Errington v Wood [1951] EWCA Civ 2 (19 December 1951)

A father bought a house for his son and daughter-in-law, paying a deposit and arranging a building society mortgage. He promised the house would be theirs when the mortgage was paid off. After his death, his widow sought possession. The Court of Appeal held the couple were contractual licensees who could not be evicted while continuing mortgage payments.

Facts

In 1936, a father purchased a house at 27 Milvain Avenue for his son and daughter-in-law to live in. He paid £250 as a deposit and borrowed £500 from a building society on mortgage, repayable by instalments of 15 shillings per week. The father took the house in his own name but told the daughter-in-law that the £250 was a present and that the house would become their property when the mortgage was paid off. He handed her the building society book and told her not to part with it. The couple paid the instalments regularly.

The father died in 1945, leaving all his property to his wife (the Plaintiff). Shortly after, the son left his wife to live with his mother. The daughter-in-law continued paying the mortgage instalments. The Plaintiff brought proceedings seeking possession of the house.

Issues

The main legal issues were:

1. What was the legal relationship between the parties?

Whether the couple were tenants at will, tenants paying rent, or licensees.

2. Was the Plaintiff entitled to possession?

Whether the widow could evict the daughter-in-law while mortgage payments continued.

Judgment

The Court of Appeal unanimously dismissed the appeal, holding that the couple were not tenants but licensees with a contractual right to remain in possession.

Lord Justice Somervell

His Lordship found it impossible to regard the couple as tenants at will, as a tenancy at will is determinable by either party on demand, which was inconsistent with the father’s promise. The payments to the building society could not be regarded as rent as they were instalments of purchase price payable to a third party under a mortgage. The couple were licensees whose possession could not be claimed so long as the instalments were paid.

Lord Justice Denning

Lord Justice Denning provided extensive analysis of the distinction between tenancies and licences. He stated that although exclusive possession is prima facie indicative of a tenancy, the circumstances may negative any intention to create a tenancy. On the father’s promise, he observed:

The father’s promise was a unilateral contract — a promise of the house in return for their set of paying the instalments. It could not be revoked by him once the couple entered on performance of the act, but it would cease to bind him if they left it incomplete and unperformed.

His Lordship explained that contractual licences now have force and validity through the infusion of equity, stating:

This infusion of equity means that contractual licences now have a force and validity of their own and cannot be revoked in breach of the contract. Neither the licensor nor anyone who claims through him can disregard the contract except a purchaser for value without notice.

Lord Justice Hodson

His Lordship agreed that the couple occupied the house as licensees under a personal contract, whereby they would pay instalments to the building society and in consideration the father (and his successor) agreed to permit them to occupy the house as long as instalments were running and being paid.

Implications

This case is significant for establishing that:

• A contractual licence cannot be revoked in breach of the underlying contract
• Exclusive possession does not automatically create a tenancy where circumstances negative such intention
• Equity will protect licensees who have acted upon promises made to them
• A successor in title takes subject to contractual licences of which they have notice

The case represents an important development in the law of licences, demonstrating the courts’ willingness to use equitable principles to protect occupiers who have relied upon promises, even where they have no proprietary interest in land.

Verdict: Appeal dismissed. The daughter-in-law was entitled to remain in possession as a contractual licensee so long as she continued to pay the building society instalments. No order for possession was made.

Source: Errington v Wood [1951] EWCA Civ 2 (19 December 1951)