513 A.C.

A [HOUSE OF LORDS]

M I D L A N D B A N K T R U S T CO. L T D . AND ANOTHER

AND

. RESPONDENTS

GREEN

APPELLANT

B 1980 Nov. 4, 5, 6; Dec. 11 Lord Wilberforce, Lord Edmund-Davies, Lord Fraser of Tullybelton, Lord Russell of Killowen and Lord Bridge of Harwich

p ^

Land ChargeCharges registrableEstate contractUnregistered option to purchase farmFarm conveyed to grantor's wife at gross undervalueWhether court can inquire into adequacy of considerationWhether wife " purchaser . . . for money or money's worth "Whether option void against wifeWhether fraudLand Charges Act 1925 (15 & 16 Geo. 5, c. 22), s. 13 (2) Section 13 (2) of the Land Charges Act 1925 provides: " A land charge of . . . class C . . . shall . . . be void as against a purchaser of the land charged therewith, . . . unless the land charge is registered in the appropriate register before the completion of the purchase: Provided that, as respects . . . an estate contract created or entered into after the commencement of this Act, this subsection only applies in favour of a purchaser of a legal estate for money or money's worth." By section 20 (8) " purchaser " was denned as meaning " . . . any person . . . who, for valuable consideration, takes any interest in land." In 1961 a father granted to his son a 10-year option to purchase the farm which the son fanned as a tenant. The option was not registered under the Land Charges Act 1925, and in 1967 the father, wishing to deprive the son of his option, conveyed the farm, then worth about 40,000, to the mother for 500. When the son found out about the conveyance he sought to register the option and give notice exercising it. In proceedings commenced, after the mother's death, by the son (and carried on after his death by his executors, the present plaintiffs) against, inter alia, the mother's estate for, inter alia, a declaration that the option was binding on the estate, the judge held that the mother was " a purchaser of a legal estate for money or money's worth " against whom the unregistered option was void under section 13 (2) of the Land Charges Act 1925. The Court of Appeal reversed the judge's decision. On appeal: Held, allowing the appeal, that on the clear words of the Act the mother took an interest in fee simple for valuable consideration and so was a purchaser for money and accordingly the option, not having been registered, was void against her inasmuch as the words of the Act were not to be qualified by any requirement that a purchaser must take in good faith or that the money paid must not be nominal (post,
pp. 5 2 7 H 5 2 8 A , 5 2 9 G - H , 5 3 1 E - F , 5 3 2 D - F ) .

_ "

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IT

A.C. 198119

514
Midland Bank Trust Co. v. Green (H.L.(E.)) [1981] In re Monolithic Building Co. [1915] 1 Ch. 643, C.A. considered. . , Decision of the Court of Appeal [1980] Ch. 590; [1979] 3 W.L.R. 167; [1979] 3 All E.R. 28 reversed. The following cases are referred to in their Lordships' opinions: Berwick & Co. v. Price [1905] 1 Ch. 632. Greaves v.Tofield (1880) i4 Cti.D. 563, C.A. Grey v. Inland Revenue Commissioners [1960] A.C. 1; [1959] 3 W.L.R. 759; [1959] 3 All E.R. 603, H.L.(E.). Le Neve v. he Neve (1748) 3 Atk. 646. Monolithic Building Co., In re [1915] 1 Ch. 643, C.A. Oliver v. Hinton [1899] 2 Ch. 264, C.A. Pilcher v. Rawlins (1872) L.R. 7 Ch.App. 259. Taylor v. London and County Banking Co. [1901] 2 Ch. 231, C.A. "

The following additional cases were cited in argument: Battison v. Hobson [1896] 2 Ch. 403. Davis v. Earl of Strathmore (1810) 16 Ves.Jun. 419. Hollington Brothers Ltd. v. Rhodes [1951] 2 T.L.R. 691; (Note) [1951] 2 All E.R. 578. Miles v. Bull [1969] 1 Q.B. 258; [1968] 3 W.L.R. 1090; [1968] 3 All D E.R. 632. Shiloh Spinners Ltd. v. Harding [1973] A.C. 691; [1973] 2 W.L.R. 28; [1973] 1 All E.R. 90, H.L.(E.). Smith v. Morrison [1974] 1 W.L.R. 659; [1974] 1 All E.R. 957. Stock v. Frank Jones (Tipton) Ltd. [1978] 1 W.L.R. 231; [1978] I.C.R. 347; [1978] 1 All E.R. 948, H.L.(E.). E Tunstall v. Trappes (1829) 3 Sim. 286.

the Court of Appeal. By writ dated January 27, 1970, as amended, the original plaintiff, Thomas Geoffrey Green, commenced proceedings against the defendants, Walter Stanley Green and Robert Derek Green, as personal representatives of Evelyne Green, for, inter alia, (1) a declaration that an option granted p to the plaintiff for the purchase at 75 per acre of Gravel Hill Farm, Thornton-le-Moor, Lincolnshire, was binding on the estate of Evelyne Green; (2) specific performance of the contract arising by reason of the option and the exercise thereof by the plaintiff; (3) all necessary accounts and inquiries; (4) damages in lieu of or in addition to specific performance; (5) damages for conspiracy; and against Walter Stanley Green personally for damages for conspiracy. By order dated January 19, 1973, G Beryl Rosalie Kemp became a defendant as the executrix of Walter Stanley Green, and, by order dated November 16, 1973, the proceedings were ordered to be carried on by the Midland Bank Trust Co, Ltd. and Margaret Ann Green, as executors of the plaintiff, as plaintiffs. On October 21, 1977, Oliver J. dismissed the action as against Robert Derek Green (the surviving personal representative of Evelyne Green) and, u as against Beryl Rosalie Kemp, ordered an inquiry as to damages. By notice dated March 23, 1978, the plaintiffs appealed on the grounds that (1) the judge, having found (a) that the primary purpose and object of

APPEAL from

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A.C. Midland Bank Trust Co. v. Green (H.L.(E.))

the conveyance to Evelyne Green was to defeat Thomas Geoffrey Green's option and (b) that the 500 paid by Evelyne Green was a " grotesque undervalue," was wrong in holding that Evelyne Green was nevertheless a purchaser for the purposes and within the meaning of the proviso to section 13 (2) of the Land Charges Act 1925 and that she accordingly took the property free from the option; (2) the judge was wrong in holding that the expression " a purchaser of a legal estate for money or money's worth " B in the proviso to section 13 (2) included a purchaser otherwise than in good faith; and (3) the judge was wrong in holding that a purchaser having actual knowledge of an estate contract which had not been registered took free therefrom. The Court of Appeal (Lord Denning M.R. and Eveleigh. L.J., Sir Stanley Rees dissenting) reversed the decision of Oliver J. Robert Derek Green, the surviving personal representative of Evelyne Green, appealed to the House of Lords. Evelyne Green died on March 28, 1968. Her husband, Walter Stanley Green, died on February 8, 1972. The respondents were the personal representatives of their son, Thomas Geoffrey Green, who died on May 11, 1973. The facts are stated in the opinion of Lord Wilberforce. D Leonard Hoffmann Q.C. and Gavin Lightman Q.C. for the appellant, Robert Derek Green. The Land Charges Act 1925 is now repealed by the Land Charges Act 1972 but the provisions material to the present case are unaltered. The Act of 1925 was in force when the material events took place. The relief sought is a declaration that the option granted to Geoffrey Green is binding on the personal representatives of Evelyne Green. This option was a C (iv) land charge: see section 10 (1) of the Act of 1925. Section 13 (2) says that unless registered the option, as an interest in land, is to be void against a purchaser of a legal estate for money or money's worth. . The conveyance by Walter Green to Evelyne Green was dated August 17, 1967. The option was registered on September 6, 1967. Therefore the question is: Was Evelyne Green a purchaser of the legal estate for money or money's worth? If she was, section 13 (2) makes the option void against her. " Purchase " is defined in section 20 (8) of the Act. It is a word which can have different meanings in law. Standing without any definition in a conveyancing context it means anyone who takes an estate, whether for value or not, otherwise than by descent or escheat. Sometimes it has the commercial meaning of someone who takes by a sale as opposed to a gift. Because of these possible ambiguities in the word, the statute provides a definition using precise and well established terms of art. Therefore only two questions need be asked: (1) Was Evelyne Green a person who took a legal estate in the land? and (2) did she take that interest for valuable consideration in money? Oliver J. found as a fact that the conveyance was genuine; therefore she took a legal estate, she gave valuable consideration and that valuable consideration was money. For these reasons, based on a simple straightforward reading of

JJ

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Midland Bank Trust Co. v. Green (H.L.(E.)) [1981]

section 13 (2), the judge was right to refuse the relief sought in the writ. All the contrary arguments involve reading into the Act qualifications which are not actually there. It is said that such qualifications can be derived by looking at the legislative history of the section and its relationship to other provisions in the 1925 property legislation or by stigmatising the conduct of Mr. and Mrs. Green as fraudulent and undoing the statute by applying the maxim that fraud unravels everything or appealing to the law of torts, conspiracy and interference with contractual relations. Obviously the Land Charges Act 1925 affects only rights of property. It does not in any way affect contractual rights. Where a contract creates a proprietary interest, as in the case of an option, the Act makes the proprietary interest defeasible, but it leaves the personal rights under the contract untouched and also any remedies in tort which might be founded on those contractual rights, like an action for interference with contractual relations. It follows that, although the judge held that the proprietary interest created by the option had become void, Geoffrey Green's estate was not left without remedy. It had an action for breach of contract against Walter Green's estate and recovered judgment. It would have had an action against Evelyne's estate for inducing breach of contract and perhaps for conspiring with Walter to break his contract but that cause of action had been allowed to become statute barred. So far as these rights were insufficient to compensate Geoffrey's estate for the loss of the proprietary interest in the option, there was an action for negligence against the solicitors for failing to register. This action was prosecuted, went to trial and succeeded. Having regard to the various remedies available in addition to the proprietary claim, it is perhaps less surprising that the legislature should have intended section 13 (2) to mean exactly what it said. As to the general scheme of the 1925 legislation and its legislative history, the Land Charges Act 1925 consolidated statutory provisions dealing with five separate registers of various matters which were capable of affecting title to land: section 1 (1). These five registers have each a separate legislative history, of which the oldest, the register of writs and orders, goes back to the time of William and Mary. But the general purpose of the registers was similar. The conveyancer's nightmare was the undisclosed estate or interest which turned out to be binding on his purchaser. The degree to which a purchaser was at risk of being bound by an undisclosed interest differed according to whether it was legal or equitable. In the case of legal estates or interests existing at the time of the purchase, they took effect in priority to the purchaser, whether or not he knew about them or had any opportunity to find out about them. In the case of equitable interests the purchaser's position was slightly better; he would not be bound if he could satisfy the court that he took for value and without actual or constructive notice. This might involve him in some quite elaborate inquiries to avoid being fixed with constructive notice. Registration statutes were designed to simplify conveyancing and avoid injustice to purchasers by creating a register where an intending purchaser could see whether a certain class of interest existed or not. To protect

JJ

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A.C. Midland Bank Trust Co. v. Green (H.L.(E.))

JJ

the purchaser they all provided that if the interest was not registered it should be void against the purchaser, or should not affect the land, or similar words. These statutes in the 18th and 19th centuries were construed in broadly two ways. Some were construed only as defeating legal estates or interests, but leaving untouched any equitable interests which might co-exist with the legal interests. The basis of this construction was that the purpose of the statute was to relieve the purchaser against the rule that he was bound by a legal interest whether he knew of it or not; that rule could operate unfairly against the purchaser, but there was nothing particularly unfair in his being bound by interests which he knew about or should have known about; indeed, it would be unfair on a person entitled to the prior interest if the purchaser was not bound by them. The other more draconian construction was to construe the statute as avoiding the unregistered interest both in law and in equity. The basis of this construction was that, although the equitable rule might look fair in theory, it often worked unfairly in practice because it opened up the possibility of arguments about whether a purchaser did or did not know or whether he should have known about a prior interest, and it made life difficult for the conveyancers, because they had to be careful that their clients were not fixed with actual or constructive knowledge through them, sometimes because they had not made enough inquiries and sometimes because they had made too many and found out things which would never otherwise have come to light. To protect purchasers against any such arguments it was thought on balance better to have a clear rule: if the interest was registered it was binding on third parties and if it was not it was defeasible. Everyone then knew where he stood: a proprietary interest was merely a defeasible personal right until it was registered. The policy of these provisions is rather similar to that of the Statute of Frauds, which was not to enable people who had made oral contracts for the sale of interests in land to get out of them, but to prevent arguments over whether such oral contracts had been made or not. It saves an alleged contracting party from the risks of litigation he might well win but which he cannot have struck out in limine. However strong his evidence that there was no oral contract, the matter would still have to go to trial. The Statute of Frauds gives him a conclusive answer which stays the action in its tracks. It is the same with the registration statutes; absence of registration is a complete answer and cuts off any disputes. The need to eliminate such disputes was particularly important when it affected title to land. The whole history of this branch of the law has shown a trend towards simplicity and certainty. Looking at the history of the registration statutes, it will be seen that, although the earliest statutes were construed in the first way, i.e., as affecting only the legal estate, and this construction was later adopted for some statutes which used similar language, the tendency has been for the legislature to make it clear that void means void and that it applies to all interests, legal or equitable, and whether the purchaser knew of them or not. The first statute of 1692 is 4 Will. & Mar. c. 20 (see in particular

518
Midland Bank Trust Co. v. Green (H.L.flS.)) [1981]
A

section 3). The Middlesex Registry Act 1708 (7 Anne, c. 20) was construed in Le Neve v. Le Neve (1748) 3 Atk. 646, 650-652, 654-655 which gave an extended meaning to fraud; to take the legal estate with knowledge of the first settiement was held to be fraud. The language of section 1 of the Annuity Act 1776 (17 Geo. 3, c. 26) " shall be null and void to all intents and purposes " was distinguished from that of the Act of 1708: Davis V. Earl of Strathmore (1810) 16 Ves.Jun. 419, 427-430. Tunstall v. Trappes (1829) 3 Sim. 286, 307 was a decision on slightly different wording in section 4 of the Yorkshire (West Riding) Registry Act 1706 (5 Anne, c. 18). That was the position before the legislative reform of the 19th century. The law concerning the registration of judgments was then altered in a series of statutes summarised in Sugden on Vendors and Purchasers, 13th ed. (1857), pp. 427-428. The Annuity Act 1776 was repealed and a new provision for the registration of annuities was substituted by section 12 of the Judgments Act 1855 (18 & 19 Vict. c. 15). It used the language of the registration Acts and made no reference to purchasers not being affected by notice. The Act was construed in Greaves v. Tofield (1880) 14 Ch.D. 563, 565-568, 570, 571, 577-578. What Bramwell L.J. said should be applied in the present case. Shortly afterwards the Yorkshire Registry legislation was amended and consolidated and the doctrine of Le Neve v. Le Neve, 3 Atk. 646 was abolished: section 14 of the Yorkshire Registries Act 1884, which was construed in Battison V. Hobson [1896] 2 Ch. 403, 411-413. Of the five registers in section 1 (1) of the Land Charges Act 1925 the origins of (b) and (c) relating respectively to annuities and writs and orders affecting land are relevant. One's understanding of the Act is not aided by examining (a) and (d). One therefore comes to (e). Land charges began with the Land Charges Registration and Searches Act 1888, which also dealt with writs and orders and deeds of arrangement. It was originally confined to statutory charges: see the definition of " land charge " in section 4. Section 10 established a register. Section 12 gave protection to purchasers using the expression "void." It is the ancestor of section 13 (2) of the Land Charges Act 1925, while the definition of " purchaser for value " in section 4 of the Act of 1888 is the predecessor of the definition of " purchaser " in section 20 (8) of the later Act. The consolidation of 1925 was preceded by two preliminary Acts, the Law of Property Act 1922 and the Law of Property (Amendment) Act 1924, which never came into operation. The former greatly enlarged the definition of " land charge " : see section 14 and Schedule 7, For estate contracts (the predecessors of class C (iv) in section 10 (1) of the Land Charges Act 1925) see paragraph 1 (1) (/) of Schedule 7 to the Law of Property Act 1922, and paragraph 1 (3) (b) applying section 12 of the Land Charges Registration and Searches Act 1888. The Act of 1924 was designed to make minor amendments to facilitate consolidation: see its long title. It grouped the land charges into classes: paragraph 3 of Schedule 6. These provisions were inserted into the Act of 1888: see paragraph 3 (9), It also reformulated the purchaser protection section of that Act, section 12, so as to fit

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A.C. Midland Bank Trust Co. v. Green (H.L.(E.))

with the new grouping into classes and the amendments made in 1922 (see paragraphs 4 (1) and (2) of Schedule 6) and this provision was also inserted into the Act of 1888: see paragraph 4 (3). The result is that in paragraph 4 " purchaser " still means purchaser as defined by the Act of 1888. Paragraph 4 (3) makes it clear that the paragraph was to be read as part of the Act of 1888 and to incorporate the definition in that Act. The Act of 1924 also disposes of Greaves v. Tofield, 14 Ch.D. 563, not merely in relation to annuities, but in relation to any matter capable of registration under the Land Charges Acts: see section 3 and paragraph 38 of Schedule 3. The section inserted by section 3 into the Conveyancing Act 1882 applied the definition of " purchaser" in section 1 (4) (ii) of that Act, which contained references to an " intending purchaser." This may have been necessary for other parts of the Act of 1882, but it had no application to the new paragraph because protection under the Land Charges Act applied only to a purchaser who had actually completed his purchase. If one ignores the reference to " intending purchaser " as inapplicable, the definition is virtually identical with that in the Act of 1882. Section 12 of the Act of 1888, as reformulated by the Act of 1924, became section 13 of the Land Charges Act 1925. The last paragraph of section 3 of the Act of 1882 inserted by paragraph 38 of Part I of Schedule 3 to the Act of 1924, became section 199 (1) (i) of the Law of Property Act 1925. If one applies the principle that consolidating Acts are not meant to change the law, " purchaser " should be construed as having the same meaning in both provisions. This historical survey enables one to answer two puzzles about section 199 (1) (i) of the Law of Property Act 1925: (1) What was its purpose? In Hollington Brothers Ltd. v. Rhodes [1951] 2 T.L.R. 691, 696-697, Harman J. treated it as complementary to section 13 (2) of the Land Charges Act 1925, but did not comment separately on its effect. Megarry and Wade, The Law of Real Property, 4th ed. (1975), pp. 1047-1049 suggests that it might be redundant. In its historical context one can see that it was intended to get rid of the doctrine in Le Neve v. Le Neve, 3 Atk. 646, and Greaves v. Tofield, 14 Ch.D. 563, and make it clear that " void " meant literally what it said; there were no equitable rights to be brought in by the back door of notice. (2) The second puzzle is caused by the fact that section 199 (1) (i) is part of the Law of Property Act 1925 which has its own rather different definition of a purchaser in section 205 (1) (xxi), Does this mean that the class of persons who are not to be prejudicially affected by section 199 (1) (i) may not be coterminous with the class against whom the interests are void or unenforceable under section 13 (2) of the Land Charges Act 1925? History shows that this is unlikely to have been intended. Section 205 (1) applies its definitions " unless the context otherwise requires " and the wording of section 199 (1) (i) is a context which shows that the word "purchaser" is used in its Land Charges Act sense: see Wolstenholme and Cherry's Conveyancing Statutes, 13th ed. (1972), vol. 1, p. 328. The note is unchanged since the 11th ed, (1925-1927): see also vol. 2, p. 8, the note to section 3 of the Land Charges Act 1925. The construction that that Act means what it says without qualification is reinforced by the qualifications introduced into other purchaser protection sections in the Act, sections 3 (1), (3) and 7 (1), (2).

520
Midland Bank Trust Co. v. Green (H.L.(E.)) [1981]

As to whether Evelyne was guilty of " fraud," in Le Neve v. Le Neve, 3 Atk. 646, 655, Lord Hardwicke L.C. adopted the definition that it was any conduct of which the court morally disapproved, including purchasing with knowledge of a prior interest but the exclusion of the doctrine in that case by section 13 (2) of the Land Charges Act 1925 and section 191 (1) (i) of the Law of Property Act 1925 means that one cannot revive it by using the word " fraudulent" to describe what was in fact simply a deliberate breach of contract. To say that Evelyne's conduct was fraudulent because she joined with Walter in a transaction designed to defeat Geoffrey's rights is to argue in a circle. The question is what Geoffrey's rights were. The effect of the legislation is that his proprietary interest in the land was a defeasible right liable to be defeated by a conveyance of the legal estate to a purchaser as defined in the Act. Walter took legal advice and was correctly told that that was the position, that it was open to him and Evelyne lawfully to render the option unenforceable against the land by a conveyance for value to Evelyne. They accepted and followed that advice. In the circumstances it is hard to say that their conduct was fraudulent, any more than it would have been if Walter had promised orally to leave Geoffrey the farm in his will, but his solicitor had advised him that such a promise was unenforceable and that he was free to break it by revoking his will and making a new one. There was no finding of fraud by Oliver J. against either Walter or Evelyne [1980] Ch. 590, 602F, 613D-F. References to fraud in In re Monolithic Building Co. [1915] 1 Ch. 643, 661-662, 669 are quite different. If one fraudulently induces a person not to register so that one can jump in and defeat his interest, one may not be able to rely on the purchaser protection section; similarly if one owes a fiduciary duty to register the earlier interest on behalf of the person entitled, like the solicitor in Battison v. Hobson [1896] 2 Ch. 403, and omits to do so, and then claims priority for oneself. But Walter owed no duty to Geoffrey to register on his behalf, nor did he induce Geoffrey not to register. They were simply grantor and grantee of the option at arm's length and so Walter was guilty of breach of contract but not fraud. On the point of " valuable consideration," Lord Denning M.R. in the Court of Appeal held that it meant adequate consideration. But " valuable consideration" is a term of art with a well settled meaning and the effect of what Lord Denning said is to create complete uncertainty as to whom consideration will be adequate, whereas the object of requiring valuable consideration was to remove uncertainty. In the judgment of Oliver J. [1980] Ch. 590, 613-614, there was no finding that the 500 was a colourable sum. It was a real sum. which was actually paid. Admittedly this was done to give the transaction a legally binding effect. In the Court of Appeal [1980] Ch. 590, 628-629, Eveleigh L.J. expressed the view that the consideration was a sham in that the transaction was a gift coupled with a token payment and because the payment was nominal Evelyne was not a bona fide purchaser. But if consideration has its traditional and well settled meaning, any item of value, even if given simply to make the transaction effective, is valuable consideration.

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The question is whether this was a sale for valuable consideration in money. The nature of the transaction should not be confused with the motive for it. Eveleigh L.J. referred to the superstition of giving a small coin for a knife. The point and intention is that the donee should receive valuable consideration; the motive is to avoid bad luck. The nature of the 1 which Geoffrey gave for the option was that it was valuable consideration; the motive was, not to compensate Walter, but to make the option enforceable at law. This point was properly dealt with in Miles v. Bull [1969] 1 Q.B. 258, 261-262. As to the question whether the consideration was nominal, see Wolstenholme and Cherry's Conveyancing Statutes, 13th ed., vol. 1, p. 340 and section 205 (1) (xxi) of the Law of Property Act 1925. Traditionally " nominal consideration " was five or ten shillings but it is not clear what the expression means in a modern context. This is a conveyancing statute and should be simple for solicitors to operate: Shiloh Spinners Ltd. v. Harding [1973] A.C. 691, 721. The decision of the Court of Appeal creates uncertainty, not merely inter partes, but on subsequent sales. This option was registered after transfer. The present law is that if a purchaser from the estate is shown a certificate, with clear search immediately before the conveyance to Evelyne, he can ignore the subsequent registration, because he knows that the option became void against her and it is therefore void against him. If the Court of Appeal is right he does not know; he has to investigate the whole transaction and form a view, because, if the option was binding on Evelyne, it will be binding on a purchaser by virtue of the subsequent registration. Anyone will be able to create uncertainty by registering options or estate contracts alleged to have been made with a previous owner and, under the doctrine in this case, alleged to have survived a subsequent conveyance. It is unfortunate that in this case Geoffrey allowed his remedy in tort to become statute barred. The limitation period was then short against estates; the law has since been changed. But his estate has had its remedy against the solicitors and has a judgment against Walter's estate. That should be enough. One should not complicate the operation of the law of property and conveyancing merely to give an additional remedy in this case. Reliance is placed on Stock v. Frank Jones {Tipton) Ltd. [1978] 1 W.L.R. 231, 237. Jonathan Parker Q.C. and Malcolm Waters for the respondents, Midland Bank Trust Co. Ltd. and Margaret Ann Green, executors of Thomas Geoffrey Green. The decision of the Court of Appeal should be upheld because: (1) Evelyne and her estate are not entitled to the protection of section 13 (2) of the Land Charges Act 1925, because she was not a purchaser in good faith on general principles and on the true construction of the relevant statutory provisions. (2) Evelyne was not " a purchaser . . . for money or money's worth " within the proviso to section 13 (2). As to the first point Evelyne's lack of good faith did not merely consist in having notice of the option; it was not just a case of seeking to take advantage of her legal rights. The very object of the transaction

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Midland Bank Trust Co. v. Green (H.L.(E.)) [1981]

was to defeat Geoffrey's option. The meaning and effect of section 13 (2) is that it does not protect a purchaser who is lacking in good faith. The courts of equity always looked at a transaction to see whether it was fair and equitable for the rights in question to be enforced against the legal owner. The onus was on the legal owner to show by the circumstances of his acquisition of the legal estate that there would be no injustice if he took free from equitable rights. That is the whole basis of the position of the purchaser for value without notice. Notice affected the conscience of the person acquiring the legal estate, and must do so all the more where the whole genesis of the transaction was to defeat the legal interest. The position is set out in Megarry and Wade, The Law of Real Property, 4th ed., pp. 115-116. It is not suggested that having notice is the same thing as bad faith, but in the present case there was bad faith beyond the existence of notice. One must distinguish between mere knowledge and a transaction the only purpose of which is to defeat the right. This was recognised in In re Monolithic Building Co. [1915] 1 Ch. 643, 669. To avoid the stigma of bad faith it must be shown that there was a genuine reason for what was done. But here the facts show that the only object of this transaction was to defeat Geoffrey's option and a justifiable reason would have to be shown for wanting to exclude him. There was a conspiracy to defeat his option and in that there was a lack of good faith. Bona fides is more than just lack of notice. If the transaction had been above board it would not have been carried out in the way it was. On the facts as they stand the plain inference is to be drawn that the object was to defeat Geoffrey's option in such a way that he should not hear of what had been done. Any fraud or dolus malus or sharp practice will forfeit a purchaser's privileges in the eye of equity: In re Monolithic Building Co: [1915] 1 Ch. 643, 657, 663-664; Le Neve v. Le Neve, 3 Atk. 646, 649-650, 654-655. As to the meaning of good faith, which is more than the absence of fraud, see Smith v. Morrison [1974] 1 W.L.R. 659, 669, 670-671, 675-676. Good faith is a relevant consideration. In the action against Evelyne's estate conspiracy is a live issue. There was an agreement to injure Geoffrey arid it was carried out. The facts found by Oliver J. [1980] Ch. 590, 611 amounted to an actionable conspiracy and indicate a transaction lacking in good faith. On the meaning and effect of the legislation of 1925 the relevant provisions are section 13 (2) of the Land Charges Act 1925 and section 199 (1) of the Law of Property Act 1925. The Acts comprising the legislation must be read together so as to produce a consistent and coherent scheme. They must be fitted into their context and in particular the context of the law before this legislation's enactment. Three separate stages were involved, the Law of Property Act 1922 and the Law of Property (Amendment) Act 1924, which were amending Acts, and the Law of Property Act 1925 and the Land Charges Act 1925 which were consolidating Acts: see the preamble to the latter Act. One must look at the law before the amending Acts were passed to see what amendments they made. In construing such an Act there is a presumption that Parliament did not intend to alter the law as existing immediately

J.J

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p,

TT

before its coming into force unless it contains plain words to indicate that a change was intended. As an instance of the application of this presumption in the context of the property legislation of 1925 see Grey v. Inland Revenue Commissioners [1960] A.C. 1, 13. One must construe the Acts of 1925 as containing the law in the two previous Acts. Before considering their provisions in detail one must set them in their general context; considering the law prior to January 1, 1926, when the legislation of 1925 came into effect, in relation to equitable interests in land binding on third parties, and also the purpose and policy of the legislation of 1925 in that respect. The courts then undertook a broad inquiry into all aspects of a transaction to see whether it was fair. The inquiry did not relate solely to notice: Pilcher v. Rawlins (1872) L.R. 7 Ch.App. 259, 268-269. Battison v. Hobson [1896] 2 Ch. 403 was a case of actual fraud and went beyond the question of mere notice. Although questions of good faith were questions of fact for the court to determine on the evidence free from statutory limitations, the extent to which a purchaser might be affected by notice of an equitable interest was limited by section 3 of the Conveyancing Act 1882. Section 1 (4) contained a definition of " purchaser." There was no express requirement of good faith. The Act was not concerned with that, so it was unnecessary to put it in because a restriction was only being placed on constructive notice. After the Act the approach of the courts was the same as before. The Land Charges Registration and Searches Act 1888 contained in section 4 a definition of " purchaser for value " as a person who " for valuable consideration takes any interest in land " and section 12 protected purchasers against unregistered charges. It is legitimate to compare that legislation with section 93 of the Companies (Consolidation) Act 1908 which was construed in In re Monolithic Building Co. [1915] 1 Ch. 643. One should assume that the same situation prevailed in regard to the relevant section of the Land Charges Act 1925. The requirement of good faith or absence of fraud prevailed at the time of the legislation of 1922. In the Act of 1922, see sections 14 and 188 (27), "purchaser" is defined as "a purchaser in good faith for money or money's worth." This is relevant to the Act of 1924. By paragraph 1 (1) of Schedule 7 the meaning of "land charge" was extended; it included an estate contract. In the Act of 1924, see the preamble, section 6 as to the provisions for facilitating consolidation of the law relating to registration of land charges and section 12 (2) which required the Act to be construed as one with the Act of 1922. Paragraph 3 of Part II of Schedule 6 classified land charges and paragraph 4 dealt with the protection of purchasers. This was the forerunner of section 13 of the Land Charges Act 1925. The word "purchaser" in paragraph 4 was used in a contract which required the application of the statutory definition of it in the Act of 1922, i.e. the requirement of "good faith." Thus'immediately before the Act of 1925 good faith was an express requirement. If that is right does the legislation of 1925 (i.e., section 13 of the Land Charges Act of 1925 and section 199 (1) of the Law of Property Act 1925) have the effect of removing the requirement of good faith? Section 13;

524
Midland Bank Trust Co. v. Green (H.L.(E.)) [1981]

of the Land Charges Act follows verbatim the wording of the Act of . 1924. The definition of "purchaser" is in section 20 (8). Since the Act is a consolidating Act there can have been no intention to change the law as regards the requirement of good faith. It must be accepted that good faith is still a requirement. To allow section 13 of the Land Charges Act 1925 (incorporating the definition of " purchaser " in section 20 (8) of that Act) to govern the meaning of " purchaser " in section 199 (1) of the Law of Property Act B 1925, thereby displacing the definition of " purchaser " in section 205 (1) (xxi) of that Act, would be to allow the tail to wag the dog. There is no reason for supposing that the general policy of the property legislation of 1925 was to do away with the equitable requirement of good faith in relation to purchasers. Indeed, the inclusion of the words " in good faith " in section 204 (1) (xxi) clearly indicate the contrary. No question of bad faith arose in either Hollington Brothers Ltd. v. Rhodes [1951] 2 T.L.R. 691, 695-696 or the Monolithic case [1915] 1 Ch. 643, 663. The respondents do not say, or need to say, that those cases were wrongly decided. The equitable requirement of good faith on the part of purchasers was recognised in the legislation of 1925 and its operation was restricted only so far as it was necessary to give effect to the new statutory provisions as to notice and no further. If the definition of " purchaser " D in the Land Charges Act 1925 included a purchaser otherwise than in good faith there would be a conflict between that definition and the definition in section 205 (1) (xxi) of the Law of Property Act 1925. As a matter of policy the latter should prevail. As to the position of a purchaser from Evelyne's estate, if nothing were registered by Geoffrey the purchaser would take a clean title under E the Land Charges Act. But what if he finds the land charge registered later? He should raise a requisition to ask to what it related. He would be bound to try to find what the position was. It would not be practical to leave it aside withoutfindingwhat lay behind it. It is not submitted that the transaction was wholly ineffective. It is accepted that 500 was paid by Evelyne and that the conveyance passed the p legal estate. But bona fides is a requirement and the court is entitled to look into the genuineness of the transaction to see what lay behind it. Evelyne was not a purchaser " for money or money's worth " within the proviso to section 13 (2) of the Land Charges Act 1925, The words must be construed in their context and they exclude a nominal consideration in money. The proviso was intended to limit the class of purchasers protected. " Valuable consideration " is a well known term of art: see G section 20 (8) of the Act and the definition of " purchaser" in section 205 (1) (xxi) of the Law of Property Act 1925, " Valuable consideration " means the same in both enactments, since it is not specifically defined in the Land Charges Act. It would be very strange if it did not, That cuts out" nominal consideration in money." 500 is " nominal consideration." The phrase has not been judicially JJ defined, but " nominal" is not synonymous with " minimal." A minimal consideration must be nominal, but the converse is not true: see the definition of " nominal" in the Oxford English Dictionary (1933), vol. 7, p, 184:

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A.C. Midland Bank Trust Co. v. Green (H.L.(E.))

-B

TT

"4. Existing in name only, in distinction to real or actual." See also Chitty on Contracts, 24th ed, (1977), p.. 145.. There is no absolute limitation. It is a matter of common sense in relation to the particular transaction. Here 500 was a grotesque undervalue, If one had a consideration worth 80 a payment of 1 would be nominal Here 500 was a token value in relation to the value of the land. It was not de minimis, which would be no consideration at all. It is always hard to draw the line, but the 500 bore no relation to the value of the land. The case was clear on the facts. Hoffmann Q.C. in reply. The respondents rely on three dubious arguments: (1) that the requirement of good faith had in the old law some meaning beyond lack of notice; (2) its survival under section 13 (2) of the Land Charges Act 1925, and (3) its content in relation to the propriety of the motive for the transaction in question. The purpose of wishing to defeat Geoffrey's option was to enable a redistribution of the property in the family different from that which would have occurred if the option had been exercised. The family were not just trying to frustrate Geoffrey. There has been no investigation as to whether the transaction was entered into for disinterested motives, whether for a selfish object or for the benefit of the family as a whole. Under the old law where a purchaser had notice of a prior interest that was the end of the matter without any inquiry into his motives, while if he did not have notice he could not have entered into the transaction for the purpose of avoiding the interest. If one looks at the whole corpus of the legislation of 1925 it appears that the words " purchaser in good faith " are used when that is what is meant. Where those words are not used presumably they are not to apply. The words are used in the definition of " purchaser " in section 3 (xxi) of the Land Registration Act 1925, One notes the absence of words excluding nominal consideration. In the definition of " purchaser" in section 55 (1) (xviii) of the Administration of Estates Act 1925 the words " in good faith " occur. They also occur in the definition of " purchaser " in section 117 (1) (xxi) of the Settled Land Act 1925. The definition of "purchaser" in the Land Charges Act does not include these words. But they do occur in sections 3 (1) and 7 (2), both relating to bankruptcy. This omission in the case of land charges means that any interest not registered is to be excluded from consideration. The provisions of the Law of Property (Amendment) Act 1924, which afterwards became section 13 (2) of the Land Charges Act 1925, were inserted into the Land Charges Registration and Searches Act 1888. It is not likely that this tidying up operation should have been intended to introduce into the Act of 1925 the requirement of good faith which would have been inconsistent with its policy. There was no intention to convey into the Act of 1925 the provisions of the Act of 1922 nor is one construing the Act of 1888 as amended by the Act of 1924. On the consideration point, when the legislation meant to exclude nominal consideration it did so expressly. When the Act of 1888 referred to a purchase " for valuable consideration " it chose words with a known and precise meaning. " Nominal consideration " indicated sums like 5s.

526 Midland Bank Trust Co. v. Green (H.L.(E.)) [1981] or 10s. which were never meant to be paid at all; that is the extent of the meaning of those words. Their Lordships took time for consideration. December 11. LORD WILBERFORCE. My Lords, this appeal relates to a 300-acre farm in Lincolnshire called "Gravel Hill Farm." It was owned by Walter Stanley Green (" Walter") and since 1954, let to his son Thomas Geoffrey Green ("Geoffrey") who farmed it as tenant. Walter owned another larger farm which he farmed jointly with another son Robert Derek Green ("Robert"), the appellant. In 1960 Walter sold this other farm to Robert at 75 per acre. On March 24, 1961, Walter granted to Geoffrey an option to purchase Gravel Hill Farm, also at 75 per acre. The option was granted for the consideration of 1, and so was contractually binding upon Walter. It was to remain open for ten years. It seems that the reason why this transaction was entered into, rather than one of sale to Geoffrey, was to save estate duty on Walter's death. This option was, in legal terms, an estate contract and so a legal charge, class C, within the meaning of the Land Charges Act 1925. The correct and statutory method for protection of such an option is by means of entering it in the Register of Land Charges maintained under the Act. If so registered, the option would have been enforceable; not only (contractually) against Walter, but against any purchaser of the farm. The option was not registered, a failure which inevitably called, in question the responsibility of Geoffrey's solicitor. To anticipate, Geoffrey in fact brought proceedings against his solicitor which have been settled for a considerable sum, payable if the present appeal succeeds. In 1967 there appears to have been some family disagreement. We do not know the nature of it, nor the merits. I am not prepared to assume, in the absence of any evidence, that either side was in the wrong. All we know is that Walter formed the intention, contrary to what he had planned in 1961, to defeat Geoffrey's option and to make Gravel Hill Farm available for the family. He instructed solicitors to prepare a conveyance of it to his wife Evelyne: this the solicitors did after verifying that the option was not registered as a land charge. On or about August 17, 1967, Walter executed a conveyance of Gravel Hill Farm to Evelyne for a consideration of 500. The judge found that this sum was paid by Evelyne to Walter. It was of course far less than the value of the farm, which was then worth about 40,000. The conveyance was also a breach of contract by Walter for which Walter or his estate was liable to Geoffrey in damages. Later, Evelyne made a will in which she left the farm, subject to Walter's life interest, to her five childrenincluding Geoffrey. On September 5, 1967, Geoffrey, who had learnt of the conveyance, caused the option to be registered as an estate contract, and on October 6, 1967, gave notice exercising the option. Finally, on January 27, 1970, Geoffrey issued a writ against Walter and Evelyne's executors (she had died in 1968) claiming that the option was still binding, specific performance of

jj

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A.C. Midland Bank Trust Co. v. Green (H.L.(E.)) Lord Wilberforce

,_,

the contract arising from its exercise and damages. This was later amended so as to claim damages for conspiracy by Walter and Evelyne. Most of the principals involved in the above transactions are dead. The place of Geoffrey is taken by the present respondents as his executors; that of Evelyne by the appellant, as her sole surviving executor; the place of Walter was taken by Beryl Rosalie Kemp as his executrix, but her defence was struck out by order dated October 7, 1975. The issue therefore effectively is between the appellant, as representing the estate of Evelyne, and the respondents as representing the estate of Geoffrey. The trial took place before Oliver J. in 1977. A number of issues arose which are no longer relevant. The learned judge, in an admirable judgment with which I wholly agree, decided (i) that the sale and conveyance to Evelyne was not a sham and was a genuine sale by the vendor to a " purchaser," as defined by the Land Charges Act 1925 for money or money's worth, and accordingly that the option was not specifically enforceable; (ii) that Walter's estate had no answer to a claim for damages, and that an inquiry as to damages must be made; (iii) that any claim for damages against the estate of Evelyne was statute-barred by virtue of the Law Reform (Miscellaneous Provisions) Act 1934. An appeal was brought to the Court of Appeal which, by a majority, reversed the judge's decision on point (i), and declared the option specifically enforceable. The ground of this decision appears to have been that the sale in 1967 was not for "money or money's worth," within the meaning of section 13 of the Land Charges Act 1925. In addition Lord Denning M.R. was prepared to hold that the protection of the Act was not available in a case of fraud meaning thereby " any dishonest dealing done so as to deprive unwary innocents of their rightful dues." The respondents, however, did not seek to support this except to the extent that they relied upon lack of good faith on the part of Evelyne. My Lords, section 13 (2) of the Land Charges Act 1925 reads as follows: " A land charge of class B, class C or class D, created or arising after the commencement of this Act, shall (except as hereinafter provided) be void as against a purchaser of the land charged therewith . . . unless the land charge is registered in the appropriate register before the completion of the purchase: Provided that, as respects a land charge of class D and an estate contract created or entered into after the commencement of this Act, this subsection only applies in favour of a purchaser of a legal estate for money or money's worth."

As regards the word " purchaser " section 20 (8) of the same Act reads: " ' Purchaser' means any person . . . who, for valuable consideration, takes any interest in land . . . " Thus the case appears to be.a plain one. The "estate contract," JJ which by definition (section 11) includes an option of purchase, was entered into after January 1, 1926; Evelyne took an interest (in fee simple) in the land " for valuable consideration"so was a " purchaser " : she was a purchaser for moneynamely 500: the option was

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Lord Wilberforce Midland Bank Trust Co. v. Green (H.L.(E.)) [198U

not registered before the completion of the purchase, It is therefore void as against her. In my opinion this appearance is also the reality. The case is plain: the Act is clear and definite. Intended as it was to provide a simple and understandable system for the protection of title to land, it should not be read down or glossed: to do so would destroy the usefulness of the Act. Any temptation to remould the Act to meet the facts of the present case, on the supposition that it is a hard one and that justice requires it, is, for me at least, removed by the consideration that the Act itself provides a simple and effective protection for persons in Geoffrey's positionviz.by registration. The respondents submitted two arguments as to the interpretation of section 13 (2): the one sought to introduce into it a requirement that the purchaser should be " in good faith "; the other related to the words " in money or money's worth." The argument as to good faith fell into three parts: first, that " good faith" was something required of a "purchaser" before 1926; secondly, that this requirement was preserved by the 1925 legislation and in particular by section 13 (2) of the Land Charges Act 1925. If these points could be made good, it would then have to be decided whether the purchaser (Evelyne) was in " good faith " on the facts of the case. My Lords, the character in the law known as the bona fide (good faith) purchaser for value without notice was the creation of equity. In order to affect a purchaser for value of a legal estate with some equity or equitable interest, equity fastened upon his conscience and the composite expression was used to epitomise the circumstances in which equity would or rather would not do so. I think that it would generally be true to say that the words " in good faith " related to the existence; of notice. Equity, in other words, required not only absence of notice, but genuine and honest absence of notice. As the law developed, this requirement became crystallised in the doctrine of constructive notice which assumed a statutory form in the Conveyancing Act 1882, section 3. But, and so far I would be willing to accompany the respondents, it would be a mistake to suppose that the requirement of good faith extended only to the matter of notice, or that when notice came to be regulated by statute, the requirement of good faith became obsolete. Equity still retained its interest in and power over the purchaser's conscience. The classic judgment of James L.J. in Pilcher v. Rawlins (1872) L.R. 7 Ch.App. 259, 269 is clear authority that it did: good faith there is stated as a separate test which may have to be passed even though absence of notice is proved. And there are references in cases subsequent to 1882 which confirm the proposition that honesty or bona fides remained something which might be inquired into (see Berwick & Co. v. Price [1905] 1 Ch. 632, 639; Taylor v. London and County Banking Co. [1901] 2 Ch. 231, 256; Oliver v. Hinton [1899] 2 Ch. 264, 273).

But did this requirement, or test, pass into the property legislation of 1925? My Lords, I do not think it safe to seek the answer to this question by means of a general assertion that the property legislation of 1922-25

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A.C. Midland Bank Trust Co. v. Green (H.L.(E.)) Lord Wilberforce

*-

JJ

was not intended to alter the law, or not intended to alter it in a particular field, such as that relating to purchases of legal estates. All the Acts of 1925, and their precursors, were drafted with the utmost care, and their wording, certainly where this is apparently clear, has to be accorded firm respect. As was pointed out in Grey v. Inland Revenue Commissioners [1960] A.C. 1, the Acts of 1922-4 effected massive changes in the law affecting property and the House, in consequence, was persuaded to give to a plain word (" disposition ") its plain meaning, and not to narrow it by reference to its antecedents. Certainly that case should firmly discourage us from muddying clear waters. I accept that there is merit in looking at the corpus as a whole in order to produce if possible a consistent scheme. But there are limits to the possibilities of this process: for example it cannot eliminate the difference between registered and unregistered land, or the respective charges on them. As to the requirement of " good faith " we are faced with a situation of some perplexity. The expression " good faith," appears in the Law of Property Act 1925 definition of " purchaser " (" a purchaser in good faith for valuable consideration "), section 205 (1) (xxi); in the Settled Land Act 1925, section 117 (1) (xxi) (ditto); in the Administration of Estates Act 1925, section 55 (1) (xviii) ("' Purchaser' means a lessee, mortgagee or other person who in good faith acquires an interest in property for valuable consideration") and in the Land Registration Act 1925, section 3 (xxi) which does not however, as the other Acts do, include a reference to nominal consideration. So there is certainly some indication of an intention to carry the concept of " good faith " into much of the 1925 code. What then do we find in the Land Charges Act 1925? We were taken along a scholarly peregrination through the numerous Acts antecedent to the final codification and consolidation in 1925the Land Charges Registration and Searches Act 1888, the Law of Property Act 1922, particularly Schedule 7, the Law of Property (Amendment) Act 1924 as well as the Yorkshire and Middlesex Deeds Registration Acts. But I think, with genuine respect for an interesting argument, that such solution as there is of the problem under consideration must be sought in the terms of the various Acts of 1925 themselves. So far as concerns the Land Charges Act 1925, the definition of " purchaser " quoted above does not mention " good faith " at all. " Good faith " did not appear in the original Act of 1888, nor in the extension made to that Act by the Act of 1922, Schedule 7, nor in the Act of 1924, Schedule 6, It should be a secure assumption that the definition of " purchaser for value " which is found in section 4 of the Act of 1888 (. , . " person who for valuable consideration takes any interest in land") together with the limitation which is now the proviso to section 13 (2) of the Act of 1925, introduced in 1922, was intended to be carried forward into the Act of 1925. The expression " good faith " appears nowhere in the antecedents. To write the word in, from the examples of contemporaneous Acts, would be bold. It becomes impossible when it is seen that the words appear in section 3 (1) and in section 7 (1), in each case in a proviso very similar, in structure, to the relevant proviso in section 13 (2). If canons of constructions have any validity at all, they must lead to the conclusion that the omission in section 13 (2) was deliberate.

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Lord Wilberforce Midland Bank Trust Co. v. Green (H.L.(E.)) [1981]

My Lords, I recognise that the inquiring mind may put the question: why should there be an omission of the requirement of good faith in this particular context? I do not think there should be much doubt about the answer. Addition of a requirement that the purchaser should, be in good faith would bring with it the necessity of inquiring into the purchaser's motives and state of mind, The present case is a good example of the difficulties which would exist. If the position was simply that the purchaser had notice of the option, and decided nevertheless to buy the land, B relying on the absence of notification, nobody could contend that she would be lacking in good faith. She would merely be taking advantage of a situation, which the law has provided, and the addition of a profit motive could not create an absence of good faith. But suppose, and this is the respondents' argument, the purchaser's motive is to defeat the option, does this make any difference? Any advantage to oneself seems necessarily to involve a disadvantage for another: to make the validity of *-" the purchase depend upon which aspect of the transaction was prevalent in the purchaser's mind seems to create distinctions equally difficult to analyse in law as to establish in fact: avarice and malice may be distinct sins, but in human conduct they are liable to be intertwined. The problem becomes even more acute if one supposes a mixture of motives. Suppose and this may not be far from the truththat the purchaser's motives D 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 inquiries of this kind may well have been part of the legislative intention. Certainly there is here no argument for departing E violentlyfrom the wording of the Act. Before leaving this part of the case, I must comment on In re Monolithic Building Co. [1915] 1 Ch. 643, which was discussed in the Court of Appeal. That was a case arising under section 93 of the: Companies (Consolidation) Act 1908 which made an unregistered mortgage void against any creditor of the company. The defendant Jenkins was a managing director of the company, and clearly had notice of the first p unregistered mortgage: he himself subsequently took and registered a mortgage debenture and claimed priority over the unregistered mortgage. It was held by the Court of Appeal, first that this was not a case of fraud : "it is not fraud to take advantage of legal rights, the existence of which may be taken to be known to both parties " (per Lord Cozens-Hardy M.R., p. 663), secondly that section 93 of the Act was clear in its terms, should be applied according to its plain meaning, and should not be weakened by infusion of equitable doctrines applied by the courts during the 19th century. The judgment of Lord Cozens-Hardy M.R. contains a valuable critique of the well known cases of Le Neve v. Le Neve (1748) 3 Atk. 646 and Greaves v. Tofield (1880) 14 Ch.D. 563 which, arising under the Middlesex Registry Act 1708 and other enactments, had led the judges to import equitable doctrines into cases of priority arising under those Acts, and establishes that the principles of those cases should not be applied to modern Acts of Parliament.

531
A.C. Midland Bank Trust Co. v. Green (H.L.(E.)) Lord Wilberforce

My Lords, I fail to see how this authority can be invoked in support of the respondents' argument, or of the judgments of the majority of the Court of Appeal. So far from supporting them, it is strongly the other way. It disposes, for the future, of the old arguments based, ultimately, upon Le Neve v. Le Neve, 3 Atk. 643 for reading equitable doctrines (as to notice, etc.) into modern Acts of Parliament: it makes it clear that it is not " fraud " to rely on legal rights conferred by Act of Parliament: it confirms the validity of interpreting clear enactments as to registration and priority according to their tenor. The judgment of Phillimore L.J. in In re Monolithic Building Co. [1915] 1 Ch. 643, 669, 670 does indeed contain a passage which appears to favour application of the principle of Le Neve v. Le Neve, 3 Atk. 646 and to make a distinction between a transaction designed to obtain an advantage, and one designed to defeat a prior (unregistered) interest. But, as I have explained, this distinction is unreal and unworkable: this whole passage is impossible to reconcile with the views of the other members of the Court of Appeal in the case, and I respectfully consider that it is not good law. My Lords, I can deal more shortly with the respondents' second argument. It relates to the consideration for the purchase. The argument is that the protection of section 13 (2) of the Land Charges Act 1925 does not extend to a purchaser who has provided only a nominal consideration and that 500 is nominal. A variation of this was the argument accepted by the Court of Appeal that the consideration must be " adequate "an expression of transparent difficulty. The answer to both contentions lies in the language of the subsection. The word " purchaser," by definition (section 20 (8) ), means one who provides valuable considerationa term of art which precludes any inquiry as to adequacy. This definition is, of course, subject to the context. Section 13 (2), proviso, requires money or money's worth to be provided: the purpose of this being to exclude the consideration of marriage. There is nothing here which suggests, or admits of, the introduction of a further requirement that the money must not be nominal. The argument for this requirement is based upon the Law of Property Act 1925 which, in section 205 (1) (xxi) defining " purchaser " provides that " valuable consideration " includes marriage but does not include a " nominal consideration in money." The Land Charges Act 1925 contains no definition of " valuable consideration," so it is said to be necessary to have resort to the Law of Property Act definition: thus " nominal. consideration in money " is excluded. An indication that this is intended is said to be provided by section 199 (1) (i). I cannot accept this. The fallacy lies in supposing that the Actseither of themset out to define "valuable consideration"; they do not: they define "purchaser," and they define the word differently (see the first part of the argument). " Valuable consideration" requires no definition: it is an expression denoting an advantage conferred or detriment suffered. What each Act does is, for its own purposes, to exclude some things from this general expression: the Law of Property Act includes marriage but not a nominal sum in money; the Land Charges Act excludes marriage but allows " money or money's worth." There is no coincidence between these two;

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Lord Wilberforcc Midland Bank Trust Co. v. Green (H.L.(E.)) [1981]

no link by reference or necessary logic between them. Section 199 (1) (i) . by referring to the Land Charges Act 1925, necessarily incorporatesfor the purposes of this provisionthe definition of " purchaser " in the latter Act, for it is only against such a " purchaser" that an instrument is void under that Act. It cannot be read as incorporating the Law of Property Act definition into the Land Charges Act. As I have pointed out the land charges legislation has contained its own definition since 1888, carried through, with the addition of the reference to " money or B money's worth" into 1925. To exclude a nominal sum of money from section 13 (2) of the Land Charges Act would be to rewrite the section. 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 inquiries which I cannot think were contemplated by Parliament. I would allow the appeal.
LORD EDMUND-DAVIES. My Lords, for the reasons indicated in the D speech of my noble and learned friend, Lord Wilberforce, which I have had the advantage of reading in draft, I would allow this appeal. LORD FRASER OF TULLYBELTON. My Lords, I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Wilberforce. I agree with it, and for the reasons that he gives, I too would allow this appeal. LORD RUSSELL OF KILLOWEN. My Lords, I entirely concur in the reasoning of my noble and learned friend, Lord Wilberforce, and cannot usefully add to it. Accordingly I agree that this appeal must be allowed. LORD BRIDGE OF HARWICH. My Lords, I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Wilberforce. I agree with it and for the reasons he gives I too would allow the appeal. Appeal allowed.

Solicitors: Simmons & Simmons for Roythome Sidney Torrance & Co. for J. Levi & Co., Leeds.

& Co., Spalding; Gr

F. C.