Limitation of actions

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Actions can only be brought within a certain amount of time. In the case of actions for recovery of land, it is 12 years.[1]. The limitation period is governed by the following principles:

  • Commencement - the time when the relevant cause of action accrues, which is when the adverse possession begins. [2]
  • No breaks - adverse possession must be continuous.[3]
  • Aggregation - adverse possession can be aggregated between different people if unbroken.[4]
  • Prevention of time - the limitation periods is restarted if:[5]
    1. The person having the cause of action effectively asserts his or her title, or
    2. When the squatter admits the existence of the superior title by acknowledgement or part payment of a debt such as one secured by a mortgage.
  • Extensions - extensions are given when (to the limit of 30 years[6]):
    1. Disability to true owner.[7]
    2. Action is based on fraud, mistake or concealed by defendant.[8]

Possession is made out of two parts: factual possession coupled with an intention to possess.[9]

  • To establish factual possession, one must prove:
    1. Physical control of the land, or occupation of it ('custody');
      • Fencing of land or erecting a building is prima facie evidence of intention to exercise exclusive control over the land.[10]
    2. Absence of the owner’s consent;
    3. Exclusive possession; and
    4. Dealing with the land as an owner would, whilst no other person had done so;
  • To establish intention, one must prove:
    1. Not an intention to own or acquire ownership, but merely to possess on one’s own behalf and for one’s own benefit;
    2. An intention to exclude the world at large (including the owner, so far as was reasonably possible).

This article is a topic within the subject Property, Equity and Trusts 1.

Contents

Required Reading

Edgeworth et all, Sackville and Neave's Property Law Cases and Materials, 8th edition, Lexis Nexis, 2008, pp. 163-184 [2.81]-[2.105]

Introduction

Note: the current legislation on limitation of actions is the Limitation Act 1969 (NSW). Where only sections are referred to, it may be assumed that they refer to sections from this Act.

[11] In all statutory jurisdictions, possessory interest will, after the lapse of a certain period of time, develop into ‘the best interest in the world’ (this was discussed under adverse possession).[12]

  • Notice that the legislation establishes this right in a ‘negative’ way - it is not that the adverse possessor acquires a superior title, but rather that the title of prior possessors diminishes (essentially, prior possessors become barred from bringing a claim).
  • So, if B dispossesses A of land, and A fails to make a claim within the limitation period, A’s interest will slowly dwindle. In the absence of A’s interest, B will have the best title. Due to the Real Property Limitation Act 1833 (UK), both A’s title and remedy are extinguished. This is adopted in NSW in ss 63–68A of the act.

Justifications for limitation of actions

[13] The chief rationale behind barring a prior possessor from bringing a claim against the adverse possessor after a certain amount of time is that the law should not allow a negligent owner who fails to assert their title to bring interminable claims when the witnesses of the facts are dead, and evidence of the title lost. Moreover, a possessor of land should be able to be assured that their title would not be usurped by some ancient claim.

In essence, the above opinion advances two justifications:

  • Certainty of title.
  • Putting an end to litigation.

McCrimmon advances four more justifications:[14]

  1. Protecting those in possession from stale claims that, as a result of the passage of time, may be difficult to defend.
  2. Encouraging holders of the documentary title not to sleep on their rights.
  3. Facilitating a conveyance of the land in the event the holder of the documentary title has disappeared, or when, as a result of secret dealings, the documentary title no longer reflects an accurate state of the title.
  4. Facilitating the investigation of title to unregistered land.

Arguments against limitations of actions

[15] Arguments against the limitations of actions contend that:

  • It is not necessarily inefficient to leave land idle.
  • The law of adverse possession does not require landowners to make productive use of their land. It only requires them to monitor and eject squatters.
  • Environmentalists contend that adverse possession leads to wilderness areas being over-exploited.

Courts have treated limitations legislation with extreme contempt. They have on several occasions read them down to extinguish their policy application.[16]

The limitation period

Length of the limitation period

[17] English and Australian legislation divides limitations-related legal actions into three categories and create individual rules for each category.

  • Shortest: 3 years – claims for damages for personal injuries.
  • Middle: 6 years – (inter alia) actions founded upon simple contract and tort.
  • Longest: 12 years – actions to recover land (in NSW).[18].
    • Claims of adverse possession against the Crown are 30 years (in NSW).[19].

Commencement of the limitation period

General principles

[20] The limitation period generally commences from the time when the relevant cause of action accrues, which is when the adverse possession begins. [21]

  • For example: if A abandons his land and, after 10 years, B takes possession, A’s right of action only accrues upon B’s possession (the 10 years aren't counted).

Persons presently entitled to possession

[22] Where the person bringing the action has been dispossessed, the right of action accrues on the date of dispossession.[23]

  • An action to recover land of a deceased person accrues upon the death of the deceased.[24]
  • An action to recover land conveyed or assured otherwise than by will accrues on the date the conveyance or assurance took effect.[25]


Sorry! This section is still incomplete. If you wish to help us, please click here.
- Unsure of the difference between this rule and the general rule.

No breaks in adverse possession

The adverse possession must be continuous - if the adverse possession has stopped before the time period is satisfied, and then resumed again, the accrual will be reset.[26]

  • For example: B is in adverse possession of A's land. After 10 years, B abandons the land (/kicked out by A) for a year and then comes back, resuming adverse possession. The previous 10 years aren't counted, A has 12 more years to challenge B's adverse possession.

Adverse possession can be aggregated if unbroken

The adverse possession period does not need be done all by the same person - the time accrues from when the first adverse possessor began adverse possession (as long as there are no breaks).[27]

  • For example: A begins adverse possession. 10 years later, B takes over adverse possession straightaway (regardless of whether he did this by the consent or by dispossessing A). The accrual does not restart, and the owner will be barred in 2 years.

Defining possession

The requirements one must satisfy to prove possession over the land were stated in JA Pye (Oxford) v Graham:

  • Dispossession occurs when one takes possession from another, without consent.
  • There can only be one possessor at a time.
  • Possession is made out of two parts: factual possession coupled with an intention to possess.
    • To establish factual possession, one must prove:
      1. Physical control of the land, or occupation of it ('custody');
      2. Absence of the owner’s consent;
      3. Exclusive possession; and
      4. Dealing with the land as an owner would, whilst no other person had done so;
    • To establish intention, one must prove:
      1. Not an intention to own or acquire ownership, but merely to possess on one’s own behalf and for one’s own benefit;
      2. An intention to exclude the world at large (including the owner, so far as was reasonably possible).

Miscellaneous rules

[28] The following are rules relating to adverse possession which have developed through various cases:

  • Lambeth Borough Council v Blackburn:[29]
    • Intention to only stay temporarily does not negate adverse possession - an admission by a squatter that he only intended to remain temporarily in the land does not negate an intention to possess on the part of the squatter.
  • Seddon v Smith:[30]
    • Fencing of land or erecting a building is prima facie evidence of intention to exercise exclusive control over the land - however, it is necessary to examine all the facts to examine whether the intention has been established.
      • In Riley v Pentilla,[31] the landowner fenced land for use as a tennis court and invited other landowners in the subdivision to use it. This was held not to be adverse possession.
      • In Bayport Industries v Watson,[32] the claimant had erected a small, weak, temporary agricultural fence on the site of a previous fence. This was held not to evince factual possession, nor the requisite intention to possess, as the claimant must have known that the fence was for farming purposes; it was unlike a suburban fence.
      • In Inglewood Investment v Baker,[33] a makeshift fence erected merely to pen sheep was similarly not held to establish adverse possession.
  • Petkov v Lucerne Nominees:[34]
    • Possession must be continuous and exclusive, and third parties must act like the adverse possessor is the sole owner - for a plaintiff to establish adverse possession, his possession must be continuous and exclusive. Others’ possession must not be inconsistent with the plaintiff’s possession. The others must be using the land per the plaintiff’s licence or permission. And the plaintiff must be behaving like the true owner. The requisite intention is an ‘intention to exercise exclusive control’.

Boundary strips

[35] Special laws apply to adverse possession of boundary strips.

  • A boundary strip is the piece of land immediately adjacent to one's neighbour.

In NSW, for Torrens land, adverse possession claims are allowed only in respect of whole parcels of land (thus not boundary strips, which are part-parcles).[36] Courts are given discretion to adjust boundaries in case of encroachment by buildings.[37]

If the land is still under the old system, boundary strips may be adversely possessed. However, especially strong evidence of adverse possession may be required for him to acquire title.[38]

  • Evidence is required that the acts of possession occurred exactly on the boundary strip, and not on the surrounding land.[39]
  • Mistaken belief of fact does not of itself preclude the claimant’s right to recovery.[40]

Future interests

[41] A cause of action of the holder of a future estate (ie, a remainderman) accrues only on the date at which the estate falls into possession. [42] In other words, the limitation period commences only once the holder of a future estate becomes presently entitled to the land.

  • For example: If A has a life estate and B is the remainder-man (entitled to the land upon A's death), and A is dispossessed by X, B’s cause of action accrues on A’s death and B has the full limitation period from that date. 

Equitable estates

[43] There are three distinct situations when considering the operation of limitation actions on equitable interests:

  1. A cause of action accrues to the holder of an equitable interest against the trustee.
    • In such a case, a trustee is generally entitled to claim the benefit of any limitation period.[44] A defrauded beneficiary has 13 years to bring an action to recover land after the time when the cause of action is discovered, or should have been discovered with reasonable diligence.[45]
  2. A cause of action accrues to the trustee against the beneficiary.
    • Where the beneficiary is absolutely entitled and is in possession to the exclusion of the trustee, the statute may run against the trustee.[46]
      • In Bridges v Mees,[47] the buyer paid the full price, but the conveyance was never completed. The buyer went into possession against the seller who was a trustee and acquired title by adverse possession.
  3. A cause of action accrues to the holder of an equitable interest, or his/her trustee, against a stranger who has taken possession of land subject to a trust.
    • Normal limitation periods generally apply. If the legal estate of the trustee is extinguished before all equitable rights are barred, the estate of the trustee is generally preserved.[48]

Adverse possession by a co-owner

When two people co-own a parcel of land, time begins to run when the adverse co-owner takes more than their share of land, rents or profits.

  • Titleholders who do not live, but merely take fruit & vegetables:
    • In Paradise Beach Transportation Co Ltd v Price-Robinson',[49] the appellant brought a claim for their share of land that was devised to their predecessors. They did not live on the land for any time; the other named trustees had lived and farmed the land until their death. The appellant’s title was thus held to have been extinguished, as the other named trustees had made full use and benefit of the land.
  • Marriage breakdown:
    • In Wills v Wills,[50] a wife who left her husband in possession of their jointly owned marital home was found to have discontinued possession for the limitation period. The husband was held to have acquired sole title by adverse possession.

Prevention of Time Running

[51] The 'clock' of the limitation restarts when either:[52]

  1. The person having the cause of action effectively asserts his or her title, or
  2. When the squatter admits the existence of the superior title by acknowledgement or part payment of a debt such as one secured by a mortgage.

Case law has ruled that:

  • Realising another’s ownership and cancelling a licence is not an acknowledgement of the rights of an owner.[53]
  • Mere assertion of title in a letter is not sufficient to stop time running against the owner.[54]
  • A superior title may be asserted by bringing an action, making a peaceable but effective entry upon the land, or even part payment.[55]

Extension of the Limitation Period

[56] The limitation period can be extended in certain situations:

  • Disability of the person to whom the cause of action has accrued. [57]
  • The action is based on fraud or mistake or the cause of action is fraudulently concealed by the defendant.[58]
  • All states have an absolute limit of 30 years on the extension of the limitation period (ie, even with extensions, the limitation period cannot be more than 30 years).[59]

End

This is the end of this topic. Click here to go back to the main subject page for Property, Equity and Trusts 1.

References

Property Textbook refers to Edgeworth et all, Sackville and Neave's Property Law Cases and Materials, 8th edition, Lexis Nexis, 2008.

Equity Textbook refers to Evans, Equity and Trusts, 3rd edition, Lexis Nexis, 2012.

  1. Limitation of Actions Act 1969 (NSW), s 27(2)
  2. Limitation of Actions Act 1969 (NSW), s 38(1)
  3. Limitation of Actions Act 1969 (NSW), s 38(3)
  4. Limitation of Actions Act 1969 (NSW), s 38(2)
  5. Limitation act 1969 (NSW) s 54
  6. Limitation act 1969 (NSW) s 51
  7. Limitation act 1969 (NSW) s 52, s 54
  8. Limitation act 1969 (NSW) s 55, s 56
  9. JA Pye (Oxford) v Graham (2003) AC 419 (House of Lords)
  10. Seddon v Smith (1877) 36 LT 168, 169
  11. Property Textbook, pp. 164-5 [2.81]-[2.82]
  12. Asher v Whitlock (1865) LR 1 QB 1
  13. Property Textbook, p. 165 [2.83], quoting Marquis Cholmondeley v Lord Clinton (1820) 2 Jac & W 1, 139-40;
  14. Property Textbook, p. 165 [2.83], quoting McCrimmon, 'Whose Land is it Anyway? Adverse Possession and Torrens Title' in Grinliton (ed), Torres Title in the Twenty-first Century, LexisNexis Butterworths, Auckland, 2004
  15. Property Textbook, pp. 165-6 [2.84], quoting Stake, 'The Uneasy Case for Adverse Possession', (2001), 89 Geo LJ 2419
  16. Property Textbook, p. 166 [2.85]
  17. Property Textbook, p. 168 [2.86]
  18. Limitation of Actions Act 1969 (NSW), s 27(2)
  19. Limitation of Actions Act 1969 (NSW), s 27(1)
  20. Property Textbook, pp. 168-9 [2.89]
  21. Limitation of Actions Act 1969 (NSW), s 38(1)
  22. Property Textbook, p. 169 [2.90]
  23. Limitation of Actions Act 1969 (NSW), s 28.
  24. Limitation of Actions Act 1969 (NSW), s 29.
  25. Limitation of Actions Act 1969 (NSW), s 30.
  26. Limitation of Actions Act 1969 (NSW), s 38(3)
  27. Limitation of Actions Act 1969 (NSW), s 38(2)
  28. Property Textbook, pp. 177-9 [2.93]-[2.96]
  29. [2001] EWCA Civ 912
  30. (1877) 36 LT 168, 169
  31. [1974] VR 547
  32. [2002] VSC 206
  33. [2003] 2 P & CR 23
  34. (1992) 7 WAR 163, 167-8
  35. Property Textbook, pp. 170-1 [2.97]-[2.99]
  36. Real Property Act 1900 (NSW), Part 6A.
  37. Encroachment of Buildings Act 1922 (NSW)
  38. Rimmer v Pearson (2000) 79 P & CR D21, D22
  39. West Bank Estates v Arthur [1967] 1 AC 665, 679; Williams v Underwood (1981) 45 P & CR 235
  40. Malter v Procopets [2000] VSCA 11
  41. Property Textbook, p. 180 [2.100]
  42. Limitation of Actions Act 1969 (NSW), s 31
  43. Property Textbook, pp. 180-1 [2.101]
  44. Limitation of Actions Act 1969 (NSW), s 36
  45. Limitation of Actions Act 1969 (NSW), s 47
  46. Re Cussons (1904) 73 LJ Ch 296, 298.
  47. [1957] Ch 475
  48. Limitation of Actions Act 1969 (NSW), s 37
  49. 1 All ER 530
  50. [2004] 1 P & CR 37
  51. Property Textbook, pp. 183-4 [2.104]
  52. Limitation act 1969 (NSW) s 54
  53. Szew To Chun Keung v Jung Kwok Wai David [1997] 1 WLR 1232
  54. Mount Carmel Investments v Peter Thurlow [1988] 3 All ER 129
  55. Limitation act 1969 (NSW) s 54
  56. Property Textbook, p. 184 [2.105]
  57. Limitation act 1969 (NSW) s 52, s 54
  58. Limitation act 1969 (NSW) s 55, s 56
  59. Limitation act 1969 (NSW) s 51
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