The emotional impact of personal injury on relationships
I was interested to read the article by Sheena Munraknah in the April PI Focus Volume 23 Issue. Sheena's article dealt with personal injury and relationship breakdowns.
Sheena's article initially questioned the percentage of these divorces arising as a result of a partner suffering a catastrophic personal injury such as brain or spinal cord damage. Whilst there had been a variety of studies carried out, one recent study by the Virginia Commonwealth University places this figure at around 25% in relation to an overall marital breakdown rate, specifically where one party has sustained brain injury.
It is assumed that the reason for such a high rate is as a result of the non-injured partner taking on many of their injured partner's responsibilities, not only in respect of domestic and household tasks, but perhaps more importantly when considering the issue of divorce, where the injured spouse is unable to work and the resulting financial strain and constraints this can cause. Furthermore, and in particular in relation to a brain injured partner it is not uncommon for them to have undergone a personality change or suffer from extreme depression which would naturally make any relationship strained.
I can fully appreciate, through colleague's work, the effects a catastrophic injury can have on someone and their loved ones. However, it is not only catastrophic injuries that can potentially result in relationship breakdowns. I have a number of clients who have sustained, for example soft tissue injuries, whereby as a result they have been unable to work for a significant period of time and are in constant pain and discomfort. As a consequence of this their partner has had to take over all domestic and household chores and the financial strain of relying on one income can bring a relationship to breaking point.
From my perspective it is not always apparent the effects an injury can have on a relationship until I come to take a witness statement from a client's partner, most commonly in support of their claim for care and assistance as a part of my client's claim. Whilst taking this statement and detailing the care and assistance they are providing it is not uncommon for partners to comment on the effect the injury has had on their relationship to include their physical relationship. As a result the relationship is struggling to survive. I have a number of clients who have separated as a result of the stress and strain an injury can cause on a relationship but fortunately and touch wood to date, these issues have been resolved over time and the relationships are now back on track.
The issues raised in Sheena's article largely centred around parties who are in the process of divorce where one has received a damages award for personal injury. Personal injury damages are not ring fenced from the matrimonial finances. This means that the award can be included in any matrimonial settlement for the benefit of the non-injured partner.
The leading authority is Wagstaff v Wagstaff (1992) 1 FLR333. This case involved parties that had been married for five years when the husband was involved in a serious road traffic accident and as a result was rendered paraplegic. He received around £400,000 by way of personal injury damages. When his wife subsequently commenced divorce proceedings part of the money had been used to purchase a property which had been adapted for his needs. He had also invested approximately £130,000 in a health club. Initially, the wife was awarded a lump sum of £32,000 but this was appealed on the basis that the lump sum was too small when compared to the extent of the award. However, as the husband had already invested and spent a considerable amount of the award any larger amount ordered to the wife would have resulted in him selling his house or business. On appeal the court found that the award was a financial resource that had to be considered. It stated that the origin and size of an asset, regardless as to whether or not it formed part of a personal injury settlement, are relevant factors in all the circumstances of section 25 (Matrimonial Causes Act 1973). The original award was not increased and whilst the husband's disabilities were taken in to account this should and had been weighed against the wife's financial circumstances in that if no lump sum was paid to her at all she would struggle financially in the future.
The issue was further reviewed in the case of Mansfield v Mansfield (2011) EWCA CIV 1056. In this case the husband had received a compensation award of around £500,000 before he even met his wife. As a result he invested the monies in two properties, one of which was the future marital home and the other an investment property. The parties subsequently married and remained together for six years during which time they had two children. Upon divorcing the wife's claim for financial relief was for a sum sufficient to enable her to purchase a property for her and her children. These needs were assessed at £285,000 and initially the husband was ordered to pay this amount. The claim was appealed and the issues raised in Wagstaff were considered. 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 of £285,000 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.
The leading case in assessing the needs of the parties is C v C (1996) 1SCR283. In this case the husband suffered a catastrophic injury that resulted in an award of five million pounds. The award reflected the level of care that he needed in the future. In this case the court found that to use any of the husband's damages would be to severely impact upon his quality of life in the future and that even though there were children involved in the relationship, the wife was not entitled to make a stake on any of the award monies as part of the matrimonial finances.
It is quite clear from these cases that the division of a personal injury award in matrimonial proceedings is by no means an easy process. I therefore asked Sarah Wright, a solicitor in our Family team for her view on how she deals with such matters, she commented.
The case of Mansfield is a significant departure from previous case law in this area as no more than approximately 15% of personal injury damages had previously been awarded. The facts of the case seemed to turn upon the needs of the wife as the primary carer for the four year old twins. It is a more generous award to the non-injured spouse than seen hitherto and is therefore something clients receiving personal injury damages need to be aware of and advice can be given by both the Personal Injury and Family teams in this regard.
The reason for the departure is probably due to the principles of equal sharing, fairness and compensation articulated in the main reported cases. Notably the conjoined case of Miller; McFarlane  reiterated that the overarching aim is to achieve fairness by considering need, equal sharing and compensation. In this case a distinction was made between matrimonial and non-matrimonial property, and what assets fell into each category. Interestingly, in Mansfield the fact that the husband had received his damages years before the parties met, and the fact that the wife brought in £30,000 to the marriage which was invested in the specially adapted bungalow, carried very little weight.
The court in Mansfield used the device of a Mesher charge back provision so that husband would recover a third of the net equity of the wife's new property once the twins had attained independence. This demonstrates that Mesher charge back provisions are a useful device for achieving fairness in situations such as these.
The case contrasts with the earlier case of C v C (1996). However, in that case the wife's conduct was a relevant consideration. She had dissipated monies from the damages for her own benefit. It was similar to the case of a colleague from a few years ago when the husband received damages after being in a road traffic accident. The wife spent large sums of the damages over a period of around three years for her own benefit. She also had acquired a new partner and therefore her resources were enhanced by pooling assets and sharing expenditure with him. In that case the court ring-fenced the remaining damages and did not share them with the wife.
Given that personal injury damages can be taken into account by the matrimonial court upon a divorce, or dissolution of a civil partnership, clients should be advised how best to protect them. 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 s.25 of the Matrimonial Causes Act 1973, which will also look at earning capacities and contributions. A tailor-made solution to each individual scenario is available but this makes predicting outcome uncertain.
Given that case law shows that if the injured party needs the damages it is more likely to be ring-fenced, it may be a good idea to focus the payments more as periodical payments rather than a lump sum. If a lump sum is to be paid it could be put into a personal injury trust which will add a layer of complexity to the matrimonial court's endeavours to ascertain the assets but it will not put them beyond the court's reach. I would advise entering into a pre-nuptial agreement if the parties are not yet married, or a post-nuptial agreement if the parties are married. The recent case of Radmacher v Granatino  UKSC 42 shows that these are likely to be upheld so long as there is full disclosure, independent legal advice and no pressure or duress. Unmarried couples should also consider entering into a living together agreement to protect their damages.