OTTAWA — The National Capital Commission says it is moving to terminate a development deal with Rendez-Vous LeBreton Group, which includes Senators owner Eugene Melnyk, in the wake of bitter legal infighting within the development group.

The NCC, the Crown corporation responsible for the redevelopment of the land at Ottawa's LeBreton Flats, signed a preferred proponent term sheet with Rendez-Vous LeBreton — a group composed of Trinity Development Group Inc. and Melnyk's Capital Sports Management Inc. —  on Jan. 19 for a new development including an NHL arena.

The plan ran into a significant hitch last month when the group told the NCC that unresolved internal issues in its partnership prevented it from moving forward with its proposal.

The situation deteriorated further when Melnyk sued Trinity chair John Ruddy for $700 million dollars in late November. A statement of claim alleged "a number of breaches, all arising out of a conflict of interest, that directly resulted in the failure of the partnership."

It claimed Ruddy began developing an abutting property that put it "in direct competition with the LeBreton project."

Ruddy and Trinity filed a counterclaim for $1 billion on Tuesday. The countersuit calls Melnyk's lawsuit "meritless" and says "the claim against John Ruddy is especially scandalous."

The NCC says the termination will come into effect in 30 days from the initial notice. The commission says it will proceed with the next steps in the redevelopment process at its next public board meeting in January.

"It is with regret that we take note of the NCC's decision to terminate the process under which we were pursuing the historic redevelopment of LeBreton Flats," the Senators said in a statement.

"For over a year, we have tried to resolve our concerns about the flaws in the economic model for the redevelopment, both within the context of our private negotiations with the NCC and then publicly since November 22, 2018. 

"After the NCC decided to extend its final decision until January, 2019, we formally requested that the Crown corporation meet with the parties in an effort to determine how best to mediate a resolution to these challenges. To our dismay, the NCC rejected both requests."

The Senators currently play in the Canadian Tire Centre in Kanata, well outside the Ottawa downtown core.

The Canadian Press