Winnipeg restaurateur Joe Chan says he intends to appeal a judge's decision that cleared Mayor Sam Katz in a conflict-of-interest case.

Justice Brenda Keyser ruled on Friday that conflict-of-interest legislation does not apply to a 2010 Christmas party Katz threw for city councillors at Hu's Asian Bistro.

Katz, who owned the restaurant at the time, paid the $3,000 tab with taxpayers' money.

The case was brought forward by Chan, who owns Cathay House restaurant.

In her ruling, Keyser said Katz's conduct amounted to "bad political and ethical behaviour," but she believed triggering a costly election was not in the public's best interest.

Keyser also ruled that Chan would have to pay $10,000 towards Katz's legal costs.

"I can't accept the judgment, and so [does] the public. And I do not want to disappoint the public," Chan told CBC News on Tuesday.

He added that the judge's order that he pay Katz's legal costs may deter taxpayers from challenging politicians.

Chan said he plans to accept donations from those who want to fund his appeal.