Personal injury damages and financial settlement

Damages awarded for personal injury claims may form a substantial part of the matrimonial assets, as seen in the recently reported case of Helen Tippett and her husband, Andrew Kerslake.

Mr Kerslake was the victim of child abuse and in 2002, received £175,000 from the Criminal Injuries Compensation Authority (CICA). Given the circumstances surrounding the CICA pay out, Mr Kerslake felt the money was “tainted” and elected to hold the money in trust, with it to be distributed to charities when he dies.

As part of her application for financial settlement, Mrs Tippett has asked the court to consider the CICA payment, which has now increased in value to £250,000 under the trust, as part of the financial assets of the parties for distribution.

In Wagstaff v Wagstaff [1992], the Court of Appeal confirmed that personal injury damages were an asset for the court’s consideration, when it conducted its usual section 25 review. The Court of Appeal stated, ”the capital sum awarded is not sacrosanct nor any part of it secured against the application of the other spouse…the reality of course is that the compensation is a financial asset which….has to be taken into account when the court comes to exercise its powers in accordance with section 25 of the Matrimonial Causes Act 1973′.

Yet the Court of Appeal also noted that, “…the reasons for the availability of the capital by way of damages … in some instances may exclude the sharing of, such capital with the other spouse. It is important to stress yet again that each case must be considered on its own facts.”

 The Wagstaff approach was also followed in the later case of Mansfield v Mansfield [2011], where damages awarded as part of a personal injury settlement were included within the matrimonial asset pot. The Court of Appeal stated however, that is was important to consider “… the need to give special reflection to the origin of the family capital and the special purposes for which it was provided…”.

In summary, it is clear that the courts current direction is to include personal injury damages within the global asset calculations of the parties. This may not be wholly relevant where the damages that have been awarded are relatively modest and have primarily been awarded for general damages, reflecting the pain, suffering and loss of amenity suffered by the injured party. Nevertheless, whilst attempting to meet the needs of the parties, the courts have the discretion to consider the source of the damages, when assessing how they should be distributed.

 If you would like to discuss your matrimonial finances with one of our expert solicitors, contact us on 01234 889777 for a free consultation. Serving Bedford, Northampton and Milton Keynes, our lawyers can help you with your family law and divorce matters.

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