We all dream of winning the Lottery and many of us play the National Lottery every week in hope of scooping that jackpot!
Imagine you invested a small part of your spare cash each week on the Lottery and one day you won a significant amount. Now imagine you are going through a divorce and are told that your winnings, or assets derived from your winnings, were to form part of the ‘matrimonial pot’ and your ex-partner will be entitled to an equal share of them...equally consider if your ex-partner won millions and you were told it was not for sharing.
This was the issue addressed for what is believed to be the first time, by Mr Justice Mostyn in the recent High Court case S v AG (Financial Remedy: Lottery Prize) [2011] EWHC 2637 (Fam). It was considered in this case whether such sums constitute matrimonial property for the purposes of financial relief and whether they should be shared, or ring-fenced and treated as separate from the marriage.
This case involved a couple who had married in Columbia in 1984 and came to the UK with their two children in the hope of a better standard of living. The marriage was unhappy from at least the mid-1990s. The Wife was part of a lottery syndicate which she regularly invested her spare cash into. She won £1 million which was shared between the Wife and her friend (the other syndicate member), resulting in a payment of £500,000 being made to the Wife. The Wife then used the majority of her winnings to purchase and renovate a property, which later became the family home. The Husband lived at the home for only 3 years before the marriage sadly broke down. During divorce proceedings the Husband claimed financial relief in relation to the assets there were a result of the windfall and claimed they should be treated in the usual way with the starting point being a 50:50 split as in White v White .
In his judgment Mr Justice Mostyn focused closely on the parties’ needs and the sharing principle. He decided that the Husband needed the sum of £82,000 for pension provision.
Moving onto the sharing principle, the receipt of the Lottery windfall was judged not to be a matrimonial property as the Wife purchased the ticket unknown to the husband and from her spare cash, so it was judged not to be a joint-endeavor. When the Wife purchased the property that was to later become the family home however, she converted that part of her non-matrimonial assets into matrimonial property based on the principle in McFarlane v McFarlane.
When deciding how much of a share the Husband should have in the Wife’s windfall Mr Justice Mostyn used his discretion and considered the relatively short amount of time he actually lived at the family home, and upon this decided that the Husband was in fact not entitled to an equal share. He was awarded the relatively small share of 17 – 20% and given a lump sum award of £85,000.
This decision appears to suggest that if the Wife was to keep the Lottery windfall separate from family assets, then it would not have formed part of the matrimonial pot and the Husband would not have had a claim to it. The decision may also worryingly encourage individuals within a marriage to keep their money and belongings separate or even hidden from their spouses or partners. It in sense moves away from the idea of a marriage being a partnership and a family being a team, and suggests that such windfalls are to be kept separate if parties do not wish to share. Some lawyers have raised concerns that this ruling also suggests that a Husband with a considerable gambling problem unknown to his family, would be entitled to keep all of his winnings to himself. This case also highlights the importance of considering a clean break where applicable, and restricting the parties from making future claims, and ending all financial ties.
Understandably this judgment has generated a lot of interest and concern within the legal profession and it is becoming increasingly unclear what is and is not considered to form part of the matrimonial pot. It will be a while before we see the full consequences of this ruling but consider this…the Wife could have scooped the jackpot just days after finalising her divorce, just as the 50 year old bus driver and his new partner did back in 2010, leaving them to enjoy the millions for themselves!