E.1.5. Pinkowitz's Appeal - The Parties' Arguments
- The trial court held that the entire damage claimed by the plaintiffs was caused by Pinkowitz alone, due to his breach of his fiduciary duty to the company only (and not due to negligence). The amount of the claim for breach of fiduciary duty was set by the plaintiffs at ILS 1,488,630 only (the damage caused by the withdrawal of funds through the company's credit cards and withdrawals of funds from the company for the purpose of establishing and financing "Hope Switzerland"), and therefore the trial court ordered Pinkovich to pay only this amount.
- In his appeal, Pinkowitz argued that in the only two components in which he was sued for monetary compensation for breach of trust (use of the credit card and withdrawal of funds in favor of "Hope Switzerland"), the plaintiffs' claims were not proven, and were even refuted by the evidence submitted to the court. It was argued that the trial court ruled that it had not been proven that funds were invested in "Hope Switzerland" beyond the donations received in the company for this purpose, and therefore the company did not have a cause of action against Pinkowitz in this matter, and certainly not a cause of action for breach of fiduciary, since the company itself did not suffer any damage from the withdrawal of the said funds, which did not belong to it and were not intended for its use. With regard to the use of the company's credit card, it was argued, inter alia, that it was the credit card of the subsidiary and not the company's, and therefore the company had no cause of action for the use of this card. It was also argued against the reliability and content of the statements of the witnesses who testified in this matter, and that the court should have accepted Pinkowitz's version, according to which the expenses in question were spent for the benefit of the village.
A significant part of Pinkowitz's appeal was devoted to the claims that the transfer of the funds to the subsidiary was intended to fulfill the company's goals and to act for the benefit of the factory and for the benefit of the residents in the village. According to Pinkowitz, the subsidiary's losses were temporary and solvable, and had it not been for hasty moves on the part of the sponsors' parents, the company's managers and the subsidiary would have found a solution to the "temporary cash flow difficulty," and the companies would have continued to operate financially stable, as they have been for many years.
- In their reply, the plaintiffs argued that the trial court did not attribute the amount of damage to which Pinkowitz was charged to one act or another, but found that all of his actions amounted to a breach of fiduciary duty, and that he was responsible for all the damages caused to the company, and therefore charged him with the maximum amount he was sued for this cause.
With regard to the ruling of the trial court that exempted Pinkowitz from liability on the ground of negligence, and charged him only for the damage he caused by fraud and breach of trust, the plaintiffs argued in their appeal that the trial court erred in doing so, and that Pinkowitz, together with the other directors, should be liable for the full amount of the damage attributed to them due to their negligence.