Executive Summary: Key Legal and Evidentiary Issues

• Law firm disqualified due to conflict of interest involving prior association with opposing party.

• Applications for disqualification were made in two separate actions but sought the same relief.

• CDE Parties claimed $41,675.82 in costs, citing case complexity and delays caused by BEL Parties.

• BEL Parties argued for $9,950.82 in costs, stating the matter was not a trial and involved no misconduct.

• Court found BEL’s conflict opposition unmeritorious and conducted in both actions despite duplicative nature.

• Costs awarded at double Column 5 of Schedule “C” due to high claim value, document volume, and oral argument preparation.

Facts and outcome of the case

The decision in B.E.L. Holdings Inc v CDE Engineering Ltd, 2025 ABKB 21 pertains to a costs determination following a successful application by CDE Engineering Ltd, Leading EPCM Inc, and AJ EPCM (the "CDE Parties") to disqualify a law firm acting for Bluestar Engineering Ltd and B.E.L. Holdings Ltd (the "BEL Parties"). That application was previously decided in the Reasons for Decision issued on May 23, 2024 (2024 ABKB 285).

The disqualification application was based on a conflict of interest, with the CDE Parties asserting that the BEL Parties’ counsel should not continue to act due to prior involvement with individuals now associated with CDE. These parties are involved in two lawsuits against each other, and the disqualification applications were brought in both actions, seeking the same relief.

Following the granting of the disqualification, the CDE Parties sought $41,675.82 in costs. This amount was calculated using Schedule “C” of the Alberta Rules of Court, applying a multiplier of three times Column 5. Their rationale included the complexity of the application, which involved multiple affidavits, cross-examinations, and an interim discovery application, as well as the $17 million amount at issue and alleged conduct by the BEL Parties that delayed proceedings unnecessarily.

The BEL Parties opposed the amount, suggesting costs should be limited to $9,950.82 based on a single application of Column 5. They emphasized that the matter was not a trial or a substantive application on liability, that both applications sought identical relief, and that they did not engage in any litigation misconduct.

Justice M.H. Hollins ruled that while there was no conduct by the BEL Parties that would justify additional punitive costs, their opposition to the conflict allegations lacked merit. Moreover, bringing the same defense in both actions, despite knowing it could lead to double costs, was noted.

Given the amount in dispute exceeded the Column 5 threshold and the proceedings involved substantial documentation and detailed oral arguments, the Court awarded costs based on double Column 5 under Schedule “C” in both actions. The Court also reviewed the draft Bills of Costs and determined that item 1(1) should be removed, as it does not apply to interim applications, while item 8(1) was properly included.