Iam Group Plc v Chowdrey

Factual and Procedural Background

This is an appeal from an order of Judge Blunsdon in the Lambeth County Court dated 9 June 2011. The order dismissed the claim of the Appellant, Company A, for possession of the first and second floors of a property located at 26 Rye Lane, The City ("the disputed property"). The Judge gave judgment for the Appellee, Defendant, on his counterclaim, declaring that the Defendant had a defence based on adverse possession under section 98(1)(a) and (b) of the Land Registration Act 2002 ("the LRA"). The Defendant was entitled to apply immediately to the Land Registry to be registered as proprietor with title absolute to the disputed property. The Judge ordered the Land Registry to register the Defendant as proprietor pursuant to section 98(5) of the LRA.

The Appellant contended that the Judge erred in concluding the Defendant satisfied the conditions in section 98(1) and paragraphs 1 and 5(4) of schedule 6 of the LRA, particularly the requirement in paragraph 5(4)(c) that the Defendant "reasonably believed" the disputed property belonged to him for the specified period.

The Appellant is the registered proprietor of the entire property at the Land Registry, having purchased it in December 2000. The Defendant had been in occupation of the adjacent property since 1990, initially as a tenant and then as registered proprietor from 1993. The disputed property is comprised of the first and second floors above the ground floor of the Appellant's property. The Defendant used these floors exclusively for his retail business, with access only through his own property. The 1928 Deed and earlier 1918 Lease documents confirmed vertical boundaries between the properties. Neither the Appellant's tenants nor landlords challenged the Defendant's possession of the disputed property during their respective leases. The Defendant honestly and reasonably believed he owned the disputed property throughout the relevant period, despite correspondence from the Appellant disputing this ownership in 2009 and 2010.

Legal Issues Presented

1. Whether the Defendant satisfied the conditions under section 98(1) and paragraphs 1 and 5(4) of schedule 6 of the Land Registration Act 2002 to establish a defence based on adverse possession.
2. Specifically, whether the Defendant "reasonably believed" that the disputed property belonged to him for the requisite period under paragraph 5(4)(c) of schedule 6 of the LRA.
3. Whether the Defendant should be fixed with the knowledge of his solicitors concerning the boundaries and title to the disputed property.
4. Whether correspondence from the Appellant challenging the Defendant's title extinguished the Defendant's reasonable belief in ownership.

Arguments of the Parties

Appellant's Arguments

• The Judge erred in concluding the Defendant satisfied paragraph 5(4)(c) of schedule 6 that he "reasonably believed" the disputed property belonged to him.
• The Defendant’s solicitors would have seen the transfer documents and Land Registry entries in 1993, showing no flying freehold and clear vertical boundaries, negating any reasonable belief in ownership of the disputed property by the Defendant.
• The 1928 Deed, obtainable from the Land Registry, would have clarified the boundary position, confirming no flying freehold over the disputed property.
• Letters sent in 2009 and 2010 from the Appellant's solicitors to the Defendant notified him that he did not own the disputed property, which should have ended any reasonable belief in ownership.
• The Judge failed to address the burden of proof on the Defendant to establish reasonable belief and improperly conflated adverse possession findings with the separate requirement of reasonable belief in ownership.
• The Judge did not properly consider imputing the solicitors’ knowledge to the Defendant for the purpose of the reasonable belief test.
• The Judge’s reliance on the alleged flying freehold and physical layout was inconsistent with the Land Registry plans and the absence of evidence regarding the flying freehold of the neighboring property.

Defendant's Arguments

• The Defendant honestly and reasonably believed he owned the disputed property throughout the relevant period.
• Exclusive possession of the disputed property since 1990, uninterrupted and unchallenged by the Appellant or its tenants, supported the Defendant’s reasonable belief.
• The physical layout, exclusive access, and apparent flying freehold of an adjacent property contributed to the Defendant’s genuine and objectively reasonable belief in ownership.
• Correspondence challenging ownership did not extinguish the Defendant’s reasonable belief, given the long period of unchallenged possession and the Defendant’s reliance on his occupation and use.
• The reasonable belief test concerns the Defendant’s own knowledge and belief, not the knowledge of his solicitors, which was not evidenced in court.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Zarb v Parry [2011] EWCA Civ 1306	Clarification that a paper title owner's challenge to adverse possession does not necessarily negate the adverse possessor's reasonable belief in ownership.	The court relied on this precedent to hold that correspondence disputing title does not automatically render a continuing belief unreasonable, particularly where possession has been long and unchallenged.

Court's Reasoning and Analysis

The court began by outlining the statutory framework under the Land Registration Act 2002, specifically section 98 and schedule 6, which set out the conditions under which a person in adverse possession may have a defence to possession proceedings and apply for registration as proprietor.

The critical issue was whether the Defendant satisfied paragraph 5(4)(c) of schedule 6, requiring that for at least ten years the Defendant reasonably believed the disputed property belonged to him. The court emphasized that the test of reasonable belief is objective but focused on the Defendant's own belief rather than imputing the knowledge of solicitors.

The court found no evidence about what the Defendant’s solicitors knew or did, and noted that the conveyancing file was unavailable. Therefore, imputing solicitors’ knowledge to the Defendant was not appropriate.

The court accepted the Judge’s findings that the Defendant had exclusive possession of the disputed property since 1990, and that the Defendant honestly believed he owned it. The physical layout, exclusive access through the Defendant’s property, and absence of challenge from the Appellant or its tenants over many years fortified this belief.

Regarding the 2009 and 2010 letters from the Appellant disputing ownership, the court referred to the precedent in Zarb v Parry, holding that such challenges do not automatically negate a reasonable belief in ownership. Given the long period of unchallenged possession, the court found the Defendant’s continuing belief reasonable.

The court rejected the Appellant’s argument that the Judge conflated the requirements for adverse possession and reasonable belief, affirming that the Judge properly distinguished these requirements and applied the statutory test correctly.

Holding and Implications

The appeal is dismissed.

The court upheld the decision that the Defendant satisfied the conditions under the Land Registration Act 2002 to claim adverse possession and be registered as proprietor of the disputed property. The Defendant’s honest and objectively reasonable belief in ownership was found to be established on the facts. The decision results in the Defendant being entitled to immediate registration as proprietor with title absolute to the disputed property. No new legal precedent was established; the ruling confirms the application of existing principles regarding reasonable belief and adverse possession under the LRA in the context of disputed boundaries and possession.