Overriding Interests – ‘actual occupation’ revisited

In Pennistone Holdings Ltd v Rock Ferry Waterfront Trust [2021] EWCA Civ 1029, the Court of Appeal revisited the question of when land is in ‘actual occupation’ for the purpose establishing an overriding interest under paragraph 2 of Schedule 1 to the Land Registration Act 2002. 

A Mr Denis Murphy had owned land – ‘the old Vestor Oil site’ — at Birkenhead on the Mersey estuary which had development value but was subject to potential expensive remediation costs. The land was registered. Mr Murphy initially held the land via a Seychelles company, then a Manx company Toluca Ltd and then in 2015 an English company Pennistone. But although the site had been transferred by Toluca to Pennistone Mr Murphy instructed his solicitors not to register Pennistone’s title since he wanted to avoid the potential remediation costs. Thus Toluca remained the registered proprietor.

Following the transfer to Pennistone, in 2016 Toluca was dissolved and the land escheated to the Crown. 

At this period the land was effectively derelict, occupied only by a couple of disused storage containers and watched over by a caretaker Mr Robertson who had fixed padlocks to the gates. 

In 2019 the Crown transferred the land to Rock Ferry Waterfront Trust, the respondent to the appeal and claimant below, for £5,000. When Mr Murphy learned of this he asserted Pennistone’s interest in the land and removed a padlock that Rock Ferry had placed on the gate. Rock Ferry brought possession proceedings against Pennistone which were successful, Pennistone’ claim to have been in actual occupation at the date of the transfer to Rock Ferry being dismissed. 

The judge at first instance (HHJ Hodge QC) held that Pennistone did indeed have a beneficial interest in the land but found that (i) Pennistone had not carried out any work to the land and (ii) that the only physical presence on the land was an abandoned and immovable digger and two abandoned containers which were being used by Mr Robertson to store his tools and equipment.. 

On appeal Pennistone argued that the caretaker’s role had been overlooked and that Pennistone had been in actual occupation of the land via Mr Robertson, the authority for this proposition being Lloyds Bank v Rossett [1989] Ch 350 at 377 per Lord Nicholls: 

“I can detect nothing in the context in which the expression ‘actual occupation’ is used.. to suggest that the physical presence of an employee or agent cannot be regarded as the presence of the employer or principal when determining whether the employer or agent is in actual occupation.” 

The Court of Appeal, the lead judgment being given by Lewison LJ, held that Mr Robertson had not, as a matter of fact, been in occupation of the site and to the extent that he used the land at all he used it for his own purposes as licensee [35]. 

Lewison LJ went on to say [39] that even in the case of derelict land some physical presence with some degree of permanence and continuity was required to amount to actual occupation. 

The appeal was dismissed. 

‘Actual occupation’ cases are now comparatively rare but the decision in Pennistone provides a useful guide at appellate level to the principles which the Court should apply when faced with such a case. The case also includes an interesting discussion of the law relating to escheat at [18] – [22] which applies to land owned dissolved offshore companies to whom the Companies Act 2006 does not apply; that is or more general application. 

Article by John de Waal KC.