15.11.2022 By Amanda Millyard and Jessica Ragh
In Bosanac v Commissioner of Taxation  HCA 34, the Wife purchased a $4.5 million dollar property in Perth in her sole name during the period of her marriage with her husband. The deposit for the property had been funded using monies in an existing joint loan account and the mortgage secured over the property was in both parties’ joint names. The parties later separated. The Husband owed a significant tax debt to the Australian Tax Office.
The Commissioner of Taxation (“the Commissioner”) commenced proceedings in the Federal Court seeking in effect a declaration of a resulting trust that the Husband held a 50% interest in the property owned by the Wife. The Commissioner was unsuccessful at first instance. On appeal to the Full Court, the Commissioner was successful, the Full Court holding that the Wife held a 50% interest in the property on trust for the Husband. The Wife was permitted leave to appeal to the High Court.
The High Court reversed the decision of the Full Court finding that the facts of this case did not support that the parties intended that a 50% interest in the property was to be held by the Husband. The Wife therefore protected the whole of the matrimonial home from debt recovery action by the ATO.
The presumption of advancement was upheld in this case (preventing a resulting trust). The High Court determined that the proper inference to be drawn from the objective facts was that the parties objectively intended for the Wife to be the sole beneficial owner of the property and that the Husband was merely facilitating the Wife’s acquisition of the property.
Those facts included that the Husband had never claimed an interest in the property, there was history of the parties holding their real and other property interests in their respective sole names, the Wife’s purchase of the property was consistent with that history of property ownership, the Husband did not advance all the funds to purchase the property and apart from some shared bank accounts there did not appear to be substantial property held in the joint names of the parties.
The takeaways from this case are:
For all spouses to document their intentions with respect to purchase of property prior to purchase and to act consistently with respect to those intentions throughout their relationship. Binding Financial Agreements should be considered for property ownership planning and legitimate asset protection. Or in circumstances where a Binding Financial Agreement cannot be obtained for these purposes, the intentions of the parties with respect to purchase of property prior to the purchase could be documented via an exchange of correspondence between the parties or an appropriately witnessed statutory declaration provided by each party. The correspondence or statutory declarations could then be used as evidence, if necessary, in the future as to what each party’s intention was prior to the purchase of that property