House of Lords
|Session 2001- 02
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|Judgments - J A Pye (Oxford) Ltd and Others v Graham and Another on 4 July 2002
HOUSE OF LORDS
Lord Bingham of Cornhill Lord Mackay of Clashfern Lord Browne-Wilkinson Lord Hope of Craighead Lord Hutton
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
J A PYE (OXFORD) LTD AND OTHERS
GRAHAM AND ANOTHER
ON 4 JULY 2002
 UKHL 30
LORD BINGHAM OF CORNHILL
1. For the reasons given by my noble and learned friend Lord Browne-Wilkinson, which I have had the privilege of reading in draft, I would allow this appeal and restore the order of the judge. In doing so, I would echo the misgivings expressed by the judge in the closing paragraph of his judgment:  Ch 676 at 709-710.
2. The Grahams have acted honourably throughout. They sought rights to graze or cut grass on the land after the summer of 1984, and were quite prepared to pay. When Pye failed to respond they did what any other farmer in their position would have done: they continued to farm the land. They were not at fault. But the result of Pye's inaction was that they enjoyed the full use of the land without payment for 12 years. As if that were not gain enough, they are then rewarded by obtaining title to this considerable area of valuable land without any obligation to compensate the former owner in any way at all. In the case of unregistered land, and in the days before registration became the norm, such a result could no doubt be justified as avoiding protracted uncertainty where the title to land lay. But 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. It is reassuring to learn that the Land Registration Act 2002 has addressed the risk that a registered owner may lose his title through inadvertence. But the main provisions of that Act have not yet been brought into effect, and even if they had it would not assist Pye, whose title had been lost before the passing of the Act. While I am satisfied that the appeal must be allowed for the reasons given by my noble and learned friend, this is a conclusion which I (like the judge: p 709F) "arrive at with no enthusiasm".
LORD MACKAY OF CLASHFERN
3. I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Browne-Wilkinson. I agree that this appeal should be allowed for the reasons which he gives.
4. In this case the defendants, as personal representatives of the late Michael John Graham, seek to establish a possessory title to 25 hectares of agricultural land at Henwick, Thatcham, Berkshire ("the disputed land"). At all material times the paper title to that land has undoubtedly been vested in the first plaintiff J A Pye (Oxford) Land Ltd and its predecessor in title in the same group JA Pye (Oxford) Ltd ("Pye") as registered proprietors of the disputed land at Her Majesty's Land Registry. At the trial Neuberger J ( Ch 676) held that the defendants had established title by possession but his decision was reversed by the Court of Appeal  Ch 804 (Mummery, Keene LJJ and Sir Martin Nourse). The defendants appealed to your Lordships' House.
5. I will later have to deal with the law at some length but at this stage it is sufficient to highlight the essential issue. The Grahams, in order to succeed, will have to show that they "dispossessed" Pye more than 12 years before Pye started proceedings on 30 April 1998. As will appear, this requires the Grahams to prove that Pye were dispossessed between 31 August 1984 (when the Grahams' occupation ceased to be with the permission of Pye) and 30 April 1986. It is the actions and intentions of the parties during this period that will determine the proper outcome of the case.
6. Until 1977 Pye was the owner of Henwick Manor together with a substantial amount of surrounding land. In 1977 Pye sold the farmhouse and approximately 67 hectares of the land (Manor Farm) but retained the disputed land which was considered to have development potential. It was, and remains, Pye's intention to retain the disputed land until planning permission can be obtained for development.
7. The disputed land consists of four fields, the Drive Field, Hill Field, Paddocks and Wallis Field. The farmhouse at Manor Farm is approached by a private drive owned with Manor Farm which runs from a public highway to the farmhouse. Abutting the southern side of the drive is the northern boundary of the disputed land. There is a further part of the disputed land to the west of the driveway and immediately south of the farmhouse and farm buildings. The eastern boundary of the disputed land abuts the public highway. Apart from the gates I shall mention, all the boundaries of the disputed land are separated from the adjoining land by hedges.
8. On the eastern boundary, there is a gate from the public highway into Drive Field. That gate has been padlocked at all material times, the key to that padlock being held by Mrs Michael Graham. The hedge between the driveway and Drive Field and the Paddocks has three gates. Pye has no rights of access over the driveway. There is a fourth gate on to the disputed land on its northern boundary from the farmhouse into Hill Field. There is a public footpath going through Manor Farm and then, over a stile, through Hill Field.
Acquisition of Manor Farm
9. In 1982 Mr John Graham and his wife purchased Manor Farm. From then on, until his unhappy death in 1998, the farming activities at Manor Farm were the day-to-day responsibility of their son Michael Graham. Initially he was farming the land for the benefit of a family partnership but later on behalf of himself and his wife Caroline Graham.
10. At the time the Grahams acquired Manor Farm, they were aware that the disputed land had been used as grazing land under agreements between the owners of Manor Farm and Pye. The Grahams were aware that this disputed land was owned by Pye and had been acquired by Pye in the hope of being able to develop it in the future. As I have said, the disputed land was fully enclosed so as to exclude the whole world except for access with the use of the key held by the Grahams from the public highway and by foot over the footway that I have mentioned.
11. On 1 February 1983 Pye entered into a written agreement with John Graham who is described as "the Grazier". That agreement permitted use of the disputed land until 31 December 1983 in return for a payment of £2,000. It limited the use of the disputed land to grazing or mowing for one cut of grass and the grazier was obliged to restrict the use of the disputed land to the grazing of sheep, cattle and horses. He was also obliged to keep the disputed land free of weeds, the gates, fences and ditches in good order, and to use the land in a good and husband-like manner. It further provided that Mr Graham would not permit any trespass upon the land and further that he would not part with "possession" of the disputed land. It further reserved to Pye the right to terminate the agreement and gain "possession" on the service of six months' notice. It also expressly provided that any grazing after its expiry would have to be by a new and distinct contract.
12. The Grahams had previously enjoyed an informal licence to graze the disputed land from September 1982 until 1 February 1983. It is not clear whether the Grahams vacated the land prior to the commencement of the 1983 agreement on 1 February 1983. The Grahams occupied the land under the grazing agreement until 31 December 1983. On 30 December 1983 Mr Evans, a chartered surveyor acting for Pye, wrote to Pye suggesting that Mr John Graham be granted a fresh grazing agreement for 1984. On the same day he wrote to Mr John Graham noting that the grazing agreement was on the verge of expiration and requiring the Grahams to vacate the land. In January 1984 Pye refused the request for a grazing agreement for 1984 because they anticipated seeking planning permission for the development of all or part of the disputed land and were firmly advised that it would be sensible for them to have the disputed land in hand at the time of the proposed planning application and the planning appeal which would almost certainly ensue. The Grahams were also led to believe that Pye would soon be making an application for planning permission and did not want the disputed land to be grazed because such grazing, in Pye's view, might damage the prospects of obtaining permission. No change of attitude on the part of Pye was ever communicated to the Grahams.
13. Notwithstanding the requirement to vacate the land at the expiry of the 1983 agreement on 31 December 1983, the Grahams remained in occupation on 1 January 1984 and have remained in occupation at all times since that date. Even though there was no grazing agreement in place in 1984, Michael Graham spread dung and loose housing straw on the disputed land during the winter of 1983/84. He was aware at the time he was spreading the dung that he was doing so at his own risk as a grazing agreement for 1984 might not be forthcoming.
14. In approximately March 1984 the Grahams turned cattle out on to the disputed land and left them to graze until about November 1984. He harrowed, rolled and fertilised the land and spread dung and straw in February and March 1984. He did this on the basis that it was his intention to carry on using the land for grazing until requested not to do so. No request to vacate or to pay for the grazing which was taking place was made. If it had been made, Michael Graham would happily have paid. He took advantage of the ability to use the disputed land as no one challenged him and he was keen not to waste the effort that he had put into preparing the grazing during 1983 and over the winter of 1983/84.
15. In June 1984 an agreement was reached whereby Pye agreed to sell to John Graham the standing crop of grass on the disputed land for £1,100. That grass was cut by the Grahams and the judge made a finding that the cut was completed by 31 August 1984. The charge of £1,100 was paid in November 1984. In the circumstances, all use of the disputed land by the Grahams from 1 September 1984 onwards was made without the permission of Pye.
16. In December 1984, pursuant to a request from the Grahams an enquiry was made of Pye whether the Grahams could take another cut of hay or preferably have a grazing agreement in 1985. There was no answer to this letter from Pye or to subsequent letters sent to Pye in May 1985. Thereafter, the Grahams did not attempt to make contact with Pye.
17. From September 1984 onwards until 1999 the Grahams used the whole of the disputed land for farming. The Grahams never vacated the disputed land: they kept farming all the year round. Dry cattle and yearlings were kept in a shed on part of the disputed land throughout the year. Dung was spread two or three times during 1984/85 and the disputed land was harrowed and rolled in February/March 1985, fertilised at Easter 1985 and limed in early 1985. In doing this Michael Graham was aware that there was a risk that he would not obtain the benefit of the work as there was no grazing agreement or agreement to take a cut of hay. He would have been prepared to pay Pye for a grazing licence or the hay but in the absence of any agreement he was willing to take a chance that an agreement would be forthcoming later.
18. The same use and management of the whole of the disputed land for grazing was maintained until 1994 when the use of the Drive Field changed to arable. Save during the mid-winter months there would be between 80 and 140 cattle grazing on the disputed land. In addition part of the disputed land was limed in 1985 and re-seeded in 1988. The boundary hedges were trimmed every year from 1983 onwards by someone employed by the Grahams and from 1984 onwards the boundary fencing was maintained by the Grahams as were the ditches on the disputed land.
19. Various witnesses confirmed that the disputed land appeared to them to be part of Manor Farm and some gave evidence that they believed that Michael Graham owned it. When asked in cross-examination what an occupying owner of the disputed land might have done, over and above what had been done by the Grahams between 1984 and 1997, Mr Evans, an experienced chartered surveyor, was unable to think of anything.
20. In his draft witness statement Michael Graham said that in the light of the lack of interest shown by Pye in the land he continued to use the land for what he considered to be its best use. He hoped a further agreement would be forthcoming in 1984. After he received no replies to his enquiries in 1985 he "gave up trying" and waited to see if Pye contacted him. He anticipated that Pye would contact him at some point and was happy to leave matters until they did. From May 1985 at the latest, his attitude was simply that he would have preferred to have obtained a formal agreement and, if Pye had asked him to pay for his occupation, he would have done so. In his draft witness statement he says that at the time he believed that it was possible to obtain ownership of land after it had been occupied for a sufficient number of years which he mistakenly thought to be seven years.
21. As to the activities of Pye on the disputed land between 1984 and 1999, there were none. In 1993 a representative of Pye visited the disputed land to inspect it but even then he only viewed it from the road and from the drive; he did not actually go on to the land. Pye showed no interest in the agricultural management of the land. Pye carried out certain paper transactions during this period relating to the disputed land. But it is not suggested that they were sufficient to constitute possession. Indeed nothing was done by or on behalf of Pye to the land itself from 1 January 1984 onwards.
22. In 1997 Michael Graham registered cautions at the Land Registry against Pye's title on the grounds that he had obtained "squatter's title" by adverse possession. Pye's solicitors sought to warn off those cautions. In early February 1998 Michael Graham agreed to release the cautions in relation to certain land needed for a relief road. Shortly thereafter his draft statement was prepared. On 19 February 1998 Michael Graham was most unhappily killed in a shooting accident.
23. On 30 April 1998 Pye issued the originating summons seeking cancellation of the caution. A week or so later, further cautions were registered on behalf of Caroline Graham, Michael's widow, and in September 1998 letters of administration to Michael's estate were granted to Caroline Graham and her father. On 20 January 1999 Pye issued further proceedings seeking possession of the disputed land.
24. At first instance there was an issue whether time should be reckoned back from the date of the issue of the originating summons or from the date of the writ action commenced on 20 January. Before the Court of Appeal it was agreed that nothing turned on the point since there was no material change in the parties' actions or states of mind between 30 April 1986 and 20 January 1987 (twelve years before the commencement of the two actions respectively).
The Limitation Act 1980
25. Section 15 of the Act of 1980 provides:
Schedule I paragraph 1 provides:
Schedule 1 paragraph 8 provides:
26. It is to be noted that the right of action to recover the land is barred whenever twelve years have elapsed from the time when any right of action accrued: it does not have to be a period immediately before action brought. In the case of unregistered land, on the expiration of the limitation period regulating the recovery of the land, the title of the paper owner is extinguished: Act of 1980 section 17. In the case of registered land, under section 75(1) of the Land Registration Act 1925 on the expiry of the limitation period the title is not extinguished but the registered proprietor is deemed to hold the land thereafter in trust for the squatter. The provisions as to registered land have been fundamentally altered by the Land Registration Act 2002 but that Act does not apply to the present case.
27. The action was brought by Pye at the earliest on 30 April 1998. The question therefore is whether, prior to that date, there was a period of twelve years during which the Grahams were in possession of the disputed land to the exclusion of Pye. More accurately, there are two questions viz:
28. It is common ground that Pye did not "discontinue" possession within the meaning of the Act. Further I did not understand there to be any claim by Pye that, if the Grahams had at any time prior to 30 April 1986 dispossessed Pye, the Grahams thereafter ceased to be in possession for the purposes of the Act.
29. It was further common ground that so long as the Grahams were occupying the disputed land with Pye's consent, they could not be treated as having dispossessed Pye. Accordingly no relevant right of action can have accrued to Pye under Schedule 1 paragraph 1 until after the expiry on or about 31 August 1984 of the grass-cutting permission.
30. The relevant question therefore is whether at some time between 1 September 1984 and 30 April 1986 Pye were "dispossessed" of the disputed land so that, at that date, Pye's right of action accrued for the purposes of Schedule 1 para 1 to the 1980 Act.
31. The apparently straight forward statutory provisions have given rise to considerable difficulties, most of which flow from the remarks of the Court of Appeal in Leigh v Jack (1879) 5 Ex. D 264 and Littledale v Liverpool College  1 Ch 19. In a remarkable judgment at first instance, Powell v McFarlane (1977) 38 P & CR 452, Slade J traced his way successfully through a number of Court of Appeal judgments which were binding on him so as to restore a degree of order to the subject and to state clearly the relevant principles. Although there are one or two minor points on which (unlike Slade J) your Lordships are not bound by authority and can therefore make necessary adjustments, for the most part the principles set out by Slade J as subsequently approved by the Court of Appeal in Buckinghamshire County Council v Moran  Ch 623 cannot be improved upon. Hereafter I adopt them without specific recognition beyond marking with inverted commas those passages which I have quoted verbatim.
Possession, Dispossession, Ouster and Adverse Possession
32. In Powell's case Slade J was considering the Limitation Act 1939. However, apart from paragraph 8(4) of Schedule 1 to the 1980 Act the statutory provisions applicable in the present case are identical in the 1939 Act and the 1980 Act. Slade J first addressed himself to the question what was the meaning of possession and dispossession in the statutory provisions. After noticing that possession and dispossession were not defined in the 1939 Act he continued, at p 469:
Save as to the last sentence I have quoted (as to which I will make certain further comments below), I entirely agree with that statement of the law. Slade J felt doubts whether, in the light of certain Court of Appeal judgments then binding on him, he could properly adhere to the view that he expressed. Decisions (for example Wallis's Cayton Bay Holiday Camp Ltd v Shell-Mex and BP Ltd  1 QB 94) appeared to hold that use of the land by a squatter which would have been sufficient to constitute possession in the ordinary sense of the word was not enough: it was said that such use by the squatter did not constitute "adverse possession" which was required for the purposes of limitation unless the squatter's use conflicted with the intentions of the paper title owner as to his present or future use of the disputed land. In those cases it was held that the use by the squatter was, as a matter of law, to be treated as enjoyed with the implied consent of the paper owner. Not surprisingly, Slade J found this line of reasoning difficult to follow. It is hard to see how the intentions of the paper title owner (unless known to the squatter) can affect the intention of the squatter to possess the land. In my judgment, Slade J was right and the decision of the Court of Appeal in those cases wrong. In any event Parliament (on the advice of the Law Reform Committee) has intervened to reverse the principle of implied licence: see 1980 Act, Schedule 1, paragraph 8 (4). However there remains a long standing confusion as to what constitutes "dispossession" and the place, if any, of "adverse possession" in the modern law.
33. The root of the problem is caused by the concept of "non-adverse possession". This was a concept engrafted by the common law and equity onto the limitation statute of James I (21 Jac 1. 16). Before the passing of the Real Property Limitation Acts 1833 and 1874, the rights of the paper owner were not taken away save by a "disseisin" or an ouster and use of the land by the squatter of a kind which was clearly inconsistent with the paper title. Such inconsistent use was called adverse possession: see Professor Dockray, "Adverse Possession and Intention"  Conveyancer 256, at p 260. Under the 1833 Act (sections 2 and 3 of which were substantially to the same effect as the 1980 Act, section 15(1) and Schedule 1 para 1) the right of action was barred 20 years after "the right . . . to bring such action shall have first accrued" and "such right shall be deemed to have first accrued at the time of such dispossession or discontinuance of possession". Soon after the passing of the 1833 Act it was held that "the second and third sections of that Act . . . have done away with the doctrine of non-adverse possession, and . . . the question is whether twenty years have elapsed since the right accrued, whatever the nature of the possession": Denman CJ in Nepean v Doe d. Knight (1837) 2 M & W 894 at p 911. The same statement of the new law was made in Culley v Doe d. Taylerson (1840) 11 Ad & E 1008, at p 1015 where Denman CJ said:
34. The same was held to be the law by the Privy Council in a carefully reasoned advice delivered by Lord Upjohn in Paradise Beach and Transportation Co Ltd v Price-Robinson  AC 1072; see also Professor Dockray (supra).
35. From 1833 onwards, therefore, old notions of adverse possession, disseisin or ouster from possession should not have formed part of judicial decisions. From 1833 onwards the only question was whether the squatter had been in possession in the ordinary sense of the word. That is still the law, as Slade J rightly said. After 1833 the phrase "adverse possession" did not appear in the statutes until, to my mind unfortunately, it was reintroduced by the Limitation Act 1939, section 10 of which is in virtually the same words as paragraph 8 (1) of Schedule 1 to the 1980 Act. In my judgment the references to "adverse possession" in the 1939 and 1980 Acts did not reintroduce by a side wind after over 100 years the old notions of adverse possession in force before 1833. Para 8(1) of Schedule 1 to the 1980 Act defines what is meant by adverse possession in that paragraph as being the case where land is in the possession of a person in whose favour time "can run". It is directed not to the nature of the possession but to the capacity of the squatter. Thus a trustee who is unable to acquire a title by lapse of time against the trust estate (see section 21) is not in adverse possession for the purposes of para 8. Although it is convenient to refer to possession by a squatter without the consent of the true owner as being "adverse possession" the convenience of this must not be allowed to re-introduce by the back door that which for so long has not formed part of the law.