Commissioner of Taxation v Bosanac

• Jurisdiction: Australia Federal only
• Court: Federal Court (Australia)
• Judgment Date: 31 August 2021
• Neutral Citation: [2021] FCAFC 158
• Date: 31 August 2021

Federal Court of Australia

Commissioner of Taxation v Bosanac [2021] FCAFC 158

Appeal from:
File number:	WAD 82 of 2021
Judgment of:	KENNY, DAVIES AND THAWLEY JJ
Date of judgment:	31 August 2021
Catchwords:	EQUITY – presumption of advancement – purchase of property by husband and wife – title registered in wife’s name only – whether presumption of advancement is qualified by statements in Trustees of Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278 – whether presumption of advancement is rebutted – where property intended as matrimonial home – where both spouses contributed equally to purchase through joint loan accounts – where husband assumed significant liability under mortgage over the property – inference husband acquired 50% beneficial interest raised on the facts – inference supported by subsequent conduct – held: presumption of advancement rebutted
Cases cited:	Actors & Announcers Equity Association of Australia v Fontana Films Proprietary Limited (1982) 150 CLR 169 Aldi Foods Pty Ltd v Moroccanoil Israel Ltd (2018) 261 FCR 301 Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060 Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 Calverley v Green (1984) 155 CLR 242 Carr v Baker (1936) 36 SR (NSW) 301 Cassimatis v Australian Securities and Investments Commission (2020) 275 FCR 533 Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 Commissioner of Taxation v Bosanac (No 7) [2021] FCA 249 Nelson v Nelson (1995) 184 CLR 538 Scott v Pauly (1917) 24 CLR 274 The Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278 Warren v Coombes (1979) 142 CLR 531
Division:	General Division
Registry:	Western Australia
National Practice Area:	Taxation
Number of paragraphs:	28
Date of hearing:	4 August 2021
Counsel for the Appellant:	Mr A J Musikanth SC with Mr J Slack-Smith
Solicitor for the Appellant:	Australian Government Solicitor
Solicitor for the First Respondent:	Mr R Blow of Cove Legal
Counsel for the Second Respondent:	Mr J Hynes with Mr T L Bagley and Mr B A O’Connor (All Pro Bono)

ORDERS

		WAD 82 OF 2021
BETWEEN:	COMMISSIONER OF TAXATION Appellant
AND:	VLADO BOSANAC First Respondent ; BERNADETTE BOSANAC Second Respondent

order made by:	Kenny, Davies and thawley JJ
DATE OF ORDER:	31 August 2021

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The orders made by McKerracher J on 22 March 2021 be set aside and, in lieu thereof, it is declared that the second respondent holds 50 per cent of her interest in the property located at 82 Philip Road, Dalkeith, Western Australia, more particularly described in certificate of title volume 1628 folio 598, on trust for the first respondent.

3. On or before 4:30 pm on 7 September 2021, the parties file and serve submissions of no more than 2 pages as to the appropriate order as to:

1. the costs of the appeal; and

2. the costs of the proceeding before the primary judge, including whether this issue of costs should be remitted to the primary judge to determine.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1. The issue in this appeal is whether, contrary to the judgment of the primary judge, Mr Bosanac held an equitable interest in residential property purchased for $4.5 million in the name of Ms Bosanac only. The deposit of $250,000 was paid with funds from a joint loan account. Mr and Ms Bosanac then jointly borrowed $4.5 million from Westpac and this was used to pay the balance of the purchase price.

2. The issue in the appeal is ultimately largely one of fact: what did Mr and Ms Bosanac intend as to the beneficial ownership of the property at the time of purchase? This question is determined by reference to the facts, including inferences appropriately drawn from the facts, and – if they are applicable and not rebutted – certain presumptions of equity. The facts are either established by direct evidence or they may be inferred from facts directly proved when those proved facts make it reasonably probable that the inferred fact exists: Carr v Baker (1936) 36 SR (NSW) 301 at 306 (Jordan CJ). Presumptions, unless “rebutted” by evidence, operate such that proof of one fact results in a second fact being presumed to exist. The presumption of the existence of a fact in this way is said to be available because it gives effect to common experience: Actors & Announcers Equity Association of Australia v Fontana Films Proprietary Limited (1982) 150 CLR 169 at 213-215 (Murphy J); Nelson v Nelson (1995) 184 CLR 538 at 601-3 (McHugh J); Calverley v Green (1984) 155 CLR 242 at 264 (Murphy J). A presumption differs from an inference in that an inference is something which may be drawn from facts directly proved, whereas a presumption (unless rebutted) operates automatically once a certain fact is proved.

3. Two “presumptions” are of particular relevance in the determination of this appeal:

1. The first presumption concerns resulting or presumptive trusts. Relevantly, a declaration of trust may be presumed where two parties contribute to the purchase price of property, but legal title to the property is put only in the name of one of them. Equity presumes there was a declaration of trust because it presumes it was intended that the person holding legal title would do so for both contributors (or that the purchaser did not intend to gift his or her contribution to the other person).

2. The second is the presumption of advancement. Where it applies, the presumption of advancement operates to prevent a resulting trust from arising because the relationship between the relevant parties provides a reason against presuming a trust. The presumption operates on the hypothesis that, because a certain relationship exists between two parties, a benefit provided by one party to the other at the cost of the first was intended to be provided by way of “advancement”; absent evidence to the contrary, the relationship supplies a reason for why a gift was intended.

4. The presumption of advancement developed as a result of Courts of equity drawing an inference, from the type of relationship, that the gift was intended as an “advancement” – see, for example: Scott v Pauly (1917) 24 CLR 274 at 282 (Isaacs J); Calverley at 267 (Deane J). As to the development of the presumption of resulting trust see: Bogert, The Law of Trusts and Trustees, revised 2nd edition 1991, § 454, 240-241; Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060 at [129]-[134] (Campbell J). Neither the presumption of resulting trust, nor the presumption of advancement, are without controversy, in particular because it has been recognised that they may not reflect contemporary understanding or views or experience; nevertheless they are recognised as entrenched – see, for example: Calverley at 248-9 (Gibbs CJ), at 264-5 (Murphy J) and at 265-6 (Deane J); Nelson at 602 (McHugh J).

5. The presumption of advancement has particular significance where there is little evidence relevant to establishing the intention of the donor or where the Court is unable to reach a positive satisfaction on the issue from the evidence adduced. That is why the presumption has been described as operating “to place the burden of proof, if there be a paucity of evidence bearing upon such a relevant matter as the intention of the party who provided the funds for the purchase”: Nelson at 547 (Deane and Gummow JJ). In Calverley at 270-271, Deane J stated:

The weight to be given to a presumption of a resulting trust in the resolution of what is essentially an issue of fact may vary in accordance with changing community attitudes and with the contemporary strength or weakness of the rationale of the rule embodying the presumption: see, eg, Snell’s Principles of Equity, 28th ed (1982), p 183 and the cases there cited, and per Mahoney J, Doohan v Nelson [[1973] 2 NSWLR 320, at pp 325-326]. The generalization that a presumption of resulting trust “should not give way to slight circumstances” [[1955] AC 431, at p...