Claims for adverse possession are being increasingly restricted by the legislature and the courts. The recent High Court decision in Beaulane v Palmer [2005] has further adjusted the scales in favour of landowners and should be heralded for doing so. The Human Rights Act 1998 (HRA 1998) has been held to prevent squatters from taking land without compensating the true owner. But will this simply move the argument onto how much compensation should be paid by a squatter for the land? Or has adverse possession reached the end of the road?

The law

ïhe law in this area was, until recently, embodied in s75 of the Land Registration Act 1925 and ss15 and 17 of the Limitation Act 1980 (the old regime). A squatter could claim adverse possession of land from the paper title owner where:

• they possessed the land and excluded all others (this was generally interpreted as requiring some form of fencing or partitioning of the land);
• they did so without the paper-title owner’s permission; and
• they did so for at least 12 years.

Section 75 has since been repealed by the Land Registration Act 2002, which came into effect from 13 October 2003 and for which there are transitional provisions in place until October 2006 (the new regime). While the transitional provisions are in place, the position is that for registered land a squatter must make their application to the Land Registry, whereas for unregistered land the squatter can use the old regime. The purpose behind this dichotomy is to encourage all those with unregistered land to register it.

Claims to adverse possession often arise not as a result of proactive behaviour by the occupier, but instead as a counterclaim to a possession action brought by the landowner. Where an owner of registered land claims possession in the County or High Court, the occupier may still defend and counterclaim on the basis of adverse possession.

The pivotal case law in relation to adverse possession claims is encapsulated in JA Pye (Oxford) Ltd v Graham [2003] and Topplan Estates v Townley [2004]. However, Beaulane v Palmer may be about to change all that. A detailed analysis of the various cases is set out in the box on page 5.

Where do we go from here?

In Beaulane v Palmer, the HRA 1998 seems to have protected the owner, Beaulane. A number of questions arise as a result of the application of the Act.

Is the next stage in development of this area of the law an award of damages to the landowner where adverse possession under the ‘old regime’ has been gained? Can squatters simply usurp the Beaulane outcome by offering compensation to the landowner? Should the High Court have ordered transfer of the land to Palmer in conjunction with an award of damages to Beaulane? If so, how would the quantum of damages be assessed?

The value of land with and without an occupier is quite distinct. The disputed land did not yet have planning permission, although Beaulane was clearly holding onto it for its development potential.

Some of these questions were addressed in the Beaulane judgment. On the authority of Mount Carmel Investments Ltd v Peter Thurlow Ltd [1998], which prevents a claim for mesne profits during the 12-year period of occupation, the judge held that damages were not an available remedy for Beaulane. If an award of damages was available, then the protection of HRA 1998 would be avoided and Palmer would have been awarded the land (albeit having to pay compensation).

Arguably, the prevention of an award of mesne profits under the Mount Carmel¯case is distinct from compensation to a party for the expropriation of their property. Similarities may be drawn with the compulsory purchase legislation. In any event, the Mount Carmel case preceded the coming into force of HRA 1998 and may well now be up for debate.

The Beaulane case may well signal the end of adverse possession claims. It is hard to see how any adverse possession claim, save for those under the new regime, can succeed where Mr Palmer’s claim in Beaulane failed. It seems doubtful that the courts will want to make the leap from the Beaulane line of argument to allowing claims to adverse possession in return for the payment of damages.

Even if they did make that leap, claims to adverse possession will reduce greatly, as claimants will no longer be entitled to windfalls of land simply by reason of their own unlawful acts. If claimants have to pay the market rate, whatever that is, for the parcel of land, they may as well open up negotiations with the landowner and save themselves the cost of bringing a claim for adverse possession.

In any event, this type of claim will dwindle away in the coming years as the transitional provisions of the Land Registration Act 2002 come to an end and claims under the ‘old regime’ die a natural death. However, unless damages awards are allowed and the Mount Carmel case is distinguished, Beaulane may well herald an earlier end to adverse possession than had been anticipated. © Property Law Journal