Labor Dispute (Tel Aviv) 28207-09-21 IT. Rehabilitation Ltd. – Avraham Matzliah - part 10

The S.L.H.  Deal

55. According to the plaintiff, on November 15, 2020, Avi took advantage of his position and transferred documents in the name of Yaakov to Ms. Irit Abulafia, from the procurement department of S.L.H. Medical Services (hereinafter - Irit and S.L.H., respectively), which is a regular customer of the plaintiff, documents in the name of Yaakov for the purpose of registering Iris Marketing as a supplier of the hospital - and thus a transaction of Corona products in the amount of ILS 2,370,720 was transferred to the defendants.  According to the subscriber in Tsafrir's affidavit, the profitability from these transactions is no less than ILS 1.2 million (paragraph 78 of Tsafrir's affidavit).
56. Tsafrir attached to his affidavit an email correspondence dated November 15, 2020 from Yaakov El-Irit (Appendix 29 to Tsafrir's affidavit), in which he asked to open Iris Marketing as a supplier with S.L.H. In addition, two price quotes were attached on behalf of Iris Marketing that were submitted to S.L.H.  (p.  225 and 226 of Tsafrir's affidavit), in a cumulative amount of ILS 2,370,720.
57. According to Avi, an order for gloves was received from the plaintiff on behalf of S.L.H. in the amount of ILS 900,000 plus a tax appeal (paragraph 60 of my father's affidavit).  He further claimed that Tsafrir reneged on his commitment to supply the goods, and S.L.H.  warned that if an alternative supplier was not found, "they would sever all commercial ties with the plaintiff," according to his version, he referred S.L.H.  to Iris Marketing, in order for it to place the order in place of the plaintiff - who refused to accept the order (paragraph 62.2 of my father's affidavit).
58. In his testimony, Avi noted that the plaintiff could not fulfill the order she received for the supply of two containers "if I am not mistaken" ( 74 of the transcript of May 12, 2024, paras.  8-9).  In addition, in his affidavit, Yaakov declares that "...  S.L.H.  - Medical Services in a Tax Appeal was interested in working with me and purchased gloves from me in November 2020 and then in July 2021)" (para.  22 of Yaakov's affidavit).
59. If so, Avi admits that the S.L.H. transactions were transferred to Iris Marketing, after he himself referred the orders to her.  There is no evidentiary backing for my father's claim that the plaintiff reneged on her obligation to S.L.H.  No text messages, emails, cancellation notices or any other evidence were presented indicating that the plaintiff had approved the transfer of the transactions or that she was unable to comply with them.
60. It should be emphasized that Avi served as a senior professional and enjoyed direct access to customers. Given Avi's organizational structure and role, we can and should expect orderly documentation of every material business decision.  Therefore, he should have presented at least a document or a short email correspondence attesting to Tsafrir's involvement or agreement in transferring the transactions to Iris Marketing.  His refusal to present such documentation nullifies the defendants' version of the plaintiff's consent.
61. The evidentiary omission in this matter is in accordance with my father's duty and accordingly, we are persuaded that the transactions were diverted by him to Iris Marketing, without authorization. In doing so, Avi violated his duty of good faith and increased trust towards his employer, as well as the provisions of the employment agreement.  The fact that the diversion of the transactions was made to a competing party (at the same point in time that Iris marketed the equipment that the plaintiff was able to supply), without proof of a waiver on the part of the plaintiff or a real inability to carry out the transactions, sharpens the severity of the violation.
62. The actions of my father, who diverted the transactions of S.L.H. to Iris Marketing, without disclosure and without obtaining the plaintiff's prior written approval, led to a direct violation of the provisions of the employment agreement between the parties.  Avi acted to transfer the transaction to Iris Marketing, while he was employed by the plaintiff and while undertaking to devote all his energy to his work for the plaintiff only, in contravention of the duty of good faith and loyalty to which he owed the plaintiff.  This is a fundamental breach within the meaning of the Contracts Law (Remedies for Breach of Contract), 5731-1970, since it harmed the heart of the engagement and the mutual trust that constitutes a fundamental condition of the employment agreement between the parties.  Therefore, it is clear that the plaintiff is entitled to compensation without proof of damage due to my father's actions, which we will refer to later in the judgment.
63. Notwithstanding the above, and although it is clear that some damage was caused to the plaintiff as a result of my father's actions, the plaintiff did not bear the burden of proving her damage. The plaintiff presented two price quotes that do not teach anything.  We do not have information regarding the expenses involved in executing the transaction, and the profit rate thereof.  In our opinion, it is not enough to subscribe to Haim's opinion in order to estimate the gross profit rate at an average rate of 45%, when he noted: "In my experience as a CPA in companies operating in fields similar to the findings detailed in the opinion, the gross profit is an average of 45%", this statement was noted without attaching any references and his testimony showed that these references were not in his hands, were not attached to his opinion and it is not possible to examine on the basis of which data the determinations were made in the opinion.  In his testimony, Haim replied that these were "private companies that I don't think I need to elaborate on because the gross profit is detailed here" (see p.  28 of the transcript, paras.  8-19).  He later testified that when he wrote a report of 45%, he referred to data from other companies that deal with similar products.  Accordingly, and in the absence of the ability to examine the determinations in the opinion since it was not included in the relevant documents, we did not find room to accept the expert's determinations as to the financial damage.
64. It should be noted that with respect to all the transactions that were transferred to Iris Marketing, we did not find that the plaintiff proved the alleged financial damage.  As noted above, it was not possible to examine or determine in the accounting opinion, we do not have before us information regarding the final payment that was transferred, there is no information regarding the expenses involved in executing the transaction, as well as reliable information regarding the profit rate in respect of them, therefore, monetary compensation should not be awarded when the plaintiff has not proven damage of this type in relation to each of the transactions.

Reut Hospital

65. Tsafrir declares that during December 2020 or January 2021, and according to him, apparently even on additional occasions, Avi acted to transfer transactions of the medical center to Iris Marketing, instead of transferring them to the plaintiff (paragraph 83 of Tsafrir's affidavit). Attached to his affidavit was a draft purchase order dated January 18, 2021, which was issued through Avi in favor of Iris Marketing from the Reuth Medical Center (Appendix 34 to Tsafrir's affidavit).  The order amount is ILS 111,139.94, including VAT, for the supply of gloves of various sizes.
66. In his affidavit, Avi does not deny this, and according to him, in January 2021, the purchasing manager contacted him and asked if he knew of a source for ordering gloves, and he referred him to Iris Marketing when, according to him, "at that time, the plaintiff's employees were prohibited from accepting or placing orders for gloves that had been placed." (para. 78 of my father's affidavit).  In his testimony, he added: " Mouse volunteered with or without quotation marks to save Ty Islands in early 2020 and I was willing to help him..." His statement later in his testimony that Tsafrir was aware of what was happening was not proven prima facie (p.  67 of the transcript of May 12, 2024, paras.  4-7).
67. Yaakov admits in his affidavit that he received a "small" invitation from the medical center, but claims that this happened in July 2021 (paragraph 22 of Yaakov's affidavit). Yaakov did not attach an invoice or any reference to verify his version.  Either way, according to Avi's version, the referral was made as early as January 2021 - even if the deal was completed (according to Yaakov) at a later date.
68. David, a representative of the medical center, testified before the court that Avi referred him to Iris Marketing (p. 17 of the minutes of May 6, 2024, para.  16).  In addition, he presented a closed purchase order in the amount of ILS 129,663.26 from the medical center supplied by Iris Marketing (Exhibit A/7), and according to him, this was the final order (p.  18 of the minutes of May 6, 2024, paras.  17-18).
69. From the aforesaid, a similar picture emerges of a transaction being referred from a medical entity to Iris Marketing without any indication of consent or authorization on the part of the plaintiff. No evidence was presented that the plaintiff waived the glove deals or sought to refer the transaction to an alternative supplier.  Therefore, this reference to a business opportunity constitutes another breach of my father's employment contract as well as the duty of good faith and fiduciary duty imposed on him, which justifies the granting of compensation without proof of damage to the plaintiff, which will be detailed later in the judgment.

ALYN Hospital

70. The evidence shows that in this case, too, Avi referred a transaction to Iris Marketing and Yaakov, in breach of the employment contract as well as the duty of good faith and loyalty imposed on him. Avi admits in his affidavit that the medical center asked the plaintiff to purchase 100 cartons of gloves, but he says that "in light of Tsafrir's instruction not to accept orders for gloves, I referred them to Iris Marketing, which has a small balance of gloves left." (Paragraph 79 of my father's affidavit, the inscription as in the original).  This instruction, as stated, has not been proven to have been given.
71. Tsafrir's affidavit was accompanied by a closed purchase order in the total amount of ILS 36,677, including a tax appeal (Appendix 36 to Tsafrir's affidavit). Galit, the procurement manager at the medical center, confirmed in her testimony that Avi was the mediator between her and Iris Marketing, that she opened the company as a supplier and also received documents regarding the engagement with the company (p.  14 of the minutes of May 6, 2024, paras.  4-6).  Galit approved the appendices that appear in Tsafrir's affidavit (p.  15 of the transcript of May 6, 2024, paras.  17-22).
72. Similar to the previous cases mentioned above, a similar picture emerges of a transaction being referred from a medical entity to Iris Marketing without any indication of consent or authorization on the part of the plaintiff. No evidence was presented that the plaintiff waived the glove deals or sought to refer the transaction to an alternative supplier.  Therefore, this reference to a business opportunity constitutes another breach of my father's employment contract as well as the duty of good faith and fiduciary duty imposed on him, which justifies the granting of compensation without proof of damage to the plaintiff, which will be detailed later in the judgment.

Augusta Victoria

73. In this matter as well, Avi admits that he transferred the order of the gloves to Iris Marketing, while claiming that Tsafrir ordered the referral of customers to other suppliers (paragraphs 71-72 of Avi's affidavit). According to Avi, the value of the transaction was only ILS 41,000 (paragraph 72 of my father's affidavit) - a claim that is not supported by the documents.
74. Attached to Tsafrir's affidavit was a copy of the purchase offer dated March 11, 2021, for a total amount of ILS 493,381.98 (Appendix 18 to Tsafrir's affidavit). The final purchase order that was approved was not attached, and a representative of the medical center did not appear to testify.  Even if the final scope of the transaction is unknown, it is clear that Avi transferred the engagement to Iris Marketing - in contravention of the provisions of the employment contract and the duty of good faith and loyalty.  Similar to the way in which the previous transactions were conducted, Avi referred the transaction directly to Iris Marketing without the plaintiff's knowledge or consent.

The Hadassah deal

75. We will preface by stating that it appears from the evidence that Hadassah did not bring in Iris Marketing as a supplier in place of the plaintiff with regard to the supply of the gloves (see testimony of Guy, p. 4 of the transcript of May 6, 2024, paras.  37-38, p.  5, paras.  3-4, p.  6, paras.  18-22, p.  10, paras.  31-32).  According to Avi Hadassah, they refused to do so (paragraph 62 of my father's affidavit), and therefore, the plaintiff is not entitled to relief for a transaction that did not materialize in practice.  If so, the plaintiff's demand for compensation due to my father's personal commitment to compensate the plaintiff, as will be described below, as well as the question of whether my father breached his employment agreement due to his actions, should be examined.
76. We will also clarify that there is more hidden than revealed, and it seems that the full picture was not laid out before us, and it is difficult to assess which of the actions were in Tsafrir's mind regarding the Hadassah deal, or not. Given this state of affairs, let us now proceed to examine the arguments in relation to the Hadassah deal.
77. According to the plaintiff, during the month of April 2021 she found out that Avi had committed on her behalf to the sale of gloves imported from the Far East within a few weeks and at a very low price, based on a representation by Iris Marketing, but Avi did not fulfill this undertaking. After negotiations between the plaintiff and Hadassah Hospital, Avi undertook to bear any damage caused to the plaintiff, after her attorney acted to reduce it.
78. On August 2, 2020, my father sent Guy a price quote for the supply of gloves (Exhibit A/5). On August 23, 2020, Avi informed Guy that due to a problem at the factory, there had been a delay in delivering the gloves to the hospital.  Avi further noted that "we have signed a new contract with a different glove factory and we intend to supply the gloves that are the subject of the order by 30-09-2020" and that "when the gloves arrive we will 'close the account', whether by way of credit or taking back equipment as we agreed between us" (Exhibit T3).  He later noted that "I ask that you pay us the invoices in question and we will manage the large shipment when it is finally on its way to Israel, in any case, Hadassah will not be damaged." Guy replied that this was acceptable to him on condition that the goods would indeed be supplied by the specified date (Exhibit A/4).  If so, it is clear that there was an explicit commitment to the date of delivery given by my father.
79. Later, on February 2, 2021, Avi wrote in an email to Guy, among other things, that he had purchased 14,000 units of gloves privately. Avi also noted that he was attaching a copy of the signed order, so that they could see the delivery times, and that the order was signed by Iris Marketing.  He also attached a copy of the letter of credit issued in favor of the factory.  At the end of the email, Avi states that "I would be happy to sign an agreement with you independently as needed" and "I would be happy for the release of A.T.'s funds." (Appendix 23 to Tsafrir's affidavit).
80. Avi declares in this regard that Tsafrir understood that he could not finance the transaction and demanded from Hadassah a letter of credit for the amount of the order (paragraph 58 of my father's affidavit). Avi further declares that when Tsafrir withdrew from his undertaking, Hadassah chose to take a financial sanction in the form of non-payment of the last invoice of the order that was issued to them, and therefore a legal dispute developed (paragraph 62.3 of my father's affidavit).
81. Avi further declares that he tried to put Iris in the plaintiff's shoes in order to provide the gloves and stop the financial sanction, but Hadassah refused and demanded compensation for the damages they suffered. Avi further stated that: "I committed an unusual and unacceptable act, and I gave Tsafrir a personal commitment in May 2021 that if the plaintiff suffers any financial damage, I will bear the damage.  In retrospect, this was a foolish act on my part, since all the undertakings I gave to Hadassah were on behalf of the plaintiff with the knowledge and consent of Tsafrir and I did not take any action on my own." (para.  62 of my father's affidavit).
82. It can be seen that, at least, part of the conduct regarding the supply of gloves was done with Tsafrir's knowledge and consent, based on an e-mail message that Tsafrir sent to Hadassah on April 6, 2021 (Appendix 10 to Tsafrir's affidavit). In this email, Tsafrir elaborates on the chain of events, including the discovery of counterfeiting of goods in the factory from which the order was ordered and the confirmation of the letter of credit (LC), and accordingly it appears that he was in direct contact with Hadassah and actively handled the issue.  The fact that Tsafrir himself reported the aforementioned details strengthens the conclusion that the steps listed in the email correspondence were taken on his own initiative.  However, it has not been proven that all the actions taken by my father were done with his approval.
83. Thus, with regard to my father's "private purchase", he admits in his testimony that the private purchase was made indirectly with the Thai company, as claimed by Tsafrir in his affidavit (paragraph 65 of Tsafrir's affidavit), when he testified that "the product is the product of that company, the purchase should have been from Iris, the purchase..." (p. 60 of the minutes of May 12, 2024, paras.  15-39, p.  61 of the minutes of May 12, 2024, paras.  1-2).  According to him, he purchased the gloves privately from Iris Marketing:

"Adv. Brotfeld: We like precision.  I refer you to Appendix 23 to Tsafrir's affidavit, February 2, 2021, I see that you are writing to him Guy Shalom I am happy to announce that in accordance with the agreement between us, yesterday I privately purchased 14,000 units of gloves and blah blah, I am attaching copies of the order, the order is signed by Iris Marketing Ltd.  Now I'm asking you, when you write to him from Hadassah I bought privately but as if the order was technically signed in the name of Iris Marketing, do you mean that Iris Marketing bought for you privately or you are like,