The amount of drama surrounding The One in Toronto can only perhaps be exceeded by the height of the tower itself, and the former may be growing faster than the latter with a potential lawsuit now threatening construction on the troubled project.
In a Notice of Motion to the Ontario Superior Court last week, Alvarez & Marsal Canada Inc., the court-appointed Receiver of The One by Mizrahi Developments, said that it has found itself in a "difficult position" as a result of legal action that may potentially be initiated by a company called Mappro Realty Inc.
According to the Receiver, Mappro Realty Inc. is the owner of 19 Bloor Street West, a retail building located at the southwest corner of Bloor Street West and Balmuto Street, immediately west of the 1 Bloor Street West site where The One is being constructed. 29 Bloor Street is currently occupied by a Scotiabank, while 15 Bloor Street — located between Scotiabank and The One — is currently occupied by a Fabricland that was previously home to H&M.
Since construction began on The One in 2020, the Receiver says, Mizrahi Developments has used a portion of Balmuto Street that spans five metres wide and 17 metres long as a staging area for a concrete pump that provides concrete to their construction site.
The City of Toronto granted a temporary street occupation permit allowing this in July 2020 and the permit has been extended several times, most recently until February 1, 2026.
Although the staging area is located adjacent to the 19 Bloor Street West property owned by Mappro Realty, where a high-rise just as tall as The One is being planned, the staging area "does not encroach on the Mappro Property," says the Receiver.
Nonetheless, Mappro Realty alleges that the concrete pump has and continues to interfere with the enjoyment of their property and that the noise from the concrete pump is affecting its ability to lease space in its building.
Mappro voiced opposition to the original temporary street occupation permit application, saying in an email to the City that their consent was not obtained or even sought. They also opposed the subsequent permit extensions, but were unsuccessful each time. In September 2022, they then commenced legal action against both Mizrahi Developments and the City of Toronto seeking $3,000,000 in damages and an injunction prohibiting further use of the staging area.
The discovery period had yet to commence when the action was then stayed as a result of The One being placed under receivership in October 2023. The Receiver says that last month, Mappro served a motion to lift the stay so it could commence action against Receiver and SKYGRiD Construction Inc., the general contractor that took over the project in March 2024.
"A Difficult Position"
Receiverships are governed by the federal Bankruptcy and Insolvency Act and Receivers are usually safeguarded from any claims except in cases of "gross negligence or wilful misconduct," and Mappro has alleged the latter.
"Mappro's allegations have put the Receiver in a difficult position," the Receiver said in its motion last week, asking for direction from the Court. "Mappro asserts that the Receiver is engaging in wilful misconduct, but the Receiver cannot fulfill its core mandate of continuing the construction of the Project without use of the Concrete Pump."
"The Receiver believes that it should be directed to continue to use the Concrete Pump for the construction of the Project," they added. "Continued construction is the only way to maximize recoveries and complete the Project for the benefit of all stakeholders. If construction stops, or is paused, stakeholders will suffer significant losses."
The crux of the issue is that the concrete pump cannot be operated, legally, anywhere else besides the staging area, and relocating the pump, even if permitted, would involve a lengthy process that would delay the project further.
19 Bloor Street West and the Amherst concrete pump on Balmuto Street, as of September 2023. / Google Maps
"Mappro suggests in the Mappro Action that the Concrete Pump could be moved to another location," said the Receiver. "The Debtors do not have the right to legally operate the Concrete Pump in any other location. Even if the Debtors could secure permission to move the Concrete Pump, the process of securing permission to move the Concrete Pump and then subsequently moving it would take at least one year. The costs of delaying the Project for this extended period would be astronomical."
Construction would be forced to stop if the concrete pump cannot be used, so the Receiver is now "caught between the need to continue construction and the risk of an allegation that continuing construction constitutes wilful misconduct within the meaning of the Receivership Order," it said.
The Receiver, however, said they believe any prejudice against Mappro to be "limited and significantly mitigated" because there is already an impending sale of the property to a developer, Reserve Properties, rendering their concern about leasing moot, since their property may soon be demolished.
According to the Receiver, after Mappro indicated it wanted to take action against the Receiver and SKYGRiD, they then said in late-October that they would not add the Receiver or SKYGRiD as defendants in their action, but reserve the right to do so at any time, resulting in a threat that looms over the project. In an endorsement on November 13, the Justice presiding over the case did not make a ruling, instead setting a case management schedule that extends at least until April 2025.
The One
This latest twist in the ongoing saga of The One comes after a months-long sales and investment solicitation process for the troubled project.
After being listed for sale by JLL in early-June, which also resulted in its own round of drama, the Receiver and JLL came away from the process having found no buyer for the project, which was listed at $1.2 billion. According to the Receiver, they received a number of proposals for the construction, development, and realization of the project, but did not receive any proposals to acquire or invest in the project.
The Receiver is now working with the lead development bidder to finalize the terms of their development proposal, while also working with the other bidders to improve their proposals.
Simultaneously, also brewing is a conflict between the Receiver and Mizrahi Developments over payment to Mizrahi before SKYGRiD took over the project. Earlier this year, Mizrahi filed a motion claiming that he was owed $4,086,007.53 for his work managing the project between when The One was placed under receivership and when SKYGRiD took over.
The original general contractor budget Mizrahi provided.
Last month, the Receiver then responded with a cross motion, alleging that Mizrahi charged $49,319,574.13 for labour and construction management fees that Mizrahi Developments was not entitled to charge, including the period between August 2022 and March 2024 when Mizrahi allegedly charged a 5% construction management fee when he was only entitled to a 3.5% fee.
"By the time MI's role on the Project had ended (i.e. March 13, 2024), MI had charged approximately 84% of the Contract Price to complete less than 50% of the Project," the Receiver said. "The Receiver now expects the total construction costs to complete the Project will significantly exceed the Contract Price with a Project completion date in the second half of 2027."
The original contract called for Mizrahi to deliver the project on or before December 31, 2022 for a total price of $583.2 million, and the Receiver says Mizrahi's failure to complete the project has "caused a material increase to the Project's total soft costs and financing costs."
The Receiver has also asked the Court to order Mizrahi to pay $9,539,853.71 for breach of contract, bringing the total amount it is seeking to $58.8 million. Last month, Mizrahi told the Toronto Star that he "strongly rejects the false allegations” by the Receiver.
This conflict will also not be resolved for some time, with the Justice presiding over the case setting a case management schedule last week that extends to May 2025.
