Executive Summary: Key Legal and Evidentiary Issues

• Justice Mah decided whether the Monitor, BDO Canada Limited, and the Bank of Montreal (BMO) were entitled to costs after successfully defeating a cross-application brought by Coast Auto Group and related non-CCAA parties.
   
• Entitlement to costs in a Companies' Creditors Arrangement Act (CCAA) proceeding required departing from the usual practice that each party bears its own costs.
   
• Coast Auto Group argued the Monitor had improperly "entered the fray" and lost its neutral, court-appointed status.
   
• Determining the appropriate scale meant choosing between Schedule C tariff rates and a percentage-based indemnity model.
   
• Quantum disputes centered on whether the Monitor's and BMO's legal accounts were excessive or improperly redacted.
   
• BMO separately sought full indemnity costs based on prior court orders and loan agreements tied to a pending, unrelated lawsuit against it.
   

Facts of the case

This costs ruling arises out of a CCAA proceeding involving Coast Automotive Group Inc, Coast North Vancouver Auto Sales Inc, Coast Auto Drayton Inc, and 2461765 Alberta Ltd (collectively, Coast Auto Group). The proceeding was initiated by BMO as senior secured creditor, and the Monitor, BDO Canada Limited, later applied to terminate the CCAA proceeding once the company's assets — a Stellantis dealership in North Vancouver, BC, and a Stellantis dealership and associated lands in Drayton Valley, Alberta — had been sold through a court-supervised Sales and Investment Solicitation Process completed in October 2025. Coast Auto Group, together with individuals Sundeep Cheema, Deepak Parmar, and Harjot Randhawa, and the entity Deerfoot Atria Partners Ltd (the non-CCAA parties), opposed termination and cross-applied to continue the CCAA proceeding under their own control, seeking to replace BDO with a new monitor. Their opposition unfolded alongside a separate action they commenced against BMO, the Founders' Claim, alleging wrongful inducement of insolvency. Justice Mah granted the Monitor's application and dismissed the cross-application in a May 11, 2026 decision (2026 ABKB 366) and invited written costs submissions, which the parties filed on June 10, 2026. This July 3, 2026 decision resolves those costs submissions.

Policy and legislative provisions at issue

The CCAA itself contains no provisions governing costs, so the court's authority derives from the Rules of Court and its inherent jurisdiction. Rule 10.31 governs the court's discretion to set reasonable and proper costs, Rule 10.33 lists relevant considerations such as result, complexity, and whether an application was unnecessary or improper, Rule 10.29(1) addresses the presumptive entitlement of a successful party, and Rule 10.41 governs assessment of costs where quantum cannot be agreed. The court drew on prior authority — including Re San Francisco Gifts Ltd, 2004 ABQB 705, Canada North Group Inc, 2020 ABQB 12, and In Re Hudson's Bay Company, 2026 ONSC 1331 — to establish that CCAA participants ordinarily bear their own costs, departing from that norm only in defined circumstances.

Reasoning and analysis

Justice Mah began from the premise that CCAA participants typically bear their own costs, since the CCAA functions as a collective forum for stakeholder views rather than classic adversarial litigation. Departure from that norm is justified where a party takes unusual applications, unreasonable positions, or unnecessary steps that affect the timing or cost of winding up the estate, where the proceeding transforms into a genuinely adversarial dispute, or where an application does nothing to advance the CCAA's remedial objectives. Applying these principles, the court found that Coast Auto Group and the non-CCAA parties pursued their opposition and cross-application primarily to gain leverage and information for the separate Founders' Claim against BMO, rather than for any legitimate restructuring purpose, and rejected their argument that the outcome reflected "mixed success." Turning to the Monitor's conduct, the court held that BDO's adversarial stance was consistent with its statutory role in seeking to terminate a CCAA proceeding whose purpose had been exhausted, and did not disqualify it from costs, distinguishing the circumstances from cases like Ernst & Young Inc v Essar Global Fund Limited. On scale, the court declined to apply Schedule C given the complexity, intensity, and importance of the litigation, instead adopting the percentage-indemnity approach from McAllister v Calgary (City) and settling on 50% of actual legal costs as proportionate. Regarding BMO's claim to full indemnity under prior court orders and loan agreements, the court declined to resolve that question here, since the enforceability of those agreements is contested in the ongoing Founders' Claim, leaving any gap between the 50% awarded and full indemnity to be addressed by the judge deciding that action. On quantum, the court rejected the argument that the accounts rendered were simply too high, but acknowledged that redactions in those accounts limited the ability to verify what the charges covered.

Ruling and overall outcome

Justice Mah ultimately found that the Monitor and BMO, as the successful parties in defeating the cross-application, were entitled to costs from Coast Auto Group and the non-CCAA parties, jointly and severally, on a scale of 50% of their actual legal fees. Rather than fixing a specific dollar figure, the decision directs that if the parties cannot agree on the final amount payable — including how to treat the redacted portions of the accounts — either side may seek an assessment from the Assessment Officer under Rule 10.41; the Monitor and BMO are also entitled to recover actual reasonable disbursements, subject to the same assessment process. The $100,000 previously ordered as security for costs is to be released to BMO's counsel and applied against whatever final costs are ultimately determined. As no exact quantum was fixed in the judgment itself, the precise monetary award remains to be determined through that assessment process.