Cello Blue to Pay 2.6 Million Shekels Following Class Action Ruling
Cello Blue will pay over 2.6 million shekels to apartment buyers following a Haifa District Court ruling over unfair indexation mechanisms in sales contracts.
Cello Blue, formerly known as Hanan Mor, announced to the Tel Aviv Stock Exchange that it has reached a settlement agreement with apartment buyers following a legal ruling. Under the arrangement, the company will pay over 2.6 million shekels to buyers regarding future input index linkages.
The announcement follows a judgment rendered by the Haifa District Court in a class action lawsuit filed against the company's fully owned subsidiaries, Kacham Investment Company and Keren Paz Building Company. The legal dispute centered around the indexation mechanism embedded in residential apartment sales contracts.
In the original lawsuit, two apartment buyers argued that a contractual clause stipulated payments made in the first half of the month were indexed to a future index rather than the current index. Presiding Judge Ron Sokol ruled that the defendants must refund group members for index linkage differentials collected on payments made prior to the publication of the applicable index.
The court determined that the linkage clause created an asymmetric and unfair disparity between the baseline index and the index used for actual payment calculations. However, the court rejected the plaintiffs' demand to impose additional interest charges on the defendants.
The minimum refund amount stands at 2.66 million shekels, including VAT, alongside consumer price index linkage differentials from the date of each payment until actual repayment. Additionally, the defendants were ordered to pay a representative compensation of 3% of the refund amount, legal fees equal to 20% of the total refund, and legal expenses totaling 40,000 shekels.
Cello Blue stated that the subsidiaries are currently reviewing the court ruling and evaluating their legal options, including the possibility of filing an appeal with the Supreme Court. The company noted that the final payout will be subject to individual audits of amounts owed to each class member and the outcome of any potential appeals.
