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MARITAL PROPERTY - Equalization or division - Exempt acquisitions and deductions - Award or settlement of damages

Monday, April 17, 2017 @ 9:51 AM  

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Appeal by the wife from characterization of litigation settlement proceeds as property rather than income. The parties married in 1995 and separated in 2011. The wife worked as an office assistant and the husband worked as a millwright. In 1996, the wife suffered significant physical injuries when she was struck by a grocer palette while shopping. The wife sued the supermarket. The action included a claim by the husband for loss of care, guidance and companionship. A 1999 settlement resulted in payment of $571,383 to the husband and wife. The wife used approximately $200,000 for family purposes. In addition, approximately $300,000 of the proceeds was used to purchase a structured settlement annuity. The annuity was non-commutable, non-assignable and non-transferable. It provided for monthly payments for the duration of the wife's life or a minimum guarantee period of 25 years, plus four equal lump-sum payments once every five years. After separation, approximately 13 years of payments remained due under the annuity. The trial judge determined that the payments to the wife fell within the meaning of property rather than income, and that such property was not excluded from equalization. The wife appealed.

HELD: Appeal allowed. The payments the wife received from the annuity were properly treated as income for the purpose of spousal support rather than family property. The annuity arose from a structured settlement purchased by the casualty insurer rather than the wife. The wife did not own the structured settlement, nor have constructive receipt of the settlement monies used to create it. In addition, the annuity was more analogous to disability income replacement benefits rather than a pension. The amount of the settlement used immediately for family purposes encompassed the husband's claim for loss of companionship. The structured settlement payments received post-separation to replace the wife's future wages were not shareable as property.

Hunks v. Hunks, [2017] O.J. No. 1594, Ontario Court of Appeal, E.E. Gillese, J.L. MacFarland and S.E. Pepall JJ.A., March 27, 2017. Digest No. TLD-Apr172017002