Do I have to share a personal injury settlement with my ex-spouse?

Short Answer:

Damages which relate to personal injuries, such as general damages for pain and suffering, damages for costs of future care, or special damages are exempt from property division. However, damages which compensate income loss for a period during the marriage are not exempt from property division.

The burden rests with the party proving an exemption to show which portion of their personal injury settlement relates to pain and suffering and is not related to income loss for a period during the marriage.

Review of the Law:

In Williams v Williams, our Court of Appeal stated that damages paid to a spouse for personal injuries to compensate for claims such as for general damages for pain and suffering may be excluded from the division of property if it is established to the satisfaction of the court that they are not compensation for economic loss suffered by the marriage “partnership”.

With that in mind, how would someone satisfy the court that the compensation from a personal injury settlement was not for economic loss suffered by the marriage partnership?

In a recent decision called Dobrovolsky v Dobrovolsky, our Court of King’s Bench expected the party claiming an exemption to provide the Court with a copy of the file from the law firm handling the personal injury suit. Documents from the law firm that handled a personal injury claim may reveal what portion of the settlement were meant to compensate for pain and suffering and what portion was for economic loss suffered by the marriage partnership.

However, the Court took a different approach in Nuttall v Rea, to determine the portion of a settlement that was exempt from property division. The starting point was to assume 75% of the entire settlement would be attributable to general damages (pain and suffering) and would be exempt.

Conclusion:

The portion of personal injury settlements that do not compensate for economic loss to the marriage partnership are exempt from property division. The onus is on the party seeking funds to be exempt to satisfy the court which portion should be exempt.