(Revised)
LORD JUSTICE CUMMING-BRUCE: Lord Justice Templeman will deliver the first judgment in this matter.
LORD JUSTICE TEMPLEMAN: This is an appeal against a judgment of His Honour Judge Fallen, Q.C., sitting as a judge of the High Court at Bristol on 15th February 198O. It is an odd little case which has been well argued on both sides and is not directly covered by authority.
The plaintiff, Mr. Hyde, claims that he acquired title to 138 Clouds Hill Road, St. George, Bristol by adverse possession under the Limitation Act 1939. Section 4(3) provides:
"No action shall be brought by any other person to recover any land after the expiration of twelve years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person".
It is submitted on his behalf that the right of action accrued in the circumstances I shall shortly narrate as early as 1958. But the Act does not end there. Section 1O provides:
"No right of action to recover land shall be deemed to accrue unless the land is in the possession of some person in whose favour the period of limitation can run (hereafter in this section referred to as 'adverse possession')".
It is one of the issues in this case whether or not in the events which happened the possession by Mr. Hyde of the disputed property was adverse possession. He was undoubtedly in occupation of the property for up to 14 years but it is in dispute as to whether he was in adverse possession.
The difficulty begins with contracts dated 12th March 1958, following a successful bid by Mr. Hyde at auction, and he thereby agreed to purchase 138 Clouds Hill Road and a little piece of adjoining land for prices in the aggregate £255* By the contracts completion was to take place, ironically as it turned out, on 14th April 1958, and Mr. Hyde paid the usual deposit. The sale was expressed to be subject to the Law Society's Conditions of Sale 1953 and Condition 6 makes provision for what is to happen if, as happens sometimes and usually fatally, the purchaser is allowed into possession pending completion. Condition 6 provides:
"6(1) Where the purchaser is authorised ... to take physical possession of the property before the actual completion of the purchase, then (save as otherwise agreed) the following provisions shall apply:-(a)(i) The purchaser shall occupy the property as a licensee of the vendor and not as a tenant."
Then there are various other provisions about outgoings and income and so on and there is a provision at (l)(c):
"The purchaser shall, from the date of taking possession ... and until the time of actual completion, or until the vendor resumes possession by reason of the rescission of the contract -
(i) keep the property in as good a state of repair and condition as it was in at the time of taking possession".
Then, and most materially, subclause (d) provides:
"If the contract is rescinded or becomes void the purchaser shall –
(i) forthwith deliver up possession of the property to the vendor in as good a state of repair and condition as aforesaid".
In my judgment, the effect of that condition - which, I should odd, has been amended and altered materially by subsequent editions - in the 1953 Law Society's Conditions of Sale seem to me to be that the vendor was not bound to let a purchaser into possession but, if he let him in without more ado, then the purchaser was entitled to stay there on the terms set out in that condition until the contract was rescinded or became void. Then the purchaser would be under a duty to deliver up possession of the property to the vendor; but it was not within the power of the vendor arbitrarily, having let the purchaser in under that condition, to say, "Out you go; I have changed my mind and you must go although the contract still subsists". But that condition itself provides that it is "save as otherwise agreed" and the vendor, not being under any obligation to let a purchaser into possession, can, of course, bargain and say, "I will only let you into possession if we vary the terms of condition 6" and he can say that expressly or by implication.
In the present case it appears from the evidence that Mr. Hyde took the law into his own hands and went into occupation of the property without letting the vendor know. So, on 14th March 1958, the auctioneers, who had concluded the sale, Victor Osmond & Co., wrote a letter to Mr. Hyde:
"re; 138 Clouds Hill Road, St. George.
We have received instructions to accept your offer of £5 for the contents of the above. If you will kindly let us have your cheque for this amount we can arrange to loan you the key on your undertaking to return same any time before completion, upon demand."
Not content with that, they obtained from Mr. Hyde his signature to a document dated l7th March 1958, whereby he acknowledged receipt from the auctioneers of a bunch of keys relating to 138 Clouds Hill Road, St. George,
"which I undertake to return to you on demand".
For some obscure reason even that was not sufficient because, in a letter dated 19th March 1958 addressed by the auctioneers to a neighbour, a Mrs. Hall of 134 Clouds Hill Road, they said:
"re; 138 Clouds Hill Road.
"Will you kindly allow the bearer Mr. Hyde to borrow the key in your possession, and he will return the key to us within a few days."
Underneath that Mr. Hyde wrote:
"This I will do at your request".
The combination of those three letters, in my judgment, is that Condition 6 was varied, not struck out, so far as was necessary to introduce a term whereby Mr. Hyde's occupation was determinable on demand and that, unlike a vendor under Condition 6 in its unmodified form, these vendors could obtain possession on demand whether or not the contract was going to be completed and whether or not it was still subsisting.
Well, that set the stage for what appeared to be a rather small and not difficult conveyancing project, and the conveyancing machinery ground on in its inevitable way past the optimistic completion date 14th May 1958 and then, to the vendors' horror no doubt, on 19th May 1958 the vendors, who were the personal representatives of one Milsom deceased, found that they had fallen into a well recognised trap. They had inadvertently conveyed away to Mr. Flook a small piece of the land, only 6O square feet it is said, which they had later contracted to sell to Mr. Hyde and, of course, they could not do it. They had conveyed it away to Mr. Flook.
On making that discovery, they told Mr. Hyde's solicitors and they offered, on advice from the auctioneers, to abate the purchase price by £10 out of the £255, that being the value the auctioneers attached to the 6O square feet. Mr. Hyde, as he was entitled to do, said that was not enough and he asked for a larger abatement. There was a row between Mr. Flook and Mr. Hyde; Mr. Flook claiming the property and a shed which belonged to it and Mr. Hyde, on the strength of his contract plan, claimed that he was entitled to it and there were words between them. The vendors then made it clear that, in their view, this disputed piece of land belonged to Mr. Flook as a result of the conveyance and at the end of their letter on 19th May they said:
"In view of .the situation concerning your first query, we herewith give you notice that we desire the keys of 138 Clouds Hill Road to be returned to us immediately. When Mr. Hyde received the keys, from our Agents, he signed an undertaking whereby he would return the keys if demanded."
So the vendors were exercising the rights which they had obtained for themselves when they gave him the key, namely, of turning Mr. Hyde out of possession or requiring him to deliver up possession, although the contract was still to march on.
Mr. Hyde's solicitors passed on his request for the key to him, and about the land and the abatement. The vendors' solicitors kept pressing Mr. Hyde's solicitors for the return of the keys and Mr. Hyde's solicitors kept pressing Mr. Hyde, but he took no notice as regards giving up possession and simply stayed on. By 2nd July 1958 Mr. Hyde's solicitors were exasperated with their own client over a matter which, so far as they were concerned, was a very small matter and so they wrote and said that, as he would not accept the reduction of £1O and had not returned the keys so that they could hand them over to the vendors' solicitors, they were not prepared to act for him any longer.
Thereupon, the vendors' solicitors had to take up the tale directly with Mr. Hyde and on 17th July 1958 they wrote directly to him, saying that they had been informed that his solicitors were no longer acting for him and that, if he had other solicitors, would he let them know, and they continued:
"In the middle of May you were instructed by your Solicitors to return the keys of 138 Clouds Hill Road and so far these instructions have not been obeyed. When you were first handed the keys by our agents, Messrs. Victor Osmond & Co., you signed an undertaking that you would return them on demand. In the middle of May, we demanded that those keys should be returned and this you have not done. Unless you return those keys to us, we will have to take action to see that we get possession of them.
"We would remind you that you are not the legal owner of 138 Clouds Hill Road, in that the Conveyance of the property has not yet been completed. You are, therefore, in an extremely delicate position should it be necessary for us to take any action against you."
Quite rightly and properly, the vendors' solicitors were using their power to obtain possession as a means of jollying along Mr. Hyde and obtaining his agreement to the eventual completion of the contract.
Mr. Hyde does not appear to have replied but it seems quite clear that he did not repudiate the contract and that he wanted it to go on and he was willing to complete; and the only question was whether the purchase price of £255 should be abated by £1O as the vendors thought proper, or by some larger amount as Mr. Hyde was insisting upon. Eventually, on 5th September 1958, there was written the last letter in a chain which, for some unaccountable reason, was then broken. The vendors' solicitors wrote to Mr. Hyde re the sale of No. 138, saying:
"We refer to the above matter in which a small piece of land and shed was by error included in the sale of the property to you by reference to the plan on the Contract, whereas in fact it did not belong to the late Mr. Milsom.
"We wrote to the Solicitors who were then acting for you on the 3Oth. of May 1958t offering £1O.O.O compensation, which is the amount we are advised is fair and reasonable but which we understand you are not prepared to accept.
"Under the Law Society's Conditions of Sale 1953» which are incorporated in the Contract for the sale of the property, any error, omission or mis-statement in the Contract shall entitle the Purchaser or Vendor as the case may require to compensation. If any dispute arises between the parties as to the amount of such compensation it shall be settled by arbitration by a sole Arbitrator, agreed by the parties, or in default of such agreement, by an Arbitrator appointed by the President or other principal officer for the time being of the Local Law Society in the area at which the property is, subject to the Arbitration Act 195O."
That paragraph correctly set out the relevant provisions of the Law Society's Conditions. They continued:
"As dispute has arisen as to the amount of compensation to be allowed, for the error concerning the small piece of land adjoining No. 138 Clouds Hill Road, we will have to invoke this clause and settle the dispute by arbitration. We now, therefore, put forward for your agreement, the name of Mr. A. O. Perkins, the senior partner of the firm of Messrs. Stanley Alder and Price, surveyors, auctioneers and estate agents of this City, as the Arbitrator and we write to you to enquire whether such person will be acceptable to you or whether you have any other person whom you wish to put forward as the suggested Arbitrator.
"We have in the last two months written several letters to you to which we have received no reply.
"We would be much obliged if you could answer this letter or consult your Solicitors in order that they may reply to it."
Now, there are several important conclusions from that letter. The first is that the vendors were proceeding on the assumption that the contract was still a good contract, that both parties were bound by it and that always in dispute was the amount determined by arbitration of abatement. It also appears that Mr. Hyde himself, far from repudiating the contract or purporting to repudiate because of the failure to produce this piece of land, was content that the contract should be completed and concluded subject to an abatement which he regarded as adequate. It also would seem, from that letter at any rate, there is no demand there for the return of the keys. We are not given any explanation. It may be, as Mr. Hyde's counsel submitted, that they incorporated the rest of the letters and were still standing by their view that he must give possession straightaway irrespective of what happened as a result of the arbitration, or it may be - we know not - that, having regard to the amount at stake, it is quite possible and probable that they were saying to themselves, "Well, there is no point in going for possession; the best thing to do is to go for arbitration. If he does not agree the arbitrator, of course, we have powers under the Arbitration Act to proceed as though he had agreed the arbitrator and, when the arbitration is finished, then he will complete and we shall not be troubled with an action for possession." But that remains obscure. It is not clear what line the vendors' solicitors were then taking about possession.
But one thing is perfectly clear. They were treating Mr. Hyde, and he was accepting treatment down to then, as being in the position of a purchaser who paid a deposit, entered into possession and was willing to complete as soon as this little dispute was resolved.
Well, the dispute never was resolved. For reasons which are unexplained and appear to be inexplicable, nothing happened after that. Mr. Hyde remained in possession of the properties and the vendors, as far as one can see, never did proceed to arbitration. They certainly never proceeded to litigation. Thus matters remained until, on 12th August 1972, again for reasons which are not explained and may be inexplicable, the vendors contracted to sell the same property, except the disputed piece of land, to the defendant in this action, Mr. Pearce, for £55O. The contract, rather prudently, provided that that sum was to be repaid to Mr. Pearce if he failed to obtain possession from Mr. Hyde.
That contract was followed by a conveyance because the contract which had been made in favour of Mr. Hyde had never been registered as a land charge and, therefore, could be over-reached by a sale for value to a purchaser whether that purchaser had actual notice of Mr. Hyde's contract or not. The transfer is dated 2nd October 1972. It is a transfer of the property 138 Clouds Hill Road then comprised in Land Registry Title BL 37588. There is no doubt that that transfer over-reached any contractual rights of Mr. Hyde under the 1958 contract because of the failure to register. Thereupon, Mr. Pearce became entitled, instead of the vendors, to evict Mr. Hyde unless Mr. Hyde had some other method of claiming that he could stay in possession.
About the same time Mr. Hyde had a dispute with the rating authorities with the result that he went to prison, and Mr. Pearce took the opportunity to enter the property and proceeded to demolish and reconstruct the present house. Whether there was any warning in any earlier correspondence is not revealed and I do not think it matters. However, Mr. Hyde, being restored to liberty, by writ and statement of claim dated 2lst January 1974 claimed against Mr. Pearce possession of the premises and damages. In the statement of claim all he alleged, and all he was bound at that time to allege, was that he was and had been at all material times the owner and entitled to possession of the property 138 Clouds Hill Road and the chattels therein. By his defence Mr. Pearce, for his part, relied on his 1972 purchase from the vendors on the fact that a search under the Land Charges Act and the Law of Property Act had not revealed any existing entries and he counterclaimed for
"A declaration that he is entitled to the fee simple absolute in possession of the said premises free of all interests, whether legal or equitable, in the said property."
On 2nd February 1977 Mr. Hyde furnished particulars in which he relied on his 1958 contract. He said:
"The Defendant's" - that is Mr. Pearce's - "predecessors in title contracted to sell the property to the Plaintiff at auction held on or about the 5th day of March 1958 at the Fire Engine Hotel, Blackswarth Road, Bristol"
and he also said:
"The Plaintiff occupied the said property continuously from prior to the said auction until dispossessed by the Defendant as pleaded in Paragraph 2 of the Statement of Claim".
By his defence to counterclaim dated 18th March 1977 Mr. Hyde pleaded that the vendors had discontinued possession of the land or, alternatively, were dispossessed by the plaintiff and, by reason of the foregoing, he says, in or about March 1958; and that Mr. Hyde himself had remained in exclusive possession of the property up to November 1972, that being the period of 14 years. He also pleaded that:
"By reason of the foregoing the Defendant's claim herein is barred and the title of the Defendant's predecessor (if any) was, prior to the contract pleaded in Paragraph 9 of the Counterclaim, extinguished by virtue of the provisions of the Limitation Act 1939."
These were assertions of title under the Limitation Act 1939 and they were incorporated by amendment into the statement of claim also some time in 1977 by much the same formula.
To this Mr. Pearce, by an amended defence and counterclaim, pleaded:
"It is alleged that the Plaintiff was in occupation of the said property as licensee of the then owners, which licence was never terminated, and by reason of the premises the then owners never discontinued possession of the said property nor were the then owners dispossessed therefrom by the Plaintiff."
So battle was joined so far as those pleadings were concerned but, subsequently, Mr. Hyde furnished further particulars. On 24th October 1977 he said:
"The nature of the Plaintiff's occupation was as a residence, and his right of occupation was after the said auction as a purchaser under a binding contract for sale with the knowledge of the vendor."
That appears to be inconsistent with a claim to possessory title under the Limitation Act 1939.
Yet further particulars, which are dated 16th July 1979, look both ways. First of all, Mr. Hyde's particulars said that he occupied the property first of all "as a squatter" but, after the auction, he occupied the property "as purchaser under a binding contract for sale with knowledge of the Vendor". Both those particulars appear to be inconsistent with a claim to a possessory title. He then proceeded to deny that he was asked for or signed any undertaking to return the keys; and that must obviously be a mistake. Having regard to the passage of time it was not surprising, but he also says:
"On or about the 19th day of May, 1958 the Vendor's Solicitors asked for the keys to be returned. The Plaintiff did not do so and remained in the property. The Plaintiff never paid the balance of the purchase price because no satisfactory title to the property was deduced."
That rather harks back to the amended statement of claim which raised a claim under the Limitation Act 1939 but certainly, so far as the pleadings were concerned, it would appear at that stage that Mr. Hyde was relying both on the contract as being the reason for his possession and also on adverse possession under the Limitation Act 1939.
At the trial it was submitted on behalf of Mr. Hyde that his licence to occupy the property, which was constituted by the letter which he signed agreeing to return the keys on demand, was terminated by the vendors by their letter dated 17th July 1958 by which they asked for the keys back; and that, thereafter, after that letter, Mr. Hyde was a trespasser and began to acquire title by adverse possession which fructified long before 1972.
On behalf of Mr. Pearce it was submitted that, pursuant to Condition 6 of the Conditions of Sale, the licence was only determinable on the rescission or avoidance of the contract, that the contract never had been rescinded or determined and, therefore, that Mr. Hyde remained a licensee of the vendors and never became a trespasser or began to acquire a title by adverse possession. This submission on behalf of Mr. Pearce does not seem to me to pay sufficient regard to the terms of the undertaking given by Mr. Hyde when he entered into possession; and the learned judge, too, appears to have ignored the terms of the undertaking given by Mr. Hyde and decided the matter as a question of construction of Condition 6. What he decided was that, no matter what Condition 6 said, by necessary implication, even though the contract had not been rescinded or otherwise brought to an end, a vendor could always get rid of a purchaser prior to completion by determining his licence by notice.
In my judgment, Condition 6, on the 1953 Condition, admits of no such construction. If the purchaser had entered pursuant to that condition without amendment, he could not have been required to leave unless and until the contract was rescinded or avoided.
In this court, by an amendment to a counter notice which the court allowed to be made, it was argued on behalf of Mr. Pearce in the present case that Condition 6 was modified by the undertaking given by Mr. Hyde that he would hand back the keys on demand. The vendors were not bound to allow Mr. Hyde into possession. Condition 6 only applied "save as otherwise agreed" and, in the present case, it had been otherwise agreed. As a condition of allowing Mr. Hyde into possession the vendors insisted on taking power to get him out on demand whether the contract had been rescinded or not and, for my part, I accept this submission. Mr. Hyde entered into possession on the terms of Condition 6 as modified by the undertaking which he signed. He was a licensee whose licence could be determined at any time on demand by the vendors to quit the property, and the vendors in 1958 did purport to determine the licence and to ask for possession of the property.
But the matter does not, however, end there because, notwithstanding the determination of Mr. Hyde's licence to occupy, the question is whether, after that determination, he was in adverse possession, and it seems to me that he was, at any rate, in an equivocal position. He was not in the same position as a squatter or a trespasser who, without a shadow of a claim of right, sits in the property for the requisite period and thus acquires a title. In the first place, as I pointed out, both the vendors and Mr. Hyde, down to and including September 1958, appeared to have accepted the existence of contract, notwithstanding the dispute which had arisen. The only dispute was as to the amount of abatement which was proper on the price of £255: the vendors said £1O, Mr. Hyde said more. Secondly, in his pleadings and particulars, Mr. Hyde repeated that he was in occupation as a purchaser under a subsisting contract. We were referred to some earlier correspondence which took place immediately before this action was launched in which a claim was made to a title for Mr. Hyde under the Limitation Act 1939; but both that correspondence and the pleadings to which I have referred seem to me to show that Mr. Hyde was relying on the contract when it suited him and relying on the Limitation Act when it suited him better. Thirdly, as a purchaser under a subsisting contract, Mr. Hyde was not a. mere stranger. He had an equitable interest in the property although, of course, subject to various caveats and to the rights of the vendors.
For that purpose we were referred to Williams on Vendor and Purchaser, 4th edition at pages 545 and 563 to 566 which, amongst other things says:
"For in equity, subject to the vendor's duty of showing a good title, to his lien for the price, and to him right to the rents and profits up to the proper time for completion, the whole estate contracted for in the lands sold is considered as belonging to the purchaser as from the date of the contract for sale."
We were also referred to certain cases in which it was held that time did not begin to run under the Limitation Act because of the peculiar nature of the position of the person claiming a title under that Act. For example, in Thomas v. Thomas (1855) Vol. 2 Kay & Johnson's Reports at page 79, a father, who entered on property, was held not to have a possessory title as against his own children because, as I understand it, he clothed himself with the capacity of a trustee and a trustee cannot assert a possessory title against beneficiaries.
In Warren v. Murray and another (1894) 2 QB 648, a lessee, who was entitled to possession in circumstances in which specific performance could not have been refused, was not affected by the Limitation Act, simply by virtue of the fact that a lease had not in fact been granted to him. But in that case there was no impediment in the granting of a lease; in the present case there was still something to be done in the ascertainment of the purchase price and the payment of the purchase price.
We were also referred to Charles Edward Victor Seneviratne Corea v. Mahatantrigey Iseris Appuhamy and another (1912) AC 230, which was an illustration that tenants in common cannot assert a possessory title against one another. Their possession is attributable to the title which they hold.
Then, fourthly, as I pointed out, the letter of 17th September 1958 is equivocal. It does not contain a demand for possession; it is equally consistent with the vendors allowing Mr. Hyde to remain in possession as a purchaser pending completion as with the view that impliedly they were still requiring possession to be handed over to them.
Fifthly, the position is a little odd in the present case. At any rate in 1958 there was not much point in the vendors taking steps to obtain possession. The purchase price was small; costs of the litigation to obtain possession would have been quite material compared to the purchase price and, if Mr. Hyde had been prepared to produce the purchase price, or even if he had not, it was quite likely that the court would have allowed him to remain in possession on terms which were fair to both sides. In effect, Mr. Hyde could not have been evicted without litigation; that litigation would have been futile or, at any rate, would not necessarily have succeeded in obtaining possession for the vendors.
Next, it seems to me it is material that Mr. Hyde never expressly repudiated or rescinded the contract at any time and there is certainly no evidence that the vendors repudiated or rescinded the contract. But it is said that there is no doubt that a right of action accrued because, once the vendors had demanded the keys, they determined his licence and they were entitled to go to court and to ask for Mr. Hyde to yield up possession and, therefore, it is said that time began to run under the Limitation Act 1939.
For my part, in the peculiar circumstances of this case, it seems to me that it is not sufficient to show that a right of action had accrued. Mr. Hyde must show some further quality, namely, adverse possession. Mr. Hyde was allowed in possession as a purchaser pending completion; and he was allowed to stay there because he was a purchaser. If he had been a mere trespasser no doubt the vendors would have brought proceedings. But the vendors, in all the circumstances of the case, seem to have decided by accident or design to allow matters to drift on without taking steps to evict him from the premises, relying on the fact that it would all turn out right in the end when the purchase price was ascertained and completion took place.
For example, in the first ten years of Mr. Hyde's occupation, he could have taken up the same attitude and, as far as we know, would have taken up the same attitude which he had adopted down to September 1953 that he was a purchaser in possession awaiting ascertainment of the purchase price and completion. In those circumstances, it does not seem to me to be right that he can, in retrospect, say: "Oh, that was all a mistake. True, I looked like a purchaser in possession, but the vendors could have evicted me; and, although I did not say so, although the contract was still subsisting, although I took no steps to repudiate it so that they were entitled to look upon me as a purchaser, although they did not realise it and it may not have suited me at the time, I was in fact a purchaser in adverse possession quietly picking up the years which are necessary to elapse before the Limitation Act 1939 barred the vendors' title". Mr. Hyde relied on the contract for the purposes of obtaining possession and for the purposes of remaining in possession and he now seeks to rely on adverse possession: firstly, because he failed to register the contract as an estate contract and, secondly, because the passage of time makes it more beneficial to him to repudiate the contract and to assert for the first time in 1973 in a letter that his possession was not referable to the contract but to adverse possession.
In my judgment, Mr. Hyde, having in effect been able to go in and stay under the contract, cannot now repudiate the contract with hindsight. As I have said, if, at any time, he made it clear that he was no longer bound by the contract, then different considerations would apply. Equally, no doubt, if he had made that clear, then the vendors would have taken action against him. It is only the fact that he was there as a purchaser pending completion which has enabled time to run in his favour, as he says, and which enables him to claim a title by adverse possession. Accordingly, in my judgment, although the full period required by the Limitation Act 1939 has elapsed, Mr. Hyde has not shown that he was in adverse possession.
In his final address counsel for Mr. Hyde submitted that that may have been all very well down to 1958 but, thereafter, or within a short time thereafter, the vendors should have realised that Mr. Hyde was simply a person in occupation of the property and that, unless they took some action, they were, in effect, allowing the contract to lapse and they were allowing him to acquire title under the Limitation Act 1939. He also, of course, points to the long period of 14 years which, inexplicably, were allowed to elapse.
For my part, not only can I see no date by which the vendors ought to have realised the changed status of Mr. Hyde but, in addition, it seems to me that, having entered the property under a claim of right, albeit on the terms of the undertaking, and then having continued in possession ostensibly and as far as he himself was saying at the time, or implying by his conduct at the time, as a purchaser pending completion, if he was to throw off that capacity and appear in the full light as a person in adverse possession acquiring a title, it was at least necessary that he should have repudiated the contract, thus marking his change of status.
In the event, he never did change his status and, as I have indicated, at the end of the day he is really seeking to have the best of both worlds. He was able to stay there because of the contract; now he says, in effect, he was there the whole of the time in spite of the contract. I do not think he has shown that he was in adverse possession and, accordingly, I would allow the appeal.
LORD JUSTICE ACKNER: Having concluded that the plaintiff's licence to occupy the premises granted in March 1958 was validly determined in May 1958, I was initially of the opinion that the plaintiff was entitled then to succeed in his contention that he had obtained title to the property by adverse possession. But the able argument of Mr. Fletcher has persuaded me that I would have been wrong.
The letter of l7th July 1958 concludes with words which are a clear threat. They say to Mr. Hyde:
"You are, therefore, in an extremely delicate position should it be necessary for us to take any action against you."
But there was a gap. A few months later in September 1958, the vendors sought to persuade Mr, Hyde to settle his difference with them by resorting to arbitration pursuant to the terms of the contract. In that letter there is no requirement that, in the meantime, he should vacate the premises. On the contrary, the last two paragraphs of the letter read as follows:
"We have in the last two months written several letters to you to which we have received no reply.
"We would be much obliged if you could answer this letter" - that is the letter concerning the arbitration - "or consult your Solicitors in order that they may reply to it."
To my mind, the inference is clear. They were seeking to persuade Mr. Hyde to complete. They did not wish to exacerbate the position meanwhile and they thus allowed him to remain in possession because of the contract. It is common ground that, thereafter, the contract continued. Mr. Hyde did not seek the return of his deposit and the vendors did not in any way seek to repay him that sum or to rescind the contract.
On the first occasion when it was necessary for Mr. Hyde, through his solicitors, to seek to deal with the situation which faced him on his return from prison - namely, the occupation by the defendant of his premises - his solicitors wrote a letter on 8th February 1973 as follows:
"We are acting on behalf of Mr. R.W.M. Hyde (at present of 81, Stokes Croft) who instructs us that on or about 1958 he paid a deposit at an auction held at the Fire Engine Inn in respect of the purchase of the above premises and that contracts were exchanged. There was then a dispute over title to part of the garden at the rear of the premises, and nothing further regarding the conveyance of the property took place."
Then they go on to say that their client had been living in the premises prior to the auction and continued to do so until he was placed in custody, which concerned a refusal to pay rates. It concludes by asking the solicitors for the defendant if they would explain the nature of their client's title or, alternatively, consent to producing the deeds for their inspection. There was no suggestion in that letter of an assertion being made by Mr. Hyde that he had obtained a title by adverse possession, that he had been squatting unlawfully in the premises or in any way asserting a right to stay in those premises other than by virtue of the contract to purchase.
Further and better particulars were provided; they were not satisfactory. The claim was struck out, but reinstated on appeal subject to proper compliance with an order for particulars being made. As a result, the further and better particulars which were delivered contained this paragraph (c):
"Thereafter the Plaintiff occupied the property as purchaser under a binding contract for sale with knowledge of the Vendor."
Then, under the heading "Further Particulars as to all facts relied on in support of the above", it says:
"On or about the 19th day of May, 1958 the Vendor's Solicitors asked for the keys to be returned. The Plaintiff did not do so and remained in the property. The Plaintiff never paid the balance of the purchase price because no satisfactory title to the property was deduced."
Thus, both in the letter immediately raising his complaint and in the particulars, he contended that his continued occupation of the property was referable to his status as a purchaser under a contract which continued in existence. In my judgment, if proceedings had been brought for possession after September 1958, the plaintiff could have set this up as a valid defence and, in those circumstances, his possession during those years was not adverse.
For those reasons and for those given by my Lord I, too, would allow this appeal.
LORD JUSTICE CUMMING-BRUCE: I agree. On an analysis of the contractual situation it appears that, after the exchange of correspondence relating to the case, the plaintiff was in possession on an undertaking to give up possession on demand; and it is clear that, thereafter, there were occasions on which the vendors' solicitors brought home to him that there was a threat that their right of resuming possession would be exercised. It is on the basis of that simple contractual situation that Mr. Bonney has forcefully argued that all the necessary ingredients of a right of action for possession vested in the vendors were present and, for some reason best known to themselves, they never exercised it and, for the purposes of the relevant proceedings and the Limitation Act, it is the right of action which matters.
The answer, in my view, is that, from September 1958, there was a material change in the quality of the possession enjoyed by Mr. Hyde, and I found that not only on the correspondence but upon the inferences to be drawn from the pleadings filed on Mr. Hyde's behalf. In his initial statement of claim the plaintiff had pleaded in the first paragraph that he is and was at all material times the owner and entitled to possession of the property known as 138 Clouds Hill Road and, by paragraph 2, alleged the wrongful entry of the defendant and the defendant's wrongfully remaining therein. On 5th October 197^ the defendants tried to extract further and better particulars of the statement of claim from the plaintiff and, this litigation proceeding at a measured speed, an order was made on 12th January 1977 that, unless the further and better particulars were delivered, the action was to be dismissed for want of prosecution. Stimulated by that order, on 2nd February 1977 further and better particulars were delivered and, in those further and better particulars, the plaintiff pleaded in paragraph 1:
"The Defendant's predecessors in title contracted to sell the property to the Plaintiff at auction held on or about the 5th day of March 1958 ... The Plaintiff occupied the said property continuously from prior to the said auction until dispossessed by the Defendant ..."
Subsequently, there was an amended statement of claim and a request for further and better particulars of the amended statement of claim, which led to particulars dated 21st April 1977 being given.
On the pleadings went until, finally, Mr. Justice Kenneth Jones on 9th July 1979, the action having been struck out, made an order restoring the action on the condition that further and better particulars, long before requested, should be given. So that vital document, the further and better particulars, were then delivered on 16th.July 1979 and represented the final attempt of the plaintiff in proceedings which had been commenced in 19?4 to state his case. Under paragraph 9 of his amended statement of claim he pleaded what were described as consolidated particulars already given of "the then owners discontinued possession" and "the then owners were dispossessed therefrom" and, as has already been stated, it was then pleaded on behalf of the plaintiff in the following way:
"(a) The Plaintiff occupied the property prior to the auction on or about the 5th day of March 1953 as a squatter.
"(b) The Defendant's predecessors in title ... contracted to sell the property to the Plaintiff at auction held on or about the 5th day of March 1958 ...
"(c) Thereafter the Plaintiff occupied the property as purchaser under a binding contract for sale ..."
He added on the next page under a heading "Further Particulars as to all facts relied on in support of the above":
"The Plaintiff denies that he was asked for or that he signed any undertaking to return the keys."
That was the case that the plaintiff finally pleaded in support of his claim. In my view, it was possible and proper to infer from the pleadings against the background of the correspondence on 5th September and other correspondence that the plaintiff throughout, right up to the moment of the hearing, was asserting that his right to continue in possession was pursuant to a contract of sale and not otherwise. The quality that he himself imparted to his possession by his pleadings was not the quality of trespasser who had been a trespasser since demand for keys had been given on the first and second occasions, but the quality that he was alleging was that of purchaser under a contract for sale with equitable rights. I agree with my Lords that, in that situation, had the vendors sought to take proceedings for possession, they would have been confronted at any time during the 12 years with a plea that he was perfectly ready, although he had been belated, to proceed to completion. The deposit had never been returned to him; no notice of rescission had ever been given and no court would, in the circumstances, have contemplated turning him out of possession as long as he was maintaining that position and giving ground for the reasonable belief that he intended to complete.
In those circumstances, the pleadings much more than any other material, represent the true character of his possession and that character was not the character of adverse possession which, on a first view, as advanced by Mr. Bonney, his possession had.
For those reasons I agree that the appeal should be allowed.
Order: Upon the undertaking of the respondent's solicitors forthwith to vacate the caution on the Register relating to 138 Clouds Hill Road, St. George, Bristol, the appeal is allowed. Judge's order relating to title to the land is quashed and upon the counterclaim there will be a declaration that the defendant is entitled to fee simple absolute in possession of No. 138 Clouds Hill Road free of all interest legal or equitable in the said property. Judge's order in relation to the chattels is not touched by this appeal, so it continues in force. Order for costs below remains and is not varied. Appeal allowed with costs not to be enforced. Application of appellant for an order for costs against the Legal Aid Fund adjourned for ten weeks. Upon the appellant complying with the regulations as to the furnishing of information and giving notice to the Law Society, there shall be an order that the Legal Aid Fund pay the appellant's costs unless within the period of ten weeks the Law Society makes representations to the contrary. Taxation of the respondent's costs.
