In 2006 Ms Bosanac purchased a residential property which became the marital home of her and Mr Bosanac. The property was registered in Ms Bosanac’s name only. The purchase money was paid from funds provided by Mr & Ms Bosanac jointly and loans obtained by them jointly. The loans were secured over the property and also other properties owned by each of Mr & Ms Bosanac in their individual names.
In 2016, the Commissioner of Taxation obtained judgment against Mr Bosanac for over $9 million plus costs.
In order to facilitate recovery of part of the judgment sum, the Commissioner sought a declaration that Ms Bosanac held 50% of her interest in the property on trust for Mr Bosanac. That is, that Mr Bosanac had a 50% interest in the property.
The duelling presumptions
The basis for seeking the declaration was the “presumption of resulting trust”. A resulting trust is presumed to arise where a person (here, Mr Bosanac) contributes to the purchase price for a property that is owned by another person (here, Ms Bosanac). The effect is that a trust is taken to “result” in favour of the person that contributed to the purchase price, to the extent of the contribution. Here that is 50% as the funds were provided jointly by two people.
The presumption can be rebutted if it is proved that there was no intention on the part of the person advancing the purchase money to obtain an interest in the property.
Another presumption that arose for consideration in the proceeding was the “presumption of advancement”. The precise nature of the “presumption” and how it operates has been variously described over time. Relevantly, it applies where a husband contributes purchase monies towards the acquisition of a property in the wife’s name. In that circumstance a “presumption” arises that the husband’s contribution is a gift to the wife such that the husband does not obtain any interest in the property.
Where the presumption of advancement arises, it rebuts the presumption of resulting trust.
The previous decisions
The primary judge in the Federal Court found that the evidence did not support an inference that Mr Bosanac intended to have an interest in the property. Accordingly, the presumption of advancement was unrebutted, and that rebutted the presumption of resulting trust.
On appeal, the Full Court of the Federal Court found that the evidence did support an inference that Mr Bosanac intended to have an interest in the property. Accordingly, the presumption of advancement was rebutted, and the presumption of resulting trust applied.
The High Court’s decisions
Ultimately the High Court found that the evidence supported an inference that the parties objectively intended Ms Bosanac to be the sole beneficial owner of the property. Consequently, there was no need to resort to either of the presumptions to determine the outcome. The appeal was allowed, with the first instance decision of the Federal Court standing.
There was no direct evidence from either Mr or Ms Bosanac as to their intention. In this case it was a question of what inference could be drawn from the objective facts.
There were a number of factors that lead to the High Court reaching its conclusion, including the following:
The Commissioner also sought to have the presumption of advancement abolished. The Court declined to do so. Gageler J considered that “the weight of history is too great for a redesign of that magnitude now to be undertaken judicially”. Kiefel CJ, Gleeson, Gordon and Edelman JJ also observed that the presumption is a ”landmark”.
The key takeaway from the High Court’s decision is that the main focus should be to ascertain the objective intention of the parties that is borne out of the objective facts from evidence led by the plaintiff. Depending on what that objective intention is, there may be no need to resort to applying either presumption.
If you would like advice around corporate & commercial property arrangements, please contact me at firstname.lastname@example.org or 07 3220 1144.
The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.