[COURT OF APPEAL]

BINIONS AND ANOTHER v. EVANS

[Plaint No. 71/50889]

Trusts - Constructive trust - Sale of land - Subject to rights of occupier under disclosed agreement - Provision for "a temporary home ... as tenant at will" rent free but fulfilling obligations - Determinable at occupier's will or death - Whether tenancy or trust

The defendant's husband was employed by an estate and lived in a cottage owned by the estate, paying no rent or rates. The husband died in 1965 when the defendant was 73 years old. She continued living in the cottage. On March 15, 1968, the trustees of the estate entered into an agreement with the defendant "to provide a temporary home" for her and 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." Clause 2 provided that the tenancy "may be determined at any time by" the defendant giving to the trustees not less than four weeks' previous notice in writing. By clause 3 the defendant undertook to keep the cottage in good condition and repair; cultivate, keep and manage the

garden; to "personally occupy and live" in the cottage as a private residence and not to "assign sublet or part with the possession of the cottage or any part thereof and ... upon ceasing personally to live there" to give vacant possession to the trustees. By clause 5 it was agreed that "the tenancy ... shall unless previously determined forthwith determine on the death" of the defendant. On May 5, 1970, the trustees agreed to sell the cottage to the plaintiffs. They gave the plaintiffs a copy of the agreement and inserted a special clause in the contract for sale to protect the defendant's occupation. As a result of that provision the plaintiffs paid a reduced price. On February 11, 1971, the plaintiffs gave the defendant notice to quit on March 17. They applied to the county court seeking possession claiming that the defendant was a tenant at will and as the tenancy had been determined she was a trespasser. The judge decided that the plaintiffs held the cottage on trust to permit the defendant to reside there during her life or as long as she desired.

On the plaintiffs' appeal:-

Held, dismissing the appeal, (1) that the words "tenant at will" in the agreement were inconsistent with the terms "for the remainder of her life or until determined as hereinafter provided" and to provide "a temporary home" for the defendant and did not create a tenancy at will (post, pp. 365G - 366B,369F-H, 372C-D).

Per Lord Denning M.R. The agreement gave rise to a contractual licence, resulting in an equitable interest which the court would protect (post, pp. 367B-E, 369C-D).

Per Megaw and Stephenson L.JJ. Semble, that the defendant was a tenant for life within the meaning of the Settled Land Act 1925 (post, pp. 370D-G, 372E, F-G).

(2) That when the cottage was sold to the plaintiffs subject to the defendant's right under the agreement the plaintiffs took the cottage on a constructive trust to permit the defendant to reside there during her life or as long as she desired (post, pp. 369D-E, 370G-H, 373D-E).

Bannister v. Bannister [1948] 2 All E.R. 133, C.A. applied.

The following cases are referred to in the judgments:

Addiscombe Garden Estates Ltd. v. Crabbe [1958] 1 Q.B. 513; [1957] 3 W.L.R. 980; [1957] 3 All E.R. 563, C.A.

Bannister v. Bannister [1948] 2 All E.R. 133, C.A.

Beatty v. Guggenheim Exploration Co. (1919) 225 N.Y. 380.

Beswick v. Beswick [1968] A.C. 58; [1967] 3 W.L.R. 932; [1967] 2 All E.R. 1197, H.L.(E.).

Boyer's Settled Estates, In re [1916] 2 Ch. 404.

Browne v. Warner (1807) 14 Ves. 156; (1808) 14 Ves. 409.

Buck v. Howarth [1947] 1 All E.R. 342, D.C.

Carne's Settled Estates, In re [1899] 1 Ch. 324.

Clore v. Theatrical Properties Ltd. and Westby & Co. Ltd. [1936] 3 All E.R. 483, C.A.

Doe d. Warner v. Browne (1807) 8 East 165.

Errington v. Errington and Woods [1952] 1 K.B. 290; [1952] 1 All E.R. 149, C.A.

Foster v. Robinson [1951] 1 K.B. 149; [1950] 2 All E.R. 342, C.A.

Gissing v. Gissing [1971] A.C. 886; [1970] 3 W.L.R. 255; [1970] 2 All E.R. 780, H.L.(E.).

Hodgson v. Marks [1971] Ch. 892; [1971] 2 W.L.R. 1263; [1971] 2 All E.R. 684, C.A.

King v. David Allen and Sons, Billposting Ltd. [1916] 2 A.C. 54, H.L.(I.).

King's Leasehold Estates, In re (1873) L.R. 16 Eq. 521.

Lace v. Chantler [1944] K.B. 368; [1944] 1 All E.R. 305, C.A.

National Provincial Bank Ltd. v. Hastings Car Mart Ltd. [1964] Ch. 665; [1964] 3 W.L.R. 463; [1964] 3 All E.R. 93, C.A.; [1965] A.C. 1175; [1965] 3 W.L.R. 1; [1965] 2 All E.R. 472, H.L.(E.).

Shell-Mex and B.P. Ltd. v. Manchester Garages Ltd. [1971] 1 W.L.R. 612; [1971] 1 All E.R. 841, C.A.

Solomon, A Bankrupt, In re, Ex parte Trustee of the Property of the Bankrupt v. Solomon [1967] Ch. 573; [1967] 2 W.L.R. 172; [1966] 3 All E.R. 255.

Webb v. Paternoster (1619) Poph 151.

Zimbler v. Abrahams [1903] 1 K.B. 577, C.A.

The following additional cases were cited in argument:

Fernie v. Scott (1871) L.R. 7 C.P. 202.

Smith v. Seghill Overseers (1875) L.R. 10 Q.B. 422

Appeal from Judge Bulger at the Newport County Court.

By a contract dated May 5, 1970, the plaintiffs, William Henry Binions and Mrs. Iris Grace Binions, agreed to purchase from the trustees of the Tredegar Estate, among other properties, a cottage known as 3 The Buildings, Cardiff Road, Newport, Monmouthshire. Condition 5 of the special conditions of sale of the contract provided that the property was sold "subject to the tenancy of" the cottage in favour of the defendant, Mrs. Beatrice Mina Louisa Evans, under an agreement dated May 15, 1968, a copy of which was supplied to the plaintiffs.

Under the agreement the trustees, as landlords, "in order to provide a temporary home" for the defendant who was the widow of a former employee of the estate, "but not otherwise" 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." Clause 2 provided that the "tenancy ... may be determined at any time by "the defendant" giving ... not less than four weeks' previous notice in writing to that effect." Clause 3 contained the defendant's undertakings to keep the cottage and the garden in good repair and condition, to personally occupy the cottage as a private residence and not to assign or sublet and on ceasing to live there to give vacant possession forthwith to the trustees. It was agreed by clause 5 that "the tenancy ... shall unless previously determined forthwith determine on the death" of the defendant.

On February 11, 1971, the plaintiffs gave the defendant a notice to quit and purported to determine the tenancy on March 17, 1971. The defendant remained in possession.

The plaintiffs applied to the county court claiming possession on the ground that the defendant was a trespasser, because her tenancy which was a tenancy at will, had been determined.

The county court judge dismissed the application deciding that the plaintiffs held the cottage on trust to permit the defendant to reside there during her life or as long as she desired.

The plaintiffs appealed.

Vernon Pugh for the plaintiffs. On the proper construction of the agreement the defendant was occupying the cottage as a tenant at will: see the use of the technical phrase "tenant at will" in clause 1 of the agreement and the expressed intention to provide a "temporary home only." The expression "tenant at will" in a document professionally drafted should be given its technical and established meaning and effect, i.e., a tenancy determinable at the will of either landlord or tenant: Hill & Redman's Law of Landlord and Tenant, 15th ed. (1970), p. 35; Littleton's Tenures, s. 68; Coke on Littleton, 55A; Fernie v. Scott (1871) L. R. 7 C.P. 202. Further, the agreement contains nothing necessarily and conclusively contrary to such an interpretation. The words "for the remainder of her life," serve to so define the greatest length of the time the defendant could reside at the cottage and also to safeguard the landlords against the defendant establishing a title by adverse possession after one year: the Limitation Act 1939, s. 9 (1). That provision does not give her a life interest or an estate for life since the governing expression is "tenant at will." The provisions for determination of the tenancy by the defendant give the landlords greater rights than usual in a tenancy at will by ensuring that they have notice of the termination thereof. Their right to terminate the tenancy immediately is not affected. Further, the defendant is occupying the cottage for an uncertain term. The law regards such an occupation as a tenancy at will: Buck v. Howarth [1947] 1 All E.R. 342. In Bannister v. Bannister [1948] 2 All E.R. 133, 135, Buck's case was distinguished because in the latter case the arrangement, as here, was purely voluntary and the court would have been slow to construe that as intending to confer a life interest.

Bannister v. Bannister [1948] 2 All E.R. 133 should not be followed in the present case because, apart from the particular and different terms of the present agreement, it was a voluntary one. Also the circumstances are not such as to impose a trust in favour of the defendant on either the landlords or the plaintiffs. Although the plaintiffs took the cottage subject to the agreement the sale gave the defendant no greater interest if all the agreement granted her was a tenancy at will. In the absence of evidence upon the point the county court judge was wrong to find that the plaintiffs paid a lesser price for the premises. The agreement was not meant to create a life interest within the Settled Land Act 1925, allowing the defendant, as tenant for life, to call for the conveyance of the legal estate in her favour and even to sell the legal estate: the Settled Land Act 1925, ss. 38 and 106 (1). The provision in the agreement against assignment shows that no life interest was intended. The alternative possibilities to a tenancy at will are not tenable. First, there is no lease capable of being converted into a 90-year term under section 149 (6) of the Law of Property Act 1925 for no rent is reserved. Secondly, it is not settled land within the Settled Land Act 1925 for no settlement was intended nor created by the agreement. Thirdly, if a contractual licence was created that was not binding upon the plaintiffs for they, as purchasers for value, took free of any contractual licence between the defendant and the landlords. Prior to Errington v. Errington and Woods [1952] 1 K.B. 290 that proposition was not seriously doubted. The observations of Lord Denning L.J., in the Errington case to the contrary are

obiter for in that case there was no transfer of the property to a third party. Denning L.J. was not referred to the House of Lords decisions in King v. David Allen & Sons, Billposting Ltd. [1916] 2 A.C. 54; and Clore v. Theatrical Properties Ltd. [1936] 3 All E.R. 483. The observations in the Errington case have since been criticised: In re Solomon [1967] Ch. 573; National Provincial Bank Ltd. v. Hastings Car Mart Ltd. [1965] A.C. 1175 and there is no other authority to support the proposition adverted to in the Errington case [1952] 1 K.B. 290. The agreement indicates that a tenancy was intended and not a licence. Fourthly, there is no authority to support the proposition that a hybrid equitable interest can exist.

David Webber for the defendant. The phraseology of the agreement shows that the defendant should have a life interest in the property. That view is consistent with clause 5 which provides that the tenancy is to determine at her death if not determined by her earlier. Clause 2 is inconsistent with a tenancy at will. If this was a tenancy at will the agreement would have provided that the landlords could also determine it. There is no provision as to determination by the landlords which confirms the view that the agreement does not create a tenancy at will. However, it is conceded that the interest created here is not within section 149 (6) of the Law of Property Act 1925 because no rent has been reserved. The terms of the agreement show that the landlords held the cottage in trust for the defendant for life or as long as she desired: Bannister v. Bannister [1948] 2 All E.R. 133. The difficulty in the way of saying that the defendant is a tenant for life under the Settled Land Act 1925 is that that enables her to sell the legal estate and exercise all the powers of a tenant for life.

There are two other alternatives. First, the agreement can be construed as a contractual licence and if so, the landlords, as licensors, would be restrained from revoking it: Foster v. Robinson [1951] 1 K.B. 149. The licensee's right can be enforced against the successors-in-title of the licensors, in the present case, the plaintiffs: Errington v. Errington and Woods [1952] 1 K.B. 290. If the agreement is a licence it is a licence coupled with an interest. It provides for putting the defendant's property in the cottage and cultivating the garden. Under common law such a licence was irrevocable. Secondly, it is some kind of hybrid tenancy; possibly a tenancy for life with a difference and a tenancy at will with a difference. Such a species of interest would be binding on the landlords' successors-in-title. The words used are akin to a tenancy and consideration and covenants are analogous to a lease. If it is a tenancy it is not a service tenancy although the defendant's husband, when living, was working for the estate. Where the servant is merely permitted, and not required, to occupy a particular house of his master, whether as part of his remuneration or merely for convenience, he is a tenant of the master: Smith v. Seghill Overseers (1875) L.R. 10 Q.B. 422, 430-431. It is a tenancy following on the tenancy under which the defendant's deceased husband occupied the cottage. In that sense it is closer to a statutory tenancy under the Rent Acts rather than any other type of tenancy.

Pugh in reply. The proposition that an irrevocable licence was binding on the licensor's successors-in-title, as was held in the Errington case [1952] 1 K.B. 290, should not be followed: see Professor Wade's article, Licences and Third Party, in (1952) 68 L.Q.R. 337. If the defendant has a

contractual licence then it is not accompanied by any interest in land - it is a mere licence to occupy. If there is a contradiction in the terms of the agreement then it should be resolved in favour of a tenancy at will rather than a life interest making the defendant a life tenant under the Settled Land Act 1925. If the latter interpretation is adopted then the plaintiffs probably do not have good title to the premises nor did the landlords have the legal estate to convey to them.

January 27, 1972. The following judgments were read.

LORD DENNING M.R. The Tredegar Estate owns 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 no. 3 Old Buildings, Cardiff Road, Newport. It had two rooms up and down. Mr. Evans married in 1922. He and his wife lived at the cottage. He paid no rent or rates. Mr. Evans died in 1965. His widow, the defendant, was then 73. She stayed on in the cottage, paying no rent or rates. On March 15, 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 the defendant 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 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 sublet 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 defendant as long as she lived. But two years later, on May 5, 1970, the Tredegar Estate agreed to sell the cottage to the plaintiffs for £937 10s. The trustees gave to the plaintiffs a copy of the agreement with the defendant, and inserted in the agreement a special clause to protect the defendant in her occupation. It said:

"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 May 15, 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 May 15, 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, the plaintiffs paid a reduced price for the cottage. Judge Bulger so found. The conveyance was completed in June 1970.

Six months later the plaintiffs sought to turn the defendant out. She was then 79. Nevertheless, on February 11, 1971, they gave her notice to quit on March 17, 1971. They then issued a plaint in the county court claiming possession on the ground that the defendant was a tenant at will, and, that having been determined, she was a trespasser. The plaintiffs did not give evidence. The defendant 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 the defendant'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

Mr. Pugh stressed the words "as tenant at will." Those words, 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 of England, 3rd ed., vol. 23 (1958), p. 505 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, the defendant is to be permitted to stay "for the

remainder of her life." So the Tredegar Estate cannot turn her out at their will. Again, the defendant 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 defendant. 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 (1807) 8 East 165. But I need not pause upon this: because there can no longer be a tenancy for life at law, see section 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 90 years, determinable, after the death of the lessee, by one month's notice: see section 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 the defendant was a tenant for life under the Settled Land Act 1925, with some support from Bannister v. Bannister [1948] 2 All E.R. 133. 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 sections 38 and 72 of the Settled Land Act 1925. No one would expect the defendant here to be able to sell the property or to lease it. It would be so entirely contrary to true intent of the parties that it cannot be right.

There is, I think, a short answer to this suggestion. The agreement of March 15, 1968, was not a settlement within section 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, the defendant was not a tenant for life.

3. Any other tenancy

Mr. Webber suggested that, although the defendant 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. Chantler [1944] K.B. 368, where a lease "for the duration of the war" was held to be no lease. So also in Buck v. Howarth [1947] 1 All E.R. 342, 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.

The defendant 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 the defendant 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 modem 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. [1971] 1 W.L.R. 612.

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 In re Carne's Settled Estates [1899] 1 Ch. 324 and In re Boyer's Settled Estates [1916] 2 Ch. 404. The courts of equity will not allow the landlord to turn the occupier out in breach of the contract: see Foster v. Robinson [1951] 1 K.B. 149, 156; nor will they allow a purchaser to turn her out if he bought with knowledge of her right - Errington v. Errington and Woods [1952] 1 K.B. 290, 299.

It is instructive to go back to the cases before the Supreme Court 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, 8 East 165, the courts of equity would grant an injunction to restrain the landlord from enforcing his rights at law, as in Browne v. Warner (1808) 14 Ves. 409. The courts of equity would give the agreement a construction, which Lord Eldon L.C. 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, 14 Ves. 156, 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. Abraham [1903] 1 K.B. 577. This means that she 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 In re King's Leasehold Estates (1873) L.R. 16 Eq. 521, 527, 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 (1619) Poph. 151, which received

the blessing of Lord Upjohn in National Provincial Bank Ltd. v. Hastings Car Mart Ltd. [1965] A.C. 1175, 1239.

Suppose, however, that the defendant 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 plaintiffs that they were to take the house "subject to" the defendant's rights under the agreement. They supplied the plaintiffs with a copy of the contract: and the plaintiffs paid less because of her right to stay there. In these circumstances, this court will impose on the plaintiffs a constructive trust for her benefit: for the simple reason that it would be utterly inequitable for the plaintiffs to turn the defendant out contrary to the stipulation subject to which they took the premises. That seems to me clear from the important decision of Bannister v. Bannister [1948] 2 All E.R. 133, 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 N.Y. 380, 386: or, as Lord Diplock put it quite recently in Gissing v. Gissing [1971] A.C. 886, 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 Licences and Third Parties in (1952) 68 L.Q.R. 337, and to the judgment of Goff J. in In re Solomon, A Bankrupt, Ex parte Trustee of the Property of the Bankrupt v. Solomon [1967] Ch. 573. 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 [1968] A.C. 58, 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 and Sons, Billposting Ltd. [1916] 2 A.C. 54 and Clore v. Theatrical Properties Ltd. and Westby & Co. Ltd. [1936] 3 All E.R. 483, 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.

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: see Hodgson v. Marks [1971] Ch. 892. 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 I stated in Errington v. Errington and Woods [1952] 1 K.B. 290, 299; and elaborated in National Provincial Bank Ltd. v. Hastings Car Mart Ltd. [1964] Ch. 665, 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 the defendant, 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 defendant 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 Judge Bulger. I would dismiss this appeal.

MEGAW L.J. In the agreement dated March 15, 1968, the persons described collectively as "the landlords" were, we are told, the trustees of the Tredegar Estate. The defendant, 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 the defendant in so far 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 clauses 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 the defendant shall be entitled to occupy the house and gardens rent free, subject to her performing the obligations undertaken by her under clause 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 the defendant? In my view, Judge Bulger was right in holding that the effect was the same as the effect of the agreement considered by this court in Bannister v. Bannister [1948] 2 All E.R. 133. 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 L.J., Asquith L.J. and Jenkins J.) held, at p. 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 making the beneficiary a tenant for life within the meaning of the Settled Land Act 1925, and, consequently, there is a very little practical difference between such a trust and a trust for life simpliciter."

As was said by the court, at p. 136:

"Similar words in deeds and wills have frequently been held to 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: ..."

I confess that I have had difficulty in seeing precisely how the Settled Land Act of 1925 was applicable. But the court in Bannister v. Bannister [1948] 2 All E.R. 133 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 [1948] 2 All E.R. 133 was free to give up occupation whenever she wished. The fact and nature of the obligations imposed upon the defendant by the agreement in the present case 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 [1948] 2 All E.R. 133. I do not find anything in the possible, theoretical, consequences 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 the defendant 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 [1948] 2 All E.R. 133 did not apply, so that there would then be no trust and the defendant would possibly have no "interest in land" within the technical meaning of those

words, there would none the less be a continuing contractual obligation as between the trustees and the defendant. 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, the defendant - because it is founded on a contract. The agreement was based on consideration - the provisions made by the defendant as her side of the agreement. That irrevocable licence, that contractual right to continue in occupation, remained binding upon 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 the defendant, the plaintiffs would, on ordinary principles, be guilty of the tort of interference with existing contractual rights if they were to evict the defendant. 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. Hastings Car Mart Ltd. [1965] A.C. 1175, 1239, which indicate doubts and difficulties in this sphere. Since, in my opinion, this case is governed by Bannister v. Bannister [1948] 2 All E.R. 133 I do not think it necessary to pursue that topic further.

I would dismiss the appeal.

STEPHENSON L.J. I agree so completely with the judgment of Judge Bulger that I am content to adopt it as my own; but out of deference to Mr. Pugh's 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 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.

Mr. Pugh, for the plaintiffs, has submitted that the agreement creates a tenancy at will in the ordinary legal sense, i.e., a tenancy terminable at the will of either party. Mr. Webber, for the defendant, submits that it creates a tenancy for life within the meaning of the Settled Land Act 1925, i.e., 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 M.R. 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 (clause 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 (clause 2) and/or by her ceasing personally to live there (clause 3 (c)). Unless previously determined in one of these two ways the tenancy will determine on her death (clause 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 till 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-clauses (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 [1948] 2 All E.R. 133 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 cottage on trust to permit her to occupy it "during her life or as long as she lives," as Judge Bulger 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 and Woods [1952] 1 K.B. 290 or Foster v. Robinson [1951] 1 K.B. 149 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 In re Solomon, A Bankrupt, Ex parte Trustee of the Property of the Bankrupt v. Solomon [1967] Ch. 573, 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 [1958] 1 Q.B. 513. 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 M.R. in Foster v. Robinson [1951] 1 K.B. 149, 156 and Somervell L.J. in Errington v. Errington and Woods [1951] 1 K.B. 290, 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, 55A, 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 Mr. Pugh persuasively contends would be to turn it into a trap for the defendant. 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.

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

Solicitors: Bower, Cotton & Bower for Charles, Bell & Crookes, Cardiff; Riders for John W. Davies, Newport.

A. R.