Civil Case (Tel Aviv) 58608-01-22 Dan Hershpang v. Bar Tarnovsky - part 7

The plaintiff:        Money

The defendant:   Tomorrow you will meet with Dennis and tell him exactly what you want.  You will receive exactly a report of the money.  And you will get what you deserve from the business to date.

The plaintiff:        I will not meet with Dennis.

The defendant:   You want money, don't you? You need to see exactly the cycles.  I would like to show you (referring to you - R.  G(" (p.  432 of the plaintiff's affidavit, correspondence dated August 31, 2020, at 02:45).

44. In addition, in his testimony, the defendant reiterated that the plaintiff has the right to provide accounts ("Adv. Levy: Is he entitled to see the financial statements in your opinion?; the defendant: [...] Before filing the lawsuit, I suggested that he come and see the data, with me. Or later I also suggested that he meet in the presence of his own people [...] to see all the data and then decide whether to move forward."Transcript, p.  72, paras.  26-39 ().
45. The defendant's willingness, as expressed both in real time and within the framework of the proceeding, to present the plaintiff with the financial data, also strengthens the conclusion that there was a special relationship between the parties. This conclusion is based, in essence, on the agreement of the parties to act within the framework of a joint venture and on their actual activity, as well as on the entrustment of the financial area of the venture to the defendant on the basis of the trust between the parties, A business institution that is essentially close to a partnership.

1.d.  Who were the parties to the agreement? Hearing the defendant's claim for dismissal of the claim in limine

46. Another issue that needs to be decided in the context of the existence of a special relationship relates to the identity of the parties to the agreement. The defendant argued that insofar as there is any entitlement to the plaintiff to take part of the profits of the venture, this liability arises in relation to the foreign corporations, through which the venture's business activity was concentrated, and not directly towards it (see, for example, paragraph 9 of the statement of defense).  Therefore, according to the defendant, the claim should be dismissed since the plaintiff did not join the foreign corporations and their shareholders in the proceeding.
47. I found that this argument is inconsistent with the totality of the evidence presented and should be rejected, if only on the grounds that the agreement was entered into between the plaintiff and the defendant. In this context, the defendant stated, inter alia, that he managed the activity with the plaintiff and that he approached him with the business proposal (Transcript, p.  46; p.  47, s.  32).  In addition, the scope of the correspondence between the parties and Mishkan indicates that the plaintiff saw the defendant as a direct and binding party to the agreement.  On the other hand, the defendant did not prove his claim that the venture was connected together with other parties and in fact confirmed the plaintiff's version that The two They dealt directly with each other.  On the contrary, The defendant claimed that the plaintiff had no connection with Grossman or Polansky.  The plaintiff relied on the defendant's personal undertaking, and saw the defendant and the venture as one and the same.  The defendant was the living spirit behind the venture, he was the one who connected all the parties involved, pushed to promote the venture, managed it and made the managerial decisions in connection with it.  The defendant's tight control over what was happening, which was expressed, inter alia, in his decision to stop the concentration of the venture's financial activity in a corporation owned by Grossman and to transfer it to a new and separate corporation he established for this purpose (a corporation DB( (Transcript, p.  43, paras.  8-22( shows that it was the defendant who actually managed the matter, and that the foreign corporations served only as a "conduit for the transfer of funds" without severing the agreement that was entered into between the parties and the defendant (Civil Case 375/08 (Haifa District().  Rom v.  Zeevi (5.6.2017(; Civil Case (Central District( 9188-01-19 Quarik v.  Nan, Bachar Engineering & Execution Group Ltd.  (14.4.2022().  It should also be emphasized in this context that this agreement is concluded before it is determined how it will be managed The Venture, including by way of establishing a separate legal entity.  Thus, at the time of the engagement, the foreign corporation Top Tier Merchant It has not yet been used as a platform needed to carry out financial transfers, and so has the corporation DB It has not yet been established at this stage.  In view of the defendant's personal commitment, the plaintiff chose to finance his steps, while acting with full confidence.  If it were not for this promise on the part of the defendant, the plaintiff would not have worked vigorously for many months for an idea that has not yet been formally formulated.

The same conclusion must be reached with respect to the defendant's claim regarding the non-inclusion of Polansky, Wheeler and Grossman in the proceeding.  Once it has been determined that the agreement that is the subject of the proceeding was entered into between the plaintiff and the defendant personally, the plaintiff was entitled to direct his claim against the defendant alone, and he is not obligated to join anyone who is not a party to the engagement with him.  The fact that the defendant entered into agreements, simultaneously and separately, with other parties for the purpose of promoting the venture (agreements which, according to him, were also not put in writing( does not make these parties necessary for a decision on the question of the defendant's liability to the plaintiff.  Moreover, the order for the provision of accounts is directed only at the defendant, as he is the person who managed the financial affairs of the venture, and it does not impose liability on third parties.  Insofar as the defendant believed that he had a right to any of these parties, the way was open to him to request that they be added as a party to the proceeding or to file a third party notice, and he did not do so.  On the contrary, as detailed above (paragraph 36), the defendant's refusal to bring them to testify is even attributable to him.

48. In summary: the engagement was made with the defendant personally, and therefore I did not see any impediment to hearing the claim even without the addition of the foreign corporations or their shareholders. The threshold arguments raised by the defendant regarding the lack of cause and the absence of rivalry are rejected Therefore.

1.e.  Did the plaintiff breach the agreement?

49. The defendant raised various arguments, both in the pleadings and in his testimony, which are intended to justify his disavowal of the agreement with the plaintiff, or at least to limit its scope.  These claims revolved mainly around two main axes: First, that the venture "started again" due to an increase in investment; and second, that the plaintiff breached the agreements, inter alia, by the extent of his involvement in the venture being negligible.  After examining the evidence, I have come to the conclusion that these claims should be rejected.
50. According to the defendant, at the time of the contract with the plaintiff, the venture was in its infancy, and the scope of the investment Be limited respectively. According to him, with the passage of time and as his financial investment in the venture deepened, this constitutes a circumstance that justifies changing the agreement (in this context, see, for example, the defendant's claim in correspondence dated August 31, 2020, that "I, who entered into this business with you, became partners in a success that collapsed and died.  and everything started again" (p.  431 of the plaintiff's affidavit, correspondence of August 31, 2020, at 02:37).  At the same time, the defendant claims that the agreement on the distribution of profits was not limited in time or amount (Transcript, p.  66, s.  3, 13-15).  In my opinion, this version expresses an attempt by the defendant to disavow the agreement and is in fact a mistake in the feasibility of the transaction, which does not establish grounds for cancelling the agreement (Section 14 of the Contracts Law; Gabriela Shalev and Effi Zemach Contract Law 343-350 (4th ed., 2019(; Civil Appeal 5349/97 Dr.  Rivka Sussman v.  Taib, IsrSC 55(2( 494, 499 (2000(; Civil Case (Tel Aviv District( 6846-09-17 He is paidWeinstein Engineering & Contracting Ltd.  v.  Urban Renewal - Development & Real Estate Ltd., paragraph 20 (January 29, 2022).  In fact, upon embarking on the joint venture, each party assumed the risks and chances in relation to the agreement that was formed.  Therefore, since the defendant has taken the "calculated risk" that his investment will not yield profits, the other side of the coin is that its chances of profits are accordingly large.  The agreement was broad enough to include the development of the venture, including an increase in investments, and does not justify a repudiation of commitments.
51. In fact, the defendant consistently recognized the agreement and the consideration from the profits throughout the parties' joint activity. Thus, for example, the defendant confirmed in his testimony that "there was an option to make a profit if the venture was successful and Dan fulfilled the things he undertook, as we determined at the beginning when Dan would receive money" (Transcript, p.  66, paras.  13-15).  The defendant further claimed in his testimony that "he (the plaintiff - R.  G.( was supposed to receive profits again, he would have received money from profits if the site had been a profit point...  We talked about whether we would bring in an outside investor and then they would cut the shape for Dan, okay, or we would find money from our family and he would enjoy it, and that's how we went with it."Transcript, p.  68, paras.  1-15).
52. The defendant further argued that the degree of the plaintiff's involvement and activity in the venture was negligible, and that in fact all of his activity amounted to the execution of simple technical actions that did not require an investment of time or knowledge on the part of the plaintiff (see, for example, paragraphs 25 and 26 of the defendant's affidavit). However, the defendant did not prove this claim with sufficient evidence, and it is even hidden from the totality of the evidence, including the correspondence between the parties and the defendant's own confessions.  This conclusion, that the plaintiff had a substantial involvement in the venture, is based on a number of external indications.  Thus, inter alia, the defendant confirmed on a number of occasions, both in real time and in the framework of his testimony, that the plaintiff's involvement in the venture was not negligible.  In addition, the plaintiff was the only entity that possessed the knowledge necessary to establish the sites, which served as the business core of the venture.  Beyond that, it was claimed and not concealed, that the plaintiff performed various actions that were necessary for the venture's activity.  In addition, the defendant confirmed that the plaintiff's involvement, even in the early stages of the venture, was not limited to the purely technical aspect (e.g., Transcript, p.  66, paras.  32-33).  I will emphasize: Even if the plaintiff's actions were mainly technical, this does not negate the agreement according to which he is entitled to a portion of the profits of the venture.  This division of roles has been agreed upon Between the parties in advance and designated the managerial and financial roles for the defendant, while the plaintiff has the technical aspect.
53. In addition, the correspondence shows that when the defendant raised claims regarding the plaintiff's functioning, the agreement was not cancelled and the defendant did not consider himself entitled to terminate the engagement unilaterally. As stated, the defendant offered the plaintiff an "exit point" in an attempt to reach new agreements.  However, it is precisely these proposals that strengthen the assertion that the agreement remains in force.  In this context, we can refer to the correspondence of April 3, 2020 (pp.  103-106 of the plaintiff's affidavit).  In this framework, the defendant complains about the plaintiff's conduct.  However, this correspondence indicates that the defendant recognized the validity of the agreement that was concluded.  This matter is also repeated in late correspondence (p.  431 of the plaintiff's affidavit, correspondence dated August 31, 2020( and later he confirmed again that "only if there are profits will I give you" and "we entered into this on the condition that the business will make a profit and there will be appropriate remunerations" (Name, at p.  432, notice from 02:41).
54. The totality of the evidence shows that the defendant's claims regarding the plaintiff's breach of agreement, or the existence of grounds for canceling the agreement due to a change in circumstances or dissatisfaction, are unfounded. The agreement between the parties remains valid, and the defendant has not proven that the plaintiff breached it in a manner that justifies its cancellation or the defendant's disavowal of it.  On the contrary, the correspondence and testimonies indicate the continued existence of the joint venture and mutual recognition, albeit tense, of the plaintiff's status as a partner entitled to part of the profits.
55. The existence of a prima facie right of claim in relation to the funds that are the subject of the accounts
56. When I determined that an agreement was entered into between the parties for a joint venture, embracing all the sites established by the plaintiff, a special relationship was established between them that establishes obligations of transparency and disclosure in relation to the financial affairs of the venture, all of which were managed by the defendant. The evidence shows that the defendant refrained from providing information and financial reports to the plaintiff despite his repeated requests, and even tried to exclude him from material data.  In these circumstances, the plaintiff has a right to receive accounts, since this remedy is intended to restore the transparency that was lost, to disclose the data in its entirety, and to prevent a party from profiting from the breach of its debts.
57. When the defendant recognized the plaintiff's right to enjoy the profits of the venture, both in real time and within the scope of the proceeding, and when it was determined that a rate of 20% of the profits would serve as a starting point for determining the remuneration (paragraph 27 above), I was persuaded that the plaintiff had a prima facie right in relation to the funds that are the subject of the accounts.
58. At the same time, the plaintiff is entitled to the accounts in relation to the period from March 2020 to the end of 2022 only, and not until the date of the judgment as requested. Once it was determined that the relationship between the parties came to an end in February 2021, when the plaintiff ceased all activity in the venture, the delimitation of the accounts until the end of 2022 expresses a proper balance, for three cumulative reasons: First, a period of about two years after the separation allows us to examine whether profits were generated from the infrastructure established by the plaintiff and his activity, since the fruits of his work, The Sites Themselves, They continued to serve the project even after he left.  Second, the initiative is inherently intended to provide a solution to a specific need that was created with the outbreak of the COVID-19 pandemic.  With the decline of the pandemic and the lifting of restrictions during 2022, the demand for the project's protective products naturally decreased, so that the end of 2022 reflects the project's expected economic utilization in its original form.  Third, extending the order until the date of the judgment would have imposed a disproportionate burden on the defendant, and severed the required connection between the plaintiff's contribution and the profits that are the subject of the accounts.  For these reasons, the date was set at the end of 2022, and not at the date of the termination of the site's activity DB, as the plaintiff claims.

Conclusion

58. Summary: The claim for the provision of bills is accepted, subject to the demarcation of the period as detailed above. The decision on the declaratory relief and the monetary relief will be made, to the extent necessary, at the second stage of the proceeding, after receiving and examining the accounts.  In this framework, the rate of remuneration due to the plaintiff will be finally determined, with a rate of 20% of the profits serving as a starting point, as detailed in paragraph 27 above, and the question of the basis of the calculation and the claim of offset raised by the defendant will be decided.
59. An order is hereby issued for the provision of accounts, within the framework of which the defendant shall submit for the plaintiff's review, within the 60 Days from today (Vacation days In a minyan), The following documents and data, in relation to the period from March 1, 2020 to December 31, 2022 (hereinafter: The Relevant Period(:
60. Full details of the income and expenses of the business activity conducted through the Sites, as defined above, including sales data, refunds and credits;
61. the financial statements of DB Corporation for the relevant period, and to the extent also prepared by Top Tier Merchant Corporation, with respect to the activities of the Sites;

• bank statements and clearing accounts used by the Sites' activity during the relevant period;

1. Details of the defendant's holdings, directly or indirectly, in the corporations through which the venture's activity was concentrated, as well as any receipts he received from them during the relevant period.

The accounts will be verified in an affidavit duly prepared, in which the defendant will declare that he does not have any additional accounts or documents of any kind in connection with the venture.  Insofar as the documents listed above are not in the possession of the defendant but in the hands of third parties, the defendant shall act, with due diligence and good faith, to obtain them.  If he has not been able to obtain them, he shall detail in his affidavit the missing documents, the identity of the party holding them, and the actions he took to obtain them.  It is clarified that the order applies to any document that is under the defendant's control or within his reach, including documents that he is entitled to receive by virtue of his status in the said corporations.

60. At this stage, I obligate the defendant to pay the plaintiff Attorney's fee of 30, 000 ILS (includes VAT"40( to be paid In 14 Days. In determining the amount, I took into account the result I reached, the rejection of the defendant's preliminary claims, and the scope of the proceeding to date, This includes hearing evidence and cross-examinations on the basis of evidence Extensive, and on the other hand, the fact that the additional remedies have not yet been decided, for which the expenses will be taken into account, if necessary, at the end of the second stage.  In the event of a delay in the payment of the fees, instructions will apply Interest Rulings and Linkage Law, 560"A-1961.
61. Up to the day 15.11.2026 The plaintiff will notify if he wishes to continue the investigation of this proceeding after the bills have been issued. In the absence of notice, I will assume that the plaintiff Isn't He is interested in continuing the clarification of the proceedings in the framework of the current hearing, in which case the case will be closed and the fee for the financial relief will be returned to the plaintiff.  I suggest that the parties conduct a dialogue until the aforesaid date in an attempt to make the further clarification of the proceeding redundant, with all the additional resources and costs that will be involved.

The secretariat will provide the parties with the partial judgment and set an internal reminder for the 16th day.11.2026.