Even if the defendants acted in good faith when they signed the affidavit, as defendant 1 testified before me (par. of November 25, 2024, pp. 36, 32, pp. 50, 33-35, p. 51, 1-2), and only were negligent towards the plaintiff (and no worse), this does not help the defendants, since in the circumstances of the present case, the plaintiff proved, with the balance of probabilities required in civil law, that there is a causal connection between the breach of the plaintiffs' duties and the damage caused to him.
C3. The causal connection between the breach of the defendants' duties and the damage caused to the plaintiff
- As proved before me, on December 14, 2016, after the plaintiff's claim was filed in the previous proceeding, the company's bank account had a balance of NIS 126,782, and on December 22, 2016, the account was closed without balances (Exhibit A/1). Defendant 1 confirmed in his cross-examination that this sum was transferred to the defendants (par. of November 25, 2024, p. 40, paras. 3-6).
As appears from the trust account statements in November 2015, approximately NIS 6 million was transferred to the company's account, originating from a lawsuit filed by the company against the Tel Aviv Municipality, and was withdrawn by the defendants (Exhibit A/3), and in accordance with the bank statements from 2015 (Exhibit A/4), various funds were withdrawn from the company's bank account, even though according to the defendants, the company had not been active since 2002. Most of the bank statements were blacked out by the defendants, and when defendant 1 was asked whether it was true that the blacked withdrawals were the withdrawals of the company's owners, his answers were evasive. At first he answered: "No", then "not only", and later confirmed that there was a situation in which it was also withdrawals of the company's owners (Par. of November 25, 2024, pp. 39, 29-36, pp. 40, 1-2).
Admittedly, on March 16, 2017, when the solvency affidavit was signed, the company's account was closed, but it was closed about three months earlier, after the defendants chose to withdraw the funds they had in their pockets.
- After signing the affidavit of solvency, on July 20, 2017, the defendants signed lien disposal documents, where they announced that the lien imposed on the company had been cleared and paid in full, and that the company had no debts to the defendants (Appendix 11 to the reply). I am aware of the testimony of defendant 1, that in practice, even though it was written in the document signed by them that the debt had been disposed of in full, the defendants did not receive money for the discharge of the lien (par. of November 25, 2024, pp. 49, paras. 24-37), since the equipment on which the lien was imposed had gone down the drain years earlier (paragraph 21 of its summaries), but this is an oral argument against a written document, and I am not persuaded that the equipment going down the drain means that the debt for which the lien was imposed has not been cleared. Given that the purpose of the lien, in the lien agreement (Appendix J to the reply), was not defined only in relation to the equipment, but rather: "to secure the company's debts to the defendants, who lent it money and will lend it money in the future, as every month of the month" (my emphases, S.P.T.).
- From the moment the plaintiff's claim was filed in the previous proceeding, there was sufficient sum in the company's bank account to cover the company's debt to the plaintiff, but the defendants chose to withdraw the funds into their pockets and close the account, they are prevented from raising a claim that, on the date they signed the solvency affidavit (about three months after they withdrew all of the company's funds into their pockets), the company had no assets from which it could have been repaid. Thus, even if they had not signed the affidavit, the plaintiff would not have suffered any damage.
A result whereby the defendants will be able to evade their liability, on the grounds that the company in any case had no assets at the time they signed the solvency affidavit, while they were the ones who emptied the company's account of funds and preferred to repay owners' loans rather than retaining the funds for a possible future debt of the company to the plaintiff, the existence of which was known to them both at the time of closing the company's bank account and when they signed the solvency affidavit. is unacceptable and contrary to logic and common sense, as well as to the purpose of the voluntary liquidation proceeding.
- The plaintiff is correct in his argument that if the defendants had not signed the affidavit of solvency on which he relied and on the basis of which the company was voluntarily liquidated, he could have requested the cancellation of the liquidation proceedings voluntarily and in the framework of liquidation under the supervision of the court, he could have requested the cancellation of the transfers of funds from the company's account to the defendants, which were made close to the closing of the company's bank account, before it had repaid its debts to the creditors in full (see and compare the Angel case, Section 50 and Section 55).
Contrary to the defendants' argument, I am of the opinion that the circumstances of the case before me are different from the circumstances inJudgment 21788-01-19 Yaakov Kahane et al. v. Receiver of the Haifa District Registrars (March 18, 2021) (published in Nevo) (hereinafter: "Financial Matter") and from the circumstances inADAM 49949-03-20 Shoshana v. Appraiser (December 12, 2022) (published in Nevo) (hereinafter: "The Appraiser Case"), where the courts ruled that the termination of the voluntary liquidation process and the initiation of liquidation by the court did not change the fact that the companies there did not have assets to be repaid from them, and therefore no damage was caused.