Adverse Possession: what it is and common misconceptions

Transcription

1 Adverse Possession: what it is and common misconceptions Kieren Mihaly Barrister Liability limited by a scheme approved under Professional Standards Legislation

2 Adverse Possession: what is it and common misconceptions 1. Adverse possession is a term that is thrown around easily and its basics are readily understood: possess someone else s land for 15 years and it becomes your own. The law and mechanism for that change of ownership, though, is considerably subtler than that and is revisited in this paper. The Basics 2. Adverse possession is the possession of land by someone other than the registered proprietor. 1 Where there is adverse possession, by definition, the registered proprietor has a right to sue for possession and recover the land. However, where the owner does not reclaim possession within 15 years, their right to do so is extinguished Conceptually therefore, acquisition by possession is merely the by- product of the operation of the statute of limitations. By comparison, a tortfeasor who converts goods by taking them from the true owner will cease to be liable after 6 years, which essentially transfers ownership of those goods to the tortfeasor. The same is true of adverse possession. The owner has lost the right to recover the land, which results in the possessor acquiring title. 4. What amounts to adverse possession was settled in Whittlesea City Council v Abbatangelo. 3 Adverse possession involves both the factual possession and the intention to possess. 4 Although the courts have refused to offer a test of factual possession, it has been generalised that as there can only be one 1 J A Pye (Oxford) Pty Ltd & Ors v Graham & Anor [2002] UKHL 30, [36] as cited in Whittlesea City Council v Abbatangelo [2009] VSCA 188, [6] 2 Limitation of Actions Act 1958, s 8 3 [2009] VSCA Powell v McFarlane (1979) 38 P and CRL 452, , cited with approval in Bayport Industries Pty Ltd v Watson [2002] VSC 206, [39]; Whittlesea City Council v Abbatangelo [2009] VSCA 188, [5] ( Abbatangelo )

3 person in possession at a time, 5 possession means dealing with the land as the owner might while no- one else did so The intention to posses requires the intention to exclude the world at large, including the registered owner, that is, an intention to exercise control over the land 7 Acquiring Title Procedurally: Equitably and Legally Equitable Acquisition 6. After the limitation period has expired, the possessor acquires title without having to do anything further; the Limitations of Actions Act 1958 operates by default. From that date, if the registered proprietor re- acquires possession, they will be doing so adversely to the interests of the true owner and will have to be in continuous possession themselves for 15 years before they reclaim title. 7. Practically, this means that a possessor does not need to do anything to continue enjoying the land as equitable owner. Absent conflict with the registered proprietor, the possessor can continue possession without legal recognition of their ownership. Further, the possessed land will pass to subsequent purchasers even if it is not expressly referred to in the contract of sale. 8 Uncontested Legal Acquisition 8. If the possessor wishes legal recognition, they do so by application to the Registrar of Titles under s 60 of the Transfer of Land Act That section 5 J A Pye (Oxford) Pty Ltd & Ors v Graham & Anor [2002] UKHL 30, [70] 6 Whittlesea City Council v Abbatangelo [2009] VSCA 188, [5] 7 Whittlesea City Council v Abbatangelo [2009] VSCA 188, [5] 8 Whittlesea City Council v Abbatangelo [2009] VSCA 188, [5]

4 prescribes that a possessor, in the absence of opposition by another, 9 can apply for a vesting order and, on satisfying the Registrar that title has been acquired by possession, the Registrar will amend the relevant titles. 10 Formal notice and stamping requirements exist. Contested Legal Acquisition 9. Where an application for a vesting order to the Registrar is contested or where the registered proprietor attempts to recover the land, the Courts have jurisdiction to determine whether the registered proprietor s title has been extinguished. Most often, a possessor will be forced to defend litigation on the basis that the time for recovery after the registered owner threatens or brings litigation alleging trespass or seeking the movement of the dividing fence to the title boundary under the Fences Act Alternatively, the possessor may take the proactive step of seeking a declaration from the courts that they have acquired title; it is a proper cause of action to apply simply to the court for declaratory recognition of the change in ownership of the disputed land. 11 It is worth remembering though, that often a claim of trespass can also be made out where the registered proprietor has attempted to retake possession. Common Misconceptions 11. Despite this relatively simply framework, disputes regarding adverse possession are often fraught with fallacious argument. What follows is an attempt to dispel some more common misconceptions. 9 Transfer of Land Act 1958, s Transfer of Land Act 1958, s The KY Enterprise v Darby [2013] VSC 484

5 The Possessor Does Not Need to Know their Possession is Adverse 12. Abbatangelo makes clear that a possessor only need to intend to possess the land. That can occur even if the possessor does not intend to own the land. 12 More importantly, it can occur even if the possessor does not know that the land they possess is not their own and is being possessed adversely Accordingly, while there are many ways to possess land, such as by use or fencing the land, the absence of a formal claim on the land, such as by the payment of rates, is not determinative. On the contrary, the majority of possessors are not even aware that they are doing so, such that a formal claim on the disputed land would be impossible. All Courts have Jurisdiction to Hear a Claim for Adverse Possession 14. As acquisition by possession is occasioned by the expiration of the statute of limitations, all courts have jurisdiction to hear the dispute; the Supreme Court does not have exclusive jurisdiction. The sole limitation on the jurisdiction of the Magistrates Court is its usual $100,000 cap; so long as the value of the relief sought, namely title to the disputed land, is less than that amount, the Magistrates Court has jurisdiction It has been suggested that the Magistrates Court does not have jurisdiction because the whole of the registered proprietor s property exceeds the jurisdictional cap. Such an argument must fail because the whole of the registered proprietor s property is not in dispute. Further, that argument would mean that a debt of $50,000 from an original supply for $1,000,000 would also exceed the cap, which is not the case. 12 Whittlesea City Council v Abbatangelo [2009] VSCA 188, [5] 13 Rains v Buxton (1880) 14 Ch D 537 and Re Johnson [2000] 2 Qd R 502, 506, as cited in Whittlesea City Council v Abbatangelo [2009] VSCA 188, [6] 14 Magistrates Court Act 1989, s 100(1)(b)

6 Possession Can Still Occur During Use by Third Parties 16. There is a distinction in principle between possession and use. The person in actual possession is in charge of the land. It follows that others may use it with his permission or pursuant to a specific limited right, such as an easement, without taking possession away from him. 15 By way of example, in The KY Enterprise v Darby, the registered proprietor argued that possession was not made out because its tenant made use of the disputed land; the Court held that because that use only occurred with the express consent of the possessor, that use did not amount to possession by the tenant and the possessor remained in possession during the owner s tenant s use As to easements, it follows that just as the registered proprietor was an owner whose rights were subject to an easement, the possessor, having adversely possessed from the owner does so subject to those same easements. That position is confirmed by s 62 of the Transfer of Land Act 1958 that provides that the possessor only takes title free from easements that have been abandoned, which implicitly allows the possessor to take title subject to easements that were not abandoned. An Inadequate Application to the Registrar of Titles is irrelevant if the matter is before the Courts 18. In litigation, the questions for determination are simpler than before the Registrar. The Courts need only determine two questions: whether the possessor entered into adverse possession; and whether the possessor was in continuous adverse possession for longer than 15 years. That determination is made by way of evidence before the Court; it follows 15 Jourdan, Adverse Possession, Butterworths Lexis Nexis United Kingdom 2003, [7-32]- [7-33] as cited in The KY Enterprise v Darby [2013] VSC 484, [137] 16 The KY Enterprise v Darby [2013] VSC 484, [137]

7 therefore that regardless of whether the Registrar would have accepted any Application for a vesting order previously submitted, the matter is determined afresh before the Court based on the evidence tendered to it. 19. It also follows that matters for determination by the Registrar that are outside the ambit of the dispute before the Court are also irrelevant. The adequacy of notice and payment of any stamp duty are examples of procedural steps for the amendment of the appropriate titles that are separate to and do not affect whether the possessor has acquired title. Conclusion 20. Adverse possession disputes are often charged with greater emotional content than would be expected based on the value of the land in dispute. That may be because land has value beyond what it can be sold for. Regardless, in claims for adverse possession, it s best to return to the basics; when and how long was the land possessed. 7 October 2013 K MIHALY Greens List