Understanding Real Property Law ch04 PDF

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2019/7/23

Understanding Real Property Law

[page 35] CHAPTER 4

Adverse Possession Key Ideas By the end of this chapter you should be able to identify: the meaning of adverse possession of land how adverse possession is established how long a true owner of land has to commence an action for recovery of the land from an adverse possessor (including when a court will extend the limitation period) [page 36]

Introduction [4.1] In its simplest terms, the doctrine of adverse possession means that a person in wrongful possession of land (an ‘adverse possessor’), for however short a period, has an interest in that land (a fee simple estate) which may be enforced against anyone who cannot show a better title to that land. The way that the doctrine of adverse possession works is that the ‘true owner’ of land may recover it from an adverse possessor provided that she or he commences an action for the recovery of land before the expiry of relevant limitation periods. After the expiry of a limitation period, both the true owner’s right of action for recovery of the land, and her or his title to the land, are extinguished. At that point in time, she or he ceases to own the land and cannot recover it from the adverse possessor. The adverse possessor then becomes the true owner of the land. [4.2] Some jurisdictions in Australia have limitations for the time in which actions to commence proceedings for the recovery of land must be taken by the true owner against an adverse possessor of land as follows: New South Wales, Tasmania, Queensland and Western Australia: 12 years;1 South Australia and Victoria: 15 years.2 [4.3] The Australian Capital Territory and the Northern Territory: no limitation period applies. In these jurisdictions, there is no possibility for the operation of the doctrine of adverse possession.3

Matters to consider in applying the limitation statutes [4.4] In order to determine whether a claim to adverse possession has been established (by applying the limitation period for an action for recovery of land) there are a number of principles that you need to understand. These are discussed in this chapter, and include: the date from which time starts to run for the purposes of determining when proceedings for the recovery of land must be commenced by the true owner; application of the doctrine to leasehold interests; adverse possession between co-owners of land; adverse possession of land owned by the Crown; adverse possession and trustees; suspension of the operation of time for the purposes of calculating the limitation period; [page 37] when a limitation period can be extended; and admissions of title by a registered proprietor in favour of an adverse possessor.

Date from which time runs for the purpose of the limitation periods [4.5] In general, for the purpose of calculating the time limitation period, time commences to run from the date on which the true owner’s cause of action first accrues (the first date on which an action could be commenced to commence legal proceedings for the recovery of land). This sounds tremendously circular! All it means is that we need to work out the date on which a cause of action for the recovery of land accrues to the true owner in order to be able to work out when time commences to run against the true owner of the land to commence proceedings against the adverse possessor to recover the land. [4.6] A cause of action for the recovery of land first accrues when:

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the true owner (the person who is entitled to possession of the land) has discontinued her or his possession, either by abandoning possession or in some way deliberately relinquishing her or his interest in the land, or has otherwise been dispossessed of the land. In other words, the time at which she or he lost possession of the land to the adverse possessor; and adverse possession of the land has in fact been taken by the adverse possessor. [4.7] So, for the cause of action to arise against an adverse possessor of land there must be both: a loss of possession by the true owner; and possession taken by an adverse possessor. [4.8] Without both of these things having occurred, the true owner cannot sue to recover her or his land, since there is no person to sue for recovery of the land in the first place. Therefore, no cause of action can arise at that point in time. For example, where there is abandonment of land by the true owner, but no possession of land by an adverse possessor, there is no cause of action arising at that point in time. There is no-one whom the true owner of land can sue to recover the land because, as a matter of fact, nobody else has taken possession of the land. [4.9] As you can see, a key element of establishing when an action for recovery of land first accrued to the true owner of the land is to determine when the act of adverse possession commenced. To do this, we need to look for acts of possession by the adverse possessor. In Chapter 1 we discussed the two requirements of exercising possession of land.4 We also learnt that the true owner of land is always presumed to have either (1) possession of the land; or (2) the right to possession of the land. For the purposes of establishing a claim for adverse possession of land, the adverse [page 38] possessor has the burden of proving her or his possession of the land, and that such possession is adverse to the possession of the land held by the true owner. [4.10] We will now consider these two requirements of possession in the context of what must be established in an adverse possession claim. In summary,5 time does not start to run under the limitation legislation until an intruder (adverse possessor) has entered into adverse possession of the land to the exclusion of others, including the true owner.6 For an intruder to be in possession of land, she or he must gain physical control of it, performing acts that an occupying owner might be expected to perform, and with the intention of enjoying possession of the land (for the time being) to the exclusion of all other persons, including the true owner.7 Requirement of factual possession [4.11] The legislation in each Australian jurisdiction does not define what ‘possession’ or ‘adverse possession’ actually means, so we have to apply the common law meaning of these terms. At common law, adverse possession is possession by an adverse possessor which is ‘open, not secret; peaceful, not by force, and adverse, not by consent of the true owner’.8 This means that the adverse possessor cannot conceal her or his possession of the land, since the true owner has to be given the opportunity to discover the adverse possession and have an opportunity to take steps to remove the adverse possessor; for example, by commencing legal proceedings and taking action to regain possession of her or his land. At [4.30] we discuss how fraud or deceit by the adverse possessor can extend the limitation period in which to commence action to recover land.9 The idea that the possession has to be peaceful can arise in circumstances such as relationships involving domestic violence. For example, in Bartlett v Ryan (2000) 10 BPR 18,077; [2000] NSWSC 807, the plaintiff had been physically evicted from the property by her de facto husband. She was too afraid to return to the property, or to commence legal proceedings. The court found that it was at least arguable that, where the owner had been frightened to use her legal rights, the possession by the husband had not been peaceable. As such, his period of possession was not counted in his claim for adverse possession. Requirement of intention [4.12] As discussed, in addition to factual possession of the property, it is necessary for the adverse possessor to establish that she or he had the required intention to possess the land. Proving intention for the purposes of establishing adverse possession equates to proof that the adverse possessor is using the land in such a way that it is clear [page 39] that she or he intends to have exclusive possession of the land.10 The intention that must be established is the intention to control the land and to exclude strangers. It is not necessary to demonstrate an intention to own the land. What is critical is the intention to possess the land.11 [4.13] Persons who are not in adverse possession of land include a person in possession of land under a licence or a proprietary right granted by the true owner. Accordingly, time does not run in favour of a person using land pursuant to: a lease; a licence; an easement or other proprietary right.12 https://unsw.wheelers.co/title/9780409340631/epub/read#!/part-ru5oOa/sub-ch04

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[4.14] Previously, courts had asserted that a person’s occupation of land could not amount to adverse possession unless it was inconsistent with the use that the true owner intended to make of the land. Otherwise, the intruder’s occupation of the land was to be ascribed to an implied licence granted by the true owner. Thus, where an owner of land had no immediate use for it and held it for future development in a specific way, and the adverse possessor was aware of this intended future use, acts of the adverse possessor that were consistent with the intended future use did not amount to acts of adverse possession.13 This line of authority has been challenged in England.14 So now, for example, the fact that a squatter is aware of the purpose for which the true owner intends to use land in the future, and uses the land in a way consistent with that purpose, rarely justifies the conclusion that the squatter (adverse possessor) did not intend to assume possession of the land. Some courts in Australia have accepted this approach.15 The problem with this line of authority is, arguably, that it has opened the way for title to land to be lost through inadvertence on the part of the true owner. For example, in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419, Pye was the registered owner of agricultural land. It granted to Graham (the owner of adjoining land) a written licence to graze sheep, cattle and horses on the land and to cut grass. When the licence expired, Pye refused to renew it for commercial reasons. Graham continued to use the land without Pye’s permission. However, Graham was not evicted, since Pye intended to retain the land until it had obtained planning permission to develop the land. Pye did not commence legal proceedings against Graham until after the limitation period had expired. The House of Lords affirmed the decision of the trial [page 40] judge that Pye’s title had been extinguished by Graham’s possession and that Graham was entitled to the land. [4.15] Although an owner’s plans for the future use of land may prevent the running of time, whether or not an owner is aware that an intruder has dispossessed her or him is, in general, irrelevant. Normally, time will run even against an owner who is unaware that an intruder has entered into possession of her or his land. Further, an owner’s transfer of title to a third party does not stop time from running in favour of an adverse possessor. Once time commences to run against an owner, it continues to run against her or his successor in title, whether the successor is a purchaser for value or not. Thus, if Xenos, who has been dispossessed of land by Zoe, sells and conveys the land to Jacob, time runs against Jacob from the date on which the predecessor in title (Xenos) was dispossessed (by Zoe). What type of interest is being asserted? [4.16] In an action by the true owner for the recovery of land, the date upon which time commences to run under the limitation legislation can depend upon several factors, including whether the true owner is claiming that she or he has either a present or a future interest in the land. Therefore, it is necessary to determine what type of interest the true owner had in the land in order to determine when a cause of action first accrued to the owner. [4.17] As discussed in Chapter 1, a future interest in land (as a fee simple owner) is an interest that confers a right to possession of the land (or to its rents and profits) at some point in time in the future. If, for example, Xenos conveys Blackacre ‘to Armanda for life and, upon her death, to Belinda’, then, during Armanda’s lifetime, Belinda is said to have a future interest in Blackacre. Upon Armanda’s death, Belinda’s interest is said to ‘fall into possession’. It is not until that point in time that Belinda’s interest becomes a present interest in the land. These future interests in land raise special problems in regard to the calculation of the time limits for actions for the recovery of land. Further, the rules that govern future interests differ from jurisdiction to jurisdiction.16 [4.18] The rules set out above apply only when an adverse possessor takes possession of land between the date on which future interest is created and the date on which the interest falls into possession. In other words, if an adverse possessor takes possession of land before the future interest is created, or after it falls into possession, then time runs from the date on which the adverse possessor entered into possession. In other words, for time to run, the true owner must have an interest in possession that the adverse possessor’s acts of possession can be counted against. [page 41]

Application of the doctrine of adverse possession to leases [4.19] Special rules relating to the doctrine of adverse possession apply to leases for the purposes of calculating the limitation period. As discussed in Chapters 2 and 11, a leasehold interest in land may take any one of four forms: a fixed term lease; a periodic lease; a tenancy at will; or a tenancy at sufferance. [4.20] It is important to be able to identify which leasehold interest applies, since different principles govern the limitation period applicable for recovery of land. The main distinction made by the limitation statutes is between fixed term leases and the other forms of leasehold interests. In this chapter, we will focus on the application of the doctrine to fixed term leases, since the ramifications of the doctrine of adverse possession have a greater impact on those leases because of the time that can be left to run under the term of the lease. Fixed term leases https://unsw.wheelers.co/title/9780409340631/epub/read#!/part-ru5oOa/sub-ch04

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[4.21] In the case of fixed term leases,17 the limitation legislation distinguishes between a lessor’s right to re-enter upon the expiry of the lease term and other rights of re-entry under the lease. In general, time does not run against a lessor’s right to re-enter on the expiry of a lease until the date on which the lease expires. If, for example, a lessor grants a lease for 10 years to a tenant who is subsequently dispossessed by an adverse possessor, then time will not commence to run against the lessor until the lease has expired. It does, however, run immediately against the lessee.18 [4.22] In the case of a lessor’s right to re-enter for breach of a lease covenant, the situation is different. When, under the terms of a lease, a lessor is entitled to forfeit the lease for breach of its terms, time commences to run against the lessor for the purposes of the limitation period on the date of the breach of the lease by the lessee.19 [page 42]

Co-owners and time limitation periods [4.23] If one of two or more co-owners is in possession of more than her or his share of the land (or its rents and profits), time normally runs against the other co-owners.20 So, if land owned by Armanda, Belinda and Camille is occupied exclusively by Armanda, time normally will run against Belinda and Camille from the date of the extra possession by Armanda.

Crown land and adverse possession [4.24] In some jurisdictions in Australia, the Crown is subject to a time limitation period for actions for recovery of its land. Each jurisdiction has different rules. In New South Wales, the operation of s 45D(3) of the Real Property Act 1900 (NSW) makes it impossible to apply for adverse possession of Torrens land to be registered against the Crown.21 In South Australia, the Crown has 60 years to commence an action for the recovery of land against an adverse possessor.22 Thus, in theory it is possible to establish adverse possession of Crown land in South Australia, but it is very difficult to imagine a successful case in practice given the time period (60 years of adverse possession) that must be established. In Tasmania, the Crown has 30 years to commence an action for the recovery of land.23 In Queensland, Victoria and Western Australia, there is no limitation period for the Crown to commence an action for recovery of land.24 It follows that there is no possibility for an adverse possessor to become the owner of the land, irrespective of for how long the adverse possessor has been in possession of the Crown land. There are no statutory limitation periods for Crown land in the Northern Territory or the Australian Capital Territory.

Trustees and adverse possession [4.25] A trustee cannot adversely possess land against a beneficiary of the trust in nearly all jurisdictions in Australia.25 In New South Wales and Western Australia, there is a limitation period in cases where a beneficiary of a trust brings an action against a trustee for fraud or fraudulent breach of trust, or to recover trust property or its proceeds from the trustee.26 [page 43]

Calculating the extent of adverse possession: successive adverse possessions and competing adverse possessors [4.26] A person in adverse possession of land for less than the statutory period enjoys rights which she or he may sell, assign, devise by will or allow to pass on intestacy. A successor in title to the rights of an adverse possessor is not merely entitled to enforce them against third parties; she or he may add her or his own period of adverse possession to that of her or his predecessor. For example, if we assume that the relevant period of adverse possession must be 12 years and Armanda (who has been in adverse possession of land for 10 years) assigns her rights to Belinda (who enters into possession for the balance of the limitation period of 2 years), then the title of the former owner of the land would have become extinguished upon the expiry of the 12 years and Belinda will become the owner of the land (because a total of 12 years of adverse possession has passed). [4.27] A similar principle applies when one adverse possessor dispossesses another adverse possessor. However, in this case, time runs in favour of the first adverse possessor. [4.28] Assume that the relevant limitation period is 12 years. Assume also that the true owner of land is dispossessed by Xenos, who remains in adverse possession for 10 years until he, in turn, is dispossessed by Jacob. If Jacob remains in adverse possession for the balance of the limitation period (2 years), the title of the true owner will be extinguished.27 However, as between Xenos (the first adverse possessor) and Jacob (the second adverse possessor), Xenos has the earlier, and therefore better, title. Should Jacob remain in possession for a further 10 years, he will, at that stage, extinguish Xenos’s title (because by then he will have been in possession for the 12 years, independently of any period of adverse possession by Xenos).28

Extending the limitation period https://unsw.wheelers.co/title/9780409340631/epub/read#!/part-ru5oOa/sub-ch04

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[4.29] The date upon which a true owner’s cause of action accrues (the time to commence action for recovery of land) is not always necessarily the date from which time runs. It is possible, in some circumstances, to extend the limitation period to commence an action for the recovery of land. The time limitation period may be extended by a court where: the true ...