The Law Commission

 


PART XIV ADVERSE POSSESSION

INTRODUCTION

14.1      In the recent decision in J A Pye (Oxford) Holdings Ltd v Graham,^[1] Neuberger J, having reluctantly given judgment in favour of a claim by squatters to be entitled to some 25 hectares of land in Berkshire (a decision since reversed by the Court of Appeal on an interpretation of the inferences to be drawn from the facts^[2]), commented that—

the right to acquire title to land by adverse possession is often explained by reference to the uncertainties which sometimes arise in relation to the ownership of land, but it appears to me that, with one or two exceptions those uncertainties are very unlikely to arise in the context of a system of land ownership involving compulsory registration; the owner of the land is readily identifiable, by inspecting the proprietorship register of the relevant title at the Land Registry. In the days when land was unregistered, one can well understand that uncertainties could arise where the owner was seeking to rely upon an old conveyance; the person in possession might claim to have lost the documents which established his title, and the legislature may have concluded that arguments about what happened long ago should be avoided, and that this should be achieved by depriving the person with apparently good if somewhat ancient paper title of his ownership if the squatter could establish more than 12 years uninterrupted possession of the land. I accept that even with registered land a problem can arise over strips of land near to boundaries, as the Land Registry plans normally show general boundaries only. In this connection I welcome the joint recommendations of the Law Commission and the Land Registry (1998) (Law Com No 254, Pt X)...

A frequent justification for limitation periods generally is that people should not be able to sit on their rights indefinitely, and that is a proposition to which, at least in general, nobody could take exception. However, if as in the present case the owner of land has no immediate use for it and is content to let another person trespass on the land for the time being, it is hard to see what principle of justice entitles the trespasser to acquire the land for nothing from the owner simply because he has been permitted to remain there for 12 years. To say that in such circumstances the owner who has sat on his rights should therefore be deprived of his land appears to me to be illogical and disproportionate. Illogical because the only reason that the owner can be said to have sat on his rights is because of the existence of the 12- year limitation period in the first place; if no limitation period existed, he would be entitled to claim possession whenever he wanted the land... I believe that the result is disproportionate, because... it does seem draconian to the owner, and a windfall for the squatter that, just because the owner has taken no steps to evict a squatter for 12 years, the owner should lose 25 hectares of land to the squatter with no compensation whatsoever.^[3]

14.2      We have quoted these remarks at length, because they encapsulate the concerns that prompted the Law Commission and HM Land Registry to recommend in the Consultative Document that there should be a wholly new system of adverse possession to be applicable to registered land.^[4] In that Consultative Document we explained the justifications for adverse possession.^[5] The most important reason for it is in relation to unregistered land, where title is relative and rests ultimately on possession. We explained that—

[t]he fact that adverse possession can extinguish earlier rights to possess facilitates and cheapens the investigation of title to unregistered land. The length of title that a vendor is required to deduce is and always has been closely linked to the limitation period. Indeed, the principal reason for having limitation statutes in relation to real property appears to have been to facilitate conveyancing.^[6]

It is noteworthy that, on at least one occasion, where the courts had developed a doctrine that significantly curtailed the circumstances in which title could be acquired by adverse possession, Parliament intervened to reverse the errant doctrine.^[7] If the requirements for adverse possession of unregistered land are made too demanding, it weakens the security of title to that land. Gaps in a paper title are not infrequently cured by showing possession of the land for the limitation period.

14.3      None of these considerations apply where title is registered. As we explained in the Consultative Document—

Where title is registered, the basis of title is primarily the fact of registration rather than possession. Registration confers title because the registration of a person as proprietor of land of itself vests in him or her the relevant legal estate (whether freehold or leasehold).^[8] The ownership of the land is therefore apparent from the register. Only a change in the register can take that title away...^[9]

Indeed, the doctrine of adverse possession runs counter to the fundamental concept of indefeasibility of title that is a feature of registered title.^[10] It is only where the register is not conclusive — as is the case, for example, in relation to boundaries^[11] and short leases that are not registrable^[12] — that the conveyancing justification for adverse possession^[13] is the same as it is in relation to unregistered land. We noted in the Consultative Document that many other common law jurisdictions which have systems of title registration have either abolished the doctrine of adverse possession completely or have substantially restricted its effects.^[14] In adopting a system of adverse possession that is specific to registered land, English law will, therefore, be following a well-worn path.

14.4      The new system of adverse possession proposed in the Consultative Document was intended both to reflect the logic of title registration and to strike a more appropriate balance between landowner and squatter. It was supported in principle by 60% of those who responded on the issue.^[15] It attracted some attention in the press.^[16] J A Pye (Oxford) Holdings Ltd v Graham^[17] was just one of a number of recent, much-publicised cases in which squatters have claimed title to land of great value by virtue of 12 years' adverse possession. Some of these involved land owned by local authorities, so that the loss resulting from a successful claim has fallen on the public purse. If the reports in the press are any kind of barometer, there would appear to be considerable public disquiet with the way that the law on adverse possession presently operates. We have therefore decided to proceed with the essentials of the scheme that we proposed. Details of that scheme have been amended to take account of both the responses to the Consultative Document and issues that were thrown up during the drafting of the Bill.

14.5      The essence of the scheme is that—

(1) adverse possession of itself, for however long, will not bar the owner's title to a registered estate;

(2) a squatter will be entitled to apply to be registered as proprietor after 10 years' adverse possession, and the registered proprietor, any registered chargee, and certain other persons interested in the land will be notified of the application;

(3) if the application is not opposed by any of those notified the squatter will be registered as proprietor of the land;

(4) if any of those notified oppose the application it will be refused, unless the adverse possessor can bring him or herself within one of three limited exceptions;^[18]

(5) if the application for registration is refused but the squatter remains in adverse possession for a further two years,^[19] he or she will be entitled to apply once again to be registered and will this time be registered as proprietor whether or not the registered proprietor objects;

(6) where the registered proprietor brings proceedings to recover possession from a squatter, the action will succeed unless the squatter can establish certain limited exceptions which are consistent with those in (4) above.

There are certain particular rules for special cases and there are transitional provisions to protect the rights of squatters who had barred the rights of the registered proprietor prior to the coming into force of the legislation.

14.6      The aims of the scheme are as follows.

(1) Registration should of itself provide a means of protection against adverse possession, though it should not be unlimited protection. Title to registered land is not possession-based as is title to unregistered land. It is registration that vests the legal estate in the owner and that person's ownership is apparent from the register. The registered proprietor and other interested persons, such as the proprietor of a registered charge, are therefore given the opportunity to oppose an application by a squatter to be registered as proprietor.

(2) If the application is not opposed, however, whether because the registered proprietor has disappeared or is unwilling to take steps to evict the squatter, the squatter will be registered as proprietor instead. This ensures that land which has (say) been abandoned by the proprietor, or which he or she does not consider to be worth the price of possession proceedings, will remain in commerce.

(3) If the registered proprietor (or other interested person) opposes the registration, then it is incumbent on him or her to ensure that the squatter is either evicted or his or her position regularised^[20] within two years. If the squatter remains in adverse possession for two years after such objection has been made, he or she will be entitled to apply once again to be registered, and this time the registered proprietor will not be able to object. In other words, the scheme provides a registered proprietor with one chance, but only one chance, to prevent a squatter from acquiring title to his or her land. The proprietor who fails to take appropriate action following his or her objection will lose the land to the squatter.

(4) Consistently with the approach set out above, a registered proprietor who takes possession proceedings against a squatter will succeed, unless the squatter can bring him or herself within some very limited exceptions. It will be apparent from this summary that one of the essential features of the scheme is that it must produce a decisive result. Either the squatter is evicted or otherwise ceases to be in adverse possession, or he or she is registered as proprietor of the land.

14.7      As we have mentioned above, there are certain very limited cases in which either—

(1) a squatter's application to be registered will be successful notwithstanding the registered proprietor's objections; or

(2) he or she may successfully resist possession proceedings brought by the proprietor.

This will be so where the squatter —

(a) was otherwise entitled to the land, as for example—

(i) where he or she was a purchaser in possession who had paid the whole of the contract price; or

(ii) by application of the principles of proprietary estoppel; or

(b) had been in adverse possession of land adjacent to his or her own under the mistaken but reasonable belief that he or she was the owner of it.

The situation in (a) is self-evident, but that in (b) needs explanation. As mentioned above, the register is not normally conclusive as to boundaries.^[21] Furthermore, cases often occur where the physical boundaries of the land and the legal boundaries as they appear from the register do not coincide. A common case is where a developer lays out an estate and constructs the fences between properties otherwise than in accordance with the boundaries as they are set out on the plan on the register. In these cases, we think that the squatter, whose conduct has been perfectly reasonable, should prevail over the registered proprietor.

14.8      In the remainder of this Part, we set out in more detail the effect of the main provisions of the Bill in relation to adverse possession. The following issues are examined—

(1) the underlying principle that adverse possession does not extinguish the title to a registered estate;^[22]

(2) the right to apply for registration after 10 years' adverse possession and the circumstances in which such an application may or must succeed and when it will be rejected;^[23]

(3) the right to make a further application for registration after two more years' adverse possession where the application for registration was initially refused;^[24]

(4) the status of an indefeasible right for the squatter to be registered;^[25]

(5) the effect of the registration of a squatter in place of the registered proprietor;^[26]

(6) possession proceedings: when they will succeed and the defences that the squatter may raise;^[27]

(7) cases for which special provision has to be made, namely adverse possession of rentcharges, land held in trust and Crown foreshore;^[28] and

(8) transitional provisions.^[29]

THE EFFECT OF THE BILL

Adverse possession shall not extinguish the title to a registered estate

The governing principle

14.9      Clause 95 of the Bill gives effect to the fundamental principle of the new scheme. In relation to a registered estate in land or registered rentcharge, no period of limitation runs in relation to -

(1) actions for the recovery of land^[30] except in favour of a chargee;^[31] and

(2) actions for redemption.^[32]

As a necessary consequence, the Bill provides that title to such an estate or rentcharge cannot be extinguished under section 17 of the Limitation Act 1980.^[33] There are a number of points implicit in the fundamental principle that require explanation.

The principle applies only in relation to registered estates and rentcharges

14.10      The rationale of the new scheme is that the registration of an estate or rentcharge protects the proprietor, because the register is conclusive as to the ownership of the land. The disapplication of the limitation periods for actions to recover land is therefore confined to registered estates in land and registered rentcharges.^[34] It follows that the Limitation Act 1980 will continue to apply in certain situations where there has been adverse possession of registered land.

(1) The first is where there has been adverse possession against a leasehold estate, where the lease was granted for a term of 21 years or less prior to the coming into force of the Bill, and which therefore took effect as an overriding interest.^[35] Such a lease is not a registered estate and is treated in most (but not all) respects in the same way as unregistered land. In particular, on any assignment of such a lease, title to it is deduced in the same way as if it were unregistered.^[36] This class of case will necessarily disappear within 21 years of the Bill coming into force. This is because, under the Bill, the only leases that will take effect as overriding interests are those granted for a term of seven years or less.^[37] The title to leases of such short duration cannot be barred by adverse possession.

(2) The second concerns claims brought by licensees and tenants at will. Possession is protected against all save those who have a better right to possess.^[38] It follows that licensees^[39] and tenants at will can take proceedings to recover possession from a squatter. Once again, as such persons are not registered proprietors, the new scheme will not apply to them, and such proceedings may therefore become time-barred under the Limitation Act 1980.

(3) Thirdly, a lease may become liable to forfeiture for breach of some condition or covenant in the lease, or a right of re-entry may become exercisable in respect of a fee simple for breach of condition or on the occurrence of some event.^[40] If the right of re-entry is not exercised within 12 years of the breach or other event, the right to do so will be lost in respect of that breach or event.^[41] This right of re-entry is not an estate in land and the disapplication of section 15 of the Limitation Act 1980 does not therefore apply to it.^[42] This situation is not, in truth, one of adverse possession at all. It is simply a case where the landlord or other person having a right of re-entry has a right to determine an estate. As such it is outside our scheme and will continue to be subject to the Limitation Act 1980.

Provisions of the Limitation Act 1980 which depend on the accrual of a cause of action or the limitation period will not apply

14.11      Because the scheme that we propose breaks away from the concept of an accrual of a cause of action or the period of limitation, certain provisions of the Limitation Act 1980 which depend upon this concept will also be inapplicable under it. In particular, certain provisions in Part II of that Act (which are concerned with the extension or exclusion of ordinary time limits) will not apply.^[43] The nature of our scheme, under which the registered proprietor (and others) may object to a squatter's application to be registered, makes these provisions unnecessary.

Mortgagors in possession

14.12      Where a mortgagor is in possession, the rights of the mortgagee^[44] to recover possession or to foreclose remain subject to the provisions of the Limitation Act 1980. The reason for this is simple. A mortgagee has two sets of remedies, its personal remedies against the mortgagor for the moneys due under the mortgage, and its remedies against the property to enforce its security.^[45] In essence, the assertion of the mortgagee's proprietary rights is linked to its personal remedies to recover the moneys that are secured by the charge. Once the latter are barred then so too are the former. As a mortgage is no more than a security for moneys owed, it would be very strange if, after the mortgagee's direct rights of enforcement were time-barred, it could still enforce them against the property.^[46] The present law achieves the necessary linkage between the mortgagee's personal and proprietary rights and may be summarised as follows.

14.13      Under the Limitation Act 1980, a 12 year limitation period applies to the mortgagee's rights to recover the moneys due under the mortgage, to possession and to foreclose. The right of action accrues-

(1) as regards the right to possession, on the date of the mortgage;^[47]

(2) as regards the rights to recover the moneys due under the mortgage^[48] and to foreclose,^[49] on the date when the right to receive the money accrued, which will be the legal date for redemption.^[50]

However, in relation to each of these limitation periods, if (as normally happens) the mortgagor pays any instalments under the mortgage, the 12 year period runs afresh from that payment.^[51] It follows that, in the typical case where the mortgagor pays instalments, the limitation period will run from the date of the last instalment that he or she has paid.

14.14      We can see no reason to depart from these principles. If our scheme were to apply to a mortgagor in possession, it would lead to the result that a mortgagee's remedies to recover its security would never be extinguished,^[52] even though its rights to recover the moneys secured by the charge were time-barred. Under the Bill, the Limitation Act 1980 therefore continues to apply to claims by a mortgagee against a mortgagor in possession.^[53]

Mortgagees in possession

14.15      The position in relation to a mortgagee in possession is very different. Under section 16 of the Limitation Act 1980, once a mortgagee has been in possession of land for 12 years, the mortgagor loses his or her right to redeem the mortgage,^[54] his or her title is extinguished,^[55] and, in consequence, the mortgagee becomes the owner of the land. We consider this rule to be wrong in principle and the Bill therefore disapplies section 16 in relation to an estate in land or a rentcharge which is registered under the Bill.^[56] Our principal -but not exclusive -reasons for this are set out below.

14.16      First, it is strange that, where a mortgagee exercises its power to take possession of land, it should be treated in the same way as if it were in adverse possession. The mortgagee's possession is plainly not adverse. A mortgagee is either a tenant under a long lease (in the case of a mortgage by demise or sub-demise),^[57] or has the same rights as if it were (in the usual case of a charge by way of legal mortgage).^[58] A tenant can never adversely possess against his or her landlord while the lease subsists, because his or her possession is not adverse, but is attributable to the tenancy.^[59]

14.17      Secondly, section 16 is a relic from the days when the nature of a mortgage was very different from what it is today. Since it was first enacted in 1832,^[60] the following significant changes have occurred:

(1) Mortgages are no longer made by an outright transfer of the mortgagor's legal estate to the mortgagee, with a proviso for reconveyance on redemption.^[61] The mortgagor remains the owner of the legal estate, and the mortgage is perceived to be what it is: a charge on the land as security for a loan of money.

(2) Foreclosure – the remedy by which a mortgagee can extinguish the mortgagor's equity of redemption and become absolute owner of the land -has become virtually obsolete.^[62] One reason for this is that, since 1852, there has been a statutory power to order sale in lieu of foreclosure.^[63] Any such sale will necessarily be fairer to the mortgagor and to any other mortgagees if the property is worth more than the sum owed to the first mortgagee, because it means that the surplus will be available to the mortgagor or to any subsequent mortgagees. Section 16 of the Limitation Act 1980, operates almost as a form of statutory foreclosure, but without any possibility of a sale in lieu.

(3) A legal mortgagee has had a statutory power of sale since 1860.^[64] Indeed, a mortgagee will invariably be able to realise its security if the mortgagor is in default under the mortgage.^[65] Even in those rare cases when the power of sale is in some way excluded or deferred, it can still seek sale under the power, explained above in (2), for the court to order sale in lieu of foreclosure.^[66]

(4) Where the mortgagee does exercise its power of sale, it holds any surplus after discharge of the mortgage and any prior encumbrances and the payment of the expenses of sale, on trust for the person entitled to the mortgaged property.^[67] Claims to recover trust property are never timebarred.^[68] This leads to the paradox under the present law that, if the mortgagee simply remains in possession, it can acquire title to the mortgaged property, but if it sells the land, it will remain accountable to the mortgagor indefinitely for any surplus in the proceeds of sale.

14.18      Finally, it is not easy to see how any equivalent of section 16 could be retained under our scheme. As we have explained above,^[69] the essence of it is that the registered proprietor is given notice of the squatter's application to be registered, to which he or she may then object. That notice will be sent to the registered proprietor's address for service, which will usually be that of the property mortgaged. Where a mortgagee takes possession, the last thing that the mortgagor is likely to have on his or her mind is the need to change the address for service at the Land Registry. In practice, therefore, any notice would be served on the mortgaged premises and would, in consequence, probably never come to the attention of the registered proprietor. As a result, he or she would never have an opportunity to object to the application for registration.

The right to apply for registration after ten years' adverse possession

The prerequisites for an application: the general position

14.19      The present limitation period applicable to actions for the recovery of land is normally (but not invariably^[70]) 12 years.^[71] However, in both its Consultation Paper and subsequent Report on Limitation of Actions, the Law Commission has recommended that the period be reduced to 10 years.^[72] Although that recommendation will not apply to the adverse possession of a registered estate or rentcharge (because the present scheme will apply instead), the Law Commission and HM Land Registry considered that it should adopt the same 10 year period of adverse possession as the trigger for its new scheme.^[73]

14.20      Under the Bill and subject to what is said below at paragraph 14.24, a person may apply to be registered as the proprietor of a registered estate if he or she has been in adverse possession of that estate for the period of 10 years ending on the date of the application.^[74] As is presently the case with an application to register under section 75 of the Land Registration Act 1925, the squatter will have to prove to the registrar that he or she^[75] has been in adverse possession for the relevant period.^[76] The estate need not have been registered throughout the period of adverse possession.^[77] If, say, a squatter went into adverse possession when the title to it was unregistered, but four years later, the owner voluntarily registered it, the squatter would be able to apply to be registered after six more years of adverse possession.^[78] For these purposes,^[79] and subject to what is said in paragraph 14.23 below, adverse possession has the same meaning as it does under the Limitation Act 1980: the Bill provides that a person is in adverse possession of an estate in land, if but for Clause 95,^[80] a period of limitation under section 15 of the Limitation Act^[81] would run in his or her favour in relation to the estate.^[82] However, to satisfy the requirement of 10 years' adverse possession, the applicant, X, does not in fact have to show that she has herself been in adverse possession for that period.^[83] Under the Bill it will suffice that—

(1) X is the successor in title of an earlier squatter from whom she acquired the land, and, taken together, the two periods of adverse possession amount to 10 years;

(2) X has been in adverse possession, has herself been dispossessed by a second squatter Y, and has then recovered the land from Y. In these circumstances, she can add Y's period of adverse possession to her own to make up the necessary 10 year period.

14.21      By contrast, where squatter Y, has evicted a prior squatter, X, Y cannot add X's period of adverse possession to his own to make up the necessary 10 year period. Y is not X's successor in title, but has a freehold estate of his own by virtue of his adverse possession.^[84] He will be unable to apply to be registered until he can show 10 years' adverse possession of his own. This is a necessary concomitant of the scheme which we propose. An example will demonstrate the problems which would otherwise result. X has been in adverse possession for 9 years. Y, a second squatter, dispossesses her. If Y could add X's adverse possession to his own, he would be entitled to apply to be registered as proprietor after 1 year. If his application were successful (as it might be), it would then be necessary to make some provision by which X could recover the land from Y, notwithstanding that Y had been registered as proprietor. Under what we propose, taken together with the proposed reduction in the limitation period contained in the Law Commission's Report on Limitation of Actions,^[85] Y would not be able to apply to be registered as proprietor until he had been in adverse possession for 10 years. At the very moment that Y could first apply to be registered as proprietor,^[86] X's right to recover the land from Y would be time-barred.^[87]

14.22      The ten year period of adverse possession must be unbroken. If X, a squatter, were to abandon land after she had been in adverse possession for 7 years, and then, some time later, Y were to take adverse possession, Y could not add X's period of adverse possession to his own. Adverse possession would start afresh when Y took possession of the land. However, once a squatter has been in adverse possession for ten years, the right to apply to be registered will not necessarily be lost if he or she is subsequently evicted by the registered proprietor other than pursuant to a judgment for possession. The squatter will still be able to apply to be registered, provided that he or she does so within six months of being evicted.^[88] We consider that it would be wrong in principle for a registered proprietor to be able to deny the squatter his or her right to apply to be registered by having resort to self-help. This is because, as we explain below, there are certain limited circumstances in which a squatter will have a right to be registered, even if the registered proprietor objects to his or application to be registered.^[89] Furthermore, in those same limited circumstances, a squatter will also have a defence to any proceedings brought to recover possession of the land.^[90]

14.23      The Bill qualifies in two respects the principle^[91] that adverse possession has the same meaning as it does for the purposes of section 15 of the Limitation Act 1980. The first way in which it does so is to disapply a technical rule about the adverse possession of a reversion^[92] which is not needed under the scheme which the Bill introduces.^[93] The second way is more significant. In determining whether a period of limitation would run for the purposes of section 15 of the Limitation Act 1980, the commencement of proceedings which involve asserting a right to possession of land is to be disregarded.^[94] Under the present law, as we explain below,^[95] the commencement of proceedings stops time running under the Limitation Act 1980 for the purposes of that particular action. This principle has no relevance to our scheme, because a right of recovery is never barred by lapse of time alone.^[96]

Where no valid application to be registered can be made

14.24      Under the Bill there are four situations in which a squatter cannot make a valid application to be registered even though he or she may have been in adverse possession for 10 years. The first two are related and can be considered together.

WHERE THERE ARE POSSESSION PROCEEDINGS AGAINST THE SQUATTER THAT ARE STILL CURRENT

14.25      A squatter may not apply to be registered-

(1) at any time when he or she is a defendant in proceedings which involve asserting a right to possession of the land; or

(2) if in any such proceedings judgment for possession is given against him or her, for two years from the date of judgment.^[97]

14.26      The effect of these provisions is to prevent a squatter, who has been in adverse possession for more than 10 years, from applying to be registered as proprietor while there are current proceedings against him or her in which the registered proprietor^[98] could obtain possession of the land. That will be so in the following circumstances-

(1) at any time after proceedings been commenced and have not been struck out or discontinued; or

(2) for two years after any judgment has been obtained against the squatter in such proceedings.

As regards (2), as we explain below, any judgment obtained against a squatter who had been in adverse possession for 10 years at the time when proceedings were commenced, ceases to be enforceable after two years.^[99]

14.27      Under the present law, the commencement of proceedings against a squatter prevents time running against that squatter for the purposes of that action.^[100] The function of the two exceptions set out in paragraph 14.25 is plainly not identical, but it is somewhat similar. The effect of the exceptions is that the registered proprietor can take proceedings against the squatter without the risk that he or she might also have to fend off an application for registration by the squatter at the same time.

WHERE THE PROPRIETOR IS AN ENEMY OR HELD IN ENEMY TERRITORY

14.28      No application can be made during, or before the end of twelve months after the end of, any period in which the existing registered proprietor is for the purposes of the Limitation (Enemies and War Prisoners) Act 1945^[101] either an enemy or detained in enemy territory.^[102] This provision is designed to ensure that the protection conferred by the 1945 Act^[103] is carried through to the present Bill.

WHERE THE PROPRIETOR IS SUFFERING FROM MENTAL DISABILITY OR PHYSICAL IMPAIRMENT

14.29      The final case is more important than the previous one and it provides protection in some cases where a registered proprietor is suffering from mental disability or physical impairment. Under the Bill no application can be made by a squatter to be registered as proprietor during any period in which the existing registered proprietor is either-

(1) unable because of mental disability^[104] to make decisions about issues of the kind to which such an application for registration would give rise; or

(2) unable to communicate such decisions because of mental disability or physical impairment.^[105]

The mischief that this provision is intended to meet is an obvious one. Where a registered proprietor is under a disability covered by this provision, someone may be looking after his or her affairs, either under an enduring power of attorney or because the court has appointed a receiver under section 99 of the Mental Health Act 1983. That person may have taken steps to ensure that he or she receives any notices served on the proprietor under a disability. But in some cases that will not be the case. There is, therefore, a danger that the application to register may be successful because no one responds when the registrar serves notice under the provisions of the Bill,^[106] and the registrar is therefore obliged to register the applicant.^[107] The Bill addresses that concern and it does so whether or not some person is looking after the affairs of the person under a disability.

14.30      The protection afforded by this provision goes beyond that which applies to a person under a disability under the Limitation Act 1980.^[108] First, the time at which the person has to be suffering the disability is when squatter applies to be registered and when the registered proprietor therefore needs to be able to act to protect his or her position. It is not (as is the case under the Limitation Act 1980), the time when the cause of action accrued (in other words, when adverse possession commenced).^[109] Secondly, it protects not only those suffering from a mental disability,^[110] but also those who are so physically impaired that they cannot communicate their decisions.

14.31      There is a power for the registrar to enter a note on the register to indicate that a registered proprietor falls within the Limitation (Enemies and War Prisoners) Act 1945 or is suffering from the requisite disability or physical impairment.^[111]

Notification of the registered proprietor and others

14.32      Under the Bill, once a valid application to be registered has been made by a squatter who has been in adverse possession for 10 years,^[112] the registrar must serve notice of that application on all the persons listed below in paragraph 14.33 (in essence those who would be prejudiced if the squatter's application were successful).^[113] That notice must inform the person-

(1) of the application for registration;^[114]

(2) that he or she may serve a counter-notice on the registrar within a period prescribed by rules^[115] requiring him to reject the application unless the squatter can satisfy one of the three conditions, explained below,^[116] which will entitle him or her to be registered;^[117] and

(3) that if such a counter-notice is not served by at least one of those notified of the application, the registrar must enter the applicant as the new proprietor of the estate.^[118]

In other words, the recipient of the registrar's notice can require that the application for registration be rejected unless the squatter can bring him or herself within one of the special cases where the squatter is entitled to be registered.

14.33      The persons on whom the registrar must serve notice are-

(1) The registered proprietor.^[119] He or she is the person most likely to oppose the registration, and obviously has the power either to take possession proceedings against the squatter or to negotiate the grant of a lease or licence to the squatter.^[120]

(2) The proprietor of any registered charge.^[121] The chargee has a right to possession of the land^[122] and can, therefore, take possession proceedings against any squatter should the registered proprietor fail to do so.^[123] As we explain below, under the Bill, the registered chargee will have a powerful incentive to act to protect its security in this way.^[124]

(3) Where the squatter applies to be registered as proprietor of a leasehold estate, the proprietor of any superior registered estate.^[125] In practice, few landlords will wish to find themselves with a squatter as tenant.^[126] Although such landlords have no right to take possession proceedings against the squatter directly, many are likely to take steps to ensure that the tenant evicts the squatter.

(4) Any person who, on application to the registrar, is registered in accordance with rules as a person who is to be notified.^[127] This category is likely to comprise those who can satisfy the registrar that they have some estate, right or interest in the land that would or might be prejudicially affected if a squatter were to acquire it. Such persons might include an equitable chargee (perhaps having the benefit of a charging order) or a rentcharge owner. Once again, such persons have no right to take possession proceedings against the squatter themselves, but they may be in a position to take steps to encourage the registered proprietor to do so.

(5) Such other persons as rules may provide.^[128] There are certain bodies or persons who should be notified of an application by a squatter to be registered even though they have not registered any interest under (4) above. Indeed, the sort of persons or bodies we have in mind may have a supervisory role in relation to the property, rather than necessarily having any interest in it as such. These might include the Charity Commission in relation to land held in charitable trusts, the Church Commissioners as regards benefices, and trustees in bankruptcy in respect of land registered in the bankrupt's name.^[129] If such bodies or persons are notified of and object to the squatter's application, they can either take steps to ensure that he or she is evicted, or, where they have standing to do so, take proceedings for the recovery of the land in their own right.

Registration where no counter-notice is served

14.34      Where a notice is served by the registrar (as explained in paragraph 14.32) and no counter-notice is served on him within the time prescribed, the registrar must approve the squatter's application to be registered as proprietor of the land in place of the existing proprietor.^[130] We explain the effect of such registration below, at paragraph 14.71. One point does need to be emphasised as a result of this provision. It will be particularly important that the registered proprietor and any registered chargee should keep up to date his or her address for service.^[131]

No registration where a counter-notice is served

14.35      By contrast, where a counter-notice is served on the registrar, he must reject the application for registration by the squatter, unless he or she can establish any one of three conditions, described in the following paragraphs, which will entitle him or her to be registered.^[132] Even if the application is rejected, it is not necessarily the end of the matter, because, as we explain below, the squatter is entitled to reapply to be registered if he or she remains in adverse possession for a further two years.^[133]

Special cases: registration even where a counter-notice is served

GENERAL SUMMARY

14.36      Even if a recipient of the notice of application for registration by the squatter serves a counter-notice on the registrar, he must approve the squatter's application in three situations. Those situations are—

(1) where, under the principles of proprietary estoppel, it would be unconscionable for the registered proprietor to object to the squatter's application to be registered;

(2) where the squatter was otherwise entitled to the land; or

(3) where the squatter is the owner of adjacent property and has been in adverse possession of the land in question under the mistaken but reasonable belief that he or she was the owner of it.

As we have already indicated,^[134] in these situations, we consider that the balance of fairness plainly lies with the squatter, and he or she should prevail.

14.37      As regards the first two grounds, there is nothing whatever to prevent the squatter from taking court proceedings to establish his or her rights to the land, regardless of how long or short a period he or she has been in adverse possession. However, under the present law, where such a person has been in adverse possession of the land claimed for 12 years, he or she is entitled to be registered on the ground of adverse possession alone without the need to establish in what may be costly court proceedings his or her rights on the basis of estoppel or some other ground. In other words, the claimant can take advantage of his or her adverse possession and the comparatively simple administrative procedure of an application to register under section 75 of the Land Registration Act 1925. We did not wish to deprive such persons of a cheap and simple avenue to registration, especially as the parcels of land in dispute are often small.^[135] However, under our scheme, in addition to showing 10 years' adverse possession, it will be necessary to establish the necessary elements of estoppel or other ground in making the application for registration. That is not so under the present law: the claimant need satisfy the registrar only that he or she was in adverse possession for 12 years.

14.38      Under the judicial provisions of the Bill, which we explain more fully in Part XVI of this Report, the registrar will no longer be able to determine an application if there has been an objection to it and it is not possible to dispose of it by agreement. He must instead refer the matter to the Adjudicator.^[136] Therefore, unless the registered proprietor and any chargee agree that the squatter is entitled to be registered because he or she falls within one of the three exceptional cases mentioned in paragraph 14.36, the matter will be resolved by the Adjudicator.

ESTOPPEL

The principle

14.39      To fall within this exception the squatter applicant will have to show two distinct matters—

(1) that it is unconscionable to dispossess him or her; and

(2) that the circumstances are such that he or she ought to be registered as the proprietor.^[137]

14.40      Although these principles are stated in statutory form, they are intended to embody the equitable principles of proprietary estoppel as these have developed.^[138] The applicant will therefore have to establish that an "equity" has arisen in his or her favour. To this end, he or she will have to show that—

(1) in some way, the registered proprietor encouraged or allowed the applicant to believe that he or she owned the parcel of land in question;

(2) in this belief, he or she acted to his or her detriment to the knowledge of the proprietor; and

(3) it would be unconscionable for the proprietor to deny the applicant the rights which he or she believed that he or she had.

When a claimant establishes an equity, that is no more than an inchoate right. It is not a defined property right, but merely gives the claimant a right to go to court to seek relief. The court has a discretion as to how to give effect to that equity, and it will ascertain what constitutes "the minimum equity" to do justice to the claimant.^[139] There is a wide range of relief which it may give.^[140] At one extreme it may order the landowner to convey the freehold to or grant some right over his or her land to the claimant.^[141] At the other, it may order the landowner to compensate the claimant for the detriment which he or she has suffered,^[142] or merely restrain the owner from enforcing his or her strict legal rights against the claimant.^[143]

14.41      As we have explained above,^[144] it will almost always fall to the Adjudicator to resolve a claim by a squatter that he or she is entitled to be registered because an equity by estoppel has arisen in his or her favour. Because the Adjudicator must give the applicant no more than the minimum necessary to do justice,^[145] there will inevitably be cases where the Adjudicator considers that, although the squatter has established an equity, it would be over-generous to grant him or her the registered estate.^[146] Under his powers of determination,^[147] he will then decide how effect should be given to that equity and he is expressly empowered to grant the applicant some less extensive form of relief.^[148] The Bill provides that if, on any appeal from the Adjudicator's decision,^[149] in a case arising out of an application by a squatter to be registered as proprietor,^[150] the court determines that it would be unconscionable for the registered proprietor to seek to dispossess the applicant, but the circumstances are not such that the applicant ought to be registered as proprietor, it must determine how best to satisfy the applicant's equity.^[151] Examples

14.42      It may be helpful to give examples of the typical kinds of case in which this exception is likely to be in issue.

(1) 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.

(2) Where neighbours have entered into an informal sale agreement for valuable consideration by which one agrees to sell the land to the other. The "buyer" pays the price, takes possession of the land and treats it as his own. No steps are taken to perfect his or her title. There is no binding contract either because the agreement does not comply with the formal requirements for such a contract,^[152] or, once electronic conveyancing is fully operative, because the agreement has not been protected on the register by means of a notice.^[153] The "buyer" discovers that he or she has no title to the land. If he or she been in possession of it for 10 years he or she can apply to be registered as proprietor.

In each of these cases, an equity arises by estoppel, and it would be just to give effect to that equity by registering the squatter as owner of the registered estate in place of the existing proprietor.

SOME OTHER RIGHT TO THE LAND

14.43      This exception^[154] is more straightforward. From time to time there may be cases where the squatter has some other right to the land that would entitle him or her to be registered as proprietor irrespective of any period of adverse possession. Two examples may be given by way of illustration.

(1) The claimant is entitled to the land under the will or intestacy of the deceased proprietor.

(2) The claimant contracted to buy the land and paid the purchase price, but the legal estate was never transferred to him or her. In a case of this kind, the squatter-buyer is a beneficiary under a bare trust, and, as such, can be in adverse possession.^[155] In such cases, the Adjudicator will be entitled to order that the claimant be registered as proprietor even though the existing registered proprietor objects.

REASONABLE MISTAKE AS TO BOUNDARY

The principle

14.44      The third exception^[156] has proved to be the most difficult to define.^[157] It will apply only where the land which is claimed by the squatter is adjacent to land which he or she owns^[158] and the boundary between the two properties is a general boundary^[159] and has not been fixed.^[160] To fall within the exception the squatter will have to prove that—

(1) there has been a period of adverse possession of at least 10 years^[161] by the applicant or his or her predecessor in title ending on the date of the application;

(2) for at least 10 years of that period, the applicant or his or her predecessor in title reasonably believed that the land to which the application relates belonged to him or her;^[162] and

(3) the estate to which the land relates was registered more than one year prior to the date of the application.^[163]

At some point prior to making the application to be registered, the squatter will have become aware that he or she is not in fact the owner of the land in issue. It is likely to be this realisation that prompts the application. It follows that the period of adverse possession that will be needed will, in practice, be more (even if only marginally) than 10 years.

14.45      The reason for the requirement in paragraph 14.44(3), above, is as follows. As the law stands, title to unregistered land can normally be acquired by 12 years' adverse possession.^[164] Under this third exception in the Bill, title to registered land may, however, be acquired after 10 years' adverse possession. There might be a case where—

(1) a squatter had been in adverse possession of a parcel of unregistered land for more than 10 but less than 12 years;

(2) the title to the land was then registered; and

(3) the requirements of this third "reasonable mistake as to boundary" exception were otherwise met.

The squatter would not have barred the title of the landowner prior to the registration of the title, but, if no special provision were made, would be entitled to apply to be registered as proprietor under this third exception as soon as the owner registered his or her title. In other words, the owner would have no opportunity to evict the squatter. The requirement that the estate to which the land relates was registered more than one year prior to the date of the application^[165] overcomes this difficulty. If the limitation period for unregistered land is reduced from 12 years to 10 years as the Law Commission has recommended,^[166] the requirement in paragraph 14.44(3) would no longer be needed and could be repealed. It should be noted that the problem explained in this paragraph is confined to the "reasonable mistake as to boundary" exception and does not apply to the other two special situations where a squatter is entitled to be registered as proprietor even though the registered proprietor objects.^[167] This is because, in those other two situations, the squatter is entitled to be registered as proprietor of the land, regardless of his or her adverse possession.

When will this exception be invoked?

14.46      Before explaining the various elements set out in paragraph 14.44, it is necessary to illustrate the types of case which this exception is intended to meet.

(1) The first is where the boundaries as they appear on the ground and as they are according to the register do not coincide. This may happen because-

(a) the physical features (such as the position of trees or other landmarks) suggest that the boundary is in one place but where in fact, according to the plan on the register, it is in another;

(b) when an estate was laid down, the dividing fences or walls were erected in the wrong place and not in accordance with the plan lodged at the Registry.

(2) The second is where the registered proprietor leads the squatter to believe that he or she is the owner of certain land on the boundary when in fact it belongs to the registered proprietor. Where the squatter has acted to his or her detriment in reliance upon the proprietor's representation, he or she may be able to rely upon the estoppel exception explained above.^[168] However, there will be cases where there is no such detrimental reliance, and the applicant will, therefore, have to rely on this third exception.

14.47      The existence of this third exception is likely to make it easier to define the boundaries between properties. This could be relevant where there is an application to fix a boundary^[169] or indeed whenever and for whatever reason, it becomes desirable to locate the line of the boundary more precisely. If it is known that X has been in possession of a parcel of land on a boundary for at least 10 years and reasonably believed him or herself to be the owner of that land, X can safely be assumed to be the owner of the land. The elements that have to be established to fall within the exception follow from this.

What has to be established to fall within the exception — factual elements

14.48      The factual elements of this third exception that have to be established are twofold. First, the land which is claimed must be adjacent to land which belongs to the squatter applicant.^[170] It follows that, if a person entered into adverse possession of another's land under the mistaken belief that he or she owned it, this exception could not be invoked unless the squatter owned the adjoining land.^[171]

14.49      Secondly, the line of the boundary must be one which has not been exactly determined.^[172] Rules will be made under Clause 60(3) to allow for such a determination. As we have explained earlier,^[173] it is possible to have boundaries fixed under the present law,^[174] though it is extremely rare for it to happen and the process can be very costly. It is anticipated, however, that with improved mapping techniques, such determinations may become much more common. Where a landowner has gone to the trouble of having a boundary fixed under this procedure, then the register is conclusive as to the boundary and the justification for the third exception is, therefore, absent. One very good reason why a registered proprietor might wish to have the boundary exactly determined would be where the legal boundary of the land and its apparent physical boundaries did not coincide.

What has to be established to fall within the exception — the mental element

14.50      To fall within the third exception, the squatter will have to demonstrate that, for a period of 10 years, either he or she or his or her predecessor in title reasonably believed that the land to which the application relates belonged to him or her.^[175] At first sight this may seem to be a very demanding requirement. In practice, it is unlikely to be.

14.51      Under the present law and under the Bill,^[176] any squatter will have to show the necessary animus possidendi to establish that he or she was in adverse possession. The animus that is required is "an intention for the time being to possess the land to the exclusion of all other persons, including the owner with the paper title".^[177] If a person is in adverse possession of land under the mistaken belief that he or she owns it, that necessarily satisfies the animus possidendi for adverse possession.^[178] In other words, the animus that will be required to establish the third exception is no more than one specific form of the animus possidendi that is needed to satisfy the requirements of adverse possession.

14.52      If X has been in possession of a parcel of land for 10 years or more in circumstances where the physical boundaries of the land suggest that it belongs to X, that fact of itself will, in practice, raise a rebuttable presumption that X had the animus needed to establish the third exception. It will then be incumbent on the registered proprietor to show that X knew or ought to have known that the parcel of land did not belong to him or her.^[179]

The right to make a further application for registration after two more years' adverse possession

Introduction

14.53      As we have explained above,^[180] the essence of the scheme which we propose is that it should produce a decisive result. It is therefore necessary to make provision as to what is to happen after a squatter has applied to be registered as proprietor and his or her application has been rejected because the proprietor or other interested person served a counter-notice and none of the special exceptions was applicable. The following matters therefore need to be apparent-

(1) whether the squatter can re-apply to be registered if his or her adverse possession continues and if so when; and

(2) what steps should be taken by the registered proprietor (or other interested person, particularly a registered chargee) after serving a counter-notice.

14.54      In the Consultative Document,^[181] we identified the most important reasons why English law has a doctrine of adverse possession. The most important of these reasons — that it facilitates unregistered conveyancing, where title is relative and ultimately rests on possession^[182] — does not apply to registered land. Indeed, it was for that reason that we devised a new system of adverse possession which was compatible with the principles of registration. However, there are other justifications for adverse possession that do apply to registered land. In particular—

(1) adverse possession is one facet of the law of limitation, the policy of which is to protect defendants from stale claims and to encourage claimants not to sleep on their rights;^[183] and

(2) if possession and ownership become wholly out of kilter, it renders land unmarketable.^[184]

14.55      The essence of our scheme is that registration should protect a registered proprietor of an estate or charge against an application for registration by a squatter in the sense that it gives him or her the chance to stop that application and then to take steps to terminate that squatter's adverse possession. However, if the registered proprietor of the estate or of a charge over that estate fails to take steps to do this within a reasonable period, the other policy objectives outlined in paragraph 14.54 come into play. As we explained in the Consultative Document— It is important that the marketability of land should be upheld, and if a registered proprietor fails to take steps to vindicate his or her title within two years of being given a clear warning to do so, we consider that it should be extinguished and that the squatter should obtain the land. Were this not so, possession and title could remain permanently out of kilter.^[185]

14.56      Two years is a reasonable period to enable the registered proprietor or registered chargee^[186] to take steps either to evict the squatter (or at least to start proceedings to do so) or to regularise his or her possession by negotiating a bilateral agreement under which he or she can stay as the proprietor's tenant or licensee.^[187] It is possible that even where a squatter's possession ceases to be adverse because he or she becomes the tenant or licensee of the registered proprietor, it may, once again, become adverse at some future date.^[188] If so, there is no reason why the squatter should not apply to be registered as proprietor once ten years' adverse possession have elapsed.

The right to make a further application to be registered

14.57      The Bill makes provision by which, where the registrar has rejected an application^[189] by a squatter to be registered as proprietor, the squatter may reapply in the three situations explained in the following paragraphs. In each case, the registrar must register the applicant as proprietor in place of the existing proprietor if he or she establishes those circumstances.^[190]

WHERE THE SQUATTER REMAINS IN ADVERSE POSSESSION TWO YEARS AFTER THE REJECTION OF HIS APPLICATION TO BE REGISTERED

14.58      The first is if the squatter was in adverse possession from the date of his or her application to be registered until the end of the period of two years from the date on which his or her application was rejected.^[191] This is likely to be the commonest situation. The registered proprietor^[192] having objected to the squatter's application for registration, fails thereafter to take any steps either to evict the squatter (by commencing possession proceedings) or otherwise to regularise his or her possession so that it is no longer adverse. This situation will also cover the case where the registered proprietor has commenced proceedings which have been discontinued or struck out,^[193] all within the two year period.^[194]

WHERE THE PROPRIETOR OBTAINS A JUDGMENT AGAINST THE SQUATTER BUT FAILS TO ENFORCE IT WITHIN TWO YEARS

14.59      The second situation in which the squatter is entitled to be registered is where the registered proprietor of the estate or some charge does commence possession proceedings against the squatter within two years of the rejection of the squatter's application, but then fails to take any steps to enforce the judgment within two years of obtaining it.^[195] To establish this situation, the squatter will have to satisfy the registrar that-

(1) he or she has been in adverse possession since the date of his or her application to be registered;^[196]

(2) the registered proprietor of the estate or of a charge over it has obtained judgment for possession against the squatter;

(3) a further two years have elapsed since the date of that judgment; and

(4) the judgment has not been enforced against the squatter.^[197]

The Bill provides that, in those circumstances the judgment for possession ceases to be enforceable.^[198]

14.60      The reasons for this second situation are fairly obvious. If the procedure is to bring about a decisive result,^[199] it must not be possible to circumvent it by the simple expedient of bringing an action for possession and then not troubling to enforce it.^[200] It should be noted that, but for these provisions, the registered proprietor of the estate or charge would have six years either to bring an action on the judgment for possession^[201] or to execute the judgment without the leave of the court.^[202] There is, therefore, an incentive for the registered proprietor of the estate or charge to ensure that any judgment for possession is enforced promptly.

WHERE PROCEEDINGS ARE DISCONTINUED OR STRUCK OUT MORE THAN TWO YEARS AFTER THE SQUATTER'S APPLICATION WAS REJECTED

14.61      The need to bring about a decisive result also underlies the third situation. This time, the registered proprietor of the estate or charge—

(1) commences proceedings against the squatter within two years of the rejection of the squatter's application for registration; but

(2) they are discontinued or struck out after the two year period referred to in (1) has elapsed.

In these circumstances, if the squatter has remained in adverse possession since he or she first applied to be registered as proprietor, he or she is entitled to apply once again to be registered.^[203]

14.62      Under the Civil Procedure Rules—

(1) discontinuance is a formal step by which an action is brought to an end;^[204] and

(2) the court has an unqualified discretion to strike out a case where there is a failure to comply with the time limits laid down by those Rules.^[205]

As regards (2), the court's case management powers should mean that the long delays that occurred prior to the introduction of the Rules should be far less frequent. Occasions in which it will be appropriate to strike out for delay should therefore be less common.^[206] Nevertheless, we anticipate that, in cases where a squatter's application to be registered has been rejected, a court would be likely to take a strict view of the need to comply with time limits laid down in the Civil Procedure Rules in any possession proceedings then brought by the registered proprietor or chargee. The purpose of our scheme is to bring about a decisive resolution as to the ownership of the land in dispute.^[207] In fairness to the squatter, that resolution should also be expeditious.^[208]

The status of a right to be registered

14.63      There are a number of situations under the Bill where a squatter acquires an indefeasible statutory right to be registered as proprietor in place of the registered proprietor. Some of these have been mentioned above, and others are explained below in relation to possession proceedings. The situations that have already been explained are where—

(1) no counter-notice is served in response to a squatter's application to be registered as proprietor;^[209]

(2) the squatter establishes any one of the three exceptional cases in which he or she is entitled to be registered even though the registered proprietor (or other person) serves a counter-notice;^[210]

(3) the squatter becomes entitled to re-apply to be registered as proprietor, even though his initial application was rejected.^[211]

There will also be an entitlement to be registered where the squatter has a defence to any possession proceedings that are brought against him or her, or where the squatter barred the rights of the registered proprietor prior to the coming into force of the Act. These are explained below. ^[212]

14.64      The squatter's statutory right to be registered is, necessarily, a proprietary right. This is because it is a right to have a legal estate vested in him or her. Not only can it be asserted by the squatter against the registered proprietor, but if that proprietor transfers the registered estate to, or creates proprietary rights in favour of, a third party, it may be binding on that person as well. This will be the case where the squatter remains in actual occupation of the land and therefore has an overriding interest.^[213]

The effect of registration Introduction

14.65      A squatter may be registered as proprietor in place of the registered proprietor because—

(1) no counter-notice has been served on the registrar in response to his or her application to be registered;^[214]

(2) there has been such a counter-notice, but the squatter—

(a) falls within one of the three exceptional cases which entitle him or her to be registered notwithstanding;^[215] or

(b) is able to re-apply to be registered, because he or she has remained in adverse possession for the relevant period since the unsuccessful application for registration was made.^[216]

To appreciate the effect of the registration of a squatter under the Bill, it is necessary to explain the legal background. Transitional provisions for cases where a squatter had barred the rights of the registered proprietor prior to the coming into force of the Bill are explained below. ^[217]

The legal background

14.66      Where title to land is unregistered, and the owner's title is extinguished by a squatter's adverse possession,^[218] the squatter has the land not by any "Parliamentary conveyance" of the paper owner's legal estate,^[219] but by virtue of the independent fee simple which every squatter has from the moment that he or she enters into adverse possession.^[220] This is so, even though the title barred by such adverse possession is merely a leasehold estate.^[221] The results of this are entirely logical, but their effect can appear strange. If a squatter has barred the estate of a leaseholder, the lease still remains in some kind of notional existence until it expires, is forfeited by the landlord for breach of covenant or is surrendered by the tenant whose rights the squatter has extinguished.^[222] Although the squatter is neither bound by nor able to enforce the covenants contained in that lease, he or she must, in practice, submit to its obligations.^[223] If he or she does not, the landlord may forfeit the lease^[224] and can then recover the land from the squatter. This is because the estate against which the squatter had adversely possessed has terminated and the landlord is therefore entitled to immediate possession.

14.67      Where title is registered, the matter is very different. If a squatter has been in adverse possession for the limitation period, the Limitation Act 1980 cannot operate in the same way as it does where title is unregistered, and extinguish the proprietor's legal title.^[225] While a person is the registered proprietor the legal estate necessarily remains vested in him or her. What happens instead is that the registered proprietor holds the estate on a bare trust for the squatter.^[226] What the incidents of this trusteeship might be "are far from clear" and have yet to be judicially explored.^[227] It has now been decided that the squatter is entitled to be registered as proprietor in place of and as successor in title to the registered proprietor.^[228] The registration does, in other words, operate as a "Parliamentary conveyance". It appears that the independent fee simple that the squatter had by virtue of his or her adverse possession is in some way "nullified".^[229] Because the squatter is successor in title to the former registered proprietor, it means (for example) that where the registered estate is leasehold, the benefit and burden of the covenants in the lease will pass. The squatter will therefore be directly subject to the burdens of the covenant but will, equally, be able to enforce covenants against the landlord.

The recommendations in the Consultative Document and the response on consultation

14.68      In the Consultative Document,^[230] we proposed the following changes in the law—

(1) the trust should no longer be used as a means of giving effect to the rights of an adverse possessor who had barred the estate of the registered proprietor;

(2) where an adverse possessor was entitled to be registered as proprietor, he or she should be registered with an absolute, possessory or qualified title;

(3) where the title barred was that of a tenant under a lease—

(a) the adverse possessor should normally be registered with a qualified freehold title;

(b) the qualification should be that he or she took subject to the estate or interest of any person or persons entitled on the termination of the lease; and

(4) where the title barred was that of a tenant under a lease, the freehold (or other) title of any person entitled to the reversion on that or any superior lease should not be closed or otherwise affected by registration of the adverse possessor with a freehold title.

14.69      The effect of these recommendations would have been to bring the effect of adverse possession in registered land in line with those applicable to unregistered land. However, our recommendations were finalised before the judgment in Central London Commercial Estates Ltd v Kato Kagaku Co Ltd^[231] had been given: the case came out as we were about to go to press. We did not, therefore, have time to give full consideration to its effects. It was clear from the responses to consultation, that although the logic of what we proposed was understood,^[232] the result in the Kato decision was widely supported. The reason for this was that the decision accorded with expectations and produced an outcome that was neither artificial nor technical.^[233] Thus, for example, if a person adversely possesses against a leaseholder, he or she expects to acquire that person's lease with the rights and burdens that go with it. In the light of this, we reconsidered our recommendations and took the decision in Kato as our guide.

The provisions in the Bill

NO TRUST

14.70      The Bill abandons the device of the trust that is employed in the Land Registration Act 1925^[234] as a means of giving effect to the rights of squatters, even under the transitional provisions.^[235] We criticised the device of the trust in the Consultative Document as being unnecessary.^[236] On consultation, not only was our view unanimously endorsed, but we also received some very helpful comments from senior members of the Chancery Bar about the problems to which the trust could give rise. As we have explained, the circumstances in which a squatter will be entitled to be registered as proprietor under the Bill will be very limited.^[237] Where there is such a right, the squatter will be adequately protected against third parties provided that he or she is in actual occupation of the land in question. His or her proprietary rights^[238] will then constitute an overriding interest.^[239]

THE SQUATTER IS SUCCESSOR IN TITLE TO THE PREVIOUS PROPRIETOR

14.71      When a squatter's application for registration is successful for any of the reasons explained above,^[240] the registrar will register him or her as the new proprietor of the estate against which he or she adversely possessed.^[241] The squatter will, therefore, be the successor in title to the previous registered proprietor.^[242] The fee simple absolute in possession which the squatter has hitherto had by virtue of his or her adverse possession will be expressly extinguished.^[243]

14.72      Registration of the squatter as proprietor will carry with it the extinction of any claims that the former registered proprietor might have had against the squatter for damages for trespass or to recover rent. This is by analogy with the rule^[244] applicable to cases where title to land is extinguished by adverse possession under section 17 of the Limitation Act 1980—

When title to land is extinguished by the statute, the rights which that title carried must also be extinguished.^[245]

The claim to mesne profits or rent is dependent on the claimant showing that he or she was entitled to possession as against the squatter. Once the squatter has been registered, the former registered proprietor is unable to do that.^[246]

14.73      As a general principle,^[247] the registration of the squatter as proprietor will not affect the priority of any interest affecting the registered estate.^[248] He or she will, therefore, take the land subject to the same estates, rights and interests that bound the previous proprietor.

REGISTRATION OF THE SQUATTER AND THE EFFECT ON REGISTERED CHARGES

14.74      To this general principle there is one significant exception. We have explained above that, where a squatter applies to be registered, not only the registered proprietor but also any registered chargee will be given the opportunity to object.^[249] Furthermore, if objection is made, a registered chargee is entitled to take possession proceedings against the squatter to recover the land (even if the proprietor of the registered estate does not) because, as mortgagee, it has a right to possession of the land.^[250] Given that the registered chargee has the same opportunity and right as the registered proprietor to prevent the squatter from acquiring title to the land by adverse possession, any squatter who is registered under the relevant provisions of the Bill^[251] should take the land free from the charge. The Bill so provides.^[252] The registered chargee will not lose its charge if the squatter's application to be registered succeeds notwithstanding the objection by the registered proprietor or the registered chargee. This will be the case where the squatter shows that he or she falls within one of the three exceptional situations, explained above,^[253] where this may happen.^[254]

14.75      The policies that underlie this exception are twofold. First, as is mentioned in paragraph 14.74, a registered chargee is as well placed as the registered proprietor to stop the squatter from acquiring title to the registered estate. It would be illogical if the registered proprietor lost his or her estate, but the registered chargee could continue to be able to assert its charge against the squatter. Secondly, it means that there is a "clean break". The squatter acquires the land unencumbered by any registered charge. This will necessarily facilitate any dealings which he or she may wish to make with the land, and so promote one of our aims,^[255] namely, that the land should remain in commerce,^[256] whether the title to the land is retained by the registered proprietor or is acquired by the squatter.

WHERE THE SQUATTER WILL BE BOUND BY CHARGES

14.76      There will be rare cases, however, where a squatter is bound by a charge over land. That will be so in two situations. The first is where the squatter is registered as proprietor notwithstanding that the registered proprietor or chargee has objected, because the facts fall within one of the three exceptions explained above.^[257] Even in some of these cases, the squatter's independent right that justifies his or her registration as proprietor will take priority over the registered charge so that he or she will in fact take free of it.^[258] The second situation is where the charge is not a registered charge, but is (for example) a charging order. Once again, such a charge will not necessarily bind the squatter: his or her independent right may precede and therefore take priority over it.^[259] Where a squatter is bound by a charge, a practical problem can arise, and we have concluded that the law should be changed to deal with it as set out in the following paragraphs.

APPORTIONMENT

14.77      Under the present law, where there is a charge over a parcel of land, part of which has been acquired by a squatter by adverse possession, that charge will be binding on the squatter.^[260] However, if the squatter wants to redeem that mortgage in order, say, to sell the land, he or she will have to pay the full amount of the debt. This is because-

the general rule applies that anyone entitled to redeem even if in right of part of the mortgaged property, can do so only upon payment of the full amount of the debt and the interest secured.^[261]

14.78      The squatter who pays the charge on the whole will be subrogated to the mortgage in so far as it relates to the other land of the mortgagor. This is on the principle that "where a third party pays off a mortgage he is presumed, unless the contrary appears, to intend that the mortgage shall be kept alive for his own benefit".^[262] However, that right of subrogation is likely to be of little practical assistance to a squatter who has, say, acquired title by adverse possession to a small portion of a large estate^[263] that is mortgaged for a substantial sum. It will mean that the portion acquired by adverse possession will in practice be unsaleable. This conflicts with our aim of seeking to ensure that land remains in commerce. If, under our scheme, a squatter does manage to acquire title to the land (which is not likely to be very often), we wish to ensure that he or she is in a position to dispose of the land freely.

14.79      To meet this concern, the Bill makes provision by which, where a squatter is registered as proprietor under our scheme, but the land in question is subject to a charge that is binding on him or her,^[264] he or she may require the chargee to apportion the charge.^[265] Apportionment is to be on the basis of-

(1) the respective values of the parcels of land subject to the charge; and

(2) the amount of the mortgage debt at the time when the squatter requires the chargee to make the apportionment.^[266]

14.80      There is, inevitably, a somewhat arbitrary element in this approach. The amount of the debt may fluctuate if, for example, the mortgage secures an overdraft on a running account. There will, in such a case, be an element of fortuity as to the date when the squatter applies for an apportionment, particularly as he or she is unlikely to be aware of the state of accounts between the mortgagee and the mortgagor. However, it is not easy to see on what other basis any apportionment could be made.

14.81      The person who requires the apportionment is entitled to have his or her estate discharged from the charge if he or she pays the amount apportioned to that estate together with the chargee's costs in making the apportionment.^[267] On payment, the liability of the mortgagor to the mortgagee will be reduced accordingly.^[268]

Possession proceedings

Introduction

14.82      In many cases, the issue of whether a squatter has acquired title to registered land by adverse possession does not arise on application by that squatter to be registered as proprietor. It is raised instead in possession proceedings brought by the registered proprietor (or by a registered chargee^[269]) to recover the land. It is therefore necessary to ensure that, in relation to such proceedings, the position of a squatter mirrors that which applies in relation to an application for registration.

The general rule: the registered proprietor is entitled to possession as against the squatter

14.83      The general rule is, therefore, that if the registered proprietor or registered chargee brings proceedings for the recovery of land in the possession of a squatter, those proceedings will succeed, regardless of how long the squatter has been in adverse possession. Under our scheme, as we have explained, the rights of the registered proprietor are not barred by lapse of time.^[270] To this general rule there are, necessarily, exceptions.

Exceptions: defences to possession proceedings

DEFENCES WHICH ARE UNCONNECTED WITH THE SQUATTER'S ADVERSE POSSESSION

14.84      In any possession proceedings, a squatter who has a defence to the action that is unconnected with his or her adverse possession, will be able to rely upon it just as he or she can now. ^[271] In other words, if the squatter has some independent right to possession of the land, he or she is entitled to raise it by way of defence. If, for example, he or she had entered into possession under a contract to purchase the land and had paid the purchase price, so that the registered proprietor held the land on a bare trust for him or her, that would, as now, be a defence to possession proceedings brought by the proprietor.^[272] Similarly, if the squatter had an equity arising in his or her favour by proprietary estoppel, he or she could raise that equity as a defence in possession proceedings.^[273]

OTHER DEFENCES

14.85      The squatter will have certain new defences under the Bill that are connected with his or her adverse possession. These mirror the grounds on which he or she will be entitled to be registered as proprietor.

Reasonable mistake as to boundary

14.86      First, it is to be a defence to possession proceedings that the squatter had been in adverse possession of land adjacent to his or her own for 10 years under the mistaken but reasonable belief that he or she was the owner of it, and was entitled to be registered as proprietor of it under Schedule 6, paragraph 5(4).^[274]

Where the squatter has become entitled to be registered even though his or her application to be registered was rejected

14.87      Secondly, as we have explained, there will be situations where a squatter, who had been in adverse possession for 10 years and whose application to be registered as proprietor under Schedule 6, paragraph 1, has been rejected, nonetheless becomes entitled to be registered because-

(1) neither the registered proprietor nor the registered chargee took steps to terminate the squatter's adverse possession within two years of that rejection and during that period he or she remained in adverse possession;^[275]

(2) although the proprietor or chargee obtained a judgment against the squatter he or she failed to enforce it within two years;^[276]

(3) although the proprietor or chargee brought possession proceedings, these were discontinued or struck out more than two years after the squatter's application had been rejected.^[277]

If, in any of these situations, the registered proprietor or a registered chargee were to bring proceedings (or, as the case may be, fresh proceedings) for possession, the squatter would have a defence to them.^[278] In such circumstances, the court would be required to order the registrar to register the squatter as proprietor of the estate in respect of which he or she has been in adverse possession.^[279] Furthermore, as regards situation (2) above, the Bill renders any judgment unenforceable two years after it was obtained.^[280]

Special cases

14.88      There are three special cases of adverse possession for which the Bill makes provision, namely rentcharges, trusts and Crown foreshore.

Rentcharges

14.89      Under the provisions of the Limitation Act 1980,^[281] the rights of an owner of a rentcharge^[282] are barred in two cases^[283]-

(1) Where no rent is paid for 12 years. The consequence of this is that the rentcharge is then extinguished.

(2) Where the rent is paid to a third party for 12 years.^[284]

In such a case, the rentcharge can still be enforced against the land. However, the previous owner's title to the rentcharge is extinguished and the third party becomes entitled to it instead.

14.90      Under the Bill, it is intended to make provision by rule which will apply to rentcharges the scheme that has been explained in this Part, with such modifications and exceptions as those rules may provide.^[285] This is considered to be the most appropriate way of dealing with rentcharges for the following reasons. First, the necessary provisions are likely to be technical and of a length that is disproportionate to their comparative unimportance. Secondly, the incidence of rentcharges tends to be rather localised.^[286] Thirdly, most rentcharges will terminate in 2037,^[287] which, given the infrequency with which statutes on property law tend to be revisited, may occur within the lifetime of the present Bill. Trusts ADVERSE POSSESSION BY A STRANGER OF LAND HELD IN TRUST

14.91      The application of the new scheme to land held in trust^[288] has caused us some difficulty.^[289] Under the present law, equitable interests under trusts as well as legal estates may be barred by adverse possession.^[290] However, the legal estate of the tenant for life or the trustees of land (as the case may be) is not extinguished by adverse possession until all the equitable interests under the trust have been successively barred.^[291] Where there are successive interests under the settlement or trust, the squatter must therefore bar each equitable interest seriatim before he or she can claim the legal estate. In accordance with this rule, the registrar will not register as proprietor^[292] a squatter who has adversely possessed against a tenant for life under the Settled Land Act 1925.^[293] It is only where the registrar is satisfied that all beneficial interests under the settlement have been barred that the squatter will be so registered.

14.92      The manner in which the Bill deals with the adverse possession of registered land that is held in trust is necessarily different from the approach adopted in the Limitation Act 1980 because it rests on different principles.

(1) The essence of the new scheme of adverse possession in the Bill is that a squatter can apply to be registered as proprietor of a registered estate in place of the existing registered proprietor, and will be registered in the limited circumstances that have been described in this Part.

(2) Because the effluxion of time does not of itself have any effect, there can be no concept in our scheme of the barring of the rights of those with merely equitable interests in land.

(3) Where a squatter is registered as proprietor under the scheme, it is with the same estate as, and as successor in title to, the previous registered proprietor.^[294]

However, the solution adopted in the Bill shares the same objective as the provisions of the Limitation Act 1980, namely, that where there are successive interests, adverse possession by a squatter should not prejudice the rights of beneficiaries who are not yet entitled in possession.

14.93      Under the Bill, for the purposes of our scheme on adverse possession,^[295] a squatter will not be regarded as being in adverse possession at any time when a registered estate is held in trust, as long as there are successive interests in the land. It is only where the interest of each of the beneficiaries in the estate is an interest in possession that a squatter can commence such adverse possession.^[296] The operation of this provision can best be illustrated by an example.

Land is held on a trust of land for A for life, thereafter for B for life, thereafter for C absolutely. S, a squatter goes into adverse possession of the land during A's lifetime and remains there. For as long as either A or B are alive, S will be unable to apply to be registered as proprietor of the land under Schedule 6, paragraph 1.^[297] Indeed, it is only 10 years after C's interest has fallen into possession^[298] that S can make such an application. This is because S is not regarded as being in adverse possession for the purposes of Schedule 6 until C, the remainderman, becomes entitled to the land. It follows that S will have no defence under the Bill^[299] to any possession proceedings brought by the trustees during the lifetimes of A and B, or ten years thereafter.

14.94      The approach adopted in the Bill will make it very difficult for a squatter to acquire title to land held on trust for successive interests. However, it is not easy under the present law. The effect of the provisions of the Limitation Act 1980 is that although S might bar A's equitable interest after 12 years' adverse possession, B's would not be barred until 12 years after S took adverse possession against A or six years after B's interest fell into possession on A's death, whichever was later.^[300] Similarly, C's interest — and the trustees' legal estate^[301] — would not be extinguished until 12 years after S took adverse possession against B^[302] or six years after C's interest fell into possession on B's death, whichever was later. The difficulty which the squatter faces under both the Limitation Act 1980 and the Bill is an inevitable consequence of the need to protect those with future interests against squatters.

ADVERSE POSSESSION BY A TRUSTEE OR BENEFICIARY OF LAND HELD IN TRUST

14.95      Under the Limitation Act 1980—

(1) there is no limitation period applicable to claims by a beneficiary to recover trust property from a trustee;^[303] and

(2) the possession of a beneficiary under a trust of land or settlement is—

(a) never adverse to that of the trustee or trustees^[304] unless and until he is absolutely entitled to the land under the trust; and

(b) never adverse to that of any other beneficiary under the trust.^[305]

14.96      The practical effect of these provisions is transposed into the scheme of the Bill. In other words, neither a trustee nor a beneficiary (other than a beneficiary who is absolutely entitled) will ever be able to—

(1) apply to be registered as proprietor under Schedule 6, paragraph 1; or

(2) resist proceedings to recover possession.

This is because neither would be in adverse possession for the purposes of Schedule 6 of the Bill.^[306]

Crown foreshore

14.97      It is necessary in the Bill to make special provision for the foreshore which belongs to the Crown.^[307] This may seem puzzling because, at present, little if any such land is likely to be registered land. Most of the foreshore is held by the Crown in demesne, in other words in its capacity as paramount feudal lord^[308] and not for an estate in fee simple. We explain more fully elsewhere in this Report that—

(1) because only an estate can be registered, the Crown cannot be registered as proprietor of land that it holds in demesne;^[309] but

(2) the Bill makes provision by which the Crown may grant to itself a fee simple out of land held in demesne in order to register it.^[310]

In this way it will become possible for the Crown to register Crown foreshore. We understand from our discussions with the Crown Estate that it is likely to avail itself of these provisions so as to protect vulnerable areas of the foreshore from the encroachments of squatters.^[311] There is, therefore, a real prospect that there may in time be substantial areas of Crown foreshore that are registered land.

14.98      Under the Limitation Act 1980, the limitation period for the recovery of foreshore by the Crown^[312] is 60 years or, where land has ceased to be foreshore but remains in the ownership of the Crown,^[313] either 60 years from the date of the accrual of the cause of action, or 30 years from the date on which the land ceased to be foreshore, whichever period expires first.^[314] The practical problem in relation to adverse possession of the foreshore is that it is very difficult for the Crown to monitor the very substantial areas of foreshore which it holds, to ensure that there are no persons in adverse possession of it. The present 60-year limitation period reflects this difficulty.

14.99      One of the commonest situations in which adverse possession of the foreshore takes place is where the adjoining landowner encroaches on it, as by building a jetty or slipway on the foreshore. Under the scheme explained in this Part, a registered proprietor will usually be in a position to prevent a squatter from acquiring title to his or her registered estate. However, one situation in which that will not be the case is in relation to land which is adjacent to the squatter's and where the squatter reasonably believed that the land belonged to him or her.^[315] There is, therefore, a risk that an owner of land adjoining foreshore the title to which has been registered by the Crown, might sometimes be able to acquire title to that foreshore under this exception, notwithstanding the Crown's objection.

14.100     The Bill meets this point by requiring that a squatter be in adverse possession for 60 years instead of 10 years before he or she can apply to be registered in place of the Crown as proprietor of any foreshore under the scheme explained in this Part.^[316] Where land ceases to be foreshore, the squatter may apply to be registered after he or she has been in adverse possession for a period of either—

(1) 60 years; or

(2) 10 years from the time when the land ceased to be foreshore; whichever is the shorter.^[317]

This approach ensures that land which ceases to be foreshore is treated in the same way as any other registered estate.

Transitional provisions

14.101     It is necessary to make transitional provisions to accommodate the very substantial changes to the law that the Bill will make, and to ensure that vested rights are preserved.

Introducing the new system

14.102     The provisions of the Bill involve a transition from a world in which there is a 12 year limitation period to one in which there is no limitation period as such, but where it is possible for a squatter to be registered as proprietor after 10 years' adverse possession. In most cases, the fact that the squatter might acquire title after only 10 years rather than 12 does not matter. The registered proprietor can stop the squatter from acquiring title by objecting to his or her application for registration. In the exceptional cases where the squatter relies upon an equity arising by proprietary estoppel or has some independent right to be registered, so that the registered proprietor's objection will not prevent the squatter from being registered, that proprietor is in the same position under the Bill as he or she is under the present law. The squatter had a right to be registered apart from his or her adverse possession. In one case, however, the provisions of the Bill could prejudice the rights of the registered proprietor. This is in relation to the case where a squatter is entitled to be registered because he or she reasonably but mistakenly believed him or herself to be the owner of the land under Schedule 6, paragraph 5(4). A squatter might find that he or she was entitled to be registered as proprietor of the land on this basis on the day that the legislation is brought into force, even though he or she had only been in adverse possession after 10 years and, the day before, the registered proprietor could have successfully initiated possession proceedings against him. It is therefore necessary to make transitional provision to cover this one case.

14.103     The provisions of the Bill are to be brought into force by order.^[318] What it is proposed to do is to bring Schedule 6, paragraph 5(4), into force one year after the rest of Schedule 6. This means that registered proprietors will have one year from the coming into force of the rest of the Bill to take proceedings against any squatter who might fall within paragraph 5(4) or otherwise regularise his or her position so that he or she is no longer in adverse possession. It follows from this that there are no provisions as such in the Bill to deal with this problem.

Preserving vested rights

14.104     The Bill necessarily contains provisions to protect the rights of squatters who, prior to the coming into force of the Bill, had become entitled to be registered as proprietor of an estate under the provisions of section 75 of the Land Registration Act 1925, but who had not been registered. Immediately prior to the coming into force of the Bill, the registered proprietor will hold the registered estate on a bare trust for the squatter under section 75. We have explained above^[319] that the incidents of this trust are far from clear, and that it could give rise to considerable difficulties. The Bill therefore adopts a double strategy. It preserves the rights of those who are entitled to be registered prior to its coming into force, but it also abolishes the trust in their favour.

14.105     The trust is abolished by the repeal without replication of section 75 of the Land Registration Act 1925. Instead, the Bill confers on a squatter who is a beneficiary under a trust under section 75 immediately before it comes into force an entitlement to be registered.^[320] That entitlement will necessarily be a proprietary right,^[321] so that the squatter will be able to protect it against third parties as an overriding interest, provided that he or she is in actual occupation.^[322] It will also constitute a defence to any proceedings for possession.^[323] If a squatter does establish this defence in such proceedings, the court must order the registrar to register him or her as proprietor of the estate to which his or her entitlement relates.^[324]

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Note 1   [2000] Ch 676.    [Back]

Note 2   [2001] EWCA Civ 117; [2001] 2 WLR 1293. The case is of some significance for another reason. The Court of Appeal rejected the view, canvassed by some writers, that the law of adverse possession contravened Article 1 of the First Protocol of the European Convention on Human Rights (right to enjoyment of possessions).    [Back]

Note 3   [2000] Ch 676, 709, 710.    [Back]

Note 4   See Law Com No 254, Part X.    [Back]

Note 5   Seeibid, paras 10.5—10.10. See further below, para 14.54.    [Back]

Note 6   Law Com No 254, para 10.9.    [Back]

Note 7   See what is now Limitation Act 1980, Schedule 1, para 8(4), which reversed decisions such as Wallis’s Cayton Bay Holiday Camp Ltd v Shell-Mex and BP Ltd [1975] QB 94, and was enacted to give effect to the recommendations of the Law Reform Committee in its 21st Report: Final report on limitation of actions (1977) Cmnd 6923, paras 3.47—3.52.    [Back]

Note 8   See Land Registration Act 1925, s 69(1).    [Back]

Note 9   Law Com No 254, para 10.11.    [Back]

Note 10   Ibid. That indefeasibility is qualified because the register can be rectified or amended. However, as we have explained, the circumstances in which that can happen are limited: see above, paras 10.13-10.18.    [Back]

Note 11   See below, paras 14.7, 14.44.    [Back]

Note 12   See below, para 14.10(1).    [Back]

Note 13   See above, para 14.2.    [Back]

Note 14   See Law Com No 254, para 10.17.    [Back]

Note 15   Including the Bar Council, Bristol Law Society, the Crown Estate, Country Landowners’ Association (now the Country Land and Business Association), British Property Federation, City of London Law Society, Ministry of Defence, National Farmers’ Union, Roger Smith, Warwickshire Law Society and the Woolwich Building Society. There was also strong support from litigators both from the Bar (seminars held at Falcon Chambers and the Chancery Bar Association) and amongst the solicitors’ profession (seminar with the Property Litigation Association). Those opposed to the proposal included Professor Graham Barnsley, Ian Leeming QC, and the Advisory Service for Squatters.    [Back]

Note 16   For example, the headline in the Daily Mail on 2 September 1998 was “Swat the squatters. Owners to be protected from home hijackers”.    [Back]

Note 17   [2000] Ch 676 (as we have explained above, at para 14.1, the decision was reversed on its facts by the Court of Appeal).    [Back]

Note 18   Explained below, paras 14.36—14.52    [Back]

Note 19   Which might happen if no steps were taken to evict the squatter, or to regularise his or her possession so that it would no longer be adverse, as where the squatter agreed to be the tenant or licensee of the registered proprietor.    [Back]

Note 20   In other words, where the squatter agrees to become the tenant or licensee of the registered proprietor.    [Back]

Note 21   See above, para 14.1; and see paras 9.9 and following.    [Back]

Note 22   See paras 14.9—14.18.    [Back]

Note 23   See paras 14.19—14.52.    [Back]

Note 24   See paras 14.53—14.62.    [Back]

Note 25   See paras 14.63—14.64.    [Back]

Note 26   See paras 14.65—14.81.    [Back]

Note 27   See paras 14.82—14.87.    [Back]

Note 28   See paras 14.88—14.100.    [Back]

Note 29   See paras 14.101—14.105.    [Back]

Note 30   Limitation Act 1980, s 15.    [Back]

Note 31   Cl 95(1). For the reason why Limitation Act 1980, s 15, continues to apply to an action by a chargee for possession or foreclosure, see below, para 14.12.    [Back]

Note 32   Cl 95(2). For the reasons why Limitation Act 1980, s 16, is disapplied, see below, paras 14.15 and following.    [Back]

Note 33   Cl 95(3).    [Back]

Note 34   See Cl 95(1).    [Back]

Note 35   See Land Registration Act 1925, s 70(1)(k).    [Back]

Note 36   See above, para 8.9; and see para 14.2.    [Back]

Note 37   See Cls 3(3), 4(1); Schedules 1, para 1; 3, para 1; above, paras 8.9, 8.50.    [Back]

Note 38   Asher v Whitlock (1865) LR 1 QB 1, 5; Hunter v Canary Wharf Ltd [1997] AC 655, 703.    [Back]

Note 39   Including it seems not just those in possession, but those who have a contractual right to possession: see Manchester Airport Plc v Dutton [2000] 1 QB 133. But seeHunter v Canary Wharf Ltd, above, at p 703, where Lord Hoffmann explained that it was exclusive possession that distinguished an occupier who might in due course acquire a title under the Limitation Act 1980 by adverse possession from a mere trespasser. A person who merely has a right to possession does not have exclusive possession. Lord Hoffmann’s remarks were not cited inDutton.    [Back]

Note 40   As where the fee simple owner fails to pay rent due under a rentcharge and the rentcharge owner thereupon becomes entitled to exercise a right of re-entry.    [Back]

Note 41   See Limitation Act 1980, Schedule 1, para 7.    [Back]

Note 42   Cf Cl 95(1).    [Back]

Note 43   See Limitation Act 1980, ss 29 (fresh accrual on acknowledgment or part payment), 30 (formal provisions as to acknowledgment and part payments), 31 (effect of acknowledgment or part payment on persons other than the maker or recipient), 32 (postponement of limitation period in case of fraud, concealment or mistake).    [Back]

Note 44   Strictly a chargee under the Bill. See above, para 7.5.    [Back]

Note 45   See Kibble v Fairthorne [1895] 1 Ch 219, 224.    [Back]

Note 46   However, just such a strange result occurred in Hong Kong recently: see the decision of the Court of Final Appeal in Common Luck Investment Ltd v Cheung Kam Chuen (1999) 2 HKCFAR 229; [1999] 2 HKLRD 417. The decision does, with respect, seem wrong in principle.    [Back]

Note 47   Limitation Act 1980, s 15(1). The mortgagee has a right to possession from the date of the mortgage: Four-Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317, 320. If, therefore, the mortgagor fails to make any payment, the right to recover possession is time barred 12 years from the date of the mortgage.    [Back]

Note 48   Limitation Act 1980, s 20(1).    [Back]

Note 49   Ibid, ss 15, 20(4).    [Back]

Note 50   The legal date for redemption is normally six months after the date of the mortgage. In theory, therefore, a mortgagee may be able to foreclose even after its right to possession is barred.    [Back]

Note 51   See Limitation Act 1980, s 29(3) (fresh accrual by part payment). The mortgagor is in adverse possession for the purposes of the Limitation Act 1980, because the land subject to the charge is in the possession of “some person in whose favour the period of limitation can run”: see Schedule 1, Part 1, para 8(1). The mortgagor does not in any sense have to be a “trespasser” for these purposes. It was this point that was overlooked in Common Luck Investment Ltd v Cheung Kam Chuen (1999) 2 HKCFAR 229; [1999] 2 HKLRD 417.    [Back]

Note 52   Because no period of limitation under Limitation Act 1980 would run: see Cl 95(1).    [Back]

Note 53   Cl 95(1); above, para 14.9.    [Back]

Note 54   Limitation Act 1980, s 16.    [Back]

Note 55   Ibid, s 17.    [Back]

Note 56   Cl 95(2).    [Back]

Note 57   See Law of Property Act 1925, ss 85, 86.    [Back]

Note 58   See Law of Property Act 1925, s 87.    [Back]

Note 59   See Megarry & Wade’s Law of Real Property (6th ed 2000), 21-027.    [Back]

Note 60   By the Real Property Limitation Act 1832, s 28. It was re-enacted in the Real Property Limitation Act 1874, s 7 and the Limitation Act 1939, s 12. The precise wording of the provision has changed over time, but the substance has not.    [Back]

Note 61   See Law of Property Act 1925, ss 85, 86.    [Back]

Note 62   See Palk v Mortgage Services Funding Plc [1993] Ch 330, 336.    [Back]

Note 63   See Law of Property Act 1925, s 91(2) for the present power. It was first introduced by Chancery Procedure Act 1852, s 48.    [Back]

Note 64   Lord Cranworth’s Act, 23 & 24 Vict c 145, s 32. The present provisions are found in the Law of Property Act 1925, ss 101(1), 103.    [Back]

Note 65   See Law of Property Act 1925, s 103.    [Back]

Note 66   Law of Property Act 1925, s 91(2); see Twentieth Century Banking Corporation v Wilkinson [1977] Ch 99.    [Back]

Note 67   Law of Property Act 1925, s 105, re-enacting Conveyancing and Law of Property Act 1881, s 21(3). This was, it seems, no more than a codification of the common law. A mortgagee who sold under an express power of sale in the mortgage deed was “a trustee for the mortgagor of any surplus”: see Matthison v Clarke (1854) 3 Drew 3, 4; 61 ER 801, per Kindersley V-C. For the effect of the Bill on Law of Property Act 1925, s 105, see Cl 54; above, para 7.43.    [Back]

Note 68   Limitation Act 1980, s 21(1).    [Back]

Note 69   See para 14.5.    [Back]

Note 70   See Megarry & Wade’s Law of Real Property (6th ed 2000), 21-004—21-011.    [Back]

Note 71   Limitation Act 1980, s 15(1).    [Back]

Note 72   See respectively Consultation Paper No 151 (1998) and (2001) Law Com No 270. The Consultation Paper preceded (1998) Law Com No 254, in which the proposals for a wholly new system of adverse possession for registered land were first made.    [Back]

Note 73   See (1998) Law Com No 254, para 10.46.    [Back]

Note 74   Schedule 6, para 1(1). Because the claimant must have been in adverse possession, a mortgagee in possession will never be able to apply to be registered. Cf Cl 95(2); above, para 14.9 and see above, para 14.16.    [Back]

Note 75   Or those through whom he or she claims: see below.    [Back]

Note 76   Whenever under Schedule 6 a squatter has to establish a period of adverse possession, he or she will have to prove that adverse possession to the registrar. It will not be presumed.    [Back]

Note 77   Schedule 6, para 1(4).    [Back]

Note 78   But see Schedule 6, para 5(4)(d); below, para 14.45.    [Back]

Note 79   That is, for the purposes of the scheme contained in Schedule 6.    [Back]

Note 80   See above, para 14.9.    [Back]

Note 81   Time limit for actions to recover land.    [Back]

Note 82   See Schedule 6, para 11(1).    [Back]

Note 83   Seeibid, para 11(2).    [Back]

Note 84   As we explain more fully below, para 14.66, every squatter acquires an independent fee simple from the moment that he or she commences adverse possession.    [Back]

Note 85   (2001) Law Com No 270; see above, para 14.19.    [Back]

Note 86   Because Y does not have a registered estate, Cl 95 does not apply to it.    [Back]

Note 87   If the Land Registration Bill is enacted before the Limitation Bill, there will be a minor anomaly. Y would be able to apply to be registered 10 years after he had dispossessed X, whereas under the Limitation Act 1980, s 15(1), X would have 12 years to recover the land from Y. However, if Y were registered after 10 years, that would necessarily defeat any claim that X might bring. This is because, as we explain below, para 14.71, Y will be registered as the successor in title of the former registered proprietor and he will thereby acquire an unassailable title. In practice, any case of this kind is likely to be very rare indeed.    [Back]

Note 88   Schedule 6, para 1(2).    [Back]

Note 89   See below, paras 14.36—14.52.    [Back]

Note 90   See Cl 97; below, paras 14.85—14.87.    [Back]

Note 91   See above, para 14.20.    [Back]

Note 92   See Limitation Act 1980, Schedule 1, para 6.    [Back]

Note 93   Schedule 6, para 11(3)(b).    [Back]

Note 94   Schedule 6, para 11(3)(b).    [Back]

Note 95   See para 14.27.    [Back]

Note 96   See Cl 95; above, para 14.9.    [Back]

Note 97   Schedule 6, para 1(3).    [Back]

Note 98   Or other person entitled to bring proceedings, such as a registered chargee: see below, para 14.33(2).    [Back]

Note 99   Cl 97(2); below, para 14.59.    [Back]

Note 100       [Back]

Note 101   See s 2(1) of that Act for the relevant definitions.    [Back]

Note 102   Schedule 6, para 8(1).    [Back]

Note 103   See s 1 of that Act.    [Back]

Note 104   Defined by the Bill to mean “a disability or disorder of the mind or brain, whether permanent or temporary, which results in an impairment or disturbance of mental functioning”: Schedule 6, para 8(3).    [Back]

Note 105   Schedule 6, para 8(2).    [Back]

Note 106   See below, para 14.32.    [Back]

Note 107   See below, para 14.34.    [Back]

Note 108   See s 28 of that Act which extends the limitation period when a cause of action accrues to a person under a disability.    [Back]

Note 109   See Limitation Act 1980, s 28(1).    [Back]

Note 110   See Limitation Act 1980, s 38(2)-(4).    [Back]

Note 111   Schedule 6, para 8(4). In practice, the registrar will probably be unaware of the proprietor’s position, so that no note will be made on the register. It follows that, in such circumstances, the registrar is likely to register the squatter applicant as proprietor. That will be a mistake. It will therefore be open to the proprietor (or those representing his or her affairs) to seek rectification of the register in the usual way: see Schedule 4, paras 2, 5; above, paras 10.10, 10.19. If rectification is refused because the new proprietor is a proprietor who is in possession within Cl 128 (above, para 10.17), the registrar will be obliged to pay indemnity.    [Back]

Note 112   That is, under Schedule 6, para 1.    [Back]

Note 113   Schedule 6, para 2(1).    [Back]

Note 114   Schedule 6, para 2(1).    [Back]

Note 115   The length of the period of notice is considered to be a matter for rules rather than for the Bill. In Law Com No 254, a period of 2 months was suggested as being the appropriate period. A number of respondents considered that the period was too short. The period is likely to be 3 months, at least initially. However, when there has been some experience of how the procedure works in practice, the length of the period can be reviewed if need be.    [Back]

Note 116   See paras 14.36-14.52.    [Back]

Note 117   This states the effect of Schedule 6, paras 3, 4.    [Back]

Note 118   Schedule 6, paras 2(2), 4.    [Back]

Note 119   Schedule 6, para 2(1)(a).    [Back]

Note 120   This is important: see below, para 14.56.    [Back]

Note 121   Schedule 6, para 2(1)(b).    [Back]

Note 122   In Four-Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317, 320, Harman J explained that “the right of the mortgagee to possession in the absence of some contract has nothing to do with default on the part of the mortgagor. The mortgagee may go into possession before the ink is dry on the mortgage unless there is something in the contract, express or by implication, whereby he has contracted himself out of that right. He has that right because he has a legal term of years in the property or its statutory equivalent”.    [Back]

Note 123   It is perhaps noteworthy that Law of Property Act 1925, s 98, makes express provision that a mortgagor can take proceedings for possession in his own name without joining the mortgagee as a party.    [Back]

Note 124   See para 14.74.    [Back]

Note 125   Schedule 6, para 2(1)(c).    [Back]

Note 126   In relation to commercial leasehold property, most assignments require the landlord’s consent, and the assignor will commonly have to enter into some form of financial guarantee in relation to the assignee’s performance of the covenants. In relation to leases granted after 1995, this will take the form of an authorised guarantee agreement under the Landlord and Tenant (Covenants) Act 1995, s 16. Where a lease is assigned by operation of law, as will be the case where a squatter is registered (see below, para 14.73), the former tenant remains liable on the covenants in the lease (see, eg, in relation to leases granted after 1995, Landlord and Tenant (Covenants) Act 1995, s 11). However, having a squatter as tenant may affect the value both of the premises and of the landlord’s reversion.    [Back]

Note 127   Schedule 6, para 2(1)(d).    [Back]

Note 128   Schedule 6, para 2(1)(e).    [Back]

Note 129   A trustee in bankruptcy does have an interest in the property. The legal title vests in him by operation of law: see Insolvency Act 1986, s 306. However, until the trustee is registered as proprietor the bankrupt remains on the register as registered proprietor, though a notice or a restriction should be entered to prevent any disposal by him of the land: see Cl 86. See above, paras 11.40, 11.41.    [Back]

Note 130   Schedule 6, para 4.    [Back]

Note 131   Cf Schedule 10, para 5(2).    [Back]

Note 132   Schedule 6, para 5(1).    [Back]

Note 133   See para 14.57.    [Back]

Note 134   See above, para 14.7.    [Back]

Note 135   Under the Bill, the procedure will not be the same as it is now: see below, para 14.38.    [Back]

Note 136   See Cls 73(1), (7); 106; below, paras 16.6; 16.7. For the new office of Adjudicator to HM Land Registry, see Cl 105; below, para 16.3.    [Back]

Note 137   Schedule 6, para 5(2).    [Back]

Note 138   For an account of these principles, see Megarry & Wade’s Law of Real Property (6th ed 2000), Chapter 13.    [Back]

Note 139   Crabb v Arun DC [1976] Ch 179, 198, per Scarman LJ.    [Back]

Note 140   For a discussion, see Simon Gardner, “The Remedial Discretion in Proprietary Estoppel” (1999) 115 LQR 438.    [Back]

Note 141   As in Pascoe v Turner [1979] 1 WLR 431; Voyce v Voyce (1991) 62 P & CR 290 (transfer of the freehold); Crabb v Arun DC [1976] Ch 179 (grant of an easement).    [Back]

Note 142   As in Dodsworth v Dodsworth (1973) 228 EG 1115; Baker v Baker [1993] 2 FLR 247.    [Back]

Note 143   As in Maharaj v Chand [1986] AC 898.    [Back]

Note 144   See para 14.38.    [Back]

Note 145   See above, para 14.40.    [Back]

Note 146   In other words, where although Schedule 6, para 5(2)(a) is satisfied, para 5(2)(b) isnot. We give some examples below, in para 14.42, where it would often be appropriate for the applicant to be registered with the registered estate. For the Adjudicator’s power to determine how the equity should be satisfied in such a case, see Cl 108(4).    [Back]

Note 147   See Cl 106(1); below, para 16.7.    [Back]

Note 148   Cl 108(4); below, para 16.8.    [Back]

Note 149   For the right of appeal from the Adjudicator’s decisions, see Cl 109; below, para 16.23.    [Back]

Note 150   That is, an application under Schedule 6, para 1.    [Back]

Note 151   Cl 109(3).    [Back]

Note 152   See Law of Property (Miscellaneous Provisions) Act 1989, s 2.    [Back]

Note 153   See above, para 13.76.    [Back]

Note 154   See Schedule 6, para 5(3).    [Back]

Note 155   See Bridges v Mees [1957] Ch 475. A buyer who has not paid the whole of the purchase price will not be in adverse possession. His or her possession is under the contract. Were it not so, the validity of agreements for leases would be undermined: see Law Com No 254, para 10.53.    [Back]

Note 156   See Schedule 6, para 5(4).    [Back]

Note 157   The final version of this exception differs in a number of respects from what we proposed in Law Com No 254, paras 10.54—10.57, 10.66(4)(c). This exception was the subject of a good deal of comment both in response to Law Com No 254, and in our discussions with property litigators (both barristers and solicitors).    [Back]

Note 158   Schedule 6, para 5(4)(a).    [Back]

Note 159   See Cl 60(1), (2); above, para 9.11.    [Back]

Note 160   Schedule 6, para 5(4)(b). For the power to make rules as to the circumstances in which the exact line of the boundary can be fixed, see Cl 60(3); above, paras 9.11, 9.12.    [Back]

Note 161   In practice it will have to be longer because of the requirement in (2): see below.    [Back]

Note 162   Schedule 6, para 5(4)(c).    [Back]

Note 163   Schedule 6, para 5(4)(d).    [Back]

Note 164   Limitation Act 1980, s 15(1). This will change if the Law Commission’s proposals on limitation of actions are carried forward, and the limitation period is reduced to 10 years. See above, para 14.19.    [Back]

Note 165   Schedule 6, para 5(4)(d). If the squatter had barred the rights of the owner prior to first registration, that squatter might apply to have the register rectified to give effect to his or her rights. See Schedule 4, paras 2, 5, above, para 10.10, 10.19. But cf Cl 11(4)(c); above, paras 3.46, 3.47.    [Back]

Note 166   See above, para 14.19.    [Back]

Note 167   See para 14.36, above.    [Back]

Note 168   See para 14.39.    [Back]

Note 169   Under Cl 60; above, paras 9.11, 9.12.    [Back]

Note 170   Schedule 6, para 5(4)(a).    [Back]

Note 171   If the applicant was the tenant of the registered proprietor of the land in dispute, his or her claim would necessarily fail. A tenant cannot adversely possess against his or her landlord: Megarry & Wade’s Law of Real Property (6th ed 2000), 21-027.    [Back]

Note 172   Schedule 6, para 5(4)(b).    [Back]

Note 173   See above, para 9.10.    [Back]

Note 174   See Land Registration Rules 1925, r 276. The fact of such a fixed boundary is noted on the Property Register of the title:ibid, r 277. It is anticipated that the same will be true under rules made pursuant to Cl 60(3)(d) of the Bill.    [Back]

Note 175   Schedule 6, para 5(4)(c).    [Back]

Note 176   See above, para 14.20.    [Back]

Note 177   Buckinghamshire County Council v Moran [1990] Ch 623, 643, per Slade LJ. This test has been repeatedly applied since, see, eg, J A Pye (Oxford) Holdings Ltd v Graham [2001] EWCA Civ 117; [2001] 2 WLR 1293, 1299, [10].    [Back]

Note 178   See, eg, Prudential Assurance Co Ltd v Waterloo Real Estate Inc [1999] 2 EGLR 85.    [Back]

Note 179   As by showing that he or she had told X that the land did not belong to X.    [Back]

Note 180   See para 14.6.    [Back]

Note 181   Law Com No 254, paras 10.6—10.10.    [Back]

Note 182   Ibid, para 10.9. See above, para 14.2.    [Back]

Note 183   Law Com No 254, para 10.6. However, as we pointed out there, that principle cannot be pressed too far. See too, above, para 2.71.    [Back]

Note 184   Law Com No 254, para 10.7.    [Back]

Note 185   Ibid, para 10.59.    [Back]

Note 186   As we have explained above, a registered chargee, as mortgagee, has a right to possession and can therefore bring possession proceedings against a squatter: see para 14.33(2).    [Back]

Note 187   There is one decision in the Court of Appeal that appears to hold that a landowner, X, can make a squatter, Y, his licensee unilaterally, simply by writing to Y and informing her that she is his licensee. Provided that Y does not write back to X to say that she is not his licensee, then she is: see BP Properties Ltd v Buckler (1987) 55 P & CR 337, 345 — 347. This decision has been criticised, rightly in our view: see Herbert Wallace “Limitation, Prescription and Unsolicited Permission” [1994] Conv 196. It appears to rest on the assumption (see 55 P & CR at 346), since discredited, that the paper owner’s intentions can be relevant to whether a squatter’s possession is adverse. However, it is now firmly settled that “it is the intention of the squatter that is decisive”: Buckinghamshire County Council v Moran [1990] Ch 623, 644, per Nourse LJ. It is also difficult to reconcile with the subsequent decision of the Court of Appeal in Mount Carmel Investments Ltd v Peter Thurlow Ltd [1988] 1 WLR 1078. In that case, a letter sent by the paper owners to the squatters demanding that they vacate the premises by a specified date did not determine the squatter’s adverse possession. Cf Markfield Investments Ltd v Evans [2001] 2 All ER 238, 241, [12], where Simon Brown LJ assumed the correctness of BP Properties Ltd v Buckler on this point. That assumption was, however, unnecessary for the decision in the case.    [Back]

Note 188   Compare para 14.11 above. As we explain there, matters which would either postpone the limitation period (such as fraud, concealment or mistake) or cause it to run afresh (as with a written acknowledgment) have no application to our scheme.    [Back]

Note 189   Under Schedule 6, para 1; above, para 14.20.    [Back]

Note 190   Schedule 6, para 7.    [Back]

Note 191   Ibid, para 6(1).    [Back]

Note 192   Or other interested person.    [Back]

Note 193   See below, para 14.62.    [Back]

Note 194   For the purposes of Schedule 6, the commencement of possession proceedings is disregarded in determining whether a period of limitation would run in the squatter’s favour: Schedule 6, para 11(3)(b); above, para 14.23.    [Back]

Note 195   Cf Cl 97(4).    [Back]

Note 196   Which is unaffected by the commencement of the proceedings for these purposes: see Schedule 6, para 11(3)(b); above, para 14.23.    [Back]

Note 197   Schedule 6, para 6(2).    [Back]

Note 198   Cl 97(2), (4).    [Back]

Note 199   See above, para 14.6.    [Back]

Note 200   Were it to be otherwise, the squatter would be left in a legal limbo.    [Back]

Note 201   Limitation Act 1980, s 24(1); Lowsley v Forbes [1999] 1 AC 329 (the case was concerned with a charging order and garnishee proceedings, not possession proceedings).    [Back]

Note 202   Under CPR, Schedule 1, R46.2(a); Schedule 2, C26.5.1(a), the leave of the court is needed to execute a judgment more than six years after it is given. As Lowsley v Forbes demonstrates, such leave may be given even though an action on the judgment would have been time-barred. However, the court will “not, in general, extend time beyond the six years save where it is demonstrably just to do so”, and the onus of so proving rests on the party seeking to enforce the judgment: see Duer v Frazer [2001] 1 All ER 249, 255, per Evans-Lombe J.    [Back]

Note 203   This follows from Schedule 6, para 6(2). Cfibid, para 11(3)(b); above, para 14.23.    [Back]

Note 204   See CPR, Part 38.    [Back]

Note 205   See Biguzzi v Rank Leisure Plc [1999] 1 WLR 1926, 1932 and following.    [Back]

Note 206   But they may occur: seeUCB Corporate Services Ltd v Halifax (SW) Ltd, The Times 23 December 1999.    [Back]

Note 207   See above, para 14.6.    [Back]

Note 208   This is why (for example) the registered proprietor will only have two years in which to enforce any judgment that he or she may obtain for possession: see above, para 14.59.    [Back]

Note 209   Above, para 14.34.    [Back]

Note 210   Above, para 14.36.    [Back]

Note 211   Above, paras 14.57 and following.    [Back]

Note 212   See paras 14.84 and following; and para 14.105.    [Back]

Note 213   See Schedule 3, para 2; above, para 8.54. As we explain below, at para 14.66, a squatter has an independent fee simple from the moment that he or she enters into adverse possession. This fee simple, when coupled with the squatter’s actual occupation, will constitute an overriding interest that could, therefore, bind any disponee of the land. However, such an overriding interest will be of little value to a squatter if the registered proprietor can terminate his or her adverse possession. That will be the case except where the squatter has a right to be registered.    [Back]

Note 214   Schedule 6, para 4.    [Back]

Note 215   Ibid, para 5. For those exceptions, see above, paras 14.36 and following.    [Back]

Note 216   Schedule 6, para 7. For these situations, see above, paras 14.57 and following.    [Back]

Note 217   See para 14.101.    [Back]

Note 218   Under Limitation Act 1980, s 17.    [Back]

Note 219   See Tichborne v Weir (1892) 67 LT 735.    [Back]

Note 220   See Rosenberg v Cook (1881) 8 QBD 162, 165; Central London Commercial Estates Ltd v Kato Kagaku Co Ltd [1998] 4 All ER 948, 950.    [Back]

Note 221   Central London Commercial Estates Ltd v Kato Kagaku Co Ltd, above, at p 950.    [Back]

Note 222   For the right of the tenant to surrender the lease, even though his or her title has been extinguished by the squatter, see Fairweather v St Marylebone Property Co Ltd [1963] AC 510, a decision that remains controversial.    [Back]

Note 223   Such as paying the rent, or observing any repairing covenants.    [Back]

Note 224   Assuming that it contains a right of re-entry as it almost certainly will.    [Back]

Note 225   Cf Limitation Act 1980, s 17.    [Back]

Note 226   Under Land Registration Act 1925, s 75.    [Back]

Note 227   Central London Commercial Estates Ltd v Kato Kagaku Co Ltd, above, at p 959, per Sedley J. We are very grateful to Mr Edward Nugee QC, who, in correspondence with us, drew our attention to the considerable difficulties to which this trust could give rise.    [Back]

Note 228   Central London Commercial Estates Ltd v Kato Kagaku Co Ltd, above. This has important implications, eg in relation to the transmission of covenants where the registered estate is leasehold.    [Back]

Note 229   SeeCentral London Commercial Estates Ltd v Kato Kagaku Co Ltd, above, at p 958, per Sedley J. At p 954, Sedley J commented that “a squatter on registered land is deprived by s 75(1) [of the Land Registration Act 1925] of his own prescriptive title... and is furnished instead with the right to acquire and register as his own the usurped leasehold title” [it was a leasehold title in that case]. This is no more than an inference from s 75: the section says nothing directly to this effect.    [Back]

Note 230   See Law Com No 254, paras 10.70-10.76, 10.78.    [Back]

Note 231   [1998] 4 All ER 948.    [Back]

Note 232   Of those who responded in writing, a small majority supported our view. However, we were persuaded that we were wrong by the opposition to the proposals that were voiced by The Law Society, by members of the Association of Property Litigators and by many members of the Bar.    [Back]

Note 233   The sort of objection that we received to our proposals was along the lines of “your client has barred the right of a leaseholder by adverse possession. You tell her that she actually has a freehold and not a leasehold title, but that if she does not observe the covenants (which do not bind her) in the lease (which she does not have), the landlord can evict her. You also have to explain that although she has a freehold title, when the lease terminates, the landlord can recover the land from her”.    [Back]

Note 234   Section 75.    [Back]

Note 235   See below, para 14.105.    [Back]

Note 236   See Law Com No 254, paras 10.40 and following.    [Back]

Note 237   See above, para 14.65.    [Back]

Note 238   Namely, the fee simple absolute in possession which the squatter has by virtue of his or her adverse possession, and his or her right to be registered as proprietor to which the existing registered proprietor cannot object.    [Back]

Note 239   See Schedule 3, para 2; above, para 8.54.    [Back]

Note 240   See para 14.65.    [Back]

Note 241   See Schedule 6, paras 1(1), 4, 7.    [Back]

Note 242   Where the property is a lease which was granted after 1995, the registration of the squatter as the new proprietor will operate as an “excluded assignment” under the Landlord and Tenant (Covenants) Act 1995, s 11. This is one case under that Act where the former tenant will remain liable on the covenants of the lease.    [Back]

Note 243   Schedule 6, para 9(1).    [Back]

Note 244   Laid down in Re Jolly [1900] 2 Ch 616.    [Back]

Note 245   Mount Carmel Investments Ltd v Peter Thurlow Ltd [1988] 1 WLR 1078, 1089, per Nicholls LJ.    [Back]

Note 246   Ibid.    [Back]

Note 247   But see below, para 14.74.    [Back]

Note 248   Schedule 6, para 9(2).    [Back]

Note 249   See para 14.33.    [Back]

Note 250   See above, para 14.56.    [Back]

Note 251   Namely, Schedule 6, paras 4 or 7.    [Back]

Note 252   Schedule 6, para 9(3).    [Back]

Note 253   See paras 14.36—14.52.    [Back]

Note 254   For the position where the squatter is registered subject to the charge, see below, paras 14.76 and following.    [Back]

Note 255   See para 14.6(2).    [Back]

Note 256   Cf para 14.78, below. It is the practice of the Land Registry when a squatter applies to be registered as proprietor under Land Registration Act 1925, s 75, to approach any registered chargee to enquire whether it will release any charge affecting the land. In many cases the chargee agrees to such a release.    [Back]

Note 257   See paras 14.36—14.52.    [Back]

Note 258   This will generally be so if that right was created before the charge and the squatter was in actual occupation of the land at the time when the registered charge was created, so that his or her rights took effect as an overriding interest: see Schedule 3, para 2; above, para 8.54.    [Back]

Note 259   Cf Cl 28; above, para 5.5.    [Back]

Note 260   See Land Registration Act 1925, s 75(3). As we have explained, where a squatter is registered, any registered chargee is normally contacted by HM Land Registry to see whether it will release its charge as against the squatter. Although the squatter is bound by the charge over the land, he or she does not become subject to the personal covenant in the mortgage by which the mortgagor undertakes to repay the mortgage debt.    [Back]

Note 261   Carroll v Manek (1999) 79 P & CR 173, 188, per Judge Hicks, QC, citing Hall v Heward (1886) 32 ChD 430 for the general rule. In that latter case, Cotton LJ explained at pp 434-435 that “[t]he owner of the equity of redemption in one of two estates comprised in the same mortgage cannot claim to redeem that estate alone. The mortgagee might refuse to allow him to do so. So on the other hand, the mortgagee cannot compel him to redeem that estate alone -he is entitled to redeem the whole, reserving the equities between him and the other part owner”.    [Back]

Note 262   Ghana Commercial Bank v Chandiram [1960] AC 732, 745, per Lord Jenkins.    [Back]

Note 263   The common case will be where the squatter owns the adjoining land and encroaches on part of his or her neighbour’s land, incorporating it into his or her own title. The squatter then seeks to sell his or her own land, together with the parcel acquired by adverse possession.    [Back]

Note 264   Whether that charge is a registered charge or merely a minor interest.    [Back]

Note 265   Schedule 6, para 10.    [Back]

Note 266   Ibid, para 10(1).    [Back]

Note 267   Ibid, para 10(2).    [Back]

Note 268   Ibid, para 10(3). It is anticipated that the mortgagor will be entitled to be reimbursed by the squatter for any costs that he or she incurs in the course of the making of the apportionment, because rules may be made to this effect:ibid, para 10(4)(d).    [Back]

Note 269   See above, para 14.33(2).    [Back]

Note 270   Cl 95; above, para 14.9.    [Back]

Note 271   Cl 97(6). Cf Schedule 6, para 5(3); above, para 14.43.    [Back]

Note 272   Cf Bridges v Mees [1957] Ch 475, where, in the face of a claim to possession by the registered proprietor, the squatter-buyer sought a declaration that he was entitled to the land.    [Back]

Note 273   There is, therefore, no need for any equivalent to Schedule 6, para 5(2); above, para 14.39.    [Back]

Note 274   Cl 97(1). See above, paras 14.44—14.52.    [Back]

Note 275   See above, para 14.58.    [Back]

Note 276   See above, para 14.59.    [Back]

Note 277   See above, para 14.61.    [Back]

Note 278   Cl 97(3).    [Back]

Note 279   Cl 97(5)(a). The effects of such registration have already been explained: see above, paras 14.70 and following.    [Back]

Note 280   Cl 97(4). But for this provision, the judgment would be enforceable for six years: see above, para 14.60.    [Back]

Note 281   The relevant provisions are section 38(8) and Schedule 1, Part 1, para 8(3)(a).    [Back]

Note 282   See Limitation Act 1980, s 38(1), for the definition of “rentcharge”.    [Back]

Note 283   See Megarry & Wade’s Law of Real Property (6th ed 2000), 21-034.    [Back]

Note 284   Which will, no doubt, occur because the person paying the charge was under the mistaken belief that the payee was entitled to the rent when he or she was not.    [Back]

Note 285   Cl 97(7); Schedule 6, para 14.    [Back]

Note 286   They are most common in Greater Manchester, Lancashire, Sunderland and Bristol.    [Back]

Note 287   See the Rentcharges Act 1977, ss 2, 3.    [Back]

Note 288   Whether there is a trust of land or a settlement made under the Settled Land Act 1925.    [Back]

Note 289   Cf Law Com No 254, para 10.77.    [Back]

Note 290   Limitation Act 1980, s 18(1).    [Back]

Note 291   Cf Law Com No 254, para 10.26, where the detailed rules laid down in Limitation Act 1980, s 18, are explained.    [Back]

Note 292   Under Land Registration Act 1925, s 75.    [Back]

Note 293   The tenant for life is the registered proprietor: see Land Registration Act 1925, s 86(1).    [Back]

Note 294   As we have explained above, at paras 14.68—14.69, this marks a departure from what we proposed in Law Com No 254 as to effect of registering the squatter as proprietor. Our proposals in relation to adverse possession of land held in trust for successive interests in the Consultative Document (see Law Com No 254, paras 10.77—10.78) were premised on what we recommended in Law Com No 254 as to the effect of registration. We have therefore had to abandon them and devise a scheme that accords with our revised policy.    [Back]

Note 295   Summarised above, in para 14.5.    [Back]

Note 296   Schedule 6, para 12.    [Back]

Note 297   See above, para 14.20.    [Back]

Note 298   On the death of A or B, whichever is the last to die.    [Back]

Note 299   S can raise any defence that he or she may have that is unconnected with his or her adverse possession.    [Back]

Note 300   See Limitation Act 1980, s 15(2).    [Back]

Note 301   See Limitation Act 1980, s 18.    [Back]

Note 302   Which, in our example, would be on the date on which A died.    [Back]

Note 303   See s 21(1)(b).    [Back]

Note 304   There may be a single trustee of the legal estate where the land is settled land, namely the life tenant. He will be the registered proprietor: see Land Registration Act 1925, s 86(1).    [Back]

Note 305   Limitation Act 1980, Schedule 1, para 9.    [Back]

Note 306   This follows from Schedule 6, para 11(1).    [Back]

Note 307   “Foreshore” is defined by Schedule 6, para 13(3) to mean “the shore and bed of the sea and of any tidal water, below the line of the medium high tide between the spring and neap tides”. For the application of the Bill to land covered by internal waters, see Cl 127; above, para 3.5.    [Back]

Note 308   What Coke called “dominium directum”: seeCoke on Littleton, 1a.    [Back]

Note 309   See para 11.8.    [Back]

Note 310   See para 11.11    [Back]

Note 311   Which are regrettably common.    [Back]

Note 312   Or Her Majesty in right of the Duchy of Lancaster, or the Duchy of Cornwall.    [Back]

Note 313   Normally land ceases to be foreshore by reason of accretion. If that is so, ownership of the accretion usually passes to the person who owns the land to which the accretion took place. If, therefore, the Crown owns the adjoining land, it will generally acquire the accretion, but not otherwise. For the law on accretion, see generally Southern Centre of Theosophy Inc v State of Australia [1982] AC 706; above, para 9.14.    [Back]

Note 314   Schedule 1, Part 2, para 11.    [Back]

Note 315   See Schedule 6, para 5(4); above, paras 14.44—14.52.    [Back]

Note 316   Schedule 6, para 13(1).    [Back]

Note 317   This states the effect of Schedule 6, para 13(2).    [Back]

Note 318   See Cl 133(2).    [Back]

Note 319   See para 14.67.    [Back]

Note 320   Schedule 12, para 18(1). Transitional provisions for rentcharges held in trust under Land Registration Act 1925, s 75, will be made by rules: see Schedule 12, para 18(4).    [Back]

Note 321   See above, para 14.64.    [Back]

Note 322   See Schedule 3, para 2; above, para 8.54.    [Back]

Note 323   Schedule 12, para 18(2).    [Back]

Note 324   Schedule 12, para 18(3).    [Back]