LORD JUSTICE DILLON: This is an appeal by the fourth defendant, Mr Maurice Tillson, against a decision of Mr Justice Ferris given on 18th June 1990 after the trial of this action in the Chancery Division. The judge's decision is reported in [1991] 2 W.L.R 540 at page 540. Proceedings were originally instituted in the Colchester and Clacton County Court in November 1984. They named three other defendants, a Mr Smith, a Mr Lamb and a Mr Dadds, who dropped out of the proceedings long ago. Mr Tillson was added as a defendant in 1985 and the proceedings were transferred to the Chancery Division of the High Court on 13th March 1986.
The plaintiffs, the Colchester Borough Council ("the Council"), are the successors in title under the Local Government Act 1972 to the Mayor, Aldermen and Burgesses of the Borough of Colchester. By their pleadings the Council claimed possession as against Mr Tillson of certain land which has been referred to as "the red land" and "the blue land", from the boundary edging on the plan attached to the particulars of claim.
The red land is some 11.5 acres in extent. On its western boundary it has a short frontage to Mile End Road. Then along the north-western boundary there is a long frontage to Turner Road, which used to be called Clay Lane. Immediately to the north east of the red land there is the blue land of approximately four acres in the apex between Turner Road to the north west and Brick Kiln Road to the east. The red land is also bounded by Brick Kiln Road to the east immediately below the blue land.
The Council's case is founded on a written agreement dated 3rd November 1983 and made between the Council of the one part and Mr Tillson of the other part ("the Agreement").
By clause 1 of the Agreement the Council, called the landlord, agreed to let and Mr Tillson, called the tenant, agreed to take the red land and the blue land for a term of 18 months commencing on 25th March 1983 and expiring on 29th September 1984 at a rent of £165.50 per annum by equal quarterly instalments in advance on the usual quarter days.
Clause 2 contained exceptions and reservations to the landlord which for present purposes do not matter.
Clause 3 contained covenants by the tenant which equally do not matter.
Clause 4 is important and is in the following terms:
"The tenant hereby acknowledges that for a number of years he has been in occupation of the land coloured red on the said plan as bare licensee of the landlord or as its tenant at will and he also acknowledges the landlord's title to the land edged red and agrees that he has not gained any right title or interest to or in it by adverse possession. The tenant further acknowledges that within the past year he has entered into occupation of the land coloured blue on the said plan without the licence or consent of the landlord and that similarly he has no right title or other interest in that land."
Clause 5 contained a landlord's covenant for quiet enjoyment and clause 6 a proviso for re-entry.
It is not in doubt that before the agreement was entered into, the red land and the blue land, or some parts thereof, had been previously occupied by Mr Tillson for agricultural purposes. The object, therefore, of making the term of the tenancy under the agreement a term of 18 months was to take advantage of the exception from the security of tenure provisions of the Agricultural Holdings Act of tenancies granted for fixed terms of more than one year and less than two years; that exception was established by the decision of this court in Gladstone v. Bower [1960] 2 Q.B. 384 which has not been affected by subsequent statutes. That particular objective was not attained because the 18 month term under the Agreement was back-dated by the Agreement and at the date of the Agreement, 3rd November 1983, there was less than a year of that term to run; see Keen v. Holland [1984] 1 W.L.R. 251, a decision of this court which on this point is indistinguishable. Accordingly, it was conceded by the Council in the court below that the tenancy under the Agreement had effect as an agricultural tenancy from year to year protected by the Agricultural Holdings Act. The Council could not therefore obtain possession as against Mr Tillson because it had not followed the appropriate procedure or served the appropriate notice to determine an agricultural tenancy.
However, Mr Tillson sought below and seeks by this appeal to go further. He claimed initially through his solicitors to have obtained a title to both the red land and the blue land by adverse possession for over 25 years. The claim to have obtained a title in respect of the blue land was abandoned on the pleadings and not pursued in the court below or here. It appears that the blue land was only purchased by the Council or its immediate predecessor, the Mayor, Aldermen and Burgesses of the Borough of Colchester, in 1974, and that did not leave time for 12 years adverse possession by Mr Tillson before 3rd November 1983. The red land had however been acquired by the Council's predecessor in 1920, and had been laid out as allotments long ago which over many years had been let to various people. Mr Tillson had at some stage between 1958 and 1960 been granted a yearly tenancy of some three acres of the red land.
While holding that Mr Tillson was entitled to the protection of the Agricultural Holdings Act, Mr Justice Ferris rejected his claim to ownership of the red land, or any part thereof, on the ground that Mr Tillson was estopped by contract or estopped by convention, from disputing the Council's title to the red land and the blue land. He further specifically held that, by reason of clause 4 of the Agreement, Mr Tillson was estopped from asserting that he was beneficially entitled to any estate or interest in any part of the red land or the blue land except as tenant of the Council under the Agreement as extended by the Agricultural Holdings Act.
To follow that finding it is necessary to look at the circumstances which led up to the execution of the Agreement, and to those I will turn in a moment. Having had however full evidence on the extent of Mr Tillson's occupation of the red land and of the activities of others on the red land, the judge made findings as to that occupation apart from the effect of the Agreement. His findings were as follows:
1. There were parts of the red land ("the occupied land") which Mr Tillson had occupied without interruption adversely to the Council from 1st January 1968 (when a previous gratuitous licence expired which had been granted by the Council's predecessor to Mr Tillson in April 1967 in correspondence) to 3rd November 1983.
- There were other parts of the red land which, like the blue land, Mr Tillson had never occupied adversely to the Council for as long as 12 years at any time before 3rd November 1983.
- There were two small plots of land (called "the French Kier land") along the roadside frontages to Mile End Road in the one case and to Turner Road in the other case, which had been occupied by Mr Tillson continuously from 1st January 1968 to 3rd November 1983, except that during a substantial period in 1973 and 1974 these two plots together with the rest of the frontage of the red land to Mile End Road and Turner Road had been fenced off and occupied by a firm of contractors, called French Kier, instructed by the Council who were laying new drains for the Council in pursuance of the Council's statutory duties under the Public Health Act 1936.
Mr Lewison's primary contention for Mr Tillson on this appeal is therefore that after 12 years adverse occupation by Mr Tillson the Council's title to the occupied land would have been extinguished, and that thereafter it was impossible for that title to be revived by any subsequent acknowledgment of title or payment by Mr Tillson to the Council. In general those propositions are made out by section 19 of the Limitation Act 1939 and section 29(7) of the Limitation Act 1980; see the decision of this court in Sanders v. Sanders 19 Ch.D.373 which was applied by a Divisional Court in Nicholson v.England [1926] 2 K.B. 93. Mr Lewison accordingly submitted that clause 4 of the Agreement had no effect at all and could not preclude Mr Tillson from setting up his own freehold title to the occupied land. Mr Lewison's second submission for Mr Tillson was that if his primary submission was correct the same result should follow in respect of the French Kier land because the occupation of that land by French Kier, not being related to the Council's position as landowner, was not to be treated as a resumption of possession by the Council and so did not interrupt Mr Tillson's adverse possession of the French Kier land, although the fencing off of the land by French Kier temporarily prevented Mr Tillson from using it. Mr Lewison accepted however that if his primary contention fails, Mr Tillson could be in no better position in relation to the French Kier land than in relation to the occupied land.
The Council took various further points of law by a respondents' notice, for instance that Mr Tillson's user of the occupied land before 1st January 1968 was not under a licence which then expired but under a continuing agricultural tenancy. But we have not found it necessary to hear Mr Taylor on behalf of the Council on the respondents' notice; the points taken in the respondents' notice remain open to the Council should this case go higher.
The crux of the case lies, in my judgment, in looking at the surrounding circumstances to see what the Agreement of 3rd November 1983 was. The answer, in my judgment, is that it was a compromise agreement to resolve a dispute between Mr Tillson and the Council and prevent court proceedings; see by analogy the case of Binder v. Alachouzos [1972] 2 Q.B. 151, a decision of this court. That case was concerned with the Moneylenders Acts. The position was that the defendant had borrowed money from the plaintiff and associates of the plaintiff, and had given cheques for payment which were not met. In several actions by the lenders the defendant had pleaded that the sums claimed were in respect of moneylending transactions by unregistered moneylenders and so were irrecoverable. Just before the original actions were due for trial an agreement of compromise was made between the parties. That agreement was made between parties, who had been advised by solicitors and counsel, and the defendant admitted that the Moneylenders Act did not apply to the transactions which were the subject of the actions. By the compromise agreement the defendant agreed to pay the plaintiff a specified sum with interest by agreed instalments and it was expressly provided that, in any action on the compromise agreement by the plaintiff, it should not be open to the defendant to raise any defence other than as to the quantum of moneys paid. The defendant failed to keep the terms of the compromise agreement and the plaintiff issued his second writ claiming payment thereunder. The defendant again pleaded the Moneylenders Act and contended that because the plaintiff was an unlicensed moneylender the compromise agreement was unenforceable and illegal. But summary judgment was granted the plaintiff by the Master and an appeal was dismissed by the judge, that is to say for the moneys due under the compromise agreement. The defendant, accordingly, appealed to this court and it was held, dismissing the appeal, that the compromise agreement was a bona fide compromise of the question of fact - whether the original loans were unlawful moneylending transactions - and it was not open to the defendant to re-open the question of illegal moneylending in the plaintiff's action on the compromise agreement. Lord Denning M.R. said this at 157F:
"Now Mr.Alachouzos, in defiance of the agreement, pleads once again the Moneylenders Act. He says that the Binder companies were a consortium of moneylenders; they ought to have been registered, and they were not; and that the agreement of compromise is not binding. He says the policy of the Moneylenders Act could be defeated if agreements of compromise were sanctioned by the courts.
There are here two competing considerations. On the one hand the Moneylenders Acts are for the protection of borrowers. The judges will, therefore, not allow a moneylender to use a compromise as a means of getting round the Act. They will inquire into the circumstances giving rise to the compromise. They will not allow the moneylender to take unfair advantage of the borrower. Even if the borrower consents to judgment being entered against him, the courts will go behind that consent, if the justice of the case so requires. For instance, where the interest charged was so high that it was presumed to be harsh and unconscionable, the court refused to enforce a consent to judgment: see Mills Conduit Investment Ltd. v. Leslie [1932] 1 K.B. 233.
On the other hand, it is important that the courts should enforce compromises which are agreed in good faith between lender and borrower. If the court is satisfied that the terms are fair and reasonable, then the compromise should be held binding."
Then a bit further down, at 158E-F, he said:
"In my judgment, a bona fide agreement of compromise such as we have in the present case (where the dispute is as to whether the plaintiff is a moneylender or not) is binding. It cannot be reopened unless there is evidence that the lender has taken undue advantage of the situation of the borrower. In this case no undue advantage was taken. Both sides were advised by competent lawyers on each side. There was a fair arguable case for each. The agreement they reached was fair and reasonable. It should not be reopened."
I see no reason why that reasoning should not also apply where the dispute was as to whether or not the defendant had acquired a title to land by adverse possession.
Lord Justice Roskill in Binder v. Alachouzos said this at
159G to 160C:
"Mr Jackson accepted in the course of his argument yesterday that if his principal contention were right, no compromise could ever safely be entered into in any case where an allegation of unlawful moneylending was raised upon the pleadings, however tenuous the evidence to support that allegation might be. He has argued that the court is bound to look behind an agreement to compromise an action in which the issue of unlawful moneylending had been raised, and in effect to retry that issue before it can determine if that compromise can be enforced. With respect, I think that argument is unfounded. Whilst it has always been the policy of the courts not to allow the Moneylenders Acts to be evaded, it has also been the policy of the court to encourage compromises and to enforce compromises when they are made. The position is clearly stated, if I may respectfully say so, in British Russian Gazette and Trade Outlook Ltd. v. Associated Newspapers Ltd. [1933] 2 K.B. 616, 654, in the judgment of Greer L.J., who said:
'I therefore feel that we are now entitled to decide the question on principle, and I think at the present stage of the development of the law we ought to decide that an agreement for good consideration, whether it be an agreement to settle an existing claim or any other kind of agreement, is enforceable at law by action if it be an agreement for valuable consideration, and such valuable consideration may consist of the promise of the other party.'
That passage in Greer L.J.'s judgment is directly in point in this case. In my judgment it is the law of this country, as Lord Denning M.R. has said, where there is a bona fide compromise of an existing dispute and that compromise includes a compromise of what, as Mr.Joseph said, is basically an issue of fact, namely, whether or not there had in fact been unlawful moneylending, especially where the compromise has been reached under the advice of counsel and solicitors, that that compromise is enforceable against the party seeking subsequently to repudiate it. Any other course would cause very great difficulty in the administration of justice."
I turn therefore to the facts of the present case antecedent to the making of the Agreement.
This part of the history starts a year before, on 2nd November 1982, when a Mr Peach, an assistant solicitor in the Council's Town Clerk's office, wrote to Mr Tillson a letter on behalf of the Town Clerk in the following terms:
"I refer to the visit paid to you by Messrs. Peach and Graves on 25th October when you mentioned that you had occupied some 11 acres of land adjacent to Turner Road for some years without making any payment to the Borough Council. While the circumstances are not, at present, entirely clear to me, I understand that you had certain correspondence from the Council granting you permission to use the land and saying that some form of Agreement would be drawn up in due course. As we now know, the matter seems to have been forgotten and no formal Agreement exists.
It is necessary, of course, to regularise the position and the Council would propose to do this by granting to you a form of Licence in respect of which you would be required to pay a fee at the rate of £10.00 an acre per annum. The Licence will be for a period of 18 months and therefore the initial rent, payable half yearly, will amount to £165.00, i.e., 11 acres at £10.00 per annum."
He then says he will write as soon as possible with the Agreement for signature.
Mr Tillson passed that letter to his solicitors, Messrs Plummer & Co. of Colchester, who wrote on 9th November stating that they acted for Mr Tillson who had instructed them with regard to the letter of 2nd November. The solicitors continue:
"Our client has no knowledge of the correspondence to which you refer and perhaps you would be good enough to let us have copies so that we can consider the position and advise our client accordingly.
We understand that our client has used this land for some 25 years without any Consent from the Council or any other person and thus we would assume that our client has obtained title to the land in question through adverse possession.
At this stage we certainly could not advise our client to enter into any form of Agreement as stated by you."
That prompted a response from Mr Peach on behalf of the Town Clerk on 1st December 1982. It begins forthrightly:
"Thank you for your letter of 9th November last. I must refute in the strongest terms the information contained in the third paragraph of your letter [that is the claim that Mr Tillson had obtained title by adverse possession]."
Then there is a summary of various notices and of matters which I need not go into at length, and a repeated assertion that Mr Tillson conceded that the Borough Council were owners of the land and had himself made no suggestion whatever that he had obtained ownership of the land by adverse possession. On the contrary he admitted being there with permission from the Council. The letter concluded:
"In the circumstances, I must ask you again to let me know whether or not your Client is willing to enter into a form of Licence in relation to his occupation of the land. Plainly, if he is not willing to do so he will be required to leave the land in the near future."
There then followed various letters from the Town Clerk's department chasing the solicitors for a reply to the letter of 1st December 1982, and several months passed. In effect it would rather seem as if Mr Tillson was taking the view that if he shut his eyes the nasty problems would go away, but on 29th March 1983 his solicitors wrote to the Council stating that they had now received confirmation from Mr Tillson that he was willing to enter into the licence referred to, and they asked the Council to supply the documents to the solicitors for signature but stated that Mr Tillson considered that the rental asked was too high.
On 11th April Mr Peach wrote back on behalf of the Town Clerk expressing his pleasure at noting that Mr Tillson was now willing to enter into a licence in relation to the land and saying that he would prepare a draft licence but it was considered that the fee was entirely reasonable.
On 29th April a draft form of tenancy agreement was sent to Mr Tillson's solicitors for their approval with a plan to follow. Mr Peach's letter ended:
"I will be pleased to hear from you as soon as possible with your client's approval of the draft when I will arrange for the document to be engrossed in duplicate, one copy to be signed by each party."
A further chaser was sent which produced no response from Mr Tillson, and on 12th July 1983 Mr Peach sent a further letter to the solicitors, Plummer & Co., which was apparently delivered by hand that day, in which he said this:
"I am surprised that I have not heard from you with your client's agreement to the draft Licence. I now enclose a plan which shows the site apparently now occupied by your client and containing about 15.65 acres.
I think it fair to tell you that the Council is fast losing patience with your client, bearing in mind that he has been in possession of 11 acres or thereabouts without paying any rent for a number of years and is now being very tardy about the question of entering into the Licence. In the circumstances, unless I hear from you with your client's agreement to the terms of the Licence and with his remittance for the first two instalments within 14 days from the date of this letter, I shall have to consider taking possession of the land."
There is a footnote saying:
"It seems that since this correspondence began your client has occupied further land belonging to my Council, increasing the area to 15.65 acres or thereabouts."
That was acknowledged by the solicitors on 14th July and they say they had written to their client, but Mr Peach wrote again on 21st July acknowledging the letter of 14th July. He continued:
"I see that you are waiting to receive the signed Licence but no doubt you will remember the amendments which were mentioned in my letter of 12th July. I think it right for me to tell you that when the time mentioned in my letter has expired I propose to give one final warning direct to Mr Tillson that if he does not respond by returning the signed Licence the Council will re-possess the land."
That was passed on by his solicitors to Mr Tillson. On 5th August Mr Peach wrote again referring to his letter of 21st July and also to a recent telephone conversation with a member of the solicitors' staff when he explained that he had been requested to attend on Mr Tillson on Monday 1st August when it was intimated that he would sign the licence agreement:
"The relative who arranged this interview spoke to me in confidence and I shall be pleased if you would treat this part of the letter as confidential. I thought it proper etiquette to mention the matter to you, as I understand that you have given certain advice to your Client. On Monday, 1st August, 1983, the relative concerned telephoned this office to cancel the appointment.
As mentioned in my last letter, I have today sent a final written warning direct to Mr.Tillson, that if he does not respond by returning the signed licence, the Council will take physical possession of the land."
The letter to Mr Tillson of 5th August summarises the previous correspondence, including a reference to the letter of 12th July where it was pointed out to the solicitors that the Council was fast losing patience. The letter concludes:
"I now give you formal notice that at any time after 5 days from the date of this letter, the Council will take physical possession of the land and you will be barred from entering it for any purpose, unless before that time, you enter into an agreement with the Council for a tenancy of the land on the conditions previously set out in the draft form sent to you or conditions substantially similar thereto. I am prepared, to negotiate with you about certain terms of the letting, but not about the general principle that you must enter into such an agreement if you are to remain in possession.
You will understand, I am sure, that after the Council take physical possession, you will not be permitted to go upon the land for any purpose other than under a Licence from the Council. I must impress upon you that this is the final warning and that action after the seven days will be taken without further notice."
In fact there were certain steps taken by committees of the Council after that. There was a meeting of the Property and Development Committee on 31st August 1983, which resolved, after considering a report by the Town Clerk, that the Town Clerk be authorised to seek counsel's opinion regarding the matter and to report further as soon as possible; and another meeting of the same committee on 12th October 1983, whereby the Town Clerk reported that counsel's opinion had been received in respect of the matter and it was recommended that "the Council institute immediate proceedings to regain possession of the land, and also to claim damages for trespass and compensation for unauthorised use of the land."
The Clerk reports that it would be necessary also to authorise the employment of counsel. It was "RESOLVED to recommend that the Town Clerk be authorised to take all necessary action to institute proceedings for the recovery of possession of the Land, and to obtain damages for trespass and compensation for unauthorised use of the Land and that authority be also given for the employment of Counsel".
Consequently on 13th October Mr Peach wrote to the solicitors, Plummer & Co.
"I refer to our previous correspondence and write to say that I have now obtained Counsel's Opinion upon the facts surrounding your clients occupation of any Council land. Counsel is firmly of the opinion that your client is now a trespasser whose licence to occupy the land has been determined. Furthermore he is confident that your client has not obtained a possessory title by adverse possession.
In the circumstances the Council has been advised to start possession proceeding in the Chancery Division of the High Court and the necessary statement of Claim has been drafted. The Property and Development Committee considered this advice last night and have recommended to the full Council that possession proceedings should be started at once. I have no doubt that this recommendation will be approved by the Council when it meets on 31st October.
I thought I would write to you with this information so as to give your client yet one more and final opportunity to acknowledge the Council's freehold title before litigation begins. I know you will advise him of the likely penalty in costs and damages which he may suffer if the Council is obliged to issue a Summons in order to recover possession.
If you are able to persuade your client to alter his present intransigent attitude will you please let me know before 31st October otherwise proceedings will be started without further notice."
That was acknowledged on 14th October, and on 27th October there is a further letter from the Town Clerk, in fact Mr Peach, to the solicitors.
"I refer to my assistant Solicitor's telephone conversation with Mr.Overall, [Mr Overall is a representative of Plummer & Co.] from which I understand that your client now acknowledges the Council's title to the land, but that he remains anxious to enter into an eighteen month tenancy agreement along the lines previously set out.
Accordingly, I enclose the engrossed Agreement for signature by your client and return by 31st October next. Please ensure that his signature is duly witnessed. Please also forward a remittance...in payment of the three quarters rent payable in advance [for certain quarter days].
The chief addition to the draft Agreement is the insertion of a new Clause 4 dealing with the acknowledgment by your client of the Council's title."
That is picked up in a further letter from Mr Peach of 11th November in which he refers to the recent correspondence and to his call at Plummer & Co.'s offices on 3rd November "when he collected from you the Tenancy Agreement duly signed by your client. The Agreement was dated that day after having been signed on behalf of the Council". That, therefore, is how the Agreement came about.
It is plain to me that it was entered into by Mr Tillson under an immediate threat of proceedings by the Council for possession and to bring to an end and settle the dispute about his occupation of the red and blue lands which had dragged on for a year. Procrastination had come to an end and he was not prepared to face the trouble and expense of proceedings which he might not have won.
Mr Lewison suggests that with the Limitation Act 1939 or 1980, there is not the absolute difficulty there was with the Moneylenders Acts that no compromise could ever be possible. He said that there could be a compromise of a claim to have acquired a title by adverse possession under either Limitation Act if, as a term of the compromise, the squatter (Mr Tillson or whoever he may be) re-conveyed to the owner of the paper title all that interest whatsoever, if any, he might have acquired in the land in question or any part thereof. But if compromise is permissible I do not see why a compromise should have to take one particular form. I do not see anything in the law to compel Mr Tillson to insist on maintaining through the hassle and possible expense of litigation his assertion through his solicitors that he has acquired a title to all or part of some land under the Limitation Acts.
In my judgment this was a bona fide compromise of a dispute and Mr Tillson, who had the advice of his solicitors and signed the Agreement through them, is estopped by the terms of the agreement he made from going behind it and litigating the antecedent dispute. That is as the judge held and whether it be labelled estoppel by agreement or estoppel by convention is a matter of indifference. Mr Lewison's primary contention therefore fails and it is unnecessary to express any opinion on his second submission about the French Kier land.
For these reasons I would dismiss this appeal.
LORD JUSTICE STOCKER: I agree. It is clear from the correspondence which my Lord has cited that the Agreement of 3rd November was a compromise of the respective contentions being put forward by the parties. It follows, as I also agree, that the consequences of that are as he has stated.
Accordingly, I agree with the judgment of my Lord.
LORD JUSTICE BUTLER-SLOSS: I also agree with the judgment of Lord Justice Dillon and would only add a few words. Where parties to a dispute reach a compromise which brings that dispute to an end and avoids the need for litigation or further litigation, such a compromise is a valuable part of the resolution of disputes within the machinery of the administration of justice. The compromise has to be genuine, entered into freely by all parties to it without concealment of essential information or undue advantage taken by one party of another party, and preferably with the assistance of lawyers. Consequently, an agreement to compromise an action or a dispute which may lead to litigation is binding and is enforceable against the party seeking subsequently to repudiate it. As Lord Justice Roskill said in Binder v. Alachouzos [1972] 2 Q.B. 151 at page 160, "any other course would cause very great difficulty in the administration of justice".
In my view the courts have an interest in upholding agreements to compromise disputes. The terms of the agreement to compromise under review are therefore in a wholly different position from the situations caught within the scope of the Limitation Acts, such as payment of rent or acknowledgement of title. The agreement to compromise at 3rd November 1983 is therefore binding upon the appellant, and I also would dismiss this appeal.
Order: Appeal dismissed with costs; order for costs not to be enforced without leave of the court; legal aid taxation of appellant's costs.
