Farakh Rashid v Teyub Nasrullah (Acting as Executor of the Estate of the late Mohammed Rashid)  EWCA Civ 2685
The Court of Appeal has decided that a registered owner of land can also be in adverse possession of the same land.
The late Mohammed Rashid (“M”), whose executor was the defendant, had purchased land in 1985. When, in 1989, he left the country for an extended period the claimant (Mr Farakh Rashid)’s father forged the defendant’s signature and fraudulently transferred the property into his own name. He then transferred the property to his son (“F”) in in the same year.
In 2013, M applied to rectify the register in accordance with Schedule 4 of the Land Registration Act 2002, which provides that a mistake can be altered by reason of fraud or lack of proper care. F argued that rectification was pointless because adverse possession had been obtained and that adverse possession amounted to an exceptional circumstance to justify not making the alteration to the register.
The Upper Tribunal followed the Court of Appeal decision in the 2013 case of Parshall v Hackney which confirmed that a registered proprietor of land could not be in adverse possession of it and allowed the rectification.
The Court of Appeal, however, declined to follow Parshall v Hackney and instead followed the 2002 House of Lords case of JA Pye (Oxford) Ltd v Graham. It found that to be in adverse possession all that mattered was that:
- the squatter had possession for the requisite period under the Limitation Act 1980, and,
- that he had it without the consent of the paper owner.
The fact that the squatter was the registered proprietor should not alter that position and that, on the facts, if F was not already the registered proprietor he would be entitled to it by now in any event.
The Court held that the forged transfer and subsequent registrations had the effect that F only acquired the legal title, with the beneficial interest remaining with M. After 12 years had passed, however, M’s beneficial interest had been extinguished and F had a good defence for any action by M to possession.
- The 12 years of possession needed (together with the other conditions listed above) to secure adverse possession comes from the provisions of the Limitation Act 1980. That Act does have provisions allowing an extension of time in a case of undiscovered fraud but these did not assist M in this case as it was clear that he had known about the issues before the 12 years of possession had lapsed.
- The Court was sympathetic to M but also made it clear that the outcome of the case turned on his inactivity - the outcome could have been different had he made an application to rectify between 1989 and 2001.
- The Court highlighted that limitation periods had a number of purposes and that “bad people are entitled to the benefit of limitation periods”.
- The court explained that it was bound to follow the House of Lords decision in Pye and not the Court of Appeal case of Parshall - the latter was irreconcilable with the former. Parshall appeared to have failed to give the act of “dispossession” (from which date time for the purpose of the Limitation Act would run) its ordinary meaning and focused on whether it was unlawful rather than on whether it was without the consent of the true owner.