Possession of land: licence from the beneficial owner trumps paper title

In Brake and others v The Chedington Court Estate Ltd [2022] EWHC 366 (Ch), the court has analysed the law relating to claims for possession in a complicated dispute between former business owners. The case concerned a property (“the cottage”) acquired in 2010 by a partnership formed by the first and second claimants and a third party and registered in their names. The partnership agreement enabled the partners to reside rent-free in the cottage as licensees. The partnership was dissolved in 2013 and subsequently went into liquidation. The first and second claimants were adjudicated bankrupt in 2015. The defendant acquired the property surrounding the cottage and the wedding and events business in 2017 and the claimants worked for the defendant until they were dismissed in November 2018. The cottage was used periodically by the first and second claimants and their son, the third claimant, when other property owned by the partnership – and subsequently the defendant – was let for business purposes. In January 2019, the defendant acquired from the liquidators of the partnership and the claimants’ trustee in bankruptcy such legal and equitable interests in the cottage as vested in them subject to a condition precedent that the trustee would obtain a court order for the transfer of the claimants’ legal title to the cottage. At the same time the trustee granted the defendant a licence to occupy the cottage. The defendant then entered and took possession of the cottage. The claimants brought proceedings for possession and damages for trespass by the defendant. An action for trespass can only be brought by a claimant in possession of land. A claimant who is seeking to recover possession of land has a claim in ejectment and must show a better title than the defendant in possession. The defendant conceded that the claimants were in factual possession of the cottage up to the date they were dispossessed – they held the only key, controlled access to it and stored their property there – but they could not show the requisite animus possidendi, or intention to exclude the world at large, since their occupation was on behalf of the defendant. The court decided that the claimants had both sufficient control over the cottage and the relevant animus possidendi to give them possession in law to found an action for the recovery of possession. The claimants had acquired legal title to the cottage as trustees for the partnership and not for themselves as beneficial owners. Their claims to a beneficial interest in the cottage vested in their trustee in bankruptcy, but the legal title, as trust property, was excluded under section 283 of the Insolvency Act 1986. The partnership licence did not give them a better title since it was not an interest in land. The defendant’s licence to occupy was not a sham. It constituted a licence from the beneficial owner of the cottage conferring rights of occupation and possession on the defendant which were enforceable against the claimants as trustees of the land: Manchester Airport plc v Dutton [2000] QB 133. The claim failed. Louise Clark is a property law consultant and mediator