Download Adverse Possession and the Transmissibility of Possessory ... and more Study notes Law in PDF only on Docsity!
Adverse Possession and the Transmissibility of Possessory Rights – The
Dark Side of Land Registration?
Mark Pawlowski*
*Barrister, Professor of Property Law, Scholl of Law, University of Greenwich
James Brown**
**Barrister, Senior Lecturer in Law, Aston University
It is trite law that, if unregistered land is adversely possessed for a period of 12 years, the title of the paper owner is automatically barred under s.15 of the Limitation Act 1980. Where the land is registered, however, there is no automatic barring of title by adverse possession^1 – instead, after being in adverse possession for a minimum of 10 years,^2 the adverse possessor can apply to be registered as the proprietor in place of the registered proprietor of the land.^3
Upon receipt of such an application, the Land Registry is obliged to notify various persons interested in the land, including the registered proprietor.^4 Those persons then have 65 business days^5 within which to object to the registration^6 and, in the absence of any objection, the adverse possessor is entitled to be registered as the new proprietor of the land. 7 In these circumstances, the registered proprietor is assumed to have abandoned the land. If, on the other hand, there is an objection, the possessor will not be registered as the proprietor unless he falls within one of the three exceptional grounds listed in paragraph 5, Schedule 6 to the Land Registration Act 2002, where: (1) it would be unconscionable for the registered proprietor to object to the application; (2) the adverse possessor is otherwise entitled to the land; or (3) if the possessor is the owner of adjacent property and has been in adverse possession of the subject land under the mistaken, but reasonable belief, that he is its owner. If none of these grounds apply, the adverse possessor will not be registered as the proprietor. The only saving is that, if his application for registration is rejected as a result of an objection and none of the three exceptions in paragraph 5, above, apply, he will be entitled to apply once again to be registered
(^1) See, s.96 of the Land Registration Act 2002. (^2) The period is 60 years for Crown foreshore. (^3) See, paragraph 1, Schedule 6, Land Registration Act 2002. (^4) See, paragraph 2, Schedule 6, Land Registration Act 2002. (^5) Although there is no provision to extend the time limit, there is power to order the rectification of the register for the purpose of correcting a mistake where, for example, adverse possession is not, in fact made out: Baxter v Mannion [2011] 1 W.L.R. 1594, (c.A.). (^6) The objection is made by giving counter notice to the registrar requiring him to deal with the application under Schedule 6, paragraph 5 of the Land Registration Act 2002. (^7) If the application relates to the whole of an existing registered title, the Land Registry will register the applicant as proprietor of that title. If, on the other hand, the application relates to part of an existing registered title, then the Land Registry will remove that part from the existing title and register the applicant as proprietor of that part under a new title number.
provided he remains in adverse possession for a further two years, and this time he will be registered as proprietor^8 whether or not anyone opposes the application.^9
Given, however, the very limited grounds under which an adverse possessor may be registered as proprietor in the event of an objection, is he not more likely to avoid the risk of applying for registration altogether if this would alert the registered proprietor of his existence and prompt opposition to the application? With an abandoned piece of land,^10 perhaps the risk of an objection would be lower, but where the disputed land forms part of an occupied property,^11 the risk would surely be much higher, so much so as to discourage the adverse possessor from ever making an application to register after the requisite 10 years of adverse possession.^12
Indeed, the incentive to “stay quiet” is made even more attractive given the principle of relativity of title in English property law and the possibility of the transmission of possessory rights between possessors creating, in effect, a “dark market” in possessory rights falling outside the registered land system. Although statistics are only available for the financial years 2008/09, 2009/10 and 2010/11, these show that the number of successful applications for adverse possession of land to the Land Registry in these years (where the land has already been registered and the application is to register the squatter as the new registered proprietor)^13 were 1,111, 1,059 and 868, respectively.^14 The Law Commission Consultation Paper, Updating the Land Registration Act 2002 , (2016), No. 227, provides more recent statistics from the Land Registry.^15 These indicate that, in the financial year 2014/15, only 749 applications for adverse possession were made under the new scheme introduced by the 2002 Act. In the period 1 April 2015 to 31 January 2016, the Land Registry received just 598 such applications under that scheme. This suggests a steady drop in the number of such applications brought under the 2002 Act over the last eight years.
(^8) The entitlement to be registered is subject to three exceptions where: (1) the applicant is a defendant in possession proceedings; (2) there has been judgment for possession given against him in the last two years; and (3) he has been evicted pursuant to a judgment for possession: see, paragraph 6, Schedule 6, Land Registration Act 2002. (^9) See, paragraphs 6 and 7, Schedule 6, Land Registration Act 2002. (^10) One can also envisage circumstances where it would be unlikely that the notification of the application would reach the registered proprietor – for example, where the proprietor was a company which had changed its registered office without informing the Land Registry of its new address for service. (^11) Although squatting in residential buildings is now outlawed under s.144 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, the offence only relates to a “building” and not its curtilage, so outbuildings, gardens, fields, etc., are not caught by the Act. But see also, R (on the application of Best) v Chief Land Registrar [2015] EWCA Civ 17, the Court of Appeal held that the criminality of trespass does not preclude a claim to adverse possession: see, M. Pawlowski, “Criminal Squatting and Adverse Possession: A Case of Interpretative Logic”, (2015) 24 Nott. L.J, 129. (^12) The Land Registry itself acknowledges that the 2002 Act “makes it more likely that a registered proprietor will be able to prevent application for adverse possession of their land being completed”: see, Practice Guide 4, Adverse Possession of Registered Land , updated 26 April 2016, para. 1.1, (^13) There are no figures where the land concerned is unregistered and the application is to register the squatter as the first registered proprietor. One of the main reasons for this is that it is not unusual for these first registration applications to be made on more than one basis. Such applications, therefore, may not be recorded as being an adverse possession application. (^14) See, Hansard, HC Deb, 12 September 2011, c1032W. (^15) See, para. 17.7.
one possessor to another? Can the possessor transfer his possessory right on death, or by sale or gift during his lifetime?
Transmission of possessory title by will or on intestacy
Apart from highlighting the principle that possession is good against all but the true owner, the decision in Asher , above, demonstrates that a possessory title is capable of transmission on death either by will or on an intestacy. In the words of Cockburn C.J.:^21
“There can be no doubt that a man has a right to devise that estate, which the law gives him against all the world but the true owner. Here the widow was a prior devisee, but durante viduitate [during widowhood] only, and as soon as the testator died, the estate became vested in the widow; and immediately on the widow’s marriage the daughter had a right to possession; the defendant however anticipates her, and with the widow takes possession. But just as he had no right to interfere with the testator, so he had no right against the daughter, and had she lived she could have brought ejectment; although she dies without asserting her right, the same right belongs to her heir.”
It is interesting to note that, in this case, there were two stages of devolution. First, the possessory right passed to the widow under the testator’s will and, secondly, it passed to the daughter’s heir upon an intestacy. Because adverse possession, as we have seen, gives all the rights and powers of ownership, the possessor acquires, to all intents and purposes, a legal estate^22 in fee simple absolute in possession^23 subject only to the true owner’s paramount right to recover the land until such time as his title is extinguished by limitation.^24 The logical upshot
September 2015, at para. 3.4: “If a second squatter dispossesses the first, the second acquires the benefit of any time that had already run against the owner. However, the first squatter will retain the right to recover possession from the second, until the full limitation period has run from the date when they were dispossessed. So if B dispossesses A (the owner) in 1986 and is then dispossessed by C in 1994, A loses the right to recover possession from C in 1998, but B could still bring possession proceedings against C until 2006.” (^21) Ibid, at 6. See also, the judgment of Mellor J, at 6-7: “Here the first possessor is connected in title with the plaintiffs; for there can be no doubt that the testator’s interest was devisable.” The decision was applied, in preference to the earlier case of Doe v Barnard 13 Q.B. 945, by the Privy Council in Perry v Clissold [1907] A.C. 73, (P.C.). See also, Calder v Alexander (1900) 16 T.L.R. 294. (^22) There has been some controversy over whether the adverse possessor’s fee simple arising from possession is legal or equitable: see, E. Cooke, “Adverse Possession – Problems of Title in Registered Land”, (1994) L.S. 1, at pp. 4-5. It has been argued that the possessor’s estate is legal because s.7 of the Law of Property Act 1925 states that “a fee simple subject to a legal or equitable right of entry or re-entry if for the purposes of this Act a fee simple absolute”: see, B. Rudden, “The Terminology of Title”, [1964] 84 L.Q.R. 63, at 69. The Law Commission has sought to resolve this controversy by suggesting that no fee simple in unregistered land can be regarded as “absolute” in the sense that it is indefeasible. It is always subject to a risk of extinction by an adverse possessor. But both the respective estates of the squatter and paper owner are absolute because they may endure in perpetuity. The notion, therefore, that “there can only be one legal fee simple at any given time rests on a fallacy: it confuses the weakness of a person’s title with the potential duration of that person’s estate in land”: see, Law Commission/HM Land Registry, Land Registration for the Twenty-First Century: A Consultative Document , (1998), Law Com. No. 254, at para. 10.23. (^23) See, Leach v Jay (1878) 9 Ch. D. 42, at 44-45; Rosenberg v Cook (1881) 8 Q.B.D. 162, at 165; Re Atkinson and Horsell’s Contract [1912] 2 Ch. 1, at 9 and Central London Commercial Estates Ltd v Kato Kagaku Ltd [1998] 4 All E.R. 948, at 951. See also generally, Cheshire and Burn, Modern Law of Real Property , (18th^ ed., 2011), at pp. 50-51 and Ruoff and Roper, Registered Conveyancing , Loose-leaf, December 2014, at para. 33.003. (^24) On this reasoning, the superior title of the lord of the manor in Asher , who was not a party to the litigation, was presumably not barred.
of this is to recognise the existence of two estates – one held by the paper owner and the other by the squatter – each qualified by reference to the other and, therefore, not in conflict.^25
There is also judicial recognition in both the English and Commonwealth cases that the squatter’s possessory title is capable of giving rise to property rights under statute. In Perry v Clissold ,^26 for example, the Privy Council held that an adverse possessor was entitled to compensation when the land became subject to compulsory purchase. Significantly, his possessory right was characterised as an “estate or interest” in the land within the meaning of the Lands for Public Purposes Acquisition Act 1880. In the course of his judgment, Lord Macnaghten stated:^27
“It cannot be disputed that a person in possession of land in the assumed character of owner and exercising peaceably the ordinary rights of ownership has a perfectly good title against all the world but the rightful owner.”
In the Australian case of Wheeler v Baldwin ,^28 the respondent sought to lodge a caveat in relation to certain lands on the basis that she was “an owner in fee simple” relying on her (and her predecessor in title’s) adverse possession for over 20 years. In order to lodge the caveat, she had to show that she had an estate or interest in the land within the meaning of the Real Property Act 1900 of New South Wales. The High Court of Australia, relying on the above- cited extract from Lord Macnaghten’s judgment in Perry , held that a person in possession of land claiming inconsistently with the title of the owner of the first estate in possession had a sufficient interest to lodge a caveat under the 1900 Act. In reaching this conclusion, Dixon J. acknowledged that an adverse possessory right in land is akin to an estate in fee simple capable of inheritance by heirs.^29
There are also other Commonwealth cases expressing the same principle. In Allen v Roughley ,^30 for example, Dixon C.J. observed that “there can be no doubt that a person who is in possession of land without a good documentary title has, whilst he continues in possession, a devisable interest in the property.”^31 Similarly, Taylor J. stated that “the inchoate interest [resulting from possession of the land]... was an interest which might have been assigned or, as actually occurred, devised by the testator.”^32
Transmission of possessory title by sale or gift
(^25) See, “Informally Created Interests in Land”, in S. Bright and J. Dewar (ed.), Land Law: Themes and Perspectives , (1998), 487, at 490. (^26) [1907] A.C. 73, (P.C.) (^27) Ibid, at 79. (^28) (1934) 52 C.L.R. 609, (High Court of Australia). (^29) Reliance was placed primarily on the statements of Joshua Williams in his lectures on the “Seisin of the Freehold”, (1878), at p. 7, and Maitland’s essay on “The Mystery of Seisin”, Collected Papers, (1911), Vol. 1, at p. 370. (^30) (1955) 94 C.L.R. 98, (High Court of Australia). (^31) Ibid, at 130-131. (^32) Ibid, at 145.
declaration by the vendors setting out their use and occupation of the plot since 1967. Although the defendant was able to establish that the council had been dispossessed of the plot for more than 12 years before it instituted proceedings for possession by relying on his own exclusive physical control of the plot since 1973, the case illustrates the possibility of a sale of possessory rights taking place informally between successive possessors under the auspices of a formal transfer of property. Indeed, a chain of possessory title was the basis for a successful claim to adverse possession in Treloar v Nute ,^38 where the defendant was able to rely on his father’s earlier use of the disputed land which had also been conveyed to him by his father by way of gift to make up the 12-year statutory period of limitation.
Mere possessory successors
It is apparent that periods of adverse possession may be added together to make up a full possessory title. This is possible in relation to both registered and unregistered land. Thus, Schedule 6, paragraph 11(2)(a), to the Land Registration Act 2002 states:
“A person is also to be regarded... as having been in adverse possession of an estate in land – (a) Where he is the successor in title to an estate in land, during any period of adverse possession by a predecessor in title to that estate”
The wording clearly recognises that a possessory right is transmissible from one adverse possessor to another. In the same way, a possessory title of 12 years can be built up in unregistered land. This was recognised under the common law in Willis v Earl of Howe ,^39 where Kay L.J. stated^40 that “a continuous adverse possession for the statutory period, though by a succession of persons not claiming under one another, does, in my opinion, bar the true owner.”^41 Indeed, a modern illustration of this principle can be found in Ellis v Lambeth London Borough Council,^42 where the claimant went to live in the house in 1985 when it was already occupied by a number of other squatters. In due course, they left and various other people moved in with the claimant controlling who would be allowed to do so. From 1995, however, the property was occupied by the claimant and one other person only. The recorder, at first instance, held that one or more of the earlier squatters (who had enjoyed possession of the property) had allowed the claimant to join them and that their possessory rights could, therefore, be transmitted to him. On this basis, the claimant was able to successfully show a
(^38) [1976] 1 W.L.R. 1295, (C.A.). (^39) [1893] 2 Ch. 545. The case was applied in the Australian case of Salter v Clarke (1904) 4 S.R. (NSW) 280, at 288, (High Court of New South Wales). (^40) Ibid, at 553. (^41) But if the first adverse possessor ceases occupation and abandons possession back to the paper owner, time runs only from when a second adverse possessor takes possession: see, paragraph 8(1), Schedule 1 to the Limitation Act 1980: “where... any such right of action is treated as accruing on a certain date and no person is in adverse possession on that date, the right of action shall not be treated as accruing unless and until adverse possession is taken of the land.” In other words, time stops running if a squatter abandons the land before the limitation period has expired. If a second squatter later takes possession, time starts to run afresh against the paper owner. See also, s.15(6), Schedule 1, para. 8(2) to the 1980 Act, which makes clear that, after abandonment of possession by the squatter, the paper owner is in the same position as if he had never been deprived of possession. (^42) (2000) 32 H.L.R. 596, (C.A).
continuous adverse possession of the property so as to defeat the local authority’s claim to possession. Although this aspect of the case was not argued on appeal, the judgment of Wilson J (with whom Swinton Thomas L.J. agreed) appears to accept the principle that, so long as the period of adverse possession is continuous,^43 the adverse possession of successive trespassers may be lumped together to defeat the paper title to the property.^44
A similar claim to adverse possession arose in Lambeth London Borough Council v Bigden ,^45 where the subject property, Oval Mansions, comprised 60 flats in a total of eight blocks. From 1983 onwards, various squatters began to occupy the blocks of flats. It was not, however, until 1997 that the local authority brought an action claiming possession which was defended on the ground that the defendants had acquired title to each block through a form of joint adverse possession relying on their own and their predecessors’ occupation. The Court of Appeal, however, rejected the claim holding that there was no exercise of effective joint or communal control over the individual flats and no joint adverse possession of the common parts such as the hallways and staircases. Moreover, there was no evidence of joint occupation of other common parts of the blocks, such as the outer walls, foundations and the roof, which would have been relevant to the acquisition of a freehold title to a block of flats by adverse possession. Although some doubt was cast by Simon Brown L.J.^46 on the correctness of the recorder’s decision in the earlier case of Ellis , above, the case again acknowledges the possibility of some form of notional transmission of possessory rights from one trespasser to another which does not require any formality complying with s.52(1) of the Law of Property Act 1925. Indeed, s.55(c) of the 1925 Act seems to make this clear by stating that nothing in s.53 (conveyances to be by deed) and s.54 (creation of interests in land by parol) shall “affect the right to acquire an interest in land by virtue of taking possession”.
Does a transfer of a possessory title trigger first registration?
Although, the Land Registry will not register a squatter’s title to unregistered land unless there is evidence of adverse possession for at least 12 years,^47 a transfer of possessory rights (whether by gift or sale) to a successor in title will (it seems) trigger an application for first registration. In this connection, the Land Registry Practice Guide 5: Adverse Possession of (1) Unregistered
(^43) See generally, Cheshire and Burn , Modern Law of Real Property , (18th (^) ed., 2011), at pp. 1133-1134. (^44) This has also been recognised by the Court of Appeal in Northern Ireland in Brown v Faulkner [2003] NICA 5(2), at [41], per Higgins J.: “A person in possession without title, but before the statutory period has elapsed, has a transmissible interest in the land (good against all the world except the paper owner). If he leaves the land and is followed by another claimant without title, the period when the paper owner is without possession, due to the first claimant’s possession, may inure to the benefit of the second claimant. The merger of the two (or more) periods of possession may defeat the paper owner.” The Australian case law is to the same effect: see, for example, Mulcahy v Curramore Property Ltd [1974] 2 N.S.W.L.R. 464, at 476-477, where the Court of Appeal of New South Wales held that, as long as there was no break in possession by successive trespassers, the cumulative time during which they adversely possessed the land could extinguish the paper title to the benefit of the last trespasser. See also, Public Trustee v Bellotti (1986) 4 B.P.R. 97, 255, (Supreme Court of New South Wales): “There can.. .be a series of trespassers on the land and, so long as there is no abandonment by any of them, the time during which each of those trespassers is in adverse possession will be added to the time of his successors so that, if there is no break in the possession, the total time of a series of trespassers will run against the owner of the land”. (^45) (2001) 33 H.L.R. 43, (C.A.). (^46) Ibid, at [57]. (^47) See, s.75(2), Land Registration Act 1925, for periods of limitation completed before 13 October 2003.
Apart from the transmission of a possessory title by sale or gift, or on death, there is the possibility that the adverse possessor may grant a form of possessory leasehold estate over the land. In this connection, although the adverse possessor has, as we have seen, the equivalent of a fee simple estate in possession, this cannot, it is submitted, clothe him with the necessary power to create a legal lease binding against the whole world. The principle of relativity of title dictates that the possessor is capable of giving a good title against the rest of the world but not someone having a better legal right to possession. This means that any grant of a tenancy over the land by the possessor will confer exclusive possession (and give rights against all who wrongfully interfere with possession) but will not bind the superior paper owner.^55 To this extent, the tenancy will have somewhat similar characteristics to a Bruton^56 tenancy which confers a form of exclusive possession/occupation but only as against the grantor and not persons with a superior title.^57 Unlike the Bruton tenancy, however, whose rights of occupation resemble those of a contractual licensee,^58 a possessory leaseholder would presumably be able to assign his leasehold term to a third party, as well as create a legal sub-tenancy out of his own possessory leasehold estate. Indeed, there is no reason why the possessory leaseholder should not have similar rights of alienation as enjoyed by the adverse possessor who holds the fee simple estate in the land. It has also been suggested by one commentator^59 that a leasehold estate derived from a common law fee simple estate qualifies as a “leasehold estate in land” (if granted for a term not exceeding seven years) for the purposes of paragraph 1 of Schedule 3 to the Land Registration Act 2002 and, given that the possessory tenant is also in actual occupation, then it should also be capable of overriding under paragraph 2 of Schedule 3.
As between the adverse possessor and his tenant, it is well-established that a tenant cannot, during the term of his tenancy, claim adverse possession against his landlord. This is because the tenant’s possession is by consent and, therefore, cannot be adverse.^60 Moreover, every tenant is estopped from denying his landlord’s title. During the currency of the landlord and tenant relationship, therefore, the landlord will continue to be characterised as being in adverse possession of the land. Only at the end of the tenancy may the tenant be in a position to assert his own adverse possession against his landlord and (in time) claim adverse possession (seeking a freehold title) against the paper owner.
The limited grounds under which the possessor may be registered following objection
(^55) It would be surprising, however, if a mere trespasser (who did not have the necessary degree of physical possession and intention to possess), could grant a possessory lease. For example, T enters onto X’s field and grants Y a weekly tenancy of the land – a valid possessory leasehold estate will not arise in these circumstances as T does not have possession in the sense of a legal fee simple estate. (^56) See, Bruton v London & Quadrant Housing Trust [2000] 1 A.C. 405, (H.L.).The same may be true of an easement, that if expressly granted by the adverse possessor, it would not bind the paper owner. However, presumably, an easement by prescription would be acquired against the paper owner regardless whether he was in possession or not. It is necessary to show acquiescence of the quasi-servient owner, which requires “a power to stop the acts or sue in respect of them” (see, Dalton v Angus & Co [1881] App. Cas. 740), but the paper owner has that power unless and until the adverse possessor gains an indefeasible title. (^57) See, Kay v Lambeth London Borough Council [2004] EWCA Civ 926, and on appeal: [2006} UKHL 10; and Islington London Borough Council v Green and O’Shea [2004] EWCA Civ 56. (^58) See, M. Pawlowski, “The Bruton Tenancy – Clarity of More Confusion?”, [2005] Conv. 262. (^59) See, N. Roberts, The Bruton Tenancy: A Matter of Relativity”, [2012] Conv. 87, at 95. (^60) Hayward v Chaloner [1968] 1 Q.B. 107, at 122, per Russell L.J.
As mentioned earlier, if an objection to the possessor’s application for registration is received in time, he will not be registered unless the case falls within one of the three exceptional grounds listed in paragraph 5, Schedule 6 to the 2002 Act. This accords with one of the underlying objectives of the 2002 Act, namely, that the basis of title should be the register and that “the title that registration confers should be capable of being overridden by adverse possession only where it is essential to ensure the marketability of land or to prevent unfairness.”^61
The first ground^62 is that it would be unconscionable because of an equity of estoppel for the registered proprietor to seek to dispossess the applicant and the circumstances are such that the applicant ought to be registered as the proprietor. The obvious difficulty here is that a possessor who occupies land under circumstances giving rise to a proprietary estoppel is unlikely to be in adverse possession. If the registered proprietor encourages the possessor to occupy the land, then presumably this would suggest that the possessor is occupying with the former’s consent. It would seem, therefore, that this ground may be confined to cases where the paper owner has stood by while the possessor mistakenly builds on the disputed land, or in which there is an informal purchase and sale and the purchaser goes into possession without taking any steps to perfect his title.^63 Quite apart from the very limited circumstances under which this ground is likely to operate, it is important to bear in mind that the Land Registry retains a discretion whether or not to register the applicant as proprietor even if a proprietary estoppel is made out. This important discretion, reserved in practice now for the First-tier Tribunal (in place of the Adjudicator), may result in the satisfaction of the applicant’s estoppel equity by some means other than his registration as proprietor of the disputed land such as an award of monetary compensation.^64
The second ground^65 is that the applicant is for some other reason entitled to be registered as the proprietor of the land. Although expressed in broad terms, the ground appears to be limited to cases where, for example, the possessor is entitled to the land as a beneficiary under a will or on intestacy of the previous registered proprietor, or where a purchaser has gone into possession after paying the purchase price but without a formal transfer of the title.^66 According to the Land Registry, this second ground is rarely successfully used in practice.^67
The third ground^68 is that (1) the land to which the application relates is adjacent to land belonging to the applicant; (2) the exact line of the boundary between the two has not been determined; (3) for at least 10 years of the period of adverse possession ending on the date of the application, the applicant (or any predecessor in title) reasonably believed that the land to which the application relates belonged to him; and (4) the estate to which the application relates was registered more than one year prior to the date of the application. Significantly, the ground
(^61) See, Law Commission/H.M. Land Registry, Land Registration for the Twenty-First Century: Consultative Document , (1998), No. 254, at para.10.43. (^62) See, para. 5(2). (^63) These examples are derived from the joint Law Commission/H.M. Land Registry Report, Land Registration for the Twenty-First Century: A Conveyancing Revolution , (2001), Law Com. No. 271, at paras. 14.36-14.52. (^64) See, s.110(4), Land Registration Act 2002. (^65) See, para. 5(3). (^66) These examples are derived from the joint Law Commission/H.M. Land Registry Report, Land Registration for the Twenty-First Century: A Conveyancing Revolution , (2001), Law Com. No. 271, at paras. 14.36-14.52. See also, Bridges v Mees [1957] Ch. 475. (^67) See, Law Commission Consultation Paper, Updating the Land Registration Act 2002 , No. 227, (2016), at para. 17.30. (^68) See, para. 5(4).
because of the risk of alerting the registered proprietor to the adverse possession and prompting opposition to the application. A variety of reasons were put forward: (1) that possession was not long enough to qualify (17 per cent); (2) there was a lack of factual possession (33 per cent); (3) there was no intention to dispossess (13 per cent); (4) possession was with the owner’s consent or licence (7 per cent); and (5) the application was likely to be rejected because the three exceptional grounds listed in Schedule 6, para. 5, to the 2002 Act were unlikely to be met (30 per cent). The last figure is particularly interesting as it shows that a significant number of potential applications are not pursued because of the difficulty envisaged in complying with the 2002 Act requirements. Typical responses included: “it would alert the owner of the paper title who might object”; “the client was not able to possess against the Crown so he decided to stay quiet”; “because of the uncertainty, time and cost of an application, it was quicker and cheaper to obtain defective title insurance”; “it is not uncommon for our clients to decide after advice not to apply for registration due to the possibility of a counter-notice”; “in our experience, more common to let lie rather than apply”.
It was also clear from these responses that only a relatively small number of applications ( per cent) had met with success relying on the three exceptional grounds listed in Schedule 6, para. 5. Most of these successful applications (73 per cent) were based on para.5(3), namely, that the client was the owner of adjacent property and had been in adverse possession of the subject land under the mistaken, but reasonable belief, that he was its owner.^73
Interestingly also, 63 per cent of solicitors who responded to the writers’ questionnaire indicated that they had been instructed on the sale or gift of a possessory title involving both registered or unregistered land. Of those who had, 85 per cent stated that, where the land was unregistered, the transaction was the subject of first registration at the H.M. Land Registry^74 The questionnaire also asked: “have you ever acted for a client applying for registration of a possessory title based on successive periods of adverse possession (i.e., relying on a chain of different possessors) in order to establish a full possessory title?” Overwhelmingly, the answer was “yes” (70 per cent) with the majority indicating a reliance on at least two (and, sometimes, three or even four) successive periods of adverse possession. Most of these were the subject of a sale (53 per cent) or based on successive physical occupation of the subject land (31 per cent). The rest involved either a transmission by gift (10 per cent) or a devolution on death by will or intestacy amongst family members (6 per cent). The responses also suggested a combination of the above (26 per cent).
Imposing a time limit on the squatter’s application to be registered as proprietor
These findings (although admittedly based on a small snapshot sample) would seem to support the notion that there is in existence a dark market in possessory titles outside the registered land system. If that is correct, then it must be asked whether such a market in possessory rights runs contrary to the overall aim of the 2002 Act which is to strengthen system of title by registration by ensuring that the basis of title is the register.^75 In the joint Law Commission/HM Land
(^73) Only 27 per cent of successful applications were expressed to have been based on the unconscionability of the registered proprietor (para. 5 (1)). The responses revealed no successful applications based on the adverse possessor being otherwise entitled to the land (para. 5 (2)). (^74) In several cases where the transaction was not made the subject of first registration, the client was advised that title to the possessory estate would be held by the transferor on bare trust for him with the effect of conferring on him a beneficial interest in his possessory estate. (^75) See, Law Commission/H.M. Land Registry, Land Registration for the Twenty-First Century, (1998), No. 254, at para. 10.43.
Registry Consultative Document published in 1998,^76 there are passages dealing with the principle of relativity of title and the protection of possession in the context of land where the title is unregistered. In particular, it is recognised that the squatter’s possessory fee simple estate will ripen into full ownership when the rights of the paper owner are automatically extinguished after the land has been adversely possessed for a period of 12 years under the Limitation Act 1980. But despite these specific references in the context of unregistered land, there is no discussion of the impact of such possessory estates in relation to land already subject to the land registration system.
What the 2002 Act does, as we have seen, is to allow the squatter to apply to be registered as proprietor after 10 years’ adverse possession. Significantly, there is no obligation on him to apply for registration after the 10-year period has elapsed – indeed, The Law Commission recognised that “if a squatter did not apply to be registered for (say) 20 or 30 years, the proprietor would still have an opportunity to object to the squatter’s application even after that (or any other) length of time.”^77 No doubt, the squatter will have every incentive to pursue his application to be registered as proprietor where he has been advised that he has a strong chance of establishing one or more of the three exceptional grounds listed in paragraph 5 to Schedule
- But, if he has little or no chance of success, there is nothing in the 2002 Act to prevent his possessory estate from continuing indefinitely until such time (if at all) as the paper owner claims possession of the land. Moreover, as the writers’ survey indicates, there is also the strong likelihood of the possessory estate devolving to another adverse possessor, in particular, either by sale or mere successive possession. It is this open-endedness, it is submitted, which has the potential for creating an ever-increasing dark market in possessory titles existing indefinitely outside the register.
If the policy underlying the 2002 Act is to limit dealings with registered land “off the register,”^78 then this suggests that such possessory estates should not endure for ever but be subject to some form of limitation period. This could be achieved, it is submitted, by a relatively simple amendment to the 2002 Act which would require the squatter to bring his application to be registered as proprietor during a stated period following his adverse possession of the land for 10 years. A failure to make the application within this extended period would have the effect of automatically extinguishing the squatter’s possessory title in respect of the land so that it would cease to exist for all purposes. Such a default rule, therefore, would operate in much the same way as the current limitation period in unregistered land which automatically extinguishes the paper owner’s title if he fails to claim possession of the land within 12 years. One obvious difference, however, is that the squatter’s fee simple ripens into absolute ownership (in effect, a wholly new estate)^79 when the rights of the paper owner have been barred under the Limitation Act 1980. In the case of a squatter who had failed to make his application for registration in time, on the other hand, the consequence of failing to apply in
(^76) Ibid, at paras. 10.21-10.24. See also, Law Commission/H.M. Land Registry Report, Land Registration for the Twenty-First Century: A Conveyancing Revolution , (2001), Law Com. No. 271, at paras. 14.20-14.22. (^77) Ibid, at para. 10.49. See also, Law Commission/H.M. Land Registry Report, Land Registration for the Twenty- First Century: A Conveyancing Revolution , (2001), Law Com. No. 271, at para. 14.83: “The general rule is, therefore, that if the registered proprietor... brings proceedings for the recovery of the land in the possession of a squatter, those proceedings will succeed, regardless of how long the squatter has been in adverse possession... the rights of the registered proprietor are not barred by laps of time.” (^78) Ibid, at para. 10.7. (^79) See, St Marylebone Property Co Ltd v Fairweather [962] 1 Q.B. 498, 533; and on appeal, [1963] A.C. 510, 543.
Conclusion
The Law Commission has repeatedly emphasised that the scheme of adverse possession introduced by the 2002 Act reflects the notion that title to registered land is based on registration and not simply on possession. In its 1998 joint Report,^81 it stated that “where title is registered, the basis of title is primarily the fact of registration rather than possession”. If this is correct, then it must be questioned whether the existence of a dark market in possessory estates is desirable given that such estates may pass through a succession of possessors and endure indefinitely off the register in the absence of any compulsion on the part of the possessor to apply for registration as proprietor in place of the registered proprietor of the land.
The writers’ proposal to amend the 2002 Act, so as to incorporate a limitation period under which the squatter would be required to bring his application either during a strict time-period following his adverse possession for 10 years or, alternatively, within a limited period of his becoming aware of his rights or following written notice from the registered proprietor, seeks to address this situation. Indeed, such a proposal would have a dual effect. First, it would compel the applicant, who has a legitimate basis for a claim, to bring his application promptly and convert his possessory estate into a registered title. Secondly, in the case of a squatter who has no likelihood of successfully registering his title within the grounds listed in Schedule 6, the limitation period would have the consequence of extinguishing his possessory estate so that it would cease to exist for all purposes. The overall effect, it is submitted, would be to bring more titles onto the register in line with the underlying rationale of the 2002 Act. At the same time, it would significantly reduce the number of possessory estates existing outside the system and curtail the emergence of a dark side to land registration.
(^81) Law Commission/H.M. Land Registry, Land Registration for the Twenty-First Century, (1998), No. 254, at para. 10.11.
