United Kingdom Supreme Court

3.         A preliminary point about reverter under section 2 of the 1841 Act

4.         The essential facts

5.         The relevant provisions of the 1841 Act

“2.       Landlords empowered to convey land to be used as sites for schools, &c.

“14.     Trustees empowered to sell or exchange lands or buildings

When any land or building shall have been or shall be given or acquired under the provisions of … this Act, or shall be held in trust for the purposes aforesaid, and it shall be deemed advisable to sell or exchange 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 or with the consent of the managers and directors of the said school, if any such there be, to sell or exchange the said land or building, or part thereof, for other land or building suitable to the purposes of their trust, and to receive on any exchange any sum of money by way of effecting an equality of exchange, and to apply the money arising from such sale or given on such exchange in the purchase of another site, or in the improvement of other premises used or to be used for the purposes of such trust …”

6.         The relevant provisions of the Reverter of Sites Act 1987

“1.       Right of reverter replaced by trust

(1)       Where any relevant enactment provides for land to revert to the ownership of any person at any time, being a time when the land ceases, or has ceased for a specified period, to be used for particular purposes, that enactment shall have effect, and (subject to subsection (4) below) shall be deemed always to have had effect, as if it provided (instead of for the reverter) for the land to be vested after that time, on the trust arising under this section, in the persons in whom it was vested immediately before that time.

(2)       Subject to the following provisions of this Act, the trust arising under this section in relation to any land is a trust for the persons who (but for this Act) would from time to time be entitled to the ownership of the land by virtue of its reverter with a power, without consulting them, to sell the land and to stand possessed of the net proceeds of sale (after payment of costs and expenses) and of the net rents and profits until sale (after payment of rates, taxes, costs of insurance, repairs and other outgoings) in trust for those persons; but they shall not be entitled by reason of their interest to occupy the land.

…

(4)       This section shall not confer any right on any person as a beneficiary -

(a)       in relation to any property in respect of which that person’s claim was statute-barred before the commencement of this Act, or in relation to any property derived from any such property; or

(b)       in relation to any rents or profits received, or breach of trust committed, before the commencement of this Act;

and anything validly done before the commencement of this Act in relation to any land which by virtue of this section is deemed to have been held at the time in trust shall, if done by the beneficiaries, be deemed, so far as necessary for preserving its validity, to have been done by the trustees.”

“6.       Clarification of status etc of land before reverter

…

(2)       It is hereby declared -

(a)       that the power conferred by section 14 of the School Sites Act 1841 (power of sale etc) is exercisable at any time in relation to land in relation to which (but for the exercise of the power) a trust might subsequently arise under section 1 above; and

(b)       that the exercise of that power in respect of any land prevents any trust from arising under section 1 above in relation to that land or any land representing the proceeds of sale of that land.”

(i)        Section 1(1) provides that (after 17 August 1987 when the Act came into force) on an event that would have occasioned a section 2 reverter, there is no longer a reverter. The land continues to be vested in the grantees but, instead of a reverter, there is a statutory trust in favour of those who would have been entitled on the reverter. Moreover, subject to some important savings in section 1(4), the statutory trust is deemed always to have had effect in place of the reverter in section 2 of the 1841 Act.

(ii)       Although this is not explicitly spelt out, the consequence of there being a statutory trust in section 1(1) instead of a statutory reverter is that there can be no acquisition of title by the grantees (or their successors) by adverse possession. This is because, as was explained by the Working Party of the Law Commission in Rights of Reverter, at para 17, “it is trite law that a trustee cannot obtain a title by long possession against his own beneficiaries”. However, by section 1(4), if title has already been acquired by the grantees by adverse possession before 17 August 1987, that title remains valid.

(iii)     Section 6(2) is a declaratory provision which clarifies, for the avoidance of doubt, that the replacement of the section 2 reverter by a statutory trust does not undermine section 14 of the 1841 Act. That is, just as the section 2 reverter was avoided where the trustees exercised the power to sell the land in accordance with section 14, so the statutory trust, which replaces the section 2 reverter, is avoided where the trustees exercise the power under section 14.

7.         The judgments below

“The question is one of certainty of concept and not ease of application, so that a sufficiently certain condition is not invalidated merely by possible difficulties in ascertaining whether events have occurred which give rise to a forfeiture.”

9.         Purposive statutory interpretation

10.       The balance struck in the 1841 Act between the grantor’s interest and the public interest

“One can see that the provision with regard to reverter would have been and no doubt was considered by the legislature to be a very useful encouragement to charitably minded persons, particularly if they were the owners of an estate or life tenants of a settled estate, to make grants for purposes such as these, because such persons might very well be satisfied to have the village school built upon the family estate, but would strongly object to the site on which such a school had been built being diverted later on to other purposes; therefore, as I have said, that proviso as to reverter must have been a very valuable encouragement, because landowners by reason of it were thus enabled to ensure that the site should be used in perpetuity for school purposes or, if it ceased to be used for school purposes, that they would get it back. The common sense of that is obvious.” (Emphasis added)

“Section 2 of the Schools Sites Act 1841 does not in my opinion permit persons to dedicate plots of land for educational purposes in the sense that the rental value of such land is to be applied to educational purposes, and what cannot be done directly cannot be done indirectly through the failure of the original trusts. … [T]he land is to be used as a site for schools (whether for religious or secular education) or their appurtenances, and not as a means of revenue for educational purposes.”

“It is said that directly the bomb fell and the school became unusable there was a reverter, because the school had ceased to be used for these purposes. So it had in a sense ceased to be used for these purposes; but the words cannot mean, in my judgment, a mere stopping of the user. Supposing, for instance, there was a fire and it were burned down in peacetime, it could not, in my judgment, be argued that the right of reverter arose because it took two years or whatever it was to rebuild the school. Here, as it appears, the intention had been to rebuild, because the cost of works was, so to speak, in the offing, and would have been effected at any cost. … In my judgment, there is no evidence at all of any permanent intention to abandon this site as a place for a Church of England school, at any rate before the order made in December 1946, for the compulsory acquisition of the land. Whether it was made then or whether it was made rather later, … in 1947, does not matter; the reverter had not occurred, in my view, until the Managers’ project for using the site for school purposes must necessarily be taken to have been abandoned, and I think probably … August 1947 is as good a date to take as another, and, on that event happening, the site had ceased to be used for the purposes aforesaid … and, therefore, the rights of the family revive ...”

12.       Alternative courses of action to avoid a section 2 reverter

13.       The essential reasons why the appeal should be allowed

(i)        In general terms, in line with Fraser (No 2), the court must apply a “broad and practical” approach to interpreting both sections 2 and 14 of the 1841 Act. This is consistent with a purposive approach to the interpretation of the 1841 Act. Moreover, the two sections should be read as a coherent whole. Additionally, the court should recognise that, because the 1841 Act operates through the creation of a statutory charitable trust, the court should lean in favour of the charitable trust continuing rather than being ended by a section 2 reverter. This in turn reflects the balance struck in the 1841 Act between the public interest and the interest of the grantor.

(ii)       In deciding on the correct purposive interpretation of the 1841 Act, we have found persuasive the following paragraph of the Working Party of the Law Commission in its Report Rights of Reverter at para 43:

“Section 14 recognises not only that the site originally granted (which was by the statute limited in extent) might become too small, but also that there might not be available any adjacent land on which it could expand. The limited power of sale contained in section 14 was an almost essential feature of the 1841 Act if the general policy of the Act was not to be frustrated. By the same token, we believe that grantors would not have regarded the grant of the original site as an end in itself, but only as a means to an end, namely the establishment of a school; and, consistently with that approach, they would not have wished to recall their benefaction simply because their school was a success and had to move to larger premises. Of course, it would be quite different if the site ceased to be used for school purposes because their school ceased to exist. The grantor’s right of reverter cannot be overridden by a sale under section 14 if education is thereafter provided not in the same school elsewhere but in a substitute school. Many grantors defined the school which they were helping to establish by reference to a locality and the fact that the new premises are a long way away from the old ones may well make the new school a different school for present purposes, if only because it is likely to have a fundamentally different catchment area.” (Emphasis added)

In our view, to interpret sections 2 and 14 as meaning that, on the facts of this case, there has been a section 2 reverter would indeed frustrate the general policy of the Act. Moreover, the contrary conclusion merely serves to encourage devices that might have potentially unfortunate effects whether educationally or financially (see para 48 above).

(iii)     There is nothing in section 14 that expressly or impliedly excludes the power to sell where the school site is being sold with vacant possession. Indeed, if there were such an exclusion, one might have expected it to have been spelt out in clear terms in the statute given that the usual sale of land is one with vacant possession.

(iv)      A relatively straightforward interpretation of section 14 is possible, permitting sale with vacant possession, by focussing on the following words: “When … it shall be deemed advisable to sell … the [land] … it shall be lawful for the trustees … by the direction or with the consent of the managers and directors of the said school, if any such there be, to sell … the said land … 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 …”. The words “used or to be used” directly support the interpretation that it was acceptable within section 14 for the school to have moved to the new site before the sale was completed.

(v)       Just as there is nothing in the 1841 Act, nor is there any case law, requiring that the correct sequence of events for section 14 to operate is one that precludes a sale of the site with vacant possession. The Working Party of the Law Commission in its Report Rights of Reverter at para 114 was simply incorrect (as Richard Spearman QC made clear at first instance: see para 24(iii) above) to assume that, in order to avoid a section 2 reverter, a sale under section 14 always had to be carried out before the closure of the school.

(vi)      We do not agree with Mr Taube’s submission (or the view of Patten LJ in the Court of Appeal at para 21, to which we refer at para 25(ii) above) that the interpretation we are taking contradicts the need for a section 2 reverter to be triggered by an event, that is certain, rather than a process. Certainly, it is incorrect to think that the triggering event cannot be dependent on the relevant intentions of the County Council. So, for example, it is not in dispute that there would have been a section 2 reverter had Nettlebed School been permanently closed down in February 2006. But whether there has been a permanent closure may itself be dependent on the intentions of those running the school as was shown so clearly by the reasoning of Harman J in In re Chavasse. The permanent closing down of a school is a conceptually certain event even if evidentially there may be some difficulty in pin-pointing when that occurred (because it may have rested on a party’s intentions).

(vii)    In summary, therefore, one can usefully link the relevant words of sections 2 and 14 of the 1841 Act to produce the following general proposition. The site of a school does not cease to be used for the purposes of the 1841 Act (section 2) where at all material times it is considered advisable to sell the site and, with the consent of the managers and directors of the school, if any, to apply the money arising from the sale in the purchase of another site, or in the improvement of other premises, used or to be used for the school (section 14). Taking a broad and practical approach to the statutory words, as required by Fraser (No 2), the power in section 14 is to be interpreted as including a power of sale of the most usual kind, namely a power to sell with vacant possession. We think it implicit in the statutory words that, as on the facts of this case, the intention to use the sale proceeds, for the purchase of another site or in the improvement of other premises, must be present prior to, or at the time of, the school being permanently moved from the former site and at the time that that site is sold; but, out of an abundance of caution, we have inserted the words “at all material times” (which do not appear in the 1841 Act) to make this clear.

14.       Conclusion