Civil Case (Tel Aviv) 50068-06-20 Haya Schuchman v. Alfred Urban Hotels Ltd. - part 3

Moreover, only on April 3, 2020, the Emergency Regulations (Novel Coronavirus) (Restricted Area), 5780-2020 (hereinafter: the "Corona Appeal Regulations"), were enacted, which allow the declaration of an area where entry and exit will be restricted; By virtue of these regulations, closures were imposed for the first time on the city of Bnei Brak (for 6 days) and on some of the neighborhoods of the city of Jerusalem (for 3 days) on April 2, 2020 and April 12, 2020, respectively (see: High Court of Justice 2435/20 Adv. Lowenthal v.  Prime Minister Benjamin Netanyahu (April 7, 2020); High Court of Justice 2491/20 Ramot Alon Community Administration v.  Government of Israel (April 14, 2020)), when state-wide closures were first imposed on Passover of that year on April 7, 2020 (see: Amendment No. 3 to the Coronavirus Appeal Regulations, K.T.  8471, 5780, p.  1062).

Moreover, beginning in mid-April 2020, and in light of an improvement in COVID-19 morbidity data, a controlled process of reducing the restrictions imposed began (see, for example, the Lounge case, at paragraphs 4-5).

In the circumstances detailed above, I am of the opinion that on March 12, 2020, when the lawsuit was filed with the Magistrate's Court, on the date that preceded most of the events and restrictions described above, it was not possible to anticipate the effects of the coronavirus outbreak on the hotel industry in Israel, as it was still in its infancy, and only on March 15, 2020, it can be said that for the first time, steps were taken that were clear that they would affect the activity of hotels in Israel.

• Contrary to the defendants' claims, the plaintiff did not act in bad faith in choosing the date of filing the claim with the Magistrate's Court on March 12, 2020 (which was deleted on May 20, 2020 due to lack of substantive jurisdiction and was refiled shortly thereafter in the framework of the present proceeding), since in light of the above description regarding the timing of the outbreak of the Corona virus in Israel , it cannot be said that the plaintiff filed her claim with the Magistrate's Court when she knew that the outbreak of the virus had caused or was expected to cause damage to the hotel. Moreover, it is reasonable to assume that the preparation of the claim for the Magistrate's Court began a considerable period of time before the date on which it was actually filed.  This is learned, for example, from the fact that the Agajani opinion, which was attached as an appendix to the claim to the Magistrate's Court, was signed on March 1, 2020.  This is also evident from the letter of the plaintiff's counsel to the company's attorney dated March 5, 2020 (Appendix 27 to the plaintiff's affidavit, p.  265 of the numerator), in which it was stated, as stated (in paragraph 1 thereof) that the lawsuit in question would be filed in the coming days.

41. Therefore, I am of the opinion that it is justified to estimate the value of the company as of December 31, 2019. This is without taking into account the late effects of the COVID-19 pandemic, which, as stated, were not known at the time the claim was filed with the Magistrate's Court, since, as is well known, in the valuation of a company as of a given date according to the DCF method , there is room to take into account only information that was known up to that date (see, for example: Civil Appeal Authority 696/20 Uniform Tax of Nazareth Illit (1977) v.  Nisani, para.  17 (May 4, 2020)).  This was also the professional position of the expert on behalf of the court, and I accept this position.  As the expert testified in his cross-examination: "A methodology that I use, and I think that most of the valuators use it, relates to the relevant and known data at the time of the valuation and not to the date on which the valuator submits his work" (Minutes of the Hearing, pp.  165, 31-33).
42. I do not accept the other arguments raised by defendants 2-3 on this issue. First, contrary to what is claimed, my above determination does not lead to an unjust result.  The significance of the valuation of a company as of a certain date is that later events that occurred after that date have no effect on the value of the company.  This accepted method of valuation does not amount to injustice merely because one of the parties might have benefited from the inclusion of an event later than the determining date (and all of this, as stated, taking into account my determinations above regarding the outbreak of the Corona virus), even if it puts the plaintiff in a better position than she would have been if she had not filed the claim.  This is just as a late event could have acted to the detriment of the plaintiff if she had filed her claim and subsequently as a result of that event the value of the company would have increased.  Indeed, it is not for nothing that Justice R.  Ronen ruled in the Margalit case, at paragraph 72, that the value of the company should be assessed at the end of 2016 close to the date of filing the lawsuit, even though by the date of the judgment in February 2022, "the company's situation had deteriorated significantly...  [and] therefore, the expert opinion no longer reflects the current value of the company." Second, I did not find any substance in the defendants' reliance on the judgment in the Regev case.  In that case, it was held that the value of the company should be assessed as of the date of filing the claim in 2013 and not at the date of the discrimination in 2005, since the best way "is by calculating the value of the company as of the date of filing the claim, and by adding the value that was deducted from it due to the acts of discrimination" (ibid., at para.  126).  Justice Ronen also reiterated her above position in the Ben-Ari case, at paragraph 78, holding that "I am of the opinion that the valuator should be instructed to assess the value of the company as of the date of filing the claim - July 3, 2016, and not as the applicant petitioned as of the date on which he ceased to work for the company.  In this way, the respondent will not be harmed by the depreciation of the company's value to the extent that it existed up to this date, only because the applicant delayed filing the claim." The situation is completely different in the present case, in which we are dealing with events that occurred after the date of filing the claim (which should be seen on March 12, 2020 when the claim was filed with the Magistrate's Court), which are not justified in taking into account them only because of their occurrence and the fact that they are acting in favor of defendants 2-3.
43. In light of my conclusions as to the proper date for the valuation of the company, and since I accepted the plaintiff's position on this issue, there is no need to address the claims of discrimination raised by the plaintiff, the acceptance of which might have had effect only for the purpose of determining the date of the valuation, including arguments in the matter: the attempted sale of the hotel, the appointment of additional directors by defendant 3, the sale of Mr. Levy's shares to defendant 3 (for which no relief was requested in the statement of claim), The plaintiff's exclusion from decision-making in the company and the failure to provide information that she claimed she was entitled to receive (except for the issue of providing information regarding the expansion of the hotel, which will be discussed later).

There was no defect in the dilution of the plaintiff's shares, which did not flow its share of the owners' loans to the company.

44. After reviewing the arguments and the evidence of the parties, I am of the opinion that the plaintiff did not meet the burden imposed on her to prove that there was a defect in the dilution of her shares, which amounts to deprivation and justifies cancelling the dilutions.

F.1 Dilution of Shares that Amounts to Deprivation - The Normative Framework

45. Section 191 of the Companies Law states that if "a matter of a company's affairs has been conducted in a manner that constitutes discrimination of its shareholders, in whole or in part, or there is a material concern that it will be conducted in this manner, the court may, at the request of a shareholder, give instructions that it deems necessary for the purpose of removing or preventing the discrimination...". A supplementary provision is enshrined in section 192(b) of the Companies Law, which states that "a shareholder shall refrain from depriving other shareholders".  The term "discrimination" has not been defined in the Companies Law.  In summary, the Supreme Court's ruling held that section 191 of the Companies Law establishes "a general and flexible norm for the court's intervention in order to establish a norm of fairness in the commercial field of company management as well" (Civil Appeal 2699/92 Bachar v.  M.M.  Aircraft Food Industries Ltd., IsrSC 50(1) 238, 244 (1996)).  It was further held that "the discrimination of the minority in a company is essentially a situation of unfair distribution of resources in the context of the relationship between the controlling shareholders of the company and minority shareholders in it" (ibid., at p.  246); Civil Appeal 3051/98 Darin v.  Discount Investment Company Ltd., IsrSC 59(1) 673, 698 (2004); Civil Appeal 9014/03 Greenfeld v.  Lesser, para.  20 (October 14, 2006)).  It was also held that harming the legitimate expectations of the shareholders to enjoy the company's assets equally or to be involved in its management may also amount to discrimination, depending on the nature of the company and the totality of the circumstances of the case (see, for example: Civil Appeal 275/89 Davidson v.  Orenstein, IsrSC 46(1) 125, 131 (1991)); Civil Appeal 2773/04 Nitsba Settlement Company in Tax Appeal v.  Atar, para.  21 of the judgment of Judge (as then described) M.  Naor (December 14, 2006; hereinafter: "the Nitsba case"); Civil Appeal 2718/09 "Gadish" Compensation Funds in Tax Appeal v.  Elsint Ltd., para.  39 (May 28, 2012); Zohar Goshen and Assaf Eckstein Corporate Law 322 (2023; hereinafter: "Goshen & Eckstein")).
46. Over the years, the Supreme Court has recognized various cases that constitute discrimination that entitles the disadvantaged shareholder to a right to relief under section 191 of the Companies Law. One of those cases is when the rights of the minority shareholders are prohibited diluted on the basis of the allocation of shares or the raising of capital below the real value of the shares (see, for example: Civil Appeal 667/76 L.  Glickman in Tax Appeal v.    M.  Barkai Investment Company Ltd., IsrSC 32(2) 281 (1978); Civil Appeal 54/96 Hollander v.  Hamidad Hadash Software in Tax Appeal (Fourth Dimension Software Ltd.), IsrSC 52(5) 673 (1998); Civil Appeal 6041/15 Hamma in Tax Appeal v.  Muller (September 25, 2016)).  The ruling in this matter was summarized in other municipal applications 8857/21 Ginzburg v.  Medipower Overseas Public Co.  Limited, (February 26, 2023; hereinafter: "the Ginzburg case"), where it was held that the person claiming discrimination in the aforementioned context is burdened in the first stage with the burden of establishing two cumulative conditions: (a) to show that the IPO or capital raising raises "a serious question mark and a real suspicion that this is not a bona fide action and in the best interest of the company"; and (b) to present "indications regarding the inappropriateness of the price set for the shares in the offering in relation to their real value" (paragraph 52.A of the judgment of Justice E.  Stein).  In this context, it was further noted that when the decision is based on a legitimate business motive, centered on the company's interest, alongside an improper motive of favoring certain shareholders, the minority shareholder must show that the dominant purpose of the decision was to cause damage to the minority by diluting its shares (ibid., at paras.  48 and 54).  Only if the plaintiff has met the said burden, "will the defendant be required to prove, on a balance of probabilities, that the offering did not in fact create the alleged minority deprivation" (ibid., at para.  52.b; See also: Civil Appeal 1264/23 Tulik Rakia Development in Tax Appeal v.  Olivier Ltd., para.  29 (October 22, 2023)).

F.2 The first dilution

47. The first dilution from 2019 was made due to the plaintiff's failure to provide its share in financing an owner's loan to the company for the purpose of repaying the loan from defendant 2. In paragraphs 30-31 of the plaintiff's summaries, it was argued that the purpose of repaying the loan in the amount of ILS 2 million to defendant 2 was to dilute the plaintiff, since defendant 2 did not fear that the company would not be able to repay the loan he gave it.  However, this is not the case from the picture that was presented to me in the course of the proceeding.
48. The company was supposed to repay the loan from defendant 2 by June 6, 2018. In practice, the company did not meet the set date, and only on March 6, 2019, did it repay the principal of the interest-free loan.  In accordance with what is stated in paragraph 25 of defendant 2's affidavit, which was not concealed from the time defendant 2 was not investigated about him, after the expiration of the repayment date set in the agreement, defendant 2 contacted the company and asked for the repayment of the loan, and as a result, he even resigned from his position as a director of the company and terminated this position on November 14, 2018 (see also: letter from defendant 2's attorney to the plaintiff's attorney dated November 27, 2018 - Appendix 16 to the plaintiff's affidavit, p.  194 of the numerator).  In these circumstances, it is clear that defendant 2 was entitled to demand the repayment of the loan as stipulated in the agreement with him, which the plaintiff also signed, regardless of whether defendant 2 was "apprehensive" of repaying his money or not, which is not relevant to his entitlement to repay the loan.  It is not superfluous to note that from the outset the loan from defendant 2 was given at a comfortable annual interest rate, which was even lower than the interest rate determined in the founders' agreement that it would be paid to the shareholders upon repayment of owners' loans.
49. As claimed in the affidavit of defendant 3 and not concealed by the plaintiff, and as appears from the company's financial statements for 2018 (Appendix 24 to defendant 3's affidavit), at that time the company did not have financial resources to repay the loan from defendant 2. Therefore, it was decided at the meeting of December 17, 2018 to raise an owner's loan in order to repay the loan.  I do not believe that there was any flaw in this method of operation, and in any event, the plaintiff did not present any evidence and in any case did not prove that it was possible to raise the required financing in another way that would have been preferable to the granting of an owner's loan.  In addition, at that stage, defendant 3 held 95% of the company's shares, and therefore the decision at the meeting met the condition set out in clause 6.4 of the founders' agreement, which requires a majority of at least 90% of the repaid share capital for the purpose of making various decisions, including a decision to grant an owner's loan.  Moreover, the evidence shows, and the plaintiff did not make any other claim, that the dilution of the plaintiff's share rate from 5% to 3.53% did not infringe any of the rights it had under the founders' agreement (such as the right of veto at the general meeting, etc.), and the only argument is regarding the dilution rate.
50. I also do not accept the plaintiff's argument that in repaying the loan to defendant 2, the defendants acted in contravention of the Companies Law, since defendant 2 was a director and authorized signatory, if only for the reason that the plaintiff did not bother to detail how the defendants' actions violated the provisions of this law. Moreover, the loan from defendant 2, which the plaintiff agreed to take, was taken about a year and a half before defendant 2 began to serve as a director of the company, while defendant 2 acted to collect the loan only after he resigned from his position as a director.  The plaintiff's claim also relates to an additional loan that defendant 2 provided to the company on May 30, 2018, in the sum of ILS 800,000 at an annual interest rate of 2% (an agreement in connection with this loan was attached as Appendix 25 to the affidavit of defendant 3).  However, there is no need to require the additional loan in this proceeding, since it had nothing to do with the first dilution of the plaintiff's shares, which was made only due to her non-participation in making the owners' loan available for repayment of the loan from defendant 2 in the sum of ILS 2 million.  More than necessary, it should be noted that on the face of it, it appears that the late loan was also given to the company on fair terms, and in any event, the plaintiff did not claim and in any case did not prove otherwise.
51. In the circumstances described above, I am of the opinion that it has been proven that the raising of the owner's loan for the purpose of repaying the loan received from defendant 2 was done in good faith and for the benefit of the company, and this is sufficient to reject the plaintiff's claims that the raising of an owner's loan was done in order to dilute its shares and amounted to deprivation of it.
52. Moreover, I do not accept the plaintiff's argument in paragraphs 28-29 of its summaries with regard to the extent at which its shares were diluted. In this context, the plaintiff argued that a dilution method that does not take into account "the true value of the business" is "detached from reality" and that for dilution "at least an updated valuation is required".  In clause 8 of the Founders' Agreement, the parties regulated the manner in which the company's activities would be financed, including the inclusion of a mechanism whereby the shares of a shareholder who refused to provide his share of the financing to the company would be diluted in a situation where another shareholder would choose to supplement this part of the financing out of his own pocket (in addition to his personal share).  The plaintiff signed the founders' agreement and agreed to act in accordance with the dilution mechanism set forth therein, even though it does not require receiving an up-to-date valuation and is not dependent on or contingent on the company's "true value".  Since the rate at which the plaintiff's shares were diluted is the result of a mechanism to which the plaintiff agreed in the founders' agreement, and since the plaintiff did not present any clear reason why this mechanism should be deviated, and in any case did not prove the existence of special and exceptional circumstances that justify doing so, it is clear that the law of her aforesaid claim should be rejected (compare: Civil Case (Tel Aviv Economy) 17248-05-19 Technopulse Ventures inTax Appeal v.  Bioville Corporation N.V., Verse 175 (September 2, 2023); Civil Case (Tel Aviv Economic) 33772-03-21 Ruben v.  Asher, paras.  48-55 (September 3, 2023)).  As it was held in the Ginzburg case, at para.  46: "In private companies, the main investors are insiders, those who are among the existing shareholders, and they are the ones who need incentives - of the type of 'carrot' and of the type of 'stick' - in order to increase their investments in the company.  In my opinion, there is nothing wrong with providing such incentives." To be precise: the plaintiff did not dispute the correctness of the calculations of the dilution of its shares on the basis of the dilution formula in the founders' agreement.
53. In summary, I determine that the first dilution was done lawfully and in accordance with the provisions of the founders' agreement, and therefore I reject the claim to cancel it.
54. In the margins, it should be noted that I did not find any substance in the plaintiff's claim that the minutes of the board meetings and the shareholders' meetings did not reflect what was said during them. This argument was raised without any evidence being presented to prove that things said in one of the meetings or meetings were not reflected in the recorded minutes.  This is despite the fact that the plaintiff recorded a number of meetings between the parties (see, for example, the transcripts of the recordings that were attached as Appendices 9 and 17 to the plaintiff's affidavit), and that her counsel regularly raised arguments against the written minutes, so that on the face of it, the plaintiff had the opportunity to show that the words of the parties that were recorded were not reflected in the written minutes.  More than necessary, it should be noted that even a review of the various minutes shows that there is no substance to the plaintiff's claim, taking into account the fact that this is a transcript and not a transcript of the meetings, and that the minutes also include documentation of serious allegations raised by the plaintiff against the defendants' conduct.

F.3 The Second Dilution

55. After review, I am of the opinion that the second dilution was also done lawfully and in accordance with the provisions of the Founders' Agreement, as detailed below.
56. First, from a review of the evidence of the parties and my impression of the testimonies of the various witnesses, it is clear that the decision regarding the expansion of the hotel was made for commercial considerations, and even the plaintiff does not claim otherwise in her summaries. This is also the conclusion required by business logic and common sense, since it is unlikely that defendant 3 would choose to risk the sum of ILS 2 million that he made available to the company as an owner's loan, in a company that the plaintiff itself tried to doubt its financial ability to repay its debts, and this only in order to dilute the plaintiff's shares from 3.53% of the company's shares to 2.73% (and in this regard, it is clear that this dilution did not detract from any vested right that the plaintiff had under the founders' agreement).  as opposed to the very rate of dilution).  This conclusion is also supported by the fact that according to the expert opinion on behalf of the court, the expansion of the hotel led to a doubling of the value of the company as of December 31, 2019 (see paragraph 7 of the expert opinion).
57. I also did not find any substance in the plaintiff's claim in paragraphs 35 and 93 of her summaries, according to which instead of raising loans from the owners, the company could have raised funds from external bodies. This argument was made in a casual manner and without any support, and this is sufficient to dismiss it.  In this context, it should be noted that with regard to the expansion of the hotel, there is no dispute that the company even took a bank loan in the amount of ILS 2 million, alongside the owner's loan of a similar amount.
58. In fact, in the matter of the second dilution, the plaintiff focused in her summaries on the claims that defendants 2-3 refused to answer questions she asked about the expansion of the hotel and refused to provide her with sufficient documents and information that she requested regarding the costs involved in the expansion and the expected return from it. Under these circumstances, the plaintiff claimed, she was unable to make an informed decision on the possibility of expanding the hotel, and therefore the dilution of her shares due to the failure to provide her share in the financing of the expansion was done unlawfully.  I do not accept these arguments:
    • At the outset, it should be noted that the plaintiff raised a general claim that the defendants concealed information relating to the company from her, and that the documents and data regarding the expansion are only one example of this. A review of the evidence of the parties did not give me the impression that this was indeed the case.  Thus, for example, the affidavit of defendant 3 (paragraph 51) indicates that at a certain point the plaintiff received full access to the company's bookkeeping, after claiming that she had "a serious buyer for a large sum of money for the company".  Moreover, even before the issue of the expansion of the hotel first came up on the agenda of the shareholders' meeting, on October 22, 2018, the plaintiff's attorney sent a letter to the company's attorney (Appendix 27 to defendant 3's affidavit) requesting that the plaintiff be provided with a great deal of information relating to the company (hereinafter: "the plaintiff's attorney's letter of October 22, 2018"), which cannot be disputed that it far exceeds the information that the plaintiff was entitled to receive by virtue of the Companies Law By virtue of being a shareholder (but not a director) in the company (such as income and expenses statements for 2017 and 2018; copies of checks paid; expenses and income report of the hotel bar; salary report; etc.).  Paragraph 51 of the affidavit of defendant 3 indicates that in an email message dated November 11, 2018, the company's attorney sent the plaintiff's attorney (Appendix 28 to defendant 3's affidavit), and following a telephone conversation between the two, the plaintiff was conveyed the information and documents requested (the email stated that these documents had already been transferred to the plaintiff several months ago).  Admittedly, in response to the aforementioned email message, the plaintiff's counsel replied that from a preliminary examination he was of the opinion that all the documents requested had not been received (Appendix 28 to the affidavit of defendant 3, at p.  185 of the numerator), but defendant 3 was not questioned about paragraph 51 of his affidavit, and the plaintiff did not testify otherwise on this particular matter, and this is sufficient to determine that it was not proven by the plaintiff that she did not receive all the documents requested in the letter of her counsel dated October 22, 2018.  In fact, it was proven otherwise (see also the additional response of the company's counsel on the subject - ibid.).
    • As stated, at the meeting of December 17, 2018, after the plaintiff received the aforementioned information, the possibility of expanding the hotel was discussed for the first time. As appears from the minutes of the meeting (Appendix 31 to the affidavit of defendant 3), during which the shareholders received an explanation from defendant 3 and the company's bookkeeper regarding its financial statements up to November 2018 and the data that appeared therein.  Defendant 3 then presented the idea of expanding the hotel, including a preliminary sketch of an additional floor that would be built as part of the expansion and which includes 16 rooms, as well as an orderly business plan formulated by defendant 3 on the subject (which was attached as Appendix 30 to his affidavit).  This plan included the presentation of data about the hotel for 2018, including occupancy rate, price per night, as well as revenue, expenses and operating profit (ibid., p.  200 of the numerator); Details of the steps required to carry out the expansion; as well as estimates regarding the expected costs, revenues and profits in connection with the expansion.  As stated above, the plaintiff was represented at the said meeting and her counsel asked various questions regarding the expansion of the hotel, and at the end of the meeting, defendant 3 clarified that the issue of the expansion of the hotel would be raised again after he had additional data.
    • At the meeting on June 13, 2019, following the presentation of the Company's financial data for the months of January-May 2019, an updated plan for the expansion of the hotel was presented, including updated estimates regarding costs, revenues and expected profits. At the meeting, defendant 3 stated that the plan had been prepared with the help of professional consultants, and the plaintiff's counsel asked to receive the working papers on the basis of which the plan was formulated.  At the meeting of July 1, 2019, a further discussion was held on the expansion of the hotel, at the end of which the expansion plan was approved.  The summons to the meeting of July 1, 2019 was also accompanied by an audited balance sheet of the company for 2018, as well as a draft agreement for the extension of the lease of the hotel and a draft addendum to the lease agreement regarding the rental of an additional floor for the purpose of expanding the hotel (Appendix 37 to the affidavit of defendant 3, p.  231 of the numerator; see also: the minutes of the meeting attached as Appendix 39 to the affidavit of defendant 3, pp.  260-261 of the numerator).
59. Against the background of the description of the sequence of events above, I do not believe that it has been proven that the plaintiff was deprived of information that was required for the purpose of a discussion and decision regarding the expansion of the hotel, and which the plaintiff requested and was entitled to receive:
    • First, I am of the opinion that the plaintiff did not meet the burden of proving what information was needed in order to make a decision regarding the expansion of the hotel (which was not provided to her). The plaintiff's claims regarding working papers, submissions to the municipality, agreements with suppliers and a lease agreement for the additional floor were made in vain, without the plaintiff pointing to a concrete document that she needed, along with a clear reason why that document was needed for the purpose of examining the possibility of expanding the hotel.  In this context, and also ignoring the fact that the plaintiff's claims were made only in general, I did not find any substance in her claim that the said information was required in light of the existence of a contradiction between the desire to expand the hotel and "the statement at the general meeting that the defendant [the company] is unable to repay its debts..." (Paragraph 32 of its summaries; see also: paragraph 70 of the affidavit).  The plaintiff raised this argument without any support that shows that the aforementioned statement was indeed made, who was behind it and when did he express this position.  To be precise, a reading of the various document requirements that the plaintiff sent to the defendants gives the impression that at least some of the aforesaid demands were not necessary (see, for example, the plaintiff's demands in the letters that were attached as Appendix H to the affidavit).  This impression is sharpened against the background of the fact that it was explained to the plaintiff in real time, and this explanation is logically acceptable to me, that the expansion of the hotel requires first of all approval in principle, based on the expansion plan, after which it will be possible to complete the full details of the planning and execution, including in connection with the documents and information that are the subject of the plaintiff's claims (see, for example: the minutes of the meeting of July 1, 2019, which was attached as Appendix 39 to the affidavit of defendant 3, at p.  261 of the numerator).
    • Second, in paragraph 72 of the plaintiff's affidavit and in paragraph 33 of her summaries, it was claimed that after she was sent a summons to a meeting on May 22, 2019, where the expansion of the hotel was planned to be discussed, the plaintiff requested various details regarding the implementation of the extension, but did not receive any answer or information on the matter. The problem is that the plaintiff did not refer in this context to any reference indicating her request as aforesaid after the summons was sent and before the meeting was held, and therefore it is not clear to whom she contacted on the matter and what details were requested by her (if any).  In these circumstances, the plaintiff also did not meet the burden of proving that she approached the defendants with a request for information that was concretely needed for the purpose of the discussion of the expansion of the hotel, and that her request was denied.
    • Third, it was proven that when the plaintiff requested documents from the company, she received them accordingly, such as when she claimed that she had a serious buyer for a large sum of money for the company, and regarding the documents requested in the plaintiff's letter of October 22, 2018. Moreover, it was proven that the plaintiff received financial data about the company even separately from its requests, such as the information provided to it prior to and during the shareholders' meetings of December 17, 2018, June 13, 2019, and July 1, 2019, which was also included in the plans for the expansion of the hotel.  In these circumstances, it has been proven, in my opinion, that the plaintiff had sufficient information for the purpose of making an informed decision regarding the expansion of the hotel.
60. In summary, it is sufficient that the plaintiff failed to prove that there was additional information that she needed in order to make a decision regarding the expansion of the hotel, and that she contacted any of the defendants with a demand for this information before the meetings of June 13, 2019 and July 1, 2019, but was refused; while it was proven that the plaintiff was provided with a great deal of information, which in my opinion was sufficient for the purpose of making an informed decision on this issue - in order to lead to the rejection of her claims in connection with the second dilution.

F.4 Allegations of unlawful taking of the company's funds by defendants 2 and 3

61. To conclude this chapter, I have also found that the plaintiff's claims regarding the illegal taking of funds by any of the defendants 2 and 3 should also be rejected. The plaintiff raised these arguments in the affidavit and in its summaries in a general and casual manner, without mentioning a single case in which the defendants pocketed the company's funds and without supporting her claims with any evidence whatsoever (see, for example: paragraph 11 of the plaintiff's affidavit and paragraph 5 of her summaries), and this is sufficient to dismiss her claims.  In this context, it should be noted that there is no substance to the plaintiff's grievances regarding the sale of the shares to Mr. Levy, due to the fact that the sum of ILS 520,000 was paid by the company to Mr. Levy (paragraph 25 of the plaintiff's summaries).  First, the sum was paid to Mr. Levy by the company, since it is a repayment of the owner's loan that was given to the company, and in any case it is not an illegal takeover from the company.  Second, from the document to which the plaintiff herself refers (Appendix 21 to the plaintiff's affidavit, at p.  233 of the numerator) and from the confirmation of the company's accountant (which was attached as Appendix 1 to the affidavit of defendant 3), it clearly emerges that an identical sum was initially transferred (on May 13, 2018) to the company by defendant 3, who in fact stepped into Mr. Levy's shoes for the purpose of the owner's loan, and only afterwards (on May 16, 2018) was it transferred from the company to Mr. Levy.  To be precise: I did not find any substance in the plaintiff's argument that the approval of the company's accountant should not be obtained solely on the grounds that he is also the accountant of defendant 2.
62. I also did not find any substance in the plaintiff's claims regarding the salary of defendant 3 as the company's CEO, which at the meeting of the board of directors and the shareholders' meeting on July 13, 2017, it was decided to increase it from a total of ILS 15,000 to a total of ILS 20,000 gross. Not only did the plaintiff not present any evidence to show that this was a salary that exceeded the fair wage to which defendant 3 would have been entitled for his work at the company, and she did not support the claim with an expert opinion on her behalf; However, the plaintiff's argument is even contradicted on the face of it from Agajani's affidavit that she submitted (Appendix L to the affidavit, at p.  282 of the numerator), in which the opinion was expressed that the acceptable cost of the salary of a hotel manager of the type of hotel in question (29 rooms on a bed and breakfast basis) is a monthly sum of ILS 20,000 (see also the testimony of Mr. Agajani - Transcript of the hearing, pp.  64, 25-29).

There is room to include the expansion of the hotel in the company's valuation

63. As noted, in the 2019 valuation, the court-appointed expert examined the company's value according to two alternatives: one, ignoring the expansion of the hotel; and the second, taking into account the expansion of the hotel, in light of the dispute between the parties on this issue. After reviewing the arguments of the parties, I am of the opinion that in the valuation of the company as of December 31, 2019, there is room to include the expansion of the hotel as well.
64. Since the valuation of the company required to take into account information that was known up to the date of the valuation, it is clear that the information regarding the expansion of the hotel, which was approved at the meeting on July 1, 2019 on the basis of the expansion plan, should be taken into account in the framework of the company's valuation. In this context, it should be noted that since the plan for the expansion of the hotel had not yet been actually executed on December 31, 2019 (although a decision had already been made to carry it out), the expert added to the discount rate as part of the valuation of the expansion a risk addition of 2% to the discount rate in connection with the plan for the expansion of the hotel, which reduced the value of the expansion.
65. In their summaries, defendants 2-3 argued that the expansion of the hotel should not be taken into account to the extent that the value of the company is estimated as of December 31, 2019, both because the plaintiff objected to the expansion and did not invest its share in it, and because it was noted in the Agajani opinion that the value of the hotel plus the expansion stated in the opinion is on the assumption that the plaintiff will invest its share in the expansion. I did not find any substance in these claims.  Defendant 3 placed the financing in place of the plaintiff and in the founders' agreement, the parties determined that the consequences of this would be in the form of dilution of the plaintiff's shares in the company.  Therefore, in the dilution of the plaintiff's shares due to her choice not to provide her share of the financing for the expansion of the hotel, the implications of this choice on the plaintiff's rights as a shareholder in the company were exhausted.  As of the date of the valuation, the value of these rights, not in connection with a legal proceeding but in a sale to a willing buyer, also embodied the potential value addition that was presented in the plan for the expansion of the hotel that had already been approved, and there is no justification for detracting this addition from the value of the plaintiff's shares beyond the higher capitalization rate that the expert used in the valuation in order to express the risk that existed at the time that the expansion would not be carried out.  On the contrary, accepting the position of defendants 2-3 will actually lead to the enrichment of defendant 3 at the expense of the plaintiff, since the plaintiff will benefit twice from the plaintiff's failure to provide the financing - once by the dilution of its shares and the second time by purchasing them at a value lower than their real value at the time of the valuation.

The parties' arguments regarding the valuation in the expert opinion of the court

66. In the summaries of defendants 2-3, it was argued that "since the honorable court appointed an expert on its behalf to evaluate the company, it is lawful to accept his opinion as a basis for valuation" (ibid., at paragraph 25). Subsequently, and with the exception of one issue (regarding the deduction of the excess loans) that will be discussed later, defendants 2-3 fully adopted the conclusions of the expert opinion on behalf of the court.  Thus, with regard to the 2020 valuation, defendants 2-3 argued that in accordance with the expert's opinion, and while preferring it to the opinion of Ben Nun on their behalf, it should be determined that the value of the company was ILS 4,920,000 as of December 31, 2020 (as stated in paragraph 37 of their summaries).  Moreover, with regard to the 2019 valuation, the defendants did not raise any argument against the manner in which the company was valued, not even as an alternative claim.  In fact, since I rejected the arguments of defendants 2-3 regarding the determining date for the valuation and determined that this date would be December 31, 2019, this means that defendants 2-3 did not submit their own valuation to the determining date (Ben Nun's opinion was submitted on December 31, 2020 only).
67. On the other hand, the plaintiff, for her part, argued in her summaries that the conclusions of the experts on her behalf in their opinions should be preferred over the conclusions of the expert on behalf of the court. Therefore, I will now turn to examine whether the plaintiff has lifted the heavy burden imposed on it for this purpose, with respect to the claims she raised relating to the 2019 valuation, taking into account that her claims regarding the 2020 valuation have become superfluous in light of my determination that the company's value should be valued as of December 31, 2019.
68. Before I turn to the plaintiff's arguments, it is not superfluous to mention the rule according to which the appointment of an objective valuator on behalf of the court, rather than relying on an expert opinion on behalf of any of the parties, is the way to go for the purpose of valuing the shares in the framework of a separation by purchasing the plaintiff's shares (see, for example, the Adler case, at para. 84; Civil Appeal 3303/13 Siman Tov v.  Siman Tov Communications Ltd.,   10 and 13 (December 29, 2015; hereinafter: "Siman Tov Case"); The Magenzi case, at verse 20; the Bachar case, at verse 57).  It is also worth mentioning that "once the court appoints an expert in order to provide the court with professional data for the purpose of deciding the hearing, it is reasonable to assume that the court will adopt the expert's findings unless there is a clear reason not to do so" (Civil Appeal 293/88 Yitzhak Neiman Company for Rent inTax Appeal v.  Rabi, para.  4 (December 31, 1988); See also: Civil Appeal 4179/17 More Insurance Agency (1989) in Tax Appeal v.  Rubin, para.  57 (December 6, 2018); Civil Appeal 6510/20 Mizrahi v.  Cohen, para.  6 (December 12, 2021)).  In addition to the aforesaid, the case law emphasized that the appointment of an expert by the court does not detract from the authority given to the court to decide definitively the dispute between the parties (see, for example: in Tax Appeal 27/06 Anonymous v.  Anonymous, para.  15 (May 1, 2006); Civil Appeal 8950/07 Nazareth Municipality v.  Kardosh, para.  8 (November 24, 2010); Civil Appeal 5509/09 Masarwa v.  Masarwa, para.  14 (February 23, 2014)).
69. First, I do not accept the plaintiff's arguments regarding the conduct of the expert on behalf of the court vis-à-vis the parties, including her claims of bias, material failures, and the lack of sufficient experience and knowledge of the expert in the field of hotels. These claims, most of them, were made without sufficient basis, and it would be better if they had not been made, when the claims detailed also turned out to be wrong.  Thus, for example, the plaintiff's claims that the expert on behalf of the court met twice with the defendants and only once with the plaintiff, and even refused to meet Mr. Agajani on her behalf, are inconsistent with the words of the expert in his testimony before me (transcript of the hearing, p.  164, s.  24 - p.  165, s.  2), and of course there was no impediment to the plaintiff bringing Mr. Agajani with her to her meeting with the expert on behalf of the court.  In addition, contrary to the plaintiff's claim, she was given the opportunity to send clarification questions to the expert (to which the expert even responded).  In general, it should be said that the professionalism and reliability of the expert were clearly evident from a review of his opinion and my impression of his testimony before me.
70. Second, there is no substance to the various claims raised by the plaintiff in her summaries regarding the expert's disregard of various data and relevant sources of study in the framework of the 2019 valuation:
    • The plaintiff claimed that the expert did not inspect other hotels in Tel Aviv "in order to understand how a hotel of the defendant's caliber is managed" (paragraph 63 of the plaintiff's summaries), but it was not clarified why the expert should have done so for the purpose of valuing the company according to the DCF method, and this is sufficient for the purpose of rejecting the claim.
    • The same is true with regard to the plaintiff's claims of inflating expenses by the defendants, which were claimed in paragraphs 71 and 82 of her summaries in a casual manner, without supporting her with an opinion on her behalf or explaining whether and how these claims are supported in the opinion submitted by her.
    • The plaintiff's arguments should also be rejected as if in his opinion the expert ignored the data presented to him by the plaintiff, including the opinion of Adv. Agajani, and preferred only data that was given to him by the defendants (paragraph 62 of the plaintiff's summary). This claim was also made casually and without any reference to specific data that was required or which the expert ignored, even though he should have acted differently.  Moreover, the source of the company's financial data to which the expert referred is not the defendants, but rather the company's audited financial statements.  In addition, the expert also clarified in his interrogation that as part of the valuation, he made adjustments that led to a reduction in various expenses of the company, in cases where he believed that its actual expenses (as stated in the financial statements) exceeded what was required (minutes of the hearing, pp.  175, 17-28), in a manner that in fact acted in favor of the plaintiff.
    • I do not accept the plaintiff's argument that the expert ignored the opinion of Dr. Agajani, and I do not believe that there is significance to the fact that this opinion was not mentioned by the expert in his opinion.  None of the expert opinions on behalf of the parties were mentioned in the expert's opinion, who was entitled but not obligated to relate to them according to his professional judgment, while the expert testified that he had read the opinion of Agajani (ibid., at p.  165, paras.  8-12).  It is not superfluous to note that the Agajani opinion was not prepared according to the DCF method (see also the testimony of Mr. Agajani on the subject - ibid., at pp.  69, paras.  1-12) or according to any other customary method for assessing the value of companies, and in fact it is not a valuation of the company but rather "the calculation of the value of [the plaintiff's] rights in the Ultra Hotel" (Agajani opinion, at p.  88 of the numerator), and therefore the expert was correct in determining that it does not fit the methodology for the purpose of valuing the hotel (see paragraph 32 of the expert's answers to the clarification questions).  on behalf of the plaintiff).  Moreover, the Agajani opinion was based on data relating to 2018 only, without reference to the 2019 data, while the calculation of the rights was made as of the end of 2018 and not on the determining date for the valuation of the company (December 31, 2019; ibid., in the second paragraph, at p.  84 of the numerator).  In these circumstances, I do not believe that there are any real implications for what is stated in the Agajani opinion, and it certainly does not contradict the expert opinion on behalf of the court.
    • Finally, I also found to reject the plaintiff's argument that in the valuation of the company the expert should have taken into account the Naimi transaction. First, and as the expert himself clarified in paragraph 47 of his answers to the clarification questions, the proposal of Mr. Naimi, the subject of this transaction, was delivered to the plaintiff on February 5, 2023, and since it was much later than the date of the valuation (more than three years), there was no room for the expert to take it into account in the framework of the valuation of the company as of December 31, 2019.  As the expert said in his testimony: "When a transaction is made in 2023, it is in accordance with the value in 2023, it will not change my opinion regarding the value as of December 31, 2019, nor regarding the value as of December 31, 2020, which are the determining dates for which the court asked me to estimate the value of the company" (Minutes of the hearing, p.  167, paras.  9-11).  Second, it is doubtful to what extent significance should be attributed to the consideration agreed upon in the Naimi transaction, which was concluded while the plaintiff's claim for the relief of the forced purchase of its shares was pending, when defendant 3 did not object to the purchase (see and compare: Siman Tov case, 2, paras.  13-14).  Third, and far more than necessary, it should be noted that both in the said answer and in his testimony before me, the expert clarified that all that was given to him in connection with the Naimi transaction was Mr. Naimi's proposal of February 5, 2023, without being informed of whether the transaction was executed or whether it remained only a proposal (ibid., at p.  166, paras.  29-33).
71. Moreover, contrary to what is implied by the plaintiff's arguments in paragraphs 66-67 of its summaries, there was no defect in the opinion in connection with the expert's failure to refer to the rate of dilution, which, as stated, was carried out according to the dilution formula in the founders' agreement. The appointment of the expert was made for the purpose of assessing the value of the company on the selected dates, and not for the purpose of examining the manner and rate of dilution of the plaintiff's shares (and this was explicitly stated by the expert - see, for example, at p.  8 of the opinion, in the last paragraph), and this is sufficient to reject the plaintiff's claims.
72. Finally, I also did not find any substance in the plaintiff's arguments in paragraphs 73, 75 and 80 of her summaries regarding the discount rate chosen by the expert, in which it was argued that the expert "determined a high and unreasonable rate in light of the relevant market data" and that in light of the data of the hotel that were owned prior to the date of the valuation, the expert should have chosen "a discount percentage as is customary in the market, which ranges between 7%-8%". These claims were made casually and without the plaintiff bothering to specify at all what the "relevant market data" are, or to provide any reference to the "discount percentage as is customary in the market".  Although the plaintiff did not refer in this context to the discounting rate proposed in the opinion of Dr.  Detelkramer on her behalf, which was set at 8.5% (at p.  11 above), I do not believe that this rate should be preferred over the discounting rates chosen by the expert in his opinion.  The capitalization rate chosen in the opinion of Detelkramer was an average of the capitalization rate used in connection with two hotel chains - Fattal (8.5%) and Isrotel (7.5%), plus 0.5% "by virtue of the hotel being a boutique hotel and not a significant hotel chain".  In contrast, the discount rate used by the expert was described in a detailed calculation included in Appendix B to his opinion, while the variables that make it up were derived from comparative data based on studies that touched on a much larger database (400 companies operating in the field of hotels in developed countries; see also: Appendix A to the Ben-Nun opinion entitled "The Price of Capital", which includes a similar calculation with a discounting rate of 13%).  It should also be noted that while the discount rate chosen by the expert also includes a reasonable risk addition of 2% in connection with the hotel expansion plan, the discount rate in the opinion of Dr.  Detelkramer does not include such an addition (the aforementioned rate appears in the chapter dealing with the value of the company prior to the expansion of the hotel).  In these circumstances, of the two courses of action chosen for calculating the capitalization rate, I am of the opinion that the path chosen by the expert on behalf of the court should be preferred, and at the very least it should be determined that the plaintiff did not meet the significant burden imposed on her for the purpose of contradicting the expert's conclusions on this issue.  In the margins, it should be noted that the plaintiff's arguments in paragraph 80 of her summaries regarding differences in the discount rates in the opinion were answered in paragraph 26 of the expert's answers to the clarification questions on behalf of the plaintiff, where it was noted that this was a clerical error that was corrected and that in any case did not affect the valuation.
73. Further to the above, I did not find any substance in the plaintiff's claim in her summaries that the expert ignored the government appraiser's report regarding the capitalization percentage, which she claimed recommended the use of a discounting rate of 8.5% for hotels (paragraphs 73-74 of the plaintiff's summaries). First, it should be noted that the plaintiff did not see fit to refer the expert to the said document issued by the Land Assessment Division of the Ministry of Justice, entitled "Guidelines Chapter 30: Preparation of Assessments for Hotels" (hereinafter: the "Government Appraiser's Document") before the expert issued his opinion or in the framework of clarification questions that she sent him, but only for the first time in his cross-examination.  Second, and on the merits, the said document was issued in March 2023, i.e., long after the dates on which the expert was asked to assess the value of the company, and therefore it is clear that in accordance with the aforesaid, there was no reason for the expert to be required to do so in the framework of his opinion.  Third, the plaintiff's argument should not be accepted on the merits of the matter.  A perusal of the government appraiser's document, and in particular section 5.4.5, which deals with the capitalization rate, shows that it does not contain any normative statement regarding a uniform capitalization rate that should be followed, but only guidelines that must be applied in accordance with the circumstances of each and every case in order to choose the appropriate discount rate.  Needless to say, the discount rate of 8.5% that appears in Appendix A to the government appraiser's document, entitled "An Example of a Business Plan and the Value of the Ownership Rights in a Built and Landed Hotel" and which constitutes a theoretical example that includes data made up for the sole purpose of illustrating the application of the lines presented in the document to a given case, does not support the plaintiff's claims.  Fourth, to all of the above, we must add the work that even if the said document referred to a uniform discount rate that should always be applied, it would not have much relevance to the case at hand.  As the expert clarified in his answers to the clarification questions (in paragraph 24 of his reference to the plaintiff's questions and in paragraph 4.2 of his reference to the questions of defendants 2-3) and as he testified before me (the minutes of the hearing, pp.  186, paras.  24-28 and p.  187, paras.  1-2), the discounting rate is a figure that is influenced by time-dependent variables, and this was reflected in Appendix B to the opinion, in which the various variables of the discounting rates used by the expert in the 2019 and 2020 valuations were detailed.  It shows that there are differences between the values of the various variables in light of the valuation date.  Therefore, it is clear that the recommended capitalization rate as of March 2023 (even if there was a recommendation regarding the capitalization rate in the said document, contrary to my opinion) could not have had much (if any) implications for the valuation of a company as of the end of the years 2019 and 2020.
74. In summary, I am of the opinion that the plaintiff did not meet the burden imposed on her to prove that there is room to deviate from the expert opinion of the court regarding the valuation of the company as of December 31, 2019.

For the purpose of valuing the company, the excess loans of the owners should not be considered as a "financial debt"

75. As stated, in his opinion, the expert expressed his professional opinion that to the extent that the percentage of the plaintiff's holdings in the company is diluted due to the granting of surplus owners' loans by defendant 3, then for the purpose of valuing the company's value, there is no economic logic to view the excess owners' loans as a financial debt of the company (paragraph 1.3 of the expert's opinion in the last paragraph).
76. The expert also reiterated this position in response to the clarification questions of defendants 2-3: "From the point of view of economic logic, insofar as the diluted rate of the party that did not inject [an owner's loan] is to be addressed, the inflow that caused the dilution should be treated not as a financial debt, but as capital" (paragraph 1 of the expert's answers to the clarification questions on behalf of defendants 2-3).
77. Even in the expert's cross-examination, counsel for defendants 2-3 was unable to contradict his professional position, even though he questioned him at length on the issue (see: Minutes of the hearing, pp. 194, 28 - pp.  205, 28).  On the contrary, in the interrogation, counsel for the defendants did not bother to confront the expert with accounting, economic or legal evidence that contradicted the expert's position, and sufficed with the argument that the expert's position does not provide a logical explanation (ibid., at p.  197, paras.  28-34).  This is not enough to contradict the expert's position, not even approximately.  It should be noted in parentheses that even in the summaries of defendants 2-3, no accounting, economic or legal references were brought that contradicted the expert's position (references that were required to be presented to the expert in his cross-examination and to allow him to deal with them).
78. I am of the opinion that defendants 2-3 have not been able to contradict the expert's position; and that this position of the expert is also correct from an economic point of view, at least in the unique circumstances of the present case, in which the dilution was done in accordance with an agreed-upon formula and not according to the valuation of the company, and is also consistent with the reference in clause 8 of the founders' agreement to the owners' loans as "equity".
79. To be precise: the expert did not pretend to intervene in the rate of dilution of the plaintiff's shares that were carried out in accordance with the founders' agreement, and in any case did not exceed his authority. All that the expert determined, in accordance with his full authority, is that if the excess owners' loans made by defendant 3 to the company (including in respect of the plaintiff's share), led to a dilution in the plaintiff's share of capital, and this not according to a valuation but according to the agreed formula, then for the purpose of valuing the company, there is no room to reduce them from the value of the company's equity, otherwise this would be a "double consideration".  This determination is within the full authority of the expert, and as stated, it is also justified on its merits.  It should also be emphasized that contrary to the arguments of defendants 2-3 in their summaries, this determination does not contradict the founders' agreement, interfere with the freedom of contracts, or deviate from the dilution mechanism that they claim was determined as "compensation" for the risk taken by a shareholder who provides an excess owner's loan.  The founders' agreement does not determine anything on the question of how it is economically correct to relate to surplus owners' loans for the purpose of valuing the company, and the expert's determination also does not cause the plaintiff to "enrich" at the expense of defendant 3.
80. Therefore, as appears from the table in clause 5.3.2 of the expert opinion, the ^[4] value of the company's equity net of owners' loans (excluding the owners' excess loans) as of December 31, 2019 (in the scenario with the expansion of the hotel) is ILS 16,612,000 (= 21,483,000-4,871,000).

The value of the plaintiff's shares in the company for the purpose of purchasing them

81. From the moment I determined that the plaintiff did not meet the initial burden of proving that there was an alleged defect in the dilutions that were made, this means that the percentage of the plaintiff's holdings at the time of filing the claim and for the purpose of the forced purchase relief is 2.73% of the company's shares.
82. It should be noted that although the second dilation was completed in March 2020, it should be taken into account despite the fact that the date set for the valuation of the company is December 31, 2019. As stated, the valuation date of December 31, 2019 was chosen due to its chronological and material proximity to the date of filing the claim to the Magistrate's Court and the absence of a valuation for the date of filing the claim in this case (June 21, 2020) or the date of filing the claim with the Magistrate's Court (March 12, 2020).  However, it should not be ignored that the claim in this proceeding was filed on June 21, 2020, after the second dilution was completed.
83. On the contrary, the plaintiff cannot insist that the company's valuation as of December 31, 2019 will take into account the expansion of the hotel, despite the fact that it was actually carried out only in 2020 (and as stated, I accepted the plaintiff's position on this matter), and at the same time ignore the need to finance the expansion also in owners' loans, which was carried out by defendant 3 alone and which led to a dilution in the amount of the plaintiff's holdings. It should also be mentioned in this context that already in the company's letter dated February 5, 2020, the plaintiff was asked to transfer its share of the loan for the purpose of financing the expansion of the hotel.  This request was in fact denied by the plaintiff in a letter of reply dated March 5, 2020, in which counsel argued that this was a move whose sole purpose was to dilute the plaintiff's shares (a claim that was rejected by me), while raising demands for receipt of various documents and data in connection with the expansion of the hotel (although, as stated, I determined that she had sufficient information for the purpose of making a decision on the matter; Appendices 43-44 to the affidavit of defendant 3).  In these circumstances, it was proven in my opinion that already on March 12, 2020, when the claim was filed with the Magistrate's Court, it was already clear that the plaintiff would not provide the company with its relative share of the owner's loan for the purpose of expanding the hotel.
84. Therefore, I am of the opinion that it is justified to determine that the percentage of shares that defendant 3 will purchase from the plaintiff will be calculated after the second dilution (which was completed about three months before the filing of the lawsuit in this case), even though the valuation of the company will be made on December 31, 2019.
85. As stated, the company's equity value as of December 31, 2019 is ILS 16,612,000. As a result, the value of the plaintiff's holdings in the company as of December 31, 2019 was ILS 453,508 [= 16,612,000 x 2.73%].
86. In light of the fact that the value of the company, and accordingly the plaintiff's shares, was assessed as of December 31, 2019, I am of the opinion that the consideration should be valued from that date until the date of repayment (see, for example: the B. case).  Management, at para.  61; Bachar, at para.  64; Margalit, at para.  75; Civil Case (Tel Aviv Economic) 41875-01-20 Kaminsky v.  Ben Ravid, para.  107 (April 7, 2023; hereinafter: "the Kaminsky case"); The Tal case, at para.  233).
87. As to the method of valuation, I am of the opinion that in the unique circumstances of this proceeding, it is appropriate to add to the value of the plaintiff's shares (in the sum of ILS 453,508) a shekel interest as stated in section 2(a) of the Interest Rulings and Linkage Law, 5721-1961 (hereinafter: the "Interest Rulings Law"), from December 31, 2019 until December 31, 2023; and linkage differentials only (without interest) as stated in Section 2(a)(1) of the Interest Ruling Law from January 1, 2024 until the "Repayment Date" (as defined in this Law).^[5] I am of the opinion that this is the proportionate and just solution in the circumstances of the present case, in which during the course of the proceeding, defendant 3 announced that he agreed to purchase the plaintiff's shares, and it was the plaintiff's conduct as of the second half of 2023 that caused, mainly, a delay in the conclusion of the proceeding. It is not superfluous to mention in this context the following data (without exhausting it): In order to determine the consideration to which the plaintiff is entitled, it was necessary to rule on its claims that the dilution of its shares was carried out illegally and that there were unlawful takeovers of defendants 2 and 3 from the company, claims that were fully rejected in this judgment; On December 21, 2023, the plaintiff filed the motion for the transfer of the shares (to Mr. Naimi), which led to a delay in hearing the expert's testimony and as a result the conclusion of the proceeding; On July 16, 2023, the plaintiff announced that she insists on her right to cross-examine the expert in court, which led to a significant delay in the conclusion of the proceeding, when at the end of the day all her arguments against the expert's opinion were rejected in this judgment.
88. Therefore, I order defendant 3 to pay the plaintiff for consideration in the company in the sum of ILS 453,508 plus shekel interest as stated in section 2(a) of the Interest Ruling Law from December 31, 2019 until December 31, 2023; and with the addition of linkage differences only (without interest) as stated in section 2(a)(1) of the Interest Ruling Law from January 1, 2024 until the "repayment date" (as defined in this law).
89. I do not accept the argument of defendants 2-3 that was argued in the margins of paragraph 37 of their summaries, that the value of the plaintiff's shares should be reduced by a control premium (in the sense of "minority discounting"). This argument was made in vain and without being supported by an expert opinion, and this is sufficient to determine that the burden was not lifted for the purpose of establishing it (see, for example: the Adler case, at paras.  99-100; the Siman Tov case in District Court, at para.  44; compare: the Regev case, at paras.  152-154).  The plaintiff, for her part, did not claim that she should be paid an excess premium on her shares due to the "forced purchase" and in any case did not meet the burden of substantiating this claim (compare: the Magenzi case, at para.  16; and see also: the S.B.    Management, at paragraphs 60-61, where the court held that the minority discount is offset with the premium for the forced purchase; Kaminsky, at para.  110; Tal, at para.  234).
90. Additional Remedies in the Statement of Claim

11.1 The repayment of the owner's loan provided by the plaintiff to the company must be ordered

90. I am of the opinion that as a supplementary instruction to the purchase of the plaintiff's shares in the company by defendant 3, it is justified to instruct the company to repay the owners' loan that the plaintiff provided to the company in the sum of ILS 235,000, in accordance with the remedy claimed in this matter in paragraph 76 of the statement of claim and in paragraph 96 of the plaintiff's summaries. The granting of this relief to the plaintiff is justified for two reasons: First, since the purchase of the plaintiff's shares by defendant 3 will be made according to the value of the company, minus the owners' loans given to it as of December 31, 2019 (excluding excess owners' loans), it is clear that this deduction is financially obligatory to repay the plaintiff's owners' loan as well.  After all, without the repayment of the owners' loans, there would have been no room to reduce them from the value of the company, and accordingly the payment that the plaintiff would have received for the purchase of its shares by defendant 3 would have increased; Second, I am of the opinion that since we are dealing with an owners' loan given by the plaintiff for the purpose of financing the company's activities, which is a small company with only two shareholders and which constitutes a "kind of partnership", a complete separation of powers between the parties requires that the plaintiff will not remain a creditor of the company after the purchase of its shares (compare: the Kaminsky case, at para.  112; Civil Case (Tel Aviv Economic) 44511-04-22 Goel v.    Goel Holdings (1993) Ltd., para.  72 (May 15, 2025)).
91. Therefore, in addition to the payment of the sum of ILS 453,508 for the purchase of the plaintiff's shares in the company, I instruct the company to repay the plaintiff's owner's loan, in the sum of ILS 235,000, plus shekel interest in accordance with section 2(a) of the Interest Ruling Law from December 31, 2019 until the "repayment date" (as defined in this law). To be precise: the plaintiff did not petition for the contractual interest in respect of the owners' loan (clause 8.5 of the founders' agreement), but only asked in its summaries "to order the repayment of the owner's loan in the sum of ILS 235,000 together with interest and linkage" (paragraph 96 of the plaintiff's summaries).  Since the plaintiff did not petition for contractual interest, and did not claim this interest in the statement of claim or in its summaries, and thus even prevented the defendants from being able to argue why the contractual interest should not be applied in the present case, I am of the opinion that it would be unjust to apply contractual interest (Civil Appeal 132/85 Amropa A.G.    H.S.I.  Gender - Steel Industries Ltd., IsrSC 41(4) 477, 491 (1987)).  It should be noted that even on the merits of the matter, it is doubtful whether there was justification for applying the contractual interest in the case at hand, since the founders' agreement did not specify a date on which the plaintiff would be entitled to receive back the owner's loan, and this is not a case in which the plaintiff had a contractual right to repay this loan, but rather that the repayment of the owner's loan as aforesaid constitutes an integral part of the provisions regarding the separation and acquisition of the plaintiff's rights in the company.
92. Notwithstanding the plaintiff's conduct as detailed in section 87 above, since with regard to the owner's loan (as opposed to the consideration for the shares) we are dealing with funds that the plaintiff provided to the company for its use, I am of the opinion that the plaintiff's loan should be returned to the plaintiff with the addition of shekel interest in accordance with section 2(a) of the Interest Ruling Law as of December 31, 2019 until the "repayment date" (as defined in this law), and I did not see fit to determine that even with regard to the owner's loan, the plaintiff will be entitled to receive linkage differentials only without interest as of January 1, 2024.
93. To be precise: I did not find it appropriate to order that any interest or linkage be added to the amount of the owner's loan for the period from the date of granting the loan until December 31, 2019 (which is the date of the valuation). As part of the valuation, the expert deducted the sums of the parties' owners' loans from the value of the activity according to the amounts recorded in the company's financial statements, which did not include interest or linkage but were included in their nominal amounts (see in this regard: note (4) to the approval of the company's accountant, which was attached as Appendix 1 to the affidavit of defendant 3, at p.  59 of the numerator; and p.  3 of the company's financial statements for 2019, which were attached as Appendix 52 to the affidavit of defendant 3, at p.  302 of the numerator).  Therefore, when determining the value of the company, the expert did not take into account the interest or linkage on the amounts of the owners' loans, which if they had been taken into account, this would have reduced its value.  Accordingly, there is no justification for repaying to the plaintiff the owner's loan that she provided to the company plus interest or linkage until December 31, 2019 (as opposed to interest under the Interest Ruling Law from that date onwards), as this would constitute double consideration for the plaintiff.

11.2 There is no room to award additional remedies to the plaintiff

94. In the statement of claim and in its summaries, the plaintiff petitioned for a number of additional remedies: (a) monetary compensation in the sum of ILS 30,000 for mental anguish caused to the plaintiff due to the violation of her rights and good name; and (b) "compensation for commercial torts" in the amount of ILS 100,000.
95. There is no reason to award the plaintiff the aforesaid remedies, which were mentioned in her summaries without any minimal detail explaining why the plaintiff is entitled to receive them. In particular, the plaintiff refrained from specifying which of the torts set forth in the Commercial Torts Law, 5759-1999, were committed against her, by which of the defendants and for which acts.
96. With regard to the compensation relief for mental anguish, the plaintiff did not substantiate her claims of damage to her good name and invasion of privacy, which were merely claimed, and were not proven, and in any event, taking into account the broad discretion given to the court in the framework of a claim for removal of discrimination, I do not believe that the conduct of any of the defendants towards the plaintiff justifies awarding her compensation for mental anguish.
97. 312. Conclusion
98. In view of all of the above, I order as follows:
    • Defendant 3 will purchase the plaintiff's shares in the company within 30 days in exchange for a sum of ILS 453,508 plus shekel interest in accordance with the Interest Rulings Law, from December 31, 2019 to December 31, 2023; and with the addition of linkage differentials only (without interest) as stated in the Interest Ruling Law from January 1, 2024 until the date of repayment as defined in this Law.
    • The company will repay the plaintiff the owner's loan it received from it within 30 days in the sum of ILS 235,000 plus shekel interest in accordance with the Interest Ruling Law as of December 31, 2019 until the date of repayment as defined in this law.
    • For the purpose of carrying out the aforesaid, within 30 days from the date of the issuance of this judgment, defendant 3 (on his behalf and on behalf of the Company, as the case may be) will deliver to the plaintiff's attorney two bank checks for the plaintiff's ordinance in the amount of the sums stated in sections 97.1-97.2 above, in exchange for receipt of share transfer notes signed by the plaintiff regarding her shares in the company. After making the payment as stated in this section, defendant 3 will be entitled to amend the register of shareholders maintained in the company accordingly and to act to amend the register with respect to the company that is managed by the Registrar of Companies.
    • For the sake of caution, and despite various arguments raised by the defendants in connection with the plaintiff's refusal to guarantee the company's debts, I determine that to the extent that the plaintiff remains a guarantor of any debt from the company's debts, defendant 3 will be responsible for releasing her from any such guarantee, within 30 days from the date of receipt of the share transfer notes signed by the plaintiff.
99. All the other elements of the claim are hereby dismissed, both in relation to the company and in relation to defendants 2 and 3.
100. In view of the conclusion I have reached, I do not see the need to address the other arguments of the parties that I did not expressly address, even though they did not go unnoticed by me, since the decision on them does not affect the outcome of this judgment (see: Civil Appeal Authority 9294/09 Chen v. Bank Hapoalim, para.  7 (March 25, 2010); High Court of Justice 1666/22 Almagor v.  National Labor Court, para.  17 (December 12, 2022)).
101. In the circumstances of the case, after having considered the considerations set out in Regulations 151-153 of the Civil Procedure Regulations, 5779-2018, and in light of the result I have reached, I determine that each of the parties will bear its own expenses. In this context, I have taken into account, inter alia (and without exhausting) the following considerations: the remedy for the purchase of the plaintiff's shares in the company was accepted by consent without determining that the plaintiff was deprived, the plaintiff's claims regarding the dilution were rejected and her claims against the expert opinion were rejected, from the outset there was no justification for filing the claim against defendant 2, and the request for the transfer of the shares was rejected; On the other hand, the plaintiff's claim regarding the date of the valuation was accepted and I rejected the defendants' claims regarding the deduction of the owners' excess loans from the company's value.
102. The Secretariat will send the judgment to the parties. The right to appeal to the Supreme Court, by law.

Given today, June 25, 2025, in the absence of the parties.