Against this background, it was determined that CPA Shaporan was negligent in his role as auditor of the company and the subsidiary, that he had breached his duty of care towards the company, and that he must compensate the company for the damages caused to him as a result of his negligence, in the sum of ILS 2,158,761.
C.5. Summary of the District Court's Judgment
- The court clarified that with the exception of the company's claim, the other plaintiffs' claims are rejected: CPA Darman's claim is dismissed, because his position in the company expired at the beginning of 2003, and the parents' claim is rejected, since their damages have not been proven.
As for the damages, it was determined that Pinkovich and CPA Sheporan would be liable according to the amount of damage caused by their actions as assessed in the statement of claim. As stated, the damage attributed to Pinkowitz due to his breach of trust amounted to ILS 1,488,630. CPA Shaporan was sued for damages in the sum of ILS 2,158,761, and the court ordered the said amount.
- The Appeals
Three appeals were filed against the trial judgment - on behalf of the plaintiffs, on behalf of Pinkovich and on behalf of CPA Shaporan. For the sake of good order, I will briefly mention the main arguments mentioned in each of the appeals, and then I will turn to the discussion of each of the issues that require a decision. In the chapter of the hearing, the arguments of the parties on each and every issue will be presented in more detail.
D.1. Plaintiffs' Appeal - Civil Appeal 4024/13
- The plaintiffs directed their appeal to four main determinations in the trial judgment - (1) the determination that the directors were not responsible for the company's damages; (2) the determination that the policy does not cover the negligence of the directors, even if they were found to be negligent; (3) the determination that the late CPA Milner is not responsible for the company's damages; (4) The determination that Pinkowitz will be charged only for the amount claimed on the grounds of fraud and breach of trust, and not for the tort of negligence. I will detail their arguments in relation to each of these determinations, as stated, below.
D.2. Pinkowitz's Appeal - Civil Appeal 5280/13