The uncertainty that this trust device has brought about heightens where it is being applied on registered leasehold estate. Law Commission pointed out that Land Registry has fixed no proper proceedings whether a squatter should be given a freehold or leasehold title where he applies for registration against a registered leasehold title which he has adversely possessed.[20] The badly drafted subsection (2) which provided that “any person claiming to have acquired a title under the Limitation Acts to a registered estate in the land may apply to be registered as proprietor thereof” give rise to difficult conveyancing matter as it brought about two different interpretation.
In Fairweater v. St Mary Lebone Property Company Ltd [21], Lord Radcliffe said that:
“…subsection (1) must somehow be reconciled with the provision under subsection (2) for the squatter to apply to register his own title, which would presumably be his independent possessory title acquired by adverse possession.”
Whereas in Spectrum Investment Co v Holmes [22], Browne-Wilkinson J provided that:
“… section 75(2) then refers to the squatter applying to be registered as proprietor 'thereof'. This word[s] … refer back to the registered estate in the land against which the squatter has acquired … i.e. the leasehold interest...”
It is clear that Browne Wilkinson J.’s interpretation of s75 (2) contradicts with Lord Radcliffe’s one as his view is that section 75(2) relates not to the usurped leasehold title but to the independent prescriptive title acquired by adverse possession.[23] Mr. Justice Sedley in Central London Commercial Estates Ltd v Kato Kagaku[24] however prefers Browne Wilkinson J.’s interpretation as his view is that:
“it eliminates the possible view that while s75 (1) creates a trust of the leasehold interest for the squatter, s75 (2) allows registration of the squatter’s own prescriptive title.”
The fact that there is no settled practice therefore causes confusion. In fact, practice actually differs between District Land Registries as to whether squatter is registered with qualified freehold title or leasehold title.[25]
The ill-thought-out subsection (3) which provided that “the registrar shall, on being satisfied as to the applicant’s title, enter the applicant as proprietor either with absolute, good leasehold, qualified, or possessory title…” also brings about some problem. The Land Registry’s practise is that they will not register two persons with similar titles to the same estate[26] as this would “runs contrary to the whole scheme of the Act, which is intended to ensure that there shall be one title for any interest in registered land.”[27] Where a squatter who has adversely possessed against a leasehold title is register with either an absolute or possessory freehold title, the effect of registration is that the registrar will then closes the existing freehold title, which then continues to exist, but off the register.[28] This will be unfair to the freeholder as his rights are barred by adverse possession before his right to oust the squatter had even arisen.[29] This argument could be supported by Lord Denning who said that “…the freeholder has no notice of the trust in favour of the squatter and his interests are not to be prejudiced by the fact that the leasehold is registered.” [30]
The Coming into Force of LRA 2002
As a result of the flaws in LRA 1925 and LA 1980, there is a perception that the existing Act and Rules are muddled and out of date.[31] This therefore results in the reform of the doctrine of adverse possession in registered land and the repeal of LRA 1925, which was then replaced with which introduces new form of law and procedures to govern the operation of adverse possession on registered land. [32] LRA 2002 which came into force on 13 October 2003 is a joint project between the Law Commission and HM Land Registry. It comes together with the Land Registration Act Rules which set out the procedure to be followed. [33]
As the objective of the new Act is to preserve the ‘fundamental concept of indefeasibility’[34], the system of registration of title which was the idea behind the earlier Act is then replaces with a wholly new system of title by registration.[35] Based on the academician Park classification of adverse possession, LRA 1925 which UK had adopted is based on the system of overriding rule while is based on veto rule. In his view, jurisdictions that operate a veto rule allows squatter to register against the land which he has adversely possessed provided that their applications are not vetoed by the registered proprietor. [36] This is true as under LRA 2002, title will no longer lost simply through a lapse of time.[37] Once a squatter is in adverse possession of land for 10 years, he is entitled to make an application to the registrar to be registered as a proprietor under a prescribed ADV1 form.[38] The onus of making a claim to a registered title is now placed on the adverse possessor.[39] This is consistent with the objective as it is not the act of possession that confers title but the actual registration.[40] Where the application is successful, the Land Registry will then notify proprietor of the estate to which the application relates and also to other interested persons such as the proprietor of any registered charge on that estate and if the estate is leasehold the proprietor of any superior registered estate.[41]
The heart of this new system is thus to provide an 'early warning' system to any person which might be affected by the adverse claim.[42] The registered owner can depend on this new scheme to alert himself on any adverse claim and will no longer have to remain attentive in defending his title against trespasser.[43] The emergence of this new scheme for notification of claims enables the registered land to be better protected against adverse possession claims as any party notified of the adverse claim is then entitled to object to the application.[44] The landowner may serve counter-notice on the Registry requiring the application be disposed of.[45] For as long as the registered owner keeps his address updated at the Land Registry and is capable of acting upon simple notices by opposing to it, his title will be safe.[46]
However, the fact is that the English veto rule is only conditional as although the registered landowner will be notified of the adverse claim, he may nevertheless need to act decisively.[47] A notice of objection which has not otherwise been submitted within 65 business days will subsequently trigger the registration of the squatter as the proprietor.[48] Once counter-notice is served, the squatter’s application for registration will then be rejected unless any of the three exceptional grounds listed below is established.[49] Nevertheless, where the squatter continue to remain in adverse possession throughout the two years of his application being rejected, or that no judgment is being executed against him within the two years, the landowner is certain to lose his land as the squatter will have another chance to reapply for registration as the new proprietor[50] irrespective of any objection from the registered proprietor[51]. This is fair as only the most careless or uninterested owner will lose his land by remain inactive during the two year period.[52]
Exceptions to the right to object the squatter’s application[53]
(i) Equity by estoppels
The first exception arises to prohibit the unconscionable conduct of the registered proprietor.[54] If the registered proprietor expressly or impliedly by acquiescence encouraged the squatter to believe that the squatter owned the land and the squatter detrimentally relied on this assurance, it would be unconscionable for the assurance to be withdrawn.[55] This is to prevent the of occurrence equitable fraud so that in the light of the circumstance mentioned, the defendant would have to recognise the claimant’s interest.[56]
LRA 2002 however adds the rider that successful plea of estoppels does not automatically result in the registration of the squatter as a proprietor of the estate in question but the circumstances must be such ‘that the applicant ought to be registered’.[57] The adjudicator is to look for substantial detriment so as to weight the cost.[58] Where the circumstances is that the squatter is entitled to some form of relief but not the registration of the squatter as proprietor, the adjudicator is empowered to grant other forms of relief.[59]
However detriment to support estoppels may be unfair to the registered proprietor. This is because the squatter may act to their detriment by making prejudicial lifestyle choices which are unrelated to land. [60] In addition, this exception allows a 10 year period of possession to be presented as ‘adverse’ even though they have entered into possession with the consent of the registered proprietor.[61]
(ii) Some other entitlement to be registered
This exceptional case arises where the squatter is entitled ‘for some other reason’ to be registered as proprietor of the register estate.[62] It permits reliance on the doctrine where an informal transfer in favour of the squatter has taken place.
(iii) Reasonable mistake as to boundary
The third exception which is closely related to the first exception is “relatively straightforward and preserves the valuable role of adverse possession in settling minor boundary disputes”.[63] To come within this exception, the boundary lines between adjoining properties must have never been fixed[64] and the squatter must have by misunderstanding of their rights in the landowner’s land, 'for at least ten years of the period of adverse possession ending on the date of the application, reasonably have believed that that land belonged to himself’.[65] This exception applies only to boundary disputes where a genuine mistake has been made.[66] Lord Wensleydale:
‘…if a stranger build knowingly on my land there is no principle of equity which prevents me from insisting on me having back my land ...”[67]
Previously, an adverse possessor may succeed in claiming neighbouring land even though he did not believe that the land were his as the test was simply that he intended to possess the land for the time being. Where the case is that the defendant is aware of the claimant’s mistaken understanding, he owned a duty to assert his title to prevent the claimant’s detriment and failure to do so would amount to equitable fraud. [68] As this exception will only be brought into force on 13 October 2004, registered owner will have the chance to restore moved boundaries to their correct positions where title has not yet been acquired by adverse possession before that date.[69]
While the third exception receives good feedback, there are disputes over the other two exceptions that they are too general as where the words of para.5 (2) makes it possible to invite a variety of interpretations, second exception makes it possible to envisage “other entitlements” being constructed in order to trigger the exception. [70]
Further Reforms
Through the introduction of the electronic conveyancing [71], LRA 2002 now makes it possible for the registered proprietor to argue that the squatter may check with minimum effort whether anyone has registered their title on the land before they decided to adversely possess on it.
The 2002 Act also reduces slightly the overriding status of adverse possession.[72] Under the 2002 Act, a squatter's rights will only bind the proprietor on first registration if the squatter was in actual occupation and that his occupation was either apparent or known to the proprietor.[73] Transitional provisions of three years from 13 October 2003 will protect squatters who had acquired title by adverse possession before the Act comes in as their interest will override against a first registration.[74] This three-year grace period therefore gives squatters the opportunity to register their interests.
In addition, the idea of trust on registered land is no more applicable under this new scheme as title will no longer be extinguished through possession[75] and will only be transferred when the register is changed.[76] These changes seem to be appropriate as it now makes it impossible for a sensible registered proprietor to be dispossessed without his knowledge.
The confusion under the old law is also now cleared as a squatter who succeeded in his adverse claim against a registered leasehold estate is now entitled to be registered against the existing title rather than to be registered with an independent new title.[77] It is only when the lease ceased to be effective then the squatter may begin to adversely possessed on the freehold title and claims his adverse possession against the freeholder. In order to be entitled to apply for registration replacing the registered freeholder the squatter would need to be in adverse possession of the freehold title for a further 10 years.[78]
Conclusion
LRA 2002 has been widely accepted by many as achieving a fair balance between the rights of the registered owner and the squatter.[79] The Act on one hand brings security to registered titles by providing a more absolute guarantee of ownership and operates by limiting any claim that can be made by a squatter, on the other hand filtered application of adverse possession to make sure that 'deserving' squatter is entitled to register.[80] The human right issues which arise under the previous law had also been resolved through the introduction of this new scheme.
On another sight of view, adverse possession can however be seen as encouraging “productive land use”.[81] In fact, New Zealand and a number of Australian territories were force to re-introduce the law of adverse possession as the numbers of abandoned land and a culture of informal transactions had seemed to threaten the marketability of registered land.[82]
As Dixon comments:
“… . there is nothing inherently contradictory in having principles of adverse possession operate in registered land, at least if those principles are seen positively as a method of transferring title from one person to another.” [83]
There are also views that the reforms introduced by the 2002 Act operates in a manner that is fairer to the owner[84] and is therefore seemed to inject more morality into the operation of the doctrine than have respect for the registration principles.
Bibliography
Books
Clarke, S, and S Greer, Land Law, Oxford University Press, New York, 2008.
Dixon, M, Modern Land Law, Routledge, 7th edn, New York, 2010.
Gray, K and SF Gray, Elements of Land Law, Oxford University Press, New York, 2008.
Journal Articles
Auchmuty, R, ‘Not Just A Good Children’s Story: A Tribute to adverse possession’, The Conveyancer, vol. 168, 2004, p.306.
Ballantine, HW, ‘Title by Adverse Possession’, Harvard Law Review, vol.32, 1918-1919, p. 135.
Brilliant, S, ‘A new name needed for adverse possession?’, Civil Court News, vol.3, 1 October 2002, p.15.
Chamberlain, L, ‘The Land Registration Act 2002- Part II’, vol. 152, New Law Journal, 26 July 2002, p.1145.
Cooke, E, “Adverse Possession - Problems of Title in Registered Land”, Legal Studies, vol. 14, no.1, March 1994, p.11.
Dixon, M, ‘The Reform of Property Law and The Land Registration Act 2002: A Risk Assessment’, The Conveyancer, vol.67, 2003, p.151.
Dockray, M, ‘Why Do We Need Adverse Possession’, The Conveyancer, vol. 49, 1985, pp. 272-277.
Flatau, T, ‘For the record’, New Law Journal, vol.153, 18 July 2003, p.1092.
Hickman, N, ‘Benchmarks: The Conveyancer’s Revenge?’, LS Gaz, 6 November 2003, p.33.
Higgins, R, ‘Get Off My Land!’, New Law Journal, vol. 155, 23 September 2005, p.1408.
Madge, N, ‘Benchmark: Squatter Rights: Juggling with Numbers’, LS Gaz, 17 July 2003, p.33.
Marks, S, ‘The Land Registration Act’, New Law Journal, vol. 152, 5 April 2002, p.492.
Nield, S, ‘Adverse Possession and Estoppel’, The Conveyancer, vol. 168, 2004, p. 128.
Pascoe, S, ‘Upholding Squatters’ Rights in Leasehold Land: Central London Commercial Estates Ltd v. Kato Kagaku Ltd’, The Conveyancer, vol.63, 1999, p.329 at 337.
Riley, A, ‘Practice Points: Have The Changes Registered?’, LS Gaz, 9 October 2003, p.39.
Woods, U, ‘The English Law on Adverse Possession: A Tale of Two System’, Common Law World Review, vol. 38, no.1, 1 March 2009, p.27.
Website Sources
MM Park, The Effect of Adverse Possession on Part of a Registered Title Land Parcel, University of Melbourne, 26 Feb 2009, retrieved, 18 Dec 2010, <http://eprints.unimelb.edu.au/>
Other Sources
Law Commission Report 254 (1998) Land Registration for the Twenty-First Century: A Consultative Document
Law Commission Report 271 (2001) Land Registration for the Twenty-First Century: A Conveyancing Resolution
[1] Limitation Act 1980, S 15 (1).
[2] M Dixon, Modern Land Law, Routledge, 7th edn, New York, 2010, p.428.
[3] Law Commission Report 254 (1998) Land Registration for the Twenty-First Century: A Consultative Document, para 10.11.
[4] HW Ballantine, ‘Title by Adverse Possession’, Harvard Law Review, vol.32, 1918-1919, p. 135.
[5] M Dixon, ‘The Reform of Property Law and The Land Registration Act 2002: A Risk Assessment’, The Conveyancer, vol.67, 2003, p.151.
[6] JA Pye (Oxford) Ltd v Graham [2000] Ch 676 at 710B-C
[7] Law Commission No 254 (1998) at paras 10.1-10.19.
[8] Law Reform Committee, 21st report (1977) para 1.7, Cmnd, 6923.
[9] Per Lord St. Leonards L.C., Trustees of Dundee Harbour v. Dougall (1852) 1 Macq. 321.
[10] M Dockray, ‘Why Do We Need Adverse Possession’, The Conveyancer, vol. 49, 1985, p. 273.
[11] op. cit., p.274.
[12] JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at [2]
[13] Dockray, op. cit., p.275.
[14] LRA 1925, s 70 (1)(f)
[15] Law Com No 254 (1998) at paras 5.46–8.
[16] LRA 1925, s 75 (1)
[17] S Clarke and S Greer, Land Law, Oxford University Press, New York, 2008, p.188.
[18] Fairweater v. St Mary Lebone Property Company Ltd [1963] AC 542-543.
[19] Clarke and Greer, loc. cit.
[20] Law Com No 254 (1998) at para 10.38
[21] [1963] AC 510
[22] [1981] 1 WLR 221
[23] S Pascoe, ‘Upholding Squatters’ Rights in Leasehold Land: Central London Commercial Estates Ltd v. Kato Kagaku Ltd’, The Conveyancer, vol.63, 1999, p.337.
[24] [1998] 4 All ER 948
[25] Law Com No 254 (1998) at para. 10.38.
[26] Law Com No 254 (1998) at para 10.37.
[27] Per Browne Wilkinson J. Spectrum Investment v Holmes [1981] 1 WLR 221 at 228.
[28] E Cooke, “Adverse Possession - Problems of Title in Registered Land”, Legal Studies, vol. 14, no.1, March 1994, p.11.
[29] Law Com 254 (1998) at para. 10.41.
[30] Fairweater v. St Mary Lebone Property Company Ltd [1963] AC 510
[31] S Brilliant, ‘A new name needed for adverse possession?’, Civil Court News, vol.3, 1 October 2002, p.15.
[32] LRA 2002, Sch. 6, Pt 9.
[33] N Madge, ‘Benchmark: Squatter Rights: Juggling with Numbers’, LS Gaz, 17 July 2003, p.33.
[34] Law Commission Report 271 (2001) Land Registration for the Twenty-First Century: A Conveyancing Resolution at para. 14.3
[35] T Flatau, ‘For the record’, New Law Journal, vol.153, 18 July 2003, p.1092.
[36] MM Park, The Effect of Adverse Possession on Part of a Registered Title Land Parcel, University of Melbourne, 26 Feb 2009, retrieved, 18 Dec 2010, <http://eprints.unimelb.edu.au/>
[37] Law Com No 271 (2001) at paras 2.74, 14.5 and 14.9.
[38] LRA 2002, s 97, Sch 6, para 1 (1)
[39] LRA 2002, s 97, Sch 6, para 1 (1).
[40] S Marks, ‘The Land Registration Act’, New Law Journal, vol. 152, 5 April 2002, p.492.
[41] LRA 2002, Sch 6, para. 2 (1).
[42] R Higgins, ‘Get Off My Land!’, New Law Journal, vol. 155, 23 September 2005, p.1408.
[43] Dixon, op. cit., p.444.
[44] LRA 2002, s 73 (1)
[45] LRA 2002, Sch 6, para. 3(1)
[46] A Riley, ‘Practice Points: Have The Changes Registered?’, LS Gaz, 9 October 2003, p.39.
[47] Higgins, loc. cit.
[48] N Hickman, ‘Benchmarks: The Conveyancer’s Revenge?’, LS Gaz, 6 November 2003, p.33.
[49] LRA 2002, Sch 6, para 5 (1).
[50] LRA 2002, Sch 6, para 6(1).
[51] LRA 2002, Sch 6, para 7.
[52] Dixon, op. cit., p.446.
[53] LRA 2002, Sch 6, para 5.
[54] LRA 2002, Sch 6, para 5(2) (a)
[55] K Gray and SF Gray, Elements of Land Law, Oxford University Press, New York, 2008, p.1173.
[56] S Nield, ‘Adverse Possession and Estoppel’, The Conveyancer, vol. 168, 2004, p. 128.
[57] LRA 2002, Sch 6, para 5 (2) (b).
[58] Gillet v Holt [2001] Ch. 210.
[59] LRA 2002, s 110 (4).
[60] Nield, op. cit., p.129.
[61] Gray, loc. cit.
[62] LRA 2002, Sch 6, para 5 (3)
[63] Dixon, op. cit., p.152.
[64] LRA 2002, Sch 6, para 5 (4)(a)-(b)
[65] LRA 2002, Sch 6, para 5(4)(c)
[66] R Auchmuty, ‘Not Just A Good Children’s Story: A Tribute to adverse possession’, The Conveyancer, vol. 168, 2004, p.306.
[67] Per Lord Wensleydale in Ramsden v Dyson (1866) 1 L.R. 129 at 168
[68] Nield, op. cit., p.132
[69] Riley, loc. cit.
[70] Dixon, loc. cit.
[71] Law Com 254 (1998) at para 11.2.
[72] U Woods, ‘The English Law on Adverse Possession: A Tale of Two System’, Common Law World Review, vol. 38, no.1, 1 March 2009, p.27.
[73] LRA 2002, sch. 3, para. 2(c); LRA 2002, s. 11(4)(b) and (c)
[74] LRA 2002 sch 12, para 7
[75] LRA 2002, s 96(1) and (3)
[76] L Chamberlain, ‘The Land Registration Act 2002- Part II’, vol. 152, New Law Journal, 26 July 2002, p.1145.
[77] LRA 2002, Sch 6, para 1(1)
[78] LRA 2002, Sch 6, paras 2-5
[79] Law Com No 271 (2001) at para 14.4.
[80] Woods, loc. cit.
[81] Dixon, loc. cit.
[82] Woods, loc. cit.
[83] Dixon, op. cit., pp. 151–152.
[84] Law Com No 254 (1998) at para 10.2.
