Binions v Evans [1972] Ch 359 (CA)

Facts

• Mrs. Evans was granted a contractual licence permitting her to occupy a cottage for her lifetime.
• The plaintiffs, the Binions, acquired the property with knowledge of Mrs. Evans's licence.
• Upon purchasing the property, the Binions sought to evict Mrs. Evans, challenging the enforceability of her licence.
• The dispute centred on whether a contractual licence could bind subsequent purchasers through the imposition of a constructive trust.

Issues

1. Whether a contractual licence can be protected against third parties by the imposition of a constructive trust.
2. Whether the Binions, as purchasers with notice, are bound by the licence held by Mrs. Evans.
3. What role notice and unconscionability play in enforcing such equitable interests against third parties.

Decision

• The Court of Appeal held that a constructive trust could arise to protect the licensee's interest where the purchaser acquired the property with notice of that interest.
• The Binions were found to be bound by Mrs. Evans's licence due to their knowledge at the time of purchase.
• It was considered unconscionable for the Binions to disregard Mrs. Evans's rights given their awareness of the prior arrangement.
• The court affirmed that a contractual licence, though not a proprietary interest at law, could attract equitable protection where circumstances justify the imposition of a constructive trust.

Legal Principles

• A constructive trust may be imposed where it would be inequitable for the legal owner to deny another party’s beneficial interest, particularly to prevent unjust enrichment or unconscionable conduct.
• Contractual licences, although personal rights rather than proprietary interests, may gain equitable protection through constructive trusts when a purchaser acquires property with notice of the licence.
• The effectiveness of equitable interests against third parties depends on the concept of notice, which can be actual, constructive, or imputed.
• Unconscionability, including reliance by the licensee and knowledge by the purchaser, is central to the decision to impose equitable remedies such as constructive trusts.

Conclusion

The Court of Appeal in Binions v Evans held that purchasers who acquire property with notice of a prior licence may be bound by a constructive trust, ensuring equitable protection of licensees’ interests and reinforcing the significance of notice and unconscionability in property law.