Husband Keeps Lottery Winnings Acquired During The First Year Of An Almost Decade Long Relationship

Did you know that how you conduct your financial affairs during your marriage may affect what you are entitled to upon separation?

It is not uncommon for a husband or a wife to purchase a lottery ticket in the ordinary course of a marriage from money he/she happens to have at that particular time. But what happens if the lottery ticket you purchased is a winner? While this is generally not something married couples find to be an issue, it most certainly may become an issue upon separation, particularly when it comes time to dividing up the assets. How will your lottery win be treated then?

In a recent Family Court Case, Elford & Elford [2016] FamCAFC 45, the Court ruled that a husband keep the lottery winnings he acquired during the first year of an almost decade long relationship.

This case was a failed appeal by the wife who was previously ordered by the Federal Circuit Court of Australia to receive $51,000 in a divorce settlement from her husband, despite the asset pool being about $1.4 million at the time.

One of the facts central to the determination of the trial judge was that 12 months after the parties commenced cohabitation, the husband won $622,842 in a lottery. The husband put these winnings, along with his savings and inheritance from his mother, into a term despite in his sole name. The term deposit was included in the property of the parties for division.

The Family Court held at paragraph [10] that “the wife’s evidence to the trial judge, albeit more in the form of an argument, described the lottery win as a “major issue” for determination. She acknowledged the husband had bought the ticket and that the proceeds of the win were deposited into his account. She prefaced all of that by saying that “we won the sum”. When cross examined, the wife acknowledged that the husband had used the same ticket numbers since 1995, that he had purchased the ticket without her assistance and she had not contributed to it. When asked in cross examination why she thought the win was a “joint contribution” she replied “because we were also in a relationship”. The wife also acknowledged in that same cross-examination that she has maintained separate bank accounts from the husband because ‘that was what he wanted.’”

The Family Law Act sets out the principles the court takes into account when deciding financial disputes after separation:

• What is the net asset pool of both parties; and
• What are the direct financial contributions by each party; and
• What are the indirect financial contributions by each party; and
• What are the non-financial contributions to the marriage or de facto relationship such as caring for children and homemaking; and
• Are there any future requirements; and
• The practical effect of the proposed property settlement and whether the overall settlement is "just and equitable" to both parties.

One of the issues raised by the wife on appeal was that the trial judge erred in treating the lottery win as a contribution by the husband rather than a joint contribution by the parties.

At paragraph [15], The Family Court noted the trial judge’s comments in relation to the husband’s conduct namely that “the husband never intended the weekly purchase of a lottery ticket to be a ‘joint matrimonial purpose’” and that “the husband did not ‘hand all his money to the wife’, nor did she have ‘practical control of the family finances.’”

The Family Court held that the trial judge was correct in treating the lottery money as the husband’s contribution only and said at paragraph [22] that in his reasons for judgment at [52], the trial judge quoted that passage from Eufrosin. His Honour then said:

“[52] in my view, it is not only “the nature of the parties’ relationship at the time the lottery ticket was purchased” that sets this case apart from so many of the decided "lottery winnings” cases; it is also the manner in which the husband and the wife conducted their financial affairs after those winnings were received by the husband…”

At paragraph [23], the Family Court held that “his honour found that the purchase was initiated by the husband independently of the wife consistent with a lengthy practice of the husband’s alone that predated the relationship by about eight years. Rather than share or utilise any of the proceeds with wife, he continued to treat his property as his own. The wife conceded that was the husband’s intention even if she was unhappy about it. That husband’s contribution was therefore appropriately recognised by the trial judge consistent with the approach outlined by authority."

This case highlights that there is no doctrine of community of matrimonial property under Australian law. Property acquired during the relationship by a party may not always be found to be a joint asset and this may affect the amount of property you may be entitled to upon separation. It is imperative that you obtain legal advice with respect to a property settlement to not only clarify what your legal rights are but also to ensure that you are aware of what you are legally entitled to.

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Source: Elford & Elford [2016] FamCAFC 45