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Eugene Melnyk suit claims Ottawa mayor’s office responded with ‘threats’ in LeBreton dispute

Ottawa Mayor Jim Watson's spokesperson said the mayor is unable to provide comment on the allegations as the matter is before the courts. THE CANADIAN PRESS IMAGES FILE/Lars Hagberg

A new lawsuit filed by Ottawa Senators owner Eugene Melnyk alleges the office of Ottawa Mayor Jim Watson issued “threats and intimidation” when the businessman flagged earlier this fall that he didn’t want to move forward with the massive and long-awaited LeBreton Flats redevelopment project until “certain concerns” of his were resolved.

The suit claims that a number of issues arose over the last three years between Capital Sports Management Inc. (CSMI) – which Melnyk owns – and its partner in the LeBreton project, Trinity Development Group Inc. CSMI said it wrote to Watson mid-September to ask for help in “resolving” some of those issues.

READ MORE: Senators owner sues Trinity Group for $700M over ‘failed joint venture’ to redevelop LeBreton Flats

CSMI’s statement of claim alleges Watson’s chief of staff subsequently told the private company that “any attempt to withdraw from the LeBreton project during the current election cycle … would be viewed as a direct attack on the mayor’s political career and re-election effort.”

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“CSMI was warned that, if it withdrew, it would result in a ‘severing’ of any relationship between Mayor Watson and Melnyk and CSMI,” the claim says.

The court filings in which these allegations are found seek $700 million in damages from the Trinity Group and its executive chairman, John Ruddy, among others. Watson is not named as a defendant in the suit.

A spokesperson for Watson said the mayor is unable to provide comment on the suit as the matter is before the courts. Ruddy issued a statement Friday night saying Trinity “strongly denies” the allegations made by CSMI and the company “intends to vigorously defend” itself.

None of CSMI’s allegations have been tested in court.

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CSMI and Trinity are at the helm of a consortium called RendezVous LeBreton, tapped in 2016 by the National Capital Commission (NCC) to redevelop the 53-acre, long-vacant property just west of the downtown core.

A new NHL arena and home for the Ottawa Senators was at the centre of Ruddy and Melnyk’s proposal for the site, along with 4,000 new housing units and a number of public and commercial spaces.

The NCC, however, announced a public meeting of its board of directors on Thursday that the status of the RendezVous LeBreton partnership was far from rosy and that “unresolved issues” between CSMI and Trinity were holding back the project.

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The Crown corporation’s CEO, Mark Kristmanson, didn’t go into detail about what those “internal partnership issues” were about but did say the two business partners couldn’t agree on their corporate governance structure.

The NCC’s board voted to give CSMI and Trinity until January to resolve their problems or else the NCC would move on.

Following the meeting, Watson, a non-voting member of the board, said he perceived Ruddy and Melnyk’s relationship as “challenging” and called on the two business partners to “get their act together.”

Melnyk’s statement of claim was filed in Ontario Superior Court the next day.