The applicants sought a declaration that their insurer, CNA, had a duty to defend them in an underlying action for property damage caused by a liquid chlorine leak from their pool supply store into an adjacent unit.
CNA denied coverage, relying on the policy's pollution exclusion.
The court found that the pollution exclusion did not apply because the chlorine leaked into an adjacent indoor premises, not the natural environment, and the underlying claim was for property damage rather than environmental remediation.
The court declared that CNA has a duty to defend the applicants and awarded the applicants their defence costs incurred to date.
