In Bosanac v Commissioner of Taxation and Another [2022] HCA 34, the High Court confirmed that, although "especially weak" and "anachronistic", the presumption of advancement is still applicable today.

Presumptions

The presumption of a "resulting trust" is an ancient presumption of equity. It provides that a person who advances purchase money for property, which is held in the name of another person, intends to have a beneficial interest in that property.

The resulting trust is subject to an exception, namely the "presumption of advancement", which presumes that, due to the nature of the relationship between the two people, the transferor did not intend the other person to take the property subject to the transferor's beneficial interest but rather that the transfer was intended to be a gift. Such a presumption has been found in relationship between husband and wife, fiancés and parents and children.

Background

The appellant, Bernadette Bosanac was the sole registered proprietor of a residential property in Perth (Property). The Property was purchased by Ms Bosanac using funds from joint loan accounts held by her and her husband, Mr Bosanac.

The security required by the bank for the loans were mortgages over the Property and two other properties owned separately by Mr Bosanac and Ms Bosanac respectively.

Mr and Ms Bosanac lived in the Property together for almost a decade. They separated in around 2012 or 2013, but continued to live together at the Property until Mr Bosanac moved out in September 2015.

Primary proceedings

The Commissioner of Taxation (Commissioner), a creditor of Mr Bosanac, commenced the primary proceedings, seeking a declaration that Ms Bosanac held half of the equity in the Property on resulting trust in favour of Mr Bosanac.

The Commissioner unsuccessfully argued that the presumption of advancement was no longer part of Australian law, effectively on the basis that it "has no acceptable rationale, and is anomalous, anachronistic and discriminatory",1 and ought to be abolished.

The primary judge dismissed the Commissioner's application, finding that the presumption of advancement applied and had not been rebutted by any evidence to suggest that Mr Bosanac intended to have an interest in the Property.

The Commissioner appealed the primary decision to the full court of the Federal Court.

Full court proceedings

The full court allowed the Commissioner's appeal.

In doing so, the court observed that the presumption of advancement can be rebutted by evidence.

In this case, the full court relied on the following factors, among others, to find that the presumption of advancement did not apply and instead that a resulting trust had arisen in respect of half of the Property in favour of Mr Bosanac:

  1. Mr Bosanac assumed a substantial liability ($4.5M) without acquiring any beneficial interest;
  2. The Property was intended to be the matrimonial home for the joint use and benefit of Mr and Ms Bosanac; and
  3. The funds to purchase the Property came from joint borrowings.

Ms Bosanac appealed the decision of the full court to the High Court.

High Court proceedings

In overturining the Full Court's decision, the High Court held that, although "especially weak" and "anachronistic" today, the presumption of advancement is "too well entrenched as a 'landmark' in the law of property to be simply discarded by judicial decision".2

The approach to be adopted by the Court in considering these presumptions is to seek to determine the real and objective intentions of the parties when the relevant property was purchased or transferred, based on the evidence.

The Court held that "the presumption of a resulting trust will yield to an actual intention to the contrary found on the balance of probabilities as an inference drawn from the totality of the evidence".3

In this case, the evidence established an inference on the balance of probabilities as to the actual intentions of Mr and Ms Bosanac when purchasing the Property. That intention was that Mr Bosanac was doing no more than facilitating Ms Bosanac's acquisition of the Property by assisting in paying the deposit and entering into the joint loans for the purpose of funding the purchase.

The Court noted that, whilst evidence of a person's thinking at the time may be accepted, albeit with caution, there was no direct evidence in this case as to the intention of either Mr or Ms Bosanac.

As such, the Court was required to draw an inference as to intention based on the following facts and the history of the parties' dealings.

  1. There was a history of the parties:
    1. holding substantial real and other property in their own names;
    2. using the properties held by each of them in their own names as security for joint loans. Apart from some shared bank accounts, the parties did not have any substantial property which they owned jointly;
  2. Ms Bosanac contracted to purchase the Property alone and the Property was transferred to Ms Bosanac and she remained at all times the sole registered proprietor;
  3. The evidence did not indicate that that Ms Bosanac purchased the Property in her name to assist Mr Bosanac with avoiding creditors;
  4. The disparity in wealth and employment of the parties meant that it was unlikely that Ms Bosanac could have obtained or serviced the loan on her own; and
  5. The parties had previously shared a matrimonial home, which was registered in Mr Bosanac's name alone.

Takeaways

The presumption of a resulting trust and advancement are still applicable today. However, the strength of the presumptions will vary from case to case, depending on the available evidence.

The appropriate starting point in these types of matters is to consider the parties' words or conduct at the time of the transaction or immediately afterwards and what those facts establish as to the objective intention of the parties in acquiring the property.

The presumption of resulting trust and the counter-presumption of advancement will only arise in cases where the totality of the evidence is incapable, or insufficient to support, on the balance of probabilities, the objective intention of the parties.

Footnotes

1 Bosanac v Commissioner of Taxation and Another [2022] HCA 34 at [29].

2 Bosanac v Commissioner of Taxation and Another [2022] HCA 34 at [95] citing Calverley [1984] HCA 81 (1984) 155 CLR 242 at 266 (citation omitted), quoting Dyer v Dyer [1788] EWHC J8; (1788) 2 Cox Eq Cas 92 at 94 [30 ER 42 at 43].

3 Bosanac v Commissioner of Taxation and Another [2022] HCA 34 at [64].