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The fire at 200 Wellesley St. E. was the most costly in the history of the public-housing agency.Moe Doiron/The Globe and Mail

Two former senior employees of a Toronto Community Housing Corporation (TCHC) subsidiary have filed wrongful dismissal lawsuits, claiming they were falsely accused of billing improprieties in connection with repairs to the 200 Wellesley St. E. high rise after a fire in September, 2010, drove hundreds of residents from their homes.

The actions of TCHC and its public statement last October that it found evidence of "serious wrongdoing" were "harsh, vindictive, reprehensible and malicious," say statements of claim filed by Lou Canton and Roman Mesec in Ontario Superior Court.

The veteran public housing employees are seeking a total of nearly $700,000 in severance pay, unpaid wages and damages. The lawsuits were filed late last month, one day after Gene Jones stepped down as chief executive after a Toronto Ombudsman's report that sharply criticized TCHC's human resources and hiring practices. The public housing agency is seeking a new chief executive as it deals with unprecedented turnover of senior staff and a backlog of more than $750-million worth of repairs for its properties.

Mr. Canton, 64, and Mr. Mesec, 51, were senior managers at the now defunct TCHC subsidiary Housing Services Inc. (HSI) when they were among five people dismissed last fall after a forensic audit into insurance claims (the dismissals of the HSI employees were not examined in the Ombudsman's report).

The two men feel "blindsided" by the actions of TCHC, said their lawyer, Norman Grosman.

"This was a situation where they did the best they could, in unique circumstances," said Mr. Grosman, who suggested TCHC made his clients "scapegoats" for reasons that have not yet been made clear.

None of the allegations has been proven in court, and TCHC says it will file a statement of defence.

The fire at 200 Wellesley St. E. was the most costly in the history of the public-housing agency. Many of the 1,200 residents were displaced for several weeks. About half of the tenants accepted compensation packages averaging about $4,000 each. The other half shared in a $4.85-million class action lawsuit settlement. The insurers for TCHC and the company that managed the building will be in court in July to determine who should ultimately be responsible for the more than $30-million paid out so far in repairs and other costs from the fire.

When the HSI employees were dismissed, media reports suggested expenses were altered to appear as a claim for repairs at 200 Wellesley when they were actually for work in Ottawa. "The findings are serious," Mr. Jones said at a news conference last October. He added that the matter was being forwarded to police.

(HSI was created in 2004 as a for-profit subsidiary to provide contracting services. It was dissolved last year).

The extent or exact nature of the alleged wrongdoing was not disclosed, although Mr. Jones promised more details at a later date.

No criminal charges were laid, and Toronto police confirmed this week that there is no active investigation into the matter. The court proceedings involving the insurers do not contain allegations of fraudulent invoices.

Sara Goldvine, a spokeswoman for TCHC, said it will release a summary of its findings once all "related legal matters" are completed.

Meanwhile, The Globe and Mail has obtained documents that show TCHC is still seeking millions of dollars for contracting work performed by HSI at 200 Wellesley. The public-housing agency filed a lawsuit last year against TGA General Contracting and Restoration, the company retained as the general contractor. TCHC received $4.7-million by early 2013 from TGA and insurers for work done by HSI. The lawsuit alleges it is still owed $5.2-million from TGA, including a standard 10 per cent profit on repair work. TGA, which has filed a notice of intent to defend, declined to comment on the lawsuit, as did TCHC, since it is an "active litigation matter," Ms. Goldvine said.

While TGA oversaw the work of HSI at 200 Wellesley, it was also given directions by the insurance adjuster, a cost-control consultant and TCHC, Mr. Canton and Mr. Mesec say in their statements of claim. "This led to a situation where HSI was receiving conflicting and/or confusing instructions from the various parties," the documents state.

The former managers say they consulted regularly about the repair work and its cost with TGA, the insurers, TCHC and Josie Scioli, who was then the chief executive at HSI. Ms. Scioli, who is now chief corporate officer with the city of Toronto, was unavailable for comment.

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