Civil Case (Tel Aviv) 15790-02-23 Yaakov Kotzer v. MedLife Ltd.

1. I have before me two claims that were filed between partners and two companies, defendants 1-2. The plaintiff, Mr. Yaakov Kotzer (hereinafter: "Kotzer"), filed a claim for relief to remove discrimination and related remedies (hereinafter: the "Discrimination Claim"), while the counter-plaintiffs, Mishael Zahav and Eran Sharoni (hereinafter: "Zahav" and "Sharoni", respectively) filed a claim for declaratory relief instructing Kotzer to act in accordance with the partners' agreement, including the separation clause set forth in that agreement (hereinafter: the "Enforcement Claim").  Zahav and Sharoni also sought to apply the provisions of the aforementioned agreement both to MedLife in a tax appeal (hereinafter: "MedLife"), which is defendant 1, and to MedLife DHS (hereinafter: "DHS"), which is defendant 2.

Is there room to grant the requested remedies (or the remainder of them, as we shall see below) in any of the above claims?

General background required

2. Kotzer (also referred to as "the plaintiff"), Zahav and Sharoni (hereinafter: "the defendants") all hold shares in Medlife, a private company that was established on April 13, 2011 and is engaged in the sale of medical equipment. DHS is a private company established in 2019 by Kotzer, Zahav and Sharoni and is engaged in software development in the field of medical equipment in the European market.  To complete the picture, it should be noted that DHS holds the development shares of the "HOBAR" system (hereinafter: "HOBAR"), which is an archiving and viewing interface for embryonic monitors, which was initially developed by MedLife and Mr. Eli Gartenbank (who currently holds, among other things, 18% of the rights in the development of the "HOBAR").
3. The acquaintance between Kotzer and the defendants began even before their work at MedLife, when Kotzer served as VP of service and development at Meditechnica Ltd. and the defendants as sales managers.  By virtue of this acquaintance, Kotzer and the defendants entered into an agreement on January 11, 2012 (hereinafter: the "Agreement") in which Kotzer was added as equal rights in Medlife, and in the manner where, as aforesaid, Kotzer, Sharoni and Zahav each owned 33.3% of the share capital of MedLife.
4. The agreement defined, among other things, the manner in which the company is managed, the rights and obligations of the partners in the company, the manner in which MedLife funds will be used, the manner in which a dividend will be paid to each of the company's shareholders, the mechanism of separation, and more. Thus, for example, clause 11.1 stipulates that gold will serve as the company's CEO, clause 11.6 stipulates that decisions in the company will be made by a majority of opinions, that gold will have veto power on material issues, and more.
5. Clause 16.4 of the Agreement regulates the separation mechanism of the shareholders of the Company, upon the attainment of retirement age or upon the retirement of any of them, and this clause stipulates as follows (hereinafter: the "Separation Clause"):

"After 3 months have elapsed from the date of termination of the employment of any of the parties, the shareholders who remain working in the company will be entitled to purchase the shares of the partner who has ceased to work at the value of the shares as determined by the company's accountant, and agreed upon by the parties, and in the absence of agreement on their value, at a price to be determined by a valuator appointed for this purpose by the president of the Institute of Certified Public Accountants."

6. On September 30, 2022, upon reaching retirement age, Kotzer resigned from his position at Medlife, after the parties reached an agreement on the terms of retirement during the months of July and August 2022 and signed a retirement agreement on August 8, 2022 (hereinafter: the "Retirement Agreement", was attached as Appendix 19 to the statement of defense on behalf of the defendants in the claim to remove the discrimination). As part of the retirement agreement, they ratified the provisions of clause 16.4 of the agreement and determined as follows:

"11.  The parties shall act in accordance with clause 16.4 of the Partners Agreement in all matters relating to the purchase of the shares held by it to the remaining partners.  During the three months from September 30, 2022, the parties will meet to discuss a possible sale of Yaakov's shares in accordance with the partners' agreement, two weeks before the date of the meeting that will be arranged, a test balance will be sent to Yaakov for the purpose of submitting an offer to the partners for the sale of the shares in his possession."

7. On October 11, 2022, Kotzer appointed his son Liran (hereinafter: "Liran") as a director on his behalf. Moving on to the meeting of the board of directors of MedLife, which was scheduled for October 24, 2022, Liran sent an email message (see Appendix 4 to the statement of claim) to the defendants regarding his desire to raise a number of issues for discussion at the said meeting regarding the company and its management, as well as regarding the sale of Kotzer shares in accordance with the agreement.  In this letter, Liran noted as follows:

"Mishael, your proposal to promote the issue of the sale of shares by linking the company's accountant with an accountant on our behalf is acceptable and logical, I suggest that we start promoting the issue by connecting them.  Mishaal, please send an email with a CPA and I will make sure to connect our CPA to this email.  It is important to note that to the best of my understanding, the partnership agreement relates to MedLife and does not apply to Medlife , DHS , however, I would be happy to consider the share price (sic) in both companies if we reach an agreement on the consideration."

8. On October 24, 2022, the aforementioned board meeting was held, in which the defendants and Liran participated. In the framework of this meeting, Liran's demands for information, the issue of increasing the defendants' wages, and more were discussed, among other things.  There is no dispute that this meeting was held in harsh tones, while accusations and insults were hurled at Liran and the defendants against each other (see the minutes of the meeting, which was attached as Appendix 6 to the statement of claim).  On October 24, 2022, immediately after the said meeting, Liran sent an email to the defendants in which he expressed his displeasure and demands in connection with the said meeting (see Appendix 7B to the statement of claim).  The next day, Kotzer contacted the defendants (see Appendix 8 to the statement of claim), inter alia, demanding that a new date be set for the shareholders' meeting.  At the same time, the defendants contacted Katzer and summoned him to another shareholders' meeting, whose agenda was "approval of the improvement of the defendants' employment conditions" (see Appendix 7A to the statement of claim).
9. On November 30, 2022, the defendants forwarded to Kotzer, through their attorneys, a valuation document for the companies MedLife and DHS , and asked for his position regarding the sale of his shares in accordance with the valuation (Appendix 22 to the statement of defense on behalf of the defendants). It should be noted that this valuation was conducted by a CPA on behalf of MedLife, Mr. Shlomi Ziv.  In response, Attorney Kotzer sent a letter to the defendants in which he refused to accept the valuation (see the parties' correspondence of December 27, 2023 and January 1, 2023 - Appendix 23 to the statement of defense on behalf of the defendants, and of January 8, 2023 - Appendix 24 to the statement of defense on behalf of the defendants).
10. The shareholders' meeting regarding the salary increase was ultimately held on January 4, 2023, as part of the "Zoom" platform, in which it was decided to raise the defendants' wages (see Appendix 24 to the defendants' statement of defense). A few days later, on January 8, 2023, Liran contacted the defendants and asked to convene the company's board of directors, to cancel the decision to raise wages, to discuss the company's situation and other demands (see Appendix 12 to the statement of claim, and also see Attorney Kotzer's letter, Appendix 24 to the statement of defense on behalf of the defendants).  Subsequently, and according to their approach, in accordance with the provisions of the agreement, the defendants approached the President of the Institute of Certified Public Accountants with a request to appoint a valuator for the company.
11. On January 19, 2023, the defendants responded to Liran's letter (see Appendix 13 to the statement of claim) in which they rebuffed Liran's claims, and raised various claims regarding Kotzer's conduct and activity in the company over the years, as well as their right to purchase Kotzer shares in accordance with the provisions of the agreement close to those dates. On January 22, 2023, Attorney Kotzer contacted the President of the Institute of Certified Public Accountants and objected to the appointment of the valuator (see Appendix 22 to the statement of defense on behalf of the companies, p.  148 of the Numerator).  On January 23, 2023, the Institute of Certified Public Accountants announced that it would not be able to grant the request for the appointment of the valuator, in view of the short-sightedness of the said appointment (see Appendix 23 to the statement of defense on behalf of the companies, p.  150 of the numerator).  Additional correspondence that was attached to the statement of claim leaves no room for doubt that the parties were unable to reach agreements regarding the implementation of the agreement and the execution of the separation, while until the date of filing these claims, they had leveled mutual accusations against each other regarding deviation from agreements, poor management of the company during the years in which they worked together in the company, and more.
12. In order to complete the picture, and to understand the escalation in the relationship between Kotzer and the defendants, I will note that in parallel with the conduct of the proceedings before me, on February 26, 2023, the defendants filed a complaint against Kotzer with the Israel Police, claiming that the aforementioned impersonated an engineer while working at MedLife (hereinafter: "the complaint", a copy of the certificate of filing the complaint was attached to the appeal against the decision of the Registrar of Defendants as Appendix 42). Subsequently, the defendants contacted Agam Leaders in a tax appeal and Phoenix in a tax appeal in a letter and noted that the company objected to the transfer of the compensation money due to Kotzer by virtue of the termination of his employment at Medlife, given their intention to file a lawsuit against Kotzer for the return of part of his wages at Medlife, which was paid to him on the basis of his declaration that he is an engineer (see in this regard the defendants' letter which was attached to the appeal against the decision of the Registrar of Defendants in Appendix 44).

The parties also conducted mutual claims in the Labor Court: in March 2023, Kotzer filed a claim against the defendants regarding the payment of retirement money, which he claimed was unlawfully withheld by the defendants (labor dispute 31561-03-23), while in June 2023, the defendants filed a monetary claim against Kotzer for MedLife compensation for damages caused to the company due to the alleged impersonation (a copy of the letter of claim was attached to the appeal against the decision of the Registrar of Defendants in Appendix 43).  Needless to say, after the testimonies in this case ended (in December 2024), and at the beginning of the evidentiary hearing in the case in the Labor Court, on March 18, 2025, the claims there were mutually dismissed by both parties by mutual consent, and Kotzer received the money claimed by him, with the exception of compensation for mental anguish and defamation.

13. the series of events that preceded the filing of the claims before me; the complaint; The parallel proceedings in the Labor Court, all of which shed light (?!) on the conduct of the parties, on the level of the "flames" between them before and after the filing of the proceedings before and after them - all as will be detailed below.

Claims of Shortcoming in the Framework of the Deprivation Claim