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

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