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Civil Litigation Cases - Costs - 'Costs in the Cause'. The Morgan Investments Group Inc. et al. v. Adi Development Group Inc. et al.
In The Morgan Investments Group Inc. et al. v. Adi Development Group Inc. et al. (Ont Div Ct, 2026) the Ontario Divisional Court considered the concept of motion 'costs in the cause', and an exception for motions to stay pending appeal:Should Costs in the Cause Be Awarded?
[3] An award of “costs in the cause” was explained in The Law of Civil Procedure in Ontario, 5th Ed., Paul M. Perell, John W. Morden, at ¶10.141-¶10.143, as follows:“Costs in the cause” is an order that the party who is eventually awarded the costs of the proceeding is entitled to the costs of the step in the proceeding. Where costs are “in the cause”, the key determinant for a party recovering the costs is that the party is awarded costs at the ultimate trial or hearing. The party need not have been the successful party at the interlocutory step, but he or she will nevertheless recover the costs of it as a part of recovering the costs of the proceeding.
To illustrate, a party unsuccessfully brings a motion for an interlocutory injunction, but the court concludes that it was reasonable for the party to have brought the motion and orders costs in the cause, which means that whichever party succeeds at the trial in recovering costs will recover the costs of the motion. Costs in the cause may be an appropriate order where success on the motion or interlocutory step is divided or where the court concludes that the unsuccessful party should not be penalized in costs if he or she ultimately succeeds in the proceeding. Where a motion for a summary judgment is reasonably brought and the decision to dismiss the motion and send the matter to trial is a close call, it may be appropriate to order costs in the cause. One value of an order for costs in the cause is that the order sustains the value of a party’s investment in his or her litigation until the outcome, and it has the virtue that sometimes it is fair that a party should recover costs for an interlocutory motion – win or lose – if that party ultimately succeeds in the action.
There is a subtle point about an order of costs in the cause. To recover costs it is not sufficient that a party awarded costs in the cause succeed on the merits at the trial of the action or the hearing of the application. What is necessary is that the party succeed in being held entitled to costs. Thus, were the court after the trial to order that there should be no order as to costs, then the pre-condition for recovery of costs in the cause would not have been satisfied. [Footnotes omitted, emphasis added.] [4] Morgan relies on Hanemaayer v. Freure, [2004] O.J. No. 4469 for the principle that the Court favours “… the general rule that costs of motions for leave or stay pending appeal be in the cause or reserved to the appellate court, since success on such motions is not determinative of the appeal”. However, Hanemaayer does not stand for this broad principle. In Hanemaayer, the Court only considered whether costs in the cause should be granted on a motion for leave to appeal and made no statement regarding whether costs in the cause should be awarded on a motion for a stay pending appeal. Specifically, Fedak J. stated, at para. 8:I am satisfied that where a moving party succeeds in a motion for leave to appeal, the court generally awards costs in the cause, or reserves costs to the appellate court. [5] The Secured Lenders submit that it would be unfair for the Court to award costs of the motion for a stay until the appeal is determined. In other words, having lost the battle, they submit that costs in respect of the motion should not be ordered until the Court has determined which party has won the war.
[6] Neither the Secured Lenders nor Morgan cited any caselaw where costs in the cause have been awarded on a motion for stay on appeal. ADG did not respond to this submission.
[7] Rule 57.03(1)(a) of the Rules of Civil Procedure is applicable. It directs that “[o]n the hearing of a contested motion, unless the court is satisfied that a different order would be more just, the court shall, fix the costs of the motion and order them to be paid within 30 days.”
[8] In my view, the principle in Hanemaayer is not applicable on a motion for a stay pending appeal. I find that it would not be just to depart from the general rule described in Rule 57.03(1)(a) in these circumstances. On this motion, none of the three elements for obtaining a stay were established. Neither the Secured Lenders nor Morgan have sufficiently explained why ADG, who successfully defended the motion for a stay, should have the recovery of their costs delayed and bear the risk that they will have to pay their costs of this unsuccessful motion for a stay in the event that this appeal is successful.
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