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Imagine winning lotto. If you're happily married you'll be sharing your windfall with your spouse without a second thought and if you're not so happily married, and you've separated, the money's all yours, right?
It turns out things are not that simple and the Family Court could award a substantial amount to your ex. Believe it or not, there are quite a few cases involving lost love and lotto.
Damien Carrick: Today on the Law Report, law students who cheat on university exams; should they be allowed to become lawyers? Also, divorce; when someone loses capacity, should their loved ones be able to step in and arrange a divorce on their behalf? That's later.
First, imagine winning Lotto. If you're happily married you'll be sharing your windfall with your spouse without a second thought. And if you're not so happily married, you're separated, the money is all yours, right? Well, it's not that simple. The Family Court could award a substantial figure to your ex. And believe it or not, there are quite a few cases involving lost love and Lotto. The latest involves a Sydney couple known only as Mr and Mrs Eufrosin.
Juliet Behrens is a senior associate with Canberra law firm Dobinson Davey Clifford Simpson.
Juliet Behrens: Damian, it was an interesting case. It was a case involving a family law property dispute between a couple who had a long marriage, a 20-year marriage, who had divorced in September 2009. Just after separation but prior to the divorce the wife had won $6 million in what is described as a gambling venture. I think it was various forms of Lotto and so on. When I say the wife won it, it was an interesting kind of factual scenario because she'd actually used her sister's…I think it's called a player card…which identifies her sister as the winner and results in the winnings being placed in her sister's bank account. And so she'd won this $6 million. She and her sister had had a kind of an agreement that they would share the winnings and ultimately the agreement between them was that her sister would take $1 million and then the wife would take the $5 million that remained. And the question was how should those winnings be dealt with in adjusting the property interests between the husband and the wife. So, a really interesting factual scenario.
Damien Carrick: So Mr Eufrosin wanted a share, he thought that this was an asset of the marriage, even though they had been separated for six months.
Juliet Behrens: Absolutely, and in a sense he is right because when judges make decisions about property matters or when we are negotiating in property matters we look at what either party or both parties have at the time of the decision or at the time of those negotiations, and that's what we call the pool of property to be divided. And so at the time that this decision was being made, that $5 million or what was left of it, there had been some significant spending, as one might expect if one had won $5 million, so what was left of it was, in a sense, in a pool available to be distributed. But the question was how much of that should the husband get?
Damien Carrick: So what was Mrs Eufrosin's argument? Why did she say, 'Hands off buddy, it's all mine'?
Juliet Behrens: She didn't say, ' Hands off, it's all mine', I think her counsel's submission in the end was that Mr Eufrosin should receive 5% of that amount. His counsel argued that he should receive either 50% of it if it could be regarded as the product of a joint partnership or joint venture, or if not 50% then 33.33%, and the difference between those percentages on such a large amount, as you can probably work out, is quite significant. So the wife was saying basically I contributed this and I contributed it after we separated, it can't be seen as the product of any kind of partnership endeavour between us, as it might have been if they had won it a while they were still together, and that therefore the vast bulk of it should be mine.
Damien Carrick: It's interesting, because this habit of buying Lotto tickets was something that she had done throughout the course of their marriage. I think for many years she would spend about $30 a week on Lotto tickets, and it was one of the arguments that this was kind of the continuation of an ongoing endeavour that the husband had originally invested in.
Juliet Behrens: I think that probably was there, but also an argument that she was actually receiving from continuing family businesses and so on and from the care of the children, she was receiving some income from those sources. So, as I understand it, she was still receiving some income from the family business and she had received a refund of some monies in respect of the children. And so the husband's argument in part was that that ticket may have been…no one knows what it was actually bought with, but that it may have been bought with funds from essentially a joint venture, if you like. So it was an interesting case because it wasn't the entirely clear-cut situation where the parties have completely separated their financial affairs and the wife or husband, whoever has won it, has just started purchasing the ticket after separation and so on. So it was an interesting case, interesting set of facts.
Damien Carrick: So what of the court ultimately decide?
Juliet Behrens: What do you think? Yes, I've run it by all my kids to say, you know, what do you think he should have got? And it varied from 'half' to 'nothing'. So one of the reasons these cases are so fascinating is I think they are intellectually interesting, they really highlight for us what the family law jurisdiction is and should be trying to do as between married couples.
So, what did he get? What the judge, Justice Stevenson in this case, actually did was to create two pools. So one was a pool of the parties' property as at the date of separation, and that was a relatively substantial pool in itself, although these parties were nearing retirement age, so they needed some considerable property to support themselves in retirement. So they had in that pool net $2.5 million, and the judge decided that they should share equally in that.
And then she created a second pool which was essentially the net value of the gambling enterprise. And at the time of the decision there was about I think $3.4 million left. And of that she said, well, the husband has made no contribution to that, so his argument that somehow funds from the business or in some other way funds that he had contributed to those winnings, that was not successful. But she said that out of that $3.4 million he should get a sum of $500,000, which if you do the maths I think is about 15% of $3.4 million.
And the reason she said that is because in family law we don't just look at what people have contributed, we also look at what their future needs and financial circumstances and a whole lot of other kind of broader justice factors would indicate. And in this case the judge was persuaded that given that he was nearing retirement age, given that there was this huge financial discrepancy now between the parties because the wife was going to keep the balance of the lottery winnings, that there should be an adjustment of that order to him. So he received, as I say, $500,000 from that second pool.
Damien Carrick: In fact this is not the first case involving the family courts and gambling wins or Lotto wins. There was a really interesting case, Farmer and Bramley I think it was, and that was decided quite differently.
Juliet Behrens: Yes, so that was really quite a tragic case in some ways. It was a decision of the full court of the Family Court of Australia back in 2000, and this is a case where there was, again, a relatively long marriage, and during the marriage the husband had some…what are described as drug-related problems, really quite significant problems actually, and the wife supported him through those problems. And at the end of this relatively long marriage, in part because of the fact that he had been unwell and unable to earn income and so on, the parties had absolutely nothing. And so the wife was not in a position of being able to get any compensation for those contributions that she'd made.
And then lo and behold, what happens? Approximately a year and a half after separation, the husband (remember, the one who had had the drug-related problems and so on) won $5 million in the lottery. And so the question is what share of those proceeds should the wife have, if any? Now, there was a bit of an argument by the husband that in fact he didn't own the proceeds at all, he bought the ticket for his mother, and you often see those kinds of arguments in these cases. But ultimately the court found that he had won that $5 million, and then turned to deal with the claims of the wife.
Damien Carrick: So at the end of the day what did the full court decide, by majority I think it was?
Juliet Behrens: So the majority of the full court in that case upheld the trial judge's decision that the wife should receive $750,000 from this pool of $5 million.
Damien Carrick: What, about 15%?
Juliet Behrens: Yes. So it's interesting you say it's quite different from Eufrosin, and in a sense it is, except that ultimately the percentages turned out quite similarly, despite I would have thought the stronger claims, in a sense, of the wife in that case, having made those very substantial contributions. And so one of the interesting arguments was could her contributions during the marriage be recognised out of post-separation acquired property? And the majority found that they could, but, even so, were only willing to uphold the decision that she should get 15%, and she ultimately only got $750,000. But these are very discretionary decisions, as I say, and other factors may have been at play in that case, including the fact that by the time the case came forward she had remarried, for instance, and so that might have made a difference.
Damien Carrick: There was another case, relatively recently, in Canberra involving I think two recently arrived immigrants from Africa. Tell me about that case.
Juliet Behrens: Well, that case is known as Kneen and Crockford, and the two cases that we've talked about so far have involved Lotto wins after separation, but Kneen and Crockford involved the different situation where the parties ultimately had won TattsLotto during their relationship and then the question was how should that be dealt with after they separated and were fighting about how property should be distributed between them.
Damien Carrick: So they were a de facto couple, is that right?
Juliet Behrens: Yes, that's right, because of course the Family Law Act now applies to de facto couples. And during their de facto relationship the de facto wife won $3 million I think it was in Lotto. And really what she was trying to say was that that wasn't the product of a joint enterprise or a partnership. Really what she was saying was 'I bought the ticket, I won it, and therefore I should get significant credit for that contribution'.
But ultimately the court found that the parties had effectively both contributed from their joint partnership to the winnings, and ultimately divided those winnings between the parties equally, with a slight adjustment to the wife because she earned significantly less than the husband.
Damien Carrick: Juliet Behrens, senior associate with Canberra law firm Dobinson Davey Clifford Simpson.
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