Alexander Melfi

A private mortgage lender purchased mortgage insurance from an insurer and became the victim of mortgage fraud.

The lender's lawyer paid mortgage proceeds to the borrower's lawyer in trust rather than directly to the borrower.

The insurer denied coverage based on an exception clause requiring proceeds to be paid to the registered title holder.

The application judge found the exception did not apply.

The insurer appealed.

The majority of the Court of Appeal upheld the application judge's decision, holding that payment to the borrower's lawyer in trust constitutes payment to the borrower for purposes of the insurance policy.

The dissent argued the exception clause was unambiguous and applied because the funds were not paid directly to the registered title holder.

The appellant appealed a decision of the Superior Court of Justice dismissing his motion for default judgment against the respondent law firms.

The respondents moved to quash the appeal for want of jurisdiction.

The Court of Appeal found that the order appealed from was interlocutory in nature, as it did not finally determine any issue in the proceeding.

Accordingly, jurisdiction lay with the Divisional Court, not the Court of Appeal.

The appeal was quashed without prejudice to the appellant's right to apply to the Divisional Court for leave to appeal.

Costs of $1,500 were awarded to each of the two moving parties.

The defendant brought a motion for security for costs against the plaintiff, Aaron Goldman, who was ordinarily resident outside Ontario.

The court found that Goldman failed to meet the high evidentiary threshold to establish impecuniosity, as his financial disclosures were incomplete and lacked supporting documentation.

Furthermore, the court determined that Goldman's professional negligence claim against his former solicitor did not have a good chance of success, particularly given a prior ruling by Justice Myers on a limitations defence in a related action.

The motion for security for costs was granted, requiring Goldman to post $60,000.00.

The applicant lender sought a declaration of coverage under a title insurance policy after a private mortgage transaction was discovered to be an identity fraud.

The respondent insurer denied coverage, relying on an exception that applied if mortgage proceeds were paid to anyone other than the registered titleholder.

The funds had been disbursed to the borrower's lawyer in trust.

The court held that the exception was ambiguous and did not clearly require direct payment to the titleholder.

Construing the ambiguity against the insurer, the court found the exception did not apply and declared that the policy provided coverage for the loss.