Family Court Finds No Error in Treating Husband’s Lottery Winnings as Soul Contribution of the Husband

Keywords:  Property settlement; section 79 of the Family Law Act;  lottery winnings; contributions;

Introduction

In the matter of Elford [2016] FamCAFC45 (29 March 2016) the Full Court of the Family Court consisting of Bryant CJ, Murphy CJ, Murphy & Cronin JJ, heard the wife’s appeal against a property order made by Judge Roberts that the husband must pay the wife a sum of $51,000, an amount which, combined with the net value of a mortgaged home purchased by the wife after separation equalled approximately 10% of the $1.4 million asset pool.

 Facts

The husband was 22 years older than the wife and had three children from a previous relationship. He won $622,842 in lottery 12 months into their 10 year relationship. The husband invested his winnings, along with his savings, into a term deposit account consisting of $650,000 in his own name. Both the husband and wife led largely separate financial lives. The husband inherited $190,000 from his mother’s estate which he also kept separate.

The Full Court said that the judge correctly considered the husband’s savings and investments as contributions on his part. The first point of appeal by the wife, however, was that the lottery win of $622,822 was incorrectly treated as a contribution by the husband. The wife argued that the lottery win should be treated as a joint contribution by the parties.

In arguing that the husband’s lottery was a joint contribution, the wife acknowledged that the husband bought the ticket and deposited the money into his account. The wife believed that the lottery winnings should have been considered as a joint contribution on the basis that they were also in a relationship. Despite being in a relationship, however, the wife said that they each maintained separate bank accounts as this is what the husband wanted. The wife argued that the trial judge incorrectly applied the decisions of Zyk v Zyk (1995) FLC 92-644 and Eufrosin & Eufrosin [2014] FamCAFC 191 by giving undue weight to the financial aspects of the purchase of the ticket and the financial relationship of the parties rather than the “joint endeavour” (being that the ticket was purchased during the parties’ relationship).

 Finding at First Instance

The Court held at first instance that in addition to noting that the lottery money had been retained separately along with the $190,000 that the husband inherited in 2007 from his mother’s estate, it was clear that the parties kept their assets and finances separate from each other. They each had separate bank accounts and the wife attested to this when she responded that it was always her husband’s request that their respective accounts be kept separate and that the husband never wanted a joint account. The Court  found that the husband’s weekly lottery purchase was not intended to be a “joint matrimonial purchase”. Further, the wife did not have practical control of the family finances.

 

The Full Court

According to the Full Court, it was better to approach the issue as one of a ‘contribution’ rather than a ‘windfall’ for the simple reason that the latter isolates the asset into a special category outside the traditional approach family law property proceedings (applying section 79 of the Family Law Act) dealing with the contribution of the parties.

The Full Court perceived the critical question in such cases to be ‘who is the contribution made by’. In ordinary marriages, the ticket would be purchased by one of the parties to the marriage with money that he or she happens to have at that particular time. Therefore, it is widely acknowledged that irrespective of the parties’ financial positions or otherwise, the purchase of a 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. It would equally apply if one party was working and the other was not as it is the type of partnership selected by the parties. 

The Court explained that generally this approach would be adopted, however, there are times and situations where this is not the practicality of the matter at hand. The Full Court in Eufrosin & Eufrosin [2014] FamCAFC 191 adopted a similar approach. In this case the wife had purchased a winning lottery ticket six months after the parties had separated. The winnings were $6,000,000 of which the wife gave her sister $1,000,000 and kept the remaining $5,000,000.

According to the Court, the origin of the funds should not determine the issue of how a lottery win should be treated for the purposes of section 79 of the Family Law Act (which deals with contributions of the parties). What is critical here is the nature of the parties’ relationship at the time the lottery ticket was purchased.

Conclusion

The Full Court found that the purchase was initiated by the husband independently of the wife, consistent with a lengthy practice of the husband’s alone that pre-dated the relationship by about eight years. Rather than share or utilise any of the proceeds with the wife, the husband continued to treat his property as his solely. The wife accepted that this was the husband’s intention even if she was dissatisfied with this.

The wife’s appeal was dismissed with the contribution being recognised as one by the husband and not a joint contribution.

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