Allyson Colby analyses a Supreme Court decision on reverter and the School Sites Act 1841.
Key points
- The right of reverter in section 2 of the School Sites Act 1841 is not a bar to sales with vacant possession
- A school can relocate to new premises and the site from which it previously operated need not remain in active use until sale
- However, there must, at all relevant times, have been a firm and settled intention to use the sale proceeds to pay for the new school premises
Victorian legislation recognised the importance of education by facilitating the provision of land for schools. The School Sites Act 1841 encouraged gifts of land for such use, but provided for land to revert to the donors, or their heirs, if and when it ceased to be used for such purposes.
However, weaknesses in drafting and the passage of time caused difficulties with the right of reverter. So parliament enacted the Reverter of Sites Act 1987 to facilitate sales of land no longer required by schools and to transfer claims by the donor’s heirs to the proceeds of sale of such land instead. Even so, the legislation still throws up problems.
Rittson-Thomas and others v Oxfordshire County Council [2021] UKSC 13; [2021] PLSCS 78 concerned land in Oxfordshire, which was gifted to an existing school in the early 1900s. Nearly a century later, the council decided to construct a new school with improved facilities on neighbouring land and, having relocated its pupils, to sell the old school to help fund the project – which it did. The sale of the land formerly used by the school realised £1.33m. But the pupils were relocated in 2006 and the land was not sold until 2007, by which time the old school building had stood empty for more than a year.
Could the council use the proceeds of sale to defray borrowing in relation to the new school? Or did the council hold the sum of £1.24m (which was attributable to the land gifted by the donor) on trust for the donor’s heirs because their entitlement arose “immediately” on the land ceasing to be used as a school?
The council explained that it had always been its intention to use the proceeds of sale to offset the costs of the new school, as was made clear in relevant documentation. The 1987 Act does not undermine the operation of section 14 of the 1841 Act, which facilitates the sale of schools so that they can relocate elsewhere, and the council claimed that it would frustrate the purposes of the 1841 Act if a school must remain in active use until sale in order to safeguard the proceeds of sale.
Judicial approach
The High Court ruled that the site was still being used for the purposes of the school because it was being sold to pay for the new building. But the Court of Appeal took the view expressed by the Law Commission in its report Property Law: Rights of Reverter (Law Com No 111). It decided that the 1841 Act requires active use of land for education and that schools must remain in operation until they are sold in order to preserve the statutory charitable trusts on which land is held and avoid triggering claims under the 1987 Act.
The Supreme Court has overturned the decision. It ruled that the legislation must be interpreted purposively and read as a coherent whole. Parliament had struck a balance between the public interest and the interests of donors – and the provisions of section 14 give statutory voice to a belief that donors would not wish to recall a gift simply because a school was a success and needed to move to larger premises.
The 1841 Act was drafted less rigorously than legislation produced after the creation of the Office of the Parliamentary Counsel in 1869, and betrayed “a lack of careful thought” in places. So the court should take a “broad and practical” approach when interpreting the statute. Furthermore, the court generally tries to prevent charitable gifts failing, if necessary by applying the doctrine of cy-près (which respects charitable intentions). Consequently, the court should lean towards the continuation of the purposes for which the statute provides, rather than being “trigger happy” in relation to rights of reverter under section 2.
Conclusions
A requirement that land is actively used as a school until it is sold could encourage devices, such as staggering school moves or retaining sites for ancillary activities, which would be educationally undesirable for pupils. And requiring a buyer to grant a licence to enable the continued use of a school until its replacement is available could reduce the price that might otherwise be paid. Therefore, to hold that there had been a statutory reverter would frustrate the legislation, with potentially unfortunate effects, educationally or financially. Consequently, it would be preferable to interpret sections 2 and 14 in a manner that put paid to such risks.
The Supreme Court did not disagree with the view expressed by Lord Walker in Fraser v Canterbury Diocesan Board of Finance (No 2) [2005] UKHL 65; [2005] PLSCS 182, that a section 2 reverter must be an event that is clear – and not a process. But the court drew a distinction between the certainty of a concept and the ease of its application. So long as the concept of closure is clear and education continues to be provided by the same school, it does not matter that, evidentially, it may be difficult to pinpoint the date of the closure.
Land is usually sold with vacant possession. Therefore, adopting a broad, practical approach, section 14 is to be interpreted as including a power to sell old school premises with vacant possession where, as on the facts of this case, there is, at all material times, a firm and settled intention to use the sale proceeds to pay for new premises for the school.
Allyson Colby is a property law consultant
