A housing developer who says he poured more than $10 million into an apartment building for flood evacuees from Lake St. Martin has filed a lawsuit against the First Nation after his tenants unexpectedly moved out.

Russ Knight says he is facing bankruptcy after Lake St. Martin leadership did not dispel the concerns of the Canadian Red Cross, which resisted paying rent for the evacuees after a stabbing inside the building.

According to a statement of claim filed this month with Court of Queen's Bench in Winnipeg, Knight is seeking more than $20 million in damages.

Knight's court challenge, filed on Sept. 10, says he was asked to move community members forced from their homes by flooding out of hotels and off the streets in 2012, after he prepared a Ness Avenue building so it could become a school for Lake St. Martin students.

Nearly 1,400 people from the First Nation in Manitoba's Interlake area were forced from their homes when the provincial government diverted floodwaters toward the community in May 2011.

Knight said multiple levels of government, as well as the Canadian Red Cross and Manitoba's Disaster Financial Assistance program, supported the housing plan, which he estimated would save Ottawa $450,000 per month by forgoing hotel accommodations.

Suites prepared for evacuees

With that support, Knight spent in excess of $10 million to renovate 519 Burnell St. in Winnipeg for the displaced community, his lawsuit states.

The first group of band members moved into the 88-unit complex in fall 2014. He furnished each unit with appliances, internet, cable and $200 grocery store vouchers.

Knight said a band council resolution confirming the arrangement was signed in April 2015.

Two months later, a stabbing incident at the complex alarmed the Red Cross, which was covering rent payments.

Early one morning in June, two band members were drinking excessively when they decided to play fight, the lawsuit alleges. One man was accidentally stabbed in the neck.

Concerned by the incident, the Red Cross made house calls to inquire about the safety of residents. The staff member found some people felt unsafe, the lawsuit said.

The organization told Knight his Lake St. Martin tenants would have to move out unless band leadership argued the payments should continue. No conversation with the agency took place, Knight claims, and everyone vacated the building that summer.

Knight alleges that by remaining silent, Lake St. Martin leadership failed to honour their agreement with him. He lost out on $6.3 million in rent payments, which he expected to last until 2018, the statement of claim says.

The developer has since lost the apartment complex he remodelled, his home on Wellington Crescent is being sold by a mortgage lender and his property at 1970 Ness Ave. will go up for a mortgage sale next week, his lawsuit claims.

He said the value of his renovated Burnell Street complex was assessed at $23 million.

The allegations in the statement of claim have not been proven in court. No statement of defence has yet been filed.

Requests for comment from the First Nation and its lawyer, Norman Boudreau, were not immediately returned.

Rent never paid for school: developer

Knight's suit also insists he's owed more than $700,000 for the old school he renovated for the community at 1970 Ness Ave.

He has never been paid the annual $111,579.24 rent, dating back to the first school year in 2012-13. The building remains in use today, the lawsuit said.

Students from the Lake St. Martin First Nation have been going to school on Ness Avenue in Winnipeg since 2011. (Austin Grabish/CBC)

The building has been subject to numerous fire and safety code violations and had to be closed several times, CBC News previously reported.

Families began moving back to Lake St. Martin First Nation again in late 2017, but many still reside in Winnipeg.

Lake St. Martin First Nation just had a grand opening celebration for their new school, which opened last week.