A Critique of the Doctrine of Adverse Possession Hong Yin Teo * Adverse possession allows for a wrongful possessor of land to have their interests ripen into a title if they can demonstrate active possession for a certain time frame. Merrill discussed four classic justifications for adverse possession. 1 In this essay I will concentrate on one particular moral justification for the law of adverse possession, which is encapsulated in Justice Holmes famous quotation: [M]an, like a tree in the cleft of a rock, gradually shapes his roots to the surroundings, and when the roots have grown to a certain size, can t be displaced without cutting at his life. 2 Justice Holmes was concerned about protecting the interests of wrongful possessors; the doctrine of adverse possession prevents such individuals from facing grave hardship due to their reliance and attachment to the land after they have occupied it for a long period of time. This essay will examine whether this age old justification is still relevant in Australia in the 21 st century and whether the doctrine should be retained. Adverse possession imposes a temporal limit on the titleholder to exercise their moral right to obtain rectification for trespass on their land. Prima facie this is unfair to the title holder. For adverse possession to be morally justified it must be shown that even with recent legislative developments, adverse possession is still the better legal remedy. The moral aspect of adverse possession is reinforced by the legal rights conferred upon possessory title. The better legal remedy * Hong Yin Teo is in her fourth year of a Bachelor of Laws degree at the Australian National University. She is a current resident of Bruce Hall. 1 Thomas W. Merrill, Property Rules, Liability Rules, and Adverse Possession (1984) 79 Northwestern University Law Review 1122. 2 O.W. Holmes, cited in Lerner, The Mind and Faith of Justice Holmes: His Speeches, Essays, Letters and Judicial Opinions (Boston: Little Brown, 1953) 417.
128 Cross sections Volume IV 2008 would provide a better balance of rights between the title holder and the wrongful possessor. This essay will argue that the continued application of adverse possession in Australia is not morally justifiable. An examination of the various circumstances in which an adverse possessor may treat the land as his own will reveal the redundancy of this doctrine in modern property law. This is due to the efficient Torrens system in Australia and a range of alternative legislative options that strike a better balance between the rights of the conflicting parties. Circumstances Which Result in Wrongful Possessors Treating Their Land as Their Own Abandoned land Adverse possession has its roots in Medieval England where there was no central registration system. 3 Historically one could squat on abandoned land for years without meeting the title holder. However, with the development of a centralised registration system, it was no longer difficult for an individual person resolved to reside on or to develop land to enquire after the title holder at the Land Title s Office and complete the necessary transactions for legal usage of the land. Missing owners With missing owners the situation is less clear, although a number of statutes provide suitable remedies in such circumstance. In South Australia, occupation can lead to a registrable title if the occupier satisfies the Limitation of Actions Act 1936 (SA) and registered persons make no objection after reasonable efforts are made to contact them. 4 This is distinct from adverse possession actions, where the adverse 3 Sandra Petersson, Something for Nothing: The Law of Adverse Possession in Alberta (1992) 30 Alberta Law Review 1291, 1292. 4 Real Property Act Amendment Act 1945 introducing Part VIIA (ss 80a 80i) into the 1886 Act amending s 251 to excempt Part VIIA applications from the prohibition against adverse possession.
A Critique of the Doctrine of Adverse Possession Hong Yin Teo 129 possessor can obtain title even if the title holder objects to it. This Act is especially important in relation to depleted and abandoned mining lands where the previous title holders are companies that no longer exist. 5 It also provides an avenue of recourse for people who have stayed on the mining land, as well as for family members in cases where heirs cannot be located. This balances the moral right of the occupier who has invested and relied on the property and the rights of the titleholder who objects to the loss of their title. Incomplete, informal and unregistrable transfers Adverse possession has historically been used as a tool to rectify uncertain records in cases where transfers are incomplete, informal and unregistrable. 6 In this situation, the occupiers who have given consideration for the land might have to fend off successors with defective documents. For example, if A has given consideration to B for land but the transaction was not registered completely, B will still own the land on paper. After A has stayed on the land for many years, A can defend his right to the land against B through adverse possession. However, the use of the doctrine in these situations fails to protect A s reliance on the land. Through adverse possession, A s claim to the land is only recognised after twelve years. Moreover, if B had initially willed the paper title to his son, C, the twelve year time frame would accrue once C received paper title; it would not be reasonable to expect C to defend the land against squatters until he received paper title. Adverse possession does not, therefore, make records more certain. On the contrary, it is arguably one of the primary reasons why records are inaccurate today. 7 An alternative to adverse possession is legislation such as the title insurance and occupying claimant statutes, which contain 5 Land Titles Amendment Act (Law Reform) Bill 2000 (No. 98). 6 See generally Malcolm Park, Lisa Ting and Ian Williamson Adverse Possession of Torrens land: Parliamentary inquiry strays out of bounds (1999) 72 Law Institute Journal 77. 7 See generally Rodney C. Roberts, Another Look at Moral Statute of Limitations on Injustice (2007) 11 The Journal of Ethics 177.
130 Cross sections Volume IV 2008 indemnification schemes. 8 These indemnification schemes would be beneficial to both conflicting parties. Judges tend to be motivated by an interest in punishing those who engage in purely coercive transfers of property. 9 Previously, judges applied the criteria of adverse possession to land disputes more strictly because the only remedy they could award to the successful party was title to land. For a wrongful possessor with bad faith intentions, judges may consider a mere absence of a few days from the land as not fulfilling the criteria of continuous possession. All investments and reliance of the wrongful possessor would therefore be overlooked by the judge and title would remain with the registered owner. However, with an indemnification scheme, judges exercise less judicial discretion at the stage of entitlement and use the compensation scheme to better balance the moral rights of the conflicting parties. The judge may award the wrongful possessor title based on their reliance on the land, but they would also order indemnification to be paid to the original title holder to compensate for the loss of land, as well as the property taxes that have been paid by the title holder. Conversely, the judge may order that title remains with the registered title holder but order compensation be paid to the wrongful possessor to enable them to recover the value of land improvements he has made. These instruments are especially important to reach a fair outcome between parties acting in good faith. Boundary disputes Boundary disputes were historically settled through adverse possession. 10 Part parcel adverse possession is one of the few tools that can correct boundary disputes in circumstances where there are differences between the true (registered) boundaries and the occupational (unregistered) boundaries. 11 Sometimes wrongful 8 Jeffery Evans Stake, The Uneasy Case for Adverse Possession (2000 01) 89 The Georgetown Law Journal 2419, 2445. 9 Roscoe Pound, The Theory of Judicial Decisions (1923) 36 Harvard Law Review 641. 10 Malcolm Park & Ian Williamson, The Effect of Adverse Possession to Part on a Future Australian Cadastre (Paper presented at the 6th South East Asian Surveyors Congress, Freemantle, 1 6 November 1999). 11 Ibid.
A Critique of the Doctrine of Adverse Possession Hong Yin Teo 131 possessors assume possession of land by erecting part of a building or a footpath. Through adverse possession, the wrongful possessor could transfer that parcel of land to their land title. According to the Tasmanian Law Reform Commissioner in 1994, one in twenty properties in Hobart had boundary issues. 12 Such problems were often due to unprofessional surveyors and rudimentary surveying techniques. 13 Improved surveying techniques and increasing affordability have minimised such problems in recent times. Legislation has also played an important role in requiring a professional survey to be completed before a land transfer is finalised. 14 These additional survey costs are a small price to pay for an accurate registration system. Jurisdictions such as the Australian Capital Territory and Singapore do not permit adverse possession for the purpose of reparation of boundaries. 15 Minimal boundary challenges occur in these jurisdictions because modern surveying techniques are used. 16 Despite improved surveying techniques, boundary disputes continue to occur throughout Australia. In some cases, the title holder would be unaware that they owned the land and would not have taken steps to exercise their rights. The wrongful possessor, for example, might have unknowingly built a building that encroaches on a neighbours land. In jurisdictions without adverse possession, 17 alternative remedies exist for acts of encroachment. 18 Such legislation does not place arbitrary time limits on the title holder whose land has been diminished by 12 Malcolm Park and Ian Williamson The need to provide for boundary adjustments in a registered title land system 48 (2003) The Australian Surveyor 50. 13 Arter, F W (1960 61) A review of the Torrens system and some aspects of title survey, 18 Australian Surveyor 108. 14 Malcolm Park and Ian Williamson The need to provide for boundary adjustments in a registered title land system 48 (2003) The Australian Surveyor 50. 15 Ibid 2. 16 Ibid 2. 17 For example, Western Australia and Alberta, Canada. 18 Ibid 11.
132 Cross sections Volume IV 2008 encroachment. 19 The amount is decided at the discretion of the courts. Once again, legislative alternatives to adverse possession improve the avenues for redress for conflicting parties. Conclusion While the doctrine of adverse possession was historically useful as a legal remedy, it has since been made redundant by legislation. This legislation balances the conflicting rights of parties better than the common law doctrine. Adverse possession encourages the wrongful possession of land in the hopes of eventually obtaining an unassailable interest in it. The United States Supreme Court has concluded that statutes of limitation find their justification in necessity and convenience rather than logic. 20 Adverse possession is arbitrary and does not differentiate between just and unjust claims. Unlike adverse possession, indemnification schemes deter bad faith possessors since they must pay compensation to the title holder for the land. If we hypothetically make the assumption that the judges in Pye 21 had used alternative statutory instruments, a more equitable outcome would have been reached. The land title would have remained with the original title holder. Meanwhile, a farmer would be entitled to compensation for the uncertainty he experienced when the title holders were uncommunicative, as well as for the farming area they had developed. This would take into account the reliance of the wrongful possessor and compensate them for their work on the land without stripping the title holder of their title merely because they had not exercised their rights earlier. A fundamental policy underlying property law is the notion that property cannot be taken against the owner s wishes. Limiting the right of a title holder to obtain rectification simply because a certain time period has passed is not morally justifiable. Plots of land are much smaller and more expensive in modern Australia. Title owners who 19 Ibid 11. 20 Chase Securities Corp. v. Donaldson (1945) 325 U.S. 304, 314. 21 J A Pye (Oxford) v Graham (2003) AC 419.
A Critique of the Doctrine of Adverse Possession Hong Yin Teo 133 have paid consideration and taxes each year should not have their property taken away merely because they did not enforce their rights soon enough. Adverse possession finds its foundation through principles established by common law and through the limitations defence in statutes. There are concerns that ridding the common law of adverse possession may interfere with the fundamental common law assumptions concerning the effect of possession over land; this essay has demonstrated the redundancy of such principles. With alternative legislation and the efficient Torrens system in Australia, there is no longer a necessity for the doctrine of adverse possession to remain part of Australian law.
134 Cross sections Volume IV 2008 Bibliography Journals/Books/Reports Arter, F. W., A review of the Torrens system and some aspects of title survey (1960) 18 Australian Surveyor 108 Edgeworth, B., Rossiter, C. Stone, M. and O Connor, P., Sackville and Neave Property Law: Cases and Materials (8 th ed, 2008) Irving, D..K, Should the Law Recognize the Acquisition of Title by Adverse Possession (1994) 2 Australian Property Law Journal 112 Kahneman, Daniel, Experimental Tests of the Endowment Effect and the Coase Theorem (1990) 98 Journal of Politcal Economy 1325 Merrill, Thomas, Property Rules, Liability Rules, and Adverse Possession (1984) 79 Northwestern University Law Review 1122 Park, Malcolm, Ting, Lisa and Williamson, Ian, Adverse Possession of Torrens land (1999) 72 Law Institute Journal 77 Park, Malcolm and Williamson, Ian The need to provide for boundary adjustments in a registered title land system (2003) 48 The Australian Surveyor 50 Petersson, Sandra, Something for Nothing: The Law of Adverse Possession in Alberta (1992) 30 Alberta Law Review 1291 Pound, Roscoe, The Theory of Judicial Decisions (1923) 36 Harvard Law Review 940 Roberts, Rodney, Another Look at Moral Statute of Limitations on Injustice (2007) 11 The Journal of Ethics 117 Stake, Jeffery, The Uneasy Case for Adverse Possession (2000) 89 The Georgetown Law Journal 2419 Case Law Chase Securities Corp. v. Donaldson (1945) 325 U.S. 304 J A Pye (Oxford) v Graham (2003) AC 419 Legislation Real Property Act Amendment Act 1945 (SA)
A Critique of the Doctrine of Adverse Possession Hong Yin Teo 135 Other sources Land Titles Amendment Act (Law Reform) Bill 2000 (No. 98) (NSW) Park, Malcolm and Williamson, Ian, The Effect of Adverse Possession to Part on a Future Australian Cadastre (Paper presented at the 6th South East Asian Surveyors Congress, Freemantle, 1 6 November 1999)