England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand London WC2A 2LL
		11 June 2008

HIS HONOUR JUDGE WAKSMAN QC:

Introduction.

1. This is an appeal from a decision of Professor Robert Abbey, a deputy adjudicator ("the adjudicator") to HM Land Registry, dated 8 November 2007 whereby he upheld the claim for adverse possession brought by the respondents to this appeal, Mr and Mrs Caunter. The appellant, the Totton and Eling Town Council, held the paper title to the land in question, having acquired it on 2 September 1994 from the New Forest District Council ("the Council"). This appeal has been brought pursuant to section 111 of the Land Registration Act 2002.
2. The land in question forms part of a large open area which was owned by the Council in 1984 when the Caunters purchased their house. Their rear garden abutted this open area. The boundary wall between the two pieces of land was in a state of disrepair. The area of Council land adjoining it was untidy and frequently covered with rubbish. In 1985 the Caunters tidied up the land and enclosed a part of it within a wooden fence, thereby in effect extending their rear garden. I shall refer to this strip of land belonging to the Council but enclosed by the Caunters simply as "the land". The appellant is represented before me today by Mr Radley-Gardiner of counsel, who did not appear below, and the Caunters appear in person by Mr Caunter.

The Issue in the Appeal.

3. Between 1990 and 1991 the Council was in correspondence with the Caunters about a proposed sale by it to them of the land. The appellant, as the Council's successor in title, contended before the adjudicator that a claim to adverse possession by the Caunters could not succeed because the effect of the correspondence was to confer upon them an implied licence to occupy the land which did not expire until the appellant had acquired the land, at least until 2 September 2004. The relevant 12-year period therefore could only have commenced in 1994 at the earliest and would not expire until after 13 October 2003. This is the date when the 2002 Act came into force. If so any claim to adverse possession would be governed by the specific procedure laid down by that Act and not by the old regime.
4. The adjudicator rejected that contention. He held that any period of adverse possession commenced no later than 30 August 1991. A 12-year period from then would end on 30 August 2003, ie just before the critical date of 13 October 2003. Accordingly adverse possession under the old law was made out. The appellant now contends that the adjudicator was wrong in law and in his analysis of the primary facts.

The Primary Facts.

5. These are not in dispute. The relevant chronology begins with a letter from the Council to the Caunters dated 1 March 1990. The material parts read follows:

"Dear Sir or Madam, Land adjacent to 14 Birchglade, Calmore [I interpose to say that this is the Caunters' address]. It has come to my notice that you are using or maintaining land which according to my records is owned by this Council. I attach a plan showing the land in question verged red. You may wish to check this against your ownership as shown on the deeds of your property. Clearly if you cannot show ownership the present situation is unsatisfactory. With a view to regularising the matter and subject to any other claims, the Council will be prepared to sell or license the land to you on terms to be agreed, including any specific requirements as to its use arising from covenants. I must also point out that this offer is made without prejudice to any planning conditions which may apply to this land and is subject to contract."

6. By a letter dated 3 April 1990 the Caunters responded thus:

"With reference to your letter dated 1 March I would like to make the following comments. I have been living at the above address for over seven years and when I arrived we had a brick wall at the rear of my garden which was in a dangerous state. At that time my children were only 5 and 8 years of age and I had no option but to knock the wall down. Before this the outside section which you say belongs to the NFDC was in a terrible state."

7. Then he goes on to say that his neighbours had told him that this part of the land belonged to the builders who had built the estate and they had gone bankrupt. Then he continues:

"So therefore to tidy up the section I put up a wood panel fence level with next door's brick wall and over the years maintained this section by cutting the grass and keeping it tidy with border flowers. If you say this section belongs to the NFDC you are welcome to have this section back but I hope that your department will keep it in good order as I have done for the last seven years. I would like to point out that some of the pathways which belong to NFDC and this estate are an eyesore and I hope this section will not go the same way. I await your reply on my comments."

8. I interpose here to say that the adjudicator found that this letter constituted an acknowledgement of the Council's title. The effect of this was to start time running again in relation to any claim for adverse possession (see paragraph 7 of his decision). I should also record at this point, to the extent that it matters, that today Mr Caunter has said that the effect of what he said in his letter was that the land belonged to the Council if the law said so. I do not think that this is a fair reading of the letter. I do accept that it was an acknowledgement, as the adjudicator found.
9. The Council in turn responded by a letter dated 10 April 1990, which reads follows:

"Dear Mr Caunter, Thank you for your letter of 3 April. As you appreciate, my original letter of 1 March 1990 was one of a large number sent to residents at Calmore. We appreciate that most people took in land for the very reasons that you give. Our present exercise is being carried out to put matters on a proper legal footing as opposed to reclaiming the land or attempting to make profit from it. We will be making specific offers without prejudice in the coming weeks."

10. This was then followed by another letter from the Council dated 16 July 1990. It states as follows:

"With reference to our previous correspondence I am writing to apologise for the delay in progressing with this matter. As you may be aware, we are dealing with almost 100 cases in all and each one entails a visit by our senior valuer and all the ensuing legal correspondence following negotiations. We will therefore be dealing with your case as quickly as possible, but if there is any particular reason you wish the matter to be dealt with more urgently, please advise me."

11. Then on 24 October 1990 the Council wrote again. They said:

"With reference to our previous correspondence, we are now in a position to deal with the piece of land adjoining your property. If you would like to discuss the matter more fully will you please contact the senior valuer, Mr Warren."

12. There was then apparently some form of meeting between the Council and on this occasion Mrs Caunter because on 16 November the Council wrote as follows:

"Further to my recent meeting with Mrs Caunter I am pleased to confirm that the Council would be prepared to sell the land which remains in Council ownership at the rear of your garden to you for the sum of £100 subject to formal contract. I also confirm you would be responsible for the Council's set nominal legal fee amounting to £50. If you wish to proceed on this basis please let me know and I will arrange for the Council's solicitor to submit a draft contract for approval."

13. There was then a lengthy period of inactivity but in around August 1991 Mr Caunter expressed his willingness to accept the Council's offer. Accordingly the Council wrote to him on 30 August 1991 as follows:

"As discussed with Mr Caunter, I am pleased to confirm the Council's agreement to sell the land which remains in Council ownership at the rear of your garden to you for the sum of £100 subject to contract. I confirm again that you will also be responsible for the Council's set nominal legal fee amounting to £50. I have accordingly asked the Council's solicitor to send the transfer document directly to you for approval. If you require any further information please let me know."

14. On the same day Mr Warren, the chief valuer, wrote to the Council's chief solicitors stating that he:

"Attached correspondence in the above connection [that was concerning Mr and Mrs Caunter] together with plans. Please submit the transfer documents directly to the purchasers in this instance."

15. Thereafter nothing happened. The Caunters did not make a payment to the Council or take the question of formalities any further but remained in occupation of the land as before. The Council took no steps to repossess it. In his statement of arguments for the adjudicator Mr Caunter said this, among other things:

"In 1990 I received a letter from the New Forest District Council including an offer to sell me the land. This was not a letter telling me to get off the land. Correspondence continued for several months until August 1991. My mistake was, if any, not to chase up the Council and formally complete this matter. Another 13 years went by before a letter from Totton and Eling Council in September 2004. I have to accept that no formal transfer of the land took place in 1991, but for 13 years neither the Council made any effort to take the land back, neither did they make any effort to keep it in a clean and tidy state, as I have."

16. In the Caunters' statement of case dated 10 October 2007 they further said that they were still willing to proceed with the purchase of the land from the appellant on the same terms as had been set out in the letter dated 16 November 1990, referred to above.

The Case Law.

17. The adjudicator's analysis of the point at issue begins in paragraph 8 of his decision. He referred there to only one of three authorities cited to him. That was the decision in BP Properties v Buckler [1987] at 55 P & CR 337. In that case the putative owner of the paper title wrote to the defendant who occupied the relevant property in October 1974 as follows:

"Since we wish to help you as much as possible we are prepared to allow you to remain in occupation of the house and garden rent free for as long as you may wish and for the rest of your life if you so desire. I am pleased accordingly to confirm that we will not require you to give up possession during your lifetime or until such time as you may choose no longer to live in the house and we have given the necessary instructions so that no proceedings will be commenced until you personally no longer live there."

18. At the time there was a pending warrant for possession against the defendant. Her solicitors produced the letter written to her from the paper title owner to the County Court judge who stayed the warrant as a result. They sought her instructions on the letter but before obtaining a response the then paper owner withdrew the warrant. The defendant never did respond to the letter by accepting or rejecting it. She remained in possession until her death some nine years later. The paper title owner contended subsequently that no claim for adverse possession could arise after October 1974 because by then the defendant was occupying the land pursuant to a licence and so her possession was not adverse. The licence was unilateral in the sense that it was not one to which she had expressly assented, but it was contended that this would make no difference. Dillon LJ, with whom Mustill LJ and Sir Edward Eveleigh agreed, accepted that argument, stating as follows:

"The claim that a unilateral licence can stop time running is a new one. It may be of some general importance in that it would enable a person who is not prepared to incur the cost of bringing proceedings for possession or of enforcing a possession order to keep his title alive for very many years until it suits him to evict. It might be thought that for title to be kept alive in this way was contrary to the policy of the statute as exemplified by section 13 of the 1939 Act which reproduced earlier statutory provision to the same effect and prevented any right of action to recover land being preserved by formal entry or continual claim."

19. A little further down, at page 346, he continued as follows:

"It may be that the result would have been different if Mrs Buckler had, assuming she had learnt of the letters, plainly told BP Properties Limited that she did not accept the letters and maintained her claims to be already the owner of the property. She, however, did not do that. She accepted her solicitor's advice that, as the warrant for possession had been withdrawn, she should do nothing while the 12-year period from the date of possession order expired."

20. He went on to say:

"Whether BP Properties could or could not in law in the absence of consideration have sought to determine in her lifetime the licence, they did not in fact seek to do so. Had they sought to do so they would in the absence of any repudiation of the letters by Mrs Buckler have had to have given Mrs Buckler a reasonable time to quit, as with any licensee. The nature of Mrs Buckler's possession after receipt of the letters cannot be decided just by looking at what was locked up in her own mind. It must depend even more on this aspect of the case, on the position as seen from the standpoint of the person with the paper title. What could that person have done? 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.

"So far as Mrs Buckler was concerned, even though she did not 'accept' the terms of the letter, BP Properties Limited would in the absence of any repudiation by her of the two letters have been bound to treat her as in possession as licensee on the terms of the letters. They could not have evicted her (if they could have done so at all) without determining the licence. I can see no escape therefore from the conclusion that, whether she liked it or not, from the time of her receipt of the letters Mrs Buckler was in possession of the farmhouse and garden by the licence of BP Properties Limited."

Accordingly, if a licence can be said to have been granted by the owner of the paper title, an express acceptance of it is not required by the occupier for these purposes.

21. In the case of Lambeth v Rumbelow, decided on 25 January 2001, Etherton J accepted that a permission or licence could be inferred from the circumstances of the owner's action. At page 23 of his judgment he stated as follows:

"In order to establish permission in the circumstances of any case two matters must be established. Firstly, there must have been some overt act by the landowner or some demonstrable circumstances from which the inference can be drawn that permission was in fact given. It is, however, irrelevant whether the users were aware of those matters. Secondly, a reasonable person would have appreciated that the user was within the permission of the landowner."

22. That approach was followed in a later case called Bath and North Somerset District Council v Nicholson, decided on 22 February 2002. In this case the defendant occupied a house belonging to the claimant Council as a squatter. He undertook various improvements, on occasion assisted by the Council. There were then protracted and sporadic negotiations for a lease between 1982 and 1988 but no lease was agreed. Nothing then happened for three years. There was then some occasional contact but in 2000 the Council took possession proceedings and the defendant counterclaimed for adverse possession. Kim Lewison QC (as he then was), sitting as a deputy judge of the Chancery Division, held that there was no adverse possession because there was permission to occupy the property during the pendency of the negotiations for the lease. He cited the dicta of Etherton J already referred to. He held that, apart from the overt acts of assistance given by the Council, the continuation of negotiations for the lease while the defendant was in possession constituted a tacit acceptance by the Council of that possession. He added this at page 11:

"Where a person is in possession of land pending negotiation for the grant of an interest in land, it is a natural inference to draw that the owner permits him to remain there at least until the negotiations have irretrievably broken down."

23. Later he said:

"In my judgment, the Council did tacitly or impliedly give Mr Nicholson permission to continue to occupy the lodge at least during the pendency of the negotiations for a lease."

24. He then said that in his view the licence probably did not end until a later stage because at paragraph 12 he said this:

"I find therefore that from 1984 at the latest, when the Council installed the new drain and provided the Elsan closet, until at least the middle of 1988, when negotiations ground to a halt, Mr Nicholson's possession was with the Council's permission and hence was not adverse possession. Indeed I think that his possession would have continued to be permissive until the Council told him that it was not. Mr Grattan's efforts to 'rationalise (not terminate)' Mr Nicholson's occupation confirms the permissive nature of it."

25. The Bath and North Somerset District Council case was one of the two cases referred to in the written submissions made before the adjudicator but was not referred to by him in his decision. The Court of Appeal has endorsed the approach taken by the learned deputy judge in the Bath case in Dawson v King's Lynn Borough Council [2005] 2 P & CR 19. This also was a "negotiations" case and the Court of Appeal held that permission should be inferred where a person is in possession of a property pending negotiations for a grant of an interest in it.
26. Finally, I refer to Batsford Estates v Taylor [2005] EGLR 12. In this case the owner eventually decided and consciously decided not to take any possession proceedings against the occupiers following service of a notice to quit. The occupiers then remained in possession for more than 12 years. Sir Martin Nourse, with whom Gage and Pill LLJ agreed, held that after serving a notice to quit the owner did not take any further steps to obtain possession, even after Mr Taylor had moved back into the farmhouse in February 1986:

"In my judgment, although it may not be possible to point to some overt act by the Estate from which permission can be inferred, the matters relied upon by Mr Morshead certainly constitute demonstrable circumstances from which the inference can be made... Further, it is clear that a reasonable person (who must be assumed to have knowledge of the material facts) would have appreciated that Mr Taylor's occupation was with the permission of the Estate."

27. He added this at paragraph 26 that it had been submitted that:

"A permission to occupy land can only be implied if it is communicated by words or conduct. At all events in the context of adverse possession, that submission cannot be correct. Once communicated, the permission would cease to be implied and become express. The concept of a communicated implied permission is difficult, if not impossible, to comprehend."

28. This is the second of the two cases referred to in the submissions made by the appellant before the adjudicator to which he did not refer.

Analysis of the Facts of this Case.

29. It is clear from the correspondence between the Council and the Caunters that they were in negotiations for the sale of the land. The Council offered to sell it to them for a very modest sum and the Caunters expressed a willingness to purchase it. Mr Caunter's statement of arguments, as noted above, refers to his mistake in not formally completing the matter and confirmed subsequently his willingness still to do so. The adjudicator found that there were negotiations, as appears from the beginning of paragraph 8 of his decision. In my judgment and consistent with the approach taken in the cases referred to above, from the Council's perspective it must have been tacitly allowing the Caunters to stay in occupation while those negotiations were pending. The fact that they did not expressly request or acknowledge this does not matter. It is an obvious inference from the negotiations. Thus the first limb of the test enunciated by Etherton J in the Lambeth case is fulfilled. So, in my judgment, is the second. Any reasonable observer would conclude that pending these negotiations the Caunters were being allowed to stay.
30. In paragraph 8 of his decision the adjudicator referred to the BP Properties case but then sought to distinguish it. He did so on the basis that the Caunters had made no written offer to purchase. However, that ignores the clear terms of the letter of 16 November 1990 which presupposes that Mrs Caunter had asked if the Council was prepared to sell the land. There is no need of course for any particular aspect of the negotiations to be in writing. Moreover, it would be entirely logical for the Caunters to take that approach, given that they had acknowledged the Council's title back in April 1990, as the adjudicator had found. The adjudicator then said that Mr Caunter did nothing to indicate that the Council had in some way actually given him permission to stay on the disputed land by way of some unilateral licence, but of course on the basis of BP Properties where the defendant did not respond one way or the other to the landowner and it made no difference, Mr Caunter did not have to do so.
31. The adjudicator then stated that, having regard to the copy letters from the Council put before him, there was nothing in these letters either to suggest a unilateral licence. But there is no difference in principle between the negotiations as constituted in part by these letters and the negotiations at issue in the Bath and Dawson cases where the implied licence was made out. Had the adjudicator given consideration to the Bath case, which was before him, it seems likely that he would have taken a different view or, if he did have it in mind, he failed to give proper effect to it. Although the adjudicator ended his paragraph 8 by saying that he was satisfied that there was no evidence of an implied licence, I conclude that his consideration of the legal position and his analysis of the primary facts in this respect and in paragraph 8 were flawed.
32. That said, in paragraph 11 of the decision the adjudicator came back to the letter of 30 August 1991. He attached importance to it because he said this:

"The last letter from the New Forest District Council to the Caunters, as mentioned above, was dated 30 August 1991. Nothing happened thereafter. I am therefore satisfied that the 12-year period expired before 13 October 2003 and as such the operative law is section 15 of the Limitation Act and hence a 12-year period is required."

33. On a fair reading of this passage the adjudicator here seems to have accepted that something prevented time from running until the date of the last letter. To this extent he may have been acknowledging that there was an implied licence of sorts, but on any view he then determined that it ended with the last letter. There was no detailed consideration at this point in his decision as to the principles applicable to the termination of such an implied licence. This may or may not be because his principal point, as evidenced in paragraph 8, seems to have been that there was no licence anyway.
34. In any event and in my judgment it cannot be the case that the negotiations, and hence any implied licence, ended as soon as 30 August 1991 for the following reasons. Firstly, the Council would on any view have been bound to have given the Caunters a reasonable period to respond and complete the formalities. There is no evidence as to when they actually received the documents and of course they would no doubt have needed to check the plans annexed to the transfer, and so on.
35. Secondly, any such period would have to take account of the fact that this apparently simple matter had taken about 18 months to reach the stage that it did on 30 August 1991. The Council had many such cases to deal with, as is abundantly clear, and certainly the Council seems to have been relaxed about the whole matter for the period between November 1990 and August 1991. This is no doubt because the Council was not interested in reclaiming or profiting from the land, it simply wanted to regularise the position (see the letter of 10 April 1990 referred to above), hence the modest sum required from the claimants. The Council was no doubt happy that the claimants would continue to maintain the land rather than it.
36. Thirdly, the fact that the Council did not revert to the Caunters is not evidence that negotiations had broken down. It is surely evidence that the Council did not regard completion of the formalities as a particularly pressing matter. This is consistent, not inconsistent, with the continuation of an implied licence.
37. In the light of the above it might be tempting in this case to attempt to construct some reasonable period following 30 August 1991 after which it could be said that the licence had been withdrawn. This was in fact the approach taken by the appellant in its submissions before the adjudicator (see ground B at page 6 of the bundle). However, in my view that is not the correct approach. This is for the reasons given by Chadwick LJ in the important Court of Appeal case of Sandhu v Farooqui [2004] 1 P and CR 3. This was not cited to the adjudicator. In this case a claim to title by adverse possession was made by a purchaser of a flat owned by the defendants who had been let into possession pending completion of the intended sale, which completion never in fact occurred. I need refer only to paragraphs 23 to 25 of the judgment of Chadwick LJ, with whom Mummery and Auld LLJ agreed. He said this:

"I accept that the term to be implied is that the licence will determine when it is no longer required; that is to say, when the parties are no longer proceeding towards completion of the transaction in relation to which the licence to occupy has been given. But such a term will be unworkable in practice unless (and so must itself require that) the intention not to proceed is communicated.

"I would not hold that the intention not to proceed needs to be communicated in express terms (although that will be the usual case). In the usual case either the proposed vendor or the proposed purchaser (or their respective agents) will write to the other in terms which make it clear that the party is no longer proceeding towards an exchange of contracts, or towards completion of the transaction without an exchange of contracts. But there may be sufficient indication from what one is doing, to the knowledge of the other, that a court will hold that a reasonable person, with that knowledge, would appreciate that the transaction is not going to proceed.

"What is essential, in my view, is that there should be some mutual communication from which the objective observer could deduce that each would appreciate that the transaction is no longer proceeding. That element is missing in this case."

38. I should add that before making those remarks in paragraph 22 the learned Lord Justice had said:

"In this case the terms of the licence have to be implied. What terms should the court imply? In particular, should the court ... imply a term that the licence will determine automatically as soon as there is no real prospect of the transaction proceeding to completion, whether or not both parties appreciate that. Or is it necessary to imply a term that the licence continue, until and unless one party does something to communicate to the other that the transaction is no longer to proceed to completion?"

39. It will be apparent from what I have said that the learned Lord Justice proceeded to endorse and approve the latter rather than the former approach. There is an echo of that approach at page 12 of the judgment of Kim Lewison QC (as he then was) in the Bath case in the passage to which I have already referred.
40. In Dawson the Court of Appeal did not consider whether the licence could have extended beyond the date of the last letter of the chain of correspondence (there, as here, August 1991), but it did not need to. That date was sufficient to prevent there being the required 12-year period. It is to be noted that the Court of Appeal in paragraph 39 referred to the implied licence having extended "at least" to August 1991. So far as the Sandhu case is concerned, I observe that if that case had been cited to the adjudicator it may well have caused him to rethink his approach, given what he said in paragraph 11.
41. For all those reasons I think that, on any sensible analysis from the Council's perspective, the Caunters were entitled to remain in possession of the land until such time as it chose to communicate with them to revoke it, no doubt after first giving them some form of deadline to comply with the formalities. Equally, any reasonable observer would have concluded thus as to the nature and extent of any permission. As at 1994, therefore, the implied licence still ran but upon transfer of the land from the Council to the appellant any implied licence arising by reason of the negotiations is likely to have been revoked by operation of law (see the decision of the Privy Council in Terrunanse v Terruananse [1968] AC 1086 at page 1095G). Accordingly, the adjudicator's determination in paragraph 11 that the last relevant date was 30 August 1991 cannot, in my judgment, stand.

The Consequences of the Implied Licence.

42. It follows that, if the implied licence did not expire until 2 September 1994, any 12-year period commencing thereafter would have expired in 2006, some three years after the coming into force of the 2002 Act. That Act provides a discrete regime for the determination of adverse possession claims and it follows that the Caunters will now need to invoke that procedure if they wish to maintain their claim to the land. Since that matter is not before me I say no more about it, save to record the fact that whether such application is deemed to have been made already by virtue of the Caunters' initial application in this case in February 2006 or because of a fresh application to be made hereafter, the Council has indicated today that it would not contend that the required ten-year period of adverse possession required by paragraph 1 of schedule 6 had not elapsed. They would dispute, however, that the Caunters could establish any of the further conditions set out in paragraph 5, including for example an equity by estoppel. If an application is made under the 2002 Act that will be a contest for another day.
43. As to the present, however, the Caunters have no title to the land. Perhaps somewhat surprisingly, the Land Registry decided to act on the decision of the adjudicator at once rather than await the outcome of this appeal. Accordingly the Caunters have now been registered as the owners of the land. It is therefore necessary for me to direct the land registrar to correct it. I am told and I accept that procedurally the way forward is for me to make an order for the alteration of the register for the purpose of correcting it pursuant to paragraph 2 of the 2002 Act. This is a correction in effect simply to reverse the impact of the decision which has been successfully appealed. It does not appear to me to constitute rectification of the register, but if I am wrong about that so that paragraph 3 of schedule 4 applies, it seems to me, following the wording of paragraph 3.2(b), that insofar as it affects the title of any proprietor it would be unjust for the alteration not to be made. That is for the obvious reason that the order for correction being made now is simply the result of a successful appeal in a dispute between the two proprietors concerned.
44. Accordingly, for the reasons that I have given in this judgment, I allow the appeal, I reverse the decision of the adjudicator and I make an order along the lines that I have intimated, subject to any further wording which is put before me. So I have taken a different view from the adjudicator about this so that I am finding that it is land which belongs to the present Council, at least so far as these proceedings are concerned. It does not mean that the Caunters cannot make a subsequent claim, but it has to be made in a different way.