Termination of Engagement
- As detailed above, when the company was exposed to the reality from which it was hidden, it contacted the municipality, in a letter dated February 21,2021 (P/36), in which it complained that for years, the municipality had concealed from it the critical fact - that the Ministry of the Interior does not agree (and will not agree) to approve the agreement between the parties even if the zoning plan is changed, so that during all this time the municipality knew very well that the agreement was not enforceable.
The company emphasized that it relied on the project and invested considerable financial resources in promoting the project, which was a major project from its point of view, and was supposed to generate revenues of tens of millions of shekels (in accordance with a business plan presented and approved by the municipality P/6). The company noted that the municipality's conduct, including the concealment of the aforementioned critical fact, constituted (inter alia) serious deception, a breach of the duty of good faith, and a breach of the agreement between the parties.
- The Municipality responded to the company in a laconic letter dated March 2,2021 (P/37), in which it rejected the company's claims without providing a response to the company's claims, and only claimed that it became aware of the Interior Ministry's position only when it received its letter of February 18,2021 (P/38), which it attached as an appendix to its letter.
- In a letter dated March 15,2021 (P/39), the company rejected the municipality's arguments that appeared in its letter of March 2,2021 (P/37), and requested to coordinate a meeting with the municipality in order to determine an outline for the payment of the compensation to which it is entitled by law.
- The Municipality ignored this letter of demand, and therefore, on June 7,2021, the Company contacted the Municipality in another letter (P/40) in which it demanded to receive back the use fees in the amount of ILS 5 million that it paid to the Municipality in accordance with the provisions of the development agreement, while preserving all its rights and claims regarding the other damages caused to it.
On August 11,2021, the Municipality responded to the company's inquiries, and in an email message from the same day (P/41), Adv. Cohen noted the Municipality's desire to return the money to the Company, but for this purpose the Company is required to sign an affidavit canceling the transaction. (Clauses 68-69 of the affidavit Wachter).
- On September 12,2021, a telephone conversation was held between the company's attorney and Adv. Cohen on behalf of the municipality, in which it was agreed that progress should be made with the return of the utility fees to the company, and that there was no connection between the issue of the affidavit canceling the transaction to the authorities and the return of the funds. A short time later, a "Zoom" meeting was held with the participation of Din, the plaintiffs' attorney, Adv. Cohen and the mayor. As part of the meeting, it was agreed that the municipality would refund the utility fees to the company without the company's signature on the affidavit canceling the transaction, and it was agreed that Adv. Cohen would update the plaintiffs' attorney regarding the refund of the funds.
- On December 14,2021, the Municipality contacted the company in a letter (P/43), in which it stated that it would return the funds (usage fees) to the company, but this requires the approval of the accompanying accountant, the approval of the Ministry of the Interior, and the approval of the Urban Development Plan (Extraordinary Budget), which in itself requires the approval of the Municipality's Finance Committee, as well as the approval of the City Council and the District Commissioner at the Ministry of the Interior.
- In light of this response, this claim was filed for the return of the funds and payment of compensation, all for the conduct of the municipality and the damages that the company claims caused to it.
The Municipality's Claims Regarding the Company's Breaches of Agreement
- The Municipality claimed against the company for breaches of the agreement, both in view of the company's commitment under the terms of the tender that it could finance the project itself and in view of the loss of the company's entitlement to receive a "back-to-back" agreement with the Ministry of Aliyah and Absorption, in violation of its commitment in the tender.
I did not find in these arguments any relevance to the dispute in question, given that the parties signed the second addendum to the agreement, in which all those issues that were alleged to be violations were settled by agreement, including the company's failure to win the agreement with the Ministry of Aliyah and Absorption (P/34). At that time, the municipality was well aware of a loan taken by the company that was attached to it and also received the approval of an accountant at its request (see P/32), that if necessary they could provide all the sources and even agreed to this. and in view of the fact that the agreement does not prohibit the bidder in the tender from taking loans for the purpose of submitting the proposal and the usage fees, and all that was determined is that the bidder must pay the financing of the project itself (i.e., the construction of the project and not the payment of the usage fees). See clause 18 of the agreement, in which it is stipulated that: "The developer will be responsible for receiving the full financing required for the performance of all its obligations under this agreement. In order to fulfill the aforesaid, the developer will be entitled to receive financing and financial support for the purpose of establishing the project, subject to the following: The financing will be provided by an authorized merchant bank in Israel and/or an insurance company. (18.3) If the Developer is not approved for financing and financial support for the purpose of carrying out the construction of the Project, the Entrepreneur will be obligated to finance the cost of the construction of the Project from its independent sources."