Adv. Sol further ruled that respondents 2-3 breached their duty of care towards the Association, and that the Association's management should consider filing lawsuits against them on the grounds of breach of duty of care. The report also determined with respect to respondent 4 that he had breached his duty of care, and that his conduct amounted to professional negligence. In light of the above, the Sol report recommended that a lawsuit be filed against him as well, on the grounds of professional negligence.
The Sol report also determined that the Association's actions to reduce the damage (by contacting the teams, the soccer league administration, the broadcasters and Toto) must be "carried out urgently and completed within a very short period of time" (paragraph 22 of the Sol report). Furthermore, it was determined that if after the Association's actions to reduce the damage, there remains damage for which the Association did not receive compensation, it will be able to decide to open legal proceedings against respondents 2-4 "as soon as possible and without further delay" (ibid.).
On May 17, 2016, the Association's management decided to adopt the conclusions of the Sol Report.
Submitting the Approval Request
- On February 20, 2017, the Applicants filed a motion to certify a derivative action on behalf of the Association against Respondents 2-4. The application claims that the respondents' actions and omissions enabled the illegal withdrawal of funds from the Association's coffers in the cumulative amount of NIS 38.5 million, while making incorrect entries in the Association's financial statements that were intended to conceal the expenditure of funds. It was also claimed that the Association is not implementing the outline set out in the Sol Report regarding the filing of a lawsuit against the Respondents, despite a series of requests made to it regarding the exercise of its rights.
The Course of the Hearing of the Application and the Request to Appoint a Claims Committee
- After the application for approval was submitted, a hearing was held, the declarants on behalf of the parties were cross-examined, and the applicants submitted summaries on their behalf. Following the submission of the applicants' summaries, the Association announced on March 1, 2019 that it was seeking to establish an independent claims committee (hereinafter also: "Claims Committee", "The Independent Committee" or "The Committee"), whose members will be Judge Lt. Varda Alsheikh (hereinafter: "Judge Dem Alsheikh"), Shlomo Zohar CPA (hereinafter: "Zohar CPA") and Adv. Doron Taubman (hereinafter: "Adv. Taubman").
- In light of the establishment of the committee, the association requested that the court delay the decision on the request for approval until the committee's decision, in order to allow it to convene, act and present its conclusions to the association.
The Applicants objected to the request to stay the proceedings for a number of reasons (some of which were also argued by them in the framework of the current summaries submitted by them). The Applicants argued that the establishment of the committee should not be considered as an implementation of the outline set out in the Sol Report. They referred to a discussion in the Association's management in which it was decided to establish the Claims Committee, and noted that it stated that the purpose of establishing the committee was to "bury the affair" and prevent a decision by the court. They added that the committee was established at a very late stage in the present proceeding, and argued that the appointment of a committee at such a stage should not affect the conduct of the proceeding. According to them, allowing the establishment of an independent claims committee at such a stage in the proceeding will allow each respondent in a derivative claim to act in a similar manner, i.e., to wait for the conclusion of the proceeding in the application for approval, and then – if the impression is created that the court is expected to accept the request – to appoint a body that can make a decision in the court's place. Such an outcome, the Applicants argued, is undesirable.