Cases - London Tara Hotel Ltd v Kensington Close Hotel Ltd

Record details

Name

London Tara Hotel Ltd v Kensington Close Hotel Ltd

Date

[2011]

Citation

EWCA Civ 1356

Legislation

Prescription Act 1832

Keywords

Commercial property - Landlord and tenant - Easements - rights by prescription - use of road on basis of prescription granted to previous owner

Summary

In 1973, LTH granted a personal licence to KCH’s original owner which entitled KCH to use - with or without vehicles - a ring road belonging to LTH. In the years following this arrangement, the ownership of KCH changed several times. Even though the licence was personal to the original owner of KCH, the open and continuing use of the road by KCH was not questioned or disputed by LTH or any of its subsequent owners.

However, in 2007, LTH claimed that KCH was trespassing on its land. LTH contended that it had been unaware that the ownership of KCH had ever changed and that this explained why it had not previously objected to the continued use of the road by KCH. KCH argued that it had acquired a right to use the road by prescription in any event, either under the Prescription Act 1832 or by lost modern grant.

The judge reviewed recent case-law on acquiring rights by prescription, and noted that the acquisition of a prescriptive right does not arise where the right is used by force, stealth or with the consent of the owner; it must be enjoyed ‘openly and in the manner that a person rightfully entitled would have used it’.

The judge found that KCH had used the ring road as if it was entitled to do so, without force, openly and continuously. On the issue of any stealth as to the changes in the ownership of KCH, Roth J concluded:

‘The ... subjective belief of the user of the right is irrelevant. The focus is on how the matter would have appeared to the owner of the servient land. Here, the right of way was exercised over the road openly and continuously. The claimant had a copy of the 1973 Licence in its possession and therefore had every opportunity to look at it and take appropriate legal advice. Had it done so, it would have realised that this was a personal licence; and thus that the use of the road could not be pursuant to the 1973 Licence if there had been a change in the corporate ownership of the KCH land. The fact that, whether through inadvertence or indifference, or for whatever reason, no one appears to have looked at the Licence or made such inquiry until much later cannot, in my judgment, change the way in which, on an objective view, the matter would have been regarded by a 'reasonably alert owner…diligent in the protection of his interests'. Accordingly, the fact that the change(s) in the corporate ownership of the KCH may not have been obvious or on display does not, in my judgment, preclude the inference, on an objective view, of acquiescence on the part of the claimant such as to establish a prescriptive right.’

It was noted obiter that the use of land after a transfer might be treated as being secret where ownership of dominant land was transferred within a family with no outward sign that the transfer had occurred and there was no basis on which the owner of the servient land could have contemplated such a transfer.

The other critical issue was whether the use of the road had been with LTH’s consent. LTH argued that the continued use of the road merely resulted from KCH’s mistaken belief that the consent under the licence was still effective. However, the judge noted that the licence had not - as a matter of fact or law - governed KCH’s use of the ring road because it had lapsed once there was a change of ownership; KCH’s mistaken belief was therefore irrelevant and its use of the road was without LTH’s permission. In accordance with the case-law, this meant that a right could be acquired by prescription after the lapse of the licence.

The judge noted that LTH could have sought to protect its position by undertaking some positive step to indicate an implied licence to KCH to continue to use the road after its ownership changed, such as demanding the payment provided for in the licence in return for the use of the rights. However, LTH’s inactivity during the 20 year period since KCH’s first change of ownership in 1980 was considered insufficient to allow the implication of any such licence. The judge therefore concluded that KCH had acquired a right of way (for commercial vehicles and coaches only) over the ring road by way of lost modern grant, on the basis of 20 years’ use of the road by KCH after the lapse of the licence when its ownership changed.

The Court of Appeal upheld the High Court's decision that KCH had acquired a right of way by prescription over the roadway of the neighbouring hotel.

The case is a useful reminder that prescriptive rights can be acquired after 20 years' use provided that the use is not by force, stealth, or permission. It also highlights that if an owner has granted a personal right to a licensee to pass over the owner's land, he should check every few years that ownership of the dominant land has not changed, otherwise a new user, without permission, can acquire a prescriptive right. Note also that the party claiming the right can rely on use by a third party to claim a prescriptive right, where the third party's use benefits the dominant land.