Jackpot! Is your partner entitled to your lotto win in your divorce?
Assisted by Carli Heald and Holly Pitt
We all dream of winning the lottery but if a marriage breaks down after your win, your dream could become the stuff of nightmares. Just how much can your soon-to-be ex claim of your good fortune? In a twist, now pretend that you hit the jackpot in the first year of your decade long nuptials…
That’s just what happened in the case of Elford & Elford, where the court heard an appeal from orders of a property settlement at the end of a relationship.
Mr Elford was lucky enough to win more than $622,000 on a ticket he bought about 12 months after the couple’s marriage. Rather than splurge, the financially prudent Mr Elford placed the winnings into a term deposit account, solely in his name. The money remained untouched for the duration of the relationship and formed the majority of the property pool.
When the couple separated, they applied to the Court seeking orders for property division. Mr Elford’s winnings were now worth a juicier $1 million and the judge decided that this money should be seen as a financial contribution made by Mr Elford only.
Mrs Elford appealed and said that after ten years of marriage, the contribution should be considered ‘joint’ and split accordingly.
The Court dismissed the wife’s appeal. It was held that Mr Elford was solely responsible for this financial contribution and Mrs Elford received about 10% of the combined property, inclusive of the lottery winnings.
Why weren’t the lottery winnings split between the two?
What was interesting (and unusual) about this case was that the couple kept their assets and finances separate during their marriage. Mr Elford’s income was used to meet expenses related to his property and utilities while Mrs Elford’s income supported her three children from a previous relationship, and purchased food and groceries for the household.
Additional factors that the court took into account included:
- Mr Elford was solely responsible for purchasing the ticket
- Mr Elford chose the winning numbers himself, using the exact numbers that he had used on a weekly basis when purchasing previous tickets
- The winning ticket was only in Mr Elford’s name
- The winnings were placed into Mr Elford’s personal bank account (the couple had no joint account) and were treated as his sole asset throughout the relationship.
Although unusual, this case sets out the legal principle for how lottery winnings should be treated in property settlements of a similar nature. Importantly, it serves as a warning that your marriage may not necessarily be viewed as a ‘joint financial enterprise’, and that in Australia, there is no concept of ‘community ownership of property’ arising from the mere fact of marriage. There can always be exceptional circumstances where a contribution made by you, or your partner, may be viewed as not having been accrued from your relationship.
History of the treatment of lottery winnings in family law proceedings
In 1995, the case of Zyk & Zyk resulted in a fundamental decision which altered how the Courts treated lotto winnings in property matters. Prior to this case, lottery winnings were essentially treated by the Courts as ‘bonuses’ which weren’t necessarily regarded by the Courts as a matrimonial asset capable of warranting an adjustment to the property pool. However, when Zyk was decided, it became the first authority characterising lotto winnings as a contribution to the marriage and capable of forming part of the property pool.
Zyk established the following principles with respect to lotto winnings:
- Generally, one of the parties to a marriage will purchase the lottery ticket from monies they possess at the time, however, that alone does not determine whose contribution it is
- The purchase of a lotto ticket is to be regarded as a purchase from joint funds where both parties are earning and receiving an income and where the parties put their respective incomes towards “a joint partnership constituted by their marriage”
- Even in instances where one of the parties isn’t working and earning an income, the above-motioned proposition will general still apply.
In 2014, Eufrosin & Eufrosin was decided. The matter concerned a lottery ticket purchased in a different context to the ticket subject to the decision in Zyk - that is, post-separation. Here, the Court decided that the husband hadn’t contributed to his wife’s lottery winnings and as consequence, held that the winnings weren’t “connected to the marriage.” The husband argued that he had in fact contributed as the money to purchase the lottery ticket was from their joint accounts. However, the Court decided that wasn’t the case as the marriage had already broken down and their funds were no longer being used “commonly,” with each using the money for their own ventures and expenses at the time the ticket was purchased.
In 2011, the Court decided the case of Kneen & Crockford in accordance with the approach taken in Zyk. In this case, the parties were in a de-facto relationship which they commenced in Sierra Leone and continued in Australia. The wife purchased a lottery ticket in Australia following a brief period of separation and won $3 million which was then placed into a joint account managed by the de-facto husband. Following the line of reasoning in Zyk, the Court held that the lottery winnings “should be regarded as the joint contributions of the parties” and the winnings were divided equally between the two.
If have questions or enquiries on how to protect your assets throughout your marriage or your relationship breakdown, please contact our divorce and separation lawyers in Parramatta and Norwest:
Karina Ralston, Associate
Phone: +61 2 9895 9296