Case Facts
In April 1916, the Army Council determined that accommodation was required in London for the headquarters personnel of the Royal Flying Corps and its Design Section. The Board of Works was engaged to identify a suitable building, and De Keyser's Royal Hotel in London was selected for this purpose. On 1 May 1916, the War Office wrote to the Receiver instructing him that the Army Council was taking possession of the hotel under the Defence of the Realm Regulations. The Receiver yielded up possession under protest and without prejudice to any rights the owners might have.
The hotel's owners, De Keyser's Royal Hotel Limited, brought their claim against the Crown by way of Petition of Right. They sought, first, a declaration of entitlement to an annual rent for use and occupation for as long as the premises remained occupied by or on behalf of the Crown, and secondly, a declaration that they were entitled to a fair rent for use and occupation by way of compensation under the Defence Act 1842. The Crown's position was that no rent or compensation was by law payable to the suppliants, whether under the Defence Act 1842 or otherwise. The Crown offered only an ex gratia payment through the Defence of the Realm Losses Commission, denying any legal entitlement on the owners' part.
At first instance, Peterson J dismissed the Petition of Right. The Court of Appeal reversed that decision, with Sir Charles Swinfen Eady MR and Warrington LJ (Duke LJ dissenting) declaring that the suppliants were entitled to a fair rent for use and occupation of the hotel by way of compensation under the Defence Act 1842. The Attorney-General appealed to the House of Lords.
Held
The House of Lords affirmed the decision of the Court of Appeal. The Crown is not entitled, as of right, either by virtue of its prerogative or under any statute, to take possession of the land or buildings of a subject for administrative purposes connected with the defence of the realm without paying compensation for their use and occupation.
Two distinct holdings emerged. First, the suppliants were not entitled to rent for use and occupation independently of any statute, as there was no consensus between the parties capable of founding an implied contract.
Secondly, and more fundamentally, Regulation 2 of the Defence of the Realm Regulations, when read together with s 1(2) Defence of the Realm Consolidation Act 1914, conferred no new powers upon the Crown for acquiring land. However, those provisions did authorise the taking of possession of land under the mechanism provided by the Defence Act 1842, while impliedly suspending certain restrictions that the 1842 Act imposed upon the acquisition and use of land. Accordingly, the Crown had no power to take possession of the hotel under the prerogative simpliciter, and the suppliants were entitled to compensation in the manner provided by the Defence Act 1842.
Ratio Decidendi
The central principle established by this case — frequently called the "De Keyser principle" — is that where Parliament has legislated over a subject matter that was previously regulated by royal prerogative, the Crown must act in accordance with the statutory framework and cannot bypass that framework by reverting to the prerogative. The prerogative is said to fall into "abeyance" to the extent that statute covers the same ground.
In this case, both the Defence Act 1842 and the Defence of the Realm Consolidation Act 1914 provided a statutory basis for the requisition of private property for defence purposes. s 19 Defence Act 1842](https://www.legislation.gov.uk/ukpga/Vict/5-6/94/section/19), included provisions for the payment of compensation. Because Parliament had established this statutory scheme — complete with compensation obligations — the Crown could not evade those obligations by purporting to act under the prerogative alone.
The House of Lords reasoned that where the Crown has been given statutory powers to do something that it could previously have done by prerogative, and those statutory powers come with conditions (such as the obligation to compensate), the Crown is obliged to exercise the statutory powers subject to those conditions. It cannot elect to proceed under the prerogative in order to avoid the burdens which Parliament has attached to the exercise of comparable statutory powers. This principle operates to protect the subject's rights against executive action unconstrained by parliamentary oversight.
The practical consequence for property owners was significant: the statutory scheme — not the bare prerogative — governed the Crown's right to requisition private property, and that scheme entitled the owners to compensation. The Crown's contention that it could lawfully take possession of private property for administrative and defence purposes without any legal obligation to compensate was therefore rejected.
Obiter Dicta
The House of Lords made broader observations about the relationship between statutory powers and prerogative powers that have proved highly influential in subsequent constitutional law. Their Lordships indicated that where a statute and a prerogative power cover the same subject matter, the statute prevails and the prerogative is suspended for so long as the statute remains in force. It was further observed that this is so even where the Crown does not directly intend to displace the prerogative — the mere fact of Parliament legislating in the area is sufficient to bring the statutory regime into operation to the exclusion of the prerogative.
These observations have been applied and developed in later cases, notably CCSU v Minister for Civil Service [1984] and R (Fire Brigades Union) v Secretary of State for the Home Department [1995], in which the courts further examined the extent to which prerogative powers are subject to judicial oversight and the conditions under which Parliament's legislative intent limits executive discretion. The De Keyser principle has since become a foundational doctrine of English constitutional law governing the relationship between statute and prerogative.