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Treatment of Compensation Claims in Family Law Property Proceedings

When a party to a relationship receives a large personal injury compensation payment it can have a significant impact on potential property proceedings.

In the case of Aleksovski v Aleksovski [1996] FamCA, the Full Court of the Family Court was required to consider how a personal injury compensation payment received during a marriage should be treated in the context of a property settlement.

In this case the Wife was injured in a motor vehicle accident and received $143,000 in compensation. Of this, the sum of $100,000 was attributed to ‘pain and suffering’. The parties were in a relationship for 18 years and there were three children of the marriage aged 9, 11 and 15 years of age. The parties were both in employment and earned comparative incomes.

During the proceedings, the trial judge took the Wife’s personal injury compensation  payment into account as a financial contribution made by the Wife. The Wife was awarded 77% of the overall asset pool.

The Husband appealed the trial judge’s decision on the basis that the judge had given full weight to the contributions of the Wife but had not given sufficient weight to the his contributions made throughout the relationship.

On appeal, the Full Court decreased the Wife’s overall entitlement to the matrimonial asset pool to 67%. The Full Court held that the Husband’s contributions should have been given greater weight by the trial judge in the context of an 18 year relationship.

In relation to personal injury compensation payments the Full Court Held that “In our opinion, in most cases, a damages verdict arising from a personal injury claim, whenever received, is a contribution by the party who suffered the injury. It should not be considered in isolation, for the reason that each and every contribution, which each party makes to the relationship, must be weighed and considered at the time”.

The Full Court further held that “As the award vested, with the Wife receiving the full amount of compensation to which she is entitled, there would have been no further need to consider the circumstances of the award in the context of s75(2), except in relation to any residual disability which the Wife may have impacting in her earning capacity”.

By Nicholes Family Lawyers


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