Lotto Winnings Kept Seperate

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In a recent and what can be described as somewhat surprising decision, the Full Court of the Family Court considered a property settlement matter recently where the parties had been together for ten years. There were no children of that relationship and one party had made more substantial initial contributions. However, there was one aspect of the case which left some perplexed grimaces on the faces of family law practitioners.

In this particular case, the husband had a lotto win of approximately $622,000.00. This win occurred about twelve months into the relationship. In other words, the lotto win was not received prior to the relationship, or after separation. In previous decisions, the Family Court had held that not only was it relevant as to how the ticket was purchased (from joint funds or otherwise), but also the nature of the parties’ relationship and how they treated their assets was important. Typically, that was interpreted to mean that lotto winnings during a relationship were effectively treated as contributions by both parties because, whilst the few sheckles that purchased the ticket may have come from someone’s pocket, the other party was making contributions directly or indirectly during that relationship. Obviously, before a relationship or after a relationship, the use of joint funds usually ceases and parties make their own independent purchases of a lotto ticket from their own resources.

In this Case, however, the Full Court decided that the facts fitted neatly into an exception to the normal situation. It was held that what made this Case different, despite the fact that lotto ticket and winnings were purchased and obtained during the relationship, included the following factors:-

  1. The husband had always purchased tickets using his parent’s numbers before the relationship and it was him who had the interest in purchasing lotto tickets only – the wife had no interest;
  2.  

  3. The husband continued to purchase tickets in the early part of the relationship and he used his own funds exclusively. The wife had no interest, or made no contribution to the purchase;
  4.  

  5. That when he won the lotto winnings, the husband kept his winnings separate in a term deposit account and he did not mix those monies with any other relationship funds, or use the winnings for relationship purposes.

 
There are other factors in this case that weighed heavily in favour of a substantial adjustment being made in the husband’s favour. They included his substantive initial contribution and also the fact that he was a lot older and in bad health. However, the “notional exclusion” of the lotto winning and the giving to the wife of a very small entitlement was still somewhat surprising.

It is yet to be seen whether this is just another “the facts are a bit different case” that adds to the confusion of ongoing Court of Appeal decisions by the Family Court, or whether we now have consistencies in situations where parties conduct their marital affairs separately and distinct from each other.

What we are seeing in recent decisions is that the following conduct by a party may assist in them retaining their own assets and/or receiving a larger share. Such conduct can include the following:-

  1. Keeping all of their assets separate and their income separate;
  2.  

  3. Buying assets only in the name of the party who has made a financial contribution;
  4.  

  5. Not operating joint accounts or joint credit cards;
  6.  

  7. Living independent financial lives, despite an emotional enmeshment;
  8.  

  9. Executing documents (whether they be Binding Financial Agreements or other Memorandum of Understanding or non-binding agreement), indicating that it is understood and agreed by the parties in the marriage that certain assets/gifts/inheritances and other things are to be kept separate and remain that parties property absolutely.

 
The interesting aspect to this Case for me is as to whether the Court would treat the negative occurring in the same manner it did the positive. Let’s assume that it was the husband who brought the lotto tickets – and let’s assume that he was obsessed with buying tickets and using his parents’ numbers. During a ten year relationship, let’s assume that he spent $50,000.00 on lotto tickets and he did not win lotto. How would the Family Court treat that wastage of money, having regard to its treatment of preserving a windfall for the party who purchased the ticket and keeps their finances separate?

Would the Court notionally adjust for the $50,000.00 and add it back to the pool of assets? – Or would it stay consistent with other Full Court Authority (where there has been worse gambling than this) in simply not making any adjustment for the husband’s spending/hobby throughout the relationship. It is easy to see how the two situations are inconsistent.

It is suggested, that the inconsistency arises because of the failure by the Full Court to take into account that contributions do not have to be shown to be made to specific pieces of property. The cause or link is not necessary. The Full Court was critical of Counsel for the husband using the word “community property”. With respect, the Full Court should have been aware that the husband’s Counsel’s use of that word was unfortunate but in effect, what he was trying to submit was that the wife did not have to show a direct financial contribution to assets held by the husband. If that was the case, then women in marriages, where there are no children, but they earn little or not as much of their husband would be substantially denied claims because their other contributions would be severely undervalued.

Relationships involve contributions of many different kinds – those contributions are not just financial and they do not have to be linked to a specific time or a specific piece of property. Proper weight has to be given to those contributions and the conduct of a party by keeping assets separate in a bank account or keeping a lotto winning separate in a bank account, does not mean that the other ones contributions are any more or any less important.

There seems to be a growing trend, especially amongst single Judgements (in the Family Court and Federal Circuit Court) that use the High Court’s decision of Stanford for justification for any sort of compartmentalising of contributions and division of assets. With respect, it is suggested that Stanford is an unusual and unique case and those unusual facts and circumstances can be gleaned by a quick reading of the case.

As such, the obiter comments by the majority in that case should be given the appropriate weight and treatment having regard to the clearly distinguishable facts of such a decision.

Finally, it is suggested that the investigation of the so called “common assumptions” that apparently underpin relationships itself has no foundation in s79. Instead, it is the direct and indirect, financial and non-financial and other contributions to the welfare of the family specifically set out in s79 that underpin the exercise of property alteration adjustments under the Act.

Clearly, in the peculiar and unique facts that exist in Stanford’s Case, there can be no argument that there was no basis for any common assumptions continuing. Of course the common assumptions that underpin that relationship (whatever that means and whatever they were), could not be said to exist given the total breakdown in physical and mental health of the parties (and death of one of the parties).

It does not follow, by converse, that when parties are healthy and separate in the normal course of events, that the “common assumptions” on which the relationship is based should somehow be confined or extended to include issues about who put money in what bank account and whether money was kept separate from the other party. It may, for example, be that parties kept money separate and conducted affairs separately because one party insisted that be the case. If that is so, does the Court have to make an enquiry as to conduct and fault in every case to work out on what basis an assumption came into existence and on what basis it is broken down (if it is broken down at all, or even if there was an assumption in the first place).

One thing can be sure, and that is in the years ahead there will be no doubt be further decisions that add further confusion and uncertainty to outcomes in financial settlement. In a time where certainty is needed by people and where it is just and equitable to provide that certainty, our system is badly failing.

About the author

Brett Hartley

Accredited Family Law Specialist

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