260 High Park: Meridian asks for the church wall lawsuit as EY seeks discharge

On September 29, 2015, TRAC Developments Inc. paid $5,700,000 to the trustees of the High Park Korean Congregation of the United Church of Canada for the church lands at 260 High Park Avenue in Toronto, per the title abstract in the Third Report of the Project Receiver, Aug. 21, 2026, App. "C", p. 119. A City of Toronto by-law registered on title in November 2017 designates the property, High Park Alhambra United Church, as being of cultural heritage value or interest, per the Third Report, App. "C", p. 131. The project on the lands at 248 and 260 High Park Avenue was to be a 70-unit condominium, the converted church beside a newly built mid-rise, and the original plan, the developers later pleaded, required a protected heritage façade wall from the church to be preserved and integrated into the new building, per the Statement of Claim, Mar. 7, 2023, para. 7 (Third Report, App. "G").

In the autumn of 2020 the wall moved. The statement of claim issued in the developers' names pleads that a section of the wall was demolished under temporary supports on or around September 27, 2020, that the structural engineer called for removal of a wall extension on or around October 29 to ease installation of the excavation shoring, and that a precision survey on or around November 3 recorded up to 20mm of lateral westward movement. A large crack became visible near the top of the wall on or around November 6. It was March 2021 before the wall was stable enough to rebuild, per the Statement of Claim, Mar. 7, 2023, paras. 8–15 (Third Report, App. "G"). The developers claimed $12,182,537.17 against their course of construction and wrap-up insurance and settled in February 2024 for $5,450,000, less a $50,000 deductible, according to the Third Report, Aug. 21, 2026, paras. 34–36.

The condominium was never finished, and the lawsuit over the wall has outlasted it. On August 26 Ernst & Young Inc. served a motion, returnable September 15, asking the Commercial List to hand Meridian Credit Union Limited whatever that suit recovers beyond the insurer's share, pay Meridian the cash left in the estate, and discharge the receiver, per the Notice of Motion, Aug. 26, 2026, Tab 1, pp. 5–8.

A sale at $35,430,000

On Meridian's application, Justice Cavanagh appointed EY project receiver, manager and construction lien trustee of 260 High Park Limited Partnership, TRAC Developments Inc. and 2486357 Ontario Inc. on May 27, 2024, per the Third Report, para. 1, App. "A". Construction had not advanced since late 2023, when, the receiver understood, trade contractors abandoned the site "due to liquidity challenges and other delays," with windows uninstalled, the demolition of certain church walls unfinished and holes left in the church roof. The developers had pre-sold 64 of the 70 units, per the First Report of the Receiver, Sept. 25, 2024, paras. 9–10, 27. Meridian was owed $42,252,410.97 on April 9, 2024, per the Assignment Agreement, July 22, 2026, recital D (Third Report, App. "I"), under a first mortgage in the principal amount of $50,000,000. Behind it sat Fiera's $14,300,000 mortgage and Westmount Guarantee Services Inc.'s $20,000,000 mortgage, postponed to both, which secured the purchaser deposit insurance "required in order to facilitate the release of deposits from escrow for use in the Project," per the Notice of Motion, Tab 1, grounds paras. 5–9.

CBRE Limited's marketing produced 45 non-disclosure agreements and seven compliant offers by the December 3, 2024 deadline; Meridian declined to finance any bidder, which left the all-cash offer of 1001136742 Ontario Inc. as the successful bid, per the Second Report of the Receiver, June 13, 2025, paras. 29–30, 34–39. On April 23, 2025, the buyer told the receiver it had "identified unexpected cost issues" and would not close at the original price, and negotiations settled on a reduction of $3,570,000, per the Second Report, paras. 41–44. The approval and vesting order sealed the unredacted agreement until 30 days after closing, per the Approval and Vesting Order, July 11, 2025, para. 12. The Third Report now attaches it in full: $39,000,000 in section 4.1 of the agreement of February 4, 2025, and a fourth amendment dated as of April 30, 2025 changing that figure to $35,430,000, per the Third Report, App. "C", pp. 85, 143. Justice Cavanagh approved the sale on July 11, 2025, and it closed on July 22 to the buyer, since renamed HP Residences Inc., per the Third Report, paras. 4, 17.

Where the money went

The receiver's statement of receipts and disbursements to August 18, 2026 records the $35,430,000.00 in sale proceeds and $3,745,986.77 of insurance money, the balance of the wall settlement, paid to the receiver after its appointment. On July 23, 2025, Meridian received $33,500,000.00, "approximately 95%" of the gross proceeds, per the Third Report, paras. 17–18, 36. That was the ceiling set by the Distribution and Ancillary Relief Order, July 11, 2025, para. 4. Thirteen lien claimants shared $1,512,876.56. Over the receivership the estate paid $768,000.90 in construction costs, $285,124.00 for security and alarm services, $249,266.54 for insurance and $145,082.15 in property taxes, and CBRE's commission came to $265,725.00. With the receiver's fees of $670,548.50 and its counsel's $430,377.50 also paid, $1,343,013.41 remains, per the Third Report, App. "L".

Meridian's August 14, 2026 statement of balance puts what it is still owed at $11,870,806.80: construction loan principal of $5,740,453.15, interest of $6,090,249.10, fees of $15,030.00 and $25,074.56 of swingline interest, accruing at $935.77 a day at Meridian's prime rate of 4.45% plus 1.50%, per the Third Report, App. "H", p. 217. Blaney McMurtry LLP has given the receiver an opinion that, subject to standard assumptions and qualifications, Meridian's security is valid. The receiver has not sought one on the Fiera and Westmount mortgages, "as there will not be distribution to these secured creditors if the Surplus Distribution and the Assignment Agreement are approved," per the Third Report, paras. 59–60.

The purchasers and the trades

The buyer took none of the pre-sale agreements. The receiver sent termination and disclaimer notices to 56 purchasers on August 1, 2025, and held six agreements listed in Schedule "E" to the vesting order open for 45 days so their purchasers could negotiate with the buyer; on or about September 9 the buyer said it would assume none, and those six were terminated on or about September 17, per the Third Report, paras. 24–27. The receiver's September 23, 2025 letter to purchasers put the total at 63 terminated agreements, per the Third Report, App. "F", p. 165. Approximately $11,200,000 of their deposits had been released from escrow and spent on construction, according to the Second Report, para. 19.

Aviva Insurance Company of Canada and Westmount, its administrative agent, brought an unopposed motion for a deposit return protocol, which Justice Steele approved on September 9, 2025. Tarion Warranty Corporation covers the first $20,000 of any individual deposit. The protocol's release was widened to "any other monies" paid for the units, to reach deposits made for improvements; when counsel for one purchaser asked what redress remained for those, "It was clarified that such claims would be unsecured claims as against the companies," per the Endorsement of Steele J., Sept. 9, 2025, paras. 1, 3, 5, 7–8. The receiver has signed a release and termination agreement for each purchase agreement, says it is aware of no outstanding obligations under the protocol, and will send any questions after its discharge to the deposit insurers' advisor, per the Third Report, paras. 29–32.

The trades registered 15 liens totalling $8,670,283.96. Their priority over Meridian under section 78 of the Construction Act reached only the deficiency in the holdbacks the owners were required to retain, which the receiver's analysis, accepted by every claimant's counsel and by Meridian, put at $1,512,876.56, from $612,889.89 for Construction One down to $3,982.40 for Topcrete, most of whose $615,856.47 lien was registered out of time, per the Second Report, paras. 68–73. Payment extinguished those priority claims; the receiver's notice of motion says "there are no funds or property for the non-priority lien claims to attach to," so the remaining $7,157,407.40 "is unsecured," per the Notice of Motion, Tab 1, grounds paras. 10, 12–13.

Nine of the claimants had sued the mortgagees as well as the owners. All nine, through counsel, consented in emails between June 19 and July 2, 2026 to dismissal of those actions as against Meridian, Fiera and Westmount only, Knightsbridge Group's consent coming from its trustee in bankruptcy, Fuller Landau. The actions against the former owners are not part of the motion and, in the words of the receiver's counsel, "will need to be addressed following the Receiver's discharge." Counsel for J.V.H. Masonry Ltd. replied that the client "has been trying to dismiss the action entirely, but, can't get Trac's position," per the Third Report, App. "E", pp. 153–163. Separately, Justice Conway lifted the stay on January 27, 2026 so that two lien actions from 2022, by DNR Restoration Inc. and by Wilkinson Construction Services Inc., could proceed solely against security posted to court, per the Order (Lifting Stay of Lien Action – DNR Restoration Inc.), Jan. 27, 2026, para. 2.

What EY asks for on September 15

The motion is to be heard at 11:00 a.m. on September 15 by videoconference, per the Notice of Motion, Tab 1, p. 6, and the draft order is prepared for Justice Myers. In June the receiver's counsel had told the lien claimants' lawyers the discharge motion was returnable July 10, 2026, per the Third Report, App. "E", p. 154. The draft would approve the Supplemental Second Report and the Third Report, with only the receiver, in its personal capacity, entitled to rely on that approval; approve the assignment to Meridian; dismiss the nine lien actions as against the mortgagees; and authorize a distribution to Meridian "up to the amount of the Debtors' indebtedness," per the Draft Distribution, Approval and Discharge Order, Aug. 26, 2026, Tab 3, pp. 131–134, paras. 2–6.

It would approve EY's fees and disbursements of $758,662.29 including HST, for 1,112.8 hours at an average of $602.58 an hour, per the Affidavit of Matthew Kaplan, Aug. 21, 2026, para. 3, Exs. "A"–"B" (Third Report, App. "J"), and Blaney McMurtry's $488,451.17 for 647.7 hours at an average of $664.47. Blaney McMurtry's accounts are proved by the affidavit of Chad Kopach, per the Affidavit of Chad Kopach, Aug. 17, 2026, paras. 3, 6, Ex. "A" (Third Report, App. "K"). A reserve of $125,000 plus HST would fund the remaining work, with any surplus to Meridian. EY would be discharged on filing a certificate that it has filed final tax and HST returns, submitted its s. 246 reports, closed the estate accounts and paid post-receivership liabilities, and released from liability "relating to matters that were raised, or which could have been raised" in the receivership, save for gross negligence or wilful misconduct, per the Draft Distribution, Approval and Discharge Order, Tab 3, paras. 10–16. The receiver's redline against the Commercial List model order shows that release as bracketed, optional language in the model, beside a footnote recording that the model order subcommittee "was divided as to whether a general release might be appropriate," per the Redline Comparison to Model Discharge Order, Tab 4, pp. 149–150, n. 4.

The wall, again

Tripoint Insurance Underwriting Inc. issued the statement of claim on March 7, 2023, under its subrogation rights and before the insurance settlement was finalized, in the names of the three debtors and of Wilkinson, the project manager in October 2020, which, it appears to the receiver, was named "through inadvertence." It sues Jablonsky, Ast and Partners, the structural engineer of record, and Isherwood Geostructural Engineers, the geotechnical engineer, for $15,000,000, the full policy claim plus an amount for contingencies, per the Third Report, paras. 37–38. The claim pleads that an engineering firm retained to investigate advised on May 25, 2021 that the causes "were related to the removal of the Wall extension without additional bracing and the proximity at which excavation was performed," and alleges errors and omissions by both defendants, per the Statement of Claim, paras. 16–19 (Third Report, App. "G").

Jablonsky's statement of defence of March 6, 2025 denies the allegations and says the request to remove that section of the wall came from Wilkinson on or about October 29, 2020, that Wilkinson "was adamant in its insistence" the demolition was necessary, and that Jablonsky "raised several caveats and concerns." It pleads that the plaintiffs knew of the alleged deficiencies as early as November 2020, more than two years before the claim issued, and crossclaims against Isherwood, per the Statement of Defence and Crossclaim of Jablonsky, Ast and Partners, Mar. 6, 2025, paras. 9–11, 21, 24 (Third Report, App. "G"). Of the 13 subtrades and consultants Jablonsky has brought in by third-party claim, two have defended; Isherwood has not, and pleadings have not closed, according to the Third Report, para. 39.

Tripoint asserts a right to the first $5,400,000 of any recovery plus its legal costs. Anything above that would belong to the debtors' estate, and Meridian's general security agreement of February 25, 2020 reaches it. By the receiver's arithmetic, complete success would leave about $9.6 million, less than Meridian's remaining debt even after the surplus distribution, per the Third Report, paras. 40–43. Waiting for the result "would significantly delay the Receiver's discharge," the notice of motion says, so Meridian asked for an assignment instead, per the Notice of Motion, Tab 1, grounds paras. 22–26.

The assignment agreement of July 22, 2026 transfers the debtors' interest in the excess "without recourse and without representation or warranty," for consideration stated only as "good and valuable consideration." Meridian bears every cost of prosecuting or settling the claim and any costs award against the debtors or the receiver, indemnifies the receiver for those awards, and releases it from claims in regard to the subrogated claim and the excess, including their value. Court approval is a condition, due within 60 days of the agreement's date or a later date the two agree in writing, per the Assignment Agreement, ss. 2.1, 3.1, 5.2–5.3, 8.3.1 (Third Report, App. "I"). The next scheduled step in the engineers' action is a case conference being arranged for in or about January 2027, per the Third Report, para. 39.