Bannister v Bannister [1948] 2 All ER 133

Facts

• Mrs. Bannister transferred two cottages to her brother-in-law (the defendant) on the oral understanding she could live in one rent-free for life.
• After the transfer, the defendant sought to evict Mrs. Bannister, arguing the oral agreement was unenforceable under the Law of Property Act 1925, which required written evidence for interests in land.
• Mrs. Bannister brought an action to enforce the agreement, claiming the defendant held the property on a constructive trust for her benefit.
• The dispute centered on whether the circumstances gave rise to an implied or constructive trust, overriding the statutory requirement for a written agreement.

Issues

1. Whether an oral agreement allowing the claimant to occupy a property for life, absent written evidence, could create an enforceable equitable interest under a constructive or implied trust.
2. Whether equity would intervene to prevent the defendant from relying on statutory formalities to deny the claimant's interest and thus allow unjust enrichment or fraud.

Decision

• The Court of Appeal held the defendant held the property on a constructive trust for Mrs. Bannister's benefit.
• The court found that seeking to evict Mrs. Bannister after inducing the transfer based on their oral agreement constituted fraud.
• Equity would not permit the defendant to rely on the absence of a written agreement to defeat Mrs. Bannister's equitable interest.
• The constructive trust was imposed to prevent the defendant's unjust enrichment and to uphold fairness.

Legal Principles

• Equity will not allow a statute to be used as an instrument of fraud.
• A constructive trust may arise where a party seeks to deny an oral agreement concerning property in circumstances amounting to fraud or unjust enrichment.
• Implied and constructive trusts are equitable remedies that may override statutory formalities to prevent injustice.
• Parties' intentions and conduct are central in determining the existence of equitable interests, beyond the formal requirements of property law.

Conclusion

The decision in Bannister v Bannister established that equity may impose a constructive trust to prevent a party from relying on legal formalities to perpetrate a fraud, thereby protecting equitable interests arising from oral agreements where one party has acted to their detriment.