Historically solicitors dealing with clinical negligence or personal injury claims have not been too involved with any divorce proceedings going on in the background. Any damages awarded to a claimant would be regarded as part of the ‘pot of assets’ for distribution but the courts, who consider a multitude of factors when deciding on distribution and create an individual result in each case, have tended to largely leave damages with the injured claimant.
However, a recent case has changed this approach and means this issue needs consideration when a claimant is, or may be, involved in a divorce.
The priority in any decision making by the court is always the needs of minor children but after that many factors are considered. In some cases a distinction is drawn between matrimonial and non matrimonial assets – and it has been argued that injury damages for a claimant are personal and non matrimonial. Whilst there is much case law on the subject, in broad terms the courts have factored in assets acquired by way of damages when making distributions but have made allowances to reflect that these are damages for the claimant including damages for pain, suffering and loss of amenity and needs arising from injury.
In Mansfield v Mansfield this issue was looked at in detail. Here the husband had received a compensation award before he met his wife and invested the monies in two properties, one of which was the future marital home and the other an investment property. He then married and had two children but then divorce proceedings commenced. The wife's claim was for a sum sufficient to enable her to purchase a property for her and her children. It was agreed that the husband's personal injury award, although received prior to the marriage, should be considered as part of the matrimonial property and, furthermore, it was necessary to consider the nature of the sums paid, the reason for their payment and the needs of the party who had received them. In assessing the sum for the wife, the court calculated that the remaining sum of money would be sufficient for the husband to meet his ongoing needs. However, when considering the husband's future needs, and the fact that these would increase in time and as his disabilities worsened with age, this was balanced against the wife's needs at the time of the proceedings as mainly in relation to her role as the primary carer of the children of the relationship. Accordingly, her needs were reduced once the children attained the age of majority and in conclusion the court decided that the husband should pay to the wife the sum of £285,000 which would enable her to purchase a property but that the property was to be subject to a charge back so that when the home was sold, upon the children turning 18, he would receive one third of the net sale proceeds. This is known as a Mesher Order and was made to provide the husband with financial security in his future given that he could no longer work. This outcome achieved the primary aim of protection for the children whilst minors, but also recognized the severity of the claimant’s injury and needs.
This case reflected a much higher award of personal injury damages than had previously been made by the courts. The facts of the case seemed to turn upon the needs of the wife as the primary carer for the two children.
Given that personal injury damages can be taken into account by the matrimonial court upon a divorce, or dissolution of a civil partnership and this much more generous award to a non injured spouse, clients should be advised how best to protect their damages. The court will consider the injured party's needs and physical and mental disabilities but these will be looked at in the round as part of the court's discretionary exercise under s25 of the Matrimonial Causes Act 1973, which will also look at earning capacities and contributions.
Possible options to protect damages include a personal injury trust or a periodical payments order or some form of documented and enforceable agreement between the parties regarding the damages in the event of divorce proceedings and injury lawyers.Philippa Luscombe, partner in the clinical negligence and personal injury team, said: “Given the outcome of this case, it needs to be recognised that claimants recovering substantial damages for an injury may, if later in life involved in divorce proceedings, have those damages distributed as part of the proceedings. It is important therefore to consider advice on this possibility and to look at options to protect such damages. Such advice will need to be a combination of advice from the claimant’s injury lawyer but also private client and family lawyers.”