Civil Case (Tel Aviv) 50068-06-20 Haya Schuchman v. Alfred Urban Hotels Ltd.

I have before me a claim for removal of discrimination filed by the plaintiff, who owned 5% of the shares of defendant 1 (hereinafter: "the company") at the time of its establishment, against the company, against defendant 3, who owned 85% of the company's shares at the time of its establishment, and against defendant 2, who is the father of defendant 3.  In the lawsuit, the plaintiff petitioned for various remedies by virtue of section 191 of the Companies Law, 5759-1999 (hereinafter: the "Companies Law"), including remedies for the purchase of its shares in the company and the repayment of an owner's loan that it had given it, as well as a remedy for cancelling the dilution of the plaintiff's shares in the company, which was allegedly carried out unlawfully.

1. The relevant background, the course of the proceeding and the summary of the expert opinion on behalf of the court
2. The Relevant Background to the Claim
3. On February 8, 2014, the plaintiff, defendant 3 and Mr. Shlomi Levy (hereinafter: " Levy") signed a founders' agreement (Appendix A to the statement of claim; Hereinafter: the "Founders' Agreement"), in the framework of which it was agreed to establish the company for the purpose of establishing and managing a boutique hotel in Tel Aviv (hereinafter: the "Hotel"). The following are the provisions of the founders' agreement that are relevant to the proceeding:
   • The ownership rate of the Company's shares will be as follows - 85% to Defendant 3 (referred to in the "Tomer" agreement), 10% to Mr. Levy (referred to in the "Shlomi" agreement) and 5% to the plaintiff (referred to in the "Haya" agreement); Each owner of 15% of the company's shares will be entitled to appoint a director and end his term (clause 4 of the founders' agreement).
   • The shareholders will provide initial capital for the company's operations in the amount of ILS 5 million. This was done by means of owners' loans on terms that were agreed upon in accordance with the ownership rate of each of them in the company's shares - i.e., defendant 3 in the sum of ILS 4,250,000, Mr. Levy in the sum of ILS 500,000 and the plaintiff in the sum of ILS 250,000 (ibid., in clause 8.2).  In this context, it should be noted that in lieu of the aforesaid sum, the plaintiff deposited a sum of only ILS 236,000 (as follows, for example, from the company's accountant's certificate, which was attached as Appendix 1 to the affidavit of defendant 3).
   • To the extent that the company requires additional financing for its operations, the parties undertake to provide it with owners' loans on terms identical to those of the initial financing and in accordance with the ownership rate of the company's shares (clause 8.4 of the founders' agreement). In a situation where one of the shareholders refuses to provide his share in this type of funding, the other shareholders will be entitled to complete the financing in place of the recalcitrant shareholder, and then they will also have the right to dilute his shares in accordance with the formula set out in clause 8.8 of the Founders' Agreement (after giving notice).
   • Defendant 3 will be appointed CEO of the company and the plaintiff will be appointed deputy CEO, with the plaintiff being subordinate to defendant 3 and acting in accordance with his instructions (ibid., in section 9).
4. The company was established on February 15, 2015. In clause 6.7 of the founders' agreement, it was determined that defendant 3 would be appointed chairman of the company's board of directors and that he would have a decisive voice.  Levy and the plaintiff, for their part, decided to appoint the plaintiff as a director by virtue of their joint shares (which together constituted 15% of the company's shares).
5. At the time of the construction of the hotel, it became clear that the financing required for this purpose exceeded the sum of ILS 5 million set out in the founders' agreement. As a result, on February 15, 2016, the company took a loan from Bank Hapoalim in the amount of ILS 2 million to be repaid in installments, guaranteed by the three shareholders and defendant 2; and an additional loan in the amount of ILS 2 million, guaranteed by the three shareholders, at an annual interest rate of 2% for a period of two years, i.e., for repayment until June 6, 2018 (a loan agreement with defendant 2, also signed by the plaintiff, was attached as Appendix 4 to the affidavit of defendant 3; hereinafter: "the loan from defendant 2").
6. The hotel opened for operation in July 2016 and at that time it had 29 guest rooms. The hotel's activity was relatively successful and its occupancy rates were high in the years leading up to the outbreak of the coronavirus crisis.
7. At the same time, there is no dispute that since the beginning of the hotel's operation, significant disputes began to arise between defendant 3 and the plaintiff, who took legal representation as of July 2017. The disputes intensified with the passage of time, with each side blaming the other for their formation.  This, inter alia, was against the background of an offer to purchase the hotel from a third party that was promoted by defendants 2-3 and which was ultimately not carried out in light of the plaintiff and Mr. Levy's refusal to accept the offer in accordance with their right to the founders' agreement.  Following these disputes, defendant 3 informed the plaintiff that he was exercising his rights by virtue of the founders' agreement and appointing two more directors on his behalf to the company - defendant 2 and another director (see, for example: the email message from defendant 3 dated July 2, 2017 - Appendix J to the plaintiff's affidavit).  It should be noted that defendant 2 terminated his position as a director on November 14, 2018 (the decision of the company's board of directors to accept defendant 2's resignation from this position was attached as Appendix 26 to defendant 3's affidavit).
8. On November 20, 2017, defendant 3 sent the plaintiff a letter of summons to a hearing prior to dismissal, against the background of various allegations he raised against her conduct in connection with her work at the hotel. On December 14, 2017, defendant 3 sent the plaintiff another letter on the subject; Subsequently, in a letter dated December 31, 2017, which was sent after defendant 3 claimed that the plaintiff did not appear for the hearing, defendant 3 notified her of the termination of her employment with the company (Appendices 13-17 to the affidavit of defendant 3).  In addition, on January 23, 2018, Mr. Levy informed the plaintiff that he was canceling her appointment as a director by virtue of his shares (Appendix 18 to the affidavit of defendant 3).
9. In January 2018, the plaintiff filed a lawsuit against the company in the Tel Aviv-Jaffa Regional Labor Court to cancel her dismissal and award her compensation in the amount of ILS 185,000 (labor dispute 44213-01-18; paragraph 39 of defendant 3's affidavit). At the hearing on January 28, 2018, the plaintiff agreed, on the recommendation of the court, to withdraw her request for temporary injunctions that was filed with her claim.  Finally, and in accordance with the agreement of the parties, on November 3, 2019, a judgment was issued by way of a settlement and without reasoning, according to which the company will pay the plaintiff the sum of ILS 20,000 for all the components of its claim.
10. On February 25, 2018, an agreement was signed according to which defendant 3 purchased Mr. Levy's shares in the company for their face value (in a symbolic amount of ILS 10), while defendant 3 undertook that the company would repay Mr. Levy the owner's loan he gave it in the sum of ILS 520,000 (Appendix 21 to the affidavit of defendant 3). In accordance with this agreement, on May 16, 2018, the company transferred to Mr. Levy the sum of ILS 520,000 for the repayment of the owner's loan, after defendant 3 transferred to the company on May 13, 2018 an identical sum of ILS 520,000, which increased the owner's loan of defendant 3 by this amount (as appears from Appendix 21 to the plaintiff's affidavit, at p.  233 of the numerator; and as stated in the approval of the company's accountant, which was attached as Appendix 1 to the affidavit of defendant 3).  Following this agreement, defendant 3 became the owner of 95% of the company's shares.
11. On November 20, 2018, defendant 3 sent a summons to hold a meeting of the company's shareholders, in order to submit a report on the hotel's activities and financial statements for 2018, in order to discuss the repayment of the loan to defendant 2 and to examine the possibility of expanding the hotel by renting an additional floor in the same building that was about to become vacant. Such a meeting was held on December 17, 2018 (hereinafter: "the meeting from December 17, 2018").  At that time, the company was about six months late in repaying the loan from defendant 2, and therefore defendant 3 suggested that the repayment of the loan be done by granting an owner's loan to the company in accordance with the relative share of each shareholder.  This proposal was accepted with the support of defendant 3 (by virtue of the large majority that he had as the owner of 95% of the company's shares) and despite the plaintiff's objection.  In addition, at the hearing, defendant 3 presented a preliminary business plan that he formulated for the expansion of the hotel by 16 or 18 additional rooms (as approved by the authorities), at an estimated cost of approximately ILS 4 million, which defendant 3 expected would increase the hotel's profits in the amount of approximately ILS 2 million per year (hereinafter: the "expansion of the hotel").  Counsel for the plaintiff, who was present at the meeting and asked questions regarding the plan to expand the hotel, replied that the plaintiff does not reject the idea but that she needs solid data in order to make a decision, and defendant 3 replied that he will raise the issue again after receiving additional data.
12. In a letter from the company's counsel to the plaintiff's attorney dated February 14, 2019 (Appendix 32 to defendant 3's affidavit), the plaintiff was asked to make available her pro rata share of the owner's loan that was agreed upon at the meeting on December 17, 2018 for the purpose of repaying the loan from defendant 2 (which at that time amounted to ILS 2,247,452). In this context, counsel for the company noted that defendant 3 informed him that if the plaintiff did not provide its share of the owners' loan in the sum of ILS 112,373, then defendant 3 intended to provide the company with this sum against the dilution of the plaintiff's shares in accordance with the provisions of sections 8.9-8.8 of the founders' agreement (ibid., in paragraphs 16-17).
13. On March 6, 2019, defendant 3 provided the company with an owner's loan in the sum of ILS 2 million for the purpose of repaying the loan principal from defendant 2 (as indicates, for example, from the company's accountant's certificate, which was attached as Appendix 1 to defendant 3's affidavit; see also: confirmation of transfer of the aforementioned sum that was attached as part of Appendix 24 to the plaintiff's affidavit, at p. 236 of the numerator), after defendant 2 agreed that the interest on the loan would be paid to him at a later date from the company's cash flow.  In light of this, in a letter from the Company's counsel to the plaintiff's attorney dated March 14, 2019, the plaintiff was asked to provide the company with its pro rata share (5%) of the said amount, in the sum of ILS 100,000, otherwise it was stated that defendant 3 would exercise his right to dilute its shares (Appendix 33 to defendant 3's affidavit, paragraphs 1-4).  After the plaintiff did not discharge its relative share to the company, the company's counsel notified it on April 1, 2019, of the dilution of its shares by defendant 3 in accordance with the formula set out in the founders' agreement, by way of the allocation of additional shares, so that the percentage of the plaintiff's holdings decreased to 3.53% of the company's shares, while the share of defendant 3's shares increased to 96.47% (Appendix 34 to defendant 3's affidavit, paragraphs 1-11; hereinafter: "The First Dilution").^[1]
14. The issue of the expansion of the hotel came up again at the shareholders' meetings held on June 13, 2019 and July 1, 2019 (hereinafter: "the meeting of June 13, 2019" and the "meeting of July 1, 2019"), in which an updated plan for the expansion of the hotel was presented (the plan and the minutes of the aforementioned meetings were attached as Appendices 38-39 to the affidavit of defendant 3; hereinafter: the "Expansion Plan" or the "Plan"). The plaintiff's counsel was also present at these meetings, in which he questioned the economic feasibility of expanding the hotel and the existence of sufficient data for making a decision on the matter, while arguing that this was a move whose sole purpose was to infringe on the plaintiff's rights and dilute her holdings in the company.  At the end of the meeting of July 1, 2019, and despite the plaintiff's objection, it was decided by a majority vote (again by the overwhelming majority of defendant 3) to approve the expansion plan and implement it, inter alia, by injecting an additional ILS 2 million into the company according to the relative share of the shareholders in the company.
15. In a letter dated February 5, 2020 (Appendix 43 to the affidavit of defendant 3), the plaintiff was asked to announce whether she intends to provide her share of the owner's loan that was decided at the meeting on July 1, 2019, while noting that the absence of an answer is tantamount to a negative answer. In this letter as well, it was stated that defendant 3 intended to place the plaintiff's share in the loan as well, to the extent that it refused to do so, subject to his right to dilute its shares in accordance with the provisions of the founders' agreement in this situation.  Subsequently, on March 3, 2020, the plaintiff transferred to the company the sum of ILS 1 million against his share of the owners' loan, which was decided at the meeting of July 1, 2019 (confirmation of the transfer was attached as Appendix 46 to the affidavit of defendant 3).  In response letters dated March 5, 2020 and March 23, 2020 (Appendices 44 and 47 to the affidavit of defendant 3), the plaintiff's counsel raised various demands for details and documents related to the expansion of the hotel, while reiterating his claim that the expansion of the hotel is nothing more than a pretext in bad faith for the purpose of diluting the plaintiff's shares and violating her rights.  In his letter dated March 5, 2020, the plaintiff's attorney noted that the plaintiff is currently filing a lawsuit against the company and its managers (ibid., in section 1).  On March 25, 2020, defendant 3 transferred an additional sum of ILS 1,000,000 to the company to complete the owners' loan that was decided upon at the meeting of July 1, 2019, which also included the plaintiff's relative share (as stated in Appendix 1 to defendant 3's affidavit).  On March 26, 2020, defendant 3 decided to once again exercise his right to dilute the plaintiff's shares in accordance with the provisions of the founders' agreement due to the fact that it did not provide the company with its share (3.53%) of the owners' loan, by way of a share allocation, so that the current share of the company's shares owned by the plaintiff decreased to 2.73% and the share of defendant 3 increased to 97.27% (hereinafter: "the second dilution"; See the letter of the company's counsel to the plaintiff's attorney dated April 30, 2020, which was attached as Appendix 49 to the affidavit of defendant 3).^[2]
16. At the same time, the Corona virus broke out in Israel, which severely damaged the tourism industry in Israel, including the hotel's operations. The work to expand the hotel, which was financed both through a bank loan in the amount of ILS 2 million and through an owner's loan decided at the meeting on July 1, 2019, began in January 2020 and was completed at the end of 2020.
17. On March 12, 2020, the plaintiff filed a lawsuit in the Tel Aviv Magistrate's Court (Civil Case 28089-03-20; hereinafter: the "Claim to the Magistrate's Court"). In their statement of defense in the present proceeding (in paragraph 88 thereof), defendants 2-3 noted that the statement of claim to the Magistrate's Court was "in the same wording as the statement of claim in this case (with negligible changes)", and this is indeed evident from a perusal of the text of the said statement of claim (which was attached as Appendix 55 to the affidavit of defendant 3).  On May 10, 2020, the plaintiff filed a request for temporary relief in the framework of the claim to the Magistrate's Court.  In the Magistrate's Court's decision of May 11, 2020, the prima facie position was expressed that the claim is not within its jurisdiction, and accordingly it was proposed to the plaintiff to delete the claim while preserving her right to file it again with the competent court.  On May 20, 2020, the plaintiff announced that she was seeking to delete the claim to the Magistrate's Court in light of the court's comment, and it was indeed deleted in a judgment given on the same day (see: Appendices 56-58 to the affidavit of defendant 3).
18. The Course of the Proceeding
19. The lawsuit in question was filed on June 21, 2020, about a month after the claim was dismissed by the Magistrate's Court. In summary, it should be noted that various claims of discrimination were raised in the statement of claim, including claims of excluding the plaintiff from the company's activities, concealing information from it, and illegally diluting its shares.  Claims were also raised according to which defendants 2 and 3 were acting in the company as their own and taking money from it illegally.  In the framework of the lawsuit, various remedies were requested, including the repayment of the owner's loan given by the plaintiff to the company in the amount of ILS 235,000; forced purchase of its shares in the amount of ILS 1,555,000; payment of compensation for commercial torts in the amount of ILS 100,000 and for causing mental anguish to the plaintiff in the amount of ILS 30,000; and an order ordering the cancellation of the dilution of the plaintiff's shares, while the plaintiff limits the amount of the claim for fee purposes to a total of ILS 800,000.
20. On July 2, 2020, the plaintiff filed a request for various temporary relief, including cancellation and delay of any attempt to dilute its shares. In a decision dated August 21, 2020, the application was rejected by the previous panel that heard the case (the Honorable Judge R.  Ronen), in light of the delay in its filing, due to the fact that "the application does not attest to a prima facie high chance that the Applicant [the plaintiff's] claims will be accepted in the hearing of the claim on its merits" and for considerations of the balance of convenience.
21. The plaintiff submitted her evidence on March 7, 2021, which included an affidavit on her behalf, an economic expert opinion of CPA Moti Detelkramer (hereinafter: "CPA Detelkramer" and "Detelkramer Opinion") as well as an expert opinion of Mr. Avi Agajani dated March 1, 2020 (hereinafter: " Agagani" and "Agajani Opinion"), which was also attached as Appendix 15 to the statement of claim to the Magistrate's Court and as Appendix 15 to the statement of claim in the present proceeding. The evidence of defendants 2-3 was submitted on May 14, 2021, and included affidavits on behalf of defendant 2 and defendant 3; Affidavit of Morris Moshe Oshik Kraus Ohayon, CPA, who serves as the company's auditor; and an expert opinion of Dr.  Gideon Ben-Nun (hereinafter: "Dr.  Ben-Nun" and "Ben-Nun's Opinion").
22. On June 20, 2022, an evidentiary hearing was held, in which the declarants and experts on behalf of the parties were examined. It should be noted that after the declarants' interrogations, I asked the parties to comment on the possibility that I would appoint an expert on behalf of the court for the purpose of assessing the company's value, taking into account the polar disputes that arose between the parties' experts as well as the various dates on which the company's value was assessed in the Detelkramer and Ben-Nun opinions.  Counsel for the plaintiff left the decision on the matter to the discretion of the court; Whereas the ISA for defendants 2-3 was of the opinion that this was not justified in the circumstances of the case, in light of the costs involved and the advanced stage of the proceeding.
23. In my decision of July 28, 2022, I ordered the appointment of an expert on behalf of the court to assess the value of the company, for the reasons detailed in the decision, as of December 31, 2019 - December 31, 2019 (to which the value of the company was assessed in the opinion of Detelkramer on behalf of the plaintiff) and December 31, 2020 (to which the value of the company was assessed in the opinion of Ben Nun on behalf of defendants 2-3).
24. Following the replacement of no less than three experts on behalf of the court (in light of various requests by the parties), on December 7, 2022, I ordered the appointment of CPA Yitzhak Idan as an expert on behalf of the court (hereinafter: "the expert" or "the expert on behalf of the court"). CPA Idan's opinion was submitted on May 31, 2023 (hereinafter: the "expert opinion"), and his answers to clarification questions sent by the parties were submitted on July 5, 2023.  On July 16, 2023, the plaintiff announced that she was interested in interrogating the expert, who was interrogated in a supplementary evidence hearing only on September 15, 2024 (in light of postponements due to the "Iron Sword" war and in light of the request for the transfer of shares filed by the plaintiff, as detailed below).
25. On December 21, 2023, the plaintiff filed an application for "approval of the transfer of shares" (hereinafter: the "application for the transfer of shares"). In the application, it was detailed that in order to reduce her damages, the plaintiff signed an agreement for the sale of her shares in the company to Mr. Nir Naimi for a sum of ILS 600,000, not including the repayment of the owner's loan to be paid directly from the company (hereinafter: " Naimi" and "the Naimi transaction").  The following picture emerges from the appendices to the application: On February 5, 2023 (i.e., more than ten months before the application for the transfer of shares was filed), the plaintiff was given an offer from Mr. Naimi to purchase its shares; On February 21, 2023, the proposal was forwarded to the company's attorney and to defendants 2-3; On March 15, 2023, the plaintiff and Mr. Naimi were served with defendant 3's notice of the exercise of the right to join (tag along) of Mr. Naimi's offer, which is available to him by virtue of clause 7.5 of the founders' agreement, so that after the purchase of 546 shares from the plaintiff only, the aforementioned number of shares will be purchased from defendant 3 and the plaintiff, according to their holdings ratio in the company (97.27%-2.73%), i.e., 531 shares from defendant 3 and 15 shares from the plaintiff).  Attached to the request for the transfer of shares was the plaintiff's attorney's request to the company's attorney dated December 4, 2023, in which he was asked to amend the shareholders' register so that the plaintiff's shares would be transferred to Mr. Naimi.  In its response dated December 5, 2023, the company's counsel rejected the plaintiff's request, in light of the existence of the right to join defendant 3 and the absence of the company's board of directors' approval for the transfer.
26. After receiving the defendants' responses to the request for the transfer of shares and the plaintiff's response to the answers, on March 19, 2024, I held a hearing on the application, in which the parties and their counsel, as well as Mr. Naimi and his counsel, were present. At the end of the hearing, the plaintiff was given 7 days to inform the court whether she was complying with the request for the transfer of shares, including taking into account the fact that it was filed within the framework of this proceeding without the plaintiff filing a motion to amend the statement of claim and not even a request to add Mr. Naimi as an additional party.  On March 27, 2024, the plaintiff announced that it did not insist on the request for the transfer of the shares, and in my decision from that day I ordered the deletion of the application, while preserving the plaintiff's right to take a separate proceeding in this matter.
27. For the sake of completeness, it should be noted that on May 13, 2024, Mr. Naimi filed a lawsuit against the company, defendant 3 and the plaintiff (which marked civil case 30350-05-24), which is also being conducted before me, in connection with the factual set described in the motion for the transfer of the shares (hereinafter: "Naimi's claim"). It should also be noted that on June 6, 2024, Mr. Naimi filed a motion to consolidate the hearing of the present claim with the hearing of his own claim, but following my recommendation, Mr. Naimi withdrew the request to consolidate the hearing.  It should also be noted that following the request of defendants 2-3, and with the consent of Mr. Naimi, in my decision of September 15, 2024, the hearing of Naimi's claim was postponed until a decision was made on the claim at hand.  Finally, it should be noted that in the hearing on September 15, 2024, in which the expert was questioned on behalf of the court, Mr. Naimi's counsel was also included among the plaintiff's counsel (in accordance with a power of attorney given to him by the plaintiff for the purpose of the evidentiary hearing only).
28. On December 19, 2024, the plaintiff submitted her summaries; On March 31, 2025, the defendants submitted their summaries; and on April 28, 2025, the plaintiff submitted reply summaries.
29. Summary of the expert opinion on behalf of the court
30. In his opinion, the court-appointed expert estimated the company's value according to the Discounted Cash Flows (Discounted Cash Flows) method. Hereinafter: "DCF"), as of the two dates required - December 31, 2019 and December 31, 2020 (hereinafter: "2019 Valuation" and "2020 Valuation", respectively).  The expert divided the 2019 valuation into two scenarios - the first scenario that does not take into account the expansion of the hotel; and a second scenario that takes into account the expansion.  The expert assessed the value of the company based on its financial statements, while making adjustments that were required in his opinion, as well as on the basis of statistical data and professional reviews relating to the tourism and hotel industry.  In each of the three valuations received, the expert noted that he was required only for information that was known at the time of the determining date for each valuation.  For example, the valuation for December 31, 2019 did not take into account the effects of the coronavirus outbreak in 2020, the information about which was not known at the time.
31. The 2019 valuation was based on the company's financial data from its reports for the years 2017-2019 and their adjustment to the company's long-term activity (based on past trends in the company and statistics regarding the hotel industry):
    • In the scenario without the expansion of the hotel, the expert estimated the value of the company's activity based on the DCF method at ILS 15,862,000. After deducting net financial liabilities in the amount of ILS 1,710,000 from the aforementioned amount, an equity value (including owners' loans) in the amount of ILS 14,152,000 was received.  The value of the equity minus the original owners' loans as they appear in the financial statements (ILS 4,871,000) and after deducting the excess owner's loan provided by defendant 3 (in the amount of ILS 2 million) amounts to ILS 7,280,000 (clause 5.2.2 of the expert opinion).
    • In a scenario that includes the expansion of the hotel, the expert also used the expansion plan on the basis of which the expansion was carried out and estimated the value of the excess activity that would be created as a result of the expansion. In accordance with the DCF method, the expert estimated that this value would be ILS 11,707,000, so that the total value of the activity, including the expansion, was estimated at ILS 27,568,000.  After deducting the costs of the hotel's expansion in the amount of ILS 4,000 million and net financial liabilities in the amount of ILS 2,085,000 from the aforementioned amount, an equity value including owners' loans in the amount of ILS 21,483,000 was obtained.  The value of the equity minus the original owners' loans as they appear in the financial statements (ILS 4,871,000) as well as the excess owners' loan provided by defendant 3 (in the amount of ILS 2 million)

NIS) amounts to ILS 14,612,000 (clause 5.3.2 of the expert opinion).

28. The valuation for 2020 was made using the Company's financial data from its reports for the years 2017-2020, while adjusting them to the Company's long-term activities, taking into account the effects of the COVID-19 outbreak on the hotel industry in the short and long term, as expected as of December 31, 2020. This assessment, of course, also included the expansion of the hotel, which was completed in December 2020.  In this framework, the expert estimated the value of the company's activity based on the DCF method in the amount of ILS 18,918,000.  After deducting net financial liabilities in the amount of ILS 3,936,000 from the aforementioned amount, an equity value (including owners' loans) of ILS 14,982,000 was received.  The value of the equity net of the owners' loans (ILS 6,062,000 as well as surplus owners' loans in the amount of ILS 4 million provided by defendant 3) amounts to ILS 4,920,000 (clause 6.3.2 of the expert opinion).
29. As part of the presentation of the above valuations less owners' loans, the expert detailed the owners' loans that were given as of each of the dates in the total amount of ILS 6,871,000 as of December 31, 2019 and ILS 10,062,000 as of December 31, 2020, according to the Company's financial statements. Out of the total owners' loans at any given time, the expert noted "surplus owners' loans" (as defined in the opinion in the last paragraph of section 1.3 and as will be referred to below), i.e., owners' loans made by defendant 3 when the plaintiff refused to provide its relative share in the loan, in a manner that led to the dilution of its shares.  Thus, the excess owners' loans amounted to ILS 2 million at the 2019 valuation and ILS 4 million at the 2020 valuation.  In the opinion, the expert noted that he does not express his opinion regarding the manner and rate of the dilution of the plaintiff's shares, which was carried out in accordance with the mechanism in the founders' agreement and not necessarily in accordance with the economic value (since he was not asked to do so).  At the same time, the expert expressed his opinion that "to the extent that the dilution is taken into account in the calculation of the shareholders' share of the company's capital as a result of the excess loans, for the purpose of valuing the company's capital, they should not be taken into account as 'financial debt'" (the end of the last paragraph of paragraph 1.3 of the expert's opinion; emphasis not in the original).
30. Discussion and Decision
31. I will preface the beginning - after reviewing the arguments of the parties in their summaries, and taking into account the agreement of defendant 3, I order that defendant 3 purchase the plaintiff's shares in the company in accordance with the company's value as of December 30, 2019, all under the conditions that will be detailed below; I also order that the company repay the plaintiff the owners' loan that it gave to the company. The matter will be detailed in detail below, while addressing the arguments of the parties relevant to the decision in the proceeding.

Defendant 3 agreed to purchase the plaintiff's shares; this result is also justified due to the loss of trust between the parties in the company, which is a "quasi-partnership"

31. In fact, there is no dispute between the parties that they should separate, when during the course of the proceeding, defendant 3 expressly expressed the position that he agrees to purchase the plaintiff's shares and that the only issue in dispute in this matter is the value of the company. Thus, for example, in a hearing held on March 19, 2024, counsel for defendants 2-3 explicitly clarified that "from day one, we argued that the claim of discrimination is unnecessary and baseless, but we are willing to purchase the plaintiff's shares.  From day one, the dispute was about the company's value.  In other words, how much will the plaintiff receive for her shares" (transcript of the hearing, p.  161, paras.  23-25).  Accordingly, in paragraph 4 of the summaries of defendants 2-3 it is also stated that "from the beginning of the proceeding, Tomer [defendant 3] announced that he agreed to purchase the plaintiff's shares at their true value, and not at the absurd value that the plaintiff demanded of him, and the main dispute in this case is therefore the value of the plaintiff's shares, a dispute in which an expert appointed by the court, Mr. Yitzhak Idan, was appointed for a decision." In my opinion, the plaintiff's claim for the purchase of its shares on the one hand and this explicit consent on the part of defendant 3 on the other, is sufficient to order that defendant 3 purchase the plaintiff's shares in the company.
32. It should be clarified that in my opinion, the company's opposing position regarding the forced purchase relief requested in the lawsuit has no relevance, taking into account the fact that I am not instructing the company to purchase the plaintiff's shares, but rather to defendant 3, who, as stated, agreed to purchase the shares (especially since this is a private company in which defendant 3 holds an almost absolute majority of the shares and the plaintiff holds some of them, so it is not clear what is the basis for the company's "independent" opposing position in this context).
33. More than necessary, it should be noted that this result is also justified in light of the clear existence of a severe crisis of trust between the plaintiff and defendant 3, which was also reflected in the plaintiff's dismissal. There is no dispute that the company that is the subject of this proceeding is a "quasi-partnership", as it is a private company owned by only two shareholders, which was established for the purpose of operating and managing the hotel jointly (even though the plaintiff was subordinate to defendant 3) on the basis of the trust that prevailed between them (see, for example: Civil Appeal 9308/20 Acre Assessor v.  Beit Hosen Ltd., paragraph 4 of the judgment of Judge R.  Ronen (February 13, 2023)).  As is well known, in the event of a loss of confidence between shareholders in a company that constitutes a "quasi-partnership", the court may, in appropriate cases, award a remedy of separation of powers, even without proof of discrimination (see, for example: Civil Appeal 8712/13 Adler v.  Livnat, para.  72 (September 1, 2015; hereinafter: "the Adler case"); Civil Appeal 6290/17 Magenzi v.  Levy, para.  16 (December 11, 2018; hereinafter: "Magenzi Case"); Civil Appeal 5804/19 B.  Real Estate Management in a Tax Appeal v.  Tinhav Construction and Development Company (1990) Ltd., para.  46 (October 3, 2021; hereinafter: "The S.B.  case.  Management"); Civil Appeal 2786/18 Bachar v.  Cooperly, para.  54 (December 30, 2021; hereinafter: "the Bachar case"); Tzipora Cohen Shareholders in the Company - Suit Rights and Remedies, vol.  2, 192-195 (2nd edition, 2008; hereinafter: "Z.  Cohen")).
34. As stated, the loss of trust between the plaintiff and defendant 3 clearly arises from the pleadings and the evidence of the parties. Thus, for example, already in paragraph 38 of their statement of defense, defendants 2-3 noted that after an offer to purchase the hotel was rejected in 2017 by a third party following the objections of the plaintiff and Mr. Levy, "between Tomer [defendant 3] and Chaya [the plaintiff] there was a severe crisis of trust and a real break in the relationship" (see also: paragraph 29 of defendant 3's affidavit).  This conclusion is reflected in the multitude of evidence submitted by the parties in real time, including the minutes of the shareholders' meeting of May 14, 2017, in which the aforementioned proposal for the purchase of the hotel was discussed (Appendix E to the plaintiff's affidavit), in which the plaintiff made three harsh accusations against the defendant; From email correspondence from June 2016 between the plaintiff, Mr. Levy, defendant 3 and the company's attorney (Appendix G to the plaintiff's affidavit), in particular taking into account the company's attorney's words regarding "the depth of the rift and the storm of emotions between Chaya and Tomer" (ibid., at p.  76 of the numerator); and from a transcript of a conversation that took place between the plaintiff, Mr. Levy, and defendants 2 and 3 on June 11, 2017 (Appendix 9 to the plaintiff's affidavit), in which, inter alia, defendant 2 stated (starting at the end of page 9 of the transcript) that "in the atmosphere that was created today, I do not see this as for the benefit of the hotel and the place...  Because I don't see Chaya and Tomer functioning together." Needless to say, these are only examples and that from the rest of the evidence presented, as well as from the testimonies of the parties, I got the impression that the rift that arose between them in the middle of 2017 only deepened with the dismissal of the plaintiff from the company at the end of 2017 and that it can no longer be repaired.  However, each party attributes the loss of trust to the other's behavior.  However, in the circumstances of the case, including in light of defendant 3's agreement to purchase the plaintiff's shares, there is no need to address this issue, since the rift between the parties and the intensity of the crisis of trust between them are not in dispute, is sufficient to justify the solution that defendant 3 will purchase the plaintiff's shares in the company.
35. Therefore, I hold that defendant 3 will purchase the plaintiff's shares in the company. To be precise: I did not find room to obligate the company and defendant 2 to debt jointly and severally with defendant 3 for the purchase of the plaintiff's shares (as requested by it in the statement of claim and in its summaries).  In view of the fact that defendant 3 is the only shareholder who will remain in the company, I do not see any justification for obliging the company to purchase the plaintiff's shares.  In the case of defendant 2, he was never a shareholder in the company, but only served as a director of the company for a fixed period of time (which ended at the end of 2018), and therefore it is clear that there is no reason to obligate him to purchase the plaintiff's shares (and it is doubtful whether this can be ordered at all), just as in my opinion from the outset there was no justification for adding him as a defendant in the present lawsuit.
36. In view of the result I have reached, there is no need to address the full claims of discrimination raised by the plaintiff, including her various claims against defendant 2, but only the claims of discrimination that may have an impact on the value of the consideration to be paid to the plaintiff for her shares, i.e., claims regarding the dilution of the plaintiff's share rate and claims that may affect the value of the company. These arguments will be discussed later in the judgment.

The value of the company and the plaintiff's shares should be assessed as of December 30, 2019 and without taking into account the effects of the COVID-19 pandemic

37. In Civil Case (Tel Aviv Economic) 11439-05-19 Tal v. Guy, paras.  150-158 (January 21, 2024; hereinafter: "the Tal case"), I addressed at length the question of the date by which the value of a plaintiff's shares should be assessed at the time of granting relief of the defendant's purchase of his shares.  The rulings of the Supreme Court and the trial courts show that there is no clear and absolute rule regarding the date of the valuation.  In most cases, the value was assessed at the date of the deprivation, the date of filing the claim, or some date in between; The court has broad discretion on the matter, which must be exercised mainly according to considerations of justice in accordance with the circumstances of each and every case (see, for example:   Cohen, at pp.  195-196; Civil Case (Tel Aviv District) 1520/08 Siman Tov v.  Siman Tov Communications in a Tax Appeal (March 20, 2013; hereinafter: "Siman Tov Matter in the District Court"); Civil Case (Tel Aviv Economic) 46449-03-13 Regev v.  Elyakim, para.  130 (December 10, 2015; hereinafter: "the Regev case"); Opening Motion (Tel Aviv Economy) 66750-06-16 Ben-Ari v.  Schechter, para.  78 (July 20, 2017; hereinafter: "the Ben-Ari case"); The Bachar case, at verse 61; Civil Case (Tel Aviv Economic) 7774-10-16 Margalit v.  Mor, para.  72 (February 22, 2022; hereinafter: "the Margalit Case")).  In Opening Motion (Tel Aviv-Yafo) 62497-12-19 Reiten v.  Yamin, para.  249 (March 3, 2025), I reiterated these words and noted that "in my opinion, subject to the court's broad discretion in determining an appropriate date in the individual circumstances of each case, the proper default is to assess the value of the company as of the date of filing the claim for removal of discrimination, since at that time the plaintiff expresses his desire for separation."
38. As stated, in the opinion of Detelkramer on behalf of the plaintiff, the value of the company was assessed as of December 31, 2019; while in the opinion of Ben Nun on behalf of the defendants, the value was valued as of December 31, 2020. It should also be noted that in their summaries, defendants 2-3 argued that the value of the company should be assessed as of the date of filing the claim on June 21, 2020, and that of the two dates examined by the expert on behalf of the court, the date of December 31, 2020 should be preferred.
39. Defendants 2-3 base their position on the date of the valuation on the claims: that as a rule, the valuation on the date of filing the claim is justified, since at that time a remedy of the purchase of the shares was claimed; that only at this time did the plaintiff express her desire to separate by way of the purchase of her shares by defendants 2-3; and that, on the other hand, the conduct of defendants 2-3 does not constitute deprivation of the plaintiff or a deliberate reduction of the value of the company, which might have justified an assessment of its value to the date prior to the date of filing the claim.
40. The principled position of defendants 2-3 is consistent with the case law and my position in principle on the issue, as stated in paragraph 37 above, and as such it is acceptable to me. However, in the totality of the circumstances of this case, I am of the opinion that this position leads to the conclusion that the value of the company should be assessed as of December 31, 2019 and not as of December 31, 2020, and I will explain:
    • Although the lawsuit in question was filed on June 21, 2020, it was preceded by the filing of the statement of claim to the Magistrate's Court on March 12, 2020, which, according to defendants 2-3 themselves, was "in the same wording as the statement of claim in this case (with negligible changes)." Therefore, on the factual level, I am of the opinion that the claim for relief of the purchase of the plaintiff's shares and the plaintiff's express desire to separate occurred as early as March 12, 2020. At the same time, I do not have before me an expert opinion estimating the value of the company as of March 12, 2020 (and not even as of June 21, 2020), and chronologically the date of filing the claim to the Magistrate's Court is closer to December 31, 2019 than to December 31, 2020.
    • Moreover, as stated above, there is no dispute that as early as the middle of 2017, long before the lawsuit was filed with the Magistrate's Court, the rift between the parties arose and disputes arose between them, with most of this period (since January 2018) the plaintiff not working for the company due to her dismissal. These facts are also sufficient to strengthen the conclusion that between the two dates in respect of which the valuations were submitted by the parties and by the expert on behalf of the court, the date of December 31, 2019 should be clearly preferred over that of December 31, 2020.
    • In my opinion, the aforesaid conclusion is justified not only because of the aforementioned chronological proximity, but also in view of the greater substantial proximity between March 12, 2020 and December 31, 2019 compared to December 31, 2020, which relates to the fact that based on the information that existed as of March 12, 2020, it was not possible, in my opinion, to know what the impact of the coronavirus would be on the hotel industry in Israel, and it was certainly not possible to foresee its dramatic consequences (as will be detailed in detail below).

Defendants 2-3 claimed in paragraph 28 of their summaries that on March 12, 2020, the impact of the outbreak of the coronavirus on the hotel industry in Israel was "immediate and clear".  In their argument, defendants 2-3 relied on the fact that on January 27, 2020, the Minister of Health signed the People's Health Order (Amendment of the List of Communicable Diseases in the Second Appendix to the Ordinance), 5780-2020 (K.T.  8334, 5770, p.  464), for the purpose of adding the coronavirus to the list of diseases of international importance that requires immediate notification, by virtue of section 11A of the Public Health Ordinance, 1940.  Defendants 2-3 also relied on the publication of updates from the Ministry of Health and guidelines on isolation when entering Israel from various countries starting in February 2020.