Civil Case (Center) 11150-09-23 Israel Aerospace Industries Ltd. v. Brook Aviation Ltd. - part 2

IAI Claims

23. In the framework of the proceeding, it was proven that during the period in which the civil appeal provided the defendant with services, the parties conducted themselves in the manner in which a civil appeal issued Brock payment demands, and after a discussion between the parties, T. Civil Appeal sent Brock an invoice for the amount of the agreed payment, and Brock approved the invoice.
24. After negotiations that lasted about 4 months, the parties reached an agreement whereby the payment for the NRE period would be for settlement purposes in the sum of ₪189,000 and would be paid by Brook in 6 installments. In practice, although Brock does not deny this debt, it paid only ILS 220,000 of it.
25. The December 2022 invoice was approved, by telephone, by Eyal Yogev, Chief Commercial Officer at Brooke at the relevant time (hereinafter: "Eyal"), after he submitted objections to the invoice and received a detailed response. The fact that the October and November 2022 invoices were approved and paid by Brook, and that the January 2023 invoice was also approved, establishes a presumption that the December 2022 invoice was also approved.
26. The January 2023 invoice was approved, and Brock did not indicate a satisfactory explanation as to why this invoice was not paid.
27. At the end of March 2023, after acivil appeal sent the defendant a payment demand for the month of February 2023, Brook sought to reach a new outline, which was intended to eliminate the disputes regarding billing hours, and would include a model of fixed monthly payment for ongoing activity.
28. On April 24,2023, a meeting was held between the parties, in which Eyal undertook that Brook would immediately settle its debts and pay the sum of ILS 1 million by May 15,2023, which includes payment for the NRE period and debt for parking, materials, and office during this period, as well as invoices for December 2022 and January 2023. In addition, the parties reached an agreement on a new outline, according to which a monthly sum of ₪74,855 would be paid to the civil appeal for the ongoing maintenance work, and that this summary would also apply retroactively with respect to invoices for the months of February and March 2023. In addition, Eyal Latt approved a civil appeal to provide service for another Sikorsky helicopter for a third party.
29. The agreement reached at the meeting was also breached by Brook. Brook paid only ILS 470,000 out of the ILS 1 million she undertook. The balance of the debt, including the debt that accumulated from February 2023 to June 2023, in which Brook unilaterally abandoned the courts of civil appeal, was not paid, despite the fact that the April 2023 invoice was explicitly approved by Brook, and despite repeated promises to settle her debts.
30. In retrospect, it turned out that during the month of December 2022 (and at the latest, in February 2023), Brook decided to switch to an alternative institute that offers her lower prices than those of IAI. This decision was the basis of Brook's evasive conduct, at the end of which she unilaterally abandoned the courts of civil appeal (while the civil appeals staff were on a lunch break), leaving behind a trail of debts.
31. In her actions described above, Brooke fundamentally violated the provisions of the agreement, and in particular her contractual obligation to pay acivil appeal for the services provided to her.
32. In addition, Brook breached her duty to act in good faith, both during the term of the agreement, and after her sudden and unilateral announcement regarding the alleged termination of the agreement.
33. Brook unlawfully enriched itself on the back of IAI, through its contractual engagements with the Ministry of Defense and MDA, while there is no dispute that at the time of the conclusion of the agreement with IAI, Brook had no previous experience in the field of helicopters in particular, and as an air operator in general, and that these bodies (with an emphasis on the Ministry of Defense) contracted with Brook on the basis of its presentations, according to which a civil appeal would constitute a significant anchor in Brook's activity.
34. Therefore, she petitioned a civil appeal for a charge of saliva in the sum of ILS 2,897,365, plus interest and linkage differentials in accordance with the law.

Brook's arguments in the statement of defense and the statement of claim

35. Most of the "debts" claimed by IAI originated from charges for working hours that were not actually performed and were deeply controversial (with the exception of sums that Brock approved in writing and which it stands behind). The accounts included charges contrary to the provisions of the agreement, which require thecivil appeal to obtain written and prior approval for any additional work, which the civil appeal admitted that it was never asked for, and obligates it to provide the defendant with details of the working hours, including the specific work performed in them.
36. Although most of the amount claimed is for "working hours" charges, a civil appeal seeks to rely on inadmissible Excel sheets to prove the correctness of their contents, without any evidence or documentation from real time, even for a single hour of work, despite the existence of a computerized monitoring system for working hours.
37. The payment of expenses during the NRE period was conditional on the completion of the training of IAI technicians. Since there is no dispute that acivil appeal never completed the processes it undertook to carry out during the NRE period, Brooke was not obligated to pay the NRE expenses.
38. The claim for a new outline does not appear in the pleadings and constitutes an expansion and a change of a prohibited front. The new outline, which was claimed to have been made orally, in a single meeting and without a protocol, is contrary to the agreement, according to which any change in it will be made in writing and with the signature of the parties, and in particular a change in the method of billing.
39. The argument of the new outline also failed substantially: on the contractual level, there is a double and explicit written requirement in the agreement, which blocks any claim to change it orally, and on the evidentiary level - there is nothing behind this claim - neither a new agreement, no specificity, no finality, and not a shred of evidence for the work, which, according to IAI, was executed against the defendant's charge.
40. Contrary to what was claimed, at the meeting on April 24,2023, only principles for a new outline were presented, which are subject to the drafting of a new appendix, after it has been approved by all the competent authorities on behalf of both sides.
41. Brook submitted a detailed, well-founded and reasoned calculation by its expert, CPA Yehuda Bar-Lev (hereinafter: "the Expert"), detailing the amounts due to IAI, the manner in which they were calculated, and the source thereof. The sum amounts to ILS 1,172,884 including VAT, and all the sums paid to acivil appeal by Brook must be deducted from it.
42. Alternatively, just as a matter of caution, Brock stands by its claim that only amounts it approved in real time, explicitly and in writing, can be included in the amount due to IAI. Brock authorized payments in the amount of $335,148 during the engagement (consisting of $189,000 for the NRE period, October-November invoices paid; January 2023 invoice of $54,372 and April 2023 invoice of $91,776).
43. The claim that Brook planned her departure in advance should be rejected. The agreement ended on the date stipulated, and Brook was forced to locate an alternative testing institute in light of the ongoing failure of a civil appeal to certify its technicians, which put Brook in operational danger in the face of its obligations to the Ministry of Defense and MDA.
44. The counterclaim lists three heads of damages, which were fully proven in the expert's opinion:

1. First, for the overpayments that Brook was forced to pay after the period of accumulation of 6 months of practical experience working on Brook helicopters, known as the OJT period, for the financing of foreign mechanics, including salary costs, flight tickets, economy and overheads, which had it faced a civil appeal in its obligation in the agreement to obtain the fence in its mechanic's license to handle Brook's helicopters, Brook would not have been forced to pay.  According to the expert opinion, the head of this damage is ILS 1,408,651 (including VAT).
2. Second, for investments made by Brook in the training of IAI technicians, which went down the drain with the failure of a civil appeal to complete the licensing processes for its technicians, within the period of the agreement, and in view of the continued use that the civil appeal continued to make of the qualifications and licenses that Brook financed, for the purpose of providing services to an identical helicopter of a third party, in violation of the agreement.  According to the expert opinion, the head of this damage is ILS 2,205,660 (including VAT).
3. Third, for preventing the use of thecivil appeal airstrip at Ben Gurion Airport for the execution of the project, and for the failure of the full consideration caused to the defendant as a result.  In accordance with the expert opinion, this head of damage was estimated at ILS 784,932 (including VAT).

45. As for the head of the first damage, it was proven that only 2 out of 5 Civil Appeal mechanics received the fence in their license during the period of the agreement. It was also proven that the Civil Appeal Company chose an American training track (FAA) that requires the determination of performance ability tests with an examiner on behalf of the Civil Appeal, instead of choosing a European Training Track (EASA) that would automatically grant the fence to its licensed mechanics at the end of 6 months of accumulating practical experience. In addition, it was proven that the civil appeal failed to document its professional experience vis-à-vis the IATA, and in any case it did not make best efforts, as required by the agreement.
46. As for the second damage, the failure of the Civil Appeal to train its mechanics in a timely manner caused the money that Brook invested as direct expenses to go down the drain to obtain a license for the inspection institute and to train the civil appeal technicians to receive the fence under their license. In addition, the civil appeal enriched itself by adding the fence to the license of the inspection institute for the maintenance of a Sikorsky helicopter, which was funded by Brook, and also enriched itself with the training of its technicians, who made use of the knowledge and certification they had accumulated for the benefit of maintaining an identical third-party helicopter and making additional profit for IAI.
47. As for the third head of damage, the location of acivil appeal landing strip in the center of the country and the possibility of using it for the purpose of flying military and security elements, was a decisive consideration in Brook's engagement with a civil appeal in the agreement. This undertaking is included in the agreement, and was explicitly put in writing in a letter sent by acivil appeal to the Ministry of Defense (Appendix 5 to Gil's affidavit). This head of damage does not require a damage assessment or an estimate, but rather a refund of sums that a civil appeal owed Brook according to its accounts, for a central service that it itself prevented.
48. Brooke's direct damages, for which the counterclaim was filed, stem from expenses proven and backed by documents proving them - cards and invoices and are not dependent on Brooke's total income or profit line in the project. Objections toa civil appeal against the expert opinion should be dismissed.
49. In the counterclaim, only direct damages were claimed, and therefore the limitation of liability clause included in the agreement does not apply. In addition, the stipulation is not limited to the amount paid for a civil appeal, but to the sums paid by Brook, including the sums that she paid out of her own pocket. Moreover, according to case law, there is a reluctance to apply an exemption clause to a fundamental breach, let alone to conduct in bad faith.

Response to Brooke's Claims in the Statement of Defense and the Counterclaim

50. Brook's claim of the lack of prior written approval for any work that was carried out is in bad faith and contradicts the intention of the parties, the purpose of the agreement and the manner in which the agreement was implemented. It was not possible to obtain prior approval for every discussion, email, telephone call, etc. Brook ignored the fact that at the end of the process she approved the invoices that were sent to her, after examining them carefully and making written comments on them.  Brooke did not present a single case in which she complained in real time that the civil appeal did not request in advance and in writing permission to carry out the works.  In any event, there is no dispute that Brook received services from IAI, and a civil appeal is entitled to consideration even by virtue of the cause of enrichment.
51. Contrary to Brook's claim, the new outline was explicitly raised in the pleadings, and was included in the invoices and the amount of the claim. The claim of widening the front is intended to prevent a situation in which a party will be surprised by the opposing party, and not in a case in which Brook has fully served her day in court, and the said dispute has become clear on the merits of the matter. Brook is prevented and silenced from raising a claim for widening the front, after her counsel devoted many questions in the investigations to this issue.
52. Both Gil and Eyal admitted in their cross-examinations that it was Brook who initiated the change in the calculation method. Eyal admitted that it was agreed that for the ongoing work, Brook would pay a fixed monthly sum of approximately $75,000 for the ongoing work. Brook also admitted that Brook was entitled to payment for the April 2023 invoice, which was prepared in accordance with the new outline.
53. It is not possible to rely on the expert opinion for the purpose of calculating the amounts to which IAI is entitled. The expert confirmed that he is not an expert in the field of helicopters and aviation inspection institutes. The tables in the opinion, which were prepared by Brock, completely ignored the undisputed parking and office costs, the NRE compromise and the January and April 2023 invoices, which Brock admitted in a civil appeal that it was entitled to receive.  There is no justification for conducting a retrospective assessment, when the parties reached explicit agreements regarding the invoices during the course of their work routine.
54. As for the counterclaim, Brook did not raise in real time before a civil appeal any of the claims raised by it in the proceeding. Not only were these claims not raised by her at all, but Brook chose to unilaterally abandon IAI's premises, and sent anotice of termination to the civil appeal on the same day, which included one single and negligible claim in relation to maintenance activities that a civil appeal began to carry out in another helicopter for a third party.
55. The allegation of negligence in the certification process contradicts a series of correspondence conducted in real time by Brook.
56. The agreement that was entered into between the parties is a best efforts agreement." The case law held that the burden of proving a breach of an effort contract is particularly heavy, and that only in exceptional and special cases will the plaintiff be able to prove this. Brook, as stated, did not meet this burden and even refrained from summoning representatives of the IATA to testify.
57. Brook undertook, as part of the agreement, to bear the costs of the certification exclusively. At the time of signing the agreement, Brook knew that the certification process involved risks and was subject to the requirements and guidelines of the IATA, and that the process could take longer than expected. There is no provision in the agreement that establishes a time frame for the completion of the certification procedures.  The Aviation Regulations (Licenses for Pilot Employees), 5741-1981 (hereinafter: the "Aviation Regulations") set a threshold of at least 6 months.  There is also no provision in the agreement that a civil appeal will be required to compensate Brook for delays in this proceeding.
58. Civil appeals technicians completed all their obligations in order to obtain the license at the beginning of November 2022. Brook herself consistently claimed that the sole reason for the delays in the certification process lay in the extreme workload at the IAA, which at the time relied on only one examiner.
59. The differences between the two training tracks (FAA and EASA) were misrepresented by Brock, as she refrained from stating that the EASA course is significantly longer than the FAA course (about 1 month vs. 10 days). Also, the EASA course requires physical overseas arrival, while the FAA course is conducted online.
60. There is no provision in the agreement permitting the defendant to make commercial use of thecivil appeal landing strip at Ben Gurion Airport, but rather take-off and landing for maintenance purposes only. Even if there was a provision intended to turn theCivil Appeal Plant into "Terminal 3", it was proven that Brook tried to hide from the court two documents that she signed, in which she declared that she undertook not to take off or land with passengers from the Civil Appeal Area (Annexes 43 and 44 to Shmuel Amrani's affidavit).
61. Brook refrained from presenting the agreement with Assaf Harofeh Hospital on the grounds of lack of relevance. Instead of presenting support in relation to the alleged expenses, the expert claimed in his opinion that the alleged damage amounted to the cost of renting an office and parking, but Brook admitted that these were undisputed costs, and that these fixed costs had nothing to do with the issue of the airstrip.
62. The expert's opinion collapsed completely. The opinion makes no reference to Brook's income from the Ministry of Defense and MDA, even though her income is the product of IAI work. The expert did not know in his interrogation how he reached the sums mentioned in his opinion, and on what dates they relate to.  The opinion also ignores the fact that for the purpose of the MDA project, which is carried out in both ends of the country and requires ongoing and intensive operation 24/7, Brook was required to employ foreign technicians in any case.
63. Even if the expert had been able to prove that damage had been caused to the defendant, the agreement included a limitation of liability clause, according to which in any event, the liability fora civil appeal under the agreement would not exceed the total amount already paid to it by Brooke, and would not include consequential and indirect damages.

The Evidence

64. On behalf of the plaintiff, Mr. Shmuel Kozi, who served during the relevant period as VP and Director of the Aviation Division at IAI; Mr. Shmuel Amrani (hereinafter: "Amrani"), Head of the Flight Lines Administration at the MRO Factory, which belongs to IAI's Aviation Division; Mr. Yiftach Zadka (hereinafter: "Tzedaka"), who served during the relevant period as the Director of the Helicopter Project at IAI's Inspection Institute; Mr. Avi Alkalay (hereinafter: "Alkalai"), Quality Assurance Officer at the Lahav Inspection Institute, which belongs to IAI's Aviation Division.
65. On behalf of Brooke, Gil, Eyal, the expert, and Mr. Simon Heath testified - a foreign inspection technician, who holds a license that includes the fence for the maintenance of Sikorsky helicopters, who was hired by Brook to supervise civil appeals technicians during the period of their training.

Discussion and Decision

66. An agreement was signed between the parties for the provision of parking and maintenance services for helicopters, which was completed in June 2023.
67. The disputes between the parties focus both on the obligations incurred by a civil appeal against Brook during the period of the agreement, in respect of which the main claim was filed, and with respect to alleged damages caused to the defendant in light of alleged breaches of the agreement by the civil appeal, for which the counterclaim was filed.
68. I will preface the latter and note that after examining the arguments of the parties, and in light of all the evidence that was placed before me, I have found that I accept the main claim in its entirety and reject the counterclaim, all as detailed below.

The main claim

69. In the framework of the main lawsuit, T.A. is petitioning a civil appeal to charge Brooke in the sum of ILS 2,897,365, plus interest and linkage differentials in accordance with the law, for services she provided to the defendant and materials required for her work, in the period between January 2022 and June 2023, for which she was not paid.
70. The lawsuit relates to two periods:

The first, from January 2022 to September 2022, is a period known as "NRE", which is the period of training the inspection institute and civil appeal technicians for the maintenance of Brook helicopters.