Fighting a Shelter Was Costly. Creating a Shell Company Didn’t Make the $30,000 Court Bill Go Away

When Niagara Neighbours for Community Safety (NNCS) launched a legal challenge against the City of Toronto and St. Felix Centre over a proposed 50-bed shelter at 629 Adelaide Street West, its members did not expect the case to leave the organization facing thousands of dollars in legal costs.

That changed on Nov. 18, when Ontario’s Court of Appeal ruled against the organization and ordered it to pay $27,348.82 in outstanding legal fees to St. Felix Centre after losing the case.

Roughly 140 kilometres west, a Peterborough judge issued a similar ruling. Northcrest Neighbours, a group that attempted to block a 52-unit supportive-housing project, was ordered to post $30,000 as security for costs before its case could proceed.

The decision came despite the group’s attempt to limit its financial exposure by creating a corporation with no assets or revenue.

The cases highlight a growing question surrounding neighbourhood opposition to shelters and supportive housing: As community groups increasingly turn to the courts to challenge how projects are approved, are the financial risks of litigation beginning to deter them?

Diana Chan McNally, a Toronto-based community engagement specialist with development consulting firm Public Progress, says recent court decisions could make it harder for groups to shield themselves from liability.

“But what we’ve seen is that that’s actually not true anymore,” Chan says. “It seems like now we have some sort of precedent where you can’t use this kind of shell corporation to protect you from liability.”

But Toronto lawyer Eric Gillespie, who represented NNCS, says he does not believe the cost of litigation is deterring the community groups he works with.

“The court said in order to proceed (NNCS) had to provide security for costs,” Gillespie says. “Niagara Neighbours was successful in raising that money directly from their community. I think that shows just how concerned people are about the way the city has been behaving.”

Why are community groups taking the risk?

Over the past three years, Gillespie has worked with numerous community groups challenging how the city selects locations for shelters and other social services. His work has spanned neighbourhoods across downtown Toronto, North York, Etobicoke and Scarborough.

He is currently representing a group opposing a supportive-housing development at 7–9 Wardlaw Cres. The group alleges that the city failed to adequately consult the community during the site-selection process.

“That particular litigation is being supported by groups from all across the city because it’s raising a central concern,” Gillespie says. “None of the facilities the city either has or is in the process of trying to open has been a facility where there was any consultation with the community about location of the facility.”

Gillespie argues that the lack of consultation has become a broader problem with how the city makes decisions about shelters and supportive housing.

“They’re just simply rejecting the idea of consulting with residents,” he says, arguing that litigation has become one of the few remaining ways for residents to challenge decisions they believe will significantly affect their neighbourhoods.

“I think that’s one of the primary causes of why you’re seeing people react adversely.”

At the centre of the dispute is a change Toronto made nearly a decade ago.

In 2017, consultant Cecil Bruce Davis advised City Hall to delegate shelter-site selection to city staff rather than having council vote on individual locations.

Davis, who was recently appointed to the CreateTO board and named chair of the city agency responsible for managing a multibillion-dollar real estate portfolio, says the change was intended to make the process safer and more efficient.

He maintains that directly involving residents at the site-selection stage historically slowed projects and exposed councillors to harassment and safety risks from angry constituents.

“In every case — whether it’s shelter or housing or supportive housing — the neighbourhood comes out in opposition,” Davis says. “And they will always — always — suggest that there is a better site.”

When the city explored those “better sites,” Davis says, new neighbourhoods would raise the same objections, creating a cycle of opposition.

“Then you spend your life chasing your tail and you can never get anything done,” he says.

As consultation town halls grew increasingly hostile, councillors faced what Davis described as “immense” pressure, sometimes requiring escorts to their cars for safety.

In response, Davis was retained to produce the 2017 Shelter, Support and Housing Administration Service Review report, which proposed reforms aimed at making the process of selecting shelter locations safer and more efficient.

“And that report, frankly, is still as relevant today as it was back then,” Davis says.

Council did not adopt all of Davis’s recommendations. It did, however, approve delegating site selection to city staff.

As a result, council no longer votes on individual shelter sites, while community consultation generally takes place later in the process.

That sequence has become a central point of contention in several lawsuits.

“The consultations come only after the city has already predetermined (the site) with zero consultation,” Gillespie says. “The word ‘consultation’ loses all its meaning when the decisions have already been made and all the city is doing is now coming forward to defend its decision and not to consult about the location.”

What was supposed to happen?

The original 2017 framework was more expansive than the process critics say exists today.

Davis’s report proposed three stages of public involvement.

The first was a city-wide discussion about priorities and budgets. The second involved ward-level engagement with residents, business improvement areas, community groups and councillors to identify local needs and resources.

“This is the key part that’s been missing,” Davis says.

Only after those discussions would staff bring forward three potential sites, seek feedback from councillors and make a final decision informed by that input.

Community groups argue that those steps are no longer consistently followed, leaving residents to learn about proposed sites after a decision has effectively been made.

In November 2024, the city awarded a non-competitive contract to Davis’s consulting firm, Public Progress, to conduct engagement for shelter projects under the Homelessness Services Capital Infrastructure Strategy, which is based on the 2017 framework Davis helped develop.

While City Hall adopted some of his recommendations, critics say the resulting consultation process can feel more like an information session than an opportunity to influence where a facility will be located.

Davis disputes that characterization.

He says he has conducted “more public outreach” on the 66 Third St. site than on any other project during his 20-year career.

Still, he remains named in a lawsuit that cites consultation failures as a central grievance.

“Residents deserve proper consultation, lawful decision-making, and oversight that protects the public interest,” the New Toronto Initiative (NTI) says.

The group is currently suing Coun. Amber Morley over a proposed 60-bed seniors’ shelter. NTI says its lawsuit is not about opposing vulnerable people, but about how the city makes its decisions.

“Our community has launched a legal challenge because the City of Toronto has not followed fair and transparent procedures, while ignoring their own minimum guidelines and requirements,” NTI tells the Star. “This lawsuit is about accountability.”

Davis sees the litigation differently.

In his view, the lawsuit is strategic and “entirely about derailing, delaying, diverting or denying housing for people who are desperate.”

“There are some new opposition tactics, the private investigators, the lawsuits, the personal harassment,” Davis says. “So we've had to adapt to keep our staff, our clients and the public safe.”

Are court rulings changing the calculus?

The legal disputes come as Toronto faces continuing pressure to create shelter and supportive-housing capacity.

Chan says the city's decision to delegate shelter-site selection to staff should not be reversed or politicized, arguing that it was made in response to an urgent need for shelter space.

“We zone for buildings. We do not zone for people,” Chan says. “This is to say you do not get to choose who moves into your neighbourhood and wholesale block an entire demographic of people… that is called discrimination.”

Community groups, however, maintain that they are challenging the city's decision-making process rather than the people who would use the facilities.

The competing arguments leave residents and city officials confronting the same fundamental question: how much influence should a neighbourhood have over a facility that will directly affect it, and at what stage should that influence occur?

The recent court decisions have added another consideration: how much financial risk are community groups willing to accept to challenge those decisions?

Chan says she hopes recent rulings will discourage lawsuits she considers without sufficient merit.

“I’m hoping, because the decisions so far have been very much in favour of the service providers, that this won’t be a long-term trend and we’ll start to see a lot of this die out a little bit because in my opinion [it is] vexatious,” Chan says.

She argues such litigation can consume resources that are already scarce at non-profits and within the city.

NNCS, meanwhile, is still attempting to raise money to cover its outstanding legal expenses.

Gillespie says that has not changed his view that community groups will continue to pursue litigation when they believe the city has failed to follow a fair process.

“Everybody understands that litigation can come with a cost,” he says.

For Davis, opposition to shelter and supportive-housing sites is nothing new.

Undeterred by the lawsuit he currently faces, he says he hopes to continue applying his experience through his work with CreateTO and in efforts to expand housing options for the city’s most vulnerable residents.

“It's great going back to a community years later after a site has opened and hearing from neighbours who were opposed who say that things have worked out well,” he says. “Better than they expected. For me that is the icing on the cake.”