Civil Case (Nazareth) 42488-07-20 Y.A. Alon Construction Ltd. v. Milad Rahal - part 2

The parties' evidence

22. As part of the hearing of the evidence, Milad Rahal, the manager of R.M.Z. (hereinafter: "Milad"( (the affidavit of his main testimony was filed and marked P/1), Mr. Shadi Agbaria, foreman at R.M.Z. (hereinafter: "Shadi" (his main testimony affidavit was filed and marked P/3), and Mr. Rami Azzam, who worked for R.M.Z.  at the relevant times of the lawsuit, and at one point was the company's legal advisor as a lawyer (hereinafter: "Rami"( (his main testimony affidavit was marked P/4).
23. On behalf of Y.A. Alon testified: Daniel Yitzhak, CEO of Y.A. Alon (hereinafter: "Yitzhak"( (his main testimony affidavit marked N/1), and Mr. Erez Eyal, Chief Engineer at Y.A.  Alon (hereinafter: "Eyal"( (the affidavit of his main testimony was marked N/2).
24. A. Alon filed a motion to summon Nahmias, one of its managers at the construction site, who is a key witness in the case, as clarified during the evidentiary hearing. Since this witness did not appear for the evidence hearing on December 16, 2024, a hearing for further evidence was set for January 29, 2025.  The witness did not appear due to a serious medical and mental condition, and as a result, the parties waived his testimony, the hearing of the evidence was declared over, and instructions were given for the submission of summaries.

Discussion and Decision

25. I will preface the beginning by saying that, after examining the entirety of the evidence that was placed before me and considering the arguments of the parties, my conclusion is that the law of R.M.Z. lawsuit should be accepted witha large amount of weight, while the law of the claims of Y.A. Alon (the Treasury and the Treasury Note( should be rejected in full.

The Contractual Engagement and Its Essence

26. There is no dispute that in October 2019, a "Fausli" agreement was signed between the parties, according to which R.M.Z. undertook to perform for Y.A. Alon, finishing works, as a subcontractor in the project that is the subject of the agreement, and to complete the work within five months.
27. According to the date stated in the agreement, and according to Y.A. Alon, the agreement was signed on October 10, 2019. However, it was claimed by R.M.Z.  that the agreement was actually signed on October 25, 2019, despite the date indicated on it.
28. The prosecution's witnesses, Milad and Rami, who were both present at the signing of the agreement, testified that the agreement was signed on October 25, 2019, even though it was dated October 10, 2019. This version is accepted by me and is corroborated by the testimony of the defense witness Yitzhak.
29. Yitzhak testified that on the day the agreement was signed, R.M.Z. did not agree to the proposed distribution of the payments, and therefore Appendix C to the agreement was not signed, which deals with the arrangement of the distribution of the consideration payments, and already on the same day, on October 25, 2019, Yitzhak sent an email to R.M.Z., to schedule a meeting to settle the matter of the payment appendix (p. 47, paras.  28-38( (the email was attached to the affidavit of Yitzhak's main testimony (Appendix F).  On the e-mail it was written in handwriting, "Immediately after the signing of the agreement, an email from Daniel to the contractor to coordinate a meeting for the purpose of preparing a payment spread", informing you that the contract was indeed signed on October 25, 2019.
30. From all of the above, the obvious conclusion is that the agreement was indeed signed on October 25, 2019, despite the date stated therein.

Agreed consideration and payment terms

31. In clause 3 of the agreement, the parties set a timetable of five months from the date of signing the agreement for the completion of all the works, which include "the readiness of all apartments for initial delivery and common areas for Form 4".
32. In exchange for the execution of these works, it was agreed in clause 17(a( of the agreement that Y.A. Alon will pay R.M.Z. A sum of ILS 1, 600, 000 plus VAT.
33. In clause 17(d( of the agreement, it was stated regarding the terms of payment that: "They are according to the rate of progress of the works and according to percentages as detailed in Appendix C attached."
34. A. Alon claimed in her pleadings and in the affidavits of her witnesses that the aforementioned Appendix C was attached to the agreement and was in the hands of R.M.Z., and that the distribution of the payments was agreed upon at the beginning of the work, and throughout the entire process R.M.Z. did not comment or propose any other payment distribution (see, for example, paragraph 21 of the statement of defense on behalf of Y.A.  Alon).
35. However, the aforementioned Appendix C was not attached to the pleadings, and the examination of the parties in the evidentiary hearing revealed that the appendix was not signed at the time of the signing of the agreement, nor at any later stage.
36. In his cross-examination, Milad claimed that a copy of Appendix C was not given to him at all, and that at the time of signing the agreement it did not exist and was not attached to the agreement, and when he asked Yitzhak for it, he answered: "Afterwards we will think about how it is, and then he told me, okay, according to the progress in the work, in stages, this is what happened" (p. 9, paras. 11-12).  Yitzhak, as stated above, also confirmed in his testimony that Appendix C was not present on the day the agreement was signed (p.  47, s.  26), and later claimed that Appendix C was presented to R.M.Z., but was not attached to the agreement and was not submitted to the file since R.M.Z.  did not agree to the distribution of the payments therein, in contradiction to Eyal's testimony that Appendix C, which dealt with the distribution of the payments, was in the hands of R.M.Z.  at the beginning of the work (in October( (pp.  76, paras.  11-16), a claim that turned out to be incorrect.
37. In all his fairness, Yitzhak testified that since there were contractors in the field before R.M.Z., and because of the nature of the supplementary work to which R.M.Z. was undertaken, it was not possible to prepare a table of payments: "And as soon as he went in after a contractor, to measure in each apartment what was missing and to express it in a table of payments, it was impossible, and therefore he too (i.e., R.M.Z.-S.I.( did not rightly receive the table that we presented that day" (p. 48, S.  20-22).
38. They are the witnesses on behalf of Y.A. Alon and the witnesses on behalf of R.M.Z. They confirmed that it was impossible to make a distribution of payments according to the type of work to be carried out by R.M.Z., since the work on the apartments was in various stages of execution, when it was a project of 94 apartments.  It seems that for this reason, the parties signed the "Fausli" agreement.
39. However, since there was no agreed payment distribution from the date the agreement was signed, there was a need for a payment method, some sort of outline or agreed procedure for payments at the expense of the final consideration. After all, the Pausley agreement is a contract in which the parties determine a total and final sum that will be paid to the contractor for the construction work that he undertook in the contract. However, it is clear that during the period of the execution of the work, R.M.Z.  is supposed to receive payments on account of the final consideration.  The mere fact that this is a Fauschly agreement does not exempt Y.A.  Alon will be paid monthly in accordance with the progress of the work in the field, as agreed upon by the parties in the agreement and acted in practice.

Payment plan as of December 5, 2019

40. This is a relatively short contract of five months. There is no dispute that already two months later, disputes arose between the parties and the work on the site was halted for a few days, with each party accusing the other of causing the breach of the agreement.
41. According to R.M.Z., the breach of the agreement by Y.A. Alon continued throughout the period of the agreement, starting from the first month, when she did not pay her the amount of the approved bill in full for the work carried out in October 2019 and withheld the sum of ILS 30, 000. Subsequently, it withheld the sum of ILS 50, 000 from the November 2019 account, and conditioned the payment of these funds, which had already been approved by it, on the consent of R.M.Z.  to make changes and improvements in the provisions of the agreement, in the form of the signing of Appendix C to the agreement made on December 5, 2019 (Appendix F to Milad's affidavit), a matter that led to R.M.Z.  Regarding the termination of work on the site on December 7, 2019.
42. On the other hand, Y.A. Alon said that R.M.Z.  violated the agreement and did not meet its terms or the timetables set out in its framework, while it paid R.M.Z.  more than it was entitled to and acted in accordance with the terms of the agreement and its appendices and according to the "payment spread" plan agreed upon by the parties (Appendix E to the affidavit of Y.A.  Alon (hereinafter: the "Payment Distribution Plan as of December 5, 2019").
43. But from what? "The payment plan of December 5, 2019" agreed upon according to Y.A. Alon, which is in fact Appendix C to the agreement, signed by Y.A. Alon only, was not agreed upon by R.M.Z.  Moreover, this plan is also not compatible with the payments actually paid to R.M.Z.  as it appears in the accounting statement of S.I.A.  Alon filed (Appendix 11 to Yitzhak's affidavit).
44. When asked why he did not agree to sign the same payment plan of December 5, 2019, Milad replied that this was because Yitzhak had added conditions for the payment plan and was not willing to pay him for the November 2019 account until he signed this plan (p. 11, paras. 7-10).
45. An examination of the payment plan shows that conditions were indeed added beyond the proposed payment plan, which are contrary to the clauses of the agreement between the parties, such as the payment condition that R.M.Z. perform a security check with a personal guarantee in the sum of ILS 200, 000. Whereas, in accordance with clause 17(f( of the agreement, it was agreed that the security check would be at a rate of 5% of the contract amount, i.e., in the sum of ILS 80, 000.
46. Moreover, in the proposed payment plan, the payments were conditioned on meeting a manpower quota of no less than 35 employees to carry out the work, contrary to the agreements of the parties in the agreement itself, which stipulated in clause 3(c( that the number of employees on behalf of R.M.Z. at the work site would be: "A minimum of about 25-30 employees on a regular basis, until the completion of wet work. After that, the number of employees will be as needed."
47. However, at the end of the day, a payment plan was not signed, and no new document was prepared in accordance with the changes and amendments that took place. If so, the payment plan signed by Y.A. Alon unilaterally does not bind R.M.Z.

Nahmias's approval is binding and final

48. Clause 17 (h( of the agreement stipulates that: "Accounts will be submitted cumulatively, at the end of each month until the 5th of the following month, and the payments paid will be deducted from them." It is also stipulated in section 17 (13( that: "The payment will be made in stages, in accordance with the progress of the works and after the approval of each relevant stage by the person in charge on behalf of the client in the field."
49. There is no dispute that R.M.Z.H.submitted an account at the end of each month for the approval of Nahmias, the project manager on behalf of Y.A. Alon (hereinafter: "Nahmias").
50. According to R.M.Z., Y.A. Alon violated the agreement when she did not pay the bills approved by Nahmias, who is the manager in charge on her behalf, and instead used to pay the bills partially
51. Shadi testified that after agreeing with Nahmias on a certain sum, a different sum would have been received (p. 33, paras. 10-11).  There is also a transcript of a conversation between Nahmias and Shadi, which came after Nahmias finished his work at Y.A.  Alon (Appendix 23 to Shadi's affidavit( indicates that Nahmias resigned because he was a member of Y.A.  Alon did not respect his word as manager and would have deducted from the sums he approved.
52. On the other hand, the witnesses on behalf of Y.A. Alon claimed in their testimony that Nahmias's approval was not final and binding, and that the company's procedure was that Nahmias did indeed sit with the contractor, but then forwarded it to the review and approval of the chief engineer, Eyal, and the latter forwarded it to the review and final approval of the CEO of Y.A. Alon, Yitzhak.
53. In his cross-examination, Milad denied such a practice, and insisted that Nahmias's approval was final, and that these were the agreements with Yitzchak even at the time of the signing of the agreement (p. 8, paras. 21-22, and paras.  35-36).
54. In fact, this procedure of approving the payments of the S.A. Alon argues that he is not included in the agreement, and that R.M.Z. She is not a party to him, so he does not obligate her.
55. The question arises as to whether Nahmias was "in charge on behalf of Y.A. Alon in the Field" as defined in clause 17(13( of the agreement, and were his accounting approvals final and binding?
56. Yitzhak testified during his interrogation that Nahmias was the manager of the project, but tried to avoid admitting that Nahmias was responsible on behalf of Y.A. Alon was in the field and claimed that there were many responsible (p. 51, s.  18).  Eyal, on the other hand, admitted that Mr. Nahmias was indeed the responsible project manager on behalf of Y.A.  Alon in the field (p.  73, s.  20 and 27).
57. A. Alon did not point to any clause in the agreement that requires the final approval of the CEO of Y.A. Alon, or notes that Nahmias' approval is insufficient and is not binding, or S.A.  Alon is not obligated to respect it.  Moreover, despite the fact that Erez testified that all the accounts approved by Nahmias that were transferred to him and which were sufficient to give a picture of the scope of the work that remained to be completed, are in the possession of Y.A.  Alon.  These documents were not presented as evidence, which was attributed to Y.A.  Alon.
58. Moreover, the term "approval" in a contractual context, and especially when it is given by the "person responsible on behalf of the Ordering in the Field" expressly defined in the Agreement, means finality and acknowledgment of the correctness of the accounts, unless expressly stated otherwise in the Agreement. Any other interpretation, which empties the authority of the person responsible of its content, is inconsistent with the commercial logic of such an agreement. Considering that the SHI.  Alon was the one who drafted the agreement, and any ambiguity regarding the scope of Nahmias' authority should be interpreted against it.
59. No less important, is the fact that S.A. Alon did not deny R.M.Z. claims regarding the amounts of payments approved by Nahmias, did not claim that various amounts were approved, and did not bring evidence to refute R.M.Z.  version as to the amounts that were approved, and all she claimed was that the amounts approved by Nahmias were not final.
60. 00Therefore, in light of all of the above, I determine that Nahmias's approval constitutes final and binding approval of Y.A. Alon, in accordance with clause 17(13( of the agreement.

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