The treatment of personal injury awards in financial disputes in divorce.
Updated: Jul 4
Cases involving people who have received awards of damages for a serious injury or accident can seem particularly sad. Most often the person in question will have been left with lifelong consequences of their injury, which may affect them in many ways. It can be a loss of mobility, or loss of sight, or impaired brain functioning, for which they will have received an award of damages. Then, some years later, they find themselves facing marriage breakdown, with all its consequences, including financial consequences.
The question comes up whether compensation monies received, should be kept for the person to whom they were awarded, or whether they should be shared with that person’s former husband or wife.
It is important to look at how the original award of damages was allocated, because different parts of the award can be treated differently in the divorce courts. Often we have to go back to the solicitor who dealt with the personal injury claim for this information. Usually an element of the damages received will have been paid for what lawyers call pain and suffering. For example the victim of the accident may have lost a limb, or the use of an eye, and they will receive a payment purely to compensate them for that. Personal injury lawyers sometimes call this “general damages”. Whilst I am not a personal injury lawyer myself, I often think that the sums awarded by way of general damages in the UK courts are not particularly generous. Most people would very much rather have their leg for example than the sorts of sums that seem to be awarded for the loss of a limb in an accident.
On top of general damages the victim will be awarded what personal injury lawyers call “special damages”. This is often the larger element of the overall award. It is subdivided into two broad categories. The first category is compensation for lost earnings, which will include lost earnings during the period between the accident and the payment of the award (past loss) and then a calculation to represent the money the victim would have earned in the future, had they not suffered from the accident or injury, known as future loss. The second category of special damages is, broadly, intended to represent costs the victim has incurred as a result of the injury, and costs they will incur in the future. This can include, for example, the cost of private medical treatment or future personal support, and other expenses, such as specialist equipment, or adapting the victim’s home so that it is suitable for them take account of their disability, or even, in some cases, relocating to a new home.
The person who received the award will have been represented by a specialist personal injury lawyer, and the party who had to pay the award (often an insurance company) will also have been represented by a specialist lawyer. The opposing lawyers produce intricate arguments and calculations, particularly for the special damages element of the award. Almost invariably the schedule for the person seeking compensation will be much higher figure than the schedule produced by the payer. Both parties will have obtained medical reports, describing the effect of the injury on the victim, and the likely future impact, to support the basis of their calculations. There will be reports from other professionals, for example from a nurse describing how the victim needs to be cared for in the future, and what support they need. There is then usually a process of negotiation, at the end of which they agree a figure somewhere between the two. The subtlety of the calculations put forward for future earnings and future cost can get lost in what amounts to a process of horse trading.
And when the victim receives his or her compensation money it is up to them, pretty much, how they spend it. Often rather than paying for the complicated nursing support, medical treatments, equipment and adaptations etc described in the schedules of special damages and the medical reports they will have used the money to buy a home which they live in with their family.
So, when it comes to a divorce someone has to decide how all this will be unpicked. To what extent should the proceeds of the personal injury claim be kept for the victim, and to what extent should it be taken into account and shared with their husband or wife. Often the argument focuses on the family home, and how to balance the needs of both parties (and their children) with the added factor that the home was paid for mostly or completely by the compensation payment.
On behalf of the person who suffered the injury it is usually said that the vast majority of the money received was intended to meet that person’s financial needs into the future. Those needs still exist, and will exist into the future so they may say that they should be allowed to keep the whole of the award or, in more practical terms what is left of it, ie the house which was bought with the proceeds of the award. But the other party will point out that they, and the children of the family, also need somewhere to live. It is often also fair to say that that, although the award of damages represents a contribution to the family wealth from the person who suffered the injury, the other party will have made contributions to the family, perhaps by bringing their earnings to the family finances, but also practical and emotional support for the person who suffered the injury, and also for their children.
The law is clear that damages awarded in personal injury claims form part of the parties’ resources which are available court to share between the parties to meet their needs. So almost inevitably the proceeds of the award will be shared in some way. The court may have some regard to the reasons for the availability of the capital but the award is by no means sacrosanct, and in each case must be considered on its own facts.
A senior judge provided this more detailed analysis: –
Money paid as compensation for loss of earnings caused by the accident will be taken into account by the courts in reaching a fair divorce settlement.
Money paid to compensate the victim for the future costs arising from their injury may also be taken into account by the court, but the court should recognise that the person who suffered the injury is the person who is likely to have the greater financial need.
Money paid as compensation for pain and suffering can also be taken into account, but the court should bear in mind that the pain and suffering fall to be borne (primarily) by the person who suffered the injury.
So, in the vast majority of cases the compensation award will be brought into account and to some extent shared between the parties. But exactly how that plays out in an individual case will depend very much on the particular circumstances, and if you face these issues, either as the person who received the compensation of, or as their former husband/wife, you should take advice from a solicitor specialising in this area.
 Butler-Sloss LJ in Wagstaff v Wagstaff  1 All ER 275).  Wilson J (as he then was) in Wakefield v Secretary of State for Social Security  1 FLR 510, CA.
John Pratley is an expert divorce lawyer, who has more than 25 years’ experience advising clients purely about divorce and related family law issues, such as the financial consequences of separating and divorcing. After establishing the first niche family law practice in Bristol, and going on to senior management roles in a national firm, John set up Apple Tree Family Law in 2018. Apple Tree Family Law solicitors specialise in advice about divorce and financial issues.
We are based in Bristol and Exeter, but we have clients all over the UK and further afield. We offer, simply, clear and accurate advice about divorce and family law issues, and the very best client service, for a clear and reasonable price.