Key Issues:

• Whether the insurer (Dominion of Canada General Insurance) was responsible for covering water damage under the policy.
• Interpretation of an exclusionary clause regarding water entering through basement walls.

Background:

• A watermain burst, causing flooding in the respondent’s (policyholder's) property.
• The insurance policy excluded coverage if water entered the property through basement walls.
• The insurer denied coverage, arguing that the water entered through a pipe that transected the basement wall.
• The motion judge ruled in favor of the respondent, finding that the pipe was distinct from the wall.

Court of Appeal’s Decision:

• The appeal was dismissed, affirming that the exclusion clause did not apply.
• The court found that:
  • A wall serves to enclose and protect a property, while a pipe enables fluid entry.
  • The policy did not explicitly exclude water entering through pipes.
  • Any ambiguity must be resolved against the insurer (contra proferentem rule).
• The appellant failed to prove the exclusion clause applied.

Outcome:

• Appeal dismissed.
• Insurer must cover the damage.
• Costs of $8,000 awarded to the respondent.