UK: Compensation for Land Lost Through Adverse Possession

The acquisition of land by adverse possession is a way in which a party who is not the legal owner of land can acquire legal title by virtue of possessing the land for a certain period of time pursuant to the provisions of the Limitation Act 1980 and the Land Registration Act 1925, or more recently, the Land Registration Act 2002.

The European Court of Human Rights has made a ruling recently in the case of J.A. Pye (Oxford) Ltd v. United Kingdom that the acquisition of registered land by adverse possession is in breach of Article 1 of Protocol 1 of the European Convention on Human Rights, which covers the entitlement to peaceful enjoyment of possessions. By a majority decision the Court held that Article 1 had been violated.

As a result of this decision, the registered proprietor of land is now entitled to compensation for the loss of his land through a claim for adverse possession. The European Court decided that the amount of the compensation payable should be reserved to allow the United Kingdom Government to agree a figure with the paper owner.

The company owned the land in question and Mr. and Mrs. Graham owned adjacent land. They had occupied the company’s land under a grazing agreement until 31st December 1983. When that agreement expired the Grahams continued to occupy the grazing land.

In 1997 the Grahams registered cautions at the Land Registry claiming adverse possession of the land. The company objected and commenced possession proceedings. The Grahams argued that the company was statute-barred and that they had acquired adverse possession of it, having been in occupation for 12 years. The High Court held that the claim for adverse possession had been proved. The Court of Appeal overturned that decision on the basis that the Grahams had not had the requisite intention to possess the land, which it held was fundamental to establishing adverse possession.

Before the Court of Appeal hearing took place, the Human Rights Act 1998 came into force and the company sought to rely on it. However, the Court of Appeal held that Article 1 did not affect the operation of the Limitation Act in this context.

The Grahams appealed this decision and the House of Lords overturned it because they considered that the Grahams had been in possession of the land and had shown the requisite intention to possess it for the 12 year period. The Article 1 point was not pursued in the House of Lords as it was conceded that the Human Rights Act 1998 could not have effect retrospectively.

The company appealed to European Court of Human Rights on the basis that it had been deprived of its land by the operation of the domestic rules on adverse possession and in a manner which was neither in the public interest nor proportionate.

This Article provides that

"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in anyway impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties".

• The combined operation of the Limitation Act 1980 and the Land Registration Act 1925, rather than factual occupation by the Grahams, had brought the company’s title to an end. Therefore Article 1 was engaged. The operation of the legislation in this way constituted interference by the State with the company’s rights under Article 1.
• The consequence of the company not regularising the occupation of the Grahams, or not seeking an order for possession within 12 years was that it lost its land pursuant to the legislation without receiving compensation for the loss. This result was disproportionate, not in the public interest and could only be justified in exceptional circumstances.
• The parties should seek to agree the level of the compensation and costs payable and the European Court would allow 6 months for this to happen.

Whilst this is a decision of major importance, it will only affect claims, relating to both registered and unregistered land, where the 12 year period had not expired before 2 October 2000, which is the date when the Human Rights Act 1998 came into force. Claims where the limitation period expired prior to the coming into force of the Human Rights Act will be determined under the old law.

Had the land in the Pye case been unregistered, the Court may have reached a different decision.

The Pye case was brought against the UK Government and was not an appeal in the action against the Grahams. From now on anyone losing title to registered land as a result of an adverse possession claim will be entitled to compensation. Pursuant to this decision the compensation will be payable by the government. We can expect an urgent review of the law relating to adverse possession in the near future.

© RadcliffesLeBrasseur

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