Civil Case (Tel Aviv) 66179-03-22 Rabatz Investments Ltd. v. Babylon Park Israel Ltd.

1. Against the backdrop of the COVID-19 pandemic, a dispute arose that the parties brought before the court. Thus it was: Babylon's children's playground was planned to open in the building itrented fromthe plaintiff in early 2020, on the eve of the COVID-19 pandemic.  It seems that there could not have been a worse timing for starting a business of this kind.  The playground - at least during the relevant period of the lawsuit - failed and did not generate the expected revenues, not even approximately.  There is no doubt that both parties who invested a lot of money in the playground suffered damages as a result of the pandemic (when according to the plaintiff, the failure of the playground was due to other reasons).

In the claim before me, the plaintiff petitions to obligate the defendant to pay her rent and management fees for a period in which, according to the defendant, she was not obligated to pay the payment required of her due to the circumstances of the pandemic, as well as to agreed compensation for the breach of the agreement for non-payment.

I will preface the discussion with a conclusion and note that with all the understanding of the difficult reality in which the defendant found herself, whose business expectations collapsed into the abyss of the pandemic - like many other businesses - it is not possible to accept most of the defense arguments in its mouth.  These are claims that seek to rewrite the agreement between the parties and place the business risks that the defendant took upon itself on the plaintiff's shoulders.  There is no reason in law to instruct in this way.  Therefore, the defendant must be charged the rent and management fees claimed in full.  The agreed compensation should also be charged to the defendant, but not to the amount claimed, as will be explained below.

factual background; The main points of the relevant lease agreement and the presentation of the dispute schedule

2. The plaintiff, Babylon Investments in a Tax Appeal (hereinafter also - "Rabatz" or "the Lessor"), and the defendant, Babylon Park Israel in Tax Appeal (hereinafter also - "Babylon" or "the Lessee") entered into an agreement whereby Babylon rented an area of approximately 2,000 gross square meters (approximately ILS 1,800 net) in a commercial center located on Yad Harutzim Street in Jerusalem. The leased property is intended to be used as a children's playground.  I will note that the original engagement was with another company from the same group (Game On Ltd.), but there is no dispute that the agreement was converted into Babylon (in addition to the lease agreement dated February 21, 2020).
3. Initially, on July 18, 2019, the parties signed the "Appendix of Special Terms to the Lease and Management Agreement dated July 18, 2019" (hereinafter - the "Commercial Terms Appendix"). In accordance with the provisions of Clause 3, the lease period was defined for five years beginning on the date of signing the Agreement, while the provisions of Clauses 3.4-3.2 defined additional lease periods of five years each, which will come into effect automatically unless Babylon notifies otherwise up to 180 days prior to the end of the previous period.  Clause 9.5 of the Commercial Terms stipulates that the Appendix to the Commercial Terms will come into effect, subject to the parties signing a full lease agreement within 30 days, otherwise the Addendum to the Commercial Terms will be cancelled on its own.  On day 6.8.2019 The full lease agreement was signed (hereinafter - the "Lease Agreement") and at the same time a management agreement was also signed (hereinafter - the "Management Agreement").  Defendant 2, Mr. Effi Malka (hereinafter also - "Effi"), controls Babylon and guarantees its obligations to the plaintiff.
4. The provisions of Sections 4.2-4.1 of the Appendix to the Commercial Terms defined the rent and management fees for the first lease period (the first five years, as stated) as follows [emphases in my prominence - L. C]:

4.1.  During the first two years of the lease period, the tenant will pay the landlord monthly rent in an amount equal to 15% of the tenant's monthly redemption in the leased property, together with VAT.  Notwithstanding the aforesaid, it is agreed that if the leased property is not opened to the public within 6 months from the date of the signing of this agreement, the tenant will pay, from the end of a period of 6 months from the date of the signing of this agreement until the leased is opened to the public, a monthly rent in the sum of ILS 60, together with linkage differentials and a tax appeal for each gross square meter of the leased area or any part thereof.