Matti Ammala v Sirpa Sisko Sarimaa [1992] ACTSC 219; (1992) 108 FLR 23 (2 July 1992)

SUPREME COURT OF THE ACT

MATTI AMMALA v. SIRPA SISKO SARIMAA
S.C. No. 589 of 1990
De facto Relationships - Equity - Trusts
[1992] ACTSC 219; (1992) 108 FLR 23

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1)

CATCHWORDS

De facto relationships - property - adjustment of interests - male partner purchased property in his own name - joint application for loan - contributions by female partner - application of equitable principles.

Equity - trusts - implied trusts - resulting trusts - presumption of advancement.

Trusts - constructive trusts - general principles.

Allen v. Snyder (1977) 2 NSWLR 685

Calverley v. Green [1984] HCA 81; (1984) 155 CLR 242

Muschinski v. Dodds [1985] HCA 78; (1985) 160 CLR 583

Baumgartner v. Baumgartner [1987] HCA 59; (1987) 164 CLR 137

Miller v. Sutherland (1990) 14 Fam LR 416 (Supreme Court of New South Wales)

HEARING

CANBERRA
2:7:1992

Counsel for the plaintiff: Mr J. Brewster

Solicitors for the plaintiff: Gallens Crowley and

Chamberlain

Counsel for the defendant: Mr I. Nash

Solicitors for the defendant: Macphillamy Cummins
and Gibson

DECISION

This matter commenced by way of originating summons. Fortunately the parties were directed to file points of claim and defence. The points of claim are filed on behalf of the defendant (Mrs Sarimaa) and the points of defence by the plaintiff (Mr Ammala).

2. The claim concerns a house and land at Hawker (the Hawker property). Mr Ammala is the sole registered proprietor and lives there. From about April 1983 to March 1989 the parties lived together elsewhere in a de facto form of marriage. Mrs Sarimaa seeks a declaration that she is entitled to a beneficial one-hald share in the Hawker property, an order for sale of the Hawker property and consequent orders adjusting the financial relationship between the parties. When the Hawker property was purchased in Mr Ammala's name in early 1986 it was in circumstances which, according to Mrs Sarimaa's case, gave rise to an implied or constructive trust whereby Mr Ammala holds the property as to one half for himself and as to one half in trust for Mrs Sarimaa.

3. It is necessary to make several findings of fact. Many factual areas are in dispute but not all need, or are capable of, resolution.

4. Mrs Sarimaa and Mr Ammala are members of the Finnish community in Canberra. They spoke to each other in a mixture of Finnish and English. Their evidence was entirely in English. However, there is no reason to conclude that there was any confusion brought about by any incorrect translation of what was said in the many conversations about which evidence was given.

5. Mrs Sarimaa was previously married. In about 1977 she acquired a house in Charnwood. In August 1982 Mr Ammala acquired a block of land at Chisholm. He is a carpenter by trade and he started to build a house on the Chisholm land. It was partly built when Mrs Sarimaa and Mr Ammala started living together in Mrs Sarimaa's house at Charnwood in April 1983. They lived there with the two children of Mrs Sarimaa from her previous marriage. Whilst they lived together Mr Ammala continued in his trade as a self-employed carpenter. Mrs Sarimaa continued in her employment as a nurse.

6. There was no express agreement between Mrs Sarimaa and Mr Ammala at the time of the commencement of cohabitation as to any financial arrangements between them. Mrs Sarimaa says, and I accept, that she paid the mortgage instalments on her house at Charnwood and the rates as well as other domestic outgoings. She also carried out the usual household chores of a wife and mother of young children, cooking, washing, ironing and the like. Mr Ammala did the conventional jobs of the husband and father in such a household, including gardening and occasional cleaning. Mr Ammala says in his affidavit of 7 November 1990, and Mrs Sarimaa denies, that Mr Ammala made regular contributions to the household expenses. Mrs Sarimaa says that Mr Ammala was always complaining that he was short of money. I think that that is likely to be true and that the complaint reflected the true situation, namely that he was paying off a mortgage on the property at Chisholm and was also paying for the materials required to continue and complete the construction of the house there. Mrs Sarimaa says further that Mr Ammala paid her a total $1,000 over eighteen months in amounts between $50 and $100 at irregular intervals which were intended to go towards the household expenses. Mr Ammala says that he paid an average of at least $100 per week by way of board and lodging over the whole period of cohabitation. My finding is that it was not until some time in 1986 or early 1987 that Mr Ammala paid regular weekly amounts of $100 and that what he paid before then probably averaged less. I further find that what he paid over the whole period was neither substantially more nor substantially less than what it cost to maintain him as a member of the household.

7. At some time in 1984 Mr Ammala completed the construction of the house at Chisholm. Before construction was completed, according to Mrs Sarimaa, she made the curtains and cleaned the house about four times. I have no reason to reject her evidence on those matters. She also says that she and the children went overseas in 1984 before the house at Chisholm was finished. He says that they went overseas before it was finished, but that work commenced on an extension at a later stage. I do not think that this question needs resolution. In any event, when Mrs Sarimaa returned from overseas, she and the children went to live with Mr Ammala in the house at Chisholm for a short time, which was probably not much more than a week. It is likely that during that time, and for at least some of the time she was overseas, Mrs Sarimaa allowed the Charnwood house to be occupied. Whether she received rent or not, I am unable to decide and again this is an issue which I think does not need resolution.

8. About July or August 1984 Mrs Sarimaa with her children and Mr Ammala returned to Mrs Sarimaa's house at Charnwood. In my view, there had been no suspension or disruption of cohabitation in the meantime, despite the temporary absence of Mrs Sarimaa overseas. At the stage of the return to the Charnwood house, they discussed the ramifications of their continuing relationship. He says that they agreed that he would keep the house at Chisholm, she would keep the house at Charnwood, with neither making any claim to the house of the other, and that they would together buy a block of land and build another house. She says that he said, "I don't like living in your house and you don't like living in my house, so why don't we buy a block of land and build a house on it for us both to live in together". I think that her version has the ring of truth about it and subject to one qualification, I accept it. The qualification is that I am not convinced that it was said that the new house was to be "for both of us for our home". That was probably the understanding of Mrs Sarimaa, but the understanding of Mr Ammala, on the other hand, was that the new house was to be built as a "spec" house and that they would live in it only until the construction was fully completed and the gardens were established. At that latter stage, it was his understanding that the parties would contemplate resale and the capital profit would be put towards the acquisition of yet another home.

9. In the light of the above, I find that there was agreement to acquire land together and to build a house on it, but there was neither agreement to live in it permanently as a joint home, nor agreement to live in it temporarily as if it were a development project. I reject Mr Ammala's evidence that Mrs Sarimaa agreed to contribute equally to the cost of construction of the new house. I also reject Mrs Sarimaa's evidence that Mr Ammala put to her a proposal, which she accepted, that he would put all his money into the purchase of the land (and possibly into the construction of a new house), and that they would live off her earnings. I think it more likely, as Mr Ammala said, that that was simply one of many proposals that was discussed. I find that the agreement did not go beyond contemplation by both parties that once the land was acquired, Mr Ammala would use his skills in assisting in the physical construction, as he had done at Chisholm, and that Mrs Sarimaa would contribute by continuing to go out to work and to provide Mr Ammala with household support. At that stage, that is from the beginning of 1985 to the beginning of 1986, there was no agreement as to how the purchase of the land, or the construction of the new house, was to be financed.

10. In February 1986 Mrs Sarimaa and Mr Ammala attended the auction at which Mr Ammala was the successful bidder for the block of land at Hawker for a price of $27,100. Mr Ammala says that after the auction he remained in the auction room and Mrs Sarimaa went outside. He joined the queue, completed the necessary paperwork and wrote out and handed over his cheque in the sum of $7,100 for the deposit. He says that he asked Mrs Sarimaa for a cheque at the auction, that none was forthcoming, and therefore the block went into his name. He says that there was no discussion about whose name the lease was to be in until about a month later.

11. Mrs Sarimaa says that after the successful bid they both stood in the queue together. When they reached the desk the woman there said, "In whose name is this block of land to be?". Mrs Sarimaa said to Mr Ammala in Finnish, "This is supposed to be in both our names". He responded, "It doesn't matter at this stage, let's go and talk outside. It is easier at this stage to have everything in my name" (affidavit of 3 February 1992). There is a slightly different account in which she says she asked him, "Wasn't this supposed to be in both our names?", suggesting that the conversation was after the signing of the papers by him (affidavit of 4 October 1990). Despite the discrepancy I think the account in her affidavits is the more likely in general terms and I accept it. I think that it is more likely that the conversation to which she deposed occurred after rather than before the signing of the cheque by him.

12. In May 1986 Mrs Sarimaa and Mr Ammala attended the National Australia Bank, Dickson and jointly made application for a loan. It was represented to the Bank by both Mrs Sarimaa and Mr Ammala that the proceeds of the loan would be used to complete the purchase of the land at Hawker and to commence construction of a home on it (Exhibit 10).

13. An "instalment loan" for $65,000 was approved, the borrowers being jointly and severally liable for repayment of that loan. The loan was to be fully drawn by 31 October 1986. There were to be 120 instalments, the initial amount of each instalment being $1,100.00 per month (principal and interest). Interest was to be provided separately each month until the loan was fully drawn. Security for the loan was to be a registered mortgage over the Crown lease of the Hawker property (Exhibit 12). In actual fact the loan was never fully drawn and Mrs Sarimaa recalls the initial instalments being $280 per month.

14. On 2 June 1986 Mr Ammala executed a Memorandum of Mortgage of the lease over the Hawker property (Exhibit 3) and on or shortly after that date $20,000 was credited to the joint loan account and the lease over the land at Hawker issued in the name of Mr Ammala alone (Exhibit 2).

15. There are many allegations and counter allegations over what happened from February 1986 until the end of cohabitation. It is common ground that there were conversations about whether the lease should issue in joint names or whether, after the lease issued to Mr Ammala, steps should be taken to place the title in both names. I am not convinced that any agreement was reached on these matters nor that either party stated unequivocally the terms of what he or she insisted should be the ongoing financial nature of their relationship. Mrs Sarimaa says, in essence, that from February 1986 she repeatedly told Mr Ammala that unless the Hawker property was put in both names, he would have to leave her house (affidavit of 5 December 1990). Mr Ammala says, in essence, that he constantly told Mrs Sarimaa that the Hawker property would be put in joint names only "when you pay your share" (affidavits of 7 November 1990 and 7 January 1992).

16. A witness, Ms Ruth Hevizi, says that she was present during a discussion in April or May 1986 in which Mr Ammala complained that Mrs Sarimaa would not "put her name onto a loan", and in which Mrs Sarimaa complained that Mr Ammala had bought the Hawker property "in his name only". Ms Hevizi said that during the discussion Mr Ammala told Mrs Sarimaa, "It will be ours even though the block is in my name", and that once they were married, "It will be in our joint names", but that he was not yet ready for marriage whilst Mrs Sarimaa's children were still living in the home.

17. Ms Hevizi was frank in declaring herself to be a friend of Mrs Sarimaa, but having seen and heard her give evidence, I have formed the firm view that she was an honest witness and in the circumstances reasonably accurate in her recollection and account of what was said.

18. During the rest of 1986 the parties continued to argue about title to the Hawker land. Ultimately there is no dispute on the part of Mr Ammala that he kept stating that he would put the title in both names, but he asserts that he made that statement of intention only on the express condition that "You pay your half share" (affidavits of 7 November 1990 and 7 January 1992). I reject the evidence of Mr Ammala to this effect and I think it is more likely that he simply complained, as she says, that "You might leave me and ask for half the house" and "You haven't done anything towards it" (affidavit of 5 December 1990).

19. Both parties agree that from March or April 1986 until the cessation of cohabitation, Mr Ammala paid $100 a week towards the household expenses at Charnwood. As previously noted, Mr Ammala claims that this payment was made from the beginning of cohabitation, but I reject that claim. Mrs Sarimaa paid some electricity accounts and the telephone accounts during this latter period and Mr Ammala paid four electricity accounts. Each party continued working as before.

20. In June 1987 the pourings of the foundations at the Hawker property commenced followed by the erection of piers. There is no evidence of any discussion between the parties about the plans or design of the house. Progress of construction was delayed because sub-surface rock was encountered. No repayments were made of the amount borrowed from the National Australia Bank and by 4 January 1988 the loan account was $27,604.20 in debit (Exhibit 10). On 2 June 1988 the manager of the National Australia Bank at Dickson wrote to Mr Ammala and Mrs Sarimaa notifying them that the loan repayments were in arrears to the sum of $1,298.00. On 7 June 1988 Mrs Sarimaa withdrew $1,298 from her own savings account (Exhibit 11) and paid it to the credit of the joint loan account. She says that the money came from her own funds and that on the same day she and Mr Ammala went to the Titles Office to collect the necessary forms to transfer the title into joint names. Mr Ammala says that the amount paid into the joint loan account was given by him to her. His version is not supported by any documentary evidence. He does not deny her statement about going to the Titles Office. I accept the evidence of Mrs Sarimaa as to the events on 7 June 1988.

21. In November 1988 Mr Ammala sold his Chisholm house. After the discharge of mortgage and costs, the proceeds to him were $52,829.14 "together with a balance of the deposit" of $9,500 (Exhibit 4; affidavit of 7 November 1990). This accords with Mrs Sarimaa's evidence that Mr Ammala "received about $60,000" (affidavit of 4 October 1990). He used part of these proceeds to pay out the balance of the joint loan account of "approximately $30,000" and the remainder of the proceeds amounting to about $30,000 was available to Mr Ammala. He says that he used these proceeds to purchase materials for the construction of the house at Hawker.

22. In December 1988 work on the Hawker property resumed and Mr Ammala hired and used a backhoe for this purpose. By 15 December the slab was poured. In 1989 Mr Ammala continued to work on the construction of the house and engaged tradesmen for particular parts of the work. He says that Mrs Sarimaa did nothing towards the completion of the house except iron some curtains. Mrs Sarimaa says that she did a good deal more, such as watering the slab, collecting and delivering materials, sweeping and cleaning. I accept the evidence of Mrs Sarimaa, but I find that the contribution by her was very small when compared to that of Mr Ammala. On the other hand, apart from his weekly payments of $100 board and lodging, Mr Ammala contributed little or nothing to the domestic expenses or arrangements at Charnwood. Whilst Mrs Sarimaa claims that in this period she was supporting Mr Ammala financially, it appears likely that he would still have had funds from the sale of Chisholm and it was from these that he contributed the weekly payment of $100 for his board and lodging and paid for any personal needs.

23. When the parties separated in March 1989, the house at Hawker was partially complete. The precipitating cause of the separation is not the subject of evidence. Mr Ammala said that he lived with friends for several months before moving into the Hawker house. I have no reason to reject that evidence. The relationship appears to have deteriorated but nevertheless to have continued. Mrs Sarimaa obtained an order against Mr Ammala under the Domestic Violence Act. Yet she continued to visit the Hawker house, bringing meals to Mr Ammala, who was still engaged in completing the internal work, and she did some more cleaning work there. She says that she did this hoping for a reconciliation. She continued to press him to place the property in joint names. Sometimes he agreed to do so, sometimes he refused, but in any event he did nothing to this end. According to his evidence, this was because she had not kept her "part of the bargain".

24. I find that Mr Ammala moved into the Hawker house some time in the months from April to August 1989. He continued to work on the house whilst living there. In April 1990 he arranged for refinancing of the joint loan. The mortgage to National Australia Bank was discharged and a substituted mortgage was granted by the then Canberra Building Society to secure a loan of $35,000 (Exhibit 6). Mrs Sarimaa played no part in the refinancing and there is no evidence as to what exactly was done with the loan from Canberra Building Society. I assume that the bulk of it was used to pay out the previous loan. On 8 August 1990 Mrs Sarimaa lodged a caveat on the title in order to prevent further dealings and Mr Ammala commenced the present proceedings.

25. On 13 August 1990 Mr Ammala received $15,000 as part payment of damages for a personal injuries claim. He says that he applied this to the construction of the Hawker house, but he gave no details and there was no supporting evidence of this claim. I find that it is likely that he spent some of this amount on materials or paying sub-contractors, but it is impossible to determine how much. It is also likely that he used some of the money to support himself whilst he was engaged in working on the completion of the Hawker house. On 8 October 1990 Mr Ammala received a further sum of $6,000 being the balance of the settlement monies due to him for his personal injuries claim. Similarly he says that he applied this to the construction of the Hawker house. He completed the house in early October 1990 and a certificate of occupancy or use issued on 6 February 1991.

26. The value of the Hawker property at the time of the trial was agreed at $215,000.
Was there an implied trust?

27. In my view, there was an implied trust created by Mr Ammala in favour of Mrs Sarimaa on the facts as found. An implied trust (sometimes called a resulting trust) of an interest in realty may be created where the owner at law has provided for less than the whole of the purchase price of the land: Allen v. Snyder (1977) 2 NSWLR 685. Apart from payment of the arrears of $1,298 by Mrs Sarimaa on 7 June 1988, there was no direct contribution by her to the purchase price. The payment of that sum on that date by Mrs Sarimaa is insufficient to create an implied trust in her favour. The payment was made after Mr Ammala had obtained legal title to the leasehold estate over the land. The question whether Mrs Sarimaa held any beneficial interest in the title by virtue of an implied trust is to be determined at the time of the acquisition of the land by Mr Ammala: Calverley v. Green [1984] HCA 81; (1984) 155 CLR 242 at 252.

28. In Calverley v. Green it was decided as follows:

1. Where a person pays the purchase price of a
property and causes it to be transferred to another or
to that person and another jointly, the property is
presumed to be held by the transferee or transferees on
trust for the person who provided the purchase money.
2. Where two or more persons advance the purchase price
in different shares, it is presumed that the transferee
or transferees hold the property upon resulting trust
in favour of those who provided the purchase price in
the shares in which they provided it.
3. Where parties borrow jointly, contribute the
borrowed funds towards the price, and mortgage the
property to secure the performance of their joint and
several obligation to pay interest, the presumption
mentioned in 2. above arises.
4. The so-called "presumption of advancement" arises so
as to displace the presumptions mentioned above in
certain recognized relationships, so that prima facie
the equitable title follows the legal title.
5. The "presumption of advancement" does not arise in
de facto relationships, nor in a case where the wife
provides the purchase money for a purchase in the name
of a husband.

29. As Calverley v. Green was a case in which the parties, who lived in a de facto relationship, purchased the property in joint names, some of the above principles may have been pronounced by way of obiter dicta. The facts are to be contrasted with those in the present case where the property was purchased in the name of Mr Ammala and although the funds were made available through the joint loan, the mortgage which secured the loan was a mortgage from Mr Ammala only. The presumption of advancement does not apply. I would therefore incline to the view that at the time of the issue of the lease Mr Ammala held the title as to one half on a resulting trust in favour of Mrs Sarimaa but subject, on the one hand, to allowance for the payment out of the loan and the work and expenditure on the construction of the house by Mr Ammala and, on the other hand, the payment of the $1,298 by Mrs Sarimaa, the value of the small amount of work she did towards completion of the house and the value to Mr Ammala of the occupation of the property by him.

30. If I am wrong in my conclusion that there was an implied trust, it is necessary to consider the alternative claim by Mrs Sarimaa, namely that there was a constructive trust.
Was there a constructive trust?

31. A constructive trust will arise when it would be a fraud for the legal owner to assert the beneficial interest claimed against the legal owner. Such a trust will be imposed by the Court, irrespective of the intention of the parties, in order to satisfy the demands of equity and good conscience. If there is an implied or resulting trust, there is no constructive trust. The principle was described by Deane J. with whom Mason J., as he then was, agreed, in Muschinski v. Dodds [1985] HCA 78; (1985) 160 CLR 583 at 620:

"... the principle operates in a case where the
substratum of a joint relationship or endeavour is
removed without attributable blame and where the
benefit of money or other property contributed by one
party on the basis and for the purposes of the
relationship or endeavour would otherwise be enjoyed by
the other party in circumstances in which it was not
specifically intended or specially provided that that
other party should so enjoy it. The content of the
principle is that, in such a case, equity will not
permit that other party to assert or retain the benefit
of the relevant property to the extent that it would be
unconscionable for him so to do: cf Attwood v. Maude
(1968) LR 3 Ch App 369 at pp 374-375, and per
Jessel M.R., Lyon v. Tweddell (1881) 17 Ch D 529 at 531."

32. This passage was approved in the majority judgment of Mason C.J., Wilson and Deane JJ. in Baumgartner v. Baumgartner [1987] HCA 59; (1987) 164 CLR 137. In the latter case the parties had pooled their earnings and on the facts the High Court joint judgment concluded as follows at 149:

"The case is accordingly one in which the parties
have pooled their earnings for the purposes of their
joint relationship, one of the purposes of that
relationship being to secure accommodation for
themselves and their child. Their contributions,
financial and otherwise, to the acquisition of the
land, the building of the house, the purchase of
furniture and the making of their home, were on the
basis of, and for the purposes of, that joint
relationship. In this situation the appellant's
assertion, after the relationship had failed, that the
Leumeah property, which was financed in part through
the pooled funds, is his sole property, is his property
beneficially to the exclusion of any interest at all on
the part of the respondent, amounts to unconscionable
conduct which attracts the intervention of equity and
the imposition of a constructive trust at the suit of
the respondent.
It therefore becomes necessary to determine the terms
of that constructive trust. The facts that the Leumeah
property was acquired and developed as a home for the
parties and that, at least indirectly, it was largely
financed out of money drawn from the pool of their
earnings, this being one of the purposes which the pool
was to serve, combine to support an equality of
beneficial ownership at least as a starting point.
Equity favours equality and, in circumstances where the
parties have lived together for years and have pooled
their resources and their efforts to create a joint
home, there is much to be said for the view that they
should share the beneficial ownership equally as
tenants in common, subject to adjustment to avoid any
injustice which would result if account were not taken
of the disparity between the worth of their individual
contributions either financially or in kind. The
question which has caused us particular difficulty is
whether any such adjustment is necessary in the
circumstances of the present case to avoid any
injustice which would otherwise result by reason of
disparity between individual financial contributions.
The conclusion to which we have come is that some such
adjustment is necessary."

33. It is clear that the pooling of earnings or of resources is not necessary to give rise to a relationship between the parties as a result of which the acquisition by the one will be regarded as subject to a constructive trust on behalf of the other. So much was recognized by Cohen J. in Miller v. Sutherland (1990) 14 Fam.LR 416 (Supreme Court of New South Wales) where, after referring to Baumgartner and to the absence in the circumstances of the case before him of the pooling of finances, Cohen J. said at 424:

"In effect there was a pooling of labour by or on
behalf of both parties and the contribution of money
for materials by the defendant. The clearly implied
intention of the parties was to use that labour and
money for the purpose of providing a home for both
parties and increasing its value for the legal owner,
the defendant. In those circumstances it would in my
opinion be unconscionable of the defendant to deny to
the plaintiff an equitable interest in the house and
accordingly a constructive trust will arise in favour
of the plaintiff.
The next question to consider is the extent of that
trust ..."

34. In the present case there was neither a pooling of funds nor in any real sense a pooling of labour from which pool Mr Ammala acquired the land and house at Hawker. The acquisition of property by one party wholly or substantially from pooled resources may assist the Court in recognition of unconscionable conduct which will raise a constructive trust, but as Gaudron J. recognized in Baumgartner (at 156), it was the existence of a joint fund in that case which provided not a pool from which the asset was acquired, but a means of facilitating its purchase.

35. Mrs Sarimaa and Mr Ammala, far from wanting to pool their funds, were careful to keep them separate. She had the house at Charnwood which had provided a home for herself and her children and upon which she had been able to keep up mortgage instalments. He had the block and the house under construction on it in Chisholm on which he had been able likewise to keep up mortgage payments and to continue towards completion of the house. Neither wanted to give up the valuable asset so acquired; although cohabitation continued for some time after the acquisition of the land and was contemplated at the time of acquisition, neither wanted to live in the house of the other. The solution arrived at was that, as the Chisholm house neared completion, freeing Mr Ammala to direct his skills and energies elsewhere, a third block of land should be acquired and another house built on it where they would continue, for the time being at least, to live as man and wife. I am satisfied on the probabilities that at the time of the auction there was agreement that the acquisition of the land and the construction on it would be a joint enterprise and that Mr Ammala had led Mrs Sarimaa to believe that she would have a half interest in the property. Why exactly Mr Ammala refused to have the lease issue in joint names is not clear. The lack of clarity does not, in my view, assist his case. Insofar as he says that she refused to keep her side of the bargain, it suggests that there was a belated recognition on his part that she may have had the better side of what he considered the bargain. He asserted at one stage that the title would go into joint names after they were married, but added that he was not prepared to marry her whilst her children were still part of the household. Yet in order to secure the initial finance for the purchase, they made a joint application for a loan. She thereby acquired the same liability under the loan as he acquired. The application to the bank no doubt relied upon their total income and she had an established history of regular income earning as well as of successful and regular maintenance of her liability on the mortgage on her own home. She incurred the liability of a joint borrower on the loan which enabled the purchase of the land at Hawker to take place. When the loan fell into arrears she paid those arrears as they were then of $1,298. Thereafter the instalments continued to fall into arrears. Mr Ammala did nothing and was possibly not able to do anything to pay off the further arrears until he organized the refinancing of the loan by another bank. From the time of the original loan until the cessation of cohabitation Mrs Sarimaa provided the conventional services of a housekeeper-wife as well as continuing in her employment when the house at Hawker was in the course of construction. Her conduct in the circumstances was entirely consistent with that of a person with a beneficial interest in the property, taking meals to Mr Ammala whilst he was working on the site and doing occasional jobs herself on the site. In my view, it would be unconscionable to regard Mr Ammala as holding the title other than as to one half of the benefit for interest in trust from the time of payment of the deposit.

36. However, at this present stage a financial adjustment of the rights between the parties requires account to be taken of the considerable injection of funds and of labour on the part of Mr Ammala. Moreover, it is to be recognized that the funds were made available to be put into the Hawker property by his disposing of the house at Chisholm. At the time of the payment of the deposit for the land at Hawker it was, in my view, contemplated by both parties that she would retain her house at Charnwood, he would retain his house at Chisholm and that each would have a half interest in the house to be built at Hawker where they were going to live. As it turned out, she retains Charnwood and continues to live there. He has lost Chisholm but owns the house at Hawker and he lives there rent free.

37. In my view, Mr Ammala should be entitled to have the benefit of what he put into Hawker from the proceeds of the sale at Chisholm. He said that about $30,000 of those proceeds went in materials purchased for the Hawker house or for sub-contractors engaged for that purpose. Although this assertion is not supported in any way by documentation or other corroborative evidence, it is likely that a substantial part of the sum nominated was used for those purposes. Mr Ammala also said, but with less conviction, that $21,000 went into the Hawker property from the proceeds of an action for damages. Bearing in mind that it was the personal efforts of Mr Ammala himself which were responsible for the organization of the construction, the engagement and use of sub-contractors and the like, and which have contributed to the likely increase in capital value which both parties are entitled to share, I think that Mr Ammala should have the benefit of a sum of $35,000 to compensate him for the value of what he has spent on materials and sub-contractors and for his own labour. He should also have the benefit of the sum of approximately $30,000 which came from the sale of his house at Chisholm and which went directly to discharge the joint loan from the National Australia Bank. In so deciding I do not leave out of account other evidence in the case which shows that Mrs Sarimaa herself paid $1,298 off the arrears on the loan account, nor that she made several payments over the years for the maintenance of the household at Charnwood and that Mr Ammala has had the use of the Hawker property rent free. In all the circumstances, however, I do not think that the case calls for anything purporting to be or resembling a taking of accounts between the parties.

38. The orders that are sought require trustees for sale to be appointed and the property to be sold and the proceeds divided. As the value of the property is agreed, however, I think that it is in the interests of the parties that the costs of a forced sale be avoided. It should be sufficient for the orders of the Court to bring about the result that the legal title remain in Mr Ammala's name so long as he pay to Mrs Sarimaa a sum calculated according to the following formula:

x - (y + z)
2
Where x = $215,000.00
y = $ 65,000.00
z = costs and expenses of giving effect to
order, if any.

39. The alternative is to declare that Mrs Sarimaa has a half interest in the property, that the property be vested in trustees for sale, that the property be sold and that from the proceeds of sale the existing mortgage be paid out together with the costs and expenses of sale, that Mr Ammala be paid $65,000, and that the balance of the proceeds of the sale be divided equally between Mrs Sarimaa and Mr Ammala.

40. Subject to hearing from counsel I would propose to order Mr Ammala to pay two-thirds of Mrs Sarimaa's costs.

41. I will fix a date to hear further from counsel on the form of the orders and, if necessary, the question of costs of this application.
Reasons for Further Decision
17:8:1992

42. Since handing down my findings on 2 July last, I have heard further submissions from counsel for both parties. Mr Brewster for the plaintiff has put a number of submissions to me in order to have some of those findings set aside.

43. I agree with the submission that having decided that Mr Ammala held the property upon a resulting trust in respect of part thereof in favour of Mrs Sarimaa, it was necessary for me to proceed to determine the respective shares contributed by each party to the purchase price. It was not sufficient to assume that, because the obligation to repay the loan was a joint and several one, each party took a one half beneficial interest in the property. That is because the moneys made available by the loan for the purchase did not constitute the whole of the purchase price. The total price paid for the purchase of the land was $27,100. An initial payment of $7,100 was made by Mr Ammala from his own funds on the day of the auction in February 1986; the loan arrangements were entered into by the parties jointly with the National Australia Bank in May 1986 and $20,000 was drawn against the loan entitlement in June 1986 to complete the purchase. Accordingly, Mrs Sarimaa's proportionate interest in the land was not one-half but 10,000/27,100. (The term "proportionate interest" is that of Gibbs C.J. in Calverley v. Green [1984] HCA 81; (1984) 155 CLR 242 at 253.)

44. I do not think that the plaintiff is entitled to have any amount set off against what he should pay Mrs Sarimaa, in order to acquire her interest, beyond the total of $65,000. Mr Brewster submitted that it was consistent with my decision that the defendant should have the benefit of the liability incurred by him in respect of a loan of $35,000 borrowed from the Canberra Building Society on the security of the property in April 1990. In relation to the moneys so advanced, I stated in my previous reasons that I assumed that the bulk of those funds was used to pay out the previous loan from the National Australia Bank. I am now convinced that that assumption was erroneous, because, as I remarked also in my previous reasons, there was no evidence as to what exactly was done with the funds so raised. There was clear evidence that the previous loan from National Australia Bank was paid out from the funds made available from the sale of the plaintiff's house at Chisholm and I accepted that evidence.

45. Other submissions were made on how I should further adjust the figures in favour of the plaintiff, but I am not convinced that I should do so.

46. The formula appearing at the foot of my reasons for decision of 2 July 1992 should be adjusted to read as follows:

A = (B - (C + D)) x 10,000
27,100
Where A = payment to be made by plaintiff to defendant
B = $215,000
C = $ 65,000
D = costs and expenses of giving effect to order,
if any, and not including amount needed to
discharge any existing mortgage.

47. The matter has been stood over to allow the parties to ascertain the value of D.