It was argued that despite this, the municipality continued to mislead the company, and the company relied on the municipality's representations and repeatedly extended the validity of the agreement with the municipality and continued to invest considerable resources in order to carry out the project.
- Given the aforesaid, the company claimed that the municipality acted improperly and in bad faith, misled the company, made negligent misrepresentations, enriched itself at its own expense and violated the duty of fairness that applied to it as an administrative authority. It was claimed that the municipality knew or should have known that the Minister of the Interior would not approve the construction of the housing cluster under these conditions, but nevertheless went out to tender and received a huge payment from the company in the amount of ILS 5,850,000. It was further claimed that the municipality concealed critical information from it, namely that the Ministry of the Interior would not approve the agreement even if the zoning plan was changed.
According to the company, this conduct constitutes a fundamental breach of the agreement under the Contracts Law (Remedies for Breach of Contract), 5731-1970, deception under section 15 of the Contracts (General Part) Law, 5733-1973, and a breach of the duty of good faith under sections 12 and 39 of that law. It was also argued that this was negligent misrepresentation under sections 35-36 of the Torts Ordinance [New Version] and unjust enrichment under section 1 of the Unjust Enrichment Law, 5739-1979 (amended statement of claim, sections 113-118).
As a result of the aforesaid, and the fact that the Municipality held its funds for 7 years, the Company claimed damages caused to it as a result of the Municipality's conduct - inter alia, interest that the Company was forced to bear, payment of expenses to lawyers, architects and consultants, non-payment of initiation fees and loss of income. The Company claimed damages that included the recovery of use fees in the amount of ILS 5 million paid to the Municipality; compensation in the amount of ILS 1.5 million for the interest that the Company undertook to pay on a loan it took for the purpose of paying the usage fees; Additional compensation in the amount of ILS 1.5 million for repeated extensions of another loan taken by Plaintiff 3 from Benny & Zvika Ltd., or alternatively debitor interest or interest under any law; compensation in the amount of ILS 2 million for initiation fees that the company undertook to pay to plaintiff 2 ; reimbursement of expenses in the amount of ILS 4 million for expenses incurred in the realization and promotion of the agreement and the project, as well as management expenses. The company also claimed the loss of a transaction in respect of the partnership with KBI in the amount of ILS 25 million.