His time has passed, his sacrifice has been in vain.
May 19, 2020
Analysis of the Judgment TA (Jerusalem) B. Yair Construction Company Ltd. v. State of Israel – Ministry of Construction and Housing et al. (Published in Nevo, 16.3.2020)
By: Adv. Shlomi Hadar
John Geva, Shlomi Hadar Law & Mediation Office
Recently, the Jerusalem District Court addressed a civil claim filed by a construction company that had won a tender related to real estate and the construction of residential buildings under the “Mechir Lamishtaken” (“Price for Residents”) program in the Artists’ Quarter in the city of Ramla, against the Ministry of Construction and Housing, the Israel Land Authority, the Ramla Municipality, and the Local Planning and Building Committee of Ramla.
Under the tender conditions, the winning developer was granted a benefit designed to encourage the completion of the project within a short timeframe. According to these conditions, upon winning the tender, the developer was required to pay 85% of the price they had offered for the land and, in addition, to deposit an autonomous bank guarantee for the remaining 15%. It was stipulated that if, within 30 months of winning the tender, the winner provided a connection approval for the buildings to the infrastructure—indicating completion of construction—and occupancy permits for more than 80% of the apartments, the guarantee would be released and the developer would not be required to pay the remaining 15%. The plaintiff submitted a proposal to purchase the land and was awarded the tender.
Analysis of the Tel Aviv (Ya-M) B. Yair Construction Works Contracting Company 1988 Ltd. v. State of Israel – Ministry of Construction and Housing et al. (Published in Nevo, March 16, 2020)
From: Attorney Shlomi Hadar
John Geva, Shlomi Hadar Law Firm and Mediators
Recently, the Jerusalem District Court heard a tort claim filed by a contracting company, which won a tender regarding land and the construction of residential buildings as part of the "Price for the Tenant" program in the Artists' Neighborhood in the city of Ramla, against the Ministry of Construction and Housing, the Israel Land Authority, the Ramla Municipality, and the local planning and building committee in the city of Ramla.
As part of the tender terms, the winning developer was given a benefit that encouraged him to carry out the project in a short time, in which it was determined that upon winning the tender, the developer must pay 85% of the price he offered for the land, and in addition to depositing an autonomous bank guarantee for the remaining amount (15%). It was determined that if, by the end of 30 months from the date of winning, the winner produces a certificate for connecting buildings to infrastructure indicating the completion of construction, as well as references to the occupancy of more than 80% of the apartments, the guarantee will expire and the developer will not have to pay the remaining 15%. The plaintiff submitted a bid to purchase the land and won.


טענת התובעת
The plaintiff claimed that she did everything necessary to quickly advance the project, while the defendants caused various delays in the implementation of the project, and as a result of the numerous delays, the Ministry of Construction and Housing and the Israel Land Authority forfeited the guarantee in the amount of approximately 5 million NIS, so that she was deprived of the benefit and was forced to pay the full cost of the land. The lawsuit also claimed financing costs and loss of profits.
The main claim made against the Ramla Municipality and the local Planning and Building Committee was that they deliberately delayed the implementation of the project, due to their principled opposition to building houses within the framework of the "Price for the Resident" program, since they designated the Kiryat Omanim neighborhood for a population with a higher socioeconomic level than the population "that typically characterizes" apartment buyers in "Price for the Resident" projects.
The main claim made against the Ministry of Construction and Housing and the Israel Land Authority was that they published the tender while knowing about the principled opposition of the Ramla Municipality and the local Planning and Building Committee to the implementation of the project, and pledged to remove it but did not do so. In addition, the plaintiff claimed that all defendants caused the delay in the implementation of the project also due to negligence.
The Ministry of Construction and Housing and the Israel Land Authority detailed delays that they claimed were caused by the plaintiff's conduct, and also claimed that they did not hide from the tender participants the objection of the Ramla Municipality and the Local Planning and Building Committee to the "Price for the Tenant" project, and that this fact was "known to all." They also claimed that they did not commit to the tender participants to obtain the consent of the Ramla Municipality and the Local Planning and Building Committee to the project, neither on a specific date nor at all, but rather announced at the time of the contractors' tour that they intended to act to remove the objection, and indeed the municipality's objection was removed, the plaintiff received a building permit, the project got underway, and the construction of the buildings was completed. In addition, they claimed that the plaintiff, who did not prove her damages at all, "took upon herself" risks that were known to her in advance, out of economic-business considerations, and could even have met the deadlines set in the contract, had she acted as required.
The Ramla Municipality and the local Planning and Building Committee argued, among other things, that since the municipality's objection was reported during the contractors' tour, the plaintiff should have "considered her actions in light of this information." According to them, since the plaintiff knew that there was a likelihood that the objection, to the extent it existed, would not be removed and that there was a possibility that it would lead to awkwardness in the implementation of the project and additional bumps that might take time, including the time that the Ministry of Construction and Housing would have to work to remove that objection, as it had allegedly promised her during the contractors' tour, the plaintiff knowingly entered into the project.
The court was asked whether the conduct of the Ramla Municipality and the local committee was intended to delay and thwart the project, or whether they did not waive their professional and legitimate demands that the project be built in accordance with proper professional standards, and came to the conclusion that their opposition did not grant them freedom "to do whatever they wanted to thwart, obstruct and sabotage," but at the same time ruled that the plaintiff was unable to prove and convince that they acted improperly.
It was also determined that the plaintiff should have known that the opposition of the municipality and the local committee could prevent her from meeting the schedules and being entitled to the benefit, and this should have been considered in advance. It was also determined that the plaintiff was unable to establish a cause of action against the Ministry of Construction and Housing and the Israel Land Authority for breach of their obligation, as evidenced by the fact that a building permit was ultimately received.
For the above reasons, the claim was dismissed. However, although the claim was dismissed, it cannot be ignored that, in addition to the Honorable Court's observation that the authorities are not free to do whatever they please to obstruct and hinder the advancement of the project, the Court decided not to impose costs on the plaintiff, on the grounds that the plaintiff entered into a contract with the Ministry of Construction and Housing and the Israel Land Authority with the "honest expectation" that with their help she would be able to meet the schedules set out in the contract, an expectation that did not materialize.
The court even commented on Natalie's lack of proof that the plaintiff did not meet, however, there is undoubtedly something in this case to shed light on the administrative and good faith duties of authorities in implementing agreements, especially considering the gaps in the powers and ability of authorities in many cases to control bureaucratic processes.











מסמכים



