The High Court of Australia (HCA) sat to hear Bosanac v Commissioner of Taxation & Anor, an appeal from the decision of the Full Federal Court (FFC) in Commissioner of Taxation v Bosanac [2021] FCAFC 158.
In the matter being heard, a husband and wife had purchased a property in Dalkeith, WA, together for use as their matrimonial home. They had used funds from a joint loan account to pay the deposit, and a mortgage was taken out in both names to pay the balance of the purchase price.
However, the property was solely in the wife’s name.
Following an audit by the Australian Taxation Office (ATO), the husband was found to be liable for substantial taxation debts, and the Commissioner of Taxation (Commissioner) obtained judgement against him for that debt.
The Commissioner commenced enforcement proceedings and sought a declaration that half of the equity in the Dalkeith property was owned beneficially by the husband, Mr Bosanac.
In doing so, the Commissioner contended that the “presumption” of advancement no longer applied to matrimonial homes and that if contention could not be accepted on the facts of the case, the appropriate inference to draw from the evidence was that Mr Bosanac intended to retain a 50% beneficial interest in the property. Thus, the presumption of advancement was rebutted.
What is the presumption of advancement?
The presumption of advancement is an equitable doctrine that applies when a husband either provides the purchase price or makes contributions to the purchase price of a property, in which the wife is given a legal interest. The presumption of advancement can also arise when parents provide, or make contributions to, the purchase price of a property placed in the name of a child.
The “presumption” was developed as a result of courts of equity drawing an inference from the type of relationship that the gift was intended as an “advancement”. Australian judges in various decisions have also expressed the view that the presumption of advancement is not a “presumption” at all, but simply a description of facts where the presumption of “resulting trust” (for the purchaser) does not arise.
In this regard, where purchase money is provided by two or more parties jointly, and the property is put into the name of one of the parties, equity will presume a resulting trust in favour of the other party or parties.
FFC decision: presumption rebutted
The FFC accepted the Commissioner’s second contention that the presumption of advancement should be rebutted, on the basis that the objective facts, together with the inferences drawn from those facts, led to the conclusion that Mr Bosanac did not intend that his contribution to the purchase of their matrimonial home be a gift to Ms Bosanac for her “advancement”.
Rather, the FFC considered that it should be inferred that both Mr and Ms Bosanac intended that Mr Bosanac would have a 50% beneficial interest in the Dalkeith property.
In particular, the fact that Mr Bosanac assumed a substantial liability in the acquisition of their matrimonial home was significant and considered to be inconsistent with an intention by him not to retain a beneficial interest in the property.
HCA proceedings
Ms Bosanac was given leave to appeal the FFC decision to the HCA on 12 April 2022 and the matter commenced to be heard by the HCA on 16 August 2022.
The HCA decision will be keenly anticipated, especially given that the Commissioner’s submissions to the HCA, as published, advance a new core argument that the "presumption" of advancement ought to be abolished entirely.
Here are the Commissioner’s key submissions:
- First, the Commissioner says the doctrine ought to be abolished, because it lacks settled or accepted rationale.
- Second, so far as the rationale is the proposition that husband and wife have no separate legal personality, the Commissioner says this is self-evidently anachronistic. Further, there is no longer any freestanding and absolute legal or moral duty imposed on a husband to maintain a wife: Family Law Act 1975 (Cth) s 72(1).
- Third, the Commissioner says the rule is fundamentally discriminatory. The principle applies to transfers from husband to wife, but not wife to husband, husband to husband or wife to wife. The principle applies within marriages, but not between de facto spouses. The principle applies from parent to child, but not child to parent. The principle affords forensic advantage to a husband which is not available to a wife.
Ms Bosanac’s submissions in reply reject these reasons for abolition, noting that:
- First, the underlying rationale for a number of equitable doctrines have evolved over time and remain unsettled, which should not mean that they lack utility or should, as bedrocks of equity, be abolished because they sit uneasily with modern principles or sensibilities.
- Second, while the presumptions of resulting trust and advancement are interrelated, the Commissioner would abolish one and keep the other but has not identified a “proper or accepted rationale” for equity, assuming that a husband has declared a trust over his contributions to property purchased in the name of his wife. The Commissioner has also not explained why abolition is to be preferred over other options — such as making the "presumption" gender neutral or expanding it to de facto couples.
- Third, while the Commissioner says the doctrine provides a forensic advantage to a husband not available to a wife, Ms Bosanac submits, by reference to a number of decided cases, that the forensic advantage is commonly to the opposite effect. These include cases in which the presumption has applied in resolving the competing claims of widows and adult children to an estate and disputes between parents and children.
The parties, in their submissions, also disagree to the extent to which the abolition of the doctrine will affect many people. The Commissioner states it is doubtful that a material number of people will be affected, while Ms Bosanac submits that the Commissioner's argument invites the Court to speculate on the non-parties who would be affected by such a decision, stating that there is substantial wisdom in the Court’s historical approach to deferring to Parliament on reform to the “presumption”.
We keenly await the outcome of the Court’s deliberations, some time after it sits again in October.
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