Midland Bank Trust Co Ltd Vs Green (No. 1) [1981] 1 AC 513

Facts:
Green was granted a farm by his father to purchase a farm. Although the farm which was given as an option to Green was no listed/registered in the Register of Title. As it was not listed as an option so Green's father sold the property to his mother for $500, but the original cost of the farm was $40,000.

The son sought a declaration that the option was binding on the mother's estate in front of the courts after the mother died. First the judge declared that it was a genuine sale which defeated son's argument that it was an unregistered option, but then in the court of appeal the decision was reversed and was appealed to the House of Lords by the mother's estate.

Issues:
Under Section13 of Land charges Act which says that a land charge is void unless registered against a purchaser of the land charged provided the purchase is 'for money or money's worth', but argument by the son was that minimal purchases should be excluded and even stated that section13(2) did not protect the person who did in bad faith.

Here the purchase done by his mother was clearly done so that the option offered to Green by his father will be defeated or should not be considered. As the offer was done in bad faith so his option is still binding and can't be declared as void in the House of Lords.

Decision:
Their Lordships allowed the arguments put forward by Mr. Green and stated that if a purchase is done then it must be done in good faith which in this case was purely done in bad faith by the mother. In fact, the section13 did not exclude any amount of money which was provided the purchase for money or money's worth.

According to Their Lordships, even if statutory rights were used dishonestly, relying on them was not fraud. As a result, the mother's estate was not bound by the son's option.