Civil Appeal 1463/22 The Greek Orthodox Patriarchate of Jerusalem v. Himanuta Ltd. - part 40

Judge Ofer Grosskopf:

Unfortunately, I must disagree with the opinion of my colleague, the President Yitzhak Amit, in this case - both for his legal reasoning and for the conclusion of his analysis.  According to the law, the claim of Himanuta 2Tax Appeal (Hereinafter: Himanuta) against the Greek Orthodox Patriarchate of Jerusalem (hereinafter: The Patriarchate) to be rejected in its entirety.  Therefore, if you listen to my opinion, we will accept the appeal of the Patriarchate, and reject the appeal of Himanuta.  I will detail my reasoning below.

Introduction - The Bird's Eye View

1. Sometimes diving into the details clarifies the factual picture, and is a necessary condition for the proper application of legal rules to complex circumstances. Sometimes it blurs the picture, and may lead to erroneous legal conclusions.  I am afraid that the case in question belongs to the second group of cases.
2. The following is a concise, bird's-eye view of the factual picture underlying Himanuta's lawsuit against the Patriarchate: Himanuta was the victim of a serious act of fraud in connection with a transaction in the Patriarchate's lands. The Patriarchate itself had nothing to do with the fraud, but the litigation that followed the fraud, and the warning notes that were illegally recorded by virtue of it, made it difficult for it, and it sought to bring about a settlement with Himanuta, the Jewish National Fund (hereinafter: the JNF), and no less important, with the State of Israel, which stands behind them.  The lawyer who represented the fraudsters in the fraud transaction (the late Adv. Dr.  Yaakov Weinroth.  hereinafter: the lawyer or Weinroth), and by virtue of which he received a substantial fee, tried to bring Himanuta and the Patriarchate to a compromise agreement that would allow him to keep his fees.  The parties negotiated a settlement with the assistance of the same lawyer, during which a compromise outline was formulated between the parties and the givers in one of two different alternatives (payment of compensation by the Patriarchate or an extension of the lease to the JNF in the land, at the choice of the Patriarchate), but it became clear that at the current stage, the negotiators and grantors on both sides cannot and are not interested in committing to any of them.  In this situation, Adv. Weinroth came up with a creative idea according to which he would hold a festive ceremony in his office, with the participation of the Patriarch, during which the negotiators and givers on behalf of the parties, in his ears and in the ears of witnesses on his behalf (two retired judges), would confirm their agreement to the settlement outline.  The festive ceremony took place on March 12, 2007, during which a written document known as the "Particular" (hereinafter: the Particular) was presented and read.  As a result, the negotiators and givers verbally expressed their agreement to what was stated in the detail (the Patriarch nodded his head, and perhaps by saying "yes"), but without signing anything; And out of awareness that according to what is explicitly stated in the Particular, the approval of the Authorized Institutions is required for any compromise alternative that it determines, and that until a "full signature" settlement agreement is signed, none of the alternatives detailed in the Detail is binding on any of the parties.  Negotiations between the parties continued for another year afterwards, and ultimately failed, and did not yield any settlement agreement.  Can it be argued that the detail itself is a binding settlement agreement? Does the refusal to enter into a settlement agreement constitute a lack of good faith that allows for the award of subsistence damages against the Patriarchate? I believe that the negative answer to these two questions is clear and obvious.  The detail is nothing more than an auxiliary document intended to assist in advancing the negotiations - an outline of a path to compromise, which the negotiators and ginders on behalf of the parties have agreed to advance, but at the present stage the parties have not committed, and did not intend to commit, with respect to any of the compromise alternatives detailed therein.  It is clear to me that with respect to such an auxiliary document, even if it is solemnly placed on the negotiating table with the kind assistance of a third party, the requirements necessary for the purpose of perfecting a binding settlement agreement are not met.  Subsequently, the withdrawal from the negotiations due to later developments, in the absence of exceptional circumstances, is not a lack of good faith, but rather the realization of the right of each party to the negotiations not to enter into a contract that is not to its liking.
3. It should be emphasized that in Israeli case law, for the past 50 years, the main weight has been placed in examining the question of whether a contract was concluded on the basis of discretion, i.e., on the requirement that the parties to the contract agree to immediately undertake a legal obligation to act in accordance with the terms of the engagement. In the meantime, the requirement of specificity and the requirements of form have been largely removed from their independent status, and have become mainly auxiliary considerations in determining whether the element of finality exists.  This trend, especially in the context of business contracts, is worthy of criticism, and I will address it later (see paragraphs 79-80 below).  However, in my view, the main difficulty in the claim of Himanuta is not the focus on the requirement of discretion, but rather the erroneous interpretation it gives to this demand.  In the present case, at the time of drafting the particular, none of the parties who are supposed to enter into the transaction - the patriarchy on the one hand, and the trustees on the other - have not yet formulated a decision to enter into an agreement according to any of the alternatives that were placed on the negotiating table.  All that was agreed upon between the negotiators and the givers (and with the opinion of the Patriarch) was a compromise outline that would be brought, after certain conditions were met, for the approval of the parties authorized to commit to these two bodies.  Such consent cannot be considered discretionary to enter into a finished transaction by the parties to the transaction.  Nor can it be a basis for imposing the finished transaction on any of the parties by virtue of the principle of good faith.  Therefore, in my view, accepting a Himanuta claim means, in practice, emptying the content of the last remaining material requirement for the conclusion of a contract, and turning the institution of the contract into a black box, the existence or absence of which is determined within the framework of it by an arbitrary judicial decision.  Such a move is certainly not acceptable.
4. How, then, did my colleague come to the conclusion that the detail is a binding contract in relation to the finished transaction? How did the trial court reach the conclusion that such a contract could be imposed on the patriarchate due to a breach of the duty of good faith in negotiations? I am afraid that the answer to this is that it is not only God in the details, but also Satan. Marginal items of information, which in general view do not change anything, may lead to a misconception, which mixes the agreement formulated by the subjects and the grantors with respect to a compromise outline that will lead to the approval of their clients, and the parties' discretion to enter into a finished transaction; between the right to withdraw from negotiations in progress due to a change in circumstances, and the obligation to conduct the negotiations in good faith.  Indeed, even a clear picture may be blurred if you get too close to it.  It should be clarified that the way to avoid this is not to ignore the details, but to analyze them from the perspective of the whole.  This is what I would like to do later in my opinion.  In my understanding, the clear conclusion from this analysis is one: there is not, and never was, a legal responsibility on the part of the Patriarchate towards Himanuta to compensate it for the damages of the fraud - not by virtue of a tort, not by virtue of a contract, and not even by virtue of the duty of good faith.  The responsibility to compensate Himanuta for the fraud was and remains at the door of the parties responsible for the fraud (and whose identity we are not dealing with the appeals in this case), and on them alone.  In any case, the stubborn attempt by Himanuta and the JNF to shift the damage of the deception onto the shoulders of the patriarchy - an attempt that itself can be attributed to a considerable degree of lack of good faith - is doomed to failure.
5. At the heart of the gap between my position and that of my colleague, President Amit, stands the question of the legal status of the particular. In this regard, I am of the opinion, unlike my colleague, that the trial court was clearly right.  The particular, as expressly stated therein, is not a compromise agreement that binds the parties (the Patriarchate and Himanuta) to the details that appear in the drafts of the settlement agreements attached to it.  Thus, even if it was presented at a festive event (initiated by Adv. Weinroth), and even if the negotiators and givers (and even the Patriarch) agreed to work to promote it, in the hope of getting it approved by the competent authorities.  In the absence of such a binding settlement agreement, and given that in my position (and apparently also the position of my colleague) the conduct of the Patriarchate in the framework of the negotiations it conducted with Himanuta does not in itself amount to a lack of good faith, and certainly not one that justifies a ruling on subsistence damages, my opinion is that the appeal should be accepted, while cancelling the financial obligation imposed on the Patriarchate in the trial judgment.
6. The order of things will be as follows. First, I will briefly and telegraphically describe parts of the factual background necessary for a decision in our case, while clarifying certain aspects that are important for the continuation of the legal analysis.  Later on, I will address the legal background, while presenting the alternatives available to those who wish to classify the particulars as a contract with binding legal validity (and not just as a "reference paper").  Afterwards, I will clarify why my approach does not have room to intervene in the trial court's determination that the parties did not view any detail of the agreement as a binding settlement, i.e., that the requirement of finality to enter into the finished transaction was not fulfilled in relation to it.  Further to this, I will explain that a similar conclusion regarding the validity of the particulars must also be reached in light of the non-fulfillment of the requirements of the relevant form in the circumstances of the case - the requirement of a signature by virtue of the consent of the parties, and the written requirement by virtue of section 8 of the Land Law, 5729-1969 (hereinafter: the Land Law).  Finally, against the background of the conclusion that the private is not a binding compromise agreement, I will turn to an examination of the conduct of the Patriarchate from the perspective of section 12 of the Contracts (General Part) Law, 5733-1973 (hereinafter: the Contracts Law), and I will clarify why no relief should be granted against the Patriarchate in this route as well.

I will therefore begin with a concise description of the circumstances of the case, in order to lay the necessary foundation for the normative discussion.  Given the broad factual platform that has already been laid out in the opinion of my colleague, the President Associate, and in order to diagnose my perspective on the circumstances of the case, this background presentation will be done telegraphically.