LM. C. R.L. – 2025 NBBR 160
Reading time: 3.5 minutes (approx.)
By: Fiona Costello (Articled Clerk)
In a recent divorce proceeding, the central dispute concerned the division of funds received by the Applicant wife from personal injury settlements and insurance proceeds related to a motor vehicle accident.
In September 2011, the Applicant invested a total sum of $438,641. This sum originated from two sources: $100,450 was received from her employer’s life insurance policy, and $338,191 stemmed from a settlement with the at-fault driver. Over the years, the value of this investment fluctuated due to market changes. The applicant also made withdrawals totaling $149,172 from the capital. These factors collectively reduced the value of the invested funds to $326,205 by April 2017, the date of separation. The question for the court was determining what portion of this remaining sum constituted “marital property” subject to division by the parties.
The court determined that $195,600, representing 60% of the $326,205, was to be treated as marital property and divided equally. This conclusion reflects a holistic approach, made necessary by the inability to trace funds qualifying as marital property.
The court first excluded the $100,450 sum originating from the life insurance policy. This amount, making up 22.90% of the initial total investment, was deemed non-marital property because it didn’t compensate for past or future loss of income. According to the court, these are the only categories of damages generally considered divisible under established case law. General damages and past and future cost of care are typically excluded from marital property.
Without direct evidence apportioning the $338,191 settlement into various heads of damages, the court relied on a mediation brief as the best available proxy. It was determined that 20.66% of the settlement could be attributed to general damages and past and future cost of care, thus rendering it non-marital property. Conversely, the court found that future loss of income, which comprised most of the settlement amount, was marital property. While the court didn’t explicitly rule on the applicant’s past loss of income, it was noted that such funds can be considered marital property if commingled with certain other assets.
Further complicating the matter, the applicant withdrew $149,172 from this mixed pool of funds, altering the remaining investment’s composition. It was unclear whether these withdrawn funds originated from marital or non-marital components. Regardless, the removal of these funds decreased the total assets available for division and thus had to be considered by the court in calculating the marital share. Although the exact amount of the withdrawn funds spent for family benefit was unclear, the court concluded that at least 50%, or $74,586 of the withdrawn funds had benefited the family.
In the end, the 60% attribution of the investments as matrimonial property reflects a global assessment of the remaining funds, grounded in the challenges associated with tracing funds. Indeed, the court adopted a percentage-based approach as a means of achieving fairness where exact quantification of marital and non-marital portions was not possible.
