Adverse Possession Unaffected by Section 33 Trusts: Interpretation of Paragraph 12, Schedule 6, LRA 2002

Introduction

This appeal arises from Nazir & Anor v Begum ([2025] EWCA Civ 587), decided by the England & Wales Court of Appeal on 7 May 2025. The core issue is whether land held under the statutory trust that arises on intestacy (Administration of Estates Act 1925, s. 33) qualifies as being “subject to a trust” for the purposes of Paragraph 12, Schedule 6 of the Land Registration Act 2002 (“LRA 2002”). If so, a squatter could not acquire title by adverse possession against that land. The appellants (administrators of their father’s intestate estate) claim their strip of land remains capable of adverse possession because it is not “subject to a trust” in the conventional sense. The respondent, Mrs Begum, sought registration of that land on the basis of ten years’ adverse possession.

Summary of the Judgment

By a unanimous Court (Lord Justice Zacaroli giving the lead judgment), the appeal was dismissed. The court held that the Section 33 statutory trust is not a trust in the conventional sense envisaged by Paragraph 12. That provision protects land against adverse possession only while held on trust for beneficiaries with successive or future interests in possession. A Section 33 trust imposes fiduciary duties on personal representatives but does not separate legal and equitable title between trustee and beneficiary. Consequently, land in an unadministered intestate estate remains open to acquisition by adverse possession under the normal Schedule 6 regime.

Analysis

Precedents Cited

Sudeley v Attorney-General [1897] AC 11: Held that executors hold the whole estate beneficially and legally until distribution, and beneficiaries acquire only a chose in action, not specific proprietary interests.
Commissioner of Stamp Duties v Hugh Duncan Livingston [1965] AC 694: Confirmed that personal representatives hold assets “in full ownership” subject to duties, not as trustees separating legal and equitable title.
Re Leigh’s Will Trusts [1970] Ch 277: Identified the “transmissible interest” of residuary legatees as a chose in action, confirming Section 33 did not create a conventional trust of land.
Marshall v Kerr [1995] 1 AC 148: Approved the principles of Leigh and Livingston, reaffirming the nature of Section 33 trusts.
Ayerst v C & K (Construction) Ltd [1976] AC 167: Described statutory trusts (e.g., bankruptcy, executorship) as “statutory” trusts lacking full equitable indicia but still denominated trusts for some purposes.
Earnshaw v Hartley [2000] Ch 155: Held that residuary legatees’ interests suffice to prevent adverse possession by a co-beneficiary under Limitation Act 1980, Schedule 1 para 9.
Pollard v Jackson (1993) P & CR 327: Confirmed that unregistered land held by personal representatives remains vulnerable to adverse possession in the absence of registration safeguards.

Legal Reasoning

The Court’s interpretation hinged on statutory construction of “subject to a trust” in Paragraph 12, Schedule 6, LRA 2002. Key reasoning points were:

Conventional Trust vs. Statutory Trust: Paragraph 12 protects land held in trust for beneficiaries whose interests are not yet in present possession (successive or future interests). The exception clause (“unless the interest of each beneficiary…is an interest in possession”) implies a trust with identifiable beneficiaries and a separation of legal/equitable title. Section 33 grants personal representatives full ownership pending administration; beneficiaries hold mere rights to require distribution. There is no split of title.
Pre-legislative Materials: The Law Commission’s Consultative Document (1998) and Joint Report (2001) envisage protection for land held on conventional trusts with successive interests, ensuring future beneficiaries are not prejudiced. No indication appears of an intention to immunize all intestate estates from adverse possession.
Definitions in Connected Statutes: Although Limitation Act 1980 and Trustee Act 1925 extend “trust” to personal representatives in certain contexts, those definitions apply only “where context admits.” In LRA 2002, Parliament omitted any deeming of Section 33 trusts into the definition of “trust,” unlike in statutes where such extension was explicit (e.g., Trustee Act 1925 s. 68, TOLATA s. 18).
Practical Consequences: Treating Section 33 trusts as “subject to a trust” would abruptly halt adverse possession rights upon death or grant of administration, leading to anomalous outcomes (e.g., a squatter’s accrual of title extinguished after nine years and eleven months simply because an administrator is appointed). The conventional-trust interpretation avoids such anomalies.
Curtain Principle and Notice: Section 78 LRA 2002 bars the registrar from notice of equitable interests. Since residuary legatees in an intestate estate have no proprietary interest in specific assets, they cannot put the registrar on notice; this aligns with the conventional-trust meaning of Paragraph 12.

Impact

This decision clarifies that:

Land in the course of administration after intestacy remains vulnerable to adverse possession under the standard LRA 2002 framework.
Paragraph 12 is confined to conventional trusts where trustees hold legal title separate from beneficiaries’ equitable interests, often with successive or future interests.
Personal representatives’ statutory duties do not shield estate land from squatters once ten years have elapsed, underlining the importance for administrators to act promptly.
Future claimants to adverse possession need not defeat an underlying Section 33 trust, simplifying adverse possession litigation in intestacy contexts.

Complex Concepts Simplified

Adverse Possession: The acquisition of title to registered land by a person who has occupied it without the owner’s consent, continuously and openly, for ten years, subject to the notice procedures in Schedule 6, LRA 2002.
Section 33 Trust (AEA 1925): A statutory arrangement by which a deceased person’s real and personal estate vests in personal representatives on intestacy. These representatives administer and distribute the estate; beneficiaries hold only a right to demand the residue, not specific assets.
Interest in Possession: A present, enforceable right to enjoy or receive income from property. Trusts with successive interests (e.g., life tenant followed by remainder beneficiaries) involve future interests not in possession until triggered.
Statutory vs. Conventional Trust: A conventional trust involves an express or implied division of legal title (trustee) and beneficial title (beneficiary). A statutory trust (e.g., Section 33 trust, bankruptcy trust) creates duties over assets without splitting ownership into trustee and beneficiaries.
“Curtain Principle”: In registered land, equitable interests are generally not entered on the register nor disclosed to third parties; they are hidden (“behind the curtain”). Section 78 maintains that the registrar is not bound by notice of such equitable interests.

Conclusion

Nazir & Anor v Begum establishes that the statutory trust arising on intestacy under Section 33 of the Administration of Estates Act 1925 does not render land “subject to a trust” for the purpose of excluding adverse possession under Paragraph 12, Schedule 6 of the Land Registration Act 2002. The Court of Appeal’s decision confirms that Paragraph 12 applies only to conventional trusts where legal and beneficial ownership are separated and beneficiaries may have future or successive interests. Practically, this outcome preserves the adverse possession regime for intestate estates and highlights the need for swift estate administration. It also reinforces statutory interpretation principles: the meaning of “trust” must be determined in context, aided by pre-legislative materials and clear legislative design, rather than by broad borrowing from related statutes.