By Hayden Nelson
In the recent case of Bosanac v FCT (2022) 18 ABC(NS) 521, the High Court made a decision that touched on the legal principles involved with resulting trusts and the presumption of advancement. The case revolved around the property ownership dispute between Ms Bosanac and Mr Bosanac, a married couple who purchased a property with joint funds, and whether a resulting trust should be inferred in favour of Mr Bosanac.
Firstly, what are resulting trusts and the presumption of advancement?
A trust is a mechanism we have that recognises that someone (the trustee) may hold the legal title of a property, but they are holding this title on behalf of another person (the beneficiary). The beneficiary is said to have equitable title of the property, which simply recognises their right to the property despite their lack of formal legal title.
There are two types of resulting trust: automatic and presumed. Automatic trusts arise regardless of the intention of the parties where an individual has simply failed to dispose of a beneficial interest – therefore they are inferred out of legal necessity. Whereas, presumed resulting trusts occur based on the presumption that one party intended to give the property to the other party.
The presumption of a resulting trust can be rebutted. This is the reason that we only call it a ‘presumption’. The presumption of advancement is a circumstance that rebuts the presumption of a resulting trust. This ‘presumption of advancement’ is based on particularly close familial relationships, where because of the nature of these relationships, it can be said that the parties intended to gift the property to the other party. So, there is no need to consider questions about trusts. This terminology of ‘presumption’ has been questioned by the court, and they have clarified that the presumption of advancement is not a presumption but simply a factual circumstance in which a presumed resulting trust does not arise.[1]
These are the types of relationships that courts have held to fall under the presumption of advancement:
- Husband to Wife[2]
- Man to Fiancée[3]
- Man to his child[4]
- Mother to her child[5]
- However, there is no presumption of advancement between:
As a side point, you may notice that these rulings may be reflective of the times in which they were made. Perhaps if the decisions were made anew today, the courts would better acknowledge that the presumption of advancement may exist in the now more common de facto relationships and from a wife to her husband. As the court says in the current case, ‘it has long been recognised that the limited classes of relationships of close trust from which the “presumption” arises “may not accord with contemporaneous practices and modes of thought.”’[8] However, the court, in this case, did not consider whether this presumption of advancement should be extended to more types of relationships.
Factual Background
Ms Bosanac and Mr Bosanac, a married couple, purchased a property in Perth for $4.5 million in 2006. Ms Bosanac contracted to buy the property subject to obtaining a loan of $3 million, with the deposit paid from a joint loan account. New loans totalling $4.5 million were applied for by both parties, securing the loans against the property and other assets. Importantly, the property was registered in Ms Bosanac’s name, and both parties moved into it as their matrimonial home. The couple separated in 2012 or 2013 but continued living together on the property until mid-2015. The Federal Commissioner of Taxation, as a creditor of Mr Bosanac, brought proceedings to assert that there was a resulting trust in favour of Mr Bosanac over half the property, which was rejected by the primary judge. On the contrary, the Full Court found that there were facts against the presumption of advancement and for the trust being intended by the couple. These included that Mr Bosanac took on a substantial liability without acquiring a beneficial interest in the home, that the property was intended as their joint matrimonial home, and that the purchase funds came from both parties. The Full Court declared that Ms Bosanac held 50% of the property on trust for Mr Bosanac. The case was subsequently appealed to the High Court.
Legal Analysis
The central issue before the High Court was whether Ms Bosanac held the property on trust for Mr Bosanac, as implied by a resulting trust, or whether Ms Bosanac was the sole legal and beneficial owner based on the parties’ intentions. The court held that the property had been given to Ms Bosanac via the presumption of advancement from a husband to wife and there were no facts supporting the presumption of a resulting trust in favour of Mr Bosanac.
(1) Intention as a Question of Fact
The court emphasised that the determination of whether a property is held on trust is a factual question reliant on the intention of the parties involved. The intention is manifested through the contributions made towards the property purchase. The contributions towards the purchase, the source of funds, and the parties’ roles in the acquisition were considered essential aspects of evaluating intention.
(2) Absence of Inferred Resulting Trust
The court’s decision rested on the objective facts and circumstances surrounding the property acquisition. It was concluded that the objective facts did not support an inference that Mr Bosanac was entitled to a resulting trust.
The Court believed that Mr and Ms Bosanac intended Ms Bosanac to be the legal and beneficial owner of the property, on the balance of probabilities, due to the facts that Mr Bosanac as a sophisticated businessman was aware of the implications of not having his name on the legal title of the property, that Mr and Ms Bosanac had kept their assets separate in other ways, that there was a pattern of using separately owned properties as security for joint loans, and the circumstances around the particular property purchase where Ms Bosanac had acted as the sole contracting party.[9]
Conclusion
The High Court’s decision in Bosanac v Federal Commissioner of Taxation reaffirms the principle that property ownership disputes, especially involving married couples, are determined by the intention of the parties as manifested through the facts of the case. In this case, the court found no basis to infer a resulting trust in favour of Mr Bosanac, as the evidence indicated an intention for Ms Bosanac’s sole beneficial ownership of the property. This decision provides valuable guidance for future property disputes involving questions of intention and resulting trusts and stresses the importance of considering the unique facts of each case.
This article is not meant to act as legal advice and serves the purpose of providing academically generalised information regarding the general principles of resulting trusts. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Foulsham & Geddes are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.
[1] Bosanac v FCT (2022) 18 ABC(NS) 521, 548 [115] (Gordon and Edelman JJ) (‘Bosanac’).
[2] Calverley v Green (1984) 155 CLR 242, 247 (‘Calverley’), cited in Joe Campbell, ‘The Consequences of Rebutting a Presumption of Advancement’ (Research Paper No 19/02, University of Sydney Law School, January 2019), 3.
[3] Wirth v Wirth (1956) 98 CLR 228, cited in Campbell, ‘The Consequences of Rebutting a Presumption of Advancement’ (n 2), 3.
[4] Ebrand v Dancer (1680) 2 Cas in Ch 26; 22 ER 920; Finch v Finch (1808) 15 Ves 43; 33 ER 671; Crabb v Crabb (1834) 1 My & K 511; 39 ER 774; Sidmouth v Sidmouth (1840) 2 Beav 447; 48 ER 1254; Christy v Courtenay (1850) 13 Beav 96; 51 ER 38; Currant v Jago (1844) 1 Coll 261, 267; 63 ER 410, 413; Oliveri v Oliveri (1993) 38 NSWLR 665, 679), cited in Campbell, ‘The Consequences of Rebutting a Presumption of Advancement’ (n 2), 3.
[5] Brown v Brown (1993) 31 NSWLR 582, 591, 598-600; Nelson v Nelson (1995) 184 CLR 538, cited in Campbell, ‘The Consequences of Rebutting a Presumption of Advancement’ (n 2), 3.
[6] Calverley at 268 (Deane J), approved in Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278, 297-8 [55], cited in Campbell, ‘The Consequences of Rebutting a Presumption of Advancement’ (n 2), 3.
[7] Napier v Public Trustee (WA) (1980) 32 ALR 153, 158; Calverley at 259-260 (Mason and Brennan JJ), 268-269 (Deane J; Gibbs CJ disagreeing at 250-251, and Murphy J at 264-265 advocating the retirement of presumed resulting trusts and presumption of advancement), cited in Campbell, ‘The Consequences of Rebutting a Presumption of Advancement’ (n 2), 3.
[8] Bosanac at 549 [116] (Gordon and Edelman JJ).
[9] Bosanac at 539-540 [72]-[77] (Gordon and Edelman JJ).
