InsolvencyLawStrata and Property

Spouse’s Presumption of beneficial interest in property affirmed

By 13 September, 2021 No Comments

In a judgment handed down on 31 August 2021, Commissioner of Taxation v Bosanac (Bosanac), the Federal Court considered whether there was an assumption, on the facts, that a husband would have a beneficial interest in the matrimonial home bought together with his wife; despite the fact the property was registered in the wife’s name alone.

The case, on appeal, found that older principles of equity still apply in Australia, and will assume there is a trust held in favour of the spouse whose name is not listed on the title of the home, unless there is explicit evidence to prove the contrary.

What happened?

In summary, the facts of the case were:

  • a husband and wife (the Bosanacs) jointly obtained a bank loan from Westpac to purchase the home, secured by a registered $4.5 million mortgage over the property;
  • upon purchase, the wife became registered as the sole registered owner;
  • the husband later borrowed further funds from Westpac, secured by the mortgage over the same property, which was used by Mr Bosanac to conduct personal share trading;
  • the couple resided in the home for several years, even after their separation in 2013; and while having some assets owned separately, also shared some bank accounts and other property assets.

The ATO sought a declaration from the Court to affirm a presumption the husband did in fact intend to have interest in the house at the time of purchase, purportedly to evade liabilities from creditors. Initially, the Court found there was insufficient evidence to suggest Mr Bosanac intended to retain an interest in the property, and maintained the fact he had used the house as security for further loans was not sufficiently indicative of intent to retain an interest.

The ATO argued that due to a lack of evidence in the contrary, the Court must infer there was a presumption that each spouse had intended a 50% beneficial interest each, at the time of purchasing the property.

The ATO appealed the case.

The Decision

The Full Federal Court allowed the appeal and affirmed there was an intention to share beneficial interest which should be presumed on the facts. This was particularly the case as there was not enough evidence to explicitly prove the Bosanacs intended for only the wife to retain interest. Factors which the Court took into account included:

  • Mr Bosanac’s later use of the property in his wife’s name, to secure the borrowing of $3.6 million which he used in his personal capacity to pursue trading activity. This reflected the intention that the property was available to the benefit of both the husband and wife;
  • despite the property being registered in the name of the wife alone at the time of purchase, the husband contributed to 50% of the purchase price, indicating Mr Bosanac intended to hold a 50% beneficial interest in their matrimonial home; and
  • the use of other properties owned separately, by either Bosanac, as security for joint loans was not conclusive enough to rebut the presumption.

Sound familiar?

There is an assumption if property is purchased with a spouse, that both will have a beneficial interest in the property, even in the case where the property is only registered in the name of just one spouse.

If you are concerned how this may affect you, or if you would like to know more about securing your or your partner’s interest in property, please reach out to us at hello@nullpragma.law or (08) 6188 3340.