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[1972] 2 All ER 70

Binions and another v Evans

COURT OF APPEAL, CIVIL DIVISION

LORD DENNING MR, MEGAW AND STEPHENSON LJJ


16, 17 DECEMBER 1971, 27 JANUARY 1972



Settlement - Agreement - Agreement to permit rent free occupation of property for life - Agreement by employer to allow widow of employee to occupy house rent free for life or so long as she may desire - Agreement making widow a tenant for life - Property held by landlords in trust for widow for life and subject thereto in trust for them - Purchaser of landlord's interest with notice of trust - Trust binding on purchaser.

Licence - Licence to occupy land - Contractual licence - Rights of licensee against third parties - Constructive trust - Agreement in writing by licensor to allow licensee to occupy premises rent free for life or so long as she may desire - Undertaking by licensee to maintain premises - Sale of licensor's interest to third party - Agreement for sale stated to be subject to agreement with license - Agreement for sale constituting constructive trust in favour of licensee - Third party bound by licensee's interest under trust.

The defendant's husband had worked for the landlords all his life. Until the husband's death he and the defendant had lived in a cottage owned by the landlords. After his death the landlords made a written agreement with the defendant by which, 'in order to provide a temporary home' for her, they agreed to permit her to reside in and occupy the cottage 'as Tenant at will of them free of rent for the remainder of her life or until determined as hereinafter provided'. The agreement provided that the defendant might determine the 'tenancy hereby created' by giving the landlords four weeks' notice in writing. It further provided that she should personally occupy and live in the cottage as a private residence and not assign or sublet it and 'upon ceasing personally to live there vacant possession shall forthwith be given to the Landlords'. The agreement contained obligations on the defendant to keep and maintain the cottage in a proper condition and on the landlords to pay all rates, taxes and outgoings, and concluded: '... the tenancy hereby created shall unless previously determined forthwith determine on the death of [the defendant]'. Two years later the landlords sold property which included the cottage to the plaintiffs. The landlords gave the plaintiffs a copy of the agreement with the defendant. In the contract of sale they inserted a clause which stated that the property was sold subject to the defendant's tenancy of the cottage and continued: 'The [plaintiffs] having been supplied with a copy of the ... Tenancy Agreement ... . shall purchase with full knowledge thereof and shall not be entitled to raise any requisitions or objections in respect of any matters contained therein or arising thereout'. By reason of that provision the plaintiffs paid a reduced price for the property. Seven months after completion of the conveyance the plaintiffs gave the defendant notice to quit and subsequently brought proceedings claiming that the defendant was a tenant at will and that, her tenancy having been determined, she was a trespasser.

Held - The plaintiffs were not entitled to possession of the cottage for the following reasons--

(i) although the words 'tenant at will' were used in the agreement, the rest of the agreement contained terms which were quite inconsistent with a tenancy at will; thus the defendant was to be permitted to stay for the remainder of her life and the landlords could not turn her out at will; the defendant was not, therefore, a tenant at will (see p 74 b and c, p 77 e to g and p 80 d, post);

[1972] 2 All ER 70 at 71

(ii) (per Lord Denning MR) although the agreement did not constitute a tenancy it did confer on the defendant a contractual licence to occupy the cottage for the rest of her life; where an owner sold land to a purchaser and at the same time stipulated that he should take it 'subject to' a contractual licence, the court would impose on the purchaser a constructive trust in favour of the licensee; accordingly the defendant as a contractual licensee had acquired an equitable interest in the cottage which the court would protect by granting an injunction to restrain the landlord from turning her out; when the plaintiffs bought the cottage 'subject to' the defendant's rights under the agreement, they took it on a constructive trust to permit the defendant to reside there during her life or as long as she might desire (see p 74 h, p 75 c and d, p 76 b and e and p 77 c, post); Errington v Errington [1952] 1 All ER 149 applied; King v David Allen & Sons, Billposting Ltd [1916-17] All ER Rep 268 and Clore v Theatrical Properties Ltd and Westby & Co Ltd [1936] 3 All ER 483 distinguished;

(iii) (per Megaw and Stephenson LJJ) the effect of the agreement was that the landlords held the cottage on trust to permit the defendant to occupy it so long as she might desire; she was therefore a tenant for life within the meaning of the Settled Land Act 1925; since the plaintiffs took with express notice of the agreement which gave rise to the trust they could not turn her out of the cottage against her will (see p 77 j to p 78 c d and e, p 79 j to p 80 a, post).

Bannister v Bannister [1948] 2 All ER 133 applied.

Per Lord Denning MR. Even if a purchaser does not take expressly 'subject to' the rights of a licensee, he may do so impliedly, at any rate when the licensee is in actual occupation of the land. Whenever the purchaser takes the land impliedly subject to the rights of the contractual licensee, a court of equity will impose a constructive trust for the beneficiary (see p 76 h to p 77 a, post).

Notes

For the meaning of settlement, see 34 Halsbury's Laws (3rd Edn) 428, 467-469, paras 756, 828.

For tenancies at will, see 23 ibid 505-509, paras 1150-1157, and for cases on the subject, see 30 Digest (Repl) 412, 417, 552-559, 605.

For the nature of a licence to occupy property, see 23 Halsbury's Laws (3rd Edn) 430-432, para 1026, and for cases on the subject, see 30 Digest (Repl) 526, 527, 1635-1648.

Cases referred to in judgments

Addiscombe Garden Estates Ltd v Crabbe [1957] 3 All ER 563, [1958] 1 QB 513, [1957] 3 WLR 980, Digest (Cont Vol A) 991, 1670a.

Bannister v Bannister [1948] 2 All ER 133, 47 Digest (Repl) 101, 733.

Beatty v Guggenheim Exploration Co (1919) 225 NY 380.

Beswick v Beswick [1967] 2 All ER 1197, [1968] AC 58, [1967] 3 WLR 932, Digest (Cont Vol C) 161, 245a.

Boyer's Settled Estates, Re [1916] 2 Ch 404, 85 LJCh 787, 115 LT 473, 40 Digest (Repl) 796, 2772.

Browne v Warner. See Doe d Warner v Browne, infra.

Buck v Howarth [1947] 1 All ER 342, 176 LT 320, 111 JP 178, 31 Digest (Repl) 616, 7315.

Carne's Steeled Estates, Re [1899] 1 Ch 324, [1895-99] All ER Rep 357, 68 LJCh 120; sub nom Re St Donats Settled Estate 79 LT 542, 40 Digest (Repl) 800, 2802.

Clore v Theatrical Properties Ltd and Westby & Co Ltd [1936] 3 All ER 483, 30 Digest (Repl) 535, 1703.

Debtor, A, Re, ex parte The Trustee v Solomon [1966] 3 All ER 255; sub nom Re Solomon, a Bankrupt, ex parte The Trustee of the Bankrupt v Solomon [1967] Ch 573, [1967] 2 WLR 172, Digest (Cont Vol B) 733, 3594a.

Doe d Warner v Browne (1807) 8 East 165, 103 ER 305, 30 Digest (Repl) 387, 315; subsequent proceedings sub nom Browne v Warner, 14 Ves 156, [1808] 14 Ves 409, 33 ER 480, 578, 31 Digest (Repl) 64, 2212.

[1972] 2 All ER 70 at 72

Errington v Errington [1952] 1 All ER 149, [1952] 1 KB 290, Digest (Cont Vol A) 992, 1684a.

Foster v Robinson [1950] 2 All ER 342, [1951] 1 KB 149, 31 Digest (Repl) 697, 7888.

Gissing v Gissing [1970] 2 All ER 780, [1971] AC 886, [1970] 3 WLR 255; rvsg CA [1969] 1 All ER 1043, [1969] 2 Ch 85, [1969] 2 WLR 525, Digest (Cont Vol C) 436, 2130ag.

Hodgson v Marks [1971] 2 All ER 684, [1971] Ch 892, [1971] 2 WLR 1263.

King v David Allen & Sons, Billposting Ltd [1916] 2 AC 54, [1916-17] All ER Rep 268, 85 LJPC 229, 114 LT 762, 30 Digest (Repl) 542, 1763.

King's Leasehold Estates, Re, ex parte East of London Ry Co (1873) LR 16 Eq 521, 29 LT 288, 30 Digest (Repl) 363, 28.

Lace v Chandler [1944] 1 All ER 305, [1944] KB 368, 113 LJKB 282, 170 LT 185, 30 Digest (Repl) 388, 330.

National Provincial Bank Ltd v Ainsworth [1965] 2 All ER 472, [1965] AC 1175, [1965] 3 WLR 1; rvsg CA sub nom National Provincial Bank Ltd v Hastings Car Mart Ltd [1964] 3 All ER 93, [1964] Ch at 702, [1964] 3 WLR 463; overruling [1964] 1 All ER 688, [1964] Ch 665, [1964] 2 WLR 751, Digest (Cont Vol B) 343, 621l.

Shell-Mex and BP Ltd v Manchester Garages Ltd [1971] 1 All ER 841, [1971] 1 WLR 612.

Webb v Paternoster (1619) 2 Roll Rep 143, 152, Palm 71, Poph 151, 81 ER 713, 719, 30 Digest (Repl) 539, 1725.

Zimbler v Abrahams [1903] 1 KB 577, 72 LJKB 103, 88 LT 46, 30 Digest (Repl) 460, 1015.

Appeal

This was an appeal by the plaintiffs, William Henry Binions and Iris Grace Binions, against the judgment of his Honour Judge Bulger at the Newport (Mon) County Court dated 30 June 1971, whereby it was adjudged that the plaintiffs were not entitled to possession of the premises known as 3 The Buildings, Cardiff Road, Newpost, Monmouthshire, and that the defendant, Beatrice Mina Louisa Evans, was entitled to reside therein free of rent for the remainder of her life. The facts are set out in the judgment of Lord Denning MR.

Vernon Pugh for the plaintiffs.

D M Webber for the defendant.

Cur adv vult

27 January 1972. The following judgments were delivered.



LORD DENNING MR.

The Tredegar Estate own many houses in Monmouthshire and South Wales. They have servants who have worked for them all their lives. One such was the late Mr J Evans. He was employed by the Tredegar Estate as a chauffeur. His father and grandfather had worked for them before him. The family always had the same cottage. It was 3 The Buildings, Cardiff Road, Newport. It had two rooms up and down. Mr J Evans married in 1922. He and his wife lived at the cottage. He paid no rent or rates. Mr J Evans died in 19659. His widow was then 73. She stayed on in the cottage, paying no rent or rates. On 15 March 1968 the trustees of the Tredegar Estate made an agreement with her by which they allowed her to stay in the cottage for the rest of her life. She was then 76. The agreement was in a form in general use by the Tredegar Estate. It described the trustees as 'the Landlords' and Mrs Evans as 'the Tenant', and was in these terms:

'1. THE Landlords in order to provide a temporary home for the Tenant (who is the widow of a former employee of the Estate of the Landlords) but not otherwise hereby agree to permit the Tenant to reside in and occupy ALL THAT Cottage and Garden known as No. 3 The Buildings Cardiff Road Newport in

[1972] 2 All ER 70 at 73

the County of Monmouth as Tenant at will of them free of rent for the remainder of her life or until determined as hereinafter provided

'2. THE tenancy hereby created may be determined at any time by the Tenant giving to the Landlords not less than four weeks previous notice in writing to that effect

'3. THE Tenant shall:--(a) keep the interior of the said Cottage and the glass in the windows and the fixtures and fittings and the painting papering and decoration thereof and the sanitary and water apparatus thereof in a clean and tidy state and condition (b) Cultivate keep and manage the said Garden and all fruit and ornamental trees shrubs and bushes in a proper manner and good order and condition (c) Personally occupy and live in the Property as a private residence only and not assign sub-let or part with the possession of the Cottage or any part thereof and not take in lodgers and upon ceasing personally to live there vacant possession shall forthwith be given to the Landlords (d) Not leave any rubbish behind in the said Cottage or Garden at the end of the tenancy (e) On the determination of the tenancy deliver up the said property to the Landlords in a clean and proper state and condition

'4. THE Landlords will pay all rates taxes and outgoings payable in respect of the said property during the tenancy and will keep the premises and the water and sanitary appliances thereof in good and tenantable repair and condition

5. IT is hereby agreed that the tenancy hereby created shall unless previously determined forthwith determine on the death of the Tenant'.

Such being the agreement, there is no doubt that the Tredegar Estate would never have turned out the widow as long as she lived. But two years later, on 5 May 1970, the Tredegar Estate agreed to sell the cottage to Mr and Mrs Binions, for £937 10s. The trustees gave to Mr and Mrs Binions a copy of the agreement with Mrs Evans and inserted in the agreement a special clause to protect Mrs Evans in her occupation. It said this:

'The property is sold subject to the tenancy of No. 3 the Buildings in favour of Mrs. B. M. L. Evans under an Agreement dated the 15th May 1968 but as to the remainder of the property with vacant possession on completion. The Purchaser having been supplied with a copy of the said Tenancy Agreement dated 15th May 1968 he shall purchase with full knowledge thereof and shall not be entitled to raise any requisitions or objections in respect of any matters contained therein or arising thereout.'

There is no doubt that, by reason of that provision, Mr and Mrs Binions paid a reduced price for the cottage. The judge so found. The conveyance was completed in June 1970.

Six months later Mr and Mrs Binions sought to turn Mrs Evans out. She was then 79. Nevertheless, on 11 February 1971, they gave her notice to quite on 17 March 1971. They then issued a plaint in the county court claiming possession on the ground that Mrs Evans was a tenant at will and, that having been determined, she was a trespasser. The plaintiffs did not give evidence. Mrs Evans did. The judge refused to order her out. He said:

'In my opinion the plaintiffs hold no 3 The Buildings on trust to permit the defendant to reside there during her life or as long as she desires.'

The plaintiffs appeal to this court. Those simple facts raise an interesting point of law. What was the nature of Mrs Evans's interest in the cottage? Was it such as to avail her against purchasers who took with full notice of it? Did the plaintiffs take the house on trust to permit her to stay there?

1. Tenancy at will

Counsel for the plaintiffs stressed the words 'as tenant at will'. Those words,

[1972] 2 All ER 70 at 74

he said, were used as a term of art. They have for centuries had a well understood meaning in our law. It means determinable at the will of either party. Halsbury's Laws states:

'... although upon its creation it is expressed to be at the will of the landlord only or at the will of the tenant only, yet the law implies that it shall be at the will of the other party also; for every lease at will must in law be at the will of both parties.'

Although the words 'tenant at will' are used in the agreement, the rest of it contains terms which are quite inconsistent with a tenancy at will as known to the law. Thus, Mrs Evans is to be permitted to stay 'for the remainder of her life'. So the Tredegar Estate cannot turn her out at their will. Again, Mrs Evans cannot herself determine the agreement except on four weeks' notice. That shows that she cannot determine it at will. These express terms prevail over the words 'tenancy at will'. It is a well-known maxim the 'modus et conventio vincunt legem' which, when interpreted, means that the manner and agreement of the parties overrides the strict letter of the law. In my opinion, therefore, this was not a tenancy at will.

2. Tenancy for life

At the other extreme, it was suggested that the agreement created a tenancy for life in the widow. At common law a tenancy for life was an estate of freehold. It could only be created by deed and not by parol: see Doe d Warner v Browne. But I need not pause on this, because there can no longer be a tenancy for life at law: see s 1 of the Law of Property Act 1925. Nowadays, if a lease is granted to a lessee for life, at a rent, it takes effect as a lease for 99 years determinable, after the death of the lessee, by one month's notice: see s 149(6) of the Law of Property Act 1925. But, as this agreement was not at a rent, that section does not apply.

But it was suggested here that Mrs Evans was a tenant for life under the Settled Land Act 1925, with some support from Bannister v Bannister. I cannot think this can be right. A tenant for life under that Act has power to sell the property and to lease it (and to treat himself or herself as the owner of it): see ss 38 and 72 of the Settled Land Act 1925. No one would expect Mrs Evans here to be able to sell the property or to lease it. It would be so entirely contrary to the true intent of the parties that it cannot be right.

There is, I think, a short answer to this suggestion. The agreement of 15 March 1968, was not a settlement within s 1(1) of the Settled Land Act 1925. In order to be a settlement, the land would have, by this agreement, to be 'limited in trust for any persons by way of succession'. This land may be held on trust (that I will deal with hereafter) but it is not 'limited' in trust (which I take to be expressly limited), nor is it limited by way of succession (because there is no trace of a succession of one beneficiary after another). It would be, I think, quite out of place to call this agreement a 'settlement' of any kind. In my opinion, therefore, Mrs Evans was not a tenant for life.

3. Any other tenancy

Counsel for Mrs Evans suggested that, although she might not have a tenancy for life, she might have a leasehold interest. He said it might be a 'hybrid' tenancy of some kind. I am afraid this will not do. In order to create a leasehold interest, it must be for a definite term of years. It must be expressed with certainty and specifically, or be capable of being ascertained with certainty at the time when the lease takes effect. That was settled by the decision of this court in Lace v Chandler, where a lease 'for the duration of the war' was held to be no lease. So also in Buck

[1972] 2 All ER 70 at 75

v Howarth, where a man, for no consideration, gave another permission to stay in a cottage until he died, it was held to be no lease but only a tenancy at will. Today it would be considered a bare licence, with no contractual right at all to stay there.

Mrs Evans has not a tenancy at will, nor a tenancy for life. She has not a tenancy for years, nor a periodic tenancy. She has, therefore, no tenancy known to the law.

4. An equitable interest

Seeing that Mrs Evans has no legal estate or interest in the land, the question is what right has she? At any rate, she has a contractual right to reside in the house for the remainder of her life or as long as she pleases to stay. I know that in the agreement it is described as a tenancy, but that does not matter. The question is: what is it in reality? To my mind it is a licence, and no tenancy. It is a privilege which is personal to her. On all the modern cases, which are legion, it ranks as a contractual licence, and not a tenancy: see Shell-Mex and B P Ltd v Manchester Garages Ltd.

What is the status of such a licence as this? There are a number of cases in the books in which a similar right has been given. They show that a right to occupy for life, arising by contract, gives to the occupier an equitable interest in the land; just as it does when it arises under a settlement (see Re Carne's Settled Estates and Re Boyer's Settled Estates). The courts of equity will not allow the landlord to turn the occupier out in breach of the contract (see Foster v Robinson) ([1950] 2 All ER 342 at 346, 347, [1951] 1 KB 149 at 156)nor will they allow a purchaser to turn her out if he bought with knowledge of her right (Errington v Errington ([1952] 1 All ER 149 at 155, [1952] 1 KB 290 at 299)).

It is instructive to go back to the cases before the Judicature Act 1873. They show that, if a landlord, by a memorandum in writing, let a house to someone, let us say to a widow, at a rent, for her life or as long as she pleased to stay, the courts of equity would not allow the landlord to turn her out in breach of his contract. If the landlord were to go to the courts of law and obtain an order in ejectment against her (as in Doe d Warner v Browne), the courts of equity would grant an injunction to restrain the landlord from enforcing his rights at law (as in Browne v Warner). The courts of equity would give the agreement a construction, which Lord Eldon LC called an 'equitable construction' and construe it as if it were an agreement to execute a deed granting her a lease of the house for her life: Browne v Warner ((1807) 14 Ves 156 at 158). They would order the landlord specifically to perform the contract, so construed, by executing such a deed. This court did so in Zimbler v Abrahams. This means that the widow had an equitable interest in the land. So much so that if a purchaser wished to buy her interest from her, he had to pay her its full value as such. Malins V-C so held in Re King's Leasehold Estades, where he described it as an 'equitable interest'. It follows that, if the owner sold his reversion to another, who took with notice of the widow's interest, his successor could not turn her out any more than he could. She would have, I should have thought, at least as strong a case as the occupier in Webb v Paternoster which received the blessing of Lord Upjohn in National Provincial Bank Ltd v Ainsworth ([1965] 2 All ER 472 at 489, [1965] Ac 1175 at 1239).

[1972] 2 All ER 70 at 76

Suppose, however, that Mrs Evans did not have an equitable interest at the outset; nevertheless it is quite plain that she obtained one afterwards when the Tredegar Estate sold the cottage. They stipulated with the purchaser that he was to take the house 'subject to' Mrs Evans's rights under the agreement. They supplied the purchaser with a copy of the contract, and the purchaser paid less because of her right to stay there. In these circumstances, this court will impose on the purchaser a constructive trust for her benefit, for the simple reason that it would be utterly inequitable for the purchaser to turn the widow out contrary to the stipulation subject to which he took the premises. That seems to me clear from the important decision of Bannister v Bannister, which was applied by the judge, and which I gladly follow.

This imposing of a constructive trust is entirely in accord with the precepts of equity. As Cardozo J once put it: 'A constructive trust is the formula through which the conscience of equity finds expression'; see Beatty v Guggenheim Exploration Co ((1919) 225 NY 380 at 385), or, as Lord Diplock put it quite recently in Gissing v Gissing ([1970] 2 All ER 780 at 790, [1971] AC 886 at 905), a constructive trust is created--

'whenever the trustee has so conducted himself that it would be inequitable to allow him to deny to the cestui que trust a beneficial interest in the land acquired.'

I know that there are some who have doubted whether a contractual licensee has any protection against a purchaser, even one who takes with full notice. We were referred in this connection to Professor Wade's article in the Law Quarterly Review^a, and to the judgment of Goff J in Re A Debtor, ex parte The Trustee v Solomon. None of these doubts can prevail, however, when the situation gives rise to a constructive trust. Whenever the owner sells the land to a purchaser, and at the same time stipulates that he shall take it 'subject to' a contractual licence, I think it plain that a court of equity will impose on the purchaser a constructive trust in favour of the beneficiary. It is true that the stipulation (that the purchaser shall take it subject to the rights of the licensee) is a stipulation for the benefit of one who is not a party to the contract of sale; but, as Lord Upjohn said in Beswick v Beswick ([1967] 2 All ER 1197, at 1219, [1968 AC 58 at 98), that is just the very case in which equity will come to the aid of the common law. It does so by imposing a constructive trust on the purchaser. It would be utterly inequitable that the purchaser should be able to turn out the beneficiary. It is to be noticed that in the two cases which are said to give rise to difficulty, King v David Allen & Sons, Billposting Ltd and Clore v Theatrical Properties Ltd and Westby & Co Ltd, there was no trace of a stipulation, express or implied, that the purchaser should take the property subject to the right of the contractual licensee. In the first case, if Mr King had protected himself by stipulating that the company should take the lease 'subject to the rights of David Allen', I cannot think that he would have been held liable in damages. In the second case the documents were exceedingly complicated, but if Mr Clore had acquired the theatre 'subject to the rights of the licensees', I cannot suppose that this court would have allowed him to disregard those rights.

^a     (1952) 68 LQR 337

In many of these cases the purchaser takes expressly 'subject to' the rights of the licensee. Obviously the purchaser then holds the land on an imputed trust for the licensee. But, even if he does not take expressly 'subject to' the rights of the licensee, he may do so impliedly. At any rate when the licensee is in actual occupation of the land, so that the purchaser must know he is there, and of the rights which he has:

[1972] 2 All ER 70 at 77

see Hodgson v Marks. Whenever the purchaser takes the land impliedly subject to the rights of the contractual licensee, a court of equity will impose a constructive trust for the beneficiary. So I still adhere to the proposition which I stated in Errington v Errington ([1952] 1 All ER 149 at 155, [1952] 1 KB 290 at 299), and elaborated in National Provincial Bank Ltd v Hastings Car Mart Ltd ([1964] 1 All ER 688 at 695-697, [1964] Ch 665 at 686-689), namely, that, when the licensee is in actual occupation--

'Neither the licensor nor anyone who claims through him can disregard the contract except a purchaser for value without notice.'

5. Conclusion

In my opinion Mrs Evans, by virtue of the agreement, had an equitable interest in the cottage which the court would protect by granting an injunction against the landlords restraining them from turning her out. When the landlords sold the cottage to a purchaser 'subject to' her rights under the agreement, the purchaser took the cottage on a constructive trust to permit the widow to reside there during her life, or as long as she might desire. The courts will not allow the purchaser to go back on that trust. I entirely agree with the judgment of the judge below. I would dismiss this appeal.



MEGAW LJ.

In the agreement dated 15 March 1968, the persons described collectively as 'the Landlords' were, we are told, the trustees of the Tredegar Estate. Mrs Evans, described as 'the Tenant', is, as the agreement itself records, the widow of a former employee of that estate. The agreement was drawn up by the solicitors acting for the trustees. In the circumstances, it falls to be construed in favour of Mrs Evans insofar as it contains any ambiguity or irreconcilable inconsistency. The phrase 'Tenant at will of them' is wholly inconsistent with what follows, namely, 'for the remainder of her life or until determined as hereinafter provided', followed by the provisions of cll 2 and 5. The support given to the concept of a tenancy at will by the earlier words 'a temporary home' is not sufficient to tilt the balance in favour of a tenancy at will. The agreement ought to be construed, reflecting the contractual intention of the parties, as providing that Mrs Evans shall be entitled to occupy the house and gardens rent free, subject to her performing the obligations undertaken by her under cl 3, for the remainder of her life or until she, of her own volition, puts an end to her right of occupation and to her own obligations by giving not less than four weeks' notice in writing. The words 'as Tenant at will of them' should be disregarded as being irreconcilably inconsistent.

What was the effect in law of that agreement, as between the trustees and Mrs Evans? In my view, the county court judge was right in holding that the effect was the same as the effect of the agreement considered by this court in Bannister v Bannister. In that case the defendant had orally agreed to sell two cottages to her brother-in-law, the plaintiff, in reliance on his statement:

'I do not want to take any rent, but will let you stay [in one of the cottages] as long as you like rent free.'

Troubles arose between the parties a few years later and the plaintiff sought to turn the defendant out, claiming that she was a mere tenant at will. The court (Scott, Asquith LJJ and Jenkins J) held as follows ([1948] 2 All ER at 137):

'... the plaintiff holds No. 30 in trust during the life of the defendant to permit the defendant to occupy the same for so long as she may desire to do so and subject thereto in trust for the plaintiff. A trust in this form has the effect of

[1972] 2 All ER 70 at 78

making the beneficiary a tenant for life within the meaning of the Settled Land Act, 1925, and, consequently, there is very little practical difference between such a trust and a trust for life simpliciter.'

As was said by the court ([1948] 2 All ER at 136):

'Similar words in deeds and wills have frequently been held to create a life interest determinable (apart from the special consideration introduced by the Settled Land Act, 1925) on the beneficiary ceasing to occupy the premises.'

I confess that I have had difficulty in seeing precisely how the Settled Land Act 1925 was applicable. But the court in Bannister v Bannister so held, and I am certainly content, and we are probably bound, to follow that authority. I see no relevant distinction. The fact that the transaction--the creation of the trust--was there effected orally, whereas here there is an agreement in writing, surely cannot be a ground for saying that the principle is not here applicable. The fact that there is here express provision for determination by the beneficiary cannot provide a relevant distinction. The defendant in Bannister v Bannister was free to give up occupation whenever she wished. The fact and nature of the obligations imposed on Mrs Evans by this agreement must tend in favour of, rather than adversely to, the creation of an interest in land, as compared with Bannister's case. I realise that the application of the Settled Land Act 1925 may produce some odd consequences; but no odder than those which were inherent in the decision in Bannister v Bannister. I do not find anything in the possible, theoretical, consequence to lead me to the conclusion that Bannister's case should not be followed. The plaintiffs took with express notice of the agreement which constitutes, or gives rise to, the trust. They cannot turn Mrs Evans out of the house against her will, for that would be a breach of the trust which binds them.

If for some reason Bannister v Bannister did not apply, so that there would then be no trust and Mrs Evans would possibly have no 'interest in land' within the technical meaning of those words, there would nonetheless be a continuing contractual obligation as between the trustees and Mrs Evans. It would then be what is sometimes called an irrevocable licence. It would be irrevocable--that is not determinable by the licensors, the trustees, without the consent of the licensee, Mrs Evans--because it is founded on a contract. The agreement was based on consideration--the provisions made by Mrs Evans as her side of the agreement. That irrevocable licence, that contractual right to continue in occupation, remained binding on the trustees. They could not, and did not, free themselves from it unilaterally by selling the land to the plaintiffs. As the plaintiffs took with express notice of, and indeed expressly subject to, the agreement between the trustees and Mrs Evans, the plaintiffs would, on ordinary principles, be guilty of the tort of interference with existing contractual rights if they were to evict Mrs Evans. For that would be knowingly to interfere with her continuing contractual rights with a third party, the trustees. In the ordinary way, the court would intervene to prevent the plaintiffs from interfering with those rights. I should have thought that ordinary principles of equity would have operated in the same way. However, it may be that there are special technical considerations in the law relating to land which would require to be reviewed before one could confidently assert that the ordinary principles as to the protection of known contractual rights would apply. There are, for example, passages in the speech of Lord Upjohn in National Provincial Bank Ltd v Ainsworth ([1965] 2 All ER 472 at 489, [1965] AC 1175 at 1239) which indicate doubts and difficulties in this sphere. Since, in my opinion, this case is governed by Bannister v Bannister I do not think it necessary to pursue that topic further.

I would dismiss the appeal.

[1972] 2 All ER 70 at 79

STEPHENSON LJ.

I agree so completely with the judgment of the learned county court judge that I am content to adopt it as my own; but out of deference to counsel for the plaintiffs' admirable argument I add a few paragraphs. Like the judge, I find nothing startling about the agreement which the trustees of the Tredegar Estate made with the widow of an ex-employee that she should have the cottage in which she and her husband had lived as her home for life or until she terminated the agreement. Widows of protected and statutory tenants have long enjoyed similar rights under the Rent Acts. If the trustees or those who purchased the cottage from them subject to that agreement are to be held not to be bound in law by the agreement and free to turn her out of the cottage, there is something very wrong with the law. Happily so far from the law forcing us to support the plaintiffs in evicting her, it, in my judgment, protects her from such a gross injustice.

Counsel for the plaintiffs has submitted that the agreement creates a tenancy at will in the ordinary legal sense, ie a tenancy terminable at the will of either party. Counsel for the defendant submits that it creates a tenancy for life within the meaning of the Settled Land Act 1925, ie a tenancy conferring on the tenant the power to ask for the legal title to be vested in her and to sell the cottage. Lord Denning MR has suggested that the agreement is a contractual licence to occupy as long as she wants--or lives. And it has also been suggested in the course of the argument that it creates a hybrid tenancy combining some of the elements both of a tenancy at will and of a tenancy for life.

By the language of the agreement, read as a whole, the landlords are agreeing (cl 1) to provide a temporary home for the widow of a former employee in a cottage as their tenant at will free of rent for the remainder of her life or until determined by her giving them not less than four weeks' previous notice in writing (cl 2) and/or by her ceasing personally to live there (cl 3 (c)). Unless previously determined in one of these two ways the tenancy will determine on her death (cl 5).

There are in the agreement various phrases indicating an attempt to do something different. 'A temporary home' suggests an occupation less permanent than a home until her death, but the later language shows that the time of her occupation may be shortened at her option only. 'Tenant at will of them' are words which if taken alone might mean that her tenancy might be determined at their option only or at the option of either party. But they do not stand alone. They are immediately followed by words which show that the only will which can determine her tenancy is hers. Then the words 'agree to permit the Tenant to reside in and occupy' suggest in one breath both a licence and a tenancy. Clause 3(c) picks up the licence idea with 'Personally occupy and live in the Property' but repeats the language of landlord and tenant by referring to the landlords, as do sub-cll (d) and (e) by referring to the tenancy.

The words 'tenant for life' are not used but that in one sense is what the landlords are agreeing that this widow should become. If, however, these words were in the agreement they would be used like 'tenant at will' in the context of the whole agreement as conferring a life interest, whatever called or however described, which was determinable by the so-called tenant for life on four weeks' notice or by ceasing permanently to live in the cottage.

Apart from authority, I would not have thought that such an interest could be understood to amount to a tenancy for life within the meaning of the Settled Land Act 1925, and I would have thought that the other terms of her tenancy (as I think it ought properly to be called) are inconsistent with a power to ask for the legal estate to be settled on her or to sell the cottage. But Bannister v Bannister is a clear decision of this court that such words as have been used in this agreement (excepting, I must concede, the words 'as Tenant at will of them') create a life interest determinable (apart from the special considerations introduced by the Settled Land Act 1925) on the beneficiary ceasing to occupy the premises and the landlords hold the

[1972] 2 All ER 70 at 80

cottage to permit her to occupy it 'during her life or as long as she lives', as the judge held, and subject thereto in trust for them.

I therefore find it unnecessary to consider or decide the vexed questions (1) whether this agreement is or creates an irrevocable contractual licence to occupy, and (2) whether such a licence has been elevated to a status equivalent to an estate or interest in land by decisions of this court such as Errington v Errington or Foster v Robinson, or still awaits legislation before it can so achieve transmissibility to subsequent purchasers with notice: see the rival views set out by Goff J in Re A Debtor, ex parte The Trustee v Solomon ([1966] 3 All ER 255 at 259-262, [1967] Ch 573 at 582-586).

On the whole of the document the defendant appears to me to agree to assume the rights and obligations of a tenant and the plaintiffs' predecessors those of a landlord, not those of a licensee and licensor: see Addiscombe Garden Estates Ltd v Crabbe. Accordingly, I prefer to regard the defendant as a tenant for life and not a licensee.

Again I need not express, and prefer to follow Sir Raymond Evershed MR in Foster v Robinson ([1950] 2 All ER at 347, [1951] 1 KB at 156) and Somervell LJ in Errington v Errington ([1952] 1 All ER at 152, [1952] 1 KB at 293) in not expressing a final view about the alternative possibility that the defendant became a tenant at will with a promise that the tenancy at will would not be determined.

The introduction of the words 'as Tenant at will of them' and the old doctrine set out in Coke on Littleton^b that a tenancy at will expressed to be at the will of one party only is by implication of law to be at the will of the other party also create a difficulty in the defendant's way; but all the rest of the document is inconsistent with the defendant being a tenant at the will of her landlords. If those six words are inconsistent with the rest of the document, I agree that we should disregard them. If they make the document ambiguous, then any ambiguity in the language of the agreement resulting from the attempt of the landlords' lawyers to have the best of different worlds ought clearly to be resolved against those who drew up the agreement and put it forward. To give it the meaning for which counsel for the plaintiffs persuasively contends would be to turn it into a trap for the widow. The successors in title to the owners who put forward this agreement took the cottage subject to the agreement and ought to be in no better position to turn her out than their predecessors who agreed not to.

^b     Coke on Littleton, s 68

I am happy to find that the law is what it ought to be and to agree that this appeal cannot succeed.

Appeal dismissed.

Solicitors: Bower, Cotton & Bower agents for Charles, Bell & Crookes, Cardiff (for the plaintiffs); Riders agents for John W Davies, Newport (Mon) (for the defendant).

L J Kovats Esq Barrister