Colchester Borough Council v Smith

A bona fide compromise of a genuine dispute is binding and enforceable. A party who enters such an agreement cannot later reopen and litigate the antecedent dispute, including a dispute about title acquired by adverse possession. The compromise must be genuine and freely entered into, without concealment of essential information or undue advantage. Legal advice is strongly supportive of enforceability. The law does not require a compromise to take one particular form. These principles apply notwithstanding the statutory rules governing acknowledgement of title or payment under limitation legislation.

The Council claimed possession of agricultural land occupied by Mr Tillson. An agreement dated 3 November 1983 granted an 18-month tenancy and contained acknowledgements of the Council's title and of the absence of any title acquired by adverse possession.

The intended exception from the security of tenure provisions of the Agricultural Holdings Act failed because the tenancy was backdated. The Council therefore conceded that the tenancy was protected. Mr Justice Ferris nevertheless held that Mr Tillson was estopped by the agreement from asserting ownership of the land, a decision reported at [1991] 2 WLR 540.

On appeal, Mr Tillson argued that limitation legislation had extinguished the Council's title before the agreement and that the agreement could not revive it. The central issue was whether the agreement was a binding compromise which prevented the antecedent adverse-possession dispute from being reopened.

The appeal was dismissed unanimously.

1. Lord Justice Dillon held that the agreement was a compromise of a genuine dispute. The correspondence showed a live dispute about occupation and title, an immediate threat of possession proceedings, and execution of the agreement with the assistance of solicitors. It was not necessary to determine whether Mr Tillson's limitation arguments would otherwise have succeeded.
2. Applying by analogy Binder v Alachouzos [1972] 2 Q.B. 151, a bona fide compromise of an existing dispute is binding and cannot be reopened merely because a party later wishes to litigate the underlying issue. The compromise could validly resolve a dispute about title acquired by adverse possession. The law did not require the compromise to take the particular form suggested by the appellant.
3. Lord Justice Stocker agreed with Dillon LJ. Lord Justice Butler-Sloss added that a compromise must be genuine, freely entered into, and made without concealment of essential information or undue advantage. Assistance from lawyers was preferable. Such an agreement occupies a different position from payment of rent or acknowledgement of title under the Limitation Act 1939 and Limitation Act 1980.
4. Whether the resulting estoppel was described as estoppel by agreement or estoppel by convention was immaterial. The appellant's primary contention therefore failed, and it was unnecessary to decide the separate argument concerning the French Kier land. The appeal was dismissed with costs, subject to the stated restriction on enforcement and legal aid taxation.

1. Court of Appeal: In [1991] EWCA Civ 7, the court dismissed Mr Tillson's appeal and upheld the conclusion that the agreement was a binding compromise preventing him from reopening the adverse-possession dispute.
2. High Court, Chancery Division: Mr Justice Ferris, on 18 June 1990, held that the tenancy was protected under the Agricultural Holdings Act but that clause 4 estopped Mr Tillson from asserting ownership of the land. The judgment was reported at [1991] 2 WLR 540.
3. County Court: Proceedings were commenced in November 1984 and were transferred to the Chancery Division on 13 March 1986.