REF/2008/1085

 

The Adjudicator to Her majesty’s Land Registry

LAND Registration act 2002

 

IN the matter of a reference from hm land registry

 

BETWEEN

 

(1) LAWRENCE TARR

(2) LILLIANA TARR

APPLICANTS

and

 

RASHID AHMED

RESPONDENT

 

Property Address: Land at the back of 6 Royal Close, Worcester Park, Surrey

 

Title Number: SY767561

 

Before: Mr Rhys sitting as Deputy Adjudicator to HM Land Registry

 

Sitting at: Victory House, Kingsway, London WC2B 6EX

 

On: 9^th June 2009

 

 

D E C I S I O N

 

 

Introduction

1. This dispute relates to a section of land enclosed within the rear garden of a property known as 6 Royal Close, Worcester Park, Surrey (“the Property”). The Property itself is registered under Title No SY429579 and the Applicants are the registered proprietors. A section of land enclosed within their rear garden (“the Disputed Land”) is registered in the Respondent’s name under Title No SY767561 (“the Respondent’s Land”), forming a small part of a larger parcel of land lying between the rear gardens of Nos 3-6 Royal Close, and the public highway known as Old Malden Lane at some distance to the west. The Respondent’s Land, excluding the Disputed Land, consists of thick woodland. On 12^th November 2007 the Applicants applied to the Land Registry in Form ADV1 for registration of the Disputed Land with a title based on adverse possession, pursuant to Schedule 6 of the Land Registration Act 2002 (“the 2002 Act”). The application indicated that the Applicants intended to rely on all three conditions set out in Paragraph 5 of Schedule 6. The Respondent, as Objector, served a counter-notice in Form NAP requiring the Land Registry to deal with the application under Schedule 6 paragraph 5. In the details of the objection, the Respondent drew a distinction between two areas of the land claimed by the Applicants. He accepted that the Applicants may have been in possession of part of the Disputed Land – the section nearest the house built on the Property – for the period they rely on. However, he alleged that they had only recently gone into possession of the westernmost section of the Disputed Land, farthest from the house. With regard to both parts of the Disputed Land, however, the Respondent denied that the Applicants satisfied the conditions stated in paragraph 5 of Schedule 6. The dispute was referred to the Adjudicator on 11^th August 2008.

 

2. The parties were agreed as to the relevant tests to be satisfied in order to amount to adverse possession. It was accepted that the leading case of J.A.Pye (Oxford) Ltd v Graham and Another [2003] 1 AC 419 sets out the correct requirements of (a) factual possession and (b) intention to possess. Where I use those expressions in this Decision, I am using the terms in the sense used in this leading case. The hearing before me took place on 9^th June 2009, and I had the benefit of a Site View on the previous day, attended by Mr Tarr and by Dr Ahmed, the Respondent, and his Counsel Mr Hinds. Evidence was given by Mr and Mrs Tarr, and their former neighbour Mr Oliver. Dr Ahmed also gave evidence. Ms Jacobs of Counsel represented the Applicants, and as I have said Mr Hinds represented the Respondent.

 

The physical appearance of the site

3. I shall now describe the Property, and the Disputed Land, in more detail. Royal Close is a cul-de-sac which runs westwards off a main road known as Royal Avenue. To the north of Royal Close lies a small housing development on Barrow Hill Close, consisting of 12 properties which interlock in an irregular terrace formation. Royal Close terminates in a hammerhead. The Property, consisting of a house, garage and front and rear gardens, is situated at the north-western corner of the hammerhead. The front garden lies to the north of the hammerhead. The rear garden lies to the west of the house and garage and is reached by a path around the side of the house. According to the Applicant’s filed plan for the Property, their rear garden is somewhat smaller than the front garden. The filed plan suggests that the western boundary of the Property – the end of the rear garden – is contiguous to the fifth house from the east along Barrow Hill Close, the rear boundary of which terminates on the northern boundary of the Property. In fact, the land currently enclosed within the apparent rear garden of the Property is perhaps three times the size of the rear garden shown on the title plan – its rear (western) boundary terminating at the tenth house built on Barrow Hill Close. The Disputed Land, therefore, consists of a large section of the Applicants’ rear garden. The rear garden itself is effectively divided into three distinct areas. The largest section (“Area A”) comprises a lawn area with well-tended flowerbeds which terminates at its western end in a low brick retaining wall. This probably comprises two-thirds of the Disputed Land. There is a smaller area of ground (“Area B”) between the retaining wall and a line of substantial conifer trees – this is not part of the formal garden but is fairly tidy. The westernmost section of the Disputed Land (“Area C”) lies between the conifer trees and a fence along the western boundary. Generally, the area is overgrown, although there are a number of trees and shrubs including a fairly large cherry tree. There is a garden shed close to the southern fence line. The fence along the western boundary is continuous, albeit somewhat ramshackle. To the west of the fence, the remainder of the Respondent’s Land has the appearance of well-established woodland.

 

The Applicants’ Case and the Objection

4. As I have said, the Applicants applied on Form ADV1 on 12^th November 2007, the application being supported by two Statutory Declarations, made by each of the Applicants. The grounds on which they relied are, in summary, as follows. They acquired the Property in December 1991 from Mr and Mrs Parkes, the previous owners. Mr and Mrs Parkes told them that they had been using an area described as “the woodland” on the basis of a personal licence granted by the owners of the Back Land. They had fenced the area within their garden shortly after their purchase, cleared it, planted trees and shrubs and have been in undisturbed possession of it ever since. They described “the woodland” as being the area to the west of the line of conifers which I have already referred to – in other words, Area C. They relied on all three of the conditions set out in paragraph 5 of Schedule 6. The Respondent’s counter-notice in Form NAP drew a distinction between an area of the Disputed Land coloured green on the notice plan, and the remainder of the land. As far as the green coloured area was concerned – which seems to equate roughly with a large part of Area A – the Respondent accepted that the Applicants had been in possession of that land as they contended. However, with regard to the remainder of the Disputed Land (Areas B and C and part of Area A), he alleged that the Applicants had only recently gone into possession, and had only recently built the fence at the western end of Area C. In relation to the entirety of the Disputed Land – including the green coloured land – he denied that the Applicants were able to satisfy any of the conditions set out under paragraph 5 of Schedule 6.4. It seems to me that the Applicants are confused, to some extent, as to the land in dispute. The Applicants assume that the only area lying outside their registered title is Area A – between the line of conifers and the fence. In fact, most of their rear garden lies within the Respondent’s Land. Their application therefore relates to Areas A and B as well as Area C.

 

The history of the Respondent’s Land.

5. It is believed that the properties in Royal Close were constructed in the early 1970s. The Applicants have produced a Licence dated 23^rd February 1982 (“the Licence”) and made between Country & Metropolitan Developments Limited (C & M”)(1) and Mr and Mrs J.W. Parkes (2). By the Licence, C & M granted Mr and Mrs Parkes a licence to use “the area of land….at the rear of 3/4/5 or 6 Royal Close Worcester Park…for garden purposes only..”. The land at the rear of these properties comprises the Respondent’s Land. I infer from the filed plan of Title No SY406420 that C & M were the original developers of Royal Close, and presumably retained the Respondent’s Land pending further development. At all events, the Respondent’s Land (first registered in 1971) was registered in the name of Royco Homes Limited on 14^th February 1985. The Applicants have obtained historical copies of the register, from which it appears that on 23^rd December 1993 Royco Homes Limited was dissolved under Section 654 of the Companies Act 1985, and that on 4^th October 2002 the Treasury Solicitor disclaimed the land pursuant to Section 654 of the same Act. On 21^st October 2005 Royco Limited became registered as proprietor, and eventually the Respondent’s Land became vested in the Respondent on 18^th January 2007 Accordingly, there was a period between 1993 and 2002 when the Back Land was vested in the Crown as bona vacantia. However, although the Respondent was initially minded to take a point with regard to the longer limitation period applicable to Crown land, in the event Counsel agreed that the effect of the disclaimer was to nullify this, and the standard limitation period is applicable.

 

The evidence.

6. As I have said, the Applicants both made Statutory Declarations, and Witness Statements, and were cross-examined by Counsel for the Respondent. To all intents and purposes, their evidence was the same, and was to this effect. When they purchased the Property in 1991, Mr and Mrs Parkes informed them that the western boundary lay along the line of conifers that I have described. There was no fence in place at that time, but Mr and Mrs Parkes occasionally used the area beyond the conifers on the basis of the Licence. It was not incorporated into their rear garden but they used it and the remainder of the Respondent’s Land for walks. They told the Tarrs that the company which had granted the Licence had gone into liquidation many years earlier, and that the 50 pence licence fee had never been collected. The Tarrs asked their solicitor to obtain a new license to use the Respondent’s Land, but the solicitor never reported back to them and of course no new license was ever granted. Within a matter of months of moving into the Property – in December 1991 – Mr and Mrs Tarr, with the help of Mrs Tarr’s father Grozdan Grozdanow, had cleared the area beyond the conifers and had erected a wooden fence in the present position, thus creating Area C and enclosing it within the rear garden of the Property. According to the Tarrs, they had to clear a great deal of undergrowth and dumped building materials from the land They planted a number of fruit trees and fruit bushes, and eventually constructed a shed on the land. They have maintained the area as an orchard ever since and it has therefore been physically incorporated into their rear garden since early 1992.

 

7. The Applicants called a former neighbour, Mr Oliver, to give evidence on their behalf. In his witness statement he said that he had lived at No 5 Royal Close since 1972 – the house was new when he bought it – and had moved out approximately six years ago, although he still visited on a regular basis since his son now owned the house. In his witness statement he confirmed that the rear fence, alleged by the Respondent to have been moved within the last year, has always been in the same position since the Applicants erected it in 1992. Under cross-examination, he seemed less certain when the rear fence had been erected, initially agreeing with Counsel that it had been in the last few years, and finally agreeing that it had been in place at least at the date of his removal from No 5 Royal Close, in approximately 2003. However, Mr Oliver was not pressed to be more specific, and the passage in his witness statement regarding the date of the fence (1992) was not put to him directly for an explanation.

 

8. Dr Ahmed also gave evidence. He of course did not acquire this title until late 2006, not being registered as proprietor until January 2007. The dispute between the previous freeholder and the Applicants was already in progress. Dr Ahmed accepted that he knew nothing about the history of the site, and only visited on one occasion before buying the Respondent’s Land at auction. However, he maintained in his witness statement, and confirmed on oath, that “in recent months the Applicants have decided to extend their fence..”. He accepted in cross-examination that he had no personal knowledge of this, but had drawn an inference that the original area occupied by the Applicants was smaller than the area currently claimed. He was unable to be more precise, and, as I have said, could not give any direct evidence to support this allegation.

 

Conclusions on the facts

9. Having regard to the evidence that I heard, I make the following findings of fact:

9.1 When the Applicants acquired the Property, the rear garden extended as far west as the line of conifers, thus including Areas A and B. Their vendors, Mr and Mrs Parkes, told them that this was the registered boundary. I infer that Mr and Mrs Parkes occupied the garden as far as the line of conifers from the date of their own purchase. Since it appears that the original licensors, C & M, ceased to be the proprietors of the Disputed Land no later than 1985, it is apparent that Mr and Mrs Parkes were trespassers on all three areas from that date.

9.2 The Applicants entered into possession of Area C in the early part of 1992 and built the fence which still stands, separating Area C from the woodland that comprises the Back Land.

9.3 Continuously since that time the Applicants have been in factual possession of the land, occupying it as any owner would. I accept that they originally cleared it of building rubble and undergrowth, and planted some trees and shrubs. I also accept that they constructed the shed on the land. I think they probably have exaggerated the extent to which they have used the land, and I am not sure that Area C can reasonably be described as an orchard, albeit that there are some fruit trees there dotted around. However, it is manifestly occupied and used as part of their rear garden and is physically enclosed within their occupation by an obvious and continuous fence.

9.4 The Applicants demonstrated an intention to possess the entirety of the Disputed Land. As far as Areas A and B are concerned, they actually believed that this land was within their legal title. As far as Area C was concerned, they of course knew that it was not included in their title. However, they knew that they did not have permission to be there from the legal owner and were trespassers. The fact that they would have accepted a licence from the true owner is not fatal to their case. This was made plain in J.A.Pye (Oxford) Ltd v Graham itself, at paragraph 78 (per Lord Hutton).

 

The law

 

10. The Applicants have applied to be registered as proprietors of the Disputed Land on the basis of adverse possession pursuant to Schedule 6 of the 2002 Act. Accordingly, they are not alleging that they had already acquired a title prior to the coming into force of the 2002 Act in October 2003. They did not acquire the Property until December 1991, so they could not rely on their own adverse possession for a period of twelve years prior to October 2002. However, on the basis of the evidence I have heard, and the findings of fact that I have made, I find that the Applicants acquired a title to Area A and Area B in or about 1997 – some 12 years after the termination of the Licence. Although the Applicants’ claim is made under the new adverse possession regime, I cannot ignore the evidence and I therefore conclude that as from 1997 or thereabouts the registered proprietor of the Respondent’s Land held Areas A and B on a bare trust – pursuant to Section 75 of the Land Registration Act 1925 – for the proprietors of the Property. When the Applicants purchased the Property in 1991 Mr and Mrs Parkes were already in adverse possession of Areas A and B. When the Applicants acquired the Property from them in 1991, they also took the benefit of their adverse possession, and as their successors in title became the beenficiatries of the Section 75 trust in or about 1997. At that point they became entitled to be registered as proprietors of Area A and Area B.

 

11. However, that determination does not deal with Area C. Furthermore, if I should be wrong in the view expressed in the preceding paragraph, and the Applicants did not acquire a title to Area A and Area B prior to 2003, it is necessary to consider whether the Applicants are able to establish a title to those areas pursuant to Schedule 6 of the 2002 Act. The relevant provisions of Schedule 6 are as follows:

“1 – (1) A person may apply to the registrar to be registered as the proprietor of a registered estate in land if he has been in adverse possession of the estate for a period of ten years ending on the date of the application.

3 – (1) A person given notice under paragraph 2 may require that the application to which the notice relates be dealt with under paragraph 5.

5 – (1) If an application under paragraph 1 is required to be dealt with under this paragraph, the applicant is only entitled to be registered as the new proprietor of the estate if any of the following conditions is met.

(2) The first condition is that –

(a) it would be unconscionable because of an equity by estoppel for the registered proprietor to seek to dispossess the applicant, and

(b) the circumstances are such that the applicant ought to be registered as proprietor.

(3) The second condition is that the applicant is for some other reason entitled to be registered as proprietor of the estate.

(4) The third condition is that –

(a) the land to which the application relates is adjacent to land belonging to the applicant,

(b) the exact line of the boundary between the two has not been determined under rules under section 60,

(c) for at least ten years of the period of adverse possession ending on the date of the application, the applicant (or any predecessor in title) reasonably believed that the land to which the application relates belonged to him, and

(d) the estate to which the application relates was registered more than one year prior to the date of the application.

In their application, the Applicants have relied on all three of the conditions under paragraph 5, and the Respondent has served a counter-notice under paragraph 3 requiring the application to be dealt with under paragraph 5. Accordingly, the Applicants must satisfy me that one or more of the conditions under Schedule 5 is established.

 

Area A and Area B

12. As I have said, there is a distinction between these elements of the Disputed Land, and Area C. It was not until the Respondent took the point on the NAP counter-notice that the Applicants became aware that these areas, to all intents and purposes part of the rear garden of the Property and used and enjoyed as such by them since the end of 1991, did not form part of their registered title. Having inspected the site, and having heard the evidence of the Respondent, I accept that Areas A and B are actually within his title. However, in my judgment the third condition, set out in paragraph 5(4), is clearly satisfied. These areas are adjacent to the Property, the boundary has not been determined, and the Disputed Land has been registered for more than ten years. Furthermore, I am satisfied that the Applicants have for more than ten years believed that Areas A and B belonged to them, since they believed that it formed part of their registered title. The only remaining issue is whether that belief was “reasonable” within the meaning of sub-paragraph 4(c). In my judgment, this belief was eminently reasonable. Although a careful study of their filed plan would have revealed the discrepancy, I think that it was reasonable for them to accept the word of Mr and Mrs Parkes as to where the western boundary of the Property lay. The rear garden of the Property appeared to extend as far as the line of conifers, and they were told that the area beyond this line was enjoyed under the Licence. The position of the boundary as per the filed plan could be verified, but only by using the houses on Barrow Hill Close as a guide. It is not immediately apparent on the ground In all the circumstances, and on the footing that I am wrong in holding that Areas A and B had already vested beneficially in the Applicants, I find that the third condition is satisfied with regard to the application insofar as it relates to Areas A and B.

 

Area C

13. The Applicants alleged that all three conditions were made out with regard to Area C, relying principally on the first and third condition. I cannot agree that they are able to rely on the third condition. In particular, I do not consider that there is any proper basis in the evidence for the contention that “for at least ten years of the period of adverse possession ending on the date of the application, the applicant (or any predecessor in title) reasonably believed that the land to which the application relates belonged to him”. The Applicants accept that they were told by Mr and Mrs Parkes that Area C was enjoyed under licence from the true owner. They accept that initially they intended to obtain a licence from the true owner, but their solicitor took it no further. Although they believed that the true owner had gone into liquidation, and had not collected the licence fee for many years, they knew perfectly well that Mr and Mrs Parkes were not purporting to sell Area C to them as part of the sale of the Property. They may well have been aware of the doctrine of adverse possession, and the possibility of obtaining a title through possession and enclosure of the land, but manifestly they knew that the land did not belong to them from the outset. Even if they did believe that the land belonged to them, such a belief was clearly unreasonable. In the circumstances, I reject the submission that the third condition is satisfied.

 

14. I also reject the submission that the second condition is satisfied. Whilst the meaning of this condition is not entirely clear, some guidance can be derived from the Law Commission Report at 14-43. The condition is said to apply in circumstances where the squatter is entitled to be registered by virtue of some other rights, such as under a trust. This clearly does not apply in the present case - subject of course to the Section 75 point. However, the Applicants do not need to satisfy the second condition if they can show that Section 75 applies.

 

15. Accordingly, the Applicants’ case on Area C will stand or fall by reference to the first condition, namely that “it would be unconscionable because of an equity by estoppel for the registered proprietor to seek to dispossess the applicant”. I have asked Counsel for both parties whether this phrase has been the subject of any judicial interpretation, and it appears that it has not. I must therefore construe this provision without such assistance. Ms Jacobs, Counsel for the Applicants, has referred me to a number of authorities, particularly Taylor Fashions v Liverpool Victoria Trustees Co Ltd [1982] QB 133n, and also to the passage at 10-16 and 10-17 in Snell’s Equity (31^st Ed). She submits that the Applicants have been encouraged to act their detriment but by the paper owner’s inaction – by “standing by and saying nothing to the Applicants”. Her skeleton argument reads as follows:

21. ………it is submitted that given the actions of the Applicants in adopting the land as their own, having been told that the original licensor was bankrupt, with the activities said to constitute physical possession and the animus possidendi would be sufficient for an estoppel when combined with the lack of action on the part of the Objector.

22. The occupation/improvement by the Applicants would have been obvious to anyone looking at the land, given the physical alteration there would be implied knowledge; someone at some stage should have seen the Applicants were occupying the land in question. Acquiescence is thus made out. Further since 2005 no action has been taken by any paper owner to effect possession.”

 

16. The essential elements of the doctrine were stated by Oliver J (as he then was) in the Taylor Fashions case (at page 144) as follows:

“If A, under an expectation created or encouraged by B that A shall have a certain interest in land thereafter, on the faith of such expectation and with the knowledge of B and without objection from him, acts to his detriment in connection with such land, a Court of Equity will compel B to give effect to such expectation.”

Ms Jacobs submits, and I accept, that the doctrine is nowadays more flexible than it was when it was first established, and it is not necessary to satisfy all five tests originally adumbrated by Fry J in Willmott v Barber (1880) 15 ChD 96 at 105-6. The following passage in Snell was cited to me:

“In the past different tests have been formulated for cases involving “encouragement” or “acquiescence” and it was originally suggested that in order to make out a case of proprietary estoppel based on acquiescence the estoppel raiser (A) had to satisfy five tests [per Willmott v Barber] and, most importantly, that A mistakenly believed that he or she was entitled to an interest in the land and that the estopped party (O) was aware of that mistaken belief. It is now clear that it is unnecessary for A to satisfy all five tests although the extent of O’s knowledge is likely to be a highly material factor in giving rise to the equity.”

However flexible the doctrine may be, it has been developed in order to protect parties from unconscionable conduct, as the words of paragraph 5 (2)(a) make clear. The Law Commission Report 2001 No 271 which preceded the Land Registration Bill contains this example of the type of situation where the first condition would apply, namely:

“Where the squatter has built on the registered proprietor’s land in the mistaken belief that he or she was the owner of it, and the proprietor has knowingly acquiesced in his or her mistake. The squatter eventually discovers the true facts and applies to be registered after 10 years”

 

17. In the present case, I am not satisfied that the essential elements of proprietary estoppel have been made out. The Applicants knew perfectly well that they did not own Area C. I do not think that their expenditure on the land – in terms of money and also the hard physical work doubtless required to tame the area – was expended by reference to any mistaken understanding of their rights. They were in the same position as any squatter who spends money on fencing and cultivation of land. They were taking a risk that the paper title owner would assert his rights at some point before they had acquired a title. On the other side, there is no evidence that the paper title owner had any knowledge of the Applicant’s activities. It is known that Royco Limited – the registered proprietor at the time of the Applicant’s purchase – went into liquidation and became dissolved in 1993. The estate then vested in the Crown for many years. The fact that it may theoretically have been possible to have observed the Applicants’ activities on the land, if a representative of the company or the Crown had visited the site, is quite insufficient in my judgment to establish the sort of knowing acquiescence which gives rise to an estoppel. In all likelihood, the paper title owner was completely unaware of the Applicants’ activities, and its failure to assert its rights until 2005 cannot be regarded as unconscionable in any sense of the word. In my judgment, an applicant seeking to rely on the first condition must show something more than adverse possession itself, which necessarily involves some “detriment” in the sense of working or expending money on the land such as to constitute factual possession. As the example in the Law Commission Report shows, there has to be some added factor, such as the classic estoppel situation where a party (the squatter) acts to his detriment in a mistaken belief which is known to the other party (the paper title owner), who acquiesces and raises no objection. Those circumstances are not present in this case, and there is neither a mistaken belief on the part of the squatter, nor relevant knowledge on the part of the paper title owner. With a degree of regret, therefore, I am bound to reject the Applicants’ claim to Area C by virtue of adverse possession.

 

Conclusion

18. I shall direct the Chief Land Registrar to give effect to the Applicants’ application with regard to Areas A and B as I have described them in Paragraph 2 of this Decision. I shall direct him to reject the application insofar as it relates to Area C, being the area between the line of conifers within the Applicants’ rear garden and the wooden fence along the apparent western boundary. It may be that a Land Registry surveyor should inspect the land with a view to drawing up accurate filed plans of the affected titles. Before making any final order I shall give the parties and the Land registry an opportunity to comment on the draft which is enclosed with this decision. I shall expect written responses, if any, to the form of order to be received within 21 days.

 

19. With regard to costs, it is my feeling that it would be appropriate to make no order. Both the Applicants and the Respondent have achieved something from the adjudication, there has been no outright winner. However, I shall allow the same period – 21 days – to the parties if they wish to make written submissions on the issue of costs, such submissions also to be copied to the other party. Responses may be made within 7 days thereafter. In all cases, the timetable is calculated from the date of this Decision.

 

Dated this 26^th day of June 2009

 

 

 

 

 

 

 

By Order of The Adjudicator to HM Land Registry