Neutral Citation Number: [2008] EWCA Civ 7
Case No: A3/2005/2560
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
THE CENTRAL LONDON COUNTY COURT
HH JUDGE LEVY QC
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 29/01/2008
Before :

LORD JUSTICE MAY
LADY JUSTICE ARDEN
and
SIR MARTIN NOURSE
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Between :

	(1) EMMANUEL OFULUE
(2) AGNES OFULUE	Appellants	
	- and -		
	ERICA BOSSERT	Respondent	

- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -

Mr Richard Wilson QC & Mr Christopher Jacobs (instructed by Messrs White Ryland, Solicitors) for the Appellants
Mr Peter Crampin QC & Mr Simon Williams (instructed by Messrs RFB, Solicitors) for the Respondent

Hearing date : 19 March 2007; further written submissions submitted October 2007
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Judgment
Lady Justice Arden: 
Introduction

1.	This is an appeal against the order dated 28 October 2005 of HHJ Levy QC sitting in the Central London County Court.  He found that the Bosserts had acquired the property (“the Property") known as 61 Coburn Road, Bow, London, by adverse possession. I will refer to the appellants as Mr and Mrs Ofulue or, where appropriate, the Ofulues. I will refer to the respondent as Ms Bossert. Her father, the late Mr Edward Bossert, also plays a part in the facts which have given rise to these proceedings.  When I refer to the Bosserts, I am referring to Ms Bossert and her father.

2.	This appeal concerns the law of adverse possession as it stood prior to the Land Registration Act 2002.  A major plank of the case put forward on appeal is that the law of adverse possession engages rights guaranteed by the European Convention on Human Rights ("the Convention").   These rights are authoritatively interpreted by the European Court of Human Rights (“the Strasbourg court”).    When this appeal was heard on 19 March 2007, a Chamber of the former Fourth Section of the Strasbourg court had held that this law violated the owners’ right to property guaranteed by art 1 of Protocol No.1 to the Convention: Pye v United Kingdom [2005] All ER (D) 199 (Nov).  However, after the hearing of the appeal, the Grand Chamber of the European Court of Human Rights came to the conclusion that art 1 was engaged but not violated: Pye v United Kingdom [2007] ECHR 44302/02.  That decision has a significant effect on the issues that need to be decided on this appeal.  Both parties have filed substantial written submissions as a result.  My first tasks in this judgment are to identify the issues that now remain and to consider (so far as material) the effect of that decision.  In the context of Pye v United Kingdom, references in this judgment to the Strasbourg court are (unless otherwise stated) to the Grand Chamber of the Strasbourg court.  References to Pye v United Kingdom are, unless otherwise stated, to the judgment of the Grand Chamber in that case.

3.	The applicants to the Strasbourg court in Pye v United Kingdom were the unsuccessful parties in the case of Pye v Graham [2003] 1 AC 419.  In that case the House of Lords explained what was required in terms of intention for a person to be in adverse possession, and I shall need to examine the decision in connection with the second issue arising on this appeal.

Issues for determination on this appeal

4.	In my judgment, the first issue which requires to be determined on this appeal is:

(1) Should this court follow Pye v. United Kingdom? 

5.	 For the reasons given below, in answer to question (1), I consider that this court should follow Pye v United Kingdom.  

6.	On that basis, there being no challenge to the judge’s findings of fact, the outcome of this appeal then turns only upon the determination of the following issues:

(2) Did the claim by the Bosserts, in their defence to possession proceedings, that they were tenants, prevent them having the necessary intention for adverse possession? 

I will call this “the intention point”, and it turns on the application of the decision of the House of Lords in Pye v Graham.  

(3) Was there an acknowledgment of the Ofulues’ title for the purposes of s 29 of the Limitation Act 1980 (“the 1980 Act”) which postponed the running of time beyond the start of these proceedings on 30 September 2003?  

I will call this “the acknowledgement of title point”. The only communications that could constitute acknowledgments for this purpose are:

(a)	the Bosserts’ defence and counterclaim, dated 18 July 1990, in the first proceedings for possession referred to below, and then only on the basis that that pleading was a continuing representation;
(b)	 the letter dated 14 January 1992 referred to below, from the Bosserts’ solicitors to the Ofulues’ solicitors, which was marked without prejudice.  This contained an offer by the Bosserts to the Ofulues to purchase the freehold.
 
7.	On these issues, for the reasons given below, I consider: 

(2) the Bosserts’ defence did not prevent them from having the intention required for adverse possession.

(3)(a) The defence and counterclaim was an acknowledgment of the landlord’s title but not that he was entitled to possession, and in any event it could only be an acknowledgement of the state of affairs as at the date of the defence and counterclaim (18 July 1990).  This pleading did not therefore stop the running of time in the Bosserts’ favour for the purpose of the 1980 Act.  

(3)(b) The letter dated 14 January 1992, whereby the Bosserts made an offer to the Ofulues to buy the Property, is not admissible in evidence because it was a without prejudice communication and is not within any established exception to the rule protecting such communications.

8.	It follows that the Bosserts have acquired the Property by adverse possession and that the appeal fails.

Issues which do not have to be decided following the decision of the Strasbourg court in Pye v United Kingdom 

9.	Because of the decision of the Grand Chamber following the hearing of this appeal, this court does not now have to determine the following further issues on which the Ofulues also made submissions at the hearing of the appeal: 

(4) where a decision of the House of Lords is inconsistent with a later decision of the Strasbourg court, what course should an inferior court take? 

(5) can s 29 of the 1980 Act be interpreted so as to avoid any issue as to incompatibility with Convention rights?

Relevant provisions of the 1980 Act and the Convention etc

10.	For convenience I will set out at this stage the relevant statutory provisions and provisions of the Convention that are most relevant to this appeal.  

11.	The relevant provisions of the 1980 Act deal with the length of time required for adverse possession, the extinction of title after that time has expired, acknowledgments of title and successors in title and, so far as material, they provide as follows:

“15. (1) No action shall be brought by any person to recover any land after the expiration of twelve years from the date on which the right of action accrued or, if it first accrued to some person through whom he claims, to that person…
(6) Part 1 of Schedule 1 contains provisions for determining the date of accrual of rights of action to recover land in the cases there mentioned.

17.	Subject to 
(a) section 18 of this Act;
(b)…		
at the expiration of the period prescribed by this Act for any person bring an action to recover land (including a redemption action) the title of that person to the land shall be extinguished.

29 (1) Subsections (2) and (3) below apply where any right of action (including a foreclosure action) to recover land …has accrued.
(2) If the person in possession of the land…in question acknowledges the title of the person to whom the right of action has accrued-
(a)	the right shall be treated as having accrued on and not before the date of the acknowledgment…
…
(7) …a current period of limitation may be repeatedly extended under this section by further acknowledgments or payments, but a right of action, once barred by this Act, shall not be revived by any subsequent acknowledgment or payment.
30. (1) To be effective for the purposes of s 29 of this Act, an acknowledgement must be in writing and signed by the person making it.
(2)	for the purposes of s 29, any acknowledgement or payment-

(a) may be made by the agent of a person by whom it is required to be made under that section; and

(b) shall be made to the person, or to an agent of the person, whose title or claim is being acknowledged or, as the case may be, in respect of whose claim the payment is being made.

31. Any acknowledgement of the title to any land… by any person in possession of it shall bind all other persons in possession during the ensuing period of limitation.

Schedule 1, Part 1
1.	Where the person bringing an action to recover land, or some person through whom he claims, has been in possession of the land, and has while entitled to the land been dispossessed or discontinued his possession, the right of action shall be treated as having accrued on the date of the dispossession or discontinuance.
…
 5. (1) Subject to sub-paragraph (2) below, a tenancy from year to year or other period, without a lease in writing, shall for the purposes of this Act be treated as being determined at the expiration of the first year or other period; and accordingly the right of action of the person entitled to the land subject to the tenancy shall be treated as having accrued at the date on which in accordance with this sub-paragraph the tenancy is determined.
..
8(1)  No right of action to recover land shall be treated as accruing unless the land is in the possession of some person in whose favour the period of limitation can run (referred to below in this paragraph as "adverse possession."); and where under the preceding provisions of this Schedule any such right of action is treated as accruing on a certain date and no person is in adverse possession on that date, the right of action shall not be treated as accruing unless and until adverse possession is taken of the land. 
…
 (4) For the purpose of determining whether a person occupying any land is in adverse possession of the land it shall not be assumed by implication of law that his occupation is by permission of the person entitled to the land merely by virtue of the fact that his occupation is not inconsistent with the latter’s present or future enjoyment of the land.
This provision shall not be taken as prejudicing a finding to the effect that a person's occupation of any land is by implied permission of the person entitled to the land in any case where such a finding is justified on the actual facts of the case.”

12.	In the case of registered land, s 75(1) of the Land Registration Act 1925 provides that, on the expiry of the limitation period, the title to land is not extinguished, but the registered proprietor is deemed to hold it thereafter in trust for the squatter.  In the present case, the judge went on to make an order that the title to the property be registered in the name of Ms Bossert in place of the Ofulues.  

13.	Art 1 of Protocol No.1 to the Convention provides:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions.  No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair 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 or to secure the payment of taxes or other contributions or penalties.”

14.	Art  6 of the Convention provides (so far as relevant) as follows:

“1. In the determination of his civil rights and obligations… everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law… ”

Background

15.	On 26 August 1976, the Ofulues became the registered owners of the Property under title number NGL 880462.  However, in the late 1970s, they went to live in Nigeria. In 1981, the Bosserts were let into the property by a former tenant, Teri Osborne. The Property was in a state of disrepair in consequence of which a closing order was made on 5 June 1981. 

16.	In 1983, while on a visit to the United Kingdom, Mr Ofulue visited the Property and finding the Bosserts in occupation confronted them. His case at trial was that he introduced himself and explained that he was the owner of the Property.  He also told the Bosserts that they would have to leave the Property but Mr Bossert (now deceased) became aggressive.  Mr Bossert did not mention anything about the state of the Property or of his having done any work.  Mr Ofulue did not have the funds to initiate proceedings.  He returned to Nigeria.  He subsequently denied having offered Mr Bossert any lease at their meeting.  The judge, however, made the following finding:

“Obviously I have not heard evidence from the father [Mr Bossert died in 1996], but I have heard evidence during the hearing from the first claimant and from the defendant.  The defendant says she was present at the meeting in 1983, referred to in the first claimant’s statement.  He has denied that.  It is quite clear that, on the evidence which I have seen, that the defendant and her father did take over the rates payment and that there was a closing order which was not enforced.  Having considered the evidence of both witnesses, on the balance of probabilities, in my judgment the first claimant’s recollection of events is less reliable than that of the defendant as to what happened in 1983 and, on the balance of probabilities, I am satisfied that the claimants learnt in 1983 that the defendant and her father were in occupation of the property; that they had taken over the management of the property in the sense of paying the rates; that they had done certain repairs to the property which avoided the closing order being enforced, and that he is likely to have given them some reassurance as to their future in the property but not one which would have entitled them to remain there as they have.  Certainly, in my judgment, they learned that the first claimant was one of the owners of the property and the first claimant must have realised that they were living there.” (judgment, [24])

17.	Accordingly, the judge's findings about this crucial meeting are not precise.  He obviously did not accept that Mr Ofulue offered to grant a lease.  Mr Ofulue was obviously prepared for the Bosserts to occupy the Property.  The judge does not define the terms on which Mr Ofulue was prepared to permit their occupation.  He may have granted them a right of occupation terminable on reasonable notice.  The judge makes no finding about the rent.  However, the Bosserts continued to occupy the Property as they had done before this event. 

18.	In 1987, Mr Ofulue again returned to England and again visited the Property. He requested the Bosserts to leave the Property and instructed a firm of solicitors to take proceedings for possession.  On 15 June 1989 an originating summons was issued by the Ofulues under what was then Order 113 of the Rules of the Supreme Court for summary possession of the Property. Mr Bossert counterclaimed on the basis that he had undertaken extensive work on the Property on the ground that he had been offered a 14-year lease in return for completion of the work. His defence and counterclaim dated 18 July 1990 states:

“Defence and Counterclaim
1. Save that it is denied that the Plaintiffs have any present entitlement to possession of 61 Coborn Road (hereinafter referred to as “the premises”) paragraph 1 of the Statement of Claim is admitted.
….
4. The premises were subject to a Closing Order made by the London Borough of Tower Hamlets on 5 June 1981 on the grounds that the premises were unfit for human habitation and were not capable of being made fit at reasonable cost.
5. By an oral agreement made between the First Defendant and Terry Osborne on or about 21 November 1981 the First Defendant took an oral assignment of Terry Osborne’s tenancy of the premises on condition that the First Defendant pay the outstanding rates bill for the premises totalling £57.70 plus costs totalling £19.15.
6. By reason of the said oral assignment, or alternatively by reason of the said oral assignment followed by performance by the First Defendant of his obligation to pay outstanding rates the First Defendant became the tenant of the premises on 21 November 1981.
7. Further or in the alternative on 5 July 1983 at a meeting between the First Plaintiff and the First Defendant at the premises the First Defendant showed the First Plaintiff works of repair and improvement which the First Defendant had carried out to make the premises fit for human habitation.  The First Defendant explained that he wished to carry out further works and asked the First Plaintiff to grant him a lease of the premises.
8. Following the meeting referred to in the preceding paragraph the First Plaintiff telephoned the First Defendant and stated that he would grant the First Defendant a fourteen year lease of the premises conditional on the completion of the works which the First Defendant intended to carry out.
9. In reliance on the promise referred to in the preceding paragraph the First Defendant carried out the works to the premises which, when added to the works previously carried out by the First Defendant had a total value of £60,000.00.
10. In the circumstances it is averred that the First Defendant is entitled to an equitable interest in the premises equal to a tenancy for a term of fourteen years from 5 July 1983.
11. In the further alternative it is averred that the agreement between the First Plaintiff and the First Defendant took effect as a protected tenancy of the premises within the meaning of the Rent Act 1977.
….
Counterclaim
15. The First Defendant repeats paragraphs 1 to 11 of the Defence.
And the First Defendant counterclaims:
1. A declaration as to the extent and nature of the First Defendant’s interest in the premises.”

19.	On 21 July 1989, Mr Bossert made an affidavit in support of his defence to the claim for possession. He said:
“2. The tenants of a flat on the first floor at 61 Coborn Road aforesaid gave me the keys to the property on 21 November 1981 and I moved into the flat with my daughter Erica Josephine Bossert, having just returned from Canada and not being able to find any other place in which to live.  At the time of their departure from the property, the tenants were paying the Plaintiff a rent of £18 per week.
3. When I moved into 61 Coborn Road, the property was in a deplorable condition and the ground floor was uninhabitable.  The London Borough of Tower Hamlets had already placed a closing order dated 5 June 1981 on the property which could not be demolished because it was attached to surrounding properties.  In addition, I was informed by the previous tenants and verily believe to be true that the Plaintiff, who was resident abroad, had not visited 61 Coborn Road for three years prior to my taking up residence there; and when I moved in had not paid the general rates for the year ending 31 March 1982.  I paid the sum of £57.70 for the rates together with costs of £19.15 on behalf of the Plaintiff.  There is now produced and shown to me marked “E.E.B.1” a copy of the closing order of the London Borough of Tower Hamlets and a copy of a receipt for the general rates dated 20 January 1982.
4. On the advice of the bailiff, I had the rates changed into my own name and have paid them ever since moving there.  As I am a builder, I carried out extensive work to the property both in labour and materials; and estimate that the cost of these was a sum in excess of £60,000 on 61 Coborn Road aforesaid.  I am advised by my solicitors that I have a substantial equitable interest in the property in addition to any other rights which I might have as a Lessee or statutory tenant.
5. On 5 July 1983 a gentleman, who introduced himself as the Plaintiff, visited the property in the morning at 10.15am.  He congratulated me on the work which I had done at the property, but I told him that the previous tenants had moved out; and that I had taken over from them.  I further advised him that more work had to be done to complete the work of renovation at the property and requested a 14 year Lease.  In the evening the Plaintiff telephoned me and said that he would send me the 14 year Lease in a few weeks but that I needed to finish the work at the property.  He also asked for my name and address.  Despite the fact that I completed the work and paid the rates the Plaintiff failed to send me the Lease.
6. The next time I heard from the Plaintiff was over four years later, when he visited the property on 25 November 1987.  He noticed the pointing which I had done to the front of the house, although he commented that I could not have a Lease and that he wanted me to leave which I refused to do.  There is now produced and shown to me marked “E.E.B.2” copies of the Plaintiff’s cards and my contemporary attendance note.
7. I am advised by my solicitors that the work which I carried out at the property could be construed as part performance of a contract for the new 14 year Lease term.
8. In the early part of 1988, the Plaintiffs solicitors wrote to me and my solicitors Messrs Geoffrey Levine & Co accusing me of trespassing at the property but my solicitors stated that I had statutory rights to remain there.  Paragraph 3 of the Plaintiff’s solicitors affidavit is disingenuous as further correspondence with me or my solicitors would have elicited the fact that I and [illegible] marked “E.E.B.3” copies of the correspondence between Messrs Hallifax Diamond & Co and Messrs Geoffrey Levine & Co.
9. As a result of my labour, the property at 61 Coborn Road, London, E3, is now worth between £150,000 and £200,000; and the closing order has been revoked.
10. I have been granted emergency legal aid for the purpose of this hearing and require time after the determination of my legal aid application to file a full defence.
12. Having regard to the matters aforesaid, I respectfully submit that I have a good defence on the merits to the Plaintiff’s claim for possession and I accordingly ask that I may be given unconditional leave to defend.”

20.	Ms Bossert also filed an affidavit dated 30 November 2004.  It is unnecessary to set it out in detail but she confirmed her later father’s account of the meeting with Mr Ofulue in July 1983:

“In July 1983 someone who presented himself as Mr Ofulue said that he was the owner of the property and came to visit us.  I was present with my father… We parted on good terms with him being pleased with the works carried out.  He assured us at the time, (1983) that he would shortly be sending us a lease for our signature but we never received it. ”

21.	On 12 August 1991, the solicitors for the Bosserts made a without prejudice offer to the solicitors for the Ofulues to purchase the freehold of the property for £20,000.  This was rejected by the Ofulues’ solicitors as derisory.  The offer was increased to £35,000 by a further letter also marked without prejudice dated 14 January 1992, which was in these terms:

“14 January, 1992
without prejudice
Dear Sirs
Re: EMMANUEL OFULUE and AGNES OFULUE - v - BOSSERT
We have taken our client’s instructions on your letter of 19th December 1991; and should point out that that your client is not entitled to both arrears of rent and the market value for the property at 61 Coborn Road, E3.  In any case, as far as the arrears of rent are concerned, the registered rent for the property is £16.80 per week and at the most your client would be entitled to six years arrears of rent or £5,250.  We do not accept that the work undertaken by our client at the property is only worth £15,000 but would place it closer to £35,000 and would place the value of the property at £60,000.  In these circumstances, our client would be willing to make an offer of £35,000 to your client for the purchase of the property.
Yours faithfully
GEOFFREY LEVINE & CO.”

22.	By letter dated 3 October 1991, the acting principal area improvement officer told the district surveyor that:

“in 1987, an area [surveyor]  interviewed a Mr Bossert who was alleged to be the owner.  He stated that the premises had been fully repaired and that he held a seven-year lease with an option for a further seven years.”

23.	On 18 August 1996, Mr Bossert died. The Ofulues failed to pursue their proceedings for possession, which were automatically stayed on 26 August 2000 under the Civil Procedure Rules. In the course of 2001, the Ofulues returned to the United Kingdom and contacted Ms Bossert to request her to leave the Property.

24.	On 13 November 2000, the Ofulues served a notice to quit on Ms Bossert.  On 1 February 2001, the Ofulues applied to lift the stay and their application was heard by District Judge Lightman who, on 16 April 2002, refused it. Ms Bossert attempted to enter a caution on the Property but this was dismissed on 19 June 2003.

25.	The Ofulues served a further notice to quit on the Bosserts on 22 August 2003.  On 30 September 2003, they issued these current proceedings seeking possession of the Property.  In her defence Ms Bossert, for the first time, contended that ownership of the Property had passed to her by way of adverse possession. 

26.	The proceedings were listed for trial on 18 April 2005 but Mr Ofulue was not able to leave Nigeria and the case was stood out of the list. The case came before HHJ Levy in October 2005. On 26 October 2005, the judge dismissed an application to amend the claim to include a point under art 1 of the First Protocol to the Convention.   On 28 October 2005, the judge gave his judgment in which he concluded that the Bosserts had been in adverse possession of the Property and that the Ofulues’ title had been extinguished before 2 October 2000 (when the Human Rights Act 1998 came into force).

27.	It is worth noting that this is not the usual case of adverse possession, where the paper owner gets no benefit out of the occupation by the person who obtains a right to the land by adverse possession.  In this case, the Ofulues were in Nigeria for many years, and in that time the Bosserts looked after the property, repaired it and paid the rates.  They have never paid any rent, but presumably the services they provided could constitute rent.  The Bosserts have now been in occupation for some twenty five years.  The Ofulues knew the Bosserts were in occupation and could have pursued possession proceedings to obtain possession of the Property earlier or, alternatively, they could have legitimised the Bosserts’ occupation by granting them a lease of the Property.

The judgment of the judge

28.	Having found the facts, the judge considered the decision of the House of Lords in Pye v Graham.  He held that Ms Bossert had taken factual possession of the Property in 1987 and had an intention to do so ([62]). The Ofulues had known since 1987 that the Bosserts were in possession and the steps taken to remove them were “slight in the extreme” ([59]).  The judge considered that the without prejudice letters offering to purchase the Property sent to the Ofulues were an attempt to settle the dispute and did not constitute an acknowledgement for any other purpose.  They could not therefore affect the position ([63]). The Ofulues’ title was extinguished in 1999 “or at least before 2 October 2000” (the date on which the Human Rights Act 1998 came into force) ([63], and see discussion after judgment).  

Issue (1):  Should this court follow Pye v United Kingdom?

(a) s 2 of the Human Rights Act 1998 

29.	It is necessary to start by considering the proper approach to be adopted by the English court where the Strasbourg court has already considered the rule of law that a party before it contends is not Convention-compliant.

30.	 S 2(1) of the Human Rights Act 1998 provides that

“A court or tribunal determining a question which has arisen in      connection with a Convention right must take into account any –
(a)	judgment…of the [ Strasbourg court]…
whenever made or given, so far as, in the opinion of the court or tribunal, it is relevant to the proceedings in which that question has arisen.”

31.	Accordingly, if a party asserts that a Convention right, such as art 1 of Protocol No.1 is engaged, the court must “take into account” Strasbourg jurisprudence. This does not inevitably mean that the domestic court must follow the Strasbourg court.  However, the House of Lords has on several occasions held that, save in special circumstances: 

“the duty of national courts under section 2 of the Human Rights Act 1998 is “to keep pace with Strasbourg jurisprudence as it unfolds over time: no more but certainly no less." (per Lord Bingham in R (Ullah) v Special Adjudicator [2004] 2 AC 323, 350) 
32.	It follows that this court would have to have very good reasons for departing from Strasbourg jurisprudence. Special circumstances justifying departure might exist if the domestic court was satisfied that the Strasbourg court had misunderstood the effect of domestic law.    Moreover, if the rule of domestic law creates a discretion rather than an absolute rule of law, the domestic court might come to the conclusion that the discretion should be exercised in a different way from that in which it was in fact exercised in the case before the Strasbourg court (see, for example, Belfast City Council v Miss Behavin’ Ltd [2007] 1 WLR 1420).  

(b) The margin of appreciation

33.	However, an additional complication exists in this case because of the doctrine of the margin of appreciation.  In a case decided by the House of Lords after the passing of the Human Rights Act 1998 and before its commencement, namely R v DPP ex parte Kebiline [2000] 2 AC  326, Lord Hope gave the following seminal guidance on the general operation of the doctrine of the margin of appreciation:
“This brings me to another matter on which there was a consensus between counsel and which, I believe, needs now to be judicially recognised. The doctrine of the "margin of appreciation" is a familiar part of the jurisprudence of the European Court of Human Rights. The European Court has acknowledged that, by reason of their direct and continuous contact with the vital forces of their countries, the national authorities are in principle better placed to evaluate local needs and conditions than an international court: Buckley v. United Kingdom (1996) 23 E.H.R.R. 101, 129, paras. 74-75. Although this means that, as the European Court explained in Handyside v. United Kingdom (1976) 1 E.H.R.R. 737, 753, para. 48, "the machinery of protection established by the Convention is subsidiary to the national systems safeguarding human rights," it goes hand in hand with a European supervision. The extent of this supervision will vary according to such factors as the nature of the Convention right in issue, the importance of that right for the individual and the nature of the activities involved in the case.
This doctrine is an integral part of the supervisory jurisdiction which is exercised over state conduct by the international court. By conceding a margin of appreciation to each national system, the court has recognised that the Convention, as a living system, does not need to be applied uniformly by all states but may vary in its application according to local needs and conditions. This technique is not available to the national courts when they are considering Convention issues arising within their own countries. But in the hands of the national courts also the Convention should be seen as an expression of fundamental principles rather than as a set of mere rules. The questions which the courts will have to decide in the application of these principles will involve questions of balance between competing interests and issues of proportionality.
In this area difficult choices may have to be made by the executive or the legislature between the rights of the individual and the needs of society. In some circumstances it will be appropriate for the courts to recognise that there is an area of judgment within which the judiciary will defer, on democratic grounds, to the considered opinion of the elected body or person whose act or decision is said to be incompatible with the Convention. This point is well made at p. 74, para. 3.21 of Human Rights Law and Practice (1999), of which Lord Lester of Herne Hill and Mr. Pannick are the general editors, where the area in which these choices may arise is conveniently and appropriately described as the "discretionary area of judgment." It will be easier for such an area of judgment to be recognised where the Convention itself requires a balance to be struck, much less so where the right is stated in terms which are unqualified. It will be easier for it to be recognised where the issues involve questions of social or economic policy, much less so where the rights are of high constitutional importance or are of a kind where the courts are especially well placed to assess the need for protection. But even where the right is stated in terms which are unqualified the courts will need to bear in mind the jurisprudence of the European Court which recognises that due account should be taken of the special nature of terrorist crime and the threat which it poses to a democratic society: Murray v. United Kingdom (1994) 19 E.H.R.R. 193, 222, para. 47.” (pages 380 to 381)

34.	 In the context of art 1 of Protocol No.1 the Strasbourg court has frequently vested the contracting states with a wide margin of appreciation, that is to say, in cases under this article the Strasbourg court has often effectively indicated in its jurisprudence that it does not wish to lay down uniform solutions for all the contracting states but leaves it to contracting states to strike the balance between the interests at stake as it thinks appropriate:  see for example James v United Kingdom [1986] E.C.H.R. 87993/79. As the speech of Lord Hope indicates, the concept of the margin of appreciation is employed in appropriate cases by the Strasbourg court because under the Convention system each of the contracting states has responsibility for ensuring that human rights within its jurisdiction are observed (art 1), and the function of the Strasbourg court is to lay down minimum guarantees (see art 53).  Its use in art 1 cases is due to the fact that the concept of the right to property varies considerably in different contracting states. 

35.	If the Strasbourg court finds that a particular area falls within the margin of appreciation of contracting states, it will generally (in the context of art 1 at least) only test the rule of law of which the applicant complains by reference to whether it serves a legitimate aim and is proportionate.  The width of the margin of appreciation may depend on the Convention right engaged.

36.	The finding that a particular area falls within the contracting states’ margin of appreciation is therefore a signal to the national judge that the decision of the national authorities as to the content of rights within that area should receive appropriate respect (see the passage cited from the speech of Lord Hope in Kebilene, at [33] above). The appropriate national authority will be identified by the internal arrangements in the contracting state. 

37.	The next task is to connect the doctrine of the margin of appreciation to the principle enunciated in Ullah, that save in special circumstances our domestic courts should follow the decisions of the Strasbourg court but not venture further. In my judgment, it must follow from the obligation in s 2 of the Human Rights Act 1998, as interpreted in cases such as Ullah, that, in the absence of special circumstances,  (1) if domestic law within an area found by the Strasbourg court to be within the contracting states’ margin of appreciation were challenged before an English court, the English court should consider whether the domestic rule serves a legitimate aim and is proportionate (according the appropriate degree of respect to the decision-maker in domestic law) but that it should find that the law is Convention-compliant if those tests are satisfied; and (2) where the Strasbourg court has itself already carried out this exercise, the English court should follow the decision of the Strasbourg court.

(c) the judgment of the Strasbourg court in Pye v United Kingdom 

38.	It is convenient to summarise the facts at this stage as this will facilitate the explanation of domestic law in relation to issue (2) (the intention point). In Pye v United Kingdom, the applicants owned some 25 hectares of agricultural land in Berkshire, which they hoped to develop.  Mr and Mrs Graham were farmers who occupied the land under a grazing agreement with the applicants until 31 December 1983.  After the termination of the grazing agreement, the applicants asked the Grahams to vacate the land and refused a request for a further grazing agreement because they anticipated that they would seek planning permission for the land.  However, the Grahams continued to graze the land and in June 1984 reached an agreement with the applicants that they would buy the standing crop of grass on the land.  This was cut at the end of August 1984.  In December 1984 the Grahams wrote to the applicants asking for permission to graze the land and to take another cut of hay from it in the following year.  No response was ever received.  From September 1984 onwards, the Grahams continued to farm the land without permission although they would have been willing to pay for the right to do so.  In June 1997, Mr Graham registered cautions with the Land Registry claiming title to the land by adverse possession.  The applicants issued proceedings against him but in 2000 Neuberger J, as he then was, held that the Grahams had acquired the land by adverse possession commencing in June 1984 and that accordingly the applicants’ title was extinguished.  On appeal to it, this court reversed the High Court on the ground that the Grahams did not have the necessary intention to possess the land and that the applicants were therefore not dispossessed of it.  But the Grahams appealed to the House of Lords, who in 2002 allowed their appeal and restored the order of the High Court.  The Grahams’ willingness to pay for the use of the land was not inconsistent with their having possession of the land and using it as they thought best.  I will need to refer further to the decision of the House of Lords when I come to the intention point (issue (2) below).

39.	I can now turn to the decision of the Strasbourg court. The United Kingdom government submitted that the case fell within art 6 (right to a fair trial) rather than art 1 of Protocol No.1.  The Strasbourg court noted that art 1 of Protocol No.1 contained three distinct rules.  The first rule set out in the first sentence of the first paragraph was of a general nature.  The second rule contained in the second sentence of the first paragraph covered deprivation of possessions.  The third rule, stated in the second paragraph, recognised that contracting states are entitled, among other things, to control the use of property in accordance with the general interest ([52]).  As a result of the general law, any interference with the right to peaceful enjoyment of possessions had to 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 ([53]).  A taking of property within the second rule without payment of an amount reasonably related to its value would normally constitute disproportionate interference ([54]).  So far as controlling the use of property was concerned, there had to exist a reasonable relationship of proportionality between the means employed and the aim sought to be realised ([55]).  In relation to this, contracting states enjoyed a wide margin of appreciation with regard both to choosing the means of enforcement and to ascertaining whether the consequences of enforcement were justified in the general interest for the purpose of achieving the object of the law in question ([55]).  The Strasbourg court noted that the responsibility of the UK government engaged in the present case was not direct responsibility for an act aimed at the applicants, but rather their responsibility for legislation activated as a result of the interactions of private individuals ([57]).

40.	The Strasbourg court noted that there was nothing in its case law to suggest that the case should only be dealt with under art 6 ([60]). It held that art 1 of Protocol No.1 was engaged ([63]). So far as the nature of the interference was concerned, the Strasbourg court held that the law on adverse possession was designed to regulate questions of title and limitation periods in the context of the ownership and use of land as between individuals.  The law of adverse possession therefore constituted a control of use of land within the meaning of the second paragraph of art 1 of Protocol No.1 ([66]).  

41.	However, the limitation period of twelve years for actions for the recovery of land pursued a legitimate aim in the general interest ([70]).  The contracting states enjoyed a wide margin of appreciation in implementing social and economic policies, and it was not unreasonable for a state to provide for the extinction of title where the requirements of adverse possession were satisfied ([74]).  

42.	The Strasbourg court held that there had to be a reasonable relationship of proportionality between the means employed and the aim sought to be realised.  A fair balance had to be struck between the demands of the general interest and the interest of the individuals concerned.  As I have already explained, in this, the state enjoyed a wide margin of appreciation with regard to both choosing the means of enforcement and ascertaining whether the consequences of enforcement were justified in the general interest for the purpose of achieving the object of the law in question ([75]). The Strasbourg court noted that very little action on the part of the applicants would have stopped time running against them and the limitation period of twelve years was relatively long ([78]).  As the case concerned control of use, the absence of compensation was not material ([79]).  There was no absence of procedural protection for the paper owner.  He could have taken proceedings for possession ([80]).  The Land Registration Act 2002, which came into force on 13 October 2002, provides that adverse possession for however long does not of itself deprive the owner of his title to registered land.  A squatter can be registered as a proprietor after 10 years but he would be refused if his application were opposed.  However, if thereafter no steps were taken to evict him, he would be entitled to apply again and would be so registered even if the application was opposed.  The fact that the paper owner had greater protection under the Land Registration Act 2002 did not mean that the pre-existing law was not Convention-compliant ([81]).

43.	The Strasbourg court held that the fact that the Grahams received a large windfall and that the applicants suffered a large loss could not alter its assessment. It held:
“…, 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.” ([83]).
44.	The Strasbourg court observed that if limitation periods were to fulfil their purpose they had to apply regardless of the size of the claim or the value of the land lost ([84]).  In sum, the Strasbourg court concluded that the fair balance required by art. 1 of Protocol No. 1 to the Convention had not been upset in the Pye case ([85]).

(d) The arguments of the parties based on Pye

45.	In their written submissions following the decision of the Strasbourg Court Mr Richard Wilson QC and Mr Christopher Jacobs, for the Ofulues, submit that the fair balance required by art 1 of Protocol No.1 was upset in this case.  They seek to distinguish Pye v United Kingdom.  In that case, the owners did not assert their title until after the limitation period had run. By contrast, in this case the Ofulues requested the Bosserts to leave the property as soon as they were discovered in 1983.  Further demands were made in 1987 and 1988 and proceedings were issued in 1989.  Moreover, Mr Bossert had claimed to be a tenant in his affidavit of 21 July 1989, his defence of 18 July 1990, and a letter to his local council of 11 October 2001, and on 12 August 1991 and 14 January 1992 the Bosserts offered to buy the property.

46.	Mr Wilson further submits that the policy considerations that lay behind the Strasbourg court’s decision in Pye do not apply here.  The Strasbourg court had regard to the Law Commission’s Consultation Paper on the Limitation of Actions (Law Com 151)(1998) which gave various reasons in support of the law on limitations, namely: that defendants have a legitimate interest in having cases brought to court reasonably promptly as evidence may not be available indefinitely; that defendants should be able to rely on their assumed entitlement to enjoy an unchallenged right; that the state has an interest in ensuring claims are made and determined within a reasonable time in order to deliver a fair trial, and as guarantor of legal certainty; and that limitation periods encourage claimants to bring claims promptly. To these points, Mr Wilson submits that the Ofulues brought their proceedings for possession within a reasonable time, and a possession order would have been obtained but for the automatic strike out provisions in the Civil Procedure Rules. The Strasbourg court also referred to the consultative document, Land Registration for the Twenty-first Century, issued jointly by the Law Commission and the Land Registry (Law Com 254) (1998) which gave four reasons to justify the law on adverse possession: to protect against a landowner who sleeps on his rights; to ensure land remains in commerce; to protect an innocent but mistaken squatter who incurs expenditure; to facilitate and cheapen investigation of title. Mr Wilson submits that none of these reasons applies in the instant case.

47.	Mr Wilson further argues that the conduct of the Bosserts leads to “the application of concepts such as estoppel and abuse of process”. No authority is cited for this proposition.  Mr Wilson relies on the fact that these features were also not present in Pye v United Kingdom.  Moreover, he submits that in Pye, the Strasbourg court held that the owners did not lose their land because of a legislative provision that permitted the state to transfer ownership in particular circumstances, but because of the operation of rules that provided that until the register was rectified the title was not extinguished.  The owner was deemed to hold the land on trust for the adverse possessor. In the instant case, the Ofulues’ title was extinguished because the judge concluded that it had been extinguished in 1999.  The nature of the interference in Pye was therefore different from that in the instant case, which involves a deprivation of possessions. Mr Wilson also submits that it is incumbent on this court to conduct a balancing exercise and to interpret the Land Registration Act 1925 and the 1980 Act compatibly with their Convention rights. Mr Wilson further submits that the judge’s finding that the Bosserts had established the requisite intention to possess was perverse in the light of the continued acknowledgments of title and offers to purchase they made. 

48.	Mr Peter Crampin QC and Mr Simon Williams, for Ms Bossert, have also submitted lengthy written submissions.  They submit that the without prejudice offer letter dated 14 January 1992 did not constitute an acknowledgement of title, and that art 6 of the Convention (right to a fair trial) does not require any modification to the without prejudice rule because, under the Convention jurisprudence, questions as to the admissibility of evidence are for the national court: Miailhe v France (No 2) [1996] EHRR 491 at [43].  Moreover, the without prejudice rule does not operate unfairly since it exists for compelling public policy reasons.

49.	Mr Crampin further submits that any distinction on the facts between Pye and the instant case does not diminish the effect of the statements of principle made by the Strasbourg court.   Moreover, Mr Crampin submits that no distinction can be drawn between cases in which the register has been rectified under s 75 of the Land Registration Act 1925 and cases of adverse possession concerning unregistered land (to which s 75 of the 1925 Act does not apply).  Either way the limitation rules cause the owner to lose his land.  Mr Crampin submits that Pye cannot be distinguished by reference to its facts and that, in deciding that Pye was not a case of deprivation of possessions, the Strasbourg court made points of general application that have the effect that all cases of adverse possession are cases of control of use rather than deprivation of possessions.  The characterisation by the High Court (Mr Nicholas Strauss QC) in Beaulane Properties Ltd v Palmer [2006] Ch 79 at [136] and [164] of the extinguishment of the beneficial ownership as a case of deprivation of possessions must be regarded as wrong in light of the Strasbourg court’s decision. 

(e) My conclusions on Pye as it applies on this appeal

50.	Two key features of the decision of the Strasbourg court in Pye are (1) the margin of appreciation and (2) legitimate aim and proportionality.  At the start of my judgment under this issue I explained the effect of the doctrine of the margin of appreciation.  In Pye v. United Kingdom, the Strasbourg court held that art 1 of Protocol No.1 to the Convention was engaged but that the legislative provisions for the extinction of title and its vesting in another person, who had been in adverse possession, were within that doctrine.  I have explained above that this means that the Strasbourg court accepts that it is in general open to the national authorities to determine the content of those rules.  Since the period of limitation is fixed by statute in the United Kingdom,  the question of the length of time for which adverse possession must take place is one which Parliament is entitled to decide, provided that the period so fixed serves a legitimate aim and is proportionate.

51.	In Pye v United Kingdom, the Strasbourg court was satisfied that the Convention requirements as to legitimate aim and proportionality were satisfied for the reasons which it gave and which I have summarised above.

52.	The written submissions of the Ofulues proceed on the basis that it is open to this court to distinguish the decision in Pye on its facts or by reference to the applicability of the policy reasons for adverse possession identified by the Law Commission. In my judgment, this approach fundamentally misunderstands the purpose of the doctrine of the margin of appreciation.  The Strasbourg court accepted that the national authorities could in general determine the rules for the extinction of title as a result of the occupation of the land by a person who was not the true owner. That determination applies to all decisions on adverse possession and it is not open to this court not to follow that determination because the case is distinguishable on its facts.  For the doctrine of the margin of appreciation to be inapplicable, the results would have to be so anomalous as to render the legislation unacceptable (see [83] of the judgment of the Strasbourg court set out above), and in my judgment that has not been demonstrated in this case (see further [55] below.

53.	The Ofulues’ submissions additionally proceed on the basis that this court must apply the test of legitimate aim and proportionality to each different case of adverse possession which arises.  Again, in my judgment this fundamentally misunderstands the function of this court.  The Strasbourg court considered the compatibility with the Convention of the limitation period in the case of adverse possession with art 1 of Protocol No.1 and assessed its legitimate aim and proportionality as a general rule and not simply in the context of the specific facts of the Pye case. It would not therefore be appropriate for this court to proceed to examine the questions of legitimate aim and proportionality simply from the perspective of the facts of this case and the relationship between them and the policy considerations in the Law Commission’s Consultation Paper.

54.	The Strasbourg court held that the relevant provisions were for the regulation of dealings in land and were controls on the use of land within the second paragraph of art 1. The significance of this holding was that the fact that adverse possession took place without any compensation for the paper owner did not entail any violation of art 1.  In my judgment, as Mr Crampin has submitted, its conclusion on this point does not turn on the specific facts of the Pye case or on the fact that the land was unregistered land so that s 75 of the Land Registration Act 1925 did not apply. On this point, the Strasbourg court differed in its conclusion from that of Mr Nicholas Strauss QC, sitting as a deputy judge of the Chancery Division in Beaulane. Mr Crampin has filed lengthy submissions to the effect that Beaulane was wrongly decided but I do not consider it is necessary to go into those submissions, nor do I propose to do so as an application has been made in that case for permission to appeal out of time. 

55.	The finding of adverse possession in Pye meant that the paper owner had lost land which was extremely valuable. But that factor was irrelevant.  In that case, the paper owners had slept on their rights.  In this case, the Ofulues objected to the presence of the Bosserts on the Property, but they also slept on their rights because they did not pursue the proceedings which they had begun for possession to a conclusion so as to prevent the completion of title by adverse possession.  It is no answer to say that the Bosserts represented in their defence that they were tenants, because this was not an assertion which the Ofulues were prepared to accept.  In the circumstances, I do not consider that “special circumstances” are shown for departing from the decision of the Strasbourg court as required by Ullah (see above, [31]).

56.	The Ofulues refer to estoppel and abuse of process, but those arguments are unparticularised and do not, as it seems to me, in the circumstances add anything to the submissions which they make on acknowledgement of title.  I deal with those under issue (3) below.  At various points in their submissions, they submit that the domestic rules as to acknowledgements should be interpreted for Convention reasons so that the Bosserts’ acquisition of ownership by adverse possession is interrupted in such a way that the period of adverse possession is not completed.   In my judgment, if these rules are within the margin of appreciation, and serve a legitimate aim and are proportionate, then the rules on acknowledgement of title are not in themselves incompatible with art 1. In addition, those rules will not violate any right under art 6 (right to a fair trial), which is the only other Convention right referred to, unless they result in the overall result of any proceedings in which they are employed being procedurally unfair. I do not consider that this qualification can be sustained because the rules as to acknowledgement of title are rules as to the admissibility of evidence, which are a matter for the contracting state. They are designed to redress any unfairness in the operation of the law of limitations resulting from a party being misled by another’s acknowledgment of liability and since they rest on that party’s own admission I do not consider that they can be said to be disproportionate. Where the acknowledgement is contained in a without prejudice communication other considerations are in play and the acknowledgment may be excluded. However, the policy behind the without prejudice rule was recently considered in a decision of the House of Lords considered below, and there is no basis on which it could be said  not to serve a legitimate aim or to be disproportionate in its effect.  

57.	In the circumstances, the courts’ obligation under s 3 of the Human Rights Act 1998 to interpret legislation compatibly with Convention rights is not invoked in this case.
Issue 2:  The intention point

58.	The leading case on the intention required for adverse possession is Pye v Graham.  I have already set out the facts above.  The central question was whether the Grahams had to show that they intended to acquire title to the property when they possessed it.  The House of Lords held that it was simply necessary to show that they possessed, and intended to possess, the property without the consent of the owner.  They did not have to show that they intended to oust the paper owner or to acquire title.  Lord Browne-Wilkinson explained in his speech how the notion that possession had to be adverse had crept into the law:  
“33. The root of the problem is caused by the concept of “non-adverse possession”.  This was a concept engrafted by the common law and equity onto the limitation statute of James I (21 Jac 1, c 16).  Before the passing of the Real Property Limitation Acts 1833 (3 & 4 Will 4, c 27) and 1874 (37 & 38 Vict c 57), the rights of the paper owner were not taken away save by a “disseisin” or an ouster and use of the land by the squatter of a kind which was clearly inconsistent with the paper title.   Such inconsistent use was called adverse possession: see Professor Dockray, “Adverse Possession and Intention” [1982] Conveyancer 256, 260.  Under the 1833 Act (sections 2 and 3 of which were substantially to the same effect as the 1980 Act, section 15(1) and Schedule 1, paragraph 1) the right of action was barred 20 years after “the right … to bring such action shall have first accrued” and “such right shall be deemed to have first accrued at the time of such dispossession or discontinuance of possession”.  Soon after the passing of the 1833 Act it was held that “the second and third section of that Act … have done away with the doctrine of non-adverse possession, and … the question is whether 20 years have elapsed since the right accrued, whatever the nature of the possession”: Denman CJ in Nepean v Doe d Knight (1837) 2 M & W 894, 911.  The same statement of the new law was made in Culley v Doe d Taylerson (1840) 11 Ad&E 1008, 1015 where Denman CJ said:
“The effect of [section 2] is to put an end to all questions and discussion, whether the possession of lands, etc, be adverse or not; and, if one party has been in the actual possession for 20 years, whether adversely or not, the claimant, whose original right of entry accrued above 20 years before bringing the ejectment, is barred by this section.”
34. The same was held to be the law by the Privy Council in a carefully reasoned advice delivered by Lord Upjohn in Paradise Beach and Transportation Co Ltd v Price-Robinson [1968] AC 1072; see also Professor Dockray [1982] Conveyancer 256.
35. From 1833 onwards, therefore, old notions of adverse possession, disseisin or ouster from possession should not have formed part of judicial decisions.  From 1833 onwards the only question was whether the squatter had been in possession in the ordinary sense of the word.  That is still the law, as Slade J rightly said.  After 1833 the phrase “adverse possession” did not appear in statutes until, to my mind unfortunately, it was reintroduced by the Limitation Act 1939, section 10 of which is in virtually the same words as para 8(1) of Schedule 1 to the 1980 Act.  In my judgment the references to “adverse possession” in the 1939 and 1980 Acts did not reintroduce by a side wind after over 100 years the old notions of adverse possession in force before 1833.  Paragraph 8(1) of Schedule 1 to the 1980 Act defines what is meant by adverse possession in that paragraph as being the case where land is in the possession of a person in whose favour time “can run”.  It is directed not to the nature of the possession but to the capacity of the squatter.  Thus a trustee who is unable to acquire a title by lapse of time against the trust estate (see section 21) is not in adverse possession for the purposes of paragraph 8.  Although it is convenient to refer to possession by a squatter without the consent of the true owner as being “adverse possession” the convenience of this must not be allowed to reintroduce by the back door that which for so long has not formed part of the law.”

59.	Lord Browne-Wilkinson concluded that all that had to be shown was that the Grahams were in possession of the disputed land without the consent of Pye before 30 April 1986 and that they had the requisite intention to possess the land.  On that basis, Pye had been dispossessed by them within the meaning of para. 1 of schedule 1 to the 1980 Act.  

60.	Mr Wilson submits that the judge failed to consider the judgment of Lord Browne-Wilkinson in Pye v Graham in its correct context.   The Bosserts believed that they were tenants and this is a vital difference.  They could not have had the requisite intention to possess. They also acknowledged the title of the paper owner. Mr Wilson criticised the judge for not having made any finding as to whether in the course of the crucial conversation between Mr Ofulue and Mr Bossert in 1983 there was an agreement for a fourteen-year lease.  Mr Wilson submits that Pye v Graham applies only where the person is in occupation as a squatter. Here the Bosserts were in possession as tenants.  Their possession was not adverse.  The judge’s conclusion penalises the Ofulues for taking steps to obtain possession lawfully through the courts as opposed to forced entry and criminal conduct. 

61.	Mr Crampin submits that the Ofulues’ submission on intention is not open on Pye v Graham.   A person believing himself to be a tenant may still be in adverse possession, even if his belief that he is a tenant is incorrect. He submits that the judge was right to conclude that from 1987 onwards the Bosserts had had the requisite intention to possess the property. Mr Crampin relies on para. 5 of schedule 1 to the 1980 Act, set out above:  under this provision, where there is a subsisting tenancy, it is deemed to have come to an end at the end of the first year or other period, and time starts to run, unless rent is paid in which case time begins to run again. 
  
62.	  Mr Crampin relies on Lodge v Wakefield MCC [1995] 2 EGLR 124.  In that case the squatter had an oral tenancy of the property but had not paid any rent for more than twelve years.  He gave evidence at trial that if he had been asked to pay rent at any time before the twelve years were completed, he would have done so.  This court held that a tenant in possession was during the subsistence of the tenancy entitled to exclude from the land the world at large, including the landlord.  So the squatter necessarily had the requisite mental intention of possessing the property for the purpose of adverse possession.

63.	In my judgment, the submissions of Mr Crampin on this point are to be preferred.  What emerges from Pye v Graham is that it is necessary only to show that the person who claims to have acquired property by adverse possession was in possession without the consent of the paper owner and intended to possess.  A person who wrongly believes he is a tenant can occupy property in such a way that he has possession, just as much as a squatter. He does not have to show that he had an intention to exclude the paper owner. This is made clear by Lord Browne-Wilkinson, when he discusses the question whether the admission by a squatter that he would have paid for his occupation if he had been asked to do so by the paper owner indicated the absence of an intention to possess.  Lord Browne- Wilkinson held that the answer to this question was in the negative:
“ Once it is accepted that the necessary intent is an intent to possess, not to own and an intention to exclude the paper owner only so far as is reasonably possible, there is no inconsistency between a squatter being willing to pay the paper owner, if asked, and his being in the meantime in possession.  An admission of title by the squatter is not inconsistent with the squatter being in possession in the meantime.”[44]

64.	It is, moreover, clear that the inception of the first set of proceedings would have stopped time running so long as those proceedings were on foot, but not thereafter:  see Markfield Investments Ltd v Evans [2001] 1 WLR 1321,  and BP Properties v Buckler (1988) 55 PC&R 337.  In my judgment this principle must apply where proceedings are permanently stayed, as the first set of proceedings were stayed in this case, and Mr Wilson has not suggested otherwise.

Issue (3):  The acknowledgement of title point  

(a) General

65.	At the hearing of this appeal, there was a large number of documents, which were said to constitute acknowledgements of title.  The Ofulues then submitted that, as adverse possession involved a violation of their rights to property under the Convention, the court had to interpret s 29 so that these acknowledgements would be effective to stop the running of time, even if they did not occur within a 12-year period of the date of the proceedings. These submissions are not now open to the Ofulues because of the decision in Pye v United Kingdom. Accordingly, we are now only concerned with acknowledgements which took place in the twelve years immediately prior to the commencement of these proceedings.  As I stated above, there are now only two candidates for an effective acknowledgement: Ms Bossert’s defence and counterclaim (which would have to be a representation throughout the first set of proceedings so as to bring the acknowledgment within twelve years of the start of the second set of proceedings), and the without prejudice letter dated 14 January 1992.  As to art 6, I have already accepted a submission that the rules as to evidence, which would include rules as to the circumstances in which a document can constitute an acknowledgement or be entitled to the benefit of the without prejudice protection, are matters for the contracting state.  Thus, art 6 would only be violated by the refusal to treat a document as an acknowledgment or a refusal to permit use to be made in proceedings of a without prejudice communication if the result was that the proceedings viewed overall were procedurally unfair.  That was not suggested in the present case.  

(b) Ms Bossert’s defence and counterclaim in the first proceedings

66.	It is a question of interpretation whether an allegation in a pleading constitutes an acknowledgment for the purpose of s 29 of the 1980 Act.  Thus in Edgington v Clark  [1963] 1 QB 367, Upjohn LJ, giving the judgment of the court, held:
“Whether or not a particular writing amounts to an acknowledgment must depend on the true construction of the document in all the surrounding circumstances…”

67.	Mr Wilson submits that, if, as a matter of interpretation of the pleading, an admission is made, that should be the party’s position at trial unless it was amended. Quite apart from the Act, submits Mr Wilson, there is justice in keeping a party to what they say in their statement of case.  Furthermore, a pleading has effect throughout the litigation and it should be construed as having effect throughout the litigation.  S 29(2) of the 1980 Act simply refers to the acknowledgment of the title and those words must be given their ordinary meaning and therefore this cannot be construed as relevant title.  

68.	Mr Crampin accepts that as Mr Bossert’s successor in title Ms Bossert is bound by any acknowledgment (s 31(1) of the 1980 Act).  However, he submits that there was no relevant admission or acknowledgement in the defence.  All that was said in the defence was said in the context of the denial of any right to possession on the part of the Ofulues. There was no acknowledgment of an immediate right to possession and thus no relevant acknowledgment.    There had to be an acknowledgment of a present right to possession. That is what the Bosserts have always denied.  

69.	Mr Crampin  draws on an analogy with the judgment of Kerr J in Surrendra v Sri Lanka [1977] 1 WLR 565 at 575 where Kerr J held:
“What I draw from these authorities, and from the ordinary meaning of “acknowledges the claim,” is that the debtor must acknowledge his indebtedness and legal liability to pay the claim in question.  There is now no need to go further to seek for any implied promise to pay it.  That artificiality has been swept away.  But, taking the debtor’s statement as a whole, as it must be, he can only be held to have acknowledged the claim if he has in effect admitted his legal liability to pay that which the plaintiff seeks to recover.  If he has denied liability, whether on the ground of what in pleader’s language is called “avoidance”, or on the ground of an alleged set off or cross-claim, then his statement does not amount to an acknowledgment of the creditor’s claim.  Alternatively, if he contends that some existing set off or cross-claim reduces the creditor’s claim in part, then the statement, taken as a whole, can only amount to an acknowledgment of indebtedness for the balance.  In effect, “acknowledges the claim” means that the statement in question must be an admission of that indebtedness which the plaintiff seeks to recover notwithstanding the expiry of the period of limitation.”
 
70.	Mr Crampin submits that there is an analogy between a pleading which confesses and avoids an allegation and the claim and the defence in the first set of proceedings in the present case. An acknowledgement has to be to the effect that the other party has a better title and that means a better right to possession (which is a title).  Here the Bosserts made no admission that the Ofulues had a right to immediate possession.  They have acknowledged that they were the paper owner but that is not the right question.  There was no acknowledgment of the relevant title, which would enable the claimants to recover possession.  Moreover the acknowledgment of the Ofulues’ title contained no admission that it was an unencumbered title.

71.	Mr Crampin accepts that the defence and counterclaim proceeded on the basis that the fee simple estate of which the Ofulues were the registered proprietors had not been extinguished.  But this was because the Bosserts had not been in adverse possession for more than twelve years.  However, the defence also denied that the Ofulues were entitled to possession.  Furthermore, Mr Crampin submits that a pleading could only be an acknowledgement of a matter that was in issue and there was no issue here as to title and thus there could be no acknowledgement of title for the purpose of the 1980 Act.  If there was an acknowledgement it was only an acknowledgement as at 18 July 1990 and therefore twelve years elapsed before the second set of proceedings was commenced on 30 September 2003.

(c)  My conclusions on the question whether the defence and counterclaim constituted an acknowledgment
72.	I reject the submission that, as the commencement of the first set of possession proceedings had the effect of stopping time from running, the defence could not have effect as an acknowledgement.  In my judgment, there is no reason in principle why a statement in the pleading cannot constitute an acknowledgement for the purpose of s 29 of the 1980 Act.   This is important because if as here the proceedings are dismissed or stayed before they are concluded, time will not be considered to have been interrupted by the commencement of proceedings:  see Markfield Investments, above.  Starting proceedings stops time running for the purpose of those proceedings, but not, without more, for other proceedings.

73.	To succeed on this issue, the Ofulues have to succeed on two points:  they have to show that the defence and counterclaim contained an acknowledgment of title for the purpose of s 29 of the 1980 Act, and they have to show that that representation continued down to a date within twelve years of the inception of the second set of possession proceedings on 30 September 2003. 
 
74.	By claiming to be entitled to a lease of the Property the Bosserts in their defence admitted that the Ofulues were the true owners of the Property.  However, they were clearly not accepting that the Ofulues were entitled to immediate possession.  Therefore on the true interpretation of the defence there could be no acknowledgement or admission that the Bosserts were not in possession or that time was not running in their favour for the purpose of the 1980 Act.  I reject the argument that, because section 29 refers to an acknowledgement of “title", the effect of the Bosserts’ acceptance of the title paramount of the Ofulues was that they had also automatically acknowledged their right to possession. The courts have always required an acknowledgement to be precisely focused on a disputed right for there to be an acknowledgement: see for example, Surrendra, above, and Re Flynn (no 2) [1969] 1 Ch 403.  In those circumstances, the reference to “title” in s 29 should in my judgment be interpreted as a reference to the relevant title for the purpose of the dispute between the parties in question.  Here the question is who has the better right to possession.  Thus what the defence had to acknowledge, for the Ofulues to succeed on this point, was that the Ofulues had a better right to possession.  There was no acknowledgment to this effect.  

75.	Mr Crampin draws the court’s attention to the dictum of Stuart Smith LJ in Horner v Cartwright, 11 July 1989, C.A (Stuart Smith and Ralph Gibson LJJ), unreported, in turn referred to in Limitation Periods, McGee, 4 ed (2002) page 323.    Stuart Smith LJ said:

“It is unnecessary for the purpose of this judgment to deal with Mr. Horner’s submission that a statement in an action once it is contained in a pleading enures from day to day as a sort of continuing or running acknowledgment.  As at present advised, I do not accept that submission for one moment, but it is unnecessary to decide that for the purpose of this appeal.”

76.	This is some support for the view that a pleading is not a continuing representation.  Although it is not necessary to decide that point in these proceedings, I consider that, in view of the fact that a pleading is dated, a pleading is in general a representation only of the facts stated in it as at the date of the pleading.  An analogy can be drawn with company accounts which can acknowledge the company’s liability for debts as at the date at which the accounts are drawn up even if they are not finalised and signed until after that date:  see, for example, Re Gee & Co (Woolwich) Ltd  [1975] Ch 52. 

77.	It follows that the service of the defence and counterclaim did not prevent the running of time in the Bosserts’ favour for the purposes of the 1980 Act. 

(c)  the without prejudice letter of offer dated 14 January 1992

78.	In Rush v Tomkins [1989] AC 1280 at 1299 to 1230, Lord Griffiths, with whom the other members of the House agreed, explained the “without prejudice” rule in these terms:

“The “without prejudice” rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish.  It is nowhere more clearly expressed than in the judgment of Oliver L.J. in Cutts v. Head [1984] Ch.290, 306:

“That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy.  It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings.  They should, as it was expressed by Clauson J. In Scott Paper Co v. Drayton Paper Works Ltd. (1927) 44 R.P.C. 151, 156, be encouraged full and frankly to put their cards on the table….The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability”.

….

Nearly all the cases in which the scope of the “without prejudice” rule has been considered concern the admissibility of evidence at trial after negotiations have failed.  In such circumstances no question of discovery arises because the parties are well aware of what passed between them in the negotiations.  These cases show that the rule is not absolute and resort may be had to the “without prejudice” material for a variety of reasons when the justice of the case requires it.  It is unnecessary to make any deep examination of these authorities and resolve the present appeal but they all illustrate the underlying purpose of the rule which is to protect a litigant from being embarrassed by any admission made purely in an attempt to achieve a settlement.  Thus the “without prejudice” material will be admissible if the issue is whether or not the negotiations resulted in an agreed settlement, which is the point that Lindley L.J. was making in Walker v. Wilsher (1889) 23 Q.B.D. 335 and which was ap this plied in Tomlin v. Standard Telephones & Cables Ltd. [1969] 1 W.L.R 1378.  The court will not permit the phrase to be used to exclude an act of bankruptcy: see In re Daintrey, Ex parte Holt [1893] 2 Q.B. 116 nor to suppress a threat if an offer is not accepted: see Kitcat v. Sharp (1882) 48 L.T. 64.  In certain circumstances the “without prejudice” correspondence may be looked at to determine a question of costs after judgment has been given: see Cutts v. Head [1984] Ch. 290.  There is also authority for the proposition that the admission of an “independent fact” in no way connected with the merits of the cause is admissible even if made in the course of negotiations for a settlement.  Thus an admission that a document was in the handwriting of one of the parties was received in evidence in Waldrige v. Kennison (1794) 1 Esp. 142.  I regard this as an exceptional case and it should not be allowed to whittle down the protection given to the parties to speak freely about all issues in the litigation both factual and legal when seeking compromise, admitting certain facts.  If the compromise fails the admission of the facts made for the purpose of the compromise should not be held against the maker of the admission and should therefore not be received in evidence.”

79.	  Mr Wilson puts his case on the without prejudice letter dated 14 January 1992 in several ways.  He submits that the without prejudice rule was predicated on policy considerations.  In the recent decision of the House of Lords in Bradford & Bingley v Rashid [2006] 1WLR 2066,  where it was held that statements which were for the purpose of obtaining time to pay an admitted liability were not entitled to the protection of the without prejudice rule, there was general agreement that there were two public interests engaged, namely the public interest in encouraging the settlement of disputes and the public interest that a debtor, who acknowledged his debt and induced a creditor not to have immediate resort to litigation, should not be able to claim that the debt was time-barred because the creditor had held his hand. However, on Mr Wilson's submission, in this case there are competing policy considerations in this case.  A person without title acknowledges the title of the true owner.  The joint consultative document of the Law Commission and the Land Registry, Land Registration in the Twenty-first Century, described the law (prior to the Land Registration Act 2002) as “at least in some cases” as “tantamount to sanctioning a theft of land” (para. 10.5), and so the regime had been set up under the Land Registration Act 2002 (summarised above).  In those circumstances he submits that this court should hold that the public policy consideration to protect without prejudice communications is subsumed by the greater policy interest that the law should not sanction the “theft” of land.  

80.	Mr Wilson further submits that the courts have recognised that the protection of the without prejudice rule may be removed where it is clear that the privilege is being abused:  see per Robert Walker LJ, as he then was, with whom Simon Brown LJ and Wilson J agreed, in Unilever plc v Proctor & Gamble [2001] 1 All ER 783 at 796G.  Mr Wilson submits that the privilege is being abused here because what Ms Bossert had done throughout the court proceedings was to set out her position but not reveal the intention to possess adversely.  

81.	Mr Wilson also submits that another exception to the without prejudice rule is where the purpose of the admission of the communication is to prove some independent fact, which is unconnected with the truth or falsity of anything said in the course of the without prejudice communications:  see per Robert Walker LJ in Unilever at 792 F- H. In the letter of 14 January 1992, the Bosserts admitted the superior title of the Ofulues. Mr Wilson submits that the admission of title is an independent fact in no way connected with the merits of the cause.  

82.	Mr Crampin submits the letter dated 14 January 1992 did not in fact amount to an acknowledgement in any event.  He submits that letter was merely an attempt to settle the dispute and there was no acknowledgement unless and until it was accepted.   In support of this submission, Mr Crampin relies on the following passage from Edgington v Clark:
“There appears to be no reported English case entirely in point.  Mr. McCulloch did rely on Doc d. Curzon v. Edmonds (1840) 6 M. & W. 295, 299.  The facts in that case were rather complicated, but it is unnecessary to say more than that the person in possession wrote a letter to the true owner saying this: “Although, if matters were contested, I am of the opinion that I should establish a legal right to the premises, yet, under all circumstances, I have made up my mind to accede to the proposal you made, of paying a moderate rent, on an agreement for a term of 21 years.” Parke B. said: “With respect to the other point,” (i.e. whether that letter constituted an acknowledgement) “although it is unnecessary to decide it, it is clear that the effect of the acknowledgment is a question for the judge.  Here, however, the judge was quite right in the opinion he expressed, that it was no acknowledgement of title, because there was no final bargain.”  Mr. McCulloch naturally relies on the concluding words of that judgment.  That authority is a very useful illustration of the fact that it is not possible to lay down any general rule as to what constitutes an acknowledgment.  Whether or not a particular writing amounts to an acknowledgment must depend on the true construction of the document in all the surrounding circumstances, and it is quite plain that in that case there was no acknowledgment by the writing, for it challenged the ownership of the true owner, but offered by way of compromise to accept the tenancy.  Had a bargain been concluded, then no doubt that would have been an acknowledgment because by agreeing to become a tenant the writer could no longer deny his landlord’s title, and that, we think, is the explanation of the concluding words at the end of the judgment.  Accordingly, that case does not help Mr. McCulloch.”  

83.	Mr Crampin submits that, if the letter dated 14 January 1992 contained an acknowledgment, it is entitled to the normal without prejudice protection.  In this case, the first public policy consideration identified in Rashid is engaged because there was pending litigation.  Moreover, in the letter dated 14 January 1992 Mr Bossert was genuinely attempting to settle a matter which was in dispute. The price offered took account of matters germane to the counterclaim, that is, the costs of repairs. The rights of the parties were still in dispute and had not been tested by any trial or judicial process.

84.	In my judgment, as a matter of interpretation, the letter contained an implied acknowledgment of the Ofulues’ title. It merely denied their entitlement to more than six years’ rent.  It is distinguishable from the acknowledgement in Edginton v Clark which contained an express denial of any such acknowledgment.  On the other issues, however, in my judgment Mr Crampin’s submissions are to be preferred.  There was an ongoing dispute as to who was entitled to possession of the Property, and the offer in the letter was made to resolve that matter.  Accordingly the without prejudice rule applied. The acknowledgment of title in the letter was not unconnected with the dispute since the offer was intended to resolve the question who was entitled to possession of the Property. I do not consider that the Bosserts can be said to have abused their position in litigation by not stating that they would, if in possession for a sufficient period, acquire the Property by adverse possession.  The Ofulues must be taken to know the law and moreover they had it in their power to bring the possession proceedings to a speedy conclusion if they wished.  Nor do I consider, particularly in the light of the decision of the Strasbourg court in Pye v United Kingdom, that the competing public policy consideration relied on, namely the Ofulues’ art 1 rights in relation to the Property, is of sufficient weight to displace the two public interests identified in Rashid.  
Disposition

85.	For the reasons given above, I would dismiss the appeal and allow the respondent’s notice in part.  

Sir Martin Nourse:

86.	I agree.

Lord Justice May:

87.	I also agree.