Healey v Fraine [2023] EWCA Civ 549

Richard Miller, led by Michael Walsh and instructed by Janani Puvi of Fladgate LLP, acted for the successful Respondent in an appeal concerning the meaning of adverse possession for the purposes of the Land Registration Act 2002 and the principles that courts should apply in considering applications to amend.

The appeal was a second appeal arising from an application by the Appellants to amend their case and rely on their draft Amended Defence and Counterclaim (“the ADCC”) to oppose the Respondent’s claim for possession of a house of which she was the registered proprietor.

The ADCC pleaded at paragraph 8 that the First Appellant had been in possession of the property as a licensee since 2009, and paragraph 13 that he had been in adverse possession of the property since 2009. The Respondents objected to the application to amend on the basis, inter alia, that the ADCC was internally inconsistent.

At first instance, Deputy District Judge Corscadden granted the application to amend. He decided that, insofar as the facts averred in the ADCC were problematic, that was a matter for cross-examination and trial. The Respondent appealed on the basis that it was not a proper exercise of discretion to give permission to amend for a pleading which was internally contradictory and legally incoherent.

The first appeal was heard by Her Honour Judge Evans on 30 June 2022. She allowed the appeal and gave an extempore judgment in which she decided that the meaning of adverse possession for registered land was the same as that as for unregistered land, that the facts pleaded ADCC were not, therefore, coherent, and that permission to amend should not have been given. She exercised her discretion and disallowed the amendments in their entirety.

The Appellants appealed on two grounds: (1) the judge was wrong to refuse permission to amend because the ADCC did not forensically depend on adverse possession, and (2) in the registered land system, occupation as licensee and adverse possession were not incompatible.

The Court of Appeal dismissed the appeal on both grounds.

On ground 1, the Appellants argued that the reference to adverse possession in paragraph 13 was otiose to the pleading, in that a defendant could not resist possession proceedings by invoking the equity by estoppel ground of Schedule 6, Paragraph 5(2) of the LRA 2002 and the Appellants were merely signalling their intention to apply to the First-Tier Tribunal at the conclusion of the trial. The Court of Appeal disagreed. Paragraph 13 of the ADCC echoed section 98(1) and (3) of the LRA 2002 and the natural reading of the paragraph was as intending to establish a substantive defence. Even if paragraph 13 were purely for information, however, there would still be a contradiction with paragraph 8. It is no answer to say that contradictory pleadings should be allowed because they breach the general rule by containing immaterial facts.

The Appellants also developed an argument that the judge, having found that the ADCC was internally contradictory, should have exercise her discretion to excise paragraph 13 and left the other paragraphs intact. The Court of Appeal rejected this submission. Quite apart from the fact that this approach was not sought by the Appellants’ then Counsel below, the Court of Appeal decided that the judge was not “obliged of her own motion” to consider how the ADCC could be made adequate; that was the Appellants’ responsibility.

On ground 2, the Appellants argued that Parliament had changed the meaning of adverse possession in the context of registered land by passing the LRA 2002, and that such was apparent from the Law Commission Report Number 278: Land Registration for the Twenty-First Century, Land Registration Bill and Commentary. The Appellants relied on the examples at paragraph 14.42, and in particular the position of a purchaser under an informal contract for sale who enters the land and pays the full price without title being transferred to them. The Law Commission stated that they expected an equity by estoppel to arise in such a situation.

The Court of Appeal considered how the policy behind section 15 of the Limitation Act 1980 in preventing ancient claims being brought and facilitating conveyancing did not apply to a system where title rests on registration rather than possession. While that represented a radical departure from the unregistered system, however, there was nothing to suggest that the meaning of adverse possession had changed. The Law Commission Report is prolific in the use of the word “squatter”, and Schedule 6, Paragraph 11 of the LRA 2002 attaches the meaning of adverse possession to section 15 of the Limitation Act 1980.

The Court of Appeal analysed the examples in the Law Commission Report in some detail. The second example at paragraph 14.42, and another at paragraph 14.43, were based on the facts in Bridges v Mees [1957] Ch 475, in which the possession of a purchaser who had paid the full purchase price, and who was therefore a beneficiary under a bare trust, was adverse to the title of the legal owner. The Appellants argued that such possession was by license, and there was, accordingly, a circumstance where possession by license was not inconsistent with adverse possession.

This argument was rejected. The Court of Appeal considered that the facts alleged in the present case involved an imperfect gift and were not analogous to those in Bridges v Mees; to the extent that Bridges v Mees has proved controversial, it was not necessary to decide whether the case was decided correctly. It was inapposite to characterise possession under a bare trust as by licence or consent, and so there was no basis to conclude that a person could be in adverse possession with the consent of the legal owner.

 

A copy of the judgment can be found here.