Family Law – Who owns the lottery winnings in a property settlement?

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The Full Court of the Family Court recently handed down an interesting decision in Elford v Elford [2016]  Fam CAFC relating to the division of lottery winnings in a property settlement.

The Court dismissed a wife’s appeal that she was entitled to a greater share in the property pool which consisted mainly of lottery winnings. The Court upheld the trial judge’s decision that the winnings were not a joint endeavour but rather that the husband had made the sole contribution to the winnings.

The decision has come as a surprise to some who expected that the lottery winnings would be treated in line with the concept of ‘community property’ in matrimonial property proceedings and be divided equally between the spouses. Instead the take home message from the decision is that the Court may exercise its discretion to see that lottery winnings are not divided where one spouse makes the sole contribution to the winnings.

The Story

In 2003, Mr and Mrs Elford began co-habitation and then married 2007. They separated in 2012. The husband, aged 68 was 21 years older than the wife who was 47 years of age. The wife had three dependent child from a previous relationship who lived with the parties during their time together. Significantly, the husband and wife’s finances were largely separated for the 9 years they were together. During the time of their cohabitation but before they were married, the husband won $622,842 in lottery winnings from a tattslotto ticket. In 2011, the husband suffered a stroke which left him blind and unable to read. The couple separated 12 months following this.

The property pool consisted largely of the lottery winnings. Other significant assets included the investments from the lottery winnings and the husband’s bank balance. The total value of the property pool was $1.4 million.

At trial, Mrs Elford was awarded 10% ($51,000) of the property pool. Mrs Elford appealed this decision seeking a 32% share in the property pool.

Grounds of appeal

  • Whether the trial judge erred in treating the lottery winnings as a ‘special contribution’ by the husband instead of assessing the contributions ‘holistically’;
  • Whether the trial judge failed to give sufficient weight to the wife’s contribution as homemaker and parent;
  • Whether the trial judge gave adequate reasoning for the assessment of the wife’s contribution
  • That the trial judge’s decision was ‘plainly wrong and manifestly unjust’ (at [8])

Decision on appeal

The Full Court confirmed the trial judge’s assessment of the wife’s contribution as 10%, finding that the husband had made the sole contribution to the lottery winnings.

Reasons

The critical question the Court had to consider was how each party’s contribution to the lottery winnings should be viewed. When the wife was asked under cross examination why she thought the winnings could be treated as a joint contribution, she responded ‘because we were in a relationship’.

The Court explained that a lottery winning will be treated as the fruits of joint partnership, in a marriage where both parties are:

‘…in receipt of income and where their marriage is predicated upon the basis of each contributing their income towards the joint partnership constituted by their marriage, the purchase of the ticket would be regarded as a purchase from joint funds in the same way as any other purchase within that context and would be treated accordingly’ (at [17]).

However the Court cautioned that lottery winnings will not be treated as fruits of a joint partnership where the parties conduct their affairs in a way where this conclusion would not be appropriate. The Court held that this was the situation in this case. The husband and wife led financially separate lives each having their own separate bank accounts. Therefore the Court held that it was not appropriate for the winnings to be divided as the fruits of a joint partnership. The Court pointed to their critical facts:

  • The wife had not contributed financially to the ticket;
  • She did not pick the winning numbers;
  • The husband had been purchasing weekly tickets with the exact numbers since 1995;
  • At the time the ticket was purchased, the wife and husband had been together for less than a year;
  • The ticket was in the husband’s name;
  • The funds were deposited into the husband’s bank account (at [42]).

As to the other grounds of appeal, the Court confirmed that the trial judge had exercised his discretion appropriately, having regard to the totality of the circumstances, and how these should be expressed in monetary terms.

Lessons

The Court’s decision here is an important one. It explains that lottery winnings will be dealt with in property settlements according to contributions dynamic that prevailed within the relationship. Where parties deal with their finances together, winnings will be treated and divided as the fruits of a joint endeavour. However where spouses live financially separate lives and one party makes the sole contribution to the ticket, then they will be entitled to the winnings to the exclusion of the other party. In this case, it was easy to ascertain that the parties led separate financial lives and thus the Court found it appropriate to regard the husband as the sole contributor.

For more information regarding the division of assets (e.g. lottery winnings) in property settlements post-separation

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