Ottawa Senators owner Eugene Melnyk is suing the developer he partnered with to redevelop LeBreton Flats and build a new arena for the NHL team downtown, a move that likely marks the end of the RendezVous LeBreton Group’s bid for the long-awaited city-building project.
News of the lawsuit, which seeks $700 million in damages, comes just one day after the National Capital Commission (NCC) announced the two partners it tapped to lead the mammoth project in 2016 had “unresolved issues” and couldn’t agree on their corporate governance structure.
The Crown corporation’s board of directors voted on Thursday to give Capital Sports Management Inc. (CSMI) — owned by Melnyk — and Trinity Development Group Inc. until January to sort out their “internal partnership issues.”
The statement of claim filed by CSMI alleges its joint venture with Trinity on LeBreton Flats “failed” because of “an egregious conflict of interest on the part of Trinity and its principal, John Ruddy.”
“The conflict was created when Ruddy and Trinity began developing an abutting property at 900 Albert Street in a manner that put the development of 900 Albert in direct competition with the LeBreton Project,” the statement of claim reads.
None of the allegations in CSMI’s suit has been proven in court.
Ruddy and Melnyk’s proposal for the long-vacant LeBreton Flats site included a 18,000-seat NHL hockey arena – the centrepiece – as well as 4,000 new housing units, commercial and retail space, a number of public areas and a French-language public school.
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The 900 Albert site is adjacent to the 53-acre LeBreton Flats property and the Bayview light rail station.
Once built, the 900 Albert development will be a massive retail, residential and office complex consisting of three skyscrapers, the biggest of which will be 65 storeys and Ottawa’s tallest highrise.
CSMI’s statement of claim alleges that when CSMI first met with Ruddy to discuss participating in the NCC’s request for proposals for LeBreton in 2014, Ruddy stated that Trinity “had an interest” in 900 Albert St. and “actively downplayed the potential of 900 Albert to compete with the LeBreton Project.”
Over the following years, the claim says, Trinity submitted applications to increase the height permitted on the 900 Albert site. CSMI then commissioned PricewaterhouseCoopers LLP to conduct an independent study on the two projects, according to the statement.
The firm’s report, issued in April 2018, allegedly concluded that “the Ottawa market could support either one project or the other, but not both.”
This led CSMI to believe that 900 Albert “would destroy the viability of the LeBreton Project outright,” according to the statement.
CSMI argues Trinity should have “either withdrawn from the joint venture or harmonized the two developments.”
The “disparity in expertise” on land development between CSMI and Trinity “made CSMI vulnerable to Ruddy and Trinity’s machinations,” the statement alleges.
The lawsuit names Trinity Development Group Inc. and Ruddy and several other players involved in the 900 Albert project.
Asked what the suit means for the future of the RendezVous LeBreton partnership and Melnyk’s commitment to the redevelopment project, CSMI’s lawyer, Robert Brush, said his client plans “to see how the process unfolds.”
“The statement of claim sets out the concerns that CSMI and Mr. Melnyk have and where things go from here remains to be seen,” Brush told Global News.
Brush said Melnyk is “disappointed” with how things have unfolded but “remains committed to the hope of the downtown arena.”
In a statement on Friday evening, Ruddy said his firm “strongly denies the allegation in CSMI’s lawsuit and intends to vigorously defend the claim.”
“For over 30 years, I have sought to make a contribution to the communities in which Trinity operates, and in particular my hometown of Ottawa,” Ruddy wrote. “I will always find ways to build Ottawa up and continue to make a contribution to our great city.”
The NCC did not comment on the suit on Friday.
A spokesperson for Ottawa Mayor Jim Watson said the mayor is unable to comment on the dispute as the matter is before the courts.
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