Second, even according to the plaintiff's position, the company must be managed jointly with the defendants. Therefore, the defendants are entitled to the appointment of a director on their behalf who is authorized to sign on behalf of the company. If so, at least there is an agreement between him and the defendants on this matter. In a private company, there is no impediment to making decisions by consent, even without convening a general meeting (section 76 of the Law). Therefore, at the very least, there is no reason to cancel the decision to appoint one of the defendants as a director of the company who has the right to sign on its behalf.
Third, since the decisions were made in 2019, many years have passed in which the company has been operating according to the agreed outline. The passage of time constitutes a significant consideration to avoid returning the company to the state it was in at the time of the decision-making, especially since even according to the plaintiff, this situation is inconsistent with the principle of joint management.
- If so, there is no reason to order the cancellation of the decisions in a manner that will "restore its glory to its former glory". But it should also not be ignored that the general meeting was not convened lawfully and the plaintiff was not given an opportunity to object to his dismissal. My opinion is that in the state of affairs that has been created, it should be determined that the agreed outline will remain in place until a lawful meeting is convened in which the plaintiff will participate. In the framework of that meeting, the manner in which the company will be managed in the future will be put on the agenda, and the plaintiff will be able to express his position on the decisions on the agenda and to object to his dismissal.
- It should be noted that I have considered the possibility of establishing joint management in the company until the general meeting is convened, but this solution is not practical and may even interfere with the proper functioning of the company. The relationship between the plaintiff and the defendant is undermined in such a way that such a solution may lead the company to an immediate dead lock. It should also be noted that I do not ignore the fact that the agreed outline also makes it somewhat difficult to manage, but the parties have been conducting themselves in this way for many years, and this is the lesser of two evils.
Claim for Provision of Accounts
- The plaintiff petitions for the relief of providing accounts and granting permission to split the remedies in order to preserve his right to sue for money according to the accounts in a separate suit. In order to obtain an order for the payment of accounts, the plaintiff must prove the existence of two cumulative conditions: first, the existence of a special relationship between him and the defendant that justifies the provision of the accounts. Second, he has a prima facie right to sue with respect to the funds in respect of which the accounts are requested (Civil Appeal 8713/11 Sayeg A. Luzon Properties and Investments Ltd., at paragraph 106 and references there (August 20,2017)). It should be noted that when there is a relationship of trust between the parties, the first condition for the granting of accounts is sufficient (Civil Appeal Authority 5685/17 Zilkha v. Calderon, para. 9 (September 6,2017); Civil Appeal 5444/95 Bnei Motornot Association of Galilee v. Salom, IsrSC 51(4) 811,819 (1997)).
- There is no dispute that there is a special relationship between the parties that justifies the granting of the company's accounts by virtue of the plaintiff's being a shareholder in it. The defendants are even prevented from arguing otherwise, since in the parallel proceeding they claimed this themselves. The question is, whether, yes, what is the scope of the documents for which the plaintiff is entitled to provide accounts and what is the period within which he is entitled to do so?
- According to the defendants, unlike the situation in which they were obliged to file a claim for the provision of accounts, the plaintiff was given the power to "control" the company's expenses and the various payments, and the plaintiff is well aware of the company's income and expenses. In the framework of the lawsuit and in the framework of the testimonies, it emerged that in a number of cases, money was spent in cash in order to pay for various expenses of the company. An explanation for this was given by the defendants. Notwithstanding the aforesaid, in view of the suspicion and the murky relations between the parties, I am of the opinion that the plaintiff should be allowed to review the documents required by him in order to get an unmediated impression of its financial management.
- As to the period to which this remedy relates. According to the defendants, the statement of claim was filed on November 21,2019, when the management of the company was transferred to them only on November 8,2019. Hence, the plaintiff is entitled to the provision of accounts for only a few weeks. Moreover, it has not been proven that there is a document that was not disclosed to him and cannot receive. He is also a partner in the company through his son Ala. The plaintiff, for his part, argues that the remedy of providing accounts is not only for the period until the filing of the statement of claim, but also for the future. A review of the statement of claim shows that the claim for the provision of accounts referred to the date as of November 8,2019, and therefore it was not limited to the past only, and therefore the relief does not deviate from the statement of claim.
- Taking into account the relationship between the parties, and the fact that the conditions for the provision of accounts are met, the defendants will transfer to the plaintiff all documents relating to payments made to the company and financial expenses from its coffers from November 8,2019 until the date of the judgment, including all documents, of any kind whatsoever, relating to its operations and business; all financial ledgers and reports; all reports, both manual and computerized, of all sales and all bank account statements.
- There is no room for appointing an accountant in this lawsuit, and the plaintiff's request in this regard is denied.
Final Note
- We are dealing with a private family company with a relatively small number of shareholders who are members of an extended family. Such companies are characterized as a "kind of partnership". The shareholders of these companies have a personal relationship that involves mutual trust, and they are generally conducted with an understanding of joint management of the company's business (Tzipora Cohen, vol. 1, p. 322).
- In companies of this type, difficulties arise that bicycle to their special texture. The case at hand is a classic example of these difficulties. The founders' generation, Hussein and the plaintiff, succeeded in managing the company in an agreed-upon manner. In practice, the plaintiff managed the company and Hussein came to terms with this state of affairs, despite being the majority owner. Naturally, when the next generation took action, the reality changed. Hussein's children are no longer willing to accept the management of the company in this format. Moreover, the gaps between them and the founding generation are not only their desire to take an active part in the management of the gas station. They also seek to make changes in the company, and among other things, to adapt it to the changing technological reality.
- The question is whether it is possible to bridge these gaps in a way that will enable the continued management of the company based on the principle of joint management. In the parallel proceeding, the court was under the impression that in view of the gaps between the parties and the murky relationship between them, there was no hope that this would happen, and recommended a separation:
"And after all this, beyond what is stated in this judgment, I have no choice but to repeat my recommendation to the parties and to the court: the relationship, after the death of the deceased, is no longer one of improvement. Regardless of my ruling now, this partnership constitutes a seed of calamity for everyone and for the company. I was clearly impressed by this during the discussion. In this state of affairs, the only way that will save the company is by separating the partners... From the continued partnership in the ownership and management of the company, it is doubtful in my power whether good things will grow" (paragraph 10E of the judgment).