Good-Bye to Pye

Oliver Radley–Gardner

Barrister
Teaching Fellow, Pembroke College, University of Oxford

radley-gardner@falcon-chambers.com

Copyright © 2007 Oliver Radley-Gardner
First published in Web Journal of Current Legal Issues

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Summary

The saga of J.A. Pye (Oxford) Ltd v Graham [2000] Ch 676; [2001] Ch 804; [2003] 1 AC 419, which eventually became J.A. Pye (Oxford Ltd) and J.A. Pye (Oxford) Land Ltd v The United Kingdom (Application No. 44302/02), is now at an end. The Grand Chamber of the European Court of Human Rights, on appeal from the earlier decision of the Court, decided that the loss of registered title to land by the combined effect of the section 15 of the Limitation Act 1980 and section 75 of the Land Registration Act 1925 (“LRA 1925”) was not a violation of Article 1 Protocol 1 (“A1P1”) to the Convention. It found that adverse possession was a justified control of use under Rule Three of A1P1, falling within the margin of appreciation.

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Contents

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Pye: The Facts

The facts can be summarised briefly: the late Mr Graham, a farmer, had initially enjoyed a grazing licence over some 25 hectares agricultural land of which Pye, a property development company, was the registered owner under the LRA 1925. The arrangement was entered into in 1983. On expiry of the last licence, Mr Graham asked for a renewal licence, but none was forthcoming. He attempted to secure renewal for a time, but his requests went unanswered. Mr Graham therefore simply held over after his licence expired, and continued to use the land without consent but otherwise as before, for a further period of twelve years. In 1997, he lodged cautions against the title to the land, and claimed the land by adverse possession. It was accepted that, prior to issuing proceedings to have the cautions removed in 1998, Pye took no steps to regularise the position. It was probable that Mr Graham would, if asked, have agreed to a further licence. He never was.

Pye At Home

In the domestic courts, the issue centred on the question of whether Mr Graham had the relevant intention to possess, given that he had previously been a licensee and had appeared willing to accept a further licence thereafter. The House of Lords, reversing the Court of Appeal, found that he had the requisite intention. At the periphery of the domestic litigation were A1P1 issues. Neuberger J (as he then was, [2000] Ch 676, at p. 710) started the debate at first instance. He expressed the view that “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”. The Court of Appeal simply noted that limitation periods were unexceptionable from a Convention point of view [2001] Ch 804, at pp. 821-822; 823. In the House of Lords, Pye conceded that the Human Rights Act 1998 was not retrospective in effect, and that therefore it was not open to it to argue the A1P1 point. Lord Bingham expressed the view, obiter, that “where land is registered it is difficult to see any justification for a legal rule which compels such an apparently unjust result, and even harder to see why the party gaining title should not be required to pay some compensation at least to the party losing it” [2003] 1 AC 419, at p. 426.

Strasbourg: Round One

Pye took its case to Strasbourg, and won before the Court. The Court found that the operation of adverse possession, in relation to land registered under the LRA 1925, amounted to a deprivation of possessions, and was therefore within the scope of the Rule Two of A1P1. The Court went on to find that adverse possession was quite disproportionate in its effect on registered title. There was no compensation payable to the deprived registered owner (in which case it followed under the Rule Two that only exceptional circumstances could justify deprivation) and there was no notification of the registered owner that his property was at risk. The loss of registered title was only rendered possible because statute – in particular the now-repealed section 75 of the LRA 1925 -  allowed it. Finally, the Law Commission papers, Law Com 254, “Land Registration for the 21^st Century” (see in particulars paragraphs 10.5 and following) and Law Com 271, “Land Registration for the 21^st Century: A Conveyancing Revolution” (see paragraphs 14.1 and following) lent some support for the view that adverse possession produced undesirable results in the context of land registered under the LRA 1925. The Commission had identified shortcomings in the regime under the LRA 1925, and proposed changes which were implemented under the Land Registration Act 2002 (“LRA 2002”). The Government appealed to the Grand Chamber.

Strasbourg: Round Two

By 10 to 7 the Grand Chamber reversed the decision of the Court. The majority decision deserves some comment. Holding A1P1 applicable, the judgment of both the majority and most of the dissenting judges proceeded on the (somewhat surprising) basis that adverse possession did not amount to a “deprivation” within Rule Two of A1P1, but rather to a “control of use” within Rule Three. There seemed to be two reasons for this. The first was that there were cases, relevant in the Grand Chamber’s view, under the Convention where there had been what seemed to be a deprivation, but which was in fact only a control of use (see paragraph 64). The material cases cited were AGOSI v United Kingdom (1986) 9 E.H.R.R. 1 (confiscation of smuggled gold coins) and Air Canada v United Kingdom (1995) 20 EHRR 150 (confiscation of an aeroplane adapted to smuggle cannabis and contraband). These have, however, generally been regarded as cases of regulatory control of property by forfeiture laws (such as customs legislation), which are more obviously within the scope and justifications of Rule Three (see T. Allen, Property and the Human Rights Act 1998 (Hart, 2005), pp. 114 – 116). Adverse possession, on the other hand, would not seem to fit readily into that category. Its apparent shoehorning into Rule Three seems further to blur the hazy line between A1P1’s three famously distinct but not unconnected rules. It might be thought, as the English Courts and the Strasbourg Court the first time around did, that Pye was a deprivation case and seemed to have more in common with such cases as James v United Kingdom (1986) 8 EHRR 123 (in relation to the Leasehold Reform Act 1967) and Holy Monasteries v Greece (1994) 20 E.H.R.R. 1 (not mentioned in the majority judgment).

A strained analysis of adverse possession furnished the second basis for treating it as a mere control of use. In essence, the Grand Chamber, most of the dissentients (somewhat grudgingly) agreeing with the majority on this point, appeared to characterise adverse possession as a logical consequence of the acceptable operation of limitation rules affecting land, rather than as a mechanism for the deprivation of ownership. On this understanding, adverse possession merely regulated the “title” position to mirror what had happened as a matter of limitation of actions. The point emerges at paragraph 66 of the majority judgment:

The extinction of title therefore was a product of, and hence shared the same legitimate aim as, the limitation rule. The Grand Chamber then said, in relation to whether a fair balance had been struck, as follows (paragraph 76):

One can understand that the Grand Chamber felt constrained to find that adverse possession “merely” fell within Rule Three, and not Rule Two. The most obvious reason is that the dispossessed registered proprietor is not compensated when the squatter takes his land. Under Rule Three absence of compensation was merely one of a number of factors (see paragraph 79) to be weighed up; Under Rule Two absence of compensation would render a violation justifiable only in exceptional circumstances. The latter course would virtually compel a finding that there had been a violation in the case of Pye, and mean that an ancient part of the substantive private law of a contracting state would require revision in light of the Convention – not a conclusion which is politically desirable. Insofar as adverse possession barred not just the remedies (possession and damages) but also the right of the owner (his title), and went on to confer a fresh and practically indefeasible title on the squatter, the Grand Chamber prayed in aid the margin of appreciation and observed that this was a “long standing and complex” are of private law regulating the rights as between private individuals (paragraph 71; see also at paragraph 81). It drew attention to the divergence of approaches in other legal systems. Confusingly, the majority also found, apparently in error (see Schedule 13 to the LRA 2002; the error also being a feature of the dissenting judgments), that the LRA 2002 “did not abolish” section 75 of the LRA 1925, and took this as evidence that “Parliament confirmed the domestic view that the traditional general interest remained valid” (at paragraph 73), without particularising further. Whether this laconic conclusion is accurate in light of the scheme of the LRA 2002 and the Law Commission reports referred to above may be open to doubt. Finally, in considering the question of the fair balance, it repeated a number of the points discussed immediately above, however it is clear that a further factor in assessing whether adverse possession struck a fair balance was that the limitation period was a lengthy one, and that possession actions, necessary to stop the clock running, were a relatively straightforward procedural step to take (paragraph 80). It was also clear that the rules of adverse possession were sufficiently well established to be a known risk to land owners in England. There was no breach.

Comment

While many will welcome both the outcome in Pye and the Grand Chamber’s unwillingness to interfere with the settled rules of private law of a contracting state, Pye seems a curiously unsatisfactory judgment. The classification of adverse possession as a mere control of use seems surprising, especially when it is recalled that section 75 was in its time viewed as giving effect to a “parliamentary conveyance” from the paper owner in favour of the squatter: Central London Commercial Estates Limited v Kato Kagaku Ltd [1998] 4 All ER 948 (contrast paragraph 65 of the majority judgment in the Grand Chamber). It is to be noted, however, that only two of the minority, Judges Loucaides and Kovler, apparently took a different view on this point, and even then did not clearly do so. Further, it is not entirely clear that the majority engaged sufficiently with the changes – and the reasons for them – contained in the LRA 2002. Of course, amendments of legislation by a State are not admissions of prior breaches. However this was one of the few cases in which the Grand Chamber had in front of it, in the form of Law Commission reports and judgments of domestic judges, a clearly expressed, and critical, view of the operation of the law. From these it ought to have been apparent that the social policies which had justified adverse possession – encouraging landowners to use their land rather than leave it idle – had in part been overtaken, land being regarded by many as an investment. While the view of land as a freely tradable commodity is at the heart of the proposed electronic conveyancing scheme under the LRA 2002, it is also evident in other changes dating back to the 1990’s, such as the introduction of the default power for trustees of land to buy further land as an investment under the Trusts of Land and Appointment of Trustees Act 1996, a power now subsumed into and extended by section 8 of the Trustee Act 2000. This requires enhanced security of title, especially where, as so often the case, land is bought to let it ripen for future development (so called “land banks”). It was very clear, and was one of the main prompts for the Law Commission proposals, that adverse possession threatened this goal in registered land. It is perhaps regrettable that the majority hid those issues in the margin of appreciation. Reference should be made to the dissenting judges, amongst whom is to be found the United Kingdom’s own judge. The dissentients dealt more directly with the above concerns. Their view was that the absence of notification and compensation, and the undesirable disharmony between a system of registered title to land and a parallel system of title by long possession, meant that there was a breach of Rule Three.

Although Pye is no more, English Courts will have to deal with its legacy. Even before the first Strasbourg decision in Pye came out, English law sensed that it was vulnerable to challenge and had shifted to neutralise its perceived vulnerability: see Beaulane Properties Ltd v Palmer [2006] Ch 79. In effect, the High Court there resurrected the rule in Leigh v Jack [1879] 5 Ex D 264, in short that a squatter’s use had to be adverse to the owner’s title and inconsistent with the proposed use to which the land was to be put by the paper owner. It was a surprise to some that an escape from the Convention required the resurrection of what Lord Browne-Wilkinson had dubbed a “heresy” in Pye [2003] 1 AC 419, at pp. 437 – 438. The effect of the Grand Chamber decision is to leave Beaulane hanging in a jurisprudential vacuum. Its status is uncertain, though that uncertainty must surely only extend to asking whether it will be formally reversed or simply not followed in future (see the guidance given in cases of this kind in Kay and Others v Lambeth London Borough Council [2006] 2 AC 465, at pp. 497 - 498).