In view of the above, I am of the opinion that the main arguments in Shaporan's appeal should be rejected, a significant part of which is also directed towards factual determinations of the trial court, which I did not find room to intervene in.
- However, I found that there is substance to Shaporan's argument that he should not be held responsible for the amount of money transferred on October 6, 2002, in the sum of ILS 1.2 million from the company to the subsidiary. As emerges from the judgment of the first instance, on this very date the application for an order for a stay of proceedings in bankruptcy 528/02 was filed, in which it was noted, as stated, that the village was in high debts, and that the company was managed by Pinkovich in breach of fiduciary duty and conflict of interest (that Foran erred in his claim that this was the day on which CPA Darman was appointed as a "special manager").
It seems to me that in these circumstances it is difficult to attribute the transfer of funds to the reliance of the supervisory bodies in the company - including the board of directors - on the partial financial statements presented by Sheporan a few months earlier. It can be assumed that on the day of the transfer of funds, which is the day the application for a stay of proceedings was filed, the company's officers and directors were already familiar with the allegations and suspicions against Pinkowitz (even if only in general), and it cannot be argued without supporting this with evidence, that the representation presented in the financial statements had a decisive impact on the approval of the transfer of funds to the subsidiary. Although the directors were not a party to the request for a stay of proceedings, in circumstances in which a substantial part of the parents of the inmates signed such a request, it can be assumed with high probability that the suspicions and allegations described therein were known and known to the officials in the village, including the directors. In any event, in order to claim that the directors were not aware of the filing of the application and the claims detailed therein, the plaintiffs had to present evidence to support it.
- In view of the aforesaid, I am of the opinion that the liability of CPA Shaporan ILS 1.2 million should be deducted, since no causal connection has been proven between the manner in which he prepared the financial statements and the transfer of the funds dated October 6, 2002, and his liability - jointly and severally with the other directors - should be set at ILS 958,761.
E.5. Pinkowitz's appeal and the amount of damages he will be charged