A ‘wife’ has succeeded before the High Court in preventing the ATO claiming what it argued was her husband’s interest in the family home in order to settle the husband’s tax debt, in excess of $9 million. Although the husband provided money for the purchase of the home, such that he, and the ATO, would benefit from a resulting trust in his favour, the antiquated and discriminatory “presumption of advancement” that he intended to give her the property operated to negate that outcome.
Facts
Ms Bosanac purchased a home with loans held and taken out jointly with her husband Mr Bosanac, secured against properties they each separately owned. The home was registered in Ms Bosanac’s name alone and was their matrimonial home. Mr Bosanac never claimed an interest in the property. They had a history of holding their substantial real and other properties in their own names and using them as security for joint loans.
It was the ATO as creditor and not Mr Bosanac that was arguing the point. Even though the Bosanacs were separated and resolving their affairs through family law proceedings, he did not seek to assert a resulting trust and did not oppose the contentions advanced for his wife in favour of her full ownership of the property.
McKerracher J had dismissed the ATO’s application, holding that the presumption of advancement arose in her favour, and that the evidence did not support an inference that Mr Bosanac intended to have an interest in the home. The Full Federal Court allowed an appeal, holding that the presumption was rebutted by the evidence.
The High Court
The High Court disagreed with the Full Court, saying that “it asked itself the wrong question”. The inference was that the parties objectively intended Ms Bosanac to be the sole beneficial owner of the property, and that Mr Bosanac was merely facilitating her purchase of it.
The ATO argued that the time had come for presumption of advancement as a doctrine of equity to be abolished as being anomalous, anachronistic, and discriminatory – a husband’s contribution to the purchase of property by his wife is presumed to be intended as a gift; but a wife’s contribution to a purchase by her husband is not so intended as a gift; nor is a contribution by one de-facto partner to a purchase by another. As the High Court said, “The discrimination is exacerbated when comparison is made to a contribution by one same-sex marriage partner to a purchase by the other”.
As the High Court explained, the Commissioner drew back from arguing that abandonment of the counter-presumption of advancement should be accompanied by abandonment or modification of the presumption of a resulting trust. The
“presumption of a resulting trust rather than the counter-presumption of advancement is the root anachronism, perpetuating expectations of a segment of society within late medieval England”.[1]
The Court continued that if the doctrines of equity were to be redesigned to accord with the societal expectations of contemporary Australia,
“the default position would be that a purchaser of property would be assumed to be its sole legal and beneficial owner. That would be so whether or not someone else might have contributed to the purchase price. For the purchaser to hold the whole or some part of the beneficial interest in the property on trust for a contributor to the purchase price would require proof of an actual intention to create a trust. There would be no presumption of a resulting trust and there would accordingly be no occasion for a counter-presumption of advancement”.
But “(f)or better or for worse, the weight of history is too great for a redesign of that magnitude now to be undertaken judicially”.
Hence, the resulting trust and the presumption of advancement remain, though the latter presumption is weak.
Cummins [2006] HCA 6
Nor, as a final point, does the counter-presumption of advancement give way to an inference of equality of ownership where a husband and a wife each contribute to the purchase by one of them of a matrimonial home, such as what might said are common practices in spousal relationships, referring to Cummins. No such principle of equality of ownership exists.
Evidence
Ultimately, the case was decided as most of these cases are, on the evidence, without the need to resort to presumptions. The evidence showed that the taxpayer husband intended that his wife be the sole beneficial owner of the property.
See Bosanac v Commissioner of Taxation [2022] HCA 34 (12 October 2022) (austlii.edu.au)
Comment
This case involved a creditor seeking access to the claimed assets of its debtor. Often, the debtor is bankrupt and the trustee is seeking to show the bankrupt as having half the ownership of the real property in the name of her or his spouse.
Thus, unhelpfully, things are often not as they seem. In a bankruptcy matter, in the context of finding in favour of a wife over the trustee of the husband’s bankruptcy, a Judge commented that
“(c)reditors should be expected in these times to be aware of the possibility of constructive trusts or of equitable interests which may arise when the debtor is married or in a de facto relationship” …[2]
========================================
[1] See Glover, John — “Re-assessing the Uses of the Resulting Trust: Modern and Medieval Themes” [1999] MonashULawRw 5; (1999) 25(1) Monash University Law Review 110 (austlii.edu.au); Ye, Ruiping — “The Presumption of Advancement in New Zealand: A Confused and Inconsistent Existence” (2021) 52(4) Victoria University of Wellington Law Review 1061
[2] Clout v Markwell [2001] QSC 91 at [21], Atkinson J. See also Keay’s Insolvency 11th ed at [4.132-4.135].
