Bosanac v Commissioner of Taxation & Anor

[2022] HCATrans 63

[2022] HCATrans 063

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth   No P42 of 2021

B e t w e e n -

BERNADETTE BOSANAC

Applicant

and

COMMISSIONER OF TAXATION

First Respondent

VLADO BOSANAC

Second Respondent

Application for special leave to appeal

KEANE J
GLEESON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA AND BY VIDEO CONNECTION

ON TUESDAY, 12 APRIL 2022, AT 11.30 AM

Copyright in the High Court of Australia

KEANE J:   In accordance with the Court’s protocol when sitting remotely, I will announce the appearances for the parties. 

MR N.C. HUTLEY, SC appears with MR T.L. BAGLEY for the applicant.  (instructed by Pier Paolo Parisi). 

MR A.J. MUSIKANTH, SC appears with MR J.S. SLACK-SMITH for the first respondent.  (instructed by Australian Government Solicitor)

MR R.A. BLOW appears for the second respondent. (instructed by Cove Legal). 

KEANE J:   Yes, Mr Hutley.

MR HUTLEY:   Thank you, your Honour.  At application book page 28, paragraph 80, the trial judge set out the cases where, in this Court, the Court has admonished against, to use the phrase of Justice McTiernan, “frittering away” the presumption advancement by “nice refinements”.  Whilst the Court – the Full Court – at application book 97 in paragraphs 21 and 22 concluded that the presumption of advancement still existed with respect to matrimonial homes, they then determined that the central reason for finding a contrary intention was the fact that there had been a borrowing to fund this home.  The centrality of that fact is made clear besides those two paragraphs – at 99, paragraph 27, where the Full Court says:

It seems to us that, ultimately, the most significant fact in favour of the operation of the presumption of advancement in this case was simply that, at the time of purchase . . . was put into Ms Bosanac’s name, notwithstanding that Mr Bosanac contributed half the purchase price.

So, the borrowing was central to the contrary conclusion.  That can also be seen from the observations of the Full Court at paragraph 16 at page 95. 

Now, if the fact of borrowing is to be seen as central to whether one talks of rebutting the presumption or perhaps that the presumption of resulting trust will apply, then one has, in our respectful submission, engaged in that which the High Court has said is not to be taken, and created in effect two circumstances to which different principles apply – that where the acquisition is funded by cash, and that where acquisition is funded by borrowing obviously from, in this circumstance, the husband.

We say that is contrary to principle in this Court and we have referred in our reply submissions to Stewart Dawson at application book 124, at paragraph 10 of our reply submissions.  The quote from that case:

“[w]here a husband or father (as the case may be) purchases property in the name of his wife . . . and is proved to have paid the purchase‑money . . . the wife . . . takes by way of advancement – that is to say, takes beneficially” -

It is also, we say, inconsistent with the approach of the High Court demonstrated by Martin v Martin 110 CLR 297 where, at 300, point 7 of the page, it was clear that the purchase price there was mostly funded out of an overdraft – a borrowing.

We submit if the Full Court’s approach is to be correct, it will lead to wholly perverse results, namely where wealthy people, for, in effect, capital reasons, choose to fund a purchase of a home where they could easily expend their cash there will be no presumption – but, if they choose to expend their cash, there will be a presumption. 

That, we submit, is contrary to a principled approach to this exercise.  What one needs is evidence tending one to rebut the presumption of advancement which is found otherwise than in the fundamental fact which gives rise to it, namely the provision of capital and the transfer of property. 

In our respectful submission, the Full Court’s decision for that reason – is an appropriate case for this Court to consider whether, as we put it in our reply submissions, the mere fact that funds are borrowed by the husband is a fact which will lead to the rebutting of the presumption of advancement which, in our submission, is what follows from the Full Court’s position.

Of course, if it is correct, one asks is it the same with respect to a parent buying a property for a child.  Should the parent choose to fund it by cash it would appear that the presumption would apply.  But if it is funded by debt, a different position would ensure.  We say that is the simple, straightforward question raised by this application and it is an appropriate case for a grant of special leave.

GLEESON J:   Mr Hutley, do you maintain all of the proposed grounds of appeal in the application for special leave?

MR HUTLEY:   No, your Honour.  Mr Bagley, with whom I appear – as your Honours will see from the reply at page 122, when he was briefed - focused the special leave questions at 1.  That is adequate to our approach.

GLEESON J:   Thank you.  Another question, are the Family Court proceedings between the Bosanacs resolved? 

MR HUTLEY:   I am not able to tell you, your Honour, I am sorry.

KEANE J:   Mr Blow, are you able to assist in that respect?

MR BLOW:   Your Honours, I do not act on those proceedings, but as far as I am aware, those proceedings have not progressed for probably several years now.  They were certainly alive and certainly begun many years ago - which is perhaps around the time that the issue of this property, which underlies this appeal and underlaid the application originally before Justice McKerracher, was commenced.  But I am not aware of those family proceedings particularly advancing and certainly not aware of them concluding.  But I do not actually act on them, so I am going by the reality that I probably would have heard if they had been.

KEANE J:   Thanks, Mr Blow. 

MR BLOW:   Thank you.

KEANE J:   Yes, Mr Musikanth.

MR MUSIKANTH:   May it please the Court.  Your Honour, two reasons have effectively been advanced during my learned friend’s address as to why special leave should be granted.  I am confining myself to the point as formulated in the reply.

The first reason appears to be that the approach of the Full Court was in error because it involved, in substance, a frittering away of the presumption of advancement.  The reason that has been proffered for that is because the court was focused, as the central reason, on the fact that loan funding was provided.  The second point which appears to have arisen is that, according to the applicant, evidence has to be adduced other than the fundamental fact that gives rise to the presumption. 

In my submission, both of those points ought not to find favour with this Court.  As to the first point, that the approach of the Full Court was erroneous because it involved the frittering away of the presumption, my learned friend suggests that the central reason that the court gave for finding that the presumption had been rebutted was the fact that loan funds were used.  In our submission, that is not correct. 

When one reads the judgment of the Full Court closely, it is apparent that the court in accordance with orthodox principles considered all the circumstances - all the surrounding circumstances and the acts of the parties in order to work out whether or not the intention of Mr Bosanac was to give a gift.  Those circumstances may be found by looking first at paragraph 27 of the judgment where the Full Court said as follows:

For the reasons we have stated, we have concluded that in this case the evidence and the facts as found by the primary judge based on that evidence rebutted the presumption –

that is, the presumption of advancement:

We infer from these facts –

I interpolate, the facts as found by the primary judge based on the evidence:

that at the time of the purchase Mr Bosanac and Ms Bosanac intended that Bosanac would have a 50% beneficial interest in the property –

In other words, the Full Court properly had regard to all the circumstances.  When one then winds back into the judgment, starting at paragraph 18, one sees that the Full Court records that the primary judge had found certain facts based on unchallenged evidence and these are the facts that were described as the core facts.  Then the court goes on at paragraphs 19 to 21 to identify, amongst other things, the following - at 19 that:

the purpose of the purchase of the Dalkeith Property was to acquire their matrimonial home.

Also, at 19, that Mr and Mrs Bosanac:

both moved into the Dalkeith Property not long after the purchase in late 2006 and that they remained there together until sometime in 2015.

The Full Court inferred from those facts, one would hope uncontroversially, that the parties intended the property to be for their joint use and benefit.  The Court then went on at paragraph 20 to identify further uncontroversial findings below to the effect that joint loans in the names of both Mr and Ms Bosanac were used to fund the purchase price of the property.

I emphasise the words “joint loans” – that does not appear to have been the case in Martin. Joint loans took the form of the deposit of 250,000 and the whole of the purchase price of $4.5 million – and that each of the Bosanacs contributed half of that purchase price. The court then went on to identify further relevant circumstance at 21, that the securities for those loans were mortgages, including over the property.

Each of these facts as found by the Full Court formed part of relevant surrounding circumstances which the authorities, including Cummins say can be used in order to work out whether the presumption has been rebutted.  It all formed part of the evidence as a whole, consistent with the authorities.

So, in effect, we would say the new proposed special leave ground, which is reflected at paragraph 1 of the reply, rests on a false premise, the premise being that the court in effect found that when funds are being borrowed, the presumption must be rebutted.  That is incorrect.

As to the second point, which was raised orally, that there must be evidence other than the fundamental fact which gives rise to the presumption, the assumption – or the premise of that appears to be that a contribution is a fundamental fact which gives rise to the presumption.  Whilst that might be the case when one considers the presumption of resulting trust, it is certainly not the case when one is dealing with the presumption of advancement.

There is only one fundamental fact which gives rise to a presumption of advancement, and that is that the parties stand in a particular relationship to one another.  So, there is no stripping down of the central fact which gives to the presumption here because there is only one - it is the relationship. 

In any event, even if a contribution were to be considered a central fact giving rise to the presumption of advancement, which it is not, there is nothing in principle which ought, in our submission, to preclude a court from having regard to the quality or nature of the contribution as part of the overall circumstances from which inferences may properly be drawn.

In essence, your Honours, those are the submissions which the first respondent seeks to make.  I should perhaps just say this, that each of the three cases which the applicant seeks to rely upon, at paragraph 11 of its reply, that is Stewart Dawson, Martin and Calverley v Green – the applicant seeks to rely upon those cases apparently because the cases did not suggest that the provision of loan funds was an important or relevant factor.  We would say that when one looks closely at each of those cases, none of them assists the applicant in making out that submission.

In Stewart Dawson, it did not involve a matrimonial home.  It involved shares being transferred into the names of two daughters and a granddaughter of the purported donor and we were unable to find any reference in the case to that disposition having been funded using a loan account, which appears to be one of the central reasons which the applicant relies upon for relying upon Stewart Dawson. 

In Martin, as I mentioned a few moments ago, the loan funds there did not appear to have come from joint funds.  According to page 300 of the judgment, it appears to have come out of the husband’s overdraft.  That is what is said there.  In Calverley v Green, in that case the plurality concluded that the presumption of advancement did not apply.  So, the relevance or otherwise of loan funds having been used in that case we would say is neither here nor there.

So, in all the circumstances it is the first respondent’s submission that in this case the judgment of the Full Court is not attended by sufficient doubt to warrant the grant of special leave and, in any event, this is not a suitable vehicle for the grant of special leave in that circumstance and in circumstances where ultimately the Full Court made its decision based entirely on the facts peculiar to this matter.  Unless there is anything further which your Honours wish to hear us on, those are our submissions.

GLEESON J:   Mr Musikanth, as a matter of principle, why is it that the facts that were identified by the Full Court in this case rebut the presumption of advancement?

MR MUSIKANTH:   Well, the facts being the fact that this was intended as the matrimonial home, that the parties jointly contributed to the purchase price, those ‑ ‑ ‑

GLEESON J:   Let me just perhaps – are you saying that the fact that it was a matrimonial home tends against the presumption of advancement?

MR MUSIKANTH:   Yes, it does, and that is consistent with the principle which was laid down by the Court in Cummins, your Honour.

GLEESON J:   What about the borrowing arrangements?

MR MUSIKANTH:   They were only arrangements in circumstances where the funds were being borrowed for an asset which was intended by the parties for their joint benefit.  That too contributes to a rebuttal of a presumption.

GLEESON J:   But why? 

MR MUSIKANTH:   Because the parties were intending to use it for their joint benefit.  Of course, there is no suggestion this was an investment property, for instance, or anything of that sort.  It was going to be a jointly used asset. 

KEANE J:   Thanks, Mr Musikanth.  Mr Blow, I take it you have no submissions to make in relation to the fate of the application?

MR BLOW:   The second respondent has effectively given a submitting appearance at every stage of the story that has led us to this point - so, both before Justice McKerracher in the first instance and then before in the Full Bench and then, obviously, in these proceedings.  In those circumstances I have seen my role as representing the second respondent to be one of merely answering questions or probably, given that I am probably the only practitioner that has been on this since the entire eight or nine years that the various matters have been proceeding, then there was always the chance that there would be some relevant background that the Court may wish to hear from me on.  But that is correct, your Honours.  We have not filed submissions, and given that it is a submitting appearance, then I see myself in the role of answering questions rather than making any particular submissions.

KEANE J:   Thanks, Mr Blow.  Mr Hutley, anything in reply?

MR HUTLEY:   Yes, just shortly, your Honour.  At paragraph 10, at application book 93, the position of Cummins is set aside as it was found by the Full Court that Cummins was directed to a separate – a different question – and was not authority for any proposition that the taking of a matrimonial home – a purchase for a matrimonial home affected the position of the presumption. 

So, secondly the centrality of the borrowing for the reasoning is apparent also, if one goes to application book 95 where the Full Court in paragraphs 15 and 16 say that the failure of the trial judge to see that very centrality was the central error in his reasoning.  Thus, it is not – whilst, in our respectful submission it is clear that the fundamental point which determined the outcome was a point which, in our respectful submission, is and must be wholly neutral, namely, that it is funded by the husband, as that is the point of departure for the question and, in our respectful submission, that is why it is a perfect vehicle for the determination of the question we have advanced.  That is all we wish to say by way of reply.

KEANE J:   Thanks, Mr Hutley.  The Court will adjourn briefly to consider the course it will take in this matter.

AT 11.51 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.54 AM:

KEANE J:   There will be as grant of special leave in this matter.  Mr Hutley, how long will the hearing occupy?

MR HUTLEY:   Half a day, your Honour, should see it comfortably out with full written submissions.

KEANE J:   Mr Musikanth, how long do you think the matter will ‑ ‑ ‑

MR MUSIKANTH:   No more than a day, your Honour.

KEANE J:   No more than a day?

MR MUSIKANTH:   No more than a day.

KEANE J:   Very well.  The parties should follow the directions of the Registrar in relation to the steps necessary to prepare the matter for hearing.  Adjourn the Court, please.

AT 11.55 AM THE MATTER WAS CONCLUDED