Two Winnipeg short-term rental operators have failed to obtain an order forcing a condominium corporation to approve their rental-licence applications while their lawsuit proceeds.
In MacDonald et al. v. Winnipeg Condominium Corporation No. 989 et al., 2026 MBKB 138, Justice Kotler of the Court of King’s Bench of Manitoba dismissed the interlocutory injunction application on October 5, 2026. The operators had not shown the strong likelihood of success or harm incapable of being compensated with damages needed for the requested relief.
The ruling does not decide the underlying lawsuit or establish a general ban on short-term rentals. The judge expressly described the assessment of the condominium corporation’s authority and conduct as preliminary, recognizing that the evidence at trial could be different.
Annual approval was essential to the rental business
Murray and Sandra MacDonald lease condominium units from their owners and then sublet them through platforms such as Airbnb and Vrbo. They are rental operators, rather than the owners of the units involved in the application.
The dispute concerns their operations in Winnipeg’s Glasshouse Skylofts condominium complex. Under the city bylaw described in the reasons, rentals lasting fewer than 30 consecutive days require a separate short-term rental accommodation licence for each unit. Licences last a year and must be renewed.
For the non-primary-residence condominium rentals at issue, applicants also need a letter from the condominium board approving the operation. That made board consent an annual requirement for the MacDonalds’ business in the building.
The MacDonalds alleged that, beginning in November 2025, the corporation denied or failed to respond to applications involving more than a dozen units. They said the refusals were unjustified, damaged their reputation and threatened the business. The corporation maintained that its decisions reflected concerns about security, disruption and the quiet enjoyment of other residents.
The operators filed a lawsuit in February 2026 alleging intentional interference with economic interests and defamation by a board member. Their injunction application followed in April. They sought an order stopping the corporation from withholding consent while that dispute was resolved.
An order to approve, not simply to stop
The wording of the requested order mattered less than what it would actually require the corporation to do.
Ordinarily, an applicant seeking an interlocutory injunction must show a serious issue to be tried, irreparable harm if relief is refused, and a balance of convenience favouring the order. But an injunction compelling a positive action carries a higher first-stage threshold: a strong likelihood that the applicant will ultimately succeed at trial.
Kotler found that this was a mandatory injunction. Although framed as stopping the corporation from withholding consent, it would require the board to issue affirmative approval letters. The MacDonalds did not identify a pre-existing entitlement to those letters; licences had to be obtained anew for each unit and each year.
It was therefore not enough to raise an arguable dispute about the board’s decisions. The operators had to show that their position was very likely to succeed.
Board authority assessed on a preliminary record
The MacDonalds argued that approval could not be withheld because neither the city bylaw nor the building’s governing documents supplied criteria for refusing it. They also relied on earlier communications in which the corporation had said it could not prohibit short-term rental operations.
Kotler was not persuaded that the absence of listed criteria made approval automatic. In the judge’s preliminary interpretation, requiring approval gave the board a decision-making role. The bylaw allowed individual buildings to determine the conditions on which short-term rentals could operate, subject to their own governing documents.
The corporation’s duties were also relevant. Its declaration and rules addressed safety, nuisance and unreasonable interference with other residents’ use of their homes and common areas. The judge considered those responsibilities relevant to the approval decision.
The ruling did not treat every allegation raised by the corporation as established fact. Kotler acknowledged limitations in the hearsay materials and some merit in the operators’ objections. Nor did the court have a comprehensive incident history allowing it to put the concerns in full context. Even so, the judge could not conclude that the corporation’s security and disruption concerns lacked any basis.
The operators also alleged that a board member’s rental business created a competitive conflict. The judge found too little evidence about the board’s composition, approval process and that member’s influence to give the allegation significant weight. Evidence indicated that five board members made the decisions collectively.
Arguments based on directors’ duties of honesty and care, and the provincial prohibition against condominium corporations prohibiting unit rentals, did not establish the required likelihood of success either. On the preliminary record, Kotler distinguished a blanket prohibition on owners renting their units from decisions concerning particular proposed rental operators. The court also lacked comparative evidence about other applications from which to infer improper unequal treatment.
For their economic-interference claim, the MacDonalds would have to establish that the corporation was not entitled to refuse approval in these circumstances, or was not entitled to proceed as it did. The injunction record did not show a strong likelihood of proving that at trial.
Business risk was not enough without supporting evidence
The judge accepted that the dispute posed risks to the operators’ reputation and market share. Their relevant customers were the unit owners who leased properties to them, not just the guests who later booked stays.
But the market at issue was a single building with a finite group of owners. A later judgment in the operators’ favour could be brought to those owners’ attention, helping restore their reputation. Although owners might choose other operators and never return, the rental and earnings history of the affected accounts offered a way to calculate lost revenue.
The MacDonalds also argued that their business would not survive until trial. They had operated for about eight years and worked in other buildings, but the court was not told how many other units they leased or what proportion of their revenue came from Glasshouse. Without that information, Kotler could not assess the claimed risk of business failure.
The balance of convenience initially did not clearly favour either side. The operators faced lost leases and the expense of moving or storing furnishings. The corporation, meanwhile, had responsibilities to residents, staff and guests that could not simply be transferred to the city’s licensing review process.
Ultimately, the judge’s reservations about the operators’ likelihood of success tipped that balance toward the corporation. Having considered all three parts of the test, Kotler dismissed the injunction application. The reasons award no quantified damages or costs, and the underlying claims remain unresolved.
