Marcus A. Knapp

The plaintiffs alleged that Maria Surovova and her company, Maria Mortgage Services Inc., engaged in a mortgage churning scheme, inducing the plaintiffs to take out a series of mortgages and transfer the proceeds to Surovova under the pretense that the funds would be applied to their mortgages.

Instead, Surovova misappropriated the funds for personal use.

The court found Surovova liable for civil fraud and breach of fiduciary duty, awarding the plaintiffs $1,666,059.13 in damages and $215,603.52 in costs.

The appellant appealed a motion judge's order finding that her insurer was obliged to defend and indemnify the respondent, Hertz Canada Limited, under s. 277(1.1) of the Insurance Act.

The Court of Appeal held that s. 277(1.1) imposes no duty on the appellant's insurer to defend on behalf of Hertz, as it speaks only to priorities of payment.

The Court also found that the indemnity issue could not be resolved on the current record.

The appeal was allowed in part and the order varied.