The changes were agreed upon in clause 3 of the addendum to the contract, that instead of receiving three apartments in the building,
If it is built on the plot, the appellants will receive three apartments, but in different buildings. One apartment on the roof of the building that will be built on the plot, a second apartment on Kadish Luz Street at the corner of Ben Eliezer Street, and a third apartment in the building that the company will build in the old Kiryat Motzkin. With regard to each of the aforementioned apartments, it was agreed that it would be of four rooms, and its area would not be less than 100 square meters.
It was also agreed that the appellants would transfer all their rights in part to the bank. In this context, it was stipulated that the bank would undertake the appellants to transfer to them the lease right on that roof apartment that was supposed to be built on the building in its plot, and which the appellants were supposed to receive according to the addendum to the contract (see paragraph 4(a) of the addendum).
- As a guarantee for the fulfillment of its obligations to the appellants in clause 3 of the addendum to the contract,
The company undertook (at the end of this section):
"... The mortgage for the benefit of the sellers is the plot known as Block 11583, Plot 51, according to the conditions that will be determined by Attorneys A. Toister and/or Shai Toister. For the purpose of registering the mortgage, the buyer will provide the sellers with an irrevocable power of attorney according to the wording attached to this addendum, at the same time a warning will be recorded (sic. in the original - my note) on the aforementioned plot at the Haifa Land Registry Office. The mortgage will be registered when the sellers demand it from a power of attorney, provided that the powers of attorney determine that there is an immediate need for it."
- There is no dispute that the appellants fulfilled their part in the contract and in the addendum thereto, and transferred the rights in part to the bank. The company provided the appellants with only two apartments. One four-room apartment in the area of 96 square meters, on Kadish Luz Street, was given to the appellants in 1981and was registered in their name in the year 1987. Second five-room apartment with an area of 145A subdivision in a building built on the plot was handed over to the appellants' possession in the year 1983. The appellants were registered as owners of this apartment about ten years later.. No additional apartment was bought and no additional apartment was given to the appellants.
There is no dispute that the company has ceased its activity. It is further agreed that no mortgage or warning note was registered in favor of the appellants' right to the real estate property mentioned in the end of the section 3To the addendum to the contract (hereinafter: the collateral asset). On the contrary, a first-degree mortgage was registered on the collateral property in favor of Mizrahi Bank. The mortgage deed was signed in front of the late Attorney A. Toister in August 1983 Lawyer The late Toister, who died in 2010 1988, was the father of respondent 5, and at the time he was a partner, with him and with respondent 5's late brother, Shlomo, in the partnership that is the respondent 4. The company has reached a state of insolvency. Repayment and the collateral asset is sold in 1990 by a receiver appointed to handle the property to cover the company's debts.
- Against this background, the appellants filed in 1993Claim for compensation. The lawsuit was directed against two groups of defendants. One group of defendants included Yehudit Shatil, Ran Shatil and Ze'ev Shatil, who are respondents 1-3, who were registered as directors of the company at the relevant dates. The second group of defendants included the partners A. Toister & Co., Advocates, and Attorney Shai Toister, who are the respondents 4 and .5
In the suit, the appellants claimed that the respondents caused them various damages, by causing the collateral asset, which was supposed to ensure the performance of the company's obligations to them, was not secured in any way in their favor, but was mortgaged for the benefit of Mizrahi Bank, and was sold by a receiver and realized in order to cover the company's debts in favor of Mizrahi Bank. In this context, the appellants claimed that by refraining from registering a warning note in favor of the appellants, and by executing a lien on the collateral asset in favor of another creditor, the respondents deceived them. The appellants also claimed that there was fraud or misrepresentation in concealing the non-registration of the warning note and in the deliberate concealment of the performance of the lien in favor of a third party.