Elford and Elford

[2014] FCCA 2531

FEDERAL CIRCUIT COURT OF AUSTRALIA

ELFORD & ELFORD [2014] FCCA 2531

Catchwords:
FAMILY LAW – Property – contributions – husband’s lottery ticket – whether lottery win should be treated as a joint contribution – subsection 75(2) factors.

Legislation:

Family Law Act 1975, ss.75, 79

Anastasio & Anastasio (1981) FLC 91-093
Clauson & Clauson (1995) FLC 92-595
C & C (2005) FLC 93-220
Eufrosin & Eufrosin [2014] FamCAFC 191
Ferraro & Ferraro (1993) FLC 92-335
Hepworth v Hepworth  (1963) 110 CLR 309
Hickey & Hickey (2003) FLC 93-143
Hirst & Rosen (1982) FLC 91-230
Kneen & Crockford [2011] FMCAfam 372
Lee Steere & Lee Steere (1985) FLC 91-626
Mallet v Mallet (1984) FLC 91-507; (1984) 156 CLR 605
OSF and OJK (2004) FLC 93-191
R v Watson; Ex parte Armstrong [1976] HCA 39; (1976) 136 CLR 248
Russell v Russell (1999) FLC 92-877
Stanford v Stanford  (2012) FLC 93-518; (2013) 293 ALR 70
Wirth v Wirth[1956] HCA 71; (1956) 98 CLR 228 at 231-232
Zyk & Zyk (1995) FLC 92-644

Applicant: MS ELFORD

Respondent: MR ELFORD

File Number: LNC 291 of 2013

Judgment of: Judge Roberts

Hearing date: 16 October 2014

Date of Last Submission: 16 October 2014

Delivered at: Burnie

Delivered on: 12 November 2014

REPRESENTATION

Counsel for the Applicant: Ms A Trezise

Solicitors for the Applicant: Andrea Trezise

Counsel for the Respondent: Mr G Tucker

Solicitors for the Respondent: Grant Tucker

ORDERS

1. That MR ELFORD (“the husband”) must pay to MS ELFORD (“the wife”) the sum of fifty-one thousand dollars ($51,000.00) within 30 days of the date of this Order.

2. That Order No. 1 hereof is in full satisfaction of any claim the wife may have against the husband under Part VIII of the Family Law Act 1975.

IT IS NOTED that publication of this judgment under the pseudonym Elford & Elford is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT LAUNCESTON

LNC 291 of 2013

MS ELFORD

Applicant

And

MR ELFORD

Respondent

REASONS FOR JUDGMENT

Introduction

1. The applicant is MS ELFORD (“the wife”) and the respondent is MR ELFORD (“the husband”).  The dispute between them results from an application for property settlement made by the wife. 

2. The parties are in general agreement that they should each retain the assets in their respective possession or control.  They also agree that the husband should make a payment to the wife.  However, they differ markedly in relation to the quantum of that payment.  The wife seeks a payment of $360,000, but the husband contends that the payment by him to the wife should only be $50,000.

Background

1. It is to the parties’ credit that they are largely in agreement about the factual background to this matter and that they were able to come to Court with an agreement about the assets to be included in the asset pool and their values. 

2. The parties started living together in early 2003, married in 2007 and separated in late 2012.  Their cohabitation lasted slightly less than 10 years.  I am aware that the parties had known each other for many years prior to that.  However, when I refer to the parties’ “relationship” in these Reasons, I am referring to that cohabitation period of slightly less than 10 years.

3. A significant event occurred approximately one year after the start of the parties’ relationship that has essentially caused the dispute that now requires a decision from this Court.  That significant event was a lottery win by the husband of $622,842 in January 2004, and it is how the Court should treat that lottery prize that is the nub of their dispute.

4. The husband was aged 57 years and the wife was 35 years old when they started living together.  The husband’s adult children were then independent of him.  However, the wife’s dependent children (then aged 3, 6 and 9) moved with her from New South Wales to Tasmania to live in the husband’s home.  The wife had a home in New South Wales, which she subsequently sold.

5. At the start of their relationship, the husband was in employment that paid reasonably well, and the wife obtained employment soon after her move from New South Wales.  At that time, the wife’s non-superannuation assets had a net value of approximately $115,000 and her superannuation was worth approximately $15,000 (total $130,000).  The wife concedes that the husband’s non-superannuation assets at that time had a total net value of approximately $510,000, and his superannuation was worth approximately $25,000 (total $535,000).  The wife set out the evidence about that in her affidavit in this manner:

   9.  At the commencement of the relationship I had assets of approximately $115,000.00 net value. In addition I had superannuation to a value of approximately $15,000.00. The assets I had at the commencement of the relationship comprised:

   a.  a property at … in New South Wales then valued at approximately $290,000.00 subject to a mortgage loan of approximately $150,000.00 ($140,000.00 equity);

   b.  a [motor vehicle] valued at $3,000.00; and

   c.  furniture valued at approximately $2,000.00.

   10.  At the date of commencement of cohabitation I had debts including credit card and loans of approximately $30,000.00 which were paid in full when the (omitted) property was sold.

   11.  At the commencement of the relationship Mr Elford owned:

   a.  the [husband’s home] then valued in the sum of approximately $250,000.00;

   b.  [an inherited property] then valued at approximately $170,000.00;

   c.  a [motor vehicle] then valued at approximately $10,000.00;

   d.  an (omitted) Bank term deposit with a balance of approximately $70,000.00; and

   e.  furniture and contents with an estimate value of approximately $10,000.00;

   totalling approximately $510,000.00.

   12.  [The husband] also had superannuation approximately $25,000.00.

6. The husband took no real issue with that evidence.  Consequently, the husband’s net worth at the start of their relationship was more than four times that of the wife.

7. In approximately 1995, when the husband was going through some of his mother’s possessions after her death, he discovered an old TattsLotto ticket which had belonged to his late father, who had died in 1981.  That ticket had eight series of numbers on it, which the husband then started using for his TattsLotto tickets that he purchased every week.  In January 2004 those numbers rewarded the husband with a first division prize of $622,842.  The wife conceded in cross-examination that the husband had paid for all lottery tickets with those numbers and that he had been doing so for nearly 10 years prior to the start of their relationship.  She also conceded in cross-examination that he had won the sum of $622,842 as stated in his affidavit, and not $668,000 as stated in her affidavit filed 8 July 2014. 

8. The husband deposited his lottery winnings in a Term Deposit account which he “topped up” to $650,000 from his savings.  That sum of $650,000 still remains invested in a Term Deposit account in the husband’s sole name.  I shall refer to this further below.

9. The wife worked initially as a (occupation omitted) and from 2004 until late 2013, she worked for a (employer omitted).  She is currently working as an (occupation omitted).

10. The husband worked for various employers in the (omitted) industry during the relationship.  He was paid out his superannuation entitlement in 2004 when he retired from working.  That funded an overseas trip for the parties and the purchase of his current motor vehicle.  He subsequently resumed employment and finally retired in early 2012.

11. In 2004 the wife sold her New South Wales property.  She cleared $107,000 from that sale, which she placed in a term deposit in her sole name.  She said that those funds were subsequently used in part by her to fund the following:

    ·her and her children’s overseas travel;

    ·a payment of $10,000 to enable her mother to discharge a debt; and

    ·a sum of $50,000 towards the purchase of the home that she now owns.

12. Some significant renovations and improvements were conducted at the husband’s home between early 2010 and early 2012.  They included the construction of a new bathroom, new laundry and renovations to the kitchen, in addition to the installation of new carpet and new fencing.  The parties agree that those renovations and improvements were funded entirely from the husband’s funds, and during her cross-examination the wife conceded that the husband had been planning significant improvements to his home for years.

13. In 2007 the husband sold the property that he had inherited from his mother’s estate and he cleared approximately $190,000.  He placed those funds in a term deposit account and topped it up to $200,000 from his savings.  That $200,000 is still in a term deposit account in his sole name.

14. In December 2013 the wife sold some shares “clearing a net balance of approximately $14,800 which [she] applied to reduce the balance of [her] mortgage account”.[1]  She subsequently re-drew those funds to pay legal costs in relation to this matter. 

    [1] Paragraph 43 of her affidavit

15. The husband suffered a stroke in 2011.  He also suffered from macular degeneration after that stroke, which effectively means that he is blind.  His unchallenged evidence is that he now is unable to drive or read, and he struggles with everyday tasks.  Carers attend his home every day to assist him with household tasks.

16. The husband now also requires kidney dialysis three times per week.

17. The wife is now aged 47 years and the husband is nearly 69 years old.

Relevant Law

1. Prior to the High Court decision in Stanford v Stanford,[2] the general approach to the determination of a property settlement application appeared to have been well established by authority as a multi-step process.[3]  The steps were said to involve:

   a)Firstly, an identification and valuation of the property, liabilities and financial resources of the parties;

   b)Secondly, an evaluation of the contributions made by the parties as defined in section 79(4) of the Family Law Act 1975 (“the Act”);

   c)Thirdly, a consideration of any relevant matters under subsection 75(2) of the Act; and

   d)Fourthly, before making an order adjusting property interests, being satisfied in all the circumstances that it is just and equitable to do so under subsection 79(2).[4] 

   [2] Stanford v Stanford  (2012) FLC 93-518; (2013) 293 ALR 70

   [3] See Lee Steere & Lee Steere (1985) FLC 91-626; Ferraro & Ferraro (1993) FLC 92-335; Clauson & Clauson (1995) FLC 92-595, Hickey & Hickey (2003) FLC 93-143 and C & C (2005) FLC 93-220

   [4] Also see Russell v Russell (1999) FLC 92-877

2. However, in Stanford, at paragraph 37, their Honours French CJ, Hayne, Kiefel and Bell JJ said:

   37. First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.

3. In paragraph 40 of Stanford, their Honours went on to say:

   40. Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”.[5] To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.

   [5] R v Watson; Ex parte Armstrong [1976] HCA 39; (1976) 136 CLR 248 at 257

4. It is now clear that being satisfied “in all the circumstances” that it is just and equitable to make an order is not the last in a series of four steps and, with the benefit of that hindsight, it may have been wise for judicial officers over the years to have heeded the words of former Federal Magistrate Walters[6] when he said that “the testing of any proposed orders by reference to section 79(2) is not a fourth substantive step (properly so called) in the property settlement exercise, and there is no fourth step in that sense.”[7]

   [6] Now Justice Walters of the Family Court of Western Australia

   [7] OSF and OJK (2004) FLC 93-191 at paragraph 16

5. Subsection 79(1) of the Act reads in part as follows:

   In property settlement proceedings, the court may make such order as it considers appropriate:

   (a) in the case of proceedings with respect to the property of the parties to the marriage or either of them - altering the interests of the parties to the marriage in the property;

6. Subsection 79(2) provides that the “court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”

7. Subsection 79(4) provides:

   In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:

   (a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

   (b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

   (c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and

   (d) the effect of any proposed order upon the earning capacity of either party to the marriage; and

   (e) the matters referred to in subsection 75(2) so far as they are relevant; and

   (f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and

   (g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

Is it just and equitable to make an order?

1. In this matter, the parties agree that there should be a payment by the husband to the wife, but they do not agree about the amount that she should be paid.  Irrespective of the quantum, such an order will involve an alteration of the husband’s property interests, because his bank deposits are in his name alone.  I conclude that it is just and equitable to make an order, because both parties accept that an order is required (even if they cannot agree upon the terms of the order).

The asset pool

1. The parties agree that the asset pool for consideration is as follows:

ASSETS
The husband’s home	$345,000
The husband’s bank balances and investments	$960,000
The husband’s motor vehicle	$8,500
The wife’s home	$269,000
The wife’s motor vehicle	$7,500
The wife’s bank balances	$1,717
The wife’s superannuation	$67,189
Total value of assets	$1,658,906
LIABILITIES
The wife’s mortgage	$234,575
The wife’s credit cards	$12,750
The wife’s personal loan	$8,490
Total of liabilities	$255,815
TOTAL NET VALUE	$1,403,091

1. In accordance with the reasoning of the majority in C & C,[8] I conclude that it is appropriate to include the wife’s superannuation interests in the same pool as the other assets.   This is because the parties agreed at the start of the hearing that there should be only one pool of assets.

   [8] C & C (2005) FLC 93-220

Contributions

1. I have referred at paragraphs 7 and 8 above to the assets that each party had at the start of the relationship.  If they had then combined those assets to form a joint asset pool, the husband would have contributed approximately 80% and the wife approximately 20% of the total pool.  However, the facts are clear that the parties did not combine those assets, and at no stage did they jointly acquire any assets of any significance.  This would appear to be confirmed in paragraph 37 of the wife’s affidavit which reads as follows:

   At separation I left all the furniture and contents with [the husband], save and except for the times[9] of furniture and contents that I had contributed when I moved from Sydney and one table and six chairs which we had purchased during our marriage. I subsequently donated that table and six chairs to City Mission.

   [9] The word “times” is clearly a typographical error, and should be “items”.

2. The parties clearly kept their assets quite separate and it is also clear that, to a very large degree, they kept their finances quite separate.  They maintained separate bank accounts and they did not ever have any joint bank accounts.[10]  Indeed, when the wife was cross-examined, she said: “that was always his request; what accounts he had were his” and “he never wanted to have a joint account”.

   [10] See paragraph 11 of the wife’s affidavit and paragraph 30 of the husband’s affidavit.

3. The parties also had a clear understanding about who would pay for what during their relationship.  In relation to that, the wife’s evidence was:[11]

   [The husband] and I had an express agreement that he would pay outgoings in relation to the home such as rates, electricity, phone, water and insurance and I would pay for food and upkeep of my children.

   [11] At paragraph 27 of her affidavit

4. The husband’s evidence in relation to that was:

   Therefore, I was providing a roof over both [the wife]’s head as well as her three children and I was meeting all the costs of the housing and providing assistance to her in respect to day care by picking the children up after school every day which she was still at work.  In addition to living in my pre-marital property, I was paying the everyday running costs of the house, including electricity, rates and insurances out of my pocket.  I would also fund trips, including overseas trips for [the wife] and myself. Some trips we went on our own and other trips the children accompanied us, and [the wife] would make a contribution towards the children’s air fares.  I still paid the accommodation, meals etc. during those times.

   and

   What [the wife] did with her income I have no idea but it was her income to deal with as she saw fit.  Predominantly I suspect she supported her children with it and groceries.[12]

   [12] See paragraphs 28 and 30 of the husband’s affidavit.

5. In her affidavit, the wife appeared to confirm what the husband had said:[13]

   When [the husband], the children and I holidayed invariably [the husband] would pay for my air travel and accommodation but I would be required to pay for the travel and accommodation of the girls.

   [The husband] asserts that he financially supported my children … during our relationship and marriage.  I received child support from their father.  I provided the major financial support for education and day-to-day living of the children.  [The husband] contributed to the children insofar as he paid for the outgoings in relation to the house which we all occupied.

   [13] At paragraphs 28 and 29 of her affidavit

1. She also said this:

   [The husband] always claimed on his taxable income each year for medical cover for myself and my girls to reduce his tax liability. 

2. That statement shows clearly that it was the husband who was responsible for paying the private health insurance premiums for the wife and her children.

3. The Case Outline filed on behalf of the wife appeared to suggest that the wife made greater financial contributions than the husband towards the end of the relationship simply because her income may have been higher than his.[15]  That cannot be the case because the clear arrangement between the parties throughout the relationship was that the wife was essentially responsible only for paying for the food and household supplies for both parties and the wife’s three children.  It should also be remembered that the husband had no legal obligation to support the wife’s children financially and it was clearly part of their agreement that the wife should meet the costs of her children’s education and other living expenses, while the husband “provided the roof over their heads” as conceded by the wife during her cross-examination.  Consequently, any increase in the wife’s income in the later years should have made it easier for her to meet the costs of maintaining her children (for which the husband was not legally responsible).

   [15] The wife’s Case Outline filed 11 August 2014 lists as a claimed contribution by the wife: “She was the primary income earner towards the end of the marriage.”

4. The financial arrangement between the parties was clearly one of convenience for them both and it had a quid pro quo element to it.  The husband’s rates and insurance on his house would probably not have increased simply because the wife and her children had moved in, but his power, water and telephone bills would most certainly have increased because five people were then consuming those services and not just one.  On the other hand, the wife’s costs for food and household supplies would have increased because she would have been buying those for five people rather than for four people.  However, that increase is likely to have been more than offset by the fact that she ceased meeting any mortgage payments on a loan of approximately $150,000 when she sold her New South Wales property in 2004. 

5. While I have not been provided with enough information to do a precise mathematical calculation in relation to each party’s direct financial contributions, I conclude that those of the husband were marginally greater than those of the wife.

6. The wife clearly made non-financial contributions to the relationship; she was primarily responsible for cooking, cleaning and gardening.  Those are important contributions to family life and should be recognised as such. [16]  Her non-financial contributions must also have increased in significance when the husband became incapacitated by his health problems towards the end of their relationship.  However, it is also important to note that prior to that incapacitation, the husband made non-financial contributions when he assisted the wife by caring for her children and collecting them from school at times when she was working. 

   [16] See Mallet v Mallet (1984) FLC 91-507

7. I turn to consider the wife’s specific claim to have contributed to the lottery win of $622,842. 

8. In her affidavit the wife said: “[The husband] claims that this Tattslotto win comprises his sole contribution.  I claim it is a joint contribution made during the period of our relationship.”  She was asked in cross-examination how it could be considered to be a “joint contribution”, and her answer was: “Because we were in a relationship.”  When questioned further, she conceded that:

   ·she did not contribute financially towards the purchase of the ticket;

   ·she did not pick the winning numbers;

   ·the husband had been buying weekly tickets with those numbers since 1995;

   ·she and the husband had been in a relationship for less than a year when his ticket was a winner;

   ·the winning ticket had been in the husband’s sole name; and

   ·the funds had been paid into the husband’s bank account.

9. In her closing submissions, the wife’s counsel said: “This was a common relationship, a common togetherness and a common joint-venture.”  Shortly thereafter she added:  “They were in a marriage.”

10. Those remarks appear to suggest a concept of “community ownership of property” arising out of the marriage relationship.  Such a concept does not form part of Australian Family Law.  Their Honours, French CJ, Hayne, Kiefel and Bell JJ said this in Stanford:[17]

    39. Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that 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 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”.[18] Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”.[19] The question presented by s 79 is whether those rights and interests should be altered.

    [17] Their Honours’ footnotes have been included, but the numbering of those footnotes here follows the sequential numbering of footnotes in these Reasons.

    [18] Hepworth v Hepworth (1963) 110 CLR 309 at 317 per Windeyer J; [1963] HCA 49.

    [19] Hepworthv Hepworth (1963) 110 CLR 309 at 317 per Windeyer J. See also Wirth v Wirth [1956] HCA 71; (1956) 98 CLR 228 at 231-232 per Dixon CJ.

11. I was referred to the decision by Baker J in Anastasio. [20]  I conclude from the reported facts of that case that it does not assist in this matter.  Part of the report of that case reads as follows:[21]

    Marriage is for most partners an economic union. The parties to a marriage in the main work together strive together with the ultimate object of buying a home and acquiring other assets. What happened in the present case is no different to what occurs in thousands of marriages throughout the country.

    There is a very strong thread through the whole of the evidence that it was a prime objective of the parties to eventually have a home of their own. The purchase of lottery and raffle tickets was an example of the parties’ attempts to acquire funds sufficient to enable them to buy their own home. This view is clearly corroborated by the fact that the name of the ticket which ultimately won the latter had the syndicate name “New Home”. 

    [His Honour then quoted from the evidence in which the husband said it was his intention that any lottery win should be applied for the benefit of himself and the wife, and continued:]

    I have no doubt that the purchase of lottery tickets was in furtherance of a joint matrimonial purpose and therefore any resultant win in the lottery must be regarded as a matrimonial asset.

    [20] Anastasio & Anastasio (1981) FLC 91-093

    [21] See page 76,650

12. In this matter, the parties’ relationship was very different from what Baker J described in Anastasio.  These parties kept their funds very separate throughout their relationship and the lottery win by the husband was treated by him as his asset.  Although the wife attempted in her affidavit to characterise the lottery win as “a joint contribution”, that attempt was not supported by the facts.  She had said this in her affidavit filed in July this year:

    A major issue between [the husband] and myself concerns the treatment of a Tattslotto win in January 2004, twelve months after the date of commencement of cohabitation.  [He] bought the ticket.  We won the sum of $668,000.00 which was initially deposited into [the husband]'s (omitted) Bank account and subsequently transferred into the (omitted) Bank term deposit.  [The husband] claims that this Tattslotto win comprises his sole contribution.  I claim it is a joint contribution made during the period of our relationship.  [The husband] claims that the Tattslotto winning was in the sum of $622,000.00.  I reject this.  We won $668,000.00 which was initially deposited into [the husband]'s (omitted) Bank account.  $650,000.00 was transferred into the (omitted) Bank term deposit subsequently….

13. I note that the wife remained “confused” about the quantum of the lottery win right up until the husband filed documentary evidence about the quantum of the win more than 10 years after that lucky event.[22]  That simply reinforces the conclusion in my mind that the husband never intended the weekly purchase of lottery tickets to be “a joint matrimonial purpose” of the type described by Baker J in  Anastasio and the wife’s use of the words “we won” twice in the paragraph quoted above did nothing to alter my conclusion.

    [22] Annexure “A” to his affidavit filed 1 August 2014

14. The wife’s counsel also relied upon the well-known decision in Zyk & Zyk.[23]  That was a decision of the Full Court of the Family Court of Australia in which their Honours (Nicholson CJ, Fogarty and Baker JJ) said this under the heading “The husband’s lottery win”:[24]

    [23] Zyk & Zyk (1995) FLC 92-644

    [24] At page 82,510

    In reality this is the central issue in this appeal and is of importance generally.

    The facts are not in dispute. Since the early 1970s the husband had been buying lottery tickets through a syndicate. His Honour concluded that the exercise was a systematic one in that the syndicate regularly purchased tickets over that period or at least through to the substantial win in 1987. … when the syndicate won a major prize in 1987 the husband received one third, namely $94,907. The wife was not a member of the syndicate and played no part in the purchase of the tickets.

15. At first sight, that seems to be a very similar fact situation to the facts in this matter.  However, their Honours continued setting out the undisputed facts as follows:

    His Honour found that it was part of the husband’s general practice during the marriage to “hand all his money to the wife who had practical control of the family finances”. The lottery tickets were purchased by him from moneys which he had from time to time. The proceeds of this win were collected by the husband and handed to the wife who applied it so that thereafter it formed part of their joint property.[25]

    [25] My emphasis

16. In this case, the husband did not “hand all his money to the wife”, nor did she have “practical control of the family finances”.

17. Counsel for the wife also referred me to the decision in Kneen & Crockford in support of her client’s case. [26]  In my view, that decision does not assist me, because the parties in that case treated the lottery prize as joint money, whereas the opposite is true in this matter.

    [26] Kneen & Crockford [2011] FMCAfam 372

18. In the Full Court decision in Eufrosin & Eufrosin,[27] their Honours (Thackray, Murphy and Aldridge JJ) said this at paragraph 11:

    As this Court in Zyk made clear, 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. In our view, the authorities just cited, together with what was said by the High Court in Stanford regarding the “common use” of property, is sufficient to dispose of the husband’s contention that her Honour erred in failing to find that he contributed to the wife’s lottery win….

    [27] Eufrosin & Eufrosin [2014] FamCAFC 191

19. 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 in 2014.  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 their other finances separate for the entirety of their relationship.

20. In view of those circumstances, I consider it appropriate to treat the husband’s lottery winnings of $622,842 in January 2004 as a contribution by the husband alone.

21. That additional contribution so early in the parties’ relationship means that, if they had parted company at that time, the husband would have had assets worth approximately $1,158,000 and the wife would have had assets with a net value of $130,000.  That would have made the husband’s assets worth 90% of the combined total net value of $1,288,000, and the wife’s assets worth 10% of that combined total net value.  However, they did not part company at that time and the husband’s assets have increased to be worth $1,313,500 and the wife’s assets have reduced to a net value of approximately $89,600.  That means that the husband’s assets are worth approximately 94% of the combined total value and the wife’s are worth approximately 6% of that combined total net value.

22. An explanation for the husband’s increase in net worth and the wife’s decrease may be found in paragraphs 16 and 17 of the husband’s affidavit where he said:

    Further, [the wife] was not a good saver and I would classify her as a bit of a compulsive spender.  I don't mean that to be a criticism, but it was just the way she was.  She would spend a lot of money on her children, spend money on flights to and from Sydney for her and the children and she would also bring her mother from Sydney at her expense on a number of occasions.  The children never went without, and again, that is not a criticism just a statement of fact.

    I was the opposite insofar as spending savings was concerned.  I was a fairly prudent person when it came to my finances.  That is evident by the situation that I am now in.

23. That may be a correct explanation, but the parties had a clear arrangement that kept their finances separate and it is to the husband’s credit that he does not criticise her for the manner in which she spent her own money.

24. If this matter was to be decided solely on the basis of contributions, I am of the view that it would be appropriate for the husband to make a payment to the wife to bring her proportion of the asset pool up to 10%.  The total net value of the asset pool at paragraph 28 above is $1,403,091, so the wife’s entitlement would be $140,000 in round figures.  Because she has assets with a net worth of approximately $89,600, she should receive an additional $50,400 (or rounded up to $51,000).

25. I note that in his Response filed in August 2013 the husband initially sought orders that would have dismissed the wife’s Application filed in February 2013 seeking a payment of $480,000.  Both parties reassessed their positions and, when the matter came on for hearing, the wife had reduced her claim to $360,000 and the husband was seeking an order that he pay her $50,000.  It therefore would seem that the husband’s position at the start of the hearing was much closer to the mark than that of the wife.

26. I therefore conclude that if this matter was to be decided solely on the basis of the parties’ contributions, an order for the husband to pay the wife $51,000 would be an appropriate order.  In arriving at that conclusion, I have also taken into account the fact that the wife has spent the sum of $14,800 that she obtained from a sale of shares on her legal costs, whereas the husband has not brought his liability to pay legal costs into account.  

27. However, such matters are not decided on the basis of contributions alone.

Relevant subsection 75(2) factors

1. The wife is 47 years old and in good health.  The husband is nearly 69 years old and is in very poor health.  He is effectively blind and he receives kidney dialysis treatment three times per week.  He cannot read or drive and he requires carers to attend at his home on a daily basis to assist him with basic tasks.

2. The wife works full-time and her total weekly income is $1,149, inclusive of Centrelink benefits and child support payments.[28]  From that income she must support herself and her three children, but it must be remembered that the husband has no legal liability to support those children.

   [28] See her Financial Statement filed 8 July 2014

3. The husband has a total weekly income of $1,221, inclusive of his aged (blind) pension and interest earned on his investments.[29]  He does not have any dependents to support.

   [29] See his Financial Statement filed 1 August 2014

4. It is clear from the above that the husband’s assets are significantly greater than those of the wife.  However, it must be remembered that a disparity in the value of assets is not a reason in itself to make a further adjustment in favour of the party whose assets have a lesser value.  In that regard, Nygh J said this in Hirst & Rosen:[30] 

   I also reject any argument based solely upon the disparity in financial resources between the parties. Section 79, as I have indicated in argument, does not entitle the Court to adopt “a soup kitchen” approach. … It is, therefore, not an open sesame for the Court to administer such justice as it thinks fit. That, indeed, would be a grievous error.

   [30] Hirst & Rosen (1982) FLC 91-230 at p 77,251

5. That was perhaps a more colourful way of putting the legal concept than Wilson J did in the High Court a short time later in Mallet v. Mallet,[31] when he said:

   The objective of the section is not to equalise the financial strengths of the parties.  It is to empower the Court … to effect a redistribution of the property of the parties if it be just and equitable to do so having regard, inter alia, to the respective contributions of the parties. 

   [31] Mallet v. Mallet (1984) FLC 91-507; (1984) 156 CLR 605

6. In this matter, the husband is very ill and, although neither party provided me with any medical evidence about his prognosis or life expectancy, it is reasonable to surmise that the husband could require significant resources to pay for his care in the future.

7. In those circumstances, I do not consider that any further adjustment is required because of subsection 75(2) of the Act.

The effect of the proposed order upon the earning capacity of either party

1. An order that the husband pay the wife $51,000 will not have any effect on her income earning capacity.  It should only have a slight effect on the husband’s current earning capacity, because it will reduce the capital from which he earns interest.  However, I do not consider that to be of great significance.

Conclusions

1. I conclude that it is just and equitable for there to be orders that require the husband pay to the wife the sum of $51,000 in full satisfaction of any claim that she may have against him under Part VIII of the Act.

I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Judge Roberts

Associate: 

Date:  12 November 2014

[14] At paragraph 30 of her affidavit