It should be noted that as part of the liquidation proceedings, Bank Mizrahi agreed to delete the warning note in respect of the mortgage in its favor, and waived receiving part of the money in exchange for the sale of the land.
- Accordingly, the consolidated lot was sold to a third party for a gross sum of ILS 77 million (approximately ILS 68 million net, after deducting expenses). As of this date, the plaintiffs have received the return of most of their investment money from my money in exchange for the sale of the lot, but some of the funds were not returned and went down the drain.
- Hence the lawsuit.
The Prosecution
- The plaintiffs, most of the members of Group 102, own 38 of the 57 units in the class. In their lawsuit, they petitioned to compel Adv. Nof and Adv. Aharonson to pay them their full investment and full expenses in the project, minus the funds that had already been returned to them from the liquidation fund. The purchase tax payments they paid for the transaction were also demanded. The plaintiffs petitioned to link the refund amount of their investment to the construction input index from 2012 (the date of their investment).
In accordance with what is stated in the lawsuit, the defendants are liable to them due to their negligence in drafting the agreements, and due to the false representations they presented to them prior to their signature. It was claimed that they had breached their duties of trust, loyalty and care, and acted towards them in a conflict of interest, and in contravention of the contractual obligations they undertook.
Against this background, the total compensation claimed was set at ILS 12.5 million.
- On September 28, 2022, the plaintiffs filed an amended statement of claim, in which they added a number of remedies. The updated claim amount (in accordance with Appendix 16) was set at ILS 12,784,061. In the amended framework, the plaintiffs also petitioned:
- To reimburse the group's collective expenses, in the sum of ILS 7,500 per notional housing unit, most of which were paid to service providers (lawyers, appraisers, etc.), and which were required for the purpose of representing and managing the group's affairs.
- Reimbursement of the fees received by Adv. Nof, in the amount of ILS 432,900 (ILS 11,700 for 37 notional housing units).
- Compensation for advance payment of the completion of the land component in violation of agreements, for 16 plaintiffs who own ten notional housing units, in the sum of ILS 763,450. This compensation is in fact the return of all payments madeto him.
- Adding a cause, without adding to the compensation amount, for adding six late purchasers to the group in 2014, after the group closed in 2012. According to the plaintiffs, the defendants' negligence in drafting the agreements, which did not prevent the addition of the late purchasers, caused the plaintiffs to be forced to share the liquidation fund together with six other purchasers, which reduced the return of the money they were able to receive.
- Adding a cause, without adding to the amount of compensation, for the negligence of the defendants in handling the issue of purchase tax, which caused the plaintiffs to foreclosures, fines, and the absorption of interest, when the fines and interest were canceled in 2020.
- Adding a cause, without adding to the amount of compensation, for the negligence of the defendants in not taking care of convening the first meeting of all the members of the class and electing a representative at an earlier date.
- There were six days of evidence in the case.
- On behalf of the plaintiffs, 27 plaintiffs and their families (some of them without an affidavit); as well as Mr. Erez Ella and Mr. Danny Mualem - architects on behalf of Green-City.
- The defendants testified on behalf of the defendants: Mr. Haim Cohen - the former city engineer of Ramat Gan; Adv. Erez, the liquidator; and Adv. Moshe Har Shemesh - who handled the issue of purchase tax.
- The parties submitted written summaries, even response summaries were submitted on behalf of everyone, and now the time has come for a decision.
The main arguments of the parties
- The arguments of the parties are very numerous and spread over hundreds of pages of affidavits and summaries. I will present here the main point of the discussion and decision. In the rest of the world, I did not find any justification for deviating from the conclusions I had reached.
The plaintiffs' arguments are very brief
- The plaintiffs' basic claim is that Ms. Or and her people deceived them. These marketed dozens of "conceptual units" to them, but concealed material details regarding the risks associated with the deal and its ability to materialize in practice. Thus, they were not presented with the expropriation that applies to the land, which limits the ability to build on it; They were not presented with the nature of the connection with the neighboring purchasing group, Group 104, and so on. And the defendants - the lawyers with whom they came into contact - took an active part in deception, concealment and non-disclosure. They are directly responsible - as those who acted on Ms. Or's behalf, and drafted the contractual system at her request and in light of her instructions - for the damages caused tothem.
- The plaintiffs insist that the defendants told them that they were also represented in the negotiations leading up to the conclusion and signing of the agreements. In other words, they served as their lawyers even before they joined the group. The agreements were deliberately drafted in a confusing manner so that this impression could be obtained, and the defendants did not bother to emphasize that the applicants to join the class must have separate legal representation. Later on, and surprisingly, the defendants claimed that they represented the members of the class only after it was established, and not before. In doing so, they tried to evade the obligations imposed on them to take care of the interests of the members of the group who wished to join it, even at the preliminary negotiation stage.
- Nof and Adv. Aharonson were in an inherent conflict of interest between protecting Ms. Or's interests and protecting their interests. They drafted the agreements in a misleading and negligent manner, concealed material information from the group members, and thus breached their duty of loyalty and dedication to the plaintiffs, and were negligent in the performance of their duties. They did not take care to ensure the interests of the members of Group 102 versus the members of Group 104.
The risks of the project were hidden. According to the plaintiffs, they were unable to obtain planning information about the transaction, since all the information was stored in the hands of Ms. Or, her people and the defendants. These are, among other things, plans to change the zoning plan that have not yet been submitted, so that the plaintiffs could not know how the buildings would be built.