Midland Bank Trust Co Ltd v Green (No. 1)

Midland Bank Trust Co Ltd v Green (No. 1) [1981] A.C. 513

UNREGISTERED OPTION – ESTATE CONTRACT – LAND CHARGES – UNREGISTERED CONVEYANCING

Facts

For the consideration of £1, W granted G the option to buy a farm, title to which was unregistered. This was an estate contract and so a legal charge, registrable under the Land Charges Act 1925 (LCA) although G did not do so. Several years later, when the property was worth £40,000, W conveyed it to his wife E for £500. A month after that G registered the option, subsequently giving notice of his intent to exercising it. G sought a declaration that the option was still binding and sued for specific performance of the contract. He failed at first instance on the basis that the sale to E had been a genuine sale by a vendor to a purchaser, defined by s.13(2) LCA as being “for money or money’s worth”. G was successful on appeal and E’s estate themselves appealed to the House of Lords.

Issues

Whether, in order to be a valid sale of unregistered land for “money or money’s worth” within the meaning of s.13(2) LCA, a transaction must be in good faith and for consideration which was more than nominal.

Decision/Outcome

The House of Lords, allowing the appeal, found that there was no requirement in s.13(3) that the purchaser should be in good faith; the word “purchaser” in s.13(2), by definition, meant one who had provided valuable consideration, a legal term of art which did not connote adequacy. There was no clause in the Land Charges Act 1925 equivalent to s.205(1)(xxi) of the Land Registration Act 1925. To exclude a nominal sum of money from s.13(2), therefore, would be to rewrite the section entirely.