School Sites Act 1841 – Reverter giving rise to trust for sale – Liability for proceeds of sale of land – Whether reverter occurring when first or second defendant owner of land – Whether earlier events precluding possibility of reverter
The first defendant was the trustee of land that had been donated in the 1800s to found a school for the education of poor persons, as provided for by section 2 of the School Sites Act 1841. The claimants were the assignees of the persons to whom the ownership of the land would have reverted under the 1841 Act when it ceased to be used for the purposes of that Act. In 1995, the land was sold to the second defendant for £121,000. The original school closed three weeks later and was replaced by a special needs school. In 2000, that school also closed. The second defendant then sold the land in 2005 for £400,000.
The claimants brought proceedings, claiming to be entitled to the proceeds of sale of the property pursuant to section 1(4) of the Reverter of Sites Act 1987. That Act had abolished the right of reverter but had replaced it with a right to the proceeds of sale under a trust for sale, provided that the right of reverter had not already become time-barred, by application of the 12-year limitation period under the 1841 Act, prior to the date at which the 1987 Act came into force. In an earlier decision, the House of Lords determined that the claimants’ right had not become time-barred, since the statutory purpose of providing a school for the education of poor persons had not ceased before 1975: see [2005] UKHL 65; [2005] PLSCS 182.
A further hearing was held to determine whether the claimants’ claim, which remained subject to issues of proof of title and quantum, lay against the first defendant for the proceeds of the 1995 sale or against the second defendant for the proceeds of the 2005 sale. In connection with that hearing, the second defendant sought to retract an earlier admission with regard to the existence of the possibility of reverter under the 1841 Act. It contended, for the first time, that reverter had ceased to be possible in 1952 as a result of a scheme put in place by the minister of education by an order under section 86(1) of the Education Act 1944, directing that the provisions of the Endowed Schools Acts 1869 to 1874 should apply. That scheme repealed “every Act of Parliament, Letters Patent, Statute, Deed, instrument or trust” that affected the educational foundations specified in a schedule, including the school in question.
Held: The claimants’ claim lay against the second defendant.
(1) The 1952 scheme had not affected the rights of revertees under the 1841 Act. The scope of the power to repeal under a scheme was confined, by section 46 of the Endowed Schools Act 1869, to legislation relating to the subject matter of that scheme. That subject matter could not extend beyond “any educational endowment”, which was defined as property dedicated to the relevant charitable uses. In the case of a school whose site had been granted to trustees under the 1841 Act, the only property dedicated to charitable uses was the determinable fee vested in the trustees. The grantor’s possibility of reverter was not part of the endowment but stood entirely outside the charitable trust established by the deed of grant. Consequently, a scheme under the 1869 Act could not affect the grantor’s rights of reverter: Bankes v Salisbury Diocesan Council of Education Inc [1960] Ch 631 considered.
(2) Any liability to the claimants lay with the second defendant for the proceeds of the 2005 sale. Reverter had occurred only when the land ceased to be used for the statutory purpose as a school for the education of the poor; the relevant date was that upon which the original school had permanently closed with no intention to reopen it for the relevant purposes. That had occurred in July 1995, after the sale to the second defendant. There was no basis for contending that reverter had occurred earlier than July 1995, such as on the date of the 1995 sale.
(3) Even if reverter had occurred earlier, that would not assist the second defendant. It could not have taken the land free of any trust for sale affecting the first defendant, since the requirements of section 27(2) of the Law of Property Act 1925, requiring the payment of the proceeds of sale to no fewer than two trustees, had not been complied with. The exception in section 27 relating to trust corporations did not apply because the first defendant was authorised to act as a trust corporation only in respect of charitable, ecclesiastical and public trusts and not in respect of a purely private trust such as the trust for sale. Accordingly, it could not have given a good receipt for the sale proceeds so as to overreach the beneficial interests of the revertees, and the second defendant would have continued to hold the land on trust for the revertees.
Christopher Nugee QC and Jonathan Davey (instructed by William Blakeney) appeared for the claimants; Francesca Quint (instructed by Brachers, of Maidstone) appeared for the second defendant; the first defendant did not appear and was not represented.
Sally Dobson, barrister
