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When Does a Personal Injury Award Become a Matrimonial Asset?

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With a rise in both personal injury claims and the size of awards received the Courts are having to consider more frequently how to deal with compensation payments when couples divorce.

hlw Keeble Hawson LogoAlthough now an established legal principle that compensation received following a personal injury claim will form part of the matrimonial pot for division, the Courts must always consider the purpose for which it was received and therefore how that sum should be divided between the couple so as to maintain fairness.

In the recent case of Mansfield v Mansfield the court was tasked with the challenge of how to deal with compensation of approximately £500,000 that had been awarded to the husband for injuries that had left him partially disabled.

The husband and wife had lived together for six years and had been married for four. They had two dependent children who were both living with the wife. The compensation that had been received by the husband before the parties met had been used to buy what became the matrimonial home and a second investment flat that gave him a rental income.

The husband continued to live at the matrimonial home which had been adapted to his requirements following the couples’ separation. The wife however needed to be able to re-house herself and the children. The Court of Appeal confirmed that money derived from the compensation claim should be included as a matrimonial asset however it was important not to forget the purpose for which it had been made. The Court here allowed the wife to retain £285,000 to provide a home for the children, more than half of the compensation payment. It was considered however that upon the children’s independence a proportion of that sum should be returned to the husband to meet what was likely to then be his higher need for capital due to an accentuation of his disabilities through ageing.

This case not only clarifies the approach that a Court should take when dealing with money received by way of compensation for injury but the importance of being able to find creative solutions to ensure the best possible allocation of resources to meet not only immediate but future and long term needs.

Antony Ball can be contacted on 01302 380225 or antonyball@hlwkeeblehawson.co.uk

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