Reversal of decision in Commissioner of Taxation v Bosanac – over turning the presumption of advancement?

By Alicia Hill, Principal, MST Lawyers and Angela Wang, Law Clerk

The recent decision of Commissioner of Taxation v Bosanac (No. 7) [2021] FCA 249, whereby the Commissioner commenced proceedings to seek a declaration that the wife held 50% of the property on trust for her husband, without any evidence of intention, has been overturned by the Full Federal Court in Commissioner of Taxation v Bosanac [2021] FCAFC 158.

To refresh on the facts of the case and arguments of the parties, refer to the previous MST article here.

Issue raised in appeal:

The appeal predominately surrounds one question: what did Mr and Ms Bosanac actually intend the beneficial ownership of the property to be at the time of purchase?

That is, did Mr Bosanac have an equitable interest in the residential property for $4.5million which had been registered solely in the name of Ms Bosanac.

The ‘presumptions’ relevant in the appeal were:

  • Resulting trusts – where two parties contribute to the purchase price of a property, but legal title vests only in one as the law presumes it was intended the legal title holder does so for both contributors and a resulting trust is found to exist;
  • Presumption of advancement – the existence of certain relationships between the parties provides a presumption against a trust being recognised and rather, by way of ‘gifting an advancement’ of what would otherwise be recognised as an beneficial interest in the property.

Findings:

The court ordered that the appeal should be allowed, and the orders made by McKerracher J on 22 March 2021, should be set aside. This means that Bernadette Bosanc, the former wife and sole registered owner, will hold 50% of her interest in the property, on trust for her ex-husband.

Reasons for judgment:

  • The presumption of advancement does not operate in exclusion of evidence where it shows the presumption to be inconsistent with the facts intended. The fact that Mr and Ms Bosanac purchased the property for the purpose of a matrimonial home, and moved in shortly after until their separation, strongly suggests they intended the property for their joint use and benefit.
  • This differed from the primary judge’s findings that Mr Bosnac’s signing his name on loan documents was not enough to satisfy that he intended a beneficial interest
  • The fundamental facts taken from the case steer away from the presumption of advancement, due to the nature of the objective facts – rejecting the idea Mr Bosanac intended his contribution to their shared home be way of ‘gift’ for her advancement. Rather, it could be inferred he intended a 50% beneficial interest in the property would be his.
  • The primary judge erred in failing to consider Mr Bosanac assumed a significant liability in the signature of loans regarding their matrimonial home.
  • Mr Bosanac used the shared property as security for borrowings of $3.6 million, supporting the inference that the property was intended to benefit both parties.
  • Existence of other separate assets in individual ownership is insignificant and does not weaken the conclusion reached.

Takeaways:

This decision clarifies that the objective intention and inferences to be drawn on a case by case from each factual circumstance are prominent in determining whether a presumption of advancement has occurred.

Based on this case it is a reasonable inference that a partner who has contributed substantially to the purchase of a matrimonial home would not do so, for no beneficial interest in the property whatsoever.

If you have any queries about any of the matters raised by this case, then please contact Alicia Hill on (03) 8540 0292 or alicia.hill@mst.com.au