The concentration of the above teaches that the very conduct within the framework of a company does not establish "immunity from liability" in its framework, however, on the other hand, in order to impose personal liability on an organ or shareholder in a company for a tort, the existence of the elements of tort in the conduct of the organ or shareholder himself must be shown.
- In a manner relevant to our case - in order to prove the existence of the foundations of a fraudulent tort in a case where the activity within the framework of a corporation raises suspicion of fraud and the defendants have information that may be able to allay the fear - the Supreme Court is required Other Municipal Applications 1206/16 Samuel Diamond Company - Rosenbaum (1992) in Tax Appeal v. State of Israel - Ministry of Industry, Trade and Labor [Nevo] (October 9, 2018) (hereinafter: "The Samuel Diamond Case""). In the same case, the fraud focused on the fact that the activity of one company was deliberately deliberately transferred to another company. The question that the court examined is whether the company's managers can be held liable for this fraud. Regarding this, in paragraphs 31-32 of the judgment it was held:
"Indeed, there is much more hidden than revealed regarding the companies' activities. However, in this state of affairs, the appellants could have easily dissipated the veil of fog that surrounded the companies' activities... However, the appellants preferred not to bring any evidence to prove their claims and relied on the passage of time and the evidentiary damage caused to them. As is well known, "the judge has nothing but what his eyes see" (Bavli, Sanhedrin 6b), and in our case the picture that emerges is one of ongoing activity in the field of diamonds of Samuel and Rosenbaum, regardless of the manner of incorporation... Thus, Samuel and Rosenbaum's activities took different forms over the years, but it is not evident that there have been changes in their nature. Under these circumstances, it was incumbent upon Samuel and Rosenbaum to provide a satisfactory explanation for their decision in 1999 to open a new company with a similar name, with identical characteristics, instead of continuing their business activities within the framework of Company A. However, they did not meet this burden even slightly.
- As detailed, the appellants' arguments regarding the existence of fraud focused on the question of the identity of companies A and B and not on the existence of the elements of the tort of fraud. However, on the face of it, it appears that the moves taken by Samuel and Rosenbaum - the transfer of the activity of Company A to Company B; while presenting a false representation that Company A has ceased to operate; with the intention of evading the payment of royalties and misleading the state; While causing financial damage to the state, all the elements of the tort of fraud are being filled."
In light of all this, the Supreme Court reached the conclusion as detailed in paragraph 33 of the judgment: