Court File No.

: CV-21-00661268-00CL

ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST

B E T W E E N:

LINK 427 GENERAL PARTNERSHIP

Applicant

- and -

HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO as represented by the

MINISTER OF TRANSPORTATION as represented by ONTARIO INFRASTRUCTURE
AND LANDS CORPORATION and BTY GROUP CONSULTANCY INC. in its capacity
as Independent Certifier

Respondents

NOTICE OF APPLICATION

TO THE RESPONDENT(S)

A LEGAL PROCEEDING HAS BEEN COMMENCED by the Applicant(s). The claim made
by the Applicant(s) appears on the following pages.

THIS APPLICATION will come on for a hearing (choose one of the following)

In person
By telephone conference
By video conference

Before Justice Hainey of the Ontario Superior Court of Justice (Commercial List) on May 17,
2021 at 12:00 p.m. and heard by judicial video conference via Zoom at Toronto, Ontario, in
accordance with the changes to the Commercial List operations in light of the COVID-19
pandemic and the Notice to the Profession updated on April 22, 2020.

Please refer to the conference details attached as Schedule “A” hereto in order to attend the hearing
and advise Daniel Schwartz at [email protected] if you (i) intend to join the hearing and/or (ii)
oppose the relief sought.
 -2-

IF YOU WISH TO OPPOSE THIS APPLICATION, to receive notice of any step in the
application or to be served with any documents in the application you or an Ontario lawyer acting
for you must forthwith prepare a notice of appearance in Form 38A prescribed by the Rules of
Civil Procedure, serve it on the Applicant(s)’ lawyer or, where the Applicant(s) do not have a
lawyer, serve it on the Applicant(s), and file it, with proof of service, in this court office, and you
or your lawyer must appear at the hearing.

IF YOU WISH TO PRESENT AFFIDAVIT OR OTHER DOCUMENTARY EVIDENCE

TO THE COURT OR TO EXAMINE OR CROSS-EXAMINE WITNESSES ON THE
APPLICATION, you or your lawyer must, in addition to serving your notice of appearance, serve
a copy of the evidence on the Applicant(s)’ lawyer or, where the Applicant(s) do not have a lawyer,
serve it on the Applicant(s), and file it, with proof of service, in the court office where the
application is to be heard as soon as possible, but at least four days before the hearing.

IF YOU FAIL TO APPEAR AT THE HEARING, JUDGMENT MAY BE GIVEN IN YOUR

ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO OPPOSE
THIS APPLICATION BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE
AVAILABLE TO YOU BY CONTACTING A LOCAL LEGAL AID OFFICE.
Digitally signed by Maggie Sawka
DN: cn=Maggie Sawka, o=Ministry of the

Maggie Sawka Attorney General, ou=Superior Court of

Justice, [email protected],
Date 27 April 2021 Issued by c=CA
Date: 2021.04.27 15:21:39 -04'00'

Local Registrar

Address of 330 University Avenue, 9th Floor

court office: Toronto ON M5G 1R7

TO: HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO, as represented

by the Minister of Transportation, as represented by Ontario Infrastructure and
Lands Corporation
Ministry of the Attorney General – Crown Law Office
McMurtry-Scott Building
720 Bay Street, 11th Floor
Toronto, ON
M7A 2S9
[email protected]

AND TO: BTY GROUP CONSULTANCY INC.,

in its capacity as Independent Certifier
127 John Street
Toronto, ON
M5V 2E2
[email protected]
 -3-

APPLICATION

1. THE APPLICANT, Link 427 General Partnership (the “Applicant” or “Project Co”)
makes this Application for:

(a) An order regarding the Applicant’s rights under the Project Agreement dated March
7, 2017 in respect of the expansion of Highway 427 (the “Project Agreement”):

(i) A declaration that the Project Agreement’s requirements for achieving

Substantial Completion1 (as defined in the Project Agreement) have been
satisfied;

(ii) An order directing the Independent Certifier to issue to Project Co and

Contracting Authority (as defined below):

(1) the Substantial Completion Certificate, nunc pro tunc to March 24,
2021, and
(2) a Minor Deficiencies List in accordance with Section 26.4 of the
Project Agreement;

(iii) A declaration that the Substantial Completion Payment Date (as defined in
the Project Agreement) occurred on March 26, 2021;

(iv) An order directing Contracting Authority to pay to Project Co the

Substantial Completion Payment (as defined below);

(v) A declaration that Contracting Authority has no entitlement under the

Project Agreement to any Liquidated Damages (as defined in the Project
Agreement) that accrued on or after March 24, 2021;

(b) The costs of this proceeding, plus all applicable taxes; and

(c) Such further and other relief as this Honourable Court may deem just.

1
Defined terms in this paragraph 1 shall have the meanings ascribed to them below or, if not defined below, the
meaning ascribed to them in the Project Agreement.
 -4-

THE GROUNDS FOR THE APPLICATION ARE:

Overview

2. This case is about the Government abusing its power to force the Applicant to undertake
costly last-minute upgrades to a major highway project without compensation. In order to
secure these upgrades, which were never bargained for, the Government is pushing the
Applicant to the precipice of default with its lenders, depriving the Applicant’s
subcontractors and suppliers of badly needed holdback funds and preventing the people of
Ontario from using a ready-for-use highway.

3. The Applicant has completed all major construction activities on the Highway 427
Expansion project, which it designed, built and must maintain for 30 years under a P3
contract with the Ontario Government. The highway has been certified as safe by an
independent auditor. 40% of it is already in use by the public. On every reasonable and
objective measure, the construction of the highway is substantially complete.

4. Nevertheless, the Government, relying on frivolous grounds, has refused to acknowledge

this or to release the contractually mandated Substantial Completion Payment of
$144,781,797.06.

5. This payment represents almost half the cost to build the highway and a quarter of the total
P3 contract value.

6. The Applicant urgently requires that these funds be released.

7. Without these funds, and absent further capital injections from the Applicant’s partners,
the Applicant’s subtrades and suppliers will not be paid their holdbacks. These subtrades
and suppliers, many of whom are small and medium sized businesses, provided the bulk
of labour and materials to the Project. They trusted that the Government would honour its
obligations. They cannot afford to wait longer for their holdbacks.

8. Without these funds, the Applicant also risks defaulting on its obligations to lenders that
financed the Project, who are owed the bulk of these funds and require certification of
 -5-

Substantial Completion no later than July 1, 2021. The Government has encouraged the
lenders to put the Applicant in default by sending them highly misleading correspondence.

9. It is in these circumstances and at the height of a global pandemic that has already delayed
the Project that the Government refuses to acknowledge that Substantial Completion has
been achieved. It has made clear that it will only do so if the Applicant submits to its
grossly unreasonable demands.

10. The Government’s demands include: (i) repaving the highway to new requirements (even
though these were not bargained for); and (ii) finishing certain work not required for the
safe operation of the highway and that the contract does not require to be completed until
after Substantial Completion.

11. None of this additional work is required for Substantial Completion, which is a contractual
milestone that is supposed to be certified by a consultant (the “Independent Certifier”) as
soon as the Applicant completes all major construction activities on the Project.

12. However, the Independent Certifier has not fulfilled its mandate. On this crucial issue, it
has uncritically adopted the Government’s position, failed to undertake any independent
analysis, and refused to certify Substantial Completion.

13. Unwilling or unable to exercise its duty of independent judgment, the Independent Certifier
has effectively sanctioned the Government’s bad faith, anti-contractual course of conduct.

14. The Applicant is therefore left with no option but to seek the intervention of the Court to
prevent inequitable financial consequences. The Applicant seeks to enforce its contractual
right to a declaration that Substantial Completion of the Project has been achieved and an
order directing payment of the Substantial Completion Payment to be made forthwith.

The Parties

15. The Applicant Project Co is a partnership comprising ACS Infrastructure Canada Inc. and
Brennan Infrastructures Inc., formed for the purposes of this P3 Project and to enter into
the Project Agreement.
 -6-

16. The Respondent Her Majesty the Queen in Right of Ontario (“Contracting Authority” or
“Government”), together with Project Co, the “Parties” and each a “Party”) is Project
Co’s counterparty to the Project Agreement.

17. Pursuant to a tripartite agreement in Schedule 6 of the Project Agreement between the
Parties and the Respondent BTY Group Consultancy Inc. (“BTY”), BTY was appointed
and accepted the role of Independent Certifier under the Project Agreement.

The Project and Project Agreement

18. In July 2015, the Government issued a request for proposals seeking proponents to design,
build, finance, and maintain for 30 years an expansion of Highway 427 in Toronto and
Vaughan (the “Project”).

19. The Project required, among other things, construction of a new 6.6-kilometre extension
of Highway 427 stretching from Highway 7 to Major Mackenzie Drive and a 4-kilometre
widening of the existing Highway 427 from Finch Avenue to Highway 7.

20. On March 7, 2017, the Parties entered into the Project Agreement, which is for a fixed
price of $616 million.

21. As is typical in a P3 project of this nature, initial financing for construction and other works
on the Project was furnished by a consortium of third-party lenders, pursuant to a certain
lending agreement between the Applicant and the third-party lenders (“the Lending
Agreement”).

Substantial Completion of the Project

22. The Project Agreement provides certain milestones that Project Co must achieve, the most
important of which is Substantial Completion of the Project.

23. The Project Agreement provides that Substantial Completion is the point at which:

(a) the Expansion has been completed in accordance with the Project Agreement;
 -7-

(b) the Payment Certifier has certified substantial performance and the related
certificate of substantial performance has been published; and

(c) all requirements for Substantial Completion, other than in respect of Minor
Deficiencies, have been satisfied (collectively, the “Substantial Completion
Requirements”).

24. Incomplete works that will not materially impair the safe use and enjoyment of the
highway, or traffic flow thereon, are “Minor Deficiencies” under the Project Agreement
and their completion can be deferred until after Substantial Completion.

25. In other words, the existence of any Minor Deficiencies is not an impediment to achieving
Substantial Completion.

26. Substantial Completion must be certified by the Independent Certifier. Following an

application by Project Co for certification of Substantial Completion, and a written
submission from Contracting Authority regarding same, the Independent Certifier then
determines whether certification is granted.

27. Having regard to the opinions of both parties, the Independent Certifier must independently
and impartially determine whether the requirements for Substantial Completion have been
met.

28. Upon achieving Substantial Completion, Project Co is entitled to be paid the Substantial
Completion Payment.

29. Project Co was required to achieve Substantial Completion of the Project by September
30, 2020 (the “Scheduled Substantial Completion Date”). Liquidated damages of
$10,000 are payable by Project Co to Contracting Authority for each business day of delay
in achieving Substantial Completion after the Scheduled Substantial Completion Date.

30. In addition, under the Lending Agreement, Project Co risks being in default of its
obligations if it does not attain certification of Substantial Completion by July 1, 2021. The
Government is improperly using this deadline to extract the concessions it is seeking.
 -8-

Substantial Completion is Delayed by Contracting Authority’s Contractual Breaches and

the Covid-19 Pandemic

31. Permanent works construction on the Project began in mid-2018.

32. As a result of various breaches of the Project Agreement by Contracting Authority,

numerous aspects of the Project were significantly disrupted.

33. In response to these disruptions, Project Co undertook extensive additional efforts at its
own expense and, as of early March 2020, was still on track to achieve Substantial
Completion by the Scheduled Substantial Completion Date.

34. In March 2020, however, Project Co’s operations were severely impacted by the COVID-
19 pandemic. Despite the pandemic’s widespread devastation, Contracting Authority
refused to acknowledge any impact to the Project or to recognize that a formal Emergency
had occurred under the Project Agreement (even though it had declared such an Emergency
internally). It also refused to grant relief of any kind. Instead, the Government began to
impose financial penalties on Project Co in the form of daily liquidated damages.

35. The impacts of the pandemic frustrated construction such that it was no longer possible to
achieve Substantial Completion by the Scheduled Substantial Completion Date. Project
Co therefore declared a Delay Event.

36. The delays to the Scheduled Substantial Completion Date, and the compensation owed to
Project Co as a result of costs it incurred to keep the Project moving forward, are the subject
of separate ongoing claims within the Project Agreement’s Dispute Resolution Procedure.
These claims are unrelated to this Application, which solely pertains to the narrow question
of whether Substantial Completion has been achieved.

37. Under the Dispute Resolution Procedure, these claims cannot be finally determined, and
Project Co is not permitted obtain any compensation, until Substantial Completion has been
certified. Keenly aware of that fact, the Government is prepared to use any means possible
to delay Substantial Completion.
 -9-

The Highway is Certified as Safe for Opening to the Public

38. Notwithstanding the delays to the Project, Project Co made additional efforts and
investments aimed at achieving Substantial Completion on the earliest possible date.

39. Construction progressed apace and, in February 2021, after an independent analysis, the
highway was certified by the third-party Road Safety Audit Team (the “RSA”) as safe for
public use (the “RSA Certificate”). The issuance of the RSA Certificate is an express
contractual requirement for Substantial Completion and is the ultimate step in determining
whether the highway is safe for public use.

40. Project Co obtained the RSA Certificate despite Contracting Authority’s efforts to obstruct
and delay. The RSA was prepared to issue the RSA Certificate in December 2020 but, at
the last moment, Contracting Authority raised unspecified safety concerns about the
highway’s crossfall gradients. Although it repeatedly refused to explain why it believed
the crossfalls were a safety risk, Contracting Authority demanded that the RSA investigate.

41. After a nearly two-month delay to carry out the investigation demanded by Contracting
Authority, the RSA issued the RSA Certificate and a report confirming that the highway
can be safely opened to the public.

42. Following issuance of the RSA Certificate, Contracting Authority stopped focusing on its
alleged unspecified safety concerns and instead created other pretexts for refusing to
acknowledge Substantial Completion.

Project Co Satisfies the Requirements for Substantial Completion and Applies for
Certification

43. On March 10, 2021, Project Co applied for certification of Substantial Completion.

44. At the time of Project Co’s application, each of the three Substantial Completion
Requirements was satisfied.

(a) The Project had been completed in accordance with the Project Agreement. Any
outstanding work was properly categorized as Minor Deficiencies and was not an
impediment to the certification of Substantial Completion.
 - 10 -

(b) The Payment Certifier had certified substantial performance on November 17,
2020, and the related certificate of substantial performance had been published on
November 24, 2020.

(c) All activities required for Substantial Completion, as described in the Project
Agreement’s Schedule 14, had been completed with the exception of Minor
Deficiencies.

45. Project Co’s Substantial Completion application acknowledged that certain minor work
relating to final surface course paving on isolated sections of the highway, road signage,
and traffic monitoring features remained outstanding, but noted that such items were
properly classified as Minor Deficiencies and were therefore not an impediment to
certifying Substantial Completion.

46. On March 17, 2021, Contracting Authority issued its opinion contending that the
requirements for Substantial Completion had not been satisfied for the following reasons:

(a) The highway was not constructed with a precise 2% crossfall gradient, despite the
fact that the Parties had not contemplated or agreed to such requirements at the time
the Project Agreement was signed. This was a transparent attempt to force Project
Co into repaving the highway to conform to new requirements without contractual
justification and/or for an ulterior or otherwise improper purpose;

(b) Certain work items had not been finally completed, although these items clearly
fell within the Project Agreement’s definition of Minor Deficiencies; and

(c) The RSA Certificate was not satisfactory to Contracting Authority, despite its
issuance by an independent third-party.

47. Contracting Authority refused to acknowledge that Substantial Completion had been
achieved despite the fact that it had already opened up 40% of the newly expanded highway
to public use.
 - 11 -

The Independent Certifier Denies Substantial Completion

48. On March 24, 2021, the Independent Certifier issued its formal determination (the “SC
Determination”) denying certification of Substantial Completion.

49. The SC Determination uncritically accepted Contracting Authority’s opinion that

Substantial Completion had not been achieved because the following Substantial
Completion Requirements were purportedly incomplete:

(a) Final surface course asphalt in certain isolated areas of the highway;

(b) The highway’s crossfall gradients were allegedly not constructed in compliance
with the Project Agreement;

(c) The installation of all regulatory, warning, and guide signing;

(d) The installation of traffic monitoring equipment;

(e) The issuance of a completed and signed RSA Certificate; and

(f) The submission of a Construction Certificate in respect of Substantial Completion.

50. As discussed below, none of these items was a proper basis for the denial of Substantial
Completion.

The SC Determination is an Abdication of the Independent Certifier’s Contractual Mandate

51. The SC Determination reflects the Independent Certifier’s complete misapprehension of

its role under the Project Agreement, the result of which was the improper denial of
certification of Substantial Completion.

52. First, the Independent Certifier failed to exercise its duty of independent judgment, which
requires an independent determination of whether outstanding work items constitute Minor
Deficiencies as defined in the Project Agreement.

53. The outstanding work relating to final surface course asphalt, installation of signage, and
installation of traffic monitoring equipment is all properly categorized as Minor
Deficiencies: it does not materially impair the use of the highway, or safety and traffic flow
thereon.
 - 12 -

54. The failure to undertake that contractually mandated analysis was a complete abdication of
the Independent Certifier’s duty.

55. Second, the SC Determination improperly concluded that the issuance of the RSA
Certificate was incomplete purportedly because the certificate “appears to be interim,
though not labelled this way”. Similarly, the submission of the Construction Certificate
was also marked incomplete, without explanation.

56. Both of these items are plainly complete – indeed, each certificate was attached to Project
Co’s Substantial Completion application. That was sufficient to satisfy the requirements
of the Project Agreement and should have been the end of the Independent Certifier’s
inquiry.

57. Instead, the Independent Certifier exceeded its authority and acted outside of its area of
expertise by baldly second-guessing the issuance of the RSA Certificate. This was well
beyond its mandate under the Project Agreement.

58. Third, the SC Determination wrongly concludes that the highway’s crossfall gradients were
not constructed in compliance with requirements of the Project Agreement. The
Independent Certifier’s conclusion was based on the false premise that the Project
Agreement requires a “stringent 2% value” on the crossfall gradients, when there is no such
requirement under the Project Agreement.

59. The standard applied by the Independent Certifier was incorrect and misapplied the
provisions of the Project Agreement. In short, the crossfall gradients, as currently
constructed, satisfy the requirements of the Project Agreement, with any non-
conformances properly categorized as Minor Deficiencies.

Project Co is Entitled to Certification of Substantial Completion

60. Project Co has satisfied all Substantial Completion Requirements. The RSA has certified
the highway as safe to be opened to the public.
 - 13 -

61. Nevertheless, Contracting Authority refuses to acknowledge this. Instead, Contracting

Authority is improperly attempting to extract additional work that it did not bargain for,
has not paid for and that is not required for certification of Substantial Completion.

62. Meanwhile, the Independent Certifier has been rendered incapable or unwilling to exercise
its contractual duty of independent judgment. For months, Contracting Authority has
relentlessly bombarded the Independent Certifier with positional correspondence in an
effort to influence its decision making. It has also blatantly interfered with the exercise of
the Independent Certifier’s mandate, including blocking a proposal to provide additional
resources which would have allowed the Independent Certifier to function effectively. This
resulted in the Independent Certifier uncritically adopting Contracting Authority’s
Substantial Completion opinion, without performing the independent and impartial
analysis it was obliged to undertake.

Government Conduct Severely Impacts Subcontractors and Imperils Project

63. Absent relief from this Court, Contracting Authority will continue to withhold the $144
million Substantial Completion Payment, while simultaneously levying liquidated
damages of $10,000 for each day that Project Co purportedly fails to achieve Substantial
Completion.

64. This is an economically unsustainable position. Unless its partners inject more of their own
funds, Project Co will be unable to pay its subcontractors and suppliers their holdback
entitlements without release of the Substantial Completion Payment.

65. Project Co has already shouldered an enormous financial burden well beyond what it
bargained for by paying for the massive acceleration efforts and other expenses
necessitated by Contracting Authority’s failure to honour its own obligations and the
Government’s unreasonable refusal to provide any relief during the pandemic.

66. Requiring Project Co to reach into its own pocket yet again to keep the Project afloat would
be plainly unjust given that it has, on any reasonable objective standard, satisfied all
requirements for Substantial Completion.
 - 14 -

67. In addition, if certification of Substantial Completion continues to be wrongfully withheld,

Project Co risks a default of its obligations under the Lending Agreement. Such default
could cause the lenders to initiate enforcement action, which would have severe impacts
on Project Co and the Project as a whole.

68. Project Co complied with its obligations under the Project Agreement’s Dispute Resolution
Procedure prior to commencing this Application.

69. The Rules of Civil Procedure, R.R.O. 1990, Reg. 194, including r. 14.05(3)(d) and (h).

70. Such other grounds as this Honourable Court may permit.

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

application:

(a) The Affidavit of Colin McAllister, to be sworn;

(b) The Affidavit of Sean McMillan, to be sworn; and

(c) Such other material as this Honourable Court may permit.

 - 15 -

April 27, 2021 Thornton Grout Finnigan LLP

100 Wellington Street West
Suite 3200
Toronto, Ontario
M5K 1K7

Daniel Schwartz (LSO #52381V)

Email: [email protected]

Adrian Visheau (LSO #58485P)

Email: [email protected]

Andrew Hanrahan (LSO #78003K)

Email: [email protected]

Derek Harland (LSO #79504N)

Email: [email protected]

Adrienne Ho (LSO# 68439N)

Email: [email protected]

Tel: 416-304-0557 / Fax: 416-304-1313

Lawyers for the Applicant

 Schedule “A”

Zoom Conference Details

Join Zoom Meeting: https://tgf-ca.zoom.us/j/89085938925

Meeting ID: 890 8593 8925

Or, dial-in: Participant one tap mobile: +16473744685,,89085938925#,# Canada (Toronto)

Host one tap mobile: +16473744685,,89085938925# Canada (Toronto)

Dial by your location

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+1 647 374 4685 Canada (Toronto)
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+1 438 809 7799 Canada (Montreal)
+1 613 209 3054 Canada
+1 647 374 4685 Canada
+1 647 558 0588 Canada
+1 778 907 2071 Canada
+1 204 272 7920 Canada
+1 438 809 7799 Canada
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+1 312 626 6799 US (Chicago)
+1 646 518 9805 US (New York)
+1 786 635 1003 US (Miami)
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Meeting ID: 890 8593 8925

Find your local number: https://tgf-ca.zoom.us/u/kbsneh271M
 CV-21-00661268-00CL

LINK 427 GENERAL PARTNERSHIP -and- HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO et al.

Plaintiff Defendant

ONTARIO
SUPERIOR COURT OF JUSTICE

PROCEEDING COMMENCED AT
TORONTO

NOTICE OF APPLICATION

Thornton Grout Finnigan LLP

100 Wellington Street West - Suite 3200
Toronto, Ontario M5K 1K7

Daniel Schwartz (LSO #52381V)

Email: [email protected]

Adrian Visheau (LSO #58485P)

Email: [email protected]

Andrew Hanrahan (LSO #78003K)

Email: [email protected]

Derek Harland (LSO #79504N)

Email: [email protected]

Adrienne Ho (LSO# 68439N)

Email: [email protected]

Tel: 416-304-0557 / Fax: 416-304-1313

Lawyers for the Applicant