England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
From The Birmingham District Registry

		Royal Courts of Justice Strand, London, WC2A 2LL
		20 April 2005

Mr Justice Hart:

1. This is a claim for possession of property known as Boulton Edge Farm, Back Lane, Chellaston, Derby. The property, which consists of a farmhouse and about one acre of land, forms part of registered title number DY30009, of which the claimant ("Clowes Developments") has been the registered proprietor since 18^th August 1989. The second and third defendants (respectively "Claire" and "Nigel") resist the claim on the ground that they have acquired a title by virtue of section 15 of the Limitation Act 1980.
2. Claire is the daughter of the late Gerry Walters. Nigel is her husband. The first defendant ("Mrs Walters") is his widow.
3. The history of this case goes back a long way. Gerry Walters had acquired the property together with about 12 acres of land in 1966. He bought it as a home for himself and his family (Mrs Walters and their children, Chris Scott and Claire) and for the purposes of his business as a smallholder. Claire was the youngest and at that date aged about 5. The business was principally one of market gardening, but Gerry Walters seems also to have tried to make a go with pigs, and at one stage with turkeys. Gary Walters was something of a character. One witness described him as larger than life. But his business ran into difficulties, and by 1972 it looked as though his house and holding were at risk from his mortgagees. Fortunately for him, he was able to interest a friend of his and local estate agent, Mr Alan Caddy, in a deal from which both in the long run might benefit. Mr Caddy would buy Mr Walters' property at an existing use value (£21,500) but on terms which would give Mr Walters a 30% share of development profit should residential planning permission be obtained for any part of the land. Mr Walters was to have an option to buy the property back at market value if permission was not granted within seven years. In the meantime Mr Walters could continue to occupy the house and the land immediately surrounding it rent free.
4. These agreements (with the exception of Mr Walter's licence to occupy the house and its immediately surrounding land) were elaborated in a contract dated 3^rd March 1973 between Mr Caddy and his partner (who later dropped out) on the one hand and Mr Walters. Mr Caddy could not, however, really afford to do the deal. He therefore sold on to a property development company, Mayfair Property Development Company Ltd ("Mayfair"), by contracts dated 15^th March 1973 and 30^th June 1973. Mayfair was owned by another mutual acquaintance of Gerry Walters and Mr Caddy, Mr Charles Clowes ("Mr Clowes"). Mr Caddy protected his interest in the development value of the property by taking a restrictive covenant from Mayfair. Mayfair (through Mr Clowes) was content for Mr Walters to continue to live at the property.
5. Despite this deal Mr Walters' business continued to flounder, and on 7^th August 1974 he was declared bankrupt. The potential financial benefit of the agreement with Mr Caddy thereupon vested in the trustee in bankruptcy, Mr Gillanders. Mr Walters however continued to enjoy the benefit of the licence which Mr Caddy had granted him and which Mr Clowes/Mayfair was content to honour.
6. Then, on 13^th January 1981, aged only in his late forties, Mr Walters died. Mr Clowes was advised by his solicitor, Mr Holmes of Flint Bishop & Barnett, that he should have a document signed by Mrs Walters recording the basis of her occupation. This was duly done, Mrs Walters signing a document dated 27^th March 1981 in the following terms:

"I Ann Felice Walters of Boulton Edge Farm Chellaston Derby hereby acknowledge that I hold my farm and land as Licensee of Mayfair Property Development Co Ltd rent free as Licensee only and I agree to give vacant possession of the whole or any part thereof at any time".

7. A year later, on 17^th May 1982, Mrs Walters consulted solicitors, Messrs Taylor Simpson and Mosley, about her position. She was able to give them a resume of the position about the sale to Mr Caddy, the retention by Mr Walters of a 30% interest in development value and her understanding that on Mr Walters' discharge from bankruptcy provision had been made for the relevant value to be paid to the trustee. She also had papers evidencing planning applications by Clowes Developments. She wanted to know who owned the farm and what her legal position was. This is all recorded in a contemporaneous attendance note. The solicitors wrote to Mr Holmes for information, and he replied on 21^st May 1982 setting out the position that the monies due from Mr Caddy to Mr Walters on a redevelopment would amount to about £8,000 per acre payable when Mr Caddy released Mayfair from its restrictive covenant, and that some three acres of the relevant land (i.e. part of the original 12 acres but not including any of the land then occupied by Mrs Walters) currently had outline permission and concluding:

"Since the original sale in 1972 Mr Walters was allowed to live on the farm as Licensee rent free and after his death the writer arranged for a similar arrangement to apply to Mrs Walters who agreed on the 27^th March 1981 that she would occupy as Licensee only rent free, and she agreed to give vacant possession of the whole or any part of the land at any time."

8. This was copied to Mrs Walters with a covering letter which asked her for her recollections of what had been agreed on 27^th March 1981. She seems not to have replied for nearly a year. When she did so, her letter dated 17^th May 1983 read in material part as follows:

"Thank you for sending me the copy of the letter from Mr Holmes, setting down my position in black and white. I realize now that I probably panicked a bit after my husband's death as I did not feel that my situation was very secure. However, time goes by and there are no further developments except that the houses are creeping closer and Mr Clowes has taken control of the land and let it to a farmer, so I will just sit tight until something definite happens."

9. Something did happen later that year. Planning permission had been obtained in respect of some 2.7 acres of the former holding and Mr Caddy had received a payment for the release of the restrictive covenant. 30% of this (a sum of about £7000) was duly accounted for by Mr Caddy to the trustee in bankruptcy. Mr Holmes wrote to Taylor Simpson Mosley on 31^st October 1983 advising them that this had been done, adding

"the covenant was released in favour of Mayfair Property Development Co (Derby) Ltd (Mr Clowes) who we understand are quite willing for Mrs Walters to continue occupation for the time being under the Licence agreed in March 1981"

10. This letter was passed on to Mrs Walters. At that time the occupants of the farm appear still to have been Mrs Walters and her three children. Chris moved out in 1984 and Scott somewhat later. At some point in the early 1980s Claire had partially removed herself while involved in doing up a house elsewhere with her then boyfriend, but she was in full time occupation again by 1985 and has been so ever since. In 1986 or 1987 Nigel, by then Claire's boyfriend and now her husband, moved in.
11. In April 1988 Mrs Walters moved out, going to live at first in Derby and later in Lyme Regis. The move seems to have been envisaged as a permanent one from the outset: Mrs Walters took with her most of the furniture in the house and the kitchen equipment. No notice of the fact that she had moved out was ever given to Mayfair.
12. By 1989 Nigel and Claire were living on their own at the farm and had decided to set up an aviary at the farm, for the purposes of business to be carried on by them specialising in exotic birds. For that purpose they were advised that they needed to apply for planning permission. The application, made in Claire's name (she was still Miss Walters at this date) on or about 28^th April 1989, was made on the footing that she was not the owner of the land, and certified that she had given notice of the application to the owners who were identified as "C W Clowes Inv Ltd Brailsford Hall Brailsford". It is clear from a contemporary letter written by her to Mr Clowes that she had in fact earlier spoken to Mr Clowes about the application and ascertained from him that he had no objection. The necessary permission was granted on 20^th June 1989.
13. That was not the first occasion that year that she had spoken to Mr Clowes. He had visited the farm in March 1989 with a surveyor called Jane Adams to do a valuation. They seem barely to have introduced themselves to Nigel and Claire, and not to have asked after Mrs Walters. The purpose of the visit was to establish a value for the farm. Claire remembers it as a case of her having been told by them that it was for the purposes of "land taxation". It seems likely that it was in fact for the purpose of ascertaining an appropriate figure to be inserted in a transfer then in contemplation of the whole of title number DY 30009 from Mayfair to Clowes Developments (then known as C W Clowes (Investments) Ltd). That in turn seems to have been in connection with a planning application which Clowes Developments was making for the residential development of a large tract of land owned by it surrounding the farm, but which also included part of title number DY 30009 (and indeed part of the land occupied by the Walters but not the farmhouse itself) which was registered in the name of Mayfair. That planning application, dated 9^th March 1989, in fact came to nothing. Permission was refused on 18^th May 1989. There was an appeal in October 1989 (of which Mrs Walters was, as an adjoining occupier – as it was believed -, given notice) but the appeal was subsequently withdrawn.
14. The transfer from Mayfair to Clowes Developments seems to have taken place on or about 21^st April 1989, but the latter's registration as proprietor for some reason did not take place until 18^th August 1989. It is clear that Mr Clowes, as the alter ego of both companies, did not intend that the effect either of the transfer or of the registration should be to determine Mrs Walters' licence. This was clear from Mr Clowes' evidence and from that of Mr Holmes. In his written evidence, which was not challenged, he explained that there had been no reference to the licence in the transfer because

"it is standard Conveyancing practice not to make reference to such a Licence on the Transfer because such a Licence is personal to the Licensee. Nevertheless both parties were aware through [Mr Clowes] and through me of the existence and nature of the Licence and intended that it should continue."

15. Mr Clowes, in his oral evidence, said that he had not been advised that the effect of the transfer of the legal estate from one company to the other had the effect in law of determining the licence.
16. Claire and Nigel continued in occupation of the property, undisturbed by any contact with Mr Clowes or his companies until May 2000. In the meantime they got on with their lives, building up their business and raising the son who was born to them. The nature of the business required them to fence off the property and to install a secure gate. During this period there was some continued contact between Mr Caddy and Mrs Walters in the form of Christmas cards sent by her to him enquiring as to the state of development proposals which might affect the farm, to which Mr Caddy responded with information on the telephone.
17. In May 2000 Mr Clowes seems to have instructed Mr Sleney, a young trainee surveyor employed by Clowes Developments, to visit the property. Exactly what the purpose of this visit was is unclear. Mr Sleney's recollection in his oral evidence was plainly very poor. His assumption was that he had been asked to inspect the buildings. There is no contemporary record of any notes taken or report made by him. Claire's recollection is of him having arranged an appointment by telephone, during which she told him that Mrs Walters no longer lived at the property but in Lyme Regis. She said that when he visited she repeated this information, and that he had asked her what her position was in the property. She had responded that she thought that it was the result of some sort of agreement between her father and Mr Caddy but that she was unclear about the details. She agreed with his description of the agreement as having been "a gentleman's agreement".
18. This visit seems to have triggered some concern on the part of Claire as to what Mr Clowes' intentions were and to have provoked her into wondering whether, if there were development proposals in the air, that might mean some money for the Walters family. She rang her mother to find out what she knew. One of Claire's concerns was that, if the bankruptcy debts were accruing interest, any money due to Mr Walters' estate under the original deal with Mr Caddy might be swallowed up by the trustee in bankruptcy. Mrs Walters then wrote to the trustee in bankruptcy enquiring as to the position, to which the trustee replied (by letter dated 31^st August 2000) to the effect that he had only a vague recollection of the matter and that the files appeared to have been destroyed. The letter from Mrs Walters was not available at the trial but was written as if from the farm. Claire thought that this was to enable her to see the contents of any reply on its delivery to the farm.
19. In October 2000 another Clowes Developments' surveyor, Mr McPherson, telephoned Claire to make an appointment. There are some discrepancies between their respective accounts of what took place but it is common ground that she told him that she lived there as the result of some sort of agreement between her late father and Messrs Clowes and Caddy. It is also common ground that he raised the subject of regularising her occupation by her entering into a written tenancy agreement and paying rent. She recalls having protested at the notion that she should be asked to pay rent.
20. In July 2001 a third surveyor from Clowes Developments, Mr Nuttall, telephoned Claire. They do not agree on the precise details of the conversation. In a note to Mr Clowes dated 18th July 2001 he recorded:

"Mrs Walters [sic], the tenant of the house. On speaking to her she explained how she has been living there for a long time following the agreement between yourself and her father made when the land was purchased that she could stay there in the status quo until re-development of the site. She asked me to pass on her gratitude to you sticking by this arrangement for her, and explained that she would like to continue occupation and be able to pass on occupation to her son eventually."

21. Mr Nuttall then embarked, without success, on a search for the original licence agreement. Solicitors instructed by Claire and Nigel in due course wrote to Clowes Developments saying that their clients had never been party to such a document. Mr Clowes' comment on this was to instruct his staff (by a memo dated 15^th November 1981) that "we do not recognise Miss Walters as tenant at will. We shall need to meet with Mrs Walters". At this stage the licence dated 27^th March 1981 had still not been located, nor was it appreciated by Mr Clowes that Mrs Walters had long since left the farm.
22. On 5^th November 2001 a letter was sent purporting to determine Mrs Walters' licence dated 27^th March 1981 and requiring her to give up possession forthwith. These proceedings were started on 6^th December 2002.

Disputes of fact

23. There were few material disputes of fact. The following controverted issues do, however, require a finding.
24. First, it was Mr Clowes' evidence that one or other of his companies had done repairs to the farmhouse in 1989. This was hotly denied by the second and third defendants. There is no contemporary evidence supporting the fact that the alleged repairs were done, and some evidence that Mr Clowes' recollection of this episode was a reconstruction based on the discovery of an invoice (which in fact turned out to be in relation to a different property) which had matured into a false recollection. There was less controversy about the fact that some repairs may have been done in 1983, and Mr Clowes conceded in his oral evidence that there was nothing to support his recollection that repairs had taken place in 1989 rather than at the earlier date. I preferred the evidence of Claire and Nigel on this issue.
25. Secondly, Claire was adamant that, in giving notice to Clowes Developments in 1989 of her application for planning permission (see paragraph 12 above), she only did so on the footing that Clowes Developments were adjoining owners, not on the footing that Clowes Developments were the owners of the property to which the application related. She says that she was told to serve the notice on adjoining owners by the planning officer whose advice she had sought. I am unable to accept that evidence. The certificate which she was required to sign made it clear that the notice had been served on "C W Clowes Inv Ltd" as owners of the property. In my judgment she must have believed at that time that that company was the owner. The only puzzle is how she came to name that company as opposed to Mayfair. She believes that she probably obtained the name of the company, and its address, from the telephone directory. The name of the company would, however, have been obtainable by sight of the company's own application for planning permission dated 9^th March 1989 (see paragraph 13 above), or might have been confirmed to her in the telephone conversation with Mr Clowes which preceded the service by her of the formal notice. Whatever the explanation, she had in fact succeeded in identifying the correct company, since by the date of her notice the transfer from Mayfair to Clowes Developments had in fact taken place.
26. Thirdly, there was an issue as to how much Claire and Nigel really knew about the basis of Mrs Walters' occupation of the property, and what they considered the basis of their own occupation to be. The picture they sought to present was that this had been a matter hardly discussed between themselves and Mrs Walters, and certainly not a matter to which they gave much thought in the daily conduct of their lives. Claire also said, as to her belief as to the ownership of the land in 1989, that she did not know who owned it, and thought that "it was in some sort of limbo land with Flints or whoever and it was held in sort of limbo". I did not find this an altogether convincing picture. That she was hazy as to the exact nature of the arrangements which had existed between her father and Mr Caddy, and between Mr Caddy and Mr Clowes, I can accept. However, for the reasons given above, I find that she believed that the property was owned by a Clowes company in 1989. Moreover, when pressed she conceded that she had known of the gist of the advice which her mother had received in 1982. She had also been aware of Clowes Developments' planning application in 1989 and conscious of the significance of the fact that the house and outbuildings were not included as part of that proposed development. She was also aware of the sporadic communications between Mrs Walters and Mr Caddy (see paragraph 16 above) in which the prospect for the development of the land was discussed. It is difficult to suppose that the basis of Claire and Nigel's continued occupation of the property following the departure of Mrs Walters would not have been the subject of full discussion between mother and daughter at the time.
27. Mrs Walters was not called to give evidence, although she was available as a witness had her evidence been thought material to Claire and Nigel's case. The inference I drew was that the arrangement between Mrs Walters and Claire was that Claire would continue to live in the property with Nigel notwithstanding Mrs Walters' departure, their understanding being that the land-owner (which they understood to be a Clowes company) might at any time determine Mrs Walter's licence to occupy and ask them to leave, that in practice it was unlikely to do so unless and until there was a prospect of redevelopment, and that, if such redevelopment took place, there was a prospect of the family coming into some money as a result of the original deal with Mr Caddy. Claire confirmed in her evidence to me that this did reflect her general understanding of the position.
28. Fourthly, there were some minor differences, already alluded to, in the accounts given by Claire on the one hand and the three surveyors on the other as to what passed between them. Claire's principal objection to their accounts was the suggestion that she had expressed gratitude to Mr Clowes for honouring or "sticking by" the agreement which had been made with Mr Walters. Mr Nuttall had, however, recorded a sentiment of exactly this nature having been expressed by Claire, and I see no reason to doubt the accuracy of that contemporary record.
29. Fifthly, there was an issue on the pleadings as to whether the failure of Claire, Nigel and/or Mrs Walters to notify Clowes Developments and/or Mayfair of the fact of Mrs Walters having left the property was deliberate (thus enabling reliance to be placed on s. 32(1)(b) of the Limitation Act 1980). I find there was no such deliberate concealment. The information was never given at the time because it was not perceived by Nigel and Claire as affecting their position. It was not concealed by Claire when the surveyors made their inquiries. I was not satisfied that the telephone conversation relied on by the first particular to paragraph 15 of the defence to counterclaim took place.

Legal issues

30. The issue in this case is when Clowes Developments' cause of action to recover the property accrued. The relevant statutory provisions are contained in section 15 of, and Schedule 1 to, the Limitation Act 1980, which are, so far as material, in the following terms:

"15(1) No action shall be brought by any 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.

(6) Part I of Schedule 1 to this Act contains provisions for determining the date of accrual of rights of action to recover land in the cases there mentioned."

Schedule 1, paragraph 1 provides:

"Where the person bringing an action to recover land, or some person through whom he claims, has been in possession of the land, and has while entitled to the land been dispossessed or discontinued his possession, the right of action shall be treated as having accrued on the date of the dispossession or discontinuance."

Schedule 1, paragraph 8 provides:

"8(1) No right of action to recover land shall be treated as accruing unless the land is in the possession of some person in whose favour the period of limitation can run (referred to below in this paragraph as 'adverse possession'); and where under the preceding provisions of this Schedule 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."

"(4) For the purpose of determining whether a person occupying any land is in adverse possession of the land it shall not be assumed by implication of law that his occupation is by permission of the person entitled to the land merely by virtue of the fact that his occupation is not inconsistent with the latter's present or future enjoyment of the land.

"This provision shall not be taken as prejudicing a finding to the effect that a person's occupation of any land is by implied permission of the person entitled to the land in any case where such a finding is justified on the actual facts of the case."

31. These provisions have been the subject of recent interpretation by the House of Lords in Pye v. Graham [2002] UKHL 30, [2003] 1 AC 419 from which the following propositions can be derived (references below being to paragraph numbers in the speech of Lord Browne-Wilkinson, with which Lord Bingham, Lord Mackay, Lord Hope and Lord Hutton agreed):

i) The cause of action does not accrue unless and until the land is in the possession of some person in whose favour the period of limitation can run: see Schedule 1 paragraph 8(1). "Adverse possession" in paragraph 8(1) refers "not to the nature of the possession but to the capacity of the squatter": Pye paragraph 35.

ii) "[T]he taking or continuation of possession by a squatter with the actual consent of the paper title owner does not constitute dispossession or possession by the squatter for the purposes of the Act": Pye paragraph 37, echoing what Slade J had said in Powell v McFarlane (1977) 38 P&CR 452 at 470:

"..whatever else may be in doubt…one negative proposition of law in my judgment remains quite clear; an intruder cannot be said to have dispossessed an owner of land for the purposes of the 1939 Act unless (at least) the intruder has taken over from the owner possession of the land, in the ordinary sense of possession recognised as such by law, without the owner's licence or consent."

iii) Legal possession requires the presence of two elements: (1) a sufficient degree of physical custody and control ("factual possession"); and (2) an intention to exercise such custody and control on one's own behalf and for one's own benefit ("intention to possess"): Pye paragraph 40.

iv) The intention to possess should not be confused with an intention to own: Pye paragraphs 42 to 43.

v) The fact that the acts of the squatter are not inconsistent with the intentions of the true owner does not prevent the squatter from having the necessary intention to possess: Pye paragraph 45. Lord Browne-Wilkinson added:

"The highest it can be put is that, if the squatter is aware of a special purpose for which the paper owner uses or intends to use the land and the use made by the squatter does not conflict with that use, that may provide some support for a finding as a question of fact that the squatter had no intention to possess the land in the ordinary sense but only an intention to occupy it until needed by the paper owner. For myself I think there will be few occasions in which such inference could be properly drawn in cases where the true owner has been physically excluded from the land. But it remains a possible, if improbable, inference in some cases."

vi) The fact that the squatter is willing to pay rent to the paper owner if asked, or otherwise acknowledges his title, is not inconsistent with his being in possession in the meantime: Pye paragraph 46.

32. In the present case the pleaded case of Claire and Nigel was that they had been in possession either since March 1988 when Mrs Walters left the property or since 18^th August 1989 when Clowes Developments became the registered owner. In his closing submissions on their behalf, Mr Geraint Jones QC (who appeared with Mr Robert Darbyshire) did not seek to rely on the first of these propositions, accepting that Mrs Walters had not by that act alone determined the licence which she enjoyed from Mayfair to occupy the property. Reliance was placed solely on the second proposition.
33. The steps in the argument were as follows. First, it was submitted that the effect in law of the transfer of the legal estate from Mayfair to Clowes Developments was to determine the licence as between Mayfair and Mrs Walters; this proposition was axiomatic and was supported by the authority of Lord Devlin delivering the opinion of the Board in M.S. Terunnanse v. W.P. Terunnanse [1968] AC 1086 at 1095g-1096a; and the same position obtained even if one analysed the relationship as one of tenancy at will rather than licence. Since the licence created no interest in the land it cannot have bound Clowes Developments even though the latter took with notice of it: see the analysis of the Court of Appeal in Ashburn Anstalt v Arnold [1989] Ch 1.
34. Secondly, it was submitted that, once it was accepted that there was no relevant licence from Clowes Developments to Mrs Walters (or Claire and Nigel), the position of Claire and Nigel was on all fours with that of the defendants in Pye. They had exercised custody and control of the property, intending to exercise that custody and control for their own benefit to the exclusion, so far as legally practicable, of the world at large including the true owner.
35. Mr Jonathan Marks QC, who appeared with Miss Kate Livesey on behalf of Clowes Developments, disputed both steps in the argument. As to the first step, he accepted that a licence creates no interest in the land, but submitted that as a matter of contract law it was possible for Mayfair's rights under the licence to have been assigned to Clowes Developments; that on the facts it had been the common intention of Mayfair and Clowes Developments that the licence should continue notwithstanding the transfer; and that in those circumstances Mayfair's contractual rights were assigned in equity to Clowes Developments. Therefore, the argument ran, Mrs Walters thenceforth became the licensee of Clowes Developments.
36. Seen as a separate argument from that based on a constructive trust (as to which see paragraph 42 and 43 below) the difficulty with this submission lies, in the first place, in identifying the contractual obligations of Mrs Walters correlative to the rights said to have been assigned. The licence enjoyed by Mrs Walters was a bare licence. Her only express obligation while the licence subsisted was to give possession on being asked to do so by Mayfair. In traditional contractual terms what was being purportedly assigned was not the benefit of a contract between Mayfair and Mrs Walters but its burden, i.e. the obligation owed by Mayfair not to disturb her possession save on notice. Although the preservation of that obligation, and its transmission to Clowes Developments, were wholly in Mrs Walters' interest, a traditional contractual analysis does not allow the burden to be transmitted without a novation which required Mrs Walters' participation. There are, in any event, difficulties in analysing the licence granted to Mrs Walters as having been contractual in nature. In support of the argument that it was, Mr Marks submitted that Mrs Walters owed implied obligations to pay council tax, but I was unpersuaded that the necessary conditions for implying such a term existed (apart from the problems of anachronism involved).
37. Mr Marks' alternative submissions were that there had in any case been a sufficient licence from Clowes Developments to Mrs Walters to prevent Claire and Nigel's continued presence in the property after 18^th August 1989 from having constituted a dispossession of Clowes Developments sufficient to start a period of limitation running in their favour. The argument for the existence of such a licence was advanced on three different fronts: implied licence, constructive trust and estoppel by convention. In the further alternative he argued that the defendants had neither established factual possession nor the intention to possess. He also invoked section 3 of the Human Rights Act 1998, arguing that the relevant provisions of the Limitation Act 1980 should be construed in a manner compatible with Article 1 of the First Protocol to the European Convention on Human Rights, and that, having regard to that Article, the concept of "dispossession" should be construed so as not to include a situation where either (a) the paper owner believed that the land was occupied with his consent, or (b) where the squatter knows or believes, or ought reasonably to know or believe, that the paper owner believes that the land is occupied with his licence or consent, or (c) where the squatter has failed to bring to the knowledge of the paper owner either the fact of his occupation or has failed to assert his right to possess the same as against the paper owner.
38. Logically the argument based on section 3 of the 1998 Act comes first since where it applies that section imposes a general interpretative obligation on the court. I have, however, concluded that Clowes Developments is entitled to succeed in its claim irrespective of the effect of that interpretative obligation. It is therefore unnecessary for me to consider it further save to pay tribute to the arguments upon which I was addressed from each side on the point, and to acknowledge that my initial reaction to the point was misconceived. That initial reaction had been that Article 1 of the First Protocol could not be engaged since the only title to property ever acquired by Clowes Developments had been a title which was inherently defeasible by the operation of the provisions of the 1980 Act; that all that had happened was that (at worst) the conditions of defeasance had been fulfilled; and that it could not therefore be said that the operation of those provisions had interfered with the peaceful enjoyment of its possessions or deprived it of those possessions. I was persuaded by Mr Marks that that simple approach could not survive the analysis of Lord Nicholls at paragraphs 40-42 of his speech in Wilson v First County Trust [2004] 1 AC 816. I should add that since the conclusion of the argument I note that the HRA points in this context are now the subject of considered decision by Mr Strauss QC in a judgment delivered on 23^rd March 2005 in Beaulane Properties v Palmer (which has been published on Lawtel). Given my approach I have felt it unnecessary to invite further argument in the light of that decision.
39. In my judgment this case turns on whether Claire and Nigel ever had an intention to possess the property such as to dispossess Clowes Developments. The critical feature present in this case, but absent in Pye, was the belief on the part of Nigel and Claire that their possession was by virtue of the permission given to Mrs Walters by the paper owner. That belief was absent in Pye because permission had in that case been first sought and refused and then sought and not granted. How does that impact on the intention to possess for the purposes of the Act? In Pye, Lord Browne Wilkinson explained, at paragraph 40, why English law requires a mental element for the purposes of establishing legal possession in the following passage:

"Suppose a case where A is found to be in occupation of a locked house. He may be there as a squatter, as an overnight trespasser, or as a friend looking after the house of the paper owner during his absence on holiday. The acts done by A in any given period do not tell you whether there is legal possession. If A is there as a squatter he intends to stay as long as he can for his own benefit: his intention is an intention to possess. But if he only intends to trespass for the night or has expressly agreed to look after the house for his friend he does not have possession. It is not the nature of the acts which A does but the intention with which he does them which determines whether or not he is in possession."

40. When, in that passage, Lord Browne-Wilkinson refers to the possibility of A being there "as a squatter" he must, I think be using the word "squatter" to mean someone who is there without the consent of the true owner. It is true that elsewhere in his speech (see in particular Pye paragraph 37 quoted above) he uses that term as potentially including a person who has factual possession as a result of the licence of the true owner. It is, however, in my judgment clear that a person who is in factual possession and who intends to remain in possession (and to use that factual possession for his own benefit) so long as the true owner continues to permit him to do so does not have the necessary intention to possess for the purpose of starting a period of limitation running in his favour. Thus if, in the example, A's response to an inquiry as to how he happens to be in occupation and control of the locked house is that he is there with the permission of the true owner, it is not open to him to say that by being there he intends to dispossess the true owner. He does not have the necessary intention, and that is so whether or not he is correct in his belief that he does have that permission and whether or not he is correct in his belief as to the identity of the true owner. The importance of this subjective element is recognised by Lord Browne-Wilkinson in the passage in paragraph 45 of his judgment which I have quoted at paragraph 31(v) above. That position must (and can) be distinguished from the case where the "squatter", knowing he has no permission, has the intention to possess until such time as the true owner chooses to evict him. It is true that in paragraph 45 of his speech Lord Browne-Wilkinson thought that the example he there gave would be a rare and improbable one, but clear nonetheless that the reason why the "squatter" in that example does not dispossess the true owner is not because of the existence of an implied licence but because of the lack of the relevant subjective intention to dispossess.
41. If that approach is correct it is, in my judgment, sufficient to dispose of this case. Both Claire and Nigel believed that they were in possession of the property as a result of the permission which Mrs Walters had from Mayfair and as a result of Mrs Walters having been content for them to stay on at the property notwithstanding her own departure. They may not have known of, or attached any significance to, the change of the ownership from Mayfair to Clowes Developments. They believed throughout that their factual possession of the property was the result of some arrangement reached with Mrs Walters. That was not an arrangement of which they may have known or at all times remembered the full details, although (as I have found) Claire must have known at one time the gist of it from discussions she had with her mother. Even were I to have accepted Claire's account of her belief as having been that the arrangement resulted in the true ownership being "in a sort of limbo", the arrangement was not one which she or Nigel (or Mrs Walters) ever showed an intention to repudiate. That is not surprising given Claire and Mrs Walters' belief that that arrangement might in due course yield financial benefits to Mrs Walters. I do not consider that on those facts Clair and Nigel are in a position to say that they ever intended to dispossess the paper owner.
42. If that conclusion is correct it is unnecessary to consider the alternative legal routes by which Mr Marks invited me to reach the same conclusion. Both the "implied consent" and the "estoppel by convention" routes suffered from the potential difficulty that there was little by way of conduct or otherwise that could be relied on as demonstrating a communication of mutual intention as between Clowes Developments on the one hand and Mrs Walters and/or Claire and Nigel on the other. Given the conclusion which I have reached it is unnecessary for me to decide to what extent such communication is necessary for the purposes of either doctrine, and probably undesirable that I should venture, as obiter dicta, my conclusions on this legal issue. In relation to implied consent, I would however make two comments. First, to the extent that reliance was placed by Mr Marks on the visits of the surveyors in 2000 and 2001 as properly to be seen as the commencement and subsequent conduct of a negotiation to "regularise" the occupation, and thus to put the case on a par with such cases as London Borough of Lambeth v. Rumbelow (unreported, 25^th January 2001), Bath & North Somerset D.C. v Nicholson (unreported 22nd February 2002) and Colin Dawson Windows Ltd v Howard [2005] EWCA Civ 09, it seemed to me that such reliance was strained. The visits of all three surveyors were made in ignorance of what the true situation was, and seem to me to have been of a largely exploratory character. I would have found it difficult to infer from those visits, and what occurred at them, that Clowes Developments was thereby impliedly permitting the situation which actually existed. I think that I would have had to accept, on the basis of the decision of the Court of Appeal in BP Properties Ltd v Buckler (1988) 55 P&CR 337 (which survives Pye – see Colin Dawson Windows Ltd v. King's Lynn and West Norfolk B.C. [2005] EWCA Civ 09 at paragraph 40), that if any such permission had then been impliedly given, it would have been effective to prevent Nigel and Claire from asserting that their possession was thereafter otherwise than permissive. Secondly, (and more favourably to the submission) I was impressed by the argument that the lack of objection by Clowes Developments to Claire's planning application (to change the user of the outbuildings) in 1989 was sufficiently express to carry with it the implication that Clowes Developments was continuing to honour the licence granted by Mayfair to Mrs Walters to use the property for herself and her family.
43. So far as the argument based on constructive trust is concerned, it was common ground that a constructive trust in favour of Mrs Walters would only have arisen on the transfer by Mayfair to Clowes Developments if the circumstances were such that it would have been unconscionable for Clowes Developments to have denied Mrs Walters her rights as licensee. Browne-Wilkinson V-C held in IDC Group Ltd v Clark (1992) 1 EGLR 187 at 190 that for the court to find a constructive trust:

"..there will have to be very special circumstances showing that the transferee undertook a new liability to give effect to provisions for the benefit of third parties."

44. In evaluating how special or not the circumstances were in the present case it is important to bear in mind how limited were the rights enjoyed by Mrs Walters under the Mayfair licence. She, with her family members, could live at the property until she was asked to leave. The only substantive right which she enjoyed was therefore the right to receive notice (by implication a reasonable notice) before being treated as a trespasser. To suppose that Clowes Developments was undertaking a fresh liability to give effect to that very limited right does not require very much in the way of ascription of intention to Clowes Developments. Indeed, given that the uncontradicted and unchallenged evidence of Mr Holmes was that it was the intention of both Mayfair and Clowes Developments that the licence should survive the transfer to the latter, if the only mechanism by which the law can achieve that result is the imposition of a constructive trust it seems to me entirely permissible to have resort to it however distasteful one may find the element of fiction involved. To deny the licence a continued life following the transfer in those circumstances would lead to potentially unconscionable results. It would mean that it would have been open to Clowes Developments at any time after 18^th August 1989 within an applicable limitation period to have sued Mrs Walters for mesne profits as a trespasser in respect of the whole intervening period. Mr Jones accepted that this was the logical consequence of his submission that Clowes Developments was not bound by the licence which Mayfair had granted. Mr Darbyshire, following, submitted that the result was not unconscionable since Mrs Walters, while liable for the mesne profits, would have had a claim over against Mayfair for breach of an implied term that it would not cause the licence to determine without giving notice of that fact to Mrs Walters. That remedy would not, however, necessarily have been of any value to Mrs Walters. I prefer to think that a suit by Clowes Developments in trespass against Mrs Walters would simply have been unconscionable, and that for that reason Clowes Developments should be seen as having been bound as a constructive trustee to give effect to Mrs Walters' rights and as precluded from asserting that she was a trespasser unless and until it had itself given her a notice determining her licence. If that is correct, then Mrs Walters and the family members whom she permitted to reside at the property, had a lawful title as against Clowes Developments to be at the property so long as no such notice had been given. In BP Properties Ltd v Buckler (1988) 55 P&CR 337 the Court of Appeal held that Mrs Buckler was precluded from setting up a claim for adverse possession where the true owner had communicated to her its willingness to grant her permission to continue to live at a property even though she had not herself indicated whether or not she accepted that permission. It was stated (by Dillon LJ.) that:

"The rule that possession is not adverse if it can be referred to a lawful title applies even if the person in possession did not know of the lawful title; the lawful title would still preclude the person with the paper title from evicting the person in possession."

45. It was said that "like it or not" Mrs Buckler could not assert that she was dispossessing the true owner where the true owner was, by its own unilateral act, precluded from asserting that she was a trespasser. So here, as it seems to me, if Clowes Developments was so precluded as against Mrs Walters and her family members, then "like it or not" they could not assert as against Clowes Developments that they were dispossessing trespassers.
46. For these reasons Clowes Developments is in my judgment entitled to recover possession.