Weekly property litigation update – 27 January 2022
As we fast approach the end of January, this week the team report on a case interpreting an option agreement and a recent Court of Appeal decision on adverse possession. As always, this leads on to insight from our colleagues around the firm and some positive news.
Retirement Villages Developments Ltd v Punch Partnerships (PTL) Ltd  EWHC 65 (Ch)
This High Court decision considered the construction of an option agreement granted in 2013 for an initial 30-month term which was subject to an extension in defined circumstances. The issue that arose was whether the extension applied meaning the option could still be exercised.
In 2013 the option was granted by the Defendant to the Claimant's predecessor, Hamlin Estates Ltd (Hamlin). It was then assigned to the Claimant in September 2019. It entitled the Claimant to acquire land for the sum of £2.61 million once a qualifying planning approval had been obtained.
The Claimant sought a declaration that the option continued in existence. The Defendant counterclaimed the application and, unsuccessfully, sought rectification of the option agreement on the basis of common mistake.
The court rejected the Defendant's counterclaim and found that the option had not expired. On the questions of interpretation, it held:
- Construction of the Option
It was argued by the Defendant that the End Date, defined in the option as the latest date of three separate events, had occurred and the option could not be exercised. The Defendant argued that to find otherwise would lead to a commercially absurd result i.e. that the property could remain subject to, and restricted by, the obligations in the option in perpetuity. The Judge found the opposite and held that the End Date had not occurred (as none of the conditions to trigger the End Date had arisen) and reached the conclusion by relying on the natural meaning of the words the parties had used in the agreement. Given they were not ambiguous, there was no reason to depart from them (even if the words lead to a commercially absurd result).
- Implied Terms
The Defendant sought to imply wording into the option agreement which would have the effect of bringing the option to an end at an earlier date. The Defendant said that doing so was reasonable, equitable and necessary to give the option business efficacy. The Judge disagreed and found that implying the terms sought was neither reasonable nor equitable and ran contrary to the background factual matrix. It was said that 'the true construction of the option is to allow it to continue until after the Property is allocated for development in the future and for the developer to have a meaningful chance to apply for planning permission. The effect of the implied terms is to the opposite…'. The tests for implication were not considered to have been met and so the argument for implying words into the option was rejected.
The judgment is a helpful reminder of the Court's approach to the interpretation of documents and the limited basis on which terms will be implied.
Adverse possession: White & another v Amirtharaja & another  EWCA Civ 11
The Court of Appeal have handed down judgment on a second appeal from an adverse possession case which was initially heard in the County Court at Southend. This was a long running dispute which considered the role of the paper title owner and whether the adverse possessor's acts were equivocal or not.
In this case, the dispute between the parties involved the ownership of a passageway which runs behind the house of the Appellants (the Whites), and between an office and a workshop (which belonged to the Respondents, the Amirtharajas). At first instance, the Whites' adverse possession application was successful, but the Amirtharajas appealed to the High Court and the decision was overturned. As part of their appeal, the Amirtharajas argued that the previous owners of the workshop had paper title to the passageway, by way of new evidence. Whilst the High Court Judge did not allow the new evidence to be admitted on the appeal, he did allow the Amirtharajas to advance this argument. In overturning the decision of the County Court, the High Court judge found that the Whites did not have evidence to show that they were in adverse possession of the passageway.
The Whites then appealed to the Court of Appeal. The only point in issue before the Court of Appeal was whether the Judge in the High Court was wrong to allow the Amirtharajas to advance the paper title / adverse possession argument on appeal, on the basis that this was a new argument not previously raised at trial. The Whites' argued that the High Court Judge impliedly accepted the argument and it affected his reasoning and undermined his conclusions. The Court of Appeal dismissed the appeal. They did accept the paper title argument was a new issue that was not raised at trial but found that the issue was wholly irrelevant to the question of whether the Whites could establish a title by adverse possession.
The important point of note to come out of this judgment is that in claims for adverse possession, whether or not the identity of paper owner is known does not have a bearing on the analysis of the adverse possessor's actions. Someone claiming adverse possession needs to show an intention to possess the relevant land and to exclude the world at large, including the paper owner, whomever he may be, and whether or not their identity is known.
Insight from around the firm
- Podcast: Positive influencers: a conversation with Jayden Ali
- Webinar: Property litigation - residential property update
- Subsidy control's impact on land dealings
- Get booking for half term! The Government has confirmed this week that from 4am on 11 February virtually all travel restrictions will be scrapped. In particular, fully vaccinated passengers arriving in the UK will no longer need to take a take a day two test.
- Hopes are high for the world's first global treaty on plastic pollution. Following the report, published by the Environmental Investigation Agency last week, which said that there could be more plastic than fish in the sea by 2040, the Government has joined charities, campaigners and businesses to lobby for an international agreement on plastic to be reached when the UN environmental assembly meets in Nairobi next month.
- Teaching assistant thanks strangers after new wheelchair fundraiser! A man who turned to crowdfunding to pay for a new wheelchair was astounded by an "amazing display of humanity" as complete strangers donated the £3,000 he needed to purchase a much needed new wheelchair. He described the donors' help as "life changing"!