The High Court reinforces “land-mark” of Family Law in Australia

The High Court of Australia reinforced in the matter of Bosanac v Commission of Taxation & Anor [2022] HCA 34 the presumption of advancement as an entrenched “land-mark” of Family Law in this country.

The Taxation Commissioner was after Mr Bosanac and relied upon the presumption of a resulting trust, seeking a declaration that Ms Bosanac holds half of her interest in a residential property in Dalkeith on trust for him. The Commissioner contended that the presumption of advancement of a wife by her husband, which operates to preclude a resulting trust from arising, is no longer part of the law of Australia in relation to the matrimonial home following the 2006 decision of the High Court in Cummins. Ms Bosanac relied upon the presumption of advancement, thereby precluding a resulting trust from arising.

The primary judge in the Federal Court, McKerracher J, dismissed the Commissioner’s application, holding that the presumption of advancement arose in Ms Bosanac’s favour, and that the evidence did not support an inference that Mr Bosanac intended to have an interest in the property. McKerracher J found that during the marriage, the Bosanacs shared some bank accounts but had substantial assets which they held in their separate names. There was evidence of the use of separately owned properties as security for joint loans. There was nothing to suggest they were used to acquire joint assets.

Their Honours, Kenny, Davies and Thawley JJ of the Full Court took a different view and allowed an appeal, holding that the presumption was rebutted by the evidence in this case:

1. Mr Bosanac assumed a substantial liability without acquiring any beneficial interest;
2. the property was intended to be the matrimonial home for their joint use and benefit; and
3. the funds for the purchase came from joint borrowings. The Full Court declared that Ms Bosanac holds 50% of her interest in the Dalkeith property on trust for Mr Bosanac.

The legal issue was a distinct battle between the presumptions of advancement and resulting trust and Ms Bosanac was granted leave to appeal in the High Court.

Resulting trust

As set out in Dyer v Dyer (1788), a trust of a legal estate in property taken in the name of another is taken to “result” to the person who advances the purchase money. This is made out based on proven facts.

The categories of resulting trust include:

1. trusts arising from A’s payment for the conveyance of rights to B;
2. the voluntary transfer of rights inter vivos from A to B; and
3. the transfer of rights on a failed declared trust.Rebutting the presumption

As in the 1933 case of Stewart Dawson & Co (Vict) Pty Ltd v Federal Commissioner of Taxation, the presumption 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 land (or other property) held on trust for him or her.

Advancement

Unlike the presumption of resulting trust where there needs to be proven facts, Nelson v Nelson (1995) sets out that the presumption of advancement allows an inference as to intention to be drawn from the fact of certain relationships.

On one view, the presumption of advancement is not strictly a presumption at all. It may be better understood as providing “the absence of any reason for assuming that a trust arose” (Cummins). At an evidentiary level, it is no more than a circumstance which may rebut the presumption of a resulting trust (Pettit v Pettit [1970]) or prevent it from arising (Wirth v Wirth (1956)). It too may be rebutted by evidence of actual intention (Calverley v Green (1984)).

Judgment

The High Court unanimously allowed the appeal from the Full Court, finding that the presumption of resulting trust will not arise where there is evidence from which it may be inferred that the parties’ objective intention is inconsistent with the person providing the purchase money obtaining an interest in a property.

The “presumption” of advancement allows an inference to be drawn from the fact of certain relationships, such as husband and wife, that the presumption of resulting trust will not arise. When evidence of the way in which the spouses deal with their property is given, inferences to the contrary of the presumption may readily be drawn.

The question of intention as to whether a trust arises is entirely one of fact, and the facts of this case do not give rise to such an intention. The proper inference to be drawn from the objective facts was that the parties objectively intended Ms Bosanac to be the sole beneficial owner of the Property, and that Mr Bosanac was merely facilitating Ms Bosanac’s acquisition of the Property.

The Commissioner invited the Court to abolish the presumption of advancement as having no acceptable rationale and being “anomalous, anachronistic, and discriminatory”, but the Court refused, observing the “presumption” an entrenched “land-mark” of the law in Australia.

If you are in a relationship where both you and your partner have assisted each other to acquire property for their own benefit without any intention of having an interest, then that could have implications in your family law proprety settlement. Please contact our team on (03) 9793 7888 or send us an email at admin@justfamilylaw.com.au to organise an appointment with one of our family lawyers.