Purchase of Event Hall for 19 Million Shekels Leads to Court Over Electricity Issues
Shareholders of a business in Kiryat Ekron sold it with a commitment to secure Form 4, but buyers were forced to rely on generators. The court ruled they must be compensated with approximately 600,000 shekels.
The District Court in Lod recently partially accepted a lawsuit filed by the buyers of an event hall in Kiryat Ekron against the shareholders who sold them the operating company for 19 million shekels. Judge Avi Porag ruled that the sellers failed to fulfill their obligation to secure Form 4 and parking permits within a reasonable time, and therefore must pay more than 600,000 shekels.
In June 2012, the parties signed a memorandum of understanding for the purchase of shares in the company operating the hall. The sellers undertook to ensure that the building owner (the lessor) would obtain all necessary permits or find a solution if unsuccessful. Despite this, when the buyers began operating the hall, Form 4 had not been received, and electricity was supplied via generators.
In their lawsuit, the buyers claimed that the sellers failed to handle the permits as required, leaving them to bear heavy costs for alternative power. The sellers argued that the buyers were aware of the planning status at the time of signing and that no short-term deadline was promised. They also attempted to shift responsibility to the lessor by filing a third-party notice.
Judge Porag ruled that the language of the memorandum was clear: the sellers were responsible for the permits and for finding a solution if the lessor failed to act. Since no specific timeframe was set, the court determined that a "reasonable time" was four months from the date of management transfer.
"The reasonable period for completing the obligations was four months from the date of transferring the management of the hall to the buyers," the judge stated.
The court ordered the sellers to indemnify the buyers for the generator operating costs—minus the standard electricity rate—totaling 581,600 shekels, plus 50,000 shekels in legal and attorney fees. The third-party notice against the building owner was rejected, and the defendants were ordered to pay the owner's legal expenses.
