Chicago Title must fund a lawyer's defence in most of 14 mortgage-related lawsuits, Ontario's Superior Court has ruled.
In a decision released August 31, 2026, Justice Edwards found that Chicago Title Insurance Company owes a duty to defend the lawyer and his professional corporation under an indemnity agreement the insurer holds with the Law Society of Ontario, dated November 12, 2009. That agreement requires Chicago Title to indemnify and save harmless any Law Society member acting for a chargee or transferee in a title-insured transaction, except for claims involving the member's gross negligence or wilful misconduct.
Between 2019 and 2022, the lawyer and his firm were named as defendants in the 14 actions, which together touch more than 60 properties. Private lenders accused the lawyer of failing to follow their instructions, misrepresenting the value of prior encumbrances, improperly disbursing mortgage funds, or failing to supervise staff accused of forging documents and postponing charges without consent. Chicago Title had issued title insurance covering most, though not all, of the underlying mortgages.
The insurer argued it owed no duty to defend at all, saying that regardless of how the claims were labelled, their true basis was gross negligence or fraud, which the indemnity agreement excludes. Chicago Title further argued that even if a duty to defend applied, only the cost of defending the negligence-based portions of each claim should fall to it.
The court rejected that framing for most of the actions. A duty to defend arises wherever the pleadings raise even a mere possibility of a covered claim, and any ambiguity about coverage favours the insured - principles the court applied to find that most of the actions pleaded ordinary negligence alongside the excluded claims of gross negligence and wilful misconduct. That was enough to trigger the duty to defend, even though the lawyer conceded some of the underlying conduct could ultimately be found to fall outside coverage once the facts are established at trial. The reasons cited a long-standing principle that a lawyer facing a covered claim "should never have to put his hand in his pocket" while that determination is made.
The insurer did prevail in a small number of the actions, including one where the pleadings never raised negligence at all, and another where the plaintiff was a mortgagor rather than a mortgagee and so fell outside the policies at issue.
Defence costs cannot yet be divided between covered and uncovered claims, the court found, since that determination depends on facts that will only be established at trial or settlement. The parties were encouraged to reach their own allocation agreement; failing that, Chicago Title must keep funding the defence in full, subject to a retroactive adjustment once each action concludes. The court also ordered Chicago Title to reimburse the lawyer for defence costs already incurred in the actions where a duty to defend was found.
