In a recent decision1 that could have far-reaching implications for determinations of future property settlements, the Full Court of the Family Court upheld a Federal Circuit Court judgment awarding a wife only 10% of an asset pool that largely comprised tattslotto winnings received by the husband in the first year after the couple started living together.

Essentially, this decision brings into sharp focus the necessity of couples carefully considering the precise financial arrangements that will be in place throughout their relationship, as it can no longer be automatically presumed that a couple intends their relationship or marriage to be a joint financial enterprise.

Background

Mr and Mrs Elford started living together in 2003, were married in 2007 and separated in late 2012. They maintained very separate financial arrangements throughout their relationship. Each of them maintained separate bank accounts and they did not have a joint account.

Mrs Elford's income was used to support her three children from a previous relationship and to buy food and groceries for the household. Mr Elford's income was used to meet the outgoings in respect of his property and the utility accounts. Monies received by Mrs Elford from the sale of a property owned by her prior to the relationship were retained and controlled by her solely, and monies received by Mr Elford from an inheritance were retained and controlled by him solely.

In January 2004, a year after the couple started living together, Mr Elford won first division tattslotto in the amount of $622,842. The winnings were deposited into a term deposit account in his sole name and not touched throughout the couple's relationship.

Why weren't the lottery winnings considered part of the couple's asset pool?

Mr Elford argued that the tattslotto winnings were a contribution made solely by him, because:

  • Mrs Elford did not contribute financially to the purchase of the ticket;
  • he alone picked the winning numbers;
  • he had been buying weekly tickets with the exact same numbers for the previous 10 years;
  • the winning ticket had been in the husband's sole name; and
  • the funds had been placed into the husband's bank account, were retained by him solely and were treated by the husband as his sole asset throughout the relationship.

Mrs Elford unsuccessfully argued that the winnings, coming as they did during the marriage, ought be regarded as a joint contribution. Her argument was that marriage was a partnership and therefore the discrete financial contributions made during the relationship by her and her former husband were not relevant, because everything accrued to them as a partnership during the course of their relationship. In other words, any property, whether hers, Mr Elford's or owned jointly should be viewed as a form of "community property."

However, the trial judge, as later upheld by the Appeal Court, specifically noted that there was no notion of "community ownership of property" in Australian law, and that the mere fact of marriage did not give rise to a common joint venture in relation to the ownership of assets.

Family & Relationship Law Special Counsel Rachell Davey said, "Obviously the facts of this case are unique to Mr and Mrs Elford's particular circumstances with regard to Mr Elford's use of his tattslotto winnings. However it may well have implications for the determination of future property cases and do away, once and for all, with the concept of marriage as being a truly joint financial enterprise.

"This case demonstrates the fundamental importance for couples of being clear about their precise financial arrangements once they move into together and/or get married. It is also a salutary lesson that creating a Financial Agreement can be a useful tool for a couple to agree in advance how their assets will be divided if they separate, as well as helping to avoid the stress and costs associated with litigation."