On November 21,2019, the proceeding before me was opened by the plaintiff with a request for urgent temporary and temporary remedies regarding the land and the management of the gas station. On December 5,2019, the statement of claim was filed, which included remedies in relation to the real estate and the management of the company, which will be detailed below.
- The Ottoman Settlement [Old Version] 1916 Originally, the statement of claim was filed against the defendants, as well as formal defendants, which included the Registrar of Companies and Partnerships, the Registrar of Land, and Bank Hapoalim Ltd. The formal defendants were deleted from the list of defendants during the proceeding (partial judgment of March 3,2024). At this stage, the claim is directed against the defendants only.
- 12-34-56-78 Chekhov v. State of Israel, P.D. 51 (2) and this will be the order in which things are going. First, I will describe the proceedings in the case as well as the main proceedings in the parallel case. Second, I will detail the remedies that the plaintiff petitioned within the framework of the statement of claim, I will limit the discussion of the judgment to the remedies that remain relevant and I will present the scope of the dispute. Third, I will discuss the disputes between the parties regarding the management of the gas station; whether the rule of joint management applies in this matter and whether the decisions made by the defendants within the framework of a general meeting convened by them are null and void due to defects in the convening of the meeting and the invitation to it. I will also discuss the plaintiff's claim for relief of providing accounts. I will conclude with a comment regarding the type of company and the relationship between the parties.
The Proceedings
- In view of the importance of a comprehensive view of the dispute, I will also detail in this framework the main proceedings in the parallel proceeding. I will note at the outset that a motion filed by the defendants in the parallel proceeding to consolidate the hearings was denied.
- In the statement of claim in the parallel proceeding, which was filed on October 3,2019 in the Family Court and was transferred to this court, it was claimed that after Hussein's death, the plaintiff took over the company even though he held only 1/3 of its shares and acted in it as his own, while excluding the defendants from their rights therein. The defendants petitioned for relief instructing the defendant to provide accounts in relation to the company's activities over the past 7 years, including its income, expenses, profits, and funds transferred to the defendant. They also petitioned to oblige the defendant to transfer Hussein's share of the company to them until his death and then to transfer their share to them.
- Simultaneously with the filing of the lawsuit, a motion was filed for ex parte interim relief instructing the plaintiff to refrain from making any transaction in his shares in the company, including any transfer thereof; to refrain from making changes in the company, including the appointment of officers; to refrain from making any engagement and agreement on behalf of the company; to refrain from collecting funds and debts due to the company; to order the seizure of its bank accounts and to issue an order for the seizure of the company's books and accounts. Due to the importance of the matter, as will be clarified below, it should be noted that within the scope of the request for temporary relief, a request to order the convening of a general meeting for the purpose of appointing directors or dismissing them was not included.
- Copy from NevoThe request for interim relief was denied. It was determined that the defendants are the majority shareholders of the company and therefore must act accordingly and convene a shareholders' meeting in order to make decisions regarding its management instead of filing a request for interim relief (decision of the Honorable Judge E. Ron on November 4,2019).
- As stated above, the claim before me was opened on November 21,2019 with a request for interim relief. In a hearing held on the application for temporary relief, the parties reached agreements that gave effect to a decision according to which no disposition would be carried out in the land; the plaintiff will be entitled to stay at the gas station at his discretion and will continue to be employed under his current salary terms but not in his current position, any expense or undertaking to spend the company is subject to the signature of the plaintiff's son, Mr. Alaa Qawasmeh (hereinafter: Ala) and defendant 3, Ms. Hanan Mahfouz (hereinafter: Hanan) or defendant 6 Mr. Hazem Qawasmeh (hereinafter: Hazam). It was also agreed that if a dispute arises regarding an expense, an undertaking to spend or a business engagement of the company, it will be deemed to be a dispute between the company's managers and will be decided accordingly (the decision of the Honorable Judge M. Kaduri of November 28,2019, hereinafter: the agreed outline).
- Due to the murky relationship between the parties, the agreed outline was fertile ground for additional requests. On November 26,2020, the plaintiff filed a motion under the Contempt of Court Ordinance, in which it was claimed that the defendants were violating the agreed outline by withdrawing funds from the company's coffers in contravention of it. The motion was rejected (the decision of the Honorable Judge M. Kaduri of February 9,2021).
- On November 16,2021, a motion was filed on behalf of the defendants to amend the temporary order, and on November 23,2021, an amended motion was filed in such a way that any expense or undertaking to expense the company would be subject to it being signed by two of the three; Ala, Hanan or Hazam. The motion was rejected (decision of the Honorable Judge M. Kaduri of December 19,2021). An appeal against the decision was granted. As part of the decision, Hanan and Azem's salaries were anchored and it was determined that Alaa would not refuse to sign the company's expenses and obligations in respect of withdrawing their monthly salaries and paying the accompanying expenses (Application for Leave to Appeal 1189/22 Qawasmeh v. Qawasmeh (April 7,2022)).
- On September 5,2023, an additional motion was filed on behalf of the defendants, according to which Alaa would not refuse to sign expenses and obligations on behalf of the company due to the withdrawal of a salary by Halaf Hazem; he would not refuse to sign checks for the distribution of profits in the company in the total amount of ILS 3 million and related tax payments; he would not refuse to sign bank forms that are required in order to arrange the signature rights in the company's name at the bank and turn the account into an online account. At the end of the day, the request focused on replacing Hazem with Hatem, and the request was granted (decision of December 11,2023). On January 24,2024, the defendants filed a motion to clarify the decision according to which Alaa must sign the company's expenses and obligations due to the withdrawal of salary by Hatem until the date on which Halaf Hazem was appointed. The request was granted (decision of February 19,2024).
- The parallel proceeding ended with a judgment in which the plaintiffs' claim for partial and narrow provision of accounts was accepted (Civil Case 6233-20-19 Qawasmeh v. Qawasmeh (February 8,2023)). In the judgment it was noted that it is clear that shareholders have a right to receive the company's accounts, but in the circumstances of the case, it is doubtful whether there is a remedy on the agenda that has a practical purpose, since all the material is in the company's computers that are in the hands of the defendants. In addition, to the extent that the shareholders receive funds, whether as dividends or otherwise, it is reasonable to assume that this can be learned from the company's financial statements, which are approved reports. Therefore, the only real question is regarding the distribution of the funds during the period managed by the plaintiff; whether the plaintiff took for himself some of the company's funds and the extent of them that he took and whether Hussein received funds. In this regard, it was noted that there was no basis for determining that there was a defect in the management of the company under the plaintiff's management, and on the financial level, the defendants will be able to file a claim after the additional accounts are received, as long as there is a reason for doing so. Subsequently, it was ruled that all that remained on the agenda was the claim for the provision of accounts, and an order was issued according to which all the material in the possession of the company's auditor, Adv. Agbaria, and in the defendant's possession - during the relevant period - would be open to the defendants' review.
- In the framework of the judgment, the court referred to the management of the company and noted:
"The overall picture indicates, indeed, a crisis of trust within the Qawasmeh family, and it is not for nothing that the proceedings in the Family Court began. In the meantime, the overall picture also points to deficiencies, as far as the plaintiffs are concerned, in everything related to the understanding of their rights as a majority, for if they had been exercised lawfully and in a timely manner, we might not be here today... In any event, only after these efforts were in vain, did the plaintiffs finally understand that in order to convene a general meeting, the consent of the minority was not required at all, and indeed they convened the meeting in which they were granted their status in the company, and as far as the picture before me in this proceeding is concerned, the defendant even respects the matter. The defendant never even sought to deny the status of the plaintiffs in the company - on his behalf, and on the basis of the inheritance order, the report was submitted to the Registrar of Companies regarding the status of the plaintiffs as shareholders after the death of the deceased" (paragraph 18 of the judgment).