Land – Reverter – Trust for sale – Respondent local authority selling land conveyed by deceased grantor for use as part of school – Appellant heirs seeking declaration that respondent holding proceeds of sale on trust for them – High Court dismissing claim – Appellant appealing – Whether land ceasing to be used for statutory purpose within section 2 of School Sites Act 1841 prior to sale – Appeal allowed
The appellants were heirs of a deceased (F) who conveyed land to the respondent local authority in 1914 and 1928 under section 2 of the School Sites Act 1841 for use as part of Nettlebed School. Although the operation of the 1841 Act had been amended by the Reverter of Sites Act 1987, it remained in force. Under section 2, land could be conveyed either as a site for a school or for the purposes of education and would revert to the grantor, or their successors, on a trust for sale when that use ceased. Under section 14, the statutory right of reverter was avoided if the land continued to be used for educational purposes.
In 2006, the respondent decided to relocate the school by building new school facilities adjacent to the existing premises, transferring the schoolchildren to the new premises and selling the old premises. In 2007, the respondent sold the land. The appellants sought a declaration that the respondent held the sale proceeds on trust for them as the closure of the old school building on the original site meant that it ceased to be used either as a site for a school or otherwise for the purposes of education within section 2. The respondent argued that the closure, sale and use of proceeds was an event or series of events which did not cause a reverter to arise under the 1841 and 1987 Acts. The holding of a school site pending the exercise of its power of sale under section 14 of the 1841 Act was within the statutory purposes in section 2.
The High Court found that the vacation and subsequent sale of the old site was part of a composite scheme or arrangement which began as early as the 1990s, when the respondent first identified the possibility of using the new site for the school. From February 2006, when the old school buildings were vacated, until the old site was sold, the land continued to be used for the section 2 statutory purposes because the respondent intended to use the sale proceeds to meet part of the costs of constructing the new school. Therefore, section 14 of the 1841 Act operated to prevent a trust arising under section 1(1) of the 1987 Act: [2018] EWHC 455 (Ch); [2018] PLSCS 48. The appellants appealed.
Held: The appeal was allowed.
(1) Section 14 could be read as accommodating a prior purchase of the new site using, for example, borrowed money and the reimbursement of that expenditure from the sale of the old site. The trustees could still be said in such circumstances to be selling the old site for other land or building suitable to the purposes of their trust and to apply the proceeds of sale of the old site in the purchase of another site. But to give section 14 that broad construction did not avoid the problem created by section 2. Unless the sale took place prior to the old site ceasing to be used for the specified statutory purposes, a reverter under section 2 would occur. Until 1987 that had the effect of depriving the trustees of their title to the land. As a result of the 1987 Act, they continued to hold the legal estate but on trust for the grantor. Either way, a sale of the land to a third party free of the rights of the grantor or his successors in title ceased to be possible. In order to prevent a reverter occurring before the sale of the site under section 14 could take place, it was necessary for the school to remain in operation at the time of the sale: Dennis v Malcolm [1934] 1 Ch 244 applied.
(2) The 1841 Act was intended to encourage the conveyance of land for a specified and limited purpose or purposes and on terms that title to the land should revert to the grantor in the event that the use of the land no longer complied with one or more of those specified purposes. Since the sale of the old site post-dated the removal of the school to the new site by more than a year, it was unrealistic to say, as a matter of ordinary language, that the land continued to be used as a site for a school or otherwise for the purposes of education. It was important to bear in mind that the statutory purposes set out in section 2 of the 1841 Act were charitable educational purposes. They required, in terms, that the land should be used as a site for a school, a schoolhouse or otherwise for educational purposes. In each case they limited the use of the land to an identifiable function or purpose: Fraser v Canterbury Diocesan Board of Finance (No 2) [2005] UKHL 65; [2005] PLSCS 182; [2006] 1 AC 377 considered.
(3) The issue was whether the land continued to be used as the site for a school or for educational purposes: not whether it provided a means of reimbursing the respondent for its expenditure on the new school. Expenditure on the improvement of other premises used for the purposes of the trust was a permissible use of the proceeds from the sale of the existing school site under section 14. But that power was only exercisable up to the moment when the land ceased to be used for those statutory purposes. By keeping the old site vacant pending a sale, the respondent did not continue either to use the land as a site for a school or to use it for educational purposes. Both required the active use of the land for the education of children. Although that could include ancillary activities, such as the use of the site as a playground or for meals, in this case the old site remained vacant with no further possible use for educational purposes.
Matthew Smith (instructed by Lee Bolton Monier-Williams) appeared for the appellants; Nigel Thomas (instructed by Oxfordshire County Council) appeared for the respondent.
Eileen O’Grady, barrister
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