Lottery Win – Wife loses appeal to seek more than 10% of the asset pool when the Husband received a significant lottery win, one year into a nine year relationship.

In Elford & Elford [2016] Fam CAFC 45 (29 March 2016) the Full Court (Bryant CJ, Murphy and Cronin JJ) dismissed an appeal of the Wife who sought that property Orders made by His Honour Justice Roberts in the Federal Circuit Court providing that she receive just over 10% of the asset pool after a nine year relationship, the feature of which was the husband’s receipt of a lottery win one year into the relationship, be set aside and that the Full Court re-exercise its discretion to make property Orders.

The broad other material facts at first instance, that were largely uncontroversial, included; the husband was 22 years older than the wife, he had suffered a stroke twelve months prior to separation that left him blind and unable to drive or read, he undertook kidney dialysis three days a week and he needed largely full time care in his home. The wife had three dependant young children from a previous relationship (at the commencement of the relationship) who lived with the parties’ through-out.

Importantly, the parties largely had separate financial lives. They did not have any joint bank account/s at any stage through-out the relationship. The husband received a $622,000 lottery win, twelve months into the relationship. These monies were placed in a term deposit in his sole name and they were held separately for the duration of the relationship.

The asset and superannuation pool was around $1.4 million made up of the husband’s unencumbered home, the wife’s home with around $35,000 equity and the husband’s bank balances and investments of around $960,000. These bank balances and investments included $197,000 (and the earnings on these funds) received by the husband from his mother’s estate, five years before the end of the relationship.

 

Material Appeal Grounds

The wife, on appeal, argued that the trial Judge incorrectly found that the lottery win was a contribution on behalf of the husband. She contended that he should have found that it be treated as a joint contribution of the parties.
The Full Court found no basis to this ground. They referred to the earlier authorities and agreed with the trial Judge that his treatment of the lottery proceeds was consistent with the earlier authorities.

In the Full Court In Zyk and Zyk, (1995) FLC 92-644 (at 82,515) the Full Court stated:

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…

However, the Full Court went on to say, in the same case:

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.

The Full Court in Elford also referred to, in this regard, Eufrosin and Eufrosin (2014) Fam CACF 191 in which the Full Court stated:

…. 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.

The Trial Judge had found in Elford (correctly the Full Court said) that this was just such a case. His Honour in Elford said:

In my view, it is not only the “nature of the parties relationship at the time the lottery ticket was purchased” that sets this case apart from so many of the decided “lottery winnings” cases; it is also the manner in which the husband and the wife conducted their financial affairs after those winnings were received by the husband…. Those winnings were placed into an account in the husband’s sole name and that is where they remain to this day. The parties also kept all of their other finances separate for the entirety of the relationship.

The husband had purchased the tickets for eight years prior to the relationship. It was his endeavour alone, the court found, in all of the circumstances.

The wife had argued to the trial Judge and on Appeal that the relationship was a partnership and that all that was accumulated through-out the relationship had accrued to the parties as a partnership.

As the Full Court indicated, the wife’s position was:

That is, the property of the parties or either of them was to be seen as a form of “community” property.

The trial Judge (correctly the Full Court found) dealt with that submission by indicating as was found in Stanford, that:

whether it is “just and equitable” to make the order is not to be answered by assuming the parties rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s.79…. must be applied keeping in mind that “community of ownership arising from marriage has no place in the common law”.

The question presented by s.79 is whether those rights and interests should be altered.

Interestingly, the Full Court in essentially dismissing this ground noted in obiter that this might have been an appropriate case for an asset by asset approach to be taken and an argument made that the monies held in the term deposit, of which the lottery money was a part, should not have been altered as it could have been argued it was not just and equitable in the circumstances to alter the existing interests in that property.

 

1. The Full Court dismissed the wife’s argument that the trial Judge failed to assess the contributions of the parties “holistically”, noting that His Honour assessed and evaluated, ie considered, the totality of the relevant financial and non-financial contributions of the parties and weighed them as he was required to do.
2. The other significant appeal ground was that the result was plainly wrong and manifestly unjust. This argument also encapsulated a submission that “the contribution finding was too low and that lack of any adjustment by reference of s.75(2) factors was inappropriate in the circumstances.”

 

This ground also failed, essentially as:

1. The Full Court found that the trial Judge did appropriately weigh all of the relevant s.75(2) factors including the wife’s future care of her children. That factor had to be balanced against two other important factors here being that it was the children’s father who was responsible for the children’s needs and not the husband, and, clearly here, the husband’s age and debilitating ill-health, with the associated need for significant paid care. The trial Judge also took into account the disparity of capital arising from the contribution findings, appropriately.

 

2. The Full Court re-stated the established principles around discretionary judgements not lightly being disturbed on Appeal and the found that the decision here did not meet the criteria of being either: the court below has acted on a wrong principle or (although the precise error of principle cannot be identified) has reached a conclusion that was plainly wrong….

As was stated in Gronow v Gronow (1979) 144 CLR 513, an appellate court’s decision that a trial Judge’s discretionary conclusion is wrong must have a discernible proper foundation and that foundation cannot be merely that it would have reached a different decision based on the same facts.

And in this case, the Full Court stated:

Some or all of us may have reached a decision different to His Honour but that circumstance does not warrant appellate interference…… We are unable to persuade ourselves that the result is outside the parameters upon which reasonable judicial minds might differ.

An interesting question is would that have been the court’s view given the same facts, pre Stanford? Perhaps it may not have.

It is another decision though, that there is little doubt Stanford has influenced.