Binions v Evans

An agreement permitting a person to occupy a home rent free for life cannot be treated as a tenancy at will where its substantive terms permit termination only by the occupier or upon death. Irreconcilable words describing the arrangement as a tenancy at will may be disregarded.

An undertaking to permit occupation for life, or for as long as the beneficiary wishes, can create a trust or equitable life interest. A purchaser who acquires the property expressly subject to that arrangement, with full knowledge and at a reduced price, is bound by it and cannot evict the beneficiary.

Trustees of an estate agreed in writing that the widow of a former employee could occupy a cottage rent free for the remainder of her life, unless she earlier ended the arrangement. Although the document described her as a tenant at will, its detailed terms denied the landlords any right to terminate during her occupation.

The trustees later sold the cottage to the plaintiffs at a reduced price. The contract of sale supplied them with the occupation agreement and expressly made the sale subject to it. After the purchasers served notice to quit, the county court held that they held the cottage on trust to permit the widow to remain for life or for as long as she wished. The purchasers appealed, contending that she was merely a tenant at will.

Appeal dismissed unanimously.

1. The agreement did not create a tenancy at will terminable by either party. Lord Denning MR, Megaw LJ and Stephenson LJ held that the words describing the widow as a tenant at will were irreconcilable with the provisions permitting her to remain for life unless she herself gave notice, ceased to occupy or died. Those isolated words therefore had to be disregarded. Any remaining ambiguity was resolved against the estate trustees whose solicitors had drafted the agreement.

2. Megaw LJ and Stephenson LJ treated Bannister v Bannister [1948] 2 All ER 133 as governing the case. The agreement created a trust under which the widow was entitled to occupy during her life or for as long as she desired, subject to her contractual obligations. They regarded the resulting interest as a life interest within the meaning attributed to such arrangements in that authority. Lord Denning MR agreed that the widow possessed an equitable interest, although he preferred to characterise the underlying right as a contractual licence rather than a tenancy for life under the settled land legislation.

3. The purchasers acquired the cottage with express knowledge of the agreement and expressly subject to the widow's rights. They consequently could not evict her. Lord Denning MR reasoned that their express undertaking, knowledge and reduced purchase price made it inequitable to deny her beneficial interest, so that a constructive trust arose. Megaw LJ and Stephenson LJ concluded that the trust created under Bannister bound the purchasers as successors who had taken subject to the agreement.

4. Lord Denning MR further considered that a purchaser taking land expressly, or in an appropriate case impliedly, subject to a contractual licence would hold on constructive trust for the licensee. Megaw LJ regarded protection through contractual and equitable principles as a possible alternative, while Stephenson LJ expressly left the wider status and transmissibility of contractual licences undecided.

1. Court of Appeal: The purchasers' appeal was dismissed unanimously. The trust or equitable right of occupation bound purchasers who had acquired the cottage expressly subject to the widow's agreement.
2. Newport County Court: His Honour Judge Bulger refused possession and held that the purchasers held the cottage on trust to permit the defendant to reside there during her life or for as long as she desired.