England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE KINGSTON-UPON-THAMES-COUNTY COURT
HHJ VILJOEN
4KT04998

		Royal Courts of Justice Strand, London, WC2A 2LL
		26th October 2006

Lord Justice Mummery:

The issue

1. The plea of adverse possession in this case turns on the construction and application of the provisions in the Limitation Act 1980 (the 1980 Act) relating to acknowledgement of title. The court below concluded that there was no acknowledgement of title and held that the adverse possession claim to a freehold dwelling house was established. The proprietor of the registered title appeals.

The legislation

2. Section 29 provides for the fresh accrual of a right of action on acknowledgement-

"(1) Subsections (2) and (3) below apply where any right of action …to recover land….has accrued.

(2) If the person in possession of the land …in question acknowledges the title of the person to whom the right has accrued –

(a) the right shall be treated as having accrued on and not before the date of acknowledgment. …"

3. Section 30 contains formal provisions as to acknowledgements-

"(1) To be effective for the purposes of section 29 of this Act, an acknowledgement must be in writing and signed by the person making it.

(2) For the purposes of section 29, any acknowledgement …

(a) may be made by the agent of the person to whom it is required to be made under that section; and

(b) shall be made to the person, or to an agent of the person, whose title or claim is being acknowledged …"

Slade J, in his judgment in Re Compania de Electricidad [1980] Ch 146 at 193F on the construction of similarly worded provisions in section 24 of the Limitation Act 1939, said-

"In my judgment, though no authority has been cited to me which either confirms or rejects such proposition, a written acknowledgement cannot be said to be "made to" a creditor or his agent, within the meaning of section 24(2) unless either (a) it is delivered to the creditor or his agent by or with the authority of the debtor or (b) it is expressly or implicitly addressed to and is actually received by the creditor or his agent.

In my judgment, in case (a) it would not matter that the acknowledgement was not, according to its terms, expressly or implicitly addressed to the recipient. In case (b) it would not matter that the acknowledgement reached the hands of the creditor otherwise than by or with the authority of the debtor. In either case, however, it would be necessary that the creditor should actually receive the acknowledgment before he could rely on it."

4. Slade J also went on to deal with the question of the date on which an acknowledgement is made. He held (p 194B-C) that, on the facts of that case, the balance sheet of a company constituted an effective acknowledgement of the relevant debt, not as at the date on which it was actually signed by the directors or received by the creditor, but as at the date of the balance sheet being the date to which the signature of the directors related and the cause of action would be deemed to have accrued at that date. For this proposition he cited In re Gee & Co (Woolwich) Ltd [1975] Ch 52, 71, per Brightman J.

Proceedings and outline facts

5. The acknowledgement issue arises on the appeal from the order of HHJ Viljoen on 8 March 2006 (wrongly dated 6 March 2006). He made a declaration that the first defendant, Mrs Julie Benfield (aka Ms Julie Wood), is the owner in fee simple in possession of 19 Merton Hall Road, Wimbledon, London SW19 (the Property), of which the claimant, Mr Sarfraz Rehman, had been the registered proprietor since 7 July 1986. The judge ordered that Ms Benfield be registered as the new proprietor of the estate under title number SY213654: paragraph 18(2) of Schedule 12 to the Land Registration Act 2002 (the 2002 Act).
6. Mr Rehman, who appeals with the permission granted by Jacob LJ on 28 June 2006, is a Pakistani national and a qualified lawyer. After living in the UK from 1974 to 1988, during which period he carried on business as a property developer and bought the Property at auction for £71,500, Mr Rehman returned to live in Pakistan because of the ill health from which he still suffers. At the time of the purchase the Property was occupied by tenants from whom Mr Rehman collected rent. His intention was to renovate the Property and occupy it, or part of it, himself. When he left for Pakistan he asked various friends to keep an eye on the Property.
7. The Property ultimately became vacant and was not re-let. It became very dilapidated. Squatters occupied it from time to time. In March 1991 Mrs Benfield and her late husband, Mr David Benfield, who were living in the area and carrying on a mobile catering business, entered the Property. They did so with a view to acquiring title to it by adverse possession. They changed the locks and started to carry out repairs to the Property. From October 1991 they physically occupied the Property as their home along with others unknown. They paid all outgoings, including local authority charges for boarding up the Property when it had fallen into a dangerous condition.
8. Mr Rehman did not issue proceedings for possession against Mrs Benfield until 18 October 2004, that is more than 12 years after the Benfields entered the Property and began to live in it. In her defence and counterclaim Mrs Benfield successfully pleaded adverse possession and counterclaimed for a declaration that she had acquired a possessory title to the Property.
9. At the trial Mr Rehman was neither present nor represented. The judge had refused his application for an adjournment. He did not appeal against the refusal of the adjournment nor does he do so now.

Acknowledgement point

10. The relevant provisions of the 2002 Act, which came into force on 13 October 2003, disapplied the period of limitation under section 15 of the 1980 Act in relation to an estate in land which is registered: section 96(1). Although Mrs Benfield had occupied the Property for more than 12 years expiring prior to 13 October 2003, Mr Rehman contended that Mrs Benfield did not acquire title by adverse possession, as she had acknowledged his title in writing on 19 December 1991 and at some later dates. If this is correct, the time ran afresh for the purposes of the 1980 Act from the date of acknowledgement and the 12 year period had not expired prior to the 13 October 2003.
11. The acknowledgement point, which is crucial to the success of Mr Rehman's appeal, is based on documents procured by the late Mr David Benfield in December 1991. The documents purported to relate to the grant of a lease of the Property by Mr Rehman, but he knew nothing about it at the time.
12. Mr Benfield arranged for a lease and a counterpart lease to be drawn up by a firm of solicitors, ostensibly between Mr Rehman, as the owner of the Property, and Mrs Benfield, as the tenant. Mr Benfield asked his wife to go with the solicitor, Mr Ken Wright of Ponsford Devenish, and to sign a document, which would be for her benefit and that of their children should anything happen to him (He was not in good health then, but lived until 21 September 1998). He also arranged for a friend, Mr Karaolis, to disguise himself as a Pakistani and to impersonate Mr Rehman to the firm of solicitors (Anna Arthur & Co), which purported to act for Mr Rehman, and to execute a lease of the Property to Mrs Benfield. Mr Rehman had not instructed anyone to prepare a lease of the Property or to act on his behalf. It was only in 1992 that he instructed his current solicitors, Daybells, to act for him in respect of the Property and that, as a result of inquiries by them, he obtained a copy of the counterpart lease.
13. The first relevant document purports to be a lease of the Property dated 18 December 1991 signed by Mr Rehman. The second document purports to be the counterpart dated 19 December 1991 signed by Mrs Benfield. The counterpart was delivered by her solicitors, Ponsford Devenish, to Anna Arthur & Co, the firm of solicitors in Wimbledon, purporting to act for Mr Rehman.
14. In the lease and counterpart Mr Rehman is stated to be the landlord and Mrs Benfield (called Julie Wood in the documents) the tenant. The term was to be for 7 years at a premium of £12,000 and a yearly rent of £1 to be paid by one payment in advance. The documents were drafted by Anna Arthur & Co. The counterpart was signed by Mrs Benfield (in the name "Wood") at the offices of Ponsford Devenish and her signature was witnessed by a solicitor.
15. In her defence and counterclaim Mrs Benfied alleged that the documents were drawn up so that she would have "an apparently official document to provide to anyone challenging her or her family's right" to occupy the Property.
16. In April 1992, in circumstances described in more detail below, Daybells, solicitors actually instructed by Mr Rehman, received a copy of the counterpart lease from Anna Arthur & Co and sent it to Mr Rehman. He did not begin his possession proceedings against Mrs Benfield until October 2004.

The judgment

17. The judge held that the Lease was false and of no effect. He found that it was not communicated to Mr Rehman, that it was not relied on by Mrs Benfield and that it could not have been enforced by her against him.
18. The major part of his judgment was taken up with points which have not been pursued on this appeal. He rejected the arguments advanced by the counsel then acting for Mr Rehman in the Amended Particulars of Claim and Reply and Defence to Counterclaim on the doctrines of estoppel by representation and by convention. He rejected arguments raised under the Human Rights Act 1998 and the decisions in Pye (Oxford) Limited v. United Kingdom [2003] 1AC 419 and in the ECHR (Application no. 44302/02: 15 November 2005) and Beaulane Properties v. Palmer [2006] Ch 79. It is unnecessary to say any more about the points, as they are not pursued by Mr Rehman's new counsel, Mr Hamilton.
19. The judge found that there was no licence or consent by Mr Rehman for Ms Benfield or others to occupy the Property and that no rent had ever been paid by the Benfields to Mr Rehman.
20. More importantly for the purposes of this appeal, the judge held that there was no acknowledgement by Mrs Benfield of Mr Rehman's title to the Property . He said that she had not acknowledged the title of Mr Rehman as

"33. ……. There is nothing here to which the claimant can point, any document, which at this time was signed by the defendant. Of course, there might be circumstances where such an acknowledgement can be made by the defendant's agent, but there is no evidence here to that effect at all, and so, in my view, the defence based on acknowledgement is entirely misconceived."

Discussion and conclusion

21. Mr Rehman's appeal rests almost entirely on the acknowledgement point, which he submitted the judge had misunderstood. I note that the judge did not have the benefit of the detailed submissions made to this court on the acknowledgement point and I think that he was probably diverted from the central point, which is based on the contents of the signed counterpart, by Mr Rehman's reliance on subsequent acts as acknowledgements, which have not been argued by Mr Hamilton in this appeal.
22. Mr Paul Staddon, who did not appear in the court below, took a pleading point on behalf of Mrs Benfield, contending that the case on acknowledgement now advanced for Mr Rehman was a different case from the one that was pleaded. He cited Vol 1 of the Supreme Court Practice, Part 52 CPR paragraph 8.2. It was a new point.
23. I agree that the arguments on acknowledgement of title have become more detailed on this appeal than they were below and they are in part based on documents that were not mentioned in the pleadings or even available to the trial judge. I do not, however, think that the acknowledgement argument is a new point taken by Mr Rehman for the first time on this appeal.
24. In his defence to Mrs Benfield's Part 20 counterclaim Mr Rehman pleaded in paragraph 9(a) that Mrs Benfield "has acknowledged the Claimant's title." No further information was supplied or requested of that general plea, which was combined with the plea that Mrs Benfield did not intend to dispossess Mr Rehman of his title to the Property. The particular acts of acknowledgement pleaded later in paragraphs 9(d) and (e) have not been relied on in the appeal. While I agree that the case on acknowledgement could have been pleaded more fully, I think that it is sufficiently pleaded to entitle the acknowledgement argument to be developed in the way that it has been on this appeal on the basis of facts which are apparent from the documents before the court.
25. The relevant facts are now clear. The counterpart was signed by Mrs Benfield on 19 December 1991. The counterpart contained recitals that (1) Mr Rehman was registered with absolute title of the Property and that (2) Mr Rehman had agreed with her to grant her a lease of the Property.
26. In my judgment the requirements of section 29 of the 1980 Act are satisfied. The statements clearly acknowledge the title of Mr Rehman to the Property. The right of action had accrued to him against Mrs Benfield in respect of her unauthorised possession of the Property. The acknowledgement was made by Mrs Benfield, who was in possession of the Property owned by Mr Rehman. The acknowledgement was in writing and it was signed by Mrs Benfield.
27. The critical question is the communication of the acknowledgment in the counterpart by Mrs Benfield, or her agent, to Mr Rehman, or his agent, as required by section 30(2) of the 1980 Act. The evidence on this point is much clearer now than it was before the judge, as further documents have come to light and have been produced to the court.
28. Mrs Benfield's solicitors, Ponsford Devenish, sent the signed counterpart to Anna Arthur & Co, as the solicitors who purported to act for Mr Rehman. Mrs Benfield does not, and could not, dispute that this must have been done with her authority. The firm of Anna Arthur & Co was not Mr Rehman's agent, although it thought it was.
29. That is not the end of the matter, however, as in April 1992 the signed counterpart did in fact come into the possession of another firm of solicitors, Daybells, instructed by Mr Rehman.
30. As appears from solicitors' correspondence, which has only recently been disclosed and was not therefore before the judge, Daybells requested a copy of the counterpart lease from Anna Arthur & Co on 31 March 1992. The request was made so that Daybells could obtain instructions from Mr Rehman, who was still in Pakistan. A copy of the counterpart lease was sent by Anna Arthur & Co to Daybells under cover of a letter dated 8 April 1992. It was actually delivered to and received by that firm as agent for Mr Rehman, to whom they then sent it.
31. When Anna Arthur & Co was asked by Daybells for a copy of the counterpart lease, it had no good reason for refusing the request: it had acted in connection with the purported lease of the Property to Mrs Benfield and did so in the belief that Mr Rehman was its client.
32. The counterpart lease containing the acknowledgement of title by Mrs Benfield was made to Mr Rehman as required by section 30 (2) of the 1980 Act. The counterpart lease was in the possession of Anna Arthur & Co with the authority of Mrs Benfield. There was no ground on which she could have objected to Anna Arthur & Co then sending a copy of it to Daybells, as agent for Mr Rehman, who was the very person for whom Anna Arthur & Co believed that it had acted in connection with the lease of the Property and the person from whom Mrs Benfield had purported to take the lease.
33. In my judgment, the judge misunderstood the argument on acknowledgement when he said that Mr Rehman could not point to any document signed by Mrs Benfield. The counterpart signed by Mrs Benfield on 19 December 1991 was such a document. The fact that the documents were not effective to create a valid and binding lease of the Property did not prevent the statements made in the counterpart signed by Mrs Benfield from being an acknowledgement of Mr Rehman's title for the purposes of the 1980 Act, and so stop time from running before 19 December 1991.
34. In these circumstances time did not start to run against Mr Rehman until the date of acknowledgement, which was, on any view, less than 12 years before the operative date of 13 October 2003 when the 2002 Act came into force.

Other points

35. It is unnecessary to deal with Mr Rehman's argument that, by reason of her signature to the counterpart, Mrs Benfield cannot satisfy the requirements of section 15 and 17 of the 1980 Act. It was submitted that she lacked the necessary intention to possess the Property, as her signature on, and retention of, the counterpart lease was fundamentally inconsistent with an intention on her part to possess the Property or to occupy it otherwise than as a tenant of Mr Rehman.
36. It is also unnecessary to express a final view on the question whether the date of acknowledgement for the purposes of the 1980 Act was the date of the signature of the counterpart (19 December 1991) or the date of communication of the counterpart to Daybells as solicitors for Mr Rehman (April 1992): whichever date it is, Mrs Benfield cannot establish title by more than 12 years adverse possession, because the right of action is treated as having accrued on and not before the date of the acknowledgement. For what it is worth my provisional view is that "the date of acknowledgement" within section 29 is 19 December 1991, being the date on which Mrs Benfield signed the counterpart, even though the counterpart was not actually delivered to Mr Rehman or his agent until April 1992.

Result, relief and costs

37. Accordingly I would allow the appeal, set aside the order of the judge, make a declaration that Mr Rehman is the owner in fee simple in possession of the Property and that he is entitled to be registered as the proprietor of the Property.
38. I would also make an order that Mrs Benfield delivers possession of the Property to Mr Rehman within 2 months from the date of the order of this court. I should explain that Mr Rehman's proceedings for possession were based on the lease, which was admittedly invalid, but which he originally contended was affected by the doctrines of estoppel. He claimed to have adopted the lease and pleaded that Mrs Benfield was estopped by her fraud or acquiescence from denying its validity. He claimed forfeiture for non-payment of rent and pleaded the service of various notices and demands on Mrs Benfield. He did not rely on Mrs Benfield's presence in the Property as a trespasser. The judge did not make an order dismissing the claim for possession.
39. It is, however, clear that Mrs Benfield has no defence to an order for possession. Her defence and counterclaim actually pleaded that the lease was a sham and she relied solely on the plea of adverse possession, which has failed by reason of her acknowledgement of title. An order for possession should be made.
40. The court received oral arguments on costs at the end of the hearing. Mr Rehman agreed to pay the costs of the appeal in any event, but Mr Hamilton argued on his behalf that, if the appeal succeeded, the order for costs below should be reversed and paid by Mrs Benfield.
41. This was opposed by Mr Staddon for Mrs Benfield, who was able to point to the number of points taken by Mr Rehman at trial which were unsuccessful and were not pursued on appeal, such as the elaborate submissions on estoppel and the Human Rights Act. He contended that the order for costs against Mr Rehman should not be disturbed.
42. In my judgment there should be no order for costs in respect of the hearing below. Mr Rehman ought to have succeeded at trial, but considerable time was taken up on a number of points which were not needed for him to succeed in defeating Mrs Benfield's counterclaim for a declaration of title by adverse possession.

Lord Justice Jacob:

43. I agree – though I express no provisional view about the date of acknowledgement. Clearly the date of signing is a date of acknowledgement but the date of sending the document may be another.
44. I would add that even if the pleading point had been good I think this would be a clear case for allowing the acknowledgement point to be taken on appeal. No procedural injustice which could not be rectified in costs would be caused. To hold that it could not be taken would be to put a pedantic and formalistic procedural point in the way of substantive justice.

Neuberger LJ:

45. I completely agree with the judgment of Mummery LJ, subject to two small points. First, like Jacob LJ, I would prefer not to express even a provisional view as to the precise date of acknowledgment under sections 29 and 30 of the Limitation Act 1980 on the facts of this case: whether it was the date of signing or the date of sending has no bearing on the outcome of this appeal.
46. Secondly, I am not convinced that the acknowledgment point, upon which this appeal succeeds, was properly pleaded by the appellant. However, like Jacob LJ, I am in no doubt whatever that it is a point which the appellant should be allowed to raise by amendment. If it was not taken below (which it may have been), the respondent had more than adequate notice that it would be raised in this court, and it has not been (and, I think, could not be) suggested that the respondent was in any way relevantly prejudiced by the fact that it was not pleaded (or, if it is the case, that it was not taken below). In the light of the costs orders which the appellant is prepared to agree, and which we are making, the question whether the acknowledgment point was pleaded is of academic interest only.