Midland Bank Trust Co Ltd v Green

An unregistered estate contract created after the commencement of the Land Charges Act 1925 is void against a purchaser of a legal estate for money or money’s worth. The statutory protection does not depend upon the purchaser acting in good faith. Notice of the contract and a motive to defeat it do not amount to fraud or remove that protection.

“Valuable consideration” does not require adequate consideration. Money remains qualifying consideration even if it is nominal or grossly inadequate. Courts must give the clear registration scheme its stated effect and must not supplement it with equitable doctrines which Parliament omitted.

Walter Green granted his tenant son, Geoffrey, a ten-year option to purchase a farm. The option was an estate contract but was not registered under the Land Charges Act 1925. Walter later conveyed the farm, then worth about £40,000, to his wife Evelyne for £500 with the intention of defeating the option.

Oliver J held that Evelyne was a purchaser for money or money’s worth and that the unregistered option was therefore unenforceable against her. The Court of Appeal reversed that decision by a majority. It held that the conveyance was not for money or money’s worth; the Master of the Rolls also considered that statutory protection was unavailable in cases of fraud.

The central issues were whether section 13(2) required a purchaser to act in good faith and whether £500 constituted money or money’s worth.

1. Appeal allowed unanimously. Lord Wilberforce delivered the leading speech. Lord Edmund-Davies, Lord Fraser of Tullybelton, Lord Russell of Killowen and Lord Bridge of Harwich agreed with his reasoning. The Court of Appeal’s order was reversed and Oliver J’s order restored.

2. Per Lord Wilberforce, section 13(2) of the Land Charges Act 1925, read with sections 11 and 20(8), made the result plain. The option was an estate contract created after the commencement of the Act. Evelyne acquired the legal estate for valuable consideration, namely £500, and the option had not been registered before completion. It was therefore void against her.

3. The Act contained no requirement that a purchaser protected by section 13(2) must act in good faith. Although good faith had been a distinct equitable requirement for a purchaser of a legal estate, Parliament omitted it from the Act’s definition of “purchaser” and from section 13(2). Its express inclusion in other provisions of the 1925 property legislation, and in sections 3(1) and 7(1) of the same Act, showed that the omission was deliberate.

4. Notice of an unregistered interest, or a motive to defeat it, does not deprive a purchaser of statutory protection. Reliance upon a legal priority created by Parliament is not fraud. A distinction between seeking an advantage and seeking to defeat another person’s interest was unreal and unworkable, particularly where motives were mixed.

5. Section 20(8) used “valuable consideration” as a term of art. It did not permit an inquiry into adequacy. The proviso to section 13(2) required money or money’s worth to exclude marriage as consideration; it did not exclude nominal sums. The different definition in section 205(1)(xxi) of the Law of Property Act 1925 could not be imported into the Land Charges Act 1925.

6. The clear registration scheme had to be applied according to its terms. Reading equitable doctrines or additional requirements into it would undermine the simple protection provided by registration. The cause was remitted to the Chancery Division, and the appellants were awarded their costs in the Court of Appeal and the House of Lords.

1. House of Lords: Allowed the appeal unanimously, reversed the Court of Appeal’s order and restored Oliver J’s order. The cause was remitted to the Chancery Division.

2. Court of Appeal: By a majority, reversed Oliver J on the enforceability of the option and declared it specifically enforceable.

3. High Court, Chancery Division: Oliver J held that the conveyance was a genuine sale to a purchaser for money or money’s worth and that the unregistered option was not specifically enforceable. He also ordered an inquiry into damages against Walter’s estate and held the claim against Evelyne’s estate statute-barred.