Civil Case (Tel Aviv) 66179-03-22 Rabatz Investments Ltd. v. Babylon Park Israel Ltd. - part 2

The Tenant will also pay, as of the date of signing this Agreement, a monthly management fee in the sum of ILS 10 , together with linkage differences and tax appeal for each 1 square meter or part thereof of the gross leased area and the leased portion of the leased public electricity and water consumption, as well as all current payments that apply to the leased property, including water, electricity and municipal taxes.

4.2.  In the third year, in the fourth year and in the fifth year, monthly rent in the sum equal to 15% of the tenant's monthly redemption in the leased premises, together with a tax appeal or in the sum of ILS 60 plus a tax appeal together with linkage differentials for each 1 square meter of gross leased area, whichever is higher.

In addition, the tenant will pay a monthly management fee in the sum of ILS 10 plus a tax appeal for each 1 square meter or part thereof of gross leased space, together with linkage differences.

The tenant shall also pay the leased portion of the leased public electricity and water consumption in the leased property, as well as all the current [current payments - L.C.] that apply to the leased property, including water, electricity and municipal taxes.

For the avoidance of doubt, it is clarified that the calculation between the parties regarding the higher of the two sums specified in this section will be made at the end of each Gregorian year [emphasis in the original - L.  C] and then the excess payment will be made, if any.

5. In other words, the rent during the first lease period (the first five years) was determined according to 15% of Babylon's monthly revenue (plus VAT), while starting from the third year, such rent will be paid as a derivative of the redemption or ILS 60 per square meter together with linkage differentials (and VAT) (hereinafter - the "Minimum Rent"), whichever is higher. In other words, in the first two years of the lease period, the minimum rent does not apply, but only the rent from the redemption.  This is except for a period in which the leased property will not be opened to the public after six months from the date of signing the agreement.
6. In order to understand the broader dispute that arose between the parties (which deviates from this proceeding), I will further note that as part of the commercial terms, it was agreed that the plaintiff would share the cost of adaptation works that were intended to prepare the leased area to be used as a playground (paragraph 8 of the appendix to the special conditions). In accordance with this summary, the plaintiff-landlord was required to participate in the cost of the works in the sum of approximately ILS 2,000, together with a tax appeal for each net square meter of leased area against an invoice, in accordance with various conditions that were agreed.  In other words, this is a contribution to the cost of the construction work in the amount of approximately ILS 3.6 million (plus VAT).  However, it was also agreed between the parties on a mechanism for proportional restitution of the plaintiff's participation cost in the event that the lease relationship ends after a period of less than 10 years, in which case Babylon is obligated under the agreement to refund the plaintiff part of the investment cost (clause 8.6 of the agreement).
7. As for the management fees, it was agreed in clause 4.1 of the appendix to the commercial conditions in Babylon to pay a management fee in the amount of ILS 10 per gross square meter, plus linkage differences. In clause 5 of the management agreement, the management company (the plaintiff itself) undertook to provide a series of services, either by itself or through others, including the conservation, renovation and cleaning of the areas; ensuring the supply of water and electricity on an ongoing basis; Ongoing maintenance of the air conditioning system and installation of directional signs in addition to the tenants' advertising signs - all in relation to the public areas in the commercial area.
8. The planned date for the opening of the playground to the public in accordance with the provisions of the agreement was within six months from the date of signing the appendix to the commercial terms; That is, in January 2020. The playground was not opened as planned, and ostensibly, according to the provisions of the agreement, the plaintiff was required to pay the defendant minimal rent from that date until the playground opened to the public.
9. However, on May 21, 2020, the parties entered into an addendum to the lease agreement (hereinafter also - the "Addendum to the Lease Agreement"). Clause 2 of the addendum states that "notwithstanding what is stated in clause 4.1 of the appendix to the commercial terms, the parties agree that the rent in respect of the leased property will begin to be paid as of the day Babylon opens its doors in the leased property to the general public, which will open on June 15, 2020.  For the avoidance of doubt, it is clarified that the rest of Game On/Babylon's liabilities, including the obligation to pay management fees for the leased, remain unchanged." In clause 4 of the addendum it was noted that "the provisions of this addendum do not detract from or prejudice any of the parties' obligations under the lease agreement and according to the addendum of January 21, 2020, which will continue to govern the relationship between the parties, except in matters expressly stated in this addendum."
10. It seems that there is no need to mention that during the month of March 2020, the COVID-19 pandemic broke out. Ultimately, the playground opened to the public in June 2020 and was subject to two lockdowns during which it did not operate, as well as various and substantial restrictions imposed by the government due to the pandemic in 2020-2022.
11. The lawsuit concerns a demand for payment of rent and management fees, which it claims were not paid in accordance with the provisions of the agreement, as well as an agreed compensation award for the breach of their non-payment. This is an alleged debt that was accumulated until the date of filing the claim in March 2022.
12. According to the defendants, due to the COVID-19 restrictions, it was not possible to continuously and fully realize the "running period" set out in the agreement - over two years, according to the claim - during which it was agreed that rent would be paid according to the redemption only (without a minimum payment of the minimum rent according to the agreement). Therefore, the playground was prevented from establishing itself and realizing its business potential, and against this background, the main defense argument raised by the defendants in their summaries is that the "running period" that lasted two years, during which Babylon is obligated to pay rent by revenue only, according to it, as of February 4, 2022, should be mentioned.  The defendants further claim in their summaries that they were not provided with management services and therefore should not be charged for management services; that they overpaid for management services that were not provided to them and that these payments should be deducted; that the plaintiff acted in bad faith by ignoring the circumstances of the coronavirus crisis and their impact on the engagement; and that the plaintiff herself breached the lease agreement and caused damages to the defendant.
13. After these brief introductory remarks , we will review the pleadings that were submitted.

Summary of the claim

14. In the statement of claim, it was claimed that the defendant did not pay rent and management fees in the sum of ILS 1,392,438. This is according to the accounting ledger for the period from July 18, 2019 to March 31, 2022 (Appendix 6 to the statement of claim).
15. It was also argued that the non-payment of the rent and management fees constitutes a fundamental breach of all the agreements, and therefore the plaintiff is also entitled to agreed compensation under clause 19.6 of the lease agreement "equal to three times the monthly rent and the last monthly management fees paid prior to the breach, plus VAT" (paragraph 10 of the claim). According to the plaintiff, this is in the sum of ILS 501,162.
16. It was further argued that Effi (defendant 2) should be charged jointly and severally for the amount claimed in view of his personal guarantee for the defendant's charges.

Summary of the statement of defense

17. In the statement of defense, it was claimed that prior to the signing of the lease agreement on June 2, 2019, negotiations were conducted between the parties , based on the plaintiff's representations that the commercial center "will be maintained at a very high level." In the draft agreement, Babylon was required to declare that it was aware of the importance of the way the leased property was managed, operated and maintained in order to maintain the level and quality of the commercial center.
18. It was further claimed that Babylon recently discovered that the plaintiff had amended the wording of the agreement in a way that changed the wording that the plaintiff herself had conveyed and that Babylon had not commented on, so that the agreement imposes on Babylon the responsibility to repair the leased systems and removes from the plaintiff-landlord responsibility for disruptions in the supply of electricity. It was argued that this new division of liability should not be validated, which "crept into the agreement without the knowledge of the tenant".

In this context, the defendant noted that as part of the agreement between the parties they signed Appendix 11 and in paragraphs 3.4-3.3 of this appendix it was agreed that the plaintiff or the management company on its behalf would be the ones to provide the electricity services to the lessee and that the defendant undertook to use only the electrical services that would be provided by them.

19. Babylon further claimed that the appendix of the commercial terms that was signed did not reflect her comments. According to her, she signed in serious bad faith the appendix to the commercial terms in a version that was not agreed upon by her, when it was claimed thatat the time of signing she believed that she was signing a version that was consistent with the changes she proposed in the draft of July 17, 2019.  According to this draft, it is claimed, in the third, fourth and fifth years, the monthly rent and management fees will be paid in a total and consolidated amount equal to the average monthly income of the tenant during the first two years of the lease period, or 15% of the monthly revenue in the leased property together with VAT, whichever is higher.  In other words, according to the wording signed throughout the lease period, the monthly management fees will be ILS 10 per square meter (and not for two years as proposed in the draft submitted by the defendant); And in the third, fourth and fifth years, a minimum rent of ILS 60 per square meter will apply, as demanded by the plaintiff, even though Babylon did not agree to this.  It was argued that, therefore, the terms of the draft submitted by the defendant on July 17, 2019 should be viewed as binding; It is the wording that Babylon thought she was signing.
20. It was argued, in this context, that although the plaintiff did not fully clarify the components of the debt claimed, "it is clear that it stems solely from the fact that the plaintiff relies on the wording of the terms attached as Appendix 3 to the statement of claim (which does not reflect the agreements between the parties as aforesaid)" (paragraph 33 of the statement of defense). The calculation of the debt according to the draft dated July 17, 2019, according to Babylon, shows that the management and rental fees during the relevant period are only ILS 341,678.
21. The defendants further claim that even the reduced amount in respect of the rent and management fees should not be charged because there was a breach of the agreements between the parties; caused damage to Babylon and also acted in bad faith when it refused to talk to it regarding the adjustment of the rental terms in light of the circumstances created in the shadow of the COVID-19 pandemic. At the very least, it was claimed, the damages caused to Babylon should be offset.
22. With regard to the damages caused by Rabetz to Babylon, it was claimed that Rabetz breached the agreement and caused damages by not allowing Babylon to place an LED sign in front of the commercial center in order to invite customers to the playground; that it was promised that the level of maintenance of the commercial center would be improved, but in practice the commercial center was "filthy", as the defendant put it, and there were even maintenance problems that created a safety risk (a cracked concrete guardrail and an old building envelope that the plaintiff undertook to replace but did not do so); Problems with the supply of electricity have led to frequent and long power outages that have impaired the ongoing functioning of the playground and caused the loss of customers and damage to its electrical equipment at a cost of tens of thousands of shekels. This is when the installation of a generator to supply electric current could minimize the damage caused.
23. As for adjusting the rent, the defendants claimed that due to the outbreak of the coronavirus, Babylon was unable to continue to conduct its business as usual and as planned. The opening date of the playground was postponed for months, both due to the impossibility of adapting the property for the purpose of renting, and due to the 68-day lockdown imposed on the public.  Even after the opening of the playground for 154 days, it was closed due to lockdowns, and even during periods when there were no lockdowns, the revenue was very low, so that the operation was usuallyimpulsive, when for many months the rent and management fees exceeded the revenues, and even when the revenue was higher, the overall expenses of the playground were higher.  It was argued that in these circumstances the lease agreement was thwarted.  The pandemic could not have been foreseen and the defendant could not have prevented the pandemic or its destructive consequences.  The defendant did everything in its power to minimize the damages and worked to market its activity through various channels (including radio, television, signs, flyers and social networks), but this was of no real benefit and the playground remained deficit for most of the months.
24. It was claimed that Babylon approached Rabetz many times in order to negotiate the terms of the agreement in accordance with the new circumstances that arose at the time, but Rabetz refused to do so. It refused to consider a reduction in management fees during the lockdowns, even though the commercial center operated in a limited manner, and also refused to negotiate the rent that would be paid after 24 months had passed since entering the leased property.  It was argued that according to clause 4.1 of the agreement, the rent to be paid in the first 24 months will be from the leased property's revenue in order to allow the defendant a sufficient period of time to establish the transaction.  However, due to the COVID-19 crisis, the rented property operated for only 13.5 months out of the 24-month period, and during this period the visitor traffic was low, so Babylon's request to take it into account was justified.  But Babylon was "angry" ignored.  It was further argued that "the landlord's insistence on the fulfillment of the agreements as written and worded, and this under the terms of the lease, even if slightly, in order to alleviate the tenant's distress and due to the exceptional circumstances that characterized the Corona crisis, constitutes a serious lack of good faith - especially in view of the thwarting of the agreement" (paragraph 51 of the statement of defense).  It was also argued that Rabetz's lack of good faith entitles Babylon to various remedies, including denying enforcement of the payment of the full rent and management fees (paragraph 53 of the statement of defense).
25. Finally, Babylon argued that there is no room for awarding agreed compensation, and that at least the amount of agreed compensation under section 15(a) of the Contracts Law (Remedies for Breach of Contract), 5731-1970 should be reduced. It was argued, inter alia, that the agreed compensation in the amount of rent and management fees of three months is not in a reasonable proportion to the damage that could have been expected at the time of the conclusion of the contract, and that the very fact that the agreed compensation clause is sweeping regardless of the severity of the breach attests to this.  It was further argued that at most, the damage that could have been foreseen as a result of the breach is in accordance with the arrears interest set out in clause 21.1 of the agreement between the parties at the rate of 2% per month.  At a minimum, the amount of the agreed compensation should be calculated in accordance with the terms agreed upon by the defendants in the draft dated July 17, 2019, as aforesaid, and it was further argued that the agreed compensation should be reduced due to the fault of Rabatz's contributor.
26. In the margins, I will note that if I have elaborated a little in describing the arguments in the statement of defense, the reason for this is Rabetz's (partially justified) arguments for the development of Babylon's claims throughout the proceeding, while deviating from the boundaries of the dispute in the pleadings, as will be detailed below.

The Preliminary Report

27. On October 23, 2022, the parties submitted a preliminary report. Among other things, the parties announced the reduction of the companies as follows: "The defendants agreed to withdraw their defense arguments relating to the electricity appendix (paragraphs 24, 43-44 of the statement of defense).  In addition, the defendants agreed to reduce their claim regarding their deception by the plaintiff prior to the signing of the lease agreements, and to place it only on the level of the plaintiff's lack of good faith in the negotiations that preceded the signing, and not to insist on the claim that the binding agreement between the parties was the draft text sent by the defendants on January 17, 2022 [Tz.  July 17, 2019 - L.  C] (paragraphs 31, 35, 59, 63 and 67 of the statement of defense).  It should be noted that according to the plaintiff's claim, this is an expansion of the front on the part of the defendants, a claim that is incorrect in the opinion of the defendants, and they referred the plaintiff in this context to paragraphs 2 and 30 of the statement of defense."

The main points of the litigation process

28. The parties' evidence was submitted in writing. On February 12, 2023, the prosecution filed affidavits of the principal witness of Mr. Yoel Madar, who served as the plaintiff's manager at the relevant times of the lawsuit (hereinafter - "Yoel") and of Mr. Aviel Amar, who is the son of the owner of the leased property and with whom negotiations were conducted to conclude the agreement (hereinafter - "Aviel").  On March 23, 2023, the defense submitted affidavits of the main witness of Effi, who is the controlling shareholder of Babylon and the guarantor of its obligations to the plaintiff, as aforesaid, and of Shiran Eini, CPA, who serves as Babylon's financial manager.
29. On March 27, 2023, the plaintiff filed a motion to delete clauses from the defense affidavits on the grounds of expanding the façade, and in a pre-trial hearing on March 28, 2023, the plaintiff's counsel notified, to the court's question, that he agreed that these arguments for the expansion of the façade would be discussed in the summaries.
30. In an evidentiary hearing held on September 17, 2024, the prosecution witnesses and CPA Eini were cross-examined on their affidavits. Effi was questioned about his affidavit in another evidentiary hearing held on November 7, 2024.  Later, in accordance with the instructions given, written summaries were submitted.

Discussion and Decision

31. After considering the arguments of the parties and the evidence material, I have come to the conclusion that the claim should be accepted in the lion's share, as will be detailed below.

There is no basis for interpreting the agreement in such a way thatentitlement to minimum rent begins after July 21

32. In the affidavit of the main witness and in the summaries, the defendants claim that in the agreement a period of two years was determined, which is the "running period", during which they should not be charged minimum rent, but only rent according to revenue. Subsequently, it was argued that the running period begins only on the day the leased property opens to the general public, and that it should be determined that it began only on February 4, 2022, when the COVID-19 restrictions were lifted (paragraph 26 of the summaries).  Previously, according to the claim, the implementation of the Run Period was prevented in view of the various restrictions imposed by the Government on businesses, when according to the Defendants, the Implementation Period is material to the Agreement and "without it, the Agreement would not have been signed in the first place" (paragraph 30 of the Summaries).  Alternatively, it was argued that the period of operation should be counted as of June 20, 2020 - when the leased property was opened to the general public (section 32 of the summaries).
33. There is a reason for the arguments that these are claims that are within the scope of a prohibited façade expansion insofar as it is an argument for interpretation of the terms of the agreement (I will note that the claims of façade expansion were reserved for the plaintiff in accordance with the pre-trial transcript of March 28, 2020 andthe argument in the evidentiary hearing, for example, pp. 121, 134 of the transcript).  In the statement of defense, Babylon claimed that the terms of the draft of July 17, 2019 applied (a claim that she retracted in the preliminary hearing), or alternatively, it was claimed that Babylon acted in bad faith by not agreeing to Babylon's request to discuss adapting the lease terms to the circumstances of the coronavirus.  It is not possible to understand - even a hint - an argument that according to the appendix of the commercial terms that was signed, the stipulation regarding the payment of rent should be "stretched" as a derivative of the redemption only, so that it will begin at a different date and later than two years after the date of the signature.  This is enough to lead to the rejection of the claim.
34. The claim should also be rejected on its merits. I will note at the outset that the argument was raised ambiguously without being clearly argued in the Babylon summaries whether this is a claim that stems solely from Ravetz's obligation to adapt the agreement to the circumstances of the Corona virus, or also to an interpretive claim of the agreement.  Either way, the argument should be rejected.
35. Insofar as we are dealing with an interpretive claim, it is not possible to accept the interpretation of Babylon. This is a business agreement.  As it appears from the evidence - and there is no dispute about this - the agreement was entered into between legally represented business entities.  In agreements of this kind, in accordance with case law, significant and even decisive weight must be given to the language of the agreement (see the opinion of the Honorable Justice A.  Grosskopf, Other Municipality Applications 7649/12 Bibi Roads, Dirt and Development in a Tax Appeal v.  Israel Railways [Nevo] (November 20, 2019) (hereinafter - the "Bibi Roads Case"); Judgment of the Vice-President, the Honorable Judge T.  Havkin, in Civil Case (Tel Aviv Magistrate) 51406-10-19 King George Tel Aviv v.  Elitam in Tax Appeal [Nevo] (January 28, 2024)).
36. The agreement is clear and explicit with regard to the question of the period during which rent will be paid as a derivative of the redemption only (without a minimum payment). Clause 4.1 of the Appendix to the Commercial Terms stipulates that rent as a derivative of the redemption (without a minimum payment) will be paid "in the first two years of the lease period".  The lease period was defined in clause 3.1 of the appendix to the commercial terms as follows: "The lease period is 5 (five years) beginning on the day of the signing of this agreement and ending at the end of 5 years thereafter [my emphasis - L.C.]".  It is therefore clear from the provisions of the agreement that a period of two years in which the rent is only a derivative of the redemption (without a minimum amount being determined) begins on the date of signing.  It should be recalled that the parties signed the appendix of the commercial terms on July 18, 2019.  Therefore, in accordance with the terms of the agreement, until July 2021, the rent is only a derivative of the revenue , after which a minimum rent applies (if the rent derived from the revenue does not exceed them).
37. I will note, in this context, that the evidence does indeed show that the purpose of the period in which the rent was set at a percentage of the redemption only, without a minimum rent being determined, was to allow Babylon a running period in order to help the playground business to establish itself and develop (see, for example, Yoel's testimony at pp. 81-83), as well as a period during which adaptation work was carried out on the property - for which it was agreed that no rent would be paid (if it was completed within six months).  However, the plain and clear language of the agreement does not allow it to be read in such a way that the two-year period in which rent is paid as a derivative of redemption alone will be extended or postponed if certain circumstances or conditions are met.  The language of the agreement is clear and unequivocal.
38. Accordingly, it is also clear from the wording of the agreement that the date on which the leased property was opened to the general public is not relevant to the beginning of the two-year period in which the rent is paid as a derivative of the redemption only, contrary to the defendant's claim. I will recall, in this context, that according to the clear provisions of the agreement, the two-year period in which the rent is a derivative of the redemption only also includes a significant period of adaptation work in the leased property after the signing for the purpose of preparing the leased property to be used as a playground (until January 2020), as indicates, inter alia, from clause 4.1 of the appendix to the commercial conditions itself.  The parties also anticipated that it was possible that the mortgage of the adjustment works that "bite" during the two-year period (in which it was determined that rent would be paid from the redemption only and without a minimum) would be extended and specifically determined in such a case in clause 4.1 of the Appendix to the Commercial Terms, that minimum rent would be paid for the extension of the adjustment works beyond a period of six months, and in a manner that shortened the period in which rent is paid from the redemption only.  In this regard, in and of itself, there is something to contradict Babylon's position.
39. It is no coincidence that in the statement of defense on behalf of the defendants, they complain about the rent and management fees and that the plaintiff insists on "fulfilling the agreements as written and written" (paragraph 51 of the statement of defense), when they claim that in light of the circumstances of the coronavirus, consideration is required on its part. Even in the summaries - beyond the argument that the "running period" should be counted on February 4, 2022 or June 20, 2020 - the defendants do not explain how, according to them, the alleged interpretation can be added to the wording of the agreement.
40. I will note, in this context, that there is also no basis for the interpretation of the addendum to the agreement (from May 2022) as one that postpones the date on which the two-year period in which rent is paid as a derivative of the redemption only and without a minimum, as claimed in the defendant's summaries (and as she also argued in the evidentiary hearing). The provision of Section 2 of the Addendum does not postpone or change the lease period that is counted from the date of signing the Commercial Terms, as defined in Section 4.1 of the Appendix to the Commercial Terms.  It is clear that the new agreement that was expressed in the addendum to the agreement regarding the rent was only regarding the fact that the minimum rent would not be paid within the two-year period due to the extension of the adaptation works beyond six months, despite what was stated in clause 4.1 of the appendix to the commercial conditions.
41. This is according to the plain and natural language of the agreement, and the same is true of the circumstances of the case. This is also evident from the defendant's admission in the statement of defense of the amount of the claim under the agreement "as written and worded" and Rabatz's alleged inflexibility (paragraphs 32-33, 51 of the statement of defense).  And if that were not enough, Babylon further claimed in the statement of defense that "the landlord refused to talk to the tenant regarding the amount of rent to be paid after 24 months from her entry into the leased property...  Under the circumstances of the cold crisis, it operated for only about 13 and a half months out of the 24-month period, during which the traffic of visitors was low, and the tenant requested, and quite rightly, some consideration on the part of the landlord.  Unfortunately, however, the tenant repeatedly encountered angry disappearances on the part of the landlord" (paragraph 50 of the statement of defense).  This argument in the statement of defense is also capable of contradicting the baseless interpretation raised by Babylon in its summaries (and see also the affidavit of Effi himself, who does not support this argument (paragraph 103 of the affidavit) and the testimony of Yoel, who conducted the negotiations on the addendum to the agreement at pp.  76 and 78 of the transcript)).  Needless to say, during the period of the work in the leased property there is no redemption, and therefore the significance of rent as a derivative of the redemption alone is that no rent is paid at all.
42. In the margins, I will mention that in the statement of defense it was claimed that the appendix to the binding commercial terms was not the one signed, but the draft that Babylon submitted on July 17, 2019. Babylon retracted this claim in the preliminary report in which the companies were reduced, and to the extent that it repeats this argument in its summaries (e.g., in section 20), Rabatz rightly claims that this is an expansion of a prohibited front.  I will also note that in any case there is no trace of this argument and the claim of deception in signing the appendix to the commercial terms in the affidavit of Effi's main witness, who described at length the contacts with Aviel prior to the signing and did not claim that he made a mistake or was misled in the signed wording, but repeated the claim in response to questions asked in the cross-examination why he retracted the claim.

Babylon's claim of thwarting should be rejected

43. Babylon argues in its summaries that in the circumstances of the case, the laws of thwarting are fulfilled in a manner that negates Ravetz's demand to pay the full rent and management fees.
44. The law of thwarting is set forth in Section 18 of the Contracts Law (Remedies for Breach of Contract), 5731-1970. This is the language of the provision of section 18(a) of the Law:

45. The application of the laws of prevention is contingent upon the fulfillment of three conditions: the first condition is the "expectation condition", according to which it is required that the breach is the result of circumstances that the violator did not know and should not have known at the time of entering into the contract. The second condition is the "Condition of Effect on the Contract", which indicates that it is required that the performance of the contract is impossible or fundamentally different from what was agreed upon due to those circumstances.  The third condition is the "preventative condition", according to which the cause of action will apply only when we are dealing with circumstances that the violator could not have prevented (see at length, Civil Appeal 6328/97 Regev v.  Ministry of Defense, IsrSC 55(5) 506, 517 (2000); Civil Appeal (Central District) 11146-04-22 Isoonic Kid Systems inTax Appeal v.  La Rhine Entrepreneurship and Events in Tax Appeal [Nevo] (August 22, 2022) (hereinafter - the "Isonik case")).
46. The conditions for the application of the laws of frustration are not met in the circumstances of the case:
47. First, in an addendum to the agreement that the parties entered into on May 21, 2020 - about two months after the outbreak of the COVID-19 pandemic - the parties agreed on a change in the agreement according to which Babylon would not be charged minimum rent for the extension of the adaptation work, while the parties added in paragraphs 2 and 4 of the addendum (quoted above) that the parties' obligations under the agreement, with the exception of the changes that were agreed upon, are arbitrary. It cannot be argued that at this time - when Babylon ratified its obligations under the language of the agreement - the coronavirus pandemic or its possible consequences were unforeseeable.  Nevertheless, the agreement that was formulated is that the obligations in the agreement will continue to apply and not, for example, a stipulation that preserves the claim of thwarting and any other claim in the future.  This is sufficient to come to the conclusion that the conditions of expectation are not met.

I will note, in this context, that in the circumstances of the case there is also a difficulty in the fact that Babylon did not pay the rent according to a decision it made.  There is no claim that Babylon was unable to pay the rent in terms of the company's resources and its cash flow situation (there is also no evidence of this).  In this sense, it seems that there is difficulty in saying that the breach occurred as a result of the frustrating circumstances, and at most it could be argued that the contract became impractical due to the economic significance of its existence or that its purpose was thwarted in the sense that a party to the contract (Babylon) cannot derive from it its underlying purpose, but even those who advocate that there may be circumstances in which such cases fall within the scope of the doctrine of prevention insist that this should be limited to extreme cases only (see Gabriela Shalev and Effi Zemach Contracts 777-782 (4th edition, 2019)).

48. Second, Babylon's argument is that it should not be required to pay the minimum rent that according to the agreement began to apply in July 2021. This was a period in which, according to the Babylon method itself, there were no lockdowns; The playground was open to the public, and the COVID-19 restrictions imposed during the Babylon method were relaxed (after the obligation to wear masks was abolished; there were also vaccinations for children, and the remaining restriction was that a Green Pass was required, which required vaccination or a PCR test at a suitable station).  Effi himself testified thatthe coronavirus did not interfere during this period (pp.  141, s.  26, p.  144, s.  18-19).  Even ignoring the meaning of the terms of the first addendum, and taking into account the stringent standards set out in case law, it cannot be said that during this period the implementation of the agreement was impossible.  In other words, the conditions of influence are also not met.

Moreover, in the period preceding the period that is the subject of the lawsuit - prior to July 2021 - Babylon was charged rent according to redemption only (i.e., only according to actual income, in a manner that weighed the damage to it as a result of the coronavirus , from which the plaintiff was also harmed).