Licence for life binding on trustee in bankruptcy

In Re Sharpe ([1980] 1 W.L.R. 219) J made a loan to her nephew S. The purpose was to allow him to buy a shop with living accommodation above it.  S had agreed that J would be able to live there with S and his wife as long as she liked. S became bankrupt and the trustee in bankruptcy sought vacant possession of the property so that he could sell it. This was refused. The licence arrangement gave rise to a constructive trust (on a basis akin to proprietary estoppel). The trustee in bankruptcy had notice of this and was subject to it. The trustee in bankruptcy had agreed to sell to a third party and the court was careful to say that it expressed no view as to whether that third party (who had no notice of the licence) was bound by it.

Michael Lower


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