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Lawsuit of tens of millions of shekels • Dania Sibus company against Yaffe Nof company "caused significant damages"

Dania Sibus company, one of the leading construction and infrastructure companies in Israel, which carries out many and varied projects worth billions of shekels, filed a lawsuit with the court, through Attorney Shai Avniali from the Barnea office, against The Yaffe Nof Municipal Corporation, the Israel Ports Company, the Ministry of Transportation, the Ministry of Finance and the Haifa Municipality, For the unprecedented lack of hands, according to them, of those responsible for the large-scale transportation project to carry out engineering works at the Gulf Port in Haifa, which are worth more than NIS 200 million.             

Significant damages, amounting to tens of millions of shekels

In the statement of claim, the Dania Sibus company details that, starting from the first moment of the project - more than a year and a half ago, it suffered from contract violations and extremely problematic conduct, amounting to bad faith, on the part of the client - Yaffe Nof. The client neglected its contractual and administrative duties, in a way that delayed the works in the project, disrupted them, and caused significant damages to the company, amounting to tens of millions of shekels, it is claimed.

The Dania Sibus company applied again and again, but unfortunately Yaffe Nof did not respond to these requests and the condition of the project not only did not improve, but got worse. A few months ago, Dania Sibus learned of an intention to carry out a "customer exchange" in the project, in such a way that Yafe Nof would cease to be the customer in the project, and in its place Hani Photo would be the customer. The company hoped that the exchange would lead to a change in the project, payments would be paid as due, instructions would be carried out on time, instructions would be given (as is customary and appropriate in any project), but she was deceived, and the condition of the project only worsened. Hani, until now, refuses to take responsibility for the project, and at the same time, Yaffe Nof behaves as if she has already been completely released from responsibility for the project.

Disputes on the back of the contractor

The lawsuit states that it seems that it is easy to manage disputes on the back of the contractor: after all, he is a deep pocket that can, according to the method of Yaffe Nof and Hani, absorb their failures and the cost of their disputes. are supposed to manage the project, according to which Yaffe Nof decided to stop work on the project for a period of one month. This is a bad faith decision that has no engineering or project justification whatsoever.

At the same time as announcing the stoppage of work, Yaffe Nof informed Dania (and apparently also other contractors involved in the project) that at this stage the budgetary sources for the project were blocked and that as a result delays in payments to the contractors are expected.

Under these circumstances, the project - and Dania Sibus - are in an impossible state of complete uncertainty: Dania Sibus does not know who is ordering her work in the project, the plaintiff has no one to turn to for instructions and guidelines, including in urgent matters related to safety; There is no party authorized to discuss with the plaintiff regarding the massive damages she suffered, and now she also does not know "what will happen tomorrow", in view of the work stoppage order and the announcement that "payments will be delayed". To this must be added the tremendous uncertainty that exists in the construction market as a whole due to the Corona crisis. Under these circumstances, the plaintiff is left with no choice, and she is forced to request the court's intervention.

Along with this lawsuit, a request for temporary orders is also submitted to the court, so that the plaintiff - and the project - will not find themselves in a situation where irreversible damages have already been caused.

The background to the lawsuit

In July 2018, as part of the activities of the Ministry of Transportation, Yaffe Nof published a tender 08/2018 for the execution of bridging works, road construction, railway route, retaining walls, drainage, sewage, water, electricity, lighting, development, irrigation, traffic, signage, road signs, SHOB building and temporary traffic arrangements, as part of the execution of a northern tender in the Gulf Port connection project.

In December 2018 Dania Sibus submitted her bid for the tender, and in April 2019 Yaffe Nof informed Dania that she was the winner.

For the purpose of carrying out the project, Gadish Engineering and Management Ltd. and Dana Engineering Ltd. were appointed as the administration of the port connections project and as the management company of the project, respectively. This is a large project in scope and important in its purpose. The original implementation period of 35 months was set for the project, and in exchange for its implementation, Dania should receive a payment in the amount of 212 million NIS (before additions and exceptions).

Immediately upon receiving the notice of winning the tender, Dania acted in accordance with the instructions of the tender for the purpose of realizing its contract with Yaffe Nof and its preparation for the execution of the project. And in May 2019, Dania signed the agreement between herself and Yaffe Nof for the execution of the project, and deposited a performance guarantee in the amount of 17,025,056 NIS, for the purpose of guaranteeing the execution of the project by her.

Dania Sibus warned about the consequences of the delay in issuing the order to start work and the negative impact on the project's schedules and the cost of its execution 

The lawsuit details that the project already started late, and only on 21/5/2019 (more than a month after receiving the winning notification) did Dania Mipa Nof receive approval to start organizing on the site. Upon receiving the approval, Dania began to act with all the means at her disposal in order to promote organizational activities for the start of the works in the project. Although Dania incurred significant costs in carrying out these actions - they were not approved for payment. 

At the same time as the organizing activities, Yaffe Nof did not promote the necessary activities that are its responsibility to promote the project, and did not issue an order to start work. Dania Sibus warned Yaffe Nof, several times, about the consequences of the delay in issuing the order to start work, and, among other things, the negative impact on the project's schedules and the cost of its execution. Unfortunately, Dania's appeals did not bear fruit. 

From the date Dania submitted her bid to the tender to the date the order to start work was issued, more than ten months passed, during which the prices in the market changed, some of them significantly

Half a year after the win Dania received an order to start work from Yaffa Nof and only two weeks later Yaffa Nof signed the agreement between the parties. As a result of the serious delay in issuing the order to start work, Dania suffered significant damages, including site overheads, financing expenses, performance bond costs, and organization expenses.

Also, from the date Dania submitted its bid for the tender (2/12/2018) to the date the work start order was issued, more than ten months passed, during which the prices in the market changed, some of them significantly. As a result, some of the unit prices that Dania committed to in its bid for the tender, which were based on available inventory and time-limited offers from suppliers, have already ceased to be relevant. If the unit prices are not updated and adjusted to the current market prices, it is expected that Dania will suffer damage of above 9 million NIS.

Dania warned Yaffe Nof several times, both orally and in writing, about the consequences of the delay in issuing the order to start work and the damages caused to her - but to no avail. Following this, on July 6, 2020, Dania submitted a request for an extension of the duration of execution, payment of compensation for overheads during the organization period and a change in unit prices, in a total amount exceeding NIS 18.5 million. This request also remained unanswered by Yaffe Nof, and this despite the fact that there is no dispute that the delays in issuing the order to start work are the sole responsibility of Yaffe Nof and stem from a lack of control and management of the project.

Dania hoped that, after the stammering start of the project, its implementation would progress positively, and that it would "get into a groove". Unfortunately, the beginning of a story, in our case, accurately indicates its end.

The failed conduct during the project and the damages caused to Dania Sibus

Even after the work start order was issued, Yaffe Nof did not fulfill its contractual obligations and denied Dania access to the site areas so that she would be able to start the work on the project. This behavior caused many serious problems in the project and many damages, including: Receiving areas late and partially.

The work areas were divided so that most of the areas were to be handed over to Dania when the order to start work was issued, and exceptional areas thereafter in accordance with the deadlines stipulated in that section. Yaffe Nof violated its commitment and when issuing the order to start work released only a small part of the areas that were supposed to be handed over to Dania.

Access to the work areas is a basic and very significant work assumption for the planning and execution of the works - the release date of the areas, and whether the delivery will be full or partial, determine the schedule for the execution of the works and the manner of their execution. The schedule and planning to which Dania committed were based on the assumption that Yaffe Nof would comply with the provisions of the agreement (probably) and deliver the work areas on time and under reasonable conditions.

Compensation for the delay in handing over the territories, in a total amount of about NIS 5.3 million

During the project, Dania warned Yaffe Nof several times about the consequences of the delay in releasing the territories, and, among other things, a negative impact on the project's schedules and the cost of its execution. Unfortunately, Dania's appeals did not bear fruit - and the areas whose delivery date was late for the issuance of a work start order were not released on time either.

A delay in the release of those areas (with a late delivery date for issuing an order to start work), gives Dania the right to receive from Mipa Nof the compensations agreed upon therein.  

In August 2020, Dania submitted a request to Lafa Nof for approval to extend schedules and pay compensation for the delay in handing over the areas, in a total amount of approximately NIS 5.3 million. Yaffe Nof did not respond to the request, and in fact avoided (and continues to avoid) her obligation to pay Dania the aforementioned agreed compensations.

Yaffe Nof failed in her role as the orderer of the works and did not coordinate the works between the various contractors

As mentioned, the project is part of a larger and more complex project of connecting the Gulf port, in which many contractors are involved who carry out work at the same time. Yaffe Nof, as the contractor of the works, is responsible for the entire project, for the various contractors involved in it, for coordination between them, and for each of them to be able to perform the works in a reasonable manner, and without unnecessary interference from other contractors.

To the late delivery of the areas, many obstacles were added by other contractors in the project to Dania, which prevented it from accessing the site and carrying out work, as a lever to exert pressure on Yaffe Nof (and not due to needs related to the advancement of the project).

Time after time Dania suffered damages as a result of the conduct of other contractors in the project, and Yaffe Nof's neglect

For example: the BR04 bridge was supposed to be delivered to Dania immediately upon the issuance of the order to start work, that is, in October 2019. Nevertheless, only in April 2020 (six months later) did Dania receive, for the first time, an email message referring to the BR04 bridge, according to which it must prepare for the foundation work to the bridge in June 2020 (More than seven months after the start of work order). 

In order to ensure the start of the works on the date set by the client, Dania began organizing work teams, subcontractors, purchased and supplied materials to the field, and more. In practice, a week after the deadline Yaffe Nof ordered, an instruction was received on her behalf according to which Dania must begin the execution of the works.

Despite this, a message was received on behalf of Electra Infrastructure and Energy Ltd. (a contractor that performed works near the project area) according to which Dania would not be able to start the works and the next day, on June 9.6.2020, 04, Electra blocked access to the BRXNUMX bridge with piles of dirt, in a way that also blocked access to the area In which Dania compiled other materials.

Dania alerted Yaffe Nof about Electra's behavior, and in response received a message stating that on June 16, 2020 she would be able to enter the area. Following this, Dania performed another preliminary tour of the site on June 15, 2020, and coordinated with subcontractors and suppliers their arrival and delivery of materials for the next day. However, also on June 16, 2020, Electra again prevented Dania from entering the site and blocked the entrance with piles of dirt. Under these circumstances, the next day Dania had to contact the inviter for the third time.

In general, Dania's inquiries were not answered by Yaffe Nof, and although the incident was over, similar events occurred later, and time after time damages were caused to Dania due to the conduct of other contractors in the project, and Yaffe Nof's neglect. It follows then that Yafe Nof failed systematically also with regard to the coordination of the works between the contractors, which caused heavy damages to Dania.

The Dania Sibus company had to carry out additional work and bear unexpected expenses that are not its responsibility

During the execution of the works, Dania Sibus, had to perform additional works and bear unexpected expenses which are not her responsibility. In respect of those works, Dania submitted several requests to Lafa Nof in which she requested that Lafa Nof recognize those works as additional works within the framework of change instructions and reimburse Dania for the additional costs she had to bear.

Initially, and when Dania still believed that she was faced with a serious and attentive customer, Dania submitted two applications for the approval of change instructions for a value exceeding 2 million NIS, as well as the two exception requests mentioned, except that Shifa Nof dishonestly ignored Dania's requests regarding the change instructions that were submitted. Until the filing of this lawsuit, they remained without any response. 

Later on in the project, Dania was asked to carry out - and carried out - additional works worth tens of millions of additional NIS. However, in light of the lack of response from Mipa Nof, Dania saw no point in submitting additional written requests following additional work she had done in recent months, but she did present them to Mipa Nof as part of the weekly meetings as well as in special meetings held for this purpose, and these requests also remained without any consideration from Mipa Nof.

It should also be noted that despite Yaffe Nof's conduct and the significant damages caused to Dania as a result, Dania continued to perform work of the highest quality, and even invested additional efforts and resources at its own expense, in order to overcome the damages caused as a result of Yaffe Nof's conduct.

Yaffe Nof disappeared from the project in July 2020

It was further detailed in the lawsuit, that when Dania Sibus believed that further deterioration of the situation was no longer possible - July 2020 came, when the most serious problem began: when Yaffe Nof simply disappeared from the project completely. In the middle of July 2020, Dania began to receive unofficial messages, according to which the Ministry of Transportation is considering the possibility of moving the project from Mipa Nof to Hani. 

It should be noted that until the date of filing this claim, no party involved in the project saw fit to send an official notice to Dania and/or discuss the matter with her. This is a critical and main issue for the project - the identity of the person ordering the work. However, Yaffe Nof chose not to give explanations to Dania, and apparently not to other contractors involved in the project, and instead to take advantage of the circumstances, to disappear from the project and evade its obligations.

Due to the disappearance of Yaffe Nof, Dania had to contact the other parties involved in the project. On July 21, 2020, after Dania's inquiries on the subject, a representative from Gadish replied to Dania. Although more than three months have passed since Gadish's letter, nothing has changed. It seems that Dania is still expected to wait patiently. This is a baseless and dishonest expectation.

Dania, for her part, waited very patiently, and continued to fulfill her obligations according to the agreement and even carry out work that exceeded the contractual content.

On September 22, 2020, Dania turned to Dana Engineering with a repeated request for approval of change instructions (it should be noted that these are requests submitted in February and March 2020), and in response, Dana Engineering clarified that "Due to a problem of passing the baton between the orderers, it is not possible to confirm change instructions for any orderer."

Following this answer, Dania realized that the project remained dead, without an invitee, and that the difficult and serious problems she has been suffering from since the beginning of the project will only continue and increase, and that she will have to deal with them alone. And on September 24, 2020, Dania again turned to the Gadish company, the project's administration, with a request to schedule an urgent meeting for the purpose of advancing the project in which temporary and immediate emergency measures will be agreed upon, which will allow Dania to carry out the upcoming works in a proper and continuous manner. But unsurprisingly, Dania's request also remained unanswered.

Yaffe Nof's conduct, in the current time period, has excessive severity. The corona crisis, which affects all sectors indiscriminately, has not spared the construction sector for infrastructures, for its entire length: from the main contractors, like Dania; the subcontractors; the suppliers; and the workers. As someone who is at the "top of the pyramid", Dania bears the responsibility of paying all the parties down the chain.

Attorney Shai Avniali (Photo: Barnea Jaffe Landa)
Attorney Shai Avniali (Photo: Barnea Jaffe Landa)

Attorney Shai Avniali, from the Barnea office, told Lahi Pa:

Dania Sibus found herself in an impossible situation from every point of view: legally, economically and project-wise. After for two years Dania made every effort to prevent damage to the project, at her own expense, the latest development came that shows that no party cares - neither about Dania nor about the project. Dania is not a company that usually exhausts its rights in legal proceedings, but in this situation it had no choice but to seek the assistance of the honorable court.

Yaffe Nof refused to comment.

Contact Chai here: At watsapBy email

Samar Odeh - Carantinji
Samar Odeh - Carantinji
Journalist in the team of correspondents of the Chai Pe site • Municipal reporter, crimes, environment and health Contact Samar by email: [email protected]

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