Pye involved 23 acres of agricultural land which had been let to a neighbouring farmer under a grazing agreement. But, when that agreement expired, the neighbour remained in occupation and eventually claimed adverse possession – by which time the land was worth many millions because of its development potential. The claim of adverse possession succeeded in the High Court, failed in the CA, and was upheld by the HL. However, the ECJ has held that the whole concept of depriving a landowner of his land without compensation – which is the combined effect of LRA 1925 and Limitation Act 1980 – is a breach of Article 1 (entitlement ‘to the peaceful enjoyment of his possessions’). Thus, adverse possession will be unlawful unless proper compensation is paid (or unless there are (undefined) ‘exceptional circumstances’). In the words of the ECJ:

‘The taking of property in the public interest without payment of compensation reasonably related to its value is justified only in exceptional circumstances… this principle is not confined to taking a property for public purposes but is equally applicable to the compulsory transfer of property from one individual to another.’

HRA 1998 came into force on 2 October 2000 and is not retrospective. So adverse possession claims based on 12 years’ occupation prior to that date may still succeed (although that is open to some doubt), but if the 12 years expired after that date, then the ECJ decision will effectively bar any adverse possession claim in respect of registered land. For unregistered land there is still some uncertainty (because this case involved registered land) but the general expectation is that similar principles will apply. The full report on Pye v UK [2005] can be found here.