COAST AUTOMOTIVE GROUP INC (RE), 2026 ABKB 490

This decision arose from competing costs Applications following the dismissal of a cross Application in proceedings under the Companies’ Creditors Arrangement Act (“CCAA”). The successful parties, the Monitor and the secured creditor, sought costs against the unsuccessful parties. The principal issue was whether the Court should depart from the usual practice in CCAA proceedings that each party bears its own costs and, if so, the appropriate entitlement, scale, and quantum of costs.

Justice Mah considered the interaction between the Rules and costs principles applicable in CCAA proceedings. Mah J. confirmed that, although the CCAA contains no costs provisions, the Court retained discretion to award costs under the Rules and its inherent jurisdiction. Applying Rules 10.29, 10.31, and 10.33, the Court held that while the ordinary practice in CCAA proceedings was for each party to bear its own costs, that practice could be displaced where the unsuccessful party advanced unusual applications, adopted unreasonable positions, took unnecessary procedural steps, or otherwise increased the costs or delayed the winding up of the estate. The Court further held that costs could also be awarded where the proceeding had evolved from a stakeholder forum into a traditional adversarial proceeding, or where the applications served no legitimate remedial purpose under the CCAA but instead sought to obtain a tactical advantage in collateral litigation.

Applying these principles, Justice Mah concluded that the unsuccessful parties had opposed the Monitor’s Application to terminate the CCAA proceedings and advanced a Cross-Application seeking to continue the proceedings, replace the Monitor, and assume control of the proceedings in order to advance collateral litigation against the secured creditor. Mah J. found that the Applications did not further any recognized objective of the CCAA, unnecessarily prolonged the proceedings, increased costs, and transformed the restructuring process into an adversarial dispute unrelated to the remedial purposes of the CCAA. The Court rejected the argument that the Monitor had forfeited its entitlement to costs by taking an adversarial position, holding that the Monitor had acted consistently with its statutory role in preserving the integrity of the CCAA proceedings.

The Court then considered the appropriate scale of costs under Rule 10.31. Justice Mah confirmed that Schedule C was not the mandatory default and that the appropriate Costs Award remained a discretionary exercise guided by proportionality and reasonableness. The Court held that Schedule C was inappropriate because of the complexity, importance, and intensity of the proceedings, and instead awarded costs based on 50% of the successful parties’ actual legal fees. Finally, the Court held that if the parties could not agree on the quantum of costs, either party could seek an assessment under Rule 10.41, with the Assessment Officer determining any issues arising from redacted accounts.