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The Primacy of Factual Intention over Legal Presumption: The High Court in Bosanac v Commissioner of Taxation

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By Alicia Hill, Principal, and Darsh Chauhan, Law Clerk

Introduction

On 12 October 2022 the High Court of Australia delivered judgment in the matter of Bosanac v Commissioner of Taxation.[1] This was an appeal by Ms Bosanac, who successfully established that her and her husband’s intention in purchasing the property which was the subject of this dispute was that she be its sole beneficial owner, contrary to the presumption of a resulting trust which would otherwise have had the effect of conferring a one-half interest in the property to Mr and Ms Bosanac.

Background

We have canvassed in fuller detail the facts of this case in our article on the trial judgment and on the appeal judgment. The following is nevertheless a summary by way of a brief overview.

The property which is the subject of this dispute was transferred to Ms Bosanac’s name and was financed by loans repaid from a joint account of both of the Bosanacs. Mr Bosanac was indebted to the Commissioner, who brought proceedings against the Bosanacs on the basis that it could recover against Mr Bosanac in respect of the property if it could establish that he held a one-half interest in it even though it was registered in Ms Bosanac’s name.

The Commissioner argued that the presumption of a resulting trust had the effect that Ms Bosanac held a half-interest in the property on trust for Mr Bosanac because he and Ms Bosanac jointly and equally contributed to the purchase price.

Ms Bosanac argued that the presumption of a resulting trust did not arise because of the operation of the countervailing presumption of advancement, which holds that it is intended that both the beneficial and legal title to the property be passed to the person to whom that property is transferred (in this case Ms Bosanac) in particular relationships including from husband to wife.

Either presumption is capable of being rebutted by inferences drawn from evidence to the contrary.

The trial judge held in Ms Bosanac’s favour but the Full Court of the Federal Court allowed the Commissioner’s appeal. Ms Bosanac appealed to the High Court by grant of special leave.

Issues

The issues for final determination in this case concerned:

  • the extent to which weight should be accorded to each of the presumptions; and
  • whether, in the particular circumstances of this case, there was evidence from which it could be inferred that it had been intended by the Bosanacs that Ms Bosanac was to be full or half beneficial owner of the property.

Decision

Although it issued three separate judgments (delivered respectively by Chief Justice Kiefel and Justice Gleeson, Justice Gageler, and Justices Gordon and Edelman), the High Court unanimously agreed that Ms Bosanac was the full beneficial owner of the property with the practical result that the Commissioner could not recover against Mr Bosanac with respect to that property.

Reasons for Judgment

The Court held that the outdatedness of the presumption of advancement caused by the absence of an assumed economic dependence by wives on their husbands did not have the result that the presumption should be abolished altogether, but that it was especially weak and more easily susceptible to rebuttal by evidence to the contrary.

Justices Gageler, Gordon and Edelman suggested that that the solution to its discriminatory effect was to extend the categories of relationship to which it applied rather than to eradicate it. In a similar vein, their Honours also held that so ineffectual was the presumption of advancement that it was not a ‘presumption’ at all, but a mere circumstance of fact or evidence.

The Court also rejected the Commissioner’s alternative contention purportedly drawn from the case of Trustees of the Property of Cummins v Cummins[2] that there should arise a presumption that matrimonial homes are intended to be owned jointly.

Justices Gordon and Edelman took a different approach to the other Justices but arrived at the same conclusion. Their Honours held that no presumption of a resulting trust arose at all in this case because the purpose of the presumption was to allow an inference to be drawn where there was little or no evidence of the objective intention of the parties. In other words, their Honours commenced the inquiry from the point of the particular circumstances of the case rather than decide whether those circumstances could displace the presumption.

Although the line of reasoning adopted by the Court differed among its members, all considered the same or similar facts of the case. It was difficult to assess the intentions of the Bosanacs because neither gave evidence at trial. Therefore the importance of the historical dealings of the Bosanacs was enhanced. In this case, the Court considered:

  • that the Bosanacs had traditionally held real and personal assets separately and in their own names operated to rebut the presumption of advancement;
  • that the fact that the purchase monies were borrowed in both Bosanacs’ names carried little weight including because this was generally the case in most purchases of property by spouses;
  • that the subject property was their matrimonial home did not indicate an intention that it was to be owned jointly, including because the Bosanacs had previously lived together in a residential unit owned entirely by Mr Bosanac;
  • that although Mr Bosanac incurred detriment for which he received no corresponding benefit, such as that his borrowing was secured against properties he solely owned, the Bosanacs had a transactional history of each contributing to purchase prices for properties which were eventually by either rather than both of them;
  • that Mr Bosanac was a ‘sophisticated businessman’ who had been involved in considerable dealings and similarly associated transactions, so there was little room for any suggestion that he had intended to have an interest in the subject property; and
  • that the offer of purchase itself was made by Ms Bosanac alone, who was willing to wear any liability arising from a default on her contribution to the loan repayments, indicating she was to be sole owner.

Ultimately, the Court held that the appropriate inference to be drawn was that it was Mr Bosanac’s intention by contributing to the purchase price of the property to help facilitate the process of its eventual transfer to Ms Bosanac, rather than that he had intended to hold a one-half interest in the property.

Takeaways

The principal lesson from this case is that the presumptions of a resulting trust and of advancement are taken to have very little legal force. They are easily rebuttable on the facts and circumstances of the case at hand by reference to the parties’ intentions at or before the purchase of the relevant property.

The Court’s refusal to abolish the presumption of advancement entirely, whilst recognising and agreeing with its relative modern irrelevance, is also telling of its unwillingness to depart from equitable principles upon which spouses have and continue to conduct their arrangements with respect to property.

If you have any questions regarding this decision or any matters raised by it, please feel free to get in contact with Alicia Hill of the MST Dispute Resolution and Litigation team on (03) 8540 0200, or by email at alicia.hill@mst.com.au.

[1] [2022] HCA 34.

[2] (2006) 227 CLR 278.