Balevents Ltd & Anor v Sartori

For registered land, adverse possession requires factual possession, exclusivity and an intention to possess. Before the Land Registration Act 2002, the relevant limitation period was 12 years and possession had to remain unbroken. The 2002 Act introduced a different regime, under which 10 years’ adverse possession alone does not ordinarily secure registration if the registered proprietor objects.

Registration obtained by a person who was not entitled to apply is a mistake for the purposes of schedule 4. Where the registered proprietor caused or substantially contributed to that mistake by fraud or lack of proper care, rectification may be ordered. The court must order rectification unless exceptional circumstances justify withholding it. A party may apply for rectification even without proving a proprietary interest.

The claim concerned a strip of private pavement outside premises occupied by a club in Birmingham. The defendant obtained registered possessory title to part of the strip in 2009. The claimants contended that the defendant held the title on constructive trust for them because he was their general manager and had appropriated a corporate opportunity. Alternatively, they sought rectification of the register under schedule 4 to the Land Registration Act 2002.

The court had to determine who had possessed the land, whether anyone had acquired title by adverse possession, whether the defendant owed and breached fiduciary duties, and whether his registration resulted from a mistake requiring rectification.

1. Adverse possession. Applying J A Pye (Oxford) Ltd v Graham [2003] 1 AC 419, possession requires factual possession, an intention to possess, an appropriate degree of physical control, and exclusivity. The alleged intermittent use of the pavement before 1991 did not establish an unbroken 12-year period. The club’s use between 1991 and 1995, and the mobile catering unit’s use in late 1995 and early 1996, likewise did not amount to continuous possession.
2. The enclosed terrace from 1996 onwards might have amounted to possession, but possession would have been by the company operating or leasing the club, not by the defendant personally. Neither the defendant nor the claimants had established an entitlement to registration under the transitional provisions or the post-2002 regime.
3. Constructive trust and fiduciary duty. The defendant’s claim was based substantially on false assertions of personal possession. Even assuming that he owed a fiduciary duty to the first claimant in relation to the application, the application was made with the knowledge, consent and active encouragement of Mr Reddy, who controlled the company and was authorised to act for its sole shareholder. The constructive-trust claim therefore failed.
4. Rectification. Under schedule 4 to the Land Registration Act 2002, the defendant’s registration was a mistake because he was not entitled to apply and obtained registration through seriously inaccurate statements. He caused or substantially contributed to the mistake by fraud and/or lack of proper care. The court therefore had power to rectify the register under paragraph 3(2)(a).
5. Paragraph 3(3) required rectification unless exceptional circumstances justified refusing it. The claimants’ lack of a proprietary interest and their earlier encouragement of the application did not justify refusal. The defendant was primarily responsible for the false statements, and it was unjust for him to retain a title he should never have obtained.
6. The claim for registration in place of the defendant was dismissed. An order was made rectifying the register by removing the defendant as registered proprietor. The form of order and consequential matters were adjourned.

The claim was first tried before Kitchin J, who dismissed it and left the defendant registered as proprietor. The Court of Appeal allowed the appeal on the basis that fresh evidence had become available and directed a new trial without restricting the evidence or issues. The present court conducted that retrial and dismissed the claimants’ proprietary claim, but ordered rectification of the register.