Inwards v Baker

Where an owner of land induces, requests or encourages another to spend money on the land in the expectation that he will be allowed to remain there, equity may protect that expectation. The occupier has a licence coupled with an equity, even though there is no binding contract, promise of a specified estate, or precise term of occupation.

The court must decide from all the circumstances how the equity should be satisfied. It will prevent the owner, and a successor taking with notice, from defeating the expectation where that would be inequitable.

The defendant built a bungalow on his father's land after his father suggested that he build there rather than on land he had contemplated acquiring elsewhere. The defendant contributed substantially to its construction and occupied it as his home from 1931.

After the father's death, his executrix and trustees sought possession. The Aylesbury County Court held that the defendant had only a revocable licence because there was no contractual promise that he could remain. The defendant appealed.

The central issue was whether expenditure incurred with the landowner's encouragement gave rise to an equity permitting the defendant to remain in occupation.

1. Appeal allowed unanimously. Lord Denning MR held that the defendant's expenditure, incurred after his father encouraged him to build on the father's land, created an equity. Lord Justice Danckwerts agreed that the claim fell within the established equitable principles, and Lord Justice Salmon agreed.
2. The equity arises where a landowner requests, permits or encourages expenditure on land while creating or encouraging an expectation that the spender will be allowed to remain there. The resulting protection does not depend upon a contract or an implied promise of a particular legal estate. It is sufficient that it would be inequitable to defeat the expectation produced by the expenditure.
3. The absence of a stated duration or defined interest does not cause the equity to fail. The court must examine the circumstances and determine the appropriate means of satisfying it. Here, the father had led the defendant to regard the bungalow as his home. The appropriate satisfaction of the equity was therefore to permit him to remain there for as long as he wished to use it as his home.
4. A purchaser taking with notice would be bound by the equity. The plaintiffs, as the father's successors in title, were likewise bound. Judgment was entered for the defendant, with the costs of the appeal; the County Court costs order was left undisturbed.

• Court of Appeal — allowed the defendant's appeal and entered judgment for him.
• Aylesbury County Court — Judge Rawlings had held that the defendant held only a revocable licence and that, absent a contractual promise, he was not protected by an equitable right to remain.