My husband does not have an interest in my property!

A Case Analysis of Bosanac v Commissioner of Taxation [2022] HCA 34

In October 2022, the High Court of Australia handed down its judgment with respect to an appeal from Ms Bosanac against the Commissioner of Taxation relating to a resulting trust existing in favour of her husband, on a property held in her name. Here, a resulting trust is a legal doctrine that arises when a person holds property for the benefit of another even when that beneficiary is not the registered interest holder.

Facts

Mr and Ms Bosanac married between 1998 and 2012. In 2006, their former matrimonial home was purchased in Ms Bosanac’s name as the sole registered proprietor. The deposit was paid with funds from a joint account, and the couple entered a home loan under both their names (even after refinancing). Throughout their marriage, the couple’s assets were a mix of properties owned in their separate names as sole registered proprietors. Mr Bosanac moved out of the matrimonial home in 2015 after the couple separated.

In 2016, Mr Bosanac was sued by the Commissioner of Taxation after failing to lodge tax returns from 2006 to 2013, and he was ordered to pay over $9M in tax debt. Following notice of this debt, Mr Bosanac declared bankruptcy.

As a creditor of Mr Bosanac’s bankruptcy, the Commissioner of Taxation attempted to claim possession of his assets.

Argument

As Mr Bosanac was not a registered proprietor of the property, the Commissioner of Taxation sought that 50% of the equity in the matrimonial home belonged to Mr Bosanac due to the existence of a resulting trust over the property.

Ms Bosanac argued that the resulting trust was countered by the presumption of advancement, being the presumption that property is transferred to the recipient along with the full legal title. This presumption is typically seen when a spouse gifts property to another spouse.

The Commissioner of Taxation contested the validity of the presumption of advancement, following the High Court decision in Trustees of the Property of Cummins v Cummins (Cummins).

Full Court of the Federal Court

The Federal Court of Australia determined that the presumption of advancement was not invalidated by Cummins, however, held that the evidence was in favour of a resulting trust as Mr Bosanac for a variety of reasons including that:

1. Mr Bosanac assumed substantial liability through the loan;
2. The property was a matrimonial homes; and
3. The funds to purchase the home came from joint borrowings.

Accordingly, the Federal Court of Australia found that Ms Bosanac held 50% of the interest in the property on trust for her husband.

Arriving to the High Court

Ms Bosanac appealed the Full Court decision, contending that there was no basis to infer Mr Bosanac had an intention to have a beneficial interest in the property. The Commissioner of Taxation invited the Court to find that the presumption of advancement ought to be abolished.

Presumption of Advancement

The Court acknowledged that the presumption of advancement was weak and outdated in modern times and could be easily overcome by evidence. However, they declined the notion to abolish the presumption due to its long existence in property law, considering that to be the job of the Parliament.

Decision of the High Court

The High Court of Australia held the Full Court decision should be overturned, finding that Mr Bosanac did not hold an interest to the property as there was no resulting trust arising. The Court found that the evidence supported Ms Bosanac’s assertion that Mr Bosanac did not have an interest in the property and that she was the sole beneficial owner.

Key evidence considered by the Court showed that the Bosanac family had historically held assets separately and in their own individual names and that they did not hold a variety of joint assets beyond certain joint bank accounts. The Court held that the inferences drawn by the Full Court were not the entirety of the facts and were inconsistent with ‘an objective intention to declare a trust’ in favour of Mr Bosanac. The Court further stated that the characteristics of the loan and borrowing do not allow for an inference either way.

Takeaway

If you are involved in a dispute as to the interests in property, particularly stemming in cases of bankrupt or separated spouses, the evidence before the Court will be a crucial element of running or defending your case. You should seek legal advice if you are faced with such a dispute.

If you have any questions relating to the above issues, please contact Stipe Vuleta or Sayward McKeown of our office.