- Autumn 2023
- The 'anachronistic' presumptions of resulting trust and advancement are here to stay Nicole Maddocks reports on Bosanac v Commissioner of Taxation  HCA 34
The 'anachronistic' presumptions of resulting trust and advancement are here to stay Nicole Maddocks reports on Bosanac v Commissioner of Taxation  HCA 34
The High Court has held unanimously that the presumption of a resulting trust and the counter-presumption of advancement still form part of Australian law. In so doing, the High Court emphasised that the central issue in determining whether either presumption arises is the actual intention of the person who contributed funds towards the purchase of the property, such question of intention being one of fact.
The issue which arose for the High Court’s determination was whether the appellant, Ms Bosanac, held an interest in land on resulting trust for her former husband, Mr Bosanac. Mr and Ms Bosanac were married in 1998. In May 2006, Ms Bosanac contracted to purchase a residential property in Dalkeith, Perth for $4.5 million, subject to her obtaining approval for a loan of $3 million. The deposit of $250,000 for the purchase was paid from an existing joint loan account held by Mr and Ms Bosanac. In October 2006, Mr and Ms Bosanac jointly applied for two new loans totalling $4.5 million. The balance of the purchase price was paid from these two loan accounts and, following settlement, the surplus funds were paid into the joint loan account from which the deposit had been drawn. In November 2006, the purchase of the Dalkeith property settled and legal title was transferred into Ms Bosanac's name as sole registered proprietor. The property was the 'matrimonial home' until around September 2015, and Mr Bosanac never claimed an interest in the property (even following Mr and Ms Bosanac’s separation and the Family Court proceedings which ensued).
Mr Bosanac had substantial tax liabilities. The Commissioner of Taxation commenced proceedings in the Federal Court, seeking a declaration of a resulting trust over the equity in one-half of the Dalkeith property. The Commissioner sought to take advantage of the presumption of resulting trust on the basis that a person (Mr Bosanac) who advances purchase monies for property which is held in the name of another person (Ms Bosanac), intends to have a beneficial interest in the property. The Commissioner also argued that the presumption of advancement of a wife by her husband, which operates to preclude a resulting trust from arising, is no longer a part of Australian law in relation to the matrimonial home, following the High Court’s decision in Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278.
At first instance, McKerracher J dismissed the application. His Honour found that the evidence did not support an inference that Mr Bosanac intended to retain a beneficial interest in the Dalkeith property, and that the presumption of advancement arose in Ms Bosanac’s favour.
The Commissioner appealed to the Full Federal Court. The Full Court (Kenny, Davies and Thawley JJ) allowed the appeal, and declared that Ms Bosanac held 50 per cent of her interest in the Dalkeith property on trust for Mr Bosanac. Their Honours found that the presumption of advancement was displaced by the evidence – namely, the substantial liability Mr Bosanac assumed without acquiring any beneficial interest in the Dalkeith property, the fact that the property was intended to be the matrimonial home, and that the funds came from joint borrowings.
High Court’s decision
In three separate judgments, the High Court allowed Ms Bosanac’s appeal. Kiefel CJ and Gleeson J noted that the presumption of a resulting trust 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 property held on trust for him or her (at ). Their Honours emphasised the need to determine the payor’s intention, stating that '[t]he presumption cannot prevail over the actual intention of the party paying the purchase price as established by the overall evidence' (at ) and '[i]t is the concern of the courts to determine what was intended when property was purchased or transferred' (at ). As to that inquiry, their Honours noted that the question of intention was 'entirely one of fact' (at ).
Their Honours proceeded to consider the circumstances at the time of the purchase of the property and what inferences were able to be drawn from the available facts as to the intentions of Mr and Ms Bosanac (at -). These facts included that there was a history of the use of properties held by each of Mr and Ms Bosanac in their own names as security for joint loans and that Mr Bosanac was a sophisticated businessman who must have appreciated the significance of the property being held in Ms Bosanac’s name.
Their Honours concluded that Mr Bosanac intended to facilitate his wife’s purchase of the Dalkeith property, which was to be held in her name (at ). Accordingly, Kiefel CJ and Gleeson J allowed Ms Bosanac’s appeal.
Similarly, Gageler J considered that the issue to be determined was the intention of the contributor and purchaser. His Honour stated that that intention was 'an objectively manifested intention that property be held in whole or in part for the benefit of another' (at ) and that the question of intention 'falls to be determined as an ordinary question of fact on the balance of probabilities' (at ).
However, Gageler J held that where evidence of intention is adduced, the presumption of resulting trust (and the presumption of advancement) will not arise at all if such evidence of intention is inconsistent with either presumption. His Honour stated that '[w]here evidence relevant to intention is adduced, the presumption and the counter-presumption are … of practical significance only in rare cases where the totality of the evidence is incapable of supporting the drawing of an inference … on the balance of probabilities about what contributors and purchasers actually intended when they participated in the purchase transaction' (at ). His Honour considered the objective facts in a similar way to Kiefel CJ and Gleeson J and also allowed the appeal.
Gordon and Edelman JJ approached the issue of whether a resulting trust is presumed in a similar way to that of Gageler J. Their Honours held that 'where the objective facts based on evidence led by the plaintiff tend to establish, even weakly, an objective intention inconsistent with a declaration of trust, then … the presumption of resulting trust will not arise' (at ). The presumption of a resulting trust will only arise where the objective facts 'are neutral, truly equivocal, non‑existent or uninformative as to the objective intention of the parties' (at ).
Their Honours considered the objective facts in a similar manner to Kiefel CJ and Gleeson J and Gageler J. Their Honours held that those facts established that the objective intention of Mr and Ms Bosanac was inconsistent with a declaration of trust in favour of Mr Bosanac, and that the presumption of resulting trust accordingly did not arise (at ).
Of interest are the High Court’s comments, in obiter (in particular, Kiefel CJ and Gleeson J at , Gageler J at -  and Gordon and Edelman JJ at - ), as to the basis of the presumptions in modern society, with Gageler J describing the presumptions as 'anachronistic' and observing that the operation of the presumption of advancement to modern day relationships was both 'inconsistent and discriminatory' (at ). Nevertheless, the High Court unanimously rejected the Commissioner’s proposition that the presumption of advancement should be abolished. The High Court also indicated a willingness to expand the categories to which the presumption of advancement applies in an appropriate case (at ,  and ). BN