5) Equity will not permit a statute to be used as an instrument of fraud. If a court finds that by insisting that the provisions of a statute be complied with will facilitate or permit fraud then equity will intervene on behalf of the aggrieved party. In Banister v Banister (1948) Mrs. Banister inherited two cottages upon the death of her husband and she sold both cottages to her brother in law for £150 less than the market value on the promise that she could live in the cottage that she was occupying for the rest of her life.
Upon the completion of the sale her brother in law sought to evict her, and Mrs. Banister claimed that she had a beneficial life interest that arose when her brother in law gave her an oral undertaking that she could remain in the property for life.
Her brother in law sought to rely on s. 53 (1) (b) of the Law of Property Act 1925 which reads as follows:- “a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will;”
Because the undertaking was not evidenced in writing as per s 53 (1) (b) of the Law of Property Act (1925) her brother in law was of the belief that he could legally evict Mrs. Banister.
It was held that Mrs. Bannister held the cottage on constructive trust and she could remain there rent free for the rest of her life. A valid trust had been created despite the fact that s. 53 (1) (b) of the Law of Property Act 1925 had not been complied with.
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