21 years after the legal proceedings began, the Supreme Court approved a settlement as part of one of the lawsuits against Club Hotel in order to “put an end to the long-standing litigation and regulate the way the annual maintenance fees are calculated in the past and in the future.” The ruling in this case dealt with the annual maintenance fees.
Other claims filed by consumers against Club Hotel, for example due to the inability to cancel the contract of the binding transaction, were resolved through legislation that allows consumers to cancel an ongoing transaction, also subject to the payment of a predetermined penalty. This legislation entered into force in 2014. It is estimated that tens of thousands of consumers are defined as members of a group, meaning that they hold the right to vacation at Club Hotal according to the engagement agreement signed decades ago.
A process that lasted more than 20 years
“Indeed, the revised settlement agreement in question is not completely complete, from time to time the ‘martyrs’ are concerned about giving up some of their demands, even those that are perceived as ‘just’, but under the circumstances of the case, in the window of more than 21 years of litigation and with a forward-looking view, if the procedure is renewed and continues any longer, there is no question In a result that is better in terms of mutual fairness, but in a result that is better than the total and that turns out to be worthwhile for everyone, both those who agree and those who oppose it”, so it is written in the ruling of the Supreme Court in the case, that it must be assumed that many of the consumers who felt that the business caused them harm and deprived them, are no longer alive.
Regarding the fact that the case was closed in a compromise, it was noted, among other things, to bring “peace and brotherhood between adversaries” as for this case, the judges believe that “pursuing the line of justice in terms of ‘judgment will level the mountain’ will not benefit anyone”.
The Club Hotel and Club Inn chains operate the resort units of Club Hotel Eilat and Club Inn Eilat, and in the 90s of the last century they entered into a uniform contract with tens of thousands of consumers, on the basis of which they will be given the right to a specified period of time of a fixed week each year in the format of “time sharing “. From the 2000s until today, a series of class actions have been filed against Club Hotel by consumers who felt resentful that it was not possible to disengage from the agreement or the sums of money they were required to pay as part of annual maintenance fees.
As part of the contract, consumers paid a one-time payment for the right to vacation – in addition to annual maintenance fees. The focus of this ruling is on the calculation of the maintenance fees paid by the owners of the units every year. Other lawsuits filed regarding the contract included, as mentioned, the inability to cancel the prolonged contract – a dispute that was resolved through legislation.
Attorney Mandelblit objected to the compromise that was proposed and approved by the court. However, the court believed that this compromise would end the saga. The settlement establishes a calculation mechanism for the maintenance fees to be paid by the owners of the units per month, including in the equation the occupancy of the rooms and the variable and fixed expenses of the hotel. According to the original agreement, the calculation of maintenance fees was based on all operating and maintenance expenses of the hotel plus a 10% management fee.
Club Hotel claims that the extent of the debt to it amounts to hundreds of millions of shekels
The compromise arrangement brings into the equation variable expenses and fixed expenses that are not affected by the occupancy of guests at the hotel (insurance, property tax, etc.). The variable expenses that are affected by the number of guests staying at the hotel will be divided between the owners of the rights who exercised their right to actually vacation during a relevant year. The calculation also includes the relative share of the owners of the vacation units in the maintenance costs according to the relevant year according to the number of nights in which the vacation units were actually used out of the total use of the hotel units by the owners of the vacation rights and by “regular” guests.
The calculation leaves the additional 10% as a management fee divided according to the total number of weeks to which owners of rights in the vacation units are entitled. The settlement also establishes a reference to the past payments that were actually collected – a calculation will be made regarding the amounts paid, whoever is found to have paid an insufficient amount according to the said calculation – will not be required to complete it – and whoever paid more will receive a refund.
Club Hotel claims that the scope of the debt to it in terms of payments amounts to hundreds of millions of shekels, however it will not recover these amounts: “Club Hotel’s waiver of the right to collect funds owed to it for the past period constitutes the main financial benefit given to the group as part of the settlement.”
It was also noted that the compromise settlement removes from the members of the group the fear that Club Hotel will claim debts that the members of the group allegedly owe to it, and thus the settlement settlement will be a “joint departure on a new path free of debt”. For those who do not wish to make use of the holiday right, we remind you that the Consumer Protection Law allows you to cancel the contract with the company.