ontario superior court of justice (commercial list) b … · b. gottardo construction ltd. and b....

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Court File No. CV-15-11054-00CL

ONTARIO

SUPERIOR COURT OF JUSTICE

(COMMERCIAL LIST)

B E T W E E N:

THE TORONTO-DOMINION BANK

Applicant

- and -

B. GOTTARDO CONSTRUCTION LTD. AND

B. GOTTARDO SITE SERVICING LIMITED

Respondents

APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND

INSOLVENCY ACT, R.S.C 1985, c. B-3 AS AMENDED AND SECTION 101 OF THE

COURTS OF JUSTICE ACT, R.S.O 1990, c. C. 43, AS AMENDED

MOTION RECORD

(Approval of Settlement – Returnable June 1, 2018)

May 28, 2018 CHAITONS LLP

Barristers and Solicitors

5000 Yonge Street, 10th Floor

Toronto, ON M2N 7E9

Harvey Chaiton (LSUC # 21592F)

Tel: (416) 218-1129

Fax: (416) 218-1849

E-mail: [email protected]

Maya Poliak (LSUC # 54100A)

Tel: (416) 218-1161

Fax: (416) 218-1844


Lawyers for BDO Canada Limited,

Court-appointed Receiver

TO: THE SERVICE LIST

mailto:[email protected]


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SERVICE LIST

(as of May 27, 2017)

TO: AIRD & BERLIS

Brookfield Place

181 Bay Street, Suite 1800

Toronto, ON M5J 2T9

D. Robb English

Tel: (416) 865-4748

Fax: (416) 863-1515

Email: [email protected]

Sam Babe

Tel: (416) 865-7718

Fax: (416) 863-1515


Lawyers for The Toronto-Dominion Bank

TO: BDO CANADA LIMITED

123 Front Street, Suite 1100

Toronto, ON M5J 2M2

Josie Parisi

Tel: (416) 369-6031


Court-Appointed Receiver of B. Gottardo Construction Ltd. and B. Gottardo Site

Servicing Limited

TO: CHAITONS LLP


Toronto, ON M2N 7E9

Harvey Chaiton

Tel: (416)-218-1123

Fax: (416) 218-1849


Lawyers for BDO Canada Limited

Maya Poliak

LSUC No. 54100A

Tel: (416) 218-1161

Fax: (416) 218-1844







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TO: TIBOLLO & ASSOCIATES PROFESSIONAL CORPORATION

11 Direcgtor Court, Suite 201

Woodbridge, ON L4L 4S5

Michael Tibollo

Tel: (905) 850-4500


Bhupinder Nagra


Lawyers for B. Gottardo Construction Ltd. and B. Gottardo Site Servicing Limited

TO: WATSON JACOBS MCCREARY LLP

509-4711 Yonge Street

North York, ON M2N 6K8

Michael C.P. McCreary

Tel: (416) 226-0055

Fax: (416) 226-3602


Lawyers for Teamsters Local 231

TO: HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF

ONTARIO AS REPRESENTED BY THE MINISTRY OF FINANCE

Legal Services Branch

777 Bay Street, 11th Floor

Toronto, ON M5G 2C8

Kevin O’Hara

Tel: (416) 327-8463

Fax: (416) 325-1460


TO: DEPARTMENT OF JUSTICE

The Exchange Tower

130 King St. West, Suite 3400

Toronto, ON M5X 1K6

Diane Winters

Tel: (416) 973-3172

Fax: (416) 973-0810







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TO: AZEVEDO & NELSON

892 College Street

Toronto, ON M6H 1A4

William Ribeiro

Tel: (416) 533-7133

Fax: (416) 533-3114


Lawyers for Triumph Aluminum and Sheet Metal Inc.

TO: SHIBLEY RIGHTON LLP

250 University Avenue, Suite 700

Toronto, ON M5H 3ES

Thomas McRae

Tel: (416) 214-5206

Fax: (416) 214-5400


Lawyers for Gilbert Steel Limited

TO: ENVISION LANDSCAPING INC.

A Division of JMJ Construction Inc.

42 Village Centre Place, Suite 200

Mississauga, Ontario L4Z 1V9

Jasmine M. Ghosn, Legal Counsel

Tel: 416-985-0362

Fax: 905-501-9529

[email protected]

Lawyers for Envision Landscaping Inc.

TO: BATTISTON & ASSOCIATES

1013 Wilson Avenue, Suite 202

Toronto, ON M3K 1G1

Eddy Battiston

Tel: (416) 630-7151

Fax: (416) 630-7472


Lawyers for Deep Foundations Contractors Inc.

TO: TEPLITSKY, COLSON LLP

70 Bond Street, Suite 200





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Toronto, ON M5B 1X3

James M. Wortzman

Tel: (416) 365-9320

Fax: (416) 365-0695


Karey Dhirani

Tel: (416) 865-5343

Fax: (416) 365-0695


Lawyers for Sundial Homes (Sharon) Limited

TO: SIMPSON WIGLE LLP

1 Hunter Street East, Suite 200

Hamilton, ON L8N 3R1

Derek A. Schmuck

Tel: (905) 528-8411 x 353

Fax: (905) 528-9008


Lawyers for Armtec Limited Partnership, by its general partner, Armtec Holdings

Ltd.




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TO: NORTON ROSE FULBRIGHT

45 O’Connor Street, Suite 1500

Ottawa, ON K1P 1A4

Dan J. Leduc

Tel: (613) 780-1536

Fax: (613) 230-5459


Lawyers for Guild Electric Limited

TO: BATTISTON AND ASSOCIATES

1013 Wilson Avenue, Suite 202

Toronto, ON M3K 1G1

Flavio Battiston

Tel: (416) 630-7151

Fax: (416) 630-7472

Email: [email protected] Harold Rosenberg

Tel: (416) 630-7151 Ext. 237

Fax: (416) 630-7472


Lawyers for Gage Aluminum & Glass Ltd.

TO: BORDEN LADNER GERVAIS LLP

Bay Adelaide Centre, East Tower

22 Adelaide St. West

Toronto, ON M5H 4E3

James MacLellan

Tel: (416) 367-6592

Fax: (416) 367-6749


Lawyers for Travelers Insurance Company of Canada and Intact Insurance

Company

TO: VOLPE, NORFI A.J.

901-3700 Steeles Avenue West

Woodbridge, ON L4L 8K8

Tel: (905) 850-2468 X 212

Fax: (905) 293-3503







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Lawyers for Omico Mechanical Limited

TO: GOWLINGS

1 First Canadian Place

100 King St. West, Suite 1600

Toronto, ON M5X 1G5

Calvin Ho

Tel: (416) 862-5788

Fax: (416) 862-7661


Lawyers for VFS Canada Inc.

TO: CASSELS BROCK & BLACKWELL

2100 Scotia Plaza

40 King St. West

Toronto, ON M5H 3C2

Todd Robinson

Tel: (416) 860-6506

Fax: (416) 642-7160


Matthew Alter

Tel: (416) 860-6764

Fax: (416) 640-3083


David Ward

Tel: (416) 869-5960

Fax: (416) 640-3154


Lawyers for the Corporation of the City of Mississauga





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TO: LIPMAN, ZENER & WAXMAN LLP

1220 Eglinton Avenue West

Toronto, ON M6C 2E3

Anthony J. O’Brien


Jason D. Spetter


Tel: (416) 789-0652

Fax: (416) 789-9015

Lawyers for Business Development Bank of Canada

TO: BORDEN LADNER GERVAIS

Bay Adelaide Centre, East Tower

22 Adelaide St. West

Toronto, ON M5H 4E3

Roger Jaipargas

Tel: (416) 367-6266

Fax: (416) 367-6749


Denise Bambrough

Tel: (416) 367-6008

Fax: (416) 367-6749


Lawyers for Aviva Insurance Company of Canada

TO: GOLDMAN, SLOAN, NASH LLP

480 University Avenue

Toronto, ON M5G 1V2

Stanley Naftolin

Tel: (416) 597-3388


Brendan Bissell

Tel: (416) 597-6489


Lawyers for Crowle Fittings & Supply Ltd.







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TO: LANDY MARR KATS LLP

Suite 900

2 Sheppard Avenue East

Toronto, ON M2N 5Y7

David Fogel

Tel: (416) 221-9343 Ext 244

Fax: (416) 221-8928


Lawyers for ASN Inc.

TO: GLAHOLT LLP

141 Adelaide St. West, Suite 800

Toronto, ON M5H 3L5

John Margie

Tel: (416) 368-8280 Ext 211

Fax: (416) 368-3467


Lawyers for Lafarge Canada Inc.

TO: DUNCAN, LINTON LLP

P.O. Box 457

45 Erb Street East

Waterloo, ON N2J 4B5

Michael A. van Bodegom

Tel: (519) 886-3340

Fax: (519) 886-8651


Lawyers for Nieltech Services Limited

TO: CHRISTOPHER A. MOORE

PROFESSIONAL CORPORATION

63 Robert Street

Ottawa, ON K2P 1G5

Tel: (613) 230-9448

Fax: (613) 230-3624


Lawyers for Rideau Leasing Corp.





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TO: PAGE, MARTIN LLP

150 York Street, Suite 800

Toronto, ON M5H 3S5

Kenneth H. Page

Tel: (416) 595-9935 x 340

Fax: (416) 595-1731


Lawyers for B & L Gottardo Brothers

TO: FRED TAYAR & ASSOCIATES

Professional Corporation

65 Queen St. West, Suite 1200

Toronto, ON M5H 2M5

Fred Tayar

Tel: (416) 363-1800 x200

Fax: (416) 363-3356


Lawyers for Bruno Gottardo, David Gottardo, Kleinridge Investments Inc.,

615146 Ontario Limited, 2191673 Ontario Limited,

Falconridge Corporation and 2303663 Ontario Ltd.

TO: DICENZO & ASSOCIATES

41-1070 Stone Church Rd. E.

Hamilton, Ontario L8W 3K8

Allan Buist

Tel: (416) 574-3300

Fax: (416) 574-1766


Lawyers for 1631057 Ontario Inc.

TO: SIMPSON WIGLE LLP

1 Hunter Street East, Suite 200

Hamilton, ON L8N 3R1

Derek A. Schmuck

Tel: (905) 528-8411 x 353

Fax: (905) 528-9008


Lawyers for Direct Equipment Ltd.





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TO: PALLETT VALO LLP

77 City Centre Drive, Suite 300

Mississauga, ON L5B 1M5

Maria Ruberto

Tel: (905) 273-3022 Ext. 206

Fax: (905) 273-6920


Paul Guaragna


Lawyers for Toromont Industries Ltd. carrying on business as Battlefield

Equipment Rentals

TO: NORTON ROSE FULBRIGHT

45 O’Connor Street, Suite 1500

Ottawa, ON K1P 1A4

Dan J. Leduc

Tel: (613) 780-1536

Fax: (613) 230-5459


Lawyers for C & R Air Systems Inc.

TO: McNEELY & KELLY

197 Bond Street East

Oshawa, ON L1G 1B4

William F. Kelly

Tel: (905) 579-1121 Ext. 28

Fax: (905) 579-0214


Lawyers for Furfari Paving

TO: WOLFGANG J. PAZULLA

202-16 Four Seasons Pl.

Etobicoke, ON M9B 6E5

Tel: (416) 622-6669

Fax: (416) 622-1440


Lawyers for Brascon Stainless Steel Fabricators Inc.






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TO: TEPLITSKY, COLSON LLP

70 Bond Street, Suite 200

Toronto, ON M5B 1X3

Jennifer Lake

Tel: (416) 865-5331

Fax: (416) 365-7702


Stephen Brunswick

Tel: (416) 865-5303

Fax: (416) 365-7702


Lawyers for Ringley Construction Ltd.

TO: MILLER THOMSON LLP

300-295 Hagey Blvd.

Waterloo, ON N2L 6R5

Timothy McGurrin

Tel: (519) 593-3221


Jack Masterman

Tel: (519) 593-2428


Lawyers for M-CON





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ONTARIO


(COMMERCIAL LIST)

B E T W E E N:


Applicant

- and -



Respondents




INDEX

TAB

Notice of Motion dated May 28, 2018 1

Ninth Report of the Receiver dated May 27, 2018 2

Appendices:

Receivership Order dated August 10, 2015 A

Bankruptcy Orders B

City’s Statement of Claim C

Construction’s Statement of Defence D

City’s Reply and Defence to Counterclaim E

Statement of Claim in Lien Action F

City’s Statement of Defence G

Minutes of Settlement H

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ONTARIO


(COMMERCIAL LIST)

B E T W E E N:


Applicant

- and -



Respondents




NOTICE OF MOTION

(Approval of Settlement – Returnable June 1, 2018)

BDO CANADA LIMITED (“BDO”), in its capacity as Court-appointed receiver (the

“Receiver”) of the property, assets and undertakings of B. Gottardo Construction Ltd.

(“Construction”) and B. Gottardo Site Servicing Limited (“Servicing”, and together with

Construction, the “Debtors”) will make a motion to a Judge of the Commercial List on Friday,

June 1, 2018 at 10:00 a.m., or as soon after that time as the motion can be heard, at 330 University

Avenue, Toronto, Ontario.

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

THE MOTION IS FOR:

(a) an order:

(i) validating the service of the Receiver’s Notice of Motion and Motion

Record;

(ii) approving the Minutes of Settlement between the City of Mississauga and

the Receiver settling all claims, counterclaims and crossclaims between the

parties concerning the Mississauga Bus Rapid Transit project (the

“Project”);

(iii) approving the Ninth Report of the Receiver dated May 27, 2018 (the “Ninth

Report”) and the conduct and activities of the Receiver described therein;

and

(b) such further and other relief as counsel may request and this Honourable Court may

permit.

THE GROUNDS FOR THE MOTION ARE:

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1. On or about September 9, 2010, following a competitive tender process, by written

agreement dated September 9, 2010 (the “Contract”), the City retained Construction to provide

construction services for the Project.

2. On or about February 18, 2015, the City terminated the Contract and subsequently

commenced an action against Construction for damages in the amount of approximately $10

million (the “City Action”).

3. Construction defended the City Action and counterclaimed against the City for payment of

the balance of the Contract amount and damages in the aggregate amount of approximately $25

million.

4. On April 1, 2015, Construction preserved a claim for lien against the Project and on May

11, 2015 commenced an action against the City and others claiming payment of the approximate

amount of $10 million for unpaid work or services and a further amount of approximately $15

million against the City only for damages (the “Lien Action”).

5. The City defended the Lien Action.

6. On August 10, 2015, the Receiver was appointed pursuant to the Order of Justice

Newbould.

7. The Toronto-Dominion Bank (the “TD Bank”), which is likely the only creditor with an

economic interest in any recovery made by the Receiver in the counterclaim or Lien Action, objects

to the Receiver using the proceeds of its collateral to fund the continuation of the actions.

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8. The Receiver sought but was unable to obtain third party funding to continue the

counterclaim and Lien Action to their conclusion.

9. David Gottardo made an offer to acquire the Receiver’s interest in the actions, but such

offer was not for an acceptable amount or on terms satisfactory to the Receiver and the TD Bank.

10. The City and Receiver have negotiated Minutes of Settlement to settle all claims,

counterclaims and crossclaims in the actions, which is conditional on approval by City Council

and this Court. City Council has approved the Minutes of Settlement.

11. TD Bank supports the Receiver entering into the Minutes of Settlement.

12. The terms of the Minutes of Settlement represent a fair and reasonable resolution of the

claims between the parties in the circumstances.

13. Such 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:

1. The Ninth Report and the Appendices annexed thereto; and

2. such further and other material as counsel may advise and this Honourable Court may

permit.

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May 27, 2018 CHAITONS LLP

Barristers and Solicitors


Toronto, ON M2N 7E9

Harvey Chaiton (LSUC # 21592F)

Tel: (416) 218-1129

Fax: (416) 218-1849



Tel: (416) 218-1161

Fax: (416) 218-1844




TO: THE SERVICE LIST

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ONTARIO SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

B E T W E E N:

THE TORONTO DOMINION BANK Applicant

- and -

B. GOTTARDO CONSTRUCTION LTD. AND B. GOTTARDO SITE SERVICING LIMITED

Respondent

APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C 1985, c. B-3 AS AMENDED AND SECTION 101 OF THE COURTS OF JUSTICE

ACT, R.S.O 1990, c. C. 43, AS AMENDED

NINTH REPORT OF BDO CANADA LIMITED, IN ITS CAPACITY

AS COURT APPOINTED RECEIVER

May 27, 2018

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TABLE OF CONTENTS

INTRODUCTION AND PURPOSE OF THIS REPORT ....................................... 3

DISCLAIMER ................................................................................. 4

DISPUTE WITH THE CITY .................................................................. 4

SETTLEMENT WITH THE CITY ............................................................. 7

SUMMARY AND RECOMMENDATIONS ..................................................... 9

APPENDICES A Receivership Order dated August 10, 2015 B Bankruptcy Orders C City’s Statement of Claim D Construction’s Statement of Defence E City’s Reply and Defence to Counterclaim F Statement of Claim in Lien Action G City’s Statement of Defence H Minutes of Settlement

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INTRODUCTION AND PURPOSE OF THIS REPORT

1. B. Gottardo Construction Ltd. (“Construction”) and B. Gottardo Site Servicing

Limited (“Site Servicing”) (collectively, the “Debtors”) are corporations incorporated

pursuant to the Business Corporations Act (Ontario). The Debtors are privately owned

directly or indirectly by members of the Gottardo family. Bruno Gottardo was the

founder and president of Construction and Site Servicing (“Bruno”). David Gottardo

(“David”), Bruno’s son, was the general manager of the Debtors.

2. The Debtors provided large scale construction services, frequently being

infrastructure projects for municipalities and other government entities as well as site

servicing for developers.

3. On application by the Toronto Dominion Bank (the “TD Bank”), the Debtors’

senior secured lender, BDO Canada Limited was appointed as the Receiver (the

“Receiver”) without security, of all of the assets, undertakings and properties of the

Debtors, pursuant to the order of Justice Newbould made August 10, 2015 (the

“Receivership Order”). Attached hereto as Appendix “A” is a copy of the Receivership

Order.

4. On August 28, 2015, the Debtors were adjudged bankrupt and BDO Canada

Limited was appointed as trustee in bankruptcy. Copies of the bankruptcy orders are

attached as Appendix “B”.

5. All court materials filed, including previous reports, and court orders and

endorsements issued in these proceedings are available on the Receiver’s website at

http://extranets.bdo.ca/BGottardo.

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http://extranets.bdo.ca/BGottardo

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6. This report (the “Ninth Report”) is prepared in support of the Receiver’s motion

for an order approving the Minutes of Settlement between the Corporation of the City

of Mississauga (the “City”) and the Receiver for the settlement of all claims,

counterclaims and crossclaims brought by the City, Construction and the Receiver

against each other in the settled Actions (as defined below).

DISCLAIMER

7. Except as otherwise described in this Ninth Report, the Receiver has not audited,

reviewed or otherwise attempted to verify the accuracy or completeness of theLi

information in a manner that would wholly or partially comply with Canadian Auditing

Standards pursuant to the Chartered Professional Accountants of Canada Handbook.

8. Unless otherwise stated, all monetary amounts contained in this Ninth Report

are expressed in Canadian dollars.

DISPUTE WITH THE CITY

9. In or around 2010, the City undertook a transit construction project referred to

as the Mississauga Bus Rapid Transit Construction Tender – Segment 1 Hurontario Street

to Fieldgate Drive Civil Works and Stations, Procurement No. FA. 49.193-10 (the

“Project”).

10. On or about September 9, 2010, following a competitive tender process, the City

retained Construction by written agreement dated September 9, 2010 with respect to

the provision by Construction of construction services to the Project as general

contractor (the “Contract”). The value of the Contract was in excess of $100 million.

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11. Aviva Insurance Company of Canada (“Aviva”) issued a performance bond with

respect to the Contract as security for Construction’s performance of the Contract.

12. Construction engaged various subcontractors and suppliers to supply certain

portions of services and materials required pursuant to the Contract (the

“Subcontractors”).

13. In or around February 18, 2015, the City terminated the Contract and

subsequently commenced an action against Construction in the Ontario Superior Court

of Justice at Brampton (the “City Action”), in which the City sought damages in the

amount of $10 million for costs, losses and expenses allegedly suffered and incurred as

a result of Construction’s alleged delays in completing the Project, incomplete and

deficient work, and other alleged defaults by Construction under the Contract. A copy

of the City’s Statement of Claim is attached hereto as Appendix “C”.

14. Construction defended the City Action and counterclaimed against the City in

the City Action for payment of the balance of the Contract amount and damages in the

aggregate amount of approximately $25 million for alleged breaches of the Contract by

the City, negligence and unjust enrichment (the “Counterclaim”). A copy of

Construction’s Statement of Defence and Counterclaim is attached hereto as Appendix

“D”.

15. The City defended the Counterclaim. A copy of the City’s Reply and Defence to

Counterclaim is attached hereto as Appendix “E”.

16. On April 1, 2015, Construction preserved a claim for lien against the Project

under the Construction Lien Act and on May 11, 2015 commenced an action against the

City and others in the Ontario Superior Court of Justice at Brampton (the “Lien Action”)

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claiming payment of the approximate amount of $10 million for unpaid work or services

provided on the Project and a further amount of approximately $15 million against the

City only for damages. A copy of the Statement of Claim in the Lien Action is attached

as Appendix “F”.

17. The City defended the Lien Action. A copy of the Statement of Defence is

attached as Appendix “G”.

18. In addition to the City Action, the Counterclaim and the Lien Action, various

Subcontractors to the Project preserved and perfected lien claims against the Project

(the “Lien Claimants”) for holdback and other unpaid amounts.

19. Following its appointment, the Receiver obtained orders authorizing it to

continue the Counterclaim and the Lien Action. Lien Claimants also sought and obtained

leave to continue their actions in order to access holdback amounts. The Receiver is

currently a party to two lien actions; one commenced by Omico Mechanical Limited (the

“Omico Action”) and another by Gage Aluminum & Glass Ltd. (the “Gage Action”).

20. The City and Omico have now reached the settlement of the Omico Action and

discussions are ongoing between the City and Gage to settle the Gage Action.

21. The Receiver and its legal counsel met with the City and/or its lawyers on

multiple occasions in an effort to settle the City Action, the Counterclaim and the Lien

Action (collectively, the “Actions”). During these meetings, the City maintained its

position that its damages for breach of the Contract by Construction were substantially

higher than any award of damages that the Receiver could be awarded under the

Contract. The City also advised the Receiver that it was determined to proceed to trial,

if necessary.

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22. The Receiver obtained an estimate of legal costs from its construction lien

lawyers at Goodmans LLP to bring these Actions to conclusion. TD Bank, which continues

to be owed in excess of $12 million despite interim distributions approved by this Court,

is likely the sole party with an economic interest in any proceeds recovered by the

Receiver in the Counterclaim and the Lien Action. The Bank has advised the Receiver

that it is not prepared to fund the continuation of these Actions with the proceeds of

its collateral.

23. The Receiver has sought but was not able to obtain third party litigation funding

for the continuation of the Actions.

24. In January 2018, the Receiver again met with representatives of the City to

continue settlement discussions. Although a settlement agreement was not reached at

that meeting, shortly thereafter, the City made a settlement offer to the Receiver.

25. Prior to accepting the City’s offer to settle, the Receiver approached David’s

counsel to inquire if David has an interest in acquiring Construction’s rights in the

Actions. Although David made an offer to purchase Construction’s rights, such offer was

inadequate as to amount and on terms not acceptable to the Receiver or TD Bank.

SETTLEMENT WITH THE CITY

26. The City and the Receiver, following consultation with TD Bank, have entered

into Minutes of Settlement to settle the Actions on the following terms:

(a) payment by the City to the Receiver of $150,000 by way of a partial

reimbursement of the Receiver’s costs incurred in connection with the

Actions;

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(b) the Actions will be dismissed on a without cost basis; and

(c) the City and the Receiver will execute a full and final mutual release.

A copy of the Minutes of Settlement is attached hereto as Appendix “H”.

27. The Minutes of Settlement are subject to approval by City Council and this Court.

The Receiver was advised by the City’s lawyers that City Council has approved the

Minutes of Settlement.

28. The Receiver is of the view that the settlement contemplated by the Minutes of

Settlement is fair and reasonable for the following reasons:

(a) TD Bank objects to the Receiver using the proceeds of its collateral to

continue to fund the Actions;

(b) The Receiver sought but was unable to obtain third party litigation funding

to enable it to continue the Actions;

(c) Pursuant to the Minutes of Settlement, the Receiver will be able to recover

a portion of the costs incurred by the Receiver in connection with the

Actions;

(d) The Minutes of Settlement will provide a cost effective resolution of the

Actions; and

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(e) TD Bank which is the only party with an economic interest in the proceeds

from the Actions likely consents to the settlement pursuant to the Minutes

of Settlement and supports the relief sought by the Receiver.

29. As a result of the foregoing, the Receiver recommends that the Court approve

the Minutes of Settlement.

SUMMARY AND RECOMMENDATIONS

30. The Receiver respectfully requests an order approving the Minutes of Settlement.

All of which is respectfully submitted this 27th day of May, 2018.

BDO CANADA LIMITED Court Appointed Receiver of B. Gottardo Construction Ltd. and B. Gottardo Site Servicing Limited

Per:

Name: Josie Parisi, CPA, CA, CBV, CIRP, LIT Title: Senior Vice President

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Court File No. CV-13-115317-00

ONTARIO SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

IN THE MATTER OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED

B E T W E E N:


Applicant

- and -

B. GOTTARDO CONSTRUCTION LTD. and B. GOTTARDO SITE SERVICES LIMITED

Respondents

APPLICATION UNDER SUBSECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED AND

SECTION 101 OF THE COURTS OF JUSTICE ACT, R.S.O. 1990, c. C-43, AS AMENDED

MINUTES OF SETTLEMENT (Effective March 23, 2018)

WHEREAS the Corporation of the City of Mississauga (the “City”) undertook a transit

construction project referred to as the Mississauga Bus Rapid Transit Construction Tender –

Segment 1 Hurontario Street to Fieldgate Drive Civil Works and Stations, Procurement No.

FA.49.193-10 (the “Project”);

AND WHEREAS on or about September 9, 2010, following a competitive tender, the City

retained B. Gottardo Construction Ltd. (“Gottardo”) by written agreement dated September 9,

2010 with respect to the provision by Gottardo of construction services to the Project as general

contractor (the “Contract”);

AND WHEREAS Gottardo engaged various subcontractors and suppliers to supply

certain portions of the services and materials required pursuant to the Contract, including Omico

Mechanical Limited (“Omico”) and Gage Aluminum & Glass Ltd. (“Gage”);

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AND WHEREAS on March 12, 2015, the City commenced an action against Gottardo in

the Ontario Superior Court of Justice in Court File No. CV-15-1225-00, commenced at Brampton

(the “City Action”), in which the City seeks damages in the amount of $10 million for costs,

losses and expenses allegedly incurred as a result of Gottardo’s alleged delays in the Project,

incomplete and deficient work, and other alleged defaults by Gottardo under the Contract;

AND WHEREAS, on May 19, 2015, Gottardo commenced a counterclaim against the City

in the City Action, in which Gottardo sought damages in the aggregate amount of

$25,876,970.65, plus HST, for alleged breaches of the Contract, negligence and unjust

enrichment;

AND WHEREAS, on April 1, 2015, Gottardo preserved a lien against the Project by

delivery of a written claim for lien dated April 1, 2015, pursuant to section 34 of the Construction

Lien Act (the “Act”) and by registration of a claim for lien as instrument number PR2693435 in the

Land Registry Office for The Regional Municipality of Peel (LRO #43) against the Project lands

and premises described therein (the “Gottardo Lien”);

AND WHEREAS, on May 11, 2015, Gottardo purported to perfect the Gottardo Lien by

commencing an action pursuant to the Act against the City, Her Majesty the Queen in right of

Ontario (“HMQ”) and The Regional Municipality of Peel (“Peel”) in Ontario Superior Court File

Number CV-15-2199-00, commenced at Brampton (the “Gottardo Action”), in which Gottardo

seeks payment and damages for costs, losses and expenses incurred under and in respect of the

Contract, and, on May 12, 2015, registering a certificate of action as instrument number

PR2710796 against the Project lands and premises;

AND WHEREAS various of Gottardo’s subcontractors and suppliers also purported to

preserve and perfect lien claims, in respect of which the City remains named as a defendant in

the following lien actions:

(a) an action by Omico against Gottardo, the City, HMQ and Peel in Ontario Superior

Court File Number CV-15-1508-00, commenced at Brampton (the “Omico

Action”); and

(b) an action by Gage against Gottardo, the City, HMQ and Peel in Ontario Superior

Court File Number CV-15-3564-00, commenced at Brampton (the “Gage Action”);

AND WHEREAS, on August 10, 2015, BDO Canada Limitedwas appointed as receiver

without security, of all of the assets, undertakings and properties of Gottardo (the “Receiver”);

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AND WHEREAS, on August 28, 2015, Gottardo was adjudged bankrupt and BDO

Canada Limited was appointed as trustee in bankruptcy of the estate of Gottardo;

AND WHEREAS orders to continue the City Action, the Gottardo Action, the Omico Action

and the Gage Action have been obtained as follows:

(a) on March 22, 2016, the Receiver obtained an order to continue i the Gottardo Lien

Action;

(b) on March 22, 2016, the Receiver obtained an order to continue its counterclaim in

the City Action;

(b) on December 1, 2016, Omico obtained an order to continue in the Omico Action;

and

(c) on December 7, 2016, Gage obtained an order to continue in the Gage Action;

AND WHEREAS the City and the Receiver have agreed to settle all claims, counterclaims

and cross-claims brought against each other in the City Action, the Gottardo Action, the Omico

Action, and the Gage Action (collectively, the “Settled Actions”), and all other disputes against

each other relating to, arising from, or as a consequence of the Project and the Contract, subject

to approval of City Council and the court.

NOW THEREFORE, in consideration of payment by the City to the Receiver as provided

herein, the terms and covenants set out herein, and other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, the City and the Receiver agree as

follows:

1. The preceding recitals are true, accurate and properly reflect the circumstances

surrounding the settlement outlined herein, and form part of these Minutes of Settlement.

2. Subject to the required approvals outlined in paragraph 4 below, the City shall pay to the

Receiver the all-inclusive sum of $150,000.00 as reimbursement for a portion of the legal costs

incurred by Gottardo and/or the Receiver in respect of the Settled Actions, which, for greater

certainty, includes without limitation all applicable taxes, interest, costs and disbursements (the

“Settlement Amount”), in full and final settlement of all claims, counterclaims and cross-claims

brought by the City, Gottardo and the Receiver against each other in the Settled Actions and all

other disputes against each other relating to, arising from, or as a consequence of the Project and

the Contract.

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3. The Settlement Amount shall be paid to the Receiver’s lawyers, Chaitons LLP, in trust,

following approval of this settlement, and the terms hereof, in accordance with paragraph 4

below and shall thereafter be held in escrow until the settlement terms described in paragraphs 5,

6, 7 and 8, below, have been satisfied.

4. It is expressly understood and agreed that this settlement, and the terms hereof, are

subject to both approval by City Council and approval of the court, and shall not be binding upon

the City or the Receiver until and unless both such approvals are successfully obtained. It is

further understood and agreed that court approval shall not be sought pending City Council

approval first being provided. City Council approval will be sought at its next scheduled meeting

on April 25, 2018. The Receiver and the City will cooperate in obtaining court approval in the

event that any person opposes such approval or otherwise challenges the settlement.

5. The City and the Receiver will consent to an order or orders, to be taken out by the City

forthwith at its sole expense with copies of the issued and entered order(s) provided to the

Receiver’s lawyers, Goodmans LLP and Chaitons LLP, as follows:

a. City Action: an order dismissing the City Action, including Gottardo’s

counterclaim, on a without costs basis;

b. Gottardo Action: an order dismissing the Gottardo Action as against the City and

all other defendants, discharging the Gottardo Lien and vacating the registrations

of the Gottardo Lien and the related certificate of action, without costs;

c. Omico Action: an order dismissing the cross-claims between Gottardo and the

City in the Omico Action, without costs; and

d. Gage Action: an order dismissing the cross-claims between Gottardo and the City

in the Gage Action, without costs.

6. Following issuance and entering of the order(s), the City will be responsible for registering

forthwith the order discharging the Gottardo Lien against title to the Project lands.

7. The City and the Receiver will execute a full and final mutual release in the form attached

hereto as Schedule “A” (the “Mutual Release”), releasing each other from, inter alia, any and all

claims, actions, causes of action, suits, proceedings, liabilities, debts, damages, sums of money,

costs, obligations, duties, dues, accounts, interests, bonds, covenants, contracts, liens, impacts,

loss of profit, overhead and extended duration costs, loss, injury, whether at law or in equity, of

whatever nature or kind, which they had, now have or hereafter may have against each other,

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however and whenever arising out of, in relation to or as a consequence of the Settled Actions,

the Contract and the Project, including without limitation compelling any accounting from the City

and any exercise of any of the remedies of Gottardo or the similar powers of the Receiver, in

either its capacity as court-appointed receiver or its capacity as trustee in bankruptcy, as against

the City.

8. Each of the parties shall provide an executed copy of the Mutual Release to the other

party’s lawyers to be held in escrow until all of the terms and conditions of these Minutes of

Settlement have been satisfied.

9. For clarity, the parties understand, acknowledge and agree that, regardless of the timing

of the dismissal of their respective cross-claims in the Omico Action and Gage Action, they will

each have no further claims against one another in respect of the matters that have been

asserted or could reasonably be asserted in those actions, and each of the City and the Receiver

shall be solely responsible for their own respective defences in those actions, including the costs

thereof and any liability findings therein, and neither shall have any obligation to contribute or

indemnify or have any further claim of contribution or indemnity from one another in respect

thereof.

10. The parties hereto agree that they fully understand the terms of these Minutes of

Settlement, have received or have had the opportunity to receive independent legal advice prior

to executing these Minutes of Settlement, and voluntarily accept the consideration offered for the

purpose of making full and final compromise and settlement of all claims, demands and issues as

herein noted.

11. The parties hereto agree that these Minutes of Settlement may be executed in

counterparts, and delivered by facsimile transmission or by email in portable document format

(pdf) bearing the signature of the party, each of which shall be deemed to be an original and in

full force and effect, and all such counterparts taken together shall constitute one and the same

instrument notwithstanding the date of actual execution.

12. These Minutes of Settlement constitute the entire agreement between the parties

pertaining to the subject matter hereof. There are no representations, warranties, conditions,

other agreements or acknowledgments, whether direct or collateral, express or implied, that form

part of or affect this agreement other than as set forth herein. The agreement set out in these

Minutes of Settlement supersedes any prior contracts, negotiations, and discussions of the

parties in respect of the subject matter hereof.

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13. If any provision of these Minutes of Settlement is determined to be invalid or

unenforceable by a court of competent jurisdiction from which no further appeal lies or is taken,

that provision shall be deemed to be severed from these Minutes of Settlement and the remaining

provisions of these Minutes of Settlement shall not be affected thereby and shall remain valid and

enforceable.

14. These Minutes of Settlement shall be construed and interpreted in accordance with the

laws of the Province of Ontario and the laws of Canada applicable therein, and the parties hereto

irrevocably attorn to the exclusive jurisdiction of the Ontario Superior Court of Justice.

IN WITNESS WHEREOF each of the parties hereto has signed these Minutes of

Settlement effective as of the date noted on the first page hereof.

THE CORPORATION OF THE CITY OF MISSISSAUGA Per:

Title:

I have authority to bind the corporation.

BDO CANADA LIMITED, in its capacity as court appointed receiver of B. Gottardo Construction Ltd. and its capacity as trustee in bankruptcy of the estate of B. Gottardo Construction Ltd. Per:

Title:

I have authority to bind the corporation.

6807429

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Doc#4203289v1

THE TORONTO-DOMINION BANK - and - B. GOTTARDO CONSTRUCTION LTD. et al

Applicant Respondents

Court File No. CV15-11054-00CL

ONTARIO


(COMMERCIAL LIST)

Proceedings commenced at Toronto

MOTION RECORD

(Approval of Settlement returnable

June 1, 2018)

CHAITONS LLP


Toronto, ON M2N 7E9

Harvey Chaiton (LSUC #21592F)

Tel: (416) 218-1129

Fax: (416) 218-1849



Tel: (416) 218-1161

Fax: (416) 218-1844




156



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