Therefore, I am of the opinion that the application for approval should be rejected and not discussed on its merits.
- It should be noted in the margins that even if it is not possible to file a derivative action on behalf of the Association in particular or on behalf of associations in general, this does not prevent the possibility of taking other measures to enforce the law, to protect the property interest of the Association and to warn against the violation of the law in other cases. As stated above, there are public supervisory bodies, including the Registrar of Non-Profit Organizations, which are granted various powers. This includes the Registrar is authorized to lead investigation and examination proceedings of the association's activities, to improve its mechanism of operation, and even to effectively bring about the filing of a lawsuit against its officers, assuming that they caused it damage.
Concluding Notes
- From the description of the forbidden transfers affair that was presented in detail in this judgment above, it appears that over the years since the affair was exposed until today, a number of actions have been taken to deal with the consequences of this affair. This included the opinions of CPA Alkalai and Adv. Sol, the independent committee was appointed by the Association and the court allowed it to act, and the present application for approval was submitted.
During the proceedings in the application for approval, the association claimed that it wished – regardless of the submission of the application – to solve the problem in the best possible way, and to heal as much as possible the damages caused to it as a result of it.
Moreover, during the hearings on the motion for approval, the concern stemming from the possibility that the court will rule that it is not possible to file a derivative action on behalf of the Association (inter alia, by the court – see paragraph 12 above and paragraph 16 of my decision of April 7, 2019). Among other things, in light of this concern, efforts were continued under the auspices of the court to reduce the Association's damages as a result of the prohibited transfers affair, and to bring about its optimal compensation in connection with the damages caused to it. This included the appointment of the independent committee, which the court allowed to complete its work. All these actions led – as detailed above – to a certain improvement in the Association's situation, and to the benefit of at least some of the damages caused to it. According to the association's approach, in the coming years, it is expected to collect additional sums.
- As detailed above, there are a number of disputes between the parties, including regarding the amount of damage caused to the association as a result of the prohibited transfers. These disputes are rooted in the question of whether certain money transfers transferred from the association to the teams should be taken into account as part of the damage, as well as the question of the amount of damage embodied in other transfers. Disagreements also arose between the parties regarding the total scope of the expected collection and the maximum amount that can be expected to be paid to the association in connection with the prohibited transfers affair.
I do not believe that it is appropriate for the court to express its opinion with respect to each and every one of the issues that were in dispute between the parties – in light of the result of the judgment as it was clarified above. At the same time, since the Association's consistent position was and still is that it seeks to improve the range of damages caused to it, I have found it appropriate to address one of the disputes that arose between the parties in this context, in order to enable the Association, if it deems it appropriate and in the spirit of its intentions during the proceeding, to act accordingly.
- As noted, the fourth draft of the Association's financial statements for 2013, which was approved on December 22, 2014, reflected a series of changes in the balance sheet: the deletion of the sum of NIS 25,988,000 under the "Receivables and Mandatory Balances" section (an amount that was previously recorded as an "asset"); Registering a property in the amount of NIS 4,023,000 under the "Excess Transfers to Groups" section; and registration of an asset in the amount of NIS 365,000 under the section "Entitlements and Credit Balances". In total, a write-off in the amount of NIS 22,330,000 was carried out in the Association's books, and the dispute relates to the nature of the property that was registered under the "Excess of Transfers to Groups".
According to the applicants, this is an expected collection component that was "offset twice" – once in the framework of the assessment of the damage in the Association's financial statements (following which the damage, prior to the assessment of collection, was put at NIS 22.3 million); and once again in the assessment of the expected collection that must be offset from the total damage. On the other hand, the respondents' argument is that the sum of NIS 4 million that was recorded as an asset on the balance sheet does not reflect an estimate of expected collection from the teams, but rather stems from the gap between the funds that were supposed to be received from the Toto and the funds received and transferred by the Association's actual collection.