5 minute read
Taxing Matters
Interlocutory Disputes
Note the comments of Martin CJ in Youlden Enterprises8 that interlocutory disputes can assume an importance out of proportion to effect on resolution of the trial.
And the (Mostly) Uniform Law
While it is not clear when the new Uniform Law will reach us, proportionality has an important role to play in lawyer/client costs. Using the Victorian version of the Uniform Law Application Act Schedule 1 s172(1) reads:
Legal costs must be fair and reasonable (emphasis added) (1) A law practice must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are— (a) proportionately and reasonably incurred; and
(b) proportionate and reasonable in amount
The wording of s 172(1) is curious but is better understood as a requirement to be fair (in the context in which they are incurred) and reasonable ( in amount which could bring in other issues such as appropriate fee earners). The circumstances part is not limited to proportionality which has two sub parts being both reasonably incurred and of reasonable amount. Both sub parts must be satisfied . The considerations are brought into play by use of the word “includes”. The context in which the costs appear mean that the costs are measured against the action in which it is incurred.
And a Last Note
Justice Brereton in 2007 wrote an excellent paper on the subject. Though it is dated the core comments are still relevant and resonate. The internet reference is https://www.supremecourt.justice. nsw.gov.au/Documents/Publications/ Speeches/Pre-2015%20Speeches/Brereton/ brereton310807.pdf and the title is Costs – The Proportionality Principle.
End Notes
1 And cites other useful cases . Note his comment about a case in the Family Court: https://lawyerslawyer. net/2020/01/21/the-costs-proportionality-overarchingobligation 2 [2008] WASCA 269 3 [2011] WADC 60 4 [2011] WADC 30 5 [2006] WASC 161; (2006) 33 WAR 1, 2, Kenneth Martin J, 6 [2009] WASC 204 7 [2008] WASC 271 [11] - [26]. Per Templeman J 8 op cit at [2]
FOR PURCHASE OF THE MATRIMONIAL HOME
By Clare Thompson SC,
Francis Burt Chambers
Lawyers are familiar with the presumption of advancement: in certain relationships where one party transfers property to another and the transferor is under a natural obligation to provide for the transferee, the law will presume the transfer of property is a gift in the hands of the transferee. It is possible to rebut the presumption of advancement, in which case the property will be held on trust by the transferee, for the benefit of the transferor.
The presumption arises most commonly in a spousal relationship between a man and a woman. Once the relationship is established and a husband buys property that is owned in his wife’s name, the law presumes the purchase was intended as a gift. Notably, gifts to a husband from a wife are not the subject of a presumption, nor does it apply to de facto couples, or same sex spouses.
However, a presumption is just that, it can be rebutted, typically by evidence which shows that the presumption does not apply. This will involve evidence of what the intention of the parties was at the time of the transaction. In the absence of direct evidence from the parties, a court is left to draw inferences from the other available evidence, including documents and the surrounding circumstances. In Commissioner of Taxation v Bosanac [2021] FCAFC 158, the Full Federal Court considered the interaction of two presumptions, the presumption of advancement and the presumption of a resulting trust. Unusually, it was not a party to the transaction who was seeking to rebut the presumption, but a third party, the Commissioner of Taxation. Both husband and wife made submissions in support of the presumption. Bosanac concerned the true beneficial ownership of a house in suburban Perth. The property was purchased by a married couple who lived in it as their matrimonial home, until they separated, and the husband moved out about 8 years later. The property was funded by a deposit from a joint bank account and a loan entered into by both husband and wife, with the title being registered solely in the wife’s name. This is not a particularly unusual factual scenario.
At first instance the trial judge concluded that the presumption of advancement arose and was not rebutted, so that the wife held the entire beneficial interest in the property. On appeal the Full Court found the presumption of advancement was rebutted so that the property was held by Ms Bosanac as to 50%, and 50% by her on trust for the benefit of Mr Bosanac. The effect of the decision is that Mr Bosanac’s share of the property is available to pay part of a taxation debt owed to the Commissioner from other proceedings.
Notably, neither Mr nor Ms Bosanac gave evidence.
The factors which the Full Court found led to the rebuttal of the presumption were:
at the time of the purchase they moved into the home together, from which the inference was drawn that it would be for their joint use and for the benefit of them both, despite what the title recorded;
the purchase was made using joint borrowings from the same bank pursuant to 2 loan agreements both Mr & Ms Bosanac entered into;
the predominant purpose of the joint loans was to purchase the property; the effect of the loan agreements was that the Bosanacs each contributed half of the purchase price; and
the securities for the loans included mortgages over the property in question.
The lack of direct evidence proved critical, in particular there was no evidence from Mr Bosanac as to why he entered into the loans when the property was registered solely in his wife’s name.
An application for special leave to appeal to the High Court has been lodged and will soon be heard orally. If special leave is granted, it will be interesting to see if the High Court says anything about the operation of the presumption in the modern era.
