Attorney General v De Keyser’s Royal Hotel Ltd [1920] AC 508

The War Office took possession of De Keyser's Royal Hotel during WWI for housing Royal Flying Corps staff. The Crown claimed it acted under prerogative, owing only ex gratia compensation. The House of Lords held statutory powers under the Defence Act 1842 applied, entitling the owners to compensation.

Facts

In April 1916, the War Office decided to take possession of De Keyser’s Royal Hotel on the Thames Embankment to house the administrative headquarters of the Royal Flying Corps. Initial negotiations between the Office of Works and Mr Whinney (the receiver representing the hotel’s interests) for a voluntary agreed rent broke down when the parties could not agree on the sum (the gap being between £19,000 and £17,500). The Office of Works then wrote to Mr Whinney on 1 May 1916 stating that possession would be taken ‘under the Defence of the Realm Regulations’. Mr Whinney protested but, without offering physical resistance, handed over the keys on 8 May 1916, expressly reserving the company’s legal rights.

The Crown refused to recognise any legal claim for rent or compensation, maintaining that any payment could only be made ex gratia by reference to the Defence of the Realm Losses Commission. The respondents presented a Petition of Right claiming compensation either on the basis of an implied contract for use and occupation, or as a fair rent by way of compensation under the Defence Act 1842. Peterson J dismissed the petition, considering himself bound by In re A Petition of Right [1915] 3 KB 649 (the Shoreham Case). The Court of Appeal reversed, declaring the respondents entitled to a fair rent under the 1842 Act. The Crown appealed to the House of Lords.

Issues

The central issue was whether the Crown, having lawfully taken possession of the hotel for purposes connected with the defence of the realm, was bound to pay compensation ex lege, or whether payment was a matter of grace only. This turned on: (1) whether the Crown could rely on the Royal Prerogative to take the subject’s property for defence purposes without compensation; and (2) if such a prerogative existed, whether it had been abridged or superseded by the Defence Act 1842 and the Defence of the Realm Consolidation Act 1914 with its Regulations. A subsidiary issue was whether a Petition of Right was the appropriate procedural remedy.

Arguments

For the Crown (Appellant)

The Attorney-General argued that possession had been taken lawfully under the Royal Prerogative, which entitled the Crown in times of emergency and for the defence of the realm to take the subject’s property without any legal obligation to pay compensation. The statutory scheme under the Defence Acts provided an additional, alternative route, but did not abridge the prerogative. Reliance was placed on Hampden’s Case, The Saltpetre Case, The Zamora and In re A Petition of Right [1915] 3 KB 649. The Defence of the Realm (Acquisition of Land) Act 1916 was said to confirm the continued existence of the prerogative.

For the Respondents

The respondents contended that possession had been taken under statutory powers (as stated in the Crown’s own letter of 1 May 1916), and that the Defence Act 1842, together with the Defence of the Realm Consolidation Act 1914 and the Regulations thereunder, imposed a statutory obligation to pay compensation. Alternatively, there was an implied contract for use and occupation. They argued there was no historical precedent for the Crown taking land for defence without payment.

Judgment

The House of Lords unanimously dismissed the appeal, affirming the Court of Appeal’s decision.

Implied Contract

Their Lordships rejected the implied contract argument. Lord Dunedin held that the facts did not permit the inference of mutual assent: the Crown took as of right under statute, and Mr Whinney emphatically reserved his rights. Lord Atkinson similarly held that the possession was taken in invitum, and a trespasser setting up adverse title cannot be treated as a contracting party.

Historical Practice

Examining an extensive body of extracts from the Public Records, their Lordships found no trace of the Crown ever having taken land for defence purposes without payment. Lord Dunedin observed that there was ‘a universal practice of payment resting on bargain before 1708, and on statutory power and provision after 1708’. Lord Parmoor noted that even in Stuart times no such prerogative claim could be traced.

Prerogative and Statute

The pivotal reasoning concerned the relationship between prerogative and statute. Lord Dunedin endorsed the Master of the Rolls’ pointed question:

What use would there be in imposing limitations, if the Crown could at its pleasure disregard them and fall back on prerogative?

He adopted Dicey’s definition of the prerogative as

The residue of discretionary or arbitrary authority which at any given time is legally left in the hands of the Crown.

Their Lordships held that where a statute covers the whole ground previously covered by the prerogative, and empowers the Crown to do the same thing subject to conditions, the prerogative is curtailed. Lord Atkinson preferred to say that the prerogative is placed ‘in abeyance’ rather than ‘merged’.

The statutory history from 1708 to 1842 showed that Parliament had provided comprehensively for the acquisition of land (whether permanent or temporary, in peace or war) for defence purposes, always on terms of compensation. The Defence Act 1842 was the culmination of this scheme. Consequently, there was no room for an unrestricted prerogative running alongside the statutory regime.

The 1914 Act and Regulations

The Defence of the Realm Consolidation Act 1914, section 1(2), permitted Regulations to suspend ‘restrictions’ on the acquisition or user of land under the Defence Acts. Their Lordships held that the obligation to pay compensation was not a ‘restriction’ within the meaning of that provision. Restrictions referred to procedural requirements such as notices and certificates. Accordingly, the Regulations enabled the Crown to bypass procedural formalities but did not extinguish the subject’s right to compensation. Lord Sumner observed that the prerogative does not extend to a right to elect not to pay: a ‘prerogative right to take without paying must have been a right to take without paying out of the Royal funds, but, in truth, prerogative can, at most, extend to taking, and stands quite apart from payment.’

The 1916 Act

Section 1 of the Defence of the Realm (Acquisition of Land) Act 1916 did not enlarge the prerogative or deprive the subject of compensation. Its reference to ‘purported exercise’ of prerogative rights merely enabled continued possession after the war however originally taken.

Petition of Right

A Petition of Right was the proper procedural remedy, since the taking was lawful and what was claimed was a resulting legal obligation rather than damages for tort.

Implications

The decision establishes the constitutional principle that where Parliament has legislated comprehensively over a subject matter previously governed by the Royal Prerogative, the Crown must act under the statute and is bound by its conditions, including any obligation to pay compensation. The prerogative does not operate alongside the statute to enable the Crown to evade statutory conditions.

The case is of fundamental importance in British constitutional law. It affirms the supremacy of Parliament over executive discretion and supports the principle of legality: the Crown cannot, by invoking ancient prerogative, take private property without compensation where statute has regulated the field. Lord Parmoor observed that the growth of constitutional liberties has ‘largely consisted in the reduction of the discretionary power of the executive’. The decision also reinforces the interpretive presumption that statutes should not be construed to permit confiscation of property without compensation absent clear words, as noted by Lord Atkinson citing Bowen LJ in London and North Western Ry. Co. v. Evans.

The case limits but does not abolish the prerogative in matters of defence. Their Lordships were careful not to define exhaustively the limits of the prerogative, and recognised that in cases of genuine immediate military necessity (such as raising bulwarks against invasion) different considerations might apply. Lord Sumner distinguished between urgent defensive acts and the mere housing of administrative officials. The principle established is therefore significant but operates within the framework of Parliament’s actual legislative intervention.

The decision is of continuing importance for practitioners advising on the exercise of executive powers, particularly where both prerogative and statutory bases might be invoked. It remains a leading authority on the relationship between the prerogative and statute, frequently cited in modern constitutional litigation concerning the scope of executive power.

Verdict: The appeal was dismissed with costs. The House of Lords affirmed the judgment of the Court of Appeal, holding that the respondents were entitled to a fair rent by way of compensation under the Defence Act 1842 for the Crown’s use and occupation of De Keyser’s Royal Hotel.

Source: Attorney General v De Keyser’s Royal Hotel Ltd [1920] AC 508