Impact of Lottery Wins on Property Division in Divorce Proceedings
Will your spouse’s lottery win be included in the asset pool available for division during a property settlement? The answer is: it depends on the circumstances of the lottery win including when they received the winnings, whether the parties intermingled their finances prior to or following the win and how the parties utilised the win.
In the case of Zyk v Zyk (1995), the Wife brought substantial assets into the marriage ($550,000 initial contribution by the Wife and $116,000 initial contribution by the Husband). The parties were married for eight years and had no children. Two years after the marriage, the Husband won $95,000 in lottery wins. The trial Judge treated the lotto win as the Husband’s contribution however the Wife appealed. During the Appeal, it was held that the lotto win should have been treated as a joint contribution as it came from shared incomes. The Appeal Judge held:
‘Since the early 1970s the husband had been buying lottery tickets through a syndicate’.
The wife was not a member of the syndicate and played no part in the purchase of the tickets. His Honour found that it was part of the husband’s general practice during the marriage to “hand all of his money to the wife who had practical control of the family finances”… The proceeds of this win were collected by the husband and handed to the wife who applied it so that thereafter it formed part of their joint property’.
From the time of the marriage, the parties jointly shared their respective incomes. The husband continued to purchase his share of the syndicate ticket each week, but from then on the purchases should be treated as coming from joint incomes. There was nothing in the circumstances here, other than that it was the continuance of the previous arrangement by the husband, which would cause one to distinguish this case from any other case of the general type to which we have referred.
The circumstance that the husband paid it to the wife and that she then applied it for their mutual benefit reinforces that view. Consequently, in our view, his Honour was in error in his treatment of the Lotto win and it should have been treated as a joint contribution of the parties. It follows from what we have said that in most cases the amount derived from a lottery win or other similar activity during cohabitation should be regarded as a joint contribution of the parties.
In the case of Eufrosin & Eufrosin (2014) FamCAFC 191, the parties were married for twenty years and had two adult children. The Wife had won the lotto six months after separation. At trial, the Judge could not determine the source of the funds used by the Wife to purchase the winning ticket. There were potentially four sources identified and accordingly, the trial judge held that the husband made no contribution to it. The Husband appealed, however, his appeal was dismissed and he was ordered to pay the Wife’s costs.
The Appeal Judge’s reasoning was as follows:
7. The husband contends that the wife used funds from a business that had been run primarily by him (and other of his family members) during the course of the marital relationship to purchase the lottery ticket. Even if that is accepted, the argument which proceeds from it ignores the reality of the parties’ post separation lives. The parties had put in place a system whereby regular withdrawals of funds were made by each of them from what was formerly a joint asset, and those funds were applied by each of the parties individually to purposes wholly unconnected with the former marital relationship.
8. At the time the wife purchased the ticket, some six months after separation, the parties had commenced the process of leading “separate lives”, including separate financial lives. That crucial matter, the importance of which is reinforced by the High Court in Stanford, renders reference to the sources of the funds or nomenclature such as “joint funds” or “matrimonial property” unhelpful in assessing what is just and equitable.
10. Similarly, and significant for the instant issue, Nicholson CJ, Fogarty and Baker JJ held in Zyk (at 82,515) that:
…In the ordinary run of marriages, a ticket is purchased by one or other of the parties from money which he or she happens to have at that particular time. That fact should not determine the issue. 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…Where one party is working and the other is not the same conclusion would ordinarily apply because that is the mode of partnership selected by the parties…There may be cases where the parties have so conducted their affairs and/or so expressed their intentions that this would not be the appropriate conclusion…
11. As this Court in Zyk made clear, the source of funds should not “determine the issue” of how a lottery win should be treated for s 79 purposes. What is relevant, in our view, is the nature of the parties’ relationship at the time the lottery ticket was purchased. In our view, the authorities just cited, together with what was said by the High Court in Stanford regarding the “common use” of property, is sufficient to dispose of the husband’s contention that her Honour erred in failing to find that he contributed to the wife’s lottery win. At the time the wife purchased the ticket, regardless of the source of the funds, the “joint endeavour” that had been the parties’ marriage had dissolved; there was no longer a “common use” of property. Rather, the parties were applying funds for their respective individual purposes.
12. In our view, whilst not expressed in those terms, her Honour’s conclusion at [109] that “…the husband made no contribution to the money which the wife applied to purchase the winning [lottery] ticket in [early] 2009” was based on that premise. So much, in our view, is plain from her Honour’s acceptance in [108] that it would be “pure sophistry” to credit the husband with any contribution to the funds used to purchase the ticket.
In the case of Elford v Elford [2016] FamFAFC 45, the parties had a nine-year relationship. One year after cohabitation (but three years before marriage), the Husband won the lotto of $622,000 which remained in a term deposit in his name. The Husband had significant future needs because of his health issues. The Wife argued that the lotto win should be treated as a joint contribution, however, the trial judge held that it was the Husband’s sole contribution. The Wife appealed and the appeal was dismissed. The Appeal Judge held that the lotto win was the Husband’s sole contribution.
The Appeal Judge’s reasoning was as follows:
[10] 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 had maintained separate bank accounts from the husband because “that was what he wanted”.
[13] In addition to noting that the lottery money had been retained separately along with a further $190,000 the husband received in 2007 through an inheritance from his mother’s estate, his Honour said:
31. The parties clearly kept their assets quite separate and it is also clear that, to a very large degree, they kept their finances quite separate. They maintained separate bank accounts and they did not ever have any joint bank accounts. Indeed, when the wife was cross-examined, she said: “that was always his request; what accounts he had were his” and “he never wanted to have a joint account”.
[14] When questioned further, she conceded that:
- she did not contribute financially towards the purchase of the ticket;
- she did not pick the winning numbers;
- the husband had been buying weekly tickets with those numbers since 1995;
- she and the husband had been in a relationship for less than a year when his ticket was a winner;
- the winning ticket had been in the husband’s sole name; and
- the funds had been paid into the husband’s bank account.
[15] His Honour also found that the husband never intended the weekly purchase of a lottery ticket to be a “joint matrimonial purpose” [47] and said “[i]n this case, the husband did not ‘hand all his money to the wife’, nor did she have ‘practical control of the family finances’” [50].
[23] 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 pre-dated the relationship by about eight years. Rather than share or utilise any of the proceeds with the 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.
Accordingly, caution should be exercised in lottery winning cases, as there is a potential that the win could be treated as a sole or joint contribution.
If you require legal assistance regarding lottery winnings, property settlements, or any other family and property matters, please contact Michael Vassili Lawyers at 1300 557 819.
