As promised, attached is the agreement that expresses the agreements we reached in a meeting held earlier in Yaakov's office in Haifa. In accordance with my conversation with my father (and for technical convenience) I indicated the amount of the bank check in the escrow so that the balance to be paid would be a round number.
In accordance with the summary, it remains to attach to the agreement a draft of an SGS inspection report format agreed by us (reflecting the specifications and the box - the test will be carried out for all dimensions).
As the time is very short and we need to act quickly, I request that you forward your comments to the agreement by 10:00 am and also serve a reservation with the shipping company by 12:00 noon.
From a test I conducted, there is difficulty and low availability of 40 feet containers in India, and therefore, if you do not receive immediate availability, I ask that you reserve a place on the basis of 20 feet containers.
I wish all of us success,
David Avraham Zada."
- Attached to the email correspondence was a draft agreement between Iris Marketing and Delicatessen in a tax appeal for the purchase of gloves (Appendix 20 to Tsafrir's affidavit). In clause 4.3 of the draft, it was noted that the total consideration of the transaction is for payment in the amount of ILS 4,582,800. Despite my father's clear involvement in this transaction, he does not refer to it at all in his affidavit. Yaakov, for his part, gave contradictory versions: on the one hand, he claimed that the agreement was never signed and that the deal did not materialize, among other things, because he did not have permission to work with the Ministry of Defense. On the other hand, he declares that he has no idea who delicatessen are (para. 5 of Yaakov's affidavit).
- His testimony was inflammatory and defensive, while claiming that he did not know the company and that he did not remember this meeting that took place (p. 34 of the transcript of May 30, 2024, paras. 19-39, p. 35, paras. 1-2). While noting that there are no signatures on the agreement (p. 35 of the minutes of May 30, 2024, paras. 5-6).
- The internal contradiction in Yaakov's affidavit, as well as the lack of reference on my father's part, strengthen the conclusion that this was a transaction that was advanced behind the plaintiff's back, even if it did not reach completion in the end.
- If so, it clearly emerges that Avi acted in contravention of his obligations as enumerated in his employment agreement, as well as in contravention of the duty of loyalty and good faith, when he acted during the period of his employment for a competing business, while he was in a conflict of interest. In our opinion, this justifies the award of compensation without proof of damage, which we will enumerate later in the judgment.
- The plaintiff did not bring a representative on behalf of the company to testify in order to contradict the claim that this transaction was not carried out. Therefore, it has not been proven that this transaction matured into a profit, and the plaintiff should not be awarded monetary compensation for this.
MDA
- The evidence clearly shows that the plaintiff's claims regarding a tender for Magen David Adom are empty. Contrary to what was claimed against Iris Marketing, it did not approach the tender at all, which the plaintiff did not win. It was not proven that Avi acted to thwart the plaintiff's winning, and in any case did not assist Iris in this matter, when she did not submit a bid for that tender (paragraph 74 of my father's affidavit, paragraph 26.4 of Yaakov's affidavit) and therefore - she did not win it, and therefore the claims regarding the failure of a tender - are rejected.
- Alongside the aforementioned, it was proven that Avi helped Yaakov and Iris Marketing in order to purchase MDA gloves, and even traveled to Turkey for this purpose, at the expense of vacation days, while hiding the trip from Safrir and when it was stated by Avi in the email that he wanted to go on vacation "due to an extensive family problem". (Appendix 24 to Tsafrir's affidavit). Avi admitted in his affidavit that he went to Turkey to examine the possibility of buying gloves, which he said was done "as a personal favor" for Yaakov, and that in the end the deal did not materialize:
"Regardless of tender 38/20, MDA (without a tender) ordered a large quantity of gloves from Iris Marketing. I traveled to Turkey on April 25, 2021 at the expense of my vacation days in order to check the possibility of purchasing and bringing gloves to Israel for the order from MDA, and I did this as a personal favor to Yaakov due to his gratitude for his assistance to the plaintiff. I was in contact with MDA and when I found out that MDA does not have a permit to import from Turkey - I returned to Israel and there was no deal, so the claim that this was a deal that was "stolen" from the plaintiff is an empty claim." (Paragraph 75 of my father's affidavit).
- MDA representative, Shlomo, testified that the transaction was indeed canceled and did not bear fruit for any of the parties (p. 22 of the minutes of May 6, 2024, paras. 36-39). However, contrary to my father's version, Shlomo's testimony revealed that MDA had an approval to import from Turkey, and that the deal fell through due to many delays in the supply of the goods (p. 22 of the minutes of May 6, 2024, paras. 36-37, pp. 25, paras. 4-7), and he said: "My father gave us the name of the Turkish supplier. In practice, nothing happened from it, we got a license and we didn't get gloves." (p. 25 of the transcript of May 6, 2024, paras. 10-11).
- In any event, even if there were disputes regarding the source of the delays or the import permit, the agreed result was the absence of profit or monetary damage. Moreover, it was not proven that it was my father who referred MDA to Iris Marketing and Yaakov, when Shlomo did not know how to provide information on the matter (p. 23 of the minutes of 6 May 2024, paras. 19-34) and according to Yaakov's testimony MDA contacted him (p. 36 of the minutes of 30 May 2024, paras. 17-31).
- At the same time, the entirety of the correspondence and testimonies indicates that my father, on behalf of Iris Marketing, was actively involved in business with MDA (see Shlomo's testimony on the subject (p. 22 of the transcript of May 6, 2024, paras. 22-39). This activity went beyond a one-time act of "personal favor" for Yaakov and Iris Marketing. This is an ongoing, consistent and documented business conduct vis-à-vis MDA called Iris Marketing. Starting with the transfer of a purchase order, handling the issuance of import licenses, and correspondence with MDA representatives regarding compliance with schedules and supplies (Appendix 27 to my father's affidavit).
- Thus, among other things, MDA's representative, Ms. Anna Gelfant of MDA's Import Department, writes to my father that "later on his son-in-law (Z.L. Our conversation - R.Z.) If you notice about the shipment coming out of Turkey, please be selected to us as soon as possible manufacturer and supplier details. Based on your previous message, we have issued an import license for Chinese and Thai supplier. As of today, we do not have an import license for gloves made in Turkey. Please do not sail the shipment until you have obtained a proper license." (p. 214 of Appendix 27). Thus, in practice, Avi acted as Iris's commercial agent, while hiding the matter from the plaintiff.
- His trip to Turkey, although reported as a "private vacation," is another layer of that ongoing business relationship. It demonstrates the depth of my father's commitment to promoting the interests of Iris Marketing, as well as the degree of concealment he used, and therefore we should not view the incident as a specific mistake.
- It clearly appears that Avi acted in contravention of his obligations listed in his employment agreement, as well as in contravention of the duty of loyalty and good faith, when he acted during the period of his employment to assist a competitor, while he was in a conflict of interest. In our opinion, this justifies the award of compensation without proof of damage, which we will enumerate later in the judgment.
- As to pecuniary compensation - in view of the aforesaid and in accordance with the evidence presented, the parties did not make a profit and no pecuniary damage was caused as a result of the parties' activity, therefore, we are not persuaded that there is entitlement to any pecuniary compensation.
Contracting with the Polish company as a supplier
- According to the plaintiff, on December 22, 2020, she invested tens of thousands of shekels in order to obtain a medical device ("medical accessories and products" approval) from the Ministry of Health, which was approved on August 31, 2021. According to her, Avi and Amir, immediately after leaving the plaintiff and even moving thereafter, contacted a representative of the Polish company and presented themselves as acting on behalf of the plaintiff, in order to divert the engagement to Sky, and this actually happened, despite their knowledge of the financial investments made by the plaintiff (paragraphs 82-93 of his affidavit).
- According to the defendants, the acquaintance with the Polish company began at the exhibition in November 2019, and that in July 2020, at the request of Ichilov Hospital, a representative of the Polish company assisted in locating a supplier for N95 masks - a transaction that yielded the plaintiff a profit of $150,000. According to them, in December 2020, applications were received for the purchase of heating cabinets from hospitals in Israel, for which the approval of the medical device is required for their import and demonstration; The defendants further added that the plaintiff's expenses were only ILS 5,000, and that the example of a single cabinet cost ₪1,700, and not tens of thousands of shekels as claimed.
- It was further claimed that the permit was limited in time and expired on August 31, 2021. A request from the Regulatory Advisor in April 2021 to extend it was rejected by Tsafrir, and the plaintiff did not sign a distribution agreement with it. After Avi's work was completed, a representative of the company contacted him regarding non-invasive temperature management devices, products that the plaintiff did not market, and in the absence of a binding engagement and a valid approval of the medical device, Avi began negotiations with it, which ended in an engagement agreement with Sky. According to Avi, this agreement was obtained by Tsafrir illegally and after Tsafrir broke in and invaded his personal email.
- Tsafrir states in his affidavit that after the plaintiff received the approval of the medical device for the Polish company's products, the plaintiff purchased samples of the company's products, delivered them to various hospitals, and marketed the products over the course of several months (paragraph 94 of Tsafrir's affidavit). Attached to his affidavit was the agreement signed between the Polish company and Sky on July 16, 2021, only sixteen days after the defendants left their employment with the plaintiff. According to him, after the agreement was signed, Avi and Amir contacted the hospitals to which the plaintiff provided the samples, announced that they were replacing the plaintiff with the representation of the Polish company, and carried out the transactions that the plaintiff had worked to promote. Therefore, it was argued that Sky should be obligated to detail all the transactions carried out by it through the Polish company in order to transfer to the plaintiff the profits of this activity (paragraphs 95-96 of Tsafrir's affidavit, as well as Appendix 44 to Tsafrir's affidavit).
- From John's testimony we learn that there was indeed no binding agreement between him and the plaintiff when he chose to enter into an agreement with my father, since according to him, he does business with people and not with companies (transcript of May 30, 2024). On a side note, we note that we did not find any substance in the plaintiff's position as expressed in her summaries regarding the transcription of John's testimony. Since the parties did not request an interpreter in English, his testimony was heard in that language, and since it was not translated into Hebrew, no transcription was made. Counsel for the parties did not complain about this, and as a result, his testimony was examined through the audio file. In our opinion, since no claim was raised regarding the lack of knowledge of the language, this does not invalidate the testimony, since no argument was raised regarding the interpretation of the witness's words.
- After examining the arguments of the parties and the evidence, we found that there is no basis for the plaintiff's claim of breach of fiduciary duty or theft of investment by the defendants in connection with the engagement with the Polish company. Although the plaintiff invested initial resources in obtaining the approval of the medical device and in importing such as a heating cabinet, it was not proven that at the time of the engagement between Sky and the Polish company, the plaintiff had a valid medical device approval, it was not claimed, and therefore it was not proven that a binding distribution agreement was signed between the plaintiff and the company, nor was any evidence presented that the plaintiff actually acted to continue marketing or to promote cooperation with the Polish company.
- Moreover, it has not been claimed and therefore it has not been proven that this supplier has a uniqueness in the field, so this requires an engagement with the specific supplier in question. There is no claim by the plaintiff that this is a single supplier in the field, and that there are no other companies with which the engagement can be performed.
- Beyond the aforesaid, Tsafrir's claims that an entire team of salespeople allegedly engaged in marketing operations for several months that cost the plaintiff "a great deal of money" (p. 23 of the minutes of May 12, 2024, paras. 19-20). This argument is not anchored in his affidavit and was raised orally for the first time in the hearing before us. On the other hand, Amir's testimony strengthens the conclusion that no material marketing activities were carried out on the part of the company. Amir testified that he knew the Polish company only at the time of his engagement with Sky, and that:
"Beyond that, I've heard about it, but no, almost nothing.."; He also testified: "I didn't see any oven, I wasn't shown any oven, I wasn't shown any operation, no instruction, nothing related (talking together) I don't know, if the person who dealt with it, it could only be my father, because", "I don't know what it's called, what happened with this oven in general, I don't even know what it is" (p. 2 of the transcript of July 11, 2024, S. 1-10).
- Hence, Tsafrir's claims regarding extensive marketing activity and significant funds spent on it are not supported by evidence and should not be given weight.
- In these circumstances, even though we are aware of the date on which the agreement was signed between the Polish company and Sky, it has not been proven that the defendants' actions constitute a breach of fiduciary duty or lack of good faith that justifies the obligation to pay any kind of compensation in favor of the plaintiff for its initial investments as noted above.
- With regard to the allegations regarding Avi's conduct vis-à-vis John in August 2020, and in general the claim that Avi sent documents intended to authorize John to purchase goods, both in the name of the plaintiff and on behalf of Iris (paragraph 58 of Tsafrir's affidavit, Appendix 19), we clarify that no sufficient evidentiary basis was laid to prove the claim. As noted above, in July 2020, John assisted in locating a supplier and promoting a transaction from which the plaintiff made a profit. At the same time, the plaintiff did not show that the document relating to Iris Marketing was actually given to John, who testified that he did not examine the documents prior to the date of the hearing (transcript of May 30, 2024). It was also not clarified whether actions were indeed taken within the framework of the representation and the legal implications of all of these. In light of the aforesaid, we have not found ourselves accepting the plaintiff's arguments in this matter.
Tender for the Israel Police
- The plaintiff's claim that Avi deliberately thwarted the tender to the Israel Police by not attaching pricing for the products (paragraph 74 of Tsafrir's affidavit) is only a hypothesis that is not supported by the evidence. The email message sent by Avi indicates that this was a human error, and that he asked the tenders committee to reconsider its position while attaching the relevant information (Appendix 28 to Tsafrir's affidavit). Therefore, and in the absence of an evidentiary basis for improper intent, the plaintiff's claims in the matter should be rejected.
Miscellaneous