Bosanac v Commissioner of Taxation

Case [2022] HCA 34

HIGH COURT OF AUSTRALIA

KIEFEL CJ,
GAGELER, GORDON, EDELMAN AND GLEESON JJ

BERNADETTE BOSANAC  APPELLANT

AND

COMMISSIONER OF TAXATION & ANOR  RESPONDENTS

Bosanac v Commissioner of Taxation

[2022] HCA 34

Date of Hearing: 16 August 2022
Date of Judgment: 12 October 2022

P9/2022

ORDER

1. Leave to amend the Notice of Contention refused.

2. Appeal allowed.

3. Set aside the orders of the Full Court of the Federal Court of Australia made on 31 August 2021 and 31 January 2022 and, in their place, order that:

(a) the appeal be dismissed; and

(b)the appellant pay the second respondent's costs.

On appeal from the Federal Court of Australia

Representation

N C Hutley SC with J E Hynes and T L Bagley for the appellant (instructed by Pier Paolo Parisi)

J O Hmelnitsky SC with D P Hume and J S Slack-Smith for the first respondent (instructed by Australian Government Solicitor)

R A Blow for the second respondent (instructed by Cove Legal) – submitting appearance

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Bosanac v Commissioner of Taxation

Trusts – Resulting trust – Presumption of resulting trust – Presumption of advancement – Where wife purchased property – Where purchase price paid from joint loans taken in names of wife and husband – Where security for joint loans from separately owned properties – Where title registered in name of wife only – Where husband never claimed interest in property – Where property matrimonial home – Where history of separate ownership of assets – Where presumption of advancement precludes presumption of resulting trust from arising – Whether presumption of resulting trust over one half of property in favour of husband – Whether objective intention of wife and husband for husband to have beneficial interest in property – Whether presumption of advancement remains part of general law of Australia.

Words and phrases – "beneficial interest in property", "benefit of another", "circumstance of fact", "circumstance of evidence", "inference", "intention", "objective intention to create a trust", "presumption of advancement", "presumption of fact", "presumption of law", "presumption of resulting trust", "proof of intention", "purchase money resulting trust", "relationship of husband and wife", "spouses", "strength of the presumptions".

  1. KIEFEL CJ AND GLEESON J.   This appeal concerns the purchase by Ms Bosanac of a residential property in Perth ("the Dalkeith property") in 2006. She and Mr Bosanac married in 1998. They separated in 2012 or 2013 but continued to reside together at the Dalkeith property until September 2015, when Mr Bosanac moved to a new residential address.

  2. Ms Bosanac appears to have instigated the purchase of the Dalkeith property. In April 2006 she offered to purchase it for $4,500,000 subject to her obtaining approval for a loan of $3,000,000 from a bank. The offer was accepted in May 2006. The contract for sale required Ms Bosanac to pay a deposit of $250,000 within 30 days. The deposit was provided from an existing joint loan…

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AGLC
Bosanac v Commissioner of Taxation [2022] HCA 34
Case
[2022] HCA 34
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered an appeal by Ms Bosanac concerning the beneficial ownership of a property. The dispute arose from the purchase of the Dalkeith property, which was registered solely in Ms Bosanac's name. The purchase price was funded by joint loans taken out in the names of both Ms Bosanac and her husband, Mr Bosanac, with security provided by several properties, including at least one owned by Ms Bosanac. Mr Bosanac contended that he held a beneficial interest in one half of the property, a claim that had been dismissed by the primary judge but upheld by the Full Court of the Federal Court of Australia.

The central legal issue before the High Court was whether a presumption of a resulting trust arose in favour of Mr Bosanac regarding a half-share of the Dalkeith property. This required the Court to determine the objective intention of Ms and Mr Bosanac at the time of the property's acquisition, considering their conduct and the surrounding circumstances, and to assess whether the presumption of advancement, which traditionally applies in husband and wife scenarios, remained part of Australian law and if it was displaced by the facts.

The High Court reasoned that the objective facts surrounding the acquisition of the Dalkeith property demonstrated that the parties' intention was inconsistent with the creation of a trust in favour of Mr Bosanac. While joint loans were obtained and the property became their matrimonial home, the Court found that Ms Bosanac contracted for the purchase in her own name, the property was registered in her name, and there was a history of separate asset ownership between the couple. The Court concluded that Mr Bosanac's involvement in the loans was primarily to facilitate Ms Bosanac's acquisition of the property, given the disparity in their financial positions and the need for joint liability to secure the finance. Consequently, the presumption of a resulting trust did not arise, and no equitable interest was created in Mr Bosanac's favour.

The High Court allowed the appeal, setting aside the orders of the Full Court of the Federal Court of Australia. The Court ordered that the appeal to the Full Court be dismissed and that Ms Bosanac pay the second respondent's costs.

Orders

Orders of the court

1. Leave to amend the Notice of Contention refused.

2. Appeal allowed.

3. Set aside the orders of the Full Court of the Federal Court of Australia made on 31 August 2021 and 31 January 2022 and, in their place, order that:

(a) the appeal be dismissed; and

(b) the appellant pay the second respondent's costs.

Background

Background to the litigation

Ms Bosanac was granted special leave to appeal. For the reasons that follow, the appeal should be allowed. These reasons will address the facts and the principles relating to the presumption of resulting trust and the so-called "presumption" of advancement. The reasons will then turn to explain that Ms and Mr Bosanac's conduct at the time of the acquisition of the Dalkeith property – the objective facts – establishes that their objective intention was inconsistent with a declaration of trust in favour of Mr Bosanac as to 50 per cent of Ms Bosanac's interest in the Dalkeith property. The presumption of resulting trust does not arise. No resulting trust was created. Facts The core facts were established by affidavit evidence filed by the Commissioner. Ms and Mr Bosanac were married in 1998. In May 2006, Ms Bosanac contracted to buy the Dalkeith property for $4.5 million, subject to her obtaining approval for a loan of $3 million from Westpac Banking Corporation. The deposit of $250,000 was paid from a pre‑existing joint loan account Ms Bosanac held with Mr Bosanac. Subsequently, Ms and Mr Bosanac jointly applied for two new loans from Westpac totalling $4.5 million for the predominant purpose of purchasing the Dalkeith property. Ms and Mr Bosanac were each liable for the full amount of the loans; each was liable to repay $1 million plus interest in four months and to repay a further $3.5 million plus interest in one year. If neither Ms Bosanac nor Mr Bosanac made those repayments, Westpac could serve a notice on both of them which, if not complied with, would have entitled it to take possession of and sell not only the Dalkeith property, which was encumbered by a first registered mortgage in favour of Westpac, but also three other properties which were provided as security for the loans, at least one of which was held by Ms Bosanac in her own name. Ms and Mr Bosanac moved into the Dalkeith property as their matrimonial home in late 2006. Ms Bosanac was the sole registered proprietor of the Dalkeith property. There was no suggestion in this Court, or in the Courts below, that the Dalkeith property was registered in Ms Bosanac's name for the purpose of Mr Bosanac avoiding creditors. And there was no suggestion that Westpac required both Ms and Mr Bosanac to sign the loans to obtain the finance or, given that they did in fact both sign the loans, that Westpac sought to require the Dalkeith property to be registered in joint names[97].[97]cf Calverley v Green (1984) 155 CLR 242 at 251. The evidence disclosed that when Ms Bosanac purchased the Dalkeith property, there was a disparity in wealth and employment between Ms and Mr Bosanac. There was also considerable evidence of separate ownership of assets. Mr Bosanac, a "self-styled venture capitalist", was a wealthy and "sophisticated businessman". In the loan applications, he disclosed that he held substantial assets in his own name, including shares with a cash value in excess of $24 million and cash reserves. He disclosed no property assets. His gross annual income was listed as $388,401, and he disclosed liabilities of $120,000 in other instalment loans and a $15,130 line of credit. He did not disclose any liabilities related to real property. The Commissioner led evidence at trial as to Mr Bosanac's ownership of at least two properties, one of which was used as security for the loans. However, McKerracher J made no findings as to that evidence, instead holding that the evidence did not disclose the precise ownership of those properties.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

KIEFEL CJ GLEESON J GAGELER J GORDON AND EDELMAN JJ
As has been observed, the Full Court reached the opposite conclusion. In short, it asked itself the wrong question. It did not start with the facts and ask – what were the parties' words or conduct at the time of the transaction or so immediately thereafter as to constitute part of the transaction[169]? It did not ask what those facts established as to the objective intention, if any, of the parties in relation to the acquisition of the Dalkeith property. Instead, the Full Court relied in particular on three facts it considered were conclusive of Mr Bosanac's intention that the Dalkeith property not be a "gift" to Ms Bosanac: that Ms and Mr Bosanac manifested an intention that the Dalkeith property be their matrimonial home; that the manifest purpose of the joint loans was to purchase the Dalkeith property; and that security for the loans was over four properties, including the Dalkeith property. With respect, those matters were not the entirety of the facts and, whether considered as part of the entirety of the facts or even alone, they were inconsistent with an objective intention to declare a trust in favour of Mr Bosanac as to 50 per cent of Ms Bosanac's interest in the Dalkeith property. Moreover, contrary to the view expressed by the Full Court, there is no qualitative difference between transferring a house and borrowing part of the purchase price. The nature of the borrowing does not permit an inference either way.[169]Calverley (1984) 155 CLR 242 at 262. See also Charles Marshall (1956) 95 CLR 353 at 365, quoting Shephard [1955] AC 431 at 445, in turn quoting Snell's Equity, 24th ed (1954) at 153. Conclusion and orders For those reasons, the appeal should be allowed. We agree with the orders proposed by Kiefel CJ and Gleeson J.

Ratio Decidendi

Legal Principle Established

Established by: KIEFEL CJ, GLEESON J, GAGELER J, GORDON AND EDELMAN JJ

Finally, and of primary significance, the two cases cited by Professor Scott in support of his second statement quoted in Cummins concerned a statutory discretion under s 17 of the Married Women's Property Act 1882 (45 & 46 Vict c 75), which provided that in any question between husband and wife as to the title or possession of property, the court was to decide the matter as it thought fit[165]. In short, under that Act, "the question of contract, gift, or trust" was put to one side[166]. The second quoted statement from Professor Scott does not concern equity more generally or any equitable presumption. [165]Rimmer v Rimmer [1953] 1 QB 63 at 70-71, 73, 76; Fribance v Fribance [No 2] [1957] 1 WLR 384 at 387; [1957] 1 All ER 357 at 359. See also Cobb v Cobb [1955] 1 WLR 731; [1955] 2 All ER 696; Silver v Silver [1958] 1 WLR 259 at 262-263; [1958] 1 All ER 523 at 525-526.[166]Fribance [1957] 1 WLR 384 at 387; [1957] 1 All ER 357 at 359.Objective intention inconsistent with declaration of trust The objective facts arising from the Commissioner's affidavit evidence – the parties' conduct at the time of the purchase of the Dalkeith property – do not permit an inference consistent with a declaration of trust. To the contrary, the inference to be drawn from the objective facts is that the parties' objective intention was inconsistent with a declaration of trust in favour of Mr Bosanac as to 50 per cent of Ms Bosanac's interest in the Dalkeith property. Accordingly, the presumption of resulting trust does not arise[167]. No equitable interest in favour of Mr Bosanac was created.[167]Pettitt [1970] AC 777 at 815, 823; Calverley (1984) 155 CLR 242 at 267; Muschinski (1985) 160 CLR 583 at 612; Goodman [1986] Fam 106 at 110-111. Ms and Mr Bosanac made the financial arrangements they did for the acquisition of the Dalkeith property recognising, intending and understanding that the Dalkeith property was Ms Bosanac's – not only was it acquired in her name and registered in her name, but it was her property. Recognition, intention and understanding are different words for expressing the inference that is to be drawn from all of the parties' conduct at the time the Dalkeith property was acquired – the objective facts – including the way in which they had arranged their overall financial affairs in the past. In particular, Ms and Mr Bosanac held their substantial assets separately. Ms Bosanac contracted to purchase the Dalkeith property alone and the purchase contract required Ms Bosanac to acquire finance. Although there was no evidence that Westpac required the loans to be put in both names[168], the disparity in wealth and employment makes it unlikely that Ms Bosanac could have obtained or serviced the loans on her own. In that circumstance, and against the history of Ms and Mr Bosanac holding their substantial assets separately, the clear inference is that the parties' objective intention was that Mr Bosanac was doing no more than facilitating Ms Bosanac's acquisition of the Dalkeith property by assisting in paying the deposit and entering into the joint loans for the purpose of funding the purchase. [168]cf Calverley (1984) 155 CLR 242 at 251.