London Tara Hotel Ltd v Kensington Close Hotel Ltd

Hearing date: 31 October 2011

Introductory

In a comprehensive judgment handed down on 1 November 2010, Roth J concluded that Kensington Close Hotel Ltd ("KCH"), the owner of the Kensington Close Hotel ("the KC Hotel") had established a right of way by prescription over a private roadway ("the roadway") belonging to London Tara Hotel Ltd ("Tara")— [2010] EWHC 2749 (Ch). This conclusion was based on his finding that KCH (or its predecessors) had used the roadway for twenty years or more without force, openly, and without the permission of the owner of the roadway. In other words, in the time-honoured expression so familiar to property lawyers, he concluded that KCH and its predecessors had used the roadway nec vi, nec clam, nec precario.

I mention in passing that Tara's skeleton argument on this appeal suggested that Mr Gale imported this expression into English law when he first wrote his treatise on the law of easements in 1839. However, as Lewison LJ pointed out, the ancestry of the phrase can be traced back to Bracton (see De legibus et consuetudinibus Angliae lib 4 f 221) and Coke (see Co. Litt 114a), long before Mr Gale put pen to paper.

The background facts

The factual background to the issues is very fully set out in the judgment below— [2010] EWHC 2749 (Ch), paras 2–42. For present purposes, the facts can be shortly stated.

The KC Hotel was built in the late 1930s; its main entrance is at its northern end, abutting Scarsdale Place, which is accessed from Wright's Lane, which runs south off Kensington High Street, London W8. Roughly to the east of the KC Hotel is the Copthorne Tara Hotel ("the Tara Hotel"), which was constructed in the early 1970s, and is accessed via the roadway from the west along Scarsdale Place. The roadway goes east from Scarsdale Place right round the Tara Hotel and back into Scarsdale Place. Importantly for present purposes, part of the roadway passes between the two hotels, and abuts the KC Hotel on its eastern side.

By a written agreement dated 30 January 1973, Tara granted a personal licence ("the Licence") permitting Kensington Close Limited ("KCL"), the then owner of the KC Hotel, to use the roadway "from year to year". The Licence recorded that the roadway was to be used as a one-way system, and it is common ground that the terms of the Licence did not permit KCL to use the roadway with coaches. The Licence provided for payment by KCL to Tara of £1 on 31 January each year, if demanded, "as an acknowledgment that the enjoyment of the [roadway] is had under this [Licence] and not otherwise". In fact, the payment of £1 was never demanded, and thus never made.

At the time the Licence was granted, Tara was the owner of the Tara Hotel and KCL was the owner of the KC Hotel. After the grant of the Licence in 1973, no one appears to have given it any thought until 2006. Those managing the Tara Hotel were aware that there was some sort of agreement which permitted use of the roadway for the benefit of the KC Hotel, but they did not appreciate that the Licence was personal to KCL. That appreciation did not come until much later; even after 2006.

Following the grant of the Licence there were a number of changes in the ownership of the KC Hotel. Although KCL had become part of the Trust Houses Forte group ("THF") in 1969 (before the grant of the Licence), the ownership and operation of the KC Hotel remained with KCL until 31 October 1978, when KCL ceased trading and the running of KC Hotel was transferred to another THF company, which became the owner in 1980. KCL was eventually dissolved on 14 July 1988. In early 1996, in a hostile takeover that attracted much publicity, Granada Group plc acquired THF. In September 1996 the KC Hotel was transferred to Post Houses Ltd, and in September 2002, the KC Hotel was acquired by its present owner, KCH.

The judge found that although some of Tara's employees would have known that the company running the KC Hotel had changed from time to time, their knowledge could not be attributed to senior management, and hence could not be attributed to Tara itself as a corporate entity. However, he concluded that the hostile takeover by Granada Group and the subsequent rebranding of the KC Hotel as a Posthouse in 1996 put Tara on notice that "there was possibly a change in the owner" of the hotel, and that when it was acquired by the Cola group in 2002 Tara had express knowledge of the change in ownership— [2010] EWHC 2749 (Ch), paras 27–28.

The conclusions reached below

It is well established that, if the owner of land uses a road as a means of access to, and egress from, his land for more than twenty years "as of right", then, at least in the absence of special circumstances, he will obtain a right of way over the land for the benefit of his land. The main question before the judge was whether the use of the roadway by KCH and its predecessors from 1980 was as of right. The judge approached the question of whether the use was as of right by asking whether it had been nec vi, nec clam, nec precario.

It was common ground that the use of the roadway by KCH and its predecessors after 1980 was effected without force, i.e. that it was nec vi. The judge therefore had to consider whether the use was nec precario, i.e. whether the use was without the permission of the owner of the roadway, and whether the use was nec clam, i.e. whether the use was open.

He dealt first with the question of permission (i.e. whether the use was precario).

Because the Licence was personal to KCL the judge held that, once KCL had ceased to be the owner of the KC Hotel in 1980, the Licence must, as a matter of law, have lapsed and could no longer govern the use of the roadway. From then on, the use by the owner or operator of the KC Hotel could no longer therefore be permissive. Tara argued that because there was nothing to suggest to it that there had been a change in ownership of the KC Hotel the continuing use should be treated as a continuation of the licensed use, even though in strictly legal terms the Licence had ceased to apply. The judge rejected that argument, saying this at [2010] EWHC 2749 (Ch), para 62:

"[The] use of the [roadway] by and for the benefit of the [KC Hotel] after May 1980 was either pursuant to permission from [Tara] or it was not. I do not see that a mistaken belief that the use was governed by an express agreement granting a licence when as a matter of fact or law it was not can affect the position. That would introduce into the operation of prescription a subjective element which forms no part of this area of the law and would add to its complication."

The judge also considered whether, on the facts, it would be right to imply a licence. His conclusion on that question, at [2010] EWHC 2749 (Ch), para 72, was:

"…that for a licence to be implied there must be some positive, overt act by the servient owner; mere inactivity will not do. In my view, the fact that a carefully drafted personal licence was granted to a particular licensee in 1973 cannot be regarded as a positive act evidencing an implied licence from a different servient owner in 1978 or 1980 (or any time thereafter) for use by a party not within the terms of the earlier licence. And there was no other positive act on which the claimant could rely."

The judge then considered whether the use of the roadway was open (i.e. not clam) in the relevant sense. He said this at [2010] EWHC 2749 (Ch), para 79:

"In the direct meaning of the term, the use by the [KC Hotel] was self-evidently not [secret]. It was open and frequent use, for all at the Tara Hotel to see. It is not in issue that the management of the Tara Hotel was well aware that the [roadway] was being used by service vehicles supplying the [KC Hotel] and I find that it also had actual knowledge that the [roadway] was being used from at least 1980 by coaches serving the [KC Hotel]. No objection to this use was taken until the events giving rise to this claim."

He accepted that, if a change of ownership was itself surreptitious, that might mean that use after the change was also surreptitious in the relevant legal sense. But he said this at [2010] EWHC 2749 (Ch), para 81:

"Not only was there nothing surreptitious in the fact that ownership of the [KC Hotel], and thus use of the [roadway], passed away from KCL but I find that such a corporate transfer at some time within at the very least a 20 year period was something that should reasonably have been in the contemplation of the claimant and which, if it had been diligent in the protection of its interests, it would have checked. As Mr David Cook, the former finance director of Millenium & Copthorne group, who had some 40 years experience in the hotel industry, acknowledged, when hotels are owned by a group there are sometimes transfers from one company to another, and the actual operating company of a hotel may change over time. He accepted that these are things which would be readily appreciated and understood by anyone in the...