It is one of the many questions that might keep a newly separated spouse awake during the night: if I win the lottery before I effect a property settlement, do I have to share the winnings with my former partner?

In this Alert, Special Counsel Rachael Murray and Law Graduate Elle McDermott discuss a recent case which considered whether a husband was entitled to share in his estranged wife’s post separation windfall.   

Since at least 2000, when the Full Court decision of Farmer v Bramley (2000) FLC 93-060 was handed down, family lawyers have advised clients that post separation windfalls, such as lottery wins, will generally be taken into account by the Court when determining property settlement matters and, on occasions, included in the pool of property available for distribution between the parties.

In that case, no assets existed at the time of separation and several years later, the husband won $5 million in a lottery.  The wife was awarded 15 percent of the winnings.  The factors motivating the Court’s decision included that the wife had made more substantial contributions throughout the marriage by supporting the husband including whilst he was unemployed, while he was studying, as he struggled with heroin addiction and in caring for their child.  

A recent Full Court appeal decision has, however provided some further guidance on the proper treatment of post separation windfalls.  It demonstrates that parties are not always awarded a share of their former partners’ post separation winnings, and that each case turns on its own facts.

In the decision of Eufrosin & Eufrosin [2014] FamCAFC 191, the Full Court of the Family Court was asked to revisit the issue of a post separation lottery win.  The wife purchased a winning ticket worth $6 million just six months after the parties separated.  The parties were not divorced at the time and had been married for approximately 20 years.  The parties had two children together who were adults at the time of separation.  The husband was ultimately denied any share of the wife’s lottery winnings which were excluded from the pool of property available for distribution between the parties.   

In denying the husband a share of the winnings, the Full Court focused on the fact the parties had, at the time of the win, commenced the process of leading separate lives, including living separate financial lives.  There was no longer a “common use” of property as both parties were applying funds for their respective individual purposes.

The husband unsuccessfully argued that he should be entitled to a share since the funds used to purchase the ticket were “joint funds” from a business that was primarily run by him during the course of the relationship.  The wife denied this and asserted she used funds received from her sister to purchase the ticket. 

The Full Court held that the source of the funds used to purchase the ticket should not determine how the lottery win should be treated and the court instead considered the nature of the parties’ relationship at the time the lottery ticket was purchased.  The “joint endeavour”, which was the parties’ marriage, had dissolved and the purchase of the ticket was not in furtherance of a joint matrimonial purpose.  The court compared post separation windfalls with lottery wins that occurred during a relationship and noted that in those circumstances, the winnings would ordinarily form part of the parties’ joint assets and therefore be available for division between them, regardless of whose funds were used to purchase the winning ticket.

Elle McDermott