Balevents Ltd v Sartori

Adverse possession requires both factual possession and an intention to possess. Factual possession requires an appropriate degree of exclusive physical control, assessed in the light of the nature of the land and its ordinary use. A temporary or movable trading installation may be insufficient. A person may possess land through a licensee, provided the occupation is undertaken with permission and on the possessor’s behalf. A fiduciary may retain rights acquired in this way where the relevant company, acting through those controlling it, knew the material facts and gave fully informed consent. Member consent may be effective under the principle in Re Duomatic Ltd [1969] 2 Ch 365.

The claimant operated a nightclub business from premises adjoining a strip of land registered in the defendant’s name with possessory title. It claimed that the defendant had never acquired adverse possession, that the claimant and predecessor companies had occupied the land in their own right, and that the defendant had acted in breach of fiduciary and good-faith duties owed to them.

The defendant relied on his family’s historical occupation, the companies’ permissive use of the land, and consent by the person who effectively directed the claimant’s affairs. The court determined whether the defendant had acquired title by adverse possession and whether any fiduciary liability prevented registration in his name.

1. Adverse possession. The claim was dismissed. The defendant was entitled to remain registered as proprietor because he had been in adverse possession for more than the required period.
2. Following J A Pye (Oxford) Ltd v Graham [2002] UKHL 30, [2003] 1 AC 419, and the formulation approved from Powell v McFarlane [1977] 38 P&CR 452, adverse possession required factual possession and an intention to possess. The defendant and his father’s movable catering trailer, tables and chairs did not amount to factual possession or establish an intention to exercise effective and exclusive control before 1991.
3. From 1991 onwards, however, the defendant possessed the land through successive licensees. The nightclub companies occupied the terrace and bar with his permission, while the catering business occupied the remaining area under his licence. Their use was therefore consistent with his continuing possession.
4. The defendant owed fiduciary and good-faith duties to the claimant because of his senior employment and subsequent directorship. Those duties were not breached. The claimant’s affairs were effectively directed by the person who knew that the defendant claimed the land, accepted that basis, and consented to the application for registration.
5. The consent was fully informed because all material facts, including the defendant’s family occupation and the basis of his claim, had been disclosed. Alternatively, the principle in Re Duomatic Ltd [1969] 2 Ch 365 applied because the beneficial owner or authorised shareholder could compel the necessary consent.
6. The claim failed. The court would hear further argument on the form of order if the parties could not agree.