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In Ontario, the Family Law Act outlines how property held by spouses is divided in the event of a separation or divorce. Generally, property acquired during the marriage up to the valuation date is included as property subject to equalization between the spouses. This includes lottery winnings. But what about proceeds from a winning lottery ticket that was acquired after separation but before the parties’ divorce? Could the lottery win still be subject to equalization?
Separated Spouse’s New Partner Wins Lottery
In Roth v. Roth, the applicant husband sought to have $15 million dollars of lottery proceeds paid into trust. The parties had been married but were long separated when the case commenced. The respondent had commenced a new relationship, and her new partner subsequently won $60 million in a lottery. He gifted half of the winnings to the respondent. When the respondent’s estranged husband learned of the lottery win, he brought an application for a preservation order seeking 50% of the lottery winnings to be held in a secure investment, preventing the respondent from dealing with the funds.
The judge largely focused on whether the claimant established a prima facie case of sufficient merit. The applicant pointed out that the parties remained married and that matrimonial issues still needed to be addressed. He claimed that the division of a large lottery win that occurred while they were still married but separated constituted an issue of sufficient merit.
Gifts From a Third Party Are Exempt From Distribution
However, the respondent pointed out that spousal property that is acquired as a gift from a third party is exempt from distribution, as was the case here. Alternatively, the respondent also argued that if the court determined that there was no gift, the applicant would still not have a meritorious claim because of section 8 of the provincial Matrimonial Property Act. She claimed that under the legislation, property acquired post-separation would need to be divided in a just and equitable manner, and that should account for the fact that the parties had been separated for a lengthy time, that the respondent was left financially disadvantaged while the applicant was not, and that the applicant did not contribute to the acquisition of the lottery ticket, and that the win was a windfall so there was no inequity to redress.
In support, she pointed to Souder v. Wereschuk, where the court had to consider whether it would be unjust to divide property equally, which would be affected by both the duration of the separation and the significance of the ties that existed between the parties after the separation date. In Roth, the lottery was won long after separation and after the parties lived independently.
Judge Highlights That Parties Were Living Independent Lives
The judge agreed that at the time of the lottery win, the “marriage was long over, and the parties were married only on paper.” The applicant left the marriage with advantages, including job opportunities and assets that the respondent did not have. Justice Sulyma concluded that the applicant did not meet the second part of the test, establishing a prima facie case of sufficient merit to warrant the pursuit of his claim.
Parties Dispute Whether Winning Lottery Ticket Was a Gift
The case of Barkacin v. Wasiak involved a dispute over lottery winnings. The plaintiff husband sought $200,000, which was the balance of half of the proceeds being held in court, arguing that the winnings should be shared equally because of the nature of the parties’ relationship. In turn, the respondent-wife alleged that the winning lottery ticket was a gift from the plaintiff or that it was abandoned. She denied there was any intention to share the prize.
The parties were divorced but frequently purchased lottery tickets. The plaintiff claimed that it was normal practice for him to check winning numbers on television and would ask the respondent to check his tickets at the store. He explained that he considered any winnings to be “their money.” Conversely, while the respondent acknowledged receiving tickets from the plaintiff, she considered the tickets to be a gift.
Respondent Does Not Tell Plaintiff About Winning Ticket
In this case, the plaintiff purchased the lottery tickets, resulting in the dispute. He did not see the winning numbers on television and testified that he asked the respondent to check the tickets at the store. When the respondent checked the tickets, she discovered one ticket was a winner. Although, when she returned to the residence, she did not tell the plaintiff about the winning numbers.
When the plaintiff learned about the lottery win, the parties agreed that the respondent stated that she would not be taking the full amount of the $1,000,000 winnings. However, a dispute arose when the respondent decided the plaintiff should only have $300,000. The initial ownership of the lottery ticket was not in dispute as the plaintiff purchased it. Since the respondent raised the issues of gift and abandonment, the court looked at the legal principles surrounding the transfer of title through gifts. It was well established that three elements need to be present to constitute a gift: an intention to donate, acceptance, and a sufficient act of delivery. Referring to Bruce Ziff’s Principles of Property Law text, the third element requires an act of transfer, which shows donative intent and is clear proof of a gift.
Judge Concludes Parties Had a Spousal Relationship Despite Divorce Order
The plaintiff described the parties as having a normal spousal relationship, while the respondent labelled it a “neighbour-like relationship.” However, the judge was not satisfied with either party’s description. Despite their divorce order, the parties continued to live together, resided in the same residence, and shared household expenses over the years. Other observers considered the parties to be common-law spouses or believed that the parties were married. The judge determined that the two had a spousal relationship based on the evidence.
Justice Gordon also determined that the plaintiff expected to share the lottery prize. His behaviour was “consistent with his expectation of equal sharing or of a joint asset.” He became upset when his request for money from the respondent was denied. The pair argued, which resulted in the plaintiff leaving the residence. Additionally, the respondent’s actions raised suspicion. She did not inform the plaintiff of the win until she needed information from him about the purchase of the ticket in order to claim the prize. Yet, she told others about the win while also providing the plaintiff with a false story to conceal her trip to Toronto, which was necessary to verify the lottery win and determine entitlement to the prize. As the judge noted, there was no need for this secrecy.
Judge Finds Parties Expected to Share Lottery Win
The evidence did not support the finding that the plaintiff intended to give the lottery ticket to the respondent. Instead, it was consistent with her usual practice of checking the numbers. There was also no act of delivery, as both parties agreed that the plaintiff placed the ticket on his bedroom dresser. Similarly, the ticket was not abandoned. Justice Gordon noted that “placing the lottery ticket on the dresser is not a sufficient act of relinquishing ownership.”
Overall, there was nothing to establish that the plaintiff gifted or abandoned the ticket. Instead, there was an intention to share the prize, as the parties followed an established practice of checking the lottery numbers at the store. Consequently, as the plaintiff purchased the ticket, he retained ownership. Ultimately, the parties’ relationship prevented the respondent from claiming all of the proceeds, so the prize money was to be equally shared.
Nature of Parties’ Relationship Can Impact Treatment of Lottery Win
Property that is included in equalization is determined by the valuation date, which frequently will be the date the parties separated. Consequently, property that is obtained after that date, such as any lottery prizes, would not usually be included in the equalization of net family property. However, this is not always true, and lottery winnings after separation may need to be shared by the parties in some circumstances. In these cases, the parties’ actual intentions, the nature of their relationship, and any long-standing practice of lottery ticket purchases can be significant factors in dealing with the lottery winnings.
Contact Johnson Miller Family Lawyers for Trusted Representation in High-Asset Divorce Disputes
When parties with high net worth and complex assets separate, difficulties can arise regarding property division, relating to analysis of asset worth, location and accessibility of assets. Questions relating to hidden assets may also come to light. At Johnson Miller Family Lawyers, our experienced family lawyers protect our client’s interests and help parties navigate negotiations in order to obtain fair outcomes. We also provide superior representation in matters where litigation is required. To speak with an experienced family lawyer about complex property division issues, call us at 519.973.1500 or contact us online.
