He joined the board after the lawsuit started. The bill still landed on him
A company director who swore an affidavit he could not stand behind has been ordered to pay costs personally, an Ontario appeal court confirmed.
The Court of Appeal for Ontario released its decision on June 29, 2026, dismissing appeals by UM Financial Inc. and two individuals tied to the company. The court also upheld an order making one of them, a UM director, jointly and severally liable with the company for the other side's costs.
The dispute traces back to 2011. UM Financial and an affiliated entity had borrowed from Central 1 Credit Union beginning around 2005 to support shariah-compliant mortgage products. By 2011 the UM companies owed Central 1 roughly $30 million. Central 1 commenced receivership proceedings, and Grant Thornton Ltd. was appointed receiver on October 7, 2011. UM was assigned into bankruptcy that November and, the courts found, remains an undischarged bankrupt. Grant Thornton was discharged as receiver in January 2013.
What followed was years of litigation against Central 1 and Grant Thornton arising from the same events. On February 29, 2024, UM commenced the action at issue, claiming $5 million for breach of contract, negligence, and misrepresentation. Its theory was that the two firms had misled UM and the courts about the effect of Grant Thornton's discharge as receiver.
A motion judge dismissed that action as frivolous, vexatious, and an abuse of process. He found the company lacked standing because it remained bankrupt, and that the claim was another attempt to relitigate matters already decided. He rejected the idea that changing a company's directors wipes out its litigation history, warning against a "wild west" in which corporations shed prior orders by swapping the people behind them.
The judge also made a vexatious litigant order under section 140 of the Courts of Justice Act. It captured not only UM but its former principal and current directors, requiring them to obtain a judge's leave before bringing further claims tied to the receivership.
The costs finding is the part advisors and firm directors will want to note. The director in question joined UM's board on January 14, 2025, after the action began, then swore an affidavit on February 17, 2025 asserting the company had been discharged from bankruptcy. On cross-examination he could not support that or other statements, had not reviewed key materials, and showed little grasp of the file. The motion judge held him personally responsible for the costs.
The Court of Appeal saw no error. It denied him leave to appeal the costs order and left the vexatious litigant restrictions in place. The panel stressed that a deponent must take care to confirm the truth of sworn statements before signing.
The appellants were ordered to pay the respondents $50,000 in costs of the appeal.
