The Second Addendum to the Agreement
- On May 7,2018, the plan was published for deposit in the Official Gazette, and on June 25,2018, the District Planning and Building Committee decided that the proposed plan requires the approval of the Minister of Finance in accordance with Section 109 of the Planning and Building Law, 5725-1965, and therefore the plan was transferred to the Municipality's Planning Department for the purpose of handling the necessary amendments in accordance with the District Committee's decision (see P/17, see also a letter demanding the advancement of the issue dated July 16,2018, P/18).
- In view of the aforementioned state of affairs and the fact that things are not progressing, the company contacted the mayor, in a letter dated June 26,2019 (P/23), requesting that he make use of his authority and act to promote the plan that is in the planning department of the municipality, so that it will be possible to obtain the necessary approvals to promote the project, in view of the damage caused to the company due to the delay in the project.
Subsequently, the company contacted the municipality in a letter dated July 17,2019 (P/24) and asked to be updated on the date of the committee's meeting and its discussion of extending the deadlines for receiving the approvals.
- In response, the company received a letter from the municipality, dated July 17,2019 (P/25), in which the municipality informed it of the termination of the contract between them, ostensibly because the company had not won a tender by the Ministry of Immigrant Absorption for the construction of housing for elderly immigrants entitled to public housing in the city of Bat Yam.
- In its letters dated July 18,2019 and July 22,2019, the Company rejected the Municipality's notice of cancellation, and after additional letters and meetings held between the parties on August 7,2019, the Company realized that the Municipality adhered to its position. (See Letters and Minutes P/26) .
- Subsequently, on November 28,2019, the Company filed a petition against the Municipality in the Tel Aviv District Court (Administrative Petition 68115-11-19) (P/27) (hereinafter: the "Petition"). On November 22,2019, the Municipality filed a reply to the petition, in which it again raised a series of claims about violations that occurred on the part of the Company that justify the cancellation of the agreement with it (P/28). The Municipality reiterated the representation it made to the company all along, according to which this is not the end of the story, since the approval of the Minister of the Interior will be examined and given only after the change in the zoning plan, i.e., the change in the order of approvals (see paragraph 13 of the responsa).
- On December 29,2019, a judgment was given in the petition, by the Honorable Judge Kobi Vardi, who ruled that there was no reason to cancel the engagement between the company and the municipality, and recommended that the parties reach understandings for the purpose of continuing the engagement and establishing the project. Due to the importance of the matter, the following will be presented as written in the minutes and in the judgment (P/29):
"... It is proposed that a judgment be given in the petition that there was no reason at this time to cancel the engagement agreement due to the non-fulfillment of the suspension conditions, when it is also clarified that each party maintains its claims and that the Municipality is of course entitled to consider, given that there was no room at this time to cancel the agreement due to the non-fulfillment of the suspension conditions, whether there is still room to cancel the agreement or not and/or to be released from it, and if so, of course, it must hold an in-depth discussion with the relevant parties and make a detailed and reasoned decision, a decision that the Petitioner will of course be able to attack if the decision is one that still insists on canceling the engagement and not a decision that reaches an agreement of one kind or another between the parties and/or an agreed solution of one kind or another that the parties may be able to reach in view of the above. ... The parties and their counsel did well to accept the court's proposal that was given the force of a judgment in the circumstances of the case."
- Following the court's recommendation, the parties began negotiations to renew the engagement between them. On January 20,2020, the municipality sent a letter of demand, demanding that the company submit a series of data and materials to it, ostensibly so that the municipality could re-examine its decision to cancel the agreement (P/30). The company replied to the municipality in a letter dated January 21,2020 (P/31).
- On November 5,2020, the Municipality entered into a second addendum to the development agreement (hereinafter: the "Second Addendum") (P/34). As part of the Second Addendum, the timetables were extended, so that the deadline for receiving approval for the change in the zoning plan was set no later than 12 months from the date of signing the Second Addendum, and the deadline for receiving the approval of the Minister of the Interior was set no later than 18 months later (see sections 18 and 20 of the Second Addendum).
- In clause 3 of the Second Addendum, the Municipality and the Company agreed that:
"After receiving the Council's renewed approval, a preliminary application will be made to the Ministry of the Interior, by the Municipality and/or by V-Equity, as instructed by the Municipality, in order to obtain the preliminary approval of the Ministry of the Interior (pre-ruling) to reconsider the approval of the engagement after and subject to the completion of the task of "adding the use" (i.e., adding a designation "Protected Housing, in the Zoning Plan"), as required by the terms of the suspension in clause 30.1.2 of the Development Agreement.
- In clause 15 of the second addendum, the company undertook the task of promoting the planning for the change in the zoning plan, including submitting the appropriate request to the local planning and building committee, after review and comments from the planning authorities in the municipality.
- In addition, the municipality demanded that the company pay it an additional sum of ILS 1 million, in addition to the ILS 5 million usage fees that had already been paid to the municipality in 2016, and also demanded that the company take upon itself the cost of promoting the zoning plan (see section 25 of the second addendum).
- It was found that even in the framework of the second addendum, the municipality repeated the same misleading representation that it presented to the company throughout the years, according to which the approval of the Minister of the Interior would be examined and given only after the change in the zoning plan - while hiding vital and material information from the company regarding the position of the Ministry of the Interior.
This is therefore a very serious conduct, since at the time of the signing of the second addendum (November 5,2020), the municipality was already well aware of the Interior Ministry's refusal to approve an agreement on the matter of Omarta, even though at that time the plan had been changed.