In yet another dramatic twist in the LeBreton Flats legal saga, the main combatants have agreed to mediation to see if their disputes can be settled before Jan. 19, the date set by the National Capital Commission to end its relationship with RendezVous LeBreton. Mediation efforts begin next week.The development was revealed Friday morning as Graham Bird, president of GBA Development and Project Management, filed a statement of defence against the $700-million lawsuit set in motion in November by Ottawa Senators owner Eugene Melnyk.Bird is a key member of RendezVous LeBreton, along with Melnyk and Trinity Development founder John Ruddy. The group had been working toward a June 30 master agreement with the NCC that would have set the stage for an epic, $4-billion transformation of LeBreton Flats.LeBreton “is too important to fail, and is worth salvaging,” Bird said in a statement. “We are hopeful that the parties can take this opportunity to keep the project moving forward.”Bird’s company, GBA, had been hired in 2014 by Melnyk’s wholly-owned subsidiary — Capital Sports Management Inc. (CSMI) — to manage the RendezVous LeBreton bid. Mediation efforts will be led by Judge Warren Winkler, a well-known mediator who had been involved in efforts to settle competing claims in Nortel’s bankruptcy proceedings as well as the more successful restructurings at Air Canada and Algoma Steel.Bird, Ruddy, Melnyk and their respective lawyers will meet with Winkler for the first time next week.Whether Winkler will be able to coax an agreement from the main players in the increasingly bitter LeBreton dispute is an open question.The litigation to date suggests profoundly deep personal divisions between Melnyk on one hand, and Ruddy and Bird on the other.Bird’s statement of defence Friday alleges Melnyk fired GBA in early May 2016, only days after RendezVous LeBreton had been selected as the preferred bidder. Bird’s litigation said a CSMI lawyer alleged Bird had breached a non-disclosure agreement while discussing the RendezVous LeBreton project with media. Bird’s litigation maintains that the information he provided did not run afoul of his non-disclosure agreement, and was provided during an open period sanctioned by the NCC.Ruddy responded to Melnyk’s move by hiring Bird directly.The various legal claims and counterclaims reveal significant disputes over money and terms throughout the negotiations with the NCC and within the partnership.The two biggest sticking points to be addressed by Winkler involve a nearby real estate project at 900 Albert St. being developed by Ruddy and other outside partners, and the terms associated with the construction and operating costs of the proposed NHL arena.The core of Melnyk’s grievance with Ruddy is his belief that the sale of nearly 1,400 apartments at 900 Albert — along with significant office and retail development — will compromise the underlying economics of LeBreton Flats, which will depend in large part on multiple streams of revenues from a new community of condos, retail shops and offices. Indeed, Melnyk’s statement of claim alleges Ruddy is in a conflict of interest.Ruddy’s $1-billion counterclaim, filed last month, maintained “there was no conflict of interest. There was no misrepresentation.” In his filing Friday, Bird alleges Melnyk and his executives had been aware of developments at 900 Albert from the beginning and that nothing was kept secret.“At no time,” the statement of claim reads, “did the Bird Defendants have any information about the proposed design of the 900 Albert Project that was not disclosed to CSMI or the public at large.”Bird’s litigation deals at length with the question of the NHL arena. Bird claims that “CSMI was aware from the outset” that profits from the LeBreton redevelopment on their own would be insufficient to finance the full $500 million US (C$670 million) cost of the arena.Accordingly, Bird’s statement of defence adds that CSMI agreed to make a direct financial contribution to the arena and sign on to a 35-year lease on “commercial” terms.Bird’s litigation also claims that the proposed location for the NHL arena in the RendezVous LeBreton bid never changed from the midpoint between the two closest light rail transit stations, Bayview (900 Albert) and Pimisi. In his initial lawsuit, Melnyk alleged Trinity had submitted land use approval applications that would have located the arena closer to Bayview.By early October 2018, according to Bird’s litigation, Melnyk was insisting that Trinity absorb or backstop the entire cost of the arena, then lease it to the Ottawa Senators for $1 per year.Melnyk’s position, outlined in a Dec. 18 statement, is that this would be in exchange for his willingness to forgo his 50 per cent share of LeBreton’s projected profits.Ruddy declined Melnyk’s suggestion last month in a statement of his own, in part because such an arrangement would mean Trinity would shoulder 100 per cent of the risk for the LeBreton project.If there is middle ground to be found in this broken relationship, Winkler might find it here — in a formula for the sharing of financial risk that satisfies the key partners, perhaps accompanied by a mechanism for separating the business operations of Melnyk from the rest of the project. Certainly there is plenty at stake for the three most important litigants here, including up to $800 million worth of profits over the next two decades assuming the project unfolds without too many hitches.The prospect of losing a landmark redevelopment is also an important catalyst.Even if mediation efforts succeed, the partners at RendezVous LeBreton will have to convince the NCC that the new arrangement is for real, that it will not fall apart later this year or next. That may be the toughest selling job of all.
Ottawa Senators owner Eugene Melnyk speaks to reporters last April about the LeBreton Flats project. The NCC has said it will end its relationship with Melnyk and his two partners on Jan. 19 if they fail to resolve their internal partnership issues.
Graham Bird, left, pictured with other members of the RendezVous LeBreton group in 2016, has agreed to enter into mediation to solve an increasingly bitter legal dispute with his partners.
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