Couples entering into marriage or a long-term relationship usually do so with the intention of staying together for the rest of their lives. However, the tragic truth is that this doesn’t always happen. Marriages and relationships can end for a variety of reasons like incompatibility, infidelity, etc but financial reasons are the most common reasons for a couple to separate.

This is specially true when one of them suffers an accident and there are enormous physical, financial and emotional burdens to be borne. Issues of employment, social interaction, physical and emotional relationships, mobility, support, care-giving etc put a huge strain on the relationship when one of them is seriously injured. When as a result these, divorce is being considered, the issue of a substantial settlement of a personal injury claim being treated as common property arises.

However, a recent ruling by an Ontario Court of Appeals in the case of Hunks vs Hunks the court ruled that such settlements could not be considered as property and are therefore not subject to the divorce proceedings under the Family Law Act. These settlements are “income” and not “matrimonial property” and their value is not to be shared between estranged spouses.

The Hunks vs Hunks Case 

Donna Hunks who is now aged 62 was badly injured in 1996 just eight months after she married her husband Gary Hunks. She was grocery-shopping in a supermarket when she was hit by a loaded shopping cart or palette and was badly injured. She was unable to return to work in the office where she was employed.

She filed a personal injury suit against the supermarket and it was settled for $571,000 including $8000 for her husband who claimed loss of her care, guidance and companionship. She utilized $200,000 for her family’s benefit and the rest was used by her lawyer to purchase her an annuity that would give her a total of four structured payments paid out once every five years, plus a certain amount every month for life.

In 2011, the couple separated. According to Ontario’s Family Law Act, with very few exceptions, all property acquired during the marriage is to be evenly split between the parties. A 2015 Ontario Superior Court deemed that the settlement received by Donna Hunks constituted a “pension” and as such it was part of the matrimonial property and had to be divided equally.

However, on appeal in March 2017, the Ontario Court of Appeals ruled unanimously that this decision was incorrect. It considered that structured payments were more similar to disability benefits which are deemed to be income under the law and thus cannot be divided.

Impact On Future Rulings

The debate regarding structured settlement vs lump sum payments remains valid, but structured settlements now seem more secure and offer a tax-free, guaranteed annuity. Even when relationships end, the injured person’s financial future remains secure. The case has far-reaching effects for personal injury settlements and what lawyers may now recommend to their clients.

Contact an experienced personal injury lawyer with experience in dealing with such cases if you or a dear one faces such an issue.