Court of Appeal for Ontario
Before: Paciocco, Sossin and Wilson JJ.A.
Between
Peninsula Employment Services Ltd.
Plaintiff (Appellant)
and
Marc Castillo*, Castillo HR Consulting Inc.*, Borderworx Logistics Inc.*, Smart Information Technologies Ltd.*, Creative Minds Children Services Inc*., Anita Crawford, Erika Saclayan, Nikki Mathews
Defendants (Respondents*)
Counsel:
Brett Hughes, for the appellant
Hailey Bruckner and Ryan Shah, for the respondents Marc Castillo and Castillo HR Consulting Inc.
No one appearing for the respondents Borderworx Logistics Inc., Smart Information Technologies Ltd. and Creative Minds Children Services Inc.
Heard and rendered orally: June 17, 2026
On appeal from the order of Justice Edward M. Morgan of the Superior Court of Justice, dated February 24, 2025, with reasons reported at 2025 ONSC 1121.
Reasons for Decision
1The law has changed since the motion judge stayed the proceedings below. He did so after finding that the appellants committed an abuse of process by failing to immediately disclose settlement agreements they had reached with the defendants who had formerly been employed by the Castllo respondents. The Handley Estate doctrine that he relied upon was overruled after his order was made in 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City), 2026 ONCA 352.
2The motion judge followed the guidance in the Handley Estate authorities and therefore did not base his abuse of process decision on a close, case-specific assessment of the circumstances, as is now required. Instead, he applied the zero-tolerance approach for breaches of the immediacy requirement that was supported by the Handley Estate authorities.
3Moreover, although he identified steps that Peninsula took after negotiating the settlements, he did not give the kind of consideration to whether Peninsula’s conduct caused actual prejudice to the Castillo respondents Welland now requires. Nor was the record developed before him with that consideration in mind. Prejudice is now an important consideration in deciding whether an abuse of process has occurred.
4After finding an abuse of process, he imposed the stay on the basis that it was the only available remedy, and he commented that he was “compelled to agree” that this was so. The authority that compelled that outcome has been set aside.
5The decision was therefore litigated and based on what, according to the current law, was an unduly rigid and limited inquiry. The decision cannot stand. This is not an appropriate case for this court to substitute a decision based on the factual findings the motion judge made. Those findings are not complete enough to permit a proper assessment. We are persuaded that this matter should be reargued both with respect to whether there has been an abuse of process and, if so, the appropriate remedy.
6We make no comment on the disclosure issue below, as this matter is not properly before us.
7The appeal is therefore allowed, and the decision is set aside and remitted back to the motion judge for re-determination on the current law.
8The parties are continuing to attempt to negotiate a settlement on the costs order to be made. By Friday, June 26, 2026, the parties shall notify the court of any settlement relating to the costs of the appeal or the proceeding below. Failing settlement, by that same deadline, the parties are to provide bills of costs, and up to five pages of written submissions.
“David M. Paciocco J.A.”
“L. Sossin J.A.”
“D.A. Wilson J.A.”