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

A father promised his son and daughter-in-law a house if they paid the mortgage. After his death, his personal representatives sought to evict her. The court found a unilateral contract, holding the father's promise was irrevocable as long as performance continued.

Facts

In 1936, a father bought a house in Newcastle-upon-Tyne for his son and daughter-in-law to live in. The house was put in the father’s name. He paid £250 of the £750 purchase price in cash and borrowed the remaining £500 from a building society, secured by a mortgage on the property. The father told his daughter-in-law that the £250 was a gift to them and promised that if they paid the weekly mortgage instalments, the house would be theirs once the debt was cleared. He gave them the building society paying-in book. The couple moved in and began making the payments. In 1945, the father died and, under his will, left the house to his widow. The son subsequently left his wife, the daughter-in-law, to live with his mother. The daughter-in-law remained in the house and continued to pay the mortgage instalments. The father’s widow, as his personal representative, brought an action seeking possession of the house from the daughter-in-law.

Issues

The central legal issue was to determine the nature of the daughter-in-law’s right to occupy the property. The court had to consider:

1. Whether the arrangement constituted a tenancy at will, which would be determinable by the father’s death and could be terminated by his successor in title upon giving notice.
2. Whether the father’s promise created a unilateral contract, which could not be revoked once the couple had embarked upon performance (i.e., paying the mortgage instalments).
3. What was the legal status of the daughter-in-law’s occupation if it was not a tenancy? Specifically, did she have a contractual or equitable licence to occupy the house which was binding on the father’s successors?

Judgment

The Court of Appeal unanimously dismissed the appeal from the County Court, holding that the daughter-in-law was entitled to remain in possession of the house so long as she continued to pay the mortgage instalments.

Lord Justice Denning’s Analysis

Lord Justice Denning delivered the leading judgment, providing a foundational analysis of unilateral contracts and contractual licences. He rejected the argument that the couple were tenants at will, stating that the circumstances were inconsistent with such a relationship. Instead, he characterised the arrangement as a unilateral contract.

The father’s promise was a unilateral contract – a promise of the house in return for their act 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, which they have not done.

Denning LJ reasoned that the couple were not mere licensees, but licensees with a contractual right to remain. This licence was irrevocable as long as they fulfilled their side of the bargain. He concluded that their right to occupy was not terminated by the father’s death and was binding on his widow as his successor in title.

They were not tenants at will but licensees. They had a licence to occupy the house as long as they paid the instalments to the building society. … In my opinion, it is clear that the father, if he were alive, would not be allowed to turn them out. His promise was binding on him: and it is equally binding on his widow, as his successor in title.

He further clarified that this right was an equitable one, which would mature into full equitable ownership upon the completion of the payments.

It is an equitable right to remain which will ripen into a good equitable title to the house itself as soon as the mortgage is paid.

Concurring Judgments

Lord Justice Somervell and Lord Justice Hodson agreed. Somervell LJ concurred that the facts were inconsistent with a tenancy at will and that the couple were licensees with an equitable right to remain as long as the mortgage was paid. Hodson LJ also agreed, finding that there was a clear arrangement which gave the daughter-in-law the right to continue in occupation under the terms originally promised by the father.

Implications

The decision in Errington v Errington and Woods is of significant importance in English contract and property law. Its key implications are:

• Irrevocability of Unilateral Offers: It established the crucial principle that once an offeree has commenced performance of a unilateral contract, the offeror cannot revoke the offer. This provides protection to offerees who have relied on the promise and started to perform the required act.
• Development of Contractual Licences: The case was instrumental in the development of the contractual licence as a proprietary interest in land. Denning LJ’s judgment advanced the idea that a licence, when coupled with a contract or an equity, could be binding not just on the original parties but also on third parties (successors in title), thereby blurring the traditional distinction between personal and proprietary rights.
• Interaction of Law and Equity: The case is a prime example of equity intervening to prevent an injustice that a strict application of common law rules (such as those relating to tenancies at will or bare licences) might otherwise produce. The creation of an ‘equitable right to remain’ protected the daughter-in-law’s reliance on the father’s promise.

Verdict: Appeal dismissed. The daughter-in-law was entitled to remain in possession of the property so long as she continued to pay the mortgage instalments.

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