Executive Summary: Key Legal and Evidentiary Issues

• The Owner sought an interim injunction halting the City of Kelowna's expropriation of the lakefront strip in front of the Hotel Eldorado on which the City's statutory right of way for a public boardwalk runs, pending the hearing of its petition challenging the resolution that started the process.
   
• Procedural fairness was challenged because council passed the resolution in camera, without notice to the Owner and without giving it an opportunity to be heard.
   
• Reasonableness of the City's decision to abandon negotiations over boardwalk access and repairs in favour of expropriation was challenged under the Vavilov framework.
   
• Although neither ground was found to be strong, the court held that the City's decision to begin expropriation cannot be completely insulated from review, so the claims were not frivolous.
   
• Loss of title could cause irreparable harm because, once payment is made and a vesting notice is filed, the Expropriation Act bars legal proceedings challenging the expropriation's validity, which would make the petition moot.
   
• On the balance of convenience, the risk of irreparable harm and the City's responsibility for altering the status quo favoured an injunction, while any prejudice to the public interest in restoring boardwalk access would be only temporary.
   

Facts of the case

1004364 B.C. Ltd. owns lakefront lands in Kelowna where, with its corporate affiliates, it operates the Hotel Eldorado and Manteo Resort (the court referred to the petitioner and its affiliates together as the "Owner"). A boardwalk runs along the lakefront over parts of these properties. The City of Kelowna holds a statutory right of way (SRW) over the land, registered on title on July 31, 2000, before the Owner acquired title, so that the public can use the boardwalk. The boardwalk sits mostly, but not entirely, within the SRW's boundaries.

This was not the parties' first dispute over the boardwalk. In earlier litigation, the City sought a permanent injunction to stop the Owner from interfering with public access, and the Owner counterclaimed to have the SRW declared unenforceable. In Kelowna (City) v. 1004364 BC Ltd, 2023 BCSC 554, Betton J. refused the injunction because the Owner had said it did not intend to interfere with public access going forward. He declared certain SRW provisions unenforceable against the Owner, a point the City conceded, but otherwise confirmed the SRW's validity. The Court of Appeal upheld that decision in 2024 BCCA 418.

More recently, the boardwalk fell into disrepair and was closed to the public. The City tried to carry out repairs so it could reopen the boardwalk, but the Owner refused to let the City onto the lands until the parties agreed on terms governing that access. Among other things, the Owner wanted to recover the costs it had already incurred to maintain the boardwalk, which the City was willing to reimburse only in part, and sought an indemnity from the City for its potential liability to boardwalk users as an occupier. The court observed that the parties' positions on these and other issues appeared to be far apart.

On July 13, 2026, in an in camera session held without notice to the Owner, the City approved a resolution initiating the expropriation of the strip of land in front of the Hotel Eldorado on which the SRW runs. The Owner brought a petition to set aside the resolution and to stop further steps toward expropriation, alleging an unfair process and an unreasonable decision lacking transparency, intelligibility and justification. Pending the hearing of the petition, it applied for an injunction to prevent the City from advancing the expropriation. Milman J. heard the application in Vancouver on September 10, 2026, and delivered oral reasons on September 18, 2026.

Policy and legislative provisions at issue

The City relied on s 90(1)(e) of the Community Charter, SBC 2003, c 26, which allows council to meet in camera where it determines that public deliberations "could reasonably be expected to harm the interests of the municipality." If the City approves the expropriation, it would pass a resolution under s 31 of the Charter to carry it out.

Several provisions of the Expropriation Act, RSBC 1996, c 125 (EA) were also at issue. Under s 4, an expropriation can occur only after notice is served under s 6(1)(a) and the approving authority approves it under s 18; here, the City is its own approving authority. Section 4(2) prevents anyone from disputing, in proceedings under the EA, an expropriating authority's right to resort to expropriation. After receiving notice, an owner may request a public inquiry under s 10, except where the expropriation is for the construction, extension or alteration of a "linear development." The Attorney General must appoint an inquiry officer under s 12, but s 11 lets the City ask that officer to refuse an inquiry on grounds including that the request is frivolous, vexatious or not made in good faith. Any inquiry is limited by s 14 to whether the expropriation is necessary to achieve the authority's objectives, or whether those objectives could be better met by another site or by varying the amount of land or the nature of the interest taken. Section 14(2) bars the inquiry from considering whether the underlying project or work is necessary.

The timing provisions were central to the harm analysis. Section 19 allows the City to abandon an expropriation, at least until payment is made under s 20. Absent an inquiry, s 18 requires the City to approve the expropriation, after which it must pay the Owner within 30 days (s 20) and file a vesting notice in the land title office 30 days after that (s 23). Once those steps are complete, s 51 bars any legal proceedings challenging the expropriation's validity.

The Owner formally requested an inquiry. The parties disagree on whether the proposed expropriation qualifies as a linear development, and they told the court they were exchanging submissions before the inquiry officer on whether the inquiry should be refused, with no decision yet made.

Reasoning and analysis

Both parties accepted the three-part test from R. v. Canadian Broadcasting Corp., 2018 SCC 5: a serious question to be tried, a risk of irreparable harm, and a balance of convenience favouring an injunction. Milman J. added that the criteria are interrelated rather than watertight compartments, so strength in one can make up for weakness in another (citing Naghmeh v. 1530378 B.C. Ltd., 2025 BCSC 1673, and Save Record Ridge Action Committee Society v. British Columbia (Environment and Parks), 2026 BCSC 477).

On the first branch, the Owner needed only to show that its claim was not frivolous or vexatious (Vancouver Aquarium Marine Science Centre v. Charbonneau, 2017 BCCA 395). The City argued that council's decision to proceed in camera under s 90(1)(e) deserved deference. The court found it was not obvious what basis the City had for that conclusion, since the City had put forward no rationale and left the court with no reasoning to defer to.

More compelling was the City's argument that the statutory scheme imposes no duty of fairness before notice is given, for which it cited authorities including Favor v. Winnipeg (City) and Purchase v. Terrace (City). Pointing to the narrow challenge rights under the EA, the City argued that any fairness obligation was correspondingly limited. It also said the complaint was premature, since the Owner's rights would be affected only if the City approved the expropriation under s 18 and passed a s 31 resolution. To meet whatever procedural obligation it may have at that stage, the City indicated its willingness to give the Owner a right to be heard before taking those steps.

As for reasonableness, the City said the Owner's unreasonable demands and obstruction of the repairs left it little choice. It noted that the Owner, having defeated the earlier injunction by disclaiming any intention to impede public access, had since done exactly that. On that basis, the City argued that the Owner lacked clean hands and had brought the petition for the collateral purpose of forcing the City to accept its negotiating terms (citing Cosman Realty Ltd. v. Winnipeg (City), 2001 MBQB 154). The City further maintained that its negotiating position was not subject to judicial review.

The Owner relied on paragraph 102 of Betton J.'s reasons, where he said the cost of maintaining the boardwalk within the right of way area "may well be the subject of negotiation and agreement" and that the parties "may determine a practical solution between them." From this, the Owner argued that the City was obliged to keep negotiating until an agreement was reached. In reply, the City characterized the passage as obiter dicta that created no duty to negotiate indefinitely.

Milman J. found the fairness complaint weak but not entirely frivolous. However narrow the Owner's scope to complain under the EA, the City's decision to embark on expropriation could not be completely insulated from review (citing Democracy Watch v. Canada (Attorney General), 2026 SCC 28). Even so, the City's promise of a hearing before the expropriation actually occurs weakened the Owner's claim about being denied a hearing to date.

Similar reasoning applied to the reasonableness ground, which the court described as not without problems but not frivolous. Its outcome, he said, would likely depend on whether abandoning negotiations was reasonable in light of the parties' positions, among other things. The first branch was met, with the relative strength of the merits to be revisited under the balance of convenience.

Irreparable harm, the court explained, is harm that cannot be remedied in damages, judged by its nature rather than its magnitude, and it can arise where a claim would otherwise become moot (Penner v. British Columbia (Minister of Forests, Lands & Natural Resource Operations), 2018 BCSC 26). The Owner argued that expropriation would cut off its restaurant patio and adjacent marina from the rest of the property. If the expropriation occurs, the City offered an easement to preserve that access.

Setting that issue aside, Milman J. noted it was not seriously disputed that a transfer of title would itself be irreparable harm. Serving notice alone is reversible under s 19, but once the City approves the expropriation, the payment and vesting deadlines follow and s 51 then bars any challenge. If approval came before the petition was decided, title could be lost irretrievably and the Owner's complaints rendered moot. With no indication that the City would pause the process, the second branch was satisfied.

On the balance of convenience, the court applied the factors listed in Wizedemy Inc. v. Karras, 2024 BCSC 630, aff'd 2024 BCCA 301. Each party blamed the other for disturbing the status quo. Milman J. said he would have agreed with the City had the issue arisen in an action by the City to enforce the SRW. He found instead that the City bore responsibility here, because it had launched a process that, if completed, would permanently and irrevocably change the parties' legal relationship. That factor favoured an injunction.

Public interest pointed the other way: the public has an interest in seeing the boardwalk repaired and reopened, and given the impasse, expropriation was more likely to achieve that in the near future. Neither side's position on the merits was so obviously strong as to tip the balance significantly. Weighing these factors, the court held that any prejudice to the public from an injunction would be only temporary. It added that expropriation alone might not guarantee reliable, stable public access to the boardwalk any time soon.

Ruling and overall outcome

Finding each element of the test satisfied, Milman J. granted 1004364 B.C. Ltd. an interim injunction [the reasons describe the application as one for an "interlocutory injunction" at para 6 and the relief granted as an "interim injunction" at para 38]. The injunction prohibits the City of Kelowna, in its capacity as approving authority, from approving the expropriation under s 18 of the EA or resolving under s 31 of the Community Charter to proceed with it, pending the outcome of the proceeding or further order of the court. The Owner succeeded on the application, though the court noted that its underlying claims were not particularly strong and the merits of the petition remain to be decided. No damages, costs or other monetary amount were ordered or awarded, and the reasons do not address costs.