Such an undertaking on the part of the Association undermines its ability to enforce the obligation it intends to impose on the Premier League and National League teams, in the amount of NIS 3.3 million. This provision also restricts the amount you can take to collect amounts from the groups related to the excess transfers.
The parties' arguments
The Applicants' Arguments
- According to the applicants, it was proven that the association suffered damage as a result of the prohibited transfers, based on various confessions by the defendant. As a result of these transfers and the resulting crisis, the association had difficulty in acting in accordance with its goals. The applicants added that the association is not supposed to support the teams, and therefore there is no basis for the claim that it was not harmed because the funds were transferred to the football teams. It was further clarified that the prohibited transfers were made in an unequal and discriminatory manner at the discretion of respondent No. 2. It was also noted that respondent No. 2 benefited personally from the manner of the distribution – both because a large amount of surplus funds were transferred to the Maccabi Petah Tikva team, with which he has a close relationship, and because the distribution helped him to be re-elected to the position of chairman of the Association.
With regard to the amount of damage, it was claimed that the respondents admitted in "real time" that the sum of at least NIS 22.3 million was transferred to the Beitar groups. However, according to them, the amount of the damage is higher in practice, and stands at NIS 38.5 million, as determined in the Alkalay report. In this context, the Applicants note that the sum of NIS 16 million should also be taken into account, which, although in accordance with the agreement between the Association and the Toto was supposed to enter the Association's coffers, was transferred by Respondent No. 2, on its own initiative and without the approval of the Association's management, to the National League teams.
- In this context, the Applicants raised a series of arguments: First, they rejected the claim that CPA Alkalai withdrew this sum at a meeting of the Association's management on February 16, 2016; Second, it was argued that the conclusion of the Sol Report regarding the existence of a "tacit agreement" for these transfers should not be accepted. This is because this is an exception to the appointment given to him to conduct a legal examination on the basis of the findings of the Alkalai Report, because this determination was made without an orderly factual clarification process, and because it is not possible to accept a waiver of the right to sue for such a significant sum on the basis of unfounded estimates; Third, the applicants argued that the argument that within the framework of the agreement between the Toto and the Association, the said sum was intended from the outset for the National League teams should be rejected; Fourth, even if there was a "tacit agreement" between the Toto and the Association, its existence does not replace a decision by the Association on the matter. Such a decision was not made, since the Association's management did not know about the transfer of funds to the National League teams, and did not approve it.
The Applicants also denied the Respondents' claim that a sum of NIS 7.545 million that was transferred to the First Division should be deducted from the amount of the damage of NIS 22.3 million. This is because the Sol report does not provide a convincing explanation for the conclusion that the transfer of the sum was legal and unrelated to the Toto funds and the broadcasting bodies.
- On the merits of the matter, it was argued that the transfer of the said sum is part of the prohibited transfers. This is evident from the multitude of documents prepared by the respondents in "real time" and from the minutes of the association's secretariat meeting from 2009, which attest to the transfer to teams in the first division that year. This transcript was not presented to Adv. Sol before he prepared the Sol report.
With regard to the argument that the decision made at the said meeting regarding the transfer to the A-League teams constitutes approval of the transfer of funds, the applicants argued that this is a new claim. According to them, there is no substance to it either, since the decision was made when the members of the Association's management were not aware of the Association's true situation in light of the misleading record in its financial statements.