John Clargo discusses the recent Supreme Court decision in Rittson-Thomas & Ors v Oxfordshire County Council  UKSC 13 and its implications for “statutory reverters” under section 2 of the School Sites Act 1841.
In Rittson-Thomas & Ors v Oxfordshire County Council  UKSC 13, the Supreme Court held that a purposive interpretation of the Schools Sites Act 1841 (1841 Act) means that, where a school’s current premises are subject to a “statutory reverter” under section 2 of that act, those premises will not revert in a case where the intention behind the closure is to be able to sell the site with vacant possession so as to use the proceeds of sale to assist with the purchase or improvement of alternative premises.
The practical effect of the decision will be to ensure greater latitude to local education authorities in arranging the selling off of land subject to the 1841 Act and, in particular, enable sales with vacant possession rather than, for example, requiring a school to continue to operate pending completion of a sale.
In 1914, Robert Fleming voluntarily conveyed 0.13 acres of land to Oxfordshire County Council (OCC) to be used as part of the playground for the Nettlebed School, which was already in existence. In 1928 he conveyed a further 0.79 acres.
In the 1990s, OCC decided to relocate the school. By 2003, OCC’s plan anticipated expenditure of some £2,000,000 of which £1,700,000 would be borrowed in the first instance. It was expected that, as against that, £1,300,000 would be raised by selling the school’s current premises. The plan proceeded.
OCC, having built new and improved buildings on adjacent land (which it already owned), the pupils transferred there in about February 2006 and the Defendant marketed the old site for sale. OCC agreed a sale of 0.844 acres to a third party in August 2007 and sold it in September 2007 for £1,355,000. Some 93.17% of the land sold to the third party was land which had come from the 1914 and 1928 conveyances from Mr Fleming (who had died in 1933). The revenue from the sale of that land was £1,243,819.50. The Claimants (being certain of Mr Fleming’s heirs) argued that they were entitled to that money and the Defendant could not properly use it to fund the school development.
Each of the 1914 and 1928 conveyances were expressed to be “for the purposes of” the 1841 Act.
A number of Victorian statutes made provision for landowners to convey relatively small areas of land, up to 1 acre, for specified public purposes: the 1841 Act in relation to schools, the Literary and Scientific Institutions Act 1854 in relation to libraries, museums and so on, and the Places of Worship Sites Act 1873 for places of worship. Each of those acts contained some provisions for “reverter” (albeit not in precisely the same form as the 1841 Act), essentially providing that the land should pass back in the event of the land no longer being required for the purpose for which it had been conveyed.
Section 2 of the 1841 Act provided, so far as is material:
“Any person … may … convey … by way of gift … any quantity not exceeding one acre …as a site for a school or the education of poor persons, of for the residence of the schoolmaster or schoolmistress, or otherwise for the purposes of the education of such poor persons in religious and useful knowledge … Provided … that upon the said land … ceasing to be used for the purposes in this Act mentioned, the same shall immediately revert to and become a portion of the said estate … as fully to all intent and purposes as if this Act had not been passed.”
As is apparent, section 2 provided for the land to revert upon it “ceasing to be used” for the relevant purposes. In fact, that “statutory reverter” was replaced, by means of the Reverter of Sites Act 1987, with a statutory trust whereby the land would, in short, remain vested in its owner on trust for the person to whom it would otherwise have reverted, with a power to sell and to retain the proceeds of sale on trust for that person. However, the Supreme Court found it convenient to continue to refer to the statutory reverter.
Section 14 of the 1841 Act provided, so far as is material:
“When any land or building shall have been …acquired under … this Act …and it shall be deemed advisable to sell … the same for any other more convenient or eligible site, it shall be lawful for the trustees in whom the legal estate in the said land or building shall be vested, by the direction with the consent of the managers and directors of such school to sell … the said land or building, or part thereof, for other land or building suitable to the purposes of their trust … and to apply the money arising from such sale … in the purchase of another site, or in the improvement of other premises used or to be used for the purposes of such trust …”
As indicated above, the Claimants contended that they were entitled to the sums raised by OCC on its sale of the land conveyed by Mr Fleming. Their case was simple: the land in question ceased to be used for the statutory purpose when the pupils transferred to the new site in or about February 2006 and thereupon the statutory reverter under section 2 (or strictly speaking the statutory trust under the 1987 Act) took effect, such that the proceeds of sale were held on trust for them and they were entitled to call for them.
The Claimants’ case was that the manner in which the relocation had been organised (and, in particular, the order in which various steps had occurred) was important. They argued that the reverter could have been avoided by a number of routes, for example by staggering the relocation or selling the land before closing the school on that site (whether by deferring completion or subject to a licence permitting the school to continue to operate until the new site was ready). However, the way arrangements had been made in fact meant that, by the time the land was sold to the third party, the reverter under section 2 had been triggered and the Claimants were beneficially entitled to any proceeds of sale.
OCC contended that, because its proceeds of sale were used to pay off expenses incurred in developing the new school, the land conveyed by Mr Fleming did not cease to be used for the purposes of the 1841 Act when the pupils left. It argued that the alternative routes suggested by the Claimants would not necessarily be to the educational advantage of the pupils and might result in a lower price than a simple sale with vacant possession.
Mr Richard Spearman QC, sitting as a Deputy Judge of the Chancery Division had found for OCC. However, the Court of Appeal (Patten, Hamblen and Davies LJJ) overturned him, holding that OCC could not close the school on the original site and thereafter hold it pending a subsequent sale.
The Supreme Court held that Mr Spearman QC was correct.
In their joint speech, Lady Arden and Lord Burrows (with whom Lord Lloyd Jones, Lord Sales and Lord Stephens
agreed) held that:
- While it was clear that an exchange or sale under section 14 could not take place if a section 2 “reverter” had already taken place, the 1841 Act was to be construed in a purposive way, so that the power to sell under section 14 included the power to sell in the most usual way, namely with vacant possession.
- A school site does not cease to be used for the purposes of the 1841 Act if, at all material times, it was thought advisable to sell it and, with the consent of the managers and directors, to apply the money for the purchase or improvement of another (school) site.
Her Ladyship and His Lordship considered that construing the 1841 Act in this way was consistent with the speech of Lord Walker in Fraser v Canterbury Diocesan Board of Finance (No. 2)  UKHL 65, who considered that it was appropriate to take a “broad and practical approach” to the question of whether, as regards section 2, it could be said that an event of reverter had occurred. They further expressed the view that taking a broad approach was appropriate as the drafting of the 1841 Act predated the establishment of the Office of Parliamentary Counsel and the more rigorous drafting style which that office introduced.
The court explained that a purposive construction required a consideration of the balance with which the 1841 Act held the potentially conflicting interests of the benefactor (or his estate) on the one hand, and the benefitting public on the other. They plainly considered that the scales fell towards the public side:
- Section 14 clearly indicated in and of itself that a charitable landowner could not ensure in perpetuity that the land they gave for a statutory purpose would not pass to a third party, possibly for development, if no longer required for that statutory purpose.
- Section 14 was consistent with an argument that it would be unlikely that such a charitable landowner would wish to recall their gift merely because the school they had been instrumental in setting up had proven so successful that it might need to move to larger premises (which would particularly be the case if there were no adjacent land on which it could expand);
- The section 2 reverter was only triggered by a cessation of use for the relevant statutory purpose and not for any other restrictions which might have been imposed by the landowner.
- The general approach of courts was to uphold charitable gifts in the public interest.
In addition, the court considered that there was nothing in the 1841 Act which precluded the possibility of a sale with vacant possession and that the words “used or to be used” in section 14 was consistent with the possibility of alternative premises being used prior to a sale completing.
Consequently, the Claimants were not entitled to the money raised on the sale of land given to the school by Mr Fleming.
As well as providing a clear guide to the approach which should be taken to the construction of this particular statute, the Court described as well-settled the view that that courts should adopt a purposive approach to construction where possible; referring to Inland Revenue Commissioners v McGuckian  1 WLR 991 and R (Quintavelle) v Secretary of State for Health  UKHL 13.
This decision of the Supreme Court will likely be welcomed by local education authorities and charities who are responsible for successful schools which need to expand or move, as well as less successful schools which may need to relinquish land in order to contract or move, where those schools stand in whole or in part on land which was conveyed for the purposes of the 1841 Act.
Written by John Clargo. First published for Practical Law.