S v Ag (Financial Remedy: Lottery Prize)
| Jurisdiction | England & Wales |
| Judgment Date | 2011 |
| Date | 2011 |
| Court | Family Division |
Divorce – Financial provision – Ancillary relief – Treatment of assets – Lottery prize – Colombian nationals marrying in Colombia and having two children – Family moving to England – Wife entering syndicate agreement for lottery and winning £500,000 – Wife purchasing property in sole name – Family moving to property before breakdown of marriage – Wife obtaining divorce in Colombia – Husband seeking financial relief in England after overseas divorce – Treatment to be accorded to lottery win – Matrimonial and Family Proceedings Act 1984, ss 12, 13.
The applicant husband and respondent wife, who were both Colombian, married in Colombia in 1984. Two children were born during the marriage, the first in 1986 and the second in 1988. In about 1991, the husband travelled to England in an attempt to better the family’s fortunes. He found a job in a Spanish restaurant and was joined by the wife and children four months later. Thereafter both spouses worked, the husband as a janitor/caretaker and the wife as a chambermaid/housekeeper. At some point the family obtained council accommodation in a three-bedroom flat. On 30 December 1999, the wife and her friend, MEM, entered into a written syndicate agreement for the National Lottery Big Draw 2000. The ticket cost £2 and won £1m. A cheque was issued payable to MEM on 7 January 2000 and £500,000 was paid into an account in the wife’s name on 10 January. In May, the wife purchased a property (108 A Road) in her sole name for £275,000. The family moved there after the completion of building works, but the husband was removed from the property by the police on 1 January 2004 in the context of an episode of serious domestic violence. The spouses remained apart from that date and, on 20 October 2005, the husband registered a Notice of Matrimonial Home Rights against the property. On 7 August 2006, the wife mortgaged the property for £300,000; £299,503.50 was paid into an account in her name on 19 September. On 8 August, the husband issued divorce proceedings in England. The wife countered by issuing divorce proceedings in Colombia. Although the decree nisi was pronounced in England on 15 May 2007, the Colombian court heard the wife’s divorce action on 16 August 2007 and decreed a divorce, declaring that ‘the matrimonial partnership’ was ‘dissolved and in liquidation …’ On 9 April 2010, the husband applied under ss 12 and 13 of the Matrimonial and Family Proceedings Act 1984 for leave to apply for financial relief
following an overseas divorce. The wife thereafter made two payments to the second respondent, MR, one of £170,508.06 and another of £80,260.83. On 11 June, leave was granted under s 13 of the 1984 Act and the English divorce proceedings were dismissed. At the final hearing, the main issue for the court was the treatment to be accorded to the lottery win. The wife had remarried and lived at 108 A Road with the children and her new husband. The applicant husband earned £1,217 per month net and his expenses amounted to £937 per month (£11,250 per annum). He contended that the wife’s assets comprised the equity in 108 A Road, which was valued at £495,000 and was subject to a mortgage of £304,000 (with costs of sale estimated at £14,850), and the monies held by MR. The wife claimed, inter alia, that she had been de facto separated from him since 1996 and that she had paid monies to MR in discharge of debts owed by her.
Held – Although treatment of a lottery prize was obviously highly fact-specific, there had to be some general principles capable of being stated in relation to the phenomenon. If the parties were in effect operating a syndicate, whether formal or informal, where both were aware that tickets were being bought and where both had agreed tacitly or expressly to their purchase, then it was easy to see the prize as a joint venture and therefore as matrimonial property, normally to be equally shared. On the other hand, if one party was unilaterally buying tickets, from his or her own earned income, without the knowledge of the other party, then it was equally easy to see the prize as a receipt by that party alone akin to an external donation, and therefore as non-matrimonial property. That case would be fortified if the party in question was buying the ticket as part of a syndicate with others, and more so if the marriage had become troubled and unhappy with the parties drifting into separate lives socially and economically. The instant case clearly fell into the second scenario. Although the wife’s case that the parties had been de facto separated from 1996 was false, the marriage had been bitterly unhappy from around the mid-1990s, if not earlier. On the evidence, her capital comprised 108 A Road and the monies transferred to MR; her assertion that those transfers had been in discharge of debts had to be rejected. In calculating the appropriate award, the first port of call was to apply the needs principle. The husband’s present income and housing needs were met, but he had an urgent need to make provision for his old age. A Duxbury calculation on £11,250 per annum for a 65-year-old gave a capital requirement of approximately £82,000 when allowance was made for a full state pension; the husband accordingly had a need for a lump sum to be paid now of £82,000. By downsizing her home at the point of retirement, the wife and her new husband would have ample funds to provide for their old age. It was then necessary to turn to the application of the sharing principle. In the circumstances, the initial receipt of the lottery prize was non-matrimonial property. However, upon purchasing 108 A Road the wife had converted that part of her non-matrimonial assets into matrimonial property. Given that the source of that matrimonial property was not joint
endeavour but rather the wife’s non-matrimonial property, and given the relatively short period that the husband had actually lived in 108 A Road, he was not entitled to an equal sharing of it, or anything resembling such; a sharing of 15%–20% would be fair. The value of the property after costs of sale (but ignoring the mortgage) was £480,150. Application of the sharing principle gave a range of award to the husband of £72,000–£96,000. Standing back and weighing together the application of both the sharing and needs principles, a lump sum award of £85,000 was the right result. It would be paid in 28 days and would be on the clean break basis. The compensation principle was not applicable (see [5], [15], [21]–[22], [29], [34]–[39], below).
Cases referred to in judgmentAnastasio (1981) FLC 91–093.
C v C[2007] EWHC 2033 (Fam), [2009] 1 FLR 8.
Charman v Charman[2007] EWCA Civ 503, [2007] 2 FCR 217, [2007] 1 FLR 1246.
Cowan v Cowan[2001] EWCA Civ 679, [2001] 2 FCR 331, [2002] Fam 97, [2001] 3 WLR 684, [2001] 2 FLR 192.
Duxbury v Duxbury [1990] 2 All ER 77, [1992] Fam 62, [1991] 3 WLR 639n, [1987] 1 FLR 7, CA.
Farmer v Bramley [2000] FamCA 1615, Aus FC.
GW v RW[2003] EWHC 611 (Fam), [2003] 2 FCR 289, [2003] 2 FLR 108.
Hauff [1986] FamCA 16, (1986) FLC 91–747, Aus FC.
Holmes (1990) FLC 92–181.
K v L[2011] EWCA Civ 550, [2011] 2 FCR 597, [2011] 3 All ER 733.
Kessey (1994) FLC 92–495.
Lynch v Lynch (26 October 2000, unreported), Aus FC.
McCartney v Mills McCartney[2008] EWHC 401 (Fam), [2008] 1 FCR 707, [2008] 1 FLR 1508.
McTaggart (1988) FLC 91–920.
Miller v Miller, McFarlane v McFarlane[2006] UKHL 24, [2006] 2 FCR 213, [2006] 3 All ER 1, [2006] 2 AC 618, [2006] 2 WLR 1283, [2006] 1 FLR 1186.
N v F (Financial Orders: Pre-Acquired Wealth)[2011] EWHC 586 (Fam), [2011] 2 FLR 533.
NA v MA[2006] EWHC 2900 (Fam), [2007] 1 FLR 1760.
Practice Guidance: McKenzie Friends (Civil and Family Courts)[2010] 2 FCR 625, [2010] 2 FLR 962.
S v S (Non-Matrimonial Property: Conduct) [2006] EWHC 2793, [2007] 1 FLR 1496.
Santos v Santos [1972] 2 All ER 246, [1972] Fam 247, [1972] 2 WLR 889.
Vaughan v Vaughan[2007] EWCA Civ 1085, [2007] 3 FCR 533, [2008] 1 FLR 1108.
White v White[2000] 3 FCR 555, [2001] 1 All ER 1, [2001] 1 AC 596, [2000] 3 WLR 1571, [2000] 2 FLR 981, HL.
Zyk v Zyk (1995) FLC 92–644, 19 Fam LR 797, Aus FC.
ApplicationThe applicant husband sought financial relief (with leave granted by Eleanor King J on 11 June 2010) from his former wife pursuant to s 13 of the Matrimonial and Family Proceedings Act 1984 after an overseas divorce granted by the Tribunal Superior Del Distrito Judicial de Cali, Sala de Familia in August 2007. The main issue for the court was how the wife’s lottery win of £500,000 was to be treated. The facts are set out in the judgment of Mostyn J.
John Ison (to whom the court granted rights of audience) for the applicant.
Cassio Caceres (to whom the court granted rights of audience) for the first respondent.
The second respondent did not appear and was not represented.
14 October 2011. The following judgment was delivered.
MOSTYN J.[1] In this case I have to consider the treatment to be accorded to a lottery prize of £500,000 in financial remedy proceedings following divorce. There have been at least five reported decisions on the subject in Australia, but the statute there is different to ours, both in its framing and in its judicial interpretation, although there are obvious similarities. To my knowledge there has been no reported decision on the subject here. In Cowan v Cowan[2001] EWCA Civ 679 at [160], [2001] 2 FCR 331 at [160], [2002] Fam 97, Mance LJ (as he then was) stated:
‘There are many perplexing situations that may one day require examination. What, for example, of the individual spouse who each week invests a small part of his or her spare cash in the National Lottery, and one day wins £1m, or £10m? Should this asset be viewed like any sudden accretion to the value of the joint home or other matrimonial investment, due to market movements? Or might it, in some circumstances at least, be more analogous to property brought into a marriage or inherited property? Would it for example make any difference, if the...
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