Trust for sale – Reverter – School Sites Act 1841 – Defendant local authority selling land conveyed by deceased grantor for use as part of school – Claimant heirs seeking declaration that defendant holding proceeds of sale on trust for them – Whether notional reverter to grantor occurring when school ceased to operate from original site – Claim dismissed
The claimants were heirs of a deceased (F) who conveyed land to the defendant 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. The 1928 conveyance permitted a new school building to be erected on the land conveyed by F while the pre-1928 school site continued in use as the school’s kitchen and dining room. F died in 1933 and the interest in any land which was subject to reverter, or in the trust of the proceeds of sale of any such land, vested in the claimants and other persons who did not wish take part in the proceedings.
The defendant decided to relocate the school by building new school facilities adjacent to the existing premises, in or about February 2006, transferring the children who attended the school to the new premises and marketing and selling the old premises. In 2007, the defendant sold 0.844 acres of land for £1,355,000. The claimants’ surveyor calculated that 93.17% of the 2007 land had been given to the defendant by F under the 1914 and 1928 conveyances. Based on that calculation, the claimants sought a declaration that the defendant held 93.17% of the proceeds of sale on trust for them. The defendant accepted that calculation, but 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 in accordance with the statutory purposes set out in section 2 and in the relevant conveyances.
The question involved considering two rival approaches: on the one hand, that land ceased to be used as the site for a school the moment the school was closed; and, on the other, that the power of sale existed to enable a school to be moved from one location to another, and that the intention behind section 14 would be frustrated if, in order to avoid the reverter of the land to the grantor, the school had to remain in use at the original site until the new site was ready.
Held: The claim was dismissed.
(1) Sections 2 and 14 of the 1841 Act did not admit of very close linguistic analysis, The court had to take a broad and practical approach to the question whether a school had ceased to be used for the purposes mentioned in section 2 and to the power of sale conferred by section 14. One possible effect of the power of sale might be to reduce the effectiveness of the provision for reverter contained in the third proviso to section 2 as an encouragement to landowners to make use of the powers conferred by the 1841 Act. The correct approach to the interpretation of the 1841 Act was that neither section 2 nor section 14 should be considered in isolation. However, if section 2 was considered alone, and bearing in mind that the 2007 land comprised, in substance, the second site transferred in 1928, in the present case the defendant might have been asked after February 2006 whether it was using the old site of the school for the purposes of a public elementary school for children of and in the Parish of Nettlebed and adjacent parishes. If “using” was given a narrow meaning, the answer to that question would be “No”. However, taking a broad and practical approach, the old site was being sold to raise money to pay for part of the cost of the new buildings, and the old site was therefore being used “for the purposes of” that public elementary school. That broader approach accorded with, and was reinforced by, the power of sale and exchange conferred by section 14 of the 1841 Act: Fraser v Canterbury Diocesan Board of Finance (No 2) [2005] UKHL 65; [2005] PLSCS 182; [2006] 1 AC 377 followed.
(2) Properly interpreted, section 14 of the 1841 Act did not require the trust property to be sold first and the money realised from the sale only then to be applied towards the cost of purchase or improvement of other suitable new land or buildings. Moreover, there were good reasons for reading section 14 less restrictively, so that it did not mean that a sale or exchange of school land or buildings always had to be carried out before or at the same time as the school was moved to new premises. It was foreseeable that making it more difficult for trustees who wished to sell an existing site in circumstances where their sole and earnest concern was to enable the school to be moved to a more suitable site might produce various consequences. If the trustees were required to keep the school in operation until the time of the move, that might cause them practical difficulties and might depress the price they were able to realise from the sale, all of which would be to the detriment of the trust. If the trustees were driven to resort to devices in an attempt to eliminate or reduce those adverse consequences, that might be detrimental to the education of the children; and, if the devices failed and reverter therefore occurred, that might produce a windfall for the descendants of the grantor. There was no obvious reason why any such effects should be intended by the legislation. The statutory power of sale or exchange could lawfully be exercised in the manner that the defendant sought to exercise it in the present case; and, in circumstances where it was thus exercised, section 6 of the 1987 Act had the effect of preventing the trust that would otherwise arise under section 1 from arising.
Matthew Smith (instructed by Lee Bolton Monier-Williams) appeared for the claimant; Nigel Thomas (instructed by Oxfordshire County Council) appeared for the defendant.
Eileen O’Grady, barrister
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