By Darryl Browne -
Snapshot
- Equity presumes that the person holding the legal title to property, whether land or personal property, does so for the person providing the funds to purchase the property.
- The presumption is anachronistic, but the High Court considered the responsibility for reform rests with the elected arm of government.
- In some relationships, the gift is presumed to be for the advancement of the recipient, but this presumption is discriminatory and inconsistent, and may be extended in the future to a broader range of relationships.
- Property, family and succession lawyers need to be alive to the fact that the name recorded on the legal title to property – whether land or personal property – may not reflect its beneficial ownership.
There are two ways to categorise resulting trusts. The most common category is the presumed ‘declaration of trust’ which often arises from the payment of purchase money by one or more persons but without the legal title commensurate with that payment. Equity presumes that the person holding the legal title to property, whether land or personal property, does so for the person providing the funds to purchase the property.
As recognised in Bosanac v Commissioner of Taxation [2022] HCA 34 (‘Bosanac’), this type of resulting trust is anachronistic. It is a disruptor of legal title in an area of law, property rights, where certainty is most prized. Nevertheless, the High Court in Bosanac (Kiefel CJ, Gleeson J, Gageler J, Gordon and Edelman JJ) decided that it is so well entrenched as a legal principle that it will remain part of the law unless removed by legislation.
This rebuttable type of resulting trust may be a ‘voluntary conveyance resulting trust’ or a ‘purchase money resulting trust’ (at [94]). The latter type of presumptive resulting trusts, and the exception of gift for advancement, were considered in Bosanac.
The ‘other’ type of resulting trust
An ‘automatic resulting trust’ arises by operation of law (i.e. automatically) where an express trust fails in recognition of the contributor’s intention that the trustee/recipient does not take the trust property beneficially. Where an express trust fails, the trust property is returned to the person who contributed the trust fund such as the ‘real’ settlor and, if that person has died, their estate. A recent example is Mantovani v Vanta Pty Ltd (No 2) [2021] VSC 771, where the inability to ascertain the terms of trust where the trust deed was lost led the Court to decide that the trust failed for uncertainty. In that case, the trust property was returned to the contributor.
Any surplus in a superannuation fund is held on a resulting trust for those who contributed to it (CSR Ltd v The Chief Commissioner of State Revenue [2006] NSWSC 1380). A failed special purpose trust, often called a ‘Quistclose’ trust, is an example of this type of resulting trust (Prickly Bay Waterside Ltd v British American Insurance Company Ltd (Grenada) (Rev2) [2022] UKPC 8).
Presumptive resulting trust
In contrast to an automatic resulting trust, the presumptive trust can be rebutted by evidence that the payer(s) did not intend title to be commensurate with contribution. It operates as a civil onus of proof. It applies, at least, where there is no evidence of actual (i.e. objectively manifested) intention or the evidence is equivocal, but it gives way to proof of actual intention about ownership (or lack of intention).
The Commissioner of Taxation as creditor of Mr Bosanac
The factual backdrop to Bosanac is that the Commissioner of Taxation had obtained a judgment against Vlado Bosanac for $9,344,111.89 plus costs. To satisfy the debt, the Commissioner sought a declaration that Vlado’s estranged wife, Bernadette, held 50 per cent of her interest in a residential property registered solely in her name (‘the residence’) on trust for Vlado. Gageler J observed that no issue was taken as to the Commissioner’s standing to assert a presumptive resulting trust in favour of Vlado.
