EHRM, 30-08-2007, nr. 44302/02

The applicant companies agreed with the Chamber's judgment. They saw three related reasons why the taking of their land, which was then held on trust by them for the squatters, breached the fair balance principle and thus violated Article 1 of Protocol No. 1. First, they saw no justification for the applicant companies, as owners of the land, to lose their right to ownership of the registered land. Secondly, they saw no justification for depriving them of the land without having to pay any compensation. The result was disproportionate to any legitimate aim as it imposed an excessive burden on the applicant companies and constituted a substantial windfall for the squatters. There were no exceptional circumstances which justified the taking of property without compensation. Thirdly, there was no justification for depriving them of their land when there was no procedural protection providing that the person in adverse possession only acquired title if he or she first stated a claim to which the formal title owner had an opportunity to respond.

The applicant companies noted the extensive criticism of the law as it then stood from the first instance judge in the case, two members of the House of Lords in the case, the recommendations of the Law Commission and the Land Registry and Parliament's amendment of the law, and the criticism of the High Court judge in the case of Beaulane Properties v. Palmer (see paragraph 35 above). They saw no justification for a transfer of registered land at the end of the limitation period without compensation and without proper procedural protection.

The applicant companies submitted a summary of the law on adverse possession or equivalent doctrines in various jurisdictions. The summary showed that in most of the countries covered, title was acquired by adverse possession only after substantially more than 12 years, and that in most countries where title could be acquired by adverse possession, this could only occur where the occupier was acting in good faith, that is, where he or she honestly believed that a good title to the land had been acquired, for example after the transfer of the defective title.

The Government took issue with the Chamber's judgment. They considered, in the first place, that the matter should be determined by reference to Article 6 of the Convention, and not Article 1 of Protocol No. 1. Unlike in previous cases, the Government in this case had not appropriated property to its own use, and had not introduced legislation for the involuntary transfer of private property from one person to another in pursuit of a social policy objective. The only interference with the applicant companies' land came about through the actions of private individuals, the squatters, who obtained adverse possession in 1983–4. The outcome of the proceedings was dictated by the applicant companies' own inaction. They contended that the application to the present facts of the conventional case-law as to the necessity, in principle, for compensation to be paid in respect of deprivations of property confirmed the logic of analysing the case by reference to Article 6: the purpose of a limitation period is to deprive a claimant, at the end of the relevant time period, of any opportunity of enforcing his rights through the courts. That objective would be frustrated if a limitation provision could only be compatible with the Convention if the claimant was provided with compensation against the very person against whom his claim was barred.

For the Government, the Chamber's reference to the need for procedural safeguards was also in error. When a limitation provision was applied in private interest litigation between private parties, there were no ‘responsible authorities’ to whom a claimant could sensibly make representations ‘challenging the measures interfering with [his] rights’ (see Jokela v. Finland, no. 28856/95, § 45, ECHR 2002-IV) because there were no public authorities seeking to acquire his property.

Under Article 1 of Protocol No. 1, the Government considered that the provision was not engaged, because the applicant companies acquired the disputed land subject to the risk of losing it pursuant to the provisions of the 1925 and 1980 Acts. That risk had to be viewed as an incident of their property. They pointed out that the second applicant company acquired the land from the first applicant company in April 1986, at which time the Grahams had been in adverse possession for some 1½ years. The second applicant company therefore took the land subject to an existing risk of losing it to the Grahams.

The Government suggested that the Chamber had failed to deal with their argument that the State's obligations under Article 1 of Protocol No. 1 were not engaged. There was no reason to impose a positive obligation on the Government to protect the applicant companies against the consequences of their own inattention.

To the objectives of the legislation accepted by the Chamber as legitimate, the Government added a third objective. Land was a limited resource, and it was in the public interest that it should be used, maintained and improved. A finite time limit for recovery of possession encouraged landowners to make use of their land.

In connection with proportionality, the Government were of the view that the Chamber had wrongly taken into account the absence of compensation and questions of procedural protection, and that it had taken insufficient account of many factors which demonstrated that any interference was proportionate: the length of the limitation period, the fact that the applicant companies were entirely free to bring an action for re-possession at any time within the 12-year period, the availability of a court remedy to determine whether the action was statute-barred, and the degree of fault on the part of the applicant companies.

As to the position in other countries, the Government referred to the research in the Law Commission's 1998 Consultation Paper, and also to further research which they had commissioned. The results of the study indicated substantial differences between the structure of the various legal regimes, particularly between common law and civil law jurisdictions, and also between the lengths of the different limitation periods. They concluded that there was no European ‘norm’: limitation periods varied considerably, good faith was irrelevant in some jurisdictions, and other factors, such as place of residence, were sometimes taken into account.

The Irish Government gave a description of the law on adverse possession as it applied in Ireland, and saw five areas of public interest which are served by the institution: in quieting titles, that is, the desirability of clarifying title where land, whether registered or unregistered, had remained abandoned and was occupied by another person; in cases of failure to administer estates on intestacy; in pursuance of a policy of using land to advance economic development; in perfecting title in cases of unregistered title, and in dealing with boundary disputes.

The Irish Government submitted that ownership of land brings duties as well as rights, and the duty to take some action to maintain possession was not unreasonable. The Court should not be influenced by post hoc legislative changes which provided a higher standard of human rights protection. They also referred to the wide margin of appreciation allowed to States in regulating land use and ownership in accordance with social policy, to the antiquity of the doctrine and the familiarity of purchasers and owners of land with it, and concluded that the doctrine did not upset the fair balance between the public interest and the right to peaceful enjoyment of possessions.

Article 1 of Protocol No. 1, which guarantees the right to the protection of property, contains three distinct rules: ‘the first rule, set out in the first sentence of the first paragraph, is of a general nature and enunciates the principle of the peaceful enjoyment of property; the second rule, contained in the second sentence of the first paragraph, covers deprivation of possessions and subjects it to certain conditions; the third rule, stated in the second paragraph, recognises that the Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest … The three rules are not, however, ‘distinct’ in the sense of being unconnected. The second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule’ (see, as a recent authority with further references, Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, § 62, ECHR 2007-…).

In order to be compatible with the general rule set forth in the first sentence of the first paragraph of Article 1, an interference with the right to the peaceful enjoyment of possessions must strike a ‘fair balance’ between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights (see Beyeler v. Italy [GC], no. 33202/96, § 107, ECHR 2000-I).

A taking of property under the second sentence of the first paragraph of Article 1 without payment of an amount reasonably related to its value will normally constitute a disproportionate interference that cannot be justified under Article 1. The provision does not, however, guarantee a right to full compensation in all circumstances, since legitimate objectives of ‘public interest’ may call for less than reimbursement of the full market value (see Papachelas v. Greece [GC], no. 31423/96, § 48, ECHR 1999-II, again with further references).

In respect of interferences which fall under the second paragraph of Article 1 of Protocol No. 1, with its specific reference to ‘the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest …’, there must also exist a reasonable relationship of proportionality between the means employed and the aim sought to be realised. In this respect, States enjoy a wide margin of appreciation with regard both to choosing the means of enforcement and to ascertaining whether the consequences of enforcement are justified in the general interest for the purpose of achieving the object of the law in question (AGOSI v. the United Kingdom, judgment of 24 October 1986, Series A no. 108, § 52).

The applicant companies' complaint is directed in essence against the terms of the relevant legislation on limitation of actions and land registration. Whilst the court decisions in the case exemplify the way in which that legislation is applied, the complaint does not relate to the manner of execution of the law by the courts. The Court will therefore direct its attention primarily to the contested legislation itself, although the consequences of the application of the legislation must also be taken into account (James and others v. the United Kingdom, referred to above, § 36).

The responsibility of the Government in the present case is therefore not direct responsibility for an executive or legislative act aimed at the applicant companies, but is rather their responsibility for legislation which is activated as a result of the inter-actions of private individuals: in the same way as the law in James and others was applied (and the Government were responsible for it) because private individuals had requested enfranchisement, in the present case the law was applied to the applicant companies only when the pre-existing conditions for the acquisition of title by adverse possession had been met.

The Court will first turn to the question of whether the case should be dealt with under Article 1 of Protocol No. 1, or whether, as the Government contended, it should be considered only under Article 6 of the Convention.

In Stubbings and Others v. the United Kingdom, the Court dealt with limitation periods under Articles 6, 8 and 14 of the Convention. Under Article 6, the Court found that a non-extendable time limit of six years from the applicants' eighteenth birthdays did not impair the very essence of the applicants' right of access to court (judgment of 22 October 1996, Reports of Judgments and Decisions 1996-IV, § 52). The Court also considered the case under Article 8 in the context of the positive obligations inherent in an effective respect for private or family life, finding that overall such protection was afforded (ibid.,§§ 60–67).

The Court finds nothing in its case-law to suggest that the present case should be dealt with only under Article 6 of the Convention, and indeed, given the different content of the two rights, it would be unusual if the Court were to decline to deal with a complaint under one head solely because it were capable of raising different issues under a separate Article. The Court agrees with the Chamber that there is nothing in principle to preclude the examination of a claim under Article 1 of Protocol No. 1 where the complaint is directed against legislation concerning property rights.

Article 1 of Protocol No. 1 protects ‘possessions’, which can be either ‘existing possessions’ or assets, including claims, in respect of which the applicant can argue that he or she has at least a ‘legitimate expectation’ of obtaining effective enjoyment of a property right. It does not, however, guarantee the right to acquire property (see Kopecký v. Slovakia [GC], no. 44912/98, § 35, ECHR 2004-IX). Where there is a dispute as to whether an applicant has a property interest which is eligible for protection under Article 1 of Protocol No. 1, the Court is required to determine the legal position of the applicant (see Beyeler v. Italy, cited above).

In the present case, the applicant companies were the beneficial owners of the land in Berkshire, as they were successive registered proprietors. The land was not subject to a right of pre-emption, as in the case of Beyeler, but it was subject to the ordinary law of the land, including, by way of example, town and country planning legislation, compulsory purchase legislation, and the various rules on adverse possession. The applicant companies' possessions were necessarily limited by the various rules of statute and common law applicable to real estate.

It remains the case, however, that the applicant companies lost the beneficial ownership of 23 hectares of agricultural land as a result of the operation of the 1925 and 1980 Acts. The Court finds inescapable the Chamber's conclusion that Article 1 of Protocol No. 1 is applicable.

The Court has, on a number of occasions, considered cases in which a loss of ownership of possessions was not categorised as a ‘deprivation’ within the meaning of the second sentence of the first paragraph of Article 1 of Protocol No. 1. In the cases of AGOSI and Air Canada, the forfeiture of the applicant companies' possessions was considered to amount to a control of use of gold coins and a control of the use of aircraft which had been employed for the import of prohibited drugs, respectively (AGOSI v. the United Kingdom, referred to above, § 51; Air Canada v. the United Kingdom, judgment of 5 May 1995, Series A no. 316-A, § 34; see also C.M. v. France (dec.), no. 28078/95, ECHR 2001-VII). The applicant company in the case of Gasus had sold a concrete-mixer to a third party subject to a retention of title clause. The tax authorities' seizure of the concrete-mixer was considered as an exercise of the State's right to ‘secure the payment of taxes’, although the tax debts were not those of the applicant company (Gasus Dosier- und Fördertechnik GmbH v. the Netherlands, judgment of 23 February 1995, Series A no. 306-B, § 59). The Court declined, in the case of Beyeler, to determine whether the interference with the applicant's property rights constituted a ‘deprivation of possessions’, as it sufficed to examine the situation complained of in the light of the general rule in the first sentence of the first paragraph of Article 1 (Beyeler v. Italy, referred to above, § 106).

The applicant companies did not lose their land because of a legislative provision which permitted the State to transfer ownership in particular circumstances (as in the cases of AGOSI, Air Canada, Gasus), or because of a social policy of transfer of ownership (as in the case of James), but rather as the result of the operation of the generally applicable rules on limitation periods for actions for recovery of land. Those rules provided that at the end of the limitation period, the paper owner's title to unregistered land was extinguished (section 17 of the 1980 Act). In the case of registered land, the position was amended to take into account the fact that until the register was rectified, the former owner continued to appear as registered proprietor. Thus in the present case, section 75(1) of the 1925 Act provided that on expiry of the limitation period the title was not extinguished, but the registered proprietor was deemed to hold the land in trust for the adverse possessor.

The statutory provisions which resulted in the applicant companies' loss of beneficial ownership were thus not intended to deprive paper owners of their ownership, but rather to regulate questions of title in a system in which, historically, 12 years' adverse possession was sufficient to extinguish the former owner's right to re-enter or to recover possession, and the new title depended on the principle that unchallenged lengthy possession gave a title. The provisions of the 1925 and 1980 Acts which were applied to the applicant companies were part of the general land law, and were concerned to regulate, amongst other things, limitation periods in the context of the use and ownership of land as between individuals. The applicant companies were therefore affected, not by a ‘deprivation of possessions’ within the meaning of the second sentence of the first paragraph of Article 1, but rather by a ‘control of use’ of land within the meaning of the second paragraph of the provision.

The applicable provisions of the l925 and 1980 Acts were concerned to apply the limitation period for actions for recovery of land which had been fixed at 20 years since the Limitation Act 1623 and at 12 years since the Real Property Limitation Act 1874, and they were concerned then to regulate the subsequent position that the paper owner was no longer able to recover possession, and the adverse possessor had been in possession for sufficiently long to establish title.

The Court has considered limitation periods as such in the context of Article 6 of the Convention in the case of Stubbings and Others v. the United Kingdom. It held as follows:

Although that statement referred to limitation periods in personal injury cases in the context of Article 6, the Court considers that it can also be applied to the situation where limitation periods in actions for recovery of land are being assessed in the light of Article 1 of Protocol No. 1. Indeed, the parties do not suggest that limitation periods for actions for recovery of land do not pursue a legitimate aim in the general interest.

The Court finds that the existence of a 12-year limitation period for actions for recovery of land as such pursues a legitimate aim in the general interest.

As to the existence, over and above the general interest in the limitation period, of a specific general interest in the extinguishment of title and the attribution of new title at the end of the limitation period, the Court recalls that in discussing the public interest present in the case of Jahn, in the context of a deprivation of property, it stated that, ‘finding it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one [the Court] will respect the legislature's judgment as to what is ‘in the public interest’ unless that judgment is manifestly without reasonable foundation’ (Jahn and Others v. Germany [GC], nos. 46720/99, 72203/01 and 72552/01, ECHR 2005-VI, § 91, with reference back to the cases of James and Others and The Former King of Greece [GC], no. 25701/94, ECHR 2000-XII, and to Zvolský and Zvolská v. the Czech Republic, no. 46129/99, § 67, ECHR 2002-IX). This is particularly true in cases such as the present one where what is at stake is a longstanding and complex area of law which regulates private law matters between individuals.

It is plain from the comparative material submitted by the parties that a large number of member States possesses some form of mechanism for transferring title in accordance with principles similar to adverse possession in the common law systems, and that such transfer is effected without the payment of compensation to the original owner.

The Court further notes, as did the Chamber, that the amendments to the system of adverse possession contained in the Land Registration Act 2002 did not abolish the relevant provisions of the 1925 and the 1980 Acts. Parliament thus confirmed the domestic view that the traditional general interest remained valid.

It is a characteristic of property that different countries regulate its use and transfer in a variety of ways. The relevant rules reflect social policies against the background of the local conception of the importance and role of property. Even where title to real property is registered, it must be open to the legislature to attach more weight to lengthy, unchallenged possession than to the formal fact of registration. The Court accepts that to extinguish title where the former owner is prevented, as a consequence of the application of the law, from recovering possession of land cannot be said to be manifestly without reasonable foundation. There existed therefore a general interest in both the limitation period itself and the extinguishment of title at the end of the period.

The second paragraph of Article 1 is to be construed in the light of the general principle enunciated in the opening sentence. There must, in respect of a ‘control of use’, also exist a reasonable relationship of proportionality between the means employed and the aim sought to be realised. In other words, the Court must determine whether a fair balance has been struck between the demands of the general interest and the interest of the individuals concerned. In determining whether a fair balance exists, the Court recognises that the State enjoys a wide margin of appreciation, with regard both to choosing the means of enforcement and to ascertaining whether the consequences of enforcement are justified in the general interest for the purpose of achieving the object of the law in question (see AGOSI v. the United Kingdom, referred to above, § 52 and, for a more recent authority concerning a deprivation of possessions, the case of Jahn and Others, cited above, at § 93). In spheres such as housing, the Court will respect the legislature's judgment as to what is in the general interest unless that judgment is manifestly without reasonable foundation (Immobiliare Saffi v. Italy [GC], no. 22774/93, § 49, ECHR 1999-V). In other contexts, the Court has underlined that it is not in theory required to settle disputes of a private nature. It can nevertheless not remain passive, in exercising the European supervision incumbent on it, where a domestic court's interpretation of a legal act appeared ‘unreasonable, arbitrary or … inconsistent … with the principles underlying the Convention’ (Pla and Puncernau v. Andorra, no. 69498/01, § 59, ECHR 2004-VIII). When discussing the proportionality of a refusal of a private television company to broadcast a television commercial, the Court considered that a margin of appreciation was particularly essential in commercial matters (Vgt Verein gegen Tierfabriken v. Switzerland, no. 24699/94, § 69, ECHR 2001-VI). In a case concerning a dispute over the interpretation of patent law, and at the same time as noting that even in cases involving litigation between individuals and companies the State has obligations under Article 1 of Protocol No. 1 to take measures necessary to protect the right of property, the Court reiterated that its duty is to ensure the observance of the engagements undertaken by the Contracting Parties to the Convention, and not to deal with errors of fact or law allegedly committed by a national court unless Convention rights and freedoms may have been infringed (Anheuser-Busch Inc. v. Portugal, cited above, § 83).

The Chamber (at paragraph 55 of its judgment) found that the relevant provisions — section 75 of the 1925 Act in particular — went further than merely precluding the applicant companies from invoking the assistance of the courts to recover possession of their property. The Court recalls that the Court of Appeal in the present case was of the view that the Grahams had not established the requisite intention to possess the land, so that time had not started to run against the applicant companies (paragraph 17 above). It nevertheless considered that the extinguishment of title at the end of the limitation period of an action for recovery of land was a logical and pragmatic consequence of the barring of the right to bring an action after the expiration of the limitation period. The House of Lords disavowed the Court of Appeal's interpretation of the law on intention to possess, but did not comment on the suggestion that to terminate title at the end of the limitation period was ‘logical and pragmatic’. Even though the general position in English law is that the expiry of a limitation period bars the remedy but not the right, the Court accepts that where an action for recovery of land is statute-barred, termination of the title of the paper owner does little more than regularise the respective positions, namely to confirm that the person who has acquired title by 12 years' adverse possession is the owner. Moreover, the law reflected the aim of the land registration legislation, which was to replicate the pre-registration law so far as practicable. As already noted above (paragraph 74), such a regime cannot be considered as ‘manifestly without reasonable foundation’.

The Court has rejected the Government's contention that the pre-existing nature of the regime of adverse possession excluded the facts of the case from consideration under Article 1 of Protocol No. 1 (paragraphs 62 and 63 above). The fact that the rules contained in both the 1925 and the 1980 Acts had been in force for many years before the first applicant even acquired the land is nevertheless relevant to an assessment of the overall proportionality of the legislation. In particular, it is not open to the applicant companies to say that they were not aware of the legislation, or that its application to the facts of the present case came as a surprise to them. Indeed, although the case proceeded domestically as far as the House of Lords, the applicant companies do not suggest that the conclusions of the domestic courts were unreasonable or unforeseeable, in the light of the legislation.

In connection with the limitation period in the present case, the Court notes that the Chamber took the view that the period was relatively long (paragraph 73). It has been unable, however, to derive any assistance from the comparative material submitted by the parties in this connection, beyond noting that there is no clear pattern as regards the length of limitation periods. It is in any event the case that very little action on the part of the applicant companies would have stopped time running. The evidence was that if the applicant companies had asked for rent, or some other form of payment, in respect of the Grahams' occupation of the land, it would have been forthcoming, and the possession would no longer have been ‘adverse’. Even in the unlikely event that the Grahams had refused to leave and refused to agree to conditions for their occupation, the applicant companies need only have commenced an action for recovery, and time would have stopped running against them.

The Chamber and the applicant companies emphasised the absence of compensation for what they both perceived as a deprivation of the applicant companies' possessions. The Court has found that the interference with the applicant companies' possessions was a control of use, rather than a deprivation of possessions, such that the case-law on compensation for deprivations is not directly applicable. Further, in the cases in which a situation was analysed as a control of use, even though the applicant had lost possessions (AGOSI, and Air Canada, both referred to above), no mention was made of a right to compensation. The Court would note, in agreement with the Government, that a requirement of compensation for the situation brought about by a party failing to observe a limitation period would sit uneasily alongside the very concept of limitation periods, whose aim is to further legal certainty by preventing a party from pursuing an action after a certain date. The Court would also add that, even under the provisions of the Land Registration Act 2002, which the applicant companies use as confirmation that the provisions of the earlier legislation were not compatible with the Convention, no compensation is payable by a person who is ultimately registered as a new owner of registered land on expiry of the limitation period.

The Chamber and the applicant companies were also exercised by the absence of procedural protection for a paper owner whose property rights are about to be extinguished by the running of the limitation period under section 15 of the 1980 Act, at least insofar as it applied to registered land. The Court would recall here that the applicant companies were not without procedural protection. While the limitation period was running, and if they failed to agree terms with the Grahams which put an end to the ‘adverse possession’, it was open to them to remedy the position by bringing a court action for re-possession of the land. Such an action would have stopped time running. After expiry of the period, it remained open to the applicant companies to argue before the domestic courts, as they did, that the occupiers of their land had not been in ‘adverse possession’ as defined by domestic law.

It is true that since the entry into force of the Land Registration Act 2002, the paper owner of registered land against whom time has been running is in a better position than were the applicant companies at the relevant time. The 2002 Act requires, in effect, the giving of notice to a paper owner before the expiry of the limitation period, to give him time, if he wishes, to take action to deal with the adverse possessor. It improves the position of the paper owner and, correspondingly, makes it more difficult for an adverse possessor to acquire a full 12 years' adverse possession. The provisions of the 2002 Act do not, however, apply to the present case, and the Court must consider the facts of the case as they are. In any event, legislative changes in complex areas such as land law take time to bring about, and judicial criticism of legislation cannot of itself affect the conformity of the earlier provisions with the Convention.

The Government contended that it could not be the role of Article 1 of Protocol No. 1 to protect commercial operators against their own failings. The Court regards this suggestion as related to those aspects of the Court's case-law which underline that the Court is not in theory required to settle disputes of a private nature, in respect of which States enjoy a wide margin of appreciation (see paragraph 75 above). In a case such as the present, where the Court is considering, principally, the statutory regime by which title is extinguished at the end of the limitation period, rather than the specific facts of the case, the relevance of the individual applicant's conduct is correspondingly restricted.

The applicant companies contended that their loss was so great, and the windfall to the Grahams so significant, that the fair balance required by Article 1 of Protocol No. 1 was upset. The Court would first note that, in the case of James, the Court found that the view taken by Parliament as to the tenant's ‘moral entitlement’ to ownership of the houses at issue fell within the State's margin of appreciation. In the present case, too, whilst it would be strained to talk of the ‘acquired rights’ of an adverse possessor during the currency of the limitation period, it must be recalled that the registered land regime in the United Kingdom is a reflection of a long-established system in which a term of years' possession gave sufficient title to sell. Such arrangements fall within the State's margin of appreciation, unless they give rise to results which are so anomalous as to render the legislation unacceptable. The acquisition of unassailable rights by the adverse possessor must go hand in hand with a corresponding loss of property rights for the former owner. In James and Others, the possibility of ‘undeserving’ tenants being able to make ‘windfall profits’ did not affect the overall assessment of the proportionality of the legislation (James and Others judgment, referred to above, § 69), and any windfall for the Grahams must be regarded in the same light in the present case.

As to the loss for the applicant companies, it is not disputed that the land lost by them, especially those parts with development potential, will have been worth a substantial sum of money. However, limitation periods, if they are to fulfil their purpose (see paragraphs 67–74 above), must apply regardless of the size of the claim. The value of the land cannot therefore be of any consequence to the outcome of the present case.

In sum, the Court concludes that the fair balance required by Article 1 of Protocol No. 1 to the Convention was not upset in the present case.