Executive Summary: Key Legal and Evidentiary Issues

• Coast Automotive Group and Non-CCAA Parties sought permission to appeal a chambers judge's March 10, 2026 order that denied their requests to compel further examination of the court-appointed Monitor, BDO Canada.

• Restrictions on cross-examining court-appointed officers in CCAA proceedings are well-established, requiring exceptional or unusual circumstances that the applicants failed to demonstrate.

• The chambers judge found that many interrogatories related to historical concerns or the separate Founder's Claim rather than live issues within the CCAA proceedings.

• Security for costs of $100,000 was ordered against the Non-CCAA Parties given the lack of enforceable assets in Alberta, exhausted corporate funds, and reliance on third-party litigation financing.

• Appellate intervention in CCAA matters is exercised sparingly, with considerable deference afforded to the supervising chambers judge's discretionary decisions.

• All applications for permission to appeal and for a stay of the March 10, 2026 order were dismissed by the Court of Appeal.

Background and the CCAA proceedings

Coast Automotive Group Inc., along with Coast North Vancouver Auto Sales Inc., Coast Auto Drayton Inc., and 2461765 Alberta Ltd (collectively, the "Coast Automotive Group"), entered proceedings under the Companies' Creditors Arrangement Act (CCAA). BDO Canada Limited was appointed as the court-appointed Monitor to oversee the proceedings, and the Bank of Montreal was a creditor to whom the Coast Automotive Group owed in excess of $16 million. The CCAA action had been ongoing since July 16, 2025, and by the time of this appeal decision, the Coast Automotive Group's primary assets had all been sold, with remaining cash expected to be exhausted by perhaps late March 2026.

The Founder's Claim and related disputes

Separately from the CCAA proceedings, the Coast Automotive Group and the Non-CCAA Parties — Sundeep Cheema, Deepak Parmar, Harjot Randhawa, and Deerfoot Atria Partners — commenced a civil action on November 28, 2025, known as the Founder's Claim. This claim was brought against the Bank of Montreal and alleged breach of contract, breach of fiduciary duty, misrepresentation, defamation, improvident realization, and constructive trust. The existence of this parallel lawsuit became a significant factor in the court's assessment of the applicants' motives in seeking further examination of the Monitor.

The chambers judge's March 10, 2026 order

On February 6, 2026, a chambers judge heard submissions on multiple applications. In her Endorsement dated March 10, 2026, she dismissed the Coast Automotive Group's and Non-CCAA Parties' applications to compel the oral examination of a BDO corporate representative concerning the Monitor's Third Report (filed December 3, 2025), and to order a re-attendance for cross-examination on the Monitor's Fee Affidavit (sworn December 2, 2025). The chambers judge noted that Canadian courts have consistently held that court-appointed officers are not generally subject to questioning absent exceptional or unusual circumstances. She reviewed the twenty-five interrogatories that had been put to the Monitor and determined that many related to historical concerns about the Monitor's conduct or the Bank of Montreal's actions leading up to the sale of the dealerships — matters already resolved through court orders and potentially more relevant to the Founder's Claim than the CCAA proceedings. She also found that questions objected to during cross-examination on the Fee Affidavit did not relate to whether the Monitor's fees and activities were reasonable and proper, which was the only issue engaged by the Fee Affidavit. In addition, the chambers judge granted the Bank of Montreal's application for security for costs, ordering the Non-CCAA Parties to post $100,000 on or before March 24, 2026, having considered the lack of significant assets belonging to the Non-CCAA Parties in Alberta, their reliance on third-party financing, and the fact that every dollar spent reduced the Bank of Montreal's recovery.

The application for permission to appeal

The Coast Automotive Group and Non-CCAA Parties applied to the Court of Appeal of Alberta for permission to appeal the March 10, 2026 order and for a stay of that order. The matter was heard on an urgent basis on April 15, 2026, before the Honourable Justice Kevin Feehan, with a request for an oral decision from the bench. Reasons were filed on April 16, 2026. The applicants argued that the rights of parties to evaluate a Monitor's evidence and the Monitor's duty of full and fair transparent disclosure were important in CCAA proceedings, and that the chambers judge did not evaluate the reasonableness of their requests, particularly since they were questioning the Monitor's objectivity and neutrality.

The Court of Appeal's analysis on leave to appeal

Justice Feehan applied the well-established four-part test for leave to appeal under the CCAA: whether the point on appeal is significant to the practice; whether the point raised is of significance to the action itself; whether the appeal is prima facie meritorious, in that it is not frivolous; and whether the appeal will unduly hinder the progress of the action. On significance to the practice, the court found that restrictions on the cross-examination of court-appointed officers is settled law, which has been addressed multiple times, and the application of settled law to these facts did not have significance to the CCAA practice. On significance to the action, the court noted the applicants had already had an opportunity to ask and receive answers to relevant questions on the Third Report and the Fee Affidavit, and that further cross-examination or written interrogatories would not resolve the remaining issues in the proceeding and would risk compromising the Monitor's neutrality and impeding the progress of the action. On the merits, the court acknowledged it was not possible to say that the requests were frivolous; however, the applicants' concerns did not rise above the necessary requirement for exceptional or unusual circumstances, and a review of the application did substantiate the concern that one of the driving goals was to obtain information for the Founder's Claim. Finally, granting leave would delay the full-day hearing scheduled for April 17, 2026, and a decision to allow further interrogatories and examinations would delay the timely and orderly resolution of the CCAA proceedings.

Security for costs

Regarding the security for costs order of $100,000, the court noted that the security had already been posted with counsel as required. The chambers judge's discretionary decision was supported by her consideration of all relevant factors under Rule 4.22 of the Alberta Rules of Court, Alta Reg 124/2010, including the finding that there was little likelihood the Bank of Montreal would be able to enforce a costs award against assets in Alberta, little ability for the Coast Automotive Group and Non-CCAA Parties to pay a costs award, and the fact that the Bank of Montreal was financing the entirety of the CCAA proceedings while the cross-application would consume what little liquidity remained. The Court of Appeal found no basis for appellate intervention, noting that the applicants failed to demonstrate how an appeal of the discretionary order would hold significance to the practice or the proceeding, particularly given that security had been posted and the cross-applications would proceed on April 17, 2026.

Ruling and outcome

Justice Feehan dismissed all applications for leave to appeal — both on the request for further interrogatories, examination, and cross-examination of a corporate officer of BDO, and on the security for costs order. The Bank of Montreal and BDO Canada Limited, as respondents, were the successful parties. No specific monetary award was determined in this appellate decision beyond the previously ordered security for costs of $100,000, which had already been posted. The cross-applications remained set to proceed before the chambers judge on April 17, 2026.