The Lottery Ticket

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By Di Simpson

Full Court Decision – Elford and Elford [2016] FamCAFC 45 (29 March 2016)

For most of us, what we would do with lottery winnings remains something we can only dream about.  However, what happens to those winnings when a marriage breaks down, is something the Family Law Courts seem to be asked to decide on an almost semi-regular basis!

On the 29 March 2016, the Full Court decided an appeal, which in part dealt with questions about how a lottery winning should be treated in a property settlement between a husband and wife.

In the case of Elford and Elford, the ticket was bought by the husband, about 12 months after the parties started living together. He won more than $622,000 and put the money into a bank account in his name.  The trial judge decided that the winnings were a financial contribution made by the husband and not a joint contribution as had been argued by the wife.

Ultimately, the wife received about 10% in total of the parties’ property, inclusive of the lottery winnings.

The wife appealed this decision and argued that the trial Judge was wrong to treat the lottery winnings as a contribution of the husband alone.  The wife also argued that after a 10 year relationship and marriage, the outcome was “manifestly unjust”.

The Full Court did not agree and dismissed her appeal.

There were a number of factors that differentiated this case from other cases where lottery winnings were regarded as a joint contribution by the parties:

  • The husband had been buying lottery tickets, using the same numbers, since 1995 (8 years before the parties got together);
  • They had been in a relationship for less than a year when the winning ticket was bought;
  • The wife agreed she had not contributed any funds to the purchase of the lottery tickets, since the relationship started;
  • The parties kept their assets separate. They kept their finances separate.  They did not have joint bank accounts. The wife said this was at the husband’s request;
  • The wife contended that it was the husband’s preference that they keep their finances separate and she was unhappy about it;
  • The Judge found that the husband had never intended that the weekly purchase of the ticket was to be a “joint matrimonial purpose”, reinforced by the husband’s actions in not “handing” the winnings to the wife;
  • The wife did not have “practical control” of the family’s finances;
  • The Full Court considered previous decisions about lottery wins (and how the contribution of those winnings would be treated) including “there might be cases where the parties have so conducted their affairs and/or so expressed their intentions that this (a joint contribution finding) would not be the appropriate conclusion…” (Zyk and Zyk, (1995) FLC 92-644  at paragraph 82,515);
  • The source of the funds for the purchase of the ticket is not the determinative issue;
  • The nature of the parties’ relationship when the ticket was bought (how they structured their finances) and how they conducted their financial relationship after the winnings came in, set this case apart;
  • The wife argued that as a couple, in a relationship, theirs was a partnership and despite how the husband required their finances to be structured, everything accrued during the relationship was as a result of that joint endeavour. This was not persuasive.  The concept of “community property” or community of ownership arising from marriage, does not exist in Australian family law.

In arguing that the outcome was “manifestly unjust” and that the result was “plainly wrong”, the wife asserted that the Judge was wrong in not making an adjustment for future needs, in her favour.  However, it was clear the Judge took into account the following:

  • The wife had three dependent children, from a previous marriage living with she and the husband. He provided some care of those children and provided the home in which the family lived, while the wife met the majority of their other costs (and received child support from their father);
  • The husband was 22 years older than the wife. About 12 months before separation, the husband suffered a serious stroke and his health was very poor.  At the time of the trial, he was almost 69 years old, virtually blind, required kidney dialysis three times a week and was dependent upon daily home care.  The wife was 47 years old and was in employment.

The wife was unable to persuade the Full Court to overturn the Judge’s discretionary judgment about these matters.  This is always difficult and it is well established that the fact that an appellate court, may have come to a different view if they had heard the matter, is not enough.  The Full Court said (para 64):

        “His Honour’s task was a difficult one; the facts upon which the proper assessment of both contributions and s79(4)(e) were based had unusual features…we do not consider that his Honour made any discretionary error. No material factual errors were made.  Some or all of us may have reached a decision different to his Honour but that circumstance does not warrant appellate interference…We are unable to persuade ourselves that the result is outside the parameters upon which reasonable judicial minds might differ.”

Having lost her case at trial, and having lost the appeal, the wife was spared a costs order – the Full Court recognising that the discrepancy between the financial circumstances of the parties was particularly important.

This is a case about lottery winnings, but it is also interesting for another reason – it is another example of a decision where the outcome favours a person who has imposed on the other, a way of living their joint (and in this case, married) lives; and which appears to have created an informal shield against the full operation of the adjustive powers under the Family Law Act.  One party may insist upon (and impose) “financially separate lives”.  The fact the parties lived “financially separate lives” appears to have been given considerable weight, without real consideration of how that arrangement came about.

This case seems to beg the question of how to exclude the jurisdiction of the Family Law Act, without signing a pre-nup? One answer may be to insist upon leading financially separate lives.

DDCS Lawyers can provide advice on all matters relating to property division and settlement, in addition to Binding Financial Agreements (pre-nups) to maximise certainty and mitigate unfavourable settlements. Please contact us on (02) 6212 7600 or mail@ddcslawyers.com.au to find out more.

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