Bosanac v Commissioner of Taxation

• Jurisdiction: Australia Federal only
• Court: High Court (Australia)
• Judge: Kiefel CJ,Gleeson J.,Gageler J.,Gordon,Edelman JJ.
• Judgment Date: 12 October 2022
• Neutral Citation: [2022] HCA 34
• Year: 2022
• Docket Number: P9/2022

Bernadette Bosanac

Appellant

and

Commissioner of Taxation & Anor

Respondent

[2022] HCA 34

Kiefel CJ, Gageler, Gordon, Edelman and Gleeson JJ

P9/2022

HIGH COURT OF AUSTRALIA

Trusts — Resulting trust — Presumption of resulting trust — Presumption of advancement — Where wife purchased property — Where purchase price paid from joint loans taken in names of wife and husband — Where security for joint loans from separately owned properties — Where title registered in name of wife only — Where husband never claimed interest in property — Where property matrimonial home — Where history of separate ownership of assets — Where presumption of advancement precludes presumption of resulting trust from arising — Whether presumption of resulting trust over one half of property in favour of husband — Whether objective intention of wife and husband for husband to have beneficial interest in property — Whether presumption of advancement remains part of general law of Australia.

Words and phrases — “beneficial interest in property”, “benefit of another”, “circumstance of fact”, “circumstance of evidence”, “inference”, “intention”, “objective intention to create a trust”, “presumption of advancement”, “presumption of fact”, “presumption of law”, “presumption of resulting trust”, “proof of intention”, “purchase money resulting trust”, “relationship of husband and wife”, “spouses”, “strength of the presumptions”.

Representation

N C Hutley SC with J E Hynes and T L Bagley for the appellant (instructed by Pier Paolo Parisi)

J O Hmelnitsky SC with D P Hume and J S Slack-Smith for the first respondent (instructed by Australian Government Solicitor)

R A Blow for the second respondent (instructed by Cove Legal) – submitting appearance

ORDER

• 1. Leave to amend the Notice of Contention refused.

• 2. Appeal allowed.

• 3. Set aside the orders of the Full Court of the Federal Court of Australia made on 31 August 2021 and 31 January 2022 and, in their place, order that:

  • (a) the appeal be dismissed; and

  • (b) the appellant pay the second respondent's costs.

1 Kiefel CJ and Gleeson J. This appeal concerns the purchase by Ms Bosanac of a residential property in Perth (“the Dalkeith property”) in 2006. She and Mr Bosanac married in 1998. They separated in 2012 or 2013 but continued to reside together at the Dalkeith property until September 2015, when Mr Bosanac moved to a new residential address.

2 Ms Bosanac appears to have instigated the purchase of the Dalkeith property. In April 2006 she offered to purchase it for $4,500,000 subject to her obtaining approval for a loan of $3,000,000 from a bank. The offer was accepted in May 2006. The contract for sale required Ms Bosanac to pay a deposit of $250,000 within 30 days. The deposit was provided from an existing joint loan account in the names of Ms and Mr Bosanac.

3 In October 2006, Ms and Mr Bosanac applied for two loans in the sums of $1,000,000 and $3,500,000. The balance of the purchase price was paid from two loan accounts in their joint names, and after settlement the surplus funds in these accounts were paid into the joint loan account from which the deposit had been drawn. The Dalkeith property was registered in Ms Bosanac's name alone. Mr Bosanac has never claimed an interest in the property.

4 The securities required by the bank for the loans were mortgages over the Dalkeith property and three other properties – units at Mount Street and a property at Hardy Street. The unit at 10/41-43 Mount Street was owned by Mr Bosanac. Ms Bosanac owned the Hardy Street property. The Dalkeith and Hardy Street properties were used as securities again almost a year later when the loans were refinanced.

5 The primary judge in the Federal Court, McKerracher J, found that during the marriage Ms and Mr Bosanac shared some bank accounts, but had substantial assets which they held in their separate names. Mr Bosanac had a substantial share portfolio. There was evidence of the use of separately owned properties as security for joint loans. There is nothing to suggest they were used to acquire joint assets. His Honour said, “this does not appear to be an instance of a husband and wife sharing all of the matrimonial assets jointly, or pooling their shareholdings … [although] … some bank accounts were shared” 1.

6 Mr Bosanac was represented on this appeal, as he had been in the proceedings below, but he took no active part in it. Neither he nor Ms Bosanac gave evidence at the hearing before the primary judge.

The reasoning below

7 The Commissioner is a creditor of Mr Bosanac. The primary judge noted that there was no suggestion that the Dalkeith property was registered in Ms Bosanac's name alone with a view to Mr Bosanac avoiding his commitments to his creditors. The Commissioner brought proceedings seeking a declaration of a resulting trust over the equity in one-half of the Dalkeith property, which is to say that Ms Bosanac held that interest in the property on trust for Mr Bosanac.

8 The Commissioner sought to take advantage of the law's presumption, known as a presumption of resulting trust, that a person who advances purchase monies for property, which is held in the name of another person, intends to have a beneficial interest in the property 2. That presumption is subject to an exception that, in the case of purchases by a husband in the name of a wife, or a parent (or person who stands in loco parentis) in the name of a child, there is a presumption of advancement or, in other words, a presumption that the purchaser intended that the beneficial interest would pass with the legal interest 3. The Commissioner contended that the presumption of advancement of a wife by her husband, which operates to preclude a resulting trust from arising, is no longer part of the law of Australia in relation to the matrimonial home following the decision of this Court in Trustees of the Property of Cummins v Cummins 4.

9 The primary judge dismissed the Commissioner's application 5. His Honour held that the presumption of advancement in relation to the matrimonial home was not precluded by Cummins, and arose in Ms Bosanac's favour. The evidence did not support an inference that Mr Bosanac intended to have an interest in the Dalkeith property and the presumption of advancement stands unrebutted. In that regard, his Honour observed that at the time of the registration of the property in Ms Bosanac's name, Mr Bosanac was a sophisticated businessman, a “self-styled venture capitalist”, who may be taken to have appreciated the significance of the name in which real property is held 6.

10 The Full Court (Kenny, Davies and Thawley JJ) took a different view. Their Honours held that the decision in Cummins did not qualify the presumption of

advancement, but the presumption is liable to be displaced or rebutted by evidence, including evidence of the nature of the particular transaction 7. There were facts which tended strongly against the presumption and in favour of a trust being intended by both Ms and Mr Bosanac: Mr Bosanac assumed a substantial liability without acquiring any beneficial interest 8; the Dalkeith property was intended to be the matrimonial home for the joint use and benefit of Ms and Mr Bosanac 9; and the funds for the purchase came from joint borrowings 10. The Full Court declared that Ms Bosanac holds 50 percent of her interest in the Dalkeith property on trust for Mr Bosanac

11 Ms Bosanac appeals from the decision of the Full Court pursuant to a grant of special leave. Ms Bosanac contends that the Full Court should have found, as the primary judge did, that there was no basis to infer that Mr Bosanac had an intention to have a beneficial interest in the property.

The presumptions

12 A trust of a legal estate in property taken in the name of another is taken to “result” to the person who advances the purchase money 11. The categories of resulting trust include trusts arising from A's payment for the conveyance of rights to B; the voluntary transfer of rights inter vivos from A to B; and the transfer of rights on a failed declared trust. The term “resulting trust” states a legal response to proved facts 12. The presumption of a resulting trust developed by analogy from the rule of the common law that where a feoffment, or conveyance, is made without consideration, the feoffment results to the feoffer 13. It arose from the common practice of the 15th to 17th centuries of those having fee simple estates in land to put them in use (the precursor to the trust) for themselves 14. Because words of trust

were not included on the face of the conveyance and because the transfers were gratuitous, the court supplied a presumption of a declaration to uses 15. There were various advantages to the practice, including avoiding the hardship of feudal times, and avoiding escheat and forfeiture to the Crown in time of war, such as the Wars of the Roses 16

13 The presumption can be rebutted by evidence from which it may be inferred that there was no intention on the part of the person providing the purchase money to have an interest in land (or other property) held on trust for him or her 17. The presumption cannot prevail over the actual intention of the party paying the purchase price as established by the overall evidence 18, and where more than one person pays the purchase price, as here, regard is necessarily had to evidence of each of their intentions.

14 The presumption of advancement allows an inference as to intention to be drawn from the fact of certain relationships 19. It applies to transfers of property from husband to wife and father to child, but in Nelson v Nelson 20 this Court accepted that there is no longer any basis for maintaining a distinction between a father and mother so far as concerns transfers of property to a child. Originally the relationships were...