The estoppel, on the other hand, establishes a procedural barrier to a party seeking to re-litigate any factual or legal question, provided that four cumulative conditions are met: a. Identity between the parties or between their substitutes; b. factual and legal identity between the company that was discussed and decided in the judgment given in the first litigation and the company discussed in the additional litigation; C. A positive factual finding was determined in the company in the first litigation; D. The necessity of deciding in the company for the purpose of the judgment (Shimoni, at p. 583).
- I will preface by saying that in the framework of this proceeding, the defendants filed a motion for summary dismissal due to an act of the court and estoppel of cause, and this request was rejected in the decision of the Honorable Registrar Lerner of January 22, 2022, which determined, inter alia: "Here, prima facie, we are dealing with a different cause of action than in the previous proceeding, and therefore, again, on the face of it, it appears that the claim has a sufficient chance of being accepted, so that there is no room for dismissal in limine."
- As appears from the evidence presented to me, the cause of action in the previous proceeding was a contractual one, in which it was claimed that the defendants personally undertook the plaintiff to pay the fees on the basis of a series of correspondence between the parties. In the proceeding before me, it was argued that the defendants should be held personally liable for the reason that they signed a false or negligent solvency affidavit during the previous proceeding, and caused the "liquidation" of the company in a proceeding of voluntary liquidation, while ignoring the existence of a pending proceeding and the possibility (which was realized) that the claim against the company would be accepted.
The cause of action before me is different from the cause of action that was raised in the previous proceeding, and it could not be included in the framework of the claim in the previous proceeding, since it was born only after it was filed. The fact that the defendants' conduct was discovered during the previous proceeding, and was mentioned incidentally in the plaintiff's summaries, does not create a "estoppel" of a cause, especially when the judgment makes no reference to it. In these circumstances, there was also no estoppel, since the question was not discussed at all and no positive factual finding was determined in it, and in any event, the decision on it was not essential for the purpose of rendering the judgment in the previous proceeding.
- Therefore, the defendants' argument that the plaintiff is silenced from raising his claims against the defendants in the proceeding before me, because of the act of the court and the estoppel of a cause of action, is rejected.
C2. The liability of the defendants, who signed an affidavit of solvency and liquidated the company in a proceeding of voluntary liquidation, while ignoring a pending proceeding
- Voluntary liquidation of a company is one of the ways to bring the life of a company to an end. This is a voluntary proceeding, which, as a rule, is carried out entirely by the company's shareholders, without the intervention and supervision of the court. The court's lack of supervision over the liquidation of the company is based on the presumption that the company undertakes – according to the declaration of its directors – to bear its debts in full, within twelve months from the date of the commencement of the liquidation (see TAM (Had) 17822-05-18 in Merom Productions 2004 Ltd. Eviatar Dotan, paragraph 14 and the references cited therein (published in Nevo) (May 5, 2020))
- The arrangement relating to the declaration of solvency is set out in section 342K ofthe Companies Law, 5759-1999 (hereinafter: the "Companies Law"), which provides as follows:
"An affidavit of solvency will be given by all or most of the directors of the company, in which they will declare that they have carefully examined the state of the company's business and that in their opinion the company can pay its debts in full within 12 months from the beginning of its liquidation.".
- At the time the defendants signed the affidavit of solvency, section 322 of the Companies Ordinance [New Version] 5743 – 1983 (hereinafter: the "Ordinance") applied, which made a similar provision:
"The provisions of this section shall apply to voluntary liquidation, unless before sending the invitations to the company's meeting at which the liquidation decision will be proposed, the directors or most of them, at their meeting, made an affidavit that they had carefully examined the company's business situation and came to an opinion that it was able to pay its debts in full within twelve months after the commencement of its liquidation (hereinafter – a declaration of solvency), and this declaration was submitted to the Registrar prior to the dispatch of the orders."
- In our case, there is no dispute that the declaration of solvency was signed by the defendants on March 16, 2017, and at that time the previous proceeding was already pending (the claim was filed on June 22, 2016), so there can be no dispute that the defendants knew at the time of signing that there was a disputed future debt, and this dispute would be decided in the judgment in the previous proceeding, in which the court may rule on the company's obligation (as actually happened).
Defendant 1 also testified before me: "The plaintiff filed a claim against us in a summary proceeding... We were given permission to defend ourselves, and it was transferred to a speedy proceeding. The trial was supposed to end quite quickly according to the regulations, during this period we decided that we would start the closure, we would start the process of closing the company, because the company had been inactive since 22.02.2001, every year is a lot of money to keep a company... (Par. of November 25, 2024, p. 26, paras. 11-16) (my emphases, S.P.T.).
- Despite this, there is no mention in the affidavit of solvency of the existence of the previous proceeding and the possibility that the company will be obligated to pay the plaintiff.
In his cross-examination, defendant 1 was asked whether when there is a pending claim against the company at the time of signing the solvency affidavit, and at the signing stage it is not yet known whether it will be accepted, the affidavit also covers future debt of this type. At first, he replied: "Of course he covers it, there is no argument about it" (par. of November 25, 2024, pp. 32, 33-36, p. 33, s. 1), later he claimed that the affidavit only covers future debt that was created within a year from the date of signing, and if the debt was created afterwards, he does not know what to do: "I don't know what to do, we signed a debt according to the regulations, what is necessary, we are guarantors for a whole year. This is what was written" and at the time of the company's closure, there was no debt (Par. of November 25, 2024, pp. 33, 1-14). As for the pending proceeding that will be decided only after the end of the year, he clarified: "... I can't be years, you can't have years to carry something, I don't know what can happen, I don't know, as soon as it's the regulations that they demanded, that's what we signed, it's not something we invented, it's a standard form" (Par. of November 25, 2024, p. 34, s. 21-25) (all my emphases, S.P.T.).