By Carlyna Yap (Trainee Lawyer) and Stefan Pantellis (Senior Associate)
When altering property interests after the breakdown of a relationship, two key factors that the Court must consider are:
- the assets, liabilities and financial resources of the parties; and
- the parties’ contributions (financial and non-financial).
When it comes to identifying the asset pool, it’s easy to point to the house, the cars and the cash in the bank. Similarly, when it comes to financial contributions, our minds generally jump to income. Who earned more? Who paid for the mortgage? Who paid for the day-to-day household expenses?
An interesting point of law is how the Courts treat lottery winnings. Do the winnings form part of the asset pool? Are they considered to be a contribution of the party who purchased the ticket? What happens if one party wins the lottery post separation?
What the courts say
Prior to 1995, the Courts generally viewed lottery winnings and other forms of windfall gains to be shared equally between the parties. In the case of Zyk (1995) FLC 92-644, the Full Court found that lottery winnings and other forms of windfall were contributions and formed part of the asset pool similar to how the purchase of a house would. However, it was also acknowledged that it was possible for some parties to have conducted their affairs and expressed intentions in a way that it would be inappropriate for such a conclusion to be drawn.
The case of Eufrosin & Eufrosin [2014] FamCAFC 191 provided further clarification to this. In that case, the Court held that the source of the funds used to purchase a winning lottery ticket is not determinative of who made the contribution. Instead, it is relevant to consider the nature of the parties’ financial relationship at the time of the ticket purchase. In this case, despite the money for the ticket coming from the joint family business, the parties were separated, the “joint endeavour” of the marriage had been dissolved and there was no longer a “common use” of the property. Accordingly, the lottery winnings did not form part of the asset pool and the wife was entitled to keep the full amount.
Similarly, in the case of Elford & Elford (2016) FamCAFC, the Court held that despite the relationship being on foot when the husband won the lottery, they lived financially separate lives. They did not have a joint bank account and the husband placed the winnings in an account in his sole name. As such, the lottery winnings were considered to be the sole contribution of the husband.
Contrastingly, in the case of Farmer v Bramley (2002) FLC 93-060, the wife was awarded 15% of the husband’s lottery winnings, despite the winnings being acquired 18 months post separation. The main motivating factor for the Court’s decision was that the wife had made substantial contributions throughout the relationship (supporting the husband through his heroin addiction and helping him get an education) and there were no significant assets at the time of separation.
What should you take away from this?
Winning lottery tickets purchased during the relationship are generally considered to be a joint contribution by the parties. This means that the money is treated as joint property for the purposes of property division. The exception to this is where the parties live financially separate lives. In this scenario, the winnings are likely to be considered to be a sole contribution by the party who bought the ticket.
Lottery winnings acquired post separation are unlikely to form part of the asset pool unless there are exceptional circumstances that would justify otherwise.
Should you require any assistance understanding your rights and entitlements, our Family & Relationship Law team is available to help and can be contacted during normal business hours via email (adminfamily@khq.com.au) or by telephone on (03) 9663 9877.
This article was written by Carlyna Yap (Trainee Lawyer), Stefan Pantellis (Senior Associate) and Monica Blizzard (Director).
