Adverse Possession Ruling

 

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Squatters’rights to another’s land are not disproportionate ( from Times Online)

European Court of Human Rights

Published October 1, 2007

J. A. Pye (Oxford) Ltd and Another v United Kingdom (Application No 44302/02)

Before J.-P. Costa, President and Judges C. Rozakis, Sir Nicolas Bratza, B. M.
Zupancic, P. Lorenzen, L. Loucaides, I. Cabral Barreto, V. Butkevych, M.
Tsatsa-Nikolovska, A. Baka, A. Kovler, V. Zagrebelsky, A. Mularoni, A.
Gyulumyan, R. Jaeger, J. ?ikuta and I. Ziemele

Deputy Registrar M. O?Boyle

Judgment August 30, 2007

Provisions of English law allowing squatters to obtain after 12 years of
adverse possession the right to title of the land, without liability to
compensation, was not an intrusion into the applicant companies? rights to
the ownership of their property.

The Grand Chamber of the European Court of Human Rights held, by 10 votes to
7, overturning a four-three judgment of a Chamber (The Times November
23, 2005), that the squatters had not violated the applicants? right to
peaceful enjoyment of their possessions as guaranteed by article 1 of
Protocol No 1 to the European Convention on Human Rights.

The applicants were two United Kingdom companies, J. A. Pye (Oxford) Ltd and
J. A. Pye (Oxford) Land Ltd. J. A. Pye (Oxford) Land Ltd was the registered
owner of a plot of 23 hectares of agricultural land at Henwick Manor,
Thatcham, Berk-shire. J. A. Pye (Oxford) Ltd was the former owner of the
land.

The value of the land was disputed. The applicant companies claimed, in losing
the land, they had lost over £10 million. The United Kingdom Government put
the value of the land in 1996 at £785,000, and in July 2002 at £2.5 million.

The owners of property adjacent to the land, Michael John Graham and Caroline
Grahams, occupied the land under a grazing agreement until December 31,
1983. On December 30, 1983 the Grahams were instructed to vacate the land as
the grazing agreement was about to expire. They did not do so.

In January 1984 the applicants refused a request for a further grazing
agreement because they anticipated seeking planning permission for the
development of all or part of the land and considered that continued grazing
might damage the prospects of obtaining such permission. From September 1984
onwards until 1999 the Grahams continued to use the land for farming without
the applicants? permission.

In 1997, Mr Graham registered cautions at the Land Registry against the
applicant companies? title on the ground that he had obtained title by
adverse possession.

The applicant companies sought the cancellation of the cautions before the
High Court and issued further proceedings seeking possession of the disputed
land.

The Grahams contested the applicant companies? claims under the Limitation Act
1980, which provided that a person could not bring an action to recover any
land after the expiration of 12 years of adverse possession by another. They
also relied on the Land Registration Act 1925, which provided that, after
the expiry of the 12-year period, the registered owner held the land in
trust for the squatter.

In 2000, the High Court held that, since the Grahams enjoyed factual
possession of the land from January 1984 and adverse possession took effect
from September 1984, the applicant companies had lost their title to the
land under the 1980 Act, and the Grahams were entitled to be registered as
the new owners (The Times March 15, 2000; [2000] Ch 676).

The applicant companies appealed successfully to the Court of Appeal (The
Times
February 13, 2001; [2001] Ch 804), but their appeal was overturned
by the House of Lords, which, restored the order of the High Court (The
Times
July 5, 2002; [2003] 1 AC 419).

However, Lord Bingham of Cornhill stated that the decision was one he had
reached with no enthusiasm. He said: ?Where land is registered it is
difficult to see any justification for a legal rule which compels such an
apparently unjust result, and even harder to see why the party gaining title
should not be required to pay some compensation?.

The Land Registration Act 2002, which does not have retrospective effect, now
enables a squatter to apply to be registered as owner after ten years of
adverse possession but requires that the registered owner be notified of the
application. The registered proprietor then has two years to regularise the
situation, for example, by evicting the squatter, failing which the squatter
is entitled to be registered as the owner.

The application was lodged with the European Court of Human Rights on December
17, 2002 and declared admissible on June 8, 2004.

After the Chamber judgment, the case was referred to the Grand Chamber, under
article 432 of the Convention and rule 73 of the Rules of Court) on April
12, 2006 at the UK?s request.

The Grand Chamber of the European Court of Human Rights held: The applicants
alleged that the United Kingdom law on adverse possession, by which they
lost land with development potential to a neighbouring landowner, was in
violation of article 1 of Protocol No 1. The Grand Chamber agreed that
article was applicable as the applicants had lost ownership of 23 hectares
of agricultural land as a result of the operation of the 1925 and 1980 Acts.

The Grand Chamber also noted that the applicants lost their land as the result
of the operation of rules on limitation periods for actions for recovery of
land. The relevant provisions of the 1925 and 1980 Acts were part of general
land law, and were concerned to regulate, among other things, limitation
periods in the context of the use and ownership of land as between
individuals.

The applicant companies were therefore affected, not by a deprivation of
possessions under article 1 of Protocol No 1, but rather by a control of use
of land.

The Grand Chamber further considered that the existence of a 12-year
limitation period for actions for recovery of land as such pursued a
legitimate aim in the general interest; and it was to be noted that the
relevant provisions of the 1925 and the 1980 Acts were not abolished by the
2002 Act.

In addition, a large number of European countries possessed some form of
mechanism for transferring title based on similar principles and without
payment of compensation to the original owner.

The Grand Chamber accepted that to extinguish title where the former owner was
prevented, as a consequence of the application of the law, from recovering
possession of land could not be said to be manifestly without reasonable
foundation. There was therefore a general interest in both the limitation
period itself and the extinguishment of title at the end of the period.

In terms of whether a fair balance had been struck between the demands of the
general interest and the interest of the individuals concerned, the Grand
Chamber observed that the rules contained in both the 1925 and the 1980 Acts
had been in force for many years before the first applicant even acquired
the land.

In particular, it was not open to the applicant companies to say that they
were not aware of the legislation, or that its application to their case
came as a surprise to them.

Very little action on the part of the applicant companies would have stopped
time running. The evidence was that if the applicant companies had asked for
rent, or some other form of payment, in respect of the Grahams? occupation
of the land, it would have been forthcoming, and the possession would no
longer have been adverse.

Even in the unlikely event that the Grahams had refused to leave and refused
to agree to conditions for their occupation, the applicant companies need
only have commenced an action for recovery, and time would have stopped
running against them.

A requirement of compensation for the situation brought about by a party
failing to observe a limitation period would sit uneasily alongside the very
concept of limitation periods, whose aim was to further legal certainty by
preventing a party from pursuing an action after a certain date. The Grand
Chamber reiterated that, even under the provisions of the 2002 Act, no
compensation was payable by a person who was ultimately registered as a new
owner of registered land on expiry of the limitation period.

The Grand Chamber also recalled that the applicant companies were not without
procedural protection. While the limitation period was running, and if they
failed to agree terms with the Grahams which put an end to the adverse
possession, it was open to them to remedy the position by bringing a court
action for repossession of the land.

Such an action would have stopped time running. After expiry of the period, it
remained open to the applicant companies to argue before the domestic
courts, as they did, that the occupiers of their land had not been in
adverse possession as defined by domestic law.

It was true that, since the entry into force of the 2002 Act, the registered
owner was in a better position than the applicant companies at the relevant
time. However, the 2002 Act was not in force at the relevant time.

In any event, legislative changes in complex areas such as land law took time
to bring about, and judicial criticism of legislation could not of itself
affect the conformity of the earlier provisions with the Convention.

The applicant companies contended that their loss was so great, and the
windfall to the Grahams so significant, that the fair balance required by
article 1 of Protocol No 1 was upset.

The Court considered that, while it would have been strained to talk of
acquired rights of an adverse possessor during the currency of the
limitation period, it had to be recalled that the registered land regime in
the United Kingdom was a reflection of a long-established system.

Such arrangements fell within the state?s margin of appreciation, unless they
gave rise to results which were so anomalous as to render the legislation
unacceptable. The acquisition of unassailable rights by the adverse
possessor had to go hand-in-hand with a corresponding loss of property
rights for the former owner.

The possibility of undeserving tenants being able to make windfall profits did
not affect the overall assessment of the proportionality of the legislation:
see James v United Kingdom (Application No 8795/79) ((1986) 8 EHRR
123; Series A No 98 paragraph 69) and any windfall for the Grahams had to be
regarded in the same light.

It was not disputed that the land lost by the applicants, especially those
parts with development potential, would have been worth a substantial sum of
money. However, limitation periods, if they were to ful-fil their purpose,
had to apply regardless of the size of the claim. Thus, the value of the
land could not be of any consequence to the outcome of the case.

The Court therefore concluded, with Judges Rozakis, Bratza,
Tsatsa-Nikolovs-ka, Gyulumyan, ?ikuta, Loucaides and Kovler dissenting, that
the fair balance required by Article 1 of Protocol No 1 was not upset.

Full text at http://www.echr.coe.int