HIGH-STAKES REN­DEZVOUS

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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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