24 February 2012, by Taylor King Family Law Solicitors
The recent case of Mansfield v Mansfield highlights the significance of the degree to which the judge in ancillary relief proceedings can take into account personal injury compensation when they are required to satisfy the housing needs of the parties.
Prior to the marriage Mr Mansfield received £500,000 by way of personal injury damages. He invested those monies into two properties; one of which was specially adapted to his needs. The wife contributed £30,000 to the marriage.
The parties married in 2003 and subsequently had twins. They separated in 2008, the wife and children moved into rented accommodation and they later divorced. The District Judge awarded the wife the sum of £285,000 in order to purchase a home for herself and the children.
Mr Mansfield unsuccessfully appealed to the High Court, and appealed again to the Court of Appeal. Lord Justice Thorpe, giving the leading judgment, confirmed the principle that personal injury damages were not “sacrosanct” and could therefore be taken into account when deciding how assets should be divided on divorce.
The Court did note that the District Judge should have considered “the origin of the family capital and the special purposes for which it was provided” Thorpe LJ decided therefore to impose a Mesher Order. He quantified Mr Mansfield’s reversionary interest as one third of the capital awarded to his wife. This meant he would have a legal charge over the property the wife was to buy and he would be entitled to a third of the equity when the twins reached the age of 18.
This demonstrates that the Court’s first responsibility is to meet the reasonable needs of the parties and any dependent children, irrespective of the contributions made by the parties to the marriage and the origin of such contributions. It does however highlight the danger that people who receive compensation for personal injury who are married or later marry could be at risk of having those monies taken into account in financial proceedings in divorce.
It may be advisable for such people, if married, to consider receiving periodical payments for their compensation rather than a lump sum to avoid their spouse making a claim on such lump sum. Where someone is in receipt, like Mr Mansfield, of a substantial lump sum by way of personal injury damages, they should consider a prenuptial agreement prior to marriage.