Bannister v Bannister
Court of Appeal
Citations:  2 All ER 133.
The defendant owned two cottages. She sold both to the claimant, based on an oral agreement allowing her to live rent free in one of them. In return for this, the claimant received a discount on the purchase price. However, the written conveyance documents did not mention this oral agreement.
At a later date, the claimant attempted to evict the defendant. When the defendant refused to leave, the claimant launched possession proceedings. The claimant argued that the defendant was a tenant at will. This would mean that he could evict her at any time with simple notice. He argued that the parties’ oral agreement was not binding. This was because it was not mentioned in the written documents and so did not comply with the formality requirements of the Law of Property Act 1925, ss.53-54.
s.53 of the Law of Property Act 1925 prohibits the creation or disposition of land interests except by signed writing. It also requires the declaration of any trust in land to be evidenced in signed writing. Failure to comply with these formalities results an interest at will only: s.54.
- Was the defendant a tenant at will?
- Did the fact that the agreement not comply with formalities matter?
The Court of Appeal held in favour of the defendant. The defendant was not a tenant at will. The claimant had received the property at a discount on the strength of his promise. Accordingly, the defendant’s conveyance had to be understood as reserving herself a life interest in one cottage. It would be fraudulent to allow the claimant to assert the written conveyance as absolute to defeat this interest.
Allowing the claimant to rely on the absence of formalities to defeat the agreement would be allowing him to use a statute as an instrument of fraud. Equity will not allow this. Therefore, it did not matter that the oral agreement did not comply with the formality requirements of the Law of Property Act 1925.
This Case is Authority For…
A constructive trust arises when a person insists on the absolute nature of a formal transaction to defeat a beneficial interest they agreed to. There is no need for this person to have procured the conveyance intending to go back on the agreement. A constructive trust can arise even if they initially agreed in good faith but later change their mind.