Экзамен зачет учебный год 2023 / Dixon, Modern Land Law

Modern Land Law

11.2.3The effect of a successful claim of adverse possession in unregistered land

This section deals with the effects of a successful claim of adverse possession on land of unregistered title; that is, when the evidential base has been proved and the limitation period has expire. In these cases, it should come as no surprise to learn that the effects of a successful claim of adverse possession vary according to the perspectives of the parties. In particular, the effect on tenants has attracted much interest in recent years.

11.2.3.1 Effect on the paper owner

It is settled law that once the limitation period has run its course in respect of unregistered land, both the paper owner’s right to sue and their title are extinguished by operation of statute(section 17 of the Limitation Act 1980). After this date, the conventional wisdom is that no acknowledgment of the paper owner’s title, written or otherwise, and no payment, rent or other sum can revive the title.40 This should be uncontroversial, as it is simply the consequence of the application of the Limitation Act 1980 and an expression of its underlying policy. However, the Court of Appeal has held, in Colchester BC v. Smith (1992) that in some circumstances, a written acknowledgment of the paper owner’s title by the adverse possessor, given after the period of limitation has ended, can be enough to prevent the adverse possessor relying on adverse possession in the face of an action for possession by the owner. This interesting decision appears to be based on an application of the estoppel doctrine, in that the adverse possessor is estopped from denying the paper owner’s title by the written acknowledgment, freely given. Surprisingly, the court offers no convincing reason why the Limitation Act 1980 should be ignored in this fashion, or even why the paper owner deserves to benefit from an estoppel; after all, the paper owner has slept on his rights, and why should a court of equity now come running to his aid? Neither does the court consider Nicholson v. England (1962) and, in this sense, the decision in Smith might be regarded as per incuriam. However, at present, the Colchester decision appears to be authority for the proposition that a bona fide compromise of a dispute between two persons (i.e. paper owner and adverse possessor), both of whom had legal advice, should be upheld on public policy grounds, even if the 12-year period of limitation has run. This is supported by the decision in the Trustees in the Charity of Sir John Morden v. Mayrick (2007), where the claimant was not permitted to disavow a compromise agreement relating to ownership of land (on the ground that he had in fact completed adverse possession prior to conclusion of the agreement), because he had entered into

40 Nicholson v. England (1962).

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the agreement freely and had raised no argument based on adverse possession at the time. In other words, a man will be bound by his contract.41

11.2.3.2 Effect on the adverse possessor – freeholds

The traditional doctrinal position is that a successful plea of adverse possession against unregistered land does not transfer the paper owner’s title to the adverse possessor. It operates negatively to prevent the paper owner suing the adverse possessor (or person now in possession; for example, a purchaser from the adverse possessor) and extinguishes the former title (section 17 of the Limitation Act 1980). There is no conveyance of the land from paper owner to adverse possessor. Moreover, because the adverse possessor is not a purchaser from (or even transferee from) the paper owner, the adverse possessor takes the land subject to all pre-existing proprietary obligations, whether these are registered as land charges or not. So, for example, an adverse possessor will be bound by the burden of unprotected equitable easements and unprotected restrictive covenants (as well as those protected as land charges) because the adverse possessor can never be ‘equity’s darling’. Yet, it is also true that an adverse possessor does acquire something as a result of a successful adverse possession because the adverse possessor may go on to deal with the land as if it were his own. He may sell it, lease it, devise it (i.e. by will), give it away, grant easements over it and generally do those things that an estate owner might do. In other words, a successful adverse possessor does acquire a valuable asset. How, in practice, does this work?

As noted above, in unregistered land the adverse possessor does not take, and is not treated as taking, a conveyance from the paper owner. Consequently, the paper owner has a bundle of worthless title documents and the adverse possessor has no proof of title at all. Yet, in practice, an adverse possessor with proof of established adverse possession usually can find a willing purchaser and will convey the land by deed to that purchaser. This new deed will be the first evidence of the adverse possessor’s title and first evidence of that of the new purchaser.42 Necessarily, of course, the

41This seemingly unobjectionable principle does not, in the context of adverse possession, recognise that there is also a policy consideration – recognised and effected by Act of Parliament no less – to the effect that sleeping on one’s rights deprives a person of those rights. The judgment in Smith fails to explain why a contract between the parties can override the express provisions of an Act of Parliament. Although some commentators accept that, in principle, contracting out of the Limitation Act 1980 should be possible, it is submitted that this should not be permitted, save in the most exceptional circumstances. The policy argument is more justifiable in the Mayrick case because, prior to the compromise agreement, adverse possession had not been an issue between the parties.

42The purchaser will then use this deed and the pre-existing claim of adverse possession to apply for first registration of title under the LRA 2002.

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adverse possessor will not be able to make out a good ‘root of title’,43 but the purchaser may be happy with a statutory declaration of good title, supported perhaps by ‘title insurance’.44 In effect then, a ‘new’ title is generated by the conveyancing process.

11.2.3.3 Effect on the adverse possessor – leaseholds

The traditional doctrine that there is no conveyance of the paper owner’s unregistered estate to the adverse possessor has some unusual consequences in the context of leaseholds. It will be remembered that a successful 12 years’ adverse possession against a tenant extinguishes only the tenant’s estate, and that the landlord has a further period of 12 years after the end of the original period of the lease in which to eject the adverse possessor before he also finds his title extinguished. This is all well and good because, as noted above, time can only run against a person when he has a right to recover land, and a landlord only has such a right when the lease expires. However, while it is true that the tenant has lost his estate by adverse possession vis-à-vis the adverse possessor, it is also true that the tenant remains as tenant vis-à-vis the landlord for the entire duration of the original lease.45 Title is relative. So, during the currency of the lease, the landlord can bring forfeiture proceedings against the tenant (for, say, non-payment of rent), even though the adverse possessor is in possession of the land under a successful (i.e. time barred) adverse possession. The effect of such forfeiture46 is to terminate the lease and bring forward the landlord’s right to eject the adverse possessor! Note, however, that the converse of the rule – that the ejected tenant remains ‘tenant’ the landlord – is that the adverse possessor is not to be regarded as the tenant, nor an assignee of the tenant, so cannot be liable on any leasehold covenants save those enforceable as restrictive covenants under the rule in Tulk v. Moxhay (1848).47

Although apparently complicated, the picture painted above is quite simple; the adverse possessor has extinguished the tenant’s title as far as he is concerned, but the tenant remains the tenant of the landlord. The difficulties arise when the ejected tenant seeks to manipulate his continuing relationship with the landlord to defeat the adverse possessor. For example, we have just noted that the landlord may forfeit the lease in an action against the ejected

43See Chapter 3.

44This is an insurance policy, paid for by the adverse possessor and purchased from a specialist company, guaranteeing compensation if the adverse possessor’s title should prove to be defective. It is very common in legal systems that do not have a state backed guarantee of title.

45See also Chan Suk Yin v. Harvest Good Development Ltd (2005), per Lord Hoffmann, giving judgment in the Hong Kong Court of Final Appeal.

46In which proceedings the adverse possessor has no right to apply for relief (Tickner v.

Buzzacott (1965)).

47See Chapter 8.

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tenant, thereby bringing forward the landlord’s right of action against the adverse possessor: the landlord does not have to wait until the lease term has expired. What, however, if the tenant surrenders his lease to the landlord, despite having ‘lost’ title vis-à-vis the adverse possessor? Does this also terminate the lease and bring forward the landlord’s right of action? In unregistered land, the case of Fairweather v. St Marylebone Property Co Ltd (1963) appears to provide a clear answer. In that case, a tenant against whom adverse possession had been completed successfully, surrendered the lease to the landlord, and the House of Lords held that this was effective to terminate the lease. In other words, the lease was brought to an end by a person (the ejected tenant) who still had an estate vis-à-vis the landlord. The adverse possessor then had no relief against the subsequent early termination of the lease because the adverse possessor does not occupy the land under the original lease, and is not entitled to remain for its full period if that lease is lawfully terminated. As a matter of strict logic and theory, this is difficult to fault. However, on a common sense view, it is difficult to see why the ejected tenant should have the power to surrender a lease that, to all intents and purposes, is an empty shell. The inequity to the adverse possessor is even more apparent if the landlord, having then evicted the adverse possessor, regrants a new lease to the ejected tenant!48 Despite powerful criticisms of this rule judicially and academically, it now seems likely that it will not be overruled: it applies only in the context of unregistered title and unregistered title is rapidly decreasing in significance.

11.2.4The substantive nature of the adverse possessor’s rights prior to completing the period of limitation in unregistered land

Pending completion of the period of limitation in respect of unregistered land, the adverse possessor is taken to have certain rights in the land, even though these can be completely defeated by the paper owner recovering possession within the limitation period. Thus, an adverse possessor awaiting completion

48Before the LRA 2002 made comparisons between registered and unregistered land pointless, the position in registered land under the LRA 1925 was different from that pertaining in unregistered land. In Central London Commercial Estates Ltd v. Kato Kagaku Ltd, the ejected tenant surrendered its lease to the freeholder, and the registered title to that lease was closed. The freeholder sought to evict the adverse possessor before the lease had expired. However, the court held that the effect of section 75 of the LRA 1925 (which was then operative) was to ensure that the tenant’s interest was held on trust for the adverse possessor, and that the tenant could not surrender after the period of limitation had run. In effect, the court held that the tenant’s interest in the lease did pass to the adverse possessor, and the adverse possessor could remain on the land for the remainder of the term. Sedley J goes so far as to say that there was, in reality, a statutory conveyance of the original lease with benefits and burdens intact.

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of the period may transfer such rights as they do have (e.g. two years’ worth of possession, ten years’ worth, etc.) to another person either by will or inter vivos (Asher v. Whitlock (1865)). The period so transferred may then be added to any period successfully completed by the legatee/assignee of the adverse possessor’s rights in order to make up a total of 12 years’ worth of adverse possession. The same is true if one adverse possessor dispossess another: the current adverse possessor is able to claim the combined period of adverse possession in respect of the paper owner.49

11.3Adverse possession under the Land Registration Act 1925

If the land is registered title, but is governed by the Land Registration Act 1925 (i.e. adverse possession was completed before the entry into force of the LRA 2002) the same limitation period applies as in land of unregistered title; that is, usually adverse possession of 12 years. This means that a person who has completed 12 years adverse possession before 12 October 2003 (the date of entry into force of the LRA 2002) is entitled to be registered as proprietor of the land.50 Pending such registration, the land is held on trust by the registered proprietor for the successful adverse possessor.51 This entitlement to be registered is enforceable against a purchaser of the land from the registered proprietor (who by definition is not in possession) title if he (the adverse possessor) is able to claim an interest which overrides by reason of his discoverable actual occupation of the land within the meaning of Schedule 3, paragraph 2 LRA 2002.52 If the transferee is not a purchaser, the right to registered is binding under the basic priority rule found in section 28 of the LRA 2002.53

Importantly, if the adverse possessor had not fully completed 12 years adverse possession before the entry into force of the 2002 Act, his situation is governed in its entirety by the 2002 scheme. This is so even if the period of adverse possession was nearing completion on the day the Act entered into force. There is no carry-over of a period of adverse possession. Consequently, the traditional rules of adverse possession will apply to registered land only in so far as the 12-year period is completed before 13 October 2003.

49In a contest between the adverse possessors, the current possessor can claim only that time which has elapsed since dispossessing the previous possessor.

50Schedule 12, paragraph 18 of the LRA 2002.

51Section 75 of the LRA 1925.

52Sections 29 and 30 of the LRA 2002.

53If an adverse possessor who is entitled to be registered (having completed 12 years’ adverse possession before the entry into force of the LRA 2002) does not have priority over a purchaser (i.e. they are not in discoverable actual occupation), they lose their claim. Note, however, that it has been argued that the adverse possessor in this position may claim rectification of the register, but this would rather seem to defeat the point of the priority rules found in sections 28 and 29 of the LRA 2002.

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11.4Adverse possession under the Land Registration Act 2002

The mass of case law in respect of adverse possession developed largely in the context of unregistered land. However, while the law concerning how adverse possession is established evidentially applies just as much to registered land as it does to unregistered, the scheme for regulating the effects of adverse possession on land whose title is registered is radically different, having been introduced by the Land Registration Act 2002.54 This scheme, which is now fully in force, will come to govern the vast majority of claims of adverse possession. It is premised on the fundamental belief that a state guaranteed title, readily provable from a title register, should not be lost because of the ‘mere’ possession of a stranger, irrespective of how long that possession lasts. Similarly, a system of e-conveyancing is effective only if the title register can be regarded in the vast majority of cases as conclusive of ownership. Anything that detracts from this – such as title through possession – is an anathema to e-conveyancing and should be severely circumscribed, if not removed altogether.

11.4.1 The basic principle

Under the Land Registration Act 2002, there is no period of limitation against a registered title and no sense in which a registered proprietor can lose title merely because another person has adversely possessed the land for a fixed period of time (section 96 of the LRA 2002). Consequently, even if factual possession plus an intention to possess is established, no amount of possession of itself can deprive the registered proprietor of his title. However, the 2002 Act recognises that claims of adverse possession are a fact of life and that merely removing a period of limitation will not stop disputes between claimants over title to land. Consequently in place of limitation, the 2002 Act establishes an application procedure whereby the adverse possessor may apply to the registrar to be registered as proprietor of the land and this application then triggers a statutory scheme spelt out in Schedule 6 to the Act. In this sense, the onus of making a claim to a registered title shifts squarely on to the shoulders of the adverse possessor and the registered owner need do nothing to maintain his title save act when (and if) the adverse possessor applies. A registered proprietor does not, therefore, have to remain vigilant in the vindication of his title but can rely on this new system to alert him to any adverse claim, a claim to which he can then respond to safeguard his interest.

54Note, however, that even under the LRA 2002, the old limitation period applies in respect of a claim by one squatter to have ousted another. This must be so as the ousted squatter has no registered title.

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11.4.2 The statutory scheme

Under the 2002 Act, where a person claims to have completed at least ten years’ adverse possession,55 that person may apply to the registrar to be registered as proprietor. If the registrar takes the view that the application discloses an arguable case for registration,56 the application will trigger notice to the current registered proprietor (and certain other persons, Schedule 6, para 2 of the LRA 2002). On receipt of this notice, the registered proprietor has the option of threes responses.57 Option one is that he may consent to the application, in which case the adverse possessor will be registered as proprietor. No doubt, this will not be commonplace. The second option is that the registered proprietor may object to the application. If he objects, the application for registration cannot be finalised until the objection has been dealt with In the absence of a negotiated settlement, the matter may be referred to the adjudicator for decision. The nature of the objection is likely to be that the factual basis of the claim of adverse possession is false, but even if this is the case, the registered proprietor may well be advised both to object and serve a counter-notice (option three, considered below), because the counter-notice procedure allows the registered proprietor to defeat the application whether or not the factual basis for the claim of adverse possession exists. Consequently, this second response, simple objection by the registered proprietor, is likely to occur only if the registered proprietor clearly can defeat the factual claim for possession or is unable to plead the benefit of the ‘two-year rule’ considered below.58

The third option open to the registered proprietor, and the most likely to be pursued, is to serve a counter-notice (either with or without an objection under option 2). This counter-notice requires the Registrar to deal with the application under paragraph 5 of Schedule 6 to the 2002 Act. In essence, this means that, irrespective of whether the factual basis for adverse possession

55Thus, there is a ten-year threshold, but it is not a period of limitation, merely the point before which an application cannot be made. The existence of adverse possession for ten years is to be assessed by reference to the traditional principles explained in Pye v. Graham, Schedule 6, paragraph 11 of the LRA 2002.

56That is, that adverse possession under the substantive law arguably has been established. The registrar is likely to reject applications only in the most obvious cases.

57Should the registered proprietor not respond to the notice within the prescribed time limit, the applicant may be registered as proprietor. Consequently, the scheme assumes that the registered proprietor actually receives the notice from the Land Registry. If the address for service is the registered land itself, there is a danger that the adverse possessor will destroy the notice and so the proprietor may never be warned! This is a primary reason why registered proprietors should avail themselves of the opportunity of lodging with the Land Registry more than one address for service of notices. If possible this should include an electronic mail address

58This may be because the adverse possessor can claim the benefit of one of the exceptions to the two-year rule.

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is made out, the adverse possessor cannot be entered as the new registered proprietor unless any one of three exceptional grounds is made out. Moreover, assuming none of these grounds to be made out (and we must await litigation for their meaning to be elucidated – see below), the registered proprietor will then have two further years following the application by the adverse possessor to recover possession of the land. If he does not so recover within these additional two years, then the adverse possessor may reapply at the expiry of the two-year period and he will be entered as proprietor.59

Clearly, this new scheme will have a dramatic effect on the frequency and success of claims of adverse possession. In essence, a registered proprietor will receive notice of any application by an adverse possessor to become the new proprietor and (putting aside consent and simple objection), unless one of the three exceptional grounds is made out, will have two years from that date to recover possession by normal court action. This action for possession will be successful simply by reason of the paper owner proving his title. No further reason need be given. It will require the minimum of effort and only the most indolent or uninterested proprietors are likely to fail to recover possession during the two-year period of grace. Moreover, this process will apply whether the adverse possessor applies for registration after 10 years or 110 years: there is no period of limitation. So, if the adverse possessor makes no application for registration, or does so and is evicted (assuming the exceptions do not apply), the registered proprietor is safe. For sure, this will do much to encourage the voluntary registration of titles, especially by owners of large landholdings who find it difficult to monitor the state of their land; for example, large farms, land held by local authorities. It will effectively reduce adverse possession of registered land to a trickle unless one of the ‘justice’ exceptions applies.

11.4.3 The exceptions

Given the robust protection given to a registered proprietor by the LRA 2002, it is anticipated that most future litigation will concern the meaning of the exceptions listed in Schedule 6 to the Act. This is likely to be the real battleground. After all, if a proprietor can evict an adverse possessor within two years of the adverse possessor’s application for registration even if the factual basis of adverse possession exists, plainly the adverse possessor will seek to rely, if at all possible, on the exceptions. It is only if the adverse possessor is able to establish adverse possession according to the substantive law and is able to rely on one of these exceptions, that the adverse possessor

59In such a case, the adverse possessor takes the land subject to any interests affecting the estate, except any registered charge (unless registration is because of the exceptional situations outlined above in paragraph 5): Schedule 6, paragraph 9 of the LRA 2002.

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stands any realistic chance of being registered as proprietor consequent upon his application.60

The exceptional cases are listed in Schedule 6, paragraph 5 of the LRA 2002. These are where: first, it would be unconscionable for the current proprietor to dispossess the adverse possessor because of an estoppel and the circumstances are such that the adverse possessor ought to be registered; second, where the adverse possessor is ‘for some other reason’ entitled to be registered as proprietor; or third, where there is a boundary dispute concerning adjoining land and for at least ten years the applicant reasonably believed the disputed land to be his, provided that the disputed land had been registered land for more than one year prior to the application.

11.4.3.1 Estoppel, unconscionability and ‘ought to be registered’

This first condition is meant to import substantive principles of proprietary estoppel into the law of adverse possession. This is perfectly consistent with the use of estoppel as a remedy for unconscionable conduct. It suggests that as well as establishing adverse possession (factual possession and intention) for at least ten years, the applicant must also show that he has detrimentally relied on some assurance by the registered proprietor in circumstances where it would be unconscionable for the assurance to be withdrawn. The two examples given by the Land Registry are where the squatter has built on the registered proprietor’s land in the mistaken belief that he was the owner of it and the proprietor has knowingly acquiesced in his mistake; and where neighbours have entered into an informal sale agreement for valuable consideration by which one agrees to sell the land to the other. The ‘buyer’ pays the price, takes possession of the land and treats it as his own and no steps are taken to perfect his title and there is no binding contract. This illustrates that it is envisaged that estoppel may be used when the ‘assurance’ is both express and implied by acquiescence, and where it supports a failed contract.61 Obviously, given the flexible nature of estoppel and the reluctance of courts to ‘pigeonhole’ cases – see Gillett v. Holt – it remains to be seen whether this is a wide or narrow ground for gaining title by adverse possession. We should remember, however, that outside of adverse possession, a successful plea of estoppel does not automatically result in the grant of a proprietary interest to the claimant – the remedy must deal with the unconscionability, but may be a monetary or other award.62 Perhaps this is why, in addition to

60Of course, the adverse possessor will also be successful if the registered proprietor does not respond to the notice, consents to the application or fails to recover possession within two years.

61Assuming, of course, that this is not an attempt to avoid the statutory rules requiring contracts to be made in writing and that there is unconscionability.

62Jennings v. Rice.

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proof of estoppel, the adverse possessor must also show that they ‘ought to be registered’. Clearly, the exact scope of this final hurdle will need to be clarified by judicially.

11.4.3.2The squatter is for some other reason entitled to be registered as the proprietor

This appears to be something of a ‘catch-all’ condition and its unspecific nature makes it ripe for use by adverse possessors who fear that the registered proprietor may simply take advantage of the two-year period of grace. The examples provided by the Land Registry are where the squatter is entitled to the land under the will or intestacy of the deceased proprietor; and where the squatter contracted to buy the land and paid the purchase price, but the legal estate was never transferred to him.63 In both these examples, the applicant need not rely on adverse possession at all to establish title and it seems that the adverse possession route is simply another way of ensuring that the register is altered to reflect the ‘true’ ownership. However, it may be important in those cases where the applicant cannot be certain of obtaining a rectification of the register and so instead establishes ten-year’s possession of the land and then pleads this exception to gain registration.

11.4.3.3 The boundary exception

The third exception reflects the reality of neighborhood living where the exact boundary line between adjoining properties may be uncertain or have been altered over time without any formal transfer or registration. It preserves the valuable role of adverse possession as a practical solution to often intractable and bitter boundary disputes. As the Land Registry indicates:

the condition may be useful in situations where the boundaries as they appear on the ground and as they are according to the title plan do not coincide, for example: where physical features suggest the boundary is in one place but according to the title plan it is in another; or where the dividing walls or fences on an estate were erected in the wrong place and not in accordance with the plans in the title deeds.64

As is apparent, the intention behind these exceptions is to ensure that the adverse possessor is registered as owner when, in a broad sense, he ‘deserves’ to be and has supported this by ten years’ adverse possession. The expectation is that normally the registered proprietor will either object to the application or simply utilise the two-year period of grace. The exceptions are meant to be truly exceptional. However, it is not fanciful to suppose that we may well see

63The squatter-buyer is a beneficiary under a bare trust.

64Land Registry Practice Guide, No. 4.

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