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Midland Bank v Green [1981] 2 WLR 28  House of Lords

In 1961 Walter Green granted an option to purchase Gravel Hill farm to his son Geoffrey Green. The option, although registrable as a land charge under the Land Charges Act 1925, was not registered. In 1967 there was a disagreement in the family and Walter sold the farm to his wife for £500 (it was worth around £40,000) in a deliberate attempt to defeat the option granted to his son. The wife then changed her will so as to leave the farm to all five of her children including Geoffrey. Geoffrey learnt of the sale and sought to enforce the option. The question for the court was whether the option was binding on the wife or whether she took the farm free of the option. S 13 (2) of the Land Charges Act 1925 provided that a land charge would be void against a purchaser of the land unless registered and where an estate contract was under consideration it would only be void against a purchaser of a legal estate for money or money’s worth.  Purchaser was also defined in s.20(8) as a purchaser who for valuable consideration takes any interest in land. The trial judge found for the wife and held that the option was not binding on the wife. This was reversed by the Court of Appeal  with Lord Denning MR holding that the sale was not for money or money’s worth and that the protection of the Act was not available in cases of fraud where there was a deliberate attempt to defeat an interest. The wife’s representative appealed to the House of Lords.

Held:

The appeal was allowed. There was no requirement of good faith for a purchaser under the Land Charges Act 1925. Reference to money or money’s worth excluded marriage consideration but did not require the consideration to be adequate.

Lord Wilberforce:

“Suppose—and this may not be far from the truth—that the purchaser's motives were in part to take the farm from Geoffrey, and in part to distribute it between Geoffrey and his brothers and sisters, but not at all to obtain any benefit for herself, is this acting in "good faith" or not? Should family feeling be denied a protection afforded to simple greed? To eliminate the necessity for enquiries of this kind may well have been part of the legislative intention. Certainly there is here no argument for departing—violently—from the wording of the Act.”

“This conclusion makes it unnecessary to determine whether £500 is a nominal sum of money or not. But I must say that for my part I should have great difficulty in so holding. " Nominal consideration" and a " nominal sum " in the law appear to me, as terms of art, to refer to a sum or consideration which can be mentioned as consideration but is not necessarily paid. To equate " nominal " with "inadequate " or even " grossly inadequate" would embark the law upon enquiries which I cannot think were contemplated by Parliament.”

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