Written by The High Court decision in Bosanac v Commissioner of Taxation [2022] HCA 34 provides useful clarification regarding whether a spouse who is not registered on title to property holds an equitable interest in that property.
Ms Bosanac purchased the property jointly with Mr Bosanac with loans secured against properties they each separately owned. The property was registered in Ms Bosanac’s name alone and used as the matrimonial home. The Commissioner of Taxation was seeking to recover a tax debt from Mr Bosanac. The Commissioner relied on the presumption of resulting trust and sought a declaration that Ms Bosanac held half of her interest in the property on trust for Mr Bosanac.
The “presumption of resulting trust” is that a person who advances purchase monies for property, which is held in the name of another person, intends to have a beneficial interest in the property. However, that presumption is subject to an exception known as the “presumption of advancement”, which applies only in the case of purchases by a husband in the name of his wife, or a parent in the name of their child, and presumes that the purchaser intended that the beneficial and legal interest would pass to either the wife or child.
As the “presumption of advancement” does not apply from wife to husband, child to parent or husband to husband or any other de facto category, the Commissioner argued it was “anachronistic” and no longer part of Australian law.
The issue was the intention of Ms and Mr Bosanac when the property was registered in Ms Bosanac’s name alone. This intention was a question of fact. Ultimately, the Court held that the parties objectively intended Ms Bosanac to be the sole beneficial owner of the property and that Mr Bosanac was merely facilitating its acquisition. The fact that they kept their substantial assets in separate names and the use of separately owned properties as securities for join loans supported the inference that Ms Bosanac did not intend to give Mr Bosanac equitable interest in the property. As such, the Commissioner was unable to rebut the “presumption of advancement” and could not recover against Mr Bosanac with respect to that property.
While the High Court acknowledged that the “presumption of advancement” was outdated due to assuming economic dependence by wives on their husbands, it did not mean the presumption should be abolished altogether. The High Court suggested that any reform of this kind would be up to the legislature.