EHRM, 15-11-2005, nr. 44302/02

Article 1 of Protocol No. 1 comprises 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 same paragraph, covers deprivation of possessions and makes it subject to certain conditions. The third rule, stated in the second paragraph, recognises that Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest. The three rules are not ‘distinct’ in the sense of being unconnected: the second and third rules are concerned with particular instances of interference with the right to the peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule (see, for example, Bruncrona v. Finland, no. 41673/98, ,§ 6516November 2004) and must comply with the principle of lawfulness and pursue a legitimate aim by means reasonably proportionate to the aim sought to be realised (see, for example, Beyeler v. Italy[GC], no. 33202/96, §§ 108–14, ECHR 2000-I).

The notion of ‘public interest’ in the second sentence of the first paragraph is necessarily extensive. In particular the decision to enact property laws will commonly involve consideration of political, economic and social issues. The taking of property in pursuance of legitimate social, economic or other policies may be in the public interest even if the community at large has no direct use or enjoyment of the property.

The national authorities are in principle better placed than the international judge to appreciate what is in ‘the public interest’. The Court, finding it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one, will respect the legislature's judgment as to what is in the public interest unless that judgment is manifestly without foundation.

The possible existence of alternative solutions does not in itself render the contested legislation unjustified. Provided that the legislature remains within the bounds of its margin of appreciation, it is not for the Court to say whether the legislation represented the best solution for dealing with the problem or whether the legislature's discretion should have been exercised in another way (James and Others v. the United Kingdom, judgment of 21 February 1986, Series A no. 98, § 51).

An interference with the peaceful enjoyment of possessions must nevertheless strike a ‘fair balance’ between the demands of the public or general interest of the community and the requirements of the protection of the individual's fundamental rights. The concern to achieve this balance is reflected in the structure of Article 1 as a whole, which is to be read in the light of the general principle enunciated in the first sentence. In particular, there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised by any measure depriving a person of his possessions or controlling their use. Compensation terms under the relevant legislation are material to the assessment of whether the contested measure respects the requisite fair balance, and notably, whether it does not impose a disproportionate burden on the applicant (see Former King of Greece and Others, [GC], no. 25701/94, ,§ 89 ECHR 2000-XII).

In this connection, the taking of property without payment of an amount reasonably related to its value will normally constitute a disproportionate interference that cannot be justified under Article 1 of Protocol No. 1. This 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, among other authorities, Papachelas v. Greece[GC], no. 31423/96,§ 48 , ECHR 1999-II). A deprivation of property without compensation can, in certain circumstances, be compatible with Article 1 (Jahn and Others v. Germany[GC], nos. 46720/99, 72203/01 and 72552/01, ECHR 2005-…, § 117 Where agricultural property is bought subject to the conditions of the general law, and the purchaser is subsequently obliged to re-sell the property at a substantially lower price, the Court will consider the lawfulness and purpose of the deprivation, bearing in mind the State's margin of appreciation (Håkansson and Sturesson v. Sweden, judgment of 21 February 1990, Series A no. 171-A, §§ 44–55).

Although Article 1 of Protocol No. 1 contains no explicit procedural requirements, the proceedings at issue must also afford the individual a reasonable opportunity of putting his or her case to the responsible authorities for the purpose of effectively challenging the measures interfering with the rights guaranteed by this provision. In ascertaining whether this condition has been satisfied, a comprehensive view must be taken of the applicable procedures (see, among other authorities, Jokela v. Finland, no. 28856/95, § 45, ECHR 2002-IV).

The Court notes that the applicant companies were owners of the freehold of the land in question and were registered in the Land Register with absolute title until, by operation of the 1925 and 1980 Acts, they lost that title in consequence of the adverse possession of the land by the Grahams. In contending that the loss of title did not engage the provisions of Article 1 of the Protocol, the Government argue that when the applicants acquired the land they did so subject to the then existing law, according to which their rights were defeasible in the event of 12 years' adverse possession by a trespasser. While accepting that where, as in the case of James and Others, a Contracting State introduces legislation which compulsorily transfers property from one individual to another, such legislation is capable of giving rise to an interference with the former owner's property rights under Article 1, the Government argue that the position is different where, as in the present case, the relevant law exists at the time the property is acquired and where the operation of the law is to be seen as an incident of the property right at the time of its acquisition.

The Court cannot accept the Government's argument. As registered freeholders, the applicants' title to the land was absolute and not subject to any restriction, qualification or limitation. Their property rights were in this respect quite different from those of the holders of a lease, licence or other defeasible or limited property interest which was liable to expire by the effluxion of time and to cease to exist as such. It was the operation of the provisions of the 1925 and 1980 Acts which brought to an end of the applicants' title and not any inherent defect or limitation in that title.

The Court does not share the Government's view that the operation of the legislation is to be regarded as an incident of, or limitation on, the applicants' property right at the time of its acquisition, such that Article 1 ceased to be engaged when the relevant provisions took effect and the property right was lost after 12 years of adverse possession. It is true that the relevant provisions of the legislation existed at the time the property was acquired by the applicants and that the consequences for the applicants' title to the land of 12 years adverse possession were known. However, Article 1 does not cease to be engaged merely because a person acquires property subject to the provisions of the general law, the effect of which is in certain specified events to bring the property right to an end, and because those events have in fact occurred. Whether it does so will depend on whether the law in question is properly to be seen as qualifying or limiting the property right at the moment of acquisition or, whether it is rather to be seen as depriving the owner of an existing right at the point when the events occur and the law takes effect. It is only in the former case that Article 1 may be held to have no application.

The Court finds that, in the present case, the provisions of the 1925 and 1980 Acts cannot be regarded as limiting or qualifying the freehold property right of the applicants at the moment of their acquisition. In this respect, the provisions were significantly different from those with which the Commission was concerned in the decisions relied on by the Government (J.S. and Others v. the Netherlands, no. 14561/89, Commission decision of 7 September 1995; Gudmundsson v. Iceland, no. 23285/94, Commission decision of 17 January 1996, Zacher v. Germany, nos. 27026/95 and 30032/96, Commission decisions of 4 September 1996), each of which related to the grant of licences which were from the outset subject to conditions imposed by law which were either never fulfilled or which ceased to be complied with. The provisions are also different from those examined by the House of Lords in Wilson v. The First County Trust Ltd. [2003] UKHL 40 — also invoked by the Government — in which the majority held that the relevant legislation regulating the enforceability of loan agreements ‘bit’ at the moment the transaction was concluded and that the lender accordingly had no right to enforce repayment of the loan of which he could be deprived under Article 1. By contrast, the 1925 and 1980 Acts are in the view of the Court to be seen as ‘biting’ on the applicants' property rights only at the point at which the Grahams had completed 12 years' adverse possession of the applicants' land and not as delimiting the right at the moment of its acquisition. Accordingly, the Court rejects the Government's argument that, on this ground, Article 1 was not engaged in the present case. Since the applicants' rights cannot therefore be regarded as defeasible rights at the moment of acquisition, the Court cannot accept the Government's further submission that, to hold Article 1 to be applicable would offend against the clear principle that the Article protects existing rights only and does not entitle a person to acquire new property rights.

The Government further contend that, even if Article 1 was in principle applicable, there was no interference with the applicants' property rights or none for which the State can be held responsible. It is argued that the operation of the 1980 Act is to be seen as imposing a limitation on the applicants' rights of access to court, rather than an interference with their property rights and that the present case should be considered in the context of Article 6 of the Convention rather than Article 1 of the Protocol. It is further argued that, as any interference with the applicant companies' peaceful enjoyment of their possessions was the result of the Grahams' actions and not the State's, there could be no question of a breach of the State's negative obligations under the Protocol. At most the State's positive obligations were engaged and these obligations could not extend to protecting the applicants against the avoidable consequences of their failure to take steps within the 12 years to bring the Grahams' adverse possession to an end.

While it is true that the application of limitation periods to bar causes of action has traditionally been examined under Article 6 of the Convention and in the context of the parties' right to effective access to court (see, for example, Stubbings and Others v. the United Kingdom, judgment of 22 October 1996, Reports of Judgments and Decisions 1996-IV), there is no reason why the application of limitation periods should not in an appropriate case give rise to issues under other Convention Articles and nothing in principle to preclude the examination of a claim under Article 1 of the Protocol where the legislation in question has an impact on the property rights of an applicant. In the present case, the Court finds that application of section 15 of the 1980 Act, when read with section 75 of the 1925 Act, clearly had such an impact on the applicants' property rights, the effect of the provisions being to deprive the applicants of their beneficial interest in the land, which was thenceforth to be held on trust for the Grahams.

The Government rely on the judgment of Mummery L.J in the Court of Appeal in the present case to the effect that the extinction of the applicants' title (under section 75) was simply a logical and pragmatic consequence of the barring of an owner's right to bring an action (under section 15). However, even if the provisions of section 75 are properly to be so regarded as a matter of domestic law — a point which the Court notes was disputed in the judgment of Deputy Judge Strauss in Beaulane Properties Ltd. v. Palmer —, it is clear that the relevant provisions did more than merely preclude the applicants from invoking the assistance of the courts to recover possession of the property concerned: the combined effect of the provisions was both to deprive the applicants of their substantive property rights and to preclude them from lawfully repossessing the land, the beneficial title to which they had lost.

As to the Government's argument that the interference with the applicants' peaceful enjoyment of the disputed land was brought about by the action of one party and the inaction of the other and that the State had no direct responsibility for such interference, the Court accepts that it was the Grahams' adverse possession of the land for 12 years which directly led to the applicants' loss of their title. However, the Court also observes that, but for the provisions of the 1925 and 1980 Acts, the adverse possession of the land by the Grahams would have had no effect on the applicants' title or on their ability to repossess the land at any stage. It was the legislative provisions alone which deprived the applicants of their title and transferred the beneficial ownership to the Grahams and which thereby engaged the responsibility of the State under Article 1 of the Protocol.

The Court accordingly finds that Article 1 of Protocol No. 1 was engaged and that the operation of the relevant provisions of the Limitation Act 1980 and the Land Transfer Act 1925 in the present case constituted an interference by the State with the applicant companies' rights under that Article.

The Government contended that the interference was in the nature of a control of use, rather than a deprivation. They considered that the State has done no more than control the circumstances in which landowners might have recourse to the courts in recovering possession and that the transfer of paper title under section 75 was merely a measure of enforcing that control.

In this regard reliance was placed on the AGOSI case (AGOSI v. the United Kingdom, judgment of 24 October 1986, Series A no. 108) in which the forfeiture of the Krugerrands was treated by the Court as a means of enforcing the prohibition on the importation of the coins and was examined under the second paragraph of Article 1 rather than the second sentence. It was argued that the present case was a fortiori since it did not even involve any form of expropriation by the State. Reference was further made to the Court's Stran Greek judgment (Stran Greek Refineries and Stratis Andreadis v. Greece, judgment of 9 December 1994, Series A no. 301-B) as one in which the court treated the case as involving an interference with the peaceful enjoyment of possessions under the first sentence of Article 1 rather than as a deprivation of possessions under the second sentence of the Article.

The Court observes that the relevant provisions of the 1925 and 1980 Acts do not involve the control of the use to which land is put and are in this respect different in aim and effect from the provisions of, for instance, planning legislation. They are instead concerned with the entitlement to land where there has been a period of adverse possession and their cumulative effect, where the statutory requirements are met, is to transfer beneficial ownership of the land from one individual to another. In this respect the contested measures bear a closer similarity to those in the James and Others case (cited above), in which property was transferred from one individual to another in furtherance of general social policy, than to those in the case of AGOSI, where the forfeiture of the coins was found by the Court to be a constituent element of the procedure for control of the illegal import of coins, or those in the Stran Greek case which were designed to prevent the enforcement of a final arbitration award.

While, as the Government emphasise, the measures in question did not involve any form of expropriation by the State, the Court notes that the same was true in the case of James and Others in which the Court expressly rejected the applicants' argument that the transfer of property from one person to another for the latter's private benefit alone could never be ‘in the public interest’ within the meaning of the second sentence. Indeed, the very fact that the contested measures involved such a transfer of property rather than a taking of the property by the State in furtherance of a system of control would appear to undermine, rather than reinforce, an argument that the case is an example of control of use falling within the second paragraph of Article 1.

The Court accordingly considers that the applicants were ‘deprived of [their] possessions’ by the contested legislation and that the case falls to be examined under the second sentence of Article 1. It recalls, however, that the three rules within that Article are not distinct or watertight in the sense of being unconnected and that the principles governing the question of justification are substantially the same, involving as they do the legitimacy of the aim of any interference, as well as its proportionality and the preservation of a fair balance.

There is no suggestion in the present case that limitation periods are incompatible with the Convention, in general or with specific reference to actions to recover land. As the Court noted in Stubbings (Stubbings and Others v. the United Kingdom, judgment of 22 October 1996, Reports of Judgments and Decisions 1996-IV, §51):

However, the Court reiterates that the present case is concerned not merely with the effect of the provisions of the Limitation Act 1980 but also with those of the Land Registration Act 1925, which brought about the deprivation of the applicants' title to the land. As the Law Commission's Consultative Document observed, where adverse possession not only bars claims to recover possession of property but transfers title to the property, such measures can only be justified by factors over and above those which explain the law on limitation.

The Government argue that the contested provisions governing the adverse possession of land serve two public interests — firstly, as in the Stubbings case, they prevent uncertainty and injustice arising from stale claims; secondly, they ensure that the reality of unopposed occupation of land and its legal ownership coincide. These aims echo two of the public interests identified by the Law Commission in its Consultative Document. While the Court accepts the undoubted relevance and importance of these aims in the case of unregistered land, their importance in the case of registered land is more questionable. As Neuberger J. explained in his judgment in the present case, with one or two limited exceptions, the uncertainties which sometimes arise in relation to the ownership of land are very unlikely to arise in the context of a system of land ownership involving compulsory registration, where the owner of the land is readily identifiable by inspecting the proprietorship register of the relevant title at the Land Register. Similar statements appear in the Report of the Law Commission on registered land and in the judgment of Lord Bingham in the House of Lords, who observed that, while in the days before registration became the norm a result whereby an adverse possessor of land was rewarded by obtaining title could be justified as avoiding protracted uncertainty as to where the title to land lay, where land was registered it was difficult to see any justification for a legal rule which impelled such an unjust result.

The Government pray in aid the law and practice in other jurisdictions as confirming that the taking of property by adverse possession is a feature common to many legal systems. However, the Court considers that the comparative material must be viewed with some caution, it being unclear whether in all jurisdictions referred to the same system of compulsory registration of land is in place. In this regard, it is of relevance to note that in the Consultative Document of the Law Commission and Land Registry it is recorded that many common law jurisdictions which had systems of title registration had either abolished the doctrine of adverse possession completely or had substantially restricted its effects.

The Court, however, notes that despite the major changes to the law of adverse possession made by the Act of 2002 in the case of registered land, the law itself was not abolished. In these circumstances and having regard to the margin of appreciation afforded to the national authorities, the Court cannot accept the applicants' argument that the law of adverse possession in England and Wales served no continuing public interest so far as registered land was concerned.

Whether in the case of registered land this public interest was of sufficient weight for the Court to be able to find the interference proportionate remains to be determined.

The Government, like Mummery L.J in the Court of Appeal, place reliance on two factors in particular for contending that the system as it operated in the applicants' case was proportionate and struck a fair balance — the reasonableness of the period of 12 years for bringing proceedings and the fact that it was neither impossible nor difficult for a landowner to prevent a squatter acquiring title by adverse possession: a mere grant to the Grahams of authority to use the land subject to an acknowledgement of the applicants' ownership would have been sufficient to stop time running.

The Court accepts that the limitation period of 12 years was relatively long and that the law of adverse possession was well-established and had not altered during the period of the applicants' ownership of the land. It is further accepted that it is a relevant consideration that, in order to avoid losing their title, the applicants had to do no more than regularise the Grahams' occupation of the land or issue proceedings for to recover its possession within the twelve year period.

The question nevertheless remains whether, even having regard to the lack of care and inadvertence on the part of the applicants and their advisers, the deprivation of their title to the registered land and the transfer of beneficial ownership to those in unauthorised possession struck a fair balance with any legitimate public interest served.

The Court notes in the first place that, not only were the applicants deprived of their property but they received no compensation for the loss. The result for the applicants was thus one of exceptional severity: as Neuberger J. expressed the point, the result was

In the House of Lords Lord Bingham similarly observed that

The Court reiterates that the taking of property in the public interest without payment of compensation reasonably related to its value is justified only in exceptional circumstances. As established by the James and Others case, this principle is not confined to the taking of property for public purposes but is equally applicable to the compulsory transfer of property from one individual to another. The Government argue that this was one of the exceptional cases where compensation was not called for, citing in support the case of Gasus ( Gasus Dosier-und Fördertechnik GmbH v. the Netherlands, judgment of 23 February 1995, Series A no. 306-B). However, not only was the Gasus case analysed by the Court as a case of control of use rather than deprivation of possessions, but the Court finds no sufficient similarity between the circumstances of the two cases as would justify treating the present case as an exception to the general principle.

The lack of compensation in the present case must also be viewed in the light of the lack of adequate procedural protection for the right of property within the legal system in force at the relevant time. In particular, although it was — as shown by facts of the present case — open to the dispossessed owner of the land to argue after the expiry of the twelve year that the land had not been adversely possessed, during the currency of that period no form of notification whatever was required to be given to the owner, which might have alerted him to the risk of losing his title. As Lord Hope observed in the House of Lords:

The Government argue that the State has no duty to protect a person against his own negligence or inadvertence. The Court would, however, observe that such inadvertence would have had no adverse consequences for the applicants but for the contested statutory provisions. More importantly, it is clear that Parliament itself recognised the deficiencies in the procedural protection of landowners under the then current system by enacting the Act of 2002. The new Act not only puts the burden on a squatter to give formal notice of his wish to apply to be registered as the proprietor after 10 years adverse possession but requires special reasons to be adduced to entitle him to acquire the property where the legal owner opposes the application. The mere fact that a legal system is changed to improve the protection provided under the Convention to an individual does not necessarily mean that the previous system was inconsistent with the Convention. However, in judging the proportionality of the system as applied in the present case, the Court attaches particular weight to the changes made in that system, and to the view of the Law Commission and the Land Registry as to the lack of cogent reasons to justify the system of adverse possession as it applied in the case of registered land.

In these circumstances, the Court concludes that the application of the provisions of the 1925 and 1980 Acts to deprive the applicant companies of their title to the registered land imposed on them an individual and excessive burden and upset the fair balance between the demands of the public interest on the one hand and the applicants' right to the peaceful enjoyment of their possessions on the other.

There has therefore been a violation of Article 1 of Protocol No. 1.