A long-running dispute over an urban renewal project in Tel Aviv ended with a win for the Hagag Group. The Tel Aviv District Court ordered Yahavim Construction Project Management to pay Hagag about NIS 3 million, which with indexation and interest will reach NIS 3.5 million.
The conflict began in 2012, when Hagag bought 50.1% of Krieger, a company active in urban renewal, as part of a strategy to expand its footprint in the sector. About three years later, disputes arose between the parties, and Krieger also ran into financial difficulties.
As a result, Hagag and Krieger agreed to sell several joint projects to Yahavim, including a project on Tagor Street in Tel Aviv. The project had originally been signed by Krieger in 2010, before Hagag entered the partnership, and involved a TAMA 38/1 plan to reinforce an existing building and add 18 housing units.
Because no special-purpose company had been formed for the project, the partnership was governed by contractual agreements rather than shareholdings. Under the sale agreement with Yahavim, the company was supposed to pay NIS 3 million to Hagag and another NIS 3 million to Krieger. Hagag said Yahavim never transferred its share of the payment, and the district court accepted Hagag’s position. Hagag was represented by attorney Ala Diab of AYR, and Yahavim by attorney Liran Michael.
