Civil Case (Center) 4585-02-19 Ephraim Naveh v. Hadas Steif - part 59

For these reasons, I reject the arguments that the police investigation that was opened in Naveh's case is a factor that negates the causation of the damage or constitutes an (unexpected) foreign factor intervening.

The Damage

180. As we have both said, infringement of privacy is a civil tort and is subject to provisions The Torts Ordinance Subject to instructions The Protection of Privacy Law (Section 4 to the Protection of Privacy Law).  Hence, there are, in essence, two tracks for determining compensation for violation of privacy: compensation for damage that has been proven, including non-pecuniary damage, and statutory compensation without proof of damage accordingly Section 29A(b) to the Protection of Privacy Law.  Naveh did not petition for statutory compensation under Section 29A(b) to the law.  According to Naveh, the hacking of the mobile devices and the publication of their content caused him financial damages in the amount of ILS 5 million for the damage to the firm's revenues, as well as non-pecuniary damages in the amount of ILS 4 million for violation of privacy and damage to reputation.  Alternatively, Naveh estimated the compensation at ILS 7 million.  I will address these components of damage according to their order.

Pecuniary damage

181. On the financial level, Naveh claimed a severe blow to his source of income, which was reflected in a sharp decline in the revenues of the "Atias-Naveh" law firm in the years 2019-2021. The law firm of Atias Naveh is incorporated as a law firm.  Therefore, Naveh submitted the opinion of the accountant Steinmetz (hereinafter - CPA Steinmetz).  CPA Steinmetz's opinion was based on the firm's audited financial statements for the years 2017-2021 as well as on an attorney's report produced by the firm (par.  p.  149, s.  26, p.  151, s.  31).  According to the financial statements, the firm's revenues in the years 2017-2021 are as follows:

182. On the basis of these data, CPA Steinmetz made a comparison between the average of the firm's revenues in the years 2017-2018 and the average of the firm's revenues in the years 2019-2021. CPA Steinmetz was asked to reflect the economic data as they were and did not estimate the total damage caused to Naveh.  CPA Steinmetz stated in his testimony: "I think my opinion is technical.  I did not try to estimate damage, I mentioned data from financial statements, I did not even interpret the conversion to a cash basis" (par.  p.  146, paras.  34-35).  According to the calculation he made, there was a 35.7% decline in the firm's revenue rate.  According to CPA Steinmetz, this decline is due, inter alia, to a decrease in the number of new cases that entered the firm: both with regard to some of the regular clients and with regard to new clients.  CPA Steinmetz was questioned about the opinion in the cross-examination, during which the following difficulties arose:

• CPA Steinmetz confirmed that he did not refer in the opinion to all of the firm's regular clients, but only to one of them, despite the fact that the firm has additional regular clients (para.   153, paras.  17-21).  In this way, the figure representing a decline in the entry of new cases of new clients is of particularly low weight.
• CPA Steinmetz was confronted with the claim that in the 2019 report produced for him by the firm for the purpose of writing the opinion, 20 clients were missing. CPA Steinmetz did not contradict the claim and did not know how to answer why this happened.  This is what emerged from his testimony: "I don't know how it is structured.  A computerized report sounds strange to me that files can be hidden.  I can't answer that" (Par.    152, paras.  29-30).
• CPA Steinmetz confirmed that the COVID-19 period (between the years 2020-2022) also affected the scope of the firm's revenues (par.    150, para.  31).  However, this effect was not taken into account in the framework of the opinion.
• CPA Steinmetz confirmed that he did not examine the firm's report for 2016. He said: "...  It took us several years, I don't remember, I gave several years to see the reduction in turnover from a certain point" (par.    150, paras.  34-35).  However, when CPA Steinmetz was presented with the ministry's financial report for 2016, according to which revenues for that year amounted to ILS 11 million, he confirmed that if he had also referred to the 2016 report, the decrease in revenues would have been lower (par.  p.  151, para.  14).

183. The defendants submitted a counter-opinion by CPA Elisha Saar (hereinafter - CPA Saar). CPA Saar's opinion does not deal with the decline in revenues itself, but raises a series of possible reasons for the decline, including: the retirement of partners (Adv. Ziv Cohen and Adv. Tzachi Yakovlev), the COVID-19 pandemic, and previous negative publications such as the Ben Gurion Airport affair.  These considerations, as noted, were not taken into account in CPA Steinmetz's opinion.  CPA Saar emphasized that the firm (which is incorporated as a company) is not a party to the lawsuit, and that Naveh refused to present his personal reports as submitted to the Income Tax, or documents clarifying his role and status in the firm.  Under these circumstances, it is not possible to point to the cause of the decline in revenues.

184. CPA Saar added that the comparison of the revenue cycles made by CPA Steinmetz is misleading, since in 2019 the company changed its accounting reporting base from a cash basis to a cumulative basis. In addition, the revenues in the years 2019-2021 derive from cases that were opened 2-5 years earlier (due to the nature of the tort cases handled by the firm), and therefore there is no causal connection between them and the alleged incident.  Finally, CPA Saar noted in his opinion that according to various publications on the Internet, in the years 2019-2021 there were additional partners in the firm who left the firm.  According to him, it is possible that in addition to the financial relationship between Naveh and Adv. Attias at the firm, there was a financial relationship with the other partners and had a direct impact on the firm's revenues.  What was stated in this context in CPA Saar's opinion is reinforced in light of Naveh's testimony according to which "they were partners in different status.  One was a partner in capital and one was a partner in a salary" (Par.  p.  110, paras.  4-5).
185. Naveh attributed most of the damage to his ministry's activity to the special broadcaster. My opinion is different.

As I have already noted, the core of the violation of privacy is the act of snooping and dealing with the personal content and material obtained by hacking into the phones, and not in the results that derive from the very disclosure of the acts in public, which are the result of improper behavior and a police investigation.  As emerged from Naveh's testimony, The special broadcast on Army Radio was not the only publication in the media on the "break-in" day of the investigation after Naveh's arrest.  The gag order was significantly reduced as the investigation became public.  It is reasonable to me that the departure of some of the clients is the result of Naveh's improper conduct and the decline in his public standing as a result of the Ben Gurion Airport affair and the publication of the police investigation into the "sex for appointment" affair.  It is not impossible that the decline in the number of clients and the firm's income is also a result of the departure of two partners in the firm.