Executive Summary: Key Legal and Evidentiary Issues

• The Court of Appeal for Ontario issued a costs decision arising from an appeal heard and decided orally on June 17, 2026.
   
• Success on the appeal was divided between the parties, leading the court to order that each side bear its own costs.
   
• Justice Morgan's underlying stay motion decision, originally reported at 2025 ONSC 1121, forms the basis for the dispute over costs.
   
• Costs of the original stay motion below were reserved to the judge who rehears that motion.
   
• Rule 37.09(3) of the Rules of Civil Procedure governs how costs will be addressed if the stay motion is abandoned.
   
• Respondents successfully resisted the appellant's request for an order concerning the disclosure/Anton Piller issue.
   

Facts of the case

This is a costs decision following an appeal in Peninsula Employment Services Ltd. v. Castillo. The appeal arose from an order of Justice Edward M. Morgan of the Superior Court of Justice, dated February 24, 2025, with reasons reported at 2025 ONSC 1121. The panel—Paciocco, Sossin and Wilson JJ.A.—heard and rendered its decision on the appeal orally on June 17, 2026. Brett Hughes appeared for the appellant, Peninsula Employment Services Ltd., while Hailey Bruckner and Ryan Shah appeared for the respondents Marc Castillo and Castillo HR Consulting Inc. No one appeared for the respondents Borderworx Logistics Inc., Smart Information Technologies Ltd. and Creative Minds Children Services Inc. This decision addresses only the allocation of costs, both for the appeal and for the proceedings below.

Policy and legislative provisions at issue

The decision references rule 37.09(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which governs the respondents' entitlement to costs of an abandoned motion. The court applied this rule in determining how costs below should be handled if the stay motion is not pursued further.

Reasoning and analysis

The court explained that success on the appeal was divided, making it an appropriate case for each party to bear its own costs. The appellant succeeded in setting aside a permanent stay of proceedings, a result the court attributed to a change in the law that occurred after the motion judge's decision was released. However, the court declined the appellant's request to find that no abuse of process had occurred; instead, it remitted the stay motion back for reconsideration, leaving that issue alive. The respondents, in turn, succeeded in resisting the appellant's attempt to obtain an appellate order on the disclosure/Anton Piller issue. Regarding costs below, the court reasoned that because the stay motion must be reheard, it was appropriate to reserve those costs to the judge conducting the rehearing, noting that work done during the first motion could likely be relied upon at the rehearing. The court further reasoned that if the motion is abandoned, resolving the costs below together with the costs of the abandoned motion under rule 37.09(3) served the interests of justice, given the close relationship between the two proceedings.

Ruling and overall outcome

The Court of Appeal for Ontario ordered that each party bear its own costs of the appeal. The costs of the proceedings below were reserved to the judge who rehears the stay motion, and if that motion is abandoned, those costs are to be resolved together with the costs of the abandoned motion under rule 37.09(3) of the Rules of Civil Procedure. No monetary amount was ordered or specified in this decision, as the ruling deals solely with the allocation and deferral of costs rather than a quantified award.