Creditor of husband attacks home owned by wife

That sounds pretty dramatic, doesn’t it? Well it kind of is, although this is not necessarily new law. But it does shine a spotlight on the fairly common asset protection strategy of the assets of a marriage being put in the name of a “safe” spouse, to keep them insulated against claims arising from the activities of the other spouse.

In August 2021 the Full Court of the Federal Court, in Commissioner of Taxation v Bosanac (No 7) [2021] FCA 249, found that a property held in the name of the wife alone was in fact owned 50% by the husband (with the result that the interest is available for this creditors).

This decision considered two presumptions at law.

The first is the presumption that where two parties contribute toward the cost of acquiring a property but title is put in the name of only one, then it is presumed that the registered owner holds a share in trust for the other party.

The second is what is known as the presumption of advancement – where there is a presumption of a gift being made in certain circumstances, eg as between husband and wife (but curiously not necessarily in reverse) and as between parent and child. If the presumption applied, then the money provided by the husband toward the purchase price would be considered a gift, and the first presumption is rebutted (i.e. does not apply).

In this decision, in the absence of evidence of the husband as to what he intended (and no mention of a contemporaneous deed of gift), and having regard to his contributions to the price (including becoming liable on borrowings) the Full Court found that the presumption was rebutted, with the result that the property is half owned by the husband.

For advice in relation to property ownership, please contact our property lawyers Peter Muller, Jessica Murray, and Megan Hanneman at peterm@qbmlaw.com.au