A stay bid to pause a real estate buyout backfired - into a bill
An Ontario court ordered an investment firm and its lender affiliates to pay nearly $27,000 in costs over a failed stay bid.
The ruling was released June 25, 2026 by the Divisional Court of the Ontario Superior Court of Justice. It resolves the costs left over from an earlier decision, 2025 ONSC 6527, which dismissed a motion by The Morgan Investments Group Inc. (Morgan) and two lender affiliates, 1000185781 Ontario Inc. and 1001259155 Ontario Inc. (the Secured Lenders), for a stay of parts of lower-court endorsements pending their appeal of an August 27, 2025 ruling.
The underlying fight involves a court-ordered buyout connected to Adi Morgan Developments (Lakeshore) Inc., a project tied to developer Adi Development Group Inc. (ADG) and a director of the company. Morgan and the Secured Lenders wanted parts of the lower court's orders paused while their appeal proceeded. Justice M.D. Faieta found none of the three elements required for a stay had been established.
ADG sought elevated, substantial indemnity costs of $45,680.08, arguing the stay motion was a bad-faith attempt to disrupt a court-ordered buyout at the last minute. ADG also pointed to its offer to post a $1.5 million charge on another real estate project to keep the buyout on track, and argued the moving parties misled the court by claiming the Secured Lenders were strangers to the litigation. The Secured Lenders sought costs in the cause, or alternatively $20,000 in partial indemnity costs. Morgan asked for costs in the cause of the appeal.
Justice Faieta rejected ADG's bad-faith framing. He found Morgan did not mislead the court and described the fight as hard-fought but misguided litigation, not the malicious conduct required for an elevated costs award. He also declined to order costs in the cause, ruling that the principle does not extend to a stay motion pending appeal.
On quantum, the judge noted the Secured Lenders' own partial indemnity costs, $28,146.63, exceeded ADG's claimed $26,950.90. He declined to second-guess the time ADG's counsel billed, finding it was not appropriate to do so given the matter was argued on an expedited basis. Because Morgan had actively supported the stay motion rather than staying on the sidelines, the judge found no basis to split costs between Morgan and the Secured Lenders.
Morgan and the Secured Lenders were ordered to pay ADG partial indemnity costs of $26,950.90 within 30 days.
For funds and lenders active in private real estate financing, the ruling is a plain reminder: a failed stay motion carries a real cost, and courts are unlikely to spare unsuccessful moving parties from paying it, even while the underlying appeal is still pending.
