Matti Ammala v Sirpa Sisko Sarimaa (1992) 108 Flr 23 [1992] ACTSC 77 (17 August 1992)

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

CWDS
  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)

HRNG
CANBERRA
#DATE 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

JUDGE1
  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
#DATE 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.