Resulting trust invoked in tax debt recovery proceedings
In Deputy Commissioner of Taxation v Vasiliades [2015] FCA 412 the DCT invoked the equitable remedy of a resulting trust in aid of the recovery a very large tax debt. The DCT successfully obtained a declaration that proceeds of sale of the debtor’s matrimonial home – which had been legally owned by his wife – were the subject of a resulting trust in favour of the debtor.
The DCT sought orders to recover from the respondent, Mr Vasiliades, a debt in excess of $30 m. Orders for default judgment and summary judgment were entered against Mr Vasiliades, who did not file a defence as ordered or appear before the Court either at a directions hearing or the hearing of the Deputy Commissioner’s application for judgment.
The DCT also sought a declaration that Mr Vasiliades’ wife held the proceeds of sale of a Toorak property on resulting or presumed trust for him. The Deputy Commissioner’s case was set out in pleadings that were not defended and were therefore taken to be admitted. Further, the facts relied on were contained in affidavits sworn by Mr and Mrs Vasiliades in an earlier stage of the proceeding.
The facts were that Mr Vasiliades had signed the contract to acquire the land in his own name and/or for a nominee. He had nominated his wife as the purchaser. The two had taken out joint finance to fund the purchase and later to demolish the then existing dwelling and build a new home. Both Mr and Mrs Vasiliades gave evidence that they were married and the property was the family home. Mr Vasiliades made the finance payments. Funds from a joint finance facility were transferred to accounts (including offshore accounts) in the name of Mr Vasiliades.
The facts established a presumed or resulting trust in the proceeds of sale of the property for the benefit of Mr Vasiliades: [15]. The legal ownership of the property by Mrs Vasiliades was for the benefit of both her and her husband jointly. Both were contributors to the purchase using joint loan funds. The Court declared that Mr Vasiliades had an equitable interest in the net proceeds of sale to the extent of a one-half share, and that Mrs Vasiliades held that sum for or on account of Mr Vasiliades.
