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Lotto Wins

In a marriage or a de facto relationship, lottery wins prior to and after separation remain property for final property settlement under the Family Law Act 1975. Lottery wins are considered property acquired through an unexpected or chance event without any direct effort on the part of either of the parties.

If the value of the pool of assets increases during a marriage or a de facto relationship due to external circumstances such as rezoning of a property or a lottery win rather than due to the activities and/or efforts of a party, it may be referred to as a windfall and a contribution.

The timing of the receipt of a windfall such as a lottery win may be highly relevant to the overall outcome of property proceedings. Although a lottery win is generally considered a contribution solely by the party who bought the ticket, it may be relevant to the assessment of the future needs of each party.

The court has held that where a winning lottery ticket was bought during the marriage, it was a windfall and a contribution by both parties. The critical question is by whom the contribution was made. Where both parties are in receipt of an income and where the mode of the marriage or the relationship is based upon each party contributing their respective income to the partnership constituted by their marriage or de facto relationship, the purchase of the winning lottery ticket is regarded as a purchase from joint funds. Likewise, if one party is in receipt of an income while the other party is involved in domestic activities as the mode of the marriage or de facto relationship ordinarily adopted by the parties, the purchase of the winning lottery ticket is also regarded as a joint and equal contribution.

However, there are cases where a lottery win is not considered a joint or equal contribution by the parties to a marriage or a de facto relationship. For example, circumstances where the parties are living separate lives or parties have been maintaining separate finances. In such circumstances, the court may adopt a two-pool approach, namely one pool for the lottery win or assets acquired from the lottery winnings and a second pool for the balance of the assets that comprise the property pool.

Examples of cases

How a lotto win is treated at settlement depends on the circumstances of the parties’ relationship when the winning ticket was bought. There are  contrasting decisions by the courts, dealing with different scenarios. Here are some examples:

ZYK and ZYK (1995)

The parties had been married for two years when the husband had a lottery win of $95,000.He had been in a syndicate before the marriage and the wife had no involvement in the lottery purchase. The court found that it was “part of the husband’s general practice” to hand all his money to the wife who had “practical control of the family finances”. The lottery ticket was bought by the husband from money he had from time to time. The court found upon the husband handing the money to the wife, she applied it “so that it formed part of their property”. Therefore the purchase of the ticket had come from the shared joint incomes of the parties. The winnings were used by the parties for joint purposes and therefore were treated as a joint contribution.

Farmer v Bramley (2000)

In this case, the husband won a lottery prize of $5 million, 18 months after separation. The parties had lived together for 12 years but at the time of separation, there were no assets of any significance and so had not effected a formal financial settlement.

Throughout the relationship, the wife provided for the husband when he was suffering from a heroin addiction, supported the husband financially during the relationship whilst he studied and, at the time of the hearing, the child of the relationship lived with the wife solely and was not supported by the husband.

Taking into consideration the wife’s significant financial and non-financial contributions throughout the marriage, the disparity in the parties’ financial circumstances, the wife’s ongoing care of the child without any financial assistance or support from the husband and the future needs of the wife, the court made an adjustment and ordered that $750,000, or 15% of the winnings, be made payable to the wife.

Eufrosin v Eufrosin (2014)

Here, the wife bought a lottery ticket six months post-separation and won $6 million. The husband contended 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 buy the ticket. The court held that even if that was accepted, the argument which proceeds from it ignored 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. At the time the wife bought the ticket, some six months after separation, the parties had begun leading “separate lives”, including separate financial lives.

The court held that the source of funds should not “determine the issue” of how a lottery win should be treated. What is relevant, is the nature of the parties’ relationship at the time the lottery ticket was bought. At the time the wife bought 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

However, as a consequence of the husband’s greater financial needs post separation, notwithstanding the court making a finding that he made no contribution to the lottery winnings, an adjustment was made in his favour because of his greater financial needs by way of an adjustment of $500,000 to the husband from the wife.

Elford v Elford (2016)

In this case, the parties largely led separate financial lives. They started living together in 2003, married in 2007 and separated in 2012. In 2004, less than a year into the relationship, the husband won $622,842 in a lottery. These winnings, with the husband’s savings, were deposited into a term deposit in his sole name. The wife argued that the lottery money should be treated as a joint contribution by the parties as their marriage was a “joint endeavour”. The husband argued that the winnings should be treated as his sole contribution.

The court stated that it was not only the nature of the parties’ relationship at the time the lottery ticket was bought that set this case apart from so many of the decided lottery winning case, it was also the manner in which the husband and the wife conducted their financial affairs after those winnings were received by the husband.

The court noted that the parties kept all their financials and assets separate for the entirety of their relationship. They maintained separate bank accounts and did not have a joint bank account. The wife stated that this was “what he wanted”, even though she was unhappy about it.

The Full Court dismissed the wife’s appeal that she was entitled to a greater share of the property pool, which consisted mainly of lottery winnings. The court upheld the trial judge’s decision that the winnings were not a “joint endeavour” but rather that the husband had made the sole contribution to the winnings.

For advice or representation in any legal matter, contact Armstrong Lawyers.

Michelle Makela

This article was written by Michelle Makela

Michelle has over 15 years experience in the legal industry, working across commercial litigation, criminal law, family law and estate planning.  Michelle has been involved in all practice areas of the firm and in her personal practice has had experience in litigation at all levels (State and Federal Industrial Tribunals, the Supreme Court, Court of Appeal, the Federal Court, Federal...

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