Amy Gannon, Partner and Head of Serious Injury Scotland at Irwin Mitchell, has teamed up with Amanda Masson, Partner and Head of Family Law at Wright, Johnston & Mackenzie LLP (WJM), to explain why compensation awarded to people living with life-changing injuries can become vulnerable if a relationship later breaks down.
Protection of seriously injured’ s damages following relationship breakdown in Scotland.
A compensation award in a serious injury claim is intended to secure an injured person’s future. Following separation or divorce, however, questions can arise as to how far those funds are protected. This article considers the practical steps that can help safeguard damages intended to meet lifelong needs in Scotland.
Irwin Mitchell act for clients who have sustained catastrophic and life-altering injuries, including traumatic brain injuries, spinal cord injuries, amputations and complex polytrauma. Such cases demand not only technical expertise in serious injury litigation, but a clear understanding of the wider impact on family life, independence, work, mental wellbeing and future security.
Unsurprisingly, serious injury can place significant pressure upon marriages, civil partnerships and long-term relationships. The impact is rarely confined to the injured person alone. Partners and family members may suddenly have to adjust to new caring responsibilities, changes in household roles, financial uncertainty, disrupted employment, altered intimacy, emotional strain and the practical demands of supporting rehabilitation while trying to maintain ordinary family life.
At Irwin Mitchell, we do all we can to support clients and their families through that period of crisis. This may include securing privately funded rehabilitation at an early stage and drawing on our in-house Support and Rehabilitation Coordinators to help source suitable therapy, practical support and wider rehabilitation input for the injured person, their partner and their family. This can help families understand the injury, adapt to changing needs and access support at a time when relationships may be under significant strain. However, even with the right support in place, the consequences of serious injury can be profound and, sadly, marital or relationship breakdown is sometimes unavoidable.
Against that backdrop, it is important that injured individuals understand how compensation awards may be treated in the event of separation or divorce in Scotland.
The importance of protecting damages
Compensation in serious injury litigation is carefully calculated to meet an injured person’s lifelong needs, often intending to fund:
• lifelong care and case management;
• specialist accommodation;
• rehabilitation and therapies;
• mobility aids and equipment;
• loss of earnings and pension;
• transport needs;
• future medical treatment; and
• support for increased vulnerability and reduced independence.
For clients living with a traumatic brain injury, spinal cord injury or amputation, these damages are frequently relied upon for the remainder of their lives. As such, ensuring those funds remain protected wherever possible is therefore essential.
The Scottish legal position
In Scotland, financial matters arising from divorce are governed principally by the Family Law (Scotland) Act 1985. The starting point is that “matrimonial property” should be shared fairly, with fair sharing generally meaning equal sharing.
Broadly speaking, the extent and value of matrimonial assets is calculated up to the ‘relevant date’. This is defined at section 10(3) of the 1985 act as the date on which the parties ceased to cohabit, or the date on which proceedings are raised; whichever is earlier.
Matrimonial property is defined at Section 10(4) of the 1985 Act. It is all the property belonging to the parties or either of them at the relevant date which was acquired by them or one of them either before the marriage for use by them as a family home or as furniture or plenishings for such home or during the marriage but before the relevant date unless that property was acquired by way of gift or inheritance. Assets which were acquired prior to marriage or following on from the separation are generally not considered matrimonial property, unless they fit within the definition. Importantly, there are exceptions to this rule.
The 1985 Act is designed to provide spouses with a financial clean break. The principle of ‘fairness’ is embedded into the heart of the legislation. It is recognised that an equal split of the assets isn’t always a fair split. There may be ‘special circumstances’ which apply in any given case.
The Court is empowered by Section 8 of the 1985 Act to make various orders directing how the assets should be divided. The Court follows a principled approach and is guided by the considerations set out in Section 9 of the 1985 Act. What constitutes ‘special circumstances’ is not an exhaustive list however helpful guidance is provided for at Section 10(6) of the 1985 Act.
The treatment of personal injury damages, however, can be more nuanced.
Unlike some assets which clearly fall inside or outside the matrimonial “pot”, compensation awards often require careful analysis. The court may consider:
• when the damages were received;
• what elements the award relates to;
• whether funds have been mixed with matrimonial assets;
• whether damages have been used to purchase family property;
• the future care and accommodation needs of the injured person; and
• the overall fairness of any proposed settlement.
For example, damages intended specifically for future care or specialist housing needs may be viewed very differently from funds used for general family expenditure.
The timing of the injury, and whether any award falls within the matrimonial pot, has been the subject of litigation previously. The case of Petrie v Petrie 1988 SCLR 390, is authority for the proposition that where an injury was sustained shortly before the date of marriage, and a substantial sum of damages was received in respect of injuries after the parties had separated, these damages were not “matrimonial property” upon which a claim to payment of a capital sum on divorce could be based.
In contrast, in the case of Skarpaas v Skarpaas 1993 SLT 343 the first division of the Inner House considered an action of divorce where the wife sought a capital sum representing a proportion of a substantial sum of damages awarded to her husband after the relevant date in respect of an accident occurring between the date of the parties’ marriage and the relevant date. The sheriff and sheriff principal decided that the claim for damages constituted matrimonial property, though the value was not quantified until after the relevant date, and found the wife entitled to more than half of the net sum remaining, valuing the claim in accordance with the sum eventually awarded.
Our family law specialists are regularly instructed in cases where there are complex financial asset portfolios of where clients have challenging personal circumstances. We are able to guide you through the process and work collaboratively with other colleagues across the Firm to ensure that you are provided with a high level of client care and that you receive excellent legal support.
The practical difficulties injured clients face
In practice, many injured individuals understandably use compensation to support the family unit following injury. Damages may be used to purchase or adapt a family home, replace lost income, or meet increased care costs during the marriage.
However, this can create difficulty later if the relationship breaks down and compensation has become intermingled with matrimonial assets.
That is why early strategic advice is so important.
At Irwin Mitchell, our personal injury and family law teams work closely together to help clients address these issues at an early stage, particularly where substantial future losses and lifelong care needs are involved.
Protecting compensation awards
While every case turns on its own facts, there are practical steps which may assist in protecting damages following settlement, including:
• careful structuring of settlements;
• maintaining clear records regarding the purpose of compensation, with careful, evidenced quantification of the individual heads of claim;
• avoiding unnecessary co-mingling of funds;
• considering property ownership arrangements;
• using personal injury trusts where appropriate; and
• obtaining early family law and financial advice.
For seriously injured people, these issues are not simply legal or financial. They go directly to questions of long-term security and independence.
A holistic approach to serious injury litigation
The most effective serious injury litigation brings together technical excellence, sound judgement and a clear focus on the injured person’s long-term welfare.
At Irwin Mitchell, we are known for advising on complex, high-value personal injury claims and for working collaboratively across specialisms in our clients’ interests. In cases of this nature, that means combining leading serious injury expertise with careful family law advice to help protect compensation that is intended to meet lifelong needs.
Irwin Mitchell’s teams are used to working in a woven way across disciplines, so clients can receive connected advice at a time when life may feel fragmented and uncertain. Alongside serious injury litigation, that may include family law, private client and property advice, with each team alive to the wider context of the client’s circumstances. This coordinated support can reduce the burden on clients and their families, avoiding the need to navigate multiple firms while trying to manage an already difficult situation.
Where relationship difficulties arise following injury, a coordinated approach between personal injury and family law solicitors is essential in safeguarding funds required for care, accommodation and long-term support.
For many catastrophically injured individuals, their compensation award represents their future security. Protecting that security, particularly in the unfortunate and often all too common event of marital breakdown following life changing injury, is crucial.
Find out more about Irwin Mitchell’s expertise in supporting individuals who have suffered serious injury in Scotland at https://www.irwinmitchell.com/