Rashid v Nasrullah – Adverse possession when you’re the registered proprietor?

 This an important decision of the Court of Appeal for the following reasons:

• It overrules the previous decision of the Court of Appeal in Parshall v Hackney [2013] Ch 568 that the registered proprietor of land cannot be in adverse possession of it on the ground, not that it was decided per incuriam, but that it was wrongly decided having regard to the prior decision of the House of Lords in Pye v Graham which was cited in Parshall v Hackney.
• It suggests, contrary to the decision of the Court of Appeal in Swift First Ltd v Chief Land Registrar [2015 EWCA Civ 330, that the legal and beneficial interests in registered land may be divided upon transfer, at least upon a fraudulent taking.
• It holds that the doctrine of illegality as recently recast in Patel v Mirza [2016] UKSC 42 has no application in relation to the limitation of actions.

Mohammed Rashid was the registered proprietor of a property in Birmingham. In 1989, by means of a forged transfer and other forged documentation, another Mohammed Rashid was registered as the proprietor of the property in his place. The original owner was in Pakistan at the time. When he returned he tried to take action to recover the property but the Police wouldn’t do anything, because it was a civil matter, and he couldn’t find a solicitor to take up his case.

In 1990 the fraudster’s son, who was a party to the fraud, was registered as the proprietor by reason of a gift from his father made in 1989.

23 years then passed before the original owner applied to the HM Land Registry to rectify the register. The fraudster’s son defended the claim on the basis that he had been in adverse possession since 1989 and had, accordingly, acquired title by adverse possession pursuant to 1925 Act.

The FTT allowed his application on the basis that Parshall v Hackney was authority for the proposition that a registered proprietor could not be in adverse possession of that land of which he was the registered proprietor and that the son ought not to be allowed to rely upon his fraud. The UT dismissed the son’s appeal on the same basis.

Lewison LJ reasoned as follows:

1. Williams v Central Bank of Nigeria [2014] UKSC 10 is authority for the proposition that time for the purposes of limitation runs against all except claims by beneficiaries in respect of fraudulent breaches of trust or fiduciaries within s. 21(1). Knowing receivers and dishonest assisters are entitled to the benefit of the 6 year limitation period prescribed by s. 21(3). The original fraudster was equally entitled to the benefit of the periods of limitation prescribed by the Limitation Act 1980 because he was not a trustee under a trust.
2. He then paused to consider the decision of the Court of Appeal in Swift First Ltd v The Chief Land Registrar [2015] Ch 602 and its overruling of the Malory ‘heresy’ that a fraudulent transfer is effective only to transfer the legal title, not the beneficial interest. In so doing he cast doubt upon the correctness of that decision insofar as it a related to a ‘fraudulent taking’ as distinct from a, ‘fraudulently induced transfer’ without expressly overruling it.
3. Lewison LJ then went on to consider the reasoning in Parshall He concluded that Mummery LJ’s reasoning in that case entailed the conclusion that, although the true owner had been dispossessed, the dispossession was lawful and therefore not ‘adverse’ because the squatter was the registered proprietor; consequently, the true owner had no right to seek an order for possession unless and until he became the registered proprietor again. That reasoning Lewison LJ said was fundamentally inconsistent with the decision of the House of Lords in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 to the effect that the touchstone of the law of adverse possession is the concept of ‘possession’ and its converse, ‘dispossession’. Only one person can be in possession of land at any one time, so, unless the possessor is in possession with the consent of the true owner, possession by someone other than the true owner is adverse to the true owner’s rights with the consequence that he has a right to seek possession and the further consequence that the prescribed period of limitation runs against him.
4. So, in this case, time ran in favour of the fraudulently registered proprietor and he was entitled to rely upon the fact that the relevant period had elapsed.

Finally, it is important to note that this situation (i.e. a claim by a fraudulent squatter) could not arise in relation to any registered land if the squatter had to rely upon a period of possession after the coming into force of the 2002 Act on 13^th October 2003. Mr Rashid’s adverse possession began in 1989 so he did not need to do so. The critical date for these purposes is 13^th October 1991.