Court File No. CV-18-610236-00CL ONTARIO SUPERIOR COURT OF

Court File No. CV-18-610236-00CL

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

BETWEEN:

BANK OF MONTREAL

Applicant

- and -

2423402 ONTARIO INC.

Respondent

MOTION RECORD (Motion for Relief re Appointment Order)

October 21, 2019 McCarthy Tétrault LLP Suite 5300, Toronto Dominion Bank Tower Toronto, ON M5K 1E6 Fax: 416-868-0673

Heather L. Meredith LSO#: 48354R Tel: 416-601-8342 Email: [email protected]

Geoff R. Hall LSO#: 34710O Tel: 416-601-7856 E-mail: [email protected]

Trevor Courtis LSO#: 76615A Tel: 416-601-7643 E-mail: [email protected]

Lawyers for the applicant, Bank of Montreal, in its capacity as Administrative Agent under the Credit Agreement TO: THE SERVICE LIST Index Tab Court File No. CV-18-610236-00CL

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

BETWEEN:

BANK OF MONTREAL

Applicant

- and -

2423402 ONTARIO INC.

Respondent

MOTION RECORD (Motion for Relief re Appointment Order)

INDEX

TAB DOCUMENT

1. Notice of Motion

2. Affidavit of Eden Orbach, sworn October 21, 2019

A. Exhibit “A” – Performance Bond (with Multiple Obligee Rider)

B. Exhibit “B” – Appointment Order, December 6, 2018

C. Exhibit “C” – Letter from Receiver to Zurich, December 7, 2018

D. Exhibit “D” – Letter from Receiver to Bondfield, December 7, 2019

E. Exhibit “E” – Order of Justice Conway, September 25, 2019

F. Exhibit “F” – Reasons of Justice Conway, September 25, 2019

G. Exhibit “G” – Notice of Appeal (Zurich), October 4, 2019

H. Exhibit “H” – Notice of Motion (BMO), October 10, 2019 TAB DOCUMENT

I. Exhibit “I” – Notice of Motion (Zurich), October 17, 2019

J. Exhibit “J” – Endorsement of Justice Hainey, July 12, 2019

K. Exhibit “K” – Letter from Lerner to Meredith, July 16, 2019

L. Exhibit “L” – Letter from Shalviri to Lerner, July 16, 2019

M. Exhibit “M” – Letter from Meredith to Lerner, July 17, 2019

N. Exhibit “N” – Letter from Mahar to Meredith, October 4, 2019

O. Exhibit “O” – Letter from Meredith to Lerner, October 8, 2019

P. Exhibit “P” – Letter from Lerner to Meredith, October 10, 2019

Q. Exhibit “Q” – Letter from Meredith to Lerner, October 17, 2019

R. Exhibit “R” – Affidavit of Steven Aquino, sworn March 5, 2019 (without exhibits)

S. Exhibit “S” – Corporate Profile Report – 2423402 Ontario Inc.

T. Exhibit “T” – Corporate Profile Report – Bondfield Construction Company Limited

U. Exhibit “U” – Purported Release

V. Exhibit “V” – Transcript of the Cross-Examination of Adrian Braganza, May 31, 2019

W. Exhibit “W” – 20 Day Notice to Interim Completion

3. Draft Stay Enforcement Order

4. Draft Appointment Amending Order

5. Comparison to Appointment Order

Court File No. CV-18-610236-00CL

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

BETWEEN:

THE BANK OF MONTREAL

Applicant

- and -

2423402 ONTARIO INC.

Respondent

NOTICE OF MOTION (Motion for Relief re Appointment Order)

Bank of Montreal, in its capacity as administrative agent (the “Administrative Agent”) pursuant to the credit agreement dated as of August 28, 2014, as amended (the “Credit Agreement”) between 2423402 Ontario Inc. (“Project Co”) as borrower, each of the financial institutions and other entities from time to time parties thereto, as lenders, and the Administrative Agent, will make a motion before a judge of the Ontario Superior Court of Justice (Commercial List) on a date to be set at a 9:30 Chambers appointment at 330 University Avenue, Toronto, Ontario.

THE MOTION IS FOR:

1. An order, substantially in form attached to the Motion Record at Tab 3 (the “Stay Enforcement Order”), among other things, declaring that the stated intention of Zurich Insurance Company Ltd. (“Zurich”) to cease all further involvement with the Project after Interim Completion is achieved is in breach of the Appointment Order, which prevents Zurich from discontinuing, altering, interfering with or terminating the Contractor Bonds or funding of the Project Costs thereunder without consent of the Receiver or leave of the Court; - 2 - 2

2. An order, substantially in the form attached to the Motion Record at Tab 4 (the “Appointment Amending Order”), among other things, amending and restating the Appointment Order to:

(a) clarify that the Appointment Order authorizes, empowers and directs the Receiver, to the exclusion of all others, to calculate the cost to complete the Project, which figure shall be used to calculate the amount to be paid by Zurich to Project Co pursuant to the Performance Bond, and

(b) establish a process for the Receiver to provide notice of its calculation to interested parties and a mechanism to resolve any disputes with respect to that calculation; and

3. Such other relief as this Honourable Court may allow.

4. All terms used but not otherwise defined herein shall have the meanings ascribed thereto in the affidavit of Eden Orbach, sworn October 21, 2019.

THE GROUNDS FOR THE MOTION ARE:

The Project and the Contractor Bonds

1. The Cambridge Memorial Hospital (“CMH”) is currently under-going a major construction and redevelopment project (the “Project”) pursuant to a P3 (Public-Private Partnership) development contract awarded to Project Co dated August 14, 2014 (the “Project Agreement”). Bondfield Construction Company Limited (the “Construction Contractor” or “Bondfield”) is the lead contractor on the Project and its obligations are pursuant to a construction contract dated August 14, 2014 (the “Construction Contract”) as between Project Co and Bondfield.

2. The Project is funded by a senior secured credit facility (the “Credit Facility”) provided to Project Co pursuant to the Credit Agreement. The Credit Facility is currently in default. - 3 - 3

3. Zurich acted as surety for the Project and, as required by the Credit Facility, issued three bonds in respect of the Project (collectively the “Contractor Bonds”): the Performance Bond in the amount of $87,377,250 (the “Performance Bond”), the Labour and Materials Payment Bond in the amount of $87,377,250 and the Demand Bond in the amount of $8,737,725.

Appointment of Receiver

4. On December 6, 2018, the Honourable Mr. Justice Hainey issued an Appointment Order (the “Appointment Order”) appointing Alvarez & Marsal Inc. as receiver (the “Receiver”), on a limited basis, over all of the assets, undertakings and properties of Project Co.

5. The Appointment Order imposed a broad stay of proceedings including an order restraining all Persons having oral or written agreements with Project Co from discontinuing, altering, interfering with or terminating the supply of goods and services required by Project Co. including insurance.

6. The Appointment Order also empowered and authorized the Receiver to execute, issue, and endorse any agreements or documentation for and on behalf of the Project Co as the Receiver considered necessary or advisable to facilitate making such demand. The Appointment Order provides that, in each case where the Receiver takes any such actions or steps, it shall be exclusively authorized and empowered to do so, to the exclusion of all other Persons (as defined in the Appointment Order) and without interference from any other Person.

7. On the day following the issuance of the Appointment Order, the Receiver sent a letter to Zurich demanding that Zurich promptly select and carry out one of the four options listed in the Performance Bond (the “Performance Bond Demand”). Zurich refused to recognize the Performance Bond Demand and refused to perform its obligations under the Performance Bond. - 4 - 4

The Motion and Zurich’s Failure to Comply

8. On May 6, 2019, the Administrative Agent commenced a motion (the “Motion”) seeking, among other things, declarations that (i) the Performance Bond Demand by the Receiver was a proper demand under the Performance Bond on behalf of Project Co, and (ii) Zurich was obligated to promptly select and carry out one of the four options listed in the Performance Bond (the “Declarations”).

9. On September 25, 2019, the Honourable Madam Justice Conway issued the Declarations sought by the Administrative Agent (the “Conway Decision”). Zurich appealed the Conway Decision (the “Appeal”) and has to date failed to select and carry out one of the four options listed in the Performance Bond.

10. The Appeal alleges an appeal as of right that does not exist. Accordingly, the Conway Decision is not stayed pending the Appeal and by failing to “promptly” select an option under the Performance Bond, Zurich is in breach of the Performance Bond, the Conway Decision and the Appointment Order.

Zurich’s Threats to Walk Away From the Project

11. After Zurich initially threatened to walk away from the Project after Interim Completion, counsel to the Administrative Agent sought assistance of the Court at a July 12, 2019 chambers’ appointment before Justice Hainey. Zurich’s counsel clarified Zurich’s position to the Court and the parties, including by stating that he expected Zurich to continue expending funds and taking steps prior to Interim Completion in respect of post-Interim Completion work such as making arrangements with a completion contractor for Phase 3 of the Project. Justice Hainey endorsed the record that “Mr. Kolenda has clarified Zurich’s position to the satisfaction of the other parties.”

12. On July 16, 2019, counsel to Zurich sent a letter advising that Zurich would cease all further involvement with the Project after Interim Completion is achieved. The Administrative Agent took the position that Zurich was not entitled to do so in the face of the Appointment Order without seeking consent of the Receiver or leave of the Court. - 5 - 5

13. During the hearing of the Motion on September 24, 2019, Zurich again stated that regardless of the outcome of the motion, it would cease funding all work and would cease all further involvement on the Project after Interim Completion.

14. On October 10, 2019, counsel to Zurich sent a letter to counsel to the Administrative Agent, again asserting that it will end its involvement with the Project after Interim Completion is achieved.

Current and Threatened Breaches

15. Interim Completion is currently scheduled to be achieved on or about November 4, 2019. To date, Zurich has maintained its position that it does not intend to advance any further funds after Interim Completion is achieved, contrary to its obligations under the Contractor Bonds and the Conway Decision.

16. Moreover, CMH has advised that work related to the planning and commencement of Phase 3 of the Project after Interim Completion is achieved has effectively ceased, subcontractors owed money for work relating to Phase 3 are not being paid and Zurich has indicated that it will not be funding same.

Zurich Should Not be Permitted to Ignore Court Orders

17. The protection of this Court was sought and obtained with respect to Project Co. The Appointment Order grants broad protections to Project Co, consistent with the stay of proceedings in the model Receivership Order.

18. Zurich negotiated the terms of the Appointment Order with the Administrative Agent and did not oppose it. Zurich did not appeal the Appointment Order.

19. Zurich has baldly alleged, but not established, that it has been “discharged” from its obligations under the Contractor Bonds. It has not sought to lift the stay of proceedings imposed in the Appointment Order and instead seems intent on simply ignoring the Court’s order, consistent with Zurich’s failure to abide by the Conway Decision. - 6 - 6

20. The continuation of funding after Interim Completion is vital to ensure that the Project is completed for the benefit of all of CMH’s stakeholders and should not be used as a bargaining chip or tactic. A key purpose of the stay of proceedings in the Appointment Order is to protect debtor companies and their stakeholders from aggressive creditors taking actions such as these to improve their individual positions.

21. If Zurich believes that it is entitled to be “discharged” from its obligations under the Performance Bond – which is strongly disputed – it should seek to lift the stay and establish its entitlement to do so. Failing to do so is a breach of the Appointment Order and should not be tolerated.

22. The Administrative Agent is not seeking relief which requires Zurich to perform its obligations indefinitely or make payments in excess of the Contractor Bond amounts. It simply seeks to maintain the status quo and hold Zurich to the terms of the Appointment Order and the Performance Bond unless and until Zurich establishes it is entitled to terminate or be discharged from its obligations as it is required to do.

23. Accordingly, the Stay Enforcement Order is necessary and appropriate and should be issued by this Court.

Zurich Proposes Itself as the Appropriate Party to Calculate the Cost to Complete

24. In accordance with the Declarations made by Justice Conway, Zurich is required to promptly select and carry out one of the four options listed in the Performance Bond. Option #4 requires Zurich to “pay the Obligee the lesser of (1) the Bond Amount or (2) the Obligee's proposed cost to complete the Construction Contract in accordance with its terms and conditions less the Balance of the Construction Contract Price.” Accordingly, if Zurich selects Option #4, the cost to complete the Construction Contract is to be calculated by the Obligee (Project Co).

25. On October 10, 2019, counsel to Zurich sent a letter to counsel to the Administrative Agent, stating that, while Zurich continues to deny its obligation to make an election under the Performance Bond, notwithstanding the express language in the - 7 - 7

Performance Bond and the Conway Decision, if an election were to be made, Zurich would elect Option #4 under the Performance Bond.

26. Counsel to Zurich also indicated that it is Zurich’s position that the Obligee (as directed by the Receiver) is, in this situation, neither qualified nor authorized to calculate the cost to complete the Construction Contract.

27. Zurich instead proposed its own cost to complete, relying on an estimate (the “EllisDon Estimate”) prepared by EllisDon Corporation (“EllisDon”) (the proposed replacement contractor to complete the Project). The Lenders have not verified the figures in the EllisDon Estimate with EllisDon, as Zurich previously objected to the Lenders dealing directly with EllisDon. However, the EllisDon Estimate contains several deficiencies and is not a correct estimate of the cost to complete.

Cost to Complete Should be Calculated by Receiver

28. The Performance Bond provides that the estimate is to be made by the “Obligee”. Given the close connections between Bondfield, Zurich and Project Co, it is inappropriate for Zurich to be the party calculating the cost to complete on behalf of Project Co.

29. In this case, a Receiver has been appointed over Project Co in light of the fact that is a special purpose entity, related to Bondfield, that was unable or unwilling to make a demand under the Performance Bond.

30. It is appropriate for the cost-to-complete to be calculated by the Receiver. As an officer of the court, the Receiver can provide an impartial calculation that does not favour the interests of any of the parties.

31. The Appointment Amending Order would clarify that the Appointment Order authorizes, empowers and directs the Receiver, to the exclusion of all others, to calculate the cost to complete the Project. The Appointment Order already provides the Receiver with such powers. In the alternative, to the extent that it does not, the Administrative - 8 - 8

Agent seeks to expand the Receiver’s powers to authorize, empower and direct the Receiver to calculate the cost to complete.

32. The Appointment Amending Order would also implement a process whereby interested parties such as Zurich, the Administrative Agent, Bondfield, CMH and IO, would be provided with an opportunity to dispute the Receiver’s calculation, in which case the appropriate calculation will be negotiated by the parties or determined by the Court.

33. It is preferable for the cost-to-complete to be determined through this process as opposed to a calculation being unilaterally imposed by Zurich, a party with close connections to Bondfield, the entity whose defaults have led to these proceedings and the Performance Bond being called.

34. Accordingly, the Appointment Amending Order is necessary and appropriate and should be issued by this Court.

35. The Administrative Agent relies upon the following:

(a) Section 243 of the Bankruptcy and Insolvency Act (Canada) and the inherent and equitable jurisdiction of this Court;

(b) Sections 97 and 101 of the Courts of Justice Act (Ontario);

(d) Such further and other grounds as counsel may advise and this Honourable Court may permit.

THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the motion:

(a) Affidavit of Eden Orbach, sworn December 5, 2018;

(b) Affidavit of Eden Orbach, sworn May 6, 2019; - 9 - 9

(d) Affidavit of Eden Orbach, sworn October 21, 2019; and

(e) Such further and other materials as counsel may advise and this Court may permit.

October 21, 2019 McCarthy Tétrault LLP Suite 5300, TD Bank Tower Toronto Dominion Centre 66 Wellington Street West Toronto, ON M5K 1E6 Fax: 416- 868-0673

Heather L. Meredith LSO#: 48354R Tel: 416-601-8342 Email: [email protected]

Geoff. R. Hall LSO#: 34701O Tel: 416-601-7856 Email: [email protected]

Trevor Courtis LSO#: 67715A Tel: 416-601-7643 Email: [email protected]

Lawyers for the Applicant, Bank of Montreal

TO: THE SERVICE LIST IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC. Court File No. CV-18-610236-00CL10

THE BANK OF MONTREAL and 2423402 ONTARIO INC.

Applicant Respondent Ontario SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

Proceedings commenced in Toronto

NOTICE OF MOTION (Motion for Relief re Appointment Order)

McCarthy Tétrault LLP Suite 5300, TD Bank Tower Toronto Dominion Centre 66 Wellington Street West Toronto, ON M5K 1E6 Fax: 416- 868-0673

Heather L. Meredith LSO#: 48354R Tel: 416-601-8342 Email: [email protected]

Geoff R. Hall LSO#: 34701O Tel: 416-601-7856 Email: [email protected]

Trevor Courtis LSO#: 67715A Tel: 416-601-7643 Email: [email protected]

Lawyers for the Applicant, Bank of Montreal 19600343

Court File No. CV-18-610236-00CL

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

BETWEEN:

THE TORONTO-DOMINION BANK

Applicant

- and -

2423402 ONTARIO INC.

Respondent

AFFIDAVIT OF EDEN ORBACH (Sworn October 21, 2019)

I, Eden Orbach, of the City of Toronto, in the Province of Ontario SWEAR AND SAY THAT:

1. I am a Senior Manager with the Bank of Montreal (the “Administrative Agent”). I have been directly involved in the Administrative Agent’s dealings with 2423402 Ontario Inc. (“Project Co”), Bondfield Construction Company Limited (the “Construction Contractor” or “Bondfield”) and Zurich Insurance Company Ltd. (“Zurich”) and have had responsibility for managing the senior secured credit facility (the “Credit Facility”) provided to Project Co pursuant to the credit agreement between Project Co, as borrower, each of the financial institutions and other entities from time to time parties thereto (the “Lenders”), as lenders, and the Administrative Agent, as administrative agent, made as of August 28, 2014, as amended (the “Credit Agreement”).

2. I have personal knowledge of the matters and facts sworn to in this affidavit, except where stated to be based on information and belief, in which case, I believe the same to be true. - 2 - 12

3. I swore an affidavit on December 5, 2018 in support of an application by the Administrative Agent to appoint Alvarez & Marsal Inc. as receiver, without security (the “Receiver”), of all of the assets, undertakings and properties of Project Co acquired for, or used in relation to a business carried on by Project Co. (the “Appointment Order”). I also swore affidavits on May 6, 2019 (the “May Affidavit”) and June 5, 2019 in support of the motion by the Administrative Agent for relief with respect of Zurich. Capitalized terms used herein and not otherwise defined have the meaning ascribed to them in my May Affidavit.

4. This affidavit is sworn in support of a motion by the Administrative Agent for:

(a) an order (the “Stay Enforcement Order”), substantially in form attached to the Administrative Agent’s Motion Record at Tab 3, to enforce the stay of proceedings pursuant to the Appointment Order by declaring that the stated intention of Zurich to cease all further involvement with the Project after Interim Completion is achieved is in breach of the Appointment Order, which prevents Zurich from discontinuing, altering, interfering with or terminating the Contractor Bonds (defined below) or funding of the Project Costs thereunder without consent of the Receiver or leave of the Court;

(b) an order (the “Appointment Amending Order”), substantially in form attached to the Administrative Agent’s Motion Record at Tab 4 to amend and restate the Appointment Order to (i) clarify that the Appointment Order authorizes, empowers and directs the Receiver, to the exclusion of all others, to calculate the cost to complete the Project, which figure shall be used to calculate the amount to be paid by Zurich to Project Co pursuant to the Performance Bond, and (ii) establish a process for the Receiver to provide notice of its calculation to interested parties and a mechanism to resolve any disputes with respect to that calculation.

Background

5. The redevelopment, construction and completion of Cambridge Memorial Hospital (“CMH”), commonly referred to as the “Cambridge Memorial Hospital Capital Redevelopment Project” (the “Project”) is a P3 (Public – Private Partnership) development awarded to Project Co - 3 - 13

in 2014 through Infrastructure Ontario (“IO”) for a guaranteed price of $187,102,400. The Project involves the construction of a brand new, 254,000 square foot patient care wing and extensive renovations to the existing Wing “B” of the Hospital and was initially slated for completion in the Spring of 2019. In connection with the Project, among other things:

(a) Project Co and CMH entered into a Project Agreement dated August 14, 2014 (the “Project Agreement”);

(b) Project Co and Bondfield (which are related) entered into a Construction Contract dated August 14, 2014 (the “Construction Contract”); and

6. Copies of these agreements along with others associated with the Project are attached to my May Affidavit and have not been re-attached hereto.

7. Bondfield has committed various defaults and each of the Project Agreement, the Construction Contract, and the Credit Agreement are presently in default. I understand that Interim Completion is presently expected to be achieved on or about November 4, 2019, which is nearly 3 years after the original Scheduled Interim Completion Date of November 30, 2016.

Contractor Bonds

8. Acting as surety for the Project, Zurich issued three bonds in respect of the Project (collectively, the “Contractor Bonds”) as required by the Credit Agreement:

(a) Performance Bond No. 6342957 in the amount of $87,377,250 (the “Performance Bond”);

(b) Labour and Materials Bond No. 6342957 (which was issued simultaneously with the Performance Bond) in the amount of $87,377,250; and

9. A copy of the Performance Bond is attached hereto as Exhibit “A”. Copies of the other Contractor Bonds are attached to my May Affidavit and have not been re-attached hereto.

10. The payment and performance assurances that were given by Zurich through the Contractor Bonds in respect of the construction work were material to the Lenders in advancing the Credit Facility pursuant to the Credit Agreement.

11. The Performance Bond binds the Surety to a primary Obligee (Project Co) entitling the Obligee to enforce the obligations of the Principal (Bondfield) and the Surety (Zurich) under the Performance Bond. Attached to the Performance Bond is a Multiple Obligee Rider which adds CMH and the Administrative Agent as additional named Obligees, also entitled to enforce the obligations of the Principal (Bondfield) and the Surety (Zurich) under the Performance Bond.

Performance Bond Call

12. The Appointment Order was issued by the Honourable Mr. Justice Hainey on December 6, 2018. A copy of the Appointment Order is attached hereto as Exhibit “B”.

13. The Appointment Order contemplated, and indeed required, that the Receiver would have the authority to make a demand under the Performance Bond on behalf of Project Co.

14. The Appointment Order also empowered and authorized the Receiver to execute, issue, and endorse any agreements or documentation for and on behalf of the Project Co as the Receiver considered necessary or advisable to facilitate making such demand. The Appointment Order provides that, in each case where the Receiver takes any such actions or steps, it shall be exclusively authorized and empowered to do so, to the exclusion of all other Persons (as defined in the Appointment Order) and without interference from any other Person.

15. Zurich negotiated the terms of the Appointment Order with the Administrative Agent and did not oppose it. Zurich did not appeal the Appointment Order.

16. On December 7, 2018, the day following its appointment, the Receiver sent a letter to Bondfield in which it notified Bondfield of numerous events of default under the Construction Contract including, without limitation, failure to remove numerous encumbrances against title to - 5 - 15

the Site (as defined in the Construction Contract), which constituted a Contractor Event of Default under the Performance Bond. A copy of this letter is attached hereto as Exhibit “C”.

17. On the same date, the Receiver sent a letter to Zurich in which the Receiver noted that Bondfield is, and has been declared by Project Co to be, in default in respect of its obligations to Project Co under the Construction Contract, and that Project Co had duly performed all of its obligations thereunder. The Receiver demanded that Zurich promptly select and carry out one of the four options listed in the Performance Bond (the “Performance Bond Demand”). A copy of this letter is attached hereto as Exhibit “D”.

18. After Zurich refused to recognize the Performance Bond Demand and refused to perform its obligations to advance funds under the Performance Bond, the Administrative Agent commenced a motion (the “Motion”) on May 6, 2019 seeking, among other things, declarations that (i) the Performance Bond Demand by the Receiver was a proper demand under the Performance Bond on behalf of Project Co, and (ii) Zurich was obligated to promptly select and carry out one of the four options listed in the Performance Bond (the “Declarations”).

19. Zurich commenced a cross-motion seeking to strike the Administrative Agent’s motion on the basis of various technical and procedural arguments.

20. On September 25, 2019, the Honourable Madam Justice Conway dismissed the various procedural challenges brought by Zurich and issued the Declarations sought by the Administrative Agent (the “Conway Decision”). The balance of the motions were dismissed without prejudice to the parties returning to court for adjudication of those issues at a later date. A copy of Justice Conway’s order is attached hereto as Exhibit “E”. A copy of Justice Conway’s oral reasons for decision are attached hereto as Exhibit “F”.

21. On October 4, 2019, Zurich delivered a Notice of Appeal purporting to appeal the Conway Decision to the Ontario Court of Appeal (the “Appeal”). A copy of the Notice of Appeal is attached hereto as Exhibit “G”.

22. On October 10, 2019, the Administrative Agent served a Notice of Motion seeking to quash the Appeal. A copy of the Notice of Motion is attached hereto as Exhibit “H”. - 6 - 16

23. On October 17, 2019, Zurich delivered a Notice of Motion seeking leave to appeal and an extension of time to seek leave to appeal. A copy of the Notice of Motion is attached hereto as Exhibit “I”.

Performance Bond Options

24. In accordance with the Declarations made by Justice Conway, Zurich is required to promptly select and carry out one of the four options listed in the Performance Bond. The Performance Bond provides, in relevant part:

Whenever the Principal shall be, and declared by the Obligee to be in default in respect of its obligations to the Obligee under the Construction Contract (a "Contractor Event of Default"), the Obligee having performed the Obligee's obligations under the Construction Contract, the Surety shall promptly select and carry out one of the four following options:

1. remedy any default, or;

2. complete the Construction Contract in accordance with its terms and conditions, or;

3. obtain a bid or bids for submission to the Obligee for completing the Construction Contract in accordance with its terms and conditions and upon determination by the Obligee and the Surety of the lowest responsible bidder, acceptable to CMH acting reasonably, arrange for a contract between such bidder and the Obligee or between such bidder and such other party as an Additional Named Obligee shall be entitled to direct, and the Surety shall make available as work progresses (even though there should be a default, or a succession of defaults, under the contract or contracts of completion, arranged under this paragraph) sufficient funds to pay to complete the Principal's obligations in accordance with the terms and conditions of the Construction Contract, less the Balance of the Construction Contract Price and to pay all expenses incurred by the Obligee as a result of the Principal's ·default relating directly to the performance of the Construction Work under the Construction Contract, but not exceeding the Bond Amount. The Balance of the Construction Contract Price is the total amount of the Guaranteed Price payable to the Principal under the Construction Contract, less the amount properly paid by the Obligee to the Principal under the Construction Contract; or

4. pay the Obligee the lesser of (1) the Bond Amount or (2) the Obligee's proposed cost to complete the Construction Contract in accordance with its terms and conditions less the Balance of the Construction Contract Price. [emphasis added]

25. Under the Performance Bond, the cost to complete the Construction Contract is to be calculated by the Obligee under Option #4. - 7 - 17

Zurich Intends to Cease Complying With the Performance Bond

26. After Zurich initially threatened to walk away from the Project after Interim Completion, counsel to the Administrative Agent sought assistance of the Court at a July 12, 2019 chambers’ appointment before Justice Hainey.

27. I am advised by Heather Meredith, counsel to the Administrative Agent, and verily believe that Zurich’s counsel clarified Zurich’s position to the Court and the parties, including by stating that he expected Zurich to continue expending funds and taking steps prior to Interim Completion in respect of post-Interim Completion work such as making arrangements with a completion contractor for Phase 3 of the Project. I am further advised by Ms. Meredith that Zurich has disputed this characterization.

28. Justice Hainey endorsed the record that “Mr. Kolenda has clarified Zurich’s position to the satisfaction of the other parties.” A copy of Justice Hainey’s endorsement is attached hereto as Exhibit “J”.

29. On July 16, 2019, Matthew Lerner, counsel to Zurich, sent a letter to Ms. Meredith advising that Zurich would cease all further involvement with the Project after Interim Completion is achieved. A copy of this letter is attached hereto as Exhibit “K”.

30. On July 16, 2019, Aryo Shalviri, counsel to the Receiver, sent a letter to Mr. Lerner responding to his letter. A copy of this letter is attached hereto as Exhibit “L”.

31. On July 17, 2019, Ms. Meredith sent a letter to Mr. Lerner stating that Zurich had no power to declare that it has been “discharged” from further obligations. A copy of this letter is attached hereto as Exhibit “M”.

32. During the hearing of the Administrative Agent’s motion on September 24, 2019, Zurich’s counsel again stated that regardless of the outcome of the motion, it would cease funding all work and would cease all further involvement on the Project after Interim Completion.

33. On October 4, 2019, Kyla Mahar, counsel to CMH, sent a letter to Ms. Meredith and others in which she noted that work related to the planning and commencement of Phase 3 of the Project after Interim Completion is achieved has effectively ceased. Subcontractors owed money for work - 8 - 18

relating to Phase 3 are not being paid and Zurich has indicated that it will not be funding same. Ms. Mahar also stated that it should be the Receiver calculating the Project Co’s proposed cost to complete the Construction Contract. A copy of this letter is attached hereto as Exhibit “N”.

34. On October 8, 2019, Ms. Meredith delivered a letter to Mr. Lerner stating, among other things, that the Appeal alleges an appeal as of right that does not exist. Accordingly, the Conway Decision is not stayed pending the Appeal and by failing to “promptly” select an option under the Performance Bond, Zurich is in breach of the Performance Bond, the Conway Decision and the Appointment Order. Ms. Meredith also stated that if and when Zurich does finally select and option under the Performance Bond, the Lenders expect the Receiver to be involved in any determination of Project Co’s proposed cost to complete the Construction Contract, and noted that, under the express language in the Performance Bond, the Receiver is to make that determination to the exclusion of any others including Zurich. A copy of this letter is attached hereto as Exhibit “O”.

35. On October 10, 2019, Mr. Lerner sent a letter to Ms. Meredith, again asserting that it will end its involvement with the Project after Interim Completion is achieved. A copy of this letter and enclosures is attached hereto as Exhibit “P”.

Zurich Proposes Itself as the Appropriate Party to Calculate the Cost to Complete

36. In his October 10, 2019 letter, Mr. Lerner also stated that while Zurich continues to deny its obligation to make an election under the Performance Bond, notwithstanding the express language in the Performance Bond and the Conway Decision, if an election were to be made, Zurich would elect Option #4 under the Performance Bond. Mr. Lerner also indicated that it is Zurich’s position that the Obligee (as directed by the Receiver) is, in this situation, neither qualified nor authorized to calculate the cost to complete the Construction Contract.

37. Zurich instead proposed its own cost to complete, relying on an estimate prepared by EllisDon Corporation (“EllisDon”) (the proposed replacement contractor to complete the Project) attached to Mr. Lerner’s letter (the “EllisDon Estimate”). The EllisDon Estimate appears to be based on quotes received by EllisDon as well as Bondfield’s accounting of work deferred through its time as contractor. The cost to complete also includes a number of exclusions. - 9 - 19

38. According to the EllisDon Estimate, the cost to complete is $108,123,736. Zurich expects that amount to be reduced by “further adjustments, including post-ratification payments and other subcontractor prices”, such that the final figure is $102,000,000.

39. Zurich proposes then that its maximum liability under the Bond if it selected Option #4 would be $32,103,486. This reflects the difference between the Zurich’s suggested Balance of the Construction Contract Price ($69,896,514), which is disputed and was the subject of relief sought and deferred in the Motion, and Zurich’s suggested cost to complete ($102,000,000).

40. The Lenders have not verified the figures in the EllisDon Estimate with EllisDon. While the Lenders initially made arrangements to coordinate with EllisDon, Zurich objected to the Lenders dealing directly with EllisDon on the basis that it may “interfere” with Zurich’s ability to contract with them.

41. In reviewing the EllisDon Estimate and Mr. Lerner’s letter, it is apparent that, among other things:

(a) Zurich improperly includes HST in its proposed Balance of the Construction Contract Price but not in the estimated cost to complete; and

(b) Zurich’s estimated cost to complete includes only EllisDon’s proposed costs for Phase 3 work and not for other costs such as deficiency work related to Phases 1 and 2 that must be completed pursuant to the Construction Contract, all of which are required costs to complete the Project.

42. On October 17, 2019, Ms. Meredith delivered a letter to Mr. Lerner again noting that Zurich’s continued threats to “walk away” after Interim Completion is achieved are contrary to Zurich’s obligations under the Performance Bond, the Appointment Order and the Conway Decision. Ms. Meredith also noted the deficiencies in the EllisDon Estimate listed above and, in any event, that under the terms of the Performance Bond clearly provided that the estimate was to be provided by the Obligee, not Zurich. A copy of this letter is attached hereto as Exhibit “Q”. - 10 20 -

Close Connections Between Zurich and Bondfield

43. Zurich has been intimately involved with Bondfield’s operations for some time. In the affidavit of Steven Aquino sworn March 5, 2019 (the “Aquino Affidavit”) in support of an application by Bondfield for an initial order pursuant to the Companies’ Creditors Arrangement Act (the “Bondfield CCAA Proceedings”), Mr. Aquino stated that:

(a) Zurich has bonded all but one of the contracts in which Bondfield is currently involved in an aggregate amount in excess of $1 billion;

(b) Various principals of Bondfield personally indemnified Zurich for any and all liability for losses and/or expenses that Zurich may incur;

(d) Zurich has had “strict daily oversight” of Bondfield since August 2018, including over payroll processing and remittances and Bondfield’s banking activity; and

(e) Bondfield cannot make any disbursements until Zurich completes a review of those disbursements.

44. A copy of the Aquino Affidavit, without exhibits, is attached hereto as Exhibit “R”.

45. In addition to its obligations under the Performance Bond, Zurich is also the Bondfield’s DIP Lender in the Bondfield CCAA Proceedings. Zurich has extended Bondfield and its related entities a revolving credit facility in the amount of $22,000,000.

46. Project Co is a special purpose entity that is wholly-owned by Bondfield. Steven Aquino is the sole officer and director of Project Co and is also a director and the President, Secretary and Treasurer of Bondfield. Copies of Corporate Profile Reports for Project Co and Bondfield are attached hereto as Exhibits “S” and “T”, respectively. - 11 21 -

The Purported Release

47. The absolute control that Bondfield and Zurich exert over Project Co is laid bare by the release that Project Co purportedly granted to Bondfield on October 19, 2018 of all claims by Project Co. relating to delay in the Construction Contract, Direct Losses, Indirect Losses or Liquidated Damages under the Construction Contract, any failure to achieve the Substantial Performance Date or the Final Completion Date and any claim by CMH against Project Co. (the “Purported Release”).

48. As between Bondfield and Project Co, the Purported Release has no apparent business purpose.

49. The Administrative Agent had no knowledge of the Purported Release prior to Zurich serving the affidavit of Adrian Braganza sworn May 31, 2019 (the “Braganza Affidavit”) in response to the Motion. A copy of the Purported Release that was appended as an exhibit to the Braganza Affidavit is attached hereto as Exhibit “U”.

50. On cross-examination, Mr. Braganza admitted that prior to service of the Braganza Affidavit, the only parties that knew about the Purported Release were (i) Bondfield, Project Co and their principals (which are the same individuals), and (ii) Zurich. Mr. Braganza also admitted that Zurich knew about the discussions among these parties leading up to the Purported Release, at the time those discussions took place. A copy of the transcript of the cross-examination of Mr. Braganza held May 31, 2019 is attached hereto as Exhibit “V”.

Stay of Proceedings

51. To date, Zurich has maintained its position that it does not intend to advance any further funds after Interim Completion is achieved, contrary to its obligations under the Contractor Bonds, which the Conway Decision makes clear have been properly called and require Zurich to select an option thereunder. - 12 22 -

52. The Appointment Order contained the following standard provisions making it clear that contractual counterparties such as Zurich are prohibited from ceasing to perform any agreement in favour of Project Co (such as the Performance Bond) without written consent of the Receiver or leave of the Court:

NO EXERCISE OF RIGHTS OR REMEDIES

NO INTERFERENCE WITH THE RECEIVER

10. THIS COURT ORDERS that no Person shall discontinue, fail to honour, alter, interfere with, repudiate, terminate or cease to perform any right, renewal right, contract, agreement, licence or permit in favour of or held by the Debtor, without written consent of the Receiver or leave of this Court.

CONTINUATION OF SERVICES

11. THIS COURT ORDERS that all Persons having oral or written agreements with the Debtor or statutory or regulatory mandates for the supply of goods and/or services, including without limitation, all computer software, communication and other data services, centralized banking services, payroll services, insurance, transportation services, utility or other services to the Debtor are hereby restrained until further Order of this Court from discontinuing, altering, interfering with or terminating the supply of such goods or services as may be required by the Debtor.

53. Zurich has not sought, or been granted, the consent of the Receiver or leave of the Court to cease performing its obligations under the Performance Bond. It has announced its unilateral decision to cease performing, contrary to the Appointment Order. - 13 23 -

Stay Enforcement Order

54. The Project is scheduled to reach Interim Completion on November 4, 2019, after which Zurich has threatened to cease performing its obligations under the Performance Bond which would be highly prejudicial to the Project Co and its stakeholders such as the Lenders.

55. A copy of the notice delivered by Project Co dated October 15, 2019 regarding the anticipated Interim Completion Date is attached hereto as Exhibit “W”.

56. The Administrative Agent is seeking the assistance of this Court to enforce the Appointment Order to avoid unfortunate consequences of further legal maneuvering by Zurich. The Stay Enforcement Order sought by the Administrative Agent would simply maintain the status quo and hold Zurich to the terms of the Appointment Order and the Performance Bond.

Appointment Amending Order

57. The Administrative Agent is also seeking the assistance of this Court to clarify that the Appointment Order authorizes, empowers and directs the Receiver, to the exclusion of all others, to calculate the cost to complete the Project. It is the position of the Administrative Agent that the Appointment Order already provides the Receiver with such powers. In the alternative, to the extent that it does not, the Administrative Agent seeks to expand the Receiver’s powers to authorize, empower and direct the Receiver to calculate the cost to complete.

58. The Administrative Agent also seeks to implement a process akin to a claims process whereby the Receiver will provide its calculation of the cost to complete to Zurich, the Administrative Agent, Bondfield, CMH and IO, who will be provided an opportunity to dispute it. If a dispute notice is not received within the prescribed time, the Receiver’s calculation will be deemed to be the cost to complete for the purposes of calculating the amount to be paid by Zurich to Project Co pursuant to the Performance Bond. If a dispute notice is received, the parties will make reasonable efforts to resolve the dispute. If the objection cannot be resolved, the dispute will be referred to the Court for determination.

59. The cost-to-complete is a critical figure in determining the payment to be made by Zurich under Option #4 of the Performance Bond and therefore can impact the Lender’s recovery. The 24

25 26

PERFORMANCE BOND

THIS BOND IS SUBJECT TO THE TERMS AND CONDITIONS OF THE MULTIPLE OBLIGEE RIDER ATTACHED HERETO

No. 6342957 Bond Amount $87,377,250.00

Bondfield Construction Company Limited, as Principal, hereinafter called the Principal, and Zurich Insurance Company Ltd., as Surety, duly authorized to transact the business of suretyship in Canada, hereinafter called the Surety, are held and firmly bound unto 2423402 Ontario Inc. as Obligee, hereinafter called the Obligee, in the amount of EIGHTY SEVEN MILLION, THREE HUNDRED AND SEVENTY SEVEN THOUSAND, TWO HUNDRED AND FIFTY AND------00/100 ($87,377,250.00) of lawful money of Canada, for the payment of which sum the Principal and the Surety bind themselves, their heirs, executors, administrators, successors and assigns, jointly and severally.

WHEREAS, the Principal has entered into a written contract entitled Construction Contract with Obligee dated August 28, 2014 for the Cambridge Memorial Hospital Capital Redevelopment Project (such contract as so amended, and as the same may hereinafter be further amended, whether by way of change, alteration, addition or other modification, and including all of its terms and provisions without limitation, is hereinafter called the Construction Contract and by reference made part hereof). Capitalized terms used in this Bond without definition shall have their respective meanings attributed thereto in the Construction Contract.

The condition of this obligation is such that if the Principal shall promptly and faithfully perform its obligations to the Obligee under the Construction Contract, then this obligation shall be null and void; otherwise it shall remain in full force and effect.

1. remedy any default, or;

2. complete the Construction Contract in accordance with its terms and conditions, or;

LEGAL_1:3174S716.2 27 -2-

Construction Work under the Construction Contract, but not exceeding the Bond Amount. The Balance of the Construction Contract Price is the total amount of the Guaranteed Price payable to the Principal under the Construction Contract, less the amount properly paid by the Obligee to the Principal under the Construction Contract; or

The Surety shall not be discharged or released from liability hereunder and such liability shall not be in any way affected by any changes, alterations, additions or variations, talcing or receiving of security between the Principal and the Obligee, or extension of time, or other modification of the Construction Contract, by the exercise by the Obligee of any of the rights or powers reserved to it under the Construction Contract or by its forbearance to exercise any such rights or powers, including (but without restricting the generality of the foregoing) any changes in the extent or nature of the Work under the Construction Contract or by any dealing, transaction, forbearance or forgiveness which may take place between the Principal and the Obligee.

The Surety agrees that for the purposes of determining its liability under this Bond, findings or decisions against the Principal under the terms of the Construction Contract, that are binding on the Principal and the Obligee shall also bind the Surety.

It is a condition of this Bond that any suit or action must be commenced before the expiration of two (2) years from the earlier of (1) the Substantial Completion Date, or (2) the date on which the Principal is declared in default by the Obligee and such notice of default is provided to CMH and Bank of Montreal.

The Surety shall, in no event, be liable for a greater sum than the Bond Amount. Further, and notwithstanding anything else in this Bond, the Surety's liability hereunder for any default under Section 26.l(a)(x) of the Project Agreement shall be limited to any default by the Principal resulting in the non-performance or non-observance by the Principal of any of its other obligations under the Construction Contract.

No right of action shall accrue on this Bond, to or for the use of, any person or corporation other than the Obligee named herein, or the heirs, executors, administrators, successors or assigns of the Obligee.

This Bond shall in all respects be interpreted in accordance with the laws of the province of Ontario and the laws of Canada applicable in the province of Ontario.

This Bond may be executed in counterparts and by means of facsimile signature or other electronic means, each of which when so executed and delivered shall be an original, and all such counterparts shall together constitute one and the same instrument. ·

[signature page follows/

L£GAL_I :J 1745716.2 28

IN WITNESS WHEREOF, the Principal and the Surety have signed and sealed this Bond dated the 28 day of August, 2014.

SIGNED, SEALED AND DELIVERED

in the presence of:

BONDFIELD CONSTRUCTION COMPANY LIMITED

:loh" Agu \~o 1 \); t.e ~'?cesi d c.d, J.. b · rY\ · Name of person signing

ZURICH INSURANCE COMPANY LTD.

By:

KAREN RAMSEY, ATTORNEY-IN-FACT

Name of person signing

Signature Page to Performance Bond 29 0 Zurich Insurance Company Ltd ZURICH 100 King Street W., Suite 5500, P.O. Box 290 Toronto, Ontario M5X IC9

Bond Number: 6342957 Zurich lnsµrance Company Ltd

RE: Notice under Part XIII of the Insurance Companies Act (Canada)

For purposes of the Insurance Companies Act (Canada), this document was issued in the course of Zurich Insurance Company Ltd's insurance business in Canada. 30

MULTIPLE OBLIGEE RIDER TO PERFORMANCE BOND

No. 6342957

TO BE ATTACHED TO AND FORM PART OF THE PERFORMANCE BOND NO. 6342957 dated August 28, 2014 (the "Bond") concurrently with the execution of this Multiple Obligee Rider, issued by Zurich Insurance Company Ltd., as Surety (hereinafter called the "Surety''), on behalf of Bondfield Construction Company Limited, as Principal (hereinafter called the "Principal"), and in favour of 2423402 Ontario Inc., as Obligee (hereinafter called the "Obligee").

NOW THEREFORE, in consideration of Ten ($10.00) Dollars and other good and valuable consideration, receipt of which is hereby acknowledged by each of the parties hereto, the undersigned hereby agree as follows:

1. The Bond shall be and is hereby amended to add Cambridge Memorial Hospital ("CMH") and Bank of Montreal, in their respective capacities as assignees of the Construction Contract, as Additional Named Obligees, which Additional Named Obligees (which hereinafter may from time to time be referred to simply as "Obligee(s)") shall, subject to the terms of the Bond and this Multiple Obligee Rider, be entitled to enforce the obligations of the Principal and the Surety under the Bond and this Multiple Obligee Rider.

1. Capitalized terms used in this Multiple Obligee Rider without definition shall have the respective meanings attributed to them in the Bond and the Construction Contract. ·

2. If there is an event of default by Contractor under the Construction Contract (a "Construction Event of Default'') and the Bank of Montreal or CMH makes a claim under the Bond, the Bank of Montreal or CMH, as the case may be, shall make available to the Surety in accordance with the terms of the Construction Contract the Balance of the Construction Contract Price.

3. All of the terms, conditions and provisions of the Bond are hereby incorporated herein by reference as if fully set forth herein.

4. No alteration or material change in the Construction Contract or any conduct of the Principal, Obligee or Bank of Montreal, prior to the Principal being declared in default, shall prejudice the rights or interest of CMH under the Bond or this Multiple Obligee Rider provided that CMH has not caused such alteration or material change without the prior written consent of the Surety.

5. The Obligee, Principal, Surety and Bank of Montreal acknowledge and agree that they will not remedy any default, settle, waive, reduce or otherwise compromise any claims under the Bond without the prior written approval of CMH, acting reasonably, and the Surety shall provide reasonable notice to CMH prior to remedying any default, settling, waiving, reducing or otherwise compromising any claim or making any payment under the Bond, provided that the Surety shall not be precluded from tendering upon the Obligee(s) performance pursuant to one of the four numbered options in the Bond.

LEOAL_l:J 1745716.2 31

6. The Surety acknowledges the process in the Lender's Direct Agreement for making a claim against the Bond, including, but not limited to, the Lender's Step In Period (as defined in the Lender's Direct Agreement) rights; provided that such acknowledgement shall in no way limit or otherwise abrogate from the Surety's rights under the Bond or this Multiple Obligee Rider.

7. In the event of any ambiguity, conflict or inconsistency, the Bond and this Multiple Obligee Rider shall prevail over the Project Agreement and the other Project Documents.

8. Nothing herein shall alter or affect the aggregate liability of the Surety as described in the Bond.

/signature page follows}

LEGAL_1:3174m6.2 32

IN WITNESS WHEREOF, the Principal, Surety, Obligee, CMH and Lender have signed and sealed this Multiple Obligee Rider dated the 28 day of August, 2014.

SIGNED, SEALED and DELIVERED

in the presence of:

BONDFIELD CONSTRUCTION COMPANY LIMITED

By s·

ZURICH INSURANCE COMPANY LTD.

By:~flR. Signature 't-

KAREN RAMSEY, ATTORNEY-IN-FACT

Name of person signing

Signature Page to Multiple Obligee Rider to Perfonnance Bond

M-4¥W>i*S+Bfft"## ¥*¥4 33

BANK OF MONTREAL, as Agent

By:

Signature

Name of person signing

Signature Page to Multiple Obligee Rider to Perfonnance Bond 34

2423402 ONTARIO INC.

Signature

Name of person signirig

BANK OF MONTREAL, as Agent

By: Sigoomre F~~ Managing Director

Name of person signing

Slgnalure Page to Multiple Obligce Rider to PcrformB11cc: Bond 35

By ignature ~1A /;JGSflllqb Name of person signing

Signature Page to Multiple Obligee Rider to Performance Bond

36 37

Court File No. CV-18-610236-00CL

ONTARIO

SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

THE HONOURABLE MR. ) THURSDAY, THE 6th ) JUSTICE HAINEY ) DAY OF DECEMBER, 2018

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

BANK OF MONTREAL

Applicant

- and -

2423402 ONTARIO INC.

Respondent

ORDER (Appointing Receiver)

THIS APPLICATION made by the Applicant for an Order pursuant to section 243(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended (the "BIA") and section 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended (the "CJA") appointing Alvarez & Marsal Canada Inc. ("ABM") as receiver (in such capacity, the "Receiver") without security, of all of the assets, undertakings and properties of 2423402 Ontario Inc. (the "Debtor") acquired for, or used in relation to a business carried on by the Debtor, was heard this day at 330 University Avenue, Toronto, Ontario.

ON READING the affidavit of Eden Orbach sworn December 5, 2018 and the Exhibits thereto (collectively, the "Affidavit") and on hearing the submissions of counsel for each of the Applicant, A&M, Cambridge Memorial Hospital ("CMH"), Infrastructure Ontario ("10"), Zurich Insurance Company Ltd. (the "Surety"), and the Debtor, and on reading the consent of A&M to act as the Receiver,

MT DOCS 18576797 38 2

SERVICE

1. THIS COURT ORDERS that the time for service of the Notice of Application and the Application is hereby abridged and validated so that this application is properly returnable today and hereby dispenses with further service thereof.

APPOINTMENT

2. THIS COURT ORDERS that pursuant to section 243(1) of the BIA and section 101 of the CJA, A&M is hereby appointed Receiver, without security, of all of the assets, undertakings and properties of the Debtor acquired for, or used in relation to a business carried on by the Debtor, including all proceeds thereof (the "Property") for the sole purpose of carrying out the terms of this Order and without taking possession or control of such Property.

RECEIVER'S POWERS

3. THIS COURT ORDERS that the Receiver is hereby empowered and authorized, but not obligated, to act at once in respect of the Property without taking possession or control of the Property and, without in any way limiting the generality of the foregoing, the Receiver is hereby expressly empowered and authorized, but not obligated, to do any of the following where the Receiver considers it necessary or desirable:

(a) to report to, meet with and discuss with such affected Persons (as defined below) as the Receiver deems appropriate on all matters relating to the receivership, and to share information, subject to such terms as to confidentiality as the Receiver deems advisable;

(b) with the consent of the Applicant in consultation with CMH and 10, to enter into any agreements for and on behalf of the Debtor or cease to perform, repudiate or disclaim any contracts of the Debtor; and

(c) to take any steps reasonably incidental to the exercise of these powers or the performance of any statutory obligations. and in each case where the Receiver takes any such actions or steps, it shall be exclusively authorized and empowered to do so, to the exclusion of all other Persons (as defined below), including the Debtor, and without interference from any other Person.

MT DOCS 18576797 39 3

DUTY TO PROVIDE ACCESS AND CO-OPERATION TO THE RECEIVER

4. THIS COURT ORDERS that (i) the Debtor, (ii) all of its current and former directors, officers, employees, agents, accountants, legal counsel and shareholders, and all other persons acting on its instructions or behalf, (iii) Bondfield Construction Company Limited ("Bondfield"), and (iv) all other individuals, firms, corporations, governmental bodies or agencies, or other entities having notice of this Order (all of the foregoing, collectively, being "Persons" and each being a "Person") shall forthwith advise the Receiver of the existence of any Property in such Person's possession or control, and shall grant immediate and continued access to the Property to the Receiver, and shall deliver all such Property to the Receiver upon the Receiver's request.

5. THIS COURT ORDERS that all Persons shall forthwith advise the Receiver of the existence of any books, documents, securities, contracts, orders, corporate and accounting records, and any other papers, records and information of any kind related to the business or affairs of the Debtor, and any computer programs, computer tapes, computer disks, or other data storage media containing any such information (the foregoing, collectively, the "Records") in that Person's possession or control, and shall provide to the Receiver or permit the Receiver to make, retain and take away copies thereof and grant to the Receiver unfettered access to and use of accounting, computer, software and physical facilities relating thereto, provided however that nothing in this paragraph 5 or in paragraph 6 of this Order shall require the delivery of Records, or the granting of access to Records, which may not be disclosed or provided to the Receiver due to the privilege attaching to solicitor-client communication or due to statutory provisions prohibiting such disclosure. The Receiver is authorized and empowered to access and make, retain and take away copies of the Records of the Debtor located at the offices of Bondfield and Bondfield shall cooperate and shall provide reasonable assistance to the Receiver with respect to such Records and information contained in such Records with respect to the Property, including the Project (as defined in the Affidavit).

MT DOCS 18576797 40 4 destroy any Records without the prior written consent of the Receiver. Further, for the purposes of this paragraph, all Persons shall provide the Receiver with all such assistance in gaining immediate access to the information in the Records as the Receiver may in its discretion require including providing the Receiver with instructions on the use of any computer or other system and providing the Receiver with any and all access codes, account names and account numbers that may be required to gain access to the information.

NO PROCEEDINGS AGAINST THE RECEIVER

7. THIS COURT ORDERS that no proceeding or enforcement process in any court or tribunal (each, a "Proceeding"), shall be commenced or continued against the Receiver except with the written consent of the Receiver or with leave of this Court.

NO PROCEEDINGS AGAINST THE DEBTOR OR THE PROPERTY

8. THIS COURT ORDERS that no Proceeding against or in respect of the Debtor or the Property shall be commenced or continued except with the written consent of the Receiver or with leave of this Court and any and all Proceedings currently under way against or in respect of the Debtor or the Property are hereby stayed and suspended pending further Order of this Court. Nothing in this Order shall limit or restrict the rights of the Applicant to take action against Bondfield or to enforce any security granted by Bondfield in favour of the Applicant.

NO EXERCISE OF RIGHTS OR REMEDIES

9. THIS COURT ORDERS that all rights and remedies against the Debtor, the Receiver, or affecting the Property, are hereby stayed and suspended except with the written consent of the Receiver or leave of this Court, provided however that this stay and suspension does not apply in respect of any "eligible financial contract" as defined in the BIA, and further provided that nothing in this paragraph shall (i) empower the Debtor to carry on any business which the Debtor is not lawfully entitled to carry on, (ii) exempt the Debtor from compliance with statutory or regulatory provisions relating to health, safety or the environment, (iii) prevent the filing of any registration to preserve or perfect a security interest, (iv) prevent the registration of a claim for lien; or (v) prevent Cambridge Memorial Hospital from asserting set-off rights against the Debtor arising under the Project Agreement, if any.

MT DOCS 18576797 41 5

NO INTERFERENCE WITH THE RECEIVER

CONTINUATION OF SERVICES

EMPLOYEES

12. THIS COURT ORDERS that all employees of the Debtor shall remain the employees of the Debtor and not of the Receiver. The Receiver shall not be liable for any employee-related responsibilities or liabilities, including any successor employer liabilities as provided for in section 14.06(1.2) of the BIA.

LIMITATION ON ENVIRONMENTAL LIABILITIES

13. THIS COURT ORDERS that nothing herein contained shall require the Receiver to occupy or to take control, care, charge, possession or management (separately and/or collectively, "Possession") of any of the Property that might be environmentally contaminated, might be a pollutant or a contaminant, or might cause or contribute to a spill, discharge, release or deposit of a substance contrary to any federal, provincial or other law respecting the protection, conservation, enhancement, remediation or rehabilitation of the environment or relating to the disposal of waste or other contamination including, without limitation, the Canadian Environmental Protection Act, the Ontario Environmental Protection Act, the Ontario Water Resources Act, or the Ontario Occupational Health and Safety Act and regulations thereunder (the "Environmental Legislation"), provided however that nothing herein shall exempt the Receiver from any duty to report or make disclosure imposed by applicable Environmental Legislation. The Receiver shall not, as a result of this Order or anything done in

MT DOCS 18576797 42 6 - pursuance of the Receiver's duties and powers under this Order, be deemed to be in Possession of any of the Property within the meaning of any Environmental Legislation, unless it is actually in possession.

LIMITATION ON THE RECEIVER'S LIABILITY

14. THIS COURT ORDERS that the Receiver shall incur no liability or obligation as a result of its appointment or the carrying out the provisions of this Order, save and except for any gross negligence or wilful misconduct on its part, and it shall have no obligations or liability (i) under sections 81.4(5) or 81.6(3) of the BIA or under the Wage Earner Protection Program Act, the Construction Act (Ontario) or any other applicable legislation, or (ii) in respect of any of the Debtor's obligations or Property, including, without limitation, the Construction Agreement attached as Exhibit "F" to the Affidavit or the Project Agreement attached as Exhibit "G" to the Affidavit. Nothing in this Order shall derogate from the protections afforded the Receiver by section 14.06 of the BIA or by any other applicable legislation. Unless further ordered by the Court, the Receiver will not be and shall not be deemed to be, in possession and control of any Property, including, without limitation, for the purposes of the BIA, the Wage Earner Protection Program Act, the Construction Act (Ontario) or any other applicable legislation.

RECEIVER'S ACCOUNTS

15. THIS COURT ORDERS that the Receiver and counsel to the Receiver shall be paid their reasonable fees and disbursements, in each case at their standard rates and charges unless otherwise ordered by the Court on the passing of accounts, and that the Receiver and counsel to the Receiver shall be entitled to the benefit of and are hereby granted a charge (the "Receiver's Charge") on the Property, as security for such fees and disbursements, both before and after the making of this Order in respect of these proceedings, and that the Receiver's Charge shall form a first charge on the Property in priority to all security interests, trusts, liens, charges and encumbrances, statutory or otherwise, in favour of any Person, but subject to sections 14.06(7), 81.4(4), and 81.6(2) of the BIA.

16. THIS COURT ORDERS that the Receiver and its legal counsel shall pass its accounts from time to time, and for this purpose the accounts of the Receiver and its legal counsel are hereby referred to a judge of the Commercial List of the Ontario Superior Court of Justice.

17. THIS COURT ORDERS that prior to the passing of its accounts, the Receiver shall be at liberty from time to time to apply reasonable amounts, out of the monies in its hands, against its

MT DOCS 18576797 43 7 fees and disbursements, including legal fees and disbursements, incurred at the standard rates and charges of the Receiver or its counsel, and such amounts shall constitute advances against its remuneration and disbursements when and as approved by this Court.

FUNDING OF THE RECEIVERSHIP

18. THIS COURT ORDERS that the Receiver be at liberty and it is hereby empowered to: (a) with the consent of the Applicant to borrow by way of a revolving credit or otherwise, such monies from time to time as it may consider necessary or desirable, provided that the outstanding principal amount does not exceed $200,000 (or such greater amount as this Court may by further Order authorize) at any time, at such rate or rates of interest as it deems advisable for such period or periods of time as it may arrange, for the purpose of funding the exercise of the powers and duties conferred upon the Receiver by this Order; and (b) open one or more new accounts to hold any amounts borrowed pursuant to foregoing paragraph (a). The whole of the Property shall be and is hereby charged by way of a fixed and specific charge (the "Receiver's Borrowings Charge") as security for the payment of the monies borrowed, together with interest and charges thereon, in priority to all security interests, trusts, liens, construction liens, charges and encumbrances, statutory or otherwise, in favour of any Person, but subordinate in priority to the Receiver's Charge and the charges as set out in sections 14.06(7), 81.4(4), and 81.6(2) of the BIA.

19. THIS COURT ORDERS that neither the Receiver's Borrowings Charge nor any other security granted by the Receiver in connection with its borrowings under this Order shall be enforced without leave of this Court.

20. THIS COURT ORDERS that the Receiver is at liberty and authorized to issue certificates substantially in the form annexed as Schedule "A" hereto (the "Receiver's Certificates") for any amount borrowed by it pursuant to this Order.

21. THIS COURT ORDERS that the monies from time to time borrowed by the Receiver pursuant to this Order or any further order of this Court and any and all Receiver's Certificates evidencing the same or any part thereof shall rank on a pan passu basis, unless otherwise agreed to by the holders of any prior issued Receiver's Certificates.

MT DOCS 18576797 44 8

SERVICE AND NOTICE

22. THIS COURT ORDERS that the E-Service Protocol of the Commercial List (the "Protocol") is approved and adopted by reference herein and, in this proceeding, the service of documents made in accordance with the Protocol (which can be found on the Commercial List website at http://www.ontariocourts.ca/scj/practice/practice-directions/toronto/eservice- commercial/) shall be valid and effective service. Subject to Rule 17.05 this Order shall constitute an order for substituted service pursuant to Rule 16.04 of the Rules of Civil Procedure. Subject to Rule 3.01(d) of the Rules of Civil Procedure and paragraph 21 of the Protocol, service of documents in accordance with the Protocol will be effective on transmission. This Court further orders that a Case Website shall be established in accordance with the Protocol with the following URL `https://www.alvarezandmarsal.com/CMH'.

23. THIS COURT ORDERS that if the service or distribution of documents in accordance with the Protocol is not practicable, the Receiver is at liberty to serve or distribute this Order, any other materials and orders in these proceedings, any notices or other correspondence, by forwarding true copies thereof by prepaid ordinary mail, courier, personal delivery, electronic or facsimile transmission to the Debtor's creditors or other interested parties and their advisors at their respective addresses as last shown on the records of the Debtor and that any such service or distribution by courier, personal delivery or facsimile transmission shall be deemed to be received on the next business day following the date of forwarding thereof, or if sent by ordinary mail, on the third business day after mailing. For greater certainty, any such distribution or service shall be deemed to be in satisfaction of a legal or juridical obligation, and notice requirements within the meaning of clause 3(c) of the Electronic Commerce Protection Regulations, Reg. 81000-2-175 (SOR/DORS).

GENERAL

24. THIS COURT ORDERS that the Receiver may from time to time apply to this Court for advice and directions in the discharge of its powers and duties hereunder.

25. THIS COURT ORDERS that nothing in this Order shall:

(a) prevent the Receiver from acting as a trustee in bankruptcy of the Debtor;

MT DOCS 18576797 45 9

(b) constitute or be deemed to constitute an exercise of "step-in rights" by the Applicant under Section 7 of the Lender's Direct Agreement (as such term is defined in the Affidavit); or

(c) prevent the Applicant from appointing the Receiver as its Appointed Representative (as such term is defined in the Lender's Direct Agreement) or taking steps pursuant to the Lender's Direct Agreement.

26. THIS COURT ORDERS that nothing in this Order shall affect the Debtor's ability to perform its obligations under the Construction Contract or alter, amend or otherwise affect the liability of the Surety to any Person pursuant to Performance Bond No. 6342957 (the "Performance Bond"), Labour and Materials Payment Bond No. 6342957 or Demand Bond No. 6342958 (collectively, the "Contractor Bonds") issued by the Surety.

27. THIS COURT ORDERS that the Receiver shall make a demand under the Performance Bond for and on behalf of the Debtor as soon as reasonably practical and shall be empowered and authorized to execute, issue and endorse any agreements or documentation for and on behalf of the Debtor as the Receiver considers necessary or advisable to facilitate making such demand. The Receiver shall not take or consent to any actions that would compromise recovery under the Contractor Bonds without written consent of the Applicant.

28. THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal, regulatory or administrative body having jurisdiction in Canada or in the United States to give effect to this Order and to assist the Receiver and its agents in carrying out the terms of this Order. All courts, tribunals, regulatory and administrative bodies are hereby respectfully requested to make such orders and to provide such assistance to the Receiver, as an officer of this Court, as may be necessary or desirable to give effect to this Order or to assist the Receiver and its agents in carrying out the terms of this Order.

29. THIS COURT ORDERS that the Receiver be at liberty and is hereby authorized and empowered to apply to any court, tribunal, regulatory or administrative body, wherever located, for the recognition of this Order and for assistance in carrying out the terms of this Order, and that the Receiver is authorized and empowered to act as a representative in respect of the within proceedings for the purpose of having these proceedings recognized in a jurisdiction outside Canada.

MT DOCS 18576797 46 -10-

30. THIS COURT ORDERS that the Applicant shall have its costs of this application, up to and including entry and service of this Order, provided for by the terms of the Applicant's security or, if not so provided by the Applicant's security, then on a substantial indemnity basis to be paid from the Debtor's estate with such priority and at such time as this Court may determine.

31. THIS COURT ORDERS that any interested party may apply to this Court to vary or amend this Order on not less than seven (7) days' notice to the Receiver and to any other party likely to be affected by the order sought or upon such other notice, if any, as this Court may order.

ENTERED AT I INSCRT A TORONTO ON / BOOK NO: LE / DANS LE REGISTRE NO: DEC 0 6 2018

PER / PAR:

MT DOCS 18576797 47

SCHEDULE "A"

RECEIVER CERTIFICATE

CERTIFICATE NO.

AMOUNT $

1. THIS IS TO CERTIFY that ALVAREZ & MARSAL CANADA INC., the receiver (in such capacity and not in its personal or corporate capacity, the "Receiver") of the assets, undertakings and properties 2423402 ONTARIO INC. acquired for, or used in relation to a business carried on by the Debtor, including all proceeds thereof (collectively, the "Property") appointed by Order of the Ontario Superior Court of Justice (Commercial List) (the "Court") dated the 6th day of December, 2018 (the "Order") made in an action having Court file number _ -CL- , has received as such Receiver from the holder of this certificate (the "Lender") the principal sum of $ , being part of the total principal sum of $ which the Receiver is authorized to borrow under and pursuant to the Order.

2. The principal sum evidenced by this certificate is payable on demand by the Lender with interest thereon calculated and compounded [daily][monthly not in advance on the day of each month] after the date hereof at a notional rate per annum equal to the rate of per cent above the prime commercial lending rate of Bank of from time to time.

3. Such principal sum with interest thereon is, by the terms of the Order, together with the principal sums and interest thereon of all other certificates issued by the Receiver pursuant to the Order or to any further order of the Court, a charge upon the whole of the Property, in priority to the security interests of any other person, but subject to the priority of the charges set out in the Order and in the Bankruptcy and Insolvency Act, and the right of the Receiver to indemnify itself out of such Property in respect of its remuneration and expenses.

4. All sums payable in respect of principal and interest under this certificate are payable at the main office of the Lender at Toronto, Ontario.

5. Until all liability in respect of this certificate has been terminated, no certificates creating charges ranking or purporting to rank in priority to this certificate shall be issued by the Receiver to any person other than the holder of this certificate without the prior written consent of the holder of this certificate.

MT DOGS 18576797 48 2

6. The charge securing this certificate shall operate so as to permit the Receiver to deal with the Property as authorized by the Order and as authorized by any further or other order of the Court.

7. The Receiver does not undertake, and it is not under any personal liability, to pay any sum in respect of which it may issue certificates under the terms of the Order.

DATED the day of , 20_.

ALVAREZ & MARSAL CANADA INC., solely in its capacity as Receiver of the Property, and not in its personal or corporate capacity

Per: Name: Title:

MT DOGS 18576797 IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC. Court File No. CV-18-610236-00CL

BANK OF MONTREAL and 2423402 ONTARIO INC. Applicant Respondent

Ontario SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

Proceedings commenced in Toronto

ORDER (Appointing Receiver)

McCarthy Tetrault LLP Suite 5300, TD Bank Tower Toronto Dominion Centre 66 Wellington Street West Toronto, ON M5K 1E6

Heather L. Meredith LSUC#48354R Tel: 416-601-8342 Fax: 416- 868-0673 Email: [email protected]

Geoff R. Hall LSUC#347010 Tel: 416-601-7856 Fax: 416-868-0673 Email: qhall mccarthy.ca

Trevor Courtis LSUC#67715A Tel: 416-601-7643 Fax: 416-868-0673 Email: [email protected] Lawyers for the applicant, Bank of Montreal 49

MT DOCS 18576797

50 51

December 7, 2018

CONFIDENTIAL

VIA COURIER

Zurich insurance Company Ltd.

Surety Department First Canadian Place, 100 King Street West Suite 5500, P.O. Box 290 Toronto, ON M5X 109

Attention: Karen Ramsey, Attorney-in-fact

Re: Demand Upon Performance Bond No. #6342957 dated August 28, 2014, together with the Multiple Oblige Rider thereto (collectively, the "Bond")

Reference is made to the Bond. Capitalized terms not otherwise defined herein shall have the respective meanings assigned to them in the Bond.

Appointment as Receiver

As you are aware, pursuant to an order of the Honourable Mr. Justice Hainey of the Ontario Superior Court of Justice (Commercial List) dated December 6, 2018 (as may be amended, restated or modified from time to time, the "Appointment Order"), Alvarez & Marsal Canada inc. was appointed receiver (in such capacity, the "Receiver"), without security, of all of the assets, undertakings and properties of 2423402 Ontario Inc. ("Project Co") acquired for, or used in relation to a business carried on by Project Co (the "Property") for the sole purpose of carrying out the terms of the Appointment Order and without taking possession or control of the Property. A copy of the Appointment Order is enclosed with this letter.

Contractor Performance Bond

As you are further aware, Project Co is an Obligee under the Bond. Pursuant to paragraph 27 of the Appointment Order, the Receiver was ordered to make a demand under the Bond for and on behalf of Project Co as soon as reasonably practicable and is empowered and authorized to execute, issue and endorse any agreements or documentation for and on behalf of Project Co as the Receiver considers necessary or advisable to facilitate making such demand.

Please find enclosed a copy of a letter dated December 7, 2018 from the Receiver to the Principal, pursuant to which the Receiver notified the Principal of the occurrence of numerous events of default under the Construction Contract including, without limitation, failure to remove numerous encumbrances registered against title to the Site (as defined in the Construction Contract). The occurrence of each such event of default constitutes a Contractor Event of Default under the Bond.

The Principal is, and has been declared by the Obligee to be, in default in respect of its obligations to the Obligee under the Construction Contract, and the Obligee has duly performed all of its obligations thereunder. Accordingly, we hereby demand that the Surety promptly remedy the above-referenced Contractor Event of Default and all other Contractor Events of Default set out in the attached letter, or promptly select and carry out one of the other specified options available to the Surety pursuant to the Bond.

DOCS 18612446v2 2 52

Yours very truly,

ALVAREZ & MARSAL CANADA INC., solely in its capacity as receiver, without security, of all of the assets, undertakings and properties of 2423402 Ontario Inc., and not in its personal or corporate capacity

By: Name: Stephen Ferguson Title: Senior Vice President cc: Rocco Sebastiano (counsel to Bondfield Construction Company Limited) Brendan Bissell (counsel to Zurich Insurance Company Ltd.) Heather Meredith (counsel to Bank of Montreal, in its capacity as administrative agent) Kyla Mahar (counsel to Cambridge Memorial Hospital)

DOGS 18612446v2 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68

December 7, 2018

CONFIDENTIAL

Via Facsimile

Bondfield Construction Company Limited 407 Basaltic Road Concord, ON L4K 4W8 Fax No.: 416-667-8462

Attention: Mr. John Aquino Attention: Mr. Steven Aquino, Vice President

Re: Construction Contract dated as of August 28, 2014, between 2423402 Ontario Inc. ("Project Co") and Bondfield Construction Company Limited (the "Construction Contractor"), as such Construction Contract is amended, amended and restated, renewed, extended, supplemented, replaced or otherwise modified from time to time (the "Construction Contract")

Dear Mr. Aquino:

Reference is made to the Construction Contract. Capitalized terms not otherwise defined herein shall have the respective meanings assigned to them in the Construction Contract.

Appointment as Receiver

As you are aware, pursuant to an order of the Honourable Mr. Justice Rainey of the Ontario Superior Court of Justice (Commercial List) dated December 6, 2018 (as may be amended, restated or modified from time to time, the "Appointment Order"), Alvarez & Marsal Canada Inc. was appointed receiver (in such capacity, the "Receiver"), without security, of all of the assets, undertakings and properties of Project Co acquired for, or used in relation to a business carried on by Project Co (the "Property") for the sole purpose of carrying out the terms of the Appointment Order and without taking possession or control of the Property. A copy of the Appointment Order is enclosed with this letter.

Contractor Performance Bond

As you are further aware, Project Co is an Obligee under Performance Bond No. 6342957 dated August 28, 2014 between the Construction Contractor, as Principal, Zurich Insurance Company Ltd. (the "Surety"), as surety (the "Contractor Performance Bond"). The Contractor Performance Bond has been provided in support of the Construction Contractor's obligations under the Construction Contract. Pursuant to the terms of the Contractor Performance Bond, whenever the Principal shall be, and declared by the Obligee to be in default in respect of its obligations under the Construction Contract, the Surety has agreed to promptly perform certain obligations set out in the Contractor Performance Bond.

Pursuant to paragraph 27 of the Appointment Order, the Receiver was ordered to make a demand under the Contractor Performance Bond for and on behalf of Project Co as soon as reasonably practicable and is empowered and authorized to execute, issue and endorse any agreements or documentation for and on behalf of Project Co as the Receiver considers necessary or advisable to facilitate making such demand.

DOCS 18612291v1 - 2 - 69

As set out in letters to the Construction Contractor and to Project Co dated November 5, 2018 and November 16, 2018 from Bank of Montreal, in its capacity as administrative agent (the "Agent") in relation to a Credit Agreement dated as of August 28, 2014 between Project Co, the Agent and certain lenders (the "Lenders"), and in the letter by Cambridge Memorial Hospital ("CMH") to Project Co dated August 10, 2018, copies of which were in each case provided to you, numerous events have occurred and continue to occur which constitute Contractor Events of Default under the Construction Contract. These include that the Construction Contractor has:

• failed to pay Liquidated Damages when due under the Contractor Support Agreement, dated as of August 28, 2014, which constitutes an event of default pursuant to Section 12 of the Construction Contract and a Liquidated Damages Default under Demand Bond 6342958 dated August 28, 2014;

• failed to remove numerous encumbrances registered against title to the Site within the time periods required under the Project Agreement, which constitutes a Project Co Construction Event of Default pursuant to Section 26.1(a)(viii) of the Project Agreement and an event of default pursuant to Section 7 of the Construction Contract; and

• failed to maintain the Project schedule and achieve schedule milestones and is consequently unable to achieve Substantial Completion by the Longstop Date, which has had a material adverse effect on CMH and its ability to operate the Facility, which constitutes a Project Co Construction Event of Default pursuant to Section 26.1(a)(iv) of the Project Agreement and an event of default pursuant to Section 7 of the Construction Contract.

In addition, we also understand that there are now few workers on Site on a daily basis, and that construction activity on the Site has decreased such that the Construction Contractor has ceased performing the Work as required under the Construction Contract.

We hereby confirm and declare on behalf of Project Co that the Construction Contractor is in default of its obligations under the Construction Contract. As an Obligee under the Contractor Performance Bond, Project Co is entitled to make demand on the Surety under the Contractor Performance Bond and will be doing so concurrently with this letter.

Project Co expressly reserves all of its other rights, powers, privileges and remedies under the Construction Contract, applicable law or otherwise. The failure of Project Co to exercise any such rights, powers privileges and remedies is not intended, and shall not be construed, to be a waiver of any such rights or remedies pursuant to the Construction Contract or otherwise and nothing in this letter or any delay by Project Co in exercising any rights, powers, privileges and remedies under the Construction Contract or applicable law shall be construed as a waiver or modification of such rights, powers, privileges and remedies. This letter is not, and shall not be deemed to be, a waiver of, or a consent to, any default noncompliance, or otherwise now existing or hereafter arising under the Construction Contract.

The holding of any discussions between or among any or all of the Agent, the Lenders, the Construction Contractor, Project Co, the Surety, CMH or Infrastructure Ontario regarding the Project or proposals regarding amendments to, or modifications or restructurings of the Construction Contract shall not constitute any waiver of any breach, default or Contractor Event of Default or the obligations of the Construction Contractor under the Construction Contract or applicable law, nor shall it be construed as an undertaking by Project Co to continue such discussions or to enter into any such amendments, modifications or restructurings.

DOCS 18612291v1 3 70

Yours very truly, ALVAREZ & MARSAL CANADA INC., solely in its capacity as receiver, without security, of all of the assets, undertakings and properties of 2423402 Ontario Inc., and not in its personal or corporate capacity

By: Name: Stephen Ferguson Title: Senior Vice President cc: Brendan Bissell (counsel to Zurich Insurance Company Ltd.) Heather Meredith (counsel to Bank of Montreal, in its capacity as administrative agent) Kyla Mahar (counsel to Cambridge Memorial Hospital)

DOCS 18612291v1

71 72

December 7, 2018

CONFIDENTIAL

Via Facsimile

Bondfield Construction Company Limited 407 Basaltic Road Concord, ON L4K 4W8 Fax No.: 416-667-8462

Attention: Mr. John Aquino Attention: Mr. Steven Aquino, Vice President

Dear Mr. Aquino:

Reference is made to the Construction Contract. Capitalized terms not otherwise defined herein shall have the respective meanings assigned to them in the Construction Contract.

Appointment as Receiver

Contractor Performance Bond

DOCS 18612291v1 - 2 - 73

DOCS 18612291v1 3 74

DOCS 18612291v1 75 76 77 78 79 80 81 82 83 84 85 86 87 88

89 .- 90

Court File No. CV-18-610236-00CL

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

THE HONOURABLE ) WEDNESDAY, THE 25TH ) MADAM JUSTICE RA. CONWAY DA Y OF SEPTEMBER, 2019 )

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

BANK OF MONTREAL

Applicant

- and-

2423402 ONTARIO INC.

Respondent

ORDER

THIS MOTION, made by the Bank of Montreal in its capacity as administrative agent under the credit agreement ("BMO") for various relief against Zurich Insurance Company Ltd. ("Zurich"), and Zurich's cross-motion seeking to strike BMO's motion, were heard on September 24, 2019 at 330 University Avenue, Toronto, Ontario, with oral reasons for judgment delivered this day.

ON READING the notices of motion, the affidavits of Eden Orbach sworn on May 6, 2019 and June 7, 2019, the affidavit of Adrian Braganza sworn May 31, 2019, the affidavit of Virginia Fletcher sworn September 23, 2019, the transcript of the cross-examination of Adrian Braganza taken on June 25, 2019, the transcript of the cross-examination of Eden Orbach taken on July 4, 2019, briefs of exhibits and answers to undertakings, and the factums and briefs of authorities of the parties, filed, and on hearing the submissions of counsel for each of BMO, Zurich and Alvarez & Marsal Canada Inc. in its capacity as receiver (the "Receiver") of 2423402 Ontario Inc. ("ProjectCo"): 91 -2 -

1. THIS COURT DECLARES that Bondfield Construction Company Limited ("BondfieJd") has been declared by the Receiver, on behalf of ProjectCo, to be in default in respect of its obligations to Project Co under the construction contract between Bondfield and ProjectCo dated August 28, 2014, that the letter from the Receiver to Zurich dated December 7, 2018 was a proper demand under Performance Bond No. 6342957 (the "Performance Bond") on behalf of ProjectCo and that Zurich is obligated to select one of the four options listed in the Performance Bond, in accordance with the terms of the Performance Bond.

2. THIS COURT ORDERS that the balance of the motions are dismissed without prejudice to the parties returning to court for adjudication of those issues at a later date.

3. THIS COURT ORDERS Zurich shall pay to BMO within 30 days the costs of this motion, fixed in the amount of $40,000.00, all-inclusive.

.A. onw J. > ENTERED AT IINSCRIT A TORONTO ON / BOOK NO: LE / DANS LE REGISTRE NO: OCT 1 1 2019

PER/PAR: A8 ('

[N THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC. Court File No. CV-18-610236-001CL

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

Proceeding commenced at Toronto

ORDER

McCarthy Tetrault LLP Suite 5300, TD Bank Tower Toronto Dominion Centre 66 Wellington Street West Toronto, ON M5K 1E6 Fax: 416- 868-0673

Heather L. Meredith LSO#: 48354R Tel: 416-601-8342 Email: .ca

GeoffR. Hall LSO#: 347010 Tel: 416-601-7856 Email: [email protected]

Trevor Courtis LSO#: 67715A Tel: 416-601-7643 Email: [email protected]

Lawyers for Bank of Montreal in its capacity as administrative agent under the credit agreement 19639372 92

93 94

Court File No. CV-18-610236-00CL

SUPERIOR COURT OF JUSTICE

ETWEEN:

Bank of Montreal Applicant

-and-

2423402 Ontario Inc. / Infrastructure Ontario Respondent

REASONS FOR JUDGMENT

BEFORE THE HONOURABLE JUSTICE B.A. CONWAY 20 on September 25, 2019, at TORONTO, Ontario

APPEARANCES: G.R. Hall Counsel for the Bank of Montreal 2s N. Meredith D. Ward Counsel for Infrastructure Ontario

D. Bulat Counsel for Cambridge Memorial Hospital

M. Lerner Counsel for Zurich Insurance Company Ltd. B. Kolenda J. McDaniel 30 L. Rogers Alvarez & Marsal Canada Inc. receiver of 2423402 Ontario Ltd ii) 95 Table of Contrl.

SUPERIOR COURT OP JUSTICE

TABLE OF CONTENTS

REASONS FOR JUDGMENT

Transcript Ordered: September 25, 2019 Transcript Completed: September 27, 2019 Ordering Party Notified: September 27, 2019 1. 96 Reasons for Judgment - Conway, J.

NEDNESDAY, SEPTEMBER 25, 2019 ...EXCERPT OF PROCEEDINGS CLERK REGISTRAR: This court is now in session. Please be seated. THE COURT: Good afternoon. MR. LERNER: Good afternoon, Your Honour. THE COURT: All right. Reporter, I have my oral reasons which will be transcribed by the reporter and you can get them in due course. I reserve the right to clean things up in the transcribed version.

REASONS FOR JUDGMENT

NAY, J. (Orally): This is a dispute over a performance bond, No. 6342957, dated August 28, 2014 (the "Bond") issued by Zurich Insurance Company Ltd. ("Zurich") . The Bond was issued in connection with the construction of a new wing and renovation of an existing wing at Cambridge Memorial Hospital ("CMH") through a special purpose vehicle ("Project Co."), a subsidiary of Bondfield Construction Company Limited ("Bondfield"). This is a public private partnership (P3) project and was financed by a syndicate of lenders. Bank of Montreal ("BMO") is one of the lenders and the administrative agent for the syndicate.

Briefly, the construction has met with numerous problems and is well behind schedule. Bondfield 2. Reasons for Judgment - Conway, J. 97

has experienced financial difficulties. There appears to be no dispute that Bondfield is in default under its construction contract with Project Co., giving rise to a Contractor Event of Default under the Bond.

On November 16, 2018, after discussions between the parties broke down, BMO, in its capacity as administrative agent for the lenders, made a call on the Bond. Zurich did not recognize BMO's demand as a proper demand on the Bond. On December 6, 2018, BMO sought and obtained an order (the "Receivership Order") appointing Alvarez & Marsal Canada Inc. as a receiver for Project Co. (the "Receiver"). The Receivership 15 Order was scaled down from the usual receivership order and the express purpose of the order was for the Receiver to make a call on the Bond. Paragraph 27 of the court order states that the Receiver shall make a demand under the Bond for and on behalf of Project Co. as soon as reasonably practicable.

The Receiver made a call on the Bond the next

25 day, on December 7, 2018. As explained below, Zurich takes the position that the Receiver's call is invalid. Zurich further asserts that while it is funding the construction to Interim Completion on a reservation of rights basis, the funding conditions under the Bond have not been met and it will consider itself discharged from the Bond after Interim Completion. 3. 98 Reasons for Judgment - Conway, J.

BMO brings this motion for two types of relief. First, it seeks certain declarations in respect of the Receiver's call on the Bond. It also seeks determination of certain substantive issues

5 regarding Zurich's liability under the Bond.

Zurich brings a cross-motion to strike BMO's notice of motion. It submits that BMO's motion is procedurally flawed and that this court has no jurisdiction to grant the relief sought on a motion, as it involves the determination of contractual rights and liabilities between the parties on a final basis. Zurich argues that BMO has no standing on the motion. It submits that the relief sought is hypothetical and moot. Finally, it argues that BMO is seeking specific performance under the Bond. Zurich says that these issues are monetary in nature and can be addressed through damages in the course of what

20 will be inevitable litigation over who is responsible for the construction costs.

The threshold issue before me is whether the Receiver's call on the Bond was a proper demand 25 and whether Zurich is required to select and carry out one of the four options set out in the Bond. I note that this issue relates only to the Receiver's call on the Bond, not BMO's call from November 2018 that was superseded by the receivership proceedings.

I see no reason why this particular threshold 4. 99 Reasons for Judgment - Conway, J. issue cannot be determined on a motion within the context of the receivership proceeding. It relates to a call made by the court appointed Receiver, who was appointed for the express purpose of calling on the Bond and was ordered to do so. It was requires an interpretation of the contractual documents that are before the court. In my view, there is no need for a determination of this preliminary threshold issue to be made on an application or action.

I also agree that BMO has standing to bring this motion before the court. As a lender and administrative agent for the syndicate that has funded the hospital construction, it has a direct, personal interest in the litigation in that it is likely to gain some advantage or suffer some disadvantage depending on the outcome of this motion concerning the Bond: see Downtown Eastside Sex Workers United Against Violence Society v. Canada (Attorney General), 2010 BCCA 439, at paragraph 29, aff'd 2012 SCC 45.

I now turn to the contract documents. The key document is the Bond itself. The Bond states in the fourth full paragraph that whenever the Principal (Bondfield) is declared by the Obligee (Project Co.) to be in default in respect of its obligations to Project Co. under the Construction Contract (a "Contractor Event of Default") Zurich, the surety, is required to select and carry out one of four options. Two of those four 5. 100 Reasons for Judgment - Conway, J.

options, numbers three and four, involve the concept of the Balance of the Construction Contract Price (the "Balance"). That concept essentially ensures that Zurich will be responsible under the Bond for the amount it costs to complete construction, but only to the extent that cost exceeds the balance owed on the original construction contract.

CMH and BMO are multiple obligees under a rider to the Bond (the 'Rider"). Zurich points to section 2 of the Rider that states that if there is a Construction Event of Default and BMO or CMH makes a claim under the Bond, CMH or BMO shall make available to Zurich the Balance in accordance with the terms of the Construction Contract. Zurich also refers to a document called the Lender's Direct Agreement between CMH, BMO and Project Co that provides for "step in

20 rights" for BMO. In s. 7.6 of that agreement BMO acknowledges that its rights as obligee under the Bond are subject to its obligation to pay the Balance to Zurich. In the Rider, Zurich acknowledges the step-in process set out in the Lender's Direct Agreement.

Zurich takes the position that the Receiver's call on the Bond is invalid, as there has been no commitment by CMH or BMO to pay the Balance. It argues that under the inter-related agreements, it was never envisioned that Project Co., a subsidiary of the contractor Bondfield, would 6. Reasons for Judgment - Conway, J. 101

make a call on the Bond and that it was always understood that it would be CMH or BMO (the parties with the economic interest in the Project) that would be making the call on the Bond. In that event, Zurich argues that the provisions of the Rider ensure that Zurich would be protected by having CMH or BMO commit to pay the Balance so that Zurich would not be exposed for the entirety of the cost to complete 10 construction. Zurich argues that by putting in a Receiver for Project Co. and having the Receiver make the call on the Bond, BMO is essentially trying to end run the requirement of the documents that it make the Balance available to Zurich in connection with a call on the Bond.

On the moticn before re, I am prepared only to decide the threshold issue of whether the Receiver's call on the Bond was a proper demand and whether Zurich is required to select and carry out one of the four options set out in the Bond.

The Receiver sent a letter to Zurich dated 25 December 7, 2018, stating that Bondfield, the Principal, was in default of its obligations under the Construction Contract and that those constituted Contractor Events of Default for purposes of the Bond. By separate letter dated December 7, 2018, the Receiver demanded that Zurich remedy the defaults or promptly select and carry out one of the other specified options 7. 102 Reasons for Judgment - Conway, J.

available to Zurich pursuant to the Bond. The Receiver's letters track the express terms and language of the Bond. According to the terms of the Bond, Zurich, on receiving these notices, was required to promptly select and carry out one of the four listed options in the Bond. It has not done so.

There is nothing in the Bond that requires that the Balance be provided or committed to Zurich as a pre-condition to making a valid demand on the Bond or as a pre-condition to Zurich selecting and carrying out one of the !our options. Indeed, it is only if a demand is made and Zurich selects options three or four that the concept of the Balance comes into play.

With respect to Section 2 of the Rider, while that section states that CMH or BMO shall make

20 the Balance available to Zurich in accordance with the Construction Contract, the Rider does not require that they do so as a pre-condition to making a demand on the Bond. I note the wording in s. 2 of the Rider that if there is a

25 Construction Event of Default and CMH or BMO makes a claim under the Bond, it shall make the Balance available to Zurich in accordance with the terms of the Construction Contract. This pre-supposes that the Balance is to be made .1. available once a claim has been made - not as a pre-condition of making the claim in the first place. 8. Reasons for Judgment - Conway, J. 103

Further, in the circumstances of this case, it is the Receiver that has made the claim on behalf of Project Co. While I do not see section 2 as establishing a pre-condition to making a claim on the Bond, I have difficulty in any event seeing how it would be a condition of the Receiver making a proper call on the Bond for BMO or CMH to have to make the Balance available to Zurich.

As I have noted, the express purpose of the Receivership Order was for the Receiver to make a call on the Bond and it was ordered to make that demand. Zurich was given notice of and attended the receivership hearing. It did not oppose the Receivership Order. Zurich did not raise any objection to the Receivership Order as being an attempt by BMO to end-run the provisions of the Bond documents, as it now suggests.

I am prepared to grant a declaration that the Receiver's demand of December 7, 2018, was a proper demand under the Bond, as it was made in accordance with the terms of the Bond. That triggers a requirement that Zurich select and carry out one of the four options set out in the Bond. I make no ruling, however, on whether any conditions to an option selected by Zurich are satisfied - that will depend on what option is selected. I also make no ruling on any defences Zurich may assert with respect to its ultimate liability under the Bond, including those relating to alleged delay and who will be 9. Reasons for Judgment - Conway, J. 104

responsible for payment of the Balance and in what quantum.

I do not consider this relief to be hypothetical, moot or unreasonably piecemeal. In my view, a declaration that the Receiver's call is a proper demand and that Zurich is required to select and carry out one of the four options will assist in moving this dispute between the parties, now at a 10 stalemate, ahead.

Finally, I am not persuaded by Zurich's argument that this matter is simply a monetary dispute and will ultimately be resolved by litigation. While litigation will undoubtedly ensue, the structure of the Bond requires that Zurich take action to select one of the four options once a call has been made. Zurich can and should, in my view, be required to take that action: see Canadian Surety

20 Company v. ICI Paints Canada Inc. (1992) 116 NSR 12") 385 (C.A.) at pare 27.

I grant a declaration that the Receiver's demand of December 7, 2018 was a proper demand under the 25 Bond and that Zurich is required to select one of the four options available to it under the Bond. As noted, I make no ruling with respect to the other issues on the motion. I dismiss the balance of the motion, without prejudice to the parties returning to court for adjudication of those issues at a later date. Thank you. _END OF EXCERPT 105 FORM 2 CERTIFICATE OF TRANSCRIPT (SUBSECTION 5(2))

Evidence Act

I, Pauline Leung Nana cl *taxed Person) certWy that this document is true and accurate transcript of the recording Bank of Montreal v. 2423402 Ontario in the Superior Court of Justice Inc. Nuns of Ca.) )Named Coot) held at Courtroom #8-5.330 University Avenue. 8th Floor. Toronto. ON. MSG 1R7 (Caa Adclots1 4899_8- 5_20190925_134859_10_CO taken from Recording NWAYBA.dcr which has been certified in Form 1.

ELECTRONIC COPY - September 27. 2019 NOT CERTIFIED COPY (Date) (*rave of Autroted PetecnOill Patina Lang. ACT D. 2567-686)93 El drb Rsivanervis con I W.9114107

THIS TRANSCRIPT IS CERTIFIED ONLY IF THE ABOVE SIGNATURE IS IN BLUE INK Ontario Regulation 158/03 — Evidence Act

Form 2 March )7.2011)

106 107

Court of Appeal File No.: Superior Court File No. CV-18-610236-00CL

COURT OF APPEAL FOR ONTARIO

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

B E T W E E N:

BANK OF MONTREAL Applicant

and

2423402 ONTARIO INC. Respondent

NOTICE OF APPEAL

THE APPELLANT, ZURICH INSURANCE COMPANY LTD. (“Zurich”),

APPEALS to the Court of Appeal from the Order of The Honourable Justice B. Conway (the

“Motions Judge”) dated September 25, 2019, made at Toronto (the “Order”), declaring that: (1) the letter from the receiver (the “Receiver”) of 2423402 Ontario Inc. (“Project Co.”) dated

December 7, 2018 to Zurich was a proper call on Performance Bond No. 6342957 (the

“Performance Bond”); (2) that the Performance Bond and the Receiver’s demand oblige Zurich to select one of the four options listed in the Performance Bond; and (3) dismissing Zurich’s cross-motion seeking to strike that of the moving party, Bank of Montreal (“BMO”).

1. THE APPELLANT ASKS that the Order be set aside and an order be granted as follows:

(a) granting Zurich’s motion and striking or dismissing BMO’s motion in its entirety;

(b) granting Zurich its costs of the motions below and of this Appeal; and

108 -2-

THE GROUNDS OF APPEAL are as follows:

1. The Motions Judge erred in law by:

(a) holding that the Court had the jurisdiction to grant final declaratory relief on an

interlocutory motion, which was not a properly constituted motion for summary

judgment in an action, and where no originating process had been issued by the

Moving Party, BMO, against Zurich;

(b) holding that the Court had jurisdiction to grant final declaratory relief on a motion

in a receivership application under the Bankruptcy and Insolvency Act, RSC 1985,

c B-3, as amended (“BIA”). The BIA does not grant the Court jurisdiction to make

such final declaratory relief;

of parties other than itself, namely Zurich and Project Co, under the Performance

Bond;

(d) making a final declaration as to the rights of parties to the Performance Bond in

circumstances where such declaration was hypothetical, moot, and determined only

one of many legal controversies between the parties;

(e) declaring that the Receiver’s December 7, 2018 letter to Zurich constituted a proper

call on the Performance Bond, where Project Co. is and was insolvent and

incapable of advancing to Zurich the Balance of the Construction Contract Price

109 -3-

(“Balance”), as defined in the Performance Bond, and where neither the Receiver

(on behalf of Project Co.), nor Project Co., nor any other party, had committed to

make the Balance available as required by the Performance Bond;

(f) declaring that the Performance Bond and the Receiver’s demand under the

Performance Bond on behalf of Project Co. oblige Zurich to select one of the four

options under the Performance Bond, where neither the Receiver nor Project Co.,

nor any other party, had committed to make available the Balance of the

Construction Contract Price, as defined in the Performance Bond; and

(g) making inconsistent findings; namely, that Zurich was obliged to make an election

under the Performance Bond while also making that finding expressly without

prejudice to Zurich’s defences under the Performance Bond. The Defences that

Zurich has and will assert (and which the Court left open) definitively entitle Zurich

to deny liability under the Performance Bond and make no such election.

2. In the alternative, the Motions Judge made palpable and overriding errors by:

(a) declaring that the Receiver’s December 7, 2018 letter to Zurich constituted a proper

call on the Performance Bond, where:

(i) neither the Receiver nor Project Co. had committed to make available the

Balance of the Construction Contract Price, as defined in the Performance

Bond; nor

110 -4-

(ii) the other conditions under the Performance Bond to a call on that bond were

not satisfied, namely that Project Co. not be in default under the

Construction Contract (it was and remains in default);

3. The form of Order below has not yet been settled and there is presently a dispute between the parties as to whether the Motions Judge issued an order compelling Zurich to select and carry out one of the four options under the Performance Bond. To the extent that the Motions Judge did so, that was an error of law, or otherwise an error of mixed fact and law, because:

(a) the Motions Judge had no jurisdiction to grant a permanent mandatory injunction or

an order for specific performance on an interlocutory motion in this proceeding;

(b) BMO had no standing to seek such an Order;

for specific performance; and

(d) there was no evidence of any irreparable harm or that damages would be an

insufficient remedy for the claims that might (but were not yet being) advanced on

behalf of ProjectCo against Zurich.

THE BASIS OF THE APPELLATE COURT’S JURISDICTION IS:

(a) The Court of Appeal has jurisdiction to hear this appeal as of right pursuant to

Sections 183(2), 193(a) and 193(c) of the BIA, namely:

(i) The Order appealed from involves property that exceeds ten thousand

dollars in value; and

111 -5-

(ii) The issues on the appeal involve future rights.

(b) Leave to appeal is not required;

(d) Rule 31(1) of the Bankruptcy and Insolvency General Rules, C.R.C., c. 368;

(e) In the alternative, Section 6(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.

43, i.e., the Court of Appeal has jurisdiction to hear this appeal because the Order

appealed from is final;

(f) In the alternative, if leave to appeal is necessary, it should be granted pursuant to

section 193(e) of the BIA and/or the inherent jurisdiction of the Court, as this

appeal:

(i) raises issues that are of significance to the practice in bankruptcy and

insolvency matters and to the administration of justice as a whole;

(ii) raises issues that are of significance to the proceeding itself; and

(iii) is prima facie meritorious.

112 -6-

October 4, 2019 LENCZNER SLAGHT ROYCE SMITH GRIFFIN LLP Barristers Suite 2600 130 Adelaide Street West Toronto ON M5H 3P5

Matthew B. Lerner (55085W) Tel: (416) 865-2940 Fax: (416) 865-2840 Email: [email protected] Brian Kolenda (60153N) Tel: (416) 865-2897 Fax: (416) 865-3710 Email: [email protected] Jonathan McDaniel (73750F) Tel: (416) 865-9555 Fax: (416) 865-1180 Email: [email protected]

Lawyers for Zurich Insurance Company Ltd.

TO: MCCARTHY, TÉTRAULT LLP Barristers and Solicitors TD Bank Tower 66 Wellington Street West Suite 5300 Toronto ON M5K 1E6

Heather L. Meredith Tel: (416) 601-8342 Email: [email protected] Geoff R. Hall Tel: (416) 601-7856 Email: [email protected]

Tel: (416) 362-1812 Fax: (416) 868-0673

Lawyers for the Applicant

AND TO: THE SERVICE LIST

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

Court File No. CV-18-610236-00CL

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

PROCEEDING COMMENCED AT TORONTO

NOTICE OF APPEAL

LENCZNER SLAGHT ROYCE SMITH GRIFFIN LLP Barristers Suite 2600 130 Adelaide Street West Toronto ON M5H 3P5

Matthew B. Lerner (55085W) Tel: (416) 865-2940 Fax: (416) 865-2840 Email: [email protected] Brian Kolenda (60153N) Tel: (416) 865-2897 Fax (416) 865-3710 Email: [email protected] Jonathan McDaniel (73750F) Tel: (416) 865-9555 Fax (416) 865-1180 Email: [email protected]

Lawyers for Zurich Insurance Company Ltd.

LSRSG 101532782

113

114 115

Court of Appeal File No.: C67522 Superior Court File No.: CV-18-610236-00CL

COURT OF APPEAL FOR ONTARIO

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

BETWEEN:

BANK OF MONTREAL

Applicant (Respondent on Appeal)

- and -

2423402 ONTARIO INC.

Respondent

NOTICE OF MOTION OF THE MOVING PARTY, BANK OF MONTREAL

The Respondent/Moving Party, Bank of Montreal, (the “Administrative Agent”), will make a motion to the Court on a date to be fixed by the Registrar, at Osgoode Hall,

Toronto, Ontario.

PROPOSED METHOD OF HEARING: The motion is to be heard orally.

THE MOTION IS FOR:

1. An order quashing the within appeal;

2. Costs of this motion; and

3. Such further and other relief as this Honourable Court deems just. - 2 - 116

THE GROUNDS FOR THE MOTION ARE:

The Project

1. The Cambridge Memorial Hospital (“CMH”) is currently under-going a major construction and redevelopment project (the “Project”) pursuant to a P3 (Public-Private

Partnership) development contract awarded to 2423402 Ontario Inc. (“Project Co”) dated

August 14, 2014.

2. The Project involves the construction of a brand new, 254,000 square foot patient care wing and extensive renovations to the existing Wing “B” of the Hospital and was initially slated for completion in the Spring of 2019 for a fixed price of approximately

$187 million.

3. Project Co is a special purpose entity that is wholly-owned by Bondfield

Construction Company Limited (the “Contractor”). The construction of the Project was to be undertaken by the Contractor pursuant to a construction contract dated August 14,

2014 (the “Construction Contract”) as between Project Co and the Contractor.

4. There have been delays and cost overruns in the construction work due to various and continuing defaults of the Construction Contract committed by the Contractor.

5. The Project is funded by a senior secured credit facility provided to Project Co pursuant to the credit agreement between Project Co, as borrower, each of the financial institutions and other entities from time to time parties thereto, as lenders, and the

Administrative Agent, made as of August 14, 2014, as amended (the “Credit

Agreement”). - 3 - 117

The Performance Bond

6. Zurich Insurance Company Ltd. (“Zurich”) acted as surety for the Project and, as required by the Credit Agreement, issued three bonds in respect of the Project, including

Performance Bond No. 6342957 (the “Performance Bond”).

7. The Performance Bond provides that whenever the Contractor, as principal, is declared to be in default under the Construction Contract, Zurich is to “…promptly select and carry out one of the four following options” to rectify the default. The specific language of the Performance Bond relating to the obligations of Zurich is as follows:

Whenever the Principal shall be, and declared by the Obligee to be in default in respect of its obligations to the Obligee under the Construction Contract (a “Contractor Event of Default”), the Obligee having performed the Obligee's obligations under the Construction Contract, the Surety shall promptly select and carry out one of the four following options:

1. remedy any default, or;

2. complete the Construction Contract in accordance with its terms and conditions, or;

3. obtain a bid or bids for submission to the Obligee for completing the Construction Contract in accordance with its terms and conditions and upon determination by the Obligee and the Surety of the lowest responsible bidder, acceptable to CMH acting reasonably, arrange for a contract between such bidder and the Obligee or between such bidder and such other party as an Additional Named Obligee shall be entitled to direct, and the Surety shall make available as work progresses (even though there should be a default, or a succession of defaults, under the contract or contracts of completion, arranged under this paragraph) sufficient funds to pay to complete the Principal's obligations in accordance with the terms and conditions of the Construction Contract, less the Balance of the Construction Contract Price and to pay all expenses incurred by the Obligee as a result of the Principal's default relating directly to the performance of the Construction Work under the Construction Contract, but not exceeding the Bond Amount. The - 4 - 118

Balance of the Construction Contract Price is the total amount of the Guaranteed Price payable to the Principal under the Construction Contract, less the amount properly paid by the Obligee to the Principal under the Construction Contract; or

8. On November 16, 2018, the Administrative Agent made a demand on the

Performance Bond. However, Zurich refused to recognize the demand on the Performance

Bond by the Administrative Agent, asserting that in order to assert rights on the

Performance Bond, the Administrative Agent was required to “step-in” to the position of

Project Co under the applicable agreements. Accordingly, Zurich refused to comply with its obligation to promptly select and carry out one of the four options listed in the

Performance Bond.

Appointment of the Receiver

9. In order to address this gating issue, the Administrative Agent brought an application for the appointment of a receiver (the “Receivership Proceedings”). On

December 6, 2018, the Honourable Mr. Justice Hainey issued an order (the “Appointment

Order”) appointing Alvarez & Marsal Inc. as receiver (the “Receiver”) on a limited basis over all of the assets, undertakings and properties of Project Co.

10. The Appointment Order clearly contemplated, and indeed required, that the

Receiver would have the authority to make a demand under the Performance Bond on behalf of Project Co. The Appointment Order provides, at paragraph 27: - 5 - 119

11. Zurich did not oppose the Appointment Order, including the language regarding the demand that would be made by the Receiver on the Performance Bond. Zurich did not appeal the Appointment Order.

Performance Bond Demand by Receiver

12. On December 7, 2018, the day following its appointment, the Receiver made a demand on the Performance Bond (the “Performance Bond Demand”). Again, Zurich refused to recognize the validity of the Performance Bond Demand and refused to comply with its obligation to promptly select and carry out one of the four options listed in the

Performance Bond.

13. Accordingly, on May 6, 2019, the Administrative Agent commenced a motion in the Receivership Proceedings for certain relief with respect to Zurich, including, among other things, a declaration that the Performance Bond Demand was a valid call on the

Performance Bond, and an order directing Zurich to comply with the Performance Bond by promptly selecting and carrying out one of the four options listed in the Performance

Bond. - 6 - 120

Decision Being Appealed

14. On September 25, 2019, the Honourable Madam Justice Conway issued a decision

(i) declaring that the Receiver had made a valid call on the Performance Bond, and (ii) directing Zurich to comply with the Performance Bond by promptly selecting and carrying out one of the four options (the “Conway Decision”).

15. On October 4, 2019, Zurich delivered a Notice of Appeal appealing the Conway

Decision to this Court (the “Appeal”).

No Appeal as of Right

16. There is no common law right of appeal. In Ontario, the right to appeal must be conferred by statute.

17. Zurich has asserted that it has an appeal as of right to this Court based on (i) subsection 193(a) of the Bankruptcy and Insolvency Act, RSC 1985, c. B-3 (“BIA”), (ii) subsection 193(c) of the BIA, or (iii) subsection 6(1)(b) of the Courts of Justice Act, RSO

1990, c. C.43 (“CJA”).

18. None of these provisions apply in these circumstances.

19. First, the Appeal does not involve future rights. Subsection 193(a) of the BIA is to be narrowly construed and restricted to cases involving a future legal right, not rights that presently exist but may be exercised in the future, and not procedural rights or commercial advantages or disadvantages that may accrue from the order being challenged. The Appeal - 7 - 121

only concerns the existing legal rights and obligations of Zurich under the Performance

Bond, not any future legal rights.

20. Second, the Appeal does not involve property that exceeds $10,000 in value.

Subsection 193(c) of the BIA is to be narrowly construed and restricted to cases where the appeal directly involves property exceeding $10,000 in value. The Appeal only concerns an order requiring Zurich to comply with its contractual obligations, it does not directly involve any property.

21. Third, the appeal provisions in the CJA do not apply. An appeal from a decision or order made in proceedings instituted under the BIA (such as the Receivership

Proceedings) is governed by the BIA and the Bankruptcy and Insolvency General Rules,

CRC, c. 368 (the “Bankruptcy Rules”), not by the CJA and the Rules of Civil Procedure,

RRO 1990, Reg. 194.

22. The Conway Decision was made in the context of the Receivership Proceedings and concerns the validity and effect of the Performance Bond Demand by the Receiver.

The purpose of the Receivership Proceedings and the appointment of the Receiver pursuant to section 243 of the BIA was to facilitate the Receiver making the Performance

Bond Demand. Accordingly, the appeal provisions in the BIA and the Bankruptcy Rules govern the Appeal.

23. As none of these statutory provisions apply in these circumstances to ground an appeal as of right, Zurich may only appeal the Conway Decision to this Court if it obtains leave to appeal pursuant to subsection 193(e) of the BIA. - 8 - 122

Application for Leave to Appeal is Out of Time

24. Rule 31(2) of the Bankruptcy Rules provides that “[w]here an appeal is brought under paragraph 193(e) of the Act, the notice of appeal must include the application for leave to appeal.” While Zurich has pled in the alternative in its notice of appeal that leave to appeal should be granted if it is necessary, it has failed to include an application seeking that leave.

25. Rule 31(1) of the Bankruptcy Rules provides that the notice of appeal must be filed within 10 days of the order or decision appealed from.

26. The Conway Decision was issued on September 25, 2019. Accordingly, Zurich is now out of time to file an application seeking leave to appeal as it was required to do.

Leave to appeal should be refused on this basis alone.

Leave to Appeal Should Not Be Granted

27. In the alternative, in deciding whether to exercise its discretion to grant leave to appeal pursuant to subsection 193(e) of the BIA, the following factors should be considered by this Court:

(a) whether the Appeal raises an issue that is of general importance to the

practice in bankruptcy/insolvency matters or to the administration of

justice as a whole, and is one that this Court should therefore consider and

address;

(b) whether the Appeal is prima facie meritorious; and - 9 - 123

bankruptcy/insolvency proceedings.

28. Each of these factors militates against granting leave to appeal.

29. First, the Appeal concerns the effect of a particular demand by the Receiver and the rights and obligations of Zurich under a particular contract and falls far short of raising an issue that is of general importance to the practice of bankruptcy and insolvency matters or to the administrative of justice as a whole.

30. Second, the Appeal does not reveal any clear and demonstrable error by Justice

Conway. Accordingly, the Appeal does not meet the high threshold of being prima facie meritorious in order for an appellate court to interfere with the exercise of discretion by a commercial court judge charged with the responsibility of supervising insolvency and restructuring proceedings.

31. Third, the Appeal would unduly hinder the progress of the Receivership

Proceedings and the progress of construction work on the Project. As Justice Conway noted in her endorsement, the purpose of the Conway Decision was to move the dispute, now at a stalemate, ahead. Granting leave to appeal and staying the Conway Decision would return construction work on the Project back to its previous state of paralysis. This would cause irreparable harm to CMH, its staff, physicians, patients and the community which it serves.

32. Accordingly, the Court should not grant leave to appeal pursuant to subsection

193(e) of the BIA. - 10 124 -

Statement of Jurisdiction

33. The Court of Appeal has jurisdiction to hear this motion to quash and grant the relief requested by the Administrative Agent pursuant to section 134(3) of the CJA.

34. The Administrative Agent will rely on such further and other grounds as counsel may advise and this Honourable Court may permit.

35. The Administrative Agent estimates that 15 minutes will be required for its oral argument.

THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the motion:

(a) The Reasons for Decision of the Honourable Justice Conway dated

September 25, 2019;

(b) The Notice of Appeal dated October 4, 2019;

(d) Such further and other evidence as counsel may tender and this Honourable

Court may permit.

October 10, 2019 McCarthy Tétrault LLP Suite 5300, TD Bank Tower Toronto Dominion Centre 66 Wellington Street West Toronto, ON M5K 1E6 Fax: 416- 868-0673 - 11 125 -

Heather L. Meredith LSO#: 48354R Tel: 416-601-8342 Email: [email protected]

Geoff. R. Hall LSO#: 34701O Tel: 416-601-7856 Email: [email protected]

Trevor Courtis LSO#: 67715A Tel: 416-601-7643 Email: [email protected]

Lawyers for the Respondents on Appeal, Bank of Montreal

TO: LENCZNER SLAGHT ROYCE SMITH GRIFFIN LLP Suite 2600, 130 Adelaide Street West Toronto ON M5H 3P5

Matthew B. Lerner LSO#: 55085W Tel: 416-865-2940 Fax: 416-865-2840 Email: [email protected]

Brian Kolenda LSO#: 60153N Tel: 416-865-2897 Fax: 416-865-3710 Email: [email protected]

Jonathan McDaniel LSO#: 73750F Tel: 416-865-9555 Fax: 416-865-1180 Email: [email protected]

Lawyers for Zurich Insurance Company Ltd.

AND TO: THE SERVICE LIST IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC. Court of Appeal File No.: C67522 BANK OF MONTREAL - and - 2423402 ONTARIO INC. Superior Court File No.: CV-18-610236-00CL

COURT OF APPEAL FOR ONTARIO

Proceeding commenced at TORONTO

NOTICE OF MOTION OF THE MOVING PARTY, BANK OF MONTREAL

McCarthy Tétrault LLP Suite 5300, TD Bank Tower Toronto Dominion Centre 66 Wellington Street West Toronto, ON M5K 1E6 Fax: 416- 868-0673

Heather L. Meredith LSO#: 48354R Tel: 416-601-8342 Email: [email protected]

Geoff R. Hall LSO#: 34701O Tel: 416-601-7856 Email: [email protected]

Trevor Courtis LSO#: 67715A Tel: 416-601-7643 Email: [email protected]

Lawyers for the Respondents on Appeal, Bank of Montreal

19680298 126

127 128

Court of Appeal File No. C67522 Court File No. CV-18-610236-00CL

COURT OF APPEAL FOR ONTARIO

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC. B E T W E E N:

BANK OF MONTREAL Applicant (Respondent on Appeal)

and

2423402 ONTARIO INC. Respondent

NOTICE OF MOTION (Leave to Appeal Pursuant to s. 193(e) of the Bankruptcy and Insolvency Act)

The Appellant, Zurich Insurance Company Ltd., will make a Motion to the Court on a date to be set by the Registrar at 10:00 a.m., or as soon after that time as the Motion can be heard at the

court house, Osgoode Hall, 130 Queen Street West, Toronto, Ontario, M5H 2N5.

PROPOSED METHOD OF HEARING: The Motion is to be heard orally.

THE MOTION IS FOR:

1. If necessary (and the Appellant maintains that it is not) an Order granting leave to appeal of the Order of Justice Conway dated September 25, 2019 pursuant to s. 193(e) of the Bankruptcy and

Insolvency Act, RSC 1985, c B-3;

2. if necessary (and the Appellant maintains that it is not), an Order extending the time to seek

leave to appeal; 129 -2-

3. the costs of this Motion, if opposed; and,

4. such further and other relief as to this Honourable Court may seem just.

THE GROUNDS FOR THE MOTION ARE:

Background

5. This appeal arises from a receivership application concerning the construction work at the

Cambridge Memorial Hospital (“CMH”) (the “Project”).

6. Zurich Insurance Company Ltd. (“Zurich”) is the surety which issued Performance Bond

No. 6342957 (the “Performance Bond”) for the Project. The Respondent in the receivership application, 2423402 Ontario Inc. (“Project Co.”), was the Obligee under the Performance Bond.

7. Bondfield Construction Company Limited (“Bondfield”) was the contractor for the

Project. Project Co. is a wholly-owned subsidiary of Bondfield. Following Bondfield’s liquidity issues beginning in 2014 and 2015 and delays on the Project, certain parties sought to call on the

Performance Bond.

8. The Respondent, Bank of Montreal (“BMO”) was an Additional Named Obligee under a

Multiple Obligee Rider to the Performance Bond. BMO purported to make a demand under the

Performance Bond on November 16, 2018, which did not comply with the requirements of the

Performance Bond. Zurich rejected that demand.

9. BMO then commenced the underlying receivership application. On December 6, 2018,

Justice Hainey issued an Order (the “Appointment Order”) appointing Alvarez & Marsal Inc. as

130 -3- receiver (the “Receiver”) of Project Co. for the purpose of making a demand on the Performance

Bond.

10. On December 7, 2018, the Receiver purported to make a demand under the Performance

Bond, which did not comply with the requirements of the Performance Bond. Zurich rejected that demand.

11. BMO brought a motion in the receivership application by Notice of Motion dated April 24,

2019 seeking the following relief:

(a) An Order (called the “Bond Compliance Order”):

(i) Declaring that Bondfield is, and has been declared by Project Co. to be, in

default in respect of its obligations to Project Co. under the construction

contract between Bondfield and Project Co. dated August 28, 2014 (the

“Construction Contract”) and that the letter from the Receiver to Zurich

dated December 7, 2018 (the “Performance Bond Demand”), was a

proper demand under the Performance Bond on behalf of Project Co.;

(ii) Declaring that, following receipt of the Performance Bond Demand, Zurich

was obligated to promptly select and carry out one of the four options listed

in the Performance Bond and that Zurich has failed to do so;

(iii) Declaring that Zurich has acted in bad faith and/or in breach of contract in

failing to select and carry out one of the four options listed in the

Performance Bond;

131 -4-

(iv) Directing Zurich to comply with the Performance Bond by promptly

selecting and carrying out one of the four options listed in the Performance

Bond and confirming in writing to BMO, CMH, and the Receiver which

option it has selected (the “Selected Option”) within two business days of

the making of this order and providing details as to how the Selection

Option will be carried out.

(b) An Order (called the “Substantive Issues Order”):

(i) declaring that the obligations of Zurich under the Performance Bond are not

limited to the costs of completing the physical construction work under the

Construction Contract, but extend to all of the collateral obligations of the

Contractor under the Construction Contract including amounts for which

Contractor is liable pursuant to Section 33.1 of Appendix A to the

Construction Contract and Liquidated Damages pursuant to Article 12 of

the Construction Contract;

(ii) determining the quantum of the Balance of the Construction Contract Price

(as defined in the Performance Bond), including Project Co.’s right to

set-off from the Guaranteed Price (as defined in the Construction Contract);

and

(iii) directing CMH, upon the Project reaching substantial completion, to release

all amounts payable to Project Co. in respect of the holdback held in trust by

CMH (the “Legislative Holdback”) pursuant to the Construction Act, RSO

1990, c. C.30, as amended (the “Construction Act”), to the Lenders, which

132 -5-

may be retained and set off by the Lenders against any amounts owing with

respect to the Project in priority to any claim from Zurich with respect

thereto.

12. Zurich brought a cross-motion by notice of motion dated May 31, 2019 seeking an Order striking BMO’s Notice of Motion and an Order that the cross-motion be heard before BMO’s motion.

13. BMO’s motion and Zurich’s cross-motion were ultimately heard together before Justice

Conway on September 24, 2019.

The Conway Decision

14. Pursuant to oral reasons delivered on September 25, 2019, Justice Conway issued an order

(the “Conway Decision”) declaring that:

(a) Bondfield has been declared by the Receiver, on behalf of Project Co., to be in

default in respect of its obligations to Project Co under the construction contract

between Bondfield and Project Co. dated August 28, 2014, and that the letter from

the Receiver to Zurich dated December 7, 2018 was a proper demand under the

Performance Bond on behalf of Project Co.; and

(b) Zurich is obligated to select one of the four options listed in the Performance Bond,

in accordance with the terms of the Performance Bond.

15. Zurich served its Notice of Appeal on October 4, 2019 and filed it with Superior Court of

Justice (Commercial List) on October 7, 2019, within ten days of the Conway Decision in

133 -6- accordance with Rule 31(1) of the Bankruptcy and Insolvency General Rules, CRC, c 368 (the

“BIA Rules”).

16. Zurich’s Notice of Appeal asserted a right of appeal pursuant to ss. 193(a) and (c) of the

Bankruptcy and Insolvency Act, RSC 1985, c B-3 (the “BIA”) and, in the alternative, requested leave to appeal pursuant to s. 193(e) of the BIA, if necessary, in accordance with Rule 31(2) of the

BIA Rules.

17. It remains Zurich’s position that it has a right of appeal under ss. 193(a) and (c) of the BIA.

BMO’s Motion to Quash

18. On October 10, 2019, BMO served Zurich with a Notice of Motion seeking to quash

Zurich’s appeal.

19. That Notice of Motion asserted, among other things, that Zurich’s Notice of Appeal did not

“include the application for leave to appeal” required by Rule 31(2) of the BIA Rules, and thus that

Zurich was out of time to seek leave to appeal.

The Conway Order

20. Counsel for Zurich, BMO, and other interested parties in the receivership proceeding appeared before Justice Conway on October 11, 2019 to settle the form of Order arising from the

Conway Decision, which Her Honour granted (the “Conway Order”).

21. The Conway Order granted final declaratory relief, declaring that the Receiver’s December

7, 2018 demand on the Performance Bond was proper, and declaring that the Performance Bond obliged Zurich, following the call, to elect one of the four options in the Performance Bond.

134 -7-

Leave to appeal should be granted, if necessary

22. It is Zurich’s position that it has a right of appeal pursuant to ss. 193(a) and (c) of the BIA.

In the alternative, it is Zurich’s position that it has a right of appeal under s. 6(1)(b) of the, Courts of Justice Act, RSO 1990, c C.43 (“CJA”), as the Conway Order is a final order.

23. If this is incorrect, Zurich should be granted leave to appeal from the Conway Order for the following reasons.

24. The Appeal raises issues that are of general importance to the practice in bankruptcy/insolvency matters and to the administration of justice as a whole, and they are issues that the Court should therefore consider and address:

(a) In particular, the Appeal raises the question of the availability and scope of final

declaratory relief in a receivership application under the BIA and in BIA

proceedings more broadly, a question of general importance to all such

proceedings.

(b) The Appeal also raises the question of the availability of final declaratory relief on

a motion in an application generally, a fundamental legal question of general

importance to the administration of justice as a whole.

standard-form, and widely-used, Performance Bond, and whether or not a

Receiver’s call on that Performance Bond was proper so as to trigger an obligation

by the Surety to make an election. This is a question of general importance to the

135 -8-

practice in bankruptcy/insolvency matters, reviewable for correctness. This is so

for two reasons:

(i) Bondfield (which is in CCAA protection) was the contractor on many

bonded projects in Ontario which involve substantially similar Performance

Bonds, some of which were issued to other of its subsidiary single-purpose

entities like Project Co.; and

(ii) The insolvency of a contractor or single-purpose entity like Project Co., and

the performance issues which insolvency creates, are common reasons why

Obligees make demands under performance bonds.

25. The Appeal is also of significance to the proceeding itself:

(a) BMO commenced the receivership application to appoint a Receiver over Project

Co. to make a demand on the Performance Bond. Whether or not the Court has the

jurisdiction to grant the declarations in the Conway Order regarding that call on the

Bond and Zurich’s obligations, if any, following that call are of central significance

to the entire proceeding.

26. The Appeal is prima facie meritorious. The legal errors made by the Court below are clear:

(a) The Court did not have the jurisdiction to grant final declaratory relief of this nature

on a motion in a receivership application under the BIA.

136 -9-

(b) The Court did not have the jurisdiction to grant final declaratory relief on a motion

in an application, which was not a properly constituted motion for summary

judgment.

Performance Bond in circumstances where such declaration was hypothetical,

moot, and determined only one of many legal controversies between the parties.

(d) The Notice of Appeal discloses a number of other clear errors of law and palpable

and overriding errors which are prima facie meritorious.

27. The Appeal would not unduly hinder the progress of this proceeding:

(a) Neither Zurich nor any other party has taken steps, or is taking steps, as a result of

the Conway Order which they would not have taken absent the Order. There is no

other pending step in the receivership proceeding, or action by the Receiver, which

cannot be taken before this Appeal is determined. Indeed, the Receiver has advised

that, even if Zurich makes election under the Performance Bond, it lacks the power

to commit the Balance of the Construction Contract Price (as defined in the

Performance Bond) to Zurich.

(b) This Appeal does not raise an issue which is minor or peripheral to the receivership

proceeding, and any delay it may cause is not “undue”.

137 -10-

The time for seeking leave to appeal should be extended, if necessary

28. Zurich’s Notice of Appeal complied with Rule 31(2) of the BIA Rules. The Notice of

Appeal included Zurich’s application for leave to appeal, in the alternative.

29. If, instead, the proper procedure was for Zurich to seek leave by separate Notice of Motion, the time for filing this Notice of Motion for leave to appeal should be extended for the following reasons:

(a) Zurich clearly formed an intention to appeal within the relevant ten day period

under Rule 31(1) of the BIA Rules, as it delivered its Notice of Appeal within that

ten day period. In doing so, it informed the BMO and the rest of the Service List of

that intention;

(b) There is no meaningful delay in Zurich’s filing of this Notice of Motion for leave to

appeal. As noted, it is Zurich’s position that the BIA Rules do not require it. It

delivered its Notice of Appeal, including an application for leave to appeal, within

the ten day period in Rule 31(1) of the BIA Rules;

List were given notice of Zurich’s intention to seek, if necessary, leave to appeal in

Zurich’s Notice of Appeal, served within the ten day period under Rule 31(1) of the

BIA Rules; and

(d) The Appeal is meritorious, for the reasons described above in this Notice of

Motion.

138 -11-

30. Finally, the justice of the case requires granting an extension of time to file this Notice of

Motion for leave to appeal, if it is necessary:

(a) As described above in this Notice of Motion, this appeal raises fundamental issues

regarding the jurisdiction of the Court to grant final declaratory relief, both on

motions in applications generally and in proceedings under the BIA. It should be

determined by the Court of Appeal.

(b) Zurich filed a Notice of Appeal within the ten day period under Rule 31(1) of the

BIA Rules, including within it an application for leave to appeal in the alternative.

This is not a case where the Appellant has sat on its rights or seeks to launch an

appeal outside of the ten day period, or where the Respondent or others have relied

upon the decision appealed from outside of the ten day period.

leave to appeal for the purposes of Rule 31.

31. Rules 3.02, 37, 61.03.1, and 61.16 of the Rules of Civil Procedure, RRO 1990, Reg 194;

32. Section 7 of the CJA;

33. Rule 31 of the BIA Rules;

34. Section 193 of the BIA; and

35. Such further and other grounds as the lawyers may advise.

36. Zurich estimates that one hour will be required for its oral argument.

139 -12-

THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the Motion:

37. The Conway Decision;

38. The Conway Order;

39. The Notice of Appeal dated October 4, 2019;

40. The Notice of Motion of BMO to quash the appeal, dated October 10, 2019;

41. The Affidavit of Adrian Braganza, to be sworn; and

42. Such further and other evidence as the lawyers may advise and this Honourable Court may permit.

October 17, 2019 LENCZNER SLAGHT ROYCE SMITH GRIFFIN LLP Barristers Suite 2600 130 Adelaide Street West Toronto ON M5H 3P5

Lawyers for Zurich Insurance Company Ltd.

140 -13-

TO: MCCARTHY, TÉTRAULT LLP Barristers and Solicitors TD Bank Tower 66 Wellington Street West Suite 5300 Toronto ON M5K 1E6

Heather L. Meredith Tel: (416) 601-8342 Email: [email protected] Geoff R. Hall Tel: (416) 601-7856 Email: [email protected]

Tel: (416) 362-1812 Fax: (416) 868-0673

Lawyers for the Applicant

AND TO: THE SERVICE LIST

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

Court of Appeal File No. C67522 Court File No. CV-18-610236-00CL

COURT OF APPEAL FOR ONTARIO PROCEEDING COMMENCED AT TORONTO

NOTICE OF MOTION OF THE MOVING PARTY, ZURICH INSURANCE COMPANY LTD.

LENCZNER SLAGHT ROYCE SMITH GRIFFIN LLP Barristers Suite 2600 130 Adelaide Street West Toronto ON M5H 3P5

Lawyers for Zurich Insurance Company Ltd.

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July 16, 2019 Matthew B. Lerner Direct line: 416-865-2940 Direct fax: 416-865-2840 Email: [email protected]

BY EMAIL

Linc Rogers Stephen Ferguson Aryo Shalviri Melanie MacKenzie Catherine Doyle Alvarez & Marsal Canada Inc. Blake, Cassels & Graydon LLP Royal Bank Plaza, South Tower 199 Bay Street 200 Bay Street, Suite 2900 Suite 4000, Commerce Court West P.O. Box 22 Toronto, ON M5L 1A9 Toronto, Ontario M5J 2J1

Counsel to the Receiver of 2423402 Ontario Inc. Receiver of 2423402 Ontario Inc.

Heather L. Meredith Geoff R. Hall Trevor Courtis McCarthy Tétrault LLP Suite 5300, TD Bank Tower 66 Wellington Street West Toronto, ON M5K 1E6

Counsel to the Applicant, Bank of Montreal

Dear Counsel:

RE: In the matter of the Receivership of 2423402 Ontario Inc. (“Project Co.”), Court File No. CV-18-610236-00CL

We write further to our letters of June 24 and July 9, 2019, and the letter of counsel to the Bank of Montreal (“BMO”) of July 11, 2019.

Discharge of Surety

As you know, since September 2018 Zurich has been providing financial and managerial support to Bondfield in order for Bondfield Construction Company Limited (“Bondfield”) to complete the work on the Cambridge Memorial Hospital (“CMH”) project under the Construction Contract between Bondfield and Project Co. At the request of CMH, on May 3, 2019, as a gesture of good faith and in furtherance of its support to Bondfield, Zurich committed to continue to fund work on the CMH project to the Interim Completion milestone.

Counsel 2 147 July 16, 2019

All of the costs and expenses incurred in achieving Interim Completion have been expended by Zurich on a full reservation of rights basis. This commitment stands.

Notwithstanding Zurich’s efforts, the Lenders and CMH have refused to recognize the obligations of the Obligee to pay Bondfield under the Construction Contract and to commit to pay the balance of the Construction Contract funds towards the completion effort.

In light of this position and the fact that Project Co is insolvent, our letter of June 24, 2019 required that the Receiver of Project Co., on behalf of Project Co., confirm on or before July 12, 2019 that it would make available to Zurich the Balance of the Construction Contract Price, pursuant to the Performance Bond issued in relation to the CMH project.

To date, the Receiver of Project Co., on behalf of Project Co., in default of its obligations under the Performance Bond, has failed to confirm that it will make the Balance of the Construction Contract Price available to Zurich. Neither has any other party (whether the Lenders or CMH) declared that they would either “step into” the Construction Contract and assume Project Co’s obligations as stipulated in the Project Agreements or confirmed that sufficient funds will be made available by Project Co. to advance the Balance of the Construction Contract Price to Zurich.

As such, this letter confirms our earlier advice that as a result of the Obligee failing to perform its obligations under the Construction Contract, Zurich has been discharged from any further obligations under the Performance Bond, denies any and all liability under the Performance Bond, will cease all further involvement with the CMH project after Interim Completion is achieved. Zurich will pursue recovery of all amounts expended and all other damages suffered to date and in the future against any parties, including the parties to the Multiple Obligee Rider, who have benefited by Zurich’s interim funding of the Project.

We note that all of the funds expended by Zurich have ultimately been for the benefit of CMH and the Lenders. Zurich will pursue recovery of all amounts expended and all other damages suffered to date and in the future against any parties, including the Lenders and CMH, who have benefited by Zurich’s interim support to the Project.

Increase to Receiver’s Charge

We acknowledge that the July 11, 2019 letter of counsel to BMO purported to offer to consent to increase the Receiver’s borrowing charge by $2,377,076.24, make any corresponding amendments to the Receivership Order, consent to these amounts being advanced to the Receiver by the Lenders from amounts presently available under the Credit Facility prior to Interim Completion, and to consent to remit certain amounts to Zurich.

We will consider whatever form of order is proposed at the attendance scheduled for July 17, 2019 and ask that it be circulated as soon as possible.

Counsel 3 148 July 16, 2019

While this payment when made by Project Co will partially pay certified amounts currently owing to Bondfield, based on currently available information, including that in the Monitor’s supplemental report of July 10, 2019, payment of these amounts will not cure all of the defaults by Project Co. under the Construction Contract. In particular, according to the Monitor’s report, the unpaid amounts owing to Bondfield, even after the new payments proposed by the Lenders above, remain at over $1 million.

Further, even after these payments, some $67.5 million of the Balance of the Construction Contract Price owing prior to substantial completion remains uncommitted.

Phase 3 Planning Work

As Mr. Kolenda explained at Friday’s 9:30 attendance, Zurich will continue as part of its commitment above (and on the same basis) to engage with Ellis Don to continue preparations for Phase 3 until Interim Completion is achieved. This includes working with Ellis Don, until Interim Completion, to refine the price and scope of the remaining work for Phase 3 to the extent possible.

Zurich continues to reserve all of its rights under the Performance Bond and otherwise at law.

Yours truly,

Matthew B. Lerner

MBL/jm c. Scott Rollwagen / Brian Kolenda / Jonathan McDaniel

Kyla Mahar/ Dražen Bulat – Counsel to Cambridge Memorial Hospital

David Ward / Erin Craddock - Counsel to Infrastructure Ontario

Rocco Sebastiano / Michael De Lellis - Counsel to 2423403 Ontario Inc. and Bondfield Construction Company Limited Alan Merskey / Evan Cobb - Counsel to the Monitor of Bondfield Construction Company Limited

149 150

Blake, Cassels & Graydon LLP Barristers & Solicitors Patent & Trade-mark Agents 199 Bay Street Suite 4000, Commerce Court West Toronto ON M5L 1A9 Canada Tel: 416-863-2400 Fax: 416-863-2653

Aryo Shalviri July 16, 2019 Dir: 416-863-2962 aryo.shalvirina VIA EMAIL

Lenczner Slaght Royce Smith Griffin LLP 130 Adelaide St. W Suite 2600, ON M5H3P5 Attention: Mr. Matthew B. Lerner Email: mlerner litibate.com

Re: In the matter of the Receivership of 2423402 Ontario Inc. ("Project Co"), Court File No. CV-18- 610236-00CL Re: Letter dated July 16, 2019 from Matthew B. Lerner (the "July 16 Letter")

Dear Mr. Lerner:

As you are aware, we are counsel to Alvarez & Marsal Canada Inc., in its capacity as receiver (but not manager) of Project Co (in such capacity, the "Receiver").

We are in receipt of your July 16 Letter and write to advise that the Receiver's position remains as set out in my letter of June 28, 2019, a copy of which is enclosed herein for ease of reference.

Yours very truly,

Aryo Shalviri

Encl. Cc: S. Ferguson & M. MacKenzie, Alvarez & Marsal Canada Inc. in its capacity as Receiver L. Rogers, counsel to the Receiver G. Hall, H. Meredith & Trevor Courtis, counsel to Bank of Montreal K. Mahar & D. Bulat, counsel to Cambridge Memorial Hospital D. Ward & E. Craddoke, counsel to Infrastructure Ontario S. Rollwage, B. Kolenda & J. McDaniel, counsel to Zurich Insurance Company Ltd. A. Merskey & E. Cobb, counsel to the Monitor of Bondfield Construction Company Limited R. Sebastiano & M. De Lellis, counsel to Bondfield Construction Company Limited 151

Blake, Cassels & Graydon LLP Barristers & Solicitors Patent &Trade-mark Agents 199 Bay Street Suite 4000, Commerce Court West Toronto ON M5L 1A9 Canada Tel: 416-863-2400 Fax: 416-863-2653

Aryo Shalviri June 28, 2019 Dir: 416-863-2962 arvo.shalviriablakes.com VIA EMAIL

Lenczner Slaght Royce Smith Griffin LLP 130 Adelaide St. W Suite 2600, ON M5H3P5 Attention: Mr. Matthew B. Lerner Email: mlerner litiqate.com

Re: In the matter of the Receivership of 2423402 Ontario Inc. ("Project Co"), Court File No. CV-18- 610236-00CL Re: Letter dated June 24, 2019 from Matthew B. Lerner (the "June 24 Letter")

Dear Mr. Lerner:

As you are aware, we are counsel to Alvarez & Marsal Canada Inc., in its capacity as receiver (but not receiver and manager) of Project Co (in such capacity, the "Receiver"). We are in receipt of your June 24 Letter and appreciate this opportunity to reply.

As you are aware, pursuant to an order of the Honourable Mr. Justice Hainey of the Ontario Superior Court of Justice (Commercial List) (the "Court") granted on December 6, 2018 (the "Appointment Order"), Alvarez & Marsal Canada Inc. was appointed as Receiver, without security, of all of the assets, undertakings and properties of Project Co acquired for, or used in relation to the business carried on by Project Co (the "Property"), for the sole purpose of carrying out the terms of the Appointment Order and without taking possession or control of the Property.

As your client Zurich Insurance Company Ltd. ("Zurich") is aware and as set out in the Motion Record of Bank of Montreal ("BMO") the parties had initially contemplated that the Appointment Order be in line with the Model Appointment Order of the Court and that the Receiver be granted with, and subject to, the more expansive powers and responsibilities provided for in the Model Appointment Order. However, at the request of Zurich, the scope of the Receiver's appointment was scaled back. The powers and authorizations granted to the Receiver pursuant to the Appointment Order are of a limited nature and do not include carrying out an independent investigation or assessment of the substantive claims made in the June 24 Letter or responding to or confirming any matters for or on behalf of Project Co. Further, the Appointment Order does not, in its current form, provide that the Receiver may cause Project Co to make the Balance of the Construction Contract Price available to Zurich. In that regard, to the extent Zurich would like to discuss any potential amendments to the Appointment Order, we would be pleased to discus same with Zurich, BMO and other stakeholders.

We would observe that the substantive matters raised in your June 24 Letter appear to be the very same which are disputed by BMO and subject to adjudication by the Court, in accordance with a timeline and procedure agreed upon by Zurich and BMO. 152

Page 2

In these circumstances and given that your client is not only aware of, but in fact insisted upon, the narrow scope of the Receiver's appointment which precludes it from addressing the June 24 Letter on a substantive basis, we do not view the June 24 Letter as constructive.

We trust this letter clarifies matters.

Yours very truly, pec Kaiwos-Q-c-

Aryo Shalviri

Cc: S. Ferguson & M. MacKenzie, Alvarez & Marsal Canada Inc. in its capacity as Receiver L. Rogers, counsel to the Receiver G. Hall, H. Meredith & Trevor Courtis, counsel to Bank of Montreal K. Mahar & D. Bulat, counsel to Cambridge Memorial Hospital D. Ward & E. Craddoke, counsel to Infrastructure Ontario S. Rollwage, B. Kolenda & J. McDaniel, counsel to Zurich Insurance Company Ltd. A. Merskey & E. Cobb, counsel to the Monitor of Bondfield Construction Company Limited R. Sebastiano & M. De Levis, counsel to Bondfield Construction Company Limited

TORONTO CALGARY VANCOUVER MONTREAL OTTAWA NEW YORK LONDON RIYADH/AL-KHOBAR BAHRAIN BEIJING Blake. Cassels & Graydon LIP •Associated Office., blakas.com

153 McCarthy Tetrault LLP 154 PO Box 48, Suite 5300 Toronto-Dominion Bank Tower Toronto ON M5K 1E6 Canada Tel: 416-362-1812 Fax: 416-868-0673

Heather L. Meredith mccarthy Partner Direct Line: (416) 601-8342 tetrault Direct Fax: (416) 868-0673 Email: [email protected]

Assistant: Fick, Kaitlin Direct Line. (416) 601-8200 x542050 Email: [email protected]

July 17, 2019

Via Email ([email protected])

Mr. Matthew Lerner Partner Lenczner Slaght Royce Smith Griffin LLP Suite 2600 130 Adelaide Street West Toronto ON M5H 3P5

Dear Mr. Lerner

Re: Performance Bond No. 6342957 dated August 28,2014 between Bondfield Construction Company Limited ("Bondfield") and Zurich Insurance Company Ltd. ("Zurich"), together with the Multiple Obligee Rider thereto naming Cambridge Memorial Hospital and Bank of Montreal (the "Agent") as Additional Named Obligees (collectively the "Performance Bond")

And Credit Agreement dated as of August 28,2014, between 2423402 Ontario Inc. Re: ("Project Co"), the Agent, and certain lenders (the "Lenders"), as such Credit Agreement is amended, amended and restated, renewed, extended, supplemented, replaced or otherwise modified from time to time (the "Credit Agreement") and Construction Contract between Bondfield and Project Co dated August 28, 2014 (the "Construction Contract")

We are in receipt of your letter dated July 16, 2019.

In the letter you claim that the Surety "has been discharged from any further obligations under the Performance Bond, denies any and all liability under the Performance Bond [and] will cease all further involvement with the CMH project after Interim Completion is achieved." Such a letter - particularly after the 9:30 Chambers appointment before Justice Hainey on July 12th - is unhelpful and contrary to the Surety's obligations under the Performance Bond.

First, the claims made in your letter are legal positions of the Surety that are not supported by the facts or law. The Surety has no power to declare that it has been "discharged" from further obligations. This is a legal argument and the imposition of a unilateral deadline has no impact on the legal analysis. Instead, contrary to your assertions, Project Co is not in default of its obligations under the Performance Bond. We have relayed to the Surety the Lender's position in this regard on multiple occasions including pointing out that:

DOCS 19189729v1 mccarthy page 2 155 tetrault

(a) There has been no refusal to pay the Balance of the Construction Contract Price ("BOCCP"). The Lenders have advised repeatedly that they are supportive of the BOCCP being advanced to Zurich in accordance with the Construction Contract and the Performance Bond. This does not entitle Zurich to an advance "commitment" of the quantum that it calculates for the BOCCP, particularly where there continues to be a disagreement over that figure and the relevant issues are before the Court on August 1, 2019;

(b) Notwithstanding that Zurich alleges that it has advanced amounts to fund the project, Zurich has not a) selected an option under the Performance Bond; or b) had any amounts certified for payment by the Lender's Consultant pursuant to the Construction Contract subsequent to the defaults. Project Co has no obligation to provide a "commitment" in advance of any amounts becoming payable pursuant to the Construction Contract; and

(c) No amounts are presently payable by Project Co to Bondfield pursuant to the Construction Contract given the ongoing Bondfield-caused defaults.

Moreover, notwithstanding the ongoing defaults, the Lenders have arranged to provide funding to the Receiver up to the full amount remaining available under the credit facility to Interim Completion (up to $2,377,076.24). The Lenders further consented to payment of $651 ,761, which represents the amount that has been certified by CMH's Consultant but unpaid to date, with the remainder to be paid as it is certified by the Lender's Consultant going forward. In the face of that good faith step, the Surety continues to threaten the parties with technical arguments and consequences for missing its unilaterally-imposed deadline - and even goes so far as to allege that "according to the Monitor's report, the unpaid amounts owing to Bondfield, even after the new payments proposed by the Lenders above, remain at over $1 million." This is false and misleading. The Monitor's report takes no position on the amount actually owing to Bondfield by Project Co. Rather, it provides information as to the amounts in dispute: both the amounts shown on Bondfield's books and records and the amounts identified by the Lenders. Indeed, in the report, the Monitor confirms that various payments identified by the Lenders were made by Project Co and not included in the Bondfield books and records. The Monitor left it to the parties to determine the legal consequences of those facts. To the extent the Surety intends to dispute that such payments were not made to or on behalf of Bondfield - notwithstanding that it was Bondfield principals who directed that such payments be made by Project Co (which was a special purpose entity designed to make payments only to Bondfield) - Zurich is free to do so in much the same manner that it has maintained every other technical argument to date. However, it should not suggest that the Monitor has reported that such amounts are "owing to Bondfield" .

Finally, to the extent your letter is intended to do anything other than assert the Surety's legal position, it is contrary to the representations made to the Court and the clear directions from the Court on July 12, 2019. At the Chambers appearance before Justice Hainey on July 12, 2019, Justice Hainey admonished the Surety for arguing that the Court did not have the power to make an order requiring the Surety to standstill from taking any action with respect to the unilateral deadline it had set. In no uncertain terms, Justice Hainey made clear that the Court did have the authority to require the Surety to stand down and that he intended to make such an order. Counsel for the Surety then claimed that the Surety was merely advising of its change in legal position, which would take place after Interim Completion was achieved, and that the Surety intended to continue expending funds to Interim Completion and counsel expected the

DOCS 19189729v1 mccarthy page 3 156 tetrault

Surety to also continue funding with respect to actions that would take place after Interim Completion such as discussions with EllisDon. Justice Hainey stated that if the Surety was merely advising of a change of legal position, effective after Interim Completion, that was alright but that if the Surety was seeking to do anything else then he would impose a stay. It was made very clear that the Surety's efforts to pressure parties to accede to the Surety's demands and unilateral deadlines with respect to issues that were already before the Court on August 1, 2019 would not be tolerated.

Accordingly, to the extent that your letter seeks to do anything other than advise of the Surety's position, which will have no effect until after Interim Completion, then it is contrary to the representations made to the Court and Justice Hainey's clear directions. We assume that the Surety is abiding by its representations to the Court in this regard and as such will treat your letter of today's date as nothing more than an expression of the Surety's intended position post- Interim Completion, which we note is merely a legal position and will be impacted by any legal findings of the judge at the August 1, 2019 motion.

Yours truly, -_ ..---", '-', ~ ( ) /)J I ~.l.../ 1~c ~~~ r( Heather L. Meredith

HLM/kf

c. E. Orbach, Bank of Montreal, as administrative agent S. Furlan, G. Hall & M. Troke, counsel to Bank of Montreal, as administrative agent K. Mahar & D. Bulat, counsel to Cambridge Memorial Hospital D. Ward, counsel to Infrastructure Ontario B. Bissell, M. Forte & S. Poteet, counsel to Zurich Insurance Company Ltd.

DOCS 19189729v1

157 158

October 4, 2019 Kyla Mahar Direct Line: 416.597.4303 [email protected] Sent by E-mail File No. 0041336.0126 Heather L. Meredith McCarthy Tétrault LLP PO Box 48, Suite 5300 Toronto-Dominion Bank Tower Toronto, ON M5K 1E6

Dear Ms. Meredith:

Re: Cambridge Memorial Hospital (“CMH”) Capital Redevelopment Project (the “Project”) Re: Project Agreement dated August 28, 2014 (“PA”) between CMH and 2423402 Ontario Inc. (“Project Co”) Re: Demand Upon Performance Bond No. 6342957 dated August 28, 2014 (the “Performance Bond”) issued by Zurich Insurance Company Ltd. (“Zurich”) by Alvarez & Marsal Canada Inc. (the “Receiver”) in its capacity as the Court appointed Receiver of Project Co

As you are aware, we are counsel for CMH.

This letter sets out CMH’s assessment of the current state of the Project and recent events, as well as CMH’s intentions. Capitalized terms used in this letter that are not defined have the meanings assigned to them in the PA.

Background

The Bank of Montreal, as Agent for the Lenders (the “Agent”), has long known of CMH’s concerns regarding Project Co’s lack of progress and delays on the Project. CMH documented its concerns in numerous letters issued to Project Co, copies of which were sent to the Lender’s Consultant, Pelican Woodcliff, which were then attached to the Lender’s Consultant’s monthly reports issued to the Agent.

In addition to the letters the Agent received through the Lender’s Consultant, on March 16, 2017 CMH wrote directly to the Agent indicating, among other things, that Project Co was constantly falling further behind schedule.

On March 12, 2018, CMH issued a notice of Project Co Event of Default due to Project Co’s failure to pay outstanding amounts owing to CMH (for utilities and other charges) (the “March 12, 2018 Notice”). A copy of the March 12, 2018 Notice was sent to the Agent in accordance with Section 6.1 of the Lenders Direct Agreement (the “LDA”), along with a cover letter in which CMH pointed out that: 159 Page 2

(a) the latest schedule delivered by Project Co indicated that Interim Completion would be achieved on April 16, 2018 (16½ months late) and Substantial Completion would be achieved on September 13, 2020 (17½ months late); (b) there were significant problems with Project Co’s work; and (c) CMH believed that Project Co would not achieve Interim Completion by April 16, 2018 and would not achieve Substantial Completion by the Longstop Date.

Although Project Co paid the amount owing to CMH, its activity on the Project did not improve. On April 18, 2018, CMH sent a further letter to Project Co setting out its concerns and sent a copy of this letter directly to the Agent. In the April 18, 2018 letter, CMH advised that: (a) CMH anticipated Project Co may be able to achieve Interim Completion in July or August, 2018, approximately 20-21 months late; (b) Project Co would, at best, attain Substantial Completion approximately 14-15 months after the Longstop Date; and (c) Project Co’s continued failure to maintain the Project schedule and achieve schedule milestones have had a material adverse effect on CMH and its ability to operate the Facility, and a significant negative impact on CMH’s patients and staff.

On May 31, 2018, CMH issued another notice of Project Co Event of Default due to Project Co’s failure to remove claims for lien that had been registered against title to the Project lands (the “May 31, 2018 Notice”). A copy of the May 31, 2018 Notice was sent to the Agent in accordance with the LDA, along with a cover letter in which CMH advised that: (a) CMH believed that Project Co would not achieve Interim Completion by Project Co’s then current projected dated of July 26, 2018 (20 months late) and would not achieve Substantial Completion by the Longstop Date; and (b) CMH continued to have ongoing serious concerns regarding Project Co’s operations and its ability to complete the Project.

On August 10, 2018, CMH issued a third notice of Project Co Event of Default due to Project Co’s numerous defaults under the PA (the “August 10, 2018 Notice”). A copy of the August 10, 2018 Notice was sent to the Agent on August 13, 2018. Project Co failed to cure the defaults that resulted in the August 10, 2018 Notice.

CMH’s exercise of its remedies due to a Project Co Event of Default is subject to the LDA. Section 6.2(c) of the LDA provides that CMH shall not exercise any right to terminate the PA or any other rights or remedies for a period of 120 days (the “Notice Period”), during which time the Agent holds the exclusive right to exercise its “step-in” rights and take specific actions described in the LDA. The Notice Period resulting from the August 10, 2018 Notice expired on December 11, 2018.

On November 16, 2018, the Agent issued a letter to the Construction Contractor, Bondfield Construction Company Ltd. (“Bondfield”), declaring it to be in default of its obligations under the Construction Contract. On the same date, the Agent also issued a notice to Zurich

42378719.3 160 Page 3 under the Performance Bond demanding that Zurich remedy the events of default or promptly select and carry out one of the other options available to Zurich pursuant to the Performance Bond.

Zurich did not accept the validity of the Agent’s demand under the Performance Bond. Instead of “stepping in” and exercising the rights available to the Agent during the Notice Period, the Agent chose to seek the appointment of a Court appointed Receiver over Project Co. The Agent’s application was served on December 5, 2018, just days before the expiry of the Notice Period, and on December 6, 2018 the Court issued an Order appointing the Receiver (the “Receivership Order”). The Agent’s application specifically referenced the expiry of the Notice Period as a reason why the relief sought was urgent.

The Receivership Order provides that the Receiver “shall make a demand under the Performance Bond for and on behalf of [Project Co]” (para. 27 of the Receivership Order), and on December 7, 2018, in accordance with the Receivership Order, the Receiver: (a) wrote to Bondfield and declared, on behalf of Project Co, that Bondfield is in default of its obligations under the Construction Contract; and (b) wrote to Zurich and made a demand on the Performance Bond.

The result of the Agent obtaining the Receivership Order was that CMH was unable to enforce its remedies against Project Co, including terminating the PA, after the expiry of the Notice Period as a result of the stay of proceedings, which stayed and suspended all of CMH’s rights and remedies against Project Co (except for the ability to assert set-off rights).1 In fact, preventing CMH from enforcing its remedies was one of the key concerns of the Agent. According to the Affidavit of Eden Orbach sworn December 5, 2018 (at para. 11) in support of the Receivership Order: The Project Co Default Notice triggered a 120-day period following which CMH becomes entitled to terminate the Project Agreement. This places the Lenders in an untenable position as the termination of the Project Agreement by CMH would cause severe and irreparable harm to Project Co and greatly increase the risk of the Lenders not recovering the Senior Secured Indebtedness.

The Receiver’s call on the Performance Bond failed to accelerate the Project reaching Interim Completion notwithstanding numerous meetings and discussions among the parties. Meanwhile, both the Interim Completion and the Substantial Completion Dates have continued to slip.2

Almost 5 months after the Receivership Order was issued, and with Zurich still not having made an election under the Performance Bond, the Agent served a motion seeking, among

1 See paras. 8, 9 of the Receivership Order. 2 When CMH issued the notice Project Co Event of Default on August 10, 2018 the projected Interim Completion date was December 3, 2018; at the time the Receivership Order was issued the Interim Completion date had moved to March 4, 2019, and it has moved 5 more times since and is now scheduled for October 28, 2019 [at one point we were advised it was scheduled for November 4, 2019 but that has since changed although there is some indication Interim Completion may be pushed back again to early November 2019].

42378719.3 161 Page 4 other things, a declaration that the Receiver’s call on the Performance Bond was properly made and requiring Zurich to select one of the options under the Performance Bond (the “Declaration Motion”). After receiving the Declaration Motion, on May 3, 2019, Zurich agreed, without prejudice to its position regarding its obligations under the Performance Bond, and on a full reservation of rights basis, that it would “continue to fund work on the project to Interim Completion”.

At the hearing of the Declaration Motion on September 24, 2019, Zurich made it clear to the Court that regardless of the outcome of the Declaration Motion, it would cease funding all work and would cease all further involvement on the Project after Interim Completion, and would pursue recovery of all damages it claims to have suffered. As a result of Zurich’s position, work related to the planning and commencement of Phase 3 of the Project has effectively ceased and CMH is in complete limbo as to when Phase 3 may begin or what entity will even undertake the construction of Phase 3 of the Project. In addition, Subcontractors owed money for work relating to Phase 3 are not being paid and Zurich has indicated that it will not be funding same.

The Declaration Motion was heard almost 5 months after the Agent originally served it. Zurich took the position, among others, that the Receiver’s demand on the Performance Bond was not properly made and, in any event, that it was a precondition of its selection of an option under the Performance Bond that Project Co / the Receiver had to make available the “Balance of the Construction Contract Price” (“BCCP”).

On September 25, 2019, Madam Justice Conway rendered her decision granting a declaration that the Receiver demand made on December 7, 2018 was a proper demand on the Performance Bond that triggers a requirement that Zurich select and carry out one of the four options under the Performance Bond (the “Decision”). That same day you issued a letter to counsel for Zurich advising that the Agent expected Zurich to select an option by September 30, failing which the Agent would “return to Court”. Zurich did not select an option by the deadline imposed and still has not selected an option under the Performance Bond.

Since issuing the above-referenced letter, the Agent and Zurich have unsuccessfully attempted to settle the form of Order. As a result, you have scheduled a Chambers Attendance before Madam Justice Conway on October 10 or 11, 2019.

CMH’s Concerns and Intent

Interim Completion is currently scheduled for October 28, 2019 (although it may be pushed into November), at which point the Project will be 3 years behind schedule. It has been over a year since the August 10, 2018 Notice was issued by CMH, with very little progress accomplished. As described in the August 10, 2018 Notice, the delay has had significant adverse effects on CMH and its ability to operate the Facility and a significant negative impact on CMH patients and staff. Meanwhile: (a) Bondfield is insolvent and subject to proceedings under the Companies’ Creditors Arrangement Act; (b) the Project Longstop Date (September 27, 2019) has now passed, constituting another Project Co Event of Default;

42378719.3 162 Page 5

(c) Zurich has yet to select one of the options under the Performance Bond and has publicly stated that it does not intend to remain on the Project after Interim Completion; (d) CMH has growing concerns over the retention of doctors and staff as a result of the dire state of the Project and the Facility; and (e) the Cambridge community that needs a modernized and completed hospital is suffering without one.

CMH is very concerned that: (a) as Zurich’s counsel stated in Court during the hearing of the Declaration Motion, that Zurich will “walk off” the Project after Interim Completion regardless of the outcome of the Declaration Motion; (b) Interim Completion will be held up as a result of demands made by Subcontractors for payment for Phase 3 work, which Zurich has indicated it will not fund; (c) Zurich may appeal the Decision, which will continue to delay any progress on the Project and stall the commencement of Phase 3 work even longer; (d) if Zurich selects “option 3” under the Performance Bond, then further delays will result while the Agent and Zurich argue about, among other things, the amount of the BCCP, when it is to be funded, and who is going to fund the Receiver to make the BCCP payments; (e) if Zurich selects “option 4” under the Performance Bond, then it is possible Zurich may ask Project Co, rather than the Receiver, to provide Project Co’s proposed cost to complete, given the wording of the Receivership Order. As I have explained to you, if this occurs, this could result in Zurich issuing a payment to Project Co under “option 4” which would not be sufficient to fund the completion of the Construction Contract. The above noted concern could be addressed by the Agent seeking an Order to clarify that Project Co has no authority to take any step with respect to the Performance Bond and to confirm that the only person authorized to do so is the Receiver. This would prevent Zurich from attempting to deal directly with Project Co in the manner described above. We understand that you are discussing the matter with counsel to the Receiver and considering whether the Receivership Order currently precludes Project Co from establishing the proposed cost to complete. We are of the view that it is possible the Court may not interpret the Receivership Order in this manner. If the Agent fails to take steps to ensure these concerns are addressed, we are of the view that there is a risk that the amount paid under the Performance Bond by Zurich (based on an undervalued proposed cost to complete from Project Co) could be substantially less than the actual costs required to complete the Construction Contract, which would result in crystalizing a loss for the Agent.

You have advised that the Agent intends to bring a motion seeking to enforce the stay of proceeding to preclude Zurich from “walking off” the Project after Interim Completion. This

42378719.3 163 Page 6 motion has not been scheduled and the date scheduled for Interim Completion is fast approaching.

As a result of the LDA and then the stay of proceedings, CMH has been required to stand by while first the Agent and then the Receiver have asserted control as Obligee attempting to enforce the rights under the Performance Bond. However, the length of time it has taken to get to where we are today, and the uncertainty that still exists regarding moving forward, cannot continue. CMH cannot continue to stand by while the community continues to suffer from not having a completed Project. In the circumstances, unless the Agent takes steps immediately to break the impasse and demonstrates a clear path forward to completing the Project, CMH intends to bring a motion seeking to lift the stay of proceedings imposed by the Receivership Order to allow it to exercise any and all of its remedies under and arising from the PA, including terminating the PA.

Yours truly,

Kyla Mahar

Copies: Matthew Alter / David Ward – Counsel to Infrastructure Ontario Michael Prociw / Patrick Gaskin – Cambridge Memorial Hospital

42378719.3

164 165 166 167 168

169 170

October 10, 2019 Matthew B. Lerner Direct line: 416-865-2940 Direct fax: 416-865-2840 Email: [email protected]

VIA EMAIL

Heather L. Meredith McCarthy Tétrault LLP Suite 5300, TD Bank Tower 66 Wellington Street West Toronto, ON M5K 1E6

Dear Counsel:

RE: In the matter of the Receivership of 2423402 Ontario Inc., Court File No. CV-18-610236-00CL Our File No.: 51406

We write in response to your letter of October 8, 2019.

Appeal as of Right

We disagree with your interpretation of the relevant appeal routes. Zurich has an appeal as of right from Justice Conway’s Order under section 193(a) and 193(c) of the Bankruptcy and Insolvency Act (“BIA”). Given that, the order of Justice Conway stayed pursuant to section 195 of the BIA.

I assume through inadvertence you failed to mention in your letter that, if leave is required under section 193(e) of the BIA, Zurich has in the alternative sought that leave as reflected in its Notice of Appeal and in accordance with section 31(2) of the Bankruptcy and Insolvency General Rules. No separate motion is required.

Nevertheless, any question about the proper appeal routes should be resolved by the Court of Appeal. Zurich’s position in the meantime is clear: the Order of Justice Conway is stayed pending appeal.

Further, as you know, it is Zurich’s position that the Order granted a declaration and no mandatory or other equitable relief. Our dispute on this will be resolved at tomorrow’s attendance before Justice Conway.

Phase 3 Issues

We once again disagree with your characterization of the July 12, 2019 chambers attendance. Zurich’s commitment to CMH made back in May 2019 (enclosed for reference) was not expanded at that attendance.

2 171 October 10, 2019

You are not correct when you allege that work towards Phase 3 has stopped. Zurich has been working and continues to work with Bondfield, sub-trades and Ellis Don to both advance work on Phase 2 and advance matters for a potential completion contractor for Phase 3.

You suggest that contractors have not been paid for work for Phase 3. This appears to be a reference to JMR, the HVAC contractor for the project. They have apparently purchased equipment for use and installation as part of Phase 3 before Interim Completion. As you will see from the enclosed email chains, Bondfield submitted a progress billing request associated with that equipment on September 23, 2019 and Stantec and CMH/Infrastructure Ontario refused to approve the invoice, suggesting it was premature. Mr. Bordieri of Perini Management is, as you will see, diligently working to resolve the issue between the parties, but we reject the suggestion that Zurich is hampering progress to Phase 3.

In any event, Zurich’s commitment was to get the Project to Interim Completion and that commitment did not include paying for anything after that, including materials for Phase 3 work.

I also note that Zurich was informed only in the last two days that Project Co. has refused to sign the relevant 20-day notice to fix the Interim Completion date. Zurich is in discussions with the Monitor of Bondfield to find a solution to this issue.

Your letter notes the desire of the Lenders to deal with Ellis Don to arrange for a replacement contractor. Zurich has not tried to prevent the Lenders or CMH from communicating with Ellis Don or any one of the other many potential contractors that they could have communicated with since delays on this project became obvious to those parties (apparently, years ago). In fact, Zurich has involved CMH in discussions with Ellis Don regarding the completion of the project.

Your letter makes reference to what are obviously without prejudice communications between the parties in relation to the cost complete and related issues. We will not comment on these issues further here because it seems likely that this correspondence will make its way into the court record soon.

Cost to Complete

You suggest that it is for the Receiver to unilaterally determine the cost to complete under the Performance Bond.

As a preliminary matter, and regardless of the outcome of our client’s pending appeal, Zurich has denied liability under the Performance Bond. It has been discharged. After Interim Completion, it will end its involvement with the Cambridge Memorial Hospital project and will seek recover from the Lenders and CMH the significant sums it has spent for their benefit to date.

3 172 October 10, 2019

To the extent that there may be any liability under the Bond (which is denied), it is not for the Receiver to determine the cost to complete. The Receiver’s position has consistently been that it has no substantial involvement in the affairs of Project Co. and so it seems unlikely that the Receiver would have the necessary information (let alone the authority) to determine this issue.

As to the cost to complete itself, I enclose correspondence from EllisDon of September 9, 2019 and October 10, 2019 outlining their current anticipated cost to complete. Their estimates for Phase 3 work, based on quotes received to date in addition to work deferred by Bondfield, is $108,123,736. However, we understand that this is not the final figure, and is likely to be reduced by further adjustments, including post-ratification payments and other subcontractor prices. Accordingly, Zurich today expects the final figure to be approximately $102 million after all of those adjustments.

Election

In light of the cost to complete phase 3 now available from Ellis Don, we can advise that, while Zurich continues to deny liability under the Performance Bond (including any obligation to make an election pursuant to its pending appeal), if an election were to be made, Zurich would elect Option 4 under the Performance Bond.

Taking in to account the current estimated cost to complete (approximately $102 million) and the Balance of the Construction Contract Price ($69,896,514), Zurich’s position based on the currently available information is that its maximum potential liability under the Bond is limited to $32,103,486.

Contempt Allegations

In light of the lack of merit in the Lenders’ positions as noted above, your insinuation that Zurich is or could be held in contempt is inappropriate.

We can address the substance of your argument regarding the implications of the Receivership Order in due course, if necessary, but for now we point you again to section 20 of that order which state that “nothing in this Order shall alter, amend or otherwise affect the liability of the Surety to any Person pursuant to the Contractor Bonds [i.e. including the Performance Bond]”.

Further, Zurich is not terminating the Performance Bond. Zurich’s position is simply that it has no surviving obligations under the Bond.

Without waiving any other potential defences under the Bond, Project Co is in default of its obligations to pay the Construction Contractor (at least $1 million and likely over $3.5 million) and Zurich has been prejudiced by the unjustified delay in the purported call(s) on the Bond.

4 173 October 10, 2019

Any party with standing to object to that position may take advice and exercise whatever remedies they believe they may have in that regard. It is ultimately an issue that will likely have to be resolve in an action and after a trial.

You propose a motion to address these issues. Your clients have threatened to bring such a motion for months. We will not agree to the scheduling of any motion until we see your motion materials and have an understanding of the extent to which responding motion materials, cross-examinations, etc. will be required.

Yours very truly,

Matthew B. Lerner

MBL/mf Encls. c. Brian Kolenda/Jonathan McDaniel/Scott Rollwagen, Lenczner Slaght Stephen Furlan/Geoff Hall/Morgan Troke, McCarthy Tetrault Kyla Mahar/Drazen Bulat, Miller Thomson David Ward, Cassels Brock & Blackwell Linc Rogers, Blakes

174

Brian Kolenda

From: Matthew Lerner Sent: Friday, May 03, 2019 5:33 PM To: Mahar, Kyla Cc: Hall, Geoff R.; Bulat, Dražen; Meredith, Heather L.; Pattison, Robert; Currie, Carolyn (IO); Scott Rollwagen; Brian Kolenda; Cyr, Marc ([email protected]); Alter, Matthew Subject: RE: [**EXT**] Re: Assurance [IWOV-LSRSGDOCS.FID508822]

Hi Kyla:

We have reviewed your request and obtained instructions from our client.

Without prejudice to our ultimate position on Zurich’s obligations under applicable bonds, our client will continue to fund work on the project to Interim Completion. These funds are being (and have been) paid for the benefit of your client as a gesture of good faith and on a full reservation of rights basis.

Pursuant to the bond, it remains our position that Project Co must pay the balance of contract funds owed, including the $2.5 million owed to Bondfield at present.

Can you please confirm that you are now content with Geoff’s timetable along with my modest revisions to it?

As mentioned I am out of the country starting this evening until the evening of May 12. I will send someone on Monday to speak to the matter, but trust it will be on the basis of a consent timetable.

Thank you Kyla, Matt

Matthew Lerner*

T 416-865-2940 F 416-865-2840 [email protected]

130 Adelaide St W Suite 2600 Toronto, ON Canada M5H 3P5 www.litigate.com

This e-mail may contain legally privileged or confidential information. This message is intended only for the recipient(s) named in the message. If you are not an intended recipient and this e-mail was received in error, please notify us by reply e-mail and delete the original message immediately. Thank you. Lenczner Slaght Royce Smith Griffin LLP.

From: Mahar, Kyla [mailto:[email protected]] Sent: May 3, 2019 7:37 AM To: Matthew Lerner Cc: Hall, Geoff R.; Bulat, Dražen; Meredith, Heather L.; Pattison, Robert; Currie, Carolyn (IO); Scott Rollwagen; Brian Kolenda; Cyr, Marc ([email protected]); Alter, Matthew Subject: RE: [**EXT**] Re: Assurance 1 175

Matt and team,

Further to our call yesterday evening, the following is the assurance that we are looking for from Zurich:

The Scheduled Interim Completion Date was November 30, 2016 and the Scheduled Substantial Completion Date was March 31, 2019. The Construction Work has not yet achieved Interim Completion (29 month delay to date). While the issues raised in the lenders’ motion will need to be resolved, CMH seeks assurance from Zurich that, until the issues raised in the motion are either settled or disposed of by the Court, Zurich will ensure that the Construction Work under and in accordance with the bonded contract continues, so that Interim Completion is achieved as soon as possible, and in accordance with the bonded contract, including without limitation the correction of deficient Construction Work required to achieve Interim Completion.

I look forward to hearing from you.

Thank you.

Kyla

KYLA MAHAR Partner

Miller Thomson LLP Scotia Plaza 40 King Street West, Suite 5800 P.O. Box 1011 Toronto, Ontario M5H 3S1 Direct Line: +1 416.597.4303 Fax: +1 416.595.8695 Email: [email protected] millerthomson.com

Please consider the environment before printing this email.

From: Mahar, Kyla Sent: Thursday, May 2, 2019 8:45 PM To: Matthew Lerner Cc: Hall, Geoff R. ; Bulat, Dražen ; Meredith, Heather L. ; Pattison, Robert ; Currie, Carolyn (IO) ; Scott Rollwagen ; Brian Kolenda Subject: Re: [**EXT**] Re: Assurance

Of course ‐ thank you for their email. 2 176

KYLA MAHAR Partner

Miller Thomson LLP Scotia Plaza 40 King Street West, Suite 5800 P.O. Box 1011 Toronto, Ontario M5H 3S1 Direct Line: +1 416.597.4303 Fax: +1 416.595.8695 Email: [email protected] millerthomson.com

Please consider the environment before printing this email.

On May 2, 2019, at 7:40 PM, Matthew Lerner wrote:

No problem.

Can you please ensure that you include Scott and Brian on all emails?

Thanks,

______Matthew Lerner Lenczner Slaght 416‐865‐2940 [email protected]

On Thu, May 2, 2019 at 6:48 PM ‐0400, "Mahar, Kyla" wrote:

Matt,

Thank you for the call. I just wanted to let you know I will get you language either later this evening or tomorrow before 8 a.m. as I to have a commitment this evening. Thanks.

Kyla

KYLA MAHAR Partner

Miller Thomson LLP Scotia Plaza 40 King Street West, Suite 5800 P.O. Box 1011 Toronto, Ontario M5H 3S1 Direct Line: +1 416.597.4303 3 177 Fax: +1 416.595.8695 Email: [email protected] millerthomson.com

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4 178

From: Myska, Paul Sent: Monday, September 23, 2019 4:37 PM To: Paul Bordieri Cc: Polny, Danny (IO); David Mason; Darryl Dietze; Trevor Bracey; John Fabiano ([email protected]); [email protected]; Bill Prokopowich; Moxam, Michael; Mike Prociw; 'Michael Winnick' Subject: RE: Progress Billing 57, JMR PH-3 Mech Equipment - Invoices 35955

Fair enough. Thanks.

From: Paul Bordieri Sent: Monday, September 23, 2019 3:59 PM To: Myska, Paul Cc: Polny, Danny (IO) ; David Mason ; Darryl Dietze ; Trevor Bracey ; John Fabiano ([email protected]) ; [email protected]; Bill Prokopowich ; Moxam, Michael ; Mike Prociw ; 'Michael Winnick' Subject: RE: Progress Billing 57, JMR PH‐3 Mech Equipment ‐ Invoices 35955

Paul,

This situation of off‐site storage has its unique issues that need consideration, I agree with that. As for the invoice being premature, without the invoice this conversation never really gets started so I don’t think it is premature. I think it kicks off the discussion and we can see what exactly your requirements are going to be for approval once further information is received from JMR on the warehouse and insurance concerns.

Thank you,

Paul A. Bordieri, Jr., P.E. Senior Project Manager Perini Management Services, Inc. 73 Mount Wayte Ave. Framingham, MA 01701-9160 T: 508.628.2125 C: 781.589.7232 F: 508.628.2357

From: Myska, Paul [mailto:[email protected]] Sent: Monday, September 23, 2019 3:40 PM To: Paul Bordieri Cc: Polny, Danny (IO) ; David Mason ; Darryl Dietze ; Trevor Bracey ; John Fabiano ([email protected]) ; [email protected]; Bill Prokopowich ; Moxam, Michael ; Mike Prociw ; 'Michael Winnick' Subject: RE: Progress Billing 57, JMR PH‐3 Mech Equipment ‐ Invoices 35955

Hi Paul – It all depends upon the agreement. Not sure how this gets paid by the Lender on behalf of the Owner and then reverts back to an EllisDon-JMR agreement. I also went through a complicated bonded warehouse agreement on a project and the product still disappeared from the warehouse. This is a complicated matter, and there are numerous

1 179 clarifications required from provision of warranties, making up on missing product, to insurance coverage, and on and on. In my opinion, the invoice is premature.

From: Paul Bordieri Sent: Monday, September 23, 2019 3:31 PM To: Myska, Paul Cc: Polny, Danny (IO) ; David Mason ; Darryl Dietze ; Trevor Bracey ; John Fabiano ([email protected]) ; [email protected]; Bill Prokopowich ; Moxam, Michael ; Mike Prociw ; 'Michael Winnick' Subject: RE: Progress Billing 57, JMR PH‐3 Mech Equipment ‐ Invoices 35955

Paul,

I never implied any of the storage costs would be borne by CMH. This would be something that would need to be resolved between JMR and EllisDon (presumably) when they finalize terms of their new subcontract agreement for the costs associated with phase 3 or part of a delay impact claim from JMR to Bondfield.

Thank you,

Paul A. Bordieri, Jr., P.E. Senior Project Manager Perini Management Services, Inc. 73 Mount Wayte Ave. Framingham, MA 01701-9160 T: 508.628.2125 C: 781.589.7232 F: 508.628.2357

From: Myska, Paul [mailto:[email protected]] Sent: Monday, September 23, 2019 3:23 PM To: Paul Bordieri Cc: Polny, Danny (IO) ; David Mason ; Darryl Dietze ; Trevor Bracey ; John Fabiano ([email protected]) ; [email protected]; Bill Prokopowich ; Moxam, Michael ; Mike Prociw ; 'Michael Winnick' Subject: RE: Progress Billing 57, JMR PH‐3 Mech Equipment ‐ Invoices 35955

Hi Paul – the agreements would have to be worked out to CMH’s satisfaction, because you’re talking about getting JMR paid for this stuff. How that works out and gets extended without CMH having to pay storage costs for many months (years?) out of their pocket, until product and material is used up would need to be resolved.

From: Paul Bordieri Sent: Monday, September 23, 2019 3:18 PM To: Myska, Paul Cc: Polny, Danny (IO) ; David Mason ; Darryl Dietze ; Trevor Bracey ; John Fabiano ([email protected]) ; [email protected]; Bill Prokopowich ; Moxam, Michael ; Mike Prociw ; 'Michael Winnick' Subject: RE: Progress Billing 57, JMR PH‐3 Mech Equipment ‐ Invoices 35955

Paul,

2 180 I’m saying the last I heard from JMR was that it was their intent to store the materials off site in a bonded warehouse. Further information from JMR with greater detail was never received, which is why I indicated that Bondfield would follow up on this. The storage agreement would not be between PCo and the storage company but would be between JMR and the storage company as it is JMR’s materials.

Thank you,

Paul A. Bordieri, Jr., P.E. Senior Project Manager Perini Management Services, Inc. 73 Mount Wayte Ave. Framingham, MA 01701-9160 T: 508.628.2125 C: 781.589.7232 F: 508.628.2357

From: Myska, Paul [mailto:[email protected]] Sent: Monday, September 23, 2019 2:54 PM To: Paul Bordieri Cc: Polny, Danny (IO) ; David Mason ; Darryl Dietze ; Trevor Bracey ; John Fabiano ([email protected]) ; [email protected]; Bill Prokopowich ; Moxam, Michael ; Mike Prociw ; 'Michael Winnick' Subject: RE: Progress Billing 57, JMR PH‐3 Mech Equipment ‐ Invoices 35955

Hi Paul – Are you saying that PCo intends to store the product and material off site in a bonded warehouse? If so (and to briefly summarize) CMH and the Consultant would first need to see and review draft storage agreements between PCo and the bonded storage company, and PCo and CMH, and then when acceptable, signed agreements in place (all to ensure that such are solid, potentially long-term sustainable agreements) and all of the product and material is moved into the bonded warehouse, inventoried by Stantec and CMH for verification purposes (there will be an associated cost for that as well). Only then could we, will we, process the billing review. Please advise.

From: Paul Bordieri Sent: Monday, September 23, 2019 1:52 PM To: Polny, Danny (IO) ; Myska, Paul ; David Mason Cc: Darryl Dietze ; Trevor Bracey ; John Fabiano ([email protected]) ; [email protected]; Bill Prokopowich ; Moxam, Michael ; Mike Prociw ; 'Michael Winnick' Subject: RE: Progress Billing 57, JMR PH‐3 Mech Equipment ‐ Invoices 35955

Danny,

Payment for phase 3 materials is not an isolated discussion between the surety and JMR. Since the materials are not stored on‐site, to my knowledge anyway, Bondfield will get information associated with their storing as requested by Stantec. I’m not sure why this pay application would be viewed and processed any different than the previous 56 submitted before it and would somehow be the surety’s to resolve.

Thank you,

Paul A. Bordieri, Jr., P.E. Senior Project Manager Perini Management Services, Inc. 3 181 73 Mount Wayte Ave. Framingham, MA 01701-9160 T: 508.628.2125 C: 781.589.7232 F: 508.628.2357

From: Polny, Danny (IO) [mailto:[email protected]] Sent: Monday, September 23, 2019 1:00 PM To: Myska, Paul ; David Mason Cc: Darryl Dietze ; Paul Bordieri ; Trevor Bracey ; John Fabiano ([email protected]) ; [email protected]; Bill Prokopowich ; Moxam, Michael ; Mike Prociw ; 'Michael Winnick' Subject: RE: Progress Billing 57, JMR PH‐3 Mech Equipment ‐ Invoices 35955

Paul, I would agree with your position if this is in fact for Phase 3 material(s), it is my understanding that Phase 3 material(s) discussions are between the sub‐contractor and the Surety/PCo and not CMH. I support this not being a Stantec and/or CMH issue.

Danny Polny [email protected] Cellular 647‐402‐1790

From: Myska, Paul [mailto:[email protected]] Sent: Monday, September 23, 2019 12:28 PM To: David Mason Cc: Darryl Dietze ; Paul Bordieri ; Trevor Bracey ; John Fabiano ([email protected]) ; [email protected]; Bill Prokopowich ; Polny, Danny (IO) ; Moxam, Michael ; Mike Prociw ; 'Michael Winnick' Subject: RE: Progress Billing 57, JMR PH‐3 Mech Equipment ‐ Invoices 35955

Hi David,

I presume the attached files are an invoice for Phase 3 product and material from JMR.

Please advise if any of this product or material is stored on site or in a bonded warehouse. Or if not, is it your intent to have further discussions with CMH on this, in which case they should have been copied. As we’ve discussed previously, until the Consultant receives a satisfactory answer on these points, from either PCo and/or CMH, we are unable to process this draw request.

In any event, I’ve copied CMH here.

Regards, Paul Myska Architect

Direct: (416) 598-6681 Mobile: (416) 399-3141 Fax: (416) 596-7892

Stantec Architecture Ltd. 100-401 Wellington Street West Toronto ON M5V 1E7 CA

4 182

From: David Mason Sent: Monday, September 23, 2019 11:36 AM To: Myska, Paul Cc: Darryl Dietze ; Paul Bordieri ; Trevor Bracey Subject: CMH: Progress Billing 57, JMR PH‐3 Mech Equipment ‐ Invoices 35955

HI Paul, See attached billing # 57 for JMR PH‐3 Mechanical equipment. Please review and advise if acceptable. Thanks.

David Mason Assistant Project Manager

[email protected]

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This email message is for the sole use of the intended recipient(s) and may contain confidential and privileged information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply email and destroy all copies of the original message.

THIS COMPANY IS AN EQUAL OPPORTUNITY EMPLOYER AND PROVIDES OPPORTUNITIES TO SMALL, WOMAN OWNED, MINORITY OWNED, LOCALLY OWNED, VETERAN OWNED, DISABLED OWNED, AND DISADVANTAGED BUSINESSES (M/F/V/D).

5 183

THIS COMPANY IS AN EQUAL OPPORTUNITY EMPLOYER AND PROVIDES OPPORTUNITIES TO SMALL, WOMAN OWNED, MINORITY OWNED, LOCALLY OWNED, VETERAN OWNED, DISABLED OWNED, AND DISADVANTAGED BUSINESSES (M/F/V/D).

6 184

From: David Mason Sent: Monday, September 23, 2019 4:22 PM To: Myska, Paul Cc: Paul Bordieri; '[email protected]'; Darryl Dietze; John Fabiano; Roland Lejambe; [email protected]; '[email protected]'; Mike Prociw; Michael Winnick Subject: CMH: Invoices 35955 PH-3 mechanical equipment - Reference Billing # 57 Attachments: Warehouse Photo July 2019.pdf; AHU-14,16 Photo July 2019.pdf; Plumbing Fixture Packing Slips.pdf; Steam Equip Packing Slips.pdf; Equipment List by Skid.pdf; Warehouse Photo 2 July 2019.pdf; 20190729_131356.jpg; Skid Layout in Warehouse - July 2019.pdf

Hi Paul M. See information below and attached as requested regarding the Phase 3 plumbing and mechanical equipment stored by JMR.

David Mason Assistant Project Manager

[email protected]

From: Shannon Hrudka [mailto:[email protected]] Sent: September-23-19 3:49 PM To: David Mason Cc: Janaka Weerasinghe Subject: RE: Invoices 35955

David,

As requested, the following is a summary of the Phase III equipment billed in June 2019:

Item Equipment Description Tag Billing Amount 1 Plumbing Fixtures (WC, Lav, Sink, MS, All $625,300 Faucets, Emerg Fixtures, etc) 1 185 2 Domestic Booster Pump DCW‐Pump_04/05/06 $38,700 3 Expansion Tanks ET‐7,8,9,11,13 $10,310 4 Air Separators (Qty 3 – 6” flanged) AS $4,230 5 Heat Exchangers HX‐10A/B, HX‐11A/B $10,400 6 Steam Equipment $49,700 8 Air Handling Units AHU‐14, AHU‐16 $152,900 9 Supply Fans SF‐205,206,207,208 $4,400 Total: $895,940

For reference, I have also attached:  Skid Layout in warehouse (1 file)  Summary list of skids in warehouse, and product on each skid (1 file)  Packing slips for all plumbing and steam equipment (2 files)  Photo’s of the equipment in warehouse storage. (3 files)  Photo of security camera at warehouse (1 file)

The address where the equipment/material is stored is:

Premium Transportation Inc. 39978 Crediton Rd Centralia, ON, N0M 1K0

The building is staffed but it is locked with security cameras (see attached photo). Their website is http://premiumtransportation.ca/index.php

You can see it on google maps using the following link: https://goo.gl/maps/532mqec51E3Er2kQ7

All the equipment being stored is insured.

Let me know if you have any further questions.

Regards,

Shannon Hrudka Mechanical Project Manager | [email protected] Mobile: (226) 268‐7676

From: David Mason [mailto:[email protected]] Sent: Monday, September 23, 2019 2:15 PM To: Shannon Hrudka Cc: Janaka Weerasinghe Subject: FW: Invoices 35955

2 186

Hi Shannon, This JMR invoice 35955 is for Phase 3 mechanical equipment. ~ Please provide a list of the equipment. ~ Where is it stored? ~ Is it stored in a bonded warehouse?

David Mason Assistant Project Manager

[email protected]

3 187 C a m b ri d g e M e m o ri al H o s pi t al R e d e v el o p m e nt P h a s e I I I M e c h a ni c al E q ui p m e n t in W a r e h o u se Jul y 2 0 19 188 C a m b ri d g e M e m o ri al H o s pi t al R e d e v el o p m e nt P h a s e I I I E q ui p m e n t in S t o r a ge J ul y 2 0 19

A H U - 14

A H U - 16 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256

Cambridge Memorial Hospital Redevelopment

Summary of Phase III Products by Skid# Prepared July 30, 2019

Skid # Order # Tag Description Qty 1 8333279 L5E WHBS161709-3/1WH-1 20 2 8333279 L5E WHBS161709-3/1WH-2 19 3 8333279 L5E WHBS161709-3/1WH-3 20 4 8333279 L5E WHBS161709-3/1WH-4 20 5 8333279 L5E WHBS161709-3/1WH-5 24 6 8333279 L5E WHBS161709-3/1WH-6 12 7 7123084 L6H 145508.02 LUCIA 8"CC 8 8 7123084 L6H 145509.02 LUCIA 8"CC 8 9 7123084 L6H 145510.02 LUCIA 8"CC 8 10 7123084 L6H 145511.02 LUCIA 8"CC 8 11 7123084 L6H 145512.02 LUCIA 8"CC 11 12 7123084 L6H 145513.02 LUCIA 8"CC 8 13 7123084 L6H 145514.02 LUCIA 8"CC 8 14 7123084 L6H 145515.02 LUCIA 8"CC 8 15 7123084 L6H 145516.02 LUCIA 8"CC 8 16 7123084 L6H 145517.02 LUCIA 8"CC 8 17 7123084 L6H 145518.02 LUCIA 8"CC 8 18 8333255 L4EW WHBS181910-30F 16 19 8333255 L4EW WHBS181910-30F 14 20 8333279 L5E WHBS161709-3/1WH-1 20 21 8333279 L5E WHBS161709-3/1WH-1 19 22 8333279 L5E WHBS161709-3/1WH-1 24 23 7123084 L6H 0059020EC.020 SHROUD 91 24 7396825 L1HE 0955901EC.020 MURRO LAV 20 25 8336488 W2H 81T201-5-6 TECK VLF 108 26 8336488 W2H 820STS WHITE SEATS 108 27 7385515 MS1 SB-702 3 28 7385515 MS1 SB-702 3 29 8385805 MDU V40-300 VORTEX MACERATOR 4 30 7438328 EWB G3600 GUARD TEMPERING 1 30 7438328 LEWS/EWDS G3807 TEMP VLV/CABINET 6 31 7192829 LEW GBF2150 3 31 7192829 EWDS G1909 GUARDIAN SHOWER/EYEWAS 4 31 7438328 L4EW G3600LF GUARDIAN TEMPERING 20 32 7385515 MS1 SB-702 3 32 7385515 MS1 T40 12 32 7385515 MS1 BP232 12 257

Cambridge Memorial Hospital Redevelopment

Summary of Phase III Products by Skid# Prepared July 30, 2019

Skid # Order # Tag Description Qty 33 7385515 MS1 SB-702 3 34 8333279 L5E EAF-700-P-ISM 97 35 8333279 L5E EAF-700-P-ISM 79 36 8333279 L5E 33T360 176 37 8333255 L4E SEF-1800-CALFNA SPEA 31 38 7123084 L6H 23C675-R5 WIDESPREAD LAV 89 38 7123084 L6H 33T260-1 89 38 7123084 L6H 33T311 89 39 7396825 W1/W3E/W4HE 3351101WH AFWALL 18 40 7396825 FRS1 9512999.02 CLINIC SINK 1 40 7396825 L3/L7H 0958908EC.020 11 40 7396825 W6 3195B101.020 1 41 7396825 FRS1 7832512.075 RIM GUARD 3 42 7396825 L1HE/L2H/L7H 0059020EC SHROUD 36 42 7262233 S1/S3 UCS4608/316P-1 S/S 18 43 7262233 S3 UCS4608/316P-1 4 43 7262233 S7 LBS4610P-1/3 4 43 7262233 S6 LBD6410/316PCB-1/3 2 43 7262233 W4HE/W5H CM16104 BACKREST 16 44 7262233 SS2E SSU2-2040-00 COMMER. SS 1 45 7313439 W5H Z5691 WHITE ZURN 3 46 7313439 W5H Z5691 WHITE ZURN 1 47 8336488 W2H 3351101 WHITE AFWALL 18 48 8336488 W2H 3351101 WHITE AFWALL 18 49 8336488 W2H 3351101 WHITE AFWALL 18 50 8336488 W2H 3351101 WHITE AFWALL 18 51 8336488 W2H 3351101 WHITE AFWALL 18 52 8336488 W2H 3351101 WHITE AFWALL 16 53 7262233 S6 LBD6410/316PCB-1/3 7 53 7262233 S7 LBS4610P-1/3 9 53 7262233 SS2E SSU2-2040-00 1 53 7262233 ? (change) WHBS161709-3 1 54 7507515 stops no charge h165lkn3 109 55 7504105 TB1 PO 42459 1 of each 56 7540391 PO 45100 FXI-11 OPTIPURE INLINE 8 CTOS-10 ICE MACHINE 18 56 7571183 W5H 81T201-6 4 258

Cambridge Memorial Hospital Redevelopment

Summary of Phase III Products by Skid# Prepared July 30, 2019

Skid # Order # Tag Description Qty 56 7566805 W5H Z5691 & CM16104 1 of each 57 7304128 FRS1 81T261 1 L5E/L12/SS2E 33T360 4 SS2E/W3E/44HE/W4HE 060704A Transformer 12 FRS1 RP32856 1 L1HE/L2H/L7H 33T260-1 34 MS1 28C2385 11 L2H 22C621 17 W5H 81T221-6 4 W3E/W4HE 81T201-HWA6 14 S1/S2 26C3125 18 L9SEC 3000T4128ATR 1 PS1 060865A 1 S3,S4,S5,S6,S7 27C2975 49 L1HE,L2H,L3,L7H 33T311 42 MS1 28T911 11 L3,L7H,L12 23C675-R5 12 L11 22C121 1 W3 81T201-HWA-20-6 2 W1 81T201-6 3 PS1 28C6924-R7 1 59 7314221 SH1,SH2H 62370 79 SH-1 T8375 3 SH2H T8370 91 SH2H A780 90 SH2H 52236GBM25 3 59 7636652 L1HE 8554AC 14 L1HE 52018F12 14 L1HE 104630 n/c 14 60 7314221 SH2H 52236GBM25 88

100 ET-11 Expansion Tank 1 101 HX-10a/b Heat Exchanger 2 102 HX-11a/b Heat Exchanger 2 103 CDW-Pump-04/05/06 Domestic Booster Pump 1 104 ET-8 Expansion Tank 1 259

Cambridge Memorial Hospital Redevelopment

Summary of Phase III Products by Skid# Prepared July 30, 2019

Skid # Order # Tag Description Qty 105 ET-7 Expansion Tank 1 106 AS Air Separators 3 107 ET-13 Expansion Tank 1 108 SF-205/206 Supply Fans 2 109 SF-207/208 Supply Fans 2 110 ET-9 Expansion Tank 1

111 40088 Steam Flash Tanks 3 112 40088 Steam Steam Specialties Lot 113 40088 Steam Steam Specialties Lot 114 40088 Steam Domestic Mixing Station 1 260

Cambridge Memorial Hospital Redevelopment Phase III Steam Equipment in Warehouse July 2019

261

Cambridge Memorial Hospital - Redevelopment Phase III

Premium Transportation Warehouse Storage Layout Date: July 30, 2019 Prepared By: Shannon Hrudka, JMR

Notes: 1. The number in each block represents the SKID #. Refer to attached list of material on each skid. 2. Not all skids are the same size therefore each block is representative of skid placement, not size. 3. Shaded area is approx space rented.

NORTH WALL door overhead door 22 21 20 19 18 6 5 x x x 55 x

17 16 15 14 13 12 11 10 x x 46 56 WEST WALL 9 8 7 4 3 2 1 53 x x 45 24

47 51 52 48 50 54/49 39 40 x x 26 25

44 43 42 41 38 58 36 37 35 x 34 57

33 32 31 30 29 28 27 23 x x 59 60

100 101 102 106 111

103 104 105 107 112

110 108 113

109 114 door 262

From: Ashley Maxwell Sent: Monday, September 09, 2019 3:16 PM To: Paul Bordieri Cc: Paul Groenenberg; Alf Balassone; KIERAN HAWE; Ryan Simmons; Randy Reymer Subject: CMH Phase 3 - EllisDon Budget Update Attachments: 190909 CMH EllisDon Phase 3 Budget v5.pdf

Hi Paul

Please find attached our updated budget for Phase 3 of the Cambridge Memorial Hospital Project. We look forward to working with you further towards a Firm Fixed Price based on further negotiation between Zurich, CMH and BMO.

Please note the following exclusions/clarifications to our price:

1. Code Compliance, design work of any type and any resulting costs or schedule increase in relation to construction exiting is excluded. 2. Liquidated Damages and any financing costs are excluded. 3. Phase 1 and 2 Deficiency and Warranty work is excluded. 4. Price is based on a 48 month Construction Schedule commencing January 2020. 5. Schedule and Form of Prime Contract to be mutually agreed upon prior to contract signing. 6. Project Co Design Contingency included. 7. EllisDon has assumed only the south side of levels 2, 3 and 4 of the tower will be occupied by the hospital for the first 6 months of construction due to services in the north tower being disrupted in the initial phases. We look forward to discussing this further with the hospital.

We have included the prior budgetary figures in the attached and notes describing major variances however if you need further input from us please do not hesitate to reach out.

Thanks

Ashley Maxwell MEng Project Manager EllisDon Corporation 2045 Oxford St E, London, ON N5V 2Z7

Direct: 519-455-6770 x55230 Cell: 519-619-2047 [email protected] www.ellisdon.com

This e-mail is CONFIDENTIAL. If you are not its intended recipient, please notify the sender and delete all copies immediately.

1 CAMBRIDGE MEMORIAL HOSPITAL - PHASE 3 263 ELLISDON BUDGET UPDATE

EllisDon Budget Status CURRENT BUDGET - SEPTEMBER 9, 2019 PREVIOUS BUDGET - JULY 23, 2019

Tier Cost Code Scope Status Subcontractor Base/Ratified Value Notes Status Subcontractor Base/Ratified Value $ 107,643,701 $ 82,415,882 1000 GENERAL REQUIREMENTS $ 33,713,706 $ 24,082,110

01 20 00 CM Fee @ 4% CONFIRMED EllisDon $ 4,140,142 PENDING EllisDon $ 3,169,842

01 20 80 EllisDon Contingency Allowance (Scope) @ 10% of Work NA PENDING EllisDon $ 6,744,344 01 20 81 EllisDon Contingency Allowance (Design) @ 7.5% of Work NA PENDING EllisDon $ 5,058,258

01 20 80 EllisDon Contingency Allowance (Scope) @ 5% of Work CONFIRMED EllisDon $ 4,928,741 01 20 81 EllisDon Contingency Allowance (Design) @ 7.5% of Trades PENDING EllisDon $ 5,530,546 % based on Subcontract work only EllisDon Allowance - Signficant Change Orders & Site Instructions PLUG EllisDon $ 485,000

01 25 53 Bonds PENDING EllisDon $ 534,294 Final Contract TBD; included to match RFP PENDING EllisDon requirements Subcontractor Bonds PENDING EllisDon $ 745,931 01 25 15 PL / PD Insurance PENDING EllisDon $ 889,879 Final Contract TBD; included to match RFP PENDING EllisDon requirements 01 25 20 Builder's Risk Insurance PENDING EllisDon incl above PENDING EllisDon 01 30 00 General Accounts (Includes Staff) CONFIRMED EllisDon $ 16,459,173 based on 48 month schedule. Increased staff CONFIRMED EllisDon $ 9,109,667 due to M&E/Phasing requirements

1500 CASH ALLOWANCES $ 2,362,444 $ 2,212,444 01 20 90 EllisDon Cash Allowances NOT RATIFIED Cash Allowance $ 2,212,444 to match RFP Cash Allowances; based on BF PLUG $ 2,212,444 remaining value 01 20 91 Donor Wall Signage NA-$ NA Brook Recognition 01 20 92 Allowance New Optical Fibre Service & Associated Equipment. NA $ - NA Mantara Construction 01 20 93 Third Party Inspection and Testing PLUG Cash Allowance $ 150,000 cash allowance fully exhausted in PH2; new NOT RATIFIED Peto Maccallum allowance to be set

2000 EXISTING CONDITIONS $ 5,485,069 $ 3,598,998 02 41 00 DEMOLITION NOT RATIFIED Biggs and Narciso $ 3,598,998 PLUG Biggs and Narciso $ 3,598,998 DEMOLITION - CONTRACT RATIFICATION PENDING $ 740,000 final contract ratification TBD DEMOLITION - SCOPE GAPS CONFIRMED $ 290,534 scanning, ACT ceiling removal & replacement and other misc. removals & patching INFECTION CONTROL CONFIRMED $ 855,537 Maintenance Labour, Filters, Neg. Air Machines, Doors to Hoardings, Tack Mats, Cleaning for Infection Control, Exterior Hoardings

3000 CONCRETE $ 1,875,287 $ 303,170 03 00 00 CONCRETE AND FORMWORK AND REINFORCING CONFIRMED ED Forming $ 885,903 includes all concrete, formwork & reinforcing BF PLUG $ 303,170 03 80 00 CONCRETE CUTTING AND BORING CONFIRMED Canadian Cutting & Coring $ 989,384 includes M&E cutting/coring and structural BF PLUG demolition

4000 MASONRY $ 349,400 $ 328,400 04 20 00 UNIT MASONRY CONFIRMED GA Masonry $ 328,400 CONFIRMED GA Masonry $ 328,400

UNIT MASONRY - SCOPE GAPS CONFIRMED $ 21,000

5000 METALS $ 2,424,900 $ 903,767 05 12 00 STRUCTURAL STEEL CONFIRMED Broeders Steel $ 1,184,100 BF PLUG Gensteel $ 685,077 05 30 00 METAL DECKING CONFIRMED incl above BF PLUG $ 1,895 05 50 00 METAL FABRICATIONS CONFIRMED Broeders Steel $ 1,240,800 BF PLUG $ 216,795

6000 WOOD AND PLASTIC $ 3,825,816 $ 795,673 06 10 00 ROUGH CARPENTRY & MISCELLANEOUS INSTALLATIONS CONFIRMED $ 934,757 includes door, hardware & all misc. NOT RATIFIED installations 06 20 00 MILLWORK CONFIRMED AMDI $ 488,360 BF PLUG KOR Furniture System $ 352,696

9/09/19 3:05 PM Page 1/4 CAMBRIDGE MEMORIAL HOSPITAL - PHASE 3 264 ELLISDON BUDGET UPDATE

EllisDon Budget Status CURRENT BUDGET - SEPTEMBER 9, 2019 PREVIOUS BUDGET - JULY 23, 2019

Tier Cost Code Scope Status Subcontractor Base/Ratified Value Notes Status Subcontractor Base/Ratified Value 06 20 01 WALL PANELS CONFIRMED AMDI $ 2,402,699 WP3,4,5 per current scope & pricing BF PLUG KOR Furniture System $ 442,977

7000 THERMAL & MOISTURE PROTECTION $ 1,077,653 $ 277,676 07 00 00 THERMAL AND MOISTURE PROTECTION - Waterproofing NA NA Bothwell Accurate THERMAL AND MOISTURE PROTECTION - Waterproofing NA NA Devonshire Restoration THERMAL AND MOISTURE PROTECTION - Insulation CONFIRMED $ 23,247 includes waterproofing to elevator pit 07 46 00 SIDING NA NA Pollard Enterprises 07 50 00 MEMBRANE ROOFING PENDING Roque $ 109,156 PENDING Roque $ 109,156 MEMBRANE ROOFING - SCOPE GAPS CONFIRMED $ 50,000 patching at mechanical penetrations 07 81 00 APPLIED FIREPROOFING CONFIRMED $ 300,000 PLUG Great Northern Insulation $ 130,000 07 92 50 Interior Joint Sealants CONFIRMED $ 195,500 BF PLUG NA $ 38,520 Interior Joint Sealants to Wall Protection CONFIRMED $ 99,000 Firestopping CONFIRMED $ 115,750 07 95 00 Expansion Joint Systems CONFIRMED $ 185,000 NA Ten Plus Architectural

8000 DOORS, ENTRANCES & WINDOWS $ 2,539,754 $ 1,353,027 08 11 10 Hollow Metal Doors And Frames NOT RATIFIED Regional Doors & Hardware $ 244,983 PLUG Regional Doors & Hardware $ 244,983 Hollow Metal Doors And Frames - CONTRACT RATIFICATION PENDING $ 50,000 final contract ratification TBD 08 32 13 Sliding Aluminum Framed Glass Doors PENDING Assa Abloy $ 124,691 PENDING Assa Abloy $ 124,694 08 33 23 Overhead Coiling Doors And Grilles NA NA Admor Dock & Doors 08 33 33 Fire Rated Horizontal Slides CONFIRMED $ 14,200 NA Edward Door System 08 44 00 CURTAIN WALL AND GLAZED ASSEMBLIES PENDING Noram $ 530,973 PENDING Noram $ 530,973 CURTAIN WALL - REPLACE SUBCONTRACTOR IF REQUIRED PLUG$ 270,000 GLASS DOOR HARDWARE CONFIRMED $ 20,000 PENDING Dorma Door Controls (glass dor hardware) 08 71 00 DOOR HARDWARE NOT RATIFIED Egress Systems $ 441,078 PLUG Egress Systems $ 441,078 DOOR HARDWARE - SITE INSTRUCTIONS & INVENTORY UPDATE PENDING $ 756,000 final contract ratification TBD 08 91 00 LOUVERS PENDING MW McGill $ 11,298 PENDING MW McGill $ 11,298 LOUVERS - REPLACE SUBCONTRACTOR IF REQUIRED PLUG$ 13,552 LOUVERS - Caulking NA NA Beverly Caulking BACKLIT GRAPHIC CEILING PANELS CONFIRMED $ 62,978

9000 FINISHES $ 15,190,133 $ 14,460,551 09 21 00 PLASTER AND GYPSUM BOARD ASSEMBLIES CONFIRMED PJ Daly Contracting $ 7,870,000 PENDING PJ Daly Contracting $ 7,870,000 Drywall Design Contingency CONFIRMED PJ Daly Contracting $ 2,000,000 PENDING PJ Daly Contracting $ 2,000,000 Infection Control Hoarding Construction and Removal CONFIRMED PJ Daly Contracting $ 2,500,000 PENDING PJ Daly Contracting $ 2,500,000 09 65 00 RESILIENT FLOORING CONFIRMED Lab Flooring $ 1,255,353 PENDING Lab Flooring $ 1,255,353 RESILIENT FLOORING - CONTRACT RATIFICATION PENDING $ 31,200 labour & material escalations RESILIENT FLOORING - SCOPE GAPS CONFIRMED $ 64,000 floor patching / leveling (<1/8") FLOOR LEVELING / PATCHING CONFIRMED $ 240,000 floor patching / leveling (>1/8") FLOOR PROTECTION (incl roof protection) CONFIRMED $ 120,382 09 66 23 Epoxy Terrazzo Flooring PENDING Duron $ 137,482 PENDING Duron $ 137,482 09 67 00 FLUID APPLIED FLOORING PENDING Stonhard $ 201,715 PENDING Stonhard $ 201,715 09 91 00 PAINTING PENDING Paramount Painting $ 496,000 PLUG Paramount Painting $ 496,000 PAINTING - SCOPE GAPS CONFIRMED $ 105,000 sprinkler pipe, schedule PAINTING - PAINT TO HOARDING CONFIRMED $ 144,000 Intumescent Paint - Scope Gap CONFIRMED $ 25,000

10000 SPECIALTIES $ 3,425,549 $ 4,149,846 10 00 01 Pre-Tendered Items CONFIRMED $ - BF PLUG $ 2,808,663 10 00 02 Manufactured Specialties CONFIRMED $ 102,000 BF PLUG $ 467,650 10 14 00 Wayfinding Signage PENDING WSI Sign Systems $ 125,725 PLUG WSI Sign Systems $ 135,525 Wayfinding Signage - Scope Gaps PLUG$ 50,000 10 21 23 Cubicles Curtains and Tracks PENDING Light Harvesting Shading $ 11,237 PLUG Light Harvesting Shading $ 11,237 Cubicles Curtains and Tracks - new subcontractor for complete scope PLUG$ 245,140 10 22 19 Demountable Partitions NOT RATIFIED Verto 360 $ 1,049,342 NOT RATIFIED Verto 360 Demountable Partitions - Contract Ratification & Scope Gaps PENDING $ 500,000 final contract ratification TBD 10 22 26 Operable Partitions NA-$ NA Corflex 10 22 27 Automatic Vertically Folding Partition NA-$ NA Vertical Solutions 10 26 00 WALL AND DOOR PROTECTION CONFIRMED $ 355,259 WP1 & Corner Guards/Handrails etc. BF PLUG Construction Specialties $ 154,403 10 28 00 TOILET, BATH, AND LAUNDRY ACCESSORIES CONFIRMED Oxford Builders $ 127,500 TOILET, BATH, AND LAUNDRY ACCESSORIES NA-$ BF PLUG Canadian Washroom Products $ 67,185

9/09/19 3:05 PM Page 2/4 CAMBRIDGE MEMORIAL HOSPITAL - PHASE 3 265 ELLISDON BUDGET UPDATE

EllisDon Budget Status CURRENT BUDGET - SEPTEMBER 9, 2019 PREVIOUS BUDGET - JULY 23, 2019

Tier Cost Code Scope Status Subcontractor Base/Ratified Value Notes Status Subcontractor Base/Ratified Value Shower Curtains NA-$ NOT RATIFIED MIP Inc Ceiling Track System 10 51 00 LOCKERS CONFIRMED Oxford Builders $ 89,915 PENDING 10 56 26 High Density Mobile Storage Shelving NOT RATIFIED Brenneman $ 37,182 PLUG Brenneman $ 37,182 High Density Mobile Storage Shelving - Contract Ratification PENDING $ 5,000 final contract ratification TBD 10 90 90 Lockable Donation Box NA NA P.Riopel 10 99 00 SPECIALTIES Patient Lifts PENDING Arjo Huntleigh $ 458,002 PLUG Arjo Huntleigh $ 458,002 Fireplaces CONFIRMED $ 5,000 PLUG Distinctive Fires $ 10,000 Public Telephone Enclosure NA-$ NA Redyref Table Lift NA-$ NA Superlift Material Handl Dome Mirrors NA-$ NA SWS Detention 10 99 99 Specialty & Finishes - Maintenance/Warranties during phased handover $ 264,246

11000 EQUIPMENT $ 2,968,952 $ 1,837,459 11 00 01 Medical Equipment NA BF PLUG $ 145,000 11 24 00 MAINTENANCE EQUIPMENT NA 11 24 23 Active Fall Protection Systems NA NA Thaler Metal 11 70 00 HEALTHCARE EQUIPMENT Biological Safety Cabinet PENDING Nuaire $ 34,935 PENDING Nuaire $ 34,935 Fume Hood Monitor Mounts CONFIRMED $ 40,530 NOT RATIFIED GCX Grossing Workstation CONFIRMED $ 85,000 NOT RATIFIED Somagen Diagnostics Pass Thru - Dryer NA NA Ultraray Medical 11 71 00 MEDICAL STERILIZING EQUIPMENT Washer/Disinfector PENDING Miele $ 85,686 PENDING Miele $ 85,686 Washer/Disinfector - Contract Ratification PLUG$ 20,000 costs of new model TBD Floor Loading Sterilizer NA-$ NOT RATIFIED McDavis Sales & Service Sterilizer NA NA Steris Canada 11 73 10 Medical Service Consoles PENDING Interspec Systems ltd $ 23,900 PLUG Interspec Systems ltd $ 23,900 Medical Service Consoles - Scope Gaps CONFIRMED $ 64,650 11 73 50 Headwall Units PENDING Amico Corporation $ 876,186 PENDING Amico Corporation $ 990,090 Headwall Units - Contract Ratification PLUG$ 131,428 for labour & material escalation costs 11 76 50 Articulated Arm Units PENDING Olympus $ 557,848 PENDING Olympus $ 557,848 11 99 98 Medical Equipment - Moving, Installation, Relocation etc. $ 638,649 11 99 98 Medical Equipment - Maintenance/Warranties during phased handover $ 410,140

12000 FURNISHINGS $ 1,554,175 $ 946,550 12 24 00 WINDOW SHADES PENDING Solarfective Products $ 114,265 PLUG Solarfective Products $ 114,265 12 24 01 Motorized Blinds NA BF PLUG $ 40,375 12 30 00 CASEWORK PENDING MottLab $ 791,910 PENDING MottLab $ 791,910 CASEWORK - Solid Phenolic CONFIRMED MottLab $ 446,000 CASEWORK - Scope Gaps CONFIRMED $ 202,000 temporary lab & other misc. scope gaps 12 35 00 SPECIALTY CASEWORK (Passthrough) NA NA Scientek Hospital 12 93 00 Site Furnishings NA NA Hauser Industries Site Furnishings NA NA Landscape Forms

14000 CONVEYING SYSTEMS : $ 761,381 $ 405,089 14 24 00 HYDRAULIC ELEVATORS NOT RATIFIED Otis Canada $ 320,332 final contract ratification TBD PLUG Otis Canada $ 60,095 HYDRAULIC ELEVATORS - Scope Gaps CONFIRMED $ 10,000 14 92 00 PNEUMATIC TUBE SYSTEMS PENDING Swisslog $ 344,994 PENDING Swisslog $ 344,994 PNEUMATIC TUBE SYSTEMS - Contract Ratification PLUG$ 36,055 labour & material escalations PNEUMATIC TUBE SYSTEMS - Scope Gaps PLUG$ 50,000

21000 FIRE SUPPRESSION $ 1,967,263 $ 1,928,851 21 00 00 FIRE SUPPRESSION CONFIRMED Forest City Fire Protection $ 1,928,851 CONFIRMED Forest City Fire Protection $ 1,928,851 FIRE SUPPRESSION - Scope Gaps CONFIRMED $ 38,412 schedule extension to 48 mths.

23000 MECHANICAL, PLUMBING AND HVAC $ 14,784,504 $ 12,278,599 22 00 00 PLUMBING NOT RATIFIED JMR Electric $ 12,278,599 PLUG JMR Electric $ 12,278,599 23 00 00 HEATING, VENTILATING, AND AIR-CONDITIONING (HVAC) PLUG

9/09/19 3:05 PM Page 3/4 CAMBRIDGE MEMORIAL HOSPITAL - PHASE 3 266 ELLISDON BUDGET UPDATE

EllisDon Budget Status CURRENT BUDGET - SEPTEMBER 9, 2019 PREVIOUS BUDGET - JULY 23, 2019

Tier Cost Code Scope Status Subcontractor Base/Ratified Value Notes Status Subcontractor Base/Ratified Value 25 00 00 INTEGRATED AUTOMATION PLUG MECHANICAL - SCOPE GAPS / CONTRACT RATIFICATION PENDING $ 2,505,905 final contract ratification TBD; scope for bonding, schedule extension, equipment warranties, SI's, CCN's

26000 ELECTRICAL $ 11,215,496 $ 11,215,496 26 00 00 ELECTRICAL NOT RATIFIED JMR Electric $ 11,215,496 PLUG JMR Electric $ 11,215,496 ELECTRICAL - SCOPE GAPS / CONTRACT RATIFICATION incl in Mech

31000 SITE IMPROVEMENTS $ 1,894,669 $ 1,275,000 31 23 00 EXCAVATION AND FILL CONFIRMED $ 619,669 includes remainder of structural excavation & PENDING M&E excavation and backfill. 31 40 00 SHORING AND UNDERPINNING CONFIRMED $ 1,275,000 PENDING HC Matcon $ 1,275,000

32000 LANDSCAPE $ 227,550 $ 63,176 32 16 00 SIDEWALKS, CURBS AND GUTTERS NA BF PLUG Ashland Paving $ 41,976 SITE DEVELOPMENT - SCOPE GAPS CONFIRMED $ 227,550 all remaining trees, landscaping, curbs, sidewalk, asphalt, planter walls, planting etc 32 90 00 PLANTING NA BF PLUG $ 21,200

9/09/19 3:05 PM Page 4/4 DATED October 7, 2019 267

DEFERRED WORK SUMMARY

Reference Item D E S C R I P T I O N Document Budget

October 7, 2019 Budget for Items 1-16 **all values exclude HST**

From sequence 1-S110, North temporary ambulance entrance (MRI entrance area); Underground utility line correction required. One of the pipe joints is not aligned. This 1 is a deficiency. Ref. Dwg C-100 $24,000 From sequence 1-B205, Temporary emergency entrance on L1, wood soffit; This is a deficiency, Stantec wants the wood soffit re-done due to incorrect grain in the 2 wood soffit and some areas of darker colored wood. Ref. Dwg A-201C $30,000 From sequence 1-B210, Temporary ICU on L1; exterior window work to be Ref. Dwg A-201C / A- completed and exterior ceramic panel wall cladding to be completed (the existing 211C (AP-211C for 3 wall gets furred out and clad with ceramic panel). Temp ICU) $278,400 From phase 2; Epoxy floor re-finish/re-broadcasting required through the East to be part of Stonhard 4 corridor on L1. Door openings to install in 3-B300 so will be done in phase 3. Ref. Dwg A-211C Subcontract Ratification From phase 2; A small part of Critical Care on L1 South will be completed in phase 3. Due to emergency egress requirement for SI-474 temporary exiting required for phase 2 turn over. Ref. Dwg A-211D. Also temporary steel stairs (2 locations) are to remain in place for SI-474 for emergency egress and will be removed later in Ref. Dwg AP-121 (2- already included in Sept 9 5 phase 3 and openings closed with windows. A005) budget From phase 2; Permanent ramp at L2 Link Bridge on the existing B-wing side. Temporary ramp was installed as CMH would not permit access to their existing OR’s to do the L1 floor reinforcing work required for the permanent ramp. The Ref. Dwg A-202C / S- already included in Sept 9 6 permanent ramp work will be done in phase 3. 202C budget

From phase 2; exterior gate required at the glass guard around the exterior exhaust grill at the N-E corner of the new OR’s. The gate cannot be installed until the 7 ceramic wall panel work is completed from sequence 1-B210 as noted above. Ref. Dwg A-201C $2,500 From sequence 1-B010, MDRD on L0; Complete the South end of this sequence to be part of JMR, B&N, Lab which was differed to phase 3 due to the extensive work above on L1 and Ref. Dwg A-200D / Flooring, Paramount etc. 8 associated above ceiling work required on L0. AP-110A Subcontract Ratification From sequence 2-B050, MDRD small office renovation; This work was differed to to be part of JMR, B&N, Lab phase 3 because CMH could not give up the dum-waiter lift that was to be Ref. Dwg A-200B / Flooring, Paramount etc. 9 demolished in this sequence. AP-120 / AD-200C Subcontract Ratification Ref. Dwg A-201B / to be part of JMR, B&N, Lab From phase 2; HouseKeeping room A.1.676A will be done in phase 3 due to AHU A202B (also refer to Flooring, Paramount etc. 10 ducting for the existing OR’s that runs through this space. CCN 174.3) Subcontract Ratification From phase 2; snow deck at existing exhaust fan (South side of the Link bridge) GL: Refer to SSI-043. Gy/8-9; this section of snow deck to be completed in phase 3 when the exhaust fan Ref. Dwg A-202C / M- 11 is removed. 502C and SI-326 $17,620 From phase 2; OR roof framing connection to be done in phase 3; W200x15 moment connection to be completed. Refer to H&A structural report # 77. This is in Ref. Dwg S-202C / A- 12 the area of the Utility clean room that also needs to be completed in phase 3. 201B $50,000 Tree planting: A group of 5 trees located near the existing bus stop (on Coronation Blvd in front of the MRI area) have been differed to phase 3. This bus stop will get already included in Sept 9 13 removed in phase 3. Ref. Dwg L-100 budget Hard landscaping along Coronation Blvd (N-E corner of new A-wing where it joins existing B-wing). This area could not be finished due to the temporary AHU’s sitting Ref. Dwg L-100 / L- already included in Sept 9 14 on the ground which service the temporary ICU. 104 budget CMH Supplied Donor Sculpture (CCN-247); Donor sculpture installation which is to already included in Sept 9 15 be located in the hard landscape area noted above in item 14. Ref. Dwg L-104 budget Shaft ceiling in L0 Corridor CRA.0.110; shaft ceiling left out for access to mechanical included in PJ Daly 16 ducting work required in phase 3. Ref. Dwg A-310B Subcontract

Scope Contingency 5.0% $20,126 Design Contingency 7.5% $30,189 Subguard, Bonding, Insurance etc. 2.4% $9,660 CM Fee 4.0% $17,540

Total Deferred Work for Items 1-16 (excl HST) $480,035

Page: 1 of 1

268 269 270 271 272 273

274 10 275

Court File No. CV-19

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

IN THE MATTER OF THE COMPANIES CREDITORS ARRANGEMENT ACT, RSC 1985, C. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF BONDFIELD CONSTRUCTION COMPANY LIMITED, 950504 ONTARIO INC., 352021 ONTARIO LIMITED, 2433485 ONTARIO INC. and 2433486 ONTARIO INC.

APPLICANTS

AFFIDAVIT OF STEVEN AQUINO

(Sworn March 5, 2019)

I, STEVEN AQUINO, of the City of Oakville, in the Province of Ontario, MAKE OATH

AND SAY:

1. This Affidavit is made in support of an Application by Bondfield Construction Company

Limited ("BCCL"), 950504 Ontario Inc., 352021 Ontario Limited, 2433485 Ontario Inc. and

2433486 Ontario Inc. (together, the "Applicants" or the "Bondfield Group") for relief under the

Companies' Creditors Arrangement Act, RSC 1985, c C-36, as amended (the "CCAA"), including a stay of proceedings.

2. I am the President of BCCL. I have held this position since October 31, 2018. Prior to serving as President, I was the Vice President of Operations of BCCL and held this position since 11 2 276

2014. I am also a director of each of the entities in the Bondfield Group. As such, I have personal knowledge of the matters to which I depose to in this Affidavit, save and except where I refer to matters based on information and belief, in which case I have stated the source of my information and, in all such cases, I verily believe that information to be true. In preparing this Affidavit, I have consulted with legal and financial advisors to the Bondfield Group as well as members of the senior management team of the Bondfield Group. Unless otherwise indicated, all amounts in this

Affidavit are in Canadian dollars.

I. INTRODUCTION

3. The Bondfield Group is a leading design-build and general construction company providing services to both public and private sector clients. It is a family owned and operated business, started by my father, Ralph Aquino, that has successfully operated in Ontario for over

45 years. The Bondfield Group currently has a team of approximately 330 employees and independent contractors.

4. Historically, and until the summer of 2018, the Bondfield Group was led by Ralph Aquino, and his sons, John Aquino and myself. During this time, Ralph Aquino and I were focused primarily on the operational side of the Bondfield Group's business, with John Aquino focused on the financial side. Thereafter, since around October 2018, I became president of the Bondfield

Group and I am a director of each entity in the Bondfield Group.

5. As a full-service construction company, the Bondfield Group has considerable experience spanning multiple sectors, including, inter alia, health-care, transit, correctional facilities, long- term care, schools, colleges and universities, commercial and residential buildings, recreational facilities and energy infrastructure. 12 3 277

6. The Bondfield Group has well-established relationships with key designers, specialty consultants, trade subcontractors and suppliers, and has been awarded some of the most socially prominent infrastructure projects in Ontario, driven by successful, long-standing public private partnerships. Since 2007, the Bondfield Group has successfully completed construction of twelve

(12) public private partnership ("P3") projects with the Province of Ontario. Key relationships with major public sector clients include the Toronto Transit Commission ("TTC"), Infrastructure

Ontario ("IO"), the City of Toronto, Defence Construction Canada and numerous other major regional and Municipal Governments, Provincial Ministries and Agencies, post-secondary institutions and school boards across Ontario.

7. The Bondfield Group is currently involved in over $1 billion of construction contracts, including, inter alia, providing traditional bid-build construction services for St. Joseph's Care

Centre, Sunnybrook Health Services Centre, Centennial College, the University of Waterloo, the

TTC, and Union Station. There is an important public interest in ensuring that these construction projects are successfully completed in a timely manner, as they provide critical infrastructure for

Ontarians.

8. As described in further detail below, while the Bondfield Group has been successfully operating in Ontario for over 45 years, the Bondfield Group has experienced significant financial and operational challenges over the past two years that have imperiled the Bondfield Group's business and long-term viability.

9. The financial challenges currently facing the Bondfield Group were associated, among other things, with its recent and significant expansion, including, in particular, the Bondfield

Group's selection as the successful bidder on a number of large P3 projects in 2014 and 2015. At the time of its expansion, the Bondfield Group had access to $60 million in financing under a credit 13 4 278 facility with a Schedule 1 financial institution. Cognizant of its need for additional funding in order to support its expanded operations, the Bondfield Group entered into negotiations with this lender, and other Schedule 1 and 2 banks in Canada, in an effort to increase the size of its credit facility to an amount it estimated would be sufficient to fund the required equity for the projects. These efforts were unsuccessful.

10. In June 2017, after having exhausted its efforts to secure traditional financing, and facing the imminent maturity of its credit facility, the Bondfield Group entered into a financing transaction with Bridging Finance Inc. ("Bridging") in the form of an $80 million credit facility

(the "Bridging Loan"). It was anticipated that the Bridging Loan would give the Bondfield Group additional time to secure a more traditional, lower interest rate and longer term corporate credit and financing solution.

11. The Bridging Loan has now matured and Bridging has made demand for repayment of all amounts owing under the Bridging Loan. As of today's date, Bridging takes the position that the

Bondfield Group owes it $52 million plus other chargeable amounts under the Bridging Loan.

Efforts to secure an alternative credit facility have been unsuccessful to date and the Bondfield

Group is unable to pay its liabilities as they become due. No additional funds have been extended by Bridging and since August 2018, the Bondfield Group's surety, Zurich Insurance Company

Ltd. ("Zurich") has funded the entirety of the Bondfield Group's operations, including overhead, that could not otherwise be funded by ordinary course cash flow.

12. Compounding the financial pressures facing the Bondfield Group are certain ongoing legal and operational pressures, in addition to highly critical reporting of the Bondfield Group in the media, which are impeding the Bondfield Group and its senior management from focusing on the company's day-to-day operations and construction business. 14 5 279

13. In particular, over the past 12 months, over 200 lawsuits have been filed against the

Bondfield Group and/or its directors for, among other things, unpaid accounts, breaches of contract and breaches of trust. This cascade of litigation has increased in recent months, as market participants seek to take advantage of the Bondfield Group's current challenges, which have been widely reported in the media. These lawsuits have distracted management from the companies' ordinary course business operations, namely, the completion of its existing projects for the benefit of the Bondfield Group's stakeholders.

14. Furthermore, in or around the Spring of 2018, I came to learn that the Bondfield Group had fallen into significant arrears with respect to amounts owing to the Canada Revenue Agency

("CRA") and certain other governmental authorities. The Bondfield Group entered into a payment plan with the CRA in order to pay down the outstanding amounts and discussions with the CRA are ongoing.

15. Most significantly, recent actions taken by Bridging have had a further destabilizing effect on the Bondfield Group. In particular, on October 1, 2018, Bridging issued demand letters and section 244 notices under the Bankruptcy and Insolvency Act ("Demand Letters and 244

Notices") to each of the Bondfield Group entities as well as the guarantors of the Bridging Loan.

Several weeks later, on November 15, 2018, Bridging brought an application seeking to appoint a

Receiver over all of the entities in the Bondfield Group.

16. Following negotiations between Bridging, the Bondfield Group, and Zurich, an agreement was reached whereby, among other things, one of the affiliates of the Bondfield Group, 1033803

Ontario Inc. operating as Forma-Con Construction Inc. and a related entity ("Forma-Con"), were placed into receivership. This agreement was set out in a Restructuring Support Agreement, as described further below. This was subsequently followed by the receivership of three other 15 280

Bondfield Group project entities established to carry out certain P3 Projects on behalf of the

Bondfield Group.

17. Since the entering into of the Restructuring Support Agreement, Bridging has continued to issue communications to the Bondfield Group noting the companies' continuing technical defaults under the Bridging Loan with respect to the Bondfield Group's reporting requirements to Bridging.

These ongoing demands are being made despite the Bondfield Group having put mechanisms in place to ensure that both Bridging and Zurich have daily visibility and financial control mechanisms over the Bondfield Group.

18. Specifically, the Bondfield Group has been under continuous monitoring by Bridging and

Zurich, through Bridging's financial advisor, KSV Advisory Inc. ("KSV"), and through Zurich's financial advisor, Ernst & Young ("EY") since August 2018. This monitoring has included the near daily attendance at the Bondfield Group's head office by one or more representatives of KSV and EY. Furthermore, as described in greater detail below, the Bondfield Group continues to report to both Bridging and Zurich (through KSV and EY) on the financial and operational matters of the

Bondfield Group, including with respect to every and all disbursements, daily banking, and cash flow projections and project by project cash flow reporting.

19. Notwithstanding this daily reporting, on March 1, 2019, Bridging, through its counsel, delivered a letter to the Bondfield Group alleging that the Bondfield Group remains in default of the financial reporting obligations under the Bridging Loan. Bridging stated that it intended to bring its application to appoint a receiver over the Bondfield Group back before the Court if the

Bondfield Group did not deliver its quarterly financial statements to Bridging by March 8, 2019.

20. In light of these challenges, the Applicants require a stay of proceedings and related relief under the CCAA in order to secure the breathing room necessary to focus the Bondfield Group's 16 7 281 efforts on completing the construction projects on which the Bondfield Group is currently engaged, while seeking to strengthen its balance sheet, with the ultimate goal of maximizing value for the

Bondfield Group's stakeholders. Zurich supports the Applicants in this proceeding.

21. In addition, the Bondfield Group is seeking this Honourable Court's approval of debtor-in- possession ("DIP") financing, to be provided by Zurich, in order to pay ordinary course operating expenses in connection with the Applicants' business in these proceedings, other than the costs covered by Zurich's bonded obligations. Zurich has agreed to provide interim financing to the

Bondfield Group as described below. The DIP financing is anticipated to "keep the lights on" to sustain the Bondfield Group's operations while it stabilizes its financial position and pursues an orderly restructuring of its business.

22. Any serious disruption to the Bondfield Group's ability to provide construction services will delay and likely imperil the viability of the various projects on which the Bondfield Group is currently engaged, and have other negative effects, including delaying the delivery of critical infrastructure to Ontarians. As a result, the Bondfield Group believes that it is imperative that it be afforded the protection of CCAA proceedings as quickly as possible in order to avoid any disruption to the Bondfield Group's operations.

23. Further, as set out above, the Bondfield Group is a well established construction business in Ontario that employs hundreds of skilled employees. The continuation of this business in some form is my goal in commencing these proceedings It is my belief that pursuing a going concern solution through a CCAA restructuring will maximize enterprise value, and is preferable to a receivership. A receivership will result in the end of the Bondfield Group to the detriment of all of the stakeholders that rely on it for their livelihood and the delivery of critical infrastructure projects. 17 8 282

II. THE BONDFIELD GROUP

A. Overview of Operations

24. The Bondfield Group, headquartered in Concord, Ontario, currently employs approximately 330 employees and independent contractors. As a full-service construction company, the Bondfield Group's core business is focused in the design-build, and construction of, medium-to-large scale construction projects throughout Ontario, including considerable experience in public and private sector infrastructure construction projects.

B. Corporate Structure of the Bondfield Group

25. The Bondfield Group and affiliated non-applicant entities are comprised of a series of private companies incorporated pursuant to the Ontario Business Corporation Act, RSO 1990, c

B-16. A copy of the Bondfield Group's corporate organizational chart is attached hereto as Exhibit 66A9,.1

26. The entities comprising the Bondfield Group, including a brief description of their operations, are as follows:

Company Description BCCL The primary contracting entity between the Bondfield Group and its clients for which it provides construction services 950504 Ontario Inc. Holding company which holds a 5% interest in a property located in Innisfil 352021 Ontario Limited Union payroll company responsible for processing payroll for the various employees that are members of unions engaged by the Bondfield Group 2433485 Ontario Inc. SPV, wholly-owned by BCCL, incorporated to hold the Bondfield Group's interest in the ErinoakKids Centre for

1 The entities noted in green in the organization chart are the Applicant entities while the red shaded entities are affiliates of Bondfield that have been placed in receivership. Grey shaded entities in the organization chart denote affiliates of the Bondfield Group that have no assets or are not involved in the business operations of the Bondfield Group 18 9 283

Company Description Treatment and Development project (which is now substantially complete) 2433486 Ontario Inc. SPV, wholly-owned by BCCL, incorporated to hold the Bondfield Group's interest in the Sheridan College Institute of Technology and Advanced Learning project (which is now substantially complete)

27. The Corporation Profile Reports in respect of each of the above noted companies are attached hereto as Exhibit "B".

C. The Bondfield Group's Operating Segments

28. The Bondfield Group conducts its operations principally through the following business segments:

(a) Construction Services: This includes building, civil engineering and development

activities and construction services in Ontario. The Bondfield Group provides

construction services to two primary types of construction projects:

(i) Public Private Partnership Projects: This includes participation in P3

projects for government buildings and infrastructure, mainly in the health

sector, in Ontario. The Bondfield Group has successfully completed twelve

(12) P3 transactions in Ontario to date.

(ii) Traditional Construction (non-P3) Projects: This includes all other

projects on which the Bondfield Group is engaged and includes all aspects

of the construction industry from design-build and construction

management to lump sump tender and project management. 1 9 - 10 - 284

(b) Excavation: The Bondfield Group provides excavation services on its projects and

for a small number of third-party customers.

D. Overview of Material Projects

29. The Bondfield Group is currently involved in over $1 billion of construction contracts.

This involves work on over 30 projects, spanning a variety of sectors, including, inter alia, healthcare, long-term care, schools, colleges and universities, recreational centres, correctional facilities, transit, commercial and residential facilities and energy infrastructure. Below are some of the material projects on which the Bondfield Group is currently engaged. A full list of the material projects is attached hereto as Schedule "A".

Project Location Description Union Station Toronto The USRP Integrated Stage 2/3 General Contract Scope Revitalization of Work covers all aspects of the final consolidated Project ("USRP") phase of construction of the USRP project including Stages 2 and 3 demolition, abatement of hazardous substances, architectural finishing and heritage restoration, and the extension of mechanical and electrical services from main systems installed in Stage 1 construction phase. Avondale Public Toronto The Avondale Public School will replace the existing School school facility at 171 Avondale Road in North York and will have rated capacity of 553 pupil places and a gross floor area of approximately 65,000 sq. ft. Centennial College Downsview The project involves extensive renovations to the Downsview Park Havilland Building, which will include the construction Aerospace Campus of new teaching facilities, laboratories and office space for research and development related to structural aircraft assembly, manufacturing and maintenance, research in navigation. Ed Sackfield Arena Richmond The new Ed Sackfield Arena second ice pad facility will and the Hill consist of an NHL size ice surface, six team dressing Revitalization of rooms, bench seating for 350 spectators, a new fitness David Hamilton facility, the repurposing of an existing fitness facility Park 20 -11- 285

Project L9catiob Dekription into program/meeting space, and a public circulation area. The revitalization of the David Hamilton Park consists of the addition of a multi-use court, outdoor facilities and a splash pad to the site, retrofit of the existing softball, hardball and soccer fields to include irrigation and drainage, replacement of the existing playgrounds and the retention of the tennis court facility. University of Waterloo The project is to create a 84,000 sq ft., 3 story addition Waterloo Student between the Student Life Centre and the Physical Life Centre PAC Activities Complex, to join the buildings as one Addition integrated Student Life entity. The building will contain expanded Dining Areas, Food Services, Lounge Spaces, PAC Control, Fitness, Multi-Purpose Rooms, Grad Services, and Administrative and Club Space. There is substantial renovation and addition work to the existing PAC lower and ground levels to create new Fitness facilities. A new second floor link between the Student Life Centre and Math and Computer Building is included. Kingston Kingston The new secondary school is designed to accommodate Intermediate approximately 1,340 students. The three storey new Secondary School construction will be approximately 175,000 sq. ft. of gross area.

30. The Bondfield Group provides construction services in respect of P3 projects. Through two special purpose project entities, 2433485 Ontario Inc. and 2433486 Ontario Inc., each wholly owned by BCCL and Applicants herein, the Bondfield Group was awarded the P3 contract for the development and design of Sheridan College Phase 2 project in Mississauga and the children's treatment centres for ErinoakKids.

31. The Bondfield Group provides construction services in respect of three additional P3 projects: 21 -12- 286

(a) Hawkesbury & District General Hospital through the special purpose entity

2423403 Ontario Inc;

(b) Cambridge Memorial Hospital Capital through the special purpose entity 2423402

Ontario Inc.; and

32. In December 2018, these three project companies were each placed in receivership upon the applications of the Toronto-Dominion Bank with respect to Hawkesbury and the Bank of

Montreal in respect of Cambridge and St. Michael's Hospitals (together, the "P3 Receiverships").

The P3 Receiverships were commenced as a result of disputes with the lenders of such P3 projects.

At this time and notwithstanding the P3 Receiverships, the Bondfield Group continues to work to complete all of these P3 Projects.

33. As described below, the Bondfield Group has had insufficient funds since August 2018 to operate in the ordinary course of business without third party financial support. Accordingly,

Zurich has funded the entirety of the Bondfield Group's operations during that time, which has enabled the Bondfield Group to "keep the lights on" and continue working on its construction projects. Going forward, without the benefit of additional financing by Zurich, the Bondfield

Group's operations will face a precipitous shutdown and significant value that may be realized from the completion of the construction projects and the collection of large receivable amounts

(including affirmative claims) owing to it for all of the Bondfield Group's stakeholders will be compromised. 22 -13- 287

F. Employees

34. As of February, 2019, the Bondfield Group employed approximately 330 employees and independent contractors, approximately 200 of whom are unionized. All of the Bondfield Group's employees are located in Ontario.

35. The Bondfield Group's unionized employees, consisting of skilled trades and labourers, are governed by various collective agreements with a number of unions, including:

(a) The International Union of Operating Engineers;

(b) The Labourers' International Union of North America;

(d) The International Union of Painters and Allied Trades;

(e) The Provincial Formwork Agreement; and

(f) The Brick and Allied Craft Union of Canada.

36. As further described below, the Bondfield Group, with strict daily oversight by Zurich and

Bridging since August 2018, manages its own payroll processing and remits employee taxes and deductions as required. The Bondfield Group's employees are paid on a weekly basis. As of the date of this Affidavit, to the best of my knowledge, the Bondfield Group (other than 352021

Ontario Inc.) is not in arrears in respect of payroll. 352021 Ontario Inc., a member of the Bondfield

Group that processes union payroll and an Applicant herein, is currently in arrears of certain amounts owing to the CRA in the approximate amount of $8,000,000. 23 - 14 - 288

G. Group RRSP and Benefit Plans

37. The Bondfield Group sponsors for its salaried employees a Group Registered Retirement

Savings Plan ("Group RRSP") and a Group Deferred Profit Sharing Plan ("Group DPSP", and together with the Group RRSP, the "Bondfield Retirement Plan"), which are administered by

Manulife Financial Corporation. Eligible employees are entitled to contribute up to five (5) percent of defined earnings to the Group RRSP account and the Bondfield Group matches contributions to a maximum of five (5) percent of defined earnings to the Group DPSP account. The Bondfield

Retirement Plan has 72 members as at December 31, 2018.

38. The Bondfield Group also provides group benefits coverage to its salaried employees through a group benefits plan administered by Sun Life Financial (the "Bondfield Group Benefits

Plan"). The Bondfield Group Benefits Plan is designed to assist and protect eligible employees and their dependents in the event of a serious illness, accident or death and to help cover the cost of some routine items such as prescription drugs, dental care, and vision care. The Bondfield Group

Benefits Plan has 119 members as at December 31, 2018.

III. FINANCIAL POSITION OF THE BONDFIELD GROUP

39. Copies of the consolidated, unaudited and draft financial statements of the Bondfield Group

(excluding the P3 Projects) as at December 31, 2017 are attached hereto as Exhibit "C"2 (the

"2017 Financials"). However, the 2017 Financials include certain non-applicant entities as well

2 The consolidated financial statements include the financial position and results of operations of the following companies under 100% common control: BCCL, 1087507 Ontario Limited, 1033803 Ontario Inc., 352021 Ontario Limited, 834076 Ontario Inc., 1291546 Ontario Inc., 950504 Ontario Inc., Bondfield Management Inc., 1291547 Ontario Inc., 2032686 Ontario Limited (operating as BMC Masonry), Bondfield Construction Equipment Limited, and 2553001 Ontario Inc. They also include the proportionate share of earnings in their investment in affiliates and in an unincorporated jointly controlled enterprise as follows: B.B.M. Excavation Company Limited (50%), Walsh Construction/Bondfield partnership (35%), and Forma-Con/Limen jointly controlled enterprise (50%). 24 -15- 289 as entities that are currently subject to Receivership Proceedings. These are the most recent set of annual consolidated financial statements prepared by the Bondfield Group.

40. In addition, a copy of BCCL's unaudited, non-consolidated draft financial statements for the quarter ended March 31, 2018 is attached as Exhibit "D" to this Affidavit. These are the most recent set of unaudited financial statements prepared by BCCL.

A. Assets

41. As at March 31, 2018, BCCL had total assets with a book value of approximately $429 million. This included current assets of approximately $417 million and non-current assets of approximately $12 million. However, it should be noted that out of the approximately $417 million of current assets, $167 million relates to amounts due from related parties. The related parties that owe the majority of this balance to BCCL include certain of the Applicants themselves, along with other legal entities that are subject to the Receivership Proceedings. Therefore, certain of these assets may not be recoverable.

B. Liabilities

42. As of March 2018, BCCL had total liabilities of approximately $361 million. This included current liabilities of approximately $350 million and non-current liabilities of approximately $11 million.

C. Tax Arrears

43. 352021 Ontario Ltd. is currently in arrears with respect to amounts owing to the CRA in the amount of approximately $8 million, on account of HST and source deductions. 352021

Ontario Ltd. does not have any assets. 25 -16- 290

44. As set out above, the Bondfield Group entered into a payment plan agreement with the

CRA in order to pay down the outstanding amounts owing to the Government of Canada.

Discussions between the parties are ongoing and the Bondfield Group has continued to make weekly payments of $40,000 to the CRA.

IV. INDEBTEDNESS

A. Bridging Loan

45. Pursuant to a Credit Agreement dated as of July 24, 2017 (as amended, the "Credit

Agreement") between Bridging, as agent for and on behalf of any of the funds sub-advised or managed by Bridging, and BCCL, as borrower, Bridging made available to BCCL: (i) a non- revolving demand loan in the amount of up to $60 million, and (ii) a revolving demand loan in the amount of up to $20 million. The obligations of BCCL under the Bridging Loan are guaranteed on a secured basis by, inter alia, Ralph Aquino, myself, John Aquino, 352021 Ontario Limited, and 950504 Ontario Inc., (collectively, the "Guarantors"). A copy of the Credit Agreement is attached hereto as Exhibit "E".

46. The purpose of the Bridging Loan was to refinance all of BCCL's obligations in connection with its earlier credit facility with National Bank of Canada ("National Bank"), to finance ongoing construction costs of the Bondfield Group, and for general working capital purposes. The Bridging

Loan was to terminate the earlier of (i) demand by Bridging, or (ii) July 24, 2018.

47. Interest on the Bridging Loan accrues at an annual rate equal to the Bank of Montreal Prime rate plus 10.3% calculated on the daily outstanding balance of the Bridging Loan and compounded monthly, not in advance and with no deemed reinvestment on monthly payments. On the 26 -17- 291 occurrence of an Event of Default (as defined therein), interest is calculated at an annual rate of

21% per annum calculated and compounded as aforesaid.

48. All of BCCL's indebtedness to Bridging under the Credit Agreement is secured, inter alia, by:

(a) a first priority, registered security agreement;

(b) an Assignment of Insurance Policies of BCCL and the Guarantors in favour of

Bridging;

his shares in BCCL and certain real property owned by him. As a result of the

Forma-Con Receivership, this limited recourse guarantee has been exhausted;

(d) an unlimited personal guarantee from each of Steven Aquino and John Aquino;

(e) a pledge of each of Steven Aquino's and John Aquino's shares in BCCL;

(f) an unlimited guarantee from 352021 Ontario Limited and 950504 Ontario Inc.; and

(g) a first priority, registered omnibus general security agreement from 352021 Ontario

Limited and 950504 Ontario Inc.

(collectively, the "Lender Security").

49. The security interests of Bridging in the personal property of the Bondfield Group pursuant to the Lender Security have been registered under the Personal Property Security Act, RSO 1990, c P-10 (the "PPSA"). Ontario Personal Property Security Registration System Certificates in 27 -18- 292 respect of the Bondfield Group with a file currency date of February 27, 2019, are attached hereto as Exhibit "F".

B. Bonded Obligations

50. Zurich is the surety for the Bondfield Group. Other than one construction project, all construction projects in which BCCL is currently engaged, including the P3 Projects, have bonds which are issued by Zurich ("Bonded Contracts") in an aggregate amount in excess of $1 billion.

51. In consideration of Zurich establishing a surety bonding facility for BCCL, BCCL and others including, 950504 Ontario Inc., 352021 Ontario Limited, Ralph Aquino, John Aquino and myself (collectively, the "Indemnitors") agreed to indemnify Zurich pursuant to General

Indemnity Agreements dated February 8, 2006 and July 16, 2015 (together, the "Indemnity

Agreements") for any and all liability for losses and/or expenses that Zurich may sustain and incur. Copies of the Indemnity Agreements are attached hereto as Exhibits "G" and "H".

52. Pursuant to the terms of the Indemnity Agreements, the Indemnitors pledged, assigned, transferred and set over to Zurich all of their right, title and interest in the following collateral in order to secure the obligations of the Indemnitors to Zurich in the Indemnity Agreements:

(a) all Bonded Contracts;

(b) all goods (including equipment, machinery, tools and materials), general

intangibles, and inventory, to the extent not subject to a prior perfected security

interest;

surety bonds supporting such subcontracts and purchase orders; -19- 293 28

(d) all sums which are or may become payable in connection with any Bonded Contract

and all other contracts in which any Indemnitor has an interest;

(e) all intellectual property (including proprietary software) necessary or required to

perform any Bonded Contract;

(f) any facilities or plants necessary or required to perform any Bonded Contract;

(g) any real or personal property, the improvement of which is secured by any Bond,

including any construction, mechanic's or builder's lien rights;

(h) any statutory trust rights; and

(i) any rights under any contract of insurance or financial instrument, including any

letter of credit, guarantee or surety bond.

53. The security interests of Zurich in the personal property of the Indemnitors under the

Indemnity Agreements have been registered under the PPSA. As noted above, Ontario Personal

Property Security Registration System Certificates in respect of the Bondfield Group evidencing the registrations of Zurich's security interests with a file currency date of February 28, 2019, are attached hereto as Exhibit "F".

54. Since August 2018, Zurich has been responsible for the stabilization of operations of the

Bondfield Group by paying pursuant to its bonded obligations: (i) subcontractors and suppliers of the Bondfield Group with the result that many of the liens registered in respect of work on the

Bondfield Group projects have been settled and/or discharged and subcontractors and suppliers accounts have been brought current in order to complete their contractual obligations on the

Bonded Projects; and (ii) all operational expenses of the Bondfield Group in order to permit the -20- 294 29

Bondfield Group to continue operating and working on ongoing construction projects notwithstanding that in many cases the Bondfield Group has not received payments from building owners on the Bonded Projects.

55. To date, Zurich has paid over $200 million in labour and material bond payment claims and to fund the operations of the Bondfield Group.

56. I am advised by Zurich that although Bridging is the senior secured lender of BCCL,

950154 Ontario Inc. and 352021 Ontario Limited, because Zurich has taken assignment of the claims it has paid under the payment bonds in respect of the Bonded Contracts, and is therefore subrogated to the position of the lien claimants, Zurich is a trust claimant with a priority entitlement to recover any funds on the Bonded Contracts.

C. Other Secured Creditors

57. The following entities have also registered security interests in respect of certain of the

Bondfield Group's assets, including equipment and vehicles: Aluma Systems Inc., Demelo's

Construction Equipment Ltd., Highland Chevrolet Buick GMC Cadillac Ltd., Toromont CAT,

Atco Structures & Logistics, and Wells Fargo Equipment Finance. Attached hereto as Exhibit

"I" is a PPSA Summary for BCCL.

D. Unsecured Creditors/Litigation

58. The Bondfield Group has recently been subject to an onslaught of litigation which has distracted management of the Bondfield Group from its ordinary course business operations. The

Bondfield Group has been named as a defendant in hundreds of litigation claims which are ongoing by a variety of entities, including, inter alia, customers, contractors and subcontractors. The amounts asserted in these claims are in the hundreds of millions of dollars. The Bondfield Group 30 -21 - 295 has initiated litigation claims against a variety of entities, including, inter alia, customers, contractors and subcontractors. The amounts of these claims are also in the hundreds of millions of dollars.

V CASH MANAGEMENT SYSTEM

59. The Bondfield Group maintains nine (9) active bank accounts in Ontario, seven (7) of which are at the Bank of Montreal and two (2) of which are with Toronto Dominion Bank and

Desjardins Bank.

60. As detailed below, any movement of cash or payment of disbursements is strictly controlled as a result of the oversight and protocols that have been put in place with both Zurich and Bridging since August 2018. In the ordinary course of business, the individual operating segments of the Bondfield Group will collect receipts for services rendered on the various construction projects on which they are engaged. All funds owed to BCCL are accounted for on a project-by-project basis. The Bondfield Group pays disbursements and when there is a shortfall

Zurich has paid the amount of such shortfall (the "Cash Management System").

61. In connection with these proposed CCAA proceedings, the Bondfield Group is seeking the authority to continue to operate the Cash Management System. The Cash Management System will be under the full oversight of the proposed Monitor. Maintaining the existing Cash

Management System will offer a number of benefits to the Bondfield Group and its stakeholders, including minimizing the disruption to the Bondfield Group's business caused by the CCAA proceedings and avoiding the need to negotiate and implement alternative banking arrangements.

VI URGENT NEED FOR RELIEF UNDER THE CCAA

62. The Bondfield Group is not able to meet its financial obligations as they become due. 31 -22- 296

63. The Bondfield Group's liquidity pressures began in 2014 and 2015, when it embarked on a period of considerable expansion, both through the growth of the Bondfield Group's traditional design-build construction services and through its selection as the successful bidder in respect of a number of large-scale P3 transactions in Ontario. Additional corporate financing was required by the Bondfield Group for the long-term P3 projects and the increasing number of traditional construction jobs that it was awarded.

64. At the time, the Bondfield Group had access to $60 million in financing under its then existing credit facility with National Bank. In anticipation of the liquidity pressures occasioned by the expansion of the Bondfield Group's operations, the Bondfield Group began discussions with

National Bank to increase the size of its then existing credit facility. The Bondfield Group understood that increased credit would be needed to fund the P3 projects and to account for potential timing delays in construction and payments received.

65. In the months leading up to negotiations with National Bank, the Globe and Mail (the

"Globe") published a series of articles about the Bondfield Group making various allegations that there was improper dealing involved in a decision by JO and a P3 project owner to name BCCL as the successful bidder on one of the P3 projects. A subsequent investigation commissioned by

I0 and report, which is public, found the procurement process was not compromised and effectively exonerated the Bondfield Group. In part as a result of the Globe's reporting, the

Bondfield Group and National Bank were unable to reach an agreement on satisfactory terms.

66. The Bondfield Group then approached other Schedule 1 and 2 banks in Canada and certain lenders in the U.S. to determine whether those lenders would be willing to extend additional credit to the Bondfield Group, however, these efforts were also unsuccessful. 32 - 23 - 297

67. In or about July 2017, the Bondfield Group was able to secure interim financing in the form of the Bridging Loan, thereby increasing the Bondfield Group's available credit to $80 million.

The Bondfield Group anticipated that the Bridging Loan would be used to fund the Bondfield

Group's operations on a short-term basis while allowing it to exit the existing corporate loan with

National Bank. While the Bridging Loan only had a one-year term, it was anticipated that the increased credit would give the Bondfield Group the breathing space necessary to secure more traditional financing at a lower interest rate and over a longer term.

68. The Bondfield Group was able to obtain an extension of the Bridging Loan from July 24,

2018 to October 22, 2018 (the "Extension Agreement"). The Bridging Loan has now matured.

To date, efforts to secure a larger credit facility or alternative financing have been unsuccessful. A true copy of the Extension Agreement dated July 10, 2018 is attached hereto as Exhibit "J".

69. On October 1, 2018, Bridging issued Demand Letters and 244 Notices to each of the

Bondfield Group entities as well as the guarantors of the Bridging Loan. A copy of the Demand

Letters and 244 Notices are attached hereto as Exhibit "K".

70. The Bondfield Group's financial challenges have been further exacerbated by certain construction projects that have experienced severe, unexpected delays, and cost overruns. The delay in bringing these projects to completion (or substantial completion) has had the effect of delaying the receipt of payment from project owners. In some cases, the Bondfield Group has been faced with numerous claims resulting in holdbacks not being released back to the Bondfield Group despite subcontractors receiving payment.

71. The Bondfield Group and its directors have also been inundated with over 200 legal proceedings. These lawsuits have distracted management from the companies' ordinary course business operations. Key senior personnel of the Bondfield Group are required to devote -24- 298 33

considerable time and energy to these proceedings that would be better spent stabilizing the

Bondfield Group's operations.

72. In light of the foregoing, the Bondfield Group engaged FAAN Advisors Inc. ("FAAN") to assist it with its financial affairs and reporting described below and to act as an intermediary between the company and its lenders. FAAN has been in attendance at the companies' premises since late July 2018.

73. In addition to FAAN's engagement, the company has been under close monitoring and control by both Zurich and Bridging. This monitoring has included the near daily attendance, since

August 2018, of one or more representatives of both EY and KSV at the companies' head office to, among other things, review each and every disbursement prior to their release by the Bondfield

Group. At this time, Zurich continues to have EY attend at the company daily. Since the date of the Forma-Con Receivership, KSV also attends at the companies' premises in its capacity as receiver of the assets, property and undertakings of Forma-Con and also conducts regular financial monitoring.

74. Zurich and Bridging, through their respective financial advisors, have had and continue to have, transparency into the finances and operations of the Bondfield Group whereby the Bondfield

Group, with the assistance of FAAN, reports to both Bridging and Zurich, inter alia, as follows:

(a) Disbursements:

(i) Bondfield provides a list of proposed disbursements to EY and KSV;

(ii) the proposed disbursement lists are provided with all the relevant

documentation to support each disbursement for review by EY and KSV,

on behalf of Zurich and Bridging, respectively. Unless related to general 34 -25- 299

overhead, the documentation includes sufficient support so that it can be

confirmed which payments relate to bonded vs non-bonded projects; and

(iii) no disbursements are to be made until EY/Zurich and KSV/Bridging

complete their review.

(b) Daily banking

(i) the Bondfield Group provides to KSV and EY the daily bank activity and

bank balances for the previous business day generally by the end of the

following business day. All project receipts are identified as bonded or non-

bonded; and

(ii) KSV and EY are provided with read-only electronic access to the bank

accounts and are able to view all bank activity at all times.

(i) the company currently provides a variance analysis for Actual Cash Flows

compared to the forecast for each week;

(ii) Additionally, for the period from August 7, 2018 to present, the company

has and continues to report detailed, line item-by-line item reporting on the

actual cash flows of the company (with no comparison to a forecast) for

each entity on a bonded vs. non-bonded basis. In preparing the reporting

for the Actual Cash Flows, the Bondfield Group incorporates the following:

(A) any receipts or disbursements that are directly attributable to a

construction project are allocated to that project. The cash flows for -26- 300 35

all the bonded projects of each legal entity are grouped together, as

are the cash flows for all the non-bonded projects of each legal

entity;

(B) the disbursements for payroll, benefits, source deductions and union

dues for, inter alia, each of BCCL and 352021 Ontario Limited, are

allocated between bonded and non-bonded cash flows based on the

actual time incurred on each of their projects. Support is provided

by the Bondfield Group to KSV and EY for the allocation of these

disbursements;

that is not the current month, then they are allocated according to the

payroll timesheets for the relevant month to which they relate;

(D) the Bondfield Group provides EY and KSV with a notional

subledger for every bonded project and non-bonded project that

records all the receipts and disbursements (directly attributable or

allocated) for every bonded and non-bonded project from the

previous week; and

(E) an accounting for any surplus or shortfall in respect of the projects

is maintained.

75. Notwithstanding the reporting and Zurich's funding of the Bondfield Groups' business since August 2018, the financial challenges facing the Bondfield Group resulted in the Forma-Con

Receivership in November 2018. The Bondfield Group's consent to the Forma-Con Receivership 36 -27- 301 was agreed to as part of a larger goal of achieving stability in the business and entering into a

Restructuring Support Agreement and Inter-Creditor and Cooperation Agreement with Bridging and Zurich. In particular,

(a) pursuant to a Restructuring Support Agreement, dated as of November 19, 2018, a

copy of which is attached hereto as Exhibit "L" (the "RSA"), the Bondfield Group

and Zurich consented to the Forma-Con Receivership. In addition, under the RSA,

the Bondfield Group was required to liquidate and transfer to Bridging marketable

securities held by the Bondfield Group (the "Marketable Securities");

(b) upon (i) commencement of the Forma-Con Receivership proceedings; and (ii) the

liquidation and transfer of all of the Marketable Securities to Bridging, an Inter-

Creditor and Co-operation Agreement dated November 19, 2018 (the "Inter-

Creditor Agreement", a copy of which is attached to the RSA) would become

effective (the "Inter-Creditor Conditions");

Bridging from enforcing their security over the Bondfield Group for one year and

outlined protocols for accounting as well as for the application of project funds; and

(d) if either of Zurich or the Bondfield Group breaches any term of the RSA or any

step is taken by the Bondfield Group or Zurich to commence an application or

proceeding under the CCAA, the Bankruptcy and Insolvency Act or any other filing

for protection or relief from creditors, Bridging shall be entitled to have its

receivership application heard immediately and neither Zurich nor the Bondfield

Group shall oppose the immediate scheduling of such application. 37 - 28 - 302

76. For reasons beyond the control of the Bondfield Group, and despite best efforts, the Inter-

Creditor Condition requiring the liquidation and transfer of all the Marketable Securities held by the Bondfield Group has not been fulfilled. The Marketable Securities held with BMO Nesbitt

Burns as intermediary, in the amount of $1.66 million and US$2.92 million, were liquidated by the Bondfield Group and transferred to Bridging. In addition, the Marketable Securities held with

Connor, Clark & Lunn Private Capital Ltd. ("CC&L"), in the amount of $5.853 million, were liquidated by the Bondfield Group and transferred to Bridging. However, the Bondfield Group has been advised that certain Marketable Securities held with CC&L in the approximate amount of

$1.876 million cannot be liquidated until mid March or April 2019 as a result of internal policies of CC&L in respect of illiquid alternative funds.

77. In recognition of the fact that the last remaining amount of the Marketable Securities cannot be liquidated, the Bondfield Group had offered to endorse the remaining Marketable Securities over to Bridging and has continued to deliver any cheques from CC&L to Bridging in respect thereof, including a cheque for $10,000 in December 2018 and a cheque for $1,900 in January

2019 on account of dividends from these illiquid alternative investments. However, as the Inter-

Creditor Conditions have not been able to be fulfilled, the Inter-Creditor Agreement is neither effective or binding. KSV, in its capacity as Receiver of Forma-Con, through counsel, recently delivered a letter dated February 28, 2019 taking the position that the Intercreditor Conditions have not been satisfied. A copy of the February 28, 2019 letter from counsel to KSV is attached hereto as Exhibit "M".

78. Despite (i) the stability provided to the business through Zurich's financial support, (ii) the consent by the Bondfield Group and Zurich to the Forma-Con Receivership, (iii) the transfer by the Bondfield Group of approximately $7.513 million and USD $2.92 million from the liquidation -29- 303 38 of substantially all of the Marketable Securities, and (iv) the existing heavy control measures and oversight by, and reporting to, Bridging by FAAN and the Bondfield Group, Bridging continues to escalate matters further by issuing letters to the Bondfield Group noting the companies' continuing technical defaults under the Bridging Loan with respect to the Bondfield Group's reporting requirements to Bridging and reserving their rights to enforcement. As recently as March

1, 2019, Bridging, through its counsel, issued such a letter to the Bondfield Group, threatening to bring forward a receivership application over the Bondfield Group. A copy of the exchange of recent correspondence with Bridging is attached hereto as Exhibit "N".

79. I am concerned that Bridging may attempt to enforce on its security at any moment. That fact, combined with the lawsuits being filed against the Company and its directors, and the liquidity issues described above, have inhibited the company from focusing their attention on the Bondfield

Group's day-to-day operations.

80. Further, while the Bondfield Group is owed outstanding receivables and project holdbacks, the ongoing costs of operations, the legal fees associated with current litigation as well as the status of matters with Bridging, has placed an insurmountable strain on the Bondfield Group as well as its finances.

81. In all of the circumstances, the Bondfield Group has determined that it is necessary for it to seek protection under the CCAA and to move forward with a restructuring as expeditiously as possible.

VIII. RELIEF SOUGHT

82. The Bondfield Group does not have adequate liquidity to fulfill its business objectives and maintain going concern operations without commencing a CCAA process, including urgently 39 -30- 304 seeking DIP financing. As set out above, the Bondfield Group will be unable to meet its liabilities as they become due and is, therefore, insolvent.

A. Stay of Proceedings

83. The Bondfield Group requires a stay of proceedings in order to preserve the status quo and secure the breathing room required to pursue and implement a restructuring, including by completing construction projects. In the interim, current and potential actions against the Bondfield

Group, as well as the maintenance of customer and supplier contracts and arrangements, need to be stayed and maintained respectively so that the Bondfield Group can focus on stabilizing its business operations.

84. With the benefit of the protection afforded by a stay of proceedings under the CCAA, the

Bondfield Group will be able to maintain the value of the Bondfield Group's contracts and projects, preserve jobs for its employees, and generally stabilize its business operations for the benefit of the Bondfield Group's stakeholders, including trades, sub-trades, private and government partners, and the local economies in which the Bondfield Group operates.

85. In the absence of a stay of proceedings, the Bondfield Group's stakeholders, business partners and contractors — and all of the complex, large-scale projects they currently service — may suffer high transition costs and potential delays. A ripple effect may be triggered wherein key suppliers also cease providing those projects with the goods and services required, thereby causing the projects themselves to become imperiled. The business interruption and resumption costs would be substantial and would inevitably have a negative effect on their own businesses and their stakeholders. 40 -31- 305

86. At this time, I believe that, without the benefit of CCAA protection, as well as the financial support of Zurich through a DIP, the Bondfield Group will be unable to complete its construction projects. While Zurich has been funding the Bondfield Group's overhead costs over the past five months, I understand that Zurich is unwilling to continue to fund these amounts without DIP financing. Furthermore, the cascade of legal proceedings and increasing demands of Bridging have reached a point where they are preventing senior personnel at the Bondfield Group from devoting sufficient time and energy to the company's day-to-day operations. CCAA proceedings will allow the Bondfield Group to refocus its efforts on stabilizing its operations and servicing the construction projects in order to receive payment and the release of any applicable holdbacks.

B. Appointment of Monitor

87. It is proposed that EY will act as the Monitor in the CCAA proceedings if the proposed

Initial Order is issued. EY has consented to act as the Monitor on the terms set out in the proposed

Initial Order. Attached hereto as Exhibit "0" is a copy of the executed consent of EY.

88. The Bondfield Group, with the assistance of EY, has prepared a 13 week cash flow forecast

(the "Cash Flow Forecast"). A copy of the Cash Flow Forecast is attached hereto as Exhibit

"P". Based on the Cash-Flow Forecast, should the DIP Facility be approved, the Bondfield Group will have sufficient cash to operate through the week ending May 31, 2019.

89. I understand that EY will file an initial pre-filing report with the Court as proposed Monitor in conjunction with the Applicants' request for relief under the CCAA. 41 -32- 306

90. EY' s appointment as Monitor, with certain specific enhanced responsibilities as set out under the proposed Initial Order, will provide a number of benefits to the company and its stakeholders, including:

(a) Monitoring of the Applicants' receipts and disbursements;

(b) Being empowered, but not obligated to, receive and collect, on behalf of the

Applicants, all monies and accounts now owed to the Applicants and to exercise all

remedies of the Applicants, on behalf of the Applicants and in consultation with the

Applicants and the DIP Lender, in collecting such monies, including without

limitation, to enforce any security held by the Applicants;

Agreement, financial and other information as agreed to between the Applicants,

the Monitor and the DIP Lender;

(d) Advising the Applicants in its preparation of the Applicants' cash flow statements,

as required by the DIP Lender, which information shall be reviewed with the

Monitor and delivered to the DIP Lender and KSV in its capacity as financial

advisor to Bridging, at the times set out in the DIP Agreement, or as otherwise

agreed to by the DIP Lender;

(e) Having full and complete access to the Property, including the premises, books,

records, data, including data in electronic form, and other financial documents of

the Applicants, to the extent that is necessary to adequately assess the Applicants'

business and financial affairs or to perform their duties arising under the proposed

Order; and 42 -33- 307

(f) reporting to, meeting with and discussing with such affected persons as the Monitor

deems appropriate on all matters relating to the Property and the CCAA

proceedings, and to share information, subject to such terms as to confidentiality as

the Monitor deems advisable.

Moreover, as detailed above, EY is already very familiar with the companies' operations, construction projects and cash flow.

91. In addition, I have identified certain potential financial irregularities and documents prepared by the former director responsible for the financial affairs of the Bondfield Group. I understand that EY will be investigating these potential financial irregularities as Monitor, if appointed. I believe that EY is well positioned to undertake this investigation based on its familiarity with the Bondfield Group's business and affairs. Furthermore, the enhanced monitor powers outlined above will facilitate investigation into any such financial irregularities.

C. Administration Charge

92. It is contemplated that the proposed Monitor, counsel to the proposed Monitor, counsel to the Bondfield Group and counsel to the directors of the Bondfield Group will be granted a first priority Court-ordered charge on the present and future assets, property and undertakings of the

Applicants (the "Property") as security for their respective fees and disbursements relating to services rendered in connection with the CCAA proceeding up to a maximum amount of $1 million

(the "Administration Charge"). The Bondfield Group believes that the Administration Charge is fair and reasonable in the circumstances.

93. The nature of the Bondfield Group's business requires the expertise, knowledge and continuing participation of the proposed beneficiaries of the Administration Charge in order to -34- 308 43 complete a successful restructuring. The professionals that are to be beneficiaries of the

Administration Charge have contributed, and continue to contribute, to the restructuring of the

Bondfield Group. I believe this Administration Charge is necessary to ensure their continued participation.

D. DIP Facility and Charge

94. As demonstrated in the Cash-Flow Forecast, the Bondfield Group will require interim financing to continue operations in order to allow it to complete ongoing construction projects and pay employees, as well as to allow the Bondfield Group to retain both the proposed monitor and legal counsel to assist and advise the Bondfield Group in relation to restructuring options. Subject to certain terms and conditions, Zurich has agreed to continue to fund the company's operations through a debtor in possession financing facility at an interest rate of 6% per annum (the "DIP

Facility"). The Cash-Flow Forecast shows draws on the DIP Facility in the amount of approximately $8 million during the forecast period. A copy of the DIP Facility is attached hereto as Exhibit "Q".

95. The DIP Facility will be used to pay ordinary course operating expenses, as more particularly described in the Cash-Flow Forecast, in connection with the Applicants' business in these proceedings, other than the costs covered by Zurich's bonded obligations (the "DIP

Obligations"). As set out in the Cash-Flow Forecast: (a) Zurich will continue to pay the costs covered by its bonded obligations in the ordinary course; and (b) if the DIP Facility is approved,

Zurich will fund the DIP Obligations through the DIP Facility.

96. The DIP Facility is proposed to be secured by a Court-ordered security interest, lien and charge (the "DIP Lender's Charge") on all of the Property of the Bondfield Group, which DIP

Lender's Charge shall not secure an obligation that exists before the proposed Initial Order is 44 -35- 309 made. The DIP Lender's Charge is to have priority over all other security interests, charges and liens other than the Administration Charge. The proposed Initial Order provides that all of the

Court-ordered charges will be subject to the trust provisions of the Construction Act.

E. Directors' and Officers' Protection

97. I am advised by Michael De Lellis of Osler, Hoskin & Harcourt LLP and believe that, in certain circumstances, directors can be held liable for certain obligations of a company owing to employees and government entities, which may include unpaid accrued wages, unpaid accrued vacation pay, and unremitted sales, goods and services, and harmonized sales taxes. The Bondfield

Group estimates, with the assistance of EY in its capacity as proposed Monitor, that these obligations may amount to as much as approximately $3 million.

98. The Bondfield Group's present and former directors do not currently benefit from any liability insurance policies, nor has the Bondfield Group provided contractual indemnities in favour of any of the Bondfield Group's current or former directors.

99. In light of the potential liabilities, and the lack of any liability insurance policies or contractual indemnities, my continued involvement in this proceeding as a director is conditional upon the granting of an Order under the CCAA which grants a charge in favour of the directors and officers of the Bondfield Group in the amount of $3 million on the Property, subject to the trust provisions of the Construction Act (the "Directors' Charge"). The Directors' Charge would act as security for indemnification for the directors' and officers' potential liabilities as set out above. The proposed Directors' Charge is to rank behind the proposed Administration Charge and the proposed DIP Charge. 45 -36- 310

100. I have long-standing relationships with the Bondfield Group's suppliers, employees, and other stakeholders, as well as knowledge gained throughout the growth of the Bondfield Group that cannot be replicated or easily replaced. It is critical that a level of continuity be maintained within the Bondfield Group to ensure focus on achieving a restructuring plan that will benefit the

Bondfield Group's stakeholders.

F. Payments During CCAA Proceedings

101. During the course of this CCAA proceeding, the Applicants, with the consent of the

Monitor, intend to make payments for goods and services supplied post-filing in the ordinary course as set out in the Cash Flow Forecast described above and as permitted by the draft Initial

Order.

102. The Applicants expect third parties with contractual arrangements with the Bondfield

Group to continue to provide goods and services in accordance with the proposed Initial Order.

However, in order to ensure uninterrupted business operations during the CCAA proceeding, the

Applicants are proposing in the Initial Order that they be authorized, with the consent of the

Monitor, but not required, to make certain payments, including payments owing in arrears, to certain critical third parties, as may be identified by the Monitor, that provide services that are integral to the Applicants' ability to operate during, and implement, their restructuring under this proceeding.

103. Any identified critical third party suppliers and contractors will be integral to the business of the Applicants and will likely discontinue critical ongoing services if the Bondfield Group ceases to pay them in the ordinary course. Any such discontinuance of these services could have a material adverse impact on the Bondfield Group's business and would cause performance defaults under its existing customer contracts. 46 -37- 311

104. Thus, in order to ensure continued supply, the Bondfield Group is seeking authorization in the Initial Order to pay obligations owing to any identified suppliers, regardless of such obligations arise before or after the commencement of these CCAA proceedings, if, in the opinion of the

Bondfield Group and the proposed Monitor, the supplier is critical to the Bondfield Group's business and its ongoing operations.

VIII. CONCLUSION

105. The Bondfield Group is not able to meet its liabilities as they come due. In particular, the

Bondfield Group cannot repay the indebtedness owing to Bridging or Zurich.

106. Further, Bridging has now threatened to bring a receivership application back before the court, which I believe would destroy any enterprise value left in the business. Conversely, Zurich has advised that it is prepared to continue to support the Bondfield Group within the stability and breathing space afforded by the CCAA and in accordance with the terms of the proposed Initial

Order.

107. I am confident that granting the Initial Order sought by the Bondfield Group is in the best interests of the Bondfield Group and its stakeholders. The Bondfield Group requires the stay of proceedings to operate in the ordinary course and complete construction projects.

108. In the absence of the stay of proceeding and the opportunity to effect the restructuring, the

Bondfield Group faces the possibility of imminent cessation of going concern operations, the liquidation of its assets, and the immediate loss of employment for approximately 330 employees.

The Bondfield Group's stakeholders, business partners and contractors — and all of the complex projects they currently service — will suffer significant transition costs and other harm. The 31247 -38- granting of the requested stay of proceedings will assist in an orderly rationalizing and/or restructuring of the affairs of the Bondfield Group.

109. For the reasons set out above, I believe it is in the best interests of the Bondfield Group and its stakeholders that the Initial Order is granted and that EY is appointed the Monitor of the

Bondfield Group.

AFFIRMED AND DECLARED BEFORE ME at the City of Toronto, in the Province of Ontario on March 5, 2019. Steven A ino

Commissioner r Taking Affid i eS5S-Z- -39- 313 48

SCHEDULE "A"

(Material Construction Projects)

The Bondfield Group is currently providing construction servicers on the following material projects:

Project Location DesCription Sunnybrook Toronto The renovation to the existing Sunnybrook Campus site Hospital, includes a 25,000 sq. ft. fit-up of interior spaces in an Morgue/Clinical existing live building to develop new clinical labs and Laboratory morgue suites, as well as various technical and office Services B, C & D support areas. Wings Renovation Union Station Toronto The USRP Integrated Stage 2/3 General Contract Scope Revitalization of Work covers all aspects of the final consolidated Project ("USRP") phase of construction of the USRP project including Stages 2 and 3 demolition, abatement of hazardous substances, architectural finishing and heritage restoration, and the extension of mechanical and electrical services from main systems installed in Stage 1 construction phase. TTC — Dupont and Toronto The project involves the excavation and installation of Spadina Easier elevator shafts within the City of Toronto's right-of-way Access to improve access to the Dupont TTC Station. As part of Construction the project, overhead utilities near the intersection of Spadina St. and Dupont St have been relocated. At the same time that relocation occurred, construction work inside Dupont Station took place. Integrated Petawawa The Health Services Centre Project will see the Healthcare Services integration, relocation and expansion of the existing Centre Garrison, medical facilities at CFB Borden. The new 7199 sq. m CFB Petawawa facility will house physiotherapy, dental and mental health services under one roof. 49 - 40 - 314

Project I,ocation Description TTC — Greenwood Toronto The work under this Project includes the supply of all Complex, Track & labour, equipment, and materials necessary to expand Structures Building and renovate the Track & Structures building, including: Renovation and roofing replacement, construction of a parts storage Retrofit area, new and configured shops, office, washroom and employee areas and an elevator. The Project also involves work in the Greenwood Carhouse, including the supply and installation of replacement DC power distribution and traction power pendant systems within the Carhouse and Track & Structures building. Avondale Public Toronto The Avondale Public School will replace the existing School school facility at 171 Avondale Road in North York and will have rated capacity of 553 pupil places and a gross floor area of approximately 65,000 sq. ft. The school building includes a daycare facility with a rated capacity of 72 children. The building construction is comprised of concrete block foundations, concrete slab-on-grade, hollow core floor slabs on reinforced concrete block bearing walls. The roof is constructed with a combination of hollow core and OWSJ roof framing and is designed to accommodate a third floor in the future. Oak Ridges Library Richmond The Oak Ridges Library will be a 19,000 sq. ft. stand- Hill alone LEED Silver Certified facility located at the northwest corner of Yonge Street and Regatta Avenue in the Town of Richmond Hill and will consist of two storeys, basement, and above grade parking on site. The Library will house meeting rooms, computer rooms, maker space, library material stacks, work rooms, study rooms and learning/browsing areas. Centennial College Downsview The repurposing of this structure involves the reuse of Downsview Park the majority of the existing floorplate, with some Aerospace Campus selective demolition to allow for new construction sized to accommodate the dimensional requirements for modern aircraft. The project involves extensive renovations to the Havilland Building, which will include the construction of new teaching facilities, laboratories and office space for research and development related to structural aircraft assembly, manufacturing and maintenance, research in navigation. 50 - 41 - 315

ProjeCt Location Description Vaughan Vaughan The work at the Vaughan Metropolitan Centre Bus Metropolitan Terminal consists of, inter alia, the construction of an Centre Bus enclosed pavilion area and finishing of service rooms in Terminal a pedestrian tunnel area, accessed by means of an elevator and a set of service stairs. The project also includes floor, wall and ceiling finishes within the pedestrian tunnel, the construction of two extended bus platforms for nine bus bays with canopy, roof and protected enclosures, facing an interior bus driveway and the construction of a landscaped plaza that connects the Terminal to the streetscape and adjacent developments. TTC — Davisville Toronto The work for Davisville Carhouse—Carhouse Carhouse — expansion includes the supply of all labour, equipment, Carhouse and materials necessary to expand and renovate Tracks Expansion 3 and 4 of Davisville Carhouse in order to accommodate the length of a six car Toronto Rocket train including demolition of building facades, excavation and utility re-routing, construction of foundation, structure, roofing and finishing building elements for the expansion. Sunnybrook Heath Toronto The Sunnybrook On-Site Dialysis project encompasses Services Centre — extensive renovations to the existing Dialysis Unit. The On-Site Clinical renovations will be accomplished in 5 distinct phases to Dialysis Unit permit the unit to remain in operation 6 days a week 17 hours a day. This 9,200 sq. ft. project is located along the hospital's main corridor at B/C/D/ wings on the second floor. Ed Sackfield Arena Richmond The new Ed Sackfield Arena second ice pad facility will and the Hill consist of an NHL size ice surface, six team dressing Revitalization of rooms, bench seating for 350 spectators, a new fitness David Hamilton facility, the repurposing of an existing fitness facility Park into program/meeting space, and a public circulation area. The revitalization of the David Hamilton Park consists of the addition of a multi-use court, outdoor facilities and a splash pad to the site, retrofit of the existing softball, hardball and soccer fields to include irrigation and drainage, replacement of the existing playgrounds and the retention of the tennis court facility. 51 -42- 316

Project Location Description The Ministry of the Toronto The Project involves the interior renovations to the Attorney General - James Drew Building on the ground, 1St, 2nd, 3rd and 19th 25 Grosevnor Co- floors, new elevators and convenience stairs and minor Location Phase 2 renovations to the upper basement. In addition to these interior renovations there are minor site and facade improvements along the Grosvenor street address to update the new civic area and access requirements. University of Waterloo The project is to create a 84,000 sq ft., 3 story addition Waterloo Student between the Student Life Centre and the Physical Life Centre PAC Activities Complex, to join the buildings as one Addition integrated Student Life entity. The building will contain expanded Dining Areas, Food Services, Lounge Spaces, PAC Control, Fitness, Multi-Purpose Rooms, Grad Services, and Administrative and Club Space. There is substantial renovation and addition work to the existing PAC lower and ground levels to create new Fitness facilities. A new second floor link between the Student Life Centre and Math and Computer Building is included. Sunnybrook Health Toronto The PET MRI consists of interior alterations to an Sciences Centre — existing area within the hospital located on the Ground PET MRI and floor and the Basement level of S-wing to accommodate Animal one new MRI suite and support areas. The work also Behavioural Suite includes associated structural work in the basement S-Wing Project level in order to provide structural reinforcement for the MRI machine and construction of new exterior access pit required for delivery of the MRI equipment. The approximate floor area to be renovated is 3318 sq.ft. The Animal Behavioural Suite project consists of interior alterations to an existing area within the hospital located on the 4th floor of S-wing to accommodate animal holding areas as part of Animal Behavioral Lab and support areas and associated mechanical and electrical alterations. The approximate floor area to be renovated is 1011 sq. ft. TTC — Glencairn Toronto The work for Glencairn Skylight Replacement includes Skylight full skylight replacement, complete with support Replacement systems, along the entire station length, from the Glencairn Avenue entrance to the Viewmont Avenue entrance. This work also includes the reinstatement of the original artwork for the station. 52 - 43 - 317

Project, Location Description University of Guelph The Project consists of the construction of a 3-storey + Guelph, Ontario penthouse, steel-framed 2,446.5 m2 Enhanced Clinical Veterinary College Learning addition to the east side of the OVC Lifetime ("OVC") Project 2 Learning Centre complete with selective demolition and — Enhanced subsequent reconstruction of 89 m2 of the LLC to Clinical Learning accommodate the new work. A second storey enclosed Addition aerial link to the OVC Main Building #003 to the north is required, complete with renovations of 337.2 m2 of space. Work also includes a 1,365 m2 of site development, including a new entry plaza complete with stairs, ramps and terraced seating, re-grading of landscaped areas with new lawn, plants and trees, and site furnishings. TTC — Wilson Yard Toronto The Wilson Yard Project involves a number of Expansion Project elements, including, inter alia: (i) the installation of an additional eight storage tracks complete with traction power, emergency alarm stations, signalling requirements, south lead track connection and new substation; (ii) the installation of additional signalling systems for the expanded yard, including an updated yard control board, route selection network and all vital/non-vital system design and controls; and (iii) the building retrofit and expansion of the Wilson Carhouse North Expansion, complete with new car hoists, maintenance pits and supporting traction power and systems elements. Kingston Kingston The new secondary school is designed to accommodate Intermediate approximately 1,340 students. The three storey new Secondary School construction will be approximately 175,000 sq. ft. of gross area. Ministry of Toronto The LEED Silver Certified Project involves the Transportation — construction of a one-storey, approximately 80,000 sq. Centre for ft. new building housing a variety of laboratories Excellence adjoining a three-storey administrative office tower. The Project also includes the construction of a multi-bay garage, back-up generator, surface parking, associated site servicing work, fencing and landscaping. St. Augustine of Toronto Construction of a 2 storey, roughly 14,840 sq. ft., Canterbury classroom and gym addition along with extensive Catholic School, landscaping. New Gym and Classroom Addition 53 -44- 318

A"roject ' Location Description TTC — Greenwood Toronto The Project, includes, but is not limited to, supply of Shop Failure labour, equipment, and materials to construct an Analysis Room enclosed Failure Analysis Room at ground level, and office space at mezzanine level. Vaughan Fire Vaughan The 10,500 sq. ft. LEED Silver Certified building will Station #7-4 be designed to enhance the heritage of the local community within the Guidelines established under the Kleinburg-Nashville Heritage Conservation District Study for new developments in the area. The station will have three drive-through apparatus bays, ancillary offices, hose tower, washrooms and provide living quarters for the crew on shift. The project will also consist of site Services, grading and paving for a site of approximately 1 acre, site Lighting, fencing, landscaping and security and septic system. Clearview Library Stayner The work includes a new library addition of 657 m2. The new structure is to be constructed as an addition to the Stayner Community Centre. St. Joseph Morrow Toronto The 105,000 sq. ft. school is 3-storeys and consist of an Park Catholic academic and administrative block, a cafeteria, Secondary School gymnasium, library and a private chapel. Hamilton General Hamilton The 4,500 sq. ft. Hybrid Operating Room Addition Hospital — Hybrid project at the Hamilton General Hospital entails Operating Room construction of a 3,000 sq. ft. one—story plus mechanical penthouse addition to the third floor of the existing Hospital and a further 1,500 sq. ft. of renovations within the fully operational surgical depai liiient. The addition will be partially supported from existing building structure, to be reinforced as part of the project scope.

319

Request ID: 023716734 Province of Ontario Date Report Produced: 2019/10/17 320 Transaction ID: 73382692 Ministry of Government Services Time Report Produced: 09:32:42 Category ID: UN/E Page: 1

CORPORATION PROFILE REPORT

Ontario Corp Number Corporation Name Incorporation Date

2423402 2423402 ONTARIO INC. 2014/06/19

Jurisdiction

ONTARIO

Corporation Type Corporation Status Former Jurisdiction

ONTARIO BUSINESS CORP. ACTIVE NOT APPLICABLE

Registered Office Address Date Amalgamated Amalgamation Ind.

NOT APPLICABLE NOT APPLICABLE 407 BASALTIC ROAD New Amal. Number Notice Date

CONCORD NOT APPLICABLE NOT APPLICABLE ONTARIO CANADA L4K 4W8 Letter Date

Mailing Address NOT APPLICABLE

Revival Date Continuation Date 407 BASALTIC ROAD NOT APPLICABLE NOT APPLICABLE

CONCORD Transferred Out Date Cancel/Inactive Date ONTARIO CANADA L4K 4W8 NOT APPLICABLE NOT APPLICABLE

EP Licence Eff.Date EP Licence Term.Date

NOT APPLICABLE NOT APPLICABLE

Number of Directors Date Commenced Date Ceased Minimum Maximum in Ontario in Ontario

00001 00010 NOT APPLICABLE NOT APPLICABLE Activity Classification

NOT AVAILABLE

Request ID: 023716734 Province of Ontario Date Report Produced: 2019/10/17 321 Transaction ID: 73382692 Ministry of Government Services Time Report Produced: 09:32:42 Category ID: UN/E Page: 2

CORPORATION PROFILE REPORT Ontario Corp Number Corporation Name

2423402 2423402 ONTARIO INC.

Corporate Name History Effective Date

2423402 ONTARIO INC. 2014/06/19

Current Business Name(s) Exist: NO

Expired Business Name(s) Exist: NO

Administrator: Name (Individual / Corporation) Address

STEVEN 407 BASALTIC ROAD AQUINO CONCORD ONTARIO CANADA L4K 4W8

Date Began First Director

2014/06/19 NOT APPLICABLE

Designation Officer Type Resident Canadian

DIRECTOR Y

Request ID: 023716734 Province of Ontario Date Report Produced: 2019/10/17 322 Transaction ID: 73382692 Ministry of Government Services Time Report Produced: 09:32:42 Category ID: UN/E Page: 3

CORPORATION PROFILE REPORT Ontario Corp Number Corporation Name

2423402 2423402 ONTARIO INC.

Administrator: Name (Individual / Corporation) Address

STEVEN 407 BASALTIC ROAD AQUINO CONCORD ONTARIO CANADA L4K 4W8

Date Began First Director

2018/10/15 NOT APPLICABLE

Designation Officer Type Resident Canadian

OFFICER PRESIDENT

Request ID: 023716734 Province of Ontario Date Report Produced: 2019/10/17 323 Transaction ID: 73382692 Ministry of Government Services Time Report Produced: 09:32:42 Category ID: UN/E Page: 4

CORPORATION PROFILE REPORT

Ontario Corp Number Corporation Name

2423402 2423402 ONTARIO INC.

Last Document Recorded Act/Code Description Form Date

CIA CHANGE NOTICE 1 2018/11/21 (ELECTRONIC FILING)

THIS REPORT SETS OUT THE MOST RECENT INFORMATION FILED BY THE CORPORATION ON OR AFTER JUNE 27, 1992, AND RECORDED IN THE ONTARIO BUSINESS INFORMATION SYSTEM AS AT THE DATE AND TIME OF PRINTING. ALL PERSONS WHO ARE RECORDED AS CURRENT DIRECTORS OR OFFICERS ARE INCLUDED IN THE LIST OF ADMINISTRATORS. ADDITIONAL HISTORICAL INFORMATION MAY EXIST ON MICROFICHE.

The issuance of this report in electronic form is authorized by the Ministry of Government Services.

324

Request ID: 023716729 Province of Ontario Date Report Produced: 2019/10/17 325 Transaction ID: 73382681 Ministry of Government Services Time Report Produced: 09:32:18 Category ID: UN/E Page: 1

CORPORATION PROFILE REPORT

Ontario Corp Number Corporation Name Amalgamation Date

1272456 BONDFIELD CONSTRUCTION COMPANY LIMITED 1997/12/31

Jurisdiction

ONTARIO

Corporation Type Corporation Status Former Jurisdiction

ONTARIO BUSINESS CORP. ACTIVE NOT APPLICABLE

Registered Office Address Date Amalgamated Amalgamation Ind.

NOT APPLICABLE A 407 BASALTIC ROAD New Amal. Number Notice Date

CONCORD NOT APPLICABLE NOT APPLICABLE ONTARIO CANADA L4K 4W8 Letter Date

Mailing Address NOT APPLICABLE

Revival Date Continuation Date 407 BASALTIC ROAD NOT APPLICABLE NOT APPLICABLE

CONCORD Transferred Out Date Cancel/Inactive Date ONTARIO CANADA L4K 4W8 NOT APPLICABLE NOT APPLICABLE

EP Licence Eff.Date EP Licence Term.Date

NOT APPLICABLE NOT APPLICABLE

Number of Directors Date Commenced Date Ceased Minimum Maximum in Ontario in Ontario

00001 00010 NOT APPLICABLE NOT APPLICABLE Activity Classification

NOT AVAILABLE

Request ID: 023716729 Province of Ontario Date Report Produced: 2019/10/17 326 Transaction ID: 73382681 Ministry of Government Services Time Report Produced: 09:32:18 Category ID: UN/E Page: 2

CORPORATION PROFILE REPORT Ontario Corp Number Corporation Name

1272456 BONDFIELD CONSTRUCTION COMPANY LIMITED

Corporate Name History Effective Date

BONDFIELD CONSTRUCTION COMPANY LIMITED 1998/11/19

BONDFIELD CONSTRUCTION COMPANY (1983) 1997/12/31 LIMITED

Current Business Name(s) Exist: YES

Expired Business Name(s) Exist: NO

Amalgamating Corporations

Corporation Name Corporate Number

959863 ONTARIO INC. 959863 BONDFIELD CONSTRUCTION COMPANY (1983) 267516 LIMITED

Request ID: 023716729 Province of Ontario Date Report Produced: 2019/10/17 327 Transaction ID: 73382681 Ministry of Government Services Time Report Produced: 09:32:18 Category ID: UN/E Page: 3

CORPORATION PROFILE REPORT Ontario Corp Number Corporation Name

1272456 BONDFIELD CONSTRUCTION COMPANY LIMITED

Administrator: Name (Individual / Corporation) Address

STEVEN 407 BASALTIC ROAD AQUINO CONCORD ONTARIO CANADA L4K 4W8

Date Began First Director

2009/08/20 NOT APPLICABLE

Designation Officer Type Resident Canadian

OFFICER SECRETARY Y

Administrator: Name (Individual / Corporation) Address

STEVEN 407 BASALTIC ROAD AQUINO CONCORD ONTARIO CANADA L4K 4W8

Date Began First Director

2009/08/20 NOT APPLICABLE

Designation Officer Type Resident Canadian

OFFICER TREASURER Y

Request ID: 023716729 Province of Ontario Date Report Produced: 2019/10/17 328 Transaction ID: 73382681 Ministry of Government Services Time Report Produced: 09:32:18 Category ID: UN/E Page: 4

CORPORATION PROFILE REPORT Ontario Corp Number Corporation Name

1272456 BONDFIELD CONSTRUCTION COMPANY LIMITED

Administrator: Name (Individual / Corporation) Address

STEVEN 407 BASALTIC ROAD AQUINO CONCORD ONTARIO CANADA L4K 4W8

Date Began First Director

2015/03/18 NOT APPLICABLE

Designation Officer Type Resident Canadian

DIRECTOR Y

Administrator: Name (Individual / Corporation) Address

RALPH 407 BASALTIC ROAD AQUINO CONCORD ONTARIO CANADA L4K 4W8

Date Began First Director

2015/03/18 NOT APPLICABLE

Designation Officer Type Resident Canadian

OFFICER CHIEF EXECUTIVE OFFICER

Request ID: 023716729 Province of Ontario Date Report Produced: 2019/10/17329 Transaction ID: 73382681 Ministry of Government Services Time Report Produced: 09:32:18 Category ID: UN/E Page: 5

CORPORATION PROFILE REPORT Ontario Corp Number Corporation Name

1272456 BONDFIELD CONSTRUCTION COMPANY LIMITED

Administrator: Name (Individual / Corporation) Address

STEVEN 407 BASALTIC ROAD AQUINO CONCORD ONTARIO CANADA L4K 4W8

Date Began First Director

2018/10/15 NOT APPLICABLE

Designation Officer Type Resident Canadian

OFFICER PRESIDENT Y

Request ID: 023716729 Province of Ontario Date Report Produced: 2019/10/17 330 Transaction ID: 73382681 Ministry of Government Services Time Report Produced: 09:32:18 Category ID: UN/E Page: 6

CORPORATION PROFILE REPORT

Ontario Corp Number Corporation Name

1272456 BONDFIELD CONSTRUCTION COMPANY LIMITED

Last Document Recorded Act/Code Description Form Date

CIA CHANGE NOTICE 1 2019/04/11 (ELECTRONIC FILING)

The issuance of this report in electronic form is authorized by the Ministry of Government Services.

331 218 332 219 333 21; 334

335 VICTORY VERBATIM 336

Court File No. CV-18-610233-OOCL

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

T,I/ke IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

BETWEEN: BANK OF MONTREAL

Applicant

- and -

2423402 ONTARIO INC.

Respondent

This is the Cross-Examination of ADRIAN BRAGANZA on his Affidavit sworn the 31st day of May, 2019, taken at the offices of VICTORY VERBATIM REPORTING SERVICES INC., Suite 900, Ernst & Young Tower, 222 Bay Street, Toronto, Ontario, on the 25th day of June, 2019. P

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 F16 WWW.VI CTO RYVER BATI M.0 0 M (416) 360-6117 INFCI@VI CTORYVERBATIM.0 OM

VICTORY VERBATIM 337

APPEARANCES:

GEOFF R. HALL ) -- for the Applicant HEATHER L. MEREDITH )

BRIAN KOLENDA ) for Zurich Insurance MATTHEW B. LERNER ) Company Ltd.

MARK ST. CYR ) for Infrastructure Ontario

KYLA MAHAR for Cambridge Memorial Hospital

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H6 WWW.VI CTO RYVE R BATI M.00 M (415) 360-5117 [email protected] OM VICTORY VERBATIM 338

A. Braganza - 3

INDEX OF PROCEEDINGS

PAGE NUMBER

ADRIAN BRAGANZA, affirmed r Cross-Examination by Mr. Hall 4 - 49 Re-Examination by Mr. Kolenda 49 - 53

Index of Exhibits 54

Index of Undertakings 55

Index of Under Advisements 56

Index of Refusals 57

Certificate 58

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1I-IS WWW.VI CTO RYVE R BATI M.001 M (415) 350-5117 INFO@VICTO RYVERBATIM.0 0 M VICTORY VERBATIM 339

A. Braganza - 4

upon convening at 2:00 p.m.

I 2 upon commencing at 2:10 p.m.

4 ADRIAN BRAGANZA, affirmed

,_s CROSS-EXAMINATION BY MR. HALL:

6 1. Q. Good afternoon, Mr. Braganza. You are here for a cross-examination on an affidavit

8 that you swore on May 31st, 2019, right?

9 A. Correct. o 2. Q. Just to begin, I want to see if we

-11 can clearly define the issues that are dividing the

Fn parties in this motion, and I think the easiest way

13 to start is by looking at the performance bond

14 itself. This is in the motion record of BMO and you

15 can look at this. But if I put in front of you that

16 motion record, specifically tab C, page 63. Do you

have that in front of you now, sir?

18 A. I do.

L9 3. Q. You are familiar with this document?

20 A. I am.

4.1 4. Q. And I am looking at the fourth r 22 paragraph, the one that begins, "Whatever the

23 principal shall be". Do you see that, sir?

29 A. M'hmm. I do.

25 5. Q. It says:

ERNST Sc YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1F16 WWW.VI CTO RYVE R BATI M.0 M (416) 350-6117 [email protected] VICTORY VERBATIM 340

A. Braganza - 5

1 "...Whatever the principal shall be and

declared by the obligee to be in default in

3 respect of its obligations to the obligee

4 under the construction contract..." Those are the words and they go on, but I just want r L 6 to focus on those words for now. Are you with me,

r 7 sir?

[ A. I am.

9 6. Q. And I am going to ask you for a

10 moment to disregard the words "and declared by the

[ 11 obligee to be in default". And I know they have to

7- 12 be read and it is part of the interpretation and so

13 on, but just for present purposes, if we take out

14 those words it says:

15 "...Whatever the principal shall be in

[ 16 default in respect of the obligations of

r 17 the obligee under the construction

18 contract..."

r 19 There is no issue that the principal, being

20 Bondfield, is currently in default in respect of its

21 obligations to the obligee, being Project Co.,

p- 22 correct?

23 MR. KOLENDA: I am not sure that is so

24 much a question for the witness to answer,

25 as a question about Zurich's legal

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MS K 11-16 WWW.VICTORYVEREIATIM.0 0 M (416) 360-6117 [email protected]

V VICTORY VERBATIM 341

A. Braganza - 6

position. Is that what you are asking?

2 7. MR. HALL: No, I think the witness can

3 answer these question. He is counsel, he

4 has sworn the affidavit. I want the

5 witness'...

MR. KOLENDA: He is not counsel.

7 8. MR. HALL: Well, he is a lawyer,

8 correct?

9 ilo BY MR. HALL:

m. 9. Q. You are a lawyer? r 12 A. I passed the Bar, if that...

13 10. Q. You...

14 A. ...meets the definition, yes.

_15 11. Q. Your position with Zurich is senior

16 claims counsel? r-17 A. Correct.

18 12. Q. All right. Well, I want the

19 witness' answer. The proposition I am putting to

20 him, which I would have thought would be

21 uncontroversial, is that there is no issue that the

F-22 principal is in default in respect of its

23 obligations to the obligee under the construction

24 contract.

25 MR. KOLENDA: If you wish to put

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1 HG WWW.VI CTO RYVERBATI WC 0 (..1 (416) 360-6117 [email protected] Nit VICTORY VERBATIM 342

A. Braganza - 7

specific events of default, or what you

suggest are events of default to the

3 witness, and ask him factual questions

[ 4 about that, I am...he may be in a position to answer that, but the question calls for

the legal position of Zurich and I won't

permit him to answer the question. /R 13. MR. HALL: So, I take it, then, that...

9 MR. KOLENDA: I will put it this way; I

10 can take the question under advisement and

11 give you Zurich's position on that issue. U/A

12 14. MR. HALL: All right. I will take that,

13 and I am surprised that you are not

14 prepared to let the witness answer that

15 position here. That is going to be telling

16 at the hearing. But, proceed as you wish.

1-17 MR. KOLENDA: Okay.

8 15. MR. HALL: I will look forward to

19 hearing your position once you have thought

20 about it.

[ 21

-22 BY MR. HALL:

23 16. Q. And if I could take you for a moment

24 to your affidavit, sir, Exhibit GG.

25 A. Have we dealt with Bond? Can I

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, :ASK 1 H6 WWW.VI CTO RYVE R BATI M.0 0 M (416) 360-6117 I N FO@VI CTO RYVE RBATI M. C OM VICTORY VERBATIM 343

A. Braganza - 8

close that?

2 17. Q. Yes, we are done with Bond. Exhibit

3 GG is a letter dated April 26th, 2019, authored by

Zurich's former counsel, Graham Bissell. Do you see

5 that, sir? A. I do.

7 18. Q. You are familiar with that letter, sir? A. Yes.

19. Q. All right. And on the first page of

-11 the letter, page 2 of 3, going down six paragraphs

to the last one on page 2 of 3:

13 "...While those discussions have been

F19 taking place..."

15 Are you with me, sir?

L.16 A. I see it.

20. Q. All right. I want to draw your

18 attention to the second sentence of that paragraph.

9 It says:

20 "...This is despite the fact that amounts

21 of approximately 2.5 million dollars are

—22 clearly owing to Bondfield under the

23 contract with Project Co...."

29 And then there is a sentence below there. There is

25 no dispute that Zurich is relying on the allegation

ERNST & YOUNG TOWER, 222 SAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1He WWW.VICTORYVERBATIM.COM (416) 350-6117 INFO@VICTORYVEREIATI M.0 OM V• VICTORY VERBATIM 344

A. Braganza - 9

that amounts of approximately 2.5 million dollars

2 are owing to Bondfield under the contract with L. 3 Project Co.? Oh, I see an objection again. What is

the issue?

5 MR. KOLENDA: When you say that Zurich is relying on that, in the way that it is

described in this letter, yes. But I don't

8 know what the witness has to say about

that.

to 21. MR. HALL: Well, he is your witness who

11 you have put forward, and I am entitled

[ 12 under the Rules to get his evidence. So, I

13 want his evidence, and I am going to ask

14 you either to object and stop him from

15 answering, or let me...or let him answer.

L 16 I am not content with you answering on his r- -17 behalf. It is obstructionist and it is

18 improper, and you know that.

19 MR. KOLENDA: Well, so...

20 22. MR. HALL: And...so, let me finish,

21 please. And so if you object, you object,

F22 but don't answer for him, unless I

23 specifically say that I am content with

24 Lenczner's answer on behalf of Zurich,

25 understood?

ERNST & YOUNG TOWER, 222 SAY STREET, SUITE 900, TORONTO, ONTARIO. M5K 1 H6 WWW.VICTORYVERBATIM.0 OM (416) 360-6117 [email protected] 0 M Nif VICTORY VERBATIM 345

A. Braganza - 10 7 MR. KOLENDA: I have objected on the

2 basis that, so it is clear for you, that

3 your question calls for a legal position of

4 Zurich, and this is a fact witness here. I

5 will let him answer factual questions, but

not questions about Zurich's legal

' 7 position. That is the basis for my

8 objection, and I am objecting. /R

9 23. MR. HALL: Okay.

Ln BY MR. HALL:

—12 24. Q. The default alleged in Mr. Bissell's

13 letter, and the sense that I am just taking you to,

[ 14 is the sole default...sole alleged default by

15 Project Co. that Zurich is currently relying upon.

,16 MR. KOLENDA: Again, on the legal

-17 position I won't let the witness answer. /R

18 25. MR. HALL: Okay.

19 MR. KOLENDA: I will take the question

20 under advisement. U/A

21 26. MR. HALL: It is not a legal question,

r - 22 it is a fact question. What are the

23 defaults?

24 MR. KOLENDA: You have got my position.

25 27. MR. HALL: Okay. All right. P

ERNST E., YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, NISK 1 H5 WWW.VI CTO RYVE R BATI M.0 0 M (416) 360-5117 [email protected] M V VICTORY VERBATIM 346

A. Braganza - 11

L 1 BY MR. HALL:

2 28. Q. I am showing you an e-mail that was

3 transmitted yesterday evening at 9:01 p.m. which

4 encloses a list of...or attaches a with prejudice

letter from Mr. Lerner. Do you see that, sir? 5 A. I do.

7 29. Q. You are familiar with this letter?

8 A. Actually, I have not seen this

9 version of this transfer. I was not copied on it. r10 I was not on the copy list. 30. Q. But you had input into a prior

12 version?

13 A. Yes, I did.

14 31. Q. All right. And you are aware that

15 it was transmitted at 9:01 p.m. last night?

16 A. I am now. r 17 32. MR. HALL: Okay, this is...I will need

18 this marked as Exhibit 1, please.

20 EXHIBIT NO. 1: Letter to Receiver of Project Co.

H22 BY MR. HALL:

23 33. Q. All right. So, if I read this

: 24 letter, it says at the bottom of the first page, and

25 over onto the second page:

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1F15 WWW.VICTO RYVE R BATI M.0 0 M (416) 360-5117 [email protected] 0 M VICTORY VERBATIM 347

A. Braganza - 12

"...In light of BMO's motion to seek a

declaration compelling Zurich to make an

3 election under the performance

4 bond...position moving forward. In the

event that the receiver of Project Co., on

, 6 behalf of Project Co., confirms on or

7 before July 12th, 2019 that it will make

8 available to Zurich the balance of the

9 construction contract price, Zurich hereby

10 agrees to select and carry out one of the

four options listed in the performance bond r 12 within five business days of achieving

13 interim completion, and/or in the event

14 that the receiver of Project Co., on behalf

15 of Project Co., does not confirm on or

L16 before July 12th, 2019 that will make it

P17 available to Zurich the balance of the

18 construction contract price, this letter

r- 19 serves as notice that Zurich will deny any

20 and all liability under the performance

21 bond, will cease all further involvement with the CHM project after interim 722

23 completion and will pursue recovery of all

24 damages suffered against all parties to the

25 multiple obligee rider..."

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1 HS WWW.VI OTI7 RYVE R BATI M. C M (416) 360-5117 [email protected] 0 M VICTORY VERBATIM 348

P A. Braganza - 13

That is what the letter says?

A. Yes.

3 34. Q. And you are aware that this motion is scheduled to be heard by the court on August 1st,

5 2019? A. I am.

7 35. Q. Yet you...Zurich has set a deadline 8 of July 12th, 2019 as set out in this letter? A. That is what the letter says, yes. r 10 36. Q. And in terms of the issues giving —n rise to the position that Zurich has asserted in the third paragraph of the letter, the one that begins,

13 "Project Co. has failed to comply". Do you see that

14 there? "Project Co. has failed to comply".

15 A. Got it.

_16 37. Q. I want to pick up the second 17 sentence that says:

18 "...Most importantly, despite many meetings

19 and letters between the parties, Project l-

20 Co. has defaulted on its obligations by P 1 21 failing to commit to make available to

F-22 Zurich the 'Balance of the Construction

23 Contract Price'..."

24 That is a default which Zurich alleges has been

25 committed by Project Co., correct?

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO. ONTARIO. M5K 11-16 WWW.VI CTO RYVE R BATI M.0 0 M (41 6) 360-61 1 7 I [email protected] OM Nif VICTORY VERBATIM 349

A. Braganza - 14

A. Yes.

2 38. Q. And that is the only default that

3 Zurich currently alleges Project Co. has committed,

4 or is currently in default of?

5 MR. KOLENDA: Well, I will take the F I question under advisement. If there are

7 others, we will let you know. U/A

8 39. MR. HALL: That wasn't my question, so I r--

! 9 would ask you to take under advisement the

10 question I actually posed, not the one you

1 want to answer. So, you have my request.

712 Think about it, decide how you want to

13 respond. All right.

15 BY MR. HALL:

.16 40. Q. And in terms of...if you get your

-17 affidavit back of you there, sir, if we go to

18 paragraph 143 of your affidavit. In terms of this

19 alleged default by Project Co. in failing to make

20 available to Zurich the Balance of the Construction Contract Price, your best information, which you

pfl have received from Perini is that the best estimate

23 of the Balance of the Construction Price is as set

24 out in the chart on paragraph 143?

25 A. Correct.

L._ ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1H 6 WWW.VI CTO RYVE REIATI N1. C 0 M (416) 360-6117 I N FO@VI GTO RYVERBATI M.0 0 IA VICTORY VERBATIM 350

A. Braganza - 15

MR. KOLENDA: Yes, so as...I think

2 as...the witness has given you his answer.

3 41. MR. HALL: Well, I don't want to hear an

4 elaboration. This is the witness...this is a cross-examination. This is...I am -5 entitled to the witness' answer. I am not

in...you are not entitled to give a speech

8 or correct his answers or elaborate on his

9 answers. I don't want to hear it.

o MR. KOLENDA: Zurich's position is the

11 one set out in the letter.

12 42. MR. HALL: We will deal with all of this

13 in front of the judge.

14 MR. KOLENDA: We will.

15 43. MR. HALL: I would ask you to stop

16 interfering and attempting to answer on

17 behalf of the witness. The witness will

18 answer on his own.

20 BY MR. HALL:

21 44. Q. All right. I am going to move onto

722 something else. I want to understand a little

23 better the chronology of Zurich's involvement with

24 the Cambridge Memorial Hospital project, and I think

25 the easiest way to do this is to get some assistance

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1H 6 WWW.VI CTO RYVE R BATI M.0 0 M (416) 360-6117 I NFO@VI CTO RYVERSATIM.0 0 M Nif VICTORY VERBATIM 351

A. Braganza - 16

from another document, which you will be familiar

with. You are familiar that Bondfield is currently

3 in CCAA protection?

4 A. Yes.

_ s 45. Q. And you are familiar that Mr. Steven

Aquino swore an affidavit in support of the application for CCAA protection, which I have given

a you. You have that in front of you, sir? A. Yes. I am aware that it was filed.

46. Q. And you have read this affidavit before today?

A. I don't really recall. I may have.

13 I have read a lot of stuff.

14 47. Q. You certainly read the court

15 materials when Bondfield brought its application for

H16 CCAA protection?

.17 A. Probably.

18 48. Q. Not probably, you did.

19 A. That is my answer, probably. I

20 don't know all what I did.

L 21 49. Q. Okay. So, let's just take a look at 722 a few points here to give us a little assistance in

23 terms of the chronology. And let's start with

24 paragraph 50 of Mr. Aquino's affidavit. Paragraph

25 50 says: p ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1H WWW.VI CTO RYVE RBATIM.0 0 M (416) 360-8117 I N FO@VI GTO RYVE RBATI M.00 M VICTORY VERBATIM 352

A. Braganza - 17

"...Zurich is the surety for the Bondfield

proof..."

3 Let's just stop there and go step by step. That

statement is true, correct?

5 A. Correct. 50. Q. It continues:

7 "...Other than one construction project,

5 all construction projects in which BCCL is

9 currently hinged, including the B2 projects, have bonds which are issued by

Zurich defined as bonded contracts in an

12 aggregate amount in excess of one billion

13 dollars..."

4 That statement is also true, correct?

is A. Correct.

'._i6 51. Q. A billion dollar obligation or bonds

7:7 valued of a billion dollars, if I can put it that

18 way, is a significant obligation for Zurich?

19 A. It is, but we have other principals

20 that have similar, or bonded programs in excess of

21 that.

c-22 52. Q. It is an obligation that Zurich has

23 closely monitored from the time that the bonded

I 24 contracts have been put in place?

25 A. When you...can you define "closely

ERNST & YOUNG TOWER, 222 SAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1H WWW.VI CTO RYVE R BATI M.0 0 M (4161 360-6117 I N F0@VI CTO RYVEREIATI M.013 M VICTORY VERBATIM 353

A. Braganza - 18

• 1 monitored"?

- 2 53. Q. Let's take out the adverb. Zurich

3 has monitored these bonded contracts since they were

4 put in place?

5 A. That was looking for some

L 6 clarity on your question. "Monitored". What do you

r- 7 mean?

8 54. Q. Well, Zurich, because of the

9 aggregate size of the bonded contracts, has had an

interest in whether Bondfield is preforming the

obligations which are bonded.

F-12 A. We do have an interest, yes.

- 13 55. Q. And you have had that interest since

14 the bonded contracts were put in place?

15 A. Yes.

L 16 56. Q. Okay. In paragraph 51 it says...of

-1.7 Mr. Aquino's affidavit, it says:

18 "...In consideration of Zurich's

19 establishment of the surety-bonded facility

20 for BCCL, BCCL and others, including 950504

21 Ontario Inc., 352021 Ontario Limited, Ralph

-22 Aquino, John Aquino and myself

23 (collectively the indemnitor) agreed to

24 indemnify Zurich pursuant to general

25 indemnity agreements dated February 8, 2006

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H6 WWW.VI CTO RYVERBATIM.0 0 M (416) 360-6117 [email protected] VICTORY VERBATIM 354

A. Braganza - 19

and July 16, 2015..."

2 That is what the words say?

A. They do.

57. Q. And, in fact, it is the case that

- 5 indemnity agreements have been in place with

- 6 Bondfield since 2006 and 2015 respectively?

7 A. Is that a question?

8 58. Q. Yes.

9 A. That is what it says, yes.

-10 59. Q. No, but I am asking you to confirm 1 that that is correct?

12 A. I would have to go back and look at

13 the indemnity agreements themselves...

14 60. Q. Okay.

15 A. ...to confirm that.

L 16 61. Q. All right. But you don't

I 17 have...there clearly are indemnity agreements in

8 place.

• 19 A. Okay.

20 62. Q. All right. So, the documents say

21 what they are...what they say. And they are in

—22 evidence in Mr. Aquino's affidavit?

23 A. They are.

24 63. Q. Okay. And you have no reason to

25 believe that Mr. Aquino inaccurate in saying that

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1 HG WWW.VICTORYVERBATIM.COM (416/ 360-6117 [email protected] VICTORY VERBATIM 355

A. Braganza - 20

these indemnity agreements have been in place since

2 2006 and 2015, respectively?

3 A. No.

64. Q. Okay. Paragraph 63 of Mr. Aquino's

--5 affidavit, please, sir. It says: "...The Bondfield Group's liquidity

7 pressures began in 2014 and 2015 when it

8 embarked on a period of considerable expansion, both through the growth of the

x.1.0 Bondfield Group's traditional design and build construction services, with Zurich

712 selection as its successful bidder, in

13 respect of the number of large scale P3

r 19 transactions in Ontario..."

15 That is what the words say?

. 16 A. They do.

r 17 65. Q . And to your knowledge, that

18 statement is correct?

19 A. I cannot confirm that it is.

20 66. Q. All right.

',_21 A. I do not have any knowledge of that.

H22 67. Q. Okay. But you certainly know that

23 Bondfield Group currently has liquidity problems?

24 A. Yes.

25 68. Q. All right. And that that didn't

ERNST & YOUNG TOWER, 222 SAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1H8 WWW,VI CTO RYVEREIATI M. C M (416) 360-8117 I [email protected] M VICTORY VERBATIM 356

A. Braganza - 21

just happen in 2019, it happened sometime before

2 2019, that they started to develop liquidity

3 pressures, to use Mr. Aquino's words? A. I do, yes.

F 5 69. Q. And Zurich was aware of Bondfield's

I- 6 liquidity pressures prior to 2019?

7 A. At some point, yes. At some point.

8 70. Q. All right. Let's see if we can pin that down a little bit. Paragraph 10 of Mr.

10 Aquino's affidavit. It says: r -11 "...In June, 2017 after having hadn't r 12 exhausted its efforts to secure traditional

13 financing and facing the imminent maturity

14 of its credit facility, the Bondfield Group

15 entered into a financing transaction with

-16 Bridging Finance Inc., in the form of an

17 $80,000,000 credit facility defined as 'the

18 bridge loan'..."

19 That is what the words say?

20 A. They do.

21 71. Q. To your knowledge, that statement is

-22 accurate?

23 A. Yes. F 24 72. Q. At the time the bridging facility

25 was put in place in June, 2017, Zurich was aware

ERNST & YOUNG TOWER, 222 SAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H6 WWW.VICTORYVERSATIM.COM (416) 360-6117 I [email protected] VICTORY VERBATIM 357

A. Braganza - 22 r- that the bridging facility was being put in place? A. No.

3 73. Q. You were not aware at the time? E 1 4 A. I am not aware at the time.

74. Q. No, I didn't ask you, I asked

Zurich. So, is your evidence that Zurich was not aware of the bridging financing?

8 A. I...you are asking me. I was not

9 aware, and I am not aware what other person at

10 Zurich was aware of this... _11 75. Q. Okay.

12 A. ...facility being put in place.

13 76. Q. Okay. Paragraph 11, and I am going

14 to pick up in the last sentence at paragraph 11 of

15 Mr. Aquino's affidavit:

L "...No additional funds..."

7-17 Are you with me there, sir?

18 A. Got it.

19 77. Q. It continues:

20 "...No additional funds have been extended

; 21 by bridging since August, 2018. The

F -22 Bondfield Group's..."

23 Sorry, I didn't read that right:

F24 "...No additional funds have been extended

25 by bridging and since August, 2018 the

ERNST Sc YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H6 WWW.VICTORYVERSATIM.COM (416) 360-6117 [email protected] V• VICTORY VERBATIM 358

A. Braganza - 23

Bondfield Group's surety, Zurich Insurance

Company Limited has funded the entirety of

3 the Bondfield Group's operations, including

4 overhead that could not otherwise be funded

by ordinary course of cash flow..."

That is what the words say?

7 A. That is what they say.

78. Q. And that statement is, to your knowledge, accurate?

o A. Yes.

79. Q. And so certainly by August of 2018,

[ 12 Zurich was aware of the liquidity pressures in

13 respect of Bondfield Group?

[ 14 A. Yes.

15 80. Q. Right. Paragraph 36, if I can take

16 you there? It says:

—17 "...As further described below, the

18 Bondfield Group with strict daily oversight

19 with Zurich and Bridging since August,

20 2018, manages its own payroll processing p 21 and remits employee taxes and deductions as

-22 required..."

[ 23 That is what the words say?

24 A. Yes.

25 81. Q. And it is, in fact, accurate, that

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 He WWW.VICTORYVERBATIM.COM (416) 360-6117 [email protected] VICTORY VERBATIM 359

A. Braganza - 24

since August, 2018, there has been strict daily

oversight by Zurich in Bondfield's management of its

3 own payroll processing and employee tax remittances?

4 A. Yes.

s 82. Q. Paragraph 74 starts out...I am going

6 to take you to parts of it, but we will start out

with paragraph 74. It starts with the words:

8 "...Zurich and Bridging, throughout their

9 respective financial advisors, have had and

o continue to have transparency in the

L ii financing and operations of the Bondfield

F -12 Group, whereby the Bondfield Group, with

13 the assistance of FAAN, reports to both

14 Bridging and Zurich inter alia as

15 follows..." That is what the words say?

r '17 A. Yes.

18 83. Q. Correct, sir? And then going over

19 the next page, page 34 of the record, paragraph

20 74(a) (iii) says:

21 "...No disbursements are to be made until

22 EY/Zurich and KSV/Bridging complete their

23 review..."

24 Ignore KSV and Bridging for a moment. I know you

25 can't speak for them. But the statement is correct,

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1H WWW.VI CTO RYVEREIATI M.00 M (416)360-6117 I N FO@VI CTO RYVEREIATI M.0 0 M VICTORY VERBATIM 360

A. Braganza - 25

is it not, that since...or, at the present time,

2 disbursements cannot be made by Bondfield until EY

3 and Zurich complete their review of the

4 disbursements?

A. That was the intent, yes.

_ 6 84. Q . That is what was happening at the time of Mr. Aquino's affidavit, correct?

8 MR. KOLENDA: Just for the record, for the witness' benefits March 5, 2019.

10 85. MR. HALL: Yes. r

[ 11 MR. KOLENDA: Is that what you are

[ L2 asking?

13 86. MR. HALL- Yes. So, as at March 5th,

I 14 2019 it was the case that Bondfield could

15 not make disbursements until EY and Zurich

L6 completed their review of those r L7 disbursements?

8 THE DEPONENT: Correct.

20 BY MR. HALL:

87. Q. And that practice continues to this

, 22 day?

23 A. Correct. 88. Q. All right. And similarly, 74(b),

25 same page, (ii) it says:

F- ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1 H6 WWW.VI GTO RYVE RBATI C 0 M (418/ 360-6117 I NFO@VICTO RYVE RBATI WC CI 361 V0 VICTORY VERBATIM r

A. Braganza - 26

"...KSV and EY are provided with read-only access to the bank accounts and are able to

3 view all bank activity at all times..."

4 Again, ignore KSV not your advisor but EY was. It

5 was, in fact, the case as at March 5th, 2019, that

- 6 EY was provided with read-only electronic access to the bank accounts of Bondfield, and was able to view

all bank activity at all times, correct? A. Correct.

10 89. Q. And that remains the case to this

1/4-11 day?

12 A. I think that activity has been taken

13 over by the monitor. P 90. Q. And similarly, paragraph 74(c)(ii)

15 item D, as in dog, this is on page 35 of the record: r--

1216 "...The Bondfield Group provides EY and KSV

-17 with a notional subledger..."

18 Do you see that, sir?

9 A. Yes.

20 91. Q. And:

21 "...The Bondfield Group provides EY and KSV

!-22 with a notional subledger for every bonded

23 project and non-bonded project that records

24 all the receipts and disbursements

25 (directly attributable or allocated) for

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1F16 WWW.VI CTO RYVERBATI M.0 0 M (416) 360-6117 [email protected] Nif VICTORY VERBATIM 362 .

A. Braganza - 27

every bonded and non-bonded project from

the previous week..."

3 That is what the words say?

A. Yes.

92. Q. And as at the time of this

6 affidavit, March 5th, 2019 that statement was

7 accurate?

8 A. Yes.

93. Q. And it remains accurate today?

_io A. I am uncertain of that, but...

n. 94. Q. And finally, with respect to the last item there, E below it, it refers to: 1-12

13 "...An accounting for any surplus or

4 shortfall in respect of the projects is

15 maintained..."

L 16 Those are the words, sir?

—17 A. Yes.

18 95. Q. And as at the date of Mr. Aquino's

19 affidavit, March 9th, 2019...sorry, March 5th, 2019,

20 that was the practice?

L 21 A. Yes.

I-22 96. Q. And it remains the practice today?

23 A. Once again, I am not sure if that

24 has been maintained under the present...

25 97. Q. All right.

r- ERNST Sc YOUNG TOWER, 222 SAY STREET, SUITE 900, TORONTO, ONTARIO, M5K I HE. WWW.VI CTO RYVE R BATI M.00 M (416) 260-611 7 I [email protected] M V• VICTORY VERBATIM 363

A. Braganza - 28

1 A. ...under the monitor.

2 98. MR. HALL: I don't believe I marked this

3 as an exhibit. Any objections to it being

marked as Exhibit 2?

5 MR. KOLENDA: I do object.

- 6 99. MR. HALL: You do object?

7 MR. KOLENDA: It is not the witness' document. He gave you some evidence about L . 9 his lack of belief and his having reviewed

10 it, and it is Mr. Aquino's affidavit in

1 L another proceeding. I don't know why it

would be marked as evidence in this

proceeding. You have read into the record the

15 portions that you...

100. MR. HALL: All right. Well, it is

-17 available on the monitor's website, which

[_ is is where I got it earlier today. If you

19 really have a problem with it being marked

20 as an exhibit, which I find a little

L surprising, let's mark it as Exhibit A.

F-22 Any objection to that?

23 MR. KOLENDA: I have no objection to it

24 being marked as an exhibit for

25 identification so we know what the witness

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1116 WWW.VIETO RYVERBATIM.00 (416) 360-6117 [email protected] 364 V0 VICTORY VERBATIM

A. Braganza - 29

looked at, but I do object to it being

2 treated as evidence in this proceeding,

3 certainly for the truth of its content.

101. MR. HALL: Okay, well, that is an A in

5 my book, so let's call it Exhibit A, for

6 identification.

r 7

a EXHIBIT NO. A: Affidavit of Mr. Aquino, dated March

9 5, 2019 (for identification)

BY MR. HALL:

102. Q. Oh, there is one other thing I wanted to do on that, sorry. I moved off too

quickly, I missed a page of my notes. Just to be

15 complete, let's go...my apologies, we are going

16 backwards rather than forwards. Paragraph 56, for a iflv moment.

18 Mr. Aquino stated in his affidavit of March i 19 5th, 2019, Exhibit A to this cross-examination:

"...I am advised by Zurich that although P 20 21 Bridging is the senior secured lender of

'22 BCCL, 950154 Ontario Inc., and 352021

` 23 Ontario Limited, because Zurich has taken

29 assignment of the claims it has paid under

25 the payment bonds in respect of the bonded

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1 H6 WWW.VI CTO RYVERSATI M.0 0 IA (416/ 350-6117 IN FO@VI CTORYVEREIATIM.0 M

Nif VICTORY VERBATIM 365

A. Braganza - 30

1 contracts, it is therefore subrogated to

2 the position of the lien claimants. Zurich [ 3 is a trust claimant with priority

r entitlement to recover any funds on the L bonded contracts..."

L 6 That is what the words say?

A. Yes.

8 103. Q. And I want to focus on the words in

9 the middle of that, a factual assertion:

o "...Zurich has taken assignment of the

-11 claims it has paid under the payment bonds

12 in respect of the bonded contracts..."

3 That statement was accurate when it was made by Mr.

r 14 Aquino under oath on March 5th, 2019?

5 A. I can't comment. I cannot confirm

L that.

F17 104. Q. Well...

18 A. I cannot confirm it is accurate, to

19 the extent that he is stating it.

20 105. Q. Okay. But it is the case that r-- Zurich has taken an assignment of the claims it has

7-22 paid under the payment bonds, correct?

23 A. Not all of them.

i 24 106. Q. Okay. How about the ones at issue

25 in this proceeding, the Cambridge Memorial Hospital

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H WWW.VICTORYVER BATI M.0 M (416) 360-6117 I N FO@VI CTO RYVERBATI M.0 0 M VICTORY VERBATIM 366

A. Braganza - 31

ones. Zurich has taken an assignment of the claims it has paid under the Cambridge Memorial Hospital

3 performance bond? r A. I would have to go back and review them to confirm that.

107. Q. All right. All right, let me move

onto something else. I need your affidavit in front of you there, sir. Just to set this up, turning to

9 paragraph 2, you indicate that you have...if you

10 look at the last sentence in paragraph 2 of your r `_.11 affidavit you:

r 12 "...have 32 years of experience handling

13 surety bond claims..."

19 Correct?

15 A. Correct.

16 108. Q. And I understand that you have been

7 at Zurich since 1989?

18 A. Correct.

• 19 109. Q. Which is a little less than 32

20 years, but let's just focus on the time period that

21 you have been at Zurich, since 1989. Whenever you

-22 have been involved, since 1989, whenever you have

23 been involved in a claim in respect of a performance

24 bond, you have always been on the side of the

25 bonding company, not someone claiming on a

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1H5 WWW.VI CTO RYVE RBATI M.0 0 M (4[16) 360-6117 [email protected] VICTORY VERBATIM 367

A. Braganza - 32

performance bond, correct?

2 A. I don't understand your question.

3 110. Q. Okay. Well, you say have 32 years

4 of experience handling surety bond claims, correct? A. Correct. 1- 5 6 Q. And I want to focus on the time

7 period from 1989...

8 A. M'hmm.

9 112. Q. ...to the present, all right? A

10 subset of that 32 years. Are you with me?

-n A. I am.

12 113. Q. Good. You have dealt with many

13 surety bonds during that time?

14 A. For Zurich, correct. L

15 114. Q. Correct. For Zurich. You have never had occasion to act for, or represent someone

F-17 claiming on a surety bond during that time period,

18 since 1989?

19 A. Yes, I have.

20 115. Q. You have? But the majority of times

21 you are acting for the surety bond company,

.22 Zurich...

23 A. I am always acting for Zurich.

24 116. Q. Correct. So, the majority of time

25 you were acting for Zurich in its capacity as a

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, 145K 1 HIS WWW.VI CTO RYVE RBATI IN.0 0 N1 (416) 360-6117 [email protected] VICTORY VERBATIM 368

A. Braganza - 33

surety, with somebody trying to get Zurich to pay.

I 2 That is the majority of times that you have dealt

3 with surety bond claims since 1989?

1 A. Correct.

117. Q. Okay. The vast majority of times

you have dealt with surety bond claims since 1989? A. Correct.

8 118. Q. So, there may be a one or two

9 situations over the years when you have had

10 to...Zurich has had to make a claim, but that is not

the normal situation?

FL2 A. Correct.

13 119. Q. All right. In paragraph 25 of your

1.4 affidavit you stated:

15 "...The commercial purpose of the 144

L6 performance bond, and every performance

1-L7 bond like it, is to guarantee a project its

owner that a contractor will perform its

L9 obligations to finish the construction and,

20 if the contractor fails to do so, to ensure

[ 81 that it is done..." r 22 Those are the words that you have put into paragraph

23 25 of your affidavit, sir?

A. Yes.

25 120. Q. You do not cite any case law in

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1F16 WWW,VICTO RYVE RBATI M.0 0 M (416) 360-6117 [email protected] V• VICTORY VERBATIM 369

A. Braganza - 34

support of this proposition that you assert in

2 paragraph 25?

3 A. No, there is none there.

I 4 121. Q. You do not refer to any other

,_.5 written authority for the statement that you have

6 put in paragraph 25?

A. No.

8 122. Q. All right. Let's move for a moment,

9 and refer to paragraph 139 of your affidavit. Sir,

ko paragraph 139 says:

,A1 "...I understand the monitor of the

12 Bondfield will be providing a report in

1 3 these proceedings, which will update these

r 14 numbers..."

5 Referring to numbers that you have set out

6 immediately above that in your affidavit, correct,

F-17 sir?

18 A. Correct.

19 123. Q. And that led to the report of the

20 monitor of Bondfield. I don't think we need to pull

21 it up, but there was a report that was also served

F-22 on May 31st, 2019, same day as your affidavit,

23 correct, sir?

24 A. Correct.

25 124. Q. All right. And you have a

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 500, TORONTO, ONTARIO, M5K 11-16 WWW.VI CTO RYVERBATI M.G M (416) 360-6117 [email protected] OM V• VICTORY VERBATIM 370

A. Braganza - 35

1 confidence that, in preparing its report, the

monitor of Bondfield calculated...

3 A. Right.

125. Q. ...the numbers carefully that it put

5 in the report?

6 A. I would hope so.

126. Q. In a neutral and impartial fashion?

8 A. Yes. I would hope so.

9 127. Q. Based on the information available r . 10 to the monitor of Bondfield at the time?

- 11 A. Correct.

1-12 128. Q. And if the monitor of Bondfield

13 issues any corrections or changes to this report,

19 you expect the monitor of Bondfield will similarly

15 be careful in calculating the numbers, correct?

L 16 A. I expect them to be that.

r -17 129. Q. To be neutral and impartial in their

8 analysis? r - 19 A. Correct.

20 130. Q. And to do their best to provide to

[ 21 the court accurate and complete information, based

n22 on the information available to them?

23 A. Correct.

Z4 131. Q. Okay. On the topic of numbers,

25 looking over at paragraph 143 of your affidavit, 7-

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H6 WWW.VICTO RYVERBATI M.0 0 M (416)360-6117 INFO@VI CTO RYVERBATI M.0 OM VICTORY VERBATIM 371

A. Braganza - 36

which you have already taken a bit of a look at,

although we didn't get too far.

3 I just want to look a little...in a little r 4 more granular manner at a couple of items. Just so that we understand the context, it says:

"...I am informed by Mr. Bordieri, that

7 Perini's best estimate of the balance of

the construction contract price owing under

9 the performance bond is as follows at this

0 time..."

• 11 That is what you said in your affidavit?

12 A. Yes.

13 132. Q. All right. And so you didn't create

19 these numbers yourself, you got them from Mr.

15 Bordieri?

A. Correct. r 17 133. Q. All right. And so when we look at

IL 18 the second item on the chart:

19 "...Approved change orders (based on

20 Bondfield billing records)..."

L 21 Do you see that, sir? c22 134. Q. You are aware that change orders

23 under the construction documents are funded by

Cambridge Memorial Hospital?

25 A. I am.

ERNST ,S, YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1H 6 WWW.VI GTO RYVE R BATI M.0 0 M (415) 350-6117 [email protected] VICTORY VERBATIM 372

A. Braganza - 37

1 135. Q. And when we look at item number 4:

2 "...The total amount paid to Bondfield L 3 inclusive of HST..."

4 Do you see that number, sir?

5 r-- A. I do.

6 136. Q. To your knowledge...and I

I 7 appreciate, obviously, you are getting this I information from Mr. Bordieri, but to your knowledge

9 this number that is there is based on Bondfield's

10 records?

A. I believe so.

137. Q. And does not include amounts that

13 were received directly from Bondfield?

14 A. Amounts that were...let me...

15 MR. KOLENDA: Amounts received by who

L .16 directly Bondfield? 138. MR. HALL: All right. Let me rephrase.

18 Let me rephrase.

20 BY MR. HALL:

139. Q. To your knowledge, this does not

-22 include amounts received directly by Bondfield from

- 23 the hospital?

24 MR. KOLENDA: Sorry, which number are

25 you asking about?

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H6 WWW.VI CTO RYVERBATI M.00 M (4161360-5117 [email protected] V• VICTORY VERBATIM 373

A. Braganza - 38

140. MR. HALL: Sorry, number 4, "total

amount paid to Bondfield inclusive of HST".

3 r BY MR. HALL:

5 141. Q. To your knowledge, that does not

6 include funds directly received by Bondfield from

7 Cambridge Memorial Hospital? And if you don't know,

8 you don't know, that is fine.

9 A. I would have to clarify that with

10 Paul Bordieri. U/T

—13. 142. Q. Okay. And to your knowledge,

F12 sitting here today, this doesn't include anything

L • 13 that was improperly recorded in Bondfield's records? 1- 14 MR. KOLENDA: When you say "this", just

15 so it is clear, which number?

16 143. MR. HALL: Well, I have been talking

r17 about the same one, I set it up. Number 4,

1a "total amount paid to Bondfield, inclusive

19 of HST".

20 THE DEPONENT: I am sorry, the question

Hil again?

r 22

23 BY MR. HALL:

24 144. Q. The amount set out at item number 4,

25 which I have been asking about for several minutes,

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H6 WWW.VI CTO RYVE R BATI M.0 0 M (416) 380-5117 I N FO@VI CTO RYVE RBATI M.0 M VICTORY VERBATIM 374

A. Braganza - 39

the total amount paid to Bondfield, inclusive of

2 HST, to your knowledge, sitting here today, that

3 does not include anything improperly recorded in Bondfield's records?

A. I am not aware that it does.

145. Q. All right. Okay. Paragraph 71 of

F 7 your affidavit, sir, says:

8 "...On or about October 19th, 2018, Project

9 Co. granted Bondfield the release of a number of potential claims by Project Co.

relating to the delay of the construction

:12 contract, direct losses, indirect losses,

13 or liquidated damages under the

4 construction contract, and any failure to

15 achieve the substantial performance date or

L 16 the final completion date, and any claims

r -17 by CMH against Project Co., referred to as

18 'the release'..."

19 That is what you said in your affidavit, sir?

20 A. Yes.

21 146. Q. And you attach as Exhibit J a copy r zz of the release?

23 A. Correct.

I 24 147. Q. All right. Your affidavit makes no

25 reference to the release having been provided, prior

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1 H6 WWW.VI GTO RYVERBATI M. C NI (416) 360-6117 I N FO@VI GTO RYVE RBATI 0 M VICTORY VERBATIM 375

A. Braganza - 40

to the affidavit itself, to the administrative

2 agent, to use the defined term in your affidavit,

3 any time before the affidavit? So, you don't make

any reference to BMO having a copy of the release

prior to receiving your affidavit?

A. No, I do not.

148. Q. Okay. You also don't say anything

8 in your affidavit about the release being provided

9 before the affidavit was served to any other member r_10 of the lending syndicate, other than BMO?

A. I do not.

149. Q. Nor do you say that it was provided

13 to Cambridge Memorial Hospital prior to the

14 affidavit being served?

15 A. I do not.

16 150. Q. Nor do you say that it was provided to Infrastructure Ontario before the affidavit was

18 served?

19 A. I do not.

20 151. Q. Nor do you say that it was provided to the receiver of Project Co. appointed on December c-22 6th, 2018?

23 A. I do not.

24 152. Q. And that is because prior to the

25 affidavit being served, Zurich had not, in fact,

ERNST & YOUNG TOWER, 222 SAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1 H6 WWW.VI CTO RYVE MEAT, M.0 0 M (4-16) 360-6117 I [email protected] 0 M V VICTORY VERBATIM 376

A. Braganza - 41

L provided the release to BMO?

2 A. Correct.

3 153. Q. Nor to any other member of the 4 lending syndicate? A. Correct.

6 154. Q. Nor to Cambridge Memorial Hospital? A. Correct.

155. Q. Nor to Infrastructure Ontario? A. Correct. 9 156. Q. Nor to the receiver appointed on December 6th, 2018?

A. Correct.

13 157. Q. Prior to the affidavit being served,

14 the only parties who knew about the release were...purported release, were the parties to the r-15 ,I _ i6 release itself, being Bondfield and Project Co.,

'1-17 correct? They knew about the release before your

( 16 affidavit was served?

19 A. Correct.

20 158. Q. And the principals of those two

21 companies knew about the release before it was r 22 served in your affidavit? A. Correct.

24 159. Q. And those principals are the same

25 individual? r--

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1H5 WWW.VI CTO RYVE RBATI M.0 0 M (4151360-6117 [email protected] V VICTORY VERBATIM 377

A. Braganza - 42

A. I believe so.

! 2 160. Q. Their counsel, Oslers, acting as

3 counsel for both Bondfield and Project Co., was aware of the existence of the release prior to your

5 affidavit?

[2_ 6 A. I believe so.

7 161. Q. Zurich was aware of the existence of the release prior to your affidavit?

9 A. Yes.

10 162. Q. And Zurich's counsel was aware of

11 the existence of the release prior to your affidavit r 12 being served?

13 A. Yes.

19 163. Q. And other than those entities that I

15 have named, Bondfield, Project Co., their

16 principals, their counsel, Zurich and Zurich's

I_ 17 counsel, no one else was aware of the existence of

18 this release until it was included and served in

1.9 your...included in your affidavit and served at the

20 end of May, 2019?

21 A. I am not aware of who knew about it,

"2 beyond the parties you mentioned.

23 164. Q. Let me put it another way, to be

!1 29 very precise with the language. To your knowledge,

25 no one, other than the individuals and the

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1H5 WWW.VI CTO RYVE RBATI M.00 M (416) 3150-6117 [email protected] Nif VICTORY VERBATIM 378

A. Braganza - 43

1 corporations that I have named, had knowledge of

this release before it was included in your

3 affidavit and served on May 31st, 2019?

A. To my knowledge, no.

5 165. Q. All right. And as at...sorry. The

6 purported release is dated, if we look at Exhibit J

7 to your affidavit, it is dated October 19th, 2018,

on the last page, page 109 of the record.

A. Correct.

10 166. Q. As at October the 19th, 2018 the

receivership proceedings that I have already

12 referred to had not yet been commenced. A

13 receivership report was made in early December,

19 2018, correct?

15 A. Correct.

. 167. Q. And this motion had not yet been

-17 launched?

18 A. No. 1-[[ 19 168. Q. The Bondfield CCAA proceedings that

20 we have talked about had not yet been commenced?

r 21 A. No.

1-22 169. Q. And there was, at that point, no

23 litigation outstanding yet in respect of the

1 24 Cambridge Memorial Hospital construction?

25 A. There was no outstanding litigation.

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H WWW.VI CTO RYVERBATI M.0 0 M (416) 360-6117 I NFO@VI CTORYVERBATIM.0 OM V VICTORY VERBATIM 379

A. Braganza - 44

170. Q. And the release did not just come into existence on October the 19th, 2018, without

3 some prior communication amongst the parties to the

r [ 4 release? There was some communication leading up to

this document? n 5

-- 6 A. Correct.

i 7 171. Q. And, perhaps, drafts of the document

8 as well?

9 A. Correct.

10 172. Q. And that is not just a perhaps,

11 there were drafts of the document before it was

12 finalized?

13 A. I would have to go back and verify

14 that.

15 173. Q. Okay. And those discussions, prior

16 to the execution of this release, were among the

917 principals of Bondfield and Project Co.?

18 MR. KOLENDA: I am just objecting to the

1 19 question because you say "those

20 discussions". What discussions? /R

, 21 174. MR. HALL: I am referring back to the

F22 discussions that I was just referring to, i 1 23 the discussions that Mr. Braganza

24 acknowledged occurred prior to the

25 execution of the release on October the

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, !ASK 1 H6 WWW.VI CTO RYVERBATI (4.0 0 (.4 (416) 360-6117 I NFO@VICTORYVERBATI M.0 0 NI VICTORY VERBATIM 380

A. Braganza - 45

19th, 2018. Those discussions, leading up

2 to the release prior to October the 19th,

3 2018, involved the principals of Bondfield

4 and Project Co.? THE DEPONENT: I am kind of confused

6 with your question.

r 7 175. MR. HALL: Okay.

BY MR. HALL:

176. Q. I am trying to understand who

-11 participated in these discussions. You acknowledge

12 the discussions occurred, that the release didn't

13 just magically appear without human beings r14 discussing it first, right?

is A. Correct.

16 177. Q. Are you with me there? The human

F-17 beings that had those discussions included

18 principals of Bondfield and principals of Project

19 Co.? A. They were the same. P20 L21 178. Q. Yes. n22 A. Do you mean talking among

,` 23 themselves?

^2424 179. Q. Presumably they were. Zurich was...

25 A. That is where you are confusing me.

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1 H6 WWW.VI OTO RYVE R BATI M.00 (4 (416) 360-6117 [email protected] VICTORY VERBATIM 381

A. Braganza - 46

180. Q. Zurich was also...yes, it is not a

; 2 simple transaction. And Zurich was aware, at the

3 time, that the discussions leading up to the r 4 purported release, dated October 19th, 2018, were

-- 5 taking place, Zurich was aware that those

6 discussions were taking place?

P 7 A. Correct.

8 181. Q. Zurich participated in those

9 discussions?

10 A. Correct.

11 182. Q. All right. And we are looking at

F-12 now a letter dated June 6th, 2019 from me, in my

13 capacity as counsel to BMO, addressed to Zurich's

14 counsel, Mr. Lerner, Mr. McDaniel, Mr. Kolenda and

15 Mr. Rollwagen. You are familiar with this letter?

16 A. I am. - r 17 183. MR. HALL: On that basis, I would like

18 to mark it as the next exhibit, number 2?

19 MR. KOLENDA: That is fine. L__

20 t 21 EXHIBIT NO. 2: Letter from Mr. Hall to Mr. Lerner et

1-22 all, dated June 6th, 2019

24 BY MR. HALL:

25 184. Q. The letter of June 6th requested,

ERNST & YOUNG TOWER, 222 SAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H6 WWW.VI CTO RYVEREIATI M.0 0 M (416) 360-6117 I [email protected] M VICTORY VERBATIM 382

A. Braganza - 47

1 looking at the sixth paragraph down, it says:

2 "...Accordingly, please provide no later

3 than June 14..." 0- 4 Do you see that, sir?

A. Yes. I do.

6 185. Q. It continues:

"...According, please provide no later than

8 June 14, 2019, all documents (as that term 0 - 9 is defined in the Rules of Civil Procedure) that are in the possession, power and

control of Zurich that relate to

P 12 communications among Project Co., Bondfield

13 and Zurich (or any combination thereof) in

14 respect of the purported release both

15 before and after October 19th, 2018. r-

L 16 This request includes, but is not

17 limited to all drafts of the purported

18 release..."

19 That was the request that was made in the letter of

20 June 6th, 2019?

21 A. Yes.

7' 186. Q. And there is further requests which

23 the letter can speak for itself. Then the response

24 from Mr. Lerner on June 17th, 2019, I am showing you

25 that letter now, and you are familiar with this

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO. ONTARIO, M5K 1 H6 WWW.VI OTO RYVERBAT1 M.00 M (416) 360-6117 I N FO@VI OTO RYVERBATI M. C CI M VICTORY VERBATIM 383

A. Braganza - 48

letter?

A. Yes.

3 187. MR. HALL: On that basis I would like to

4 mark it as the next Exhibit, number 3,

5 please?

MR. KOLENDA: That is fine.

4 - 7 188. MR. HALL: Thank you.

' 9 EXHIBIT NO. 3: Letter from Mr. Lerner to Mr. Hall,

r 0 dated June 17, 2019

1-12 BY MR. HALL:

13 189. Q. And the letter states in paragraph 7 1 14 2, potentially...the second paragraph, sorry, it is

15 not numbered. The second paragraph:

X 16 "...Potentially relevant documents have

r--17 been reviewed and we have determined that

18 none are producible. Attached is a

H9 schedule identifying documents relevant to

20 your request over which privilege is

L claimed..."

-22 And then there is a schedule attached. That is what

23 the letter says?

A. It does.

25 190. Q. And it says, in the next paragraph

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MSK 1 FI6 WWW.VI GTO RYVER BATI M.0 0 M (416) 360-6117 [email protected] VICTORY VERBATIM 384

A. Braganza - 49 r -

- 1 down: "...We have not itemized the correspondence

3 between Zurich and its counsel which are

solicitor/client privileged..."

5 That is, again, what the letter said?

6 A. Correct.

7 191. Q. And in accordance with this letter,

8 no documents have, in fact, been produced by Zurich

9 in response to my letter of June 6th, 2019?

10 A. Correct.

192. MR. HALL: Thank you very much, those

12 are all my questions.

13 MR. KOLENDA: I do have some questions

19 by way of re-examination. L _

15 193. MR. HALL: Okay.

P7 RE-EXAMINATION BY MR. KOLENDA:

18 194. Q. Mr. Braganza, my friend asked you

19 some questions about paragraph 143 of your

20 affidavit, I am putting it in front of you. You see

L_21 that?

22 A. I do.

23 195. Q. And do you recall those questions?

24 A. Yes.

25 196. Q. And Mr. Hall also asked you about

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1HG WWW.VICTORYVERBATIM.COM (4115) 350-5117 [email protected] V• VICTORY VERBATIM 385 T

A. Braganza - 50

correspondence sent by...on behalf of Mr. Lerner

2 yesterday evening, marked as Exhibit 1. Do you see

3 that?

4 A. Yes.

5 197. Q. And I am showing you the second page of the Exhibit, which is the letter itself, which

1 7 was attached to the e-mail. Do you see that?

A. I do.

9 198. Q. And do you recall you were asked

10 questions about this letter?

A. Yes.

r -12 199. Q. In paragraph 143 of your affidavit

13 there is a reference to:

14 "...balance of original contract funds..."

15 And there is a number that reads $72,035,514. Do

16 you see that?

17 A. I do.

18 200. Q. And in Mr. Lerner's letter at

19 Exhibit 1, the third paragraph concludes with the

20 reference:

21 "...The balance of the construction

7n contract price..." `23 And a reference to a number $69,896,514. Do you see

that?

25 A. I do. P

ERNST & YOUNG TOWER, 222 SAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H6 WWW.VI CTO RYVER BATI M.013 M (416) 360-6117 [email protected] M VICTORY VERBATIM 386

A. Braganza - 51

201. Q. Can you explain why there is a difference between the number in Mr. Lerner's letter

3 and the number I just referenced at paragraph 143 of r 4 your affidavit? P MR. HALL• I don't think that is even 5 remotely proper reply. How does that flow r from cross-examination? 202. MR. KOLENDA: My position is it does, so I would like the witness to answer the

o question. MR. HALL: Well, he can answer it but it

is under my objection that this is not

13 proper reply, or re-examination, sorry. THE DEPONENT: I asked the monitor to

15 take another look at the numbers, and to

• ,6 give me a total that did not include the

-7 change orders that were paid directly by

8 Cambridge Memorial Hospital.

20 BY MR. KOLENDA:

L 203. Q. And just so it is clear, when did you ask the monitor to do that? Before or after

23 your affidavit?

• 4 A. After my affidavit.

25 204. Q. Do you recall that Mr. Hall asked

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1H 5 WWW.VI CTO RYVE R BATIM.0 M (415)350-6117 I N FO@VI CTO RYVERBATI M. C M V• VICTORY VERBATIM 387

A. Braganza - 52

1 you about the release that is at Exhibit...

2 MS. MEREDITH: Exhibit J.

3 205. MR. KOLENDA: Thank you.

L s BY MR. KOLENDA:

6 206. Q. Exhibit J of your affidavit, and he

7 asked you about the date of the release, and I am

just putting it in front of you. Do you see that?

9 A. Yes. I do. 207. Q. And the date that is on the document is October 19th, 2018, and he asked you some

r 12 questions which referenced that. Do you recall

13 that?

1; 19 A. Yes. I do.

15 208. Q. And Mr. Hall asked you whether

L ,16 litigation was outstanding as at that date. Do you

n17 recall those questions?

18 A. I do.

r 19 209. Q. To the best of your recollection,

20 yes or no, was any litigation contemplated by Zurich P 21 at that time?

—22 A. Yes.

-23 210. Q. What...litigation between what

29 parties had Zurich contemplated at that time?

25 A. Zurich was contemplating litigation

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H6 WWW.VICTORYVERBATIM.0 0 M (416) 360-6117 I N FO@VI OTO RYVERSATI M.0 0 M Nef VICTORY VERBATIM 388

A. Braganza - 53

between itself and the obligees under the bonds, the

2 Cambridge and St. Michael's Hospital bonds.

3 211. MR. KOLENDA: Thank you, those are my

4 questions by way of examination.

5 MR. HALL: Thank you very much. And we 1,-- 6 are done.

I- 7

a upon adjourning at 3:15 p.m.

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, MS IC 1 H6 WWW.VI CTO RYVE R SAT' M.00 NI (416) 360-6117 INFO@VI GTO RYVE REIATI IN.0 0 N1 VICTORY VERBATIM 389

A. Braganza - 54

1 INDEX OF EXHIBITS 2 3

L_ 4 EXHIBIT PAGE 5 NUMBER DESCRIPTION NUMBER

6 7 L._ 6 1 Letter to Receiver of Project Co. 11 9 10 A Affidavit of Mr. Aquino, dated March 11 5, 2019 (for identification) 29 12 L 13 2 Letter from Mr. Hall to Mr. Lerner 14 et all, dated June 6th, 2019 46 15 —n 3 Letter from Mr. Lerner to Mr. Hall, 17 dated June 17, 2019 48

ERNST SE YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H6 WWW.VI GTO RYVERBATI M.00 M (416) 360-6117 [email protected] VICTORY VERBATIM 390

A. Braganza - 55

INDEX OF UNDERTAKINGS 2 3 L.4 REFERENCE PAGE QUESTION 5 NUMBER NUMBER NUMBER F 6 7 8 1 38 141

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO. M5K 1 H6 WWW.VI CTO RYVERSATI M.G 0 M (416) 360-5117 [email protected] VICTORY VERBATIM 391

A. Braganza - 56

INDEX OF UNDER ADVISEMENTS 2 r 3 4 REFERENCE PAGE QUESTION 5 NUMBER NUMBER NUMBER 6

L_ 7 8 1 7 13

9 2 10 25

10 3 14 38

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ONTARIO, M5K 1 H6 WWW.VICTORYVERBATIM.COM (416) 360-6117 INFO@VICTORYVERBATI M.0 0 M VICTORY VERBATIM 392

A. Braganza - 57

INDEX OF REFUSALS 2

3 REFERENCE PAGE QUESTION 5 NUMBER NUMBER NUMBER 6 7 8 1 7 12

2 10 22 L 9 10 3 10 24

I'[ ji 4 44 173

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ❑ NTARIO, M5K 1He WWW.VICTORYVERBATIM.COM (416) 360-6117 INFO@VICTO RYVERBATIM.COM • VICTORY VERBATIM 393

A. Braganza - 58

1 2 3 4 REPORTER'S NOTE: 5 6 Please be advised that any undertakings, objections, under 7 advisements and refusals are provided as a service to all counsel, for 8 their guidance only, and do not purport to be legally binding or 9 necessarily accurate and are not binding upon Victory Verbatim 10 Reporting Services Inc. 11 12 13 14 15 I hereby certify the foregoing to be a true and accurate 16 transcription of the above-noted proceedings held before me on the 17 25th DAY OF JUNE, 2019, and taken to the best of my skill, ability 18 and understanding. 19

20 ) 21 ) Certified Correct: 22 ) 23 ) 24 ) 25 ) 26 ) 27 ) / 28 ) Lilian Ibeleg u 29 ) Verbatim Reporter 30 •

ERNST & YOUNG TOWER, 222 BAY STREET, SUITE 900, TORONTO, ❑ NTARIO, M5K 1 H6 WWW.VI CTO RYVERBATI M. C 0 M (416) 360-6117 I N FO@VI CTO RYVERBATI M.0 0 M

394 395 IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC. Court File No. CV-18-610236-00CL

Ontario SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

Proceedings commenced in Toronto

AFFIDAVIT OF EDEN ORBACH (Sworn October 21, 2019)

McCarthy Tétrault LLP Suite 5300, TD Bank Tower Toronto Dominion Centre 66 Wellington Street West Toronto, ON M5K 1E6 Fax: 416- 868-0673

Heather L. Meredith LSO#: 48354R Tel: 416-601-8342 Email: [email protected]

Geoff R. Hall LSO#: 34701O Tel: 416-601-7856 Email: [email protected]

Trevor Courtis LSO#: 67715A Tel: 416-601-7643 Email: [email protected]

Lawyers for the Applicant, Bank of Montreal 19600295

396

Court File No. CV-18-610236-00CL

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

THE HONOURABLE ) , THE ) ) DAY OF, 2019

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

BANK OF MONTREAL

Applicant

- and -

2423402 ONTARIO INC.

Respondent

ORDER

THIS MOTION, made by the Bank of Montreal in its capacity as administrative agent under the credit agreement (“BMO”) for an order enforcing the stay of proceedings in the Appointment Order issued by the Honourable Mr. Justice Hainey in these proceedings on December 6, 2018 (the “Appointment Order”) against Zurich Insurance Company Ltd. (“Zurich”), was heard this day at 330 University Avenue, Toronto, Ontario.

ON READING the notice of motion, the affidavit of Eden Orbach, sworn October 21, 2019 (the “Orbach Affidavit”), and on hearing the submissions of counsel for each of BMO, Zurich, Cambridge Memorial Hospital, Ontario Infrastructure and Lands Corporation and Alvarez & Marsal Inc. in its capacity as receiver, on a limited basis, over all of the assets, undertakings and properties of 2423402 Ontario Inc.:

1. THIS COURT ORDERS that all terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Orbach Affidavit. 397 - 2 -

2. THIS COURT DECLARES that the stated intention of Zurich to cease all further involvement with the Project after Interim Completion is achieved is in breach of the Appointment Order, which prevents Zurich from discontinuing, altering, interfering with or terminating the Contractor Bonds or funding of the Project Costs thereunder without consent of the Receiver or leave of the Court.

______IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC. Court File No. CV-18-610236-001CL

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

Proceeding commenced at Toronto

ORDER

McCarthy Tétrault LLP Suite 5300, TD Bank Tower Toronto Dominion Centre 66 Wellington Street West Toronto, ON M5K 1E6 Fax: 416- 868-0673

Heather L. Meredith LSO#: 48354R Tel: 416-601-8342 Email: [email protected]

Geoff R. Hall LSO#: 34701O Tel: 416-601-7856 Email: [email protected]

Trevor Courtis LSO#: 67715A Tel: 416-601-7643 Email: [email protected]

Lawyers for the Applicant, Bank of Montreal 19643191 398

399

Court File No. CV-18-610236-00CL

ONTARIO

SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

THE HONOURABLE ) , THE ) JUSTICE ) DAY OF , 2019

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

BANK OF MONTREAL

Applicant

- and -

2423402 ONTARIO INC.

Respondent

ORDER (Amending and Restating Receivership Order)

THIS MOTION made by Bank of Montreal, in its capacity as administrative agent (the “Administrative Agent”), for an order amending and restating the December 6, 2018 order (the “Appointment Order”) in which Alvarez & Marsal Canada Inc. was appointed receiver (in such capacity, the “Receiver”), without security, of all of the assets, undertakings and properties of 2423402 Ontario Inc., to, among other things, clarify the powers of the Receiver, was heard this day at 330 University Avenue, Toronto, Ontario.

ON HEARING the submissions of counsel for the Administrative Agent, the Receiver, Zurich Insurance Company Ltd., and such other parties as were present,

MT DOCS 19390624 400 - 2 -

SERVICE

1. THIS COURT ORDERS that the time for service of the Notice of Motion is hereby abridged and validated so that this motion is properly returnable today and hereby dispenses with further service thereof.

AMENDED & RESTATED ORDER

2. THIS COURT ORDERS AND DECLARES that the Appointment Order is hereby amended and restated in the form attached hereto as Schedule “A”.

______

MT DOCS 19390624 401

Schedule “A”

Court File No. CV-18-610236-00CL

ONTARIO

SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

THE HONOURABLE MR. ) THURSDAY, THE 6th ) JUSTICE HAINEY ) DAY OF DECEMBER, 2018

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

BANK OF MONTREAL

Applicant

- and -

2423402 ONTARIO INC.

Respondent

AMENDED & RESTATED ORDER (Appointing Receiver)

THIS APPLICATION made by the Applicant for an Order pursuant to section 243(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended (the “BIA”) and section 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended (the “CJA”) appointing Alvarez & Marsal Canada Inc. (“A&M”) as receiver (in such capacity, the “Receiver”) without security, of all of the assets, undertakings and properties of 2423402 Ontario Inc. (the “Debtor”) acquired for, or used in relation to a business carried on by the Debtor, was heard this day at 330 University Avenue, Toronto, Ontario.

ON READING the affidavits of Eden Orbach sworn December 5, 2018 (the “December Affidavit”) and on October 21, 2019 (the “October Affidavit” and collectively with the

MT DOCS 19390624 402 - 2 -

December Affidavit, the “Affidavits”) and on hearing the submissions of counsel for each of the Applicant, A&M, Cambridge Memorial Hospital (“CMH”), Infrastructure Ontario (“IO”), Zurich Insurance Company Ltd. (the “Surety”), and the Debtor, and on reading the consent of A&M to act as the Receiver,

SERVICE

APPOINTMENT

2. THIS COURT ORDERS that pursuant to section 243(1) of the BIA and section 101 of the CJA, A&M is hereby appointed Receiver, without security, of all of the assets, undertakings and properties of the Debtor acquired for, or used in relation to a business carried on by the Debtor, including all proceeds thereof (the “Property”) for the sole purpose of carrying out the terms of this Order and without taking possession or control of such Property.

RECEIVER’S POWERS

(b) with the consent of the Applicant in consultation with CMH and IO, to enter into any agreements for and on behalf of the Debtor or cease to perform, repudiate or disclaim any contracts of the Debtor; and

MT DOCS 19390624 403 - 3 -

DUTY TO PROVIDE ACCESS AND CO-OPERATION TO THE RECEIVER

4. THIS COURT ORDERS that (i) the Debtor, (ii) all of its current and former directors, officers, employees, agents, accountants, legal counsel and shareholders, and all other persons acting on its instructions or behalf, (iii) Bondfield Construction Company Limited (“Bondfield”), and (iv) all other individuals, firms, corporations, governmental bodies or agencies, or other entities having notice of this Order (all of the foregoing, collectively, being “Persons” and each being a “Person”) shall forthwith advise the Receiver of the existence of any Property in such Person’s possession or control, and shall grant immediate and continued access to the Property to the Receiver, and shall deliver all such Property to the Receiver upon the Receiver’s request.

5. THIS COURT ORDERS that all Persons shall forthwith advise the Receiver of the existence of any books, documents, securities, contracts, orders, corporate and accounting records, and any other papers, records and information of any kind related to the business or affairs of the Debtor, and any computer programs, computer tapes, computer disks, or other data storage media containing any such information (the foregoing, collectively, the “Records”) in that Person’s possession or control, and shall provide to the Receiver or permit the Receiver to make, retain and take away copies thereof and grant to the Receiver unfettered access to and use of accounting, computer, software and physical facilities relating thereto, provided however that nothing in this paragraph 5 or in paragraph 6 of this Order shall require the delivery of Records, or the granting of access to Records, which may not be disclosed or provided to the Receiver due to the privilege attaching to solicitor-client communication or due to statutory provisions prohibiting such disclosure. The Receiver is authorized and empowered to access and make, retain and take away copies of the Records of the Debtor located at the offices of Bondfield and Bondfield shall cooperate and shall provide reasonable assistance to the Receiver with respect to

MT DOCS 19390624 404 - 4 - such Records and information contained in such Records with respect to the Property, including the Project (as defined in the Affidavits).

6. THIS COURT ORDERS that if any Records are stored or otherwise contained on a computer or other electronic system of information storage, whether by independent service provider or otherwise, all Persons in possession or control of such Records shall forthwith give unfettered access to the Receiver for the purpose of allowing the Receiver to recover and fully copy all of the information contained therein whether by way of printing the information onto paper or making copies of computer disks or such other manner of retrieving and copying the information as the Receiver in its discretion deems expedient, and shall not alter, erase or destroy any Records without the prior written consent of the Receiver. Further, for the purposes of this paragraph, all Persons shall provide the Receiver with all such assistance in gaining immediate access to the information in the Records as the Receiver may in its discretion require including providing the Receiver with instructions on the use of any computer or other system and providing the Receiver with any and all access codes, account names and account numbers that may be required to gain access to the information.

NO PROCEEDINGS AGAINST THE RECEIVER

7. THIS COURT ORDERS that no proceeding or enforcement process in any court or tribunal (each, a “Proceeding”), shall be commenced or continued against the Receiver except with the written consent of the Receiver or with leave of this Court.

NO PROCEEDINGS AGAINST THE DEBTOR OR THE PROPERTY

MT DOCS 19390624 405 - 5 -

NO EXERCISE OF RIGHTS OR REMEDIES

9. THIS COURT ORDERS that all rights and remedies against the Debtor, the Receiver, or affecting the Property, are hereby stayed and suspended except with the written consent of the Receiver or leave of this Court, provided however that this stay and suspension does not apply in respect of any “eligible financial contract” as defined in the BIA, and further provided that nothing in this paragraph shall (i) empower the Debtor to carry on any business which the Debtor is not lawfully entitled to carry on, (ii) exempt the Debtor from compliance with statutory or regulatory provisions relating to health, safety or the environment, (iii) prevent the filing of any registration to preserve or perfect a security interest, (iv) prevent the registration of a claim for lien; or (v) prevent Cambridge Memorial Hospital from asserting set-off rights against the Debtor arising under the Project Agreement, if any.

NO INTERFERENCE WITH THE RECEIVER

CONTINUATION OF SERVICES

EMPLOYEES

12. THIS COURT ORDERS that all employees of the Debtor shall remain the employees of the Debtor and not of the Receiver. The Receiver shall not be liable for any employee-related

MT DOCS 19390624 406 - 6 - responsibilities or liabilities, including any successor employer liabilities as provided for in section 14.06(1.2) of the BIA.

LIMITATION ON ENVIRONMENTAL LIABILITIES

13. THIS COURT ORDERS that nothing herein contained shall require the Receiver to occupy or to take control, care, charge, possession or management (separately and/or collectively, “Possession”) of any of the Property that might be environmentally contaminated, might be a pollutant or a contaminant, or might cause or contribute to a spill, discharge, release or deposit of a substance contrary to any federal, provincial or other law respecting the protection, conservation, enhancement, remediation or rehabilitation of the environment or relating to the disposal of waste or other contamination including, without limitation, the Canadian Environmental Protection Act, the Ontario Environmental Protection Act, the Ontario Water Resources Act, or the Ontario Occupational Health and Safety Act and regulations thereunder (the “Environmental Legislation”), provided however that nothing herein shall exempt the Receiver from any duty to report or make disclosure imposed by applicable Environmental Legislation. The Receiver shall not, as a result of this Order or anything done in pursuance of the Receiver’s duties and powers under this Order, be deemed to be in Possession of any of the Property within the meaning of any Environmental Legislation, unless it is actually in possession.

LIMITATION ON THE RECEIVER’S LIABILITY

14. THIS COURT ORDERS that the Receiver shall incur no liability or obligation as a result of its appointment or the carrying out the provisions of this Order, save and except for any gross negligence or wilful misconduct on its part, and it shall have no obligations or liability (i) under sections 81.4(5) or 81.6(3) of the BIA or under the Wage Earner Protection Program Act, the Construction Act (Ontario) or any other applicable legislation, or (ii) in respect of any of the Debtor’s obligations or Property, including, without limitation, the Construction Agreement attached as Exhibit “F” to the December Affidavit or the Project Agreement attached as Exhibit “G” to the December Affidavit. Nothing in this Order shall derogate from the protections afforded the Receiver by section 14.06 of the BIA or by any other applicable legislation. Unless further ordered by the Court, the Receiver will not be and shall not be deemed to be, in

MT DOCS 19390624 407 - 7 - possession and control of any Property, including, without limitation, for the purposes of the BIA, the Wage Earner Protection Program Act, the Construction Act (Ontario) or any other applicable legislation.

RECEIVER’S ACCOUNTS

15. THIS COURT ORDERS that the Receiver and counsel to the Receiver shall be paid their reasonable fees and disbursements, in each case at their standard rates and charges unless otherwise ordered by the Court on the passing of accounts, and that the Receiver and counsel to the Receiver shall be entitled to the benefit of and are hereby granted a charge (the “Receiver’s Charge”) on the Property, as security for such fees and disbursements, both before and after the making of this Order in respect of these proceedings, and that the Receiver’s Charge shall form a first charge on the Property in priority to all security interests, trusts, liens, charges and encumbrances, statutory or otherwise, in favour of any Person, but subject to sections 14.06(7), 81.4(4), and 81.6(2) of the BIA.

17. THIS COURT ORDERS that prior to the passing of its accounts, the Receiver shall be at liberty from time to time to apply reasonable amounts, out of the monies in its hands, against its fees and disbursements, including legal fees and disbursements, incurred at the standard rates and charges of the Receiver or its counsel, and such amounts shall constitute advances against its remuneration and disbursements when and as approved by this Court.

FUNDING OF THE RECEIVERSHIP

MT DOCS 19390624 408 - 8 - duties conferred upon the Receiver by this Order; and (b) open one or more new accounts to hold any amounts borrowed pursuant to foregoing paragraph (a). The whole of the Property shall be and is hereby charged by way of a fixed and specific charge (the “Receiver’s Borrowings Charge”) as security for the payment of the monies borrowed, together with interest and charges thereon, in priority to all security interests, trusts, liens, construction liens, charges and encumbrances, statutory or otherwise, in favour of any Person, but subordinate in priority to the Receiver’s Charge and the charges as set out in sections 14.06(7), 81.4(4), and 81.6(2) of the BIA.

19. THIS COURT ORDERS that neither the Receiver’s Borrowings Charge nor any other security granted by the Receiver in connection with its borrowings under this Order shall be enforced without leave of this Court.

20. THIS COURT ORDERS that the Receiver is at liberty and authorized to issue certificates substantially in the form annexed as Schedule “A” hereto (the “Receiver’s Certificates”) for any amount borrowed by it pursuant to this Order.

21. THIS COURT ORDERS that the monies from time to time borrowed by the Receiver pursuant to this Order or any further order of this Court and any and all Receiver’s Certificates evidencing the same or any part thereof shall rank on a pari passu basis, unless otherwise agreed to by the holders of any prior issued Receiver’s Certificates.

SERVICE AND NOTICE

22. THIS COURT ORDERS that the E-Service Protocol of the Commercial List (the “Protocol”) is approved and adopted by reference herein and, in this proceeding, the service of documents made in accordance with the Protocol (which can be found on the Commercial List website at http://www.ontariocourts.ca/scj/practice/practice-directions/toronto/eservice- commercial/) shall be valid and effective service. Subject to Rule 17.05 this Order shall constitute an order for substituted service pursuant to Rule 16.04 of the Rules of Civil Procedure. Subject to Rule 3.01(d) of the Rules of Civil Procedure and paragraph 21 of the Protocol, service of documents in accordance with the Protocol will be effective on transmission. This Court

MT DOCS 19390624 409 - 9 - further orders that a Case Website shall be established in accordance with the Protocol with the following URL ‘https://www.alvarezandmarsal.com/CMH‘.

23. THIS COURT ORDERS that if the service or distribution of documents in accordance with the Protocol is not practicable, the Receiver is at liberty to serve or distribute this Order, any other materials and orders in these proceedings, any notices or other correspondence, by forwarding true copies thereof by prepaid ordinary mail, courier, personal delivery, electronic or facsimile transmission to the Debtor’s creditors or other interested parties and their advisors at their respective addresses as last shown on the records of the Debtor and that any such service or distribution by courier, personal delivery or facsimile transmission shall be deemed to be received on the next business day following the date of forwarding thereof, or if sent by ordinary mail, on the third business day after mailing. For greater certainty, any such distribution or service shall be deemed to be in satisfaction of a legal or juridical obligation, and notice requirements within the meaning of clause 3(c) of the Electronic Commerce Protection Regulations, Reg. 81000-2-175 (SOR/DORS).

GENERAL

24. THIS COURT ORDERS that the Receiver may from time to time apply to this Court for advice and directions in the discharge of its powers and duties hereunder.

25. THIS COURT ORDERS that nothing in this Order shall:

(a) prevent the Receiver from acting as a trustee in bankruptcy of the Debtor;

(b) constitute or be deemed to constitute an exercise of “step-in rights” by the Applicant under Section 7 of the Lender’s Direct Agreement (as such term is defined in the December Affidavit); or

(c) prevent the Applicant from appointing the Receiver as its Appointed Representative (as such term is defined in the Lender’s Direct Agreement) or taking steps pursuant to the Lender’s Direct Agreement.

26. THIS COURT ORDERS that nothing in this Order shall affect the Debtor’s ability to perform its obligations under the Construction Contract or alter, amend or otherwise affect the

MT DOCS 19390624 410 - 10 - liability of the Surety to any Person pursuant to Performance Bond No. 6342957 (the “Performance Bond”), Labour and Materials Payment Bond No. 6342957 or Demand Bond No. 6342958 (collectively, the “Contractor Bonds”) issued by the Surety.

COST TO COMPLETE

28. THIS COURT ORDERS that, for greater certainty, the Receiver is empowered, and directed, to the exclusion of all others, to calculate the Debtor’s proposed cost to complete the Project (as defined in the Affidavits) (the “Cost to Complete Estimate”), which figure shall be used to calculate the amount to be paid by the Surety to the Debtor pursuant to the Performance Bond.

29. THIS COURT ORDERS AND DIRECTS the Receiver to deliver the Cost to Complete Estimate in writing to each of the Surety, Bondfield, Bank of Montreal, in its capacity as administrative agent (the “Administrative Agent”), CMH and IO (each, a “Recipient”).

30. THIS COURT ORDERS that a Recipient who intends to dispute the Cost to Complete Estimate (the “Disputing Recipient”) shall deliver notice of such dispute in writing including the basis for such dispute and all documentation that the Disputing Recipient intends to rely upon in support of its position (a “Dispute Notice”) to the Receiver so that it is received by the Receiver no later than fourteen (14) calendar days after the Disputing Recipient received the Cost to Complete Estimate, or such longer period as may be agreed to by the Receiver in writing. The receipt of a Dispute Notice by the Receiver within the fourteen (14) calendar day period specified in this paragraph shall constitute an application by the Disputing Recipient to have the amount of the Cost to Complete Estimate determined pursuant to the procedure provided in this Order.

MT DOCS 19390624 411 - 11 -

31. THIS COURT ORDERS that, if a Dispute Notice is not delivered to the Receiver by any of the Recipients in accordance with paragraph 30 of this Order, the Cost to Complete Estimate shall be deemed to be the cost to complete for the purposes of calculating the amount to be paid by the Surety to Project Co pursuant to the Performance Bond, and any right or ability of the Recipients to challenge, object to, or review the Cost to Complete Estimate shall be forever barred and extinguished.

32. THIS COURT ORDERS that as soon as practicable after a Dispute Notice is received by the Receiver in accordance with this Order, the Receiver, in consultation with each of the Recipients, may attempt to resolve the dispute.

33. THIS COURT ORDERS that in the event that a dispute raised in a Dispute Notice is not settled within a reasonable time period or in a manner satisfactory to each of the Recipients, the Receiver shall, on notice to each of the Recipients, schedule an appointment with the Court for the purpose of scheduling a motion to seek a determination by the Court of the Cost to Complete Estimate, at which appointment directions will be sought from the Court on the process for such determination.

AID AND RECOGNITION

34. THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal, regulatory or administrative body having jurisdiction in Canada or in the United States to give effect to this Order and to assist the Receiver and its agents in carrying out the terms of this Order. All courts, tribunals, regulatory and administrative bodies are hereby respectfully requested to make such orders and to provide such assistance to the Receiver, as an officer of this Court, as may be necessary or desirable to give effect to this Order or to assist the Receiver and its agents in carrying out the terms of this Order.

35. THIS COURT ORDERS that the Receiver be at liberty and is hereby authorized and empowered to apply to any court, tribunal, regulatory or administrative body, wherever located, for the recognition of this Order and for assistance in carrying out the terms of this Order, and that the Receiver is authorized and empowered to act as a representative in respect of the within

MT DOCS 19390624 412 - 12 - proceedings for the purpose of having these proceedings recognized in a jurisdiction outside Canada.

36. THIS COURT ORDERS that the Applicant shall have its costs of this application, up to and including entry and service of this Order, provided for by the terms of the Applicant’s security or, if not so provided by the Applicant’s security, then on a substantial indemnity basis to be paid from the Debtor’s estate with such priority and at such time as this Court may determine.

37. THIS COURT ORDERS that any interested party may apply to this Court to vary or amend this Order on not less than seven (7) days’ notice to the Receiver and to any other party likely to be affected by the order sought or upon such other notice, if any, as this Court may order.

______

MT DOCS 19390624 413

SCHEDULE “A”

RECEIVER CERTIFICATE

CERTIFICATE NO. ______

AMOUNT $______

1. THIS IS TO CERTIFY that ALVAREZ & MARSAL CANADA INC., the receiver (in such capacity and not in its personal or corporate capacity, the “Receiver”) of the assets, undertakings and properties 2423402 ONTARIO INC. acquired for, or used in relation to a business carried on by the Debtor, including all proceeds thereof (collectively, the “Property”) appointed by Order of the Ontario Superior Court of Justice (Commercial List) (the “Court”) dated the 6th day of December, 2018 (the “Order”) made in an action having Court file number __-CL-______, has received as such Receiver from the holder of this certificate (the “Lender”) the principal sum of $______, being part of the total principal sum of $______which the Receiver is authorized to borrow under and pursuant to the Order.

2. The principal sum evidenced by this certificate is payable on demand by the Lender with interest thereon calculated and compounded [daily][monthly not in advance on the ______day of each month] after the date hereof at a notional rate per annum equal to the rate of ______per cent above the prime commercial lending rate of Bank of ______from time to time.

4. All sums payable in respect of principal and interest under this certificate are payable at the main office of the Lender at Toronto, Ontario.

MT DOCS 19390624 414

to any person other than the holder of this certificate without the prior written consent of the holder of this certificate.

6. The charge securing this certificate shall operate so as to permit the Receiver to deal with the Property as authorized by the Order and as authorized by any further or other order of the Court.

7. The Receiver does not undertake, and it is not under any personal liability, to pay any sum in respect of which it may issue certificates under the terms of the Order.

DATED the _____ day of ______, 20__.

ALVAREZ & MARSAL CANADA INC., solely in its capacity as Receiver of the Property, and not in its personal or corporate capacity

Per: Name: Title:

MT DOCS 19390624 415

Schedule “B”

Lenders’ Consultant’s Certificate

TO: Bank of Montreal, as administrative agent for and on behalf of the Lenders (the “Administrative Agent”)

AND TO: 2423402 ONTARIO INC. (the “Borrower”)

AND TO: ALVAREZ & MARSAL CANADA INC., in its capacity as court appointed receiver of the Borrower (in such capacity and not in its personal or corporate capacity, the “Receiver”)

RE: Requested Funding in the amount of $[Insert Amount]

Reference is made to the Credit Agreement made as of August 28, 2014 as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), between the Borrower, each of the financial institutions and other entities from time to time parties hereto (the “Lenders”) and the Administrative Agent.

Reference is made to the guaranteed price contract made as of August 28, 2014 (the “Construction Contract”), between the Borrower and Bondfield Construction Company Limited (the “Contractor”) for the carrying out of the Work. All terms used with initial capital letters but not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.

Reference is made to the amending and restating receivership order of the Honourable Justice Hainey made July [●], 2019 (the “Receivership Order”).

1. We are the Lenders’ Consultant and in such capacity have reviewed the following, each as constituted as of the date hereof:

(a) an application for payment in respect of a Base Progress Payment from the Contractor dated [Insert Date] in the amount of the Requested Funding delivered pursuant to Section 4.4(c) of the Construction Contract, a copy of which is attached hereto;

(b) the certificate of the Consultant delivered pursuant to Section 4.5(a) of the Construction Contract in connection with the Requested Funding, a copy of which is attached hereto;

(c) a Workplace Safety & Insurance Board Certificate of Clearance delivered pursuant to Section 4.4(f) of the Construction Contract, a copy of which is attached hereto; and

(d) a statutory declaration of the Contractor on CCDC Form 9A delivered pursuant to Section 4.4(g) of the Construction Contract, a copy of which is attached hereto.

MT DOCS 19390624 416

2. We have made, or caused to be made, such examinations or investigations as are, in our belief, necessary to enable us to make the statements or give the opinions contained or expressed in this Lenders’ Consultant’s Certificate, in accordance with our responsibilities in such regard pursuant to the provisions of the Construction Contract. We have periodically visited the Project Lands and last visited the Work on [Insert Date].

3. Based upon the foregoing, we certify and confirm that:

(a) the incurred Construction Costs to date are $[Insert Amount];

(b) as of the date hereof, all Consents required in connection with the performance of the Work done to date, have been obtained;

(c) the Requested Funding in the amount of $[Insert Amount] is equal to ●% of the certified Construction Costs in respect of the Work for this Funding Period and is a “Certified Amount” for the purposes of the Receivership Order;

(d) the construction Work is not abandoned;

(e) all Loans made to the Borrower to date have been spent on incurred Construction Costs (less the Legislative Holdback), Borrowing Costs and Transaction Expenses;

(f) true and complete copies of such bills, receipts and invoices necessary to substantiate the incurrence and payment of the incurred Construction Costs for which the Requested Funding is requested have been reviewed by us and we are satisfied with the same;

(g) the sum of Fundings made on account of Construction Costs in respect of prior Funding Periods plus the Requested Funding on account of Construction Costs for this Funding Period does not exceed 90% of the total Construction Costs incurred and certified to date; and

(h) we have received a title search of the Project Lands and confirmation from the Administrative Agent that there exists upon the Project Lands no Liens other than Permitted Liens.

This Lenders’ Consultant’s Certificate is being delivered to the Administrative Agent pursuant to Section 8.2(7)(c) of the Credit Agreement, and to the Receiver pursuant to the Receivership Order, and may be relied upon by the addressees hereof and their respective successors and assigns.

MT DOCS 19390624 417

DATED this ● day of ● 20●.

PELICAN WOODCLIFF INC.

By:

Name:

Title:

MT DOCS 19390624 IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC. Court File No. CV-18-610236-00CL

BANK OF MONTREAL and 2423402 ONTARIO INC. Applicant Respondent

Ontario SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

Proceedings commenced in Toronto

ORDER (Appointing Receiver)

McCarthy Tétrault LLP Suite 5300, TD Bank Tower Toronto Dominion Centre 66 Wellington Street West Toronto, ON M5K 1E6

Heather L. Meredith LSUC#48354R Tel: 416-601-8342 Fax: 416- 868-0673 Email: [email protected]

Geoff R. Hall LSUC#34701O Tel: 416-601-7856 Fax: 416-868-0673 Email: [email protected]

Trevor Courtis LSUC#67715A Tel: 416-601-7643 Fax: 416-868-0673 Email: [email protected] Lawyers for the applicant, Bank of Montreal 418

MT DOCS 19390624 IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC. Court File No. CV-18-610236-00CL

Ontario SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

Proceedings commenced in Toronto

ORDER (Amending and Restating Receivership Order)

McCarthy Tétrault LLP Suite 5300, TD Bank Tower Toronto Dominion Centre 66 Wellington Street West Toronto, ON M5K 1E6 Fax: 416-868-0673

Heather L. Meredith LSUC#48354R Tel: 416-601-8342 Email: [email protected]

Geoff R. Hall LSUC#34701O Tel: 416-601-7856 Email: [email protected]

Trevor Courtis LSUC#67715A Tel: 416-601-7643 Email: [email protected] Lawyers for the applicant, Bank of Montreal 419

MT DOCS 19390624

420

Court File No. CV-18-610236-00CL

ONTARIO

SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

THE HONOURABLE MR. ) THURSDAY, THE 6th ) JUSTICE HAINEY ) DAY OF DECEMBER, 2018

IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC.

BANK OF MONTREAL

Applicant

- and -

2423402 ONTARIO INC.

Respondent

AMENDED & RESTATED ORDER (Appointing Receiver)

ON READING the affidavitaffidavits of Eden Orbach sworn December 5, 2018 and the Exhibits thereto (collectively, the “Affidavit(the “December Affidavit”) and on October 21, 2019 (the “October Affidavit” and collectively with the December Affidavit, the “Affidavits”) and on

MT DOCS 1857679719390624 421 - 2 - hearing the submissions of counsel for each of the Applicant, A&M, Cambridge Memorial Hospital (“CMH”), Infrastructure Ontario (“IO”), Zurich Insurance Company Ltd. (the “Surety”), and the Debtor, and on reading the consent of A&M to act as the Receiver,

SERVICE

APPOINTMENT

2. THIS COURT ORDERS that pursuant to section 243(1) of the BIA and section 101 of the CJA, A&M is hereby appointed Receiver, without security, of all of the assets, undertakings and properties of the Debtor acquired for, or used in relation to a business carried on by the Debtor, including all proceeds thereof (the “Property”) for the sole purpose of carrying out the terms of this Order and without taking possession or control of such Property.

RECEIVER’S POWERS

MT DOCS 1857679719390624 422 - 3 -

DUTY TO PROVIDE ACCESS AND CO-OPERATION TO THE RECEIVER

4. THIS COURT ORDERS that (i) the Debtor, (ii) all of its current and former directors, officers, employees, agents, accountants, legal counsel and shareholders, and all other persons acting on its instructions or behalf, (iii) Bondfield Construction Company Limited (“Bondfield”), and (iv) all other individuals, firms, corporations, governmental bodies or agencies, or other entities having notice of this Order (all of the foregoing, collectively, being “Persons” and each being a “Person”) shall forthwith advise the Receiver of the existence of any Property in such Person’s possession or control, and shall grant immediate and continued access to the Property to the Receiver, and shall deliver all such Property to the Receiver upon the Receiver’s request.

5. THIS COURT ORDERS that all Persons shall forthwith advise the Receiver of the existence of any books, documents, securities, contracts, orders, corporate and accounting records, and any other papers, records and information of any kind related to the business or affairs of the Debtor, and any computer programs, computer tapes, computer disks, or other data storage media containing any such information (the foregoing, collectively, the “Records”) in that Person’s possession or control, and shall provide to the Receiver or permit the Receiver to make, retain and take away copies thereof and grant to the Receiver unfettered access to and use of accounting, computer, software and physical facilities relating thereto, provided however that nothing in this paragraph 5 or in paragraph 6 of this Order shall require the delivery of Records, or the granting of access to Records, which may not be disclosed or provided to the Receiver due to the privilege attaching to solicitor-client communication or due to statutory provisions prohibiting such disclosure. The Receiver is authorized and empowered to access and make, retain and take away copies of the Records of the Debtor located at the offices of Bondfield and Bondfield shall cooperate and shall provide reasonable assistance to the Receiver with respect to

MT DOCS 1857679719390624 423 - 4 - such Records and information contained in such Records with respect to the Property, including the Project (as defined in the AffidavitAffidavits).

NO PROCEEDINGS AGAINST THE RECEIVER

NO PROCEEDINGS AGAINST THE DEBTOR OR THE PROPERTY

MT DOCS 1857679719390624 424 - 5 -

NO EXERCISE OF RIGHTS OR REMEDIES

9. THIS COURT ORDERS that all rights and remedies against the Debtor, the Receiver, or affecting the Property, are hereby stayed and suspended except with the written consent of the Receiver or leave of this Court, provided however that this stay and suspension does not apply in respect of any “eligible financial contract” as defined in the BIA, and further provided that nothing in this paragraph shall (i) empower the Debtor to carry on any business which the Debtor is not lawfully entitled to carry on, (ii) exempt the Debtor from compliance with statutory or regulatory provisions relating to health, safety or the environment, (iii) prevent the filing of any registration to preserve or perfect a security interest, (iv) prevent the registration of a claim for lien; or (v) prevent Cambridge Memorial Hospital from asserting set-off rights against the Debtor arising under the Project Agreement, if any.

NO INTERFERENCE WITH THE RECEIVER

CONTINUATION OF SERVICES

EMPLOYEES

12. THIS COURT ORDERS that all employees of the Debtor shall remain the employees of the Debtor and not of the Receiver. The Receiver shall not be liable for any employee-related

MT DOCS 1857679719390624 425 - 6 - responsibilities or liabilities, including any successor employer liabilities as provided for in section 14.06(1.2) of the BIA.

LIMITATION ON ENVIRONMENTAL LIABILITIES

13. THIS COURT ORDERS that nothing herein contained shall require the Receiver to occupy or to take control, care, charge, possession or management (separately and/or collectively, “Possession”) of any of the Property that might be environmentally contaminated, might be a pollutant or a contaminant, or might cause or contribute to a spill, discharge, release or deposit of a substance contrary to any federal, provincial or other law respecting the protection, conservation, enhancement, remediation or rehabilitation of the environment or relating to the disposal of waste or other contamination including, without limitation, the Canadian Environmental Protection Act, the Ontario Environmental Protection Act, the Ontario Water Resources Act, or the Ontario Occupational Health and Safety Act and regulations thereunder (the “Environmental Legislation”), provided however that nothing herein shall exempt the Receiver from any duty to report or make disclosure imposed by applicable Environmental Legislation. The Receiver shall not, as a result of this Order or anything done in pursuance of the Receiver’s duties and powers under this Order, be deemed to be in Possession of any of the Property within the meaning of any Environmental Legislation, unless it is actually in possession.

LIMITATION ON THE RECEIVER’S LIABILITY

14. THIS COURT ORDERS that the Receiver shall incur no liability or obligation as a result of its appointment or the carrying out the provisions of this Order, save and except for any gross negligence or wilful misconduct on its part, and it shall have no obligations or liability (i) under sections 81.4(5) or 81.6(3) of the BIA or under the Wage Earner Protection Program Act, the Construction Act (Ontario) or any other applicable legislation, or (ii) in respect of any of the Debtor’s obligations or Property, including, without limitation, the Construction Agreement attached as Exhibit “F” to the December Affidavit or the Project Agreement attached as Exhibit “G” to the December Affidavit. Nothing in this Order shall derogate from the protections afforded the Receiver by section 14.06 of the BIA or by any other applicable legislation. Unless further ordered by the Court, the Receiver will not be and shall not be deemed to be, in possession and control of any Property, including, without limitation, for the purposes of the

MT DOCS 1857679719390624 426 - 7 -

BIA, the Wage Earner Protection Program Act, the Construction Act (Ontario) or any other applicable legislation.

RECEIVER’S ACCOUNTS

15. THIS COURT ORDERS that the Receiver and counsel to the Receiver shall be paid their reasonable fees and disbursements, in each case at their standard rates and charges unless otherwise ordered by the Court on the passing of accounts, and that the Receiver and counsel to the Receiver shall be entitled to the benefit of and are hereby granted a charge (the “Receiver’s Charge”) on the Property, as security for such fees and disbursements, both before and after the making of this Order in respect of these proceedings, and that the Receiver’s Charge shall form a first charge on the Property in priority to all security interests, trusts, liens, charges and encumbrances, statutory or otherwise, in favour of any Person, but subject to sections 14.06(7), 81.4(4), and 81.6(2) of the BIA.

FUNDING OF THE RECEIVERSHIP

MT DOCS 1857679719390624 427 - 8 - any amounts borrowed pursuant to foregoing paragraph (a). The whole of the Property shall be and is hereby charged by way of a fixed and specific charge (the “Receiver’s Borrowings Charge”) as security for the payment of the monies borrowed, together with interest and charges thereon, in priority to all security interests, trusts, liens, construction liens, charges and encumbrances, statutory or otherwise, in favour of any Person, but subordinate in priority to the Receiver’s Charge and the charges as set out in sections 14.06(7), 81.4(4), and 81.6(2) of the BIA.

SERVICE AND NOTICE

22. THIS COURT ORDERS that the E-Service Protocol of the Commercial List (the “Protocol”) is approved and adopted by reference herein and, in this proceeding, the service of documents made in accordance with the Protocol (which can be found on the Commercial List website at http://www.ontariocourts.ca/scj/practice/practice-directions/toronto/eservice-commercial/) shall be valid and effective service. Subject to Rule 17.05 this Order shall constitute an order for substituted service pursuant to Rule 16.04 of the Rules of Civil Procedure. Subject to Rule 3.01(d) of the Rules of Civil Procedure and paragraph 21 of the Protocol, service of documents in accordance with the Protocol will be effective on transmission. This Court further orders that a

MT DOCS 1857679719390624 428 - 9 -

Case Website shall be established in accordance with the Protocol with the following URL ‘https://www.alvarezandmarsal.com/CMH‘.

23. THIS COURT ORDERS that if the service or distribution of documents in accordance with the Protocol is not practicable, the Receiver is at liberty to serve or distribute this Order, any other materials and orders in these proceedings, any notices or other correspondence, by forwarding true copies thereof by prepaid ordinary mail, courier, personal delivery, electronic or facsimile transmission to the Debtor’s creditors or other interested parties and their advisors at their respective addresses as last shown on the records of the Debtor and that any such service or distribution by courier, personal delivery or facsimile transmission shall be deemed to be received on the next business day following the date of forwarding thereof, or if sent by ordinary mail, on the third business day after mailing. For greater certainty, any such distribution or service shall be deemed to be in satisfaction of a legal or juridical obligation, and notice requirements within the meaning of clause 3(c) of the Electronic Commerce Protection Regulations, Reg. 81000-2-175 (SOR/DORS).

GENERAL

24. THIS COURT ORDERS that the Receiver may from time to time apply to this Court for advice and directions in the discharge of its powers and duties hereunder.

25. THIS COURT ORDERS that nothing in this Order shall:

(a) prevent the Receiver from acting as a trustee in bankruptcy of the Debtor;

MT DOCS 1857679719390624 429 - 10 -

26. THIS COURT ORDERS that nothing in this Order shall affect the Debtor’s ability to perform its obligations under the Construction Contract or alter, amend or otherwise affect the liability of the Surety to any Person pursuant to Performance Bond No. 6342957 (the “Performance Bond”), Labour and Materials Payment Bond No. 6342957 or Demand Bond No. 6342958 (collectively, the “Contractor Bonds”) issued by the Surety.

COST TO COMPLETE

MT DOCS 1857679719390624 430 - 11 - in this paragraph shall constitute an application by the Disputing Recipient to have the amount of the Cost to Complete Estimate determined pursuant to the procedure provided in this Order.

AID AND RECOGNITION

34. 28. THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal, regulatory or administrative body having jurisdiction in Canada or in the United States to give effect to this Order and to assist the Receiver and its agents in carrying out the terms of this Order. All courts, tribunals, regulatory and administrative bodies are hereby respectfully requested to make such orders and to provide such assistance to the Receiver, as an officer of this Court, as may be necessary or desirable to give effect to this Order or to assist the Receiver and its agents in carrying out the terms of this Order.

35. 29. THIS COURT ORDERS that the Receiver be at liberty and is hereby authorized and empowered to apply to any court, tribunal, regulatory or administrative body, wherever located, for the recognition of this Order and for assistance in carrying out the terms of this Order, and

MT DOCS 1857679719390624 431 - 12 - that the Receiver is authorized and empowered to act as a representative in respect of the within proceedings for the purpose of having these proceedings recognized in a jurisdiction outside Canada.

36. 30. THIS COURT ORDERS that the Applicant shall have its costs of this application, up to and including entry and service of this Order, provided for by the terms of the Applicant’s security or, if not so provided by the Applicant’s security, then on a substantial indemnity basis to be paid from the Debtor’s estate with such priority and at such time as this Court may determine.

37. 31. THIS COURT ORDERS that any interested party may apply to this Court to vary or amend this Order on not less than seven (7) days’ notice to the Receiver and to any other party likely to be affected by the order sought or upon such other notice, if any, as this Court may order.

______

MT DOCS 1857679719390624 432

SCHEDULE “A”

RECEIVER CERTIFICATE

CERTIFICATE NO. ______

AMOUNT $______

4. All sums payable in respect of principal and interest under this certificate are payable at the main office of the Lender at Toronto, Ontario.

MT DOCS 1857679719390624 433 - 2 - to any person other than the holder of this certificate without the prior written consent of the holder of this certificate.

6. The charge securing this certificate shall operate so as to permit the Receiver to deal with the Property as authorized by the Order and as authorized by any further or other order of the Court.

7. The Receiver does not undertake, and it is not under any personal liability, to pay any sum in respect of which it may issue certificates under the terms of the Order.

DATED the _____ day of ______, 20__.

ALVAREZ & MARSAL CANADA INC., solely in its capacity as Receiver of the Property, and not in its personal or corporate capacity

Per: Name: Title:

MT DOCS 1857679719390624 IN THE MATTER OF THE RECEIVERSHIP OF 2423402 ONTARIO INC. Court File No. CV-18-610236-00CL

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

Proceeding commenced at Toronto

MOTION RECORD (Motion for Relief re Appointment Order)

McCarthy Tétrault LLP Suite 5300, TD Bank Tower Toronto Dominion Centre 66 Wellington Street West Toronto, ON M5K 1E6 Fax: 416- 868-0673

Heather L. Meredith LSO#: 48354R Tel: 416-601-8342 Email: [email protected]

Geoff R. Hall LSO#: 34701O Tel: 416-601-7856 Email: [email protected]

Trevor Courtis LSO#: 67715A Tel: 416-601-7643 Email: [email protected]

Lawyers for the Applicant, Bank of Montreal 19726686