Another legal battle is brewing involving owners of 650 Parliament and their handling of the dislocation of hundreds of residents following a fire 18 months ago.

The city is set to take the building’s ownership to court over the nonreimbursement of more than $3.5 million incurred in the immediate aftermath of a six-alarm fire that forced an estimated 1,500 residents out of their homes since Aug. 2018.

The money from the city coffers was spent on providing emergency services that residents needed, including shelter, food, clothing and transportation, in the first two months after the fire.

Council has adopted a motion directing the city solicitor to launch a civil action against Parwell Investments Inc. and Bleeman Holdings Ltd., two companies that own 650 Parliament and a number of other residential buildings in St. James Town.

“As this deals with a potential litigation matter, we are not able to provide any comments beyond what is in the public staff report,” a city spokesperson wrote to the Star on behalf of the legal counsel.

A short statement from the property’s ownership noted the city’s latest move was expected, but perplexing in its timing.

“It is surprising that, while we remain singularly focused on continuing to provide assistance to our residents, addressing the staggering reconstruction efforts required, and meeting our primary goal of returning tenants to their homes as quickly as possible, there are those who, at this critical time, would seek to divert resources in any way from where they are most needed,” the statement noted.

The building’s owners added that discussions with the city have been “productive” and that the motion at council is just “procedural in nature.” The owners have not yet been served with a statement of claim, the statement added.

Should the city go ahead and file this lawsuit, it would be the third time ownership and management at 650 Parliament have been served in connection with the 2018 fire, which has been characterized as one of the worst the city has seen in a long time.

Two class-action lawsuits were filed in the months following the fire and mass displacement, seeking compensation for damages that residents sustained in the process. Last summer Justice Edward Belobaba of the Ontario Superior Court certified a merged version of the two actions, with a total of $40 million sought in damages. The case continues.

Regarding the new potential litigation, details in the staff report submitted to council this week indicate that the owners were presented with “hundreds of pages” of documentation showing how the costs accumulated, and were given ample time to pay back.

“In failing to reimburse the city, the property owner has breached their agreement with the city and been unjustly enriched. Commencing a civil action to hold the property owner to account is warranted,” the report reads in part.

With the sudden evacuation of all 570 apartment units in the 22-storey building on the afternoon of Aug. 21, city officials made it clear to the owners that it was their responsibility to take care of the displaced residents.

But property ownership president Samuel Grosz indicated that ownership was not well equipped with staff and enough resources to provide emergency assistance, and asked the city to step in, according to the city staff report. He agreed to “make the city whole,” if they could help with providing the much-needed services.

As part of its resiliency and preparedness program, the city has a standing contract with Red Cross, whereby the charity can be called upon to offer various forms of assistance in case of an emergency. The Red Cross stepped in, deploying 80 permanent staff and 233 volunteers, who spent thousands of hours helping provide basic needs and medical support.

Initially, the city opened up nearby community centres to serve as temporary shelter for displaced residents, while other people were moved into hotels and other housing units across the city.

By the time property ownership moved to take care of residents’ needs in early October 2018, the city had shelled out a total of $3,754,994 in response to the emergency, according to the staff report. The money includes all the Red Cross invoices as well as city’s overtime staffing, additional security and direct assistance in food transportation for residents.

Nearly a year-and-half later, none of that amount has been paid back, according to the staff report.

The fire that displaced all the residents did not cause any major injuries.

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Fire officials concluded the incident was caused by an electrical system failure that triggered an explosion in the electrical room.

Management estimates the total recovery work to cost anywhere between $60 million and $70 million.

Earlier this month, property management announced that repairs were complete and residents are scheduled to return home, starting March 2. Some of the previous residents have since broken their leases and moved on to other places, but management expects occupants of close to 500 units to return.