1451 Wellington: a disclaimer fight over the drywall suites

On October 26, the company developing 1451 Wellington, a twelve-storey condominium in Ottawa's Westboro neighbourhood, brought a motion before Justice Kershman for what it calls its eighth stay extension, to December 18, 2026. The current stay expires on November 2, when the motion is returnable by Zoom. The company calls what it is asking for "a short-term extension intended to serve as a bridge to a further Court attendance," at which it means to seek longer relief that "may include approval of an amendment to the DIP Agreement and increase in amount under the DIP Facility, if necessary," per the Notice of Motion, Oct. 26, 2026, para. 1 and grounds paras. 14–15. The supporting affidavit of the company's principal says the monitor, MNP Ltd., supports the extension and that the DIP lender "is also supportive," per the Affidavit, Oct. 26, 2026, paras. 5, 7, 79, 87.

The same affidavit sets out a dispute the motion does not ask the court to decide. In April 2024 the company signed agreements to sell three suites, numbers 806, 302 and 208, to the principal of its drywall subcontractor, and the agreements were assigned to Crawford & Finchley Capital LLC. On August 13, 2026 it gave notice that it would disclaim them. Four days later the principal's counsel emailed the company's lawyers asking for written reasons; one of the two addresses used was wrong, the company says, and its counsel did not answer within what the affidavit calls "the prescribed five-day period under Section 32(8) of the CCAA." On August 28 the principal and Crawford each served a notice of motion opposing the disclaimers. On October 23 the company reissued the notices and, in a letter to the movers' counsel, gave its reasons, per the Affidavit, Oct. 26, 2026, paras. 49, 51–54; Notice of Motion (drywall principal), Aug. 28, 2026, Ex. "Z", grounds paras. 1, 12, 19.

The building, four months on

When the case was last reported here, on June 22, the company was asking for its stay and its DIP facility to run to November 1. The court's order of June 19 extended the stay to November 2, 2026 and authorized the company to borrow up to $54,500,000 under the facility, per the Seventh Stay Extension and DIP Amendment Approval Order, June 19, 2026, paras. 3, 5. The fourth amendment to the facility from TCC Mortgage Holdings Inc., which that order approved, also moved the repayment date to November 1, 2026, the October affidavit recites, per the Affidavit, Oct. 26, 2026, paras. 9(c), 35.

In June the company's principal swore that the company anticipated finishing floors 10 to 12 by the end of August and the roof by the end of September, with registration anticipated in October, per the Affidavit, June 16, 2026, Ex. "A", paras. 38, 41. The October affidavit says construction "remains ongoing on floors 10, 11 and 12, the retail space and the roof, and is otherwise complete." It now anticipates finishing the three floors by December 2026 and the roof by the end of November, "subject to the contractor maintaining its current construction schedule and timeline," after which the company intends to apply for registration. The City of Ottawa has granted occupancy for P3 to floor 9. Occupancy of the top three floors, anticipated in June by the end of August, is now anticipated by December, per the Affidavit, Oct. 26, 2026, paras. 38–40; Affidavit, June 16, 2026, Ex. "A", para. 39.

Occupancy notices have gone out for six units. Whether a purchaser moves in, the affidavit says, depends among other things on approval by the company, the monitor and the DIP lender, and on "the agreed purchase price being acceptable to the Applicant, and the DIP Lender." The company intends "to continue to work with Purchasers to renegotiate certain of the remaining Unit purchase prices," and to market and sell any units that are "disclaimed, terminated and otherwise unsold." Half of the retail space is leased, per the Affidavit, Oct. 26, 2026, paras. 36(n), 41–43.

Under the purchasers' agreements, if a unit was not complete by the outside occupancy date of December 31, 2025, the purchaser could terminate within the 30 days that followed. The company, the monitor and the DIP lender have now consented to 38 terminations, up from 36 in June. On the monitor's advice, the October affidavit says 42 units have "transitioned to the Deposit Return Process, involving 38 previous Purchasers," against 34 units and 30 purchasers as of June 9, per the Affidavit, Oct. 26, 2026, paras. 44–45, 47; Affidavit, June 16, 2026, Ex. "A", paras. 45, 52. That process comes from an order, drafted by Tarion's counsel to make the return of deposit money one step rather than two, that the court approved on March 30. The termination window has closed, and the company and the monitor are still corresponding with other purchasers about returning deposits or terminating, per the Affidavit, Oct. 26, 2026, paras. 31, 33–34, 46.

What the extension is for

The draft order attached to the motion would extend the stay to December 18 and contains no term about the DIP facility, per the Draft Eighth Stay Extension Order, Tab 3, para. 3. The affidavit says the extension will give the company time to "finalize and evaluate longer-term cash flow projections" and "continue discussions with the DIP Lender regarding the Applicant's go-forward restructuring plan." If the extension is granted, it says, the company intends to return before it expires to seek "a lengthy extension" and approval of an amendment to the DIP agreement "if necessary," per the Affidavit, Oct. 26, 2026, paras. 80, 85.

The company prepared a revised cash-flow forecast with the monitor's assistance, running from the week beginning October 12, 2026 to the week ending January 1, 2027. The affidavit says the forecast shows that, if the order is granted, the company will have sufficient liquidity during the stay period to fund its ordinary operations and the completion of construction, and that it "will be appended to the Ninth Report of the Monitor, to be filed," per the Affidavit, Oct. 26, 2026, para. 84. No Ninth Report of the Monitor is in the record.

Three suites and a drywall contract

The company's account begins with a fixed-price contract for the building's drywall. In the affidavit's telling, the subcontractor later said it could not finish at the contract price, "as it would cost double the amount as agreed to under the fixed price contract," and, "following threats by [the contractor] to register a lien," the parties discussed an arrangement under which the contractor would acquire units, and the three agreements followed. The company says the arrangement was conditional on the contractor completing all of its remaining drywall scope and supplying materials through completion at its own cost, and it quotes the amendments of April 19, 2024: "The Purchaser agrees to undertake any future drywall work required to finish the building located at 1451 Wellington Street West, Ottawa, Ontario and shall be at the Purchaser's expense," per the Affidavit, Oct. 26, 2026, paras. 48–50.

Its position is that the contractor failed to complete the drywall work and the other obligations it had taken on. "Effectively, [the contractor] abandoned the Project," the affidavit says, and the company and its general contractor, Mizrahi Inc., had to engage replacement trades at additional cost. The company sets out its figures: agreements with the contractor "for an aggregate amount of $4,715,156.58"; purchase prices for the three suites totalling $3,116,970; and $4,475,328 already paid, including payments made after the purchase agreements were signed. Letting the contractor or Crawford keep the benefit of the suites "would amount to an unjustified windfall and does not make commercial sense," it says; they are units that "can be marketed and sold for the benefit of the estate and its creditors." Any claim the contractor has on its fixed-price contract "may be evaluated and determined in a claims process by the Monitor, if a claims process is initiated," per the Affidavit, Oct. 26, 2026, paras. 55–57, 59. Its counsel's October 23 letter puts what the two companies have paid or owe the new contractors at $1,606,192.37, per the Applicant's counsel's letter, Oct. 23, 2026, Ex. "DD", p. 254.