THE MASTER OF THE ROLLS: This is another case of a "family arrangement" which gives rise to special problems. Mrs. Hardwick is the mother of Robert Johnson. He has been twice married. On each occasion his mother has helped him and his wife to get a house. On the first marriage, the house was put in the joint names of the couple. That marriage broke up and there was a divorce. It gave rise to problems about the house which were later resolved. On the second marriage the mother determined to keep the house in her own name. That marriage has now broken up. And problems have now arisen about this second house. The story is this:-
In 1972 the son, Robert Johnson, became engaged to Janet. The mother promised to buy them a house to live in when they got married. They found a house at Trowbridge in Wiltshire - 222 Frome Road, Trowbridge. It was a good and suitable house. The price was £12,000. Janet, the fiancee, paid a reservation fee of £100 to get it reserved for them. The mother went to see it and told the young couple: "I'll buy the house and you can pay me rent". The mother went to her solicitor and told him she would buy the house for the young couple for £12,000. The solicitor suggested that it should be put into the joint names of the young couple, but the mother insisted that the house should be conveyed into her own name. The mother repaid Janet the £100 reservation fee and paid £12,000 for the house. It was conveyed to the mother on 30th March, 1973. The son and his fiancee married four days later, on 4th April, 1973, and they occupied the house thereafter. It was arranged that the young couple were to pay the mother £.7 a week from 1st April, 1973, and this was supposed to pay off the purchase price of the house. It appears that the young couple made a few payments. They made them through a joint account. They were made on 19th April, 1973, £28: 12th November, 1973, £20: 7th February, 1974, £20: and 28th May, 1974, £20. But that was all. The mother did not insist on any more payments. She knew the young couple had not got much money to live on. (It appears that the son had to make payments in respect of the child of his first marriage). The second marriage with Janet lasted about a year, but then they began to drift apart. The wife became pregnant. The son started to have an affair with another woman. On 8th January, 1975, the mother, through her solicitors, wrote to the young wife at the house, saying that she wanted possession: -
"We are instructed that our client purchased the property upon the understanding that a rent of £7 a week would be paid by your husband, but we understand that only about two months' rent was in fact ever paid ... Whilst our client was prepared to allow this state of affairs to continue in order to provide a home during the early years of your marriage, we understand that unfortunately matrimonial differences have now arisen, and that divorce proceedings are being contemplated. In the circumstances, as you are aware, our client wishes to place the property on the market for sale ...".
So the mother wanted the wife to go out and the property to be sold. In March 1975 the son left the house. In June 1975 the mother took proceedings for possession of the house in the County Court. The little grandson was born just about that time. The wife and baby have been staying in the house. The mother made both her son and daughter-in-law defendants.
The Judge heard much evidence as to the arrangements about the house, but it was all very vague and uncertain. He said:-
"There is no doubt it was very much a family arrangement, and I do not suppose that all the implications of the arrangement were very fully discussed between the parties".
The Judge accepted the daughter-in-law's evidence completely. He preferred it to all the others. She said in evidence: "... I did not really know where we stood except that she was buying the House for Robert and I. Mrs. Hardwick did not want to take payment for the first few months to help us get on our feet". Later on she said: "... Think Mrs. Hardwick always envisaged that house would become ours by inheritance. Nothing ever was said about when you've finished buying I will convey. Previously she had agreed to loan us the money. That is why I paid the £100 reservation. ... Think (we) agreed ... just before marriage that we would pay £7 a week. I don't know what it was for really. Subject was always dropped like a hot potato. 'Rent' and 'Purchase Price' never really regarded as separate matters. Never anything crystal clear about this arrangement so that I could turn round and say we are renting it or buying it". That extract shows just how vague everything was. No doubt if the marriage had turned out successfully, the couple would have gone on living in the house, the mother would not have insisted on receiving £7 a week, and on her death they would have inherited the house. But the marriage did not turn out successfully. It has broken down. A situation has arisen which they did not envisage. The son has left the house, leaving the daughter-in-law and the child there.
So we have to consider once more the law about family arrangements. In the well-known case of Balfour v. Balfour (1919) 2 King's Bench 591, Lord Justice Atkin said that family arrangements made between husband and wife "are not contracts because the parties did not intend that they should be attended by legal consequences". Similarly, family arrangements between parent and child are often not contracts which bind them, see Jones v. Padevatton (1969) 1 WLR 328. Nevertheless these family arrangements do have legal consequences: and, time and time again, the Courts are called upon to determine what is the true legal relationship resulting from them. This is especially the case where one of the family occupies a house or uses furniture which is afterwards claimed by another member of the family: or when one pays money to another and afterwards says it was a loan and the other says it was a gift: and so forth. In most of these cases the question cannot be solved by looking to the intention of the parties: because the situation which arises is one which they never envisaged; and for which they made no provision. So many things are undecided, undiscussed, and unprovided for that the task of the Courts is to fill in the blanks. The Court has to look at all the circumstances and spell out the legal relationship. The Court will pronounce in favour of a tenancy or a licence, a loan or a gift, or a trust -according to which of these legal relationships is most fitting in the situation which has arisen: and will find the terms of that relationship according to what reason and justice require. In the words of Lord Diplock in Pettit v. Pettit [1970] AC at page 823:
"The court imputes to the parties a common intention which in fact they never formed and it does so by forming its own opinion as to what would have been the common intention of reasonable men as to the effect" of the unforeseen event if it had been present to their minds.
The present case is a good illustration of the process at work. The correspondence and the pleadings show that the parties canvassed all sorts of legal relationships. One of them was that there was a loan by the mother to the couple of £12,000 which was repayable by instalments of £28 a month. Another suggestion was that there was a tenancy at £7 a week. Another suggestion was that there might be an implied or constructive trust for the young couple. Yet another suggestion was that there was a personal licence to this young couple to occupy the house.
Of all these suggestions, I think the most fitting is a personal licence. The occupation of the house was clearly personal to this young couple. It was a personal privilege creating a licence such as we have often had: see the case of Errington v. Errington and Woods (1952) 1 King's Bench 290. I do not think it could properly be called a contractual licence because it is difficult to say that this family arrangement was a contract. Balfour v. Balfour (1919) 2 King's Bench 391 is authority for saying there was no contract. I should have thought it was more in the nature of an equitable licence of which the court has to spell out the terms.
That is what the judge did here. He held that there was a licence, and he spelt out the terms in these words:
"... The first and second Defendants were married on 4th April, 1973, and they occupied the property thereafter. I find as a fact that they agreed to pay £28 per calendar month to the Plaintiff while they or either of them was in occupation, and I am prepared to accept that this liability was to commence from 1st April, 1973, as claimed by the Plaintiff".
Then, as time went on and the mother did not insist on or require the weekly payments to be made because the young couple could not afford it, the judge found that she did waive the requirement for regular monthly payments:
"I think that the Plaintiff was postponing the time when the monthly instalments had to start and the real question is for how long she did so".
He found that she did in fact postpone the time the payments were to start until the mother made a visit in January 1975 and asked about the "rent". From that time onwards the judge found that £7 a week was payable in respect of the premises. He said that in May 1975, when the action was brought "she was only entitled to ask for £112, that is to say, for the instalments for January, February, March and April, 1975, having by her conduct waived payments for the earlier months". In point of fact the daughter-in-law, through her solicitors, offered that £7 a week from the time of the first demand in January 1975.
So the position is that it was a personal licence to the son and daughter-in-law at £7 a week. But now comes the crucial question. Was this licence revocable by the mother? And in what circumstances? What term is the Court to spell out about revocability?.
In May 1975 the mother's solicitor, being uncertain of the legal position, wrote letters determining the tenancy, if there was one; determining the licence, if there was one; and claiming possession. To my mind this licence was not revocable by the mother at will. It was certainly not revocable as against the daughter-in-law, who was still living in the house with her baby, deserted by the son. Looking simply at what is reasonable, it seems to me that the mother could not turn the daughter-in-law and child out, at all events when the daughter-in-law was ready to pay the £7 a week.
It is unnecessary to decide today in what circumstances the mother could revoke the licence. No doubt circumstances might arise in which it could be done. A few days ago we had a case where parents allowed a daughter to occupy a house indefinitely and after their deaths the reversion was sold to a purchaser. We held that the purchaser could not turn the daughter out, but we recognised that circumstances might arise in which it could be done. It was Williams v. Staite & anr., 1st December, 1977. For instance, if in the present case, if there had been no grandchild and the wife had formed an association with another man in the house, I should have thought that the mother could have revoked the licence. But there has not been a divorce, not even a judicial separation. The daughter-in-law and the grandchild are still at the house. It seems to me that as long as she pays the £7 a week this licence cannot be revoked. Things may develop in the future. One cannot foresee when it may be possible to determine the licence, but it cannot be determined at this stage. The judge was quite right in refusing to order possession and in giving, as he did, judgment for the amount of £112 - that is, £7 a week from the time when the daughter-in-law first offered it until the commencement of the action in May, 1975.
There was one further point raised. The mother wished to claim nearly £646, being £7 a week from May 1975, the date of particulars of claim, to February 1977, the date of the hearing. That was claimed as mesne profits, that is, on the footing that the daughter-in-law was a trespasser. She was not a trespasser. I do not think the mother can claim on that footing: and I do not think an amendment should be allowed now to put it on any other footing. The judgment was drawn up. It provided for the £112. I do not think it right on appeal to have that judgment altered in any way.
I find myself in entire agreement with the very careful and full judgment of the deputy county court judge, and I would dismiss the appeal.
LORD JUSTICE ROSKILL: I agree that this appeal should be dismissed. In deference to Mr. Gosland's excellent argument, which if he will allow me to say so loses none of its merit by its lack of success, I would add a few words to what my Lord has said.
I too have reached the conclusion that this appeal should be dismissed. I have great sympathy with the appellant mother. In 1973 her son was about to embark upon a second marriage. She had already helped him in connection with a first marriage which had broken down and she was therefore not inexperienced in the problems which can arise when parents are generous towards their children when marriages are about to take place. On this occasion she was anxious to help to provide a house for the couple who were about to be married; but, as my Lord has said, it is plain that what she did was to enter upon a family arrangement, and the courts must, in my view, be careful when family arrangements are entered into not to try and force those family arrangements into an unfitting legal straitjacket.
When one looks at the correspondence before action brought and indeed at the pleadings, one sees an ever-increasing mumber of legal arguments being founded upon a perfectly simple family arrangement, but in my judgment this case can be decided upon one very short ground. It is plain, as the learned deputy judge said, that there was here never any tenancy. It is equally plain, in my judgment, that there was here a licence; and for my part, with respect to the Master of the Rolls, I prefer to call it a contractual licence rather than an equitable licence.
The only question we have to decide is what was the nature of that contractual licence. Was it a licence to both the son and his future wife as a joint licencees or was it a licence to the son alone? Nobody contemplated the possibility that this marriage would break down as soon as it did. Nobody contemplated that the son would within a couple of years or so go off and have an affair with another woman, abandoning his wife with the child of the marriage who remained in the house. What the parties would have agreed upon if they had thought of that possibility in March 1973 no one can tell, but the court (as my Lord has said and as has been said many times before Lord Diplock also said it in Pettitt v. Pettitt) has in those circumstances to impute to the parties a common intention to make some arrangement in the events which have occurred, albeit unexpectedly. I cannot, for my part, think that anybody would impute to these parties an intention that, if the marriage broke down as soon as it did and the husband went off with another woman, the wife would be liable to be ejected from the home together with the child of the marriage. It seems to me that the arrangement was perfectly straightforward: it was a joint contractual licence to the husband and the wife to live there. It was not conditional upon the marriage succeeding. It was not conditional upon a number of other possibilities.
I am disinclined to express any opinion upon what if any events that licence is now determinable. Suffice it to say that in my judgment it is not determinable in the event which has occurred, namely, that the husband has left the wife - no divorce proceedings are pending, as my Lord has said - since that licence was not given only to the husband. It seems to me that no event has yet taken place which justifies the bringing to an end of this contractual licence; and therefore, for that reason, I think the learned deputy judge reached the right conclusion in a careful and closely reasoned judgment.
I would only add this as regards the alleged arrears of £28 a month payable under the contractual licence. The learned deputy judge spoke in his judgment of "waiver" of the appellant's right to that money. I do not think in that passage he meant "waiver" in the strict legal sense of that word. I think he meant that, as one often finds in family arrangements, the creditor was saying to the debtor: "All right; pay as and when you can, but I will not enforce the debt now". In other words, the mother was agreeing to postpone but not discharge the liability.
As regards the suggestion we should increase the amount of the money judgment, I agree with my Lord that at this stage it would not be right to give leave to amend to increase the figure of £112 to a larger figure.
For those reasons I would dismiss this appeal.
LORD JUSTICE BROWNE: I agree that this appeal should be dismissed for the reasons given by my Lords. I only add I hope a short summary of my own reasons out of respect for the admirable argument of Mr. Gosland.
I too feel great sympathy with the mother, the plaintiff in this case, who I think has behaved with great generosity to her son, but I have no doubt that the deputy county court judge in a very careful judgment came to the right conclusion. He found, first, that whatever rights of occupancy had been given, they had been given to both the first and second defendants and not to the first defendant alone as the plaintiff alleged. He said that on page 8 of his judgment. He then goes on to refer to the evidence supporting that conclusion which, in my judgment, amply supports it. He then went on on page 9 to find that the result of the arrangement made was a licence. Again I entirely agree with that finding. Like Lord Justice Roskill I think it was a contractual licence.
The effect of his finding was that the defendants or either of them could stay on in the house so long as they complied with the conditions of the licence. The condition of the licence was that payments of £28 a month should be made. Undoubtedly they were not made in full during the earlier part of the time when the couple were living there together, but the deputy county court judge held that there had been a waiver. I entirely agree with Lord Justice Roskill that this was not a waiver in the sense that it was permanent. It is quite clear, I think, that the judge so found. At page 10, towards the bottom of the page, he said:
"I have come to the conclusion that she" - that is, the mother - "did waive the requirement for regular monthly payments. By this I do not mean that she waived her right to receive the whole £12,000 before she conveyed the house to the Defendants. But I think that for many months she was prepared to and did waive her right those paid instalments due for those months".
Over the page he says:
"So I think that the Plaintiff was postponing the time when the monthly instalments had to start and the real question is for how long she did so".
On the 10th February, 1975 her solicitors wrote the letter at page 5 of the supplementary bundle demanding payment in full of the arrears. Mr. Gosland submits that the plaintiff was entitled to do that. He accepts, I think, that having agreed to postpone payments month by month, she had to give some sort of notice before she could again demand payments, but he says she was then entitled to demand the whole arrears, and did so in that letter of the 10th February and again on 14th May. I do not agree with that submission. The judge came to the conclusion that the position was that, although she could say, "Now you have to start again", that would merely mean that she could demand that the payments of £28 a month should start again.
When the payment of £7 a week was demanded by her solicitors from the wife on the 8th January, 1975 in the letter on page 1 of the correspondence, it is perfectly true that they demanded it under the wrong label calling it "rent", but the wife was prepared to pay and offered to pay that £7 a week and, in my judgment, there was therefore no breach by the wife of the condition of the licence that £7 a week or, rather, £28 a month should be paid. The judge's conclusion, with which I entirely agree, at the very end of his judgment was:
"For all these reasons I find it impossible to say that the second Defendant was in breach of the conditions of her licence and therefore in my opinion this action fails".
I entirely agree, and for the reasons given by my Lords, which I need not repeat, I agree that this appeal must be dismissed.
I should add that I am not saying that the wife is necessarily entitled to stay in the house indefinitely so long as she makes these payments: circumstances might arise in the future which might entitle the plaintiff to determine the licence, but it is not necessary to consider on this appeal what those circumstances might be.
(Order: Appeal dismissed. No order for costs).
