Outright Disposal
- At the outset, I saw fit to accept the Municipality's arguments and order the dismissal of the claim of plaintiffs 2-3 against the defendants, in the absence of any rivalry with the defendants.
- This is a tender published by the Municipality in which the Company won, and as a result, a development agreement was signed between the Company and the Municipality on March 22,2016. On the face of it, various agreements were signed between the plaintiffs among themselves regarding the Company's winning of the tender, but the Municipality is not a party to these agreements and do not bind it. Beyond what is required, it should be noted that none of the plaintiffs 2-3 entered into a direct contract with any of the defendants of any kind.
Given the aforesaid, in the absence of any rivalry between the plaintiffs and any of the defendants, there is no choice but to order the dismissal of the claim of plaintiffs 2-3 against the defendants.
- In addition, the lawsuit against defendant 2 should be dismissed in limine since no evidentiary basis has been laid to establish a cause of action against it. The contractual rivalry that is the subject of the proceeding was formed between the company and the municipality. Defendant 2 is a municipal corporation that constitutes an executive arm for the implementation of the municipality's decisions and nothing more.
The company's claims regarding the non-fulfillment of the agreement focus solely on the municipality, with which the agreement was signed. And the company has no cause of action against defendant 2. The same applies to the existence of a cause of action in torts, to the extent that false representations were made and to the extent that information was concealed from the company, it was the municipality's omissions, since it was the municipality (through the legal department) that received the letters from the Ministry of the Interior and was aware of its position, and it was the company that acted against the company when the validity of the agreement with it was extended time and time again.
- In light of the aforesaid, and even after the dismissal of the claim of plaintiffs 2-3, there is no choice but to continue to order the dismissal of the company's claim against defendant 2, due to the absence of rivalry and the absence of any tort in tort against it.
On the merits of the matter
- I will preface the beginning by saying that after examining all the correspondence and documents, including the affidavits, I am not convinced that the municipality should be attributed a lack of good faith or deliberate deception at the time of the publication of the tender or when it entered into an agreement with the company that is the subject of the proceeding.
Admittedly, it is not appropriate for an authority to advance tender proceedings for the construction of a construction project while the zoning plan does not allow it, since such a tender embodies the risk of not approving the change in the zoning plan and not granting the approval of the Minister of the Interior, and therefore leads to losses to the public coffers. However, in the circumstances that will be detailed below, I am prepared to accept the Municipality's position that it acted at the time to enrich the public coffers, and hoped that it would be able to obtain the approval of the Minister of the Interior for the transaction subject to the change in the Zoning Plan, in light of previous cases in which it succeeded in doing so in the past, as detailed above. (See Real Estate Sale Transactions with Companies » Waybox Real Estate and Zigdon of Boden, which were approved in 2014, as well as a combination sale transaction with Bat Hayam Towers Ofek Construction and Development, which was approved in April 2015, although in these cases the planning situation did not match the current situation).
- In addition to the aforesaid, even if at the outset, at the time of the publication of the tender, the Municipality believed in good faith that it would be able to obtain the approval of the Ministry of the Interior for the transaction, subject to a change in the zoning plan, it has been proven that even after the company won the tender and signed an agreement with it, the Municipality received letters from the Ministry of the Interior both regarding this tender and regarding tenders similar to the circumstances at hand, which were published close to the date on which the tender that is the subject of the discussion was published, informing it categorically that the Ministry of the Interior will no longer approve an engagement that is contrary to the zoning plan.
It was, therefore, the duty of the Municipality to act in good faith in the existence of an agreement and to disclose this vital information to the Company at every stage at which the position of the Ministry of the Interior was brought before it in order to be able to finance its affairs. Even if doubt arose with the Municipality as to the position of the Ministry of the Interior, it was its duty to demand clarification on the matter, especially when it held in its hands the sum of more than ILS 5 million of the Company's funds.