Does a spouse have to share their lottery winnings with their former Partner? This was one of the questions addressed in the judgment in S v AG (Financial Remedy:Lottery Prize) [2011] EWHC 2637 (Fam) handed down in October 2011.
In this case, the wife won £500,000 through a lottery syndicate during the course of the marriage. The judge found that the winnings were non-matrimonial assets meaning that they can be ring-fenced from the family finances. However, she used £275,000 of her winnings to buy a family home in which her husband and two children lived with her. She separated from her husband 4 years later and he moved out however they had been married for 20 years at that point. The court found that family home bought with non-matrimonial assets was now matrimonial property and so could be divided between the parties. However, the balance of her winnings remained ring-fenced. Given the financial needs of the husband, the duration of the marriage and the fact that she won the money during the marriage, it could be argued that the judge’s decision favoured the wife too heavily giving her the benefit of the windfall.
Background
H and W were Columbian and married in 1984. They moved over they moved over to the UK in the early 90s with their two children. At some point they moved into council accommodation until 2000. W was in a lottery syndicate with her friend and they won £1m in January 2000, over a decade ago. W received her share (£500,000) and she bought a house in her sole name for £275,000 where she lived with her Husband (H) and their two children. The property is now worth £495,000.
In January 2004, H was removed from the property by the police and the parties were fully separated at the time. In October 2005, H registered a Notice of Matrimonial Home Rights against the property.
W mortgaged the property for £300,000 in 07 August 2006 and the following day, H issued divorce proceedings. W responded by petitioning for divorce in Columbia on 14 September and put the entirety of the mortgage monies into her account on 19 September 2006. In May and June 2007, she wrote two cheques for £100,000 and £200,000 respectively and made payable to her friend MR (a different friend from the lottery syndicate).
Decree nisi was pronounced in the UK in May 2007 however W was granted her divorce in Columbia in August 2007 and the marriage was dissolved.
Three years later, in 2010, H made an application to the court for leave to apply for financial relief following an overseas divorce and leave was granted. It appeared that in response to this, W transferred to her friend MR £170,508 and £80,260. It was unclear from the evidence whether this was the same money as before.
At the time of the case, H was a 55 year old hotel porter with earnings of £12,000 per annum and he was in rented accommodation provided by the Housing Association. W was remarried and on a similar income. She also owned the house and another property in Columbia.
In court, W tried to argue that she did not win the lottery after all. Rather she had received a loan from a friend to buy her house in her sole name as there was history of abuse and H’s alcoholism. Her cheques in 2007 and 2010 were repayments to MR for the loan. However, there were many problems with this story, including her own contradictory evidence, and the court did not believe her.
The judge found that the initial receipt of the lottery prize was a non-matrimonial asset as she paid for the lottery ticket directly from her earnings, entered into a syndicate with a friend and H was unaware of her buying the ticket. It was not a joint endeavour.
However, W then went on to buy a property which H lived in for 4 years with the family. In Miller & MacFarlane, Lord Nicholls specified that the matrimonial home should always be designated matrimonial property, whatever the source of the funds.
The outcome
When W bought the property in 2000, she converted part of her non-matrimonial assets into matrimonial property of which H was entitled to a share. Given that H was only at the property for a relatively short period he was not entitled to an equal share of the property. The court awarded him £85,000.
Perhaps it is worth considering whether H was entitled to a larger percentage. Although he only lived at the property for 4 years, it was a marriage of 20 years and W came into a windfall. At the time of the hearing, H was living a very frugal lifestyle whereas W owned two properties and had the benefit of her current husband’s income in addition to her own. The judge made the order in favour of H so that he would have provision for his retirement on the basis that he continued spending at his current levels. Clearly, W will live out her retirement in substantially greater comfort than H will and you must wonder whether that is equitable.
For more information on this or any other similar issue, please contact Lorraine Burke by emailing Lorraine or by calling her on 08450 990045, or speak to your usual contact in the Family Team.
This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this document.
