As if that were not gain enough, they are then rewarded without any obligation to compensate the former owner in any way at all

Lord Bingham

The Court of Appeal overturned that decision a year later after ruling the farmers had never shown an intention to dispossess the property company and claim squatters' rights.

But on Thursday five Law Lords headed by Lord Bingham said it was with "no enthusiasm" they had reinstated the original High Court decision giving the farmers ownership of the land.

The development company, J A Pye (Oxford) Ltd, had taken no steps to evict the family from the land from 1984 while it negotiated with local planners to build houses there.

Until 1977, Pye was the owner of Henwick Manor and surrounding farmland but in 1977 sold the farmhouse and 67 hectares, keeping the disputed land which was considered to have development potential.

'Acted honourably'

In 1982, John Graham bought the farm at auction for his son, Michael, who married Caroline in 1987 and farmed it until the son died in a shooting accident in 1998.

The company had granted grazing rights to the family but correspondence ceased in 1985 and the Grahams continued to use the land for farming without permission.

The legal battle began in 1997 when Michael Graham registered cautions over ownership of the land at the Land Registry on the basis that he had obtained it by the law of adverse possession - squatting.

Under the law, a squatter must show that for at least 12 years he has been in possession of the land adversely to the person who would otherwise be the owner.

No payment

Lord Bingham said in his ruling: "The Grahams have acted honourably throughout. They sought rights to graze or cut grass on the land after the summer of 1984, and were quite prepared to pay.

"When Pye failed to respond they did what any other farmer in their position would have done: they continued to farm the land."

He said because of Pye's inaction, the family had enjoyed the use of the land without payment for 12 years.

"As if that were not gain enough, they are then rewarded without any obligation to compensate the former owner in any way at all."