1573454 Ontario Ltd.
975A Elgin Street West, Suite 425
Cobourg, Ontario K9A 5J3
Phoenix Genesis Financial Inc.
975A Elgin Street West, Suite 425
Cobourg, Ontario K9A 5J3
Johnttlee36@gmail.com
905-269-4166
November 18th, 2024
Via e-mail Melinda@dhacondolaw.ca jsavini@tmlegal.ca
Davidson Houle Allen LLP Templeman LLP
Suite 400, 410 Laurier Avenue West 205 Dundas Street East
Ottawa, Ontario K1R 1B7 Belleville, Ontario K8N
Attention: Melinda Andrews Attention: Jennifer Savini
Via e-mail ONLY James@schmidtlegalservices.com
Schmidt Legal Services
59 Walton Street
Port Hope, Ontario L1A 1N2
Attention: James McGrath
Dear All:
Reference: NSCC72 v 1573454 Ontario Ltd. – Overview of Lawsuit
From the date of the first claim being filed by NSCC72, we were completely confused that Phoenix Genesis Investments Inc. (PGI) was involved as it did not exist. It had been dissolved 8 years before. The Plaintiff realized that and then went to Court “ex-parte” to swap PGI out for Phoenix Genesis Financial Inc. (PGF). We find this incomprehensible and unworthy for Officers of the Court.
We had no ability to defend this change from the Plaintiffs lawyers as we were not given notice.
This is no “misnomer” as stated by counsel for the Plaintiff. It was in fact fraud as there was no connection between Phoenix Genesis Financial Inc. and the development, construction and registration of NSCC72.
PGF was not incorporated during the time from 2003 – 2011.
The Town, in turn, sued PGI and PGF by copying the style of cause of NSCC72 in their pleadings. The Town was wrong in doing so without verifying if PGI and PGF had any connection to the Mansions on George Project.
At the Case Conference in Cobourg in December 2019, counsel for the Town said that she named Phoenix Genesis Investments Ltd & Phoenix Genesis Financial Inc because I used the Phoenixgenesis.ca e-mail address. This was unfortunately ludicrous, simply an email address and not a legal entity. Just like Gmail and Outlook.com.
Original Statement of Claim – NSCC72 – May 18, 2017
The original Statement of Claim, against 1573457 Ontario Ltd. “et al” is riddled with inaccuracies and untruths from beginning to end.
Paragraph 3
This states that PGF was the developer and builder of the units and common elements of NSCC72.
Plainly incorrect and untruthful as PGF was not incorporated when NSCC72 was developed, built, and registered.
Paragraph 4
1573454 Ontario Ltd. (1573454) was the builder, developer and Declarant of NSCC72 which gave it the right to be the owner and vendor of the units in the building.
Paragraph 5
Branding 1573454 and PGF as Phoenix is meant to muddy the waters even though PGF had not been incorporated until after NSCC72 was registered as a condominium corporation.
Paragraph 9
It is normal for the builders to control the board initially until the number of units sold reaches the threshold where a turnover meeting to include other residents on the condominium Board. John Lee was re-elected May 6th, 2013, to the board along with 2 independent owners, Mr. Brian McCartney and Mr. Tom Faulds.
Paragraph 14
This implies that residents of NSCC72 were not aware that the Performance Audit was not completed by NSCC72. This is misleading as owners were organizing the Performance Audit, which is for the benefit of the owners, paid by the owners and orchestrated by the owners. There was a committee formed by the owners to deal with this matter and they continually deferred it through 2011, 2012 and into 2013.
Tom Faulds, Board member, was looking for an Engineer to perform the audit and with the continuing stonewalling John Lee moved ahead to commission the Performance Audit in October 2014.
When the new board led by Tim Miller (owner of unit 205) took over in November 2014 the board immediately cancelled Pitchler Engineering and the Performance Audit.
Pitchler Engineering was due to perform a Reserve Fund Study in January – February 2015 and in January of the same year Mr. Miller re-commissioned Mr. Pitchler to undertake the Performance Audit. Pitchler did the Performance Audit and the Reserve Fund Study simultaneously and ended on March 6, 2015.
Paragraph 17
During these two reviews Mr. Pitchler stated various defects were in the project, some of which were correct but most of which were untrue, misleading and maintenance issues. Bear in mind that NSCC72 had been registered on August 11, 2011, some four years before, and that naturally, continuing wear and tear over that time would occur unless the building was vacant.
Any deficiencies that were the fault of 1573454 were rectified immediately and even went above and beyond and repaired maintenance issues which should have been handled by NSCC72.
By the time the lawsuit was filed on May 18, 2017, a further two and a quarter year had elapsed and obviously for ease the Plaintiff simply lifted the Performance Audit alleged deficiencies verbatim into the lawsuit without verifying these issues still existed.
Paragraph 18
This is a false claim as the exterior staircase was demanded by the Town of Cobourg to allow the occupancy of unit 406. Interestingly that unit was purchased by Mr. Gratton who was then on the Condominium Board.
Paragraph 19
This states that the staircase was without consent of NSCC72, but Gratton was aware that it was erected so that he could legally occupy his unit. The construction of the staircase was demanded by the Town Planning Department and supervised by Mr. Doubt, our Engineer, and Mr. Frank Lukes who was the Town’s Chief Building Officer at the time.
However, NSCC72 is playing both ways and if the staircase is not needed 1573454, would be happy to remove it next week. We await Plaintiff’s position by return.
Paragraph 20
The building was in 2011 “fit for human habitation” as otherwise the Town of Cobourg would not have issued the Occupancy Certificates for each unit.
Paragraph 21
1573454 did fulfill its duty of care. Taking a hundred-year-old building, ripping it apart, adding a fourth floor and a ground floor and a 5-story extension was no mean feat. It was an 8-year project with all the twists and turns of working with a hundred-year-old heritage building. This is nothing like building a brand-new building on a green field site. Much improvision was necessary and James Doubt was at the project regularly to suggest solutions.
For example, OTS incompetently did drawings for the HVAC system and the ductwork which were impossible to fulfill. This was because the ground floor had a different ceiling height than the others, but OTS did not bother to verify before they submitted their drawings.
James Doubt was a good friend and a highly competent professional Architect and Engineer. 1573454 worked hand in hand to make a 100-year-old school building into the best condominium in Cobourg. 1573454 was the only bidder on the purchase of this building and this architectural gem could have been, sadly demolished, like a similar school in Brighton, Ontario had it not been for 1573454 and Jim Doubt.
1573454 was responsible for saving and restoring what is the second largest Heritage building in Cobourg after Victoria Hall.
We realize that everybody must make a living to pay their bills, mortgages, car loans but this lawsuit is really a nothing lawsuit created by an incompetent Engineer’s Performance Audit and assisted and amended by Board members Mr. Tim Miller and Mr. Lynas and their agents.
Many of the alleged defects we hardly need to talk about. Door closers, elevator licenses, missing switch plates, wobbly patio stones on the roof top patio, guard rails, which were not required on private property, circuit braker panels that were not labeled, which were intended for Phase II, missing water heater for the washroom and meeting room which surprisingly had hot water!
In the NSCC72 Declaration it specifically states that the Declarant is to be included in the Performance Audit meetings, we were never permitted or invited. Clearly the presence of 1573454 would have helped with the Audit.
NSCC72, now led by Mr. Gratton, has gone out of its way to block the extension of Mansions on George Phase II. Mr. Gratton has told John Lee personally that he was aware that the bulk of the profits in the overall project were from Phase II, and he is right. All the Services and facilities are in Phase I and to date, Mr. Gratton has succeeded in preventing Phase II being built for what purpose? The deficiencies do not exist in 2024.
Phase I was extremely expensive as it was a conversion of a 100-year-old building, and it was difficult and ran over an 8-year period.
1573454 was an inordinately expensive project and 1573454 lost over $1,800,000 in Phase I.
Many have probably forgotten but we had an international financial crash in 2008/9 when Banks failed worldwide. The housing market collapsed particularly in the USA. Interest rates climbed and businesses failed. In Canada Banks pulled back on loans and for some time it was very acute.
Condominiums were not the as popular in small towns and some developments had failed in Cobourg.
In any event, at the time of registration NSCC72 had only sales of 10 units out of 35 at that time. We did not reach sales of over 17 until 2013.
Pitcher knew that the Declarant was to be involved in the Performance Audit, and he ignored that. His incompetence and willingness to do the bidding of Messrs. Miller and Lynas left us with a Performance Audit that looked bad and then Mr. Miller sent it on to the Town of Cobourg to inflame the Building Department and Mr. Gil Brocanier the Mayor.
There was plenty of incompetence to go around, but it was not with 1573454, James Doubt, Steve MacDonald and Frank Lukes, CBO of the Town of Cobourg. They collectively created an architectural gem, and we have never met a resident who has not said anything other than their units are gorgeous.
Please go onto Realtor.ca and view the units at Mansions on Geroge that are for sale. These Units are incidentally selling well below their condominium’s peers in Cobourg partly because of the unfinished Phase II building and this ongoing lawsuit. On this note, we are concerned that the Status Certificates being issued states that “that window replacements and the alleged repair of the 118-year-old columns” are included in the Claim by NSCC72. These statements in the Status Certificate need to be deleted as they are false.
We find it hard to believe that we are all dealing with a lawsuit dated May 18, 2017, which is clearly Statute Barred as obviously the Plaintiffs knew, or ought to have known, of these alleged deficiencies from 2011 onwards when the condominium was registered.
We also find it hard to believe that the plaintiff and/or their lawyers launched the lawsuit in May 2017 without verifying that the alleged defects (discovered in early 2015) still existed.
As ex-bankers we find it hard to believe that a lawyer does not have an obligation to verify the veracity of their allegations before filing the Statement of Claim.
The Town of Cobourg had their own independent engineer ORR BROWN, inspecting the many alleged deficiencies in October 2023 and found the NSCC72 claims to be wanting.
The Town of Cobourg and/or its lawyers must have a report on the ORR BROWN visit, in one shape or form, and this should be tabled NOW to save further waste of time and expenses for the Town of Cobourg’s taxpayers and NSCC72 residents.
Gratton, surprisingly, cannot grasp the financial advantages for NSCC72. The unit owners are paying higher fees than they would need to if the extension has been built and the Cost Sharing Agreement was in force. If the landscaping was finished with driveway lighting etc. the existing NSCC72 Condos would benefit from improved aesthetics and a consequent increase in value.
Unfortunately, because the new extension has been stalled for around eight years, the Town and taxpayers of Cobourg have lost millions of dollars in Property Tax Revenue for naught.
Combined Cobourg residential tax mill rates are 0.0158631 as at 2023. Assuming a valuation of $800,000 per new condominium and a total 36 Unit assessment of, at least $28,800,000, this would imply a total property tax of $456,857 for Phase II in 2023. These taxes are split between Northumberland County, the local School Board and the Town of Cobourg. The Town gets the lion’s share of this which would be $261,837.
Overall, the lawsuit has prevented total property taxes of $456,857 and the Town of Cobourg has lost $261,837 annually. Making an assumption that without the lawsuit, the project could have been finished in 2019. This means that 6 years of property taxes so far have been lost to the residents of Cobourg and surrounding areas.
Specifically, the Town of Cobourg taxpayers have lost $2,094,551, assuming that the additional units will not be occupied until 2027. This rises to $2,356,369 if occupancy does not take place until 2028.
This is an atrocious waste of taxpayer money caused by Gratton and his fellow board members making false claims in 2017 on deficiencies that did not exist, and simply lifted verbatim from a Performance Audit done in 2015 when NSCC72 had been in existence for 4 years.
By 2017 any deficiencies would have been 6 years old. Now if they exist, they are 13 years old!
There is no proof that most of these alleged deficiencies existed in 2017, nor 2024.
The Lawsuit is nonsense and will likely be dismissed at trial as there is no proof of a causable action.
When filed on May 18th, 2017, the Lawsuit was already Statute Barred (2 years) as the Performance Audit was done in January, February and March of 2015. The Plaintiffs knew, or ought to have known of their claims by March of 2015 at the latest.
That is the law.
All defendants, including the Town, are using this same Defence.
Now for some important facts. During our documentary search for the Affidavit of Documents we found two emails which have a direct bearing on the Plaintiffs claim. Both from MOG residents, Briggs and Reilly.
Below these emails show that on September 8, 2014, and earlier alleged deficiencies existed years before the Pichler Report. The residents knew of Deficiencies then and the Statute of Limitations therefore ran from 2014; not 2015. Therefore, the Plaintiffs claim is very definitely Statute Barred by May 18, 2017. The claims were really barred on or before September 2016.
For emphasis these alleged deficiencies did not exist on May 18, 2017, the date of the original statement of claim, apart from the issues to be resolved when the extension is built.
Also, the new claim for the Easements is Statute Barred as the Staircase was erected in 2016. By May 25, 2022, when the easement claim was brought in the “Fresh as Amended Statement of Claim” this issue was 6 years old. Well beyond the Statute of Limitations.
Also, these new claims in 2022 required leave of the Court under the Rules of Civil Procedure.
It seems that this Case is going to founder, if it ever gets to Court, so I respectfully suggest we get together and save the Courts valuable time with a Negotiated settlement.
If these matters go to Court, we will apply to have these claims set aside against PGF & 1573454 Ontario Ltd and all other defendants on the grounds that the action is frivolous and vexatious, and 1573454 and PGF will be seeking large punitive damages and substantial costs for these malicious proceedings. This has been a complete waste of the Honourable Courts’ time and a huge muti-million cost to the struggling Taxpayers of Cobourg.
Regards,
John Lee
ASO and Representative of
1573454 Ontario Ltd. and
Phoenix Genesis Financial Inc.