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Errington v Errington (or Errington v Wood)

[1952] 1 KB 290

Overview

House keys

A father bought house subject to mortgage and promised his son and daughter-in-law they could have the house when he died if they made the mortgage repayments (which they did). 

An issue arose about whether there a contract for the sale of the house?

The court unanimously held that there was a unilateral contract between the father and the couple. The father promised to convey the house if they paid the mortgage. Although the children made no reciprocal promise to make payments, the contract was binding unless they stopped making payments.

 

Facts

Mr Errington (father and husband of plaintiff) bought house in Newcastle upon Tyne for his son and daughter-in-law (defendant). The house was subject to a mortgage and Mr Errington promised his son and the defendant that they could live in the house and have the house when he died if they made the mortgage repayments. They did. Lord Justice Denning set out the facts as follows:

The facts are reasonably clear. In 1936 the father bought the house for his son and daughter-in-law to live in. The father put down £250 in cash and borrowed £500 from a building society on the security of the house, repayable with interest by instalments of 15s. 0d. a week. He took the house in his own name and made himself responsible for the instalments. The father told the daughter-in-law that the £250 was a present for them, but he left them to pay the Building Society instalments of 15s. 0d. a week themselves. He handed the Building Society book to the daughter-in-law and said to her: "Don't part with this book". "The house will be your property when this mortgage is paid." He said that when he retired he would transfer it into their names. She has in fact paid the Building Society instalments regularly from that day to this with the result that much of the mortgage has been repaid, but there is a good deal yet to be paid. ...

The father died and left the house to his widow. The son later left the house to live with his mother and the mother/widow (plaintiff) sought possession of the house from the daughter-in-law (defendant).

 

Issue

Was there a contract for the sale of the house?

 

Held

There was a unilateral contract between the father and the couple. The father promised to convey the house if they paid the mortgage; the children made no reciprocal promise to make payments, but the contract was held to be binding unless they stopped making payments.

Lord Justice Sommervell

The father was undertaking to convey the house to the son and his wife if and when they had paid all the instalments....

The son and his wife were to occupy the house in consideration of their paying the instalments to the Building Society. Two further questions remain to be considered which are connected. First, were they undertaking to pay the instalments? If they failed would they have committed a breach of the agreement? I have hesitated about this. It would have been on the face of it advantageous for them so to undertake. They would be getting a house on ordinary building society terms for two-thirds of its price.

I do not think that the transaction as found by the learned Judge justifies finding that they had so undertaken. Further, if this had been the intention it is difficult to see why the father did not convey the house then and there. If the instalments were not paid I think their rights were at an end. If this happened towards the end of the period the father or his successors in title would have a good bargain, but the parties were not considering future possibilities at arms length and the contemplation was that the son and his wife would complete the payments.

Were their rights assignable? I think not. The father desired to benefit his son and daughter-in-law by making a present of the £250. He wanted to assist them to get a house to live in in advantageous terms. If they did not want it to live in then I think the proper inference from the fact that he remained the owner is that he intended it should come back into his control.

I find it impossible to regard them as tenants at will. ...

... the son and his wife were licences, and for the reasons elaborated by my brother Denning his his judgment ... there is no legal obstacle to holding that as licencees possession cannot be claimed so long as the instalments are paid.

 

...

Lord Justice Denning

Lord Justice Denning also dismissed the appeal, offering the following reasons (my emphasis)"

... the couple never bound themselves to pay the instalments to the Building Society; and I see no reason why any such obligation should be implied. It is clear law that the Court is not to imply a term unless it is necessary; and I do not see that it is necessary here. Ample content is given to the whole arrangement by holding that the father promised that the house should belong to the couple as soon as they paid off the mortgage. The parties did not discuss what was to happen if the couple failed to pay the instalments to the Building Society, but I should have thought it clear that, if they did fail to pay the instalments the father would not be bound to transfer the house to them. 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, which they have done. If that was the position during the father's lifetime, so it must be after his death. If the daughter-in-law continues to pay all the building society instalments, the couple will be entitled to have the property transferred to them as soon as the mortgage is paid off; but if she does not do so, then the Building Society will claim the instalments from the father's estate and the estate will have to pay them. I cannot think that in those circumstances the estate would be bound to transfer the house them, any more than the father himself would have been.

...

[Lord Justice Denning then went on to consider whether the couple were tenants or licensees of the property]

...

In the present case it is clear that the father expressly promised the couple that the property should belong to them as soon as the mortgage was paid, and impliedly promised that so long as they paid the instalments to the Building Society, they should be allowed to remain in possession. They were not purchasers because they never bound themselves to pay the instalments, but nevertheless they were in a position analogous to purchasers. They have acted on the promise and neither the father nor his widow, his successor in title, can eject them in disregard of it.

The result is that in my opinion the appeal should be dismissed ...

 

Lord Justice Rodson

Agreed the appeal should fail.