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Fairweather Vs. St. Marylebone Property Co. Ltd. - Court Judgment

LegalCrystal Citation
CourtHouse of Lords
Decided On
Case NumberNo.
Judge
AppellantFairweather
RespondentSt. Marylebone Property Co. Ltd.
Excerpt:
my lords, this appeal raises a short but, possibly, important point with regard to the effect of the real property limitation acts. for the purpose of deciding it we were invited to consider a good deal of ancient learning and somewhat obscure pronouncements by sages of the past as to such subjects as the operation of mergers and surrenders and the drowning of estates. i do not at all complain of this, because the argument was in itself informative and, no doubt, such statutes as the real property limitation act, 1833, cannot be understood without reference to older forms arid conceptions of conveyancing, many of which are now outmoded. nevertheless i have come to the conclusion that the solution of the problem which we have before us depends upon nothing more than the inferences to be.....
Judgment:

My lords,

This appeal raises a short but, possibly, important point with regard to the effect of the Real Property Limitation Acts. For the purpose of deciding it we were invited to consider a good deal of ancient learning and somewhat obscure pronouncements by sages of the past as to such subjects as the operation of mergers and surrenders and the drowning of estates. I do not at all complain of this, because the argument was in itself informative and, no doubt, such statutes as the Real Property Limitation Act, 1833, cannot be understood without reference to older forms arid conceptions of conveyancing, many of which are now outmoded. Nevertheless I have come to the conclusion that the solution of the problem which we have before us depends upon nothing more than the inferences to be drawn from one or two principles about real property limitation that are themselves, I believe, incapable of being disputed at the present day.

Let me try to state our facts in skeleton form, for their details do not contribute anything that is material. What is in dispute between the Appellant and the Respondents is which of them is presently entitled to possession of part of a shed. The shed has been so constructed at some past date that its entrance is on a property known as No. 311 West End Lane, Hampstead, and its back wall on the adjoining property, No. 315 ; three-fourths of the length in 315, one-fourth in 311. The Respondents own the freehold of No. 315, and since they acquired it they have bought and taken a surrender of the only outstanding lease of that property, a lease for 99 years granted in 1894 to expire by effluxion of time on the 29th September, 1992.

The Appellant derives his rights to the shed from a sublease of the ground floor and shop of No. 311, of which he is the assignee and which runs for a term of 21 years from the 29th September, 1951. There is no dispute that that sublease included the shed in the premises demised, as appurtenant to the ground floor and shop, or that there passed under the demise squatter's rights to so much of the shed as was actually on the site of No. 315. The squatter's rights in question arose from adverse possession of that part of the shed by the Appellant's predecessors in title, who, since the year 1920, had maintained adverse possession without acknowledgment of title against the lessee of No. 315, who or whose successors in title have now surrendered their lease to the Respondents.

The Respondents' claim to possession can be stated in a few words. They are the fee simple owners of No. 315, including the site of the shed, so far as it is on that land; they have cleared off the lease which stood between them and their present right to possession ; and, although the Appellant as squatter was entitled to hold possession against the lessee, he had held no adverse possession against them until by the surrender of the lease, which took place on the 14th December, 1959, their right to claim possession from him accrued for the first time. As they 'began their ejectment proceedings in August, 1960, their right is not statute barred.

The Appellant's position is a little more complicated to state. By 12 years adverse possession as against the lessee of No. 315 his predecessor, he says, acquired a squatter's rights in that part of the shed that was on the property and upon that event the lessee's title thereto became extinguished. That extinguishment would have occurred some time in the year 1932. Had the lease continued for its full term, until 1992, he would have been entitled by virtue of his rights against the lessee to continue to occupy the shed as quatter and the lessee, he says, cannot by surrendering the lease to the landlord put the landlord in a position to claim possession against him before the time when the lease would have expired. One branch of his argument is to say that the lessee had lost any right or title to possession of the shed, because his title was extinguished under section 34 of the Real Property Limitation Act, 1833, and he had nothing, therefore, in this respect that he could transfer to the landlord: the other branch involves the proposition that until 1992 the landlord could only claim a present right to possession through the lessee and, if the lessee himself had no right to possession against the squatter, the landlord claiming through him could be in no better position.

It is plain that the case on each side involves several deductive steps which are claimed to follow by irrefutable logic from their respective premises. After some hesitation between two inviting paths, I have come to the conclusion that the Appellant's arguments are vitiated by the fact that their reasoning contains an engaging but considerable fallacy. It seeks to revive in an elegant new form tine rejected proposition that a squatter becomes in some way the successor to the title of the dispossessed owner.

It is necessary to start, I think, by recalling the principle that defines a squatter's rights. He is not at any stage of his possession a successor to the title of the man he has dispossessed. He comes in and remains in always by right of possession, which in due course becomes incapable of disturbance as time exhausts the one or more periods allowed by statute for successful intervention. His title, therefore, is never derived through but arises always in spite of the dispossessed owner. At one time during the 19th century it was thought that section 34 of the Act of 1833 had done more than this and effected a statutory transfer of title from dispossessed to dispossessor at the expiration of the limitation period. There were eminent authorities who spoke of the law in just these terms. But the decision of the Court of Appeal in 1892 in Tichborne v. Weir, 67 L.T. 735, put an end to this line of reasoning by holding that a squatter who dispossessed a lessee and extinguished his title by the requisite period of occupation did not become liable in covenant to the lessee's landlord by virtue of any privity of estate. The point was fully considered by the members of the Court, and they unanimously rejected the idea that the effect of the limitation statute was to make a Parliamentary conveyance of the dispossessed lessee's title or estate to the dispossessing squatter.

In my opinion this principle has been settled law since the date of that decision. It formed the basis of the later decision of the Divisional Count in Taylor v. Twinberrow [1930] 2 K.B. 16, in which it was most clearly explained by Scrutton, L.J. that it was a misunderstanding of the legal effect of 12 years adverse possession under the Limitation Acts to treat it as if it gave a title whereas its effect is merely negative and, where the possession had been against a tenant, its only operation was to bar his right to claim against the man in possession (see loc. cit. p. 23). I think that this statement needs only one qualification: a squatter does in the end get a title by his possession and the indirect operation of the Act and he can convey a fee simple.

If this principle is applied, as it must be, to the Appellant's situation, it appears that the adverse possession completed in 1932 against the lessee of No. 315 did not transfer to him either the lessee's' term or his rights against or has obligations to the landlord who held the reversion. The appellant claims to be entitled to keep the landlord at bay until the expiration of the term by effluxion of time in 1992: but, if he is, it cannot be because he is the transferee or holder of the term which was granted to the lessee. He is in possession by his own right, so far as it is a right: and it is a right so far as the statutes of limitation which govern the matter prescribe both when the rights to dispossess him are to be treated as accruing and when, having accrued, they are thereafter to be treated as barred. In other words, a squatter has as much protection as but no more protection than the statutes allow: but he has not the title or estate of the owner or owners whom he has dispossessed nor has he in any relevant sense an estate commensurate with the estate of the dispossessed. All that this misleading phrase can mean is that, since his possession only defeats the rights of those to whom it has been adverse, there may be rights not prescribed against, such, for instance, as equitable easements, which axe no less enforceable against him in respect of the land than they would have been against the owners he has dispossessed.

No one supposes that adverse possession against a lessee during his term is itself adverse possession against his landlord. It is necessary, therefore, to see what provision the limitation statutes have made for the accrual of a landlord's right to make his entry against a squatter on demised land. Until 1939 there is no doubt, I think, that the general provision about the landlord (there were special sections for special cases) was to be found in section 2 of the Real Property Limitation Act, 1874, and that the landlord was to be regarded as having for this purpose an estate or interest in reversion or remainder. It has long been common to speak of a landlord as having a reversion expectant upon the determination of a term of years, and as early as the case of Doe d. Davy v. Oxenham (1840) 7 M. and W. 131, he had been treated as having an estate "in remainder" and as falling within the corresponding but earlier provisions of the Real Property Limitation Act 1833. It is true that in Wakefield and Barnsley Union Bank Ltd. v. Yates [1916] 1 Ch. 452 both Lord Cozens-Hardy, M.R., and Warrington, L.J. were at pains to point out in relation to section 3 of the 1833 Act that an estate in fee subject to a lease is an estate in possession, not an estate in remainder or reversion. And so in many senses it is: but I think that in stating their proposition in such an unqualified form they were to some extent seduced by the vigour of language and clarity of thought that distinguishes Mr. Challis's book on the Law of Real Property. In my opinion, both for the purposes of section 2 of the Real Property Limitation Act, 1874, and for the purposes of section 6 (1) of the Limitation Act, 1939, which has taken the place of the relevant portion of that section, an owner in fee simple subject to a term of years has an estate or interest in reversion or remainder and, consequently, his right of action against a squatter on the demised land is to be deemed to have accrued at the date when the preceding estate or interest represented by the term determines in such manner that his estate or interest falls into possession. It is, therefore, vital to the decision of this case to make up one's mind at what date the lease which preceded the Respondents' fee simple interest and so their right to possession is to be treated as determining.

In the ordinary way one would regard a lease or tenancy as being determinable by effluxion of time, by notice, by forfeiture on breach of condition or by surrender. Ostensibly the lease of No. 315, including the site of the shed, was determined by the surrender in December, 1959, and upon that event, one would say. the fee simple owner's right to possession of the demised property accrued. According to the Appellant's argument, however, the surrender was ineffective in law to determine the lease so far as it extended to the site of the shed because by virtue of section 34 of the Limitation Act of 1833 the lessee's right and title to that part of the demised premises was extinguished upon the barring of his right to dispossess the squatter: and, if his right and title had been thus extinguished in 1932, he had nothing by way of title that he could pass to the landlord by his ostensible surrender. Nemo dot quod non habet. That is the argument and line of reasoning that prevailed with a Divisional Count in Walter v. Yalden [1902] K.B. 304, and it assumes that it is correct to apply that general and probably unimpeachable proposition to the circumstances of the present case.

It becomes necessary, therefore, to determine what is meant by this phrase, which in section 34 of the 1833 Act runs: at the determination of the period limited by this Act to any person for making an entry or distress, or bringing . . . any action or suit, the right and title of such person to the land, rent or advowson, for the recovery whereof such entry, distress, action or suit respectively might have been made or brought within such period, shall be extinguished, and in section 16 of the Limitation Act, 1939, runs: "... at the expiration of the period prescribed by this Act for any person to bring an action to recover land ... the title of that person to the land . . . shall be extinguished ". On one view, which seems not an implausible one having regard to the structure of the respective sections, the right or title extinguished is coterminous with the right of action the barring of which is the occasion of the extinguishment. This would mean that, when a squatter dispossesses a lessee for the statutory period, it is the lessee's right and title as against the squatter that is finally destroyed but not his right or title as against persons who are not or do not take through the adverse possessor. On the other view, that upon which the Appellant's case depends, the lessee's right and, title to the premises becomes extinguished for all purposes and in all relations, so that as between himself and the lessor, for instance, he has thereafter no estate or interest in the land demised.

My Lords, I think that even at first impression I should have been inclined to favour the former of these two possible interpretations as being more consistent with the apparent purpose of the Limitation Acts. But the major difficulty that I see in considering the adoption of the second alternative is that its logical application is very far-reaching indeed, much more far-reaching than is convenient for the Appellant's argument, and would produce situations that would seem to me neither reasonable nor just. First, if the lessee's estate or right or title or interest—I do not believe that there is any useful distinction between these words in this connection—is really extinguished as against his landlord, I see no escape from the conclusion that the landlord's right to possession against the squatter accrues upon that event. The squatter has not got the lessee's term or estate and there is nothing between the fee simple owner and the man in possession. In the terms of this case, the landlord's right of action would have accrued in 1932 and become barred for good in 1944: and this, although the lessee was continuing throughout the period to pay the rent under the lease and, for all that appears, the landlord had neither means of knowing nor reason to know that dispossession of part of the premises had taken place or that time was running against him. This seems quite wrong; yet if the lessee's estate was extinguished for all purposes it must also have determined at the same time within the meaning of section 2 of the 1874 Act and section 6 (1) of the 1939 Act. This situation, manifestly unjust, could occur whenever there is current a long term of years and there have been 12 years or more of adverse possession of a portion or even the whole of the demised premises during the currency of the term. It is to be noted that the expiration by efftuxion of time of the term granted by the lease ceases to be of any significance, once the Appellant's conception is accepted, for in respect of the premises the title to which was previously extinguished no estate or interest exists which can then expire.

The difficulties of such an interpretation stretch out further. If the lessee's estate or title is destroyed for all purposes, there disappears with it any privity of estate between him and the landlord. If privity of estate is gone so are gone the covenants on the part of the lessee which depend on such privity: if the current lessee is an assignee of the lease, as he is likely to be if the term in question is a long term of years, the landlord will find himself deprived by the act of the Legislature of the right to enforce in respect of the squatter's portion of the land a set of covenants of value to him and he will have been so deprived without compensation or any necessary notice that the event that brings it about has in fact 'taken place. The squatter himself, on the other hand, is entitled to remain in possession as against the landlord without personal liability for rent or convenant. It seems a strange statutory scheme.

Then there is the question of forfeiture. The Appellant's argument, I think, included the proposition that, if he does not take the incautious step of accepting a surrender, the landlord could achieve a forfeiture on breach of condition and under it enter on the squatter's land. But I have not been able to see how this can be. A condition, the breach of which justifies a forfeiture or re-entry, must be attached to the estate the grant of which imposes the condition; and if a statute has itself wiped out or destroyed the estate, so that the squatter is in possession by a different title derived aliunde, I cannot see how the land-lord can any longer rely upon the condition or forfeit an interest which has ceased to exist.

I (think, therefore, that it is a false approach to the provisions of the Limitation Acts to regard the extinguishment of title as extinguishing more than the title of the dispossessed against the dispossessor. Where the person dispossessed is a lessee, I do not think it right to try to build legal conclusions on the assumption that the nexus between him and his lessor has been destroyed; or, consequently, that, once adverse possession has been completed, he ceases to hold the term of years and estate in it granted to him by his lessor. If I may express my point of view by an illustration which was propounded during the course of the argument, if after 12 years adverse possession a squatter vacates the premises and leaves the possession vacant. would it be the lessee or his lessor who would have the better right to possession as between themselves? Of course, the answer begs the question, because the answer one gives depends on the view of the law one takes; but I think that it would be very difficult for anyone to reply that during the remainder of the term the landlord could exclude the lessee. If he cannot it shows that, as against him, the lessee still holds the estate granted and it has not been extinguished for all purposes. But, if he can, it can only be because the landlord enjoys a present right of possession and this view brings in again the former difficulty that his right of action against the squatter must then have accrued as soon as the 12 years adverse possession against the lessee had completed the ouster of the latter.

I conclude, therefore, that the effect of the extinguishment sections of the Limitation Acts is not to destroy the lessee's estate as between himself and the lessor; and that it would be incorrect to say that if he offers a surrender to the lessor he has nothing to surrender to him in respect of the land in the possession of the squatter. Nemo dot quod non habet, and I dare say that he does not, but, as Pearson, L.J. indicated in the Court of Appeal, the question here is not whether there are any exceptions from that general principle but whether, as a principle, it is relevant to the situation that we have here. In my opinion it is not.

What the lessee surrendered in this case was the encumbrance on the fee simple in possession which was represented by the term of years. It was that encumbrance and nothing else, I think, which until then prevented the fee simple owner from asserting a claim to possession against the squatter. This is clear, if one assumes claims made at three successive points of time and asks what the defence to them would be. If the fee simple owner claimed possession against the squatter before his adverse possession against the lessee had been completed, I do not see what defence would be open to the squatter except that the outstanding term of years prevented the landlord from having a present title to possession. He would defend himself by alleging the grant to the lessee. Secondly, if the landlord came against him after he had enjoyed his 12 years adverse possession against the lessee, his defence would have to be the same, for otherwise the landlord would have a present and unbarred right to possession. Yet this would be after the limitation statute had extinguished the lessee's title. Now, thirdly, if the landlord then goes to the lessee and gets him to surrender the outstanding term, which encumbers his fee simple in possession, then the squatter's defence against the landlord disappears and, since he has not completed adverse possession against the landlord, he must give up to the rightful owner's claim to the land. That is the situation that we have here.

This appeal then requires a choice between two decisions that have hitherto ranked as of equal authority, Walter v. Yalden [1902] 2 K.B. 304 and Taylorv. Twinberrow [1930] 2 K.B. 16. Each was decided by a Divisional Court, one sixty yea-re, the other thirty years ago. I regard their decisions as inconsistent with each other, since the lines of distinction suggested in the later case (more out of propriety than conviction, I think) are not capable of supporting a relevant difference. It cannot really matter whether the squatter is being attacked by a landlord who has taken a surrender of a lease or by a lessee who has taken a conveyance of the fee simple : nor can it matter whether the interest defeated by adverse possession is a fixed term of years or a tenancy from year to year. In my opinion, Waller v. Yalden (supra) was wrongly decided, since it depends on what I regard as the mistaken idea that the squatter can defend his possession against the fee simple owner even though he is not entitled to and has no interest in the intervening term of years.

We have been in a little difficulty over a point that was argued for the Appellant with regard to the operation of section 75 of the Land Registration Act, 1925, because, although his Counsel was able to take this point in the Court of Appeal despite the fact that it was not raised in the County Court, he was refused leave to adduce further evidence bearing upon it. The result is that neither that Court nor this House had available enough of the facts to know whether the point had any actual bearing upon the case or not. As I think that the true meaning of section 75 (1) is not at all easy to discover and may have to be fully considered on some other occasion, I think it best on this occasion to say as little about it as possible.

Briefly, section 75 (1) appears to set out with the purpose of applying the Limitation Acts and therefore the statutory consequences of adverse possession to registered land, but then goes on to provide that where the estate of a person registered as proprietor would be extinguished, such estate shall not be extinguished but shall be deemed to be held by the proprietor for the time being in trust for the person who . . . has acquired title against any proprietor ". It therefore succeeds in making a provision at the end of the subsection which is wholly inconsistent with the conceptions of the limitation Acts as previously understood and achieves just that Parliamentary conveyance (through the medium of trustee and cestui que trust) which was denied by the decision in Tichborne v. Weir supra. It would certainly be very satisfactory for the appellant if this is what the 1925 Act has really done, because it would give him just that beneficial interest in the lessee's term which, in my view, he lacks under the Limitation Acts themselves.

But, although it is known from the Land Registry that the lease had been entered on the Charges Register as an incumbrance on the Absolute Title and the entry of it had later been cancelled, presumably after the surrender, there is no evidence to show at what date the lessee himself had thus come upon the Register as a proprietor. As proprietor in the Act is defined as meaning registered proprietor ", it is pointed out that it is impossible on the evidence to say whether or not the lessee was a registered proprietor at the date when the Act came into force, or for that matter was a registered proprietor at the date when adverse possession was completed.

The Court of Appeal were unanimous in holding that this uncertainty by itself was fatal to the success of the Appellant's argument, since, to use the words of Holroyd Pearce, L.J : Section 75(1) clearly deals with the future, not the past ". He said that, had the Appellant's counsel been able to establish by evidence that the leasehold title was registered before the Act came into force, his point might well have had weight. My Lords, I agree with this view in the sense that I regard section 75 (1) as operating only upon events occurring after the Act came into force, and if the Limitation Acts effected extinguishment at a date when the lessee was not a registered proprietor, the subsection would not operate.

I do not think, therefore, that the Appellant can succeed on this point. I only wish to add that at present I am not at all satisfied that section 75 (1) does create a trust interest in the squatter of the kind that one would expect from the words used. So to hold would raise difficulties which I do not now explore; and the trust of the dispossessed owner's title under subsection (1) must somehow be reconciled with the provision under subsection (2) for the squatter to apply to register his own title, which would presumably be his independent possessory title acquired by the adverse possession.

For the reasons that I have given I think that the appeal ought to be dismissed.

My Lords, my noble and learned friend, Lord Guest, who is not able to be here today, has asked me to say that he has read my Opinion and concurs in it.

Lord Denning

My lords,

At the back of a leasehold house in Hampstead there is a shed. In the year 1920 the next door neighbour, Mr. Millwood, saw it was unused and out of repair. He went in and repaired it and has treated it as his own ever since. Mr. Millwood has actually sublet it as part of his own house. Now a property company has bought the freehold of the property on which the shed stands and wants to recover possession of the shed. Can it do so, or is it barred by the statutes of limitation?

There are three important persons to consider:

1. The freeholder who in 1893 let the premises on which the shed stands on a lease for 99 years at a ground rent with a repairing covenant and a proviso for re-entry. The 99 years will not expire till 1992.

2. The leaseholder who has token no steps for more than 12 years to recover possession of the shed which stands on part of his leasehold premises. His right of action first accrued in 1920. So the 12 years for him to sue expired in 1932.

3. The squatter who has been in possession of the shed since 1920, by himself or his subtenants.

And there is one important event to consider:

The surrender in 1959 by the leaseholder to the freeholder of 'the rest of the term of 99 years. Whereupon the freeholder claims that he is entitled to possession of the shed. But the squatter says he is entitled to stay in it until 1992.

It is quite clear from the statutes of limitation that in the year 1932 the title of the leaseholder to the land was extinguished. What does this mean? There are four suggestions to consider.

The first suggestion is that the title of the leaseholder to the shed is extinguished completely, not only against the squatter, but also against the freeholder. So that the leasehold interest disappears altogether, and the freeholder becomes entitled to the land. I reject this suggestion completely. It would mean in this case that the freeholder would have become entitled to possession of the shed in the year 1932 and time would have begun to run against him from 1932. So that 12 years later the title of the freeholder to the shed would have been extinguished, that is, in 1944. That cannot be right. And it was not seriously suggested. In 99 cases out of 100, the freeholder has no knowledge that the squatter is on the premises at all. It would be utterly wrong if the title of the freeholder could be eroded away during the lease without his knowledge. The correct view is that the freehold is an estate in reversion within section 6 (1) of the 1939 Act and time does not run against the freeholder until the determination of the lease, see Doe d. Davy v. Oxenham (1840) 7 M. and W. 131.

The second suggestion is that the title of 'the leaseholder to the shed is extinguished so far as the leaseholder is concerned—so that he is no longer entitled to the shed—but that the leasehold interest itself persists and is vested in the squatter. In other words, the squatter acquired a title which is commensurate with the leasehold interest which has been extinguished. This suggestion was made in 1867 in the first edition of Darby and Bosanquet's book at p. 390 and it was accepted in 1888 as correct by the Court in Ireland in Rankin v. McMurtry (1889) 24 L.R. Irish (Q.B.) 290. But it has since been disapproved. If it were correct, it would mean that the squatter would be in the position of a statutory assignee of the shed, and he would by reason of privity of estate, be liable on the covenants and subject to the conditions of the lease. I reject this suggestion also: for the simple reason that the operation of the statutes of limitation is merely negative. It destroys the leaseholder's title to the land but does not vest it in the squatter. The squatter is not liable on the repairing covenants, see Tichborne v. Weir (1892) 67 L.T. 735. Nor, when the leasehold is a tenancy from year to year, does he step into the shoes of the tenant so as to be himself entitled to six months' notice to quit, see Taylor v. Twinberrow [1930] 2 K.B. 16.

The third suggestion is that the title of the leaseholder is extinguished but that his estate in the land is not. This is too fine a distinction for me. And so it was for Parliament. For Parliament itself uses the two words as if they meant the same. See section 16 of the Limitation Act, 1939, and section 75 of the Land Registration Act, 1925.

The fourth suggestion is that the title of the leaseholder to the shed is extinguished as against the squatter, but remains good as against the free-holder. This seems to me the only acceptable suggestion. If it is adopted, it means that time does not run against the freeholder until the lease is determined—which is only just. It also means that until that time the freeholder has his remedy against the leaseholder in the covenants, as he should have; and can also re-enter for forfeiture, as he should be able to do, see Humphry v. Damion (1612) Cro. Jac. 300, and can give notice to determine on a " break " clause or notice to quit, as the case may be. Further, it means that if the leaseholder should be able to induce the squatter to leave the shed—or if the squatter quits and the leaseholder resumes possession the leaseholder is at once in the same position as he was originally, being entitled to the benefits and subject to the burdens of the lease in regard to the shed. All this seems to me eminently reasonable, but it can only be achieved if, despite the presence of the squatter, the title of the leaseholder remains good as against the freeholder.

On this footing it is quite apparent that at the date of the surrender, the leaseholder had something to surrender. He still had his title to the shed as against the freeholder and was in a position to surrender it to him. The maxim nemo dat quod non habet has no application to the case at all.

But there still remains the question: What was the effect of the surrender? There are here two alternatives open :

1. On the one hand, it may be said that the surrender operated to determine the term, just as a forfeiture does. If this is correct, it would mean that the freeholder would be entitled to possession at once as soon as the leaseholder surrendered the house. He could evict the squatter by virtue of his freehold estate against which the squatter could say nothing. And time would begin to run against the freeholder as soon as the surrender took place. This view is based on Ecclesiastical Com- missioners of England and Wales v. Rowe (1880) 5 App. Cas. 736 and section 6 (1) of the Limitation Act, 1939.

2. On the other hand, it may be said that the surrender operated as an assignment by the leaseholder to the freeholder of the rest of the 99 years. If this is correct, it would mean that the freeholder could not evict the squatter because the freeholder would be claiming through the leaseholder and would be barred for the rest of the 99 years, just as the leaseholder would be, see section 4 (3) of the Limitation Act. Time would not begin to run against the freeholder until the 99 years expired. This view is based on Walter v. Yalden [1902] 2 K.B. 304.

My Lords, I have come to the clear conclusion that a surrender operates as a determination of the term. It is not an assignment of it. I am aware that no less an authority than Lindley, L.J. once said that the surrender of the term only operated as an assignment of the surrenderor's interest in it, see David v. Sabin [1893] 1 Ch. at p. 533. But if that be true, it is not by any rule of the common law, only by force of statute: and then only in the case of under-leases, not in the case of trespasser or squatter.

At common law if a leaseholder made an underlease and afterwards surrendered his term to the freeholder, then the freeholder could not evict the underlessee during the term of the underlease, see Pleasant (Lessee of Hayton) v. Benson (1811) 14 East 234. But this was not because there was any assignment from surrenderer to surrenderee. It is clear that, upon the surrender, the head term was determined altogether. It was extinguished completely, so much so that the freeholder could not sue the under-lessee on the covenants or enforce the proviso for re-entry, see Webb v. Russell (1789) 3 T.R. 393. The underlessee could enjoy the property without payment of rent and without performance of the covenants and conditions until the end of the term of the underlease, see Ecclesiastical Commissioners for England v. Treemer [1893] 1 Ch, at p. 174. This was remedied by the statutes of 1740 and 1845 which have been re-enacted in sections 139 and 150 of the Law of Property Act, 1925. Under those statutes, on a surrender of the head lease, an underlessee becomes a direct tenant of the freeholder on the terms of his underlease. So that the surrender does operate as if it were an assignment of the surrenderor's interest. But those statutes have no application to trespassers or squatters.

The question may be asked: Why did the common law on a surrender protect the underlessee from eviction? The answer is to be found in Coke on Littleton II p. 338, where it is said that "having regard to the parties to the surrender, the estate is absolutely drowned . . . But having regard to strangers, who were not parties or privies thereunto, lest by a voluntary surrender they may receive prejudice touching any right or interest they had before the surrender, the estate surrendered hath in consideration of law a continuance. This passage applies in favour of an underlessee so as to protect him from eviction during the term of his underlease: but it does not apply in favour of a trespasser. The reason for the difference is because the underlessee comes in under a grant from the lessee ; and the lessee cannot, toy a surrender, derogate from his own grant, see Davenport's case (1608) 8 Co. Rep. 144b, Mellor v. Watkins (1874) L.R. 9 Q.B. at p. 345 by Blackburn, J. But a trespasser comes in by wrong and not by grant of the lessee. If the lessee surrenders his term, the freeholder is at once entitled to evict the trespasser for the simple reason that, on the surrender, the lease is determined, and there is no bar whatever to the freeholder recovering possession, see Ecclesiastical Commissioners of England and Wales v. Rowe (1880) 5 App. Cas. 736. And I see no reason why the same reasoning should not apply even though, at the date of the surrender, the trespasser is a squatter who has been there more than 12 years or, as against the freeholder, he is still a trespasser. The freeholder's right to possession does not arise until the lease is determined by the surrender. It then comes into being and time begins to run against him under section 6 (1) of the Limitation Act, 1939.

The only reason, it seems to me, which can be urged against this conclusion is that it means that a squatter's title can be destroyed by the leaseholder and freeholder putting their heads together. It is said that they can by a surrender —or by a surrender and regrant—destroy the squatter's title completely and get rid of him. So be it. There is no way of preventing it. But I would point out that, if we were to deny the two of them this right, they could achieve the same result in another way. They could easily do it by the leaseholder submitting to a forfeiture. If the leaseholder chooses not to pay the rent, the freeholder can determine the lease under the proviso for re-entry. The squatter cannot stop him. He cannot pay the rent without the authority of the leaseholder. He cannot apply for relief against forfeiture. The squatter's title can thus be defeated by a forfeiture—or by a forfeiture and regrant—just as it can by a surrender—or by a surrender and regrant. So there is nothing in the point.

My Lords, so far as these questions under the Limitation Acts are concerned, I must say that I see no difference between a surrender or merger or a forfeiture. On each of those events the lease is determined and the free-holder is entitled to evict the squatter, even though the squatter has been on the land during the lease for more than twelve years: and on the determination of the lease, time then begins to run against the freeholder. It follows that, in my opinion, Walter v. Yalden was wrongly decided and Taylorv. Twinberrow was rightly decided.

One word about section 75 (1) of the Land Registration Act, 1925. That point was not raised in the County Court and its availability depends on facts which were not proved. I do not think it is open to the Appellant here. But in any case I doubt if .that puts registered land on a very different footing from unregistered land. It is machinery so as to apply the Limitation Acts to registered land, but it does not alter the substantive position very materially. The registered leaseholder clearly remains liable on the covenants and subject to the conditions of the lease, including the proviso for re-entry: and I do not see why, on a surrender, the freeholder should not recover possession from a squatter, just as he can on a forfeiture. The freeholder has no notice of the trust in favour of the squatter and his interests are not to be prejudiced by the fact that the leasehold is registered. I say no more because the point is not available here. Suffice it to say that for the reasons I have given, I would dismiss this appeal.

Lord Morris of Borth-y-Gest

My lords,

The question which arises in this appeal is whether the plaintiffs were entitled to possession of that .part of the shed which is on the land of No. 315. The plaintiffs acquired the freehold of No. 315 in February, 1959. They acquired it subject to the subsisting lease. That was a lease dated the 26th April, 1894. It was for a term of 99 years which would expire in 1992. From 1920 onwards there had been continuous possession of the shed which was adverse to the rights of the lessee of No. 315. After 1932 the lessee was not entitled to eject Millwood from the shed. Nor thereafter could he eject either Pliska or the defendant (Fairweather). The plaintiffs do not suggest that the previous freeholder could in 1932 have ejected Millwood. Nor do they suggest that the acquisition by them of the freehold in February, 1959, gave them at that time the right to possession of the part of the shed which is on No 315. Why, then, were they entitled to such possession in August, 1960, at which date they took proceedings in the County Court? The only basis for such entitlement which is asserted is that the plaintiffs after acquiring the freehold of No. 315 took in December, 1959, what has been called a surrender of the lease of No. 315. The result, it is asserted, is that though the surrenderor could not have ejected the defendant the surrenderors (the plaintiffs) could do so. This means that though the lessees could not have ejected the defendant and though the plaintiffs could not have ejected the defendant, yet the lessees and the plaintiffs could make some agreement between them-selves or come to some arrangement as a result of which there arose in the plaintiffs a right to eject the defendant. This would seem surprising.

The plaintiffs as the successors of the previous freeholder and lesser became entitled to have possession of No. 315 on the expiry of the term of the lease. They also had a right of re-entry if occasion for a forfeiture arose. Under the terms of the lease the lessee had covenanted that at the expiration or sooner determination of the term he would peaceably surrender and yield up the demised premises. At the time when the plaintiffs claimed possession in the County Court the term of the lease had not expired and there had been no forfeiture. The plaintiffs were only entitled to possession if the lessees had peaceably surrendered and yielded up the demised premises. They relied upon the Deed of Surrender dated the 14th December, 1959, which was intended to be supplemental to the lease of the 26th April, 1894. The Deed recited that by virtue of divers mesne assignments acts in law and events the lease was then vested for the residue of the term in the persons described in the Deed as the lessees: it further recited that the reversion immediately expectant on the termination of the lease was vested in the plaintiffs who were described as the reversioner. The Deed then provided: In consideration of the sum of one thousand eight hundred and seventy-five pounds paid by the reversioner to the lessees (the receipt whereof the lessees hereby acknowledge) and of the release hereinafter contained the lessees as trustees hereby convey surrender and yield up to the reversioner All and Singular the premises demised by the Lease subject to and with the benefit of the tenancies mentioned in the Schedule hereto To the Intent that the term of years granted by the Lease may merge and be extinguished in the reversion expectant thereof. There followed a release of the lessees from all liability claims and demands in respect of the rent reserved by or any breach of the covenants contained in or otherwise arising under the lease. There was also a schedule of the tenancies referred to.

If the lessees were not entitled to possession of one part of No. 315 (that is, the part on which the shed stood) how could they yield up possession of that part to the plaintiffs? If the plaintiffs were not entitled to eject the defendant before the deed and if equally the lessees were not entitled to eject the defendant before the deed, how does the deed give or how could the lessees give to the plaintiffs a right to eject the defendant?

When a lessor grants a lease to a lessee for a term of years the lessee is given a right to possession during the term. The lessee will have a right to possession for the period of the term which will be effective as against his lessor and as against everyone else. If thereafter the lessee wishes during the term to place the lessor in the position of having a right to possession as against everyone he does not do this merely by abandoning any such right to possession as against the lessor as might be thought to exist: he must also be in a position to cede to the lessor rights to possession as against everyone else—which was one part of what he had obtained from the lessor. If, however, he has lost all his rights to possession how can he reinvest his lessor with any of them? Unless he is in a position to transfer those rights to his lessor the lessor must wait until he acquires such rights in some other way. If it can be said in a case where a squatter has during a lease remained in possession for the statutory period that the lessee has merely lost his right to possession vis-a-vis the squatter, how can his give his lessor a right to possession against such squatter?

In the present case the Deed of Surrender of the 14th December, 1959, involved that, subject to the tenancies mentioned in the schedule, the right to possession of the demised premises was to be given by the lessees to the plaintiffs. As the lessees had not got possession or the right to possession of that part of No. 315 on which the shed stood and as they did not obtain such possession or the right to it they were not able to give such possession to the plaintiffs. It follows, in my view, that the plaintiffs could not show that they had any right to eject the defendant.

My Lords, if authority is needed to support this view it is to be found in the decision in Walter v. Yalden [1902] 2 K.B. 304—a decision which has stood for nearly 60 years. Channel, J. expressed the matter clearly when he said (see p. 310) that a lessee cannot convey to his landlord, any more than to anyone else, anything that he has not got himself. In that case there was a letting of certain premises on the 7th February, 1837. It was for a term of 99 years if three named persons shall so long live. Before the year 1885 the lessees had lost their title. This was because certain persons had been in possession of the land. By an indenture in 1885 made between one Pothecary as sole surviving executor of the survivor of the lessees and Walter, who was entitled to the fee simple, it was witnessed that Pothecary, so far as he could or lawfully might, surrendered to Walter all the premises demised by the lease to the intent that the residue of the term of years and all the estate and interest of Pothecary as personal representative might be merged and extinguished in the reversion and inheritance of the premises. Walter died in 1894 and the plaintiff was his successor in title. In 1895 the last of the three lives, for which the lease of 1837 had been granted, came to an end. In 1902 the plaintiff claimed possession from the defendant who had taken a conveyance of the premises from one Watts in 1867 and had since then remained in possession. The premises were described in the conveyance as having been for the previous thirteen years in the occupation of Watts and before then for eleven years in the occupation of one Fulker from whom Watts obtained possession. Onbehalf of the defendant it was contended that when Walter accepted a surrender in 1885 he acquired an immediate right of re-entry and that as the claim for possession had not been brought within 12 years from that date the claim was barred. On behalf of the plaintiff it was contended that time only began to run in 1895 and accordingly that the plaintiff's claim was not barred. The plaintiff succeeded. Lord Alverstone, C.J. said .that the surrender could not operate to defeat the defendant. Channel, J. said (see p. 310) that " inasmuch as in 1885 Pothecary had lost all title as against the persons in possession of this particular land, he could not have assigned a right of entry to anybody else, and no more could he assign it to his lessor. The result is that a right of entry did not arise in the lessor at the date of the surrender, but only when the last life dropped on January 5,1895.

The plaintiffs in the present case had a superior or paramount title which would enable them to resume possession of No. 315 on the expiration of the term of the lease. The adverse possession of Millwood and others after 1920 of a part of No. 315 could not interfere with the plaintiffs' right to possession at such time. Nor could the adverse possession interfere with the contractual provisions of the lease of No. 315 or debar the plaintiffs from claiming a forfeiture or from exercising any right of re-entry. The plaintiffs do not assert that their claim to possession in the action rested upon any provision in the lease of No. 315: there was no forfeiture and no exercise of any right of re-entry. It seems to me that the so-called surrender gave to the plaintiffs no right of action for possession of the part of No. 315 because the lessees could not yield to the plaintiffs something (that is, a right to possession) which they had not got.

My Lords, this, as it seems to me, is the conclusion to which the reasoning of the matter points: it seems to me further that the contrary conclusion is undesirable. I see no reason why Coke's statement (see Coke on Littleton p. 338b) that " having regard to the parties to the surrender the estate is absolutely drowned . . . But having regard to strangers, who were not parties or privies thereunto, lest by a voluntary surrender they may receive prejudice touching any right or interest they had before the surrender, the estate surrendered hath in consideration of law a continuance should not embrace the situation where an adverse possessor has remained in possession for the period specified by statute. If a lessee who has lawfully assigned or sublet cannot by a surrender affect the rights of assignees or sublessees, I do not see why a surrender should endow a lessor with a right against an adverse possessor which was not possessed by the lessee. Further-more, it is to be observed that the protection which is given by the Limitation Act, 1939, to an adverse possessor is recognised in the Land Registration Act, 1925. He is enabled in the case of a registered estate to be registered as proprietor thereof. Section 75 (2) of the Land Registration Act, 1925, provides that—" Any person claiming to have acquired a title under the Limitation Acts to a registered estate in the land may apply to be registered as proprietor thereof.

It is provided by section 6 (1) of the Limitation Act, 1939, as follows: —

“6.—(1) Subject as hereafter in this section provided, the right of action to recover any land shall, in a case where the estate or interest claimed was an estate or interest in reversion or remainder or any other future estate or interest and no person has taken possession of the land by virtue of the estate or interest claimed, be deemed to have accrued on the date on which 'the estate or interest fell into possession by the determination of the preceding estate or interest."

The wording of section 6 (2) shows that the preceding estate or interest may be a term of years absolute. A lessee's estate or interest will consist of his right to possession. A lessor's right to possession may be regarded as a future interest. That future interest may fall into possession by the determination of the preceding estate or interest. It seems to me that there could be a determination other than by effluxion of time and that the word could cover a surrender. In the present case, however, the purported surrender, whatever other effect it may have had, could not in my view, for the reasons which I have set out, yield to the plaintiffs a right to immediate possession of that small part of No. 315 on which the shed stood. The circumstances that only a very small part of No. 315 is involved makes no difference to the principles which are involved: if the adverse possession after 1920 had been of the whole area of No. 315 the decision of the Court of Appeal involves that after a purported surrender by disentitled lessees the plaintiffs would have been entitled to immediate possession.

After a lessor has granted a lease to a lessee for a term of years, the right to possession for the duration of the term is the substance of the lessee's title, and if anything is gained in this case by speaking separately of his estate or interest—of his estate or interest as well. If a third person trespasses on the land the lessee has a right of action to eject him, but at the expiration of the period prescribed by Parliament for the bringing of an action to recover possession the title of the lessee to the land is extinguished (see Limitation Act, 1939, section 16, which replaced section 34 of the Real Property Limitation Act, 1833.) There is then no one who can eject the adverse possessor, and he has the best right to bring an action against anyone who in turn intrudes upon his possession. There is no one with a better title to possession until the time arrives when, at the end of the period of the lease, the lessor is entitled to possession. That does not mean, however, that the term is transferred to the adverse possessor so as to make him liable on the covenants in the leases (see Tichborne v. Weir, 67 L.T. 735). Nor does it mean that the covenants and obligations which bind the lessee are affected. The lessee's title or estate or interest (whichever word is used) consists of his right to possession. If a squatter remains in possession for the statutory period, then the title or estate or interest of the lessee is extinguished. But that does not mean that anything has happened which relieves the lessee from his contractual obligations towards his lessor or which in any way affects or adds to the pre-existing right of the lessor to resume possession when the term of the lease expires. If the extinguishment of the lessee's title or estate or interest could be said to be a determination within section 6 (1) of the Act of 1939, it would not be a determination which would cause the future estate or interest of the lessor to fall into possession within the meaning of that subsection. In the absence of any arrangement between lessor and lessee the contractual obligations of the latter would not only continue but would continue for the duration of their contractual period. The adverse possessor is therefore in peril if circumstances give occasion for the exercise by the lessor of a right of forfeiture, and it will be for him to ensure that no such occasion arises. In this state of affairs it seems to me that whatever a purported surrender by a lessee whose title to the land has been extinguished may achieve, it cannot pass to the lessor any title to the land: so far as title to the land is concerned the lessor will have nothing added to his pre-existing right which was a right to resume possession of the land at the end of the term granted by the lease. I cannot find support in the case of Ecclesiastical Commissioners of England and Wales v. Rowe (1880) 5 App. Cas. 736 for any contrary view. In that case there was a surrender by a lessee to the Dean in 1828 and contemporaneously the grant of a new lease. At the time there was a trespasser in occupation. It was held that on the surrender a right of action to recover the premises accrued to the Dean. In that case, however, at the time of the surrender the period of adverse possession had not been such as to extinguish the title of the lessee. This distinguishing feature of that case was put before the Court by Mr. Buckmaster, Q.C., in his argument in Walter v. Yalden.

The majority in the Court of Appeal in the present case were influenced by what was referred to as the mechanical difficulty which it was said may arise in the case of periodic tenancies. If there is a tenancy from year to year and if a squatter retains adverse possession against the tenant for over the statutory period and if thereafter the tenant purchases the landlord's reversion (or equally if the tenant purports to surrender to his landlord) can the squatter be ejected? In Taylor v. Twinberrow [1930] 2 K.B. 16 the facts gave rise to one of these questions. On the 18th May, 1900, the father of the plaintiff became tenant from year to year of a cottage. The father, Mr. Taylor, senior, allowed Mr. Twinberrow to occupy rent free as a tenant at will. By the combined effect of sections 7 and 34 of the Real Property Limitation Act, 1833, and section 1 of the Real Property Limitation Act, 1874, the right and title of Mr. Taylor, senior, to the cottage became extinguished in or about the year 1913. On the 5th February, 1919, Mr. Taylor, senior, bought the freehold of the cottage. In 1925 Mr. Twinberrow died. The defendant was his widow. She continued to occupy. In 1928 Mr. Taylor, senior, died, having by his will devised 'the cottage to the plaintiff, who in 1929 brought an action in the County Court against Mrs. Twinberrow claiming possession of the cottage. Questions arose as to whether the claim was barred and as to whether it could be brought in the absence of a determination of the yearly tenancy by a notice to quit. The claim to possession succeeded and an appeal to the Divisional Court failed. My Lords, it seems to me that the result in that case was correct, though I would reach that result by a somewhat different process of reasoning from that contained in the judgments in the Divisional Court. I can see no difference in principle between a case where there is possession which is adverse to a tenant who has a lease for a fixed term and a case where there is possession which is adverse to a tenant from year to year. II a landlord lets from year to year and if there is adverse possession for a statutory period against the tenant, then the title of the tenant will be extinguished. His tenancy will, however, not be transferred to the adverse possessor. The position will be that the tenant will have lost the right to eject the adverse possessor. The landlord can, however, give an appropriate notice to quit to his tenant, and upon its expiration the landlord will be entitled to possession. What, then, is the position if at a time after such tenant has lost his right to eject an adverse possessor the tenant acquires the freehold from his landlord or alternatively if the tenant purports to effect a surrender to his landlord? The result should, I apprehend, be the same in either of these two eventualities.

My Lords, though this point does not directly arise in this appeal and does not, therefore, call for a final expression of opinion, it seems to me that the approach should be the same as in the situation where a tenant has a tenancy for a fixed term. If a tenant from year to year who has lost his right to eject a squatter proposes to acquire the freehold reversion he could acquire it after his landlord has given him an appropriate notice to quit or after he has given an appropriate notice to quit: having acquired the freehold the tenant could then eject the squatter after such notice has expired. If no notice to quit is given and the tenant acquires the freehold reversion he will then possess the sum of the rights previously possessed by him together with those previously possessed by the freehold landlord. If the landlord previously had no right to eject the squatter and if the tenant also had no such right, I cannot see that any such right could arise or be created as a result of the joinder of the rights possessed by the landlord and the tenant. It may well be that as such joinder would obviate any necessity for the giving of a notice to quit the result would be that possession could be obtained as against the squatter at such date as would have been the end of the period of a notice to quit which apart from the merger could validly have been given. In Taylorv. Twinberrow the position would therefore be that Mr. Taylor, senior, after acquiring the freehold on the 5th February, 1919, became entitled to possession after the 18th May, 1920: before the rights which he acquired from the freeholder could be extinguished by reason of Mrs. Twinberrow's possession time would have to run from such latter date. As the action for possession was brought on the 24th October, 1929, time had not run.

If there is a lease for a term of years with an option to determine before such term expires and if a squatter is in adverse possession as against the tenant for the statutory period, the contractual obligations as between the landlord and tenant (including the break clause) would remain unaffected. The question was raised in argument as to what would be the position if before any exercise of the option there was a joinder of the rights of the landlord and tenant either upon an acquisition by the tenant of the freehold or upon a purported surrender by the tenant. This matter does not call for present decision and might require consideration of particular provisions, but it may well be that the squatter would not be protected from ejectment after the date when but for the events that had taken place, the term, by the exercise of an option, could have been terminated.

In view of the opinion which I have expressed I do not find it necessary to deal with the submission which was made in reference to section 75 (1) of the Land Registration Act, 1925.

For the reasons that I have given I would allow the appeal.


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