Clowes Developments (UK) Ltd. v Walters & Ors

For limitation purposes, occupation does not amount to adverse possession where the occupier genuinely believes that it continues by permission of the person entitled to the land. The occupier must have both factual possession and an intention to possess for their own benefit. An intention to remain while permission continues is not an intention to dispossess the paper owner, even if the belief in permission or ownership is mistaken. The court must assess the occupier’s subjective intention from the facts. A transfer of the legal estate may, in appropriate circumstances, preserve a licensor’s rights through a constructive trust, but that issue need not be decided where the occupiers lack the necessary intention to possess.

Clowes Developments (UK) Ltd., the registered proprietor of Boulton Edge Farm, claimed possession against Claire and Nigel Dowsett and Ann Walters. Claire and Nigel had occupied the farmhouse for many years after Ann Walters, who had originally occupied under a rent-free licence, left the property.

The defendants relied on adverse possession under section 15 of the Limitation Act 1980, contending that time began to run when the property was transferred to Clowes Developments and registered in its name. The central issue was whether their occupation thereafter was accompanied by the intention to possess necessary to dispossess the registered proprietor.

1. Claim for possession allowed. Clowes Developments was entitled to recover possession of the property.
2. Under section 15 and Schedule 1 to the Limitation Act 1980, a right to recover land does not accrue until the land is possessed by someone in whose favour time can run. Following Pye v Graham [2002] UKHL 30, legal possession requires factual possession and an intention to possess. The intention to possess is distinct from an intention to own.
3. The critical distinction was between an occupier who knows that permission has ended and intends to possess until evicted, and an occupier who intends to remain only while the true owner permits it. The latter lacks the necessary intention to dispossess. That remains so if the occupier is mistaken about the existence of permission or the identity of the true owner.
4. Claire and Nigel believed that their occupation derived from the arrangement under which Ann Walters had occupied and from her consent to their remaining after she left. They had never repudiated that arrangement and did not intend to dispossess the paper owner. Their occupation therefore did not start time running in their favour.
5. The alternative arguments concerning implied licence, estoppel by convention, the effect of the transfer, and the Human Rights Act were unnecessary to the result. The judge nevertheless considered that the evidence could potentially support a constructive trust preserving Ann Walters’s limited licence against the transferee, because denying its continuation might be unconscionable. That observation was obiter.