Settlement money for pain and suffering awards are excluded from family property division in British Columbia so your ex-wife or ex-husband is not entitled to half. However, it is critically important in a family law proceeding to have evidence and demonstrate to the court that the ICBC settlement award is in fact excluded.
As a personal injury lawyer since 1995 I have been asked on many occasions: does my ex-wife or ex-husband get half of my ICBC claim settlement? Well, today we will explain what the law says about ICBC settlements as family assets and review one real case example to help readers understand the law related to settlement proceeds and divorce.
Section 81 of the Family Act provides that, subject to certain exceptions, upon separation, each spouse, husband and wife, has a right to an undivided half interest in all family property as a tenant-in-common, and is equally responsible for family debt, regardless of their respective use or contribution. However under section 85 some settlements and insurance money are excluded from family property including:
A settlement or an award of damages to a spouse as compensation for injury or loss, unless the settlement or award represents compensation for (i) loss to both spouses, or (ii) lost income of a spouse; and
Money paid or payable under an insurance policy, other than a policy respecting property, except any portion that represents compensation for(i) loss to both spouses, or (ii) lost income of a spouse.
In this family law case the claimant settled her claim with ICBC in relation to the motor vehicle accident for the sum of $310,428. (A.A.P. v. G.T.F., 2015 BCSC 662). After deduction of case expenses (disbursements), legal fees, interest and taxes, she received a net amount of $193,271. From that amount, she made a lump sum payment of $55,125 towards the mortgage. She spent a further $88,000 of her settlement money to pay for renovations to her first house. When the house was sold, the net proceeds were used towards the purchase of the official “family home”.
The claimant alleged therefore that some portion of the equity in the family home could be traced back to the money she put towards the mortgage on her first house and the $88,000 she paid for renovations to that property. Since those moneys were obtained by her from a motor vehicle accident settlement, she claimed they are excluded property and not subject to division.
The Judge did not agree. First, with respect to the money spent on renovations, there was no evidence that this increased the sale value of her first house. As the judge pointed out, “Section 85(2) of the Act is very clear that a spouse claiming that property is excluded bears the onus of demonstrating this to be the case.”
Second, and more importantly, the claimant did not demonstrate what portion, if any, of the settlement money she received from ICBC was excluded property.
Although s. 85(1)(c) provides that excluded property includes a settlement or award of damages as compensation for injury or loss, it also provides that such a settlement is not excluded property if it represents compensation for lost income. On the evidence before me, it would appear highly probable that a very significant portion of the settlement from ICBC resulted from the fact that the claimant was let go from her job…. and did not work again outside the home up to the date of the settlement.
It is not for the other spouse to prove what portion of the settlement was in relation to lost income. The claimant is the spouse who is claiming that the settlement money is excluded property and she bears the onus of proving that the portion of the settlement she says is excluded, was not paid as compensation for lost income. In our case example, the claimant adduced no evidence on that point, and therefore, had not proven that any portion of the equity in the family home was excluded property.
Read a review of a case where the ICBC settlement was considered excluded property and the husband did not have to share with the wife: ICBC Settlement not Family Asset in Divorce Proceeding. Remember, if you have got a family law matter, whether you are the husband or wife with an ICBC settlement, you will need to get legal advice from a family law lawyer.
Have you got questions? Leave them in the comments and we’ll have answers.