Bannister v Bannister [1948]

Bannister v Bannister [1948] 2 All ER 133

Constructive trust of land; oral agreement to allow vendor to occupy a house rent free.

Facts

Ms Bannister inherited two cottages upon the death of her husband including the one in which she lived. She sold both cottages to her brother-in law for at least £150 less than market value after he gave an oral undertaking that she could remain living in her cottage rent free, for as long as she wished. Her brother in law then sought to evict her from the cottage.

Issues

Ms Bannister claimed she held a beneficial life interest in the cottage which arose as soon as her brother in law gave the oral undertaking that she could remain in the property rent free, for as long as she wished. Mr Bannister claimed there was no valid trust over land because it had not been evidenced in writing, as required under s53(1)(b) Law of Property Act 1925. He also claimed that his purchase of the two cottages had not been fraudulent and he was, therefore, entitled to insist on the true construction of the conveyance as having transferred both legal and equitable title to him.

Decision/Outcome

Mr Bannister held the cottage on constructive trust for Ms Bannister who held a life interest in the property, and could remain there rent free. Ms Bannister only agreed to sell the property at an undervalue because of the undertaking that she could remain there. It would be fraudulent of Mr Bannister to insist on the absolute character of the conveyance to defeat Ms Bannister’s life interest, and a valid trust of land had been created despite it not having satisfied the formality requirements of s53(1)(b) Law of Property Act 1925.