The treatment of Lottery wins in divorce proceedings

The question of how a lottery win is dealt with by the courts in the context of divorce has recently been considered by the High Court in the case of S –v- AG (Financial Remedy: Lottery Prize) [2011] EWHC 2637

The case concerned a couple who had married in 1984 in Columbia. The family moved to the UK in 1991.  The Wife joined a lottery syndicate which she played without the Husband’s knowledge, and by paying for the tickets from her own earnings.

In 1999 the Wife’s syndicate won the lottery prize and she received £500,000.  The Wife used part of the winnings to purchase the matrimonial home in which the parties and the children lived for approximately three years until separation. At the time of the judgement the Husband was 55 and the Wife was 51. They had two grown up children and the Wife had subsequently remarried.

The Husband claimed that the Wife’s lottery win should form part of the matrimonial assets and that he was therefore entitled to a share.  The court was not satisfied that the evidence of either party was entirely truthful.  The court was tasked with deciding to what extend the assets acquired from the Wife’s lottery win should be divided between the parties.

Ultimately the High Court decided that the Wife’s initial lottery win was not a matrimonial asset. The funds however became a matrimonial asset when they were used to purchase the family home, to the extent that they were used in the purchase.

The Court took the view that the Husband’s financial and housing needs should be the first factor to be considered. In this case the Husband’s needs to provide for himself in old age were relevant.  The judge therefore applied recognised principles to calculate that the Husband needed a lump sum of £82,000 to meet his needs, particularly in retirement. The court also considered the financial needs of the Wife and her new Husband and concluded that these would continue to be sufficiently met even after the payment of a lump sum to the Husband.

The established case law including the cases of White –v- White (2001) and Miller and MacFarlane (2006) have long confirmed that matrimonial assets should be shared and that the starting point should be an equal division.  When looking at how the assets in this case should be shared the court took account of the fact that the initial lottery win was non-matrimonial property acquired by the Wife, and the fact that the Husband lived in the matrimonial home for only a relatively short time until separation. On that basis the court felt that an equal division would not be fair, but that the Husband should be entitled to a share in the region of 15 – 20% of the value of the home.  Having performed this calculation the judge decided that the Wife should pay to the Husband the lump sum of £85,000 on a clean break basis.

This provides useful guidance when looking at how assets – particularly those which have been brought into a marriage by one party without contribution from the other – should be divided between separating couples. The law in the UK continues to operate on a case by case basis and every individual case will be decided based on its own particular facts.

As an additional point this was a matter in which neither party was represented by the time the matter came before the High Court.  This appears to have brought in the added complication of parties who were familiar with neither the relevant legal principles nor court procedures. Furthermore the judge was clear that neither party nor indeed one of their children who had given evidence had been entirely truthful. These factors added to the time and cost to the court and the role which the judge needed to undertake to ensure that the case was dealt with appropriately.

If you would like further advice in connection with the matters raised in this article then please contact one of our family solicitors, Miss Vincent or Miss Booth on 01926 422 101.