The recent High Court case of CGT v West Sussex County Council is essential reading for anyone managing personal injury (PI) compensation, trusts or care funding issues under the Care Act 2014. The ruling provides welcome clarity for families, deputies and trustees, particularly where a client receives care from the local authority but also has a personal injury award held in trust. Nichola Fosler and Daisy Young examine the decision.

The court’s decision in CGT v West Sussex County Council [2026] EWHC 293 (Admin) makes clear that where a client’s funds fall within the disregards of Regulation 12A under the Care Act, the local authority must treat that money as excluded from the financial assessment.

This decision offers reassurance to clients whose compensation must last a lifetime, that it should not be treated as ordinary savings.

What happened in the CGT case?

CGT is a young adult with severe lifelong disabilities arising from a brain injury sustained as a baby. He received a significant Criminal Injuries Compensation Authority (CICA) award worth over £3.5m, which was placed in a PI trust. This structure is standard for protecting awards intended to fund long‑term care and support.

Years later, CGT’s deputy applied to West Sussex County Council for assistance with care costs under the Care Act 2014. Rather than carrying out a normal financial assessment, the council decided that CGT’s PI trust meant he had “too much capital” and, therefore, should pay for all of his care from the trust. It also demanded repayment of the previous four years’ funding, amounting to over £271,000.

This placed considerable strain on the trust, undermining its purpose and putting CGT’s future financial security at risk. The deputy challenged the decision by judicial review and won decisively.

The court’s key findings were as follows:

1. Personal injury trusts must be fully disregarded.

The Care and Support (Charging and Assessment of Resources) Regulations 2014 within Schedule 2, which were made in exercise of powers conferred by the Care Act 2014, require local authorities to ignore all funds in a PI trust when working out how much a client should pay towards their care. The court described the wording as “clear, unambiguous and unqualified”.

This means councils cannot pick apart the award, separate “care” and “non-care” parts, or look at how the funds are currently used or invested. If the money derives from a PI award and is in a qualifying trust, it must be ignored in full.

2. Local authorities must follow Annex B of the Care and Support Statutory Guidance issued under the Care Act 2014.

Annex B sets out mandatory capital disregards “any payment made as a result of a personal injury to the adult, including payments made under a court order or from a trust established for that purpose”, including personal injury payments and trusts. The key principles include:

• PI compensation must be ignored, in whatever form it takes.
• The purpose of the payment is what matters, not how it has been invested.
• Councils must not treat PI funds as ordinary capital.

Annex B is statutory guidance under section 78 of the Care Act 2014. The court stressed that councils can only depart from it if they have a very strong justification; in this case, West Sussex County Council had none.

3. Double recovery arguments are irrelevant to decisions under the Care Act 2014.

The council argued that funding CGT’s care would amount to “double recovery” because his award already included a care element. The court rejected this completely.

“Double recovery” is an issue only for the personal injury court when damages are assessed. Once a case is settled or decided, the local authority cannot revisit or second‑guess the award. A council cannot therefore:

• Punish someone for having received compensation, or
• Refuse statutory support because of how damages were calculated years earlier.

4. The council acted unlawfully.

The court found multiple serious failings by the council as follows:

• It did not carry out a proper financial assessment.
• It misapplied the Regulations.
• It ignored mandatory statutory guidance.
• It wrongly demanded repayment.
• It unlawfully refused care funding.

The decision was quashed. The council was ordered to reimburse the trust for £66,979.15 of care costs wrongly paid.

How does the decision in CGT fit with earlier case law?

The case of ZYN v Walsall (2014) established that PI awards should not be treated as general capital.

The case of Cunningham v Hertfordshire (2020) held that discretionary trusts do not make PI funds ‘available’ for charging.

The case of JF v Merton (2023) confirmed that local authorities cannot ‘look through’ a PI trust unless the Regulations permit it.

The above cases emphasise that compensation is intended to meet that person’s needs resulting from injury and not to reduce pressure on local authority budgets. This ruling in CGT strengthens this protection under the Care Act 2014.

Why this decision matters for clients and their families

When a council wrongly treats PI funds as chargeable capital, the consequences can be serious:

• Erosion of the trust. Money intended to meet the client’s lifetime needs is spent too quickly.
• Unstable long‑term care. Clients risk losing the support they are legally entitled to.
• Unnecessary disputes and stress. Deputies and families may feel pressured or forced into legal challenges.
• Loss of financial security. Care costs wrongly taken from the trust reduce funds intended for future needs.

Ultimately, the decision in CGT reinforces that personal injury compensation must remain protected for the people it was intended to support. For clients and families, the decision provides welcome certainty that their compensation is there for them, and the law will uphold that protection.