The Toronto Port Authority has terminated a deal for Captain John’s Restaurant and expects the rusting relic to remain tied up at the foot of Yonge St. at least until spring.

It plans to return the $33,501 that Toronto entrepreneur James Sbrolla paid earlier this year in a court-ordered auction of the defunct Toronto landmark.

That’s despite the fact Sbrolla is believed to be in default, both because he paid the $33,501 late, but also because he failed to remove the former seafood restaurant and tourist attraction from its slip at the foot of Yonge St. by the Aug. 22 deadline.

The waterfront authority, which controls the slip where the ship has been anchored for decades, says it’s still negotiating with Sbrolla, although “a few” other interested parties have expressed interest in the ship.

Sbrolla was adamant Friday that he’s “the clear owner” of the ship. He said he warned the port authority a deal had to be reached by Oct. 15 or it would be tough to move the ship before next spring.

“We looked for several months at various options and, for me, the best solution is for the ship to be dismantled in our own backyard,” he added.

A Federal Court had ordered that the 300-foot ship, named the Jadran, be removed from the waterfront by Aug. 22. The ship was shut down by civic officials more than two years ago and put up for auction last July because owner “Captain” John Letnik owes almost $2 million in back taxes, berthing fees and mortgages.

After Sbrolla won the bidding, he partnered with Priestly Demolition and came up with a plan — which had yet to get port authority or Federal Court approval — for towing the Jadran to a Parliament St. slip and beginning demolition on Toronto’s shoreline.

“We don’t feel comfortable proceeding with a plan at this point that involves tearing the ship apart in the harbour,” said port authority spokeswoman Erin Mikaluk in an interview Friday.

“We want to be sure we’re doing this right, mitigating risk and removing the ship in a manner that is safe from an environmental and public safety standpoint.”

Sbrolla beat out one other bidder — a third was deemed to have filed their bid four minutes after the court-ordered deadline. That bidder, veteran ship scrapper Wayne Elliott, had offered to tow and demolish the ship, but at a cost of $303,000 to the port authority, factoring in insurance, towing and the tricky work involved in removing and disposing of asbestos and other toxins on board.