Property Assignment

Adverse Possession

The history of adverse possession is the history of land possession under English Law.[1]  A doctrine of land law, adverse possession found favour in a time of English law’s historical recognition of possessory interests; the idea that only one person can be seised (or possessed) or property at one time[2] rather than a right to absolute ownership.[3]

The doctrine primarily grew out of the need to award title to land through occupation and use of land, particularly unregistered and unoccupied land, by reference of notions to public utility,[4] whilst providing a mechanism to restrict the actions of dispossessed owners through the application of a statutory time period for reclamation of possession.

Arguably, adverse possession provides judicial recognition of the trespasser.[5]  Simplistically, it refers to the actual possession of the land without the consent of the true owner,[6] whereby the individual who for a necessary period of time[7] utilises land for their own use and excludes others, (including the true owner) from occupation.[8]  In addition to the notion of public utility, support for the doctrine follows two paths of reasoning: (1) it clears title to land thereby increasing its marketability; and (2) it prevents valuable land from being left idle or vacant for long periods of time.[9]  Furthermore, adverse possession can assist in minimising extensive (and expensive) litigation[10] whilst decreasing the possibility of ‘land stealing.’[11]

However, adverse possession is not without its critics.[12]  Aside from the costs that ‘inadvertent’ owners must invest in monitoring their land to prevent uncompensated loss of title,[13] adverse possession fails to provide any meaningful distinction between ‘good and bad’ faith possessors.[14]  Although the terms differ in different contexts, plainly put, a good faith adverse possessor may be defined as one who takes possession of land in the belief (mistaken or otherwise) that the land is his or her own; a bad faith adverse possessor takes possession without such belief.[15]  In any case, the current law cares only that the adverse possessor demonstrates the elements to possession and not whether or not the elements were met in good faith.[16]

Possession as Nine Tenths of the Law – The Current Law in Victoria

Whole Adverse Possession

At common law, possession requires the fulfilment of two elements; factual possession and the requisite intention to possess (animus possidendi),[17] with an appropriate degree of physical custody and control for the possessor’s own benefit.[18]  Furthermore the possession must be as Bowen CJ stated in Mulcahy v Curramore Pty Ltd,[19] ‘open, not secret; peaceful, not by force; and adverse not by consent of the true owner.’

Historically, there are those who have doubted that adverse possession is a punishment to be inflicted upon the inadvertent owner who has permitted an adverse trespasser to move into occupation.[20]  This doubt however, was challenged and criticised by the House of Lords in the passing of the judgment in Pye.[21]

On 1 February 1983, Graham entered into an agreement with Pye to use the disputed land to graze.  Following the expiry of the grazing agreement between Pye and Graham on 31 December 1983, Pye wrote to Graham requesting he vacate the land.  Graham did not and continued to remain in occupation of the land from 1 December 1984 until 1997.  Neither party made any real effort to contact the other during this time.  In 1997, the Grahams registered cautions at the Land Registry against Pye’s title on the grounds that the had obtained ‘squatters title’ by adverse possession.[22]  Upon finding that Graham had indeed satisfied the aforementioned elements of adverse possession, in conjunction with remaining on the land for the requisite period of 12 years,[23] he was awarded possession of the valuable grazing land, thus barring the title of Pye, the documentary owner.  Furthermore, there was no obligation on Graham’spart to compensate Pye for the taking of the land.

The decision of the House of Lords was arrived at ‘with no enthusiasm’[24] and was deemed unfair, not ‘in the absence of compensation, although that is an important factor, but in the lack of safeguards against oversight or inadvertence on the part of the registered proprietor.’[25]

The Victorian Court of Appeal endorsed the decision of Pye in the case f Whittlesea City Council v Abbatangelo.[26]  In 1958 the Abbatangelo’s purchased a property abutting the boundaries of the land in dispute.  For the next 45 years, they treated the disputed land as their own.  In 2004, they informed the council of their adverse possession to the land under section 8 of the Limitation of Actions Act 1958 (Vic).[27]  In applying the reasoning upheld in the case of Pye, their Honours awarded Laurice Abbatangelo with adverse possession of the disputed land, thus dismissing the Appeal made by the Whittlesea City Council.[28]

Whilst it now seems clear that recent legislative changes as to the Act now prevent claims for adverse possession against the Crown,[29] the case of Abbatangelo confirms the well established principles within the doctrine of adverse possession in relation to private land in Victoria.

Part Parcel Adverse Possession

Victoria is the only State that relies solely on the law of trespass and the law of adversepossession to resolve disputes over boundaries.[30]  Arguably, s.272 of the Property Law Act 1958 (Vic),[31] does act as a boundary repair system, however, in a state where statutory encroachments are not permitted, this section has allowed part-parcel adverse possession claims outside the error limits to be commonplace in Victoria,[32] without any default on the part of the owners or their agents.

Furthermore, the use of part-parcel adverse possession as the sole boundary repair mechanism appears only to add to the expensive litigation and highly charged nature of neighbourly disputes.[33]  In the case of Patsios v Glavinic,[34] neighbours Nicholas Patsios and Zeljko Glavinic argued over the fence line that separated their properties.  Although settlement was eventually reached after significant mediation, in handling down his judgment, Smith J stated ‘This was a case in which the costs, if the case was fought, were always going to grossly exceed any value of the land in question.  That is often the case.’[35]  Unfortunately such a scenario seems an all too common-place occurrence.[36]

To Be or Not to Be – The Future of Adverse Possession in Victoria

Proprietary interests continue to be the subject of doubt and challenge.[37]  Prior to the introduction of the Torrens system of land registration, there existed a need to quieten ‘old’ disputes,[38] through the rationalisation offered under the limitation statutes.

The introduction of the Torrens system sought to provide yet another mechanism by which to assist in the resolution of land disputes.  It is a system of title by registration[39] and therefore by its very nature,works in opposition to the historical principles of adverse possession through its ability to confer ‘certainty of title’.[40] Consequently, there exists some recognition that the principles pertaining to adverse possession cannot be incorporated within a registered title system without abandoning logic.[41]  In reality however, uncertainty can and does still prevail under the Torrens system and many exceptions to indefeasibility of title still exist.[42]

That there are some circumstances where adverse possession may play a vital role under the Torrens system: (a) where a registered proprietor of land has abandoned it and cannot be traced (b) where Torrens land has been transferred informally from person to person over a number of years so that the register no longer reflects the fact of ownership and (c) where a building on one person’s land encroaches on behalf of another:[43] does not negate the notable trend in common law countries to protect registered proprietors against the loss of deprivation of title through adverse possession.[44]

Operating on a Prohibition Model,[45] with the exception of Alberta, the Canadian registered land title provinces do not allow adverse possession.[46]  The United States jurisdictions which have adopted registered title also do not permit adverse possession of registered title land.  Additionally, in the last decade, Singapore and Malaysia have abolished adverse possession from their registered land title systems.[47]

Looking domestically, all jurisdictions within Australia with the exception of Victoria and Western Australia have prohibited/and or restricted adverse possession to some extent.[48]  Victoria and Western Australia continue to operate under what could be described as the overriding model[49] whereby adverse possession overrides register entries, both acquired or in the course of being acquired.[50]

There exists an inclination to agree with the doctrine of adverse possession in cases of property abandonment and ‘missing’ title holders, the current law as it stands in Victoria confers too many benefits on the ‘squatter’.  Any proposal for reform in Victoria therefore, must lie in addressing the root of public dissatisfaction to the doctrine; the lack of ‘adequate procedural protection’.[51]  Here it is suggested to address the comments of concern as held by their Lordships in Pye (and confirmed as authority in Victoria in the decision of Abbatangelo), in and around the lack of compensation and perceived ‘punishment’ against the inadvertent owner.

The Conditional Veto Model

In reviewing the current statutory laws operating across varying jurisdictions, both domestically and internationally, the model which appears to best address the above concern is that of a Veto model,[52] the philosophy of which seeks to veto against the acquisition of registered title by adverse possession by providing an opportunity for the title owner to register a caveat over the property in dispute, thus negativing the application.

Arguably, South Australia and New Zealand have taken the most restrictive approach in that the registered owner is provided with a right to an absolute or unconditional right to veto the application.  The recommendation for Victoria however, is to follow the conditional veto model as defined in England.

The English law is an adaptation of the Australian jurisdiction, yet distinguished in that it seeks to attach a time limit to the veto.  Applicable to all first applications, the law permits ejection proceedings to be brought within two years by the registered proprietor.[53]  Incorporated into Part 9 and Schedule 6 of the Land Registration Act 2002 (UK), the time stamped veto provision has curtailed the risk that a registered owner may lose their title through inadvertence, thus responding to one of the concerns held in the decision of Pye.[54]  The time limit seeks to strike a balance between registered owners who fail to heed the warning to recover the land ultimately losing their titles whilst ensuring adequate procedural protection against a squatter who has a legal or equitable claim in addition to possessory title: a ‘good faith’ possessor.[55]

At a stretch, the rule could also be modified to screen out bad faith adverse possessors, by providing that the registered owner’s objection is determinative unless the adverse possessor believed (or reasonably believed) throughout the limitation period that the subject land belonged to him or her.[56]  Granted there is difficulty in establishing such subjective notions.

Notably missing in the conditional veto model is the factor of compensation, a point that received worthy attention in the judgment of Lord Bingham in the case of Pye.[57]  In addressing this, consideration should be given to the introduction of a compensation model for the ‘losing party’ even in those cases where a claim for adverse possession is deemed equitable.  Such a provision would provide some reprieve from the unjust and disproportionate penalty on the title owner (or good faith possessor) as was the case in Pye.  Furthermore, the provision would act consistently with human rights norms by encompassing just compensation as payable to the expropriated landowner.[58]

Building Encroachment Laws

The recommendation around building encroachments and part parcel adverse possession is a more complex topic on which to advise.  By nature, building encroachments require special provision as the area of land involved is typically small, whilst the costs of rectifying may be prohibitively high.[59]

As per the Victorian Law Reform Commission’s Report, it is recommended that Victoria adopt a Building Encroachment Relief provision.[60]  Modelled on the Encroachment of Buildings Act 1922 (NSW), the provision would work in partnership with part parcel adverse possession.[61]  Building encroachment laws provide the court with the power to grant relief in cases where part of a building on one piece of land has encroached over the boundary onto the adjoining piece of land.[62]  In following the New South Wales model, the court may, if it thinks just, order the removal of the encroachment , the transfer of an estate or interest in the subject land and the payment of compensation.  The introduction of a building encroachment provision would bring Victoria in line with other Australian States and Territories.

Conclusion

The question as to whether or not the law should recognise the acquisition of title by adverse possession in Victoria is ultimately a question of public policy, requiring the balance of competing principles.  It is submitted however, that the English law under the Land Registration Act 2002 (UK) and the Encroachment of Buildings Act 199 (NSW), represent the preferred approach to the current law of adverse possession in Victoria in that it addresses the lack of ‘adequate procedural protection’.  Such an approach would allow the law to continue to recognise the doctrine of adverse possession albeit within strict confines and with a different judicial focus.

It would also be desirable to have uniform laws throughout Australia concerning title by adverse possession and the Torrens code.

Bibliography

1. Articles/Books/Reports

Bradbrook AJ MacCallum SV Moore AP and Grattan S Australian Real Property Law (5^th Ed, 2012 Lawbook Co)

Brendan Edgeworth ‘Adverse possession, prescription and their reform in Australian law’ (2007) 15 Australian Property Law Journal 1

David Kenneth Irving, ‘Should the Law Recognise the Acquisition of Title by Adverse Possession?’ (1994) 2 Australian Law Journal 112

Jonathan Tisher and Phillip Leaman, ‘What’s yours is mine adverse possession in Victoria’ (2010) 84 Law Institute Journal 6, 31

Lynden Griggs, ‘Possession, Indefeasibility and Human Rights’ (2008) 8 Queensland University of Technology Law and Justice Journal 2, 296

Malcolm McKenzie, ‘The effect of adverse possession of part of Registered Title Land Parcel’ (PhD Thesis, The University of Melbourne, 2003)

Matthew Baker, Thomas Miceli, CF Sirmuns and Geoffrey K Turnbull, ‘Property Rights by Squatting: Land Ownership Risk and Adverse Possession Statutes (2001) 77 Land Economics 31

1. Case Law

JA Pye (Oxford) v Graham [2003] 1 AC 419

JA Pye (Oxford) Ltd and JA Pye (Oxford) Land Ltd v United [2007] ECHR 700

Monash City Council v Melville (2000) VSC 55

Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464

Patsios v Glavinic [2006] VSC 92

Whittlesea City Council v Abbatangelo [2009] VSCA 188

1. Legislation

Building Encroachment Act 1922 (NSW)

Land Registration Act 2002 (UK)

LandTitles Act 1925 (ACT)

Land Title Act 2000 (NT)

Limitations Act 1965 (NSW)

Limitation Act 1974 (Tas)

Limitation Act 1981 (UK)

Limitation Act 1935 (WA)

Limitation of Actions Act 1974 (Qld)

Limitation of Actions Act 1936 (SA)

Limitation of Actions Act 1958 (Vic)

Property Law Act 1958 (Vic)