Battle over $1.3m lotto loot

BY MICHAEL FOX

An estranged Wellington couple have gone to court to fight over their $1.3 million Lotto windfall.

Paraparaumu man Malcolm Rabson tried to claim he bought the winning ticket with money from a trust, but a High Court judge isn't wearing it.

Mr Rabson said he bought the ticket, while he and former partner Linda Gallagher were together, on behalf of a trust set up before their relationship began. Ms Gallagher was not a beneficiary of that trust.

However, two separate judges have thrown out his argument, calling his claim "inherently unlikely" and ruling that Ms Gallagher is entitled to her share.

The Lotto prize was part of a Family Court dispute between the pair, decided last week following a High Court appeal, after they split four years ago.

In it, Mr Rabson argued that he bought the ticket in late October or early November 2001, on behalf of the trust he began setting up earlier that year. The couple began their six-year relationship that December.

When Mr Rabson claimed the prize, the cash was placed directly into his own account, then split into two shared term deposits before being deposited into the trust.

According to the judgment, the money "substantially funded" three properties in the name of both Mr Rabson and Ms Gallagher, with a combined value of $1,351,000.

Mr Rabson, independently wealthy according to comments he made which were recorded in the judgment, did not realise he had won the November 5 draw until the following February.

When he returned to the couple's Mana home and told Ms Gallagher of their win, she said she was delighted but berated him for failing to do the grocery shopping.

The winning ticket was one of several he had been carrying in his wallet for some time before checking them, he said.

Justice Wild threw out Mr Rabson's claims, saying he did not believe he had specifically spent $10 of the trust's money on a ticket for the trust's benefit as it was not "typical trustee investment".

Mr Rabson admitted he knew "for certain" the $10 used to buy the winning ticket did not come from the trust. He also admitted he had not discussed the investment with his brother, a former trustee.

Justice Wild said he could not rely on Mr Rabson's testimony.

But Mr Rabson maintained to The Dominion Post yesterday that he bought tickets on behalf of the trust, which he did "from time to time". He regularly used personal money for trust expenses, he said.

Mr Rabson said he was appealing against the decision, calling the judgment "completely flawed".

Once an "extremely successful businessman", Mr Rabson said he had been unemployed since September. He had applied for legal aid but had not heard back.

"I've been absolutely shafted in this whole affair and I can't wait to get the facts across."

Victoria University law professor Bill Atkin said if Mr Rabson used his own income to buy the ticket, the winnings were likely to be relationship property.

"In terms of the starting position then if it had been bought by the trust then it would be the trust's winnings but it sounds ... as though he didn't have the appropriate evidence for that and ... as though he was trying it on a little bit."

Ms Gallagher declined to comment.

Lotteries Commission spokeswoman Karen Jones said that in her three years with the commission, this was the first matrimonial dispute involving Lotto winnings that she was aware of, "but that's not to say it doesn't happen".

Once the money was paid out, always to a single account, it was out of the commission's hands. Money could be deposited into a trust's bank account if requested.

The commission recommended syndicates had a written agreement to avoid disputes.

FACTS ACCORDING TO THE JUDGEMENT

Early 1999: Mr Rabson begins setting up a trust.

December 1999: He and Linda Gallagher begin a relationship.

April 2000: The couple move in together.

November 2000:Trust is settled.

October/November 2001: Mr Rabson buys winning Lotto ticket.

November 5, 2001: He wins Lotto.

February 12, 2002: He claims the $1.3 million prize, with the winnings placed in his personal account.

March 12, 2002: The money is placed into the trust's account.

March 2002: Mr Rabson seeks financial advice due to a change in relationship status, investigating a combined trust.

April 2002 to February 2003: The couple buy three properties, with money advanced to the trust.

July 10, 2003: Ms Gallagher is made a trustee.

May 2005: A combined trust is executed.April 2006: The relationship ends.

- © Fairfax NZ News